EXHIBIT 10.16(a)
LOAN AND SECURITY AGREEMENT
GMAC COMMERCIAL FINANCE LLC
(AS COLLATERAL AGENT AND ADMINISTRATIVE AGENT)
AND
THE BANK OF NEW YORK
(AS DOCUMENTATION AGENT)
AND
WACHOVIA BANK, NATIONAL ASSOCIATION
(AS SYNDICATION AGENT)
AND
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME
(AS LENDERS),
WITH
STANADYNE CORPORATION
(AS BORROWING AGENT)
AND
THE OTHER LOAN PARTIES SIGNATORY HERETO
(AS LOAN PARTIES)
OCTOBER 24, 2003
TABLE OF CONTENTS
Page
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I. DEFINITIONS............................................................................................... 1
1.1 Accounting Terms................................................................................. 1
1.2 General Terms.................................................................................... 1
1.3 Uniform Commercial Code Terms.................................................................... 21
1.4 Certain Matters of Construction.................................................................. 21
II. ADVANCES, PAYMENTS........................................................................................ 21
2.1 (a) Revolving Advances........................................................................... 21
(b) Individual Revolving Advances........................................................... 22
(c) Discretionary Rights.................................................................... 22
(d) Swingline Loans......................................................................... 22
2.2 Procedure for Borrowing.......................................................................... 23
2.3 Disbursement of Advance Proceeds................................................................. 25
2.4 Term Loan........................................................................................ 25
2.5 [Intentionally Omitted].......................................................................... 25
2.6 Maximum Revolving Advances....................................................................... 25
2.7 Repayment of Advances............................................................................ 25
2.8 Repayment of Excess Advances..................................................................... 26
2.9 Statement of Account............................................................................. 26
2.10 Letters of Credit ............................................................................... 27
2.11 Issuance of Letters of Credit.................................................................... 27
2.12 Requirements For Issuance of Letters of Credit................................................... 28
2.13 Additional Payments.............................................................................. 29
2.14 Manner of Borrowing and Payment.................................................................. 29
2.15 Mandatory Prepayments............................................................................ 31
2.16 Use of Proceeds.................................................................................. 31
2.17 Defaulting Lender................................................................................ 31
III. INTEREST AND FEES......................................................................................... 32
3.1 Interest......................................................................................... 32
3.2 Letter of Credit Fees............................................................................ 33
3.3 Facility Fee..................................................................................... 33
3.4 Collateral Monitoring Fee........................................................................ 34
3.5 Computation of Interest and Fees................................................................. 34
3.6 Maximum Charges.................................................................................. 34
3.7 Increased Costs.................................................................................. 34
3.8 Basis For Determining Interest Rate Inadequate or Unfair......................................... 35
3.9 Capital Adequacy................................................................................. 35
IV. COLLATERAL: GENERAL TERMS................................................................................ 36
4.1 Security Interest in the Collateral.............................................................. 36
4.2 Perfection of Security Interest.................................................................. 36
4.3 Disposition of Collateral........................................................................ 37
4.4 Preservation of Collateral....................................................................... 38
4.5 Ownership of Collateral.......................................................................... 38
4.6 Defense of Agent's and Lenders' Interests........................................................ 38
4.7 Books and Records................................................................................ 39
4.8 Financial Disclosure............................................................................. 39
4.9 Compliance with Laws............................................................................. 39
4.10 Inspection of Premises........................................................................... 40
4.11 Insurance........................................................................................ 40
4.12 Failure to Pay Insurance......................................................................... 41
4.13 Payment of Taxes................................................................................. 41
4.14 Payment of Leasehold Obligations................................................................. 42
4.15 Accounts and other Receivables................................................................... 42
(a) Nature of Accounts...................................................................... 42
(b) Solvency of Customers................................................................... 42
(c) Locations of Loan Party................................................................. 42
(d) Collection of Accounts and other Receivables............................................ 42
(e) Notification of Assignment of Accounts and other Receivables............................ 43
(f) Power of Agent to Act on Loan Parties' Behalf........................................... 43
(g) No Liability............................................................................ 44
(h) Establishment of a Lockbox Account, Dominion Account.................................... 44
(i) Adjustments............................................................................. 44
4.16 Inventory........................................................................................ 45
4.17 Maintenance of Equipment......................................................................... 45
4.18 Exculpation of Liability......................................................................... 45
4.19 Environmental Matters............................................................................ 45
4.20 Financing Statements............................................................................. 47
V. REPRESENTATIONS AND WARRANTIES............................................................................ 47
5.1 Authority........................................................................................ 47
5.2 Formation and Qualification...................................................................... 48
5.3 Survival of Representations and Warranties....................................................... 48
5.4 Tax Returns...................................................................................... 48
5.5 Financial Statements............................................................................. 48
5.6 Corporate Name................................................................................... 49
5.7 O.S.H.A. and Environmental Compliance............................................................ 49
5.8 Solvency; No Litigation, Violation, Indebtedness or Default...................................... 50
5.9 Patents, Trademarks, Copyrights and Licenses..................................................... 51
5.10 Licenses and Permits............................................................................. 51
5.11 Default of Indebtedness.......................................................................... 52
5.12 No Default....................................................................................... 52
5.13 No Burdensome Restrictions....................................................................... 52
5.14 No Labor Disputes................................................................................ 52
5.15 Margin Regulations............................................................................... 52
5.16 Investment Company Act........................................................................... 52
5.17 Disclosure....................................................................................... 52
5.18 Delivery of Senior Subordinated Debt Documentation............................................... 52
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5.19 Swaps............................................................................................ 53
5.20 Conflicting Agreements........................................................................... 53
5.21 Application of Certain Laws and Regulations...................................................... 53
5.22 Business and Property of Loan Parties............................................................ 53
5.23 Material Contracts............................................................................... 53
VI. AFFIRMATIVE COVENANTS..................................................................................... 53
6.1 Payment of Fees.................................................................................. 53
6.2 Conduct of Business and Maintenance of Existence and Assets...................................... 53
6.3 Violations....................................................................................... 54
6.4 Government Receivables........................................................................... 54
6.5 Execution of Supplemental Instruments............................................................ 54
6.6 Payment of Indebtedness.......................................................................... 54
6.7 Standards of Financial Statements................................................................ 54
6.8 Financial Covenants.............................................................................. 54
(a) EBITDA.................................................................................. 54
(b) Fixed Charge Coverage Ratio............................................................. 55
(c) Senior Leverage Ratio................................................................... 55
6.9 Minimum Undrawn Availability..................................................................... 55
VII. NEGATIVE COVENANTS........................................................................................ 56
7.1 Merger, Consolidation, Acquisition and Sale of Assets............................................ 56
7.2 Creation of Liens................................................................................ 56
7.3 Guarantees....................................................................................... 56
7.4 Investments...................................................................................... 56
7.5 Loans............................................................................................ 56
7.6 Capital Expenditures............................................................................. 56
7.7 Dividends and Distributions...................................................................... 58
7.8 Indebtedness..................................................................................... 58
7.9 Nature of Business............................................................................... 58
7.10 Transactions with Affiliates..................................................................... 58
7.11 Leases........................................................................................... 58
7.12 Subsidiaries..................................................................................... 58
7.13 Fiscal Year and Accounting Changes............................................................... 59
7.14 Pledge of Credit................................................................................. 59
7.15 Amendment of Articles of Formation, LLC Agreement, Certificate of Incorporation and By-Laws...... 59
7.16 Compliance with ERISA............................................................................ 59
7.17 Prepayment of Indebtedness for Money Borrowed.................................................... 59
7.18 Senior Subordinated Notes........................................................................ 59
7.19 Jurisdiction of Organization..................................................................... 60
VIII. CONDITIONS PRECEDENT...................................................................................... 60
8.1 Conditions to Initial Advances................................................................... 60
(a) Notes................................................................................... 60
(b) Filings, Registrations, Recordings and Searches......................................... 60
(c) Corporate Proceedings of Loan Parties................................................... 61
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(d) Incumbency Certificates of Loan Parties................................................. 61
(e) Certificates............................................................................ 61
(f) Good Standing Certificates.............................................................. 61
(g) Legal Opinion........................................................................... 61
(h) No Litigation........................................................................... 61
(i) Collateral Examination.................................................................. 61
(j) Fees.................................................................................... 62
(k) Guaranties, Pledge Agreement, Other Documents........................................... 62
(l) Insurance............................................................................... 62
(m) Title Insurance......................................................................... 62
(n) Environmental Reports................................................................... 62
(o) Payment Instructions.................................................................... 62
(p) Blocked Accounts........................................................................ 62
(q) Consents................................................................................ 62
(r) No Adverse Material Change.............................................................. 62
(s) Leasehold Agreements.................................................................... 63
(t) Mortgage................................................................................ 63
(u) Subordinated Debt Documentation......................................................... 63
(v) Contract Review......................................................................... 63
(w) Closing Certificate..................................................................... 63
(x) Borrowing Base.......................................................................... 63
(y) Undrawn Availability.................................................................... 63
(z) Control Agreements...................................................................... 63
(aa) Other................................................................................... 63
8.2 Conditions to Each Advance....................................................................... 63
(a) Representations and Warranties.......................................................... 63
(b) No Default.............................................................................. 64
(c) Maximum Revolving Advances.............................................................. 64
(d) Maximum Letters of Credit............................................................... 64
IX. INFORMATION AS TO BORROWERS............................................................................... 64
9.1 Disclosure of Material Matters................................................................... 64
9.2 Schedules........................................................................................ 64
9.3 Environmental Reports............................................................................ 65
9.4 Litigation....................................................................................... 65
9.5 Material Occurrences............................................................................. 65
9.6 Government Receivables........................................................................... 65
9.7 Annual Financial Statements...................................................................... 65
9.8 Quarterly Financial Statements................................................................... 66
9.9 Monthly Financial Statements..................................................................... 66
9.10 Other Reports.................................................................................... 67
9.11 Additional Information........................................................................... 67
9.12 Projected Operating Budget....................................................................... 67
9.13 Variances From Operating Budget.................................................................. 67
9.14 Notice of Suits, Adverse Events.................................................................. 67
9.15 ERISA Notices and Requests....................................................................... 68
9.16 Additional Documents............................................................................. 68
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X. EVENTS OF DEFAULT......................................................................................... 68
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT................................................................ 71
11.1 Rights and Remedies.............................................................................. 71
11.2 Application of Proceeds.......................................................................... 72
11.3 Agent's Discretion............................................................................... 72
11.4 Setoff........................................................................................... 72
11.5 Rights and Remedies not Exclusive................................................................ 73
XII. WAIVERS AND JUDICIAL PROCEEDINGS.......................................................................... 73
12.1 Waiver of Notice................................................................................. 73
12.2 Delay............................................................................................ 73
12.3 Jury Waiver...................................................................................... 73
XIII. EFFECTIVE DATE AND TERMINATION............................................................................ 73
13.1 Term............................................................................................. 73
13.2 Termination...................................................................................... 73
XIV. REGARDING AGENT........................................................................................... 74
14.1 Appointment...................................................................................... 74
14.2 Nature of Duties................................................................................. 74
14.3 Lack of Reliance on Agent and Resignation........................................................ 75
14.4 Certain Rights of Agent.......................................................................... 75
14.5 Reliance......................................................................................... 75
14.6 Notice of Default................................................................................ 76
14.7 Indemnification.................................................................................. 76
14.8 Agent in its Individual Capacity................................................................. 76
14.9 Delivery of Documents............................................................................ 76
14.10 Loan Parties' Undertaking to Agent............................................................... 76
14.11 Documentation Agent and Syndication Agent........................................................ 77
XV. GUARANTEE................................................................................................. 77
XVI. BORROWING AGENCY.......................................................................................... 81
16.1 Borrowing Agency Provisions...................................................................... 81
16.2 Waiver of Subrogation............................................................................ 82
XVII. MISCELLANEOUS............................................................................................. 82
17.1 Governing Law.................................................................................... 82
17.2 Entire Understanding............................................................................. 83
17.3 Successors and Assigns; Participations; New Lenders.............................................. 84
17.4 Application of Payments.......................................................................... 87
17.5 Indemnity........................................................................................ 87
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17.6 Notice........................................................................................... 87
17.7 Survival......................................................................................... 88
17.8 Severability..................................................................................... 88
17.9 Expenses......................................................................................... 88
17.10 Injunctive Relief................................................................................ 89
17.11 Consequential Damages............................................................................ 89
17.12 Captions......................................................................................... 89
17.13 Counterparts; Telecopied Signatures.............................................................. 89
17.14 Construction..................................................................................... 89
17.15 Confidentiality; Sharing Information............................................................. 89
17.16 Publicity........................................................................................ 90
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List of Exhibits and Schedules (*)
Exhibits
Exhibit A Borrowing Base Certificate
Exhibit 2.1(a) Revolving Credit Note
Exhibit 2.1(d) Swingline Note
Exhibit 2.4 Term Note
Exhibit 5.5(b) Financial Projections
Exhibit 17.3 Commitment Transfer Supplement
Schedules
Schedule 1.2(a) Permitted Encumbrances
Schedule 1.2(b) Real Property
Schedule 4.5 Equipment and Inventory Locations
Schedule 4.15(c) Location of Executive Offices
Schedule 5.2(a) States of Qualification and Good Standing
Schedule 5.2(b) Subsidiaries
Schedule 5.4 Federal Tax Identification Number
Schedule 5.6 Prior Names
Schedule 5.7 Environmental
Schedule 5.8(b)(i) Litigation
Schedule 5.8(d) Plans
Schedule 5.9 Intellectual Property, Source Code Escrow
Agreements
Schedule 5.10 Licenses and Permits
Schedule 5.14 Labor Disputes
Schedule 5.23 Material Contracts
Schedule 7.3 Guarantees
Schedule 7.4 Investments
Schedule 7.8 Existing Indebtedness
(*) The Company shall furnish supplementally a copy of any omitted exhibits or
schedules to the Commissioner upon request.
LOAN AND SECURITY AGREEMENT
Loan and Security Agreement dated October 24, 2003 among STANADYNE
CORPORATION, a corporation organized under the laws of the State of Delaware
("Stanadyne"), PRECISION ENGINE PRODUCTS CORP., a corporation organized under
the laws of the State of Delaware ("Precision") (Stanadyne and Precision, each a
"Borrower" and collectively, the "Borrowers"), STANADYNE AUTOMOTIVE HOLDING
CORP., a corporation organized under the laws of the State of Delaware
("Guarantor"), the financial institutions which are now or which hereafter
become a party hereto (each a "Lender" and collectively, the "Lenders") GMAC
COMMERCIAL FINANCE LLC, a limited liability company organized under the laws of
the State of Delaware ("GMAC CF"), as collateral agent and administrative agent
for Lenders (GMAC CF, in such capacity, the "Agent"), THE BANK OF NEW YORK, a
New York banking corporation ("BNY"), as documentation agent for Lenders (BNY,
in such capacity, the "Documentation Agent") and WACHOVIA BANK, NATIONAL
ASSOCIATION ("Wachovia"), as syndication agent for Lenders (Wachovia, in such
capacity, the "Syndication Agent")
IN CONSIDERATION of the mutual covenants and undertakings herein
contained, the parties hereto hereby agree as follows:
I. DEFINITIONS
1.1 Accounting Terms. As used in this Agreement, the Notes, any
Other Document, or any certificate, report or other document made or delivered
pursuant to this Agreement, accounting terms not defined in Section 1.2 or
elsewhere in this Agreement and accounting terms partly defined in Section 1.2
to the extent not defined, shall have the respective meanings given to them
under GAAP.
1.2 General Terms. For purposes of this Agreement the following
terms shall have the following meanings:
"Accountants" shall have the meaning set forth in Section 9.7.
"Accounts" shall mean and include as to each Loan Party, all of such
Loan Party's "accounts" as defined in the UCC, whether now owned or hereafter
acquired including, without limitation all present and future rights of such
Loan Party to payment of a monetary obligation, whether or not earned by
performance, which is not evidenced by chattel paper or an instrument, (a) for
property that has been or is to be sold, leased, licensed, assigned, or
otherwise disposed of, (b) for services rendered or to be rendered, (c) for a
secondary obligation incurred or to be incurred, or (d) arising out of the use
of a credit or charge card or information contained on or for use with the card.
"Accounts Advance Rate" shall have the meaning set forth in Section
2.1(a)(y)(i).
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar Loan
for any Interest Period a rate of interest equal to:
(a) the offered rate for deposits in U.S. dollars in the London
interbank market for the relevant Interest Period which is published by the
British Bankers' Association and currently appears on Telerate Page 3750 as of
11:00 a.m. (London time) on the day which is two (2) Business Days prior to the
first day of such Interest Period for a term comparable to such Interest Period;
provided, however, that if such a rate ceases to be available on that or any
other source from the British Bankers' Association, Adjusted LIBO Rate shall be
a rate per annum equal to the offered rate for deposits in U.S. dollars in the
London interbank market for the relevant Interest Period that appears on Reuters
Screen LIBO Page (or any successor page) as of 11:00 a.m. (London time) on the
day which is two (2) Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period, provided that if more than
one rate is specified on Reuters Screen LIBO Page, Adjusted LIBO Rate shall be a
rate per annum equal to the arithmetic mean of all such rates (rounded upwards,
if necessary, to the nearest 1/100 of 1%); provided, however, that if, for any
reason, such a rate is not published by the British Bankers' Association or
available on the Reuters Screen LIBO Page, Adjusted LIBO Rate shall be equal to
a rate per annum equal to the average rate (rounded upwards, if necessary, to
the nearest 1/100 of 1%) at which Agent determines that U.S. dollars in an
amount comparable to the amount of the applicable Loans are being offered to
prime banks at approximately 11:00 a.m. (London time) on the day which is two
(2) Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period for settlement in immediately available funds
by leading banks in the London interbank market selected by Agent; divided by
(b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two (2) Business Days prior to the
beginning of such Interest Period (including, without limitation, basic,
supplemental, marginal and emergency reserves under any regulations of the Board
of Governors of the Federal Reserve System or other governmental authority
having jurisdiction with respect thereto, as now and from time to time in
effect) for Eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) which are required to be maintained
by a member bank of the Federal Reserve System; such rate (if greater than zero)
to be rounded upward to the next whole multiple of one-sixteenth of one percent
(.0625%).
"Advances" shall mean and include the Revolving Advances, Letters of
Credit, and the Term Loan.
"Advance Rates" shall have the meaning set forth in Section 2.1(a).
"Affiliate" of any Person shall mean (a) any Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with such Person, or (b) any Person who is a director
or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of
any Person described in clause (a) above. For purposes of this definition,
control of a Person shall mean the power, direct or indirect, (x) to vote 5% or
more of the securities having ordinary voting power for the election of
directors of such Person, or (y) to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise.
"Agent" shall have the meaning set forth in the preamble to this
Agreement and shall include its successors and assigns.
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"Agreement" shall mean this Loan and Security Agreement, as amended,
restated, modified and supplemented from time to time.
"Applicable Margin" for each type of Advance shall mean as of the
Closing Date, the applicable percentage specified below:
----------------------------------------------------------------------------------------------------------------
APPLICABLE MARGIN FOR DOMESTIC RATE APPLICABLE MARGIN FOR EURODOLLAR
TYPE OF ADVANCE LOANS RATE LOANS
----------------------------------------------------------------------------------------------------------------
Revolving Advances 1.75% 2.75%
--------------------------------------------------------------------------------------------------
Term Loan 2.25% 3.25%
--------------------------------------------------------------------------------------------------
"Authority" shall have the meaning set forth in Section 4.19(c).
"Base Rate" shall mean a variable rate of interest per annum equal to
the rate of interest from time to time published by the Board of Governors of
the Federal Reserve System in Federal Reserve statistical release H.15 (519)
entitled "Selected Interest Rates" as the Bank Prime Loan Rate, such rate to be
adjusted automatically, without notice, on the effective date of any change in
such rate. Base Rate also includes rates published in any successor publications
of the Federal Reserve System reporting the Bank Prime Loan Rate or its
equivalent. The statistical release generally sets forth a Bank Prime Loan Rate
for each Business Day. The applicable Bank Prime Loan Rate for any date not set
forth in such statistical release or equivalent document shall be the rate set
forth for the last preceding date. In the event the Board of Governors of the
Federal Reserve System ceases to publish a Bank Prime Loan Rate or equivalent,
the term "Base Rate" shall mean a variable rate of interest per annum equal to
the highest of the "prime rate," "reference rate," "base rate" or other similar
rate as determined by Agent announced from time to time by any of Bank One, X.X.
Xxxxxx Xxxxx & Co. or Citibank, N.A. (or any successor to any of the foregoing
institutions) (with the understanding that any such rate may merely be a
reference rate and may not necessarily represent the lowest or best rate
actually charged to any customer by such bank).
"Blocked Accounts" shall have the meaning set forth in Section 4.15(h).
"Borrower" or "Borrowers" shall have the meaning set forth in the
preamble to this Agreement and shall extend to all permitted successors and
assigns of such Persons.
"Borrowers' Account" shall have the meaning set forth in Section 2.9.
"Borrowing Agent" shall mean Stanadyne.
"Borrowing Base Certificate" shall mean a certificate duly executed by
an officer of Borrowing Agent appropriately completed and in substantially the
form of Exhibit A.
"Business Day" shall mean with respect to Eurodollar Rate Loans, any
day on which commercial banks are open for domestic and international business,
including dealings in Dollar deposit, in London, England and New York, New York
and with respect to all other matters, any day other than a day on which
commercial banks in New York are authorized or required by law to close.
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"Cap/Ex Carryover Amount" shall mean, for any given fiscal year, an
amount equal to the (a) lesser of (i) $5,000,000 and (ii) the difference between
the scheduled amount of Capital Expenditures permitted for the immediately prior
fiscal year pursuant to Section 7.6 of this Agreement (exclusive of any
applicable Cap/Ex Carryover Amount) minus the actual Capital Expenditures
incurred by Borrowers during such immediately prior fiscal year.
"Capital Expenditures" means, without duplication, all expenditures
(including deposits) for, or contracts for expenditures with respect to any
fixed assets or improvements, or for replacements, substitutions or additions
thereto, which have a useful life of more than one year, including the direct or
indirect acquisition of such assets by way of increased product or service
charges, offset items or otherwise, as determined in accordance with GAAP,
consistently applied.
"Capital Lease" means any lease of any property (whether real, personal
or mixed) that, in conformity with GAAP, should be accounted for as a capital
lease.
"Cash Equivalents" shall mean: (a) marketable direct obligations issued
or unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within six (6) months from the date of acquisition thereof;
(b) commercial paper maturing no more than six (6) months from the date issued
and, at the time of acquisition, having a rating of at least A-1 from Standard &
Poor's Corporation or at least P-1 from Xxxxx'x Investors Service, Inc.; and (c)
certificates of deposit or bankers' acceptances maturing within six (6) months
from the date of issuance thereof issued by, or overnight reverse repurchase
agreements from, any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia having
combined capital and surplus of not less than $500,000,000 and whose debt
obligations, or those of a holding company of which it is a Subsidiary, are
rated not less than A (or the equivalent rating) by a nationally recognized
investment rating agency and not subject to setoff rights in favor of such bank.
"Cash Interest Expense" means, without duplication, for any period, the
following: interest expenses deducted in the determination of net income
(excluding (a) the amortization of fees and costs with respect to the
transactions contemplated by this Agreement which have been capitalized as
transaction costs, and (b) interest paid in kind).
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601 et
seq.
"Change of Control" shall mean (a) the occurrence of any event (whether
in one or more transactions) which results in a transfer of control of any Loan
Party to a Person who is not an Original Owner; (b) 50% or more of the common
stock of any Loan Party is no longer owned or controlled by (including for the
purposes of the calculation of percentage ownership, any shares of common stock
into which any capital stock of any Loan Party held by any of the Original
Owners is convertible or for which any such shares of the capital stock of any
Loan Party or of any other Person may be exchanged and any shares of common
stock issuable to such Original Owners upon exercise of any warrants, options or
similar rights which may at the time of calculation be held by such Original
Owners) a Person who is either an Original Owner or an Affiliate of an Original
Owner or (c) any merger or consolidation of or with any Loan Party or
4
sale of all or substantially all of the property or assets of any Loan Party;
provided, that the sale by Holding of any shares of the capital stock of
Stanadyne shall be deemed a sale of substantially all of Holdings' assets. For
purposes of clause (a) of this definition, "control of Loan Party" shall mean
the power, direct or indirect (x) to vote 50% or more of the securities having
ordinary voting power for the election of directors of any Loan Party or (y) to
direct or cause the direction of the management and policies of any Loan Party
by contract or otherwise.
"Charges" shall mean all taxes, charges, fees, imposts, levies or other
assessments, including, without limitation, all net income, gross income, gross
receipts, sales, use, ad valorem, value added, transfer, franchise, profits,
inventory, capital stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation and property taxes,
custom duties, fees, assessments, liens, claims and charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts, imposed by any taxing or other authority, domestic or
foreign (including, without limitation, the PBGC or any environmental agency or
superfund), upon the Collateral, any Loan Party or any of its Affiliates.
"Closing Date" shall mean October 24, 2003.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time and the regulations promulgated thereunder.
"Collateral" shall mean and include:
(a) Accounts and other Receivables;
(b) certificated securities;
(c) chattel paper, including electronic chattel paper;
(d) Computer Hardware and Software and all rights with
respect thereto, including, any and all licenses, options, warranties, service
contracts, program services, test rights, maintenance rights, supporting
information, improvement rights, renewal rights and indemnifications, and any
substitutions, replacements, additions or model conversions of any of the
foregoing;
(e) Contract Rights;
(f) commercial tort claims;
(g) deposit accounts;
(h) documents;
(i) financial assets;
(j) General Intangibles, including payment intangibles
and software;
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(k) goods (including all Equipment and Inventory), and
all embedded software, accessions, additions, attachments, improvements,
substitutions and replacements thereto and therefor;
(l) instruments;
(m) Intellectual Property;
(n) Investment Property;
(o) Real Property;....
(p) Subsidiary Stock;.
(q) Leasehold Interests;
(r) cash, cash equivalents or other money (in every
jurisdiction whatsoever);
(s) letter of credit rights;
(t) security entitlements;
(u) supporting obligations;
(v) uncertificated securities; and
(w) to the extent not included in the foregoing, all of
each Loan Party's right, title and interest in and to (i) its respective goods
and other property including, but not limited to, all merchandise returned or
rejected by Customers, relating to or securing any of the Receivables; (ii) all
of each Loan Party's rights as a consignor, a consignee, an unpaid vendor,
mechanic, artisan, or other lienor, including stoppage in transit, setoff,
compensation, detinue, replevin, reclamation and repurchase; (iii) all
supporting obligations and all additional amounts due to any Loan Party from any
Customer relating to the Receivables; (iv) other property, including warranty
claims, relating to any goods securing this Agreement; (v) all of each Loan
Party's contract rights, rights of payment which have been earned under a
contract right, letter of credit rights (whether or not the letter of credit is
evidenced by a writing), instruments (including promissory notes), documents,
chattel paper (whether tangible or electronic), warehouse receipts, deposit
accounts, money and securities; (vi) if and when obtained by any Loan Party, all
real, immovable, movable and personal property of third parties in which such
Loan Party has been granted a lien or, security interest or a hypothec as
security for the payment or enforcement of Receivables; and (vii) any other
goods, movable or personal property or real or immovable property now owned or
hereafter acquired in which any Loan Party has expressly granted a security
interest or may in the future grant a security or a hypothec interest to Agent
hereunder, or in any amendment or supplement hereto or thereto, or under any
other agreement between Agent and any Loan Party, or any other personal property
of any kind or description;
together with all books, records, writings, data bases, information and other
property relating to, used or useful in connection with, or evidencing,
embodying, incorporating or referring to any of
6
the foregoing, and all proceeds, products, offspring, rents, issues, profits and
returns of and from any of the foregoing.
"Commitment Percentage" of any Lender shall mean the percentage set
forth below such Lender's name on the signature page hereof as same may be
adjusted upon any assignment by a Lender pursuant to Section 17.3(b).
"Commitment Transfer Supplement" shall mean a document in the form of
Exhibit 17.3, properly completed and otherwise in form and substance
satisfactory to Agent by which the Purchasing Lender purchases and assumes a
portion of the obligation of Lenders to make Advances under this Agreement.
"Commitments" shall mean, as to any Lender, its obligation to make
Advances (including participating in Letters of Credit) in an aggregate amount
not to exceed at any one time outstanding the amount set forth below such
Lender's name on the signature page hereof under the heading "Commitment", as
same may be adjusted in accordance with this Agreement.
"Computer Hardware and Software" means all of each Loan Party's rights
(including rights as licensee and lessee) with respect to (a) computer and other
electronic data processing hardware, including all integrated computer systems,
central processing units, memory units, display terminals, printers, computer
elements, card readers, tape drives, hard and soft disk drives, cables,
electrical supply hardware, generators, power equalizers, accessories,
peripheral devices and other related computer hardware; (b) all software and all
software programs designed for use on the computers and electronic data
processing hardware described in clause (a) above, including all operating
system software, utilities and application programs in whatsoever form (source
code and object code in magnetic tape, disk or hard copy format or any other
listings whatsoever); (c) any firmware associated with any of the foregoing; and
(c) any documentation for hardware, software and firmware described in clauses
(a), (b) and (c) above, including flow charts, logic diagrams, manuals,
specifications, training materials, charts and pseudo codes.
"Consents" shall mean all filings and all licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental authorities
and other third parties, domestic or foreign, necessary to carry on any Loan
Party's business, including, without limitation, any Consents required under all
applicable federal, state or other applicable law.
"Contract Rate" shall mean, as applicable, the Revolving Interest Rate
or the Term Loan Rate.
"Contract Right" means any right of each Loan Party to payment under a
contract for the sale or lease of goods or the rendering of services, which
right is at the time not yet earned by performance.
"Controlled Group" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with any Loan Party, are treated as a single
employer under Section 414 of the Code.
"Customer" shall mean and include the account debtor with respect to
any Receivable and/or the prospective purchaser of goods, services or both with
respect to any contract or
7
contract right, and/or any party who enters into or proposes to enter into any
contract or other arrangement with any Loan Party, pursuant to which such Loan
Party is to deliver any personal property or perform any services.
"Customs" shall have the meaning set forth in Section 2.12(c).
"Default" shall mean an event which, with the giving of notice or
passage of time or both, would constitute an Event of Default.
"Default Rate" shall have the meaning set forth in Section 3.1.
"Defaulting Lender" shall have the meaning set forth in Section
2.17(a).
"Depository Accounts" shall have the meaning set forth in Section
4.15(h).
"Documentary Letters of Credit" shall mean all Letters of Credit issued
in connection with this Agreement to pay the purchase price for Inventory
purchased by a Borrower.
"Documents" shall have the meaning set forth in Section 8.1(c).
"Dollar" and the sign "$" shall mean lawful money of the United States
of America.
"Domestic Rate Loan" shall mean any Advance that bears interest based
upon the Base Rate.
"Early Termination Date" shall have the meaning set forth in Section
13.1.
"EBITDA" means for any period, without duplication, the total of the
following for Loan Parties and their Subsidiaries on a consolidated basis, each
calculated for such period: (a) net income determined in accordance with GAAP;
plus, to the extent included in the calculation of net income, (b) the sum of
(i) income and franchise taxes paid or accrued; (ii) interest expenses, net of
interest income, paid or accrued; (iii) amortization and depreciation and (iv)
other non-cash charges (excluding accruals for cash expenses made in the
ordinary course of business); less to the extent included in the calculation of
net income, (c) the sum of (i) the income of any Person (other than wholly-owned
Subsidiaries of Borrowers) in which Borrowers or a wholly owned Subsidiary of
Borrowers or joint ventures owned by Borrowers, has an ownership interest except
to the extent such income is received by Borrowers or such wholly-owned
Subsidiary or joint ventures owned by Borrowers, in a cash distribution during
such period; (ii) gains or losses from sales or other dispositions of assets
(other than Inventory in the normal course of business); and (iii) the greater
of (A) $0 and (B) the sum of extraordinary or non-recurring gains less
extraordinary or non-recurring "cash" losses.
"Eligible Accounts" shall mean and include with respect to each
Borrower, each Account of such Borrower arising in the ordinary course of such
Borrower's business and which Agent, in its sole credit judgment, shall deem to
be an Eligible Account, based on such considerations as Agent may from time to
time deem appropriate. An Account shall not be deemed eligible unless such
Account is subject to Agent's first priority perfected security interest and no
other Lien (other than Permitted Encumbrances), and is evidenced by an invoice
or other documentary evidence satisfactory to Agent. In addition, no Account
shall be an Eligible Account if:
8
(a) it arises out of a sale made by any Borrower to an Affiliate
of any Borrower or to a Person controlled by an Affiliate of any Borrower;
(b) it is due or unpaid more than sixty (60) days after the
original due date or one hundred twenty (120) days after the original invoice
date;
(c) fifty percent (50%) or more of the Accounts from such Customer
are not deemed Eligible Accounts hereunder. Such percentage may, in Agent's sole
discretion, be increased or decreased from time to time;
(d) any covenant, representation or warranty contained in this
Agreement with respect to such Account has been breached;
(e) the Customer shall (i) apply for, suffer, or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its property or call
a meeting of its creditors, (ii) admit in writing its inability, or be generally
unable, to pay its debts as they become due or cease operations of its present
business, (iii) make a general assignment for the benefit of creditors, (iv)
commence a voluntary case under any state or federal bankruptcy laws (as now or
hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a
petition seeking to take advantage of any other law providing for the relief of
debtors, (vii) acquiesce to, or fail to have dismissed, any petition which is
filed against it in any involuntary case under such bankruptcy laws, or (viii)
take any action for the purpose of effecting any of the foregoing;
(g) the sale to the Customer is on a xxxx-and-hold, guaranteed
sale, sale-and-return, sale on approval, consignment or any other repurchase or
return basis or is evidenced by chattel paper;
(h) Agent believes, in its sole judgment, reasonably exercised,
that collection of such Account is insecure or that such Account may not be paid
by reason of the Customer's financial inability to pay;
(i) the Customer is the United States of America, any state or any
department, agency or instrumentality of any of them, unless Borrower assigns
its right to payment of such Account to Agent pursuant to the Assignment of
Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 et seq. and 41 U.S.C.
Sub-Section 15 et seq.) or has otherwise complied with other applicable statutes
or ordinances;
(j) the goods giving rise to such Account have not been shipped
and delivered to and accepted by the Customer or the services giving rise to
such Account have not been performed by the applicable Borrower and accepted by
the Customer or the Account otherwise does not represent a final sale;
(k) the Account of the Customer exceed a credit limit determined
by Agent, in its sole discretion, to the extent such Account exceeds such limit;
it being acknowledged that Agent shall use its reasonable efforts to provide
Borrowers with notice of any change in any credit limit for any Customer
established by Agent, but the failure to provide such notice shall not limit,
impair or otherwise affect Agent's rights hereunder;
9
(l) the Account is subject to any offset, deduction, defense,
dispute, or counterclaim, the Customer is also a creditor or supplier of a
Borrower or the Account is contingent in any respect or for any reason; except
that, with respect to Accounts that are subject to offset as a result of volume
rebates owing to a Customer by a Borrower, such Accounts shall be deemed to be
Eligible Accounts to the extent that the aggregate amount of such Accounts
exceeds the aggregate amount of the volume rebate owing to such Customer;
(m) the applicable Borrower has made any agreement with any
Customer for any deduction therefrom, except for discounts or allowances made in
the ordinary course of business for prompt payment, all of which discounts or
allowances are reflected in the calculation of the face value of each respective
invoice related thereto;
(n) shipment of the merchandise or the rendition of services has
not been completed;
(o) any return, rejection or repossession of the merchandise has
occurred;
(p) such Account is not payable to a Borrower; or
(q) Accounts with respect to which the Customer is located in New
Jersey, Minnesota, or any other state denying creditors access to its courts in
the absence of a Notice of Business Activities Report or other similar filing,
unless the applicable Borrower is incorporated under the laws of such state or
has either qualified as a foreign corporation authorized to transact business in
such state or has filed a Notice of Business Activities Report or similar filing
with the applicable state agency for the then current year.
"Eligible Inventory" shall mean and include raw material,
work-in-process and finished goods Inventory owned by and in the possession of a
Borrower and located at premises of a Borrower listed on Schedule 4.5, with
respect to each Borrower valued at the lower of cost or market value, determined
on a first-in-first-out basis, which is not, in Agent's opinion, obsolete, slow
moving or unmerchantable and which Agent, in its sole discretion, shall not deem
ineligible Inventory, based on such considerations as Agent may from time to
time deem appropriate including, without limitation, whether the Inventory is
subject to a perfected, first priority security interest in favor of Agent and
no other Lien and whether the Inventory conforms to all standards imposed by any
governmental agency, division or department thereof which has regulatory
authority over such goods or the use or sale thereof.
"Environmental Complaint" shall have the meaning set forth in Section
4.19(c).
"Environmental Laws" shall mean all federal, state and local
environmental, land use, zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances and codes relating to the protection of the
environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of Hazardous
Substances and the rules, regulations, policies, formal agency, interpretations,
decisions, orders and directives of federal, state and local governmental
agencies and authorities with respect thereto.
"Environmental Reports" shall mean all such documents as are listed on
Schedule 5.7.
"Equipment" shall mean and include as to each Loan Party all of such
Loan Party's goods (other than Inventory) whether now owned or hereafter
acquired and wherever located
10
including, without limitation, all equipment, machinery, apparatus, motor
vehicles, fittings, furniture, furnishings, fixtures, parts, accessories and all
replacements and substitutions therefor or accessions thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time and the rules and regulations promulgated
thereunder.
"Eurodollar Rate" shall mean for any Eurodollar Rate Loan for the then
current Interest Period relating thereto the rate per annum (such Eurodollar
Rate to be adjusted to the next higher 1/100 of one percent (1%)) equal to the
Adjusted LIBO Rate.
"Eurodollar Rate Loan" shall mean an Advance at any time that bears
interest based on the Adjusted LIBO Rate.
"Event of Default" shall mean the occurrence of any of the events set
forth in Article X.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Federal Funds Rate" shall mean, for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or if such rate is not so published for any
day which is a Business Day, the average of quotations for such day on such
transactions received by Agent from three Federal funds brokers of recognized
standing selected by Agent.
"Fee Letter" shall mean the fee letter dated as of the date hereof,
among Loan Parties and GMAC CF.
"Fixed Charge Coverage Ratio" shall mean and include, with respect to
any fiscal period, the ratio of (a) (i) Operating Cash Flow during such period
to (b) Fixed Charges during such period.
"Fixed Charges" means, for any period, the sum of (a) Cash Interest
Expense of Borrowers and their Subsidiaries, plus (b) scheduled payments of
principal with respect to all Indebtedness of Borrowers and their Subsidiaries
(other than amounts paid in connection with the redemption or repurchase of any
Senior Subordinated Notes as permitted under Section 7.18 hereof), plus (c) any
provision for (to the extent it is greater than zero) income or franchise taxes
included in the determination of net income, excluding any provision for
deferred taxes, plus (d) payment of deferred taxes accrued in any prior period,
plus (e) all amounts paid to shareholders as permitted under Section 7.7 hereof
in excess of $750,000, less (f) interest income during such period.
"Formula Amount" shall have the meaning set forth in Section 2.1(a).
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time, as may be amended from
time to time by the Financial Accounting Standards Board; except that, if there
occurs after the date of this Agreement any change in GAAP that affects in any
respect the calculation of any covenant contained in Section
11
6.8 hereof, Agent and Borrowers shall negotiate in good faith amendments to the
provisions of this Agreement that relate to the calculation of such covenants
with the intent of having the respective positions of the Agent, Lenders and the
Borrowers after such change in GAAP conform as nearly as possible to their
respective positions as of the date of this Agreement and, until any such
amendments have been agreed upon, the covenants in Section 6.8 hereof shall be
calculated on the basis of such principles in effect on the date hereof and
consistent with those used in the preparation of the most recent audited
financial statements delivered to Agent prior to the date hereof.
"General Intangibles" shall mean and include as to each Loan Party all
of such Loan Party's general intangibles, whether now owned or hereafter
acquired including, without limitation, all payment intangibles, choses in
action, commercial tort claims, causes of action, corporate or other business
records, inventions, designs, patents, patent applications, equipment
formulations, manufacturing procedures, quality control procedures, trademarks,
service marks, trade secrets, goodwill, copyrights, design rights,
registrations, licenses, franchises, customer lists, tax refunds, tax refund
claims, computer programs and computer software, all claims under guaranties,
security interests or other security held by or granted to such Loan Party to
secure payment of any of the Receivables by a Customer, all rights of
indemnification and all other intangible property of every kind and nature
(other than Receivables).
"GMAC CF" shall have the meaning set forth in the preamble to this
Agreement and shall include its successors and assigns.
"Governmental Body" shall mean any nation or government, any state or
other political subdivision thereof or any entity exercising the legislative,
judicial, regulatory or administrative functions of or pertaining to a
government.
"Guarantor" shall have the meaning set forth in the preamble to this
Agreement and shall extend to all permitted successors and assigns of such
Person.
"Guaranty" shall mean the guaranty set forth in Article XV of this
Agreement and any other guaranty of the obligations of Borrowers executed by a
Guarantor in favor of Agent for its benefit and for the ratable benefit of
Lenders.
"Hazardous Discharge" shall have the meaning set forth in Section
4.19(d).
"Hazardous Substance" shall mean, without limitation, any flammable
explosives, radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or
related materials as defined in CERCLA, the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA, Articles 15 and 27 of
the New York State Environmental Conservation Law or any other applicable
Environmental Law and in the regulations adopted pursuant thereto.
"Hazardous Wastes" shall mean all waste materials subject to regulation
under CERCLA, RCRA or applicable state law, and any other applicable Federal and
state laws now in force or hereafter enacted relating to hazardous waste
disposal.
"Holding" shall mean Stanadyne Automotive Holding Corp.
12
"Indebtedness" of a Person at a particular date shall mean all
obligations of such Person which in accordance with GAAP would be classified
upon a balance sheet as liabilities (except capital stock and surplus earned or
otherwise) and in any event, without limitation by reason of enumeration, shall
include (a) all indebtedness, debt and similar monetary obligations of such
Person whether direct or guaranteed; (b) that portion of obligations with
respect to Capital Leases that is properly classified as a liability on a
balance sheet in conformity with GAAP; (c) notes payable and drafts accepted
representing extensions of credit; (d) any obligation owed for all or any part
of the deferred purchase price of property or services if the purchase price is
due more than six (6) months from the date the obligation is incurred or is
evidenced by a note or similar written instrument; and (e) all indebtedness
secured by any Lien on any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby shall have been assumed
by that Person or is nonrecourse to the credit of that Person.
"Individual Formula Amount" shall mean at the date of determination
thereof, with respect to each Borrower an amount equal to: (a) up to the
Accounts Advance Rate of Eligible Accounts of such Borrower, plus (b) up to the
Inventory Advance Rate of the value of Eligible Inventory of such Borrower;
minus (c) the aggregate amount of Swingline Loans and aggregate amount of
Letters of Credit issued or caused to be issued on behalf of such Borrower,
minus (e) Reserves.
"Individual Maximum Revolving Advance Amount" shall mean at any given
time with respect to each Borrower, the Maximum Revolving Advance Amount less
the Revolving Advances and Letters of Credit outstanding to the other Borrower.
"Intellectual Property" shall mean all past, present and future: trade
secrets and other proprietary information; trademarks, service marks, business
names, Internet domain names, designs, logos, trade dress, slogans, indicia and
other source and/or business identifiers, and the goodwill of the business
relating thereto and all registrations or applications for registrations which
have heretofore been or may hereafter be issued thereon throughout the world;
copyrights (including copyrights for computer programs and software) and
copyright registrations or applications for registrations which have heretofore
been or may hereafter be issued throughout the world and all tangible property
embodying the copyrights; unpatented inventions (whether or not patentable);
patent applications and patents; industrial designs, industrial design
applications and registered industrial designs; license agreements related to
any of the foregoing and income therefrom; books, records, writings, computer
tapes or disks, flow diagrams, specification sheets, source codes, object codes
and other physical manifestations, embodiments or incorporations of any of the
foregoing; the right to xxx for all past, present and future infringements of
any of the foregoing; and all common law and other rights throughout the world
in and to all of the foregoing.
"Interest Period" shall mean the period provided for any Eurodollar
Rate Loan pursuant to Section 2.2(b).
"Inventory" shall mean and include as to each Loan Party all of such
Loan Party's now owned or hereafter acquired goods, merchandise and other
personal property, wherever located, to be furnished under any contract of
service or held for sale or lease, all raw materials, work in process, finished
goods and materials and supplies of any kind, nature or description which are or
might be used or consumed in such Loan Party's business or used in selling or
furnishing such
13
goods, merchandise and other personal property, all other inventory of such Loan
Party, and all documents of title or other documents representing them.
"Inventory Advance Rate" shall have the meaning set forth in Section
2.1(a)(y)(ii).
"Investment Property" means any "investment property" as such term is
defined in Section 9-115 of the UCC in those jurisdictions in which such
definition has been adopted now owned or hereafter acquired by any Loan Party,
wherever located, including (a) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (b) all securities entitlements of any Loan Party, including
the rights of any Loan Party to any securities account and the financial assets
held by a securities intermediary in such securities account and any free credit
balance or other money owing by any securities intermediary with respect to that
account; (c) all securities accounts of any Loan Party; (d) all commodity
contracts of any Loan Party; and (e) all commodity accounts held by any Loan
Party.
"Issuer" shall mean any Person who issues a Letter of Credit and/or
accepts a draft pursuant to the terms thereof (it being agreed that so long as
GMAC CF shall be Agent or a Lender, then the Issuer shall be General Motors
Acceptance Corporation ("GMAC"); provided, however, that in the event that GMAC
is neither the Agent nor a Lender, the "Issuer" with respect to all subsequently
issued Letters of Credit shall be a Lender selected by the Borrowers and which
Lender has agreed to act as Issuer).
"Leasehold Interests" shall mean all of each Loan Party's right, title
and interest in and to the premises located at 000 Xxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxx Xxxxxxxx 00000.
"Lender" and "Lenders" shall have the meaning ascribed to such term in
the preamble to this Agreement and shall include each Person which becomes a
transferee, successor or assign of any Lender.
"Lender Default" shall have the meaning set forth in Section 2.17(a).
"Letter of Credit Application" shall have the meaning set forth in
Section 2.11.
"Letter of Credit Fees" shall have the meaning set forth in Section
3.2.(a).
"Letters of Credit" shall have the meaning set forth in Section 2.10.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, security interest, lien (whether statutory or otherwise), Charge,
claim or encumbrance, or preference, priority or other security agreement or
preferential arrangement held or asserted in respect of any asset of any kind or
nature whatsoever including, without limitation, any conditional sale or other
title retention agreement, any lease having substantially the same economic
effect as any of the foregoing, and the filing of, or agreement to give, any
financing statement under the UCC or comparable law of any jurisdiction.
"Loan Parties on a Consolidated Basis" shall mean the consolidation in
accordance with GAAP of the accounts or other items of Loan Parties and their
respective Subsidiaries.
14
"Loan Party" shall mean, individually, each Borrower and each
Guarantor, and "Loan Parties" shall mean, collectively, the Borrowers and the
Guarantors.
"Loan Year" means each period of 12 consecutive months commencing on
the Closing Date and ending on the day prior to each anniversary thereof.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the condition, operations, assets, business or prospects of any Loan Party on an
individual basis, (b) any Loan Party's ability to pay the Obligations in
accordance with the terms thereof, or (c) the value of the Collateral, or
Agent's Liens on the Collateral or the priority of any such Lien.
"Maximum Loan Amount" shall mean $65,000,000.
"Maximum Revolving Advance Amount" shall mean $40,000,000 (inclusive of
outstanding Swingline Loans).
"Maximum Swingline Loan Amount" means $2,000,000.
"Maximum Term Loan Amount" shall mean $25,000,000 less repayments of
the Term Loan.
"Metromedia" shall mean Metromedia Company.
"Money Borrowed" shall mean (a) Indebtedness arising from the lending
of money by any Person to any Borrower, (b) Indebtedness, whether or not in any
such case arising from the lending by any Person of money to any Borrower, (i)
which is represented by notes payable or drafts accepted that evidence
extensions of credit, (ii) which constitutes obligations evidenced by bonds,
debentures, notes or similar instruments, or (iii) upon which interest charges
are customarily paid (other than accounts payable) or that was issued or assumed
as full or partial payment for Property, (c) reimbursement obligations with
respect to letters of credit or guaranties of letters of credit, and (d)
Indebtedness of any Borrower under any guaranty of obligations that would
constitute Indebtedness for Money Borrowed under clauses (a) and (b) hereof, if
owed directly by such Borrower.
"Monthly Advances" shall have the meaning set forth in Section 3.1.
"Mortgage" shall mean the mortgage or deed of trust on the Real
Property securing the Obligations together with all extensions, renewals,
amendments, supplements, modifications, substitutions and replacements thereto
and thereof.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Sections 3(37) and 4001(a)(3) of ERISA.
"Net Income" shall mean, for any period, the aggregate income (or loss)
of the Loan Parties on a Consolidated Basis for such period, all computed and
calculated in accordance with GAAP.
"Non-Defaulting Lenders" shall have the meaning set forth in Section
2.17(b).
15
"Note" or "Notes" shall mean, individually or collectively, the Term
Note, the Revolving Credit Notes, and the Swingline Note.
"Obligations" shall mean and include any and all of each Loan Party's
Indebtedness and/or liabilities to Agent, Lenders, or any Issuer of every kind,
nature and description, direct or indirect, secured or unsecured, joint,
several, joint and several, absolute or contingent, due or to become due, now
existing or hereafter arising, contractual or tortious, liquidated or
unliquidated, regardless of how such indebtedness or liabilities arise or by
what agreement or instrument they may be evidenced or whether evidenced by any
agreement or instrument (including all interest accruing after the commencement
of any bankruptcy or similar proceeding whether or not enforceable in such
proceeding) and all obligations of any Loan Party to Agent, Lenders or any
Issuer to perform acts or refrain from taking any action.
"Operating Cash Flow" shall mean for any Person for any period, (a)
EBITDA for such period minus (b) Investments permitted under Section 7.4 plus
Capital Expenditures net of amounts financed by a third party for such period.
"Original Owners" shall mean, (a) with respect to Stanadyne, Holding,
and (b) with respect to Precision, Stanadyne.
"Original Term" shall have the meaning set forth in Section 13.1.
"Other Documents" shall mean the Mortgage, the Notes, the
Questionnaire, any Guaranty and any and all other agreements, instruments and
documents, including, without limitation, guaranties, pledges, powers of
attorney, consents, and all other writings heretofore, now or hereafter executed
by any Loan Party and/or delivered to Agent or any Lender in respect of the
transactions contemplated by this Agreement.
"Parent" of any Person shall mean a corporation or other entity owning,
directly or indirectly, at least 50% of the shares of stock or other ownership
interests having ordinary voting power to elect a majority of the directors of
the Person, or other Persons performing similar functions for any such Person.
The term "Parent" shall include, without limitation, Holding.
"Participant" shall mean each Person who shall be granted the right by
any Lender to participate in any of the Advances and who shall have entered into
a participation agreement in form and substance satisfactory to such Lender and
Agent.
"Payment Office" shall mean initially 0000 Xxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxxx 00000; thereafter, such other office of Agent, if any,
which it may designate by notice to Borrowing Agent and to each Lender to be the
Payment Office.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permitted Encumbrances" shall mean (a) Liens in favor of Agent for the
benefit of Agent, Lenders and/or any Issuer, which, in each case, secure
Obligations; (b) Liens for taxes, assessments or other governmental charges not
delinquent or being contested in good faith and by appropriate proceedings and
with respect to which proper reserves have been taken by Loan Parties; provided,
that, a stay of enforcement of any such Lien shall be in effect; (c) Liens
disclosed in the financial statements referred to in Section 5.5, the existence
of which Agent has
16
consented to in writing; (d) deposits or pledges to secure obligations under
worker's compensation, social security or similar laws, or under unemployment
insurance; (e) deposits or pledges to secure bids, tenders, contracts (other
than contracts for the payment of money), leases, statutory obligations, surety
and appeal bonds and other obligations of like nature arising in the ordinary
course of any Loan Party's business; (f) judgment Liens that have been stayed or
bonded and mechanics', workers', materialmen's or other like Liens arising in
the ordinary course of any Loan Party's business with respect to obligations
which are not due or which are being contested in good faith by the applicable
Loan Party; (g) Liens placed upon fixed assets hereafter acquired to secure a
portion of the purchase price thereof, provided that (i) any such lien shall not
encumber any other property of the Loan Parties and (ii) the aggregate amount of
Indebtedness secured by such Liens incurred as a result of such purchases during
any fiscal year shall not exceed the amount provided for in Section 7.6; (h)
other Liens incidental to the conduct of Loan Parties' business or the ownership
of its property and assets which were not incurred in connection with the
borrowing of money or the obtaining of advances or credit, and which do not in
the aggregate materially detract from Agent's or Lenders' rights in and to the
Collateral or the value of Loan Parties' property or assets or which do not
materially impair the use thereof in the operation of Loan Parties' business;
(i) the environmental land use restriction recorded against the Borrowers' Real
Property located in Windsor, Connecticut, which restriction shall constitute an
interest against such Real Property superior to the interests of Agent and
Lender therein, and (j) Liens disclosed on Schedule 1.2(a).
"Permitted Purchase Money Debt" shall mean indebtedness incurred by any
Borrower (excluding by way of capitalized leases) to finance the acquisition by
such Borrower of fixed or capital assets set forth on Schedule 7.8 and
additional indebtedness incurred after the Closing Date by any Borrower
(excluding by way of capitalized leases) to finance the acquisition by such
Borrower of fixed or capital assets, not to exceed, however, One Million Dollars
($1,000,000) at any one time outstanding, in aggregate amount, as to all
Borrowers in respect of all such Indebtedness incurred after the Closing Date.
"Permitted Purchase Money Liens" shall mean Liens securing the payment
of Permitted Purchase Money Debt, provided that (a) such Liens secure only the
payment of such Indebtedness, (b) such Liens extend only to the fixed or capital
assets acquired with the proceeds of such Permitted Purchase Money Debt, and (c)
such Liens are promptly released as and when the Permitted Purchase Money Debt
corresponding thereto has been paid in full.
"Person" shall mean any individual, sole proprietorship, partnership,
corporation, business trust, joint stock company, trust, unincorporated
organization, association, limited liability company, institution, public
benefit corporation, joint venture, entity or government (whether Federal,
state, county, city, municipal or otherwise, including any instrumentality,
division, agency, body or department thereof).
"Plan" shall mean any employee benefit plan within the meaning of
Section 3(3) of ERISA, maintained for employees of Loan Parties or any member of
the Controlled Group or any such Plan to which any Loan Party or any member of
the Controlled Group is required to contribute on behalf of any of its
employees.
"Pro Forma Balance Sheet" shall have the meaning set forth in Section
5.5(a).
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"Pro Forma Financial Statements" shall have the meaning set forth in
Section 5.5(b).
"Purchasing Lender" shall have the meaning set forth in Section
17.3(c).
"Questionnaire" shall mean the Documentation Information Questionnaire
and the responses thereto provided by Loan Parties and delivered to Agent.
"RCRA" shall mean the Resource Conservation and Recovery Act, 42 U.S.C.
Sections 6901 et seq., as same may be amended from time to time.
"Real Property" shall mean all of each Loan Party's right, title and
interest in and to the owned and leased premises identified on Schedule 1.2(b).
"Receivables" shall mean and include, as to each Loan Party, all of
such Loan Party's Accounts, contract rights, instruments (including promissory
notes and instruments evidencing indebtedness owed to Loan Parties by their
Affiliates), documents, chattel paper (whether tangible or electronic), general
intangibles relating to Accounts, drafts and acceptances, and all other forms of
obligations owing to such Loan Party arising out of or in connection with the
sale, lease or other disposition of Inventory or the rendition of services, all
guarantees and other security therefor, whether secured or unsecured, now
existing or hereafter created, and whether or not specifically sold or assigned
to Agent hereunder.
"Release" shall have the meaning set forth in Section 5.7(c)(i).
"Reportable Event" shall mean a reportable event described in Section
4043(b) of ERISA or the regulations promulgated thereunder.
"Required Lenders" shall mean Lenders holding at least fifty-one
percent (51%) of the Advances and, if no Advances are outstanding, shall mean
Lenders holding at least fifty-one percent (51%) of the Commitments.
"Reserves" shall mean such reserves as Agent may reasonably deem proper
and necessary from time to time.
"Revolving Advances" shall mean loans and advances made pursuant to
Section 2.1 hereof.
"Revolving Credit Note" shall mean, collectively, the promissory notes
referred to in Section 2.1(a).
"Revolving Interest Rate" shall mean an interest rate per annum equal
to (a) the sum of the Base Rate plus the Applicable Margin per annum with
respect to Domestic Rate Loans that are Revolving Advances and (b) the sum of
the Eurodollar Rate plus the Applicable Margin per annum with respect to
Eurodollar Rate Loans that are Revolving Advances.
"Sellers" shall mean Metromedia and the other Sellers (as defined in
the Stock Purchase Agreement).
"Senior Debt" shall mean and include, as at any given date, the
aggregate amount of
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Advances outstanding and all other Obligations.
"Senior Leverage Ratio" shall mean and include, as of any given date,
the ratio of (a) Senior Debt as of such date to (b) EBITDA for the period ending
as of such date.
"Senior Subordinated Debt" shall mean all Indebtedness of any Loan
Party under or in connection with the Senior Subordinated Indenture or the
Senior Subordinated Notes.
"Senior Subordinated Indenture" shall mean the Indenture, dated as of
December 11, 1997 among Borrowers, DSD International Corp. and Senior
Subordinated Indenture Trustee, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced,
pursuant to which Borrowers issued the Senior Subordinated Notes on and subject
to the terms and conditions set forth therein.
"Senior Subordinated Indenture Trustee" shall mean, The Bank of New
York, as successor to United States Trust Company of New York, in its capacity
as trustee under the Senior Subordinated Indenture for the holders of the Senior
Subordinated Notes and any successor, replacement or additional trustee under
the Senior Subordinated Indenture, and their respective successors and assigns.
"Senior Subordinated Notes" shall mean, collectively, the 10.25%
Subordinated Notes due December 15, 2007, pursuant to the Senior Subordinated
Indenture, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
"Settlement Date" shall mean the Closing Date and thereafter every
Business Day designated by Agent as a "Settlement Date" by notice from Agent to
each Lender, but not less frequently than weekly.
"Standby Letters of Credit" shall mean all Letters of Credit issued in
connection with this Agreement as a credit enhancement for certain Indebtedness
(other than Indebtedness for Money Borrowed) of Borrowers.
"Stock Purchase Agreement" shall mean that certain Stock Purchase
Agreement dated as of November 7, 1997 among SAC, Inc., Stanadyne Automotive
Holding Corp., Metromedia and the other Seller parties thereto.
"Subsidiary" shall mean a corporation or other entity of whose shares
of stock or other ownership interests having ordinary voting power (other than
stock or other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.
"Subsidiary Stock" shall mean (a) one hundred percent (100%) all of the
issued and outstanding shares of stock owned by Stanadyne of Precision and of
Stanadyne Amalgamations Private Limited, an organization formed under the laws
of India; (b) sixty-six and two-thirds percent (66 2/3%) of the issued and
outstanding shares of stock owned by Stanadyne of Stanadyne Systems Private
Limited, an organization formed under the laws of India, and Stanadyne, S.p.A.,
an organization formed under the laws of Italy, and (c) sixty-six and two-thirds
percent (66 2/3%) of the issued and outstanding quotas owned by Precision of
Precision
19
Engine Products Ltda, an organization formed under the laws of Brazil.
"Swingline Lender" means GMAC CF, or if GMAC CF shall resign as
Swingline Lender, another Lender selected by Agent and reasonably acceptable to
Borrowers.
"Swingline Loan" means each Revolving Advance made by Swingline Lender
pursuant to Section 2.1(d).
"Swingline Note" shall mean the promissory note referred to in Section
2.1(d)(iii).
"Term" shall have the meaning set forth in Section 13.1.
"Term Loan" shall mean the Advances made pursuant to Section 2.4.
"Term Loan Rate" shall mean an interest rate per annum equal to (a) the
sum of the Base Rate plus the Applicable Margin per annum with respect to
Domestic Rate Loans that comprise the Term Loan and (b) the sum of the
Eurodollar Rate plus the Applicable Margin per annum with respect to Eurodollar
Rate Loans that comprise the Term Loan.
"Term Note" shall mean, collectively, the promissory notes described in
Section 2.4.
"Termination Date" shall have the meaning set forth in Section 13.1.
"Termination Event" shall mean (a) a Reportable Event with respect to
any Plan or Multiemployer Plan; (b) the withdrawal of any Loan Party or any
member of the Controlled Group from a Plan or Multiemployer Plan during a plan
year in which such entity was a "substantial employer" as defined in Section
4001(a)(2) of ERISA; (c) the providing of notice of intent to terminate a Plan
in a distress termination described in Section 4041(c) of ERISA; (d) the
institution by the PBGC of proceedings to terminate a Plan or Multiemployer
Plan; (e) any event or condition (i) which might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan or Multiemployer Plan, or (ii) that may result in
termination of a Multiemployer Plan pursuant to Section 4041A of ERISA; or (f)
the partial or complete withdrawal within the meaning of Sections 4203 and 4205
of ERISA, of any Loan Party or any member of the Controlled Group from a
Multiemployer Plan.
"Toxic Substance" shall mean and include any material which is subject
to regulation under the Toxic Substances Control Act (TSCA), 15 U.S.C. Sections
2601 et seq., applicable state law, or any other applicable Federal or state
laws now in force or hereafter enacted relating to toxic substances. "Toxic
Substance" includes but is not limited to asbestos, polychlorinated biphenyls
(PCBs) and lead-based paints.
"Transactions" shall have the meaning set forth in Section 5.5(a).
"Transferee" shall have the meaning set forth in Section 17.3(b).
"UCC" shall mean the Uniform Commercial Code as in effect in the State
of New York from time to time.
"Undrawn Availability" at a particular date shall mean an amount equal
to (a) the lesser
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of (i) the Formula Amount or (ii) (x) the Maximum Revolving Advance Amount minus
(y) Reserves, minus (b) the sum of (i) the outstanding amount of Advances (other
than the Term Loan), (ii) all amounts due and owing to Borrowers' trade
creditors which are outstanding beyond normal trade terms, except those amounts
which are past due solely because of a good faith dispute between a Borrower and
such trade creditor, as demonstrated to the satisfaction of Agent in its sole
discretion, and for which such Borrower has established appropriate reserves on
its books and (iii) fees and expenses arising under or in connection with this
agreement for which Borrowers are liable but which have not been paid or charged
to Borrowers' Account.
"Week" shall mean the time period commencing with the opening of
business on a Monday and ending on the end of business the following Sunday.
1.3 Uniform Commercial Code Terms. All terms used herein and
defined in the UCC, including, the terms account debtor, certificated security,
chattel paper, commercial tort claim, deposit account, document, electronic
chattel paper, equipment, financial asset, fixtures, goods,
health-care-insurance receivable, inventory, instrument, investment property,
letter-of-credit rights, payment intangibles, proceeds, security, security
entitlement, software, supporting obligations and uncertificated security, shall
have the meaning given therein unless otherwise defined herein.
1.4 Certain Matters of Construction. The terms "herein", "hereof"
and "hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular section, paragraph or subdivision. Each
reference to a Section, an Exhibit or a Schedule shall be deemed to refer to a
Section, an Exhibit or a Schedule, as applicable, of this Agreement unless
otherwise specified. Any pronoun used shall be deemed to cover all genders.
Wherever appropriate in the context, terms used herein in the singular also
include the plural and vice versa. All references to statutes (including the
UCC) and related regulations shall include any amendments of same and any
successor statutes and regulations. Unless otherwise provided, all references to
any instruments or agreements to which Agent is a party, including, without
limitation, references to any of the Other Documents, shall include any and all
modifications or amendments thereto and any and all extensions or renewals
thereof. For purposes of Sections 3.1, 3.6, 3.7, 3.8, 3.9, Articles IV, V, VIII,
XI, XII, XIII, XIV, XV, XVI and XVII, the term "Lender" shall include each
Lender and Swingline Lender.
II. ADVANCES, PAYMENTS.
2.1 (a) Revolving Advances. Subject to the terms and
conditions set forth in this Agreement (including, without limitation, Section
2.1(b)), each Lender, severally and not jointly, will make Revolving Advances to
Borrowers in aggregate amounts outstanding at any time equal to such Lender's
Commitment Percentage of the lesser of (x) an amount equal to (i) the Maximum
Revolving Advance Amount minus (ii) the aggregate amount of outstanding Letters
of Credit and the outstanding principal amount of the Swingline Loans minus
(iii) Reserves, or (y) an amount equal to the sum of:
(i) up to eighty-five percent (85%), subject to
the provisions of Section 2.1(c) (the "Accounts Advance Rate"), of Eligible
Accounts, plus
(ii) up to the least of (A) up to fifty percent
(50%), subject to the
21
provisions of Section 2.1(c), of the lesser of (I) the aggregate cost,
calculated on a first-in-first-out basis, of Eligible Inventory at such time or
(II) the aggregate fair market value of Eligible Inventory at such time, (B) up
to eighty-five percent (85%), subject to the provisions of Section 2.1(c), of
the appraised net orderly liquidation value of Inventory at such time, and (C)
$15,000,000 (clauses (A), (B) and (C) collectively, the "Inventory Advance Rate"
and, together with the Accounts Advance Rate, the "Advance Rates"); minus
(iii) the aggregate amount of outstanding Letters
of Credit and Swingline Loans, minus
(iv) Reserves.
The amount derived from the sum of (x) Sections 2.1(a)(y)(i) and (ii)
minus (y) Section 2.1 (a)(y)(iii) and (iv) at any time and from time to time
shall be referred to as the "Formula Amount". The Revolving Advances shall be
evidenced by one or more secured promissory notes ("Revolving Credit Note")
substantially in the form attached hereto as Exhibit 2.1(a).
(b) Individual Revolving Advances. Subject to Section
2.1(a), each Lender, severally and not jointly, will make Revolving Advances to
each Borrower in aggregate amounts outstanding at any time not greater than such
Lender's Commitment Percentage of the lesser of (x) such Borrower's Individual
Maximum Revolving Advance Amount or (y) such Borrower's Individual Formula
Amount.
(c) Discretionary Rights. The Advance Rates and Reserves
may be increased or decreased by Agent at any time and from time to time in the
exercise of its reasonable discretion. Each Borrower consents to any such
increases or decreases and acknowledges that decreasing the Advance Rates or
increasing the Reserves may limit or restrict Advances requested by Borrowing
Agent.
(d) Swingline Loans.
(i) Agent may convert any request by Borrowing
Agent for a Revolving Advance into a request for a Swingline Loan. The Swingline
Loans shall be Domestic Rate Loans and shall not exceed in the aggregate at any
time outstanding the Maximum Swingline Loan Amount. In the event that on any
Business Day Swingline Lender desires that all or any portion of the outstanding
Swingline Loans should be reduced in whole or in part, Swingline Lender shall
promptly notify Agent to that effect and indicate the portion of the Swingline
Loans to be reduced. Swingline Lender hereby agrees that it shall notify Agent
to reduce the outstanding Swingline Loans to $0 at least once every month. Agent
agrees to promptly transmit to Lenders the information contained in each notice
received by Agent from Swingline Lender and shall concurrently notify Lenders of
each Lender's Commitment Percentage of the obligation to make a Revolving
Advance to repay the Swingline Loan (or portion thereof).
(ii) Each of the Lenders hereby unconditionally
and irrevocably agrees to fund to Agent for the benefit of Swingline Lender, in
lawful money of the United States and in same day funds, not later than 1:00
p.m. New York time on the Settlement Date, such Lender's Commitment Percentage
of a Revolving Advance under Sections 2.1(a) and (b) (which Revolving Advance
shall be a Domestic Rate Loan and shall be deemed to be requested by
22
Borrowing Agent) in the principal amount of such portion of the Swingline Loans
which is required to be paid to Swingline Lender under this Section 2.1(d)
(regardless of whether the conditions precedent thereto set forth in Article
VIII are then satisfied and whether or not Borrowing Agent has provided a notice
of borrowing under Section 2.2 and whether or not any Default or Event of
Default exists or all or any of the Advances have been accelerated, but subject
to the other provisions of this Section 2.1(d)). The proceeds of any such
Revolving Advance shall be immediately paid over to Agent for the benefit of
Swingline Lender for application to the Swingline Loan.
(iii) In the event that an Event of Default shall
occur and either (i) such Event of Default is of the type described in Section
10.7 or 10.9 or (ii) no further Revolving Advances are being made under this
Agreement, so long as any such Event of Default is continuing, then, each of the
Lenders (other than Swingline Lender) shall be deemed to have irrevocably,
unconditionally and immediately purchased from Swingline Lender such Lender's
Commitment Percentage of the Swingline Loan outstanding as of the date of the
occurrence of such Event of Default. Each Lender shall effect such purchase by
making available an amount equal to its participation on the date of such
purchase in Dollars in immediately available funds to Agent for the benefit of
Swingline Lender. In the event any Lender fails to make available to Swingline
Lender when due the amount of such Lender's participation in the Swingline Loan,
Swingline Lender shall be entitled to recover such amount on demand from such
Lender together with interest at the Federal Funds Rate. Each such purchase by a
Lender shall be made without recourse to Swingline Lender, without
representation or warranty of any kind, and shall be effected and evidenced
pursuant to documents reasonably acceptable to Swingline Lender. The Swingline
Loans shall be evidenced by one or more promissory notes substantially in the
form of Exhibit 2.1(d). The obligations of the Lenders under this Section 2.1(d)
shall be absolute, irrevocable and unconditional, shall be made under all
circumstances and shall not be affected, reduced or impaired for any reason
whatsoever.
2.2 Procedure for Borrowing. (a) Borrowing Agent on behalf of any
Borrower may notify Agent prior to 11:00 a.m. (New York time) on a Business Day
of a Borrower's request to incur, on that day, a Revolving Advance hereunder.
Any amount required to be paid as interest hereunder, or as fees or other
charges under this Agreement or any other agreement with Agent, Lenders and/or
any Issuer, or with respect to any other Obligation, which shall become due,
shall be deemed a request for an Advance as of the date such payment is due, in
the amount required to pay in full such interest, fee, charge or Obligation
under this Agreement or any other agreement with Agent, Lenders and/or any
Issuer and such request shall be irrevocable.
(b) Notwithstanding the provisions of (a) above, in the
event any Borrower desires to obtain a Eurodollar Rate Loan, Borrowing Agent
shall give Agent at least three (3) Business Days' prior written notice,
specifying (i) the date of the proposed borrowing (which shall be a Business
Day), (ii) the type of borrowing and the amount on the date of such Advance to
be borrowed, which amount shall be in a minimum amount of $500,000 and in
integral multiples of $100,000 in excess thereof, and (iii) the duration of the
first Interest Period therefore. Interest Periods for Eurodollar Rate Loans
shall be for one, two, three, or six months. No Eurodollar Rate Loan shall be
made available to any Borrower during the continuance of a Default or an Event
of Default.
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(c) Each Interest Period of a Eurodollar Rate Loan shall
commence on the date such Eurodollar Rate Loan is made and shall end on such
date as Borrowing Agent may elect as set forth in (b)(iii) above provided that
the exact length of each Interest Period shall be determined in accordance with
the practice of the interbank market for offshore Dollar deposits and no
Interest Period shall end after the Termination Date.
(d) Borrowing Agent shall elect the initial Interest
Period applicable to a Eurodollar Rate Loan by its notice of borrowing given to
Agent pursuant to Section 2.2(b) or by its notice of conversion given to Agent
pursuant to Section 2.2(d), as the case may be. Borrowing Agent shall elect the
duration of each succeeding Interest Period by giving irrevocable written notice
to Agent of such duration not less than three (3) Business Days prior to the
last day of the then current Interest Period applicable to such Eurodollar Rate
Loan. If Agent does not receive timely notice of the Interest Period elected by
Borrowing Agent, Borrowers shall be deemed to have elected to convert to a
Domestic Rate Loan subject to Section 2.2(e) herein below.
(e) Provided that no Event of Default shall have occurred
and be continuing, any Borrower may, on the last Business Day of the then
current Interest Period applicable to any outstanding Eurodollar Rate Loan, or
on any Business Day with respect to Domestic Rate Loans, convert any such loan
into a loan of another type in the same aggregate principal amount provided that
any conversion of a Eurodollar Rate Loan shall be made only on the last Business
Day of the then current Interest Period applicable to such Eurodollar Rate Loan.
If a Borrower desires to convert a loan, Borrowing Agent shall give Agent not
less than three (3) Business Days' prior written notice to convert from a
Domestic Rate Loan to a Eurodollar Rate Loan or one (1) Business Day's prior
written notice to convert from a Eurodollar Rate Loan to a Domestic Rate Loan,
specifying the date of such conversion, the loans to be converted and if the
conversion is from a Domestic Rate Loan to any other type of loan, the duration
of the first Interest Period therefor. After giving effect to each such
conversion, there shall not be outstanding more than six (6) Eurodollar Rate
Loans, in the aggregate.
(f) Each Loan Party shall indemnify Agent and Lenders and
hold Agent and Lenders harmless from and against any and all losses or expenses
that Agent and Lenders may sustain or incur as a consequence of any prepayment,
conversion of or any default by any Borrower in the payment of the principal of
or interest on any Eurodollar Rate Loan or failure by any Borrower to complete a
borrowing of, a prepayment of or conversion of or to a Eurodollar Rate Loan
after notice thereof has been given, including, but not limited to, any interest
payable by Agent or Lenders to lenders of funds obtained by it in order to make
or maintain its Eurodollar Rate Loans hereunder. A certificate as to any
additional amounts payable pursuant to the foregoing sentence submitted by Agent
or any Lender to Borrowing Agent shall be conclusive absent manifest error.
(g) Notwithstanding any other provision hereof, if any
applicable law, treaty, regulation or directive, or any change therein or in the
interpretation or application thereof, shall make it unlawful for any Lender
(for purposes of this subsection (g), the term "Lender" shall include any Lender
and the office or branch where any Lender or any corporation or bank controlling
such Lender makes or maintains any Eurodollar Rate Loans) to make or maintain
its Eurodollar Rate Loans, the obligation of Lenders to make Eurodollar Rate
Loans hereunder, as the case may be, shall forthwith be cancelled and Borrowers
shall, if any affected Eurodollar
24
Rate Loans are then outstanding, promptly upon request from Agent, either pay
all such affected Eurodollar Rate Loans or convert such affected Eurodollar Rate
Loans into loans of another type. If any such payment or conversion of any
Eurodollar Rate Loan is made on a day that is not the last day of the Interest
Period applicable to such Eurodollar Rate Loan, Borrowers shall pay Agent, upon
Agent's request, such amount or amounts as may be necessary to compensate
Lenders for any loss or expense sustained or incurred by Lenders in respect of
such Eurodollar Rate Loan as a result of such payment or conversion, including
(but not limited to) any interest or other amounts payable by Lenders to lenders
of funds obtained by Lenders in order to make or maintain such Eurodollar Rate
Loan. A certificate as to any additional amounts payable pursuant to the
foregoing sentence submitted by Lenders to Borrowing Agent shall be conclusive
absent manifest error.
2.3 Disbursement of Advance Proceeds. All Advances shall be
disbursed from whichever office or other place Agent may designate from time to
time and, together with any and all other Obligations of Borrowers to Agent or
Lenders, shall be charged to Borrowers' Account on Agent's books. During the
Term, Borrowers may use the Advances by borrowing, prepaying and reborrowing,
all in accordance with the terms and conditions hereof. The proceeds of each
Advance requested by Borrowers or deemed to have been requested by Borrowers
under Section 2.2(a) shall, with respect to requested Advances to the extent
Lenders make such Advances, be made available to the applicable Borrower on the
day so requested by way of credit to such Borrower's operating account at The
Bank of New York or such other bank as Borrowing Agent may designate following
notification to Agent, in immediately available federal funds or other
immediately available funds or, with respect to Advances deemed to have been
requested by any Borrower, be disbursed to Agent to be applied to the
outstanding Obligations giving rise to such deemed request.
2.4 Term Loan. Subject to the terms and conditions of this
Agreement, each Lender, severally and not jointly, will make a Term Loan to
Borrowers in the sum equal to such Lender's Commitment Percentage of the Maximum
Term Loan Amount. The Term Loan shall be advanced on the Closing Date and shall
be, with respect to principal, payable as follows, subject to acceleration upon
the occurrence of an Event of Default under this Agreement or termination of
this Agreement in sixteen (16) consecutive quarterly installments, commencing on
January 2, 2004 and on the first Business Day of each of Borrower's fiscal
quarters thereafter until paid in full, the first fifteen (15) of which
quarterly principal installments shall be in the amount of $892,857.25 each, and
a final and sixteenth (16th) quarterly principal installment in an amount equal
to the then outstanding and unpaid principal balance of the Term Loan, together
with accrued interest thereon. The Term Loan shall be evidenced by a secured
promissory note (the "Term Note") in substantially the form attached hereto as
Exhibit 2.4.
2.5 [Intentionally Omitted]
2.6 Maximum Revolving Advances. The sum of the aggregate balance
of Revolving Advances plus the aggregate amount of Letters of Credit outstanding
at any time shall not exceed the lesser of (a) Maximum Revolving Advance Amount
or (b) the Formula Amount.
2.7 Repayment of Advances.
25
(a) The Revolving Advances shall be due and payable in
full on the Termination Date subject to earlier prepayment as herein provided.
The Term Loan shall be due and payable as provided in Section 2.4 and in the
Term Note.
(b) Each Borrower recognizes that the amounts evidenced
by checks, notes, drafts or any other items of payment relating to and/or
proceeds of Collateral may not be collectible by Agent on the date received. In
consideration of Agent's agreement to conditionally credit Borrowers' Account as
of the Business Day on which Agent receives those items of payment, each
Borrower agrees that, in computing the charges under this Agreement, all items
of payment shall be deemed applied by Agent on account of the Obligations on the
same Business Day of confirmation to Agent by the Blocked Account bank or
Depository Account bank, as provided for in Section 4.15(h), that such items of
payment have been collected in good funds and finally credited to Agent's
account. Agent is not, however, required to credit Borrowers' Account for the
amount of any item of payment which is unsatisfactory to Agent and Agent may
charge Borrowers' Account for the amount of any item of payment which is
returned to Agent unpaid.
(c) All payments of principal, interest and other amounts
payable hereunder, or under any of the related agreements shall be made to Agent
at the Payment Office not later than 1:00 p.m. (New York time) on the due date
therefor in lawful money of the United States of America in federal funds or
other funds immediately available to Agent. Agent shall have the right to
effectuate payment on any and all Obligations due and owing hereunder by
charging Borrowers' Account or by making Revolving Advances as provided in
Section 2.2.
(d) Borrowers shall pay principal, interest, and all
other amounts payable hereunder, or under any related agreement, without any
deduction whatsoever, including, but not limited to, any deduction for any
setoff or counterclaim.
2.8 Repayment of Excess Advances. The aggregate balance of
Advances outstanding at any time in excess of the maximum amount of Advances
permitted hereunder shall be immediately due and payable without the necessity
of any demand, at the Payment Office, whether or not a Default or Event of
Default has occurred.
2.9 Statement of Account. Agent shall maintain, in accordance with
its customary procedures, a loan account (the "Borrowers' Account") in the name
of Borrowers in which shall be recorded the date and amount of each Advance made
by Lenders and the date and amount of each payment in respect thereof; provided,
however, the failure by Agent to record the date and amount of any Advance shall
not adversely affect Agent or any Lender. Each month, Agent shall send to
Borrowing Agent a statement showing the accounting for the Advances made,
payments made or credited in respect thereof, and other transactions between
Lenders and Borrowers, during such month. The monthly statements shall be deemed
correct and binding upon Borrowers in the absence of manifest error and shall
constitute an account stated between Lenders and Borrowers unless Agent receives
a written statement of Borrowers' specific exceptions thereto within thirty (30)
days after such statement is received by Borrowing Agent. The records of Agent
with respect to the loan account shall be conclusive evidence absent manifest
error of the amounts of Advances and other charges thereto and of payments
applicable thereto.
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2.10 Letters of Credit . Subject to the terms and conditions
hereof, Agent shall issue or cause the issuance of Documentary Letters of Credit
and Standby Letters of Credit (collectively, "Letters of Credit") by the Issuer
on behalf of any Borrower; provided, however, that Agent will not be required to
issue or cause to be issued any Letters of Credit to the extent that the face
amount of such Letters of Credit would then cause the sum of (i) the outstanding
Revolving Advances plus (ii) outstanding Letters of Credit to exceed the lesser
of (x) the Maximum Revolving Advance Amount or (y) the Formula Amount; provided,
further, however, that Agent will not be required to issue or cause to be issued
any Letters of Credit to any Borrower to the extent that the face amount of such
Letters of Credit issued for such Borrower would then cause the sum of (i) the
outstanding Revolving Advances (including Swingline Loans) to such Borrower plus
(ii) the outstanding Letters of Credit issued or caused to be issued on behalf
of such Borrower to exceed the lesser of (x) such Borrower's Individual Maximum
Revolving Advance Amount or (y) such Borrower's Individual Formula Amount. The
maximum amount of outstanding Letters of Credit shall not exceed $12,000,000 in
the aggregate at any time. All disbursements or payments related to Letters of
Credit shall be deemed to be Domestic Rate Loans consisting of Revolving
Advances and shall bear interest at the Revolving Interest Rate for Domestic
Rate Loans; Letters of Credit that have not been drawn upon shall not bear
interest.
2.11 Issuance of Letters of Credit.
(a) Borrowing Agent, on behalf of Borrowers, may request
Agent to issue or cause the issuance of a Letter of Credit by delivering to
Agent at the Payment Office, Issuer's standard form of letter of credit and
security agreement and standard form of letter of credit application
(collectively, the "Letter of Credit Application") and any draft if applicable,
completed to the satisfaction of Agent; and, such other certificates, documents
and other papers and information as Agent or Issuer may reasonably request.
Borrowing Agent, on behalf of Borrowers, also has the right to give instructions
and make agreements with respect to any application, any applicable letter of
credit and security agreement, any applicable letter of credit reimbursement
agreement and/or any other applicable agreement, any letter of credit and the
disposition of documents, disposition of any unutilized funds, and to arrange
the issuance of any amendment, extension or renewal of any Letter of Credit.
(b) Each Letter of Credit shall, among other things, (i)
provide for the payment of sight drafts or acceptances of issuance drafts when
presented for honor thereunder in accordance with the terms thereof and when
accompanied by the documents described therein and (ii) (a) with respect to
Documentary Letters of Credit, have an expiry date not later than one hundred
fifty (150 days after such Documentary Letter of Credit's date of issuance or
(b) with respect to Standby Letters of Credit, have an expiry date not later
than one (1) year after such Standby Letter of Credit's date of issuance, and
(with respect to clauses (ii) (a) and (ii) (b) above) in no event having an
expiry date later than the Termination Date unless Loan Parties provide cash
collateral equal to not less than one hundred five percent (105%) of the face
amount thereof to be held by Agent pursuant to a cash collateral agreement in
form and substance satisfactory to Agent. Each Documentary Letter of Credit
shall be subject to the Uniform Customs and Practice for Documentary Credits
(1993 Revision), International Chamber of Commerce Publication No. 500, and any
amendments or revision thereof adhered to by the Issuer and, to the extent not
inconsistent therewith, the laws of the State of New York. All Standby Letters
of Credit shall be subject to the laws or rules designated in such Standby
Letter of Credit, or if no laws or rules are designated, the International
Standby Practices (ISP98 -
27
International Chamber of Commerce Publication Number 590) (the "ISP98 Rules")
and, as to matters not governed by the ISP98 Rules, the laws of the State of New
York.
(c) Agent shall use its reasonable efforts to notify
Lenders of the request by Borrowing Agent for a Letter of Credit hereunder.
2.12 Requirements For Issuance of Letters of Credit.
(a) In connection with the issuance of any Letter of
Credit Borrowers shall indemnify, save and hold Agent, each Lender and each
Issuer harmless from any loss, cost, expense or liability, including, without
limitation, payments made by Agent, any Lender or any Issuer and expenses and
reasonable attorneys' fees incurred by Agent, any Lender or any Issuer arising
out of, or in connection with, any Letter of Credit to be issued or created for
any Borrower. Borrowers shall be bound by Agent's or Issuer's regulations and
good faith interpretations of any Letter of Credit issued or created for
Borrowers' Account, although this interpretation may be different from its own;
and, neither Agent, nor any Lender, nor any Issuer nor any of their
correspondents shall be liable for any error, negligence, or mistakes, whether
of omission or commission, in following Borrowing Agent's or any Borrower's
instructions or those contained in any Letter of Credit or of any modifications,
amendments or supplements thereto or in issuing or paying any Letter of Credit
except for Agent's, any Lender's, any Issuer's or such correspondents' willful
misconduct.
(b) Borrowing Agent shall authorize and direct any Issuer
of a Letter of Credit to name the applicable Borrower as the "Applicant" or
"Account Party" therein to deliver to Agent all related payment/acceptance
advices, to deliver to Agent all instruments, documents, and other writings and
property received by the Issuer pursuant to the Letter of Credit and to accept
and rely upon Agent's instructions and agreements with respect to all matters
arising in connection with the Letter of Credit or the application therefor.
(c) In connection with all Letters of Credit issued or
caused to be issued by Agent under this Agreement, each Borrower hereby appoints
Agent, or its designee, as its attorney, with full power and authority if an
Event of Default or Default shall have occurred, (i) to sign and/or endorse such
Borrower's name upon any warehouse or other receipts, letter of credit
applications and acceptances; (ii) to sign such Borrower's name on bills of
lading; (iii) to clear Inventory through the United States of America Customs
Department ("Customs") in the name of such Borrower or Agent or Agent's
designee, and to sign and deliver to Customs officials powers of attorney in the
name of such Borrower for such purpose; and (iv) to complete in such Borrower's
name or Agent's, or in the name of Agent's designee, any order, sale or
transaction, obtain the necessary documents in connection therewith, and collect
the proceeds thereof. Neither Agent nor its attorneys will be liable for any
acts or omissions nor for any error of judgment or mistakes of fact or law,
except for Agent's or its attorney's willful misconduct. This power, being
coupled with an interest, is irrevocable as long as any Letters of Credit remain
outstanding.
(d) Each Lender shall to the extent of the percentage
amount equal to the product of such Lender's Commitment Percentage times the
aggregate amount of all unreimbursed reimbursement obligations arising from
disbursements made or obligations incurred with respect to the Letters of Credit
be deemed to have irrevocably purchased an
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undivided participation in (i) each such unreimbursed reimbursement obligation,
(ii) Agent's credit support enhancement provided to the Issuer of any Letter of
Credit and (iii) each Revolving Advance made as a consequence of the issuance of
a Letter of Credit and all disbursements thereunder, in each case in an amount
equal to such Lender's applicable Commitment Percentage times the outstanding
amount of the Letters of Credit and disbursements thereunder. In the event that
at the time a disbursement is made the unpaid balance of Revolving Advances
exceeds or would exceed, with the making of such disbursement, the amount
permitted under Section 2.1(a), and such disbursement is not reimbursed by
Borrowers within two (2) Business Days, Agent shall promptly notify each Lender
and upon Agent's demand each Lender shall pay to Agent such Lender's
proportionate share of such unreimbursed disbursement together with such
Lender's proportionate share of Agent's unreimbursed costs and expenses relating
to such unreimbursed disbursement. Upon receipt by Agent of a repayment from any
Borrower of any amount disbursed by Agent for which Agent had already been
reimbursed by Lenders, Agent shall deliver to each Lender that Lender's pro rata
share of such repayment. Each Lender's participation commitment shall continue
until the last to occur of any of the following events: (A) Agent ceases to be
obligated to issue or cause to be issued Letters of Credit hereunder; (B) no
Letters of Credit issued hereunder remains outstanding and uncancelled or (C)
all Persons (other than the applicable Borrower) have been fully reimbursed for
all payments made under or relating to Letters of Credit.
2.13 Additional Payments. Any sums expended by Agent or any Lender
due to any Loan Party's failure to perform or comply with its obligations under
this Agreement or any Other Document including, without limitation, any Loan
Party's obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1, may be
charged to Borrowers' Account as a Revolving Advance and added to the
Obligations.
2.14 Manner of Borrowing and Payment.
(a) Each borrowing of Revolving Advances shall be
advanced according to the applicable Commitment Percentages of Lenders. The Term
Loan shall be advanced according to the Commitment Percentages of Lenders.
(b) Each payment (including each prepayment) by Borrowers
on account of the principal of the Revolving Advances, shall be applied to the
Revolving Advances pro rata according to the applicable Commitment Percentages
of Lenders. Each payment (including each prepayment) by Borrowers on account of
the principal of the Term Note, shall be made from or to, or applied to that
portion of the Term Loan evidenced by the Term Note pro rata according to the
Commitment Percentages of Lenders. Except as expressly provided herein, all
payments (including prepayments) to be made by Borrowers on account of
principal, interest and fees shall be made without set off or counterclaim and
shall be made to Agent on behalf of the Lenders to the Payment Office, in each
case on or prior to 1:00 p.m., New York time, in Dollars and in immediately
available funds.
(c) (i) Notwithstanding anything to the contrary
contained in Sections 2.14(a) and 2.14(b), commencing with the first Business
Day following the Closing Date, each borrowing of Advances shall be advanced by
Agent and each payment by any Borrower on account of Advances shall be applied
first to those Revolving Advances advanced by Agent. On
29
or before 1:00 p.m., New York time, on each Settlement Date commencing with the
first Settlement Date following the Closing Date, Agent and Lenders shall make
certain payments as follows: (A) if the aggregate amount of new Revolving
Advances made by Agent during the preceding Week (if any) exceeds the aggregate
amount of repayments applied to outstanding Revolving Advances during such
preceding Week, then each Lender shall provide Agent with funds in an amount
equal to its applicable Commitment Percentage of the difference between (1) such
Revolving Advances and (2) such repayments and (B) if the aggregate amount of
repayments applied to outstanding Revolving Advances during such Week exceeds
the aggregate amount of new Revolving Advances made during such Week, then Agent
shall provide each Lender with funds in an amount equal to its applicable
Commitment Percentage of the difference between (1) such repayments and (2) such
Revolving Advances.
(ii) Each Lender shall be entitled to earn
interest at the applicable Contract Rate on Advances which it has funded until
such Advances have been repaid to such Lender's account.
(iii) Promptly following each Settlement Date,
Agent shall submit to each Lender a certificate with respect to payments
received and Revolving Advances made during the Week immediately preceding such
Settlement Date. Such certificate of Agent shall be conclusive in the absence of
manifest error.
(d) If any Lender or Participant (a "benefited Lender")
shall at any time receive any payment of all or part of its Advances, or
interest thereon, or receive any Collateral in respect thereof (whether
voluntarily or involuntarily or by set-off) in a greater proportion than any
such payment to and Collateral received by any other Lender, if any, in respect
of such other Lender's Advances, or interest thereon, and such greater
proportionate payment or receipt of Collateral is not expressly permitted
hereunder, such benefited Lender shall purchase for cash from the other Lenders
a participation in such portion of each such other Lender's Advances, or shall
provide such other Lender with the benefits of any such Collateral, or the
proceeds thereof, as shall be necessary to cause such benefited Lender to share
the excess payment or benefits of such Collateral or proceeds ratably with each
of Lenders; provided, however, that if all or any portion of such excess payment
or benefits is thereafter recovered from such benefited Lender, such purchase
shall be rescinded, and the purchase price and benefits returned, to the extent
of such recovery, but without interest. Each Lender so purchasing a portion of
another Lender's Advances may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.
(e) Unless Agent shall have been notified by telephone,
confirmed in writing, by any Lender that such Lender will not make the amount
which would constitute its applicable Commitment Percentage of the Advances
available to Agent, Agent may (but shall not be obligated to) assume that such
Lender shall make such amount available to Agent on the next Settlement Date
and, in reliance upon such assumption, make available to Borrowers a
corresponding amount. Agent will promptly notify Borrowers of its receipt of any
such notice from a Lender. If such amount is made available to Agent on a date
after such next Settlement Date, such Lender shall pay to Agent on demand an
amount equal to the product of (i) the daily average Federal Funds Rate
(computed on the basis of a year of 360 days) during such period as quoted by
Agent, times (ii) such amount, times (iii) the number of days from and including
such Settlement Date to the date on which such amount becomes immediately
available to Agent. A
30
certificate of Agent submitted to any Lender with respect to any amounts owing
under this paragraph (e) shall be conclusive, in the absence of manifest error.
If such amount is not in fact made available to Agent by such Lender within
three (3) Business Days after such Settlement Date, Agent shall be entitled to
recover such an amount, with interest thereon at the rate per annum then
applicable to such Revolving Advances hereunder, on demand from Borrowers;
provided, however, that Agent's right to such recovery shall not prejudice or
otherwise adversely affect Borrowers' rights (if any) against such Lender.
2.15 Mandatory Prepayments.
(a) When any Loan Party sells or otherwise disposes of
any Collateral other than Inventory in the ordinary course of business, Loan
Parties shall repay the Advances in an amount equal to the net proceeds of such
sale (i.e., gross proceeds less the reasonable costs of such sales or other
dispositions), such repayments to be made promptly but in no event more than one
(1) Business Day following receipt of such net proceeds, and until the date of
payment, such proceeds shall be held in trust for Agent. The foregoing shall not
be deemed to be implied consent to any such sale otherwise prohibited by the
terms and conditions hereof. Such repayments shall be applied, (i) first, to the
outstanding principal installments of the Term Loan in the inverse order of the
maturities thereof and (ii) second, to the remaining Advances in such order as
Agent may determine, subject to Borrowers' ability to reborrow Revolving
Advances in accordance with the terms hereof.
(b) Subject to the provisions of Section 4.11, the Agent
shall apply the proceeds of any insurance settlements from casualty losses which
are received by the Agent to the outstanding Advances in such order as Agent may
determine, subject to Borrower's ability to reborrow Revolving Advances in
accordance with the terms hereof.
2.16 Use of Proceeds. Borrowers shall apply the proceeds of (i)
Revolving Advances and the Term Loan made on the Closing Date to repay existing
indebtedness owed to Bank One and to pay fees and expenses relating to this
transaction, and (ii) Revolving Advances made on and after the Closing Date to
provide for their respective working capital needs.
2.17 Defaulting Lender.
(a) Notwithstanding anything to the contrary contained
herein, in the event any Lender (x) has refused (which refusal constitutes a
breach by such Lender of its obligations under this Agreement) to make available
its portion of any Advance or (y) notifies either Agent or Borrowing Agent that
it does not intend to make available its portion of any Advance (if the actual
refusal would constitute a breach by such Lender of its obligations under this
Agreement) (each, a "Lender Default"), all rights and obligations hereunder of
such Lender (a "Defaulting Lender") as to which a Lender Default is in effect
and of the other parties hereto shall be modified to the extent of the express
provisions of this Section 2.17 while such Lender Default remains in effect.
(b) Advances shall be incurred pro rata from Lenders (the
"Non-Defaulting Lenders") which are not Defaulting Lenders based on their
respective Commitment Percentages, and no Commitment Percentage of any Lender or
any pro rata share of any Advances required to be advanced by any Lender shall
be increased as a result of such Lender Default. Amounts
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received in respect of principal of any type of Advances shall be applied to
reduce the applicable Advances of each Lender pro rata based on the aggregate of
the outstanding Advances of that type of all Lenders at the time of such
application; provided, that, such amount shall not be applied to any Advances of
a Defaulting Lender at any time when, and to the extent that, the aggregate
amount of Advances of any Non-Defaulting Lender exceeds such Non-Defaulting
Lender's Commitment Percentage of all Advances then outstanding.
(c) A Defaulting Lender shall not be entitled to give
instructions to Agent or to approve, disapprove, consent to or vote on any
matters relating to this Agreement and the Other Documents. All amendments,
waivers and other modifications of this Agreement and the Other Documents may be
made without regard to a Defaulting Lender and, for purposes of the definition
of "Required Lenders", a Defaulting Lender shall be deemed not to be a Lender
and not to have either Advances outstanding or a Commitment Percentage.
(d) Other than as expressly set forth in this Section
2.17, the rights and obligations of a Defaulting Lender (including the
obligation to indemnify Agent) and the other parties hereto shall remain
unchanged. Nothing in this Section 2.17 shall be deemed to release any
Defaulting Lender from its obligations under this Agreement and the Other
Documents, shall alter such obligations, shall operate as a waiver of any
default by such Defaulting Lender hereunder, or shall prejudice any rights which
any Borrower, Agent or any Lender may have against any Defaulting Lender as a
result of any default by such Defaulting Lender hereunder.
(e) In the event a Defaulting Lender retroactively cures
to the satisfaction of Agent the breach which caused a Lender to become a
Defaulting Lender, such Defaulting Lender shall no longer be a Defaulting Lender
and shall be treated as a Lender under this Agreement.
III. INTEREST AND FEES.
3.1 Interest. Interest on Advances shall be payable to Agent for
the benefit of Lenders in arrears on the first day of each month with respect to
Domestic Rate Loans and, with respect to Eurodollar Rate Loans, at the end of
each Interest Period or, for Eurodollar Rate Loans with an Interest Period in
excess of three months, at the earlier of (a) each three months on the
anniversary date of the commencement of such Eurodollar Rate Loan or (b) the end
of the Interest Period. Interest charges shall be computed on the actual
principal amount of Advances outstanding during the month (the "Monthly
Advances") at a rate per annum equal to (i) with respect to Revolving Advances,
the applicable Revolving Interest Rate, and (ii) with respect to the Term Loan,
the applicable Term Loan Rate (as applicable, the "Contract Rate"). Whenever,
subsequent to the date of this Agreement, the Base Rate is increased or
decreased, the applicable Contract Rate shall be similarly changed without
notice or demand of any kind by an amount equal to the amount of such change in
the Base Rate during the time such change or changes remain in effect. Upon and
after the occurrence of an Event of Default, and during the continuation
thereof, the Agent may, and at the direction of the Required Lenders the Agent
shall, adjust the interest rate such that the Obligations shall bear interest at
the applicable Contract Rate plus two percent (2.0%) per annum (the "Default
Rate").
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3.2 Letter of Credit Fees.
(a) Borrowers shall pay (x) to Agent, for the benefit of
Lenders, fees for each Letter of Credit for the period from and excluding the
date of issuance of same to and including the date of expiration or termination,
equal to the average daily face amount of each outstanding Letter of Credit
multiplied by (i) two and three quarters percent (2.75%) per annum with respect
to Standby Letters of Credit and (ii) two and three quarters percent (2.75%) per
annum with respect to Documentary Letters of Credit, such fees to be calculated
on the basis of a 360-day year for the actual number of days elapsed and to be
payable monthly in arrears on the first day of each month and on the last day of
the Term and (y) to Agent for the benefit of the Issuer, any and all fees and
expenses as agreed upon by the Issuer and the Borrowing Agent in connection with
any Letter of Credit, including, without limitation, in connection with the
opening, amendment or renewal of any such Letter of Credit and shall reimburse
Agent for any and all fees and expenses, if any, paid by Agent to the Issuer
(all of the foregoing fees, the "Letter of Credit Fees"). All such charges shall
be deemed earned in full on the date when the same are due and payable hereunder
and shall not be subject to rebate or proration upon the termination of this
Agreement for any reason. Any such charge in effect at the time of a particular
transaction shall be the charge for that transaction, notwithstanding any
subsequent change in the Issuer's prevailing charges for that type of
transaction. Upon and after the occurrence of an Event of Default, and during
the continuation thereof, the Agent may, and at the direction of the Required
Lenders the Agent shall, increase the Letter of Credit Fees by two percent
(2.0%) per annum. All Letter of Credit Fees payable hereunder shall be deemed
earned in full on the date when the same are due and payable hereunder and shall
not be subject to rebate or proration upon the termination of this Agreement for
any reason.
(b) (i) At any time when a Default or an Event of Default
has occurred and is continuing, (ii) on any date that Undrawn Availability is
less than zero; (iii) at any time after a notice of termination of this
Agreement has been issued in accordance with Section 13.1 of this Agreement or
(iv) upon expiration of the Term, Borrowers will cause cash to be deposited and
maintained in an account with Agent, as cash collateral, in an amount equal to
one hundred and five percent (105%) of the outstanding Letters of Credit, and
each Borrower hereby irrevocably authorizes Agent, in its discretion, on such
Borrower's behalf and in such Borrower's name, to open such an account and to
make and maintain deposits therein, or in an account opened by such Borrower, in
the amounts required to be made by such Borrower, out of the proceeds of
Receivables or other Collateral or out of any other funds of such Borrower
coming into any Lender's possession at any time. Agent will invest such cash
collateral (less applicable reserves) in such short-term money-market items as
to which Agent and such Borrower mutually agree and the net return on such
investments shall be credited to such account and constitute additional cash
collateral. No Borrower may withdraw amounts credited to any such account except
upon payment and performance in full of all Obligations and termination of this
Agreement.
3.3 Facility Fee. If, for any month during the Term, the average
daily unpaid balance of the Revolving Advances for each day of such month does
not equal the Maximum Revolving Advance Amount, then Borrowers shall pay to
Agent for the ratable benefit of Lenders a fee at a rate equal to one half of
one percent (0.50%) per annum on the amount by which the Maximum Revolving
Advance Amount exceeds such average daily unpaid balance. Such fee shall be
payable to Agent in arrears on the first day of each month. Such fee shall be
payable to Agent in arrears on the first day of each month.
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3.4 Collateral Monitoring Fee. Borrowers shall pay to Agent on the
first day of each month following any month in which Agent performs any
collateral monitoring - namely any field examination, collateral analysis or
other business analysis, the need for which is to be determined by Agent and
which monitoring is undertaken by Agent or for Agent's benefit at any time in
Agent's sole discretion; it being acknowledged that prior to the occurrence of a
Default or an Event of Default, Agent shall not perform field examinations more
frequently than two (2) times per annum.
3.5 Computation of Interest and Fees. Interest and fees hereunder
shall be computed on the basis of a year of 360 days and for the actual number
of days elapsed. If any payment to be made hereunder becomes due and payable on
a day other than a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and interest thereon shall be payable at the
applicable Contract Rate.
3.6 Maximum Charges. In no event whatsoever shall interest and
other charges charged hereunder exceed the highest rate permissible under law.
In the event interest and other charges as computed hereunder would otherwise
exceed the highest rate permitted under law, such excess amount shall be first
applied to any unpaid principal balance owed by Borrowers,, and if the then
remaining excess amount is greater than the previously unpaid principal balance,
Lenders shall promptly refund such excess amount to Borrowers and the provisions
hereof shall be deemed amended to provide for such permissible rate.
3.7 Increased Costs. In the event that any applicable law, treaty
or governmental regulation, or any change therein or in the interpretation or
application thereof, or compliance by any Lender (for purposes of this Section
3.7, the term "Lender" shall include Agent or any Lender and any corporation or
bank controlling Agent or any Lender) and the office or branch where Agent or
any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any
request or directive (whether or not having the force of law) from any central
bank or other financial, monetary or other authority, shall:
(a) subject Agent or any Lender to any tax of any kind
whatsoever with respect to this Agreement or any Other Document or change the
basis of taxation of payments to Agent or any Lender of principal, fees,
interest or any other amount payable hereunder or under any Other Documents
(except for changes in the rate of tax on the overall net income of Agent or any
Lender by the jurisdiction in which it maintains its principal office);
(b) impose, modify or hold applicable any reserve,
special deposit, assessment or similar requirement against assets held by, or
deposits in or for the account of, advances or loans by, or other credit
extended by, any office of Agent or any Lender, including (without limitation)
pursuant to Regulation D of the Board of Governors of the Federal Reserve
System; or
(c) impose on Agent or any Lender or the London interbank
Eurodollar market any other condition with respect to this Agreement or any
Other Document;
and the result of any of the foregoing is to increase the cost to Agent or any
Lender of making, renewing or maintaining its Advances hereunder by an amount
that Agent or such Lender deems to be material or to reduce the amount of any
payment (whether of principal, interest or
34
otherwise) in respect of any of the Advances by an amount that Agent or such
Lender deems to be material, then, in any case Borrowers shall promptly pay
Agent or such Lender, upon its demand, such additional amount as will compensate
Agent or such Lender for such additional cost or such reduction, as the case may
be, provided that the foregoing shall not apply to increased costs which are
reflected in the Adjusted LIBO Rate. Agent or such Lender shall certify the
amount of such additional cost or reduced amount to Borrowers, and such
certification shall be conclusive absent manifest error.
3.8 Basis For Determining Interest Rate Inadequate or Unfair. In
the event that Agent or any Lender shall have determined that:
(a) reasonable means do not exist for ascertaining the
Adjusted LIBO Rate applicable pursuant to Section 2.2 for any Interest Period;
or
(b) Dollar deposits in the relevant amount and for the
relevant maturity are not available in the London interbank Eurodollar market,
with respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate
Loan, or a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate
Loan,
then Agent shall give Borrowing Agent prompt written, telephonic or telegraphic
notice of such determination. If such notice is given, (i) any such requested
Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless Borrowing
Agent shall notify Agent no later than 10:00 a.m. (New York time) two (2)
Business Days prior to the date of such proposed borrowing, that its request for
such borrowing shall be cancelled or made as an unaffected type of Eurodollar
Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have
been converted to an affected type of Eurodollar Rate Loan shall be continued as
or converted into a Domestic Rate Loan, or, if Borrowing Agent shall notify
Agent, no later than 10:00 a.m. (New York time) two (2) Business Days prior to
the proposed conversion, shall be maintained as an unaffected type of Eurodollar
Rate Loan, and (iii) any outstanding affected Eurodollar Rate Loans shall be
converted into a Domestic Rate Loan, or, if Borrowing Agent shall notify Agent,
no later than 10:00 a.m. (New York time) two (2) Business Days prior to the last
Business Day of the then current Interest Period applicable to such affected
Eurodollar Rate Loan, shall be converted into an unaffected type of Eurodollar
Rate Loan, on the last Business Day of the then current Interest Period for such
affected Eurodollar Rate Loans. Until such notice has been withdrawn, Lenders
shall have no obligation to make an affected type of Eurodollar Rate Loan or
maintain outstanding affected Eurodollar Rate Loans and no Borrower shall have
the right to convert a Domestic Rate Loan or an unaffected type of Eurodollar
Rate Loan into an affected type of Eurodollar Rate Loan.
3.9 Capital Adequacy.
(a) In the event that Agent or any Lender shall have
determined that any applicable law, rule, regulation or guideline regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by Agent or any Lender (for purposes of this Section 3.9, the term "Lender"
shall include Agent or any Lender and any corporation or bank controlling Agent
or any Lender) and the office or branch where Agent or any Lender (as so
defined) makes or maintains any
35
Eurodollar Rate Loans with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on Agent or any Lender's capital as a consequence of its obligations hereunder
to a level below that which Agent or such Lender could have achieved but for
such adoption, change or compliance (taking into consideration Agent's and each
Lender's policies with respect to capital adequacy) by an amount deemed by Agent
or any Lender to be material, then, from time to time, Borrowers shall pay upon
demand to Agent or such Lender such additional amount or amounts as will
compensate Agent or such Lender for such reduction. In determining such amount
or amounts, Agent or such Lender may use any reasonable averaging or attribution
methods. The protection of this Section 3.9 shall be available to Agent and each
Lender regardless of any possible contention of invalidity or inapplicability
with respect to the applicable law, regulation or condition.
(b) A certificate of Agent or such Lender setting forth
such amount or amounts as shall be necessary to compensate Agent or such Lender
with respect to Section 3.9(a) when delivered to Borrowers shall be conclusive
absent manifest error.
IV. COLLATERAL: GENERAL TERMS
4.1 Security Interest in the Collateral. To secure the prompt
payment and performance to Agent, each Issuer and each Lender of the
Obligations, each Loan Party hereby assigns, pledges and grants to Agent for the
ratable benefit of Agent, each Issuer and each Lender a continuing security
interest in and to all of its Collateral, whether now owned or existing or
hereafter acquired or arising and wheresoever located. Each Loan Party shall
xxxx its books and records as may be necessary or appropriate to evidence,
protect and perfect Agent's security interest and shall cause its audited annual
financial statements to reflect such security interest.
4.2 Perfection of Security Interest.
(a) Each Loan Party shall take all action that may be
necessary or desirable, or that Agent may request, so as at all times to
maintain the validity, perfection, enforceability and priority of Agent's
security interest in the Collateral or to enable Agent to protect, exercise or
enforce its rights hereunder and in the Collateral, including, but not limited
to, (i) immediately discharging all Liens other than Permitted Encumbrances,
(ii) obtaining landlords' or mortgagees' lien waivers, (iii) delivering to
Agent, endorsed or accompanied by such instruments of assignment as Agent may
specify, and stamping or marking, in such manner as Agent may specify, any and
all chattel paper, instruments, letters of credits and advices thereof and
documents evidencing or forming a part of the Collateral, (iv) entering into
warehousing, lockbox, bailee and other custodial arrangements satisfactory to
Agent, and (v) executing and delivering financing statements, instruments of
pledge, mortgages, notices and assignments, in each case in form and substance
satisfactory to Agent, relating to the creation, validity, perfection,
maintenance or continuation of Agent's security interest under the UCC or other
applicable law.
(b) Agent may at any time and from time to time file,
without the signature of any Loan Party in accordance with Section 9-509 of the
UCC, financing statements, continuation statements and amendments thereto that
describe the Collateral as "all assets" of the applicable
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Loan Party and which contain any other information required by the UCC for the
sufficiency or filing office acceptance of any financing statements,
continuation statements or amendments. Each Loan Party agrees to furnish any
such information to Agent promptly upon request.
(c) Each Loan Party shall, at any time and from time to
time, take such steps as Agent may reasonably request (i) to obtain an
acknowledgment, in form and substance reasonably satisfactory to Agent, of any
bailee having possession of any of the Collateral, stating that the bailee holds
such Collateral for Agent, (ii) to obtain "control" of any letter-of-credit
rights, deposit accounts or electronic chattel paper (as such terms are defined
in the UCC with corresponding provisions thereof defining what constitutes
"control" for such items of Collateral), with any agreements establishing
control to be in form and substance reasonably satisfactory to Agent, and (iii)
otherwise to insure the continued perfection and priority of Agent's security
interest in any of the Collateral for the benefit of the Lenders and of its
rights therein. If any Loan Party shall at any time, acquire a "commercial tort
claim" (as such term is defined in the UCC) in excess of $250,000, such Loan
Party shall promptly notify Agent thereof in writing, therein providing a
reasonable description and summary thereof, and upon delivery thereof to Agent,
such Loan Party shall be deemed to thereby grant to Agent for the benefit of the
Lenders (and each Loan Party hereby grants to Agent, for the benefit of each
Lender) a security interest and lien in and to such commercial tort claim and
all proceeds thereof, all upon the terms of and governed by this Agreement.
(d) Each Loan Party hereby confirms and ratifies all UCC
financing statements filed by Agent with respect to such Loan Party on or prior
to the date of the Agreement.
(e) All charges, expenses and fees Agent may incur in
doing any of the foregoing, and any local taxes relating thereto, shall be
charged to Borrowers' Account as a Revolving Advance and added to the
Obligations, or, at Agent's option, shall be paid to Agent for the ratable
benefit of Lenders immediately upon demand.
4.3 Disposition of Collateral. Each Loan Party will safeguard and
protect all Collateral for Agent's general account and make no disposition
thereof whether by sale, lease or otherwise except (a) the sale of Inventory in
the ordinary course of business and (b) the disposition or transfer of obsolete
and worn-out Equipment in the ordinary course of business during any fiscal year
having an aggregate fair market value of not more than $1,000,000 and only to
the extent that (i) the proceeds of any such disposition are used to acquire
replacement Equipment which is subject to Agent's first priority security
interest or (ii) the proceeds of such disposition are remitted to Agent as a
prepayment on the Term Loan, as required by Section 2.15. In the event that the
applicable Loan Party elects to utilize clauses (i) and/or (ii) above, (x) the
applicable Loan Party shall give the Agent written notice of such election
within ninety (90) days of the date of the applicable disposition; (y) such
acquisition of replacement Equipment or such prepayment of the Term Loan shall
be made no later than one (1) year after the date of such disposition; and (z)
until such time as the proceeds are used as described in clauses (i) and/or (ii)
above, at the Agent's option, either (a) such proceeds shall be held by Agent as
cash collateral for the Obligations pursuant to terms acceptable to Agent in its
sole discretion or (b) such proceeds shall be applied as a repayment of
Revolving Advances and a reserve against loan availability under Section 2.1(a)
in the amount of such repayment shall be established. Such cash collateral or
loan availability reserve, as the case may be, shall be released by Agent only
in
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connection with the making of a Revolving Advance to be used by the Borrowers
solely for the purposes set forth in clauses (i) and (ii) above; provided,
however, that nothing contained herein shall waive or modify any conditions to
the making of Revolving Advances or any other provisions of this Agreement.
4.4 Preservation of Collateral. Following the occurrence of a
Default or Event of Default, in addition to the rights and remedies set forth in
Section 11.1, Agent: (a) may at any time take such steps as Agent deems
necessary to protect Agent's interest in and to preserve the Collateral,
including the hiring of such security guards or the placing of other security
protection measures as Agent may deem appropriate; (b) may employ and maintain
at any Loan Party's premises a custodian who shall have full authority to do all
acts necessary to protect Agent's interests in the Collateral; (c) may lease
warehouse facilities to which Agent may move all or part of the Collateral; (d)
may use any Loan Party's owned or leased lifts, hoists, trucks and other
facilities or equipment for handling or removing the Collateral; and (e) shall
have, and is hereby granted, a right of ingress and egress to the places where
the Collateral is located, and may proceed over and through any Loan Party's
owned or leased property. Each Loan Party shall cooperate fully with all of
Agent's efforts to preserve the Collateral and will take such actions to
preserve the Collateral as Agent may direct. All of Agent's expenses of
preserving the Collateral, including any expenses relating to the bonding of a
custodian, shall be charged to Borrowers' Account as a Revolving Advance and
added to the Obligations.
4.5 Ownership of Collateral. With respect to the Collateral, at
the time the Collateral becomes subject to Agent's security interest: (a) each
Loan Party shall be the sole owner of and fully authorized and able to sell,
transfer, pledge and/or grant a first priority security interest in each and
every item of its respective Collateral to Agent; and, except for Permitted
Encumbrances the Collateral shall be free and clear of all Liens and
encumbrances whatsoever; (b) each document and agreement executed by each Loan
Party or delivered to Agent or any Lender in connection with this Agreement
shall be true and correct in all respects; (c) all signatures and endorsements
of each Loan Party that appear on such documents and agreements shall be genuine
and each Loan Party shall have full capacity to execute same; and (d) each Loan
Party's Equipment and Inventory shall be located as set forth on Schedule 4.5
and shall not be removed from such location(s) without the prior written consent
of Agent except with respect to (i) the sale of Inventory in the ordinary course
of business (ii) Equipment to the extent permitted in Section 4.3, and (iii)
Equipment which may be moved between domestic locations owned or leased by the
Loan Parties upon thirty (30) days prior written notice to Agent and provided
further that any such location to which the Equipment is to be moved shall be
subject to a landlord or mortgagee waiver in favor of Agent, in form and content
satisfactory to Agent.
4.6 Defense of Agent's and Lenders' Interests. Until (a) payment
and performance in full of all of the Obligations and (b) termination of this
Agreement, Agent's interests in the Collateral shall continue in full force and
effect. During such period no Loan Party shall, without Agent's prior written
consent, pledge, sell (except Inventory in the ordinary course of business and
Equipment to the extent permitted in Section 4.3), assign, transfer, create or
suffer to exist a Lien upon or encumber or allow or suffer to be encumbered in
any way except for Permitted Encumbrances, any part of the Collateral. Each Loan
Party shall defend Agent's interests in the Collateral against any and all
Persons whatsoever. At any time following demand by Agent for payment of all
Obligations, Agent shall have the right to take possession of the indicia of the
Collateral and the Collateral in whatever physical form contained, including
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without limitation: labels, stationery, documents, instruments and advertising
materials. If Agent exercises this right to take possession of the Collateral,
Loan Parties shall, upon demand, assemble it in the best manner possible and
make it available to Agent at a place reasonably convenient to Agent. In
addition, with respect to all Collateral, Agent and Lenders shall be entitled to
all of the rights and remedies set forth herein and further provided by the UCC
or other applicable law. Each Loan Party shall, and Agent may, at its option,
instruct all suppliers, carriers, forwarders, warehouses or others receiving or
holding cash, checks, Inventory, documents or instruments in which Agent holds a
security interest to deliver same to Agent and/or subject to Agent's order and
if they shall come into any Loan Party's possession, they, and each of them,
shall be held by such Loan Party in trust as Agent's trustee, and such Loan
Party will immediately deliver them to Agent in their original form together
with any necessary endorsement.
4.7 Books and Records. Each Loan Party shall (a) keep proper books
of record and account in which full, true and correct entries will be made of
all dealings or transactions of or in relation to its business and affairs; (b)
set up on its books accruals with respect to all taxes, assessments, charges,
levies and claims; and (c) on a reasonably current basis set up on its books,
from its earnings, allowances against doubtful Receivables, advances and
investments and all other proper accruals (including without limitation by
reason of enumeration, accruals for premiums, if any, due on required payments
and accruals for depreciation, obsolescence, or amortization of properties),
which should be set aside from such earnings in connection with its business.
All determinations pursuant to this subsection shall be made in accordance with,
or as required by, GAAP consistently applied in the opinion of such independent
public accountant as shall then be regularly engaged by Loan Parties.
4.8 Financial Disclosure. Each Loan Party hereby irrevocably
authorizes and directs all accountants and auditors employed by such Loan Party
at any time during the Term to exhibit and deliver to Agent and each Lender
copies of any of the Loan Party's financial statements, trial balances or other
accounting records of any sort in the accountant's or auditor's possession, and
to disclose to Agent and each Lender any information such accountants may have
concerning such Loan Party's financial status and business operations. Each Loan
Party hereby authorizes all federal, state and municipal authorities to furnish
to Agent and each Lender copies of reports or examinations relating to such Loan
Party, whether made by such Loan Party or otherwise; however, Agent and each
Lender will attempt to obtain such information or materials directly from such
Loan Party prior to obtaining such information or materials from such
accountants or such authorities.
4.9 Compliance with Laws. Except to the extent that Sellers are
responsible for certain environmental matters as disclosed in writing to Agent
by Borrowers on the date hereof, each Loan Party shall comply with all acts,
rules, regulations and orders of any legislative, administrative or judicial
body or official applicable to its respective Collateral or any part thereof or
to the operation of such Loan Party's business the non-compliance with which
could reasonably be expected to have a Material Adverse Effect. Each Loan Party
may, however, contest or dispute any acts, rules, regulations, orders and
directions of those bodies or officials in any reasonable manner, provided that
any related Lien is inchoate or stayed and sufficient reserves are established
to the reasonable satisfaction of Agent to protect Agent's Lien on or security
interest in the Collateral. The assets of Loan Parties at all times shall be
maintained in
39
accordance with the requirements of all insurance carriers which provide
insurance with respect to the assets of Loan Parties so that such insurance
shall remain in full force and effect.
4.10 Inspection of Premises. (a) Prior to the occurrence of a
Default or an Event of Default, upon reasonable notice to Borrowers and, (b)
after the occurrence of a Default or an Event of Default, at any time, Agent and
each Lender shall have full access to and the right to audit, check, inspect and
make abstracts and copies from each Loan Party's books, records, audits,
correspondence and all other papers relating to the Collateral and the operation
of each Loan Party's business. Agent, any Lender and their agents may enter upon
any of Loan Party's premises at any time during business hours and at any other
reasonable time, and from time to time, for the purpose of inspecting the
Collateral and any and all records pertaining thereto and the operation of such
Loan Party's business.
4.11 Insurance. Each Loan Party shall bear the full risk of any
loss of any nature whatsoever with respect to the Collateral. At each Loan
Party's own cost and expense in amounts and with carriers acceptable to Agent,
each Loan Party shall (a) keep all its insurable properties and properties in
which each Loan Party has an interest insured against the hazards of fire,
flood, sprinkler leakage, those hazards covered by extended coverage insurance
and such other hazards, and for such amounts, as is customary in the case of
companies engaged in businesses similar to such Loan Party's including, without
limitation, business interruption insurance; (b) maintain insurance in such
amounts as is customary in the case of companies engaged in businesses similar
to such Loan Party insuring against larceny, embezzlement or other criminal
misappropriation of insured's officers and employees who may either singly or
jointly with others at any time have access to the assets or funds of such Loan
Party either directly or through authority to draw upon such funds or to direct
generally the disposition of such assets; (c) maintain public and product
liability insurance against claims for personal injury, death or property damage
suffered by others; (d) maintain all such worker's compensation or similar
insurance as may be required under the laws of any state or jurisdiction in
which Loan Party is engaged in business; (e) furnish Agent with (i) a copy of a
binder for all policies and evidence of the maintenance of such policies by the
renewal thereof prior to any expiration date, and (ii) appropriate loss payable
endorsements in form and substance satisfactory to Agent, naming Agent as a
co-insured and loss payee as its interests may appear with respect to all
insurance coverage referred to in clauses (a), and (c) above, and providing (A)
that all proceeds thereunder shall be payable to Agent, (B) no such insurance
shall be affected by any act or neglect of the insured or owner of the property
described in such policy, and (C) that such policy and loss payable clauses may
not be cancelled, amended or terminated unless at least thirty (30) days' prior
written notice is given to Agent. In the event of any loss thereunder, the
carriers named therein hereby are directed by Agent and the applicable Loan
Party to make payment for such loss to Agent and not to such Loan Party and
Agent jointly. If any insurance losses are paid by check, draft or other
instrument payable to any Loan Party and Agent jointly, Agent may endorse such
Loan Party's name thereon and do such other things as Agent may deem advisable
to reduce the same to cash. After the occurrence of a Default or an Event of
Default, Agent is hereby authorized to adjust and compromise claims under
insurance coverage referred to in clauses (a), and (b) above, it being
acknowledged that Borrower shall not adjust or compromise any claim under such
insurance coverage without Agent's prior written consent. All loss recoveries
received by Agent upon any such insurance may be applied to the Obligations, in
such order as Agent in its sole discretion shall determine. Any surplus shall be
paid by Agent to Loan Parties or applied as may be otherwise required by law.
Any deficiency thereon shall be paid by
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Loan Parties to Agent, on demand. Anything hereinabove to the contrary
notwithstanding, and subject to the fulfillment of the conditions set forth
below, Agent shall remit to Loan Parties insurance proceeds received by Agent
during any calendar year under insurance policies procured and maintained by
Loan Parties which insure Loan Parties' insurable properties to the extent such
insurance proceeds do not exceed $250,000 in the aggregate during such calendar
year or $50,000 per occurrence. In the event the amount of insurance proceeds
received by Agent for any occurrence exceeds $50,000, then Agent shall not be
obligated to remit the insurance proceeds to Loan Parties unless Loan Parties
shall provide Agent with evidence reasonably satisfactory to Agent that the
insurance proceeds will be used by Loan Parties within thirty (30) days of such
Loan Party's receipt of such insurance proceeds to repair, replace or restore
the insured property which was the subject of the insurable loss. In the event
Loan Parties have previously received (or, after giving effect to any proposed
remittance by Agent to Loan Parties would receive) insurance proceeds which
equal or exceed $250,000 in the aggregate during any calendar year, then Agent
may, in its sole discretion, either remit the insurance proceeds to Loan Parties
upon Loan Parties providing Agent with evidence reasonably satisfactory to Agent
that the insurance proceeds will be used by Loan Parties within thirty (30) days
of such Loan Party's receipt of such insurance proceeds to repair, replace or
restore the insured property which was the subject of the insurable loss, or
apply the proceeds to the Obligations, as aforesaid. The agreement of Agent to
remit insurance proceeds in the manner above provided shall be subject in each
instance to satisfaction of each of the following conditions: (x) no Event of
Default or Default shall then have occurred, (y) Loan Parties shall use such
insurance proceeds to repair, replace or restore the insurable property which
was the subject of the insurable loss and for no other purpose and (z) until
such time as Loan Parties shall use such insurance proceeds for such repair,
replacement or restoration, at the Agent's option, either (a) such proceeds
shall be held by Agent as cash collateral for the Obligations pursuant to terms
acceptable to Agent in its sole discretion or (b) such proceeds shall be applied
as a repayment of Revolving Advances and a reserve against loan availability
under Section 2.1(a) in the amount of such repayment shall be established. Such
cash collateral or loan availability reserve, as the case may be, shall be
released by Agent only in connection with the making of a Revolving Advance to
be used by the Borrowers solely for the purposes of such repair, replacement or
restoration; provided, however, that nothing contained herein shall waive or
modify any conditions to the making of Revolving Advances or any other
provisions of this Agreement. Notwithstanding the foregoing, Agent shall not
make available insurance proceeds in any calendar year in excess of $2,000,000
in the aggregate to the Loan Parties in accordance with the foregoing without
obtaining the consent of the Required Lenders.
4.12 Failure to Pay Insurance. If any Loan Party fails to obtain
insurance as hereinabove provided, or to keep the same in force, Agent, if Agent
so elects, may obtain such insurance and pay the premium therefor for Borrowers'
Account, and charge Borrowers' Account therefor and such expenses so paid shall
be part of the Obligations.
4.13 Payment of Taxes. Each Loan Party will pay, when due, all
taxes, assessments and other Charges lawfully levied or assessed upon such Loan
Party or any of the Collateral including, without limitation, real and personal
property taxes, assessments and charges and all franchise, income, employment,
social security benefits, withholding, and sales taxes. If any tax by any
governmental authority is or may be imposed on or as a result of any transaction
between any Loan Party and Agent or any Lender which Agent or any Lender may be
required to withhold or pay or if any taxes, assessments, or other Charges
remain unpaid after the date fixed
41
for their payment, or if any claim shall be made which, in Agent's or any
Lender's opinion, may possibly create a valid Lien on the Collateral, Agent may
without notice to Loan Parties pay the taxes, assessments or other Charges and
each Loan Party hereby indemnifies and holds Agent and each Lender harmless in
respect thereof. Agent will not pay any taxes, assessments or Charges to the
extent that any Loan Party has contested or disputed those taxes, assessments or
Charges in good faith, by expeditious protest, administrative or judicial appeal
or similar proceeding provided that any related tax lien is stayed and
sufficient reserves are established to the reasonable satisfaction of Agent to
protect Agent's security interest in or Lien on the Collateral. The amount of
any payment by Agent under this Section 4.13 shall be charged to Borrowers'
Account as a Revolving Advance and added to the Obligations and, until Loan
Parties shall furnish Agent with an indemnity therefor (or supply Agent with
evidence satisfactory to Agent that due provision for the payment thereof has
been made), Agent may hold without interest any balance standing to Loan
Parties' credit and Agent shall retain its security interest in any and all
Collateral held by Agent.
4.14 Payment of Leasehold Obligations. Each Loan Party shall at all
times pay, when and as due, its rental obligations under all leases under which
it is a tenant, and shall otherwise comply, in all material respects, with all
other terms of such leases and keep them in full force and effect and, at
Agent's request will provide evidence of having done so.
4.15 Accounts and other Receivables.
(a) Nature of Accounts. Each of the Accounts shall be a
bona fide and valid account representing a bona fide indebtedness incurred by
the Customer therein named, for a fixed sum as set forth in the invoice relating
thereto (provided immaterial or unintentional invoice errors shall not be deemed
to be a breach hereof) with respect to an absolute sale or lease and delivery of
goods upon stated terms of a Loan Party, or work, labor or services theretofore
rendered by a Loan Party as of the date each Account is created. Same shall be
due and owing in accordance with the applicable Loan Party's standard terms of
sale without dispute, setoff or counterclaim except as may be stated on the
accounts receivable schedules delivered by Loan Parties to Agent.
(b) Solvency of Customers. Each Customer, to the best of
each Loan Party's knowledge, as of the date each Account is created, is and will
be solvent and able to pay all Accounts on which the Customer is obligated in
full when due or with respect to such Customers of any Loan Party who are not
solvent such Loan Party has set up on its books and in its financial records bad
debt reserves adequate to cover such Accounts.
(c) Locations of Loan Party. Each Loan Party's chief
executive office is located at the addresses set forth on Schedule 4.15(c).
Until written notice is given to Agent by Borrowing Agent of any other office at
which any Loan Party keeps its records pertaining to Accounts and the other
Receivables, all such records shall be kept at such executive office.
(d) Collection of Accounts and other Receivables. Until
any Loan Party's authority to do so is terminated by Agent (which notice Agent
may give at any time following the occurrence of an Event of Default or a
Default or when Agent in its sole discretion deems it to be in Lenders' best
interest to do so), each Loan Party will, at such Loan Party's sole cost and
expense, but on Agent's behalf and for Agent's account, collect as Agent's
property and in trust
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for Agent all amounts received on Accounts and other Receivables, and shall not
commingle such collections with any Loan Party's funds or use the same except to
pay Obligations. Each Loan Party shall deliver to Agent, or deposit in the
Blocked Account, in original form and on the date of receipt thereof, all
checks, drafts, notes, money orders, acceptances, cash and other evidences of
Indebtedness.
(e) Notification of Assignment of Accounts and other
Receivables. At any time following the occurrence of an Event of Default or a
Default, Agent shall have the right to send notice of the assignment of, and
Agent's security interest in, the Accounts to any and all Customers or any third
party holding or otherwise concerned with any of the Collateral. Thereafter,
Agent shall have the sole right to collect the Accounts and other Receivables,
take possession of the Collateral, or both. Agent's actual collection expenses,
including, but not limited to, stationery and postage, telephone and telecopy,
secretarial and clerical expenses and the salaries of any collection personnel
used for collection, may be charged to Borrowers' Account and added to the
Obligations.
(f) Power of Agent to Act on Loan Parties' Behalf. Agent
shall have the right to receive, endorse, assign and/or deliver in the name of
Agent or any Loan Party any and all checks, drafts and other instruments for the
payment of money relating to the Accounts and other Receivables, and each Loan
Party hereby waives notice of presentment, protest and non-payment of any
instrument so endorsed. Each Loan Party hereby constitutes Agent or Agent's
designee as such Loan Party's attorney with power (i) to endorse such Loan
Party's name upon any notes, acceptances, checks, drafts, money orders or other
evidences of payment or Collateral; (ii) to sign such Loan Party's name on any
invoice or xxxx of lading relating to any of the Accounts and other Receivables,
drafts against Customers, assignments and verifications of Accounts and other
Receivables; (iii) to send verifications of Accounts and other Receivables to
any Customer or Person; (iv) to sign such Loan Party's name on all financing
statements or any other documents or instruments deemed necessary or appropriate
by Agent to preserve, protect, or perfect Agent's interest in the Collateral and
to file same; (v) after the occurrence of a Default or an Event of Default, to
demand payment of the Accounts and other Receivables; (vi) after the occurrence
of a Default or an Event of Default, to enforce payment of the Accounts and
other Receivables by legal proceedings or otherwise; (vii) after the occurrence
of a Default or an Event of Default, to exercise all of Loan Parties' rights and
remedies with respect to the collection of the Accounts and any other
Collateral; (viii) after the occurrence of a Default or an Event of Default, to
settle, adjust, compromise, extend or renew the Accounts and other Receivables;
(ix) after the occurrence of a Default or an Event of Default, to settle, adjust
or compromise any legal proceedings brought to collect Accounts and other
Receivables; (x) after the occurrence of a Default or an Event of Default, to
prepare, file and sign such Loan Party's name on a proof of claim in bankruptcy
or similar document against any Customer; (xi) to prepare, file and sign such
Loan Party's name on any notice of Lien, assignment or satisfaction of Lien or
similar document in connection with the Accounts; and (xii) to do all other acts
and things necessary to carry out this Agreement. All acts of said attorney or
designee are hereby ratified and approved, and said attorney or designee shall
not be liable for any acts of omission or commission nor for any error of
judgment or mistake of fact or of law, unless done maliciously or with gross
(not mere) negligence; this power being coupled with an interest is irrevocable
while any of the Obligations remain unpaid. Agent shall have the right at any
time following the occurrence of an Event of Default or Default, to change the
address for delivery of mail addressed to any Loan Party to
43
such address as Agent may designate and to receive, open and dispose of all mail
addressed to any Loan Party.
(g) No Liability. Neither Agent nor any Lender shall,
under any circumstances or in any event whatsoever, have any liability for any
error or omission or delay of any kind occurring in the settlement, collection
or payment of any of the Accounts, other Receivables or any instrument received
in payment thereof, or for any damage resulting therefrom. Following the
occurrence of an Event of Default or Default Agent may, without notice or
consent from any Loan Party, xxx upon or otherwise collect, extend the time of
payment of, compromise or settle for cash, credit or upon any terms any of the
Accounts, other Receivables or any other securities, instruments or insurance
applicable thereto and/or release any obligor thereof. Agent is authorized and
empowered to accept following the occurrence of an Event of Default or Default
the return of the goods represented by any of the Accounts and other
Receivables, without notice to or consent by any Loan Party, all without
discharging or in any way affecting any Loan Party's liability hereunder.
(h) Establishment of a Lockbox Account, Dominion Account.
As of the Closing Date and at all times thereafter, Loan Parties shall establish
and maintain a lockbox account, dominion account or such other "blocked account"
(collectively, the "Blocked Accounts") with such bank as may be selected by Loan
Parties and be acceptable to Agent and, at such time and thereafter, proceeds of
Collateral shall be deposited by Loan Parties, and the Loan Parties shall cause
their Customers to send payments on all Accounts and other Receivables, into
such Blocked Accounts as Agent may require pursuant to an arrangement with such
bank on terms acceptable to Agent. Such Blocked Accounts shall be governed by
"control" or other agreements in form and substance acceptable to Agent
satisfactory to establish Agent's perfection and rights in such Blocked Accounts
under the UCC. All invoices for sales of Inventory or services shall contain the
address of the Blocked Accounts as the address for remittance of payment. Loan
Parties shall issue to any such bank, an irrevocable letter of instruction
directing said bank to, upon the occurrence of a Default (that is not curable
during any applicable grace or cure period) or an Event of Default, transfer
such funds so deposited to Agent, either to any account maintained by Agent at
said bank or by wire transfer to appropriate account(s) of Agent. Immediately
upon the request of Agent to said bank following the occurrence of a Default
(that is not curable during any applicable grace or cure period) or Event of
Default, all funds deposited in a Blocked Account shall immediately become the
property of Agent and Loan Party shall obtain the agreement by such bank to
waive any offset rights against the funds so deposited. Neither Agent nor any
Lender assumes any responsibility for any Blocked Account arrangement, including
without limitation, any claim of accord and satisfaction or release with respect
to deposits accepted by any bank thereunder. Alternatively, upon the occurrence
of a Default (that is not curable during any applicable grace or cure period) or
Event of Default, Agent may establish depository accounts (collectively, the
"Depository Accounts") in the name of Agent at a bank or banks for the deposit
of such funds and Loan Parties shall deposit all proceeds of Collateral or cause
same to be deposited, in kind, in such Depository Accounts of Agent in lieu of
depositing same to the Blocked Accounts.
(i) Adjustments. No Loan Party will, without Agent's
consent, compromise or adjust any Accounts or other Receivables (or extend the
time for payment thereof) or accept any returns of merchandise or grant any
additional discounts, allowances or credits thereon
44
except for those compromises, adjustments, returns, discounts, credits and
allowances as have been heretofore customary in the business of such Loan Party.
4.16 Inventory. To the extent Inventory held for sale or lease has
been produced by any Loan Party, it has been and will be produced by such Loan
Party in accordance with the Federal Fair Labor Standards Act of 1938, as
amended, and all rules, regulations and orders thereunder.
4.17 Maintenance of Equipment. The Equipment shall be maintained in
good operating condition and repair (reasonable wear and tear excepted) and all
necessary replacements of and repairs thereto shall be made so that the value
and operating efficiency of the Equipment shall be maintained and preserved. No
Loan Party shall use or operate the Equipment in violation of any law, statute,
ordinance, code, rule or regulation. Each Loan Party shall have the right to
sell Equipment to the extent set forth in Section 4.3.
4.18 Exculpation of Liability. Nothing herein contained shall be
construed to constitute Agent or any Lender as any Loan Party's agent for any
purpose whatsoever, nor shall Agent or any Lender be responsible or liable for
any shortage, discrepancy, damage, loss or destruction of any part of the
Collateral wherever the same may be located and regardless of the cause thereof.
Neither Agent nor any Lender, whether by anything herein or in any assignment or
otherwise, assume any of Loan Party's obligations under any contract or
agreement assigned to Agent or such Lender, and neither Agent nor any Lender
shall be responsible in any way for the performance by Loan Party of any of the
terms and conditions thereof.
4.19 Environmental Matters.
(a) Except to the extent that Sellers are responsible for
certain environmental matters as disclosed in writing to Agent by Borrowers on
the date hereof, Loan Parties shall ensure that the Real Property remains in
material compliance with all Environmental Laws and they shall not place or
permit to be placed any Hazardous Substances on any Real Property except as not
prohibited by applicable law or appropriate governmental authorities.
(b) Loan Parties shall establish and maintain a system to
assure and monitor continued compliance with all applicable Environmental Laws
which system shall include periodic reviews of such compliance.
(c) Except as otherwise set forth in Schedule 5.7, Loan
Parties shall (i) employ in connection with the use of the Real Property
appropriate technology necessary to maintain compliance with any applicable
Environmental Laws and (ii) dispose of any and all Hazardous Waste generated at
the Real Property only at facilities and with carriers that maintain valid
permits under RCRA and any other applicable Environmental Laws. Loan Parties
shall use their best efforts to obtain certificates of disposal, such as
hazardous waste manifest receipts, from all treatment, transport, storage or
disposal facilities or operators employed by Loan Parties in connection with the
transport or disposal of any Hazardous Waste generated at the Real Property.
(d) In the event any Loan Party obtains, gives or
receives notice of any Release of any Hazardous Substances affecting the Real
Property which has or could reasonably be expected to have a Material Adverse
Effect (any such event being hereinafter referred to as a
45
"Hazardous Discharge") or receives any notice of violation, request for
information or notification that it is potentially responsible for investigation
or cleanup of environmental conditions at the Real Property, demand letter or
complaint, order, citation, or other written notice with regard to any Hazardous
Discharge or violation of Environmental Laws affecting the Real Property or any
Loan Party's interest therein (any of the foregoing is referred to herein as an
"Environmental Complaint") from any Person, including any state agency
responsible in whole or in part for environmental matters in the state in which
the Real Property is located or the United States Environmental Protection
Agency (any such person or entity hereinafter the "Authority"), then Borrowing
Agent, for events which have or could reasonably be expected to have a Material
Adverse Effect, shall, within five (5) Business Days, give written notice of
same to Agent detailing facts and circumstances of which any Loan Party is aware
giving rise to the Hazardous Discharge or Environmental Complaint. Such
information is to be provided to allow Agent to protect its security interest in
the Real Property and is not intended to create nor shall it create any
obligation upon Agent or any Lender with respect thereto.
(e) Loan Parties shall promptly forward to Agent copies
of any request for information, notification of potential liability, demand
letter relating to potential responsibility which has or could reasonably be
expected to have a Material Adverse Effect with respect to the investigation or
cleanup of Hazardous Substances at any other site owned, operated or used by any
Loan Party to dispose of Hazardous Substances and shall continue to forward
copies of such correspondence between any Loan Party and the Authority regarding
such claims to Agent until the claim is settled. Loan Parties shall promptly
forward to Agent copies of all documents and reports concerning a Hazardous
Discharge at the Real Property which has or could reasonably be expected to have
a Material Adverse Effect and that any Loan Party is required to file under any
Environmental Laws. Such information is to be provided solely to allow Agent to
protect Agent's security interest in the Real Property and the Collateral.
(f) Except to the extent that Sellers are responsible for
certain environmental matters as disclosed in writing to Agent by Borrowers on
the date hereof, Loan Parties shall respond promptly to any Hazardous Discharge
or Environmental Complaint and take all reasonably necessary action in order to
safeguard the health of any Person and to avoid subjecting the Collateral or
Real Property to any Lien. If any Loan Party shall fail to respond promptly to
any Hazardous Discharge or Environmental Complaint or any Loan Party shall fail
to comply with any of the requirements of any Environmental Laws and such
failure has or could reasonably be expected to have a Material Adverse Effect,
Agent on behalf of Lenders may, but without the obligation to do so, for the
sole purpose of protecting Agent's interest in Collateral: (A) give such notices
or (B) enter onto the Real Property (or authorize third parties to enter onto
the Real Property) and take such actions as Agent (or such third parties as
directed by Agent) deem reasonably necessary or advisable, to clean up, remove,
mitigate or otherwise deal with any such Hazardous Discharge or Environmental
Complaint. All reasonable costs and expenses incurred by Agent and Lenders (or
such third parties) in the exercise of any such rights, including any sums paid
in connection with any judicial or administrative investigation or proceedings,
fines and penalties, together with interest thereon from the date expended at
the Default Rate for Domestic Rate Loans constituting Revolving Advances shall
be paid upon demand by Loan Parties, and until paid shall be added to and become
a part of the Obligations secured by the Liens created by the terms of this
Agreement or any other agreement between Agent, any Lender and any Loan Party.
46
(g) During the continuance of an Event of Default,
subject to the limitations of those matters disclosed in writing to Agent by
Borrowers on the date hereof, upon the written request of Agent, Loan Parties
shall provide Agent, at Loan Parties' expense, with an environmental site
assessment or environmental audit report prepared by an environmental
engineering firm acceptable in the reasonable opinion of Agent, to assess with a
reasonable degree of certainty the existence of a Hazardous Discharge and the
potential costs in connection with abatement, cleanup and removal of any
Hazardous Substances found on, under, at or within the Real Property. Any report
or investigation of such Hazardous Discharge proposed and acceptable to an
appropriate Authority that is charged to oversee the clean-up of such Hazardous
Discharge shall be acceptable to Agent. If such estimates of remediation,
individually or in the aggregate, exceed $100,000 and an Event of Default
exists, Agent shall have the right to require Loan Parties to post a bond,
letter of credit or other security reasonably satisfactory to Agent to secure
payment of these costs and expenses.
(h) Loan Parties shall defend and indemnify Agent and
Lenders and hold Agent, Lenders and their respective employees, agents,
directors and officers harmless from and against all loss, liability, damage and
expense, claims, costs, fines and penalties, including attorney's fees, suffered
or incurred by Agent or Lenders under or on account of any Environmental Laws,
including, without limitation, the assertion of any Lien thereunder, with
respect to any Release of any Hazardous Substances affecting the Real Property,
the presence of any Hazardous Substances affecting the Real Property, whether or
not the same originates or emerges from the Real Property or any contiguous real
estate, including any loss of value of the Real Property as a result of the
foregoing except to the extent such loss, liability, damage and expense is
attributable to any Release of any Hazardous Substances at the Real Property
resulting from actions on the part of Agent or any Lender. Loan Parties'
obligations under this Section 4.19 shall arise upon the discovery of the
presence of any Hazardous Substances at the Real Property, whether or not any
federal, state, or local environmental agency has taken or threatened any action
in connection with the presence of any Hazardous Substances. Loan Parties'
obligation and the indemnifications hereunder shall survive the termination of
this Agreement.
(i) For purposes of Sections 4.19 and 5.7, all references
to Real Property shall be deemed to include all of Loan Parties' right, title
and interest in and to its owned and leased premises as disclosed on Schedule
1.2(b).
4.20 Financing Statements. Except with respect to the financing
statements filed by Agent and the financing statements described on Schedule
1.2(a), no financing statement covering any of the Collateral or any proceeds
thereof is on file in any public office.
V. REPRESENTATIONS AND WARRANTIES.
Each Loan Party represents and warrants as follows:
5.1 Authority. Each Loan Party has full power, authority and legal
right to enter into this Agreement and the Other Documents and to perform all
its respective Obligations hereunder and thereunder. The execution, delivery and
performance of this Agreement and of the Other Documents (a) are within such
Loan Party's limited liability company or corporate powers, have been duly
authorized, are not in contravention of law or the terms of such Loan Party's
certificate of formation, limited liability company agreement, by-laws,
certificate of
47
incorporation or other applicable documents relating to such Loan Party's
formation or to the conduct of such Loan Party's business or of any material
agreement or undertaking to which such Loan Party is a party or by which such
Loan Party is bound, and (b) will not conflict with nor result in any breach in
any of the provisions of or constitute a default under or result in the creation
of any Lien except Permitted Encumbrances upon any asset of such Loan Party
under the provisions of any agreement, charter document, instrument, by-law, or
other instrument to which such Loan Party or its property is a party or by which
it may be bound.
5.2 Formation and Qualification. (a) Each Loan Party is duly
formed or incorporated and in good standing under the laws of the state listed
on Schedule 5.2(a) and is qualified to do business and is in good standing in
the states listed on Schedule 5.2(a) which constitute all states in which
qualification and good standing are necessary for such Loan Party to conduct its
business and own its property and where the failure to so qualify could
reasonably be expected to have a Material Adverse Effect. The exact State
organizational number of each Loan Party is set forth on Schedule 5.2(a). Each
Loan Party has delivered to Agent true and complete copies of its certificate of
formation, limited liability company agreement, certificate of incorporation and
by-laws, as the case may be and will promptly notify Agent of any amendment or
changes thereto. The exact name of each Loan Party is set forth in the first
paragraph to this Agreement (or, if such Loan Party is not listed in such first
paragraph, such exact name is set forth on Schedule 5.2(a)).
(b) The only Subsidiaries of each Loan Party are listed
on Schedule 5.2(b).
5.3 Survival of Representations and Warranties. All
representations and warranties of such Loan Party contained in this Agreement
and the Other Documents shall be true at the time of such Loan Party's execution
of this Agreement and the Other Documents, and shall survive the execution,
delivery and acceptance thereof by the parties thereto and the closing of the
transactions described therein or related thereto.
5.4 Tax Returns. Each Loan Party's federal tax identification
number is set forth on Schedule 5.4. Each Loan Party has filed all federal,
state and local tax returns and other reports each is required by law to file
and has paid all taxes, assessments, fees and other governmental charges that
are due and payable. Federal, state and local income tax returns of each Loan
Party have been examined and reported upon by the appropriate taxing authority
or closed by applicable statute and satisfied for all fiscal years prior to and
including the fiscal year ending December 31, 1999. The provision for taxes on
the books of each Loan Party are adequate for all years not closed by applicable
statutes, and for its current fiscal year, and no Loan Party has any knowledge
of any deficiency or additional assessment in connection therewith not provided
for on its books.
5.5 Financial Statements.
(a) The pro forma balance sheet of the Loan Parties as at
September 30, 2003 on a Consolidated Basis (the "Pro Forma Balance Sheet")
furnished to Agent on the Closing Date reflects the consummation of the
transactions contemplated under this Agreement (the "Transactions") and is
accurate, complete and correct and fairly reflects the financial condition of
the Loan Parties on a Consolidated Basis as of the Closing Date after giving
effect to the Transactions, and has been prepared in accordance with GAAP,
consistently applied. The Pro
48
Forma Balance Sheet has been certified as accurate, complete and correct in all
material respects by the President and Chief Financial Officer of the Loan
Parties. All financial statements referred to in this Section 5.5(a), including
the related schedules and notes thereto, have been prepared, in accordance with
GAAP, except as may be disclosed in such financial statements.
(b) The twelve-month cash flow projections of the Loan
Parties on a Consolidated Basis and their projected balance sheets as of the
Closing Date, copies of which are annexed hereto as Exhibit 5.5(b) were prepared
by the Chief Financial Officer of the Loan Parties, are based on underlying
assumptions which provide a reasonable basis for the projections contained
therein and reflect Loan Parties' judgment based on present circumstances of the
most likely set of conditions and course of action for the projected period. The
cash flow Projections together with the Pro Forma Balance Sheet, are referred to
as the "Pro Forma Financial Statements".
(c) The consolidated and consolidating balance sheets of
the Loan Parties, their Subsidiaries and such other Persons described therein
(including the accounts of all Subsidiaries for the respective periods during
which a subsidiary relationship existed) as of December 31, 2002, and the
related statements of income, changes in stockholder's equity, and changes in
cash flow for the period ended on such date, all accompanied by reports thereon
containing, with respect to the consolidated statements, opinions without
qualification by independent certified public accountants, copies of which have
been delivered to Agent, have been prepared in accordance with GAAP,
consistently applied (except for changes in application in which such
accountants concur and present fairly the financial position of the Loan Parties
and their Subsidiaries at such date and the results of their operations for such
period). Since December 31, 2002 there has been no change in the condition,
financial or otherwise, of Loan Parties or their Subsidiaries as shown on the
consolidated balance sheet as of such date and no change in the aggregate value
of machinery, equipment and Real Property owned by Loan Parties and their
Subsidiaries except changes in the ordinary course of business, none of which
individually or in the aggregate has been materially adverse.
5.6 Corporate Name. The exact name of each Loan Party is set forth
in the first paragraph to this Agreement (or, if such Loan Party is not listed
in such first paragraph, such exact name is set forth on Schedule 5.6). No Loan
Party has been known by any other corporate, limited liability company or
partnership name in the past five years and no Loan Party sells Inventory under
any other name except as set forth on Schedule 5.6, nor has any Loan Party been
the surviving corporation of a merger or consolidation or acquired all or
substantially all of the assets of any Person during the preceding five (5)
years.
5.7 O.S.H.A. and Environmental Compliance.
(a) Except as disclosed on Schedule 5.7, each Loan Party
has duly complied with, and its facilities, business, assets, property,
leaseholds and Equipment are in compliance in all material respects with, the
provisions of the Federal Occupational Safety and Health Act, the Environmental
Protection Act, RCRA and all other Environmental Laws; there have been no
outstanding citations, notices or orders of non-compliance issued to any Loan
Party or relating to its business, assets, property, leaseholds or Equipment
under any such laws, rules or regulations, in each case except as set forth on
Schedule 5.7.
49
(b) Each Loan Party has been issued all required federal,
state and local licenses, certificates or permits relating to all applicable
Environmental Laws, except as set forth on Schedule 5.7.
(c) Except as disclosed on Schedule 5.7, (i) there are no
visible signs of releases, spills, discharges, leaks or disposal (each, a
"Release") of Hazardous Substances at, upon, under or within any Real Property
or any premises leased by any Loan Party which has or could reasonably be
expected to have a Material Adverse Effect; (ii) there are no underground
storage tanks or polychlorinated biphenyls on the Real Property or any premises
leased by any Loan Party; (iii) neither the Real Property nor any premises
leased by any Loan Party has ever been used as a treatment, storage or disposal
facility of Hazardous Waste; and (iv) no Hazardous Substances are present on the
Real Property or any premises leased by any Loan Party, excepting such
quantities as are handled in accordance with all applicable manufacturer's
instructions and governmental regulations and in proper storage containers and
as are necessary for the operation of the commercial business of any Loan Party
or of its tenants.
5.8 Solvency; No Litigation, Violation, Indebtedness or Default.
(a) After giving effect to the Transactions, Loan
Parties, on a consolidated basis, will be solvent, able to pay its debts as they
mature, has capital sufficient to carry on its business and all businesses in
which it is about to engage, and (i) as of the Closing Date, the fair present
saleable value of each Loan Party's assets, calculated on a going concern basis,
is in excess of the amount of its liabilities and (ii) subsequent to the Closing
Date, the fair saleable value of each Loan Party's assets (calculated on a going
concern basis) will be in excess of the amount of its liabilities.
(b) Except as disclosed in Schedules 5.7 and 5.8(b)(i),
no Loan Party has (i) any pending or threatened litigation, arbitration, actions
or proceedings which involve the possibility of having a Material Adverse
Effect, and (ii) any liabilities nor indebtedness for Money Borrowed other than
the Obligations.
(c) No Loan Party is in violation of any applicable
statute, regulation or ordinance in any respect which could reasonably be
expected to have a Material Adverse Effect, nor is any Loan Party in violation
of any order of any court, governmental authority or arbitration board or
tribunal.
(d) No Loan Party nor any member of the Controlled Group
maintains or contributes to any Plan other than those listed on Schedule 5.8(d).
Except as set forth in Schedule 5.8(d), (i) no Plan has incurred any
"accumulated funding deficiency," as defined in Section 302(a)(2) of ERISA and
Section 412(a) of the Code, whether or not waived, and each Loan Party and each
member of the Controlled Group has met all applicable minimum funding
requirements under Section 302 of ERISA in respect of each Plan, (ii) each Plan
which is intended to be a qualified plan under Section 401(a) of the Code as
currently in effect has been determined by the Internal Revenue Service to be
qualified under Section 401(a) of the Code and the trust related thereto is
exempt from federal income tax under Section 501(a) of the Code, (iii) no Loan
Party nor any member of the Controlled Group has incurred any liability to the
PBGC other than for the payment of premiums, and there are no premium payments
which have become due which are unpaid, (iv) no Plan has been terminated by the
plan administrator thereof nor by
50
the PBGC, and there is no occurrence which would cause the PBGC to institute
proceedings under Title IV of ERISA to terminate any Plan, (v) contributions to
the Plan have been made in accordance with the requirements of the Code and any
relevant Governmental Body, (vi) no Loan Party or any member of the Controlled
Group has breached any of the responsibilities, obligations or duties imposed on
it by ERISA with respect to any Plan, (vii) no Loan Party nor any member of a
Controlled Group has incurred any liability for any excise tax arising under
Section 4972 or 4980B of the Code, and no fact exists which could give rise to
any such liability, (viii) no Loan Party nor any member of the Controlled Group
nor any fiduciary of, nor any trustee to, any Plan, has engaged in a "prohibited
transaction" described in Section 406 of ERISA or Section 4975 of the Code nor
taken any action which would constitute or result in a Termination Event with
respect to any such Plan which is subject to ERISA, (ix) each Loan Party and
each member of the Controlled Group has made all contributions due and payable
with respect to each Plan, (x) there exists no event described in Section
4043(b) of ERISA, for which the thirty (30) day notice period contained in 29
CFR Section 2615.3 has not been waived, (xi) no Loan Party nor any member of the
Controlled Group has any fiduciary responsibility for investments with respect
to any plan existing for the benefit of persons other than employees or former
employees of any Loan Party and any member of the Controlled Group, and (xii) no
Loan Party nor any member of the Controlled Group has withdrawn, completely or
partially, from any Multiemployer Plan so as to incur liability under the
Multiemployer Pension Plan Amendments Act of 1980.
5.9 Patents, Trademarks, Copyrights and Licenses. All patents,
patent applications, trademarks, trademark applications, service marks, service
xxxx applications, copyrights, copyright applications, design rights,
tradenames, assumed names, trade secrets and licenses owned or utilized by any
Loan Party are set forth on Schedule 5.9, are valid and have been duly
registered or filed with all appropriate governmental authorities and constitute
all of the intellectual property rights which are necessary for the operation of
its business; there is no objection to or pending challenge to the validity of
any such material patent, trademark, copyright, design right, tradename, trade
secret or license and no Loan Party is aware of any grounds for any challenge,
except as set forth in Schedule 5.9. Each patent, patent application, patent
license, trademark, trademark application, trademark license, service xxxx,
service xxxx application, service xxxx license, copyright, copyright application
and copyright license owned or held by any Loan Party and all trade secrets used
by any Loan Party consist of original material or property developed by such
Loan Party or was lawfully acquired by such Loan Party from the proper and
lawful owner thereof. Each of such items has been maintained so as to preserve
the value thereof from the date of creation or acquisition thereof. With respect
to all software used by any Loan Party, such Loan Party is in possession of all
source and object codes related to each piece of software or is the beneficiary
of a source code escrow agreement, each such source code escrow agreement being
listed on Schedule 5.9.
5.10 Licenses and Permits. Except as set forth in Schedules 5.7 and
5.10, each Loan Party (a) is in compliance with and (b) has procured and is now
in possession of, all material licenses or permits required by any applicable
federal, state, or local law or regulation for the operation of its business in
each jurisdiction wherein it is now conducting or proposes to conduct business
and where the failure to procure such licenses or permits could have a Material
Adverse Effect.
51
5.11 Default of Indebtedness. No Loan Party is in default in the
payment of the principal of or interest on any Indebtedness greater than
$100,000 or under any instrument or agreement under or subject to which any
Indebtedness has been issued and no event has occurred under the provisions of
any such instrument or agreement which with or without the lapse of time or the
giving of notice, or both, constitutes or would constitute an event of default
thereunder.
5.12 No Default. No Loan Party is in default in the payment or
performance of any of its contractual obligations, except with respect to
payments or performance of any contractual obligations which are past due solely
because of a good faith dispute between a Borrower and a contracting party, as
demonstrated to the satisfaction of Agent in its sole discretion, for which such
Borrower has established appropriate reserves on its books, and no Default has
occurred.
5.13 No Burdensome Restrictions. No Loan Party is party to any
contract or agreement the performance of which could have a Material Adverse
Effect. No Loan Party has agreed or consented to cause or permit in the future
(upon the happening of a contingency or otherwise) any of its property, whether
now owned or hereafter acquired, to be subject to a Lien which is not a
Permitted Encumbrance.
5.14 No Labor Disputes. No Loan Party is involved in any labor
dispute; there are no strikes or walkouts or union organization of any Loan
Party's employees threatened or in existence and no labor contract is scheduled
to expire during the Term other than as set forth on Schedule 5.14.
5.15 Margin Regulations. No Loan Party is engaged, nor will it
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" within the meaning of the quoted term under Regulation U of the Board of
Governors of the Federal Reserve System as now and from time to time hereafter
in effect. No part of the proceeds of any Advance will be used for "purchasing"
or "carrying" "margin stock" as defined in Regulation U of such Board of
Governors.
5.16 Investment Company Act. No Loan Party is an "investment
company" registered or required to be registered under the Investment Company
Act of 1940, as amended, nor is it controlled by such a company.
5.17 Disclosure. No representation or warranty made by any Loan
Party in this Agreement or in any financial statement, report, certificate or
any other document furnished in connection herewith contains any untrue
statement of fact or omits to state any fact necessary to make the statements
herein or therein not misleading in any material respect. There is no fact known
to Loan Parties or which reasonably should be known to Loan Parties which Loan
Parties have not disclosed to Agent in writing with respect to the transactions
contemplated this Agreement which could reasonably be expected to have a
Material Adverse Effect.
5.18 Delivery of Senior Subordinated Debt Documentation. Agent has
received complete copies of the Senior Subordinated Debt documentation
(including all exhibits, schedules and disclosure letters referred to therein or
delivered pursuant thereto, if any) and all amendments thereto, waivers relating
thereto and other side letters or agreements affecting the terms thereof. None
of such documents and agreements has been amended or supplemented, nor
52
have any of the provisions thereof been waived, except pursuant to a written
agreement or instrument which has heretofore been delivered to Agent.
5.19 Swaps. No Loan Party is a party to, nor will it be a party to,
any swap agreement whereby such Loan Party has agreed or will agree to swap
interest rates or currencies; except that, with Agent's prior written consent, a
Borrower may enter into an unsecured swap arrangement with a financial
institution that is not a Lender hereunder.
5.20 Conflicting Agreements. To the best of Borrower's knowledge
after due investigation, no provision of any mortgage, indenture, contract,
agreement, judgment, decree or order binding on any Loan Party or affecting the
Collateral conflicts with, or requires any Consent which has not already been
obtained to, or would in any way prevent the execution, delivery or performance
of, the terms of this Agreement or the Other Documents.
5.21 Application of Certain Laws and Regulations. To the best of
Borrower's knowledge after due investigation, no Loan Party nor any Affiliate of
any Loan Party is subject to any statute, rule or regulation which regulates the
incurrence of any Indebtedness, including without limitation, statutes or
regulations relative to common or interstate carriers or to the sale of
electricity, gas, steam, water, telephone, telegraph or other public utility
services.
5.22 Business and Property of Loan Parties. Upon and after the
Closing Date, Loan Parties do not propose to engage in any business other than
the design and manufacture of engine components and activities necessary to
conduct the foregoing. On the Closing Date, each Loan Party will own all the
property and possess all of the rights and Consents necessary for the conduct of
the business of such Loan Party.
5.23 Material Contracts Schedule 5.23 contains a true, correct and
complete list of all contracts which are material to the operation of any Loan
Party's business. Except as set forth on Schedule 5.23, each such contract is in
full force and effect and no material defaults enforceable against such Loan
Party exist thereunder. No Loan Party has received notice from any party to such
contract stating that it intends to terminate or amend such contract.
VI. AFFIRMATIVE COVENANTS.
Each Loan Party shall, until payment in full of the Obligations and
termination of this Agreement:
6.1 Payment of Fees. Pay to Agent on demand all usual and
customary fees and expenses which Agent incurs in connection with (a) the
forwarding of Advance proceeds and (b) the establishment and maintenance of any
Blocked Accounts or Depository Accounts as provided for in Section 4.15(h).
Agent may, without making demand, charge Borrowers' Account for all such fees
and expenses.
6.2 Conduct of Business and Maintenance of Existence and Assets.
(i) Conduct continuously and operate actively its business according to good
business practices and maintain all of its properties useful or necessary in its
business in good working order and condition (reasonable wear and tear excepted
and except as may be disposed of in accordance with the terms of this
Agreement), including, without limitation, all licenses, patents, copyrights,
design rights, tradenames, trade secrets and trademarks and take all actions
necessary to enforce and
53
protect the validity of any intellectual property right or other right included
in the Collateral; (ii) keep in full force and effect its existence and comply
in all material respects with the laws and regulations governing the conduct of
its business where the failure to do so could reasonably be expected to have a
Material Adverse Effect; and (iii) make all such reports and pay all such
franchise and other taxes and license fees and do all such other acts and things
as may be lawfully required to maintain its rights, licenses, leases, powers and
franchises under the laws of the United States or any political subdivision
thereof .
6.3 Violations. Promptly notify Agent in writing of any violation
of any law, statute, regulation or ordinance of any Governmental Body, or of any
agency thereof, applicable to any Loan Party which could reasonably be expected
to have a Material Adverse Effect.
6.4 Government Receivables. Take all steps necessary to protect
Agent's interest in the Collateral under the Federal Assignment of Claims Act or
other applicable state or local statutes or ordinances and deliver to Agent
appropriately endorsed, any instrument or chattel paper connected with any
Receivable arising out of contracts between any Loan Party and the United
States, any state or any department, agency or instrumentality of any of them.
6.5 Execution of Supplemental Instruments. Execute and deliver to
Agent from time to time, upon demand, such supplemental agreements, statements,
assignments and transfers, or instructions or documents relating to the
Collateral, and such other instruments as Agent may request, in order that the
full intent of this Agreement may be carried into effect.
6.6 Payment of Indebtedness. Subject at all times to any
applicable subordination arrangement in favor of Agent and/or Lenders, pay,
discharge or otherwise satisfy at or before maturity (subject, where applicable,
to specified grace periods and, in the case of the trade payables, to normal
payment practices) all its obligations and liabilities of whatever nature,
except when the failure to do so could not reasonably be expected to have a
Material Adverse Effect or when the amount or validity thereof is currently
being contested in good faith by appropriate proceedings and each Loan Party
shall have provided for such reserves as Agent may reasonably deem proper and
necessary.
6.7 Standards of Financial Statements. Cause all financial
statements referred to in Sections 9.7, 9.8, 9.9, 9.10 and 9.12 as to which GAAP
is applicable to be complete and correct in all material respects (subject, in
the case of interim financial statements, to normal year-end audit adjustments)
and to be prepared in reasonable detail and in accordance with GAAP applied
consistently throughout the periods reflected therein (except as concurred in by
such reporting accountants or officer, as the case may be, and disclosed
therein).
6.8 Financial Covenants.
(a) EBITDA. Maintain EBITDA for the Loan Parties on a
Consolidated Basis of not less than the minimum amounts indicated below in
respect to the corresponding periods (for each period a "Calculation Period")
calculated as of the last day of such period:
MINIMUM
CALCULATION PERIOD EBITDA
---------------------------------------------------------------------------------------------------------
October 1, 2003 to December 31, 2003 $ 6,800,000
---------------------------------------------------------------------------------------------------------
54
MINIMUM
CALCULATION PERIOD EBITDA
---------------------------------------------------------------------------------------------------------
October 1, 2003 to March 31, 2004 $13,500,000
---------------------------------------------------------------------------------------------------------
October 1, 2003 to June 30, 2004 $21,500,000
---------------------------------------------------------------------------------------------------------
October 1, 2003 to September 30, 2004 $27,000,000
---------------------------------------------------------------------------------------------------------
the 12 month trailing period ending December 31, 2004 $28,000,000
---------------------------------------------------------------------------------------------------------
the 12 month trailing period ending March 31, 2005 $31,000,000
---------------------------------------------------------------------------------------------------------
the 12 month trailing period ending June 30, 2005 $33,000,000
---------------------------------------------------------------------------------------------------------
the 12 month trailing period ending September 30, 2005 $36,000,000
---------------------------------------------------------------------------------------------------------
the 12 month trailing period ending December 31, 2005 $38,000,000
---------------------------------------------------------------------------------------------------------
the 12 month trailing period ending March 31, 2006 and for the 12 month trailing period $40,000,000
ending the last day of each fiscal quarter thereafter
---------------------------------------------------------------------------------------------------------
(b) Fixed Charge Coverage Ratio. If Undrawn Availability
is less than $22,500,000 (each such date being a "Fixed Charge Springing
Calculation Date"), Borrowers shall maintain a Fixed Charge Coverage Ratio for
the Loan Parties on a Consolidated Basis of not less than the minimum amounts
indicated below in respect to the corresponding periods (for each period a
"Calculation Period") calculated as of the last day of such period:
---------------------------------------------------------------------------------------------------------------
MINIMUM FIXED
CHARGE
CALCULATION PERIOD COVERAGE RATI
---------------------------------------------------------------------------------------------------------------
October 1, 2003 to December 31, 2003 0.45:1.0
------------------------------------------------------------------------------------------------------------
October 1, 2003 to March 31, 2004 0.70:1.0
------------------------------------------------------------------------------------------------------------
October 1, 2003 to June 30, 2004 0.60:1.0
------------------------------------------------------------------------------------------------------------
October 1, 2003 to September 30, 2004 0.50:1.0
------------------------------------------------------------------------------------------------------------
the 12 month trailing period ending December 31, 2004 0.65:1.0
------------------------------------------------------------------------------------------------------------
the 12 month trailing period ending March 31, 2005 0.80:1.0
------------------------------------------------------------------------------------------------------------
the 12 month trailing period ending June 30, 2005 1.00:1.0
------------------------------------------------------------------------------------------------------------
the 12 month trailing period ending September 30, 2005 1.05:1.0
------------------------------------------------------------------------------------------------------------
the 12 month trailing period ending December 31, 2005 1.15:1.0
------------------------------------------------------------------------------------------------------------
the 12 month trailing period ending March 31, 2006 and for the 12 month trailing period ending 1.20:1.0
the last day of each fiscal quarter thereafter
------------------------------------------------------------------------------------------------------------
Notwithstanding the foregoing, if after a Fixed Charge Springing
Calculation Date, Borrowers maintain Undrawn Availability of $25,000,000 or more
for ninety (90) consecutive days, then commencing with the first fiscal quarter
occurring after such ninety (90) consecutive day period, Agent shall not test
Borrowers' Fixed Charge Coverage Ratio pursuant to this Section 6.8(b) until the
next Fixed Charge Springing Calculation Date.
(c) Senior Leverage Ratio. Maintain, on a consolidated
basis, as of the end of each fiscal quarter and for each fiscal quarter
thereafter, a Senior Leverage Ratio as of the end of each fiscal quarter, of not
greater than 2.0:1.0.
6.9 Minimum Undrawn Availability. Maintain at all times Undrawn
Availability of not less than $5,000,000.
55
VII. NEGATIVE COVENANTS.
No Loan Party shall, until satisfaction in full of the Obligations and
termination of this Agreement:
7.1 Merger, Consolidation, Acquisition and Sale of Assets.
(a) Enter into any merger, consolidation or other
reorganization with or into any other Person or acquire all or a substantial
portion of the assets or stock of any Person or permit any other Person to
consolidate with or merge with it.
(b) Sell, lease, transfer or otherwise dispose of any of
its properties or assets, except in the ordinary course of its business and
except as provided in Section 4.3.
7.2 Creation of Liens. Create or suffer to exist any Lien or
transfer upon or against any of its property or assets now owned or hereafter
acquired, except Permitted Encumbrances and Permitted Purchase Money Liens.
7.3 Guarantees. Become liable upon the obligations of any Person
by assumption, endorsement or guaranty thereof or otherwise (other than to
Lenders) except (a) as disclosed on Schedule 7.3, and (b) unsecured corporate
guarantees made in the ordinary course of business by Borrowers up to an
aggregate amount of $1,000,000 for the benefit of trade creditors of any
Borrower; and (c) the endorsement of checks in the ordinary course of business.
7.4 Investments. Except as set forth on Schedule 7.4 hereof,
purchase or acquire obligations or stock of, or any other interest in, any
Person, except Cash Equivalents; except that, from and after the date hereof,
Borrowers may make investments in non-domestic Affiliates from time to time
provided that, (a) Agent has a duly perfected, first priority lien on the
Subsidiary Stock constituting the equity interests in such non-domestic
Affiliate, and (b) the aggregate amount of all such investments in all
non-domestic Affiliates shall not exceed $2,000,000 in the aggregate.
7.5 Loans. Make advances, loans or extensions of credit to any
Person, including without limitation, any Parent, Subsidiary or Affiliate except
(a) with respect to the extension of commercial trade credit in connection with
the sale of Inventory in the ordinary course of its business and (b) loans by a
Borrower to a Borrower after the date hereof, provided, that, (i) as to all of
such loans, (A) within thirty (30) days after the end of each fiscal year,
Borrowers shall provide to Agent a report in form and substance satisfactory to
Agent of the outstanding amount of such loans as of the last day of the
immediately preceding month and indicating any loans made and payments received
during the immediately preceding month and (B) the Indebtedness arising pursuant
to any such loan shall not be evidenced by a promissory note or other
instrument, unless the single original of such note or other instrument is
promptly delivered to Agent upon its request to hold as part of the Collateral,
with such endorsement and/or assignment by the payee of such note or other
instrument as Agent may require.
7.6 Capital Expenditures. Contract for, purchase or make any net
Capital Expenditures as of the end of each fiscal year set forth below for the
respective fiscal periods set forth below ending on the last day of such fiscal
year in an aggregate amount in excess of the amounts set forth below:
56
FISCAL PERIOD CAPITAL EXPENDITURES
------------- --------------------
For the Fiscal Year ending 12/31/2003 $16,846,000 inclusive of the
aggregate amount of investments in
Borrowers' non-domestic Affiliates
permitted in Section 7.4 of this
Agreement made during such fiscal
year
For the Fiscal Year ending 12/31/2004 the Cap/Ex Carryover Amount plus
$19,661,000 inclusive of the
aggregate amount of investments in
Borrowers' non-domestic Affiliates
permitted in Section 7.4 of this
Agreement made during such fiscal
year
For the Fiscal Year ending 12/31/2005 the Cap/Ex Carryover Amount plus
$18,913,000 inclusive of the
aggregate amount of investments in
Borrowers' non-domestic Affiliates
permitted in Section 7.4 of this
Agreement made during such fiscal year
For the Fiscal Year ending 12/31/2006 the Cap/Ex Carryover Amount plus
$17,364,000 inclusive of the
aggregate amount of investments in
Borrowers' non-domestic Affiliates
permitted in Section 7.4 of this
Agreement made during such fiscal year
For the Fiscal Year ending 12/31/2007 the Cap/Ex Carryover Amount plus
$18,300,000 inclusive of the
aggregate amount of investments in
Borrowers' non-domestic Affiliates
permitted in Section 7.4 of this
Agreement made during such fiscal year
57
7.7 Dividends and Distributions. Declare, pay or make any dividend
or distribution on any shares of the common stock, preferred stock or other
equity interests of any Loan Party (other than dividends or distributions
payable in its stock or other equity interests or split-ups or reclassifications
of its stock or other equity interests) or apply any of its funds, property or
assets to the purchase, redemption or other retirement of any common or
preferred stock, or of any options to purchase or acquire any such shares of
common or preferred stock or other equity interests of any Loan Party; except
that Borrowers shall be permitted to purchase, redeem or retire any stock of
Borrowers stock owned by any Person to the extent required under any stockholder
agreement as in effect on the date hereof, provided that, the aggregate amount
of payments made to all shareholders shall not exceed $2,000,000 in the
aggregate and as of the date of any such payment, no Event of Default exists and
is continuing, and after giving effect thereto, no Event of Default would exist.
7.8 Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness for Money Borrowed (exclusive of trade debt) of Loan Party except
in respect of (i) Indebtedness to Lenders; (ii) Indebtedness incurred for
capital expenditures permitted under Section 7.6; (iii) Indebtedness existing on
the Effective Date as set forth on Schedule 7.8, (iv) Indebtedness due under the
Subordinated Debt Documentation; (v) Permitted Purchase Money Debt; and (vi)
other Indebtedness for Money Borrowed (other than loans between Borrowers) not
to exceed at any given time outstanding $2,000,000 in the aggregate.
7.9 Nature of Business. Substantially change the nature of the
business in which it is presently engaged, nor except as specifically permitted
hereby purchase or invest, directly or indirectly, in any assets or property
other than in the ordinary course of business for assets or property which are
useful in, necessary for and are to be used in its business as presently
conducted.
7.10 Transactions with Affiliates. Directly or indirectly,
purchase, acquire or lease any property from, or sell, transfer or lease any
property to, or otherwise deal with, any Affiliate, except transactions
disclosed in the ordinary course of business, on an arm's-length basis on terms
no less favorable than terms which would have been obtainable from a Person
other than an Affiliate.
7.11 Leases.
(a) Enter as lessee into any lease arrangement for real
or personal property (unless capitalized and permitted under Section 7.6) if
after giving effect thereto aggregate annual rental payments for all leased
property would exceed $3,000,000 in any one fiscal year for all Loan Parties.
(b) Enter into Capital Leases if after giving effect
thereto, the aggregate outstanding Indebtedness under such Capital Leases would
exceed $5,000,000.
7.12 Subsidiaries.
(a) Form any Subsidiary unless (i) such Subsidiary
expressly joins in this Agreement as a Loan Party and becomes jointly and
severally liable for the obligations of Loan Parties hereunder, under the Notes,
and under any other agreement between any Loan Party and
58
Lenders and (ii) Agent shall have received all documents, including legal
opinions, it may reasonably require to establish compliance with each of the
foregoing conditions.
(b) Enter into any partnership, joint venture or similar
arrangement.
7.13 Fiscal Year and Accounting Changes. Change its fiscal year
from a fiscal year ending December 31 or make any change (a) in accounting
treatment and reporting practices except as required by GAAP or (b) in tax
reporting treatment except as required by law.
7.14 Pledge of Credit. Now or hereafter pledge Agent's or any
Lender's credit on any purchases or for any purpose whatsoever or use any
portion of any Advance in or for any business other than the applicable Loan
Party's business as conducted on the date of this Agreement.
7.15 Amendment of Articles of Formation, LLC Agreement, Certificate
of Incorporation and By-Laws. Amend, modify or waive any term or provision of
its Articles of Formation, LLC Agreement, Certificate of Incorporation and
By-Laws or any shareholders agreement unless required by law.
7.16 Compliance with ERISA. (a) (i) Maintain, or permit any member
of the Controlled Group to maintain, or (ii) become obligated to contribute, or
permit any member of the Controlled Group to become obligated to contribute, to
any Plan, other than those Plans disclosed on Schedule 5.8(d), (b) engage, or
permit any member of the Controlled Group to engage, in any non-exempt
"prohibited transaction", as that term is defined in section 406 of ERISA and
Section 4975 of the Code, (c) incur, or permit any member of the Controlled
Group to incur, any "accumulated funding deficiency", as that term is defined in
Section 302 of ERISA or Section 412 of the Code, (d) terminate, or permit any
member of the Controlled Group to terminate, any Plan where such event could
result in any liability of any Loan Party or any member of the Controlled Group
or the imposition of a lien on the property of any Loan Party or any member of
the Controlled Group pursuant to Section 4068 of ERISA, (e) assume, or permit
any member of the Controlled Group to assume, any obligation to contribute to
any Multiemployer Plan not disclosed on Schedule 5.8(d), (f) incur, or permit
any member of the Controlled Group to incur, any withdrawal liability to any
Multiemployer Plan; (g) fail promptly to notify Agent of the occurrence of any
Termination Event, (h) fail to comply, or permit a member of the Controlled
Group to fail to comply, with the requirements of ERISA or the Code or other
applicable laws in respect of any Plan, (i) fail to meet, or permit any member
of the Controlled Group to fail to meet, all minimum funding requirements under
ERISA or the Code or postpone or delay or allow any member of the Controlled
Group to postpone or delay any funding requirement with respect of any Plan.
7.17 Prepayment of Indebtedness for Money Borrowed. Except as
permitted pursuant to Section 7.18, at any time, directly or indirectly, prepay
any Indebtedness for Money Borrowed (other than to Lenders), or repurchase,
redeem, retire or otherwise acquire any Indebtedness of any Loan Party.
7.18 Senior Subordinated Notes. (a) Amend, modify, alter or change
in any material respect any of the Senior Subordinated Notes, the Senior
Subordinated Indenture or any related agreements, documents or instruments,
except that Borrowers may, after prior written notice to
59
Agent, amend, modify, alter or change the terms thereof so as to extend the
maturity thereof or defer the timing of any payments in respect thereof, or to
forgive or cancel any portion of the Senior Subordinated Debt other than
pursuant to payments thereof, or to reduce the interest rate or any fees in
connection therewith, or (b) except as expressly permitted under this Agreement
and the Senior Subordinated Indenture, redeem, retire, defease, purchase or
otherwise acquire any Senior Subordinated Debt or set aside or otherwise deposit
or invest any sums for such purpose; except that Borrowers may redeem, retire,
defense, purchase or otherwise acquire all or a portion of the Senior
Subordinated Debt, provided that: (i) any such payment shall be made from funds
legally available therefor; (ii) any such payment shall not violate any law or
regulation or the terms of the Senior Subordinated Indenture or any other
agreement or undertaking to which any Loan Party is a party or by which a Loan
Party or its properties are bound; (iii) as of the date of any such proposed
payment and after giving effect thereto, no Default or Event of Default shall
exist or have occurred; and (iv) for the period of sixty (60) days immediately
prior to such date, Undrawn Availability shall not be less then $15,000,000; (v)
as of the date of any such proposed payment, Borrowers shall have Undrawn
Availability of not less than $15,000,000; and (vi) not less than five (5)
Business Days prior to any such proposed payment, Borrowers shall have presented
Agent with a pro forma Borrowing Base Certificate, in form and content
satisfactory to Agent, projecting Undrawn Availability of not less than
$15,000,000 for the sixty day period immediately after giving effect to any such
proposed payment. Borrowers and Guarantor hereby designate, acknowledge, confirm
and agree that the Obligations constitute "Designated Senior Indebtedness", as
defined in the Senior Subordinated Indenture.
7.19 Jurisdiction of Organization. Change the jurisdiction in which
it is incorporated or otherwise organized, unless it has given the Agent not
less than thirty (30) days prior written notice thereof.
VIII. CONDITIONS PRECEDENT.
8.1 Conditions to Initial Advances. The agreement of Lenders to
make the initial Advances requested to be made on the Closing Date is subject to
the satisfaction, or waiver by Lenders, immediately prior to or concurrently
with the making of such Advances, of the following conditions precedent:
(a) Notes. Agent shall have received the Notes duly
executed and delivered by an authorized officer of each Borrower;
(b) Filings, Registrations, Recordings and Searches. Each
document (including, without limitation, any UCC financing statement) required
by this Agreement, any related agreement or under law or reasonably requested by
the Agent to be filed, registered or recorded in order to create, in favor of
Agent, a perfected security interest in or lien upon the Collateral shall have
been properly filed, registered or recorded in each jurisdiction in which the
filing, registration or recordation thereof is so required or requested, and
Agent shall have received an acknowledgment copy, or other evidence satisfactory
to it, of each such filing, registration or recordation and satisfactory
evidence of the payment of any necessary fee, tax or expense relating thereto.
The Agent shall also have received UCC, tax and judgment lien searches with
respect to each Loan Party in such jurisdictions as the Agent shall require, and
the results of such searches shall be satisfactory to the Agent;
60
(c) Corporate Proceedings of Loan Parties. Agent shall
have received a copy of the resolutions in form and substance reasonably
satisfactory to Agent, of the Board of Directors (or equivalent authority) of
each Loan Party authorizing (i) the execution, delivery and performance of this
Agreement and the Other Documents, the Notes, the Mortgage, any related
agreements, and the Subordinated Debt Documentation, (collectively the
"Documents") and (ii) the granting by each Loan Party of the security interests
in and liens upon the Collateral in each case certified by the Secretary or an
Assistant Secretary of each Loan Party as of the Closing Date; and, such
certificate shall state that the resolutions thereby certified have not been
amended, modified, revoked or rescinded as of the date of such certificate;
(d) Incumbency Certificates of Loan Parties. Agent shall
have received a certificate of the Secretary or an Assistant Secretary of each
Loan Party, dated the Closing Date, as to the incumbency and signature of the
officers of each Loan Party executing this Agreement, any certificate or other
documents to be delivered by it pursuant hereto, together with evidence of the
incumbency of such Secretary or Assistant Secretary;
(e) Certificates. Agent shall have received a copy of the
Articles or Certificate of Incorporation of each Loan Party, and all amendments
thereto, certified by the Secretary of State or other appropriate official of
its jurisdiction of incorporation together with copies of the By-Laws of each
Loan Party and all agreements of each Loan Party's shareholders certified as
accurate and complete by the Secretary of each Loan Party;
(f) Good Standing Certificates. Agent shall have received
good standing certificates for each Loan Party dated not more than thirty (30)
days prior to the Closing Date, issued by the Secretary of State or other
appropriate official of each Loan Party's jurisdiction of incorporation and each
jurisdiction where the conduct of each Loan Party's business activities or the
ownership of its properties necessitates qualification;
(g) Legal Opinion. Agent shall have received the executed
legal opinion of Xxxxxxx & Xxxxxxx LLP in form and substance satisfactory to
Agent which shall cover such matters incident to the transactions contemplated
by this Agreement and the Other Documents as Agent may reasonably require and
each Loan Party hereby authorizes and directs such counsel to deliver such
opinions to Agent and Lenders;
(h) No Litigation. (i) No litigation, investigation or
proceeding before or by any arbitrator or Governmental Body shall be continuing
or threatened against any Loan Party or against the officers or directors of any
Loan Party (A) in connection with this Agreement and/or the Other Documents or
any of the transactions contemplated thereby and which, in the reasonable
opinion of Agent, is deemed material or (B) which could, in the reasonable
opinion of Agent, have a Material Adverse Effect; and (ii) no injunction, writ,
restraining order or other order of any nature materially adverse to any Loan
Party or the conduct of its business or inconsistent with the due consummation
of the Transactions shall have been issued by any Governmental Body;
(i) Collateral Examination. Agent shall have completed
Collateral examinations and received appraisals, the results of which shall be
satisfactory in form and substance to Lenders, of the Receivables, Inventory,
General Intangibles, Investment Property,
61
Real Property , Leasehold Interests and Equipment of each Loan Party and all
books and records in connection therewith;
(j) Fees. Agent shall have received all fees payable to
Agent and Lenders on or prior to the Closing Date pursuant to Article III;
(k) Guaranties, Pledge Agreement, Other Documents. Agent
shall have received executed Guaranties, Pledge Agreements, the Fee Letter and
all Other Documents, each in form and substance satisfactory to Lenders;
(l) Insurance. Agent shall have received in form and
substance satisfactory to Agent, (i) certified copies of Loan Parties' property
insurance policies, together with loss payable endorsements on Agent's standard
form of loss payee endorsement naming Agent as loss payee, and certified copies
of Loan Parties' liability insurance policies, together with endorsements naming
Agent as an additional insured;
(m) Title Insurance. Agent shall have received fully paid
mortgagee title insurance policies (or binding commitments to issue title
insurance policies, redated to the date of the Mortgage recording and marked to
Agent's satisfaction to evidence the form of such policies to be delivered with
respect to the Mortgage), in standard ALTA form (or its equivalent if the ALTA
form is unavailable in the State), issued by a title insurance company
satisfactory to Agent, each in an amount equal to not less than the fair market
value of the Real Property subject to the Mortgage, insuring the Mortgage to
create a valid Lien on the Real Property with no exceptions which Agent shall
not have approved in writing and no survey exceptions;
(n) Environmental Reports. Agent shall have received a
schedule of all material environmental studies and reports prepared by
independent environmental engineering firms with respect to all Real Property
owned or leased by Loan Parties;
(o) Payment Instructions. Agent shall have received
written instructions from Loan Parties directing the application of proceeds of
the initial Advances made pursuant to this Agreement;
(p) Blocked Accounts. Agent shall have received duly
executed agreements establishing the Blocked Accounts or Depository Accounts
with financial institutions acceptable to Agent for the collection or servicing
of the Receivables and proceeds of the Collateral;
(q) Consents. Agent shall have received any and all
Consents necessary to permit the effectuation of the transactions contemplated
by this Agreement and the Other Documents; and, Agent shall have received such
Consents and waivers of such third parties as might assert claims with respect
to the Collateral, as Agent and its counsel shall deem necessary;
(r) No Adverse Material Change. (i) Since September 30,
2002, there shall not have occurred any event, condition or state of facts which
could reasonably be expected to have a Material Adverse Effect and (ii) no
representations made or information supplied to Lenders shall have been proven
to be inaccurate or misleading in any material respect;
62
(s) Leasehold Agreements. Agent shall have received
landlord, mortgagee or warehouseman agreements satisfactory to Agent with
respect to all premises leased by Loan Parties at which Inventory is located;
(t) Mortgage. Agent shall have received in form and
substance satisfactory to Lenders (i) an executed Mortgage and (ii) a title
policy for the Real Property and (iii) surveys and an opinion of local counsel
to the Loan Parties with respect to such Mortgage;
(u) Subordinated Debt Documentation. Agent shall have
received final executed copies of the Subordinated Debt Documentation which
shall contain such terms and provisions including, without limitation,
subordination terms, satisfactory to Agent;
(v) Contract Review. Agent shall have reviewed all
material contracts of Loan Parties including, without limitation, leases, union
contracts, labor contracts, vendor supply contracts, license agreements and
distributorship agreements and such contracts and agreements shall be
satisfactory in all respects to Agent;
(w) Closing Certificate. Agent shall have received a
closing certificate signed by the Chief Financial Officer of each Loan Party
dated as of the date hereof, stating that (i) all representations and warranties
set forth in this Agreement and the Other Documents are true and correct on and
as of such date, (ii) Loan Parties are on such date in compliance with all the
terms and provisions set forth in this Agreement and the Other Documents and
(iii) on such date no Default or Event of Default has occurred or is continuing;
(x) Borrowing Base. Agent shall have received a duly
executed Borrowing Base Certificate which shall indicate that the aggregate
amount of Eligible Accounts and Eligible Accounts less Reserves is sufficient in
value and amount to support Advances in the amount requested by Borrowers on the
Closing Date;
(y) Undrawn Availability. After giving effect to the
initial Advances hereunder, Borrowers shall have Undrawn Availability plus cash
and Cash Equivalents in accounts subject to control agreements in favor of Agent
and satisfactory in form and content to Agent in the aggregate amount of at
least $39,000,000;
(z) Control Agreements. Agent shall have received control
agreements with respect to all Collateral in which a security interest may be
perfected by means of control under the UCC; and
(aa) Other. All tax assumptions, capital, organization,
ownership, legal structure and all corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
Transactions shall be satisfactory in form and substance to Agent, Lenders and
their counsel.
8.2 Conditions to Each Advance. The agreement of Lenders to make
any Advance requested to be made on any date (including, without limitation, the
initial Advance), is subject to the satisfaction of the following conditions
precedent as of the date such Advance is made:
(a) Representations and Warranties. Each of the
representations and warranties made by any Loan Party in or pursuant to this
Agreement and any related agreements
63
to which it is a party, and each of the representations and warranties contained
in any certificate, document or financial or other statement furnished at any
time under or in connection with this Agreement or any related agreement shall
be true and correct in all material respects on and as of such date as if made
on and as of such date;
(b) No Default. No Event of Default or Default shall have
occurred and be continuing on such date, or would exist after giving effect to
the Advances requested to be made, on such date provided, however that Lenders,
in their sole discretion, may continue to make Advances notwithstanding the
existence of an Event of Default or Default and that any Advances so made shall
not be deemed a waiver of any such Event of Default or Default;
(c) Maximum Revolving Advances. In the case of any
Revolving Advances requested to be made, after giving effect thereto, the
aggregate Revolving Advances shall not exceed the maximum amount of Revolving
Advances permitted under Section 2.1; and
(d) Maximum Letters of Credit. In the case of any Letters
of Credit requested to be made, after giving effect thereto, the aggregate face
amount and reimbursement obligations outstanding in respect of Letters of Credit
shall not exceed the maximum amount permitted under Section 2.10.
Each request for an Advance by any Borrower hereunder shall constitute a
representation and warranty by each Borrower as of the date of such Advance that
the conditions contained in this subsection shall have been satisfied.
IX. INFORMATION AS TO BORROWERS.
Each Loan Party shall, until satisfaction in full of the Obligations
and the termination of this Agreement:
9.1 Disclosure of Material Matters. Immediately upon learning
thereof, report to Agent all matters materially affecting the value,
enforceability or collectibility of any portion of the Collateral including,
without limitation, any Loan Party's reclamation or repossession of, or the
return to any Loan Party of, a material amount of goods or claims or disputes
asserted by any Customer or other obligor.
9.2 Schedules.
(a) Deliver to Agent, on Wednesday of each Week (or more
frequently if required by Agent), a Borrowing Base Certificate (which shall be
calculated as of the last day of the immediately preceding Week and which shall
not be binding upon Agent or restrictive of Agent's rights under this
Agreement).
(b) Deliver to Agent on or before the fifteenth (15th)
day of each month as and for the prior month (a) accounts receivable agings, (b)
accounts payable agings, and (c) Inventory reports. In addition, each Loan Party
shall deliver to Agent at such intervals as Agent may require: (i) confirmatory
assignment schedules, (ii) copies of Customer's invoices, (iii) evidence of
shipment or delivery, and (iv) such further schedules, documents and/or
information regarding the Collateral as Agent may require including, without
limitation, trial balances and test verifications. Agent shall have the right to
confirm and verify all Receivables
64
by any manner and through any medium it considers advisable and do whatever it
may deem reasonably necessary to protect its interests hereunder.
(c) The items to be provided under Sections 9.2(a) and
9.2(b) are to be in form satisfactory to Agent and executed by each Loan Party
and delivered to Agent from time to time solely for Agent's convenience in
maintaining records of the Collateral, and any Loan Party's failure to deliver
any of such items to Agent shall not affect, terminate, modify or otherwise
limit Agent's Lien with respect to the Collateral.
9.3 Environmental Reports. Furnish Agent, concurrently with the
delivery of the financial statements referred to in Sections 9.7 and 9.8, with a
certificate signed by the President of each Loan Party stating, to the best of
his knowledge and except as provided in Schedule 5.7, that each Loan Party is in
compliance in all material respects with all federal, state and local laws
relating to environmental protection and control and occupational safety and
health. To the extent any Loan Party is not in compliance with the foregoing
laws, the certificate shall set forth with specificity all areas of
non-compliance and the proposed action Loan Party will implement in order to
achieve material compliance.
9.4 Litigation. Promptly notify Agent in writing of any
litigation, suit or administrative proceeding affecting any Loan Party, whether
or not the claim is covered by insurance, and of any suit or administrative
proceeding, which in any such case could reasonably be expected to have a
Material Adverse Effect.
9.5 Material Occurrences. Promptly notify Agent in writing upon
the occurrence of (a) any Event of Default or Default; (b) any event of default
under the Senior Subordinated Indenture or the Senior Subordinated Notes; (c)
any event which with the giving of notice or lapse of time, or both, would
constitute an event of default under the Senior Subordinated Indenture or the
Senior Subordinated Notes; (d) any event, development or circumstance whereby
any financial statements or other reports furnished to Agent fail in any
material respect to present fairly, in accordance with GAAP consistently
applied, the financial condition or operating results of any Loan Party as of
the date of such statements; (e) any accumulated retirement plan funding
deficiency which, if such deficiency continued for two plan years and was not
corrected as provided in Section 4971 of the Code, could subject any Loan Party
to a tax imposed by Section 4971 of the Code; (f) each and every default by any
Loan Party which might result in the acceleration of the maturity of any
Indebtedness, including the names and addresses of the holders of such
Indebtedness with respect to which there is a default existing or with respect
to which the maturity has been or could be accelerated, and the amount of such
Indebtedness; and (g) any other development in the business or affairs of any
Loan Party which could reasonably be expected to have a Material Adverse Effect;
in each case describing the nature thereof and the action Loan Parties propose
to take with respect thereto.
9.6 Government Receivables. Notify Agent immediately if any of its
Receivables arise out of contracts between any Loan Party and the United States,
any state, or any department, agency or instrumentality of any of them.
9.7 Annual Financial Statements. Furnish Agent within ninety (90)
days after the end of each fiscal year of Loan Parties, financial statements of
Loan Parties on a consolidating and consolidated basis including, but not
limited to, statements of income and stockholders' equity
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and cash flow from the beginning of the current fiscal year to the end of such
fiscal year and the balance sheet as at the end of such fiscal year, all
prepared in accordance with GAAP applied on a basis consistent with prior
practices, and in reasonable detail and reported upon without qualification by
an independent certified public accounting firm selected by Loan Parties and
satisfactory to Agent (the "Accountants"). The report of the Accountants shall
be accompanied by a statement of the Accountants certifying that, on a
consolidated basis: (a) they have caused the Loan Agreement to be reviewed, (b)
in making the examination upon which such report was based either no information
came to their attention which to their knowledge constituted an Event of Default
or a Default under this Agreement or any related agreement or, if such
information came to their attention, specifying any such Default or Event of
Default, its nature, when it occurred and whether it is continuing, and such
report shall contain or have appended thereto calculations which set forth Loan
Parties' compliance with the requirements or restrictions imposed by Sections
6.8, 7.6, 7.8 and 7.11. In addition, the reports shall be accompanied by a
certificate of each Loan Party's Chief Financial Officer which shall state that,
based on an examination sufficient to permit him to make an informed statement,
no Default or Event of Default exists, or, if such is not the case, specifying
such Default or Event of Default, its nature, when it occurred, whether it is
continuing and the steps being taken by Loan Parties with respect to such event,
and such certificate shall have appended thereto calculations which set forth
Loan Parties' compliance with the requirements or restrictions imposed by
Sections 6.8, 7.6, 7.8 and 7.11.
9.8 Quarterly Financial Statements. Furnish Agent within
forty-five (45) days after the end of each fiscal quarter, an unaudited balance
sheet of Loan Parties on a consolidated and consolidating basis and unaudited
statements of income and stockholders' equity and cash flow of Loan Parties
reflecting results of operations from the beginning of the fiscal year to the
end of such quarter and for such quarter, prepared on a basis consistent with
prior practices and complete and correct in all material respects, subject to
normal and recurring year end adjustments that individually and in the aggregate
are not material to the business of Loan Parties. Each such balance sheet,
statement of income and stockholders' equity and statement of cash flow shall
set forth a comparison of the figures for (a) the current fiscal period and (b)
the current year-to-date with the figures for (c) the same fiscal period and
year-to-date period of the immediately preceding fiscal year and (d) the
projections for such fiscal period and year-to-date period delivered pursuant to
Section 5.5(b) or Section 9.12, as applicable. The financial statements shall be
accompanied by a certificate signed by the Chief Financial Officer of each Loan
Party, which shall state that, based on an examination sufficient to permit him
to make an informed statement, no Default or Event of Default exists, or, if
such is not the case, specifying such Default or Event of Default, its nature,
when it occurred, whether it is continuing and the steps being taken by Loan
Parties with respect to such default and, such certificate shall have appended
thereto calculations which set forth Loan Parties' compliance with the
requirements or restrictions imposed by Sections 6.8, 7.6, 7.8 and 7.11.
9.9 Monthly Financial Statements. Furnish Agent within thirty (30)
days after the end of each month, an unaudited balance sheet of Loan Parties on
a consolidated and consolidating basis and unaudited statements of income and
stockholders' equity and cash flow of Loan Parties on a consolidated and
consolidating basis reflecting results of operations from the beginning of the
fiscal year to the end of such month and for such month, prepared on a basis
consistent with prior practices and complete and correct in all material
respects, subject to normal and recurring year end adjustments that individually
and in the aggregate are not material
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to the business of Loan Parties. Each such balance sheet, statement of income
and stockholders' equity and statement of cash flow shall set forth a comparison
of the figures for (a) the current fiscal period and (b) the current
year-to-date with the figures for (c) the same fiscal period and year-to-date
period of the immediately preceding fiscal year and (d) the projections for such
fiscal period and year-to-date period delivered pursuant to Section 5.5(b) or
Section 9.12, as applicable. The financial statements shall be accompanied by a
certificate of each Loan Party's Chief Financial Officer, which shall state
that, based on an examination sufficient to permit him to make an informed
statement, no Default or Event of Default exists, or, if such is not the case,
specifying such Default or Event of Default, its nature, when it occurred,
whether it is continuing and the steps being taken by Loan Parties with respect
to such event and, such certificate shall have appended thereto calculations
which set forth Loan Parties' compliance with the requirements or restrictions
imposed by Sections 6.8, 7.6, 7.8 and 7.11.
9.10 Other Reports. Furnish Agent as soon as available, but in any
event within ten (10) days after the issuance thereof, (a) with copies of such
financial statements, reports and returns as each Loan Party shall send to its
stockholders and (b) copies of all notices sent pursuant to the Subordinated
Debt Documentation.
9.11 Additional Information. Furnish Agent with such additional
information as Agent shall reasonably request in order to enable Agent to
determine whether the terms, covenants, provisions and conditions of this
Agreement and the Notes have been complied with by Loan Parties including,
without limitation and without the necessity of any request by Agent, (a) copies
of all environmental audits and reviews, (b) at least thirty (30) days prior
thereto, notice of any Loan Party's opening of any new office or place of
business or any Loan Party's closing of any existing office or place of
business, and (c) promptly upon any Loan Party's learning thereof, notice of any
labor dispute to which any Loan Party may become a party, any strikes or
walkouts relating to any of its plants or other facilities, and the expiration
of any labor contract to which any Loan Party is a party or by which any Loan
Party is bound.
9.12 Projected Operating Budget. Furnish Agent, no later than
fifteen (15) days after the beginning of each Loan Party's fiscal years
commencing with fiscal year December 31, 2003, a month by month projected
operating budget and cash flow of Loan Parties on a consolidated and
consolidating basis for such fiscal year (including an income statement for each
month and a balance sheet as at the end of the last month in each fiscal
quarter), such projections to be accompanied by a certificate signed by the
President or Chief Financial Officer of each Loan Party to the effect that such
projections have been prepared on the basis of sound financial planning practice
consistent with past budgets and financial statements and that such officer has
no reason to question the reasonableness of any material assumptions on which
such projections were prepared.
9.13 Variances From Operating Budget. Furnish Agent, concurrently
with the delivery of the financial statements referred to in Section 9.7 and
each monthly report, a written report summarizing all material variances from
budgets submitted by Loan Parties pursuant to Section 9.12 and a discussion and
analysis by management with respect to such variances.
9.14 Notice of Suits, Adverse Events. Furnish Agent with prompt
notice of (a) any lapse or other termination of any Consent issued to any Loan
Party by any Governmental Body or any other Person that is material to the
operation of any Loan Party's business, (b) any refusal
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by any Governmental Body or any other Person to renew or extend any such
Consent; and (c) copies of any periodic or special reports filed by any Loan
Party with any Governmental Body or Person, if such reports indicate any
material change in the business, operations, affairs or condition of any Loan
Party, or if copies thereof are requested by Agent or any Lender, and (d) copies
of any material notices and other communications from any Governmental Body or
Person which specifically relate to any Loan Party.
9.15 ERISA Notices and Requests. Furnish Agent with immediate
written notice in the event that (a) any Loan Party or any member of the
Controlled Group knows or has reason to know that a Termination Event has
occurred, together with a written statement describing such Termination Event
and the action, if any, which such Loan Party or member of the Controlled Group
has taken, is taking, or proposes to take with respect thereto and, when known,
any action taken or threatened by the Internal Revenue Service, Department of
Labor or PBGC with respect thereto, (b) any Loan Party or any member of the
Controlled Group knows or has reason to know that a prohibited transaction (as
defined in Sections 406 of ERISA and 4975 of the Code) has occurred together
with a written statement describing such transaction and the action which such
Loan Party or any member of the Controlled Group has taken, is taking or
proposes to take with respect thereto, (c) a funding waiver request has been
filed with respect to any Plan together with all communications received by any
Loan Party or any member of the Controlled Group with respect to such request,
(d) any increase in the benefits of any existing Plan or the establishment of
any new Plan or the commencement of contributions to any Plan to which any Loan
Party or any member of the Controlled Group was not previously contributing
shall occur, (e) any Loan Party or any member of the Controlled Group shall
receive from the PBGC a notice of intention to terminate a Plan or to have a
trustee appointed to administer a Plan, together with copies of each such
notice, (f) any Loan Party or any member of the Controlled Group shall receive
any favorable or unfavorable determination letter from the Internal Revenue
Service regarding the qualification of a Plan under Section 401(a) of the Code,
together with copies of each such letter; (g) any Loan Party or any member of
the Controlled Group shall receive a notice regarding the imposition of
withdrawal liability, together with copies of each such notice; (h) any Loan
Party or any member of the Controlled Group shall fail to make a required
installment or any other required payment under Section 412 of the Code on or
before the due date for such installment or payment; (i) any Loan Party or any
member of the Controlled Group knows that (x) a Multiemployer Plan has been
terminated, (y) the administrator or plan sponsor of a Multiemployer Plan
intends to terminate a Multiemployer Plan, or (z) the PBGC has instituted or
will institute proceedings under Section 4042 of ERISA to terminate a
Multiemployer Plan.
9.16 Additional Documents. Execute and deliver to Agent, upon
request, such documents and agreements as Agent may, from time to time,
reasonably request to carry out the purposes, terms or conditions of this
Agreement.
X. EVENTS OF DEFAULT.
The occurrence of any one or more of the following events shall
constitute an "Event of Default":
10.1 failure by any Loan Party to pay any principal or interest on
the Obligations when due, whether at maturity or by reason of acceleration
pursuant to the terms of this Agreement or by notice of intention to prepay, or
by required prepayment or failure to pay any other liabilities
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or make any other payment, fee or charge provided for herein when due or in any
Other Document;
10.2 (a) failure by Loan Parties to perform, keep or observe any
provision of Sections 4.2, 4.3, 4.4, 4.5, 4.6, 4.10, 4.11, 4.15(h), 6.8, 6.9,
6.10, Article VII or (b) any representation or warranty made or deemed made by
any Loan Party in this Agreement or any related agreement or in any certificate,
document or financial or other statement furnished at any time in connection
herewith or therewith shall prove to have been misleading in any material
respect on the date when made or deemed to have been made;
10.3 failure by any Loan Party to (a) furnish financial information
when due or when requested which is unremedied for a period of fifteen (15)
days, or (b) permit the inspection of its books or records;
10.4 issuance of a notice of Lien, levy assessment, injunction
attachment or service against a material portion of any Loan Party's property
which is not stayed or lifted within forty-five (45) day or bonded pending
appeal;
10.5 failure or neglect of any Loan Party to perform, keep or
observe any term, provision, condition, covenant herein contained, or contained
in any Other Document, now or hereafter entered into between any Loan Party,
Agent and/or any Lender (to the extent such breach is not otherwise embodied in
any other provision of this Article X for which a different grace or cure period
is specified or which constitute an immediate Event of Default under this
Agreement or the Other Documents), which is not cured within five (5) Business
Days after the occurrence of such Event of Default, except where a longer cure
period is permitted herein;
10.6 any judgment or judgments are rendered or judgment liens filed
against one or more Loan Parties for an aggregate amount in excess of $500,000
which within thirty (30) days of such rendering or filing is not either
satisfied, stayed or discharged of record or covered in full by insurance;
10.7 any Loan Party shall (a) apply for, consent to or suffer the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar fiduciary of itself or of all or a substantial part of its
property, (b) make a general assignment for the benefit of creditors, (c)
commence a voluntary case under any state or federal bankruptcy laws (as now or
hereafter in effect), (d) be adjudicated a bankrupt or insolvent, (e) file a
petition seeking to take advantage of any other law providing for the relief of
debtors, (f) acquiesce to, or fail to have dismissed, within forty-five (45)
days, any petition filed against it in any involuntary case under such
bankruptcy laws, or (g) take any action for the purpose of effecting any of the
foregoing;
10.8 any Loan Party shall admit in writing its inability, or be
generally unable, to pay its debts as they become due or cease operations of its
present business;
10.9 any domestic Affiliate or any Subsidiary of any Loan Party
shall (a) apply for, consent to or suffer the appointment of, or the taking of
possession by, a receiver, custodian, trustee, liquidator or similar fiduciary
of itself or of all or a substantial part of its property, (b) admit in writing
its inability, or be generally unable, to pay its debts as they become due or
cease operations of its present business, (c) make a general assignment for the
benefit of creditors, (d) commence a voluntary case under any state or federal
bankruptcy laws (as now or hereafter in
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effect), (e) be adjudicated a bankrupt or insolvent, (f) file a petition seeking
to take advantage of any other law providing for the relief of debtors, (g)
acquiesce to, or fail to have dismissed, within forty-five (45) days, any
petition filed against it in any involuntary case under such bankruptcy laws, or
(h) take any action for the purpose of effecting any of the foregoing;
10.10 any non-domestic Affiliate or any Subsidiary of any Loan Party
shall (a) apply for, consent to or suffer the appointment of, or the taking of
possession by, a receiver, custodian, trustee, liquidator or similar fiduciary
of itself or of all or a substantial part of its property, (b) admit in writing
its inability, or be generally unable, to pay its debts as they become due or
cease operations of its present business, (c) make a general assignment for the
benefit of creditors, (d) commence a voluntary case under any state or federal
bankruptcy laws (as now or hereafter in effect), (e) be adjudicated a bankrupt
or insolvent, (f) file a petition seeking to take advantage of any other law
providing for the relief of debtors, (g) acquiesce to, or fail to have
dismissed, within forty-five (45) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (h) take any action for the
purpose of effecting any of the foregoing, to the extent that any of the
foregoing would have a Material Adverse Effect on a consolidated basis;
10.11 any change in any Loan Party's condition or affairs (financial
or otherwise) which in Agent's opinion has a Material Adverse Effect;
10.12 any Lien created hereunder or provided for hereby or under any
Other Document for any reason ceases to be or is not a valid and perfected Lien
having a first priority interest;
10.13 an event of default has occurred under the Senior Subordinated
Indenture or the Senior Subordinated Notes, which default shall not have been
cured or waived within any applicable grace period and for which Senior
Subordinated Indenture Trustee is permitted to take action pursuant to the terms
of the Senior Subordinated Indenture or the Subordinated Notes as in effect on
the Closing Date;
10.14 a default of the obligations of any Loan Party under any other
agreement to which it is a party shall occur which materially and adversely
affects its condition, affairs or prospects (financial or otherwise) which
default is not cured within any applicable grace period;
10.15 termination or breach of any Guaranty or similar agreement
executed and delivered to Agent in connection with the Obligations of any Loan
Party, or if any Guarantor attempts to terminate, challenges the validity of, or
its liability under, any such Guaranty or similar agreement;
10.16 any Change of Control shall occur;
10.17 (a) any Governmental Body shall (i) revoke, terminate, suspend
or adversely modify any license, permit, patent, trademark or tradename of any
Loan Party, or (ii) commence proceedings to suspend, revoke, terminate or
adversely modify any such license, permit, trademark, tradename or patent and
such proceedings shall not be dismissed or discharged within sixty (60) days, or
(iii) schedule or conduct a hearing on the renewal of any license, permit,
trademark, tradename or patent necessary for the continuation of any Loan
Party's business and the staff of such Governmental Body issues a report
recommending the termination, revocation, suspension or material, adverse
modification of such license, permit, trademark, tradename or patent the effect
of which, in any case with respect to any of the foregoing, would reasonably be
70
expected to have a Material Adverse Effect; or (b) any agreement which is
necessary or material to the operation of any Loan Party's business shall be
revoked or terminated and not replaced by a substitute acceptable to Agent
within thirty (30) days after the date of such revocation or termination, and
such revocation or termination and non-replacement would reasonably be expected
to have a Material Adverse Effect;
10.18 any portion of the Collateral shall be seized or taken by a
Governmental Body, or any Loan Party or the title and rights of any Loan Party
or any Original Owner which is the owner of any material portion of the
Collateral shall have become the subject matter of litigation which might, in
the opinion of Agent, upon final determination, result in impairment or loss of
the security provided by this Agreement or the Other Documents;
10.19 the operations of any Borrower's manufacturing facility, taken
as a whole, is interrupted in any material respect and such interruption would
reasonably be expected to have a Material Adverse Effect;
10.20 the breach by the Sellers of any of their obligations and
liabilities with respect to any environmental matters as disclosed in writing to
Agent by Borrowers on the date hereof and the Loan Parties have not cured or
remedied such breach by the Sellers or the Loan Parties are not taking action,
in good faith, to compel the Sellers to comply with its obligations and
liabilities with respect to such environmental matters, provided however, that,
if the Sellers breach their obligations and liabilities with respect to such
environmental matters and such breach, in the reasonable judgment of Agent,
would have a Material Adverse Effect, then such breach shall constitute an Event
of Default notwithstanding any action by a Loan Party to compel the Sellers to
comply with their obligations and liabilities with respect to such environmental
matters; or
10.21 an event or condition specified in Section 7.16 or 9.15 shall
occur or exist with respect to any Plan and, as a result of such event or
condition, together with all other such events or conditions, any Loan Party or
any member of the Controlled Group shall incur, or in the opinion of Agent be
reasonably likely to incur, a liability to a Plan or the PBGC (or both) which,
in the reasonable judgment of Agent, would have a Material Adverse Effect.
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.
11.1 Rights and Remedies. Upon the occurrence of (a) an Event of
Default pursuant to Section 10.7 all Obligations shall be immediately due and
payable and this Agreement and the obligation of Lenders to make Advances shall
be deemed terminated; and, (b) any of the other Events of Default and at any
time thereafter (such default not having previously been cured), at the option
of Required Lenders all Obligations shall be immediately due and payable and
Lenders shall have the right to terminate this Agreement and to terminate the
obligation of Lenders to make Advances and (c) a filing of a petition against
any Loan Party in any involuntary case under any state or federal bankruptcy
laws, the obligation of Lenders to make Advances hereunder shall be terminated
other than as may be required by an appropriate order of the bankruptcy court
having jurisdiction over any Loan Party. Upon the occurrence of any Event of
Default, Agent shall have the right to exercise any and all other rights and
remedies provided for herein, under the UCC and at law or equity generally,
including, without limitation, the right to foreclose the security interests
granted herein and to realize upon any Collateral by any
71
available judicial procedure and/or to take possession of and sell any or all of
the Collateral with or without judicial process. Agent may enter any Loan
Party's premises or other premises without legal process and without incurring
liability to any Loan Party therefor, and Agent may thereupon, or at any time
thereafter, in its discretion without notice or demand, take the Collateral and
remove the same to such place as Agent may deem advisable and Agent may require
Loan Parties to make the Collateral available to Agent at a convenient place.
With or without having the Collateral at the time or place of sale, Agent may
sell the Collateral, or any part thereof, at public or private sale, at any time
or place, in one or more sales, at such price or prices, and upon such terms,
either for cash, credit or future delivery, as Agent may elect. Except as to
that part of the Collateral which is perishable or threatens to decline speedily
in value or is of a type customarily sold on a recognized market, Agent shall
give Loan Parties reasonable notification of such sale or sales, it being agreed
that in all events written notice mailed to Loan Parties at least ten (10) days
prior to such sale or sales is reasonable notification. At any public sale Agent
or any Lender may bid for and become the purchaser, and Agent, any Lender or any
other purchaser at any such sale thereafter shall hold the Collateral sold
absolutely free from any claim or right of whatsoever kind, including any equity
of redemption and such right and equity are hereby expressly waived and released
by each Loan Party. Agent may specifically disclaim any warranties of title or
the like at any sale of Collateral. In connection with the exercise of the
foregoing remedies, Agent is granted permission to use all of each Loan Party's
trademarks, trade styles, trade names, patents, patent applications, licenses,
franchises and other proprietary rights which are used in connection with (i)
Inventory for the purpose of disposing of such Inventory and (ii) Equipment for
the purpose of completing the manufacture of unfinished goods.
11.2 Application of Proceeds. The proceeds realized from the sale
of any Collateral shall be applied as follows: first, to the reasonable costs,
expenses and attorneys' fees and expenses incurred by Agent for collection and
for acquisition, completion, protection, removal, storage, sale and delivery of
the Collateral; second, to interest due upon any of the Obligations; third, to
fees payable in connection with this Agreement; fourth, to furnish to Agent cash
collateral in an amount not less than 105% of the aggregate undrawn amount of
all Letters of Credit, such cash collateral arrangements to be in form and
substance satisfactory to Agent; and, fifth, to the principal of the
Obligations. If any deficiency shall arise, Loan Parties shall remain liable to
Agent and Lenders therefor. If it is determined by an authority of competent
jurisdiction that a disposition by Agent did not occur in a commercially
reasonably manner, Agent may obtain a deficiency judgment for the difference
between the amount of the Obligation and the amount that a commercially
reasonable sale would have yielded. Agent will not be considered to have offered
to retain the Collateral in satisfaction of the Obligations unless Agent has
entered into a written agreement with Loan Party to that effect.
11.3 Agent's Discretion. Agent shall have the right in its sole
discretion to determine which rights, Liens, security interests or remedies
Agent may at any time pursue, relinquish, subordinate, or modify or to take any
other action with respect thereto and such determination will not in any way
modify or affect any of Agent's or Lenders' rights hereunder.
11.4 Setoff. In addition to any other rights which Agent, any
Lender or any Issuer may have under applicable law, upon the occurrence of an
Event of Default hereunder, Agent, such Lender and such Issuer shall have a
right to apply any Loan Party's property held by Agent, such Lender or such
Issuer to reduce the Obligations.
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11.5 Rights and Remedies not Exclusive. The enumeration of the
foregoing rights and remedies is not intended to be exhaustive and the exercise
of any right or remedy shall not preclude the exercise of any other right or
remedies provided for herein or otherwise provided by law, all of which shall be
cumulative and not alternative.
XII. WAIVERS AND JUDICIAL PROCEEDINGS.
12.1 Waiver of Notice. Each Loan Party hereby waives notice of
non-payment of any of the Receivables, demand, presentment, protest and notice
thereof with respect to any and all instruments, notice of acceptance hereof,
notice of loans or advances made, credit extended, Collateral received or
delivered, or any other action taken in reliance hereon, and all other demands
and notices of any description, except such as are expressly provided for
herein.
12.2 Delay. No delay or omission on Agent's or any Lender's part in
exercising any right, remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any default.
12.3 Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY
HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
XIII. EFFECTIVE DATE AND TERMINATION.
13.1 Term. This Agreement, which shall inure to the benefit of and
shall be binding upon the respective successors and permitted assigns of each
Loan Party, Agent and each Lender, shall become effective on the date hereof and
shall continue in full force and effect until the earliest of (a) October 15,
2007 (the "Original Term"), (b) the acceleration of all Obligations pursuant to
the terms of this Agreement or (c) the date on which this Agreement shall be
terminated in accordance with the provisions hereof or by operation of law (the
"Termination Date"; such period referred to herein as the "Term"). Loan Parties
may terminate this Agreement at any time upon ninety (90) days' prior written
notice upon payment in full of the Obligations.
13.2 Termination. The termination of the Agreement shall not affect
any Loan Party's, Agent's or any Lender's rights, or any of the Obligations
having their inception prior to the
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effective date of such termination, and the provisions hereof shall continue to
be fully operative until all transactions entered into, rights or interests
created or Obligations have been fully disposed of, concluded or liquidated. The
security interests, Liens and rights granted to Agent and Lenders hereunder and
the financing statements filed hereunder shall continue in full force and
effect, notwithstanding the termination of this Agreement or the fact that
Borrowers' Account may from time to time be temporarily in a zero or credit
position, until all of the Obligations of each Loan Party have been paid or
performed in full after the termination of this Agreement or each Loan Party has
furnished Agent and Lenders with an indemnification satisfactory to Agent and
Lenders with respect thereto. Accordingly, each Loan Party waives any rights
which it may have under Section 9-513 of the UCC to demand the filing of
termination statements with respect to the Collateral, and Agent shall not be
required to send such termination statements to each Loan Party, or to file them
with any filing office, unless and until this Agreement shall have been
terminated in accordance with its terms and all Obligations paid in full in
immediately available funds. All representations, warranties, covenants, waivers
and agreements contained herein shall survive termination hereof until all
Obligations are paid or performed in full.
XIV. REGARDING AGENT.
14.1 Appointment. Each Lender hereby designates GMAC CF to act as
Agent for such Lender under this Agreement and the Other Documents. Each Lender
hereby irrevocably authorizes Agent to take such action on its behalf under the
provisions of this Agreement and the Other Documents and to exercise such powers
and to perform such duties hereunder and thereunder as are specifically
delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto and Agent shall hold all Collateral,
payments of principal and interest, fees (except the fees set forth in Sections
3.3(a) and 3.4) and in the Fee Letter charges and collections (without giving
effect to any collection days) received pursuant to this Agreement, for the
ratable benefit of Lenders. Agent may perform any of its duties hereunder by or
through its agents or employees. As to any matters not expressly provided for by
this Agreement (including without limitation, collection of the Note) Agent
shall not be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Required Lenders,
and such instructions shall be binding; provided, however, that Agent shall not
be required to take any action which exposes Agent to liability or which is
contrary to this Agreement or the Other Documents or applicable law unless Agent
is furnished with an indemnification reasonably satisfactory to Agent with
respect thereto.
14.2 Nature of Duties. Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement and the
Other Documents. None of Agent, any Lender, or any Issuer nor any of their
respective officers, directors, employees or agents shall be (i) liable for any
action taken or omitted by them as such hereunder or in connection herewith,
unless caused by their gross (not mere) negligence or willful misconduct, or
(ii) responsible in any manner for any recitals, statements, representations or
warranties made by any Loan Party or any officer thereof contained in this
Agreement, or in any of the Other Documents or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any of the Other Documents or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement, or any of the Other Documents or for any failure of Loan
Party to perform its obligations
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hereunder. Agent shall not be under any obligation to any Lender to ascertain
or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any of the Other Documents, or
to inspect the properties, books or records of any Loan Party. The duties of
Agent as respects the Advances to Borrowers shall be mechanical and
administrative in nature; Agent shall not have by reason of this Agreement a
fiduciary relationship in respect of any Lender; and nothing in this Agreement,
expressed or implied, is intended to or shall be so construed as to impose upon
Agent any obligations in respect of this Agreement except as expressly set forth
herein.
14.3 Lack of Reliance on Agent and Resignation. Independently and
without reliance upon Agent, any Issuer or any other Lender, each Lender has
made and shall continue to make (i) its own independent investigation of the
financial condition and affairs of each Loan Party in connection with the making
and the continuance of the Advances hereunder and the taking or not taking of
any action in connection herewith, and (ii) its own appraisal of the
creditworthiness of each Loan Party. Agent shall have no duty or responsibility,
either initially or on a continuing basis, to provide any Lender with any credit
or other information with respect thereto, whether coming into its possession
before making of the Advances or at any time or times thereafter except as shall
be provided by any Loan Party pursuant to the terms hereof. Agent shall not be
responsible to any Lender for any recitals, statements, information,
representations or warranties herein or in any agreement, document, certificate
or a statement delivered in connection with or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of this
Agreement or any Other Document, or of the financial condition of any Loan
Party, or be required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of this Agreement, the
Note, the Other Documents or the financial condition of any Loan Party, or the
existence of any Event of Default or any Default.
Agent may resign on sixty (60) days' written notice to each of Lenders
and Borrowing Agent and upon such resignation, the Required Lenders will
promptly designate a successor Agent reasonably satisfactory to Loan Parties. If
no such successor Agent is appointed at the end of such sixty (60) day period,
Agent may designate one of the Lenders as a successor Agent.
Any such successor Agent shall succeed to the rights, powers and duties
of Agent, and the term "Agent" shall mean such successor agent effective upon
its appointment, and the former Agent's rights, powers and duties as Agent shall
be terminated, without any other or further act or deed on the part of such
former Agent. After any Agent's resignation as Agent, the provisions of this
Article XIV shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
14.4 Certain Rights of Agent. If Agent shall request instructions
from Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any Other Document, Agent shall be entitled to
refrain from such act or taking such action unless and until Agent shall have
received instructions from the Required Lenders; and Agent shall not incur
liability to any Person by reason of so refraining. Without limiting the
foregoing, Lenders shall not have any right of action whatsoever against Agent
as a result of its acting or refraining from acting hereunder in accordance with
the instructions of the Required Lenders.
14.5 Reliance. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier
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message, cablegram, order or other document or telephone message believed by it
to be genuine and correct and to have been signed, sent or made by the proper
person or entity, and, with respect to all legal matters pertaining to this
Agreement and the Other Documents and its duties hereunder, upon advice of
counsel selected by it. Agent may employ agents and attorneys-in-fact and shall
not be liable for the default or misconduct of any such agents or
attorneys-in-fact selected by Agent with reasonable care.
14.6 Notice of Default. Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default hereunder or
under the Other Documents, unless Agent has received notice from a Lender or a
Loan Party referring to this Agreement or the Other Documents, describing such
Default or Event of Default and stating that such notice is a "notice of
default". In the event that Agent receives such a notice, Agent shall give
notice thereof to Lenders. Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Required
Lenders; provided, that, unless and until Agent shall have received such
directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of Lenders.
14.7 Indemnification. To the extent Agent is not reimbursed and
indemnified by Loan Parties, each Lender will reimburse and indemnify Agent and
each Issuer in proportion to its respective portion of the Advances (or, if no
Advances are outstanding, according to its Commitment Percentage), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against Agent
and such Issuer in performing its duties hereunder, or in any way relating to or
arising out of this Agreement or any Other Document; provided that, Lenders
shall not be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the indemnified party's gross (not mere) negligence or willful
misconduct.
14.8 Agent in its Individual Capacity. With respect to the
obligation of Agent to lend under this Agreement, the Advances made by it shall
have the same rights and powers hereunder as any other Lender and as if it were
not performing the duties as Agent specified herein; and the term "Lender" or
any similar term shall, unless the context clearly otherwise indicates, include
Agent in its individual capacity as a Lender. Agent may engage in business with
any Loan Party as if it were not performing the duties specified herein, and may
accept fees and other consideration from any Loan Party for services in
connection with this Agreement or otherwise without having to account for the
same to Lenders.
14.9 Delivery of Documents. To the extent Agent receives documents
and information from any Loan Party pursuant to Sections 9.7, 9.8 and 9.9, Agent
will promptly furnish such documents and information to Lenders.
14.10 Loan Parties' Undertaking to Agent. Without prejudice to their
respective obligations to Lenders under the other provisions of this Agreement,
each Loan Party hereby undertakes with Agent to pay to Agent from time to time
on demand all amounts from time to time due and payable by it for the account of
Agent or Lenders or any of them pursuant to this Agreement to the extent not
already paid. Any payment made pursuant to any such demand shall
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pro tanto satisfy the relevant Loan Party's obligations to make payments for the
account of Lenders or the relevant one or more of them pursuant to this
Agreement.
14.11 Documentation Agent and Syndication Agent. The Lenders
identified on the facing page or signature pages of this Agreement as a
"Documentation Agent" or "Syndication Agent", as the case may be, shall have no
right, power, obligation, liability, responsibility or duty under this Agreement
or any of the Other Documents other than those applicable to all Lenders as
such. Without limiting the foregoing, each Lender so identified shall not have
or be deemed to have any fiduciary relationship with any Lender. Each Lender
acknowledges that it has not relied, and will not rely, on any Lender so
identified in deciding to enter into this Agreement or in taking or not taking
action hereunder.
XV. GUARANTEE.
15.1 Each Guarantor hereby unconditionally guarantees, as a primary
obligor and not merely as a surety, jointly and severally with each other
Guarantor when and as due, whether at maturity, by acceleration, by notice of
prepayment or otherwise, the due and punctual performance of all Obligations.
Each payment made by any Guarantor pursuant to this Guarantee shall be made in
lawful money of the United States in immediately available funds.
15.2 Each Guarantor hereby absolutely, unconditionally and
irrevocably waives (i) promptness, diligence, notice of acceptance, notice of
presentment of payment and any other notice hereunder, (ii) demand of payment,
protest, notice of dishonor or nonpayment, notice of the present and future
amount of the Obligations and any other notice with respect to the Obligations,
(iii) any requirement that the Agent or any Lender protect, secure, perfect or
insure any security interest or Lien or any property subject thereto or exhaust
any right or take any action against any other Loan Party, or any Person or any
Collateral, (iv) any other action, event or precondition to the enforcement
hereof or the performance by each such Guarantor of the Obligations, and (v) any
defense arising by any lack of capacity or authority or any other defense of any
Loan Party or any notice, demand or defense by reason of cessation from any
cause of Obligations other than payment and performance in full of the
Obligations by the Loan Parties and any defense that any other guarantee or
security was or was to be obtained by Agent.
15.3 No invalidity, irregularity, voidableness, voidness or
unenforceability of this Agreement or any Other Document or any other agreement
or instrument relating thereto, or of all or any part of the Obligations or of
any collateral security therefor shall affect, impair or be a defense hereunder.
15.4 The Guaranty hereunder is one of payment and performance, not
collection, and the obligations of each Guarantor hereunder are independent of
the Obligations of the other Loan Parties, and a separate action or actions may
be brought and prosecuted against any Guarantor to enforce the terms and
conditions of this Article XV, irrespective of whether any action is brought
against any other Loan Party or other Persons or whether any other Loan Party or
other Persons are joined in any such action or actions. Each Guarantor waives
any right to require that any resort be had by Agent or any Lender to any
security held for payment of the Obligations or to any balance of any deposit
account or credit on the books of any Agent or any Lender in favor of any Loan
Party or any other Person. No election to proceed in one form of action or
proceedings, or against any Person, or on any Obligations, shall constitute a
waiver of Agent's
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right to proceed in any other form of action or proceeding or against any other
Person unless Agent has expressed any such right in writing. Without limiting
the generality of the foregoing, no action or proceeding by Agent against any
Loan Party under any document evidencing or securing indebtedness of any Loan
Party to Agent shall diminish the liability of any Guarantor hereunder, except
to the extent Agent receives actual payment on account of Obligations by such
action or proceeding, notwithstanding the effect of any such election, action or
proceeding upon the right of subrogation of any Guarantor in respect of any Loan
Party.
15.5 The liability of each Guarantor hereunder shall be absolute,
unlimited and unconditional and shall not be subject to any reduction,
limitation, impairment, discharge or termination for any reason, including,
without limitation, any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any claim, defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of any other Obligation or otherwise. Without
limiting the generality of the foregoing, the obligations of each Guarantor
shall not be discharged or impaired, released, limited or otherwise affected by:
(i) any change in the manner, place or terms of
payment or performance, and/or any change or extension of the time of payment or
performance of, release, renewal or alteration of, or any new agreements
relating to any Obligation, any security therefor, or any liability incurred
directly or indirectly in respect thereof, or any rescission of, or amendment,
waiver or other modification of, or any consent to departure from, this
Agreement or any Other Document, including any increase in the Obligations
resulting from the extension of additional credit to any Borrower or otherwise;
(ii) any sale, exchange, release, surrender,
loss, abandonment, realization upon any property by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing, all or any of the
Obligations, and/or any offset there against, or failure to perfect, or continue
the perfection of, any Lien in any such property, or delay in the perfection of
any such Lien, or any amendment or waiver of or consent to departure from any
other guaranty for all or any of the Obligations;
(iii) the failure of the Agent or any Lender to
assert any claim or demand or to enforce any right or remedy against any
Borrower or any other Loan Party or any other Person under the provisions of
this Agreement or any Other Document or any other document or instrument
executed an delivered in connection herewith or therewith;
(iv) any settlement or compromise of any
Obligation, any security therefor or any liability (including any of those
hereunder) incurred directly or indirectly in respect thereof or hereof, and any
subordination of the payment of all or any part thereof to the payment of any
obligation (whether due or not) of any Loan Party to creditors of any Loan Party
other than any other Loan Party;
(v) any manner of application of Collateral, or
proceeds thereof, to all or any of the Obligations, or any manner of sale or
other disposition of any Collateral for all or any of the Obligations or any
other assets of any Loan Party; and
(vi) any other agreements or circumstance of any
nature whatsoever
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that may or might in any manner or to any extent vary the risk of any Guarantor,
or that might otherwise at law or in equity constitute a defense available to,
or a discharge of, the Guaranty hereunder and/or the obligations of any
Guarantor, or a defense to, or discharge of, any Loan Party or any other Person
or party hereto or the Obligations or otherwise with respect to the Advances,
Letters of Credit or other financial accommodations to any Borrower pursuant to
this Agreement and/or the Other Documents.
15.6 The Agent shall have the right to do any of the above without
notice to or the consent of any Guarantor and each Guarantor expressly waives
any right to notice of, consent to, knowledge of and participation in any
agreements relating to any of the above or any other present or future event
relating to Obligations whether under this Agreement or otherwise or any right
to challenge or question any of the above and waives any defenses of such
Guarantor which might arise as a result of such actions.
15.7 Agent may at any time and from time to time (whether prior to
or after the revocation or termination of this Agreement) without the consent
of, or notice to, any Guarantor, and without incurring responsibility to any
Guarantor or impairing or releasing the Obligations, apply any sums by
whomsoever paid or howsoever realized to any Obligations regardless of what
Obligations remain unpaid.
15.8 (a) The Guaranty provisions herein contained shall
continue to be effective or be reinstated, as the case may be, if claim is ever
made upon the Agent or any Lender for repayment or recovery of any amount or
amounts received by such Person in payment or on account of any of the
Obligations and such Person repays all or part of said amount for any reason
whatsoever, including, without limitation, by reason of any judgment, decree or
order of any court or administrative body having jurisdiction over such Person
or the respective property of each, or any settlement or compromise of any claim
effected by such Person with any such claimant (including any Loan Party); and
in such event each Guarantor hereby agrees that any such judgment, decree,
order, settlement or compromise or other circumstances shall be binding upon
such Guarantor, notwithstanding any revocation hereof or the cancellation of any
note or other instrument evidencing any Obligation, and each Guarantor shall be
and remain liable to the Agent and/or Lenders for the amount so repaid or
recovered to the same extent as if such amount had never originally been
received by such Person(s).
(b) Agent shall not be required to marshal any assets in
favor of any Guarantor, or against or in payment of Obligations.
(c) No Guarantor shall be entitled to claim against any
present or future security held by Agent from any Person for Obligations in
priority to or equally with any claim of Agent, or assert any claim for any
liability of any Loan Party to any Guarantor in priority to or equally with
claims of Agent for Obligations, and no Guarantor shall be entitled to compete
with Agent with respect to, or to advance any equal or prior claim to any
security held by Agent for Obligations.
(d) If any Loan Party makes any payment to Agent, which
payment is wholly or partly subsequently invalidated, declared to be fraudulent
or preferential, set aside or required to be repaid to any Person under any
federal or provincial statute or at common law or under equitable principles,
then to the extent of such payment, the Obligation intended to be paid shall
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be revived and continued in full force and effect as if the payment had not been
made, and the resulting revived Obligation shall continue to be guaranteed,
uninterrupted, by each Guarantor hereunder.
(e) All present and future monies payable by any Loan
Party to any Guarantor, whether arising out of a right of subrogation or
otherwise, are assigned to Agent for its benefit and for the ratable benefit of
Lenders as security for such Guarantor's liability to Agent and Lenders
hereunder and are postponed and subordinated to Agent's prior right to payment
in full of Obligations. Except to the extent prohibited otherwise by this
Agreement, all monies received by any Guarantor from any Loan Party shall be
held by such Guarantor as agent and trustee for Agent. This assignment,
postponement and subordination shall only terminate when the Obligations are
paid in full in cash and this Agreement is irrevocably terminated.
(f) Each Loan Party acknowledges this assignment,
postponement and subordination and, except as otherwise set forth herein, agrees
to make no payments to any Guarantor without the prior written consent of Agent.
Each Loan Party agrees to give full effect to the provisions hereof.
15.9 Upon the occurrence and during the continuance of any Event of
Default, the Agent may and upon written request of the Required Lenders shall,
without notice to or demand upon any Loan Party or any other Person, declare any
obligations of such Guarantor hereunder immediately due and payable, and shall
be entitled to enforce the obligations of each Guarantor. Upon such declaration
by the Agent, the Agent and Lenders are hereby authorized at any time and from
time to time to set off and apply any and all deposits (general or special, time
or demand, provisions or final) at any time held and other indebtedness at any
time owing by the Agent or Lenders to or for the credit or the account of any
Guarantor against any and all of the obligations of each Guarantor now or
hereafter existing hereunder, whether or not the Agent or Lenders shall have
made any demand hereunder against any other Loan Party and although such
obligations may be contingent and unmatured. The rights of the Agent and Lenders
hereunder are in addition to other rights and remedies (including other rights
of set-off) which the Agent and Lenders may have. Upon such declaration by the
Agent, with respect to any claims (other than those claims referred to in the
immediately preceding paragraph) of any Guarantor against any Loan Party (the
"Claims"), the Agent shall have the full right on the part of the Agent in its
own name or in the name of such Guarantor to collect and enforce such Claims by
legal action, proof of debt in bankruptcy or other liquidation proceedings, vote
in any proceeding for the arrangement of debts at any time proposed, or
otherwise, the Agent and each of its officers being hereby irrevocably
constituted attorneys-in-fact for each Guarantor for the purpose of such
enforcement and for the purpose of endorsing in the name of each Guarantor any
instrument for the payment of money. Each Guarantor will receive as trustee for
the Agent and will pay to the Agent forthwith upon receipt thereof any amounts
which such Guarantor may receive from any Loan Party on account of the Claims.
Each Guarantor agrees that at no time hereafter will any of the Claims be
represented by any notes, other negotiable instruments or writings, except and
in such event they shall either be made payable to the Agent, or if payable to
any Guarantor, shall forthwith be endorsed by such Guarantor to the Agent. Each
Guarantor agrees that no payment on account of the Claims or any security
interest therein shall be created, received, accepted or retained during the
continuance of any Event of Default nor shall any financing statement be filed
with respect thereto by any Guarantor.
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15.10 Any acknowledgment or new promise, whether by payment of
principal or interest or otherwise and whether by any Loan Party or others
(including any Lenders) with respect to any of the Obligations shall, if the
statute of limitations in favor of any Guarantor against the Agent or Lenders
shall have commenced to run, toll the running of such statute of limitations
and, if the period of such statute of limitations shall have expired, prevent
the operation of such statute of limitations.
15.11 All amounts due, owing and unpaid from time to time by any
Guarantor hereunder shall bear interest at the interest rate per annum then
chargeable with respect to Domestic Rate Loans constituting Revolving Advances.
15.12 Each Guarantor acknowledges receipt of a copy of each of this
Agreement and the Other Documents. Each Guarantor has made an independent
investigation of the Loan Parties and of the financial condition of the Loan
Parties. Neither Agent nor any Lender has made and neither Agent nor any Lender
does make any representations or warranties as to the income, expense,
operation, finances or any other matter or thing affecting any Loan Party nor
has Agent or any Lender made any representations or warranties as to the amount
or nature of the Obligations of any Loan Party to which this Article XV applies
as specifically herein set forth, nor has Agent or any Lender or any officer,
agent or employee of Agent or any Lender or any representative thereof, made any
other oral representations, agreements or commitments of any kind or nature, and
each Guarantor hereby expressly acknowledges that no such representations or
warranties have been made and such Guarantor expressly disclaims reliance on any
such representations or warranties.
15.13 The provisions of this Article XV shall remain in effect until
the indefeasible payment in full in cash of all Obligations and irrevocable
termination of this Agreement.
XVI. BORROWING AGENCY.
16.1 Borrowing Agency Provisions.
(a) Each Borrower hereby irrevocably designates Borrowing
Agent to be its attorney and agent and in such capacity to borrow, sign and
endorse notes, and execute and deliver all instruments, documents, writings and
further assurances now or hereafter required hereunder, on behalf of such
Borrower or Borrowers, and hereby authorizes Agent to pay over or credit all
loan proceeds hereunder in accordance with the request of Borrowing Agent.
(b) The handling of this credit facility as a
co-borrowing facility with a borrowing agent in the manner set forth in this
Agreement is solely as an accommodation to Borrowers and at their request. None
of Agent, any Issuer or any Lender shall incur liability to Borrowers as a
result thereof. To induce Agent and Lenders to do so and in consideration
thereof, each Borrower hereby indemnifies Agent, each Issuer and each Lender and
holds Agent, each Issuer and each Lender harmless from and against any and all
liabilities, expenses, losses, damages and claims of damage or injury asserted
against Agent, any Issuer or any Lender by any Person arising from or incurred
by reason of the handling of the financing arrangements of Borrowers as provided
herein, reliance by Agent or any Lender on any request or instruction from
Borrowing Agent or any other action taken by Agent or any Lender with respect to
this
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Section 16.1 except due to willful misconduct or gross (not mere) negligence by
the indemnified party.
(c) All Obligations shall be joint and several, and each
Borrower shall make payment upon the maturity of the Obligations by acceleration
or otherwise, and such obligation and liability on the part of each Borrower
shall in no way be affected by any extensions, renewals and forbearance granted
by Agent or any Lender to any Loan Party, failure of Agent or any Lender to give
any Borrower notice of borrowing or any other notice, any failure of Agent or
any Lender to pursue or preserve its rights against any Loan Party, the release
by Agent or any Lender of any Collateral now or thereafter acquired from any
Loan Party, and such agreement by each Loan Party to pay upon any notice issued
pursuant thereto is unconditional and unaffected by prior recourse by Agent or
any Lender to the other Loan Parties or any Collateral for such Loan Party's
Obligations or the lack thereof.
16.2 Waiver of Subrogation. Each Loan Party expressly waives any
and all rights of subrogation, reimbursement, indemnity, exoneration,
contribution of any other claim which such Loan Party may now or hereafter have
against the other Loan Parties or other Person directly or contingently liable
for the Obligations hereunder, or against or with respect to the other Loan
Parties' property (including, without limitation, any property which is
Collateral for the Obligations), arising from the existence or performance of
this Agreement, until termination of this Agreement and repayment in full of the
Obligations.
XVII. MISCELLANEOUS.
17.1 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applied to
contracts to be performed wholly within the State of New York. Any judicial
proceeding brought by or against any Loan Party with respect to any of the
Obligations, this Agreement or any related agreement may be brought in any court
of competent jurisdiction in the State of New York, United States of America,
and, by execution and delivery of this Agreement, each Loan Party accepts for
itself and in connection with its properties, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement. Each
Loan Party hereby waives personal service of any and all process upon it and
consents that all such service of process may be made by registered mail (return
receipt requested) directed to Borrowing Agent at its address set forth in
Section 17.6 and service so made shall be deemed completed five (5) days after
the same shall have been so deposited in the mails of the United States of
America, or, at the Agent's and/or any Lender's option, by service upon
Borrowing Agent which each Loan Party irrevocably appoints as such Loan Party's
Agent for the purpose of accepting service within the State of New York. Nothing
herein shall affect the right to serve process in any manner permitted by law or
shall limit the right of Agent or any Lender to bring proceedings against any
Loan Party in the courts of any other jurisdiction. Each Loan Party waives any
objection to jurisdiction and venue of any action instituted hereunder and shall
not assert any defense based on lack of jurisdiction or venue or based upon
forum non conveniens. Any judicial proceeding by any Loan Party against Agent or
any Lender involving, directly or indirectly, any matter or claim in any way
arising out of, related to or connected with this Agreement or any related
agreement, shall be brought only in a federal or state court located in the City
of New York, State of New York.
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17.2 Entire Understanding. (a) This Agreement and the documents
executed concurrently herewith contain the entire understanding between each
Loan Party, Agent and each Lender and supersedes all prior agreements and
understandings, if any, relating to the subject matter hereof. Any promises,
representations, warranties or guarantees not herein contained and hereinafter
made shall have no force and effect unless in writing, signed by each Loan
Party's, Agent's and each Lender's respective officers. Neither this Agreement
nor any portion or provisions hereof may be changed, modified, amended, waived,
supplemented, discharged, cancelled or terminated orally or by any course of
dealing, or in any manner other than by an agreement in writing, signed by the
party to be charged. Each Loan Party acknowledges that it has been advised by
counsel in connection with the execution of this Agreement and Other Documents
and is not relying upon oral representations or statements inconsistent with the
terms and provisions of this Agreement.
(b) The Required Lenders, Agent with the consent in
writing of the Required Lenders, and Borrowers may, subject to the provisions of
this Section 17.2 (b), from time to time enter into written supplemental
agreements to this Agreement or the Other Documents executed by Borrowers, for
the purpose of adding or deleting any provisions or otherwise changing, varying
or waiving in any manner the rights of Lenders, Agent or Loan Parties thereunder
or the conditions, provisions or terms thereof or waiving any Event of Default
thereunder, but only to the extent specified in such written agreements;
provided, however, that no such supplemental agreement shall, without the
consent of all Lenders:
(i) increase the Commitment Percentage of any
Lender;
(ii) increase the Maximum Loan Amount, the
Maximum Revolving Advance Amount, the Maximum Capital Expenditure Amount or the
Maximum Term Loan Amount;
(iii) extend the maturity of any Note or the due
date for any amount payable hereunder, or decrease the rate of interest or
reduce any scheduled principal payment or fee payable by Borrowers to Lenders
pursuant to this Agreement;
(iv) alter the definition of the term Required
Lenders or alter, amend or modify this Section 17.2(b);
(v) release any Collateral during any calendar
year (other than in accordance with the provisions of this Agreement) having an
aggregate value in excess of $5,000,000;
(vi) change the rights and duties of Agent;
(vii) permit any Revolving Advance to be made if
after giving effect thereto the total of Revolving Advances outstanding
hereunder would exceed the Formula Amount for more than sixty (60) consecutive
Business Days or exceed one hundred and ten percent (110%) of the Formula
Amount;
(viii) increase the Advance Rates above the Advance
Rates in effect on the Closing Date (including any increase provided under
Section 2.1(c)).
83
Any such supplemental agreement shall apply equally to each Lender and shall be
binding upon Loan Parties, Lenders and Agent and all future holders of the
Obligations. In the case of any waiver, Loan Parties, Agent and Lenders shall be
restored to their former positions and rights, and any Event of Default waived
shall be deemed to be cured and not continuing, but no waiver of a specific
Event of Default shall extend to any subsequent Event of Default (whether or not
the subsequent Event of Default is the same as the Event of Default which was
waived), or impair any right consequent thereon.
(b) In the event that Agent requests the consent of a
Lender pursuant to this Section 17.2 and such Lender shall not respond or reply
to Agent in writing within ten (10) days of delivery of such report, such Lender
shall be deemed to have consented to the matter that was the subject of the
request. In the event that Agent requests the consent of a Lender pursuant to
this Section 17.2 and such consent is denied, then GMAC CF may, at its option,
require such Lender to assign its interest in the Advances to GMAC CF or to
another Lender or to any other Person designated by the Agent (the "Designated
Lender"), for a price equal to the then outstanding principal amount thereof
plus accrued and unpaid interest and fees due such Lender, which interest and
fees shall be paid when collected from Borrowers. In the event GMAC CF elects to
require any Lender to assign its interest to GMAC CF or to the Designated
Lender, GMAC CF will so notify such Lender in writing within forty five (45)
days following such Lender's denial, and such Lender will assign its interest to
GMAC CF or the Designated Lender no later than five (5) days following receipt
of such notice pursuant to a Commitment Transfer Supplement executed by such
Lender, GMAC CF or the Designated Lender, as appropriate, and Agent.
Notwithstanding the foregoing, Agent may at its discretion and without
the consent of the Required Lenders, voluntarily permit the outstanding
Revolving Advances at any time to exceed the Formula Amount by up to one hundred
and ten percent (110%) of the Formula Amount for up to thirty (30) consecutive
Business Days. For purposes of the preceding sentence, the discretion granted to
Agent hereunder shall not preclude involuntary overadvances that may result from
time to time due to the fact that the Formula Amount was unintentionally
exceeded for any reason, including, but not limited to, Collateral previously
deemed to be either "Eligible Accounts" or "Eligible Inventory", as applicable,
becomes ineligible, collections of Receivables applied to reduce outstanding
Advances are thereafter returned for insufficient funds or overadvances are made
to protect or preserve the Collateral. In the event Agent involuntarily permits
the outstanding Revolving Advances to exceed the Formula Amount by more than ten
percent (10%), Agent shall decrease such excess in as expeditious a manner as is
practicable under the circumstances and not inconsistent with the reason for
such excess. Revolving Advances made after Agent has determined the existence of
involuntary overadvances shall be deemed to be involuntary overadvances and
shall be decreased in accordance with the preceding sentence.
17.3 Successors and Assigns; Participations; New Lenders.
(a) This Agreement shall be binding upon and inure to the
benefit of Loan Parties, Agent, each Lender, all future holders of the
Obligations and their respective successors and assigns, except that no Loan
Party may assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of Agent and each Lender.
84
(b) Each Loan Party acknowledges that in the regular
course of commercial banking business one or more Lenders may at any time and
from time to time sell participating interests in the Advances to other
financial institutions (each such transferee or purchaser of a participating
interest, a "Transferee"). Each Transferee may exercise all rights of payment
(including without limitation rights of set-off) with respect to the portion of
such Advances held by it or other Obligations payable hereunder as fully as if
such Transferee were the direct holder thereof provided that Loan Parties shall
not be required to pay to any Transferee more than the amount which it would
have been required to pay to Lender which granted an interest in its Advances or
other Obligations payable hereunder to such Transferee had such Lender retained
such interest in the Advances hereunder or other Obligations payable hereunder
and in no event shall Loan Parties be required to pay any such amount arising
from the same circumstances and with respect to the same Advances or other
Obligations payable hereunder to both such Lender and such Transferee. Each Loan
Party hereby grants to any Transferee a continuing security interest in any
deposits, moneys or other property actually or constructively held by such
Transferee as security for the Transferee's interest in the Advances.
(c) Any Lender may with the consent of Agent which shall
not be unreasonably withheld or delayed sell, assign or transfer all or any part
of its rights under this Agreement and the Other Documents to one or more
additional banks or financial institutions and one or more additional banks or
financial institutions may commit to make Advances hereunder (each a "Purchasing
Lender"), in minimum amounts of not less than $5,000,000, pursuant to a
Commitment Transfer Supplement, executed by a Purchasing Lender, the transferor
Lender, and Agent and delivered to Agent for recording. Upon such execution,
delivery, acceptance and recording, from and after the transfer effective date
determined pursuant to such Commitment Transfer Supplement, (i) Purchasing
Lender thereunder shall be a party hereto and, to the extent provided in such
Commitment Transfer Supplement, have the rights and obligations of a Lender
thereunder with a Commitment Percentage as set forth therein, and (ii) the
transferor Lender thereunder shall, to the extent provided in such Commitment
Transfer Supplement, be released from its obligations under this Agreement, the
Commitment Transfer Supplement creating a novation for that purpose. Such
Commitment Transfer Supplement shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the addition of such
Purchasing Lender and the resulting adjustment of the Commitment Percentages
arising from the purchase by such Purchasing Lender of all or a portion of the
rights and obligations of such transferor Lender under this Agreement and the
Other Documents. Loan Parties hereby consent to the addition of such Purchasing
Lender and the resulting adjustment of the Commitment Percentages arising from
the purchase by such Purchasing Lender of all or a portion of the rights and
obligations of such transferor Lender under this Agreement and the Other
Documents. Loan Parties shall execute and deliver such further documents and do
such further acts and things in order to effectuate the foregoing.
Notwithstanding the foregoing, any Lender may assign all or any portion of the
Advances or Notes held by it to any Federal Reserve Bank or the United States
Treasury as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any Operating Circular issued by
such Federal Reserve Bank, provided, that any payment in respect of such
assigned Advances or Notes made by the Borrowers to or for the account of the
assigning or pledging Lender in accordance with the terms of this Agreement
shall satisfy the Borrowers' obligations hereunder in respect to such assigned
Advances or Notes to the extent of such payment. No such assignment shall
release the assigning Lender from its obligations hereunder.
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(d) Agent shall maintain at its address a copy of each
Commitment Transfer Supplement delivered to it and a register (the "Register")
for the recordation of the names and addresses of the Advances owing to each
Lender from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and Loan Parties, Agent and Lenders may treat
each Person whose name is recorded in the Register as the owner of the Advance
recorded therein for the purposes of this Agreement. The Register shall be
available for inspection by Loan Parties or any Lender at any reasonable time
and from time to time upon reasonable prior notice. Agent shall receive a fee in
the amount of $3,500 payable by the applicable Purchasing Lender upon the
effective date of each transfer or assignment to such Purchasing Lender.
(e) Loan Parties authorize each Lender to disclose to any
Transferee or Purchasing Lender and any prospective Transferee or Purchasing
Lender any and all financial information in such Lender's possession concerning
Loan Parties which has been delivered to such Lender by or on behalf of Loan
Parties pursuant to this Agreement or in connection with such Lender's credit
evaluation of Loan Parties.
(f) Each Lender or participant organized under the laws
of a jurisdiction outside the United States, and from time to time thereafter if
either requested by Borrowing Agent or the Agent or upon the obsolescence or
expiration of any previously delivered form, shall provide the Agent and the
Borrowing Agent with (i) two (2) original executed copies of a correct and
completed Internal Revenue Service Form 1001 or 4224, as appropriate, or any
successor or other form prescribed by the Internal Revenue Service, certifying
that payments to such Lender or participant are not subject to United States
federal withholding tax under the Code because such payment is either
effectively connected with the conduct by such Lender or participant of a trade
or business in the United States or totally exempt from United States federal
withholding tax by reason of the application of an income tax treaty to which
the United States is a party or such Lender is otherwise exempt, (ii) or to the
extent permitted by law, as an alternative to form 1001 or 4224, each such
Lender or participant may provide the Borrowing Agent and the Agent with two
original executed copies of Internal Revenue Service Form W-8, or any successor
form prescribed by the Internal Revenue Service, certifying that such Lender is
exempt from United States federal withholding tax pursuant to Section 871(h) or
881(c) of the Code, together with an annual certificate stating that such Lender
or participant is not a "person" described in Section 871(h)(3) or 881(c)(3) of
the Code and (iii) a duly completed and executed Internal Revenue Service Form
W-8 or W-9, as appropriate, or any successor or other form establishing an
exemption from United States federal backup withholding tax. Each such Lender
further agrees to complete and deliver to Borrowing Agent, upon its request,
such other forms or other documentation as may be appropriate to minimize any
withholding tax on payments pursuant to this Agreement under the laws of any
other jurisdiction unless such completion and delivery may in any event be
disadvantageous for such Lender. For purposes of this subsection (b), the term
"United States" shall have the meaning specified in Section 7701 of the Code.
(g) At the request of Agent from time to time both before
and after the Closing Date, the Loan Parties will assist Agent in the
syndication of the credit facility provided pursuant to this Agreement and the
Other Documents. Such assistance shall include, but not be limited to (i) prompt
assistance in the preparation of an information memorandum and the verification
of the completeness and accuracy of the information and the reasonableness of
the projections contained therein, (ii) preparation of offering materials and
financial projections by Loan Parties and their advisors, (iii) providing Agent
with all information reasonably deemed
86
necessary by Agent to successfully complete the syndication, (iv) confirmation
as to the accuracy and completeness of such offering materials and information
and confirmation that management's projections are based on assumptions believed
by the Loan Parties to be reasonable at the time made, and (v) participation of
the Loan Parties' senior management in meetings and conference calls with
potential lenders at such times and places as Agent may reasonably request.
17.4 Application of Payments. Agent shall have the continuing and
exclusive right to apply or reverse and re-apply any payment and any and all
proceeds of Collateral to any portion of the Obligations. To the extent that any
Loan Party makes a payment or Agent or any Lender receives any payment or
proceeds of the Collateral for any Loan Party's benefit, which are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, debtor in possession, receiver, custodian or any other
party under any bankruptcy law, common law or equitable cause, then, to such
extent, the Obligations or part thereof intended to be satisfied shall be
revived and continue as if such payment or proceeds had not been received by
Agent or such Lender.
17.5 Indemnity. Each Loan Party shall indemnify Agent, each Issuer,
each Lender and each of their respective officers, directors, Affiliates,
employees and agents from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses and
disbursements of any kind or nature whatsoever (including, without limitation,
fees and disbursements of counsel) which may be imposed on, incurred by, or
asserted against Agent, such Issuer or any Lender in any litigation, proceeding
or investigation instituted or conducted by any governmental agency or
instrumentality or any other Person with respect to any aspect of, or any
transaction contemplated by, or referred to in, or any matter related to, this
Agreement or the Other Documents, whether or not Agent, any Issuer or any Lender
is a party thereto, except to the extent that any of the foregoing arises out of
the willful misconduct of the party being indemnified.
17.6 Notice. Any notice or request hereunder may be given to any
Loan Party or to Agent or any Lender at their respective addresses set forth
below or at such other address as may hereafter be specified in a notice
designated as a notice of change of address under this Section 17.6. Any notice
or request hereunder shall be given by (a) hand delivery, (b) overnight courier,
(c) registered or certified mail, return receipt requested, or (d) telecopy to
the number set out below (or such other number as may hereafter be specified in
a notice designated as a notice of change of address) with electronic
confirmation of its receipt. Any notice or other communication required or
permitted pursuant to this Agreement shall be deemed given (a) when personally
delivered to any officer of the party to whom it is addressed, (b) on the
earlier of actual receipt thereof or three (3) days following posting thereof by
certified or registered mail, postage prepaid, or (c) upon actual receipt
thereof when sent by a recognized overnight delivery service or (d) upon actual
receipt thereof when sent by telecopier to the number set forth below with
electronic confirmation of its receipt, in each case addressed to each party at
its address set forth below or at such other address as has been furnished in
writing by a party to the other by like notice:
87
(A) If to Agent or to
GMAC CF as Lender at: GMAC COMMERCIAL FINANCE LLC
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Portfolio Manager
Telephone: 000-000-0000
Telecopier: 000-000-0000
GMAC COMMERCIAL FINANCE LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: SF Legal Department
Telephone: 000-000-0000
Telecopier: 000-000-0000
(B) If to a Lender other than GMAC CF, as specified on the
signature pages hereof.
(C) If to Borrowing Agent
or any Loan Party, at: STANADYNE CORPORATION
00 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Telephone: 000-000-0000
Telecopier: 000-000-0000
17.7 Survival. The obligations of Loan Parties under Sections
2.2(f), 3.7, 3.9, 4.19(h), 14.7 and 17.5 shall survive termination of this
Agreement and the Other Documents and payment in full of the Obligations.
17.8 Severability. If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible.
17.9 Expenses. All costs and expenses including, without
limitation, (i) reasonable attorneys' fees and disbursements incurred by Agent,
Agent on behalf of Lenders and Lenders (a) in all efforts made to enforce
payment of any Obligation or effect collection of any Collateral, or (b) in
connection with the entering into, modification, amendment, administration and
enforcement of this Agreement or any consents or waivers hereunder and all
related agreements, documents and instruments, or (c) in instituting,
maintaining, preserving, enforcing and foreclosing on Agent's security interest
in or Lien on any of the Collateral, whether through judicial proceedings or
otherwise, or (d) in defending or prosecuting any actions or proceedings arising
out of or relating to Agent's or any Lender's transactions with any Loan Party,
or (e) in connection with any advice given to Agent or any Lender with respect
to its rights and obligations under this Agreement and all related agreements,
and (ii) reasonable fees and disbursements incurred by Agent or Agent on behalf
of Lenders in connection with any
88
appraisals of Inventory or other Collateral, field examinations, collateral
analysis or monitoring or other business analysis conducted by outside Persons
in connection with this Agreement and all related agreements, may be charged to
Borrowers' Account and shall be part of the Obligations.
17.10 Injunctive Relief. Each Loan Party recognizes that, in the
event any Loan Party fails to perform, observe or discharge any of its
obligations or liabilities under this Agreement, any remedy at law may prove to
be inadequate relief to Lenders; therefore, Agent, if Agent so requests, shall
be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving that actual damages are not an adequate remedy.
17.11 Consequential Damages. None of Agent, any Issuer, any Lender,
nor any agent or attorney for any of them, shall be liable to any Loan Party for
consequential damages arising from any breach of contract, tort or other wrong
relating to the establishment, administration or collection of the Obligations.
17.12 Captions. The captions at various places in this Agreement are
intended for convenience only and do not constitute and shall not be interpreted
as part of this Agreement.
17.13 Counterparts; Telecopied Signatures. This Agreement may be
executed in any number of and by different parties hereto on separate
counterparts, all of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission shall be deemed to be an original
signature hereto.
17.14 Construction. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
17.15 Confidentiality; Sharing Information.
(a) Agent, each Lender and each Transferee shall hold all
non-public information obtained by Agent, such Lender or such Transferee
pursuant to the requirements of this Agreement in accordance with Agent's, such
Lender's and such Transferee's customary procedures for handling confidential
information of this nature; provided, however, Agent, each Lender and each
Transferee may disclose such confidential information (i) to its examiners,
affiliates, outside auditors, counsel and other professional advisors, (ii) to
Agent, any Lender or to any prospective Transferees and Purchasing Lenders, and
(iii) as required or requested by any Governmental Body or representative
thereof or pursuant to legal process; provided, further that (A) unless
specifically prohibited by applicable law or court order, Agent, each Lender and
each Transferee shall use reasonable efforts prior to disclosure thereof, to
notify the Borrowing Agent of the applicable request for disclosure of such
non-public information (1) by a Governmental Body or representative thereof
(other than any such request in connection with an examination of the financial
condition of a Lender or a Transferee by such Governmental Body) or (2) pursuant
to legal process and (B) in no event shall Agent, any Lender or any Transferee
be obligated to return any materials furnished by any Loan Party other than
those documents and instruments in possession of Agent or any Lender in order to
perfect its Lien on the Collateral once the
89
Obligations have been paid in full and this Agreement has been terminated. Each
Loan Party acknowledges that from time to time financial advisory, investment
banking and other services may be offered or provided to such Loan Party or one
or more of its Affiliates (in connection with this Agreement or otherwise) by
any Lender or by one or more Subsidiaries or Affiliates of such Lender and each
Loan Party hereby authorizes each Lender to share any information delivered to
such Lender by such Loan Party and its Subsidiaries pursuant to this Agreement,
or in connection with the decision of such Lender to enter into this Agreement,
to any such Subsidiary or Affiliate of such Lender, it being understood that any
such Subsidiary or Affiliate of any Lender receiving such information shall be
bound by the provision of this Section 17.15 as if it were a Lender hereunder.
Such authorization shall survive the repayment of the Obligations and the
termination of this Agreement.
(b) Notwithstanding anything to the contrary set forth
herein or in any of the Other Documents or any other written or oral
understanding or agreement, (i) any obligations of confidentiality contained
herein, in any of the Other Documents or any such other understanding or
agreement do not apply and have not applied from the commencement of discussions
between the parties to the tax treatment and tax structure of the transactions
contemplated herein (and any related transactions or arrangements), and (ii)
each party (and each of its employees, representatives, or other agents) may
disclose to any and all persons the tax treatment and tax structuring of the
transactions contemplated herein and all materials of any kind (including
opinions or other tax analyses) that are provided to such party relating to such
tax treatment and tax structure, all within the meaning of Treasury Regulation
Section 1.6011-4; provided, that, each party recognizes that the privilege that
it may, in its discretion, maintain with respect to the confidentiality of a
communication relating to the transactions contemplated herein, including a
confidential communication with its attorney or a confidential communication
with a federally authorized tax practitioner under Section 7525 of the Internal
Revenue Code, is not intended to be affected by the foregoing. Loan Parties do
not intend to treat the Advances, loans and related transactions as being a
"reportable transaction" (within the meaning of Treasury Regulation Section
1.6011-4). In the event Loan Parties determine to take any action inconsistent
with such intention, it will promptly notify Agent thereof. Each Loan Party
acknowledges that one or more of Lenders may treat its Advances and loans as
part of a transaction that is subject to Treasury Regulation Section 1.6011-4 or
Section 301.6112-1, and the Agent and such Lender or Lenders, as applicable, may
file such IRS forms or maintain such lists and other records as they may
determine is required by such Treasury Regulations.
17.16 Publicity. Upon the prior consent of Loan Parties, which
consent shall not be unreasonably withheld, each Loan Party hereby authorizes
Agent to make appropriate announcements of the financial arrangement entered
into among Loan Parties, Agent and Lenders, including, without limitation,
announcements which are commonly known as tombstones, in such publications and
to such selected parties as Agent shall in its sole and absolute discretion deem
appropriate.
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Each of the parties has signed this Agreement as of the day and year
first above written.
STANADYNE CORPORATION,
as a Borrower and Loan Party
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President & Chief Financial
Officer
Address: 00 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxx 00000-0000
PRECISION ENGINE PRODUCTS CORP.,
as a Borrower and Loan Party
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President & Chief Financial
Officer
Address: 00 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxx 00000-0000
STANADYNE AUTOMOTIVE HOLDING
CORP., as a Guarantor and Loan Party
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President & Chief Financial
Officer
Address: 00 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxx 00000-0000
[SIGNATURES CONTINUED ON NEXT PAGE]
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
GMAC COMMERCIAL FINANCE LLC,
as a Lender and as Administrative Agent and
Collateral Agent
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Director
Address: 000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Commitment Percentage: 30.7693%
THE BANK OF NEW YORK,
as a Lender and as Documentation Agent
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
Address: 000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
Commitment Percentage: 23.0769%
[SIGNATURES CONTINUED ON NEXT PAGE]
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
WACHOVIA BANK, NATIONAL
ASSOCIATION, as a Lender and as
Syndication Agent
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Name: Xxxxx X. Xxxxx
Title: Senior Vice President
Address: 000 Xxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxxx 00000
Commitment Percentage: 23.0769%
NATIONAL CITY BANK,
as a Lender
By: /s/ Xxxxxxxxxxx X. Xxxx
------------------------------------
Name: Xxxxxxxxxxx X. Xxxx
Title: Assistant Vice President
Address: 000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Commitment Percentage: 23.0769%
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