Exhibit 10.18
EXECUTION COPY
AMENDED AND RESTATED CREDIT AND GUARANTY AGREEMENT,
dated as of January 19, 1999
among
KEY COMPONENTS, LLC,
as Borrower,
CERTAIN OF ITS SUBSIDIARIES,
as Guarantors,
CERTAIN FINANCIAL INSTITUTIONS,
as Lenders,
and
SOCIETE GENERALE,
as Agent for the Lenders.
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1. DEFINED TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . . - 2 -
1.2. USE OF DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . - 25 -
1.3. CROSS-REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . - 26 -
1.4. ACCOUNTING AND FINANCIAL DETERMINATIONS. . . . . . . . . . . . . . - 26 -
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES,
LETTERS OF CREDIT AND NOTES
2.1. COMMITMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . - 26 -
2.1.1. REVOLVING LOAN COMMITMENT. . . . . . . . . . . . . . . . . . . . - 26 -
2.1.2. LETTER OF CREDIT COMMITMENT. . . . . . . . . . . . . . . . . . . - 26 -
2.1.3. TERM LOAN COMMITMENT . . . . . . . . . . . . . . . . . . . . . . - 26 -
2.2. LENDERS NOT PERMITTED OR REQUIRED TO MAKE CREDIT EXTENSIONS. . . . - 27 -
2.2.1. REVOLVING LOANS. . . . . . . . . . . . . . . . . . . . . . . . . - 27 -
2.2.2. LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . . . . . . - 27 -
2.2.3. TERM LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . - 27 -
2.3. OPTIONAL REDUCTION OF THE COMMITMENT AMOUNTS . . . . . . . . . . . - 27 -
2.4. BORROWING PROCEDURE. . . . . . . . . . . . . . . . . . . . . . . . - 27 -
2.5. CONTINUATION AND CONVERSION ELECTIONS. . . . . . . . . . . . . . . - 27 -
2.6. FUNDING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 28 -
2.7. ISSUANCE PROCEDURES. . . . . . . . . . . . . . . . . . . . . . . . - 28 -
2.7.1. OTHER LENDERS' PARTICIPATION . . . . . . . . . . . . . . . . . . - 28 -
2.7.2. DISBURSEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . - 28 -
2.7.3. REIMBURSEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . - 29 -
2.7.4. DEEMED DISBURSEMENTS . . . . . . . . . . . . . . . . . . . . . . - 29 -
2.7.5. NATURE OF REIMBURSEMENT OBLIGATIONS. . . . . . . . . . . . . . . - 29 -
2.8. NOTES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 30 -
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
3.1. REPAYMENTS AND PREPAYMENTS . . . . . . . . . . . . . . . . . . . . - 30 -
3.1.1. VOLUNTARY PREPAYMENTS. . . . . . . . . . . . . . . . . . . . . . - 30 -
3.1.2. MANDATORY PREPAYMENTS. . . . . . . . . . . . . . . . . . . . . . - 30 -
3.2. INTEREST PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . - 32 -
3.2.1. RATES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 32 -
3.2.2. POST-DEFAULT RATES . . . . . . . . . . . . . . . . . . . . . . . - 33 -
3.2.3. PAYMENT DATES. . . . . . . . . . . . . . . . . . . . . . . . . . - 33 -
3.3. FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 33 -
3.3.1. REVOLVER COMMITMENT FEE. . . . . . . . . . . . . . . . . . . . . - 33 -
3.3.2. LETTER OF CREDIT FEE . . . . . . . . . . . . . . . . . . . . . . - 34 -
3.3.3. AGENT'S FEES, ETC. . . . . . . . . . . . . . . . . . . . . . . . - 34 -
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
4.1. LIBO RATE LENDING UNLAWFUL . . . . . . . . . . . . . . . . . . . . - 34 -
4.2. DEPOSITS UNAVAILABLE . . . . . . . . . . . . . . . . . . . . . . . - 34 -
4.3. INCREASED COSTS, ETC.. . . . . . . . . . . . . . . . . . . . . . . - 34 -
4.4. FUNDING LOSSES . . . . . . . . . . . . . . . . . . . . . . . . . . - 35 -
4.5. INCREASED CAPITAL COSTS. . . . . . . . . . . . . . . . . . . . . . - 36 -
4.6. TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 36 -
4.7. PAYMENTS, COMPUTATIONS, ETC. . . . . . . . . . . . . . . . . . . . - 37 -
4.8. SHARING OF PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . - 37 -
4.9. SETOFF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 37 -
4.10. USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . - 38 -
ARTICLE V
CONDITIONS TO CREDIT EXTENSIONS
5.1. INITIAL CREDIT EXTENSION . . . . . . . . . . . . . . . . . . . . . - 38 -
5.1.1. CORPORATE AND PARTNERSHIP DOCUMENTS, ETC.. . . . . . . . . . . . - 38 -
5.1.2. AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . - 38 -
5.1.3. DELIVERY OF NOTES. . . . . . . . . . . . . . . . . . . . . . . . - 38 -
5.1.4. REQUIRED CONSENTS AND APPROVALS. . . . . . . . . . . . . . . . . - 38 -
5.1.5. FINANCIAL INFORMATION, ETC.. . . . . . . . . . . . . . . . . . . - 39 -
5.1.6. PLEDGED PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . - 39 -
5.1.7. SECURITY AGREEMENTS, FILINGS, ETC. . . . . . . . . . . . . . . . - 39 -
5.1.8. SOLVENCY CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . - 39 -
5.1.9. CLOSING DATE CERTIFICATES. . . . . . . . . . . . . . . . . . . . - 39 -
5.1.10. EVIDENCE OF INSURANCE . . . . . . . . . . . . . . . . . . . . . - 39 -
5.1.11. OPINIONS OF COUNSEL . . . . . . . . . . . . . . . . . . . . . . - 39 -
5.1.12. AGENT'S CLOSING FEES, EXPENSES, ETC.. . . . . . . . . . . . . . - 40 -
5.1.13. BORROWING BASE CERTIFICATE. . . . . . . . . . . . . . . . . . . - 40 -
5.1.14. SATISFACTORY LEGAL FORM, ETC. . . . . . . . . . . . . . . . . . - 40 -
5.1.15. EQUITY CONTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . - 40 -
5.1.16. ACQUISITION MATTERS . . . . . . . . . . . . . . . . . . . . . . - 40 -
5.2. ALL CREDIT EXTENSIONS. . . . . . . . . . . . . . . . . . . . . . - 40 -
5.2.1. COMPLIANCE WITH WARRANTIES, NO DEFAULT, ETC. . . . . . . . . . - 40 -
5.2.2. CREDIT EXTENSION REQUEST, ETC. . . . . . . . . . . . . . . . . . - 41 -
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1. ORGANIZATION, ETC. . . . . . . . . . . . . . . . . . . . . . . . . - 41 -
6.2. DUE AUTHORIZATION, NON-CONTRAVENTION, ETC. . . . . . . . . . . . . - 42 -
6.3. GOVERNMENT APPROVAL, REGULATION, COMPLIANCE WITH LAW, ETC. . . . . - 42 -
6.4. VALIDITY, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . - 42 -
6.5. FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . - 42 -
6.6. NO MATERIAL ADVERSE CHANGE . . . . . . . . . . . . . . . . . . . . - 42 -
6.7. LITIGATION, LABOR CONTROVERSIES, ETC.. . . . . . . . . . . . . . . - 43 -
6.8. SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . - 43 -
6.9. OWNERSHIP OF PROPERTIES. . . . . . . . . . . . . . . . . . . . . . - 43 -
6.10. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 43 -
6.11. PENSION AND WELFARE PLANS . . . . . . . . . . . . . . . . . . . . - 43 -
6.12. ENVIRONMENTAL WARRANTIES. . . . . . . . . . . . . . . . . . . . . - 43 -
6.13. ACCURACY OF INFORMATION . . . . . . . . . . . . . . . . . . . . . - 45 -
6.14. INTELLECTUAL PROPERTY COLLATERAL. . . . . . . . . . . . . . . . . - 45 -
6.15. OWNERSHIP OF EQUITY INTERESTS . . . . . . . . . . . . . . . . . . - 45 -
6.16. ABSENCE OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . - 46 -
6.17. REGULATIONS U AND X . . . . . . . . . . . . . . . . . . . . . . . - 46 -
6.18. GOVERNMENT REGULATION . . . . . . . . . . . . . . . . . . . . . . - 46 -
6.19. BURDENSOME AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . - 46 -
6.20. YEAR 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 46 -
6.21. NO IMMUNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . - 46 -
6.22. CANADIAN TAX. . . . . . . . . . . . . . . . . . . . . . . . . . . - 46 -
6.23. ENFORCEABILITY IN CANADA. . . . . . . . . . . . . . . . . . . . . - 47 -
ARTICLE VII
COVENANTS
7.1. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . - 47 -
7.1.1. FINANCIAL INFORMATION, REPORTS, NOTICES, ETC.. . . . . . . . . . - 47 -
7.1.2. COMPLIANCE WITH LAWS, ETC. . . . . . . . . . . . . . . . . . . . - 49 -
7.1.3. MAINTENANCE OF PROPERTIES. . . . . . . . . . . . . . . . . . . . - 49 -
7.1.4. INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . - 49 -
7.1.5. BOOKS AND RECORDS. . . . . . . . . . . . . . . . . . . . . . . . - 50 -
7.1.6. ENVIRONMENTAL COVENANT . . . . . . . . . . . . . . . . . . . . . - 50 -
7.1.7. AS TO INTELLECTUAL PROPERTY COLLATERAL . . . . . . . . . . . . . - 51 -
7.1.8. FUTURE SUBSIDIARIES. . . . . . . . . . . . . . . . . . . . . . . - 52 -
7.1.9. FUTURE REAL ESTATE PROPERTIES. . . . . . . . . . . . . . . . . . - 53 -
7.1.10. BOARD MONITORING. . . . . . . . . . . . . . . . . . . . . . . . - 53 -
7.1.11. SEPARATE CORPORATE EXISTENCE. . . . . . . . . . . . . . . . . . - 53 -
7.1.12. FURTHER ASSURANCES. . . . . . . . . . . . . . . . . . . . . . . - 53 -
7.1.13. REAL ESTATE MORTGAGES . . . . . . . . . . . . . . . . . . . . . - 54 -
7.1.14. TITLE INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . - 54 -
7.1.15. REALTY SURVEY . . . . . . . . . . . . . . . . . . . . . . . . . - 54 -
7.1.16. DISSOLUTION OF CERTAIN SUBSIDIARIES . . . . . . . . . . . . . . - 55 -
7.2. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . - 55 -
7.2.1. BUSINESS ACTIVITIES. . . . . . . . . . . . . . . . . . . . . . . - 55 -
7.2.2. INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . - 55 -
7.2.3. LIENS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 56 -
7.2.4. FINANCIAL CONDITION. . . . . . . . . . . . . . . . . . . . . . . - 57 -
7.2.5. INVESTMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . - 58 -
7.2.6. RESTRICTED PAYMENTS, ETC.. . . . . . . . . . . . . . . . . . . . - 59 -
7.2.7. CAPITAL EXPENDITURES, ETC. . . . . . . . . . . . . . . . . . . . - 60 -
7.2.8. RENTAL OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . - 61 -
7.2.9. TAKE OR PAY CONTRACTS. . . . . . . . . . . . . . . . . . . . . . - 61 -
7.2.10. CONSOLIDATION, MERGER, ETC. . . . . . . . . . . . . . . . . . . - 61 -
7.2.11. ASSET DISPOSITIONS, ETC.. . . . . . . . . . . . . . . . . . . . - 61 -
7.2.12. MODIFICATION OF CERTAIN AGREEMENTS. . . . . . . . . . . . . . . - 62 -
7.2.13. TRANSACTIONS WITH AFFILIATES. . . . . . . . . . . . . . . . . . - 62 -
7.2.14. NEGATIVE PLEDGES, RESTRICTIVE AGREEMENTS, ETC.. . . . . . . . . - 62 -
7.2.15. MANAGEMENT AND DIRECTOR FEES, EXPENSES, ETC.. . . . . . . . . . - 62 -
7.2.16. ENVIRONMENTAL LIENS . . . . . . . . . . . . . . . . . . . . . . - 63 -
7.2.17. FISCAL YEAR END . . . . . . . . . . . . . . . . . . . . . . . . - 63 -
ARTICLE VIII
EVENTS OF DEFAULT
8.1. LISTING OF EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . - 63 -
8.1.1. NON-PAYMENT OF OBLIGATIONS . . . . . . . . . . . . . . . . . . . - 63 -
8.1.2. BREACH OF WARRANTY . . . . . . . . . . . . . . . . . . . . . . . - 63 -
8.1.3. NON-PERFORMANCE OF CERTAIN COVENANTS AND OBLIGATIONS . . . . . . - 64 -
8.1.4. NON-PERFORMANCE OF OTHER COVENANTS AND OBLIGATIONS . . . . . . . - 64 -
8.1.5. DEFAULT ON OTHER INDEBTEDNESS. . . . . . . . . . . . . . . . . . - 64 -
8.1.6. JUDGMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . - 64 -
8.1.7. PENSION PLANS. . . . . . . . . . . . . . . . . . . . . . . . . . - 64 -
8.1.8. CHANGE IN CONTROL. . . . . . . . . . . . . . . . . . . . . . . . - 64 -
8.1.9. BANKRUPTCY, INSOLVENCY, ETC. . . . . . . . . . . . . . . . . . . - 65 -
8.1.10. IMPAIRMENT OF SECURITY, ETC.. . . . . . . . . . . . . . . . . . - 65 -
8.2. ACTION IF BANKRUPTCY . . . . . . . . . . . . . . . . . . . . . . . - 65 -
8.3. ACTION IF OTHER EVENT OF DEFAULT . . . . . . . . . . . . . . . . . - 65 -
ARTICLE IX
GUARANTY
9.1. THE GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . - 65 -
9.2. GUARANTY UNCONDITIONAL . . . . . . . . . . . . . . . . . . . . . . - 66 -
9.3. REINSTATEMENT IN CERTAIN CIRCUMSTANCES . . . . . . . . . . . . . . - 67 -
9.4. WAIVER BY THE GUARANTORS . . . . . . . . . . . . . . . . . . . . . - 67 -
9.5. POSTPONEMENT OF SUBROGATION, ETC.. . . . . . . . . . . . . . . . . - 67 -
9.6. STAY OF ACCELERATION . . . . . . . . . . . . . . . . . . . . . . . - 67 -
9.7. LIMITATION ON LIABILITY. . . . . . . . . . . . . . . . . . . . . . - 67 -
ARTICLE X
THE AGENT
10.1. ACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 68 -
10.2. FUNDING RELIANCE, ETC.. . . . . . . . . . . . . . . . . . . . . . - 68 -
10.3. EXCULPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . - 68 -
10.4. SUCCESSOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 69 -
10.5. CREDIT EXTENSIONS BY SG . . . . . . . . . . . . . . . . . . . . . - 69 -
10.6. CREDIT DECISIONS. . . . . . . . . . . . . . . . . . . . . . . . . - 69 -
10.7. LOAN DOCUMENTS, ETC.. . . . . . . . . . . . . . . . . . . . . . . - 69 -
10.8. COPIES, ETC.. . . . . . . . . . . . . . . . . . . . . . . . . . . - 69 -
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. WAIVERS, AMENDMENTS, ETC. . . . . . . . . . . . . . . . . . . . . - 70 -
11.2. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 70 -
11.3. PAYMENT OF COSTS AND EXPENSES . . . . . . . . . . . . . . . . . . - 70 -
11.4. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . - 71 -
11.5. SURVIVAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 72 -
11.6. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . - 72 -
11.7. HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 72 -
11.8. EXECUTION IN COUNTERPARTS, EFFECTIVENESS, ETC.. . . . . . . . . . - 72 -
11.9. GOVERNING LAW; ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . - 73 -
11.10. SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . - 73 -
11.11. SALE AND TRANSFER OF LOANS AND NOTES; PARTICIPATIONS IN LOANS
AND NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . - 73 -
11.11.1. ASSIGNMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . - 73 -
11.11.2. PARTICIPATIONS . . . . . . . . . . . . . . . . . . . . . . . . - 74 -
11.11.3. CERTAIN OTHER PROVISIONS . . . . . . . . . . . . . . . . . . . - 74 -
11.12. OTHER TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . - 75 -
11.13. CERTAIN COLLATERAL AND OTHER MATTERS . . . . . . . . . . . . . . - 75 -
11.14. CONFIDENTIAL INFORMATION . . . . . . . . . . . . . . . . . . . . - 75 -
11.15. FORUM SELECTION; SERVICE OF PROCESS; CONSENT TO JURISDICTION ETC - 75 -
11.16. WAIVER OF JURY TRIAL, ETC. . . . . . . . . . . . . . . . . . . . - 76 -
11.17. JUDGMENT CURRENCY. . . . . . . . . . . . . . . . . . . . . . . . - 77 -
SCHEDULES AND EXHIBITS
SCHEDULE I - Disclosure Schedule
SCHEDULE II - Percentages
SCHEDULE III - Administrative Information
EXHIBIT A - Form of Revolving Note
EXHIBIT B - Form of Term Note
EXHIBIT C-1 - Form of Borrowing Request for Revolver Loans
EXHIBIT C-2 - Form of Borrowing Request for Term Loans
EXHIBIT D - Form of Continuation/Conversion Notice
EXHIBIT E - Form of Issuance Request
EXHIBIT F - Form of Borrowing Base Certificate
EXHIBIT G - Form of Compliance Certificate
EXHIBIT H-1 - Form of Amended and Restated Pledge Agreement
EXHIBIT H-2 - Form of Valley Forge Pledge Agreement
EXHIBIT I-1 - Form of Borrower Security Agreement
EXHIBIT I-2 - Form of Guarantor Security Agreement
EXHIBIT J - Form of Closing Date Certificate
EXHIBIT K-1 - Form of Borrower Solvency Certificate
EXHIBIT K-2 - Form of Guarantor Solvency Certificates
EXHIBIT L - Form of Lender Assignment Agreement
EXHIBIT M - Form of Opinion of Counsel to the Obligors
CREDIT AND GUARANTY AGREEMENT
AMENDED AND RESTATED CREDIT AND GUARANTY AGREEMENT, dated as of January 19,
1999, among the following:
(a) KEY COMPONENTS, LLC, a Delaware limited liability company (the
"BORROWER"),
(b) each of the Subsidiaries of the Borrower identified under the
caption "GUARANTORS" on the signature pages hereto (individually, a
"GUARANTOR" and, collectively, the "GUARANTORS" and, together with the
Borrower, the "OBLIGORS"),
(c) the various financial institutions as are or may become parties
hereto (collectively, the "LENDERS"), and
(d) SOCIETE GENERALE ("SG"), as agent (in such capacity, the "AGENT")
for the Lenders.
W I T N E S S E T H:
WHEREAS, each of the Guarantors is a Subsidiary (such capitalized term and
other capitalized terms used in these recitals without definition shall have the
meanings provided for in SECTION 1.1) of the Borrower; and
WHEREAS, the Borrower and its Subsidiaries are currently engaged in the
business of manufacturing, distributing and marketing flexible shaft products,
medium-security locks and specialized componentry for the recreation, marine,
automotive, electrical utility and other general recreational and industrial
markets; and
WHEREAS, in order to finance the acquisition by the Borrower of all of the
capital stock of Valley Forge Corporation, the acquisition of certain assets of
G&H Technologies, Inc. and other Permitted Acquisitions (as hereinafter
defined), and to finance the working capital needs of the Borrower and its
Subsidiaries, including the issuance of standby letters of credit, the Borrower
desires to obtain from the Lenders:
(a) Term Loan Commitments pursuant to which Term Loans will be made
in a maximum aggregate amount not to exceed $60,000,000; and
(b) Revolving Loan Commitments pursuant to which Revolving Loans may
be made in a maximum aggregate amount at any one time outstanding not to
exceed the lesser of (x) $35,000,000 and (y) the Borrowing Base Amount as
in effect at such time; and
(c) Letter of Credit Commitments pursuant to which the Issuers will
issue Letters of Credit from time to time in a maximum aggregate Stated
Amount at any one time outstanding not to exceed $5,000,000; PROVIDED that,
in any event, the aggregate outstanding principal amount of all Revolving
Loans, together with the aggregate amount of all Letter of Credit
Outstandings, shall not at any one time exceed the lesser of $35,000,000
and the Borrowing Base Amount in effect at such time; and
WHEREAS, in order to induce the Lenders, each Issuer and the Agent to enter
into this Agreement, which amends and restates in its entirety the Credit and
Guaranty Agreement, dated as of July 27, 1998, among the Borrower, the
Guarantors, certain lenders and the Agent (the "EXISTING CREDIT AGREEMENT"), and
to make Credit Extensions hereunder, the Borrower and the Guarantors have agreed
to deliver the Security Agreements, the Pledge Agreements and the Mortgages to
secure all of the Obligations; and
WHEREAS, the Lenders and the Issuers are willing, on the terms and subject
to the conditions hereinafter
set forth (including ARTICLE V), to extend such Commitments and make such Loans
to the Borrower and issue (or participate in) Letters of Credit for the account
of the Borrower;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. DEFINED TERMS. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"ACCOUNT" means any "account" (as that term is defined in Section 9-106 of
the U.C.C.).
"ACCOUNT DEBTOR" is defined in CLAUSE (D) of the definition of "ELIGIBLE
ACCOUNT" in this SECTION 1.1.
"ACQUISITION" means, collectively, (a) the Tender Offer, (b) the
acquisition by KCI Acquisition Corp. of not less than 90% of the capital stock
of Valley Forge in the Tender Offer and (c) the Merger.
"AFFILIATE" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person has, directly or indirectly,
(a) power to vote more than 10% of the securities or other ownership
interests (in each case, on a fully diluted basis) having ordinary voting
power for the election of directors or managing general partners;
(b) power to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise; or
(c) beneficial ownership of more than 10% of any class of the voting
stock of such Person or 10% or more of all outstanding equity interests or
other interests in such Person.
For purposes of SECTION 7.2.13 only, the term "Affiliate" shall not include
any Subsidiary that is wholly-owned directly or indirectly by the Borrower.
"AGENT" is defined in the PREAMBLE and includes each other Person as shall
have subsequently been appointed as the successor Agent pursuant to
SECTION 10.4.
"AGREEMENT" means this Amended and Restated Credit and Guaranty Agreement,
as amended, supplemented, restated or otherwise modified from time to time.
"AMENDED AND RESTATED PLEDGE AGREEMENT" means the Amended and Restated
Pledge Agreement executed and delivered pursuant to CLAUSE (A) of SECTION
5.1.6, substantially in the form of EXHIBIT H-1 hereto, as the same may be
amended, supplemented, restated or otherwise modified from time to time.
"APPLICABLE MARGIN" means with respect to all Loans that are LIBO Rate
Loans, 3.25% and with respect to all Loans that are Base Rate Loans, 2.25%,
PROVIDED that if the Funded Debt to EBITDA Ratio as at the last day of any two
consecutive Fiscal Quarters ending after March 31, 1999 shall fall within any of
the ranges set forth in
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the Schedule below then, subject to the delivery to the Agent of a certificate
of a senior financial officer of the Borrower demonstrating such fact prior to
the end of the next succeeding fiscal quarter, the "Applicable Margin" for each
Loan shall be reduced to the rate set forth below during the period commencing
on the Quarterly Payment Date on or immediately following the date of receipt of
such certificate to but not including the next succeeding Quarterly Payment Date
thereafter (except that notwithstanding the foregoing, the Applicable Margin
shall not be reduced for any period during which an Event of Default shall have
occurred and be continuing):
Applicable Margin
Funded Debt to
EBITDA Ratio LIBO Rate Loans Base Rate Loans
-------------- --------------- ---------------
equal to or greater
than 4.50 to 1 3.250% 2.250%
less than 4.50 to 1
but equal to or greater
than 4.00 to 1 3.000% 2.000%
less than 4.00 to 1
but equal to or greater
than 3.50 to 1 2.750% 1.750%
less than 3.50 to 1 2.500% 1.500%
"ASSIGNEE LENDER" is defined in SECTION 11.11.1.
"AUTHORIZED OFFICER" means, relative to any Obligor, those of its officers
or general partners, whose signatures and incumbency shall have been certified
to the Agent and the Lenders pursuant to SECTION 5.1.1.
"BASE RATE LOAN" means a Loan bearing interest at a fluctuating interest
rate determined by reference to the SG Base Rate.
"BORROWER" is defined in the PREAMBLE.
"BORROWER SECURITY AGREEMENT" means the Amended and Restated Borrower
Security Agreement executed and delivered pursuant to SECTION 5.1.7,
substantially in the form of EXHIBIT I-1 hereto, together with the Security
Agreement (Trademark), Security Agreement (Patents) and Security Agreement
(Copyright) related thereto, in each case as amended, supplemented, restated or
otherwise modified from time to time.
"BORROWING" means the Loans of the same type and, in the case of LIBO Rate
Loans, having the same Interest Period, made by all Lenders on the same Business
Day and pursuant to the same Borrowing Request in accordance with SECTION 2.1.
"BORROWING BASE AMOUNT" means, at any time, an amount equal to the sum of,
without duplication,
(a) 85% of the aggregate amount of all Eligible Accounts at such
time; and
-3-
(b) 60% of the aggregate amount of all Eligible Inventory at such
time; and
(c) 100% of the aggregate amount of all Eligible Cash Equivalents at
such time.
The Borrowing Base Amount shall initially be computed by the Borrower in each
Borrowing Base Certificate delivered from time to time to the Agent pursuant to
SECTION 5.1.13 and CLAUSE (D) of SECTION 7.1.1. The Agent shall have the right
to review such computations and if, in the Agent's reasonable judgment, such
computations have not been computed in accordance with the terms of this
Agreement, the Agent shall have the right to adjust such computations.
"BORROWING BASE CERTIFICATE" means a certificate duly completed and
executed by the chief accounting or financial Authorized Officer of the
Borrower, substantially in the form of EXHIBIT F hereto, together with such
changes thereto as the Agent may from time to time reasonably request for the
purpose of monitoring the Borrower's compliance therewith.
"BORROWING REQUEST" means a loan request and certificate duly executed by
an Authorized Officer of the Borrower, substantially in the form of EXHIBIT C-1
in the case of any Borrowing of Revolving Loans and EXHIBIT C-2 in the case of
any Borrowing of Term Loans.
"BUSINESS ACQUISITION" means (a) any Investment in the capital stock or
partnership interests of any Person or (b) any acquisition of the assets of any
Person pursuant to a transaction not in the ordinary course of such Person's
business (it being understood that acquisitions of equipment or raw materials in
bulk pursuant to salvage or similar transactions are in the ordinary course of
the Obligors' business).
"BUSINESS DAY" means
(a) any day which is neither a Saturday or Sunday nor a legal holiday
on which banks are authorized or required to be closed in New York,
New York; and
(b) relative to the making, continuing, prepaying or repaying of any
LIBO Rate Loan, any day which is a Business Day described in CLAUSE (A)
above and which is also a day on which dealings in Dollars are carried on
in the interbank eurodollar market of the Agent's LIBOR Office.
"CAPITAL EXPENDITURES" means, for any period, without duplication, the sum
of
(a) the aggregate amount of all expenditures of the Borrower and its
Subsidiaries for fixed or capital assets (including tooling costs) made
during such period which, in accordance with GAAP, would be classified as
capital expenditures, excluding expenditures for the replacement of fixed
assets to the extent fully financed by the proceeds of any insurance policy
described in SECTION 7.1.4; and
(b) the aggregate amount of all Capitalized Lease Liabilities
incurred during such period.
"CAPITALIZED LEASE LIABILITIES" means all monetary obligations of the
Borrower or any of its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, would be classified as capitalized leases, and,
for purposes of this Agreement and each other Loan Document, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP, and the stated maturity thereof shall be the date of the last payment
of rent or any other amount due under such lease prior to the first date upon
which such lease may be terminated by the lessee without payment of a penalty.
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"CASH EQUIVALENT INVESTMENT" means, at any time:
(a) any evidence of Indebtedness, maturing not more than one year
after the date of purchase thereof, issued or guaranteed by the United
States Government or any agency thereof (so long as such Indebtedness is
backed by the full faith and credit of the United States of America);
(b) commercial paper, maturing not more than three months from the
date of purchase thereof and rated at least A-1 by Standard & Poor's
Ratings Services, a division of The XxXxxx-Xxxx Companies, Inc., or P-1 by
Xxxxx'x Investors Service, Inc. and other evidence of Indebtedness,
maturing not more than one year after the purchase thereof and rated at
least A by Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc., or A2 by Xxxxx'x Investors Service, Inc.,
which is issued by
(i) a corporation (other than an Affiliate of any Obligor)
organized under the laws of any state of the United States or of the
District of Columbia, or
(ii) any Lender or any Affiliate thereof;
(c) any certificate of deposit or bankers acceptance, maturing not
more than one year after such time, which is issued by (i) a Lender or (ii)
a commercial banking institution that (A) is a member of the Federal
Reserve System, (B) has a combined capital and surplus and undivided
profits of not less than $500,000,000 and (C) has outstanding short-term
debt securities which are rated at least A-1 by Standard & Poor's Ratings
Services, a division of The XxXxxx-Xxxx Companies, Inc., or P-1 by Xxxxx'x
Investors Service, Inc.;
(d) any repurchase agreement entered into with any Lender (or other
commercial banking institution of the stature referred to in CLAUSE (C))
secured by a fully perfected Lien in any obligation thereunder of the type
described in any of CLAUSES (A) through (C), having a market value at the
time such repurchase agreement is entered into of not less than 100% of the
repurchase obligation thereunder of such Lender or other commercial banking
institution; or
(e) any money market mutual fund with a daily right of redemption and
a policy of maintaining a net asset value of $1.00 per share substantially
all the assets of which are comprised of investments of the types described
in the preceding CLAUSES (A) through (D).
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"CHANGE IN CONTROL" means
(a) the failure of Xxxx X. Xxxxx and Xxxxx Family Members and/or other
Permitted Holders at any time to own, either directly or indirectly,
beneficially free and clear of all Liens at all times, at least 51% of the
issued and outstanding ownership interests of the Parent or the Borrower
(both voting and non-voting), on a fully diluted basis;
(b) the direct or indirect acquisition by any Person or a group (as
such term is defined in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended), other than any Permitted Holder, of beneficial ownership
(as such term is defined in Rule 13D-3 promulgated under the Securities
Exchange
-5-
Act of 1934, as amended) of 35% or more of the ownership interests of the
Parent or the Borrower;
(c) the failure of Millbrook Capital Management, Inc., any of its
Affiliates or Xxxx X. Xxxxxxxxxx to control the day-to-day management of
the Obligors;
(d) the failure of the Borrower at any time to own, beneficially and
of record, the percentage of the issued and outstanding capital stock of
each Guarantor listed in ITEM 6.15 ("Ownership of Capital Stock") of the
Disclosure Schedule as the percentage so owned on the date of this
Agreement (other than capital stock disposed of in accordance with SECTION
7.2.11 and except for dilution of the Borrower's ownership interest in
Multiplex Technology, Inc. as a result of the exercise of the options
described in such Item), in each case free and clear of all Liens (other
than Liens in favor of the Agent arising pursuant to the Pledge
Agreements), on a fully diluted basis; or
(e) any other event constituting a "Change of Control" under the
Indenture governing the Senior Notes (unless the holders of the Senior
Notes waive any right to require redemption of the Senior Notes arising as
a result of such event).
"CLOSING DATE" means the date on which all of the conditions set forth in
SECTIONS 5.1 and 5.2 shall have been met.
"CODE" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time. References to sections of the Code also
refer to any successor sections.
"COLLATERAL" means any assets of the Borrower or any of its Subsidiaries or
of any other Obligor subject to a Lien pursuant to any Loan Document.
"COMMITMENT" means, as the context may require, a Lender's Revolving Loan
Commitment, Term Loan Commitment or Letter of Credit Commitment.
"COMMITMENT AMOUNT" means, as the context may require, either the Revolving
Loan Commitment Amount, the Term Loan Commitment Amount or the Letter of Credit
Commitment Amount.
"COMMITMENT TERMINATION EVENT" means
(a) the occurrence of any Default described in CLAUSES (B) through
(D) of SECTION 8.1.9; or
(b) the occurrence and continuance of any other Event of Default and
either
(i) the declaration of the Loans to be due and payable pursuant
to SECTION 8.3, or
(ii) the giving of notice by the Agent, acting at the direction
of the Required Lenders, to the Borrower that the Commitments have
been terminated.
"COMPLIANCE CAPITAL" has the meaning given to that term in the definition
of "EBITDA" in this SECTION 1.1.
"COMPLIANCE CERTIFICATE" means a certificate duly executed by the chief
accounting or financial Authorized Officer of the Borrower, substantially in the
form of EXHIBIT G hereto, together with such changes thereto as the Agent may
from time to time reasonably request for the purpose of monitoring the
Borrower's compliance with the financial covenants contained herein.
-6-
"CONTINGENT LIABILITY" means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) any indebtedness,
obligation or other liability of any other Person (other than by endorsements of
instruments in the course of collection), or guarantees the payment of dividends
or other distributions upon the shares of any other Person. The principal
amount of any Person's obligation under any Contingent Liability shall (subject
to any limitation set forth therein) be deemed to be the outstanding principal
amount (or maximum principal amount, if larger) of the debt, obligation or other
liability guaranteed thereby.
"CONTINUATION/CONVERSION NOTICE" means a notice duly executed by an
Authorized Officer of the Borrower, substantially in the form of EXHIBIT D
hereto.
"CONTROLLED GROUP" means all members of a controlled group of corporations
and all members of a controlled group of trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section 414(b) or 414(c) of
the Code or Section 4001 of ERISA.
"CREDIT EXTENSION" means, as the context may require,
(a) the making of a Loan by a Lender; or
(b) the issuance of any Letter of Credit, the extension of any Stated
Expiry Date of any existing Letter of Credit or the increase in the Stated
Amount of any existing Letter of Credit, in each case by an Issuer.
"CREDIT EXTENSION REQUEST" means, as the context may require, any Borrowing
Request or Issuance Request.
"DEFAULT" means any Event of Default or any condition, occurrence or event
which, after notice or lapse of time or both, would constitute an Event of
Default.
"DISBURSEMENT" is defined in SECTION 2.7.2.
"DISBURSEMENT DATE" is defined in SECTION 2.7.2.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule attached hereto as
SCHEDULE I, as it may be amended, supplemented or otherwise modified from time
to time by the Borrower with the written consent of the Agent and the Required
Lenders.
"DOLLAR" and the symbol "$" mean lawful money of the United States.
"DOMESTIC OFFICE" means, relative to any Lender, the office of such Lender
designated as such on SCHEDULE III hereto or designated in a Lender Assignment
Agreement, or such other office of a Lender (or any successor or assign of such
Lender) within the United States as may be designated from time to time by
notice from such Lender to each other Person party hereto.
"DYSON FAMILY MEMBER" means any of (a) Xxxx X. Xxxxx'x wife, (b) his issue,
(c) the respective executors, administrators, committees, conservators,
guardians or custodians or donees of powers during the minority of or with
respect to any of the individuals referred to in clauses (a) and (b) of this
definition, or (d) the trustee or trustees of any inter vivos trust or
testamentary trust created for the benefit of Xxxx X. Xxxxx or any of the
individuals referred to in clauses (a) and (b) of this definition.
-7-
"EBIT" means, for any period, the sum, without duplication, of
(a) Net Income for such period;
PLUS
(b) the amounts deducted, in determining Net Income for such period,
for
(i) provision for taxes based on the income or profits of the
Borrower and its Subsidiaries,
PLUS
(ii) interest expense (determined in accordance with GAAP),
PLUS
(iii) Management Fees.
"EBITDA" means, for any Rolling Period, the sum, without duplication, for
such Rolling Period, of
(a) EBIT;
PLUS
(b) the amount deducted, in determining Net Income for such Rolling
Period, for amortization and depreciation of assets of the Borrower and its
Subsidiaries during such Rolling Period (as determined in accordance with
GAAP);
PLUS (or MINUS)
(c) any (i) extraordinary non-recurring expense (or income) deducted
(or added) in determining Net Income for such Rolling Period (up to a
maximum amount of $1,500,000 for any Rolling Period ending at any time
prior to the date 18 months after the Closing Date, and up to a maximum of
$1,000,000 for any subsequent Rolling Period), and (ii) non-cash expense
(or income) that is not included in the preceding clause (c)(i) and that
was deducted (or added) in determining Net Income for such Rolling Period,
except to the extent that such non-cash expense (or income) is reasonably
likely to result in a future cash outflow (or cash inflow);
PLUS
(d) the following amounts (to the extent applicable):
(i) if any Permitted Acquisition was consummated in the fourth
Fiscal Quarter of such Rolling Period, an amount equal to the Net Cost
Savings with respect to such Permitted Acquisition;
(ii) if any Permitted Acquisition was consummated in the third
Fiscal Quarter of such Rolling Period, an amount equal to 75% of the
Net Cost Savings with respect to such Permitted Acquisition;
-8-
(iii) if any Permitted Acquisition was consummated in the second
Fiscal Quarter of such Rolling Period, an amount equal to 50% of the
Net Cost Savings with respect to such Permitted Acquisition;
(iv) if any Permitted Acquisition was consummated in the first
Fiscal Quarter of such Rolling Period, an amount equal to 25% of the
Net Cost Savings with respect to such Permitted Acquisition; and
(v) if any Permitted Acquisition, or if the Acquisition or the
G&H Acquisition, was consummated at any time during such Rolling
Period, an amount, calculated as provided in clauses (a), (b) and (c)
of this definition, with respect to the business acquired in such
acquisition, for the period commencing on the first day of such
Rolling Period and ending immediately prior to the date such
acquisition was consummated;
PROVIDED that the amounts provided for this clause (d) shall not be
included in calculating "EBITDA" for purposes of the definition of "Excess
Cash Flow";
PLUS
(e) the aggregate amount of cash contributions made to the common
equity capital of the Borrower ("COMPLIANCE CAPITAL") during the Fiscal
Quarter immediately following the end of such Rolling Period so long as (x)
each of the Lenders is given prior notice of the making of such capital
contribution (including the amount thereof and the date on which it will
occur) and (y) such notice identifies the contribution as being made to
cure a default under SECTION 7.2.4 (as contemplated in SECTION 8.1.3);
PLUS
(f) non-recurring expenses deducted in determining Net Income for such
Rolling Period in connection with (i) the offering of the Senior Notes,
(ii) the Acquisition, and (iii) entering into the Existing Credit
Agreement;
PLUS
(g) corporate overhead expenses of Valley Forge incurred at its
location in San Rafael, California;
MINUS
(h) the aggregate amount of distributions made to the Parent pursuant
to SECTION 7.2.6(A)(I)(D) during such Rolling Period.
"EFFECTIVE DATE" means the date this Agreement becomes effective pursuant
to SECTION 11.8.
"ELIGIBLE ACCOUNT" means, at any time of determination thereof, any Account
of any Obligor as to which each of the following requirements has been fulfilled
to the reasonable satisfaction of the Agent:
(a) such Obligor has lawful and absolute title to such Account, free
and clear of all Liens other than the Liens in favor of the Agent for the
benefit of the Lenders;
(b) the Agent for the benefit of the Lenders has a security interest
in such Account, which
-9-
security interest is legal, valid, binding, perfected and first priority
under the U.C.C.; PROVIDED, HOWEVER, that
(i) no Account as to which any United States federal or state
governmental agency or instrumentality ("GOVERNMENT RECEIVABLES") is
the Account Debtor may be an Eligible Account, except to the extent
that
(x) the aggregate amount of all such Accounts of the
Obligors does not exceed 10% of the amount of all Eligible
Accounts of the Obligors at such time, or
(y) the Account Debtor with respect to such Accounts is the
United States of America (or any agency thereof) and the Agent's
Lien on such Account for the benefit of the Lenders is duly
perfected under the Assignment of Claims Act of 1940, as amended;
and
(ii) no Account as to which any other government or agency of
such government (including any foreign governmental authority or
agency) is the Account Debtor may be an Eligible Account, except for
(x) Accounts owing by the government of Canada or any agency
of Her Majesty in Right of Canada in an aggregate amount not
exceeding the greater of (x) 5% of the amount of all Eligible
Accounts of the Obligors at such time and (y) $500,000, and
(y) Accounts to the extent supported by an irrevocable
letter of credit issued by a Lender or another bank reasonably
acceptable to the Agent;
(c) such Obligor has the full and unqualified right to assign and
xxxxx x Xxxx in such Account to the Agent for the benefit of the Lenders;
(d) such Account is payable in Dollars and is a legal, valid, binding
and enforceable obligation of the Person who is obligated under such
Account (the "ACCOUNT DEBTOR");
(e) if such Account is subject to any dispute, setoff, counterclaim
or other claim or defense on the part of the Account Debtor denying
liability under such Account (other than unasserted claims arising as a
matter of law), the portion of such Account so subject shall be excluded
from Eligible Accounts;
(f) such Account is evidenced by an invoice or marketer's sales
report rendered to the Account Debtor and evidences monetary obligations;
(g) such Account is a BONA FIDE Account which arose in the ordinary
course of business, and with respect to which,
(i) in the case of an Account arising from the sale of goods,
such goods have been shipped or delivered to and not rejected by the
Account Debtor, such Account was created as a result of a sale on an
absolute basis and not on a consignment, approval or sale-and-return
basis and all other actions necessary to create a binding obligation
on the part of the Account Debtor for such Account have been taken,
and
(ii) in the case of an Account relating to the sale of services,
such services have been performed or completed and not rejected by the
Account Debtor and all other actions necessary to create a binding
obligation on the part of the Account Debtor have been taken;
-10-
(h) with respect to such Account, the Account Debtor is not
(i) an Affiliate of the Borrower or any of its Subsidiaries,
(ii) organized or located in a jurisdiction other than the
United States or Canada, except to the extent that the amount of all
such Accounts of the Obligors does not exceed 10% of the amount of all
Eligible Accounts of the Obligors at such time,
(iii) organized or located in Canada, except for Accounts not
exceeding $1,500,000 in the aggregate, or
(iv) the subject of any reorganization, bankruptcy,
receivership, custodianship or insolvency or any other condition of
the type described in CLAUSES (B) through (D) of SECTION 8.1.9;
(i) such Account is not outstanding more than 90 days past the due
date with respect thereto (or such longer period, not to exceed 120 days,
as the Agent may agree with respect to any particular Account);
(j) such Account is not owing from an Account Debtor as to which more
than 10% of the aggregate amount of the Accounts owing from such Account
Debtor are more than 90 days past due;
(k) unless the Agent shall otherwise agree, such Account is not owing
from an Account Debtor as to which all Accounts owing from such Account
Debtor and its affiliates exceed 15% (or, if for the previous three
consecutive months the Accounts owing from such Account Debtor and its
affiliates exceeded 10% of all Accounts then payable to the Obligors, 10%)
of all Accounts then payable to the Obligors (PROVIDED that the portion of
such Accounts that does not exceed such 15% (or 10%) shall be included as
Eligible Receivables);
(l) no payment with respect to such Account made by check has been
returned for insufficient funds;
(m) such Account has not been placed with a lawyer or other agent for
collection;
(n) if the Borrower or any of its Subsidiaries is indebted to such
Account Debtor, unless the Borrower or the relevant Subsidiary (as the case
may be), on the one hand, and such Account Debtor, on the other hand, have
entered into an agreement whereby such Account Debtor is prohibited from
exercising any right of setoff with respect to the Accounts of the Borrower
and its Subsidiaries, Eligible Accounts shall exclude an amount equal to
the amount of such indebtedness; and
(o) such Account has such other characteristics or criteria as the
Agent, in its reasonable discretion, may specify in writing to the Borrower
from time to time.
"ELIGIBLE CASH EQUIVALENTS" means, at any time of determination thereof,
any Cash Equivalent Investments of any Obligor as to which each of the following
requirements has been fulfilled to the reasonable satisfaction of the Agent:
(a) such Obligor has lawful and absolute title to such Cash
Equivalent Investment, free and clear of all Liens other than Liens in
favor of the Agent for the benefit of the Lenders;
(b) the Agent has a security interest for the benefit of the Lenders
in such Cash Equivalent Investment, which security interest is legal,
valid, perfected and first priority under the U.C.C.;
-11-
(c) such Obligor has the full and unqualified right to assign and
xxxxx x Xxxx in such Cash Equivalent Investment to the Agent for the
benefit of the Lenders; and
(d) such Cash Equivalent Investment is payable in Dollars.
"ELIGIBLE INVENTORY" means, at any time of determination thereof, any
Inventory of any Obligor arising in the ordinary course of business and as to
which each of the following requirements has been fulfilled to the reasonable
satisfaction of the Agent:
(a) such Inventory is located in (x) the United States or (y) Canada
(but only to the extent that the amount of such Inventory located in Canada
does not exceed $1,000,000);
(b) such Obligor has the full and unqualified right to assign and
xxxxx x Xxxx in such Inventory to the Agent for the benefit of the Lenders;
(c) such Obligor has full and lawful title to such Inventory, free and
clear of all Liens, other than any Liens in favor of the Agent for the
benefit of the Lenders;
(d) the Agent for the benefit of the Lenders has a security interest
in such Inventory, which security interest is legal, valid, binding,
perfected and first priority under the U.C.C.;
(e) none of such Inventory shall consist of (i) items in the custody
of third parties for processing or manufacture, (ii) items in such
Obligor's possession but intended by such Obligor for return to the
suppliers thereof, (iii) items belonging to third parties that have been
consigned to such Obligor or are otherwise in such Obligor's custody or
possession, or (iv) items in such Obligor's custody and possession on a
sale-on-approval or sale-or-return basis or subject to any other repurchase
or return agreement;
(f) none of such Inventory shall consist of work-in-process;
(g) such Inventory is currently saleable in the normal course of such
Obligor's business; and
(h) none of such Inventory is obsolete, damaged or otherwise unfit for
sale.
"ENVIRONMENTAL LAWS" means all applicable federal, state, county or local
statutes, laws, treaties, ordinances, decrees, directives, codes, rules,
regulations and guidelines (including consent decrees and administrative orders)
relating to public health and safety and protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.
"ESTIMATION PERIOD" means the period for which a Taxpayer is required to
estimate for Federal income tax purposes his allocation of taxable income from
the Borrower during a calendar year in connection with determining his estimated
federal income tax liability for such period.
"EVENT OF DEFAULT" is defined in SECTION 8.1.
"EXCESS CASH FLOW" means, for any Fiscal Year (other than the 1998 Fiscal
Year) the excess for such Fiscal Year of
(a) EBITDA for such Fiscal Year;
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OVER
(b) the sum, determined for such Fiscal Year, of
(i) Capital Expenditures permitted by SECTION 7.2.7, and all
other expenditures in respect of plant, property and equipment, made
or incurred by the Borrower and its Subsidiaries during such Fiscal
Year, other than Capital Expenditures financed with the proceeds of
(A) Indebtedness, (B) Net Disposition Proceeds, (C) Net Equity
Proceeds or (D) Excess Insurance Proceeds;
PLUS
(ii) all prepayments and repayments of Term Loans made during
such Fiscal Year pursuant to SECTION 3.1.1 or 3.1.2 (other than
pursuant to SECTION 3.1.2(C)(B)) and all mandatory redemptions of
Senior Notes and all repayments of Indebtedness incurred pursuant to
SECTION 7.2.2(C) or (D) made during such Fiscal Year);
PLUS
(iii) all distributions permitted to be made pursuant to SECTION
7.2.6(A)(I)(A) for such Fiscal Year;
PLUS
(iv) the portion of the amount of provision for taxes based on
the income or profits of the Borrower and its Subsidiaries that has
been accrued to be paid in respect of such Fiscal Year;
PLUS
(v) the amount of the net increase in Working Capital (and MINUS
the amount of any net decrease in Working Capital) of the Borrower and
its Subsidiaries from the last day of the preceding Fiscal Year;
PLUS
(vi) Interest Expense for such Fiscal Year;
PLUS
(vii) the aggregate amount of all voluntary prepayments of the
Revolving Loans made during such Fiscal Year to the extent that, on
the day any such voluntary prepayment was made, the Borrower made a
voluntary reduction of the Revolving Loan Commitment pursuant to
SECTION 2.3;
PLUS
(viii) the aggregate amount of dividends and other distributions
made pursuant to SECTION 7.2.6(A)(I)(C) during such Fiscal Year,
PROVIDED that, for purposes of determining the amount of Excess Cash Flow for
Fiscal Year 1999, Fiscal Year 1999 shall be deemed to begin on the date that the
Merger is consummated and end on December 31, 1999.
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"EXCESS INSURANCE PROCEEDS" is defined in CLAUSE (D) of SECTION 7.1.4.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to
(a) 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
(b) if such rate is not so published for any day which is a Business
Day, the average of the quotations for such day on such transactions
received by SG from three federal funds brokers of recognized standing
selected by it.
"FEE LETTER" means the confidential fee letter, dated December 16, 1998,
from SG and XX Xxxxx Securities Corporation, addressed to, and agreed to and
accepted by, the Borrower.
"FISCAL QUARTER" means any quarter of a Fiscal Year.
"FISCAL YEAR" means any period of twelve consecutive calendar months ending
on the 31st day of each December. References to a Fiscal Year with a number
corresponding to any calendar year (e.g., "Fiscal Year 1998") refer to the
Fiscal Year ending for such calendar year.
"FIXED CHARGE COVERAGE RATIO" means, as of the last day of any Fiscal
Quarter, the ratio of:
(a) sum of
(i) EBITDA for the Rolling Period ending on such day;
MINUS
(ii) Capital Expenditures made or incurred by the Borrower and
its Subsidiaries during such Rolling Period;
TO
(b) the sum of
(i) the portion of Interest Expense accrued to be paid in
respect of such Rolling Period;
PLUS
(ii) all scheduled repayments of the Term Loans made pursuant to
SECTION 3.1.2 (B) during such Rolling Period.
"F.R.S. BOARD" means the Board of Governors of the Federal Reserve System
or any successor thereto.
"FUNDED DEBT" means, as of any date of determination, any Indebtedness of
the Borrower and its Subsidiaries of a type described in CLAUSE (A), (B) or (C)
of the definition of Indebtedness, or any Contingent Liability of the Borrower
or any of its Subsidiaries in respect of any such type of Indebtedness.
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"FUNDED DEBT TO EBITDA RATIO" means, as of the last day of any Rolling
Period, the ratio of:
(a) Funded Debt as at the last day of such Rolling Period (LESS the
aggregate amount of Compliance Capital made during the Fiscal Quarter
immediately following such Rolling Period to the extent used to prepay
principal of Loans);
TO
(b) EBITDA for such Rolling Period.
"GAAP" is defined in SECTION 1.4.
"G&H ACQUISITION" means the acquisition by the Borrower (or one of its
wholly-owned Subsidiaries) of all of the assets included in the flexible shaft
product line and in the shielding business of G&H Technologies, Inc., so long as
after giving effect thereto the Borrower is in compliance with its obligations
under Section 7.1.12.
"GOVERNMENT RECEIVABLES" has the meaning given to that term in the
definition of "Eligible Account" in this SECTION 1.1.
"GUARANTEED OBLIGATIONS" is defined in SECTION 9.1.
"GUARANTOR SECURITY AGREEMENT" means each Amended and Restated Guarantor
Security Agreement executed and delivered pursuant to SECTION 5.1.7,
substantially in the form of EXHIBIT I-2 hereto, as amended, supplemented,
restated or otherwise modified from time to time.
"HAZARDOUS MATERIAL" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource Conservation
and Recovery Act, as amended;
(c) any oil or petroleum product;
(d) asbestos in any form that is or could become friable; or
(e) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material or substance within the meaning of any other applicable
federal, state or local law, regulation, ordinance or requirement
(including consent decrees and administrative orders) relating to or
imposing liability or standards of conduct concerning any hazardous, toxic
or dangerous waste, substance or material, all as amended or hereafter
amended.
"HEDGING OBLIGATIONS" means, with respect to any Person, all liabilities of
such Person under Rate Protection Agreements.
"HEREIN", "HEREOF", "HERETO", "HEREUNDER" and similar terms contained in
this Agreement or any other Loan Document refer to this Agreement or such other
Loan Document, as the case may be, as a whole and not to any particular section,
paragraph or provision of this Agreement or such other Loan Document.
"IMPERMISSIBLE QUALIFICATION" means, relative to the opinion or
certification of any independent public
-15-
accountant as to any financial statement of any Obligor, any qualification or
exception to such opinion or certification
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination of matters
relevant to such financial statement; or
(c) which relates to the treatment or classification of any item in
such financial statement and which, as a condition to its removal, would
require an adjustment to such item the effect of which would be to cause
such Obligor to be in default of any of its obligations under SECTION
7.2.4.
"INCLUDING" means including without limiting the generality of any
description preceding such term, and, for purposes of this Agreement and each
other Loan Document, the parties hereto agree that the rule of contract
interpretation to the effect that where general words are followed by a specific
listing of items, the general words shall not be given their widest meaning,
shall not be applicable to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned.
"INDEBTEDNESS" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money, all
obligations of such Person evidenced by bonds, debentures, notes,
subordinated debt or other similar instruments and all capital stock which
has redemption provisions exercisable at the option of the holder thereof
in whole or in part prior to the Stated Maturity Date, for cash;
(b) all obligations, contingent or otherwise, relative to the face
amount of all letters of credit, whether or not drawn, and banker's
acceptances issued for the account or upon the application of such Person;
(c) all obligations of such Person as lessee under leases which have
been or should be, in accordance with GAAP, recorded as Capitalized Lease
Liabilities;
(d) net liabilities of such Person with respect to each Hedging
Obligation;
(e) whether or not so included as liabilities in accordance with
GAAP, all obligations of such Person to pay the deferred purchase price of
property or services, other than trade accounts payable incurred in the
ordinary course of business;
(f) indebtedness (excluding prepaid interest thereon) secured by a
Lien on property owned or being purchased by such Person (including
indebtedness arising under conditional sales or other title retention
agreements), whether or not such indebtedness shall have been assumed by
such Person or is limited in recourse; and
(g) all Contingent Liabilities of such Person in respect of any of
the foregoing.
For all purposes of this Agreement, the Indebtedness of any Person shall (x)
include the Indebtedness of any partnership or joint venture in which such
Person is a general partner thereof or has direct liability in the nature of a
general partner and (y) exclude any accrued and unpaid Management Fees.
"INDEMNIFIED LIABILITIES" is defined in SECTION 11.4.
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"INDEMNIFIED PARTIES" is defined in SECTION 11.4.
"INTELLECTUAL PROPERTY COLLATERAL", with respect to the Borrower and the
Guarantors, has the meaning provided for such term in the Borrower Security
Agreement and the Guarantor Security Agreements, respectively.
"INTEREST COVERAGE RATIO" means, as of the last day of any Fiscal Quarter,
the ratio of:
(a) EBITDA for the Rolling Period ending on such day
TO
(b) the portion of Interest Expense accrued to be paid in respect of
such Rolling Period.
"INTEREST EXPENSE" means, for any period, (a) the aggregate consolidated
interest expense of the Borrower and its Subsidiaries for such period, as
determined in accordance with GAAP, including, without duplication, net
obligations of the Borrower and its Subsidiaries (including fees) in respect of
Rate Protection Agreements and the portion of any Capitalized Lease Liabilities
of the Borrower and its Subsidiaries allocable to interest expense, and (b) all
commitment fees, agency fees, letter of credit fees and other ongoing fees in
respect of Indebtedness of the Borrower and its Subsidiaries, in each case
payable for such period; PROVIDED that for any period ending prior to March 31,
2000, "Interest Expense" shall mean Interest Expense (as calculated in this
definition) for the period beginning on the date that the Merger is consummated
and ending on the last day of the relevant period, annualized for a year of 365
days (PROVIDED that the amounts provided for in this proviso shall not be
included in calculating "Interest Expense" for purposes of the definition of
"Excess Cash Flow").
"INTEREST PERIOD" means, relative to any LIBO Rate Loan, the period
beginning on (and including) the date on which such LIBO Rate Loan is made or
continued as, or converted into, a LIBO Rate Loan pursuant to SECTION 2.4 or 2.5
and ending on (but excluding) the day which is one, three or six months
thereafter (or, if such month has no numerically corresponding day, on the last
Business Day of such month), as the Borrower may select in its relevant notice
pursuant to SECTION 2.4 or 2.5; PROVIDED, HOWEVER, that
(a) the Borrower shall not be permitted to select Interest Periods to
be in effect at any one time which have expiration dates occurring on more
than five different dates;
(b) if such Interest Period would otherwise end on a day which is not
a Business Day, such Interest Period shall end on the next following
Business Day (unless such next following Business Day is the first Business
Day of a month, in which case such Interest Period shall end on the
Business Day next preceding the day on which such Interest Period would
otherwise end); and
(c) the Borrower shall not be permitted to select, and there shall not
be applicable, any Interest Period that would be broken by reason of a
mandatory payment of Term Loans required pursuant to CLAUSE (B), (C) or (D)
of SECTION 3.1.2 or any Interest Period for any Loan which would end later
than the Stated Maturity Date for such Loan.
"INVENTORY" means any "inventory" (as defined in Section 9-109(4) of the
U.C.C.) of any Person.
"INVESTMENT" means, relative to any Person,
(a) any loan or advance made by such Person to any other Person
(excluding commission, reasonable travel, relocation and similar advances
to officers and employees made in the ordinary course of business); and
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(b) any ownership or similar interest held by such Person in any
other Person.
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without adjustment
by reason of the financial condition of such other Person) and shall, if made by
the transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such property.
"ISSUANCE REQUEST" means a Letter of Credit request and certificate duly
executed by an Authorized Officer of the Borrower, substantially in the form of
EXHIBIT E hereto.
"ISSUER" means SG in its capacity as issuer of the Letters of Credit. At
the request of SG, another Lender or an Affiliate of SG may issue one or more
Letters of Credit hereunder, in which case the term "Issuer" as used herein
shall refer to each of SG, any such Lender and any such Affiliate of SG.
"LENDER" is defined in the PREAMBLE.
"LENDER ASSIGNMENT AGREEMENT" means a lender assignment agreement in
substantially the form of EXHIBIT L hereto.
"LETTER OF CREDIT" is defined in CLAUSE (A) of SECTION 2.1.2.
"LETTER OF CREDIT COMMITMENT" means, with respect to any Issuer, such
Issuer's obligation to issue Letters of Credit pursuant to SECTIONS 2.1.2 and
2.7 and, with respect to each of the other Lenders, the obligations of each such
Lender to participate in such Letters of Credit pursuant to SECTION 2.7.1.
"LETTER OF CREDIT COMMITMENT AMOUNT" means, on any date, $5,000,000, as
such amount may be permanently reduced from time to time pursuant to SECTION
2.3.
"LETTER OF CREDIT OUTSTANDINGS" means, on any date, an amount equal to the
sum of
(a) the then aggregate amount which is undrawn and available under
all issued and outstanding Letters of Credit;
PLUS
(b) the then aggregate amount of all unpaid and outstanding
Reimbursement Obligations.
"LIBO RATE" is defined in SECTION 3.2.1.
"LIBO RATE LOAN" means a Loan bearing interest, at all times during an
Interest Period applicable to such Loan, at a fixed rate of interest determined
by reference to the LIBO Rate (Reserve Adjusted).
"LIBO RATE (RESERVE ADJUSTED)" is defined in SECTION 3.2.1.
"LIBOR OFFICE" means, relative to any Lender, the office of such Lender
designated as such on SCHEDULE III hereto or designated in a Lender Assignment
Agreement, or such other office of a Lender as designated from time to time by
notice from such Lender to the Borrower and the Agent, whether or not outside
the United States, which shall be making or maintaining LIBO Rate Loans of such
Lender hereunder.
"LIBOR RESERVE PERCENTAGE" is defined in SECTION 3.2.1.
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"LIEN" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property to secure payment of a debt or
performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.
"LOAN" means, as the context may require, a Revolving Loan or a Term Loan.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Letters of Credit,
the Fee Letter, the Borrower Security Agreement, each Guarantor Security
Agreement, the Pledge Agreements, the Mortgages, each Rate Protection Agreement
with a Lender, each Lender Assignment Agreement and each other agreement,
instrument or document executed and delivered pursuant to or in connection with
this Agreement and the other Loan Documents (including the agreements executed
from time to time by Subsidiaries of the Borrower pursuant to SECTION 7.1.8).
"MANAGEMENT AGREEMENT" means the Management Agreement, dated May 28, 1998,
between the Parent, certain of its Subsidiaries and Millbrook Capital
Management, Inc., as it may be amended, modified, supplemented or restated from
time to time.
"MANAGEMENT FEES" means those certain fees (excluding reimbursements of
out-of-pocket expenses) payable under the Management Agreement.
"MERGER" means the merger of KCI Acquisition Corp. into Valley Forge
pursuant to the terms of the Merger Agreement, as amended by Amendment No. 1
thereto, dated as of December 28, 1998.
"MERGER AGREEMENT" means the Agreement and Plan of Merger, dated as of
December 2, 1998, among Valley Forge, the Borrower and KCI Acquisition Corp.
"MORTGAGES" is defined in SECTION 7.1.13, and shall include any and all
mortgages, deeds of trust and other real estate security instruments securing
the payment of the Obligations.
"NAPA LEASE ARRANGEMENT" means the lease arrangement, dated as of January
18, 1995, pursuant to which Valley Forge leased from Xxxxxxxxx Associates, L.P.
real property and facilities located at 0000 Xxxxxxxxx Xxxxx, Xxxx, Xxxxxxxxxx.
"NET COST SAVINGS" means, with respect to any Permitted Acquisition, an
amount equal to 50% of the cost savings reasonably estimated by the Borrower to
be obtained during the 12-month period following such Permitted Acquisition, as
a result of such Permitted Acquisition, where
(a) such costs savings include only the "hard" cost savings (such as
from the planned reduction of overhead and by planned reductions in the
number of employees) of such Permitted Acquisition, and
(b) such cost savings are calculated net of expenses associated with
such cost savings (such as plant closure costs and severance expenses),
PROVIDED that the amount of such expenses shall be reduced by the amount of
any contributions to the common equity capital of the Borrower that were
used to partially finance such Permitted Acquisition.
"NET DEBT PROCEEDS" means, in the case of the issuance, incurrence,
placement or sale of any Indebtedness (other than Indebtedness in respect of the
Notes and Indebtedness in respect of the Senior Notes or any refinancing of the
Senior Notes permitted pursuant to SECTION 7.2.2(G)) of the type referred to in
CLAUSE (A) of the definition thereof (whether pursuant to a public or private
offering), permitted to be outstanding pursuant to SECTION 7.2.2 or otherwise
permitted with the prior consent of the Required Lenders from and after the
Effective Date, the excess of
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(a) the gross cash proceeds received by the Borrower or any of its
Subsidiaries from such issuance, incurrence, placement or sale of permitted
Indebtedness (including any cash payments received by way of deferred
payment of principal pursuant to a permitted promissory note or installment
receivable or otherwise, but only as and when received);
OVER
(b) in connection with the issuance, incurrence, placement or sale of
permitted Indebtedness, (i) all reasonable and customary fees and expenses
actually paid by the Borrower or its Subsidiaries and (ii) underwriters'
discounts and commissions not payable to the Borrower, any of its
Subsidiaries or any of their Affiliates.
"NET DISPOSITION PROCEEDS" means the excess of
(a) the gross cash proceeds (other than proceeds from any sale of
Inventory of the Borrower or any of its Subsidiaries in the ordinary course
of their business and other than any consideration received in the form of
assumption by the acquiring Person of Indebtedness in connection with any
Permitted Acquisition) received by the Borrower or any of its Subsidiaries
from any Permitted Disposition made after the Effective Date, including any
cash payments received by way of a deferred payment of principal pursuant
to a permitted note or installment receivable or otherwise, but only when
and as received;
OVER
(b) (i) all legal, investment banking, brokerage, accounting,
financial advisory, title, recording, and other professional fees and
expenses actually incurred by the Borrower and its Subsidiaries in
connection with such Permitted Disposition, (ii) all taxes actually paid or
estimated by the Borrower (in good faith) to be payable in cash in
connection with such Permitted Disposition; PROVIDED, HOWEVER, that if,
after the payment of all taxes with respect to such Permitted Disposition,
the amount of estimated taxes, if any, pursuant to CLAUSE (II) above
exceeded the amount of taxes actually paid in cash in respect of such
Permitted Disposition, the aggregate amount of such excess shall be
immediately payable, pursuant to CLAUSE (C) of SECTION 3.1.2, as Net
Disposition Proceeds, (iii) the amount of income taxes payable (assuming
the Taxpayer is subject to taxation at the highest applicable marginal rate
and determined without regard to any other tax items of the Borrower or the
Taxpayer) by the Taxpayers arising from such Permitted Disposition
(provided that a certificate is delivered to the Agent, satisfactory in
form and substance to the Agent, by Price Waterhouse Coopers LLC (or other
independent public accountants of nationally recognized standing, with the
prior written approval of the Agent) at the time of such Permitted
Disposition setting forth in detail the calculation of such amount, (iv) if
permitted hereunder or otherwise by the Required Lenders, the aggregate
amount of any Indebtedness of the type referred to in CLAUSE (A) or (C) of
the definition thereof which is secured by such asset and required to be
repaid from such gross cash proceeds and (v) the amount of any reserve or
escrow established in respect of any claims or liabilities of or payable by
the Borrower or its Subsidiaries in respect of such Permitted Disposition.
"NET EQUITY PROCEEDS" means, in the case of the issuance, placement or sale
of equity securities or other ownership interests (whether pursuant to a public
or private offering, but excluding any issuance of securities or other ownership
interests to employees of the Borrower or any of its Subsidiaries (including any
issuance upon the exercise of options held by any such employee) so long as the
aggregate amount received by the Borrower or any of its Subsidiaries in
connection with all such issuances does not exceed $2,000,000) from and after
the Effective Date (other than any such issuance, placement or sale the proceeds
of which are used to finance a Permitted Acquisition), the excess of
(a) the gross cash proceeds received by the Borrower or any of its
Subsidiaries or any corporation
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of which the Borrower is a Subsidiary from such issuance, placement or sale
of equity securities or other ownership interests (including any cash
payments received by way of deferred payment of principal pursuant to a
permitted promissory note or installment receivable or otherwise, but only
as and when received);
OVER
(b) in connection with such issuance, placement or sale of such
equity securities, all (i) legal, investment banking, brokerage,
accounting, financial advisory, title, recording, and other professional
fees and expenses actually paid by the Borrower or its Subsidiaries or any
corporation of which the Borrower is a Subsidiary and (ii) underwriters'
discounts and commissions not payable to the Borrower, any of its
Subsidiaries or any of their Affiliates.
"NET INCOME" means, for any period, all amounts (exclusive of all amounts
in respect of any extraordinary gains or losses) which, in accordance with GAAP,
would be included as net income on a consolidated statement of income of the
Borrower and its Subsidiaries for such period (and including, in any event, any
net income of any Subsidiary of the Borrower that is "held for sale").
"NEW EQUITY" is defined in SECTION 5.1.15.
"NOTE" means, as the context may require, either a Revolving Note or a Term
Note.
"OBLIGATIONS" means all obligations (monetary or otherwise) of the Borrower
and each other Obligor arising under or in connection with this Agreement, the
Notes and each other Loan Document.
"OBLIGOR" is defined in the Preamble.
"ORGANIC DOCUMENT" means, relative to any Obligor, its articles or
certificate of incorporation, its operating agreement, its by-laws, its
certificate of partnership, its certificate of organization and all shareholder
agreements, partnership agreements, voting trusts and similar arrangements
applicable to any of its authorized shares of capital stock or other ownership
interests.
"PARENT" means Key Components, Inc.
"PARTICIPANT" is defined in SECTION 11.11.2.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"PENSION PLAN" means a "pension plan", as such term is defined in Section
3(2) of ERISA, which is subject to Title IV of ERISA (other than a multiemployer
plan as defined in Section 4001(a)(3) of ERISA), and to which either the
Borrower or any of its Subsidiaries or any corporation, trade or business that
is, along with the Borrower or any of its Subsidiaries, a member of a Controlled
Group, may have liability, including any liability by reason of having been a
substantial employer within the meaning of Section 4063 of ERISA at any time
during the preceding five years, or by reason of being deemed to be a
contributing sponsor under Section 4069 of ERISA.
"PERCENTAGE" means, relative to any Lender, the percentage set forth
opposite the name of such Lender on SCHEDULE II hereto or set forth in a duly
executed Lender Assignment Agreement, as such percentage may be adjusted from
time to time pursuant to Lender Assignment Agreement(s) executed by such Lender
and its Assignee Lender(s) and delivered pursuant to SECTION 11.11.
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"PERMITTED ACQUISITION" means any acquisition by the Borrower of all of the
capital stock of, or all or substantially all of the assets of, any Person (or
of all of a line of business or business segment of any Person) that was,
immediately prior to such acquisition, in a Permitted Business, provided that
the following conditions are met:
(a) at the time of such Permitted Acquisition, or after giving effect
thereto, the ratio of (x) the aggregate principal amount of all Funded Debt
of the Borrower and its Subsidiaries (other than the Senior Notes) to (y)
EBITDA for the period of four consecutive Fiscal Quarters most recently
ended prior to the date of such Permitted Acquisition does not exceed 2.50
to 1;
(b) at least ten Business Days prior to such Permitted Acquisition,
the Borrower shall have furnished the Agent with the following:
(i) a description (in detail reasonably satisfactory to the
Agent) of such Permitted Acquisition;
(ii) a certificate of the chief financial officer of the
Borrower demonstrating compliance with, and projected compliance with,
the covenants set forth in Article VII for the term hereof (including
a reasonably detailed financial model supporting such certificate);
(iii) a true and complete copy of a fully executed purchase
agreement (or the execution form of the purchase agreement) relating
to such Permitted Acquisition, which purchase agreement shall be in
form and substance reasonably satisfactory to the Agent;
(iv) such other information relating to such Permitted
Acquisition as the Agent or any Lender may reasonably request
(including audited financial information for the prior three fiscal
years regarding the business to be acquired or, if no audited
financial statements are available, financial statements certified by
a senior financial officer of the relevant entity); and
(v) if a due diligence report is obtained by the Borrower with
respect to such Permitted Acquisition, a copy of such due diligence
report (in scope and form reasonably acceptable to the Agent);
(c) after giving effect to such Permitted Acquisition, the Borrower
shall be in compliance with its obligations under Section 7.1.12, and, if
such Permitted Acquisition consists in whole or in part of a stock
acquisition or other acquisition of equity interests, after giving effect
thereto, the Borrower shall be in compliance with the provisions of
Sections 7.1.8 and 7.1.9;
(d) after giving effect to such Permitted Acquisition, no more than
three Permitted Acquisitions shall have been consummated during the
immediately preceding 180-day period;
(e) after giving effect to such Permitted Acquisition, the aggregate
consideration paid or to be paid by the Obligors with respect to all
Permitted Acquisitions consummated during the immediately preceding 180-day
period, together with the aggregate amount of all Indebtedness assumed in
connection therewith, shall not exceed $15,000,000;
(f) immediately prior to such Permitted Acquisition and after giving
effect thereto, no Default shall be continuing; and
(g) after giving effect to such Permitted Acquisition, the sum of (x)
the Borrowing Base Amount as then in effect, MINUS (y) the aggregate
outstanding amount of Revolving Loans and Letter of Credit
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Outstandings is greater than $5,000,000.
"PERMITTED BUSINESS" means the business of the Borrower and its
Subsidiaries on the Effective Date or any business related, ancillary or
complementary thereto, or which is an extension thereof, or which involves the
light manufacturing of component products.
"PERMITTED DISPOSITION" means any sale, lease, transfer or other
disposition of assets of the Borrower or any of its Subsidiaries to the extent
that
(a) the Borrower and such Subsidiary shall have received fair value
therefor (as determined by the Board of Directors of the Borrower or such
Subsidiary); and
(b) at the time of each such disposition, no Default shall have
occurred and be continuing.
"PERMITTED HOLDER" means (a) Xxxx X. Xxxxx, (b) any Dyson Family Member,
(c) any trustee of any voting or "blind" trust established with respect to
investments of or assets held by Xxxx X. Xxxxx or any Dyson Family Member as a
consequence of or during the period of service by Xxxx X. Xxxxx as an appointed
or elected public official, of which Xxxx X. Xxxxxxxxxx (or, following his death
or disability, another member of the management of the Parent or the Borrower),
either individually or with one or more additional trustees, is a trustee and
(d) Xxxx X. Xxxxxxxxxx.
"PERMITTED QUARTERLY TAX DISTRIBUTIONS" means quarterly distributions of
Tax Amounts determined on the basis of the annualized estimated taxable income
of the Borrower and its consolidated Subsidiaries for the related Estimation
Period, but not less than the minimum amount, based upon the prior tax year's
tax liability (taking into account only tax items attributable to the Borrower)
required to avoid any underpayment penalties or interest, PROVIDED, HOWEVER,
that (A) prior to any distributions of Tax Amounts the Borrower shall deliver an
officers' certificate certifying that the Tax Amounts to be distributed were
determined pursuant to the terms of this Agreement and stating to the effect
that the Borrower is disregarded or is treated as a pass-through entity for
Federal income tax purposes and whether or not the Parent is a pass-through
entity for the relevant period and (B) at the time of such distributions, the
most recent audited financial statements of the Borrower reflect that the
Borrower was disregarded or treated as a pass-through entity for Federal income
tax purposes for the period covered by such financial statements.
"PERSON" means any natural person, corporation, partnership, firm, limited
liability company, association, trust, government, governmental agency or any
other entity, whether acting in an individual, fiduciary or other capacity.
"PLAN" means any Pension Plan or Welfare Plan.
"PLEDGE AGREEMENTS" means the Amended and Restated Pledge Agreement and the
Valley Forge Pledge Agreement.
"QUARTERLY PAYMENT DATE" means the last day of each March, June, September
and December or, if any such day is not a Business Day, the next succeeding
Business Day.
"RATE PROTECTION AGREEMENT" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement, currency swap or
exchange agreement or any similar arrangement designed to protect a Person
against fluctuations in interest rates or currency fluctuations and entered
into, from time to time, by the Borrower or any of its Subsidiaries.
"REALTY" means all right, title and interest of the Borrower and its
respective Subsidiaries in any land,
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buildings, improvements, fixtures, other interests in real estate and any
leasehold interest in any of the foregoing.
"REIMBURSEMENT OBLIGATION" is defined in SECTION 2.7.3.
"RELEASE" means any spilling, leaking, pumping, pouring emitting, emptying,
discharging, injecting, escaping, leaching, dumping or disposing of any
Hazardous Material or pollutant or contaminant into the environment (including
the abandonment or discarding of barrels, containers, and other closed
receptacles containing any Hazardous Material or pollutant or contaminant).
"REQUIRED LENDERS" means, at the time any determination thereof is to be
made, Lenders holding more than 50% of the then aggregate unpaid principal
amount of the Loans or, if no Loans are outstanding, Lenders having an aggregate
Percentage of more than 50%.
"RESOURCE CONSERVATION AND RECOVERY ACT" means the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901, ET SEQ., as in effect from time to
time.
"REVOLVING LOAN" is defined in SECTION 2.1.1.
"REVOLVING LOAN COMMITMENT" is defined in SECTION 2.1.1.
"REVOLVING LOAN COMMITMENT AMOUNT" means, on any date, $35,000,000, as such
amount may be reduced from time to time pursuant to SECTION 2.3.
"REVOLVING LOAN COMMITMENT TERMINATION DATE" means the earliest of
(a) January 19, 2005;
(b) the date on which the Revolving Loan Commitment Amount is
terminated in full or reduced to zero pursuant to SECTION 2.3; and
(c) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described above, the Revolving Loan Commitments
shall terminate automatically and without any further action.
"REVOLVING NOTE" means a promissory note of the Borrower payable to any
Lender, in the form of EXHIBIT A hereto (as such promissory note may be amended,
endorsed or otherwise modified from time to time), evidencing the aggregate
Indebtedness of the Borrower to such Lender resulting from outstanding Revolving
Loans, and also means all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.
"ROLLING PERIOD" means, as of any date of calculation, the immediately
preceding four full Fiscal Quarters.
"SECURITY AGREEMENTS" means, as the context may require, the Borrower
Security Agreement and each Guarantor Security Agreement.
"SENIOR NOTES" means the $80,000,000 10 1/2% Senior Notes Due 2008 of the
Borrower, as such Senior Notes may be amended and restated or otherwise modified
from time to time in accordance with SECTION 7.2.12.
"SG" is defined in the PREAMBLE.
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"SG BASE RATE" means, on any date and with respect to all Base Rate Loans,
a fluctuating rate per annum (rounded upward, if necessary, to the next highest
1/16 of 1%) equal to the higher of
(a) the SG Rate in effect on such day; and
(b) the Federal Funds Rate in effect on such day plus 1/2 of 1%.
The SG Base Rate is not necessarily intended to be the lowest rate of interest
determined by SG in connection with extensions of credit. Changes in the rate
of interest on that portion of any Loans maintained as Base Rate Loans will take
effect simultaneously with each change in the SG Base Rate. The Agent will give
notice promptly to the Borrower and the Lenders of changes in the SG Base Rate.
"SG RATE" means, at any time, the rate of interest then most recently
established by SG in New York, New York as its base rate for Dollars loaned in
the United States.
"STATE" means the several states of the United States of America, including
the District of Columbia, and their political subdivisions.
"STATED AMOUNT" of each Letter of Credit means the total amount available
to be drawn under such Letter of Credit upon the issuance thereof.
"STATED EXPIRY DATE" is defined in SECTION 2.7.
"STATED MATURITY DATE" means (a) with respect to Revolving Loans, the
Revolving Loan Commitment Termination Date, and (b) with respect to Term Loans,
January 19, 2005.
"SUBSIDIARY" means, with respect to any Person, (a) any corporation of
which more than 50% of the outstanding capital stock having ordinary voting
power to elect the board of directors of such corporation (irrespective of
whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned or controlled by such
Person, by such Person and one or more Subsidiaries of such Person, or by one or
more other Subsidiaries of such Person, or (b) any partnership, joint venture,
limited liability company or other entity as to which such Person, such Person
and one or more of its Subsidiaries or one or more Subsidiaries of such Person
owns more than a 50% ownership, equity or similar interest or has power to
direct or cause the direction of management and policies, or the power to elect
the managing partner (or the equivalent), of such partnership, joint venture,
limited liability company or other entity, as the case may be.
"TAX AMOUNTS" means, with respect to any taxable period, an amount equal to
(A) the product of (x) the taxable income of the Borrower and its consolidated
Subsidiaries for such period as determined by the Tax Amounts CPA and (y) the
Tax Percentage reduced by (B) to the extent not previously taken into account,
any income tax benefit attributable to the tax items of the Borrower and its
consolidated Subsidiaries which could legally be realized (without regard to the
actual realization) by the Taxpayers with respect to tax items of the Borrower
and its consolidated Subsidiaries in the current or any prior taxable year, or
portion thereof, commencing on or after the Closing Date (including any tax
losses or tax credits up to the aggregate amount of income tax benefits
previously legally realizable by the Taxpayers), computed at the applicable Tax
Percentage for the year that such benefit is taken into account for purposes of
this computation.
"TAX AMOUNTS CPA" means a nationally recognized certified public accounting
firm.
"TAXES" is defined in SECTION 4.6.
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"TAXPAYER(S)" means, (i) for any period when Parent is a pass through
entity for federal income tax purposes, the stockholders of Parent and (ii) for
any period when the Parent is not a pass through entity for federal income tax
purposes, the Parent.
"TAX PERCENTAGE" means, for a particular taxable year, the highest
effective marginal combined rate of Federal, state and local income tax, imposed
on any Taxpayer, as certified by the Tax Amounts CPA in a certificate filed with
the Agent. The rate of "state income tax" to be taken into account for purposes
of determining the Tax Percentage for a particular taxable year shall be deemed
to be the highest state marginal tax rate applicable to any Taxpayer.
"TENDER OFFER" means the tender by KCI Acquisition Corp. for all of the
capital stock of Valley Forge, pursuant to the Offer to Purchase for Cash All
Outstanding Shares of Valley Forge Corporation, dated December 9, 1998, as
supplemented by the Supplement dated December 31, 1998.
"TERM LOAN" is defined in SECTION 2.1.3.
"TERM LOAN COMMITMENT" is defined in SECTION 2.1.3.
"TERM LOAN COMMITMENT AMOUNT" means $60,000,000.
"TERM NOTE" means a promissory note of the Borrower payable to any Lender,
in the form of EXHIBIT B hereto (as such promissory note may be amended,
endorsed or otherwise modified from time to time), evidencing the aggregate
Indebtedness of the Borrower to such Lender resulting from outstanding Term
Loans, and also means all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.
"TOTAL COMMITMENT AMOUNT" means the sum, without duplication, of the
Revolving Loan Commitment Amount and the Term Loan Commitment Amount.
"TRUE-UP AMOUNT" means, in respect of a particular taxable year, an amount
determined by the Tax Amounts CPA equal to the difference between (i) the
aggregate Permitted Quarterly Tax Distributions actually distributed in respect
of such taxable year and (ii) the actual Tax Amounts for such year. For
purposes of this Agreement, the amount equal to the excess, if any, of the
amount described in clause (i) over the amount described in clause (ii) above
shall be referred to as the "True-up Amount due to the Borrower" and the excess,
if any, of the amount described in clause (ii) over the amount described in
clause (i) above shall be referred to as the "True-up Amount due to the
Taxpayers."
"TYPE" means, relative to any Loan, whether such Loan is maintained as a
Base Rate Loan or a LIBO Rate Loan.
"U.C.C." means the Uniform Commercial Code as from time to time in effect
in the State of New York.
"UNITED STATES" or "U.S." means the United States of America, its fifty
States and the District of Columbia.
"VALLEY FORGE" means Valley Forge Corporation, a corporation organized
under the laws of the State of Delaware.
"VALLEY FORGE PLEDGE AGREEMENT" means the Valley Forge Pledge Agreement
executed and delivered pursuant to CLAUSE (A) of SECTION 5.1.6, substantially in
the form of EXHIBIT H-2 hereto, as the same may be amended, supplemented,
restated or otherwise modified from time to time.
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"WELFARE PLAN" means a "welfare plan" (as such term is defined in Section
3(1) of ERISA), maintained by the Borrower or for which the Borrower or any of
its Subsidiaries has any contractual liability.
"WORKING CAPITAL" means, at any time of determination, the excess of
(a) the consolidated current assets of the Borrower and its
Subsidiaries at such time (other than cash and cash equivalents held by the
Borrower and its Subsidiaries)
OVER
(b) the consolidated current liabilities of the Borrower and its
Subsidiaries at such time (other than the current portion of outstanding
Term Loans and the current portion of the Senior Notes).
SECTION 1.2. USE OF DEFINED TERMS. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and each
other Loan Document.
SECTION 1.3. CROSS-REFERENCES. Unless otherwise specified, references in
this Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and, unless otherwise specified, references in any
Article, Section or definition to any clause are references to such clause of
such Article, Section or definition.
SECTION 1.4. ACCOUNTING AND FINANCIAL DETERMINATIONS. (a) Unless
otherwise specified, all accounting terms used herein or in any other Loan
Document shall be interpreted, all accounting determinations and computations
hereunder or thereunder (including under SECTION 7.2.4) shall be made, and all
financial statements required to be delivered hereunder or thereunder shall be
prepared, in accordance with those generally accepted accounting principles
("GAAP") applied in the preparation of the financial statements referred to in
SECTION 6.5.
(b) For purposes of making accounting determinations and computations
(including under Section 7.2.4), for all periods, and for all dates, prior to
May 28, 1998 each reference to the Borrower shall be deemed to be a reference to
the Parent.
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES,
LETTERS OF CREDIT AND NOTES
SECTION 2.1. COMMITMENTS. On the terms and subject to the conditions of
this Agreement (including ARTICLE V), each Lender severally agrees to make Loans
pursuant to the Commitments described in this SECTION 2.1.
SECTION 2.1.1. REVOLVING LOAN COMMITMENT. From time to time on any
Business Day occurring prior to the Revolving Loan Commitment Termination Date,
each Lender agrees to make loans (relative to such Lender, its "REVOLVING
LOANS") to the Borrower equal to such Lender's Percentage of the aggregate
amount of the Borrowing of Revolving Loans requested by the Borrower to be made
on such day; PROVIDED that at all times the unused amount of the Revolving Loan
Commitment shall be at least equal to an amount equal to $19 times the total
number of shares of Valley Forge Corporation (x) that have not been purchased by
KCI Acquisition Corp. pursuant to the Tender Offer and (y) as to which merger
consideration has not been paid at or prior to such time pursuant to and in
accordance with the Merger Agreement. The Commitment of each Lender described
in this Section is herein referred to as its "REVOLVING LOAN COMMITMENT". On
the terms and subject to the conditions hereof, the Borrower may from time to
time borrow, prepay and reborrow the Revolving Loans.
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SECTION 2.1.2. LETTER OF CREDIT COMMITMENT. From time to time on any
Business Day occurring prior to the Revolving Loan Commitment Termination Date,
the applicable Issuer will
(a) issue one or more standby letters of credit (relative to such
Issuer, its "LETTER OF CREDIT") for the account of the Borrower in respect
of obligations of the Borrower in Stated Amounts requested by the Borrower
on such day with a Stated Expiry Date not later than one year from such
requested date of issuance; or
(b) extend the Stated Expiry Date of an existing Letter of Credit
previously issued hereunder to a date not later than the earlier of (i) the
Revolving Loan Commitment Termination Date and (ii) one year from the date
of such extension.
SECTION 2.1.3. TERM LOAN COMMITMENT. On the Closing Date, each Lender
agrees to make one loan (relative to such Lender, its "TERM LOAN") to the
Borrower equal to such Lender's Percentage of the aggregate amount of the
Borrowing of Term Loans requested by the Borrower to be made on such day. The
Commitment of each Lender described in this Section is herein referred to as its
"TERM LOAN COMMITMENT". No amounts paid or prepaid with respect to Term Loans
may be reborrowed.
SECTION 2.2. LENDERS NOT PERMITTED OR REQUIRED TO MAKE CREDIT EXTENSIONS.
No Lender shall be permitted or required to make any Loan, and no Issuer shall
be obligated to issue or extend any Letter of Credit, under any circumstance
described below in this Section.
SECTION 2.2.1. REVOLVING LOANS. No Borrowing of Revolving Loans shall be
made if, after giving effect thereto, the aggregate outstanding principal amount
of all the Revolving Loans, together with the aggregate amount of all Letter of
Credit Outstandings, (a) of all the Lenders would exceed the lesser of the
Revolving Loan Commitment Amount or the then existing Borrowing Base Amount, or
(b) of such Lender would exceed the lesser of such Lender's Percentage of the
Revolving Loan Commitment Amount or such Lender's Percentage of the then
existing Borrowing Base Amount.
SECTION 2.2.2. LETTERS OF CREDIT. No issuance or extension of a Letter of
Credit shall be made if, after giving effect thereto, (a) the aggregate amount
of all Letter of Credit Outstandings would exceed the Letter of Credit
Commitment Amount or (b) the aggregate amount of all Letter of Credit
Outstandings together with the aggregate outstanding principal amount of all
Revolving Loans, would exceed the lesser of the Revolving Loan Commitment Amount
or the then existing Borrowing Base Amount.
SECTION 2.2.3. TERM LOANS. No Borrowing of Term Loans shall be made if,
after giving effect thereto, the aggregate principal amount of all the Term
Loans (a) of all Lenders would exceed the Term Loan Commitment Amount or (b) of
such Lender would exceed such Lender's Percentage of the Term Loan Commitment
Amount.
SECTION 2.3. OPTIONAL REDUCTION OF THE COMMITMENT AMOUNTS. The Borrower
may, from time to time on any Business Day occurring after the time of the
initial Credit Extension hereunder, voluntarily reduce the unused amount of the
Revolving Loan Commitment Amount; PROVIDED, HOWEVER, that all such reductions
shall require at least one Business Day's prior notice to the Agent and be
permanent, and any partial reduction of the unused amount of the Revolving Loan
Commitment Amount shall be in a minimum amount of $1,000,000 and in an integral
multiple of $500,000.
SECTION 2.4. BORROWING PROCEDURE. By delivering a Borrowing Request to
the Agent on or before 10:00 a.m. (New York City time) on a Business Day, the
Borrower may from time to time irrevocably request that Base Rate Loans be made
on such Business Day or on another Business Day within five Business Days of
such Business Day, or that LIBO Rate Loans be made on any Business Day not less
than three nor more than five Business Days thereafter. All Loans shall be made
in a minimum aggregate amount of $100,000 and an aggregate
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integral multiple of $50,000 or, if less, in the unused amount of the applicable
Commitment, and the proceeds of all Loans shall be used solely for the purposes
described in SECTION 4.10. On the terms and subject to the conditions of this
Agreement, each Borrowing shall be made on the Business Day specified in such
Borrowing Request. On or before 11:00 a.m. (New York City time) on such
Business Day, each Lender shall deposit with the Agent same day funds in an
amount equal to such Lender's Percentage of the requested Borrowing. Such
deposit will be made to an account which the Agent shall specify from time to
time by notice to the Lenders. To the extent funds are received from the
Lenders, the Agent shall make such funds available to the Borrower by wire
transfer to the accounts the Borrower shall have specified in its Borrowing
Request. No Lender's obligation to make any Loan shall be affected by any other
Lender's failure to make any Loan.
SECTION 2.5. CONTINUATION AND CONVERSION ELECTIONS. By delivering a
Continuation/Conversion Notice to the Agent on or before 11:00 a.m. (New York
City time) on a Business Day, the Borrower may from time to time irrevocably
elect, on not less than one Business Day's notice in the case of conversions to
Base Rate Loans, or three Business Days' notice in the case of conversions to or
continuations of LIBO Rate Loans, and in either case not more than five Business
Days' notice, that all, or any portion in a minimum aggregate amount of $100,000
and an aggregate integral multiple of $50,000 be, in the case of Base Rate Loans
converted into LIBO Rate Loans or be, in the case of LIBO Rate Loans converted
into Base Rate Loans or continued as LIBO Rate Loans (in the absence of delivery
of a Continuation/Conversion Notice with respect to any LIBO Rate Loan at least
three Business Days (but not more than five Business Days) before the last day
of the then current Interest Period with respect thereto, such LIBO Rate Loan
shall, on such last day, automatically convert to a Base Rate Loan); PROVIDED,
HOWEVER, that (a) each such conversion or continuation shall be prorated among
the applicable outstanding Revolving Loans of all Lenders and (b) no portion of
the outstanding principal amount of any Loans may be continued as, or be
converted into, LIBO Rate Loans when any Default has occurred and is continuing
(unless the Required Lenders otherwise agree in writing).
SECTION 2.6. FUNDING. Each Lender may, if it so elects, fulfill its
obligation to make, continue or convert LIBO Rate Loans hereunder by causing one
of its foreign branches or Affiliates (or an international banking facility
created by such Lender) to make or maintain such LIBO Rate Loan; PROVIDED,
HOWEVER, that such LIBO Rate Loan shall nonetheless be deemed to have been made
and to be held by such Lender, and the obligation of the Borrower to repay such
LIBO Rate Loan shall nevertheless be to such Lender for the account of such
foreign branch, Affiliate or international banking facility. In addition, the
Borrower hereby consents and agrees that, for purposes of any determination to
be made for purposes of SECTIONS 4.1 through 4.5, it shall be conclusively
assumed that each Lender elected to fund all LIBO Rate Loans by purchasing
Dollar deposits in its LIBOR Office's interbank eurodollar market.
SECTION 2.7. ISSUANCE PROCEDURES. By delivering to the Agent an Issuance
Request on or before 11:00 a.m., New York City time, on a Business Day, the
Borrower may, from time to time irrevocably request, on not less than three nor
more than 5 Business Days' notice, that the applicable Issuer issue, increase
the Stated Amount of, or extend the Stated Expiry Date of, as the case may be, a
Letter of Credit in such form as may be requested by the Borrower and approved
by such Issuer, such Letter of Credit to be used solely for the purposes
described in SECTION 4.10. Each Letter of Credit shall by its terms be stated
to expire on a date (its "STATED EXPIRY DATE") no later than the earlier of
(a) one year from the date of issuance (subject to extensions for additional
one-year periods) and (b) the Revolving Loan Commitment Termination Date. The
applicable Issuer will make available to the beneficiary thereof the original of
each Letter of Credit which it issues hereunder. Unless notified in writing by
the Required Lenders before it issues a Letter of Credit that a Default exists,
the applicable Issuer may issue the requested Letter of Credit in accordance
with such Issuer's customary practices.
SECTION 2.7.1. OTHER LENDERS' PARTICIPATION. Upon the issuance of each
Letter of Credit issued by an Issuer pursuant hereto, and without further
action, each Lender (other than such Issuer) shall be deemed to have irrevocably
and unconditionally purchased (without recourse, representation or warranty), to
the extent of its Percentage, a participation interest in such Letter of Credit
(including the Contingent Liability and any
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Reimbursement Obligation with respect thereto), and such Lender shall, to the
extent of its applicable Percentage, be responsible for reimbursing promptly
(and in any event within one Business Day together with interest at the Federal
Funds Rate (rounded upward, if necessary, to the next highest 1/16 of 1%) for
each day until reimbursement is made) the Issuer for Reimbursement Obligations
which have not been reimbursed by the Borrower in accordance with SECTION 2.7.3
or which have been reimbursed by the Borrower but have been required to be
returned or disgorged by such Issuer. In addition, such Lender shall, to the
extent of its Percentage and so long as it shall have complied with its
obligations under this Section and SECTION 2.7.3, be entitled to receive a
ratable portion of the Letter of Credit fees payable pursuant to SECTION 3.3.3
with respect to each Letter of Credit and of interest payable pursuant to
SECTION 3.2 with respect to any Reimbursement Obligation.
SECTION 2.7.2. DISBURSEMENTS. The applicable Issuer will notify the
Borrower and the Agent promptly of the presentment for payment of any Letter of
Credit issued by such Issuer, together with notice of the date (the
"DISBURSEMENT DATE") such payment shall be made (each such payment, a
"DISBURSEMENT"). Subject to the terms and provisions of such Letter of Credit
and this Agreement, such Issuer shall make such payment to the beneficiary (or
its designee) of such Letter of Credit. Prior to 11:00 a.m. (New York City
time) on the first Business Day following the Disbursement Date, the Borrower
will reimburse the Agent, for the account of such Issuer, for all amounts which
such Issuer has disbursed under such Letter of Credit, together with interest
thereon at a rate per annum equal to the highest rate per annum then in effect
pursuant to SECTION 3.2 for the period from the Disbursement Date through the
date of such reimbursement.
SECTION 2.7.3. REIMBURSEMENT. The obligation (a "REIMBURSEMENT
OBLIGATION") of the Borrower under SECTION 2.7.2 to reimburse the applicable
Issuer with respect to each Disbursement (including interest thereon), and, upon
the failure of the Borrower to reimburse such Issuer (or if any reimbursement by
the Borrower must be returned or disgorged by such Issuer for any reason), each
Lender's obligation under SECTION 2.7.1 to reimburse such Issuer, shall be
absolute and unconditional under any and all circumstances and irrespective of
any setoff, counterclaim or defense to payment which the Borrower or such
Lender, as the case may be, may have or have had against such Issuer or any
Lender, including any defense based upon the failure of any Disbursement to
conform to the terms of the applicable Letter of Credit or any non-application
or misapplication by the beneficiary of the proceeds of such Letter of Credit;
PROVIDED, HOWEVER, that after paying in full its Reimbursement Obligation
hereunder, nothing herein shall adversely affect the right of the Borrower or
such Lender, as the case may be, to commence any proceeding against such Issuer
for any wrongful Disbursement made by such Issuer under a Letter of Credit as a
result of acts or omissions constituting gross negligence or wilful misconduct
on the part of such Issuer.
SECTION 2.7.4. DEEMED DISBURSEMENTS. Upon the occurrence and during the
continuation of any Default of the type described in SECTION 8.1.9 or, with
notice from the Agent, upon the occurrence and during the continuation of any
other Event of Default
(a) an amount equal to that portion of all Letter of Credit
Outstandings attributable to the then aggregate amount which is undrawn and
available under all Letters of Credit issued and outstanding for the
account of the Borrower shall, without demand upon or notice to the
Borrower, be deemed to have been paid or disbursed by the applicable Issuer
under such Letters of Credit (notwithstanding that such amount may not in
fact have been so paid or disbursed); and
(b) upon notification by the Agent to the Borrower of its obligations
under this Section, the Borrower shall be immediately obligated to
reimburse the applicable Issuer for the amount deemed to have been so paid
or disbursed by such Issuer.
Any amounts so payable by the Borrower pursuant to this Section shall be
deposited in cash in an account under the sole control of the Agent and
otherwise on terms satisfactory to the Agent and held as collateral security for
the Obligations in connection with the Letters of Credit issued by the Issuers.
In the case of any such deemed
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disbursement resulting from the occurrence of a Default, if such Default has
been cured or waived, the Agent shall return to the Borrower all amounts then on
deposit with the Agent pursuant to this Section which have not been applied to
the partial satisfaction of such Obligations.
SECTION 2.7.5. NATURE OF REIMBURSEMENT OBLIGATIONS. The Borrower shall
assume all risks of, and each Lender's Obligations under this SECTION 2.7 shall
not be affected by, the acts, omissions or misuse of any Letter of Credit by the
beneficiary thereof. Neither the applicable Issuer nor any Lender shall be
responsible for:
(a) the form, validity, sufficiency, accuracy, genuineness or legal
effect of any Letter of Credit or any document submitted by any party in
connection with the application for and issuance of a Letter of Credit,
even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged (except to the extent of
such Issuer's gross negligence or wilful misconduct);
(b) the form, validity, sufficiency, accuracy, genuineness or legal
effect of any instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit or the rights or benefits thereunder
or the proceeds thereof in whole or in part, which may prove to be invalid
or ineffective for any reason;
(c) failure of the applicable beneficiary to comply fully with
conditions required in order to demand payment under a Letter of Credit
(except for a failure by such Issuer to honor a demand for payment that
strictly complies with the terms of such Letter of Credit);
(d) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex, telecopy or
otherwise; or
(e) any loss or delay in the transmission or otherwise of any document
or draft required in order to make a Disbursement under a Letter of Credit.
None of the foregoing shall affect, impair or prevent the vesting of any of the
rights or powers granted to any Issuer or any Lender hereunder. In furtherance
and extension and not in limitation or derogation of any of the foregoing, any
action taken or omitted to be taken by an Issuer in good faith shall be binding
upon the Borrower and each Lender, and shall not put the Issuer or any Lender
under any resulting liability to either the Borrower or any Lender, as the case
may be.
SECTION 2.8. NOTES. Each Lender's Loans under a Commitment shall be
evidenced by a Note payable to the order of such Lender in a maximum principal
amount equal to such Lender's Percentage of the original applicable Commitment
Amount. The Borrower hereby irrevocably authorizes each Lender to make (or
cause to be made) appropriate notations on the grid attached to such Lender's
Notes (or on any continuation of such grid), which notations, if made, shall
evidence, INTER ALIA, the date of, the outstanding principal of, and the
interest rate applicable to, the Loans evidenced thereby. Such notations shall
be rebuttable presumptive evidence of the matters evidenced thereby; PROVIDED,
HOWEVER, that the failure of any Lender to make any such notations shall not
limit or otherwise affect any Obligations of the Borrower or any other Obligor.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. REPAYMENTS AND PREPAYMENTS. The Borrower shall repay in full
the unpaid principal amount of each Loan made to it upon the Stated Maturity
Date therefor and pursuant to SECTION 8.2 and SECTION 8.3. Prior thereto,
repayments and prepayments of Loans shall be made as set forth in this
SECTION 3.1.
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SECTION 3.1.1. VOLUNTARY PREPAYMENTS. Prior to the Stated Maturity Date,
the Borrower may, from time to time on any Business Day, make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of
Revolving Loans or Term Loans; PROVIDED, HOWEVER, that
(a) any such prepayments shall be applied to the Loans that the
Borrower directs;
(b) all such voluntary prepayments shall require at least one but no
more than five Business Days' prior written notice to the Agent; and
(c) all such voluntary partial prepayments shall be in an aggregate
minimum amount of $500,000 and an integral multiple of $100,000, except in
the case of Revolving Loans, which shall be in an aggregate minimum amount
of $100,000 and an integral multiple of $50,000.
Each voluntary prepayment of any Term Loans made pursuant to this Section shall
be applied, to the extent of such prepayment, in the inverse order of the
scheduled repayments of such Loans set forth in CLAUSE (B) of SECTION 3.1.2 and
shall be applied first to any Base Rate Loans outstanding prior to being applied
to any LIBO Rate Loans outstanding. Each prepayment of any Loans made pursuant
to this Section shall be without premium or penalty but subject to SECTION 4.4.
SECTION 3.1.2. MANDATORY PREPAYMENTS. Prior to the Stated Maturity Date,
(a) the Borrower agrees that it shall, on each date when the sum of
(x) the aggregate outstanding principal amount of all Revolving Loans and
(y) Letter of Credit Outstandings exceeds the lesser of the Revolving Loan
Commitment Amount (as it may be reduced from time to time) and the then
existing Borrowing Base Amount, make a mandatory prepayment of all
Revolving Loans in an amount equal to such excess (or, to the extent that
the aggregate outstanding amount of Revolving Loans is less than such
excess, deposit cash in an amount equal to such shortfall in an account as
contemplated by the penultimate sentence of SECTION 2.7.4);
(b) the Borrower shall, on each date set forth below, make a scheduled
repayment of the aggregate outstanding principal amount of Term Loans in
the amounts set forth opposite each such date:
Principal Amount Due
Repayment Date on Each Repayment Date
-------------- ----------------------
April 19, 1999 $1,250,000
July 19, 1999 $1,250,000
October 19, 1999 $1,250,000
January 19, 2000 $1,250,000
April 19, 2000 $1,500,000
July 19, 2000 $1,500,000
October 19, 2000 $1,500,000
January 19, 2001 $1,500,000
April 19, 2001 $2,500,000
July 19, 2001 $2,500,000
October 19, 2001 $2,500,000
January 19, 2002 $2,500,000
April 19, 2002 $2,750,000
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July 19, 2002 $2,750,000
October 19, 2002 $2,750,000
January 19, 2003 $2,750,000
April 19, 2003 $3,500,000
July 19, 2003 $3,500,000
October 19, 2003 $3,500,000
January 19, 2004 $3,500,000
April 19, 2004 $3,500,000
July 19, 2004 $3,500,000
October 19, 2004 $3,500,000
January 19, 2005 $3,500,000
(c)the Borrower shall,
(i) on the date of receipt by it or any of its Subsidiaries of
any Net Disposition Proceeds, Net Equity Proceeds or Net Debt
Proceeds,
(ii) on the fifth Business Day following the receipt by it or any
of its Subsidiaries of any Excess Insurance Proceeds, and
(iii) on the date of delivery of the audited financial statements
pursuant to CLAUSE (B) of SECTION 7.1.1 for each Fiscal Year,
commencing with the Fiscal Year ending December 31, 1999 (but not
later than the date such financial statements are required to be
furnished to the Lenders), in the case of Excess Cash Flow,
apply (A) 100% of all such Net Disposition Proceeds, Net Equity Proceeds,
Excess Insurance Proceeds and Net Debt Proceeds, as the case may be, and
(B) 75% of such Excess Cash Flow, (x) first, to make a mandatory prepayment
of the Term Loans to be applied to the installments thereof in the inverse
order of the scheduled repayments of the Term Loans and (y) second, to make
a mandatory prepayment of the Revolving Loans; PROVIDED, HOWEVER, that no
prepayment shall be required pursuant to this subparagraph (c) if such Net
Disposition Proceeds, Net Equity Proceeds or Net Debt Proceeds are
reinvested by the Borrower or any of its Subsidiaries in a Permitted
Acquisition or in other assets no later than 180 days after their receipt;
and
(d) the Borrower shall, immediately upon any acceleration of the
Stated Maturity Date of any Loans pursuant to SECTION 8.2 or SECTION 8.3,
repay all (or if only a portion of the Loans are accelerated thereunder,
such portion of) the Loans.
Each prepayment of any Loans made pursuant to this Section shall be made without
premium or penalty, except as specified herein.
SECTION 3.2. INTEREST PROVISIONS. Interest on the outstanding principal
amount of Loans shall accrue and be payable in accordance with this SECTION 3.2.
SECTION 3.2.1. RATES. Subject to SECTIONS 2.4 and 2.5, the Borrower may
elect, pursuant to an appropriately delivered Borrowing Request or Continuation/
Conversion Notice, that Loans comprising a Borrowing accrue interest at a rate
per annum:
(a) on that portion of the Revolving Loans maintained from time to
time as Base Rate Loans, equal to the sum of the SG Base Rate from time to
time in effect plus the Applicable Margin;
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(b) on that portion of Revolving Loans maintained as a LIBO Rate Loan,
during each Interest Period applicable thereto, equal to the sum of the
LIBO Rate (Reserve Adjusted) for such Interest Period plus the Applicable
Margin;
(c) on that portion of the Term Loans maintained from time to time as
Base Rate Loans, equal to the sum of the SG Base Rate from time to time in
effect plus the Applicable Margin; and
(d) on that portion of Term Loans maintained as a LIBO Rate Loan,
during each Interest Period applicable thereto, equal to the sum of the
LIBO Rate (Reserve Adjusted) for such Interest Period plus the Applicable
Margin.
"LIBO RATE (RESERVE ADJUSTED)" means, relative to any Loan to be made,
continued or maintained as, or converted into, a LIBO Rate Loan for any Interest
Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/16 of
1%) determined pursuant to the following formula:
LIBO Rate
LIBO Rate = -------------------------------
(Reserve Adjusted) 1.00 - LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate Loans
will be determined by the Agent on the basis of the LIBOR Reserve Percentage in
effect on, and the applicable rates furnished to and received by the Agent from
SG, two Business Days before the first day of such Interest Period.
"LIBO RATE" means, relative to any Interest Period for LIBO Rate Loans, the
rate of interest equal to the average (rounded upwards, if necessary, to the
nearest 1/16 of 1%) of the rates per annum at which Dollar deposits in
immediately available funds are offered to SG's LIBOR Office in the London,
England interbank market at or about 11:00 a.m. (London, England time) two
Business Days prior to the beginning of such Interest Period for delivery on the
first day of such Interest Period, and in an amount approximately equal to the
amount of SG's LIBO Rate Loan and for a period approximately equal to such
Interest Period.
"LIBOR RESERVE PERCENTAGE" means, relative to any Interest Period for LIBO
Rate Loans, the reserve requirements (expressed as a decimal) equal to the
maximum aggregate reserve requirements (including all basic, emergency,
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements)
specified under regulations issued from time to time by the F.R.S. Board and
then applicable to assets or liabilities consisting of or including
"Eurocurrency Liabilities", as currently defined in Regulation D of the F.R.S.
Board, having a term approximately equal or comparable to such Interest Period.
All LIBO Rate Loans shall bear interest from and including the first day of
the applicable Interest Period to (but not including) the last day of such
Interest Period at the interest rate determined as applicable to such LIBO Rate
Loan.
SECTION 3.2.2. POST-DEFAULT RATES. After the date any principal amount of
any Loan is due and payable (whether on the Stated Maturity Date, upon
acceleration or otherwise), and after the Borrower has defaulted in the payment
of any other monetary Obligation which has become due and payable, and for so
long as any such amount continues to be due and payable, the Borrower shall pay
interest (after as well as before judgment) on all amounts payable hereunder at
a rate per annum equal to the otherwise applicable rate plus an additional
margin of 2%.
SECTION 3.2.3. PAYMENT DATES. Interest accrued on each Loan shall be
payable, without duplication:
(a) on the Stated Maturity Date therefor;
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(b) on the date of any payment or prepayment, in whole or in part, of
principal outstanding on such Loan on the principal amount so paid or
prepaid;
(c) with respect to Base Rate Loans, on each Quarterly Payment Date
occurring after the Effective Date;
(d) with respect to LIBO Rate Loans, on the last day of each
applicable Interest Period (and, if such Interest Period shall exceed
90 days, on the 90th day of such Interest Period);
(e) with respect to any Base Rate Loans converted into LIBO Rate Loans
on a day when interest would not otherwise have been payable pursuant to
CLAUSE (C), on the date of such conversion; and
(f) on that portion of any Loans the Stated Maturity Date of which is
accelerated pursuant to SECTION 8.2 or SECTION 8.3, immediately upon such
acceleration.
Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Stated Maturity Date therefor, upon acceleration or
otherwise) shall be payable upon demand.
SECTION 3.3. FEES. The Borrower agrees to pay the fees set forth in this
SECTION 3.3. All such fees shall be non-refundable.
SECTION 3.3.1. REVOLVER COMMITMENT FEE. The Borrower agrees to pay to the
Agent, for the PRO RATA account of each Lender, for the period (including any
portion thereof when the Revolving Loan Commitments are suspended by reason of
the Borrower's inability to satisfy any condition of ARTICLE V) commencing on
the Effective Date and continuing through the Revolving Loan Commitment
Termination Date, a commitment fee at the rate of 1/2 of 1% per annum on such
Lender's Percentage of the sum of the average daily undrawn and unused portion
of the Revolving Loan Commitment Amount. Such commitment fees shall be payable
by the Borrower in arrears on each Quarterly Payment Date, commencing with the
first Quarterly Payment Date following the Effective Date, and on the Revolving
Loan Commitment Termination Date.
SECTION 3.3.2. LETTER OF CREDIT FEE. The Borrower agrees to pay to the
Agent, for the PRO RATA account of the Issuer and each other Lender of Revolving
Loans, a Letter of Credit fee in an amount equal to the then Applicable Margin
for LIBO Rate Revolving Loans multiplied by the Stated Amount of all Letters of
Credit outstanding, such fee to be paid quarterly in arrears on each Quarterly
Payment Date and on the Revolving Loan Commitment Termination Date. The
Borrower further agrees to pay to each Issuer (a) on the date of (x) the
issuance of each Letter of Credit, (y) each increase in the Stated Amount
thereof and (z) each extension (automatic or otherwise) of the Stated Expiry
Date thereof, an issuance fee in an amount equal to the greater of (i) $500 and
(ii) 1/4 of 1% of the Stated Amount thereof (or increase in such Stated Amount)
and (b) all reasonable costs and expenses incurred by such Issuer in connection
with such Letter of Credit.
SECTION 3.3.3. AGENT'S FEES, ETC. The Borrower agrees to pay to the Agent
for its own account, fees and/or other consideration in the amounts, on the
dates and in the manner set forth in the Fee Letter.
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 4.1. LIBO RATE LENDING UNLAWFUL. If any Lender shall determine
(which determination shall, upon notice thereof to the Borrower and the Agent,
be conclusive and binding on the Borrower) that the introduction of or any
change in or in the interpretation of any law makes it unlawful, or any central
bank or other
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governmental authority asserts that it is unlawful, for such Lender to make,
continue or maintain any Loan as, or to convert any Loan into, a LIBO Rate Loan,
the obligations of such Lender to make, continue, maintain or convert any such
LIBO Rate Loan shall, upon such determination, forthwith be suspended until such
Lender shall notify the Agent that the circumstances causing such suspension no
longer exist, and all outstanding LIBO Rate Loans of such Lender shall
automatically convert into Base Rate Loans at the end of the then current
Interest Periods with respect thereto or sooner, if required by such law or
assertion.
SECTION 4.2. DEPOSITS UNAVAILABLE. If the Agent shall have determined
that
(a) Dollar deposits in the relevant amount and for the relevant
Interest Period are not available to SG in its relevant market; or
(b) by reason of circumstances affecting SG's relevant market,
adequate means do not exist for ascertaining the interest rate applicable
hereunder to LIBO Rate Loans,
then, upon notice from the Agent to the Borrower and the Lenders, the
obligations of all Lenders under SECTION 2.4 and SECTION 2.5 to make or continue
any Loans as, or to convert any Loans into, LIBO Rate Loans shall forthwith be
suspended until the Agent shall notify the Borrower and the Lenders that the
circumstances causing such suspension no longer exist.
SECTION 4.3. INCREASED COSTS, ETC. (a) The Borrower agrees to reimburse
each Lender for any increase in the cost to such Lender of, or any reduction in
the amount of any sum receivable by such Lender in respect of, making,
continuing or maintaining (or of its obligation to make, continue or maintain)
any Loans as, or of converting (or of its obligation to convert) any Loans into,
LIBO Rate Loans (including but not limited to any imposition or effectiveness of
reserve requirements not already included in the LIBO Rate Reserve Percentage)
that arise in connection with any change in, or the introduction, adoption,
effectiveness, interpretation, reinterpretation or phase-in, after the Effective
Date, of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other governmental authority. Such Lender shall promptly notify the Agent
and the Borrower in writing of the occurrence of any such event as provided in
clause (c) below, such notice to state, in reasonable detail, the reasons
therefor and the additional amount required fully to compensate such Lender for
such increased cost or reduced amount. Such additional amounts shall be paid by
the Borrower directly to such Lender promptly (and, in any event, within 15
Business Days of receipt of such notice), and such notice shall, in the absence
of manifest error, be conclusive and binding on the Borrower.
(b) If at any time the introduction or effectiveness of or any change in
any applicable law, rule or regulation (including without limitation those
announced or published prior to the date of this Agreement), or in the
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof, or compliance by any Lender
with any request or directive issued by any such authority (whether or not
having the force of law) shall either (i) impose, modify or make applicable any
reserve, deposit, capital adequacy or similar requirement against letters of
credit issued, or participated in, by any Issuer or Lender, or (ii) impose on
any Issuer or Lender any other conditions affecting this Agreement or any Letter
of Credit; and the result of any of the foregoing is to increase the cost to any
Issuer or Lender of issuing, maintaining or participating in any Letter of
Credit, or reduce the amount of any sum received or receivable by any Issuer or
Lender hereunder with respect to Letters of Credit, then, within ten days of the
receipt of the notice referred to below (which notice shall be given by the
respective Issuer or Lender promptly after it determines such increased cost or
reduction is applicable to Letters of Credit or its participation therein) to
the Borrower by the respective Issuer or Lender (a copy of which notice shall be
sent by such Issuer or Lender to the Agent), the Borrower shall pay to such
Issuer or Lender such additional amount or amounts as will compensate such
Issuer or Lender for such increased cost or reduction. A notice submitted to
the Borrower by such Issuer or Lender, setting forth the basis for the
calculation of such additional amount or amounts necessary to compensate such
Issuer or Lender as aforesaid shall be conclusive and binding on the Borrower
absent manifest error.
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(c) Each Lender shall notify the Borrower of any event occurring after the
date of this Agreement entitling such Lender to compensation under paragraph (a)
or (b) of this SECTION 4.3 as promptly as practicable, but in any event within
30 days after such Lender obtains actual knowledge thereof, PROVIDED that if any
Lender fails to give such notice within 30 days after it obtains actual
knowledge of such an event, such Lender shall, with respect to compensation
payable pursuant to this SECTION 4.3 in respect of any costs resulting from such
event, only be entitled to payment under this SECTION 4.3 for costs incurred
from and after the date 30 days prior to the date that such Lender does give
such notice.
(d) Provided that no Default shall have occurred and be continuing, the
Borrower may, at any time, replace any Lender as to which the Borrower is
obligated to make payments under this SECTION 4.3 (or under SECTION 4.6), by
giving not less than ten Business Days' prior notice to the Agent (who shall
promptly notify such Lender), that it intends to replace such Lender with one or
more lenders (including but not limited to one or more Lenders under this
Agreement) selected by the Borrower that (i) have agreed to replace such Lender
as provided in this paragraph and (ii) are reasonably acceptable to the Agent.
Upon the effective date of any replacement under this paragraph and as a
condition to such replacement, the replacement lender or lenders shall pay to
the Lender being replaced the principal of the Loans held by such Lender and the
Borrower shall pay to such Lender, upon delivery to the Borrower of the Notes
evidencing the Loans made by such Lender, all accrued interest on such Loans and
all other amounts owing to such Lender hereunder (including any amounts payable
under SECTION 4.4 as if such Loans were being prepaid by the Borrower) whereupon
each such replacement lender (if not already a Lender) shall become a "Lender"
for all purposes of this Agreement.
SECTION 4.4. FUNDING LOSSES. In the event any Lender shall incur any loss
or expense (including any loss or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by such Lender to make,
continue or maintain any portion of the principal amount of any Loan as, or to
convert any portion of the principal amount of any Loan into, a LIBO Rate Loan)
as a result of
(a) any conversion or repayment or prepayment of the principal amount
of any LIBO Rate Loans on a date other than the scheduled last day of the
Interest Period applicable thereto, whether pursuant to SECTION 3.1 or
otherwise;
(b) any Loans not being made as LIBO Rate Loans in accordance with the
Borrowing Request therefor as a result of the conditions precedent to such
Loans not being satisfied or as a result of the Borrower attempting to
revoke such Borrowing Request; or
(c) any Loans not being continued as, or converted into LIBO Rate
Loans in accordance with the Continuation/Conversion Notice therefor,
then, upon the written notice of such Lender to the Borrower (with a copy to the
Agent), the Borrower shall promptly (and, in any event, within 5 Business Days
of receipt of such notice) pay directly to such Lender such amount as will (in
the determination of such Lender) reimburse such Lender for such loss or
expense. Such written notice (which shall include calculations in reasonable
detail) shall, in the absence of manifest error, be conclusive and binding on
the Borrower.
SECTION 4.5. INCREASED CAPITAL COSTS. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other governmental authority affects or would affect the amount of capital
required or expected to be maintained by any Lender or Issuer or any Person
controlling such Lender or Issuer, and such Lender or Issuer determines (in its
sole and absolute discretion) that the rate of return on its or such controlling
Person's capital as a consequence of its Commitments or the Loans made by such
Lender or (to the extent, if any, not covered by SECTION 4.3(B)) Letters of
Credit issued or participated in by such Lender or Issuer is reduced to a level
below that which such Lender, Issuer or such controlling Person
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(to the extent, if any, not covered by SECTION 4.3(B)) could have achieved but
for the occurrence of any such circumstance, then, in any such case upon notice
from time to time by such Lender or Issuer to the Borrower, the Borrower shall
immediately pay directly to such Lender or Issuer additional amounts sufficient
to compensate such Lender or Issuer or such controlling Person for such
reduction in rate of return. A statement of such Lender or Issuer as to any
such additional amount or amounts (including calculations thereof in reasonable
detail) shall, in the absence of manifest error, be conclusive and binding on
the Borrower. In determining such amount, such Lender or Issuer may use any
method of averaging and attribution that it (in its sole and absolute
discretion) shall deem applicable.
SECTION 4.6. TAXES. All payments by the Borrower of principal of, and
interest on, the Loans and all other amounts payable hereunder (including
Reimbursement Obligations and fees) shall be made free and clear of and without
deduction for any present or future income, excise, stamp or franchise taxes and
other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority, but excluding franchise taxes and
taxes imposed on or measured by any Lender's net income or receipts (such
non-excluded items being called "TAXES"). In the event that any withholding or
deduction from any payment to be made by the Borrower hereunder is required in
respect of any Taxes pursuant to any applicable law, rule or regulation, then
the Borrower will
(a) pay directly to the relevant authority the full amount required to
be so withheld or deducted;
(b) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
authority; and
(c) pay to the Agent for the account of the Lenders such additional
amount or amounts as is necessary to ensure that the net amount actually
received by each Lender will equal the full amount such Lender would have
received had no such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against the Agent or any Lender
with respect to any payment received by the Agent or such Lender hereunder, the
Agent or such Lender may pay such Taxes and the Borrower will promptly pay such
additional amounts (including any penalties, interest or expenses) as is
necessary in order that the net amount received by such Person after the payment
of such Taxes (including any Taxes on such additional amount) shall equal the
amount such Person would have received had no such Taxes been asserted.
If the Borrower fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Agent, for the account of the respective
Lenders, the required receipts or other required documentary evidence, the
Borrower shall indemnify the Lenders for any incremental Taxes, interest or
penalties that may become payable by any Lender as a result of any such failure.
For purposes of this SECTION 4.6, a distribution hereunder by the Agent or any
Lender to or for the account of any Lender shall be deemed a payment by the
Borrower.
Upon the request of the Borrower or the Agent, each Lender that is
organized under the laws of a jurisdiction other than the United States or any
State thereof shall, prior to the due date of any payments under the Notes,
execute and deliver to the Borrower and the Agent, on or about the first
scheduled payment date in each Fiscal Year, one or more (as the Borrower or the
Agent may reasonably request) United States Internal Revenue Service Forms 4224
or Forms 1001 or such other forms or documents (or successor forms or
documents), appropriately completed, as may be applicable to establish the
extent, if any, to which a payment to such Lender is exempt from withholding or
deduction of Taxes.
SECTION 4.7. PAYMENTS, COMPUTATIONS, ETC. Unless otherwise expressly
provided, all payments by the Borrower pursuant to or in respect of this
Agreement, the Notes, each Letter of Credit or any other Loan Document shall be
made by the Borrower to the Agent for the PRO RATA account of the Lenders
entitled to receive such payment. All such payments required to be made to the
Agent shall be made, without setoff, deduction or
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counterclaim, not later than 11:00 a.m. (New York City time), on the date due,
in same day or immediately available funds, to such account as the Agent shall
specify from time to time by notice to the Borrower. Funds received after that
time shall be deemed to have been received by the Agent on the next succeeding
Business Day. The Agent shall promptly remit in same day funds to each Lender
its share, if any, of such payments received by the Agent for the account of
such Lender. All interest and fees (including any Post-Default Rate interest
payments made pursuant to SECTION 3.2.2) shall be computed on the basis of the
actual number of days (including the first day but excluding the last day)
occurring during the period for which such interest or fee is payable over a
year comprised of 360 days (or, in the case of interest on Base Rate Loans,
365 days or, if appropriate, 366 days). Whenever any payment to be made shall
otherwise be due on a day which is not a Business Day, such payment shall
(except as otherwise required by CLAUSE (B) of the definition of the term
"INTEREST PERIOD" with respect to LIBO Rate Loans) be made on the next
succeeding Business Day and such extension of time shall be included in
computing interest and fees, if any, in connection with such payment. The Agent
is authorized to charge any account maintained by the Borrower with it for any
Obligations owing to it or any of the Lenders.
SECTION 4.8. SHARING OF PAYMENTS. If any Lender shall obtain any payment
or other recovery (whether voluntary, involuntary, by application of setoff or
otherwise) on account of any Loan (other than pursuant to the terms of SECTIONS
4.3, 4.4, 4.5 and 4.6) in excess of its PRO RATA share of payments pursuant to
SECTION 4.7, then or therewith obtained by all Lenders, such Lender shall
purchase from the other Lenders such participations in Credit Extensions made by
them (without recourse, representation or warranty) as shall be necessary to
cause such purchasing Lender to share the excess payment or other recovery
ratably with each of them; PROVIDED, HOWEVER, that if all or any portion of the
excess payment or other recovery is thereafter recovered from such purchasing
Lender, the purchase shall be rescinded and each Lender which has sold a
participation to the purchasing Lender shall repay to the purchasing Lender the
purchase price to the ratable extent of such recovery together with an amount
equal to such selling Lender's ratable share (according to the proportion of
(a) the amount of such selling Lender's required repayment to the purchasing
Lender to (b) the total amount so recovered from the purchasing Lender) of any
interest or other amount paid or payable by the purchasing Lender in respect of
the total amount so recovered. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section may, to
the fullest extent permitted by law, exercise all its rights of payment
(including pursuant to SECTION 4.9) with respect to such participation as fully
as if such Lender were the direct creditor of the Borrower in the amount of such
participation. If under any applicable bankruptcy, insolvency or other similar
law, any Lender receives a secured claim in lieu of a setoff to which this
Section applies, such Lender shall, to the extent practicable, exercise its
rights in respect of such secured claim in a manner consistent with the rights
of the Lenders entitled under this Section to share in the benefits of any
recovery on such secured claim.
SECTION 4.9. SETOFF. Each Lender shall, upon the occurrence of any Event
of Default and with the consent of the Required Lenders, to the extent permitted
under applicable law, appropriate and apply to the payment of the Obligations
owing to it (whether or not then due), and (as security for such Obligations)
the Borrower hereby grants to each Lender a continuing security interest in, any
and all balances, credits, deposits, accounts or moneys of the Borrower then or
thereafter maintained with such Lender; PROVIDED, HOWEVER, that any such
appropriation and application shall be subject to the provisions of SECTION 4.8
and each application shall be in accordance with the application provided for in
the Security Agreements (each Lender agreeing promptly to notify the Borrower
and the Agent after any such setoff and application made by such Lender; but the
failure to give such notice shall not affect the validity of such setoff and
application). The rights of each Lender under this Section are in addition to
other rights and remedies (including other rights of setoff under applicable law
or otherwise) which such Lender may have.
SECTION 4.10. USE OF PROCEEDS. The proceeds from the Credit Extensions
shall be applied as follows:
(a) in the case of Revolving Loans and Letters of Credit, (i) any
Revolving Loan or Letter of Credit may be used for working capital and
general corporate purposes of the Borrower (including to finance the
Acquisition, to make Permitted Quarterly Tax Distributions and to pay
Management Fees), (ii)
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up to $5,000,000 of the Revolving Loans may be used to finance the G&H
Acquisition and (iii) any amount of the Revolving Loan Commitments in
excess of $35,000,000 (if any) may be used to finance Permitted
Acquisitions; and
(b) in the case of Term Loans, to finance the Acquisition.
ARTICLE V
CONDITIONS TO CREDIT EXTENSIONS
SECTION 5.1. INITIAL CREDIT EXTENSION. The obligations of the Lenders
and, if applicable, the applicable Issuer to fund the initial Credit Extension
shall be subject to the prior or concurrent fulfillment of each of the
conditions precedent set forth in this SECTION 5.1 to the satisfaction of the
Agent.
SECTION 5.1.1. CORPORATE AND PARTNERSHIP DOCUMENTS, ETC. The Agent shall
have received
(a)from each Obligor, a certificate, dated the date of the initial
Credit Extension, of its Secretary or Assistant Secretary as to
(i) resolutions of its Board of Directors then in full force and
effect authorizing the execution, delivery and performance of this
Agreement, the Notes and each other Loan Document to be executed by
it;
(ii) each Organic Document of such Obligor; and
(iii) the incumbency and signatures of the officers of such
Obligor authorized to act with respect to this Agreement, the Notes
and each other Loan Document to be executed by it,
upon which certificates the Agent and each Lender may conclusively rely
until it shall have received a further certificate of the Secretary or
Assistant Secretary of such Obligor canceling or amending such prior
certificate.
SECTION 5.1.2. AGREEMENT. The Agent shall have received, with
counterparts for each Lender identified on the signature pages hereto, this
Agreement duly executed by each such Lender, the Agent and an Authorized Officer
of each of the Obligors.
SECTION 5.1.3. DELIVERY OF NOTES. The Agent shall have received, for the
account of each Lender entitled thereto, its Revolving Note and Term Note, each
dated the date of the initial Credit Extension, and duly executed and delivered
by an Authorized Officer of the Borrower.
SECTION 5.1.4. REQUIRED CONSENTS AND APPROVALS. All required consents and
approvals required to be obtained prior to the Effective Date shall have been
obtained and be in full force and effect with respect to the transactions
contemplated hereby and by the Acquisition from (a) all relevant governmental
authorities and regulatory bodies and (b) any other Person whose consent or
approval the Agent deems necessary or appropriate to effect the transactions
contemplated hereby and by the Acquisition.
SECTION 5.1.5. FINANCIAL INFORMATION, ETC. The Agent shall have received
prior to the Effective Date, with counterparts for each Lender,
(a) audited financial statements for the Parent for the fiscal year
ended December 31, 1997, prepared in accordance with GAAP consistently
applied and free of any Impermissible Qualification; and
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(b) unaudited financial statements for the Parent for the nine-month
period ended September 30, 1998, certified by the chief financial
Authorized Officer of the Borrower, prepared in accordance with GAAP
consistently applied (subject to normal year-end audit adjustments and lack
of footnote disclosure).
SECTION 5.1.6. PLEDGED PROPERTY. The Agent shall have received:
(a)the Pledge Agreements, dated as of the date of the initial Credit
Extension, duly executed by the Borrower; and
(b) the original certificates evidencing all of the issued and
outstanding shares of capital stock required to be pledged pursuant to the
terms of the Pledge Agreements, which certificates shall be accompanied by
undated stock powers duly executed in blank by each relevant Pledgor.
SECTION 5.1.7. SECURITY AGREEMENTS, FILINGS, ETC. The Agent shall have
received executed counterparts of the Borrower Security Agreement and each
Guarantor Security Agreement, each dated as of the date of the initial Credit
Extension duly executed by the Borrower and the relevant Guarantor, as
appropriate, together with executed copies of U.C.C. financing statements naming
the Borrower and the relevant Guarantor, as appropriate, as the debtor, and the
Agent for the benefit of the Lenders, as the secured party, filed or to be filed
under the U.C.C. in all jurisdictions as may be necessary or, in the opinion of
the Agent, desirable to perfect the first priority security interest of the
Agent pursuant to the Security Agreements, together with evidence satisfactory
to the Agent of the filing (or delivery for filing) of an appropriate trademark
security agreement supplement.
SECTION 5.1.8. SOLVENCY CERTIFICATES. The Agent shall have received, with
copies for each Lender, a solvency certificate, duly executed by the chief
executive officer or chief financial Authorized Officer of the Borrower and each
Guarantor, as the case may be, in substantially the form of EXHIBITS K-1 and
K-2, respectively, attached hereto.
SECTION 5.1.9. CLOSING DATE CERTIFICATES. The Agent shall have received,
with copies for each Lender, a closing date certificate in substantially the
form of EXHIBIT J attached hereto, duly executed by the chief financial or
executive Authorized Officer of each Borrower and the Guarantors, and dated the
date of the initial Credit Extension, in which certificate the Borrower and the
Guarantors shall agree and acknowledge that the statements made therein shall be
true and correct representations and warranties of the Borrower and the
Guarantors as of such date. All documents and agreements appended to such
Closing Date Certificate shall be in form and substance satisfactory to the
Agent and the Lenders.
SECTION 5.1.10. EVIDENCE OF INSURANCE. The Agent shall have received a
certificate, dated the date of the initial Credit Extension, duly executed by an
Authorized Officer of the Borrower certifying that each of the Borrower and the
Guarantors is in compliance with the insurance requirements set forth in SECTION
7.1.4, together with evidence of the insurance coverage required to be
maintained pursuant to SECTION 7.1.4 as of the Closing Date.
SECTION 5.1.11. OPINIONS OF COUNSEL. The Agent shall have received an
opinion, dated the date of the initial Credit Extension and addressed to the
Agent and all the Lenders, from Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx, counsel to
the Borrower and the Guarantors, substantially in the form of EXHIBIT M hereto.
SECTION 5.1.12. AGENT'S CLOSING FEES, EXPENSES, ETC. The Agent shall have
received for its own account, and for the account of each Lender, as the case
may be, all fees, costs and expenses due and payable pursuant to SECTIONS 3.3
and, if then invoiced, 11.3.
SECTION 5.1.13. BORROWING BASE CERTIFICATE. The Agent shall have
received, with counterparts for each Lender, an initial Borrowing Base
Certificate from the Borrower, dated the date of the initial Credit Extension
and calculated as of a recent date satisfactory to the Agent, duly executed and
delivered by an Authorized Officer of the
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Borrower.
SECTION 5.1.14. SATISFACTORY LEGAL FORM, ETC. All documents executed or
submitted pursuant hereto on or prior to the Effective Date by or on behalf of
the Borrower or any of its Subsidiaries or any other Obligors shall be
reasonably satisfactory in form and substance to the Agent, the Lenders and
their counsel; the Agent, the Lenders and their counsel shall have received all
information, approvals, opinions, documents or instruments as the Agent, the
Lenders or their counsel may reasonably request (including, without limitation,
the form of the stock appreciation rights issued by the Parent).
SECTION 5.1.15. EQUITY CONTRIBUTIONS. The Agent shall have received
evidence that the Borrower shall have received net proceeds from the issuance of
additional shares of its capital stock (the "NEW EQUITY") in amounts sufficient
to satisfy the conditions set forth in SECTION 5.1.16(A).
SECTION 5.1.16. ACQUISITION MATTERS.
(a) The Acquisition (other than the Merger) shall have been duly
consummated; the aggregate purchase price for shares of Valley Forge, when
taken together with any merger consideration payable in respect of the
Merger to any holders of the capital stock of Valley Forge and all
Indebtedness assumed or refinanced in connection with the Acquisition,
shall not exceed the sum of (a) $88,500,000 PLUS (b) the amount of the New
Equity; and the Agent shall be satisfied that the Merger shall occur
promptly after the Closing Date.
(b) The Agent shall have received a copy of the Merger Agreement,
duly executed and delivered by all of the parties thereto; and all of the
closing conditions set forth in Article VI to the Merger Agreement shall
have been satisfied in accordance with the terms thereof.
(c) All Indebtedness of Valley Forge and its Subsidiaries (other than
any Indebtedness set forth on ITEM 5.1.16 of the Disclosure Schedule) shall
have been paid in full or otherwise satisfied in accordance with the terms
thereof, and any Liens securing any such Indebtedness shall have been
released and terminated of record.
(d) The Napa Lease Arrangement shall have been modified or amended in
accordance with its terms such that the Merger shall not result in a breach
of the Napa Lease Arrangement, and such modification or amendment shall set
forth terms with respect to the payment of rent thereunder that are, in the
opinion of the Lenders, no less favorable to Valley Forge than the terms of
the Napa Lease Arrangement existing prior to the Merger.
SECTION 5.2. ALL CREDIT EXTENSIONS. The obligation of each Lender and
Issuer to make any Credit Extension (including the initial Credit Extension)
shall be subject to the fulfillment of each of the conditions precedent set
forth in this SECTION 5.2 to the satisfaction of the Agent.
SECTION 5.2.1. COMPLIANCE WITH WARRANTIES, NO DEFAULT, ETC. Both before
and after giving effect to any Credit Extension, the following statements shall
be true and correct:
(a) the representations and warranties set forth in ARTICLE VI
(excluding, however, those contained in SECTION 6.7, and such
representations and warranties as are modified to the extent disclosed to
the Agent and the Lenders solely as a result of a Permitted Acquisition or
Permitted Disposition made in accordance with the terms of this Agreement)
and those set forth in the other Loan Documents shall be true and correct
in all material respects with the same effect as if then made (unless
stated to relate solely to an earlier date, in which case such
representations and warranties shall be true and correct as of such earlier
date);
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(b) except as disclosed by the Borrower to the Agent and the Lenders
pursuant to SECTION 6.7,
(i) no labor controversy, litigation, arbitration or governmental
investigation or proceeding shall be pending or, to the knowledge
(after due inquiry) of the Borrower, threatened against the Borrower
or any of its Subsidiaries (including, without limitation, Valley
Forge and its Subsidiaries) which is reasonably likely to restrain,
prevent or impose burdensome conditions on the Acquisition or to
materially adversely affect the consolidated business, operations,
assets, revenues, properties or prospects of the Borrower and its
Subsidiaries (including, without limitation, Valley Forge and its
Subsidiaries), which purports to affect the legality, validity or
enforceability of this Agreement, the Notes or any other Loan Document
or, in the case of the initial Credit Extension, seeks to restrain,
enjoin or otherwise prevent the consummation of, or to recover damages
or obtain relief as a result of, the transactions contemplated by or
in connection with this Agreement or the other Loan Documents; and
(ii) no development shall have occurred in any labor controversy,
litigation, arbitration or governmental investigation or proceeding
disclosed pursuant to SECTION 6.7 which might materially adversely
affect the consolidated businesses, operations, assets, revenues,
properties or prospects of the Borrower and its Subsidiaries taken as
a whole;
(c) the sum of the (i) aggregate outstanding principal amount of all
Revolving Loans and (ii) aggregate amount of Letter of Credit Outstandings
shall not exceed the lesser of the Revolving Loan Commitment Amount (as
such amount may be reduced from time to time) and the Borrowing Base Amount
in effect at such time (as demonstrated by a Borrowing Base Certificate
dated as of the most recent month-end); and
(d) no Default shall have then occurred and be continuing and the
Borrower shall not be in material violation of any law or governmental
regulation or court decree.
SECTION 5.2.2. CREDIT EXTENSION REQUEST, ETC. The Agent shall have
received a Borrowing Request if Loans are being requested or an Issuance Request
if a Letter of Credit is being requested or extended. Each of the delivery of a
Borrowing Request or Issuance Request and the acceptance by the Borrower of the
proceeds of such Credit Extension shall constitute a representation and warranty
by the Borrower that on the date of such Credit Extension (both immediately
before and after giving effect to such Credit Extension and the application of
the proceeds thereof) the statements made in SECTION 5.2.1 are true and correct.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders, each Issuer and the Agent to enter into
this Agreement and to make Credit Extensions hereunder, each Borrower and the
Guarantors jointly and severally represents and warrants to the Agent, each
Issuer and each Lender as set forth in this ARTICLE VI.
SECTION 6.1. ORGANIZATION, ETC. The Borrower and each of its Subsidiaries
and each other Obligor (i) is a corporation or limited liability company validly
organized and existing and in good standing under the laws of the jurisdiction
of its incorporation or formation and (ii) is duly qualified to do business and
is in good standing as a foreign corporation or limited liability company in
each jurisdiction where the nature of its business requires such qualification,
and has full power and authority and holds all requisite governmental licenses,
permits and other approvals to enter into and perform its Obligations under this
Agreement, the Notes and each other Loan Document to which it is a party and to
own and hold under lease its property and to conduct its business substantially
as currently conducted by it, other than any such qualifications, the absence of
which, could not
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reasonably be expected to have a material adverse effect on the Borrower and its
Subsidiaries, taken as a whole.
SECTION 6.2. DUE AUTHORIZATION, NON-CONTRAVENTION, ETC. The execution,
delivery and performance by the Borrower of this Agreement, the Notes and each
other Loan Document executed or to be executed by it, and the execution,
delivery and performance by each other Obligor of each Loan Document executed or
to be executed by it, are within the Borrower's and each such Obligor's
corporate or limited liability company powers, have been duly authorized by all
necessary corporate action or limited liability company action, as the case may
be, and do not
(a) contravene or result in a default under the Borrower's or any such
Obligor's Organic Documents;
(b) contravene or result in a default under any law or governmental
regulation, court decree, order or material contractual restriction binding
on the Borrower or any such Obligor; or
(c) result in, or require the creation or imposition of, any Lien on
any of any Obligor's properties other than the Liens created under the Loan
Documents in favor of the Agent for the benefit of the Lenders.
SECTION 6.3. GOVERNMENT APPROVAL, REGULATION, COMPLIANCE WITH LAW, ETC.
No authorization or approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body or other Person is required
for (a) the due execution, delivery or performance by the Borrower or any other
Obligor of this Agreement, the Notes, or any other Loan Document to which it is
a party or the Merger Agreement, (b) the grant by the Borrower and each
applicable Obligor of the security interests, pledges and Liens granted by the
Loan Documents, (c) the perfection of or the exercise by the Agent or any Lender
of its rights and remedies under this Agreement or any other Loan Document or
(d) the Acquisition, OTHER THAN, in the case of (b) and (c) above, compliance
with the Assignment of Claims Act of 1940.
SECTION 6.4. VALIDITY, ETC. This Agreement and each of the Notes has been
duly executed and delivered, and each other Loan Document executed by the
Borrower will, on the due execution and delivery thereof, constitute, the legal,
valid and binding obligations of the Borrower enforceable in accordance with
their respective terms; and each Loan Document executed pursuant hereto by each
other Obligor will, on the due execution and delivery thereof by such Obligor,
be the legal, valid and binding obligation of such Obligor enforceable in
accordance with its terms, subject in each case to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar law affecting
creditors' rights generally, and subject to the effect of general principles of
equity (regardless of whether considered in a proceeding in equity or at law).
Each of the Loan Documents which purports to create a security interest creates
a valid first priority security interest in the Collateral subject thereto,
subject only to Liens permitted by SECTION 7.2.3, securing the payment of the
Obligations.
SECTION 6.5. FINANCIAL INFORMATION. The financial statements delivered
pursuant to SECTIONS 5.1.5(A) and (B) have been prepared in accordance with GAAP
consistently applied (including application of Financial Accounting Statement
No. 106), except that in the case of financial statements for interim periods
such statements do not have footnotes and are subject to customary year-end
audit adjustments) and such financial statements present fairly the financial
condition of the corporations or other entities covered thereby as at the dates
thereof and the results of their operations for the periods then ended. The
Borrower and its Subsidiaries have no material liabilities, including as to
contingencies and unusual or forward commitments, that are not disclosed in the
foregoing financial statements or the footnotes thereto or set forth in ITEM 6.5
("Certain Material Liabilities") of the Disclosure Schedule.
SECTION 6.6. NO MATERIAL ADVERSE CHANGE. Since the date of the financial
statements described in CLAUSE (A) of SECTION 5.1.5, there has been no material
adverse change in the condition (financial or otherwise),
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operations, business, assets or liabilities of the Borrower and its Subsidiaries
(including, without limitation, Valley Forge and its Subsidiaries), taken as a
whole.
SECTION 6.7. LITIGATION, LABOR CONTROVERSIES, ETC. There is no pending
or, to the knowledge of either the Borrower or any Guarantor, any litigation
threatened in writing, action, proceeding, or labor controversy affecting the
Borrower or any of its Subsidiaries or any other Obligor, or any of their
respective properties, businesses, assets or revenues, which could reasonably be
expected to materially adversely affect the condition (financial or otherwise),
operations, business, assets or liabilities of the Borrower and its Subsidiaries
(including, without limitation, Valley Forge and its Subsidiaries) taken as a
whole, except as disclosed in ITEM 6.7 ("Litigation") of the Disclosure
Schedule, or which purports to affect the legality, validity or enforceability
of this Agreement, the Notes or any other Loan Document.
SECTION 6.8. SUBSIDIARIES. The Borrower has no Subsidiaries except the
Guarantors, Key Components Finance Corp. and those Subsidiaries which it may
acquire or create after the date of the initial Credit Extension with the prior
written consent of the Required Lenders.
SECTION 6.9. OWNERSHIP OF PROPERTIES. Except as set forth in ITEM 6.9
("Ownership of Properties") of the Disclosure Schedule, the Borrower and each of
its Subsidiaries, own good and marketable title to all of their properties and
assets, have valid fee or leasehold interests in all property, as the case may
be, real and personal, tangible and intangible, of any nature whatsoever
(including patents, trademarks, trade names, service marks and copyrights), free
and clear of all Liens, charges or claims (including infringement claims with
respect to patents, trademarks, copyrights and the like) other than the Liens
permitted pursuant to SECTION 7.2.3. Neither the Borrower nor any of its
Subsidiaries owns any real property in fee other than as set forth in ITEM 6.9
of the Disclosure Schedule. There are no copyrights or patents owned by the
Borrower.
SECTION 6.10. TAXES. The Borrower and each of its Subsidiaries have filed
(a) all returns and reports required by law to have been filed by or with
respect to it in connection with federal, state and local income taxes
(including any predecessor entity or entities (including, without limitation,
any withholding taxes of any nature whatsoever)) and (b) all other returns and
reports with respect to Taxes required by law to have been filed. All federal,
state and local income taxes (as described above) that are shown as due on any
tax return have been paid in full and all other Taxes and governmental charges
that are owing have been paid in full, except such taxes or charges which are
being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside on its
books.
SECTION 6.11. PENSION AND WELFARE PLANS. During the
twelve-consecutive-month period prior to the date of the execution and delivery
of this Agreement and prior to the date of any Credit Extension hereunder, no
steps have been taken to terminate any Pension Plan, and no contribution failure
has occurred with respect to any Pension Plan sufficient to give rise to a Lien
under Section 302(f) of ERISA. No condition exists or event or transaction has
occurred with respect to any Pension Plan which might result in the incurrence
by the Borrower or any member of the Controlled Group of any material liability,
fine or penalty. Except as disclosed in ITEM 6.11 ("Employee Benefit Plans") of
the Disclosure Schedule, neither the Borrower nor any member of the Controlled
Group or any other Obligor has any contingent liability with respect to any
post-retirement benefit under a Welfare Plan, other than liability for
continuation coverage described in Part 6 of Title I of ERISA.
SECTION 6.12. ENVIRONMENTAL WARRANTIES. Except as set forth in ITEM 6.12
("Environmental Matters") of the Disclosure Schedule, and except to the extent
that the same could not reasonably be expected to have a material adverse effect
on the financial condition of any Obligor:
(a) all facilities and property (including underlying groundwater)
owned or leased by the Borrower or any of its Subsidiaries have been, and
continue to be, owned or leased by the Borrower and such Subsidiaries in
compliance with all Environmental Laws;
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(b) there have been no past, and there are no pending or threatened,
(i) claims, complaints, notices or requests for information
received by the Borrower or any of its Subsidiaries with respect to
any alleged violation of any Environmental Law, or
(ii) complaints, notices or inquiries to the Borrower or any of
its Subsidiaries regarding potential liability under any Environmental
Law or, with regard to contamination, any common or civil law;
(c) there is no claim, complaint, notice, request for information or
inquiry that has been received by or made to the Borrower or any of its
Subsidiaries with respect to any alleged violation of any Environmental Law
or regarding potential liability under any Environmental Law or, with
regard to contamination, any common or civil law;
(d) there have been no Releases of Hazardous Materials at, on or under
any property now or previously owned or leased by the Borrower or any of
its Subsidiaries;
(e) the Borrower and its Subsidiaries have been issued and are in
compliance in all material respects with all permits, certificates,
approvals, licenses and other authorizations relating to environmental
matters and necessary for their businesses;
(f) no property now or previously owned or leased by the Borrower or
any of its Subsidiaries is listed or proposed for listing (with respect to
owned property only) on the National Priorities List pursuant to CERCLA, on
the CERCLIS or on any similar state list of sites requiring investigation
or clean-up;
(g) there are no underground storage tanks (including petroleum
storage tanks) that are abandoned or that have been inactive for greater
than one year on or under any property now or previously owned or leased by
the Borrower or any of its Subsidiaries;
(h) there are no underground storage tanks, active or abandoned,
including petroleum storage tanks, on or under any property now or
previously owned or leased by the Borrower or any of its Subsidiaries that
do not have leak detection systems as required by and in compliance with
all Environmental Laws;
(i) there are no underground storage tanks, active or abandoned,
including petroleum storage tanks, on or under any property now or
previously owned or leased by the Borrower or any of its Subsidiaries that
have Released or suffered Release(s) of Hazardous Materials;
(j) there are no fuel pumps, underground storage tanks, or above
ground storage tanks, including petroleum storage tanks, on or under any
property now owned or leased by the Borrower or any of its Subsidiaries
that may reasonably be expected to have a material adverse effect on the
financial condition of any Obligor;
(k) neither the Borrower nor any of its Subsidiaries has, to the best
of its knowledge, directly transported or directly arranged for the
transportation of any Hazardous Material to any location which is listed or
proposed for listing on the National Priorities List pursuant to CERCLA, on
the CERCLIS or on any similar state list or which is the subject of
federal, state or local enforcement actions or other investigations which
may lead to material claims against the Borrower or such Subsidiary thereof
for any remedial work, damage to natural resources or personal injury,
including claims under CERCLA;
(l) there are no polychlorinated biphenyls or friable asbestos present
at any property now or
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previously owned or leased by the Borrower or any of its Subsidiaries;
(m) no conditions (other than those covered in the preceding CLAUSES
(A) through (L)) exist at, on or under any property now or previously owned
or leased by the Borrower or any of its Subsidiaries which, with the
passage of time, or the giving of notice or both, would give rise to any
material liability under any Environmental Law; and
(n)each of the representations and warranties set forth in Section
3.17 of the Merger Agreement ("Environmental Matters") is true and correct
in all material respects.
SECTION 6.13. ACCURACY OF INFORMATION. (a) All factual information
heretofore or contemporaneously furnished by or on behalf of the Borrower or any
Guarantor in writing to the Agent or any Lender for purposes of or in connection
with this Agreement or any transaction contemplated hereby is, and all other
such factual information hereafter furnished by or on behalf of the Borrower or
such Guarantor to the Agent or any Lender, will be, when taken as a whole true
and accurate in every material respect on the date as of which such information
is dated or certified and, as to information delivered before the Effective
Date, as of the date of execution and delivery of this Agreement by the Agent
and such Lender, and such information is not, or shall not be, as the case may
be, incomplete by omitting to state any material fact necessary to make such
information not misleading.
(b) All written information prepared by any consultant or professional
advisor on behalf of the Borrower or any of its Subsidiaries which was furnished
to the Agent or any Lender in connection with the preparation, execution and
delivery of this Agreement has been reviewed by the Borrower, and nothing has
come to the attention of the Borrower in the context of such review which would
lead them to believe that such information (or the assumptions on which such
information is based) is not, taken as a whole, true and correct in all material
respects or that such information, taken as a whole, omits to state any material
fact necessary to make such information not misleading in any material respect.
(c) Insofar as any of the information described above includes assumptions,
estimates, projections or opinions, each of the Borrower and the Guarantors has
reviewed such matters and nothing has come to the attention of the Borrower in
the context of such review which would lead it to believe that (subject to
qualitative variances therein to reflect differing scenarios) such assumptions,
estimates, projections or opinions omit to state any material fact necessary to
make such assumptions, estimates, projections or opinions not reasonable or not
misleading in any material respect. All projections and estimates have been
prepared in good faith on the basis of reasonable assumptions and represent the
best estimate of future performance by the party supplying the same.
SECTION 6.14. INTELLECTUAL PROPERTY COLLATERAL. With respect to any
Intellectual Property Collateral the loss, impairment or infringement of which
might have a material adverse effect on the financial condition, operations,
assets, business, properties, revenues or prospects of the Borrower and its
Subsidiaries, taken as a whole:
(a) such Intellectual Property Collateral is subsisting and has not
been adjudged invalid or unenforceable, in whole or in part;
(b) such Intellectual Property Collateral is valid and enforceable;
(c) the Borrower and its Subsidiaries have made all necessary filings
and recordations to protect their respective interests in such Intellectual
Property Collateral, including without limitation, recordations of all such
interests in the Intellectual Property Collateral in the United States
Patent and Trademark Office; and
(d) the Borrower and its Subsidiaries are the exclusive owners of the
entire and unencumbered
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right, title and interest in and to such Intellectual Property Collateral
(except for Liens created under the Loan Documents) and no claim has been
made that the use of such Intellectual Property Collateral does or may
violate the asserted rights of any third party.
SECTION 6.15. OWNERSHIP OF EQUITY INTERESTS. The Borrower owns free and
clear of all Liens (other than any Lien pursuant to the Pledge Agreements), the
respective percentages of issued and outstanding capital stock of each of the
Guarantors set forth in ITEM 6.15 ("Ownership of Capital Stock") of the
Disclosure Schedule. Except as set forth in said ITEM 6.15, there are no
outstanding options, warrants or convertible securities with respect to the
capital stock of the Borrower or any of its Subsidiaries. Said ITEM 6.1.5 sets
forth all of the stock appreciation rights issued by the Parent and outstanding
on the date hereof.
SECTION 6.16. ABSENCE OF DEFAULT. Neither the Borrower nor any of its
Subsidiaries is (i) in default as of the Effective Date in the payment of (or in
the performance of any obligation applicable to) any Indebtedness, except as
disclosed in ITEM 6.17 ("Absence of Default") of the Disclosure Schedule or
(ii) in violation of any law or governmental regulation or court decree or
order, in any respect.
SECTION 6.17. REGULATIONS U AND X. Neither the Borrower nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
"margin stock". None of the proceeds of any Loan or any Letter of Credit will
be used for the purpose of, or be made available by the Borrower in any manner
to any other Person to enable or assist such Person in, directly or indirectly
purchasing or carrying "margin stock", PROVIDED that the proceeds of the Term
Loans and Revolving Loans made on the Closing Date may be so used solely to the
extent that such proceeds are applied (i) as payment in respect of the
Acquisition and (ii) in a manner that does not constitute a violation of
Regulation U or X. Terms for which meanings are provided in F.R.S. Board
Regulation U or X or any regulations substituted therefor, as from time to time
in effect, are used in this Section with such meanings.
SECTION 6.18. GOVERNMENT REGULATION. Neither the Borrower nor any of its
Subsidiaries is an "investment company" or a "company controlled by an
investment company" within the meaning of the Investment Company Act of 1940, as
amended, or a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
SECTION 6.19. BURDENSOME AGREEMENTS. Neither the Borrower nor any of its
Subsidiaries is or will be a party to any instrument which could have a
materially adverse effect on the financial condition, operations, assets,
business, properties, revenues or prospects of the Borrower and its
Subsidiaries, taken as a whole.
SECTION 6.20. YEAR 2000. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of (a) the computer systems of the
Borrower and its Subsidiaries and (b) equipment containing embedded microchips
(including systems and equipment supplied by others or with which the systems of
the Borrower and its Subsidiaries interface) and the testing of all such systems
and equipment, as so reprogrammed, will be completed by December 31, 1999,
except to the extent such reprogramming and testing would not be reasonably
expected to have a material adverse effect on the business of the Borrower and
its Subsidiaries, taken as a whole. The currently anticipated cost to the
Borrower and its Subsidiaries of such reprogramming and testing and of the
reasonably foreseeable consequence of year 2000 compliance to the Borrower and
its Subsidiaries would not reasonably be expected to have a material adverse
effect on the Borrower and its Subsidiaries, taken as a whole.
SECTION 6.21. NO IMMUNITY. Force 10 Marine Ltd. is generally subject to
suit, and neither Force 10 Marine Ltd. nor any of its properties or assets has
any immunity from the jurisdiction of any court or from legal process (whether
through service of process or notice of attachment prior to judgment, attachment
in aid of execution, execution or otherwise) under the laws of Canada or any
political subdivision thereof.
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SECTION 6.22. CANADIAN TAX. There is no tax, duty, fee, assessment or
other governmental charge, or any deduction or withholding, imposed by Canada or
any political subdivision or taxing authority thereof or therein (i) on or by
virtue of the execution, delivery, acquisition, registration or enforcement of
this Agreement or any of the other Loan Documents, or (ii) on any payment to be
made by Force 10 Marine Ltd. pursuant to this Agreement or any of the other Loan
Documents.
SECTION 6.23. ENFORCEABILITY IN CANADA. To ensure the enforceability or
admissibility in evidence of this Agreement and/or any other Loan Document, it
is not necessary that this Agreement or any of the other Loan Documents be filed
or recorded with any court or other authority in Canada or any political
subdivision thereof or that any stamp or similar tax be paid hereon or thereon
or in respect hereof or thereof.
ARTICLE VII
COVENANTS
SECTION 7.1. AFFIRMATIVE COVENANTS. The Borrower agrees with the Agent,
each Issuer and each Lender that, until all Commitments have terminated and all
Obligations have been paid and performed in full, the Borrower will perform the
obligations set forth in this SECTION 7.1.
SECTION 7.1.1. FINANCIAL INFORMATION, REPORTS, NOTICES, ETC. The Borrower
will furnish, or will cause to be furnished, to each Lender and the Agent copies
of the following financial statements, reports, notices and information:
(a) as soon as available and in any event within 30 days after the end
of each month of each Fiscal Year of the Borrower, (i) a monthly financial
report and consolidated and consolidating balance sheets of the Borrower
and its Subsidiaries as of the end of such month and consolidated and
consolidating statements of earnings of the Borrower and its Subsidiaries
for such month and for the period commencing at the end of the previous
Fiscal Year and ending with the end of such month, setting forth in each
case in comparative form (x) the consolidated and consolidating figures for
the corresponding date and periods of the previous Fiscal Year (giving pro
forma effect to any consummated acquisitions) and (y) the corresponding
consolidated and consolidating figures from the applicable budget referred
to in SECTION 7.1.1(I) certified by the chief financial Authorized Officer
of the Borrower in a manner acceptable to the Agent, and (ii) a Compliance
Certificate, executed by the chief financial Authorized Officer of the
Borrower, showing (in reasonable detail and with appropriate calculations
and computations in all respects satisfactory to the Agent) compliance with
the financial covenants set forth in SECTION 7.2.4;
(b) (i) as soon as available and in any event within 90 days after the
end of each Fiscal Year of the Borrower (or, with respect to the first such
Fiscal Year ending after the date of this Agreement, 120 days), a copy of
the annual audit report for such Fiscal Year for the Borrower and its
Subsidiaries, including therein consolidated and consolidating balance
sheets of the Borrower and its Subsidiaries as of the end of such Fiscal
Year and consolidated and consolidating statements of earnings and
consolidated statements of cash flow of the Borrower and its Subsidiaries
for such Fiscal Year, in each case certified (without any Impermissible
Qualification) by Price Waterhouse Coopers LLP or other independent public
accountants of nationally recognized standing as fairly presenting, in
accordance with GAAP consistently applied, the financial condition, results
of operations and cash flows of the Borrower and its Subsidiaries at the
end of such Fiscal Year and for the Fiscal Year then ended, together with a
certificate, executed by the chief financial Authorized Officer of the
Borrower, (x) showing (in reasonable detail and with appropriate
calculations and computations in all respects satisfactory to the Agent)
the calculation of Excess Cash Flow, (y) setting forth in comparative form
the corresponding consolidated and consolidating figures from the
applicable budget referred to in SECTION 7.1.1(I), and (z) a Compliance
Certificate,
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executed by the chief financial Authorized Officer of the Borrower, showing
(in reasonable detail and with appropriate calculations and computations in
all respects satisfactory to the Agent) compliance with the financial
covenants set forth in SECTION 7.2.4 and (ii) as soon as available and in
any event within 120 days after the end of each Fiscal Year of the
Borrower, all management letters and internal control and similar memoranda
prepared by the accountants certifying the financial statements of the
Borrower for such Fiscal Year;
(c) as soon as available and in any event within 45 days after the end
of each Fiscal Quarter of each Fiscal Year of the Borrower, (i) a quarterly
financial report and consolidated and consolidating balance sheets of the
Borrower and its Subsidiaries as of the end of such Fiscal Quarter and
consolidated and consolidating statements of earnings and consolidated and
consolidating statements of cash flow of the Borrower and its Subsidiaries
for such Fiscal Quarter and for the period commencing at the end of the
previous Fiscal Year and ending with the end of such Fiscal Quarter,
setting forth in each case in comparative form (x) the consolidated and
consolidating figures for the corresponding date and periods of the
previous Fiscal Year (giving pro forma effect to any consummated
acquisitions) and (y) the corresponding consolidated and consolidating
figures from the applicable budget referred to in SECTION 7.1.1(I)
certified by the chief financial Authorized Officer of the Borrower in a
manner acceptable to the Agent, and (ii) a Compliance Certificate, executed
by the chief financial Authorized Officer of the Borrower, showing (in
reasonable detail and with appropriate calculations and computations in all
respects satisfactory to the Agent) compliance with the financial covenants
set forth in SECTION 7.2.4;
(d) as soon as available and in any event within 15 days after the end
of each calendar month (if any Revolving Loans are then outstanding), a
Borrowing Base Certificate calculated as of the last day of such month;
(e) as soon as possible and in any event within three Business Days
after knowledge of an Authorized Officer of the occurrence of any Default,
a statement of the chief financial Authorized Officer of the Borrower
setting forth details of such Default and the action which the Borrower has
taken and proposes to take with respect thereto;
(f) as soon as possible and in any event within three Business Days
after (x) the occurrence of any materially adverse development with respect
to any litigation, action, proceeding, or labor controversy described in
SECTION 6.7 or (y) the commencement of any labor controversy, litigation,
action or proceeding of the type described in SECTION 6.7, notice thereof
and, at the Agent's request, copies of all documentation relating thereto;
(g) promptly after the sending or filing thereof, copies of all
reports which the Borrower sends to any class of its security holders
generally, in their capacities as such, and all reports and registration
statements which the Borrower or any of its Subsidiaries files with the
Securities and Exchange Commission or any securities exchange;
(h) immediately upon becoming aware of the institution of any steps by
the Borrower or any other Person to terminate any Pension Plan, or the
failure to make a required contribution to any Pension Plan if such failure
is sufficient to give rise to a Lien under Section 302(f) of ERISA, or the
taking of any action with respect to a Pension Plan which could result in
the requirement that the Borrower furnish a bond or other security to the
PBGC or such Pension Plan, or the occurrence of any event with respect to
any Pension Plan which could result in the incurrence by the Borrower of
any material liability, fine or penalty, or any material increase in the
contingent liability of the Borrower with respect to any post-retirement
Welfare Plan benefit, notice thereof and copies of all documentation
relating thereto;
(i) promptly when available and, in any event, (x) at least 30 days
prior to the last day of each
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Fiscal Year, a preliminary budget in form and scope satisfactory to the
Agent for the next succeeding Fiscal Year, and (y) within 60 days after the
beginning of each Fiscal Year, a definitive budget in form and scope
satisfactory to the Agent for such Fiscal Year, in each case in reasonable
detail for the relevant Fiscal Year, prepared on a consolidated and
consolidating basis, and setting forth the principal assumptions upon which
such budget is based;
(j)if, as a result of any material change in accounting principles and
policies from those used in the preparation of the Financial Statements
referred to in SECTION 6.5, the financial statements delivered pursuant to
CLAUSE (A), (B) or (C) of this SECTION 7.1.1 will differ in any material
respect from the financial statements that would have been delivered
pursuant to such clauses had no such change in accounting principles and
policies been made, then, at the reasonable request of the Required
Lenders, consolidated financial statements of the Borrower and its
Subsidiaries for (i) the then current Fiscal Year to the effective date of
such change and (ii) the one full Fiscal Year immediately preceding the
Fiscal Year in which such change is made, in each case prepared on a PRO
FORMA basis as if such change had been in effect during such periods, and a
written statement of the chief accounting Authorized Officer or chief
financial Authorized Officer of the Borrower setting forth the differences
which would have resulted if such financial statements had been prepared
without giving effect to such change; and
(k) such other information respecting the condition or operations,
financial or otherwise, of the Borrower or any of its Subsidiaries as any
Lender through the Agent may from time to time reasonably request,
including in respect of establishing the eligibility of the Accounts and
Inventory comprising the Eligible Accounts and Eligible Inventory included
in each Borrowing Base Certificate delivered pursuant to this Agreement.
SECTION 7.1.2. COMPLIANCE WITH LAWS, ETC. The Borrower will, and will
cause each of its Subsidiaries to:
(a) comply in all material respects with all governmental rules and
regulations and all other material applicable laws, rules, regulations and
orders, such compliance to include the maintenance and preservation of its
corporate, limited liability company or other organizational existence and
qualification as a foreign corporation or limited liability company in any
jurisdiction where the Borrower or its Subsidiaries have assets or conduct
business; and
(b) comply in all material respects with all governmental rules and
regulations and all other material applicable laws, rules, regulations and
orders relating to taxation, including the payment, before the same become
delinquent, of (i) all federal, state and local income taxes and (ii) all
other taxes, assessments and governmental charges except in each such case
to the extent being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall
have been set aside on its books.
SECTION 7.1.3. MAINTENANCE OF PROPERTIES. The Borrower will, and will
cause each of its Subsidiaries to, maintain, preserve, protect and keep their
respective properties in good repair, working order and condition, subject to
ordinary wear and tear, and make necessary and proper repairs, renewals
(including lease payments on leasehold properties) and replacements so that the
business carried on in connection therewith may be conducted as it is on the
date of this Agreement.
SECTION 7.1.4. INSURANCE. (a) The Borrower shall maintain, and shall
cause each of its Subsidiaries to maintain, with responsible and reputable
insurance carriers licensed to write insurance, insurance with respect to all
their property, business and assets against such casualties and contingencies
and of such types and in such amounts as is customary in the case of similar
businesses.
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(b) All premiums on insurance policies required under this Section shall be
paid by the Borrower and its Subsidiaries. Each policy for property insurance
maintained by the Borrower and its Subsidiaries shall (i) name the Agent (as
Agent for the Lenders) as loss payee under a lenders loss payable clause, (ii)
provide that no cancellation, reduction in amount or material change in coverage
thereof or any portion thereof shall be effective until at least 30 days after
receipt by the Agent of written notice thereof, (iii) provide that any notice
under such policies relating to cancellation, reduction or material change in
coverage or the occurrence of any loss in excess of $250,000 shall be
simultaneously delivered to the Agent and (iv) be reasonably satisfactory in all
other respects to the Agent. Each policy for liability insurance maintained by
the Borrower and its Subsidiaries shall (i) name the Agent (as Agent for the
Lenders) as an additional insured, (ii) provide that no cancellation, reduction
in amount or material change in coverage thereof or any portion thereof shall
occur by reason of any breach of any representation or warranty, nor shall any
thereof be effective, until at least 30 days after receipt by the Agent of
written notice thereof, (iii) provide that any notice under such policies
relating to cancellation, reduction or material change in coverage or the
occurrence of any loss in excess of $250,000 shall be simultaneously delivered
to the Agent and (iv) be reasonably satisfactory in all other respects to the
Agent.
(c) The Borrower will deliver, and will cause its Subsidiaries to deliver,
to the Agent, promptly upon request, (i) the originals of all policies
evidencing all insurance required to be maintained under CLAUSE (A) or
certificates thereof by the insurers together with a counterpart of each policy,
(ii) a satisfactory insurance broker's letter as to the adequacy of the
insurance being maintained by the Borrower and its Subsidiaries and as to the
compliance of the same with the requirements of this Section and (iii) evidence
as to the payment of all premiums then due thereon (or with respect to any
insurance policies providing for payment other than by a single lump sum, all
installments for the current year due thereon to such date), PROVIDED that
neither the Agent nor any Lender shall be deemed by reason of its custody of
such policies to have knowledge of the contents thereof. The Borrower will also
deliver, and will cause its Subsidiaries to deliver, to the Agent not later than
five days prior to the expiration of any policy a binder or certificate of the
insurer evidencing the replacement thereof.
(d) If a Default has not occurred and is not continuing, all proceeds of
property insurance (other than any proceeds of business interruption insurance
and proceeds which reimburse the Borrower or any applicable Subsidiary for
environmental liabilities or remediation costs previously paid by the Borrower
or such Subsidiary) paid on account of the loss of or damage to any property or
asset of the Borrower or any of its Subsidiaries shall be paid to the Borrower
or applicable Subsidiary, and the Borrower or such Subsidiary shall use such
proceeds within 365 days thereafter to repair, restore or replace such property
or asset. With respect to any casualty or other covered occurrence in which the
aggregate proceeds of property insurance receivable by the Borrower or any
applicable Subsidiary (other than any proceeds of business interruption
insurance and proceeds which reimburse the Borrower or such Subsidiary for
environmental liabilities or remediation costs previously paid by the Borrower
or such Subsidiary) exceeds $1,000,000, to the extent the Borrower or such
Subsidiary elects not to apply such insurance proceeds for the repair,
replacement or restoration of such property or asset, or such insurance proceeds
are not in fact so applied within 365 days, all of such unutilized insurance
proceeds shall be delivered by the Borrower or such Subsidiary (and the Borrower
shall cause such Subsidiary to so deliver) to the Agent and shall constitute
"Excess Insurance Proceeds", to be applied as a mandatory prepayment of the Term
Loans and Revolving Loans pursuant to CLAUSE (C) of SECTION 3.1.2.
Notwithstanding any provision to the contrary in this Agreement or any other
Loan Document, if a Default has occurred and is continuing, all proceeds of
property insurance (including business interruption insurance) shall be payable
directly to the Agent and the Agent in its sole discretion may treat such
proceeds as "Excess Insurance Proceeds" or, subject to the consent of the
Required Lenders, permit the use of such proceeds to repair, restore or replace
the property or asset which suffered the loss for which such proceeds are being
paid.
SECTION 7.1.5. BOOKS AND RECORDS. (a) The Borrower will, and will cause
each of their respective Subsidiaries to, keep books and records which
accurately reflect all of their respective business affairs and transactions.
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(b) The Borrower will, and will cause each of its Subsidiaries to, permit
the Agent and each Lender or any of their representatives, at reasonable times
and intervals and upon reasonable notice, to visit all of their respective
offices, to discuss their respective financial matters with their respective
officers and independent public accountant and consultants (and the Borrower
hereby authorizes such independent public accountant and consultants to discuss
such financial matters with each Lender or its representatives whether or not
any representative of the Borrower is present) and to examine (and, at the
expense of the Borrower, copy extracts from) any of their respective books or
other business records (including computer records).
(c) The Borrower shall pay any reasonable fees of such independent public
accountant and consultants incurred in connection with the Agent's or any
Lender's exercise of its rights pursuant to this Section. The Agent, in its
sole discretion and at the sole expense of the Borrower, may conduct such audits
and examinations of the books and records of the Borrower and its Subsidiaries
as the Agent reasonably deems necessary or advisable.
SECTION 7.1.6. ENVIRONMENTAL COVENANT. The Borrower will, and will cause
each of its Subsidiaries to,
(a) use and operate all of their respective facilities and properties
in compliance in all material respects with all Environmental Laws, keep
(and, when applicable, obtain in a timely manner) all necessary material
permits, approvals, certificates, licenses and other authorizations
relating to environmental matters in effect and remain in compliance in all
material respects therewith, and handle all Hazardous Materials (including
the disposition and storing thereof) in compliance in all material respects
with all applicable Environmental Laws;
(b) respond to all Releases upon or from the Realty in accordance
with law and in a manner that assures and will assure that, to the maximum
extent possible, State funds pay for the response to Releases;
(c) promptly notify the Agent and provide copies upon receipt of all
written claims, complaints, notices or inquiries relating to the condition
of its facilities and properties or compliance with Environmental Laws;
(d) comply in all material respects with all governmental
requirements regarding notification and reporting of spills and releases of
Hazardous Materials and provide to the Agent promptly after the receipt
thereof, a copy of all required notices and reports in the event of any
spill or release of Hazardous Material upon or from the Realty;
(e) promptly notify the Agent of any notice of violation, order or
other enforcement action under the Environmental Laws or any request for
information or notification that the Borrower or any of its Subsidiaries is
a potentially responsible party at any site, or request or requirement for
corrective or response action which comes to the attention of the Borrower
or any of its Subsidiaries in connection with any Environmental Laws, and
the Borrower will, and will cause each of its Subsidiaries to, notify the
Agent of any action or proceeding, which to its knowledge is threatened or
pending, of any claim relating to the existence in, on or under the Realty
or any property adjoining the Realty of, or the spilling, discharge or
emission on or from the Realty or any such adjoining property of, any
Hazardous Material; and
(f) provide such information and certifications which the Agent may
reasonably request from time to time to evidence compliance with this
Section.
SECTION 7.1.7. AS TO INTELLECTUAL PROPERTY COLLATERAL. (a) The Borrower
shall not, and shall not permit any of its Subsidiaries to, unless the Borrower
or such Subsidiary shall reasonably and in good faith determine (and notice of
such determination shall have been delivered to the Agent) that any of its
Intellectual Property Collateral is not of material economic value to it, do any
act, or omit to do any act, whereby any of such Intellectual Property
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Collateral may lapse or become abandoned or dedicated to the public or
unenforceable.
(b)The Borrower shall notify the Agent immediately if it knows, or has
reason to know, that any application or registration relating to any material
item of the Intellectual Property Collateral may become abandoned or dedicated
to the public or placed in the public domain or invalid or unenforceable (except
for any Intellectual Property Collateral that terminates or expires in
accordance with its terms or the term of its original patent), or of any
material adverse determination or development (including the institution of, or
any such determination or development in, any proceeding in the United States
Patent and Trademark Office, the United States Copyright Office or any foreign
counterpart thereof or any court) regarding the ownership of the Borrower or any
of its Subsidiaries of any material item of the Intellectual Property Collateral
or the Borrower's or such Subsidiary's right to register the same or to keep and
maintain and enforce the same.
(c) In no event shall the Borrower or any of its Subsidiaries, or any of
their respective agents, employees, designees or licensees, file an application
for the registration of any Intellectual Property Collateral with the United
States Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in any other country or any political subdivision
thereof, unless it promptly informs the Agent, and upon request of the Agent,
executes and delivers any and all agreements, instruments, documents and papers
as the Agent may reasonably request to evidence the Agent's security interest
for the benefit of the Lenders in such Intellectual Property Collateral and the
goodwill and general intangibles of the Borrower or such Subsidiary relating
thereto or represented thereby.
(d) The Borrower shall take, and shall cause its Subsidiaries to take, all
reasonably necessary steps, including in any proceeding before the United States
Patent and Trademark Office or the United States Copyright Office, to maintain
and pursue any application (and to obtain the relevant registration) filed with
respect to, and to maintain any registration of, any material item of the
Intellectual Property Collateral (other than any common law intellectual
property that cannot be so registered), including the filing of applications for
renewal, affidavits of use, affidavits of incontestability and opposition,
interference and cancellation proceedings and the payment of fees and taxes
(except to the extent that dedication, abandonment or invalidation is permitted
under the foregoing CLAUSES (A), (B) and (C)).
SECTION 7.1.8. FUTURE SUBSIDIARIES. Without limiting the effect of any
provision contained herein (including SECTION 7.2.5), upon any Person becoming,
after the Effective Date, either a direct or indirect Subsidiary of the
Borrower, or upon the Borrower acquiring additional capital stock or other
ownership interests of any existing Subsidiary having voting rights or
contingent voting rights
(a) such Person shall become a party to (x) a guaranty in
substantially the form of the provisions of the guaranty of the Guarantors
contained in ARTICLE IX hereto, and (y) a security agreement in
substantially the form of the Guarantor Security Agreement, if not already
a party to any of the foregoing, with such modifications as the Agent may
reasonably request, in a manner satisfactory to the Agent;
(b)the Borrower and the applicable Subsidiary shall, pursuant to a
Pledge Agreement or another pledge agreement substantially in the form of a
Pledge Agreement, pledge to the Agent for the benefit of the Lenders all of
the outstanding shares of such capital stock or other ownership interests
of such Subsidiary owned directly by it, along with undated stock powers
for such certificates, executed in blank (or, if any such shares of capital
stock or other ownership interests are uncertificated, confirmation and
evidence satisfactory to the Agent that the security interest in such
uncertificated securities has been perfected by the Agent in accordance
with Section 8-313 and Section 8-321 of the U.C.C. or any similar law which
may be applicable); and
(c) the Agent shall have received from each such Subsidiary certified
copies of Uniform Commercial Code Requests for Information or Copies
(Form UCC-11), or a similar search report certified
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by a party acceptable to the Agent, dated a date reasonably near (but prior
to) the date of any such Person becoming a direct or indirect Subsidiary of
the Borrower, listing all effective financing statements, tax liens and
judgment liens which name such Person as the debtor and which are filed in
the jurisdictions in which filings are to be made pursuant to this
Agreement and the other Loan Documents, and in such other jurisdictions as
the Agent may reasonably request, together with copies of such financing
statements (none of which (other than financing statements (i) filed
pursuant to the terms hereof in favor of the Agent for the benefit of the
Lenders, if such Form UCC-11 or search report, as the case may be, is
current enough to list such financing statements, (ii) being terminated
pursuant to termination statements that are to be delivered on or prior to
the date such Person becomes such Subsidiary or (iii) in respect of
protective filings or Liens permitted under SECTION 7.2.3) shall cover any
of the Collateral); and
(d) the Agent shall have received from each such Subsidiary executed
copies of U.C.C. financing statements naming each such Subsidiary as the
debtor and the Agent for the benefit of the Lenders as the secured party,
suitable for filing under the U.C.C. of all jurisdictions as may be
necessary or, in the reasonable opinion of the Agent, desirable to perfect
the first priority security interest of the Agent for the benefit of the
Lenders pursuant to the security agreement entered into by such Subsidiary,
together with evidence satisfactory to the Agent of the filing (or delivery
for filing) of appropriate trademark, copyright and patent security
supplements,
together, in each case, with such opinions of legal counsel for the Borrower
relating thereto, which legal opinions shall be in form and substance reasonably
satisfactory to the Agent.
SECTION 7.1.9. FUTURE REAL ESTATE PROPERTIES. Within 30 days after the
acquisition by the Borrower or any Guarantor of any real property owned in fee,
the Borrower shall take all steps necessary, at its own cost and expense, to (a)
grant the Agent for the benefit of the Lenders a first priority mortgage Lien on
such real property and buildings and improvements thereon and (b) obtain title
insurance coverage on such property in an amount, containing such terms and
exceptions and issued by an insurance company acceptable to the Agent in the
Agent's reasonable discretion (together with such favorable legal opinions with
respect thereto as the Agent may reasonably request).
SECTION 7.1.10. BOARD MONITORING. The Borrower and the Guarantors hereby
agree to permit the Agent's counsel or any other Person designated by the Agent
from time to time, to attend and monitor at the Borrower's expense all meetings
of the Borrower's or the Guarantors' Board of Directors, and to receive copies
of all board minutes, and other materials or documents provided by the Borrower
and the Guarantors to their shareholders.
SECTION 7.1.11. SEPARATE CORPORATE EXISTENCE. Each of the Borrower and
the Guarantors shall (a) do all things necessary to maintain its corporate
existence separate and apart from each other, including, without limitation,
holding regular meetings of its shareholders and Board of Directors, and
maintain appropriate business books and records (including a current minute
book), (b) not suffer any limitation on the authority of its own directors and
officers to conduct its business and affairs in accordance with their
independent business judgment (except for any limitations imposed by applicable
law), or authorize any Person other than its own officers and directors to act
on their own behalf with respect to matters, and (c) shall (i) maintain
capitalization adequate for the conduct of its business, (ii) account for and
manage all of its liabilities separately from those of any other Person,
including, without limitation, payment by it of all payroll and other
administrative expenses and taxes from its own assets, and (iii) segregate and
identify separately all of its assets from those of any other Person.
SECTION 7.1.12. FURTHER ASSURANCES. The Borrower agrees that from time to
time, at the expense of the Borrower, the Borrower will, and will cause each of
its Subsidiaries to, promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that the Agent may request, in order to perfect and protect the assignments,
security interests and Liens granted or purported to be
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granted under the Loan Documents or to enable the Agent or any Lender to
exercise and enforce its rights and remedies under this Agreement or any other
Loan Document with respect to any Collateral. Without limiting the generality
of the foregoing, the Borrower will, and will cause each of its Subsidiaries to
(a) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be
necessary or desirable, or as the Agent may request, in order to perfect
and preserve the assignments, security interests and Liens granted or
purported to be granted under the Loan Documents;
(b) furnish to the Agent, from time to time at the Agent's request,
statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as the Agent may
reasonably request, all in reasonable detail.
With respect to the foregoing and the grant of the security interest under
the Loan Documents, the Borrower and each of its Subsidiaries hereby authorize
the Agent to file one or more financing or continuation statements, and
amendments thereto, relative to all or any part of the Collateral without the
signature of the Borrower or any such Subsidiary where permitted by law. A
carbon, photographic or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement where permitted by law. Anything in this Section 7.1.12 to
the contrary notwithstanding, so long as no Default shall be continuing, the
Borrower and its Subsidiaries will not be obligated to file any Uniform
Commercial Code financing statements:
(i) with respect to equipment (as that term is used in the U.C.C.)
that is not located at a place of business of the Borrower or any of its
Subsidiaries, so long as (x) the aggregate value of all such equipment as
to which no such financing statements have been filed does not exceed
$1,000,000 and (y) the aggregate value of all such equipment at any one
location does not exceed $200,000; and
(ii) with respect to inventory (as that term is used in the U.C.C.)
that is work-in-process that is not located at a place of business of the
Borrower or any of its Subsidiaries, so long as (x) the aggregate value of
all such inventory as to which no such financing statements have been filed
does not exceed $700,000 and (y) the aggregate value of all such inventory
at any one location does not exceed $200,000.
SECTION 7.1.13. REAL ESTATE MORTGAGES. The Borrower and the Guarantors
agree that:
(i) no later than 60 days after the Effective Date, they shall deliver
to the Agent counterparts of mortgages or deeds of trust, which shall be in
form and substance reasonably satisfactory to the Agent (as amended,
supplemented, restated or otherwise modified from time to time, the
"MORTGAGES"), duly executed by the Borrower and the Guarantors, covering
all real property owned by any Obligor (other than the real property owned
by Gits Manufacturing Company, Inc., Atlantic Guest, Inc. and Xxxxxxxxxxx
Marine Products, Inc.), and
(ii) they will use their best efforts (to the extent not requiring any
unreasonable expenditures) to obtain second priority Mortgages on the real
property owned by Gits Manufacturing Company, Inc., and
(iii) they will use their best efforts (to the extent not requiring
any unreasonable expenditures) to obtain leasehold Mortgages on all real
property in which any Obligor has a leasehold interest (other than the
leasehold estates held by Marine Industries Company),
together with:
(a) evidence of the completion (or satisfactory arrangements for the
completion) of all recordings
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and filings of the Mortgages (and related fixture filings), to the extent
required above in this Section 7.1.13, as may be necessary or, in the
opinion of the Agent, desirable to effectively create a valid first
priority mortgage Lien against all of the Realty owned by the Borrower; and
(b) such other approvals, opinions or documents in connection
therewith as the Agent may reasonably request.
SECTION 7.1.14. TITLE INSURANCE. The Borrower agrees that, no later than
60 days after the Effective Date, it shall furnish to the Agent a mortgagee's
title insurance policy satisfactory to it and from an independent title insurer
satisfactory to it (the "TITLE INSURER"), with respect to the Realty owned by
the Borrower and its Subsidiaries, insuring that title to such Realty is
marketable and that the interests created by each Mortgage constitute valid
Liens thereon free and clear of all defects and encumbrances, and such other
matters reasonably approved by the Agent, and such policy shall also include a
revolving credit endorsement, comprehensive endorsement, variable rate
endorsement, access and utilities endorsements, a mechanic's lien endorsement
and such other endorsements as the Agent shall reasonably request. All
premiums, title examination, survey, departmental violations, judgment and
U.C.C. search charges, mortgage recording taxes and fees, and other taxes,
charges and fees shall be paid in full or provided for in a manner satisfactory
to the Title Insurer and the Agent, and the Agent shall have been furnished
satisfactory evidence of such payment or provision.
SECTION 7.1.15. REALTY SURVEY. The Borrower agrees that, no later than 60
days after the Effective Date (and to the extent necessary to obtain the title
insurance required pursuant to Section 7.1.14), it shall furnish to the Agent a
current survey of the Realty owned by the Borrower and its Subsidiaries and the
improvements thereon prepared in accordance with the current Minimum Standard
Detail Requirements for Land Title Surveys as adopted by the American Land Title
Association and the American Congress on Surveying and Mapping, prepared and
certified to the Agent and the Title Insurer by a licensed surveyor or engineer,
which surveyor and survey shall be reasonably satisfactory in all respects to
the Agent and to the Title Insurer and which certification shall include, among
other things, a statement to the effect that all portions of such Realty that
lie within any flood areas designated on any maps entitled "Flood Insurance Rate
Map", "Flood Hazard Floodway Boundary Map", "Flood Hazard Boundary Map", or
"Flood Boundary and Floodway Map" published by the Federal Emergency Management
Agency or on any Flood Hazard Boundary Map published by the U.S. Department of
Housing and Urban Development have been outlined and labeled on the survey.
SECTION 7.1.16. DISSOLUTION OF CERTAIN SUBSIDIARIES. Promptly after the
Closing Date the Borrower will cause each of Gits Bros. Mfg. Co. and Force 10
USA Co. to be dissolved.
SECTION 7.2. NEGATIVE COVENANTS. The Borrower agrees with the Agent, each
Issuer and each Lender that, until all Commitments have terminated and all
Obligations have been paid and performed in full, the Borrower will perform the
obligations set forth in this SECTION 7.2.
SECTION 7.2.1. BUSINESS ACTIVITIES. The Borrower will not, and will not
permit any of its Subsidiaries to, engage in any business activity, except
Permitted Businesses.
SECTION 7.2.2. INDEBTEDNESS. The Borrower will not, and will not permit
any of its Subsidiaries to, create, incur, assume or suffer to exist or
otherwise become or be liable in respect of any Indebtedness, other than the
following:
(a) Indebtedness in respect of the Credit Extensions and other
Obligations;
(b) until the date of the initial Credit Extension, Indebtedness
identified in ITEM 7.2.2(B) ("Indebtedness to be Paid") of the Disclosure
Schedule;
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(c) Indebtedness existing as of the Effective Date which is identified
in ITEM 7.2.2(C) ("Ongoing Indebtedness") of the Disclosure Schedule;
(d) Indebtedness (other than Indebtedness described in the immediately
preceding CLAUSE (C)) in an aggregate principal amount not to exceed
$5,000,000 at any time outstanding in respect of (i) purchase money
Indebtedness which is incurred by the Borrower or any of its Subsidiaries
to a vendor to finance its acquisition of any assets permitted to be
acquired pursuant to SECTION 7.2.7 and (ii) Capitalized Lease Liabilities
to the extent permitted by SECTION 7.2.7;
(e) unsecured Indebtedness incurred in the ordinary course of business
(including open accounts extended by suppliers on normal trade terms in
connection with purchases of goods and services, but excluding all
Indebtedness incurred through the borrowing of money and all Contingent
Liabilities);
(f) Indebtedness in respect of Rate Protection Agreements with a
Lender and entered into solely with respect to the Credit Extensions;
(g) Indebtedness consisting of the Senior Notes (and any refinancing
thereof on terms that are, in all material respects, at least as favorable
to the Borrower as the terms of the Senior Notes), PROVIDED that the
aggregate principal amount thereof shall not exceed $80,000,000;
(h)Indebtedness of the Borrower to any Guarantor, and Indebtedness of
any Guarantor to the Borrower or any other Guarantor; and
(i) other Indebtedness in an aggregate amount not to exceed $2,000,000
at any one time outstanding;
PROVIDED, HOWEVER, that no Indebtedness pursuant to CLAUSE (D) or (I) may be
incurred if, after giving effect to the incurrence thereof, any Default shall
have occurred and be continuing.
SECTION 7.2.3. LIENS. The Borrower will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any
of its property, revenues or assets, whether now owned or hereafter acquired,
except:
(a) Liens securing payment of the Obligations granted pursuant to any
Loan Document;
(b) Liens granted to secure payment of the Indebtedness of the type
permitted and described in CLAUSE (D) of SECTION 7.2.2 and covering only
those assets acquired with the proceeds of such Indebtedness and Liens
identified in ITEM 7.2.3 ("Existing Liens") of the Disclosure Schedule;
(c) Liens for taxes, assessments or other governmental charges or
levies not at the time delinquent or thereafter payable without penalty or
being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside
on its books;
(d) Liens of carriers, warehousemen, mechanics, materialmen and
landlords incurred in the ordinary course of business for sums not overdue
or being diligently contested in good faith by appropriate proceedings and
for which adequate reserves in accordance with GAAP shall have been set
aside on its books;
(e) Liens incurred in the ordinary course of business in connection
with worker's compensation, unemployment insurance or other forms of
governmental insurance or benefits (excluding any Liens in
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favor of a Pension Plan or PBGC), or to secure performance of tenders,
statutory obligations, leases and contracts (other than for borrowed money)
entered into in the ordinary course of business or to secure obligations on
surety or appeal bonds;
(f) judgment Liens in existence less than 30 days after the entry
thereof or with respect to which execution has been stayed or the payment
of which is covered in full (subject to a customary deductible) by
insurance maintained with responsible insurance companies;
(g) easements, rights-of-way, zoning and similar restrictions and
other similar encumbrances or title defects which, in the aggregate, are
not substantial in amount, and which do not in any case materially detract
from the value of the property subject thereto or interfere with the
ordinary conduct of the business of the Borrower or its Subsidiaries; and
(h) Liens arising out of leases or subleases granted by the Borrower
to others in the ordinary course of business of the Borrower and its
Subsidiaries.
SECTION 7.2.4. FINANCIAL CONDITION. The Borrower will not permit:
(a) the Interest Coverage Ratio, as of the last day of each Fiscal
Quarter falling in the periods set forth below, to be less than the ratio
set forth opposite such period:
Fiscal Quarters ending Minimum Interest
in the following periods Coverage Ratio
------------------------ ----------------
Closing Date through June 29, 2000 2.00 to 1
June 30, 2000 through December 30, 2000 2.15 to 1
December 31, 2000 through June 29, 2001 2.35 to 1
June 30, 2001 through December 30, 2001 2.50 to 1
December 31, 2001 through June 29, 2002 2.75 to 1
June 30, 2002 and at all times thereafter 3.00 to 1
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(b) the Fixed Charge Coverage Ratio, as of the last day of each Fiscal
Quarter falling in the periods set forth below, to be less than the ratio
set forth opposite such period:
Fiscal Quarters ending Minimum Fixed Charge
in the following periods Coverage Ratio
------------------------ --------------------
Closing Date through June 29, 1999 1.20 to 1
June 30, 1999 through December 30, 1999 1.25 to 1
December 31, 1999 through June 29, 2000 1.30 to 1
June 30, 2000 through December 30, 2000 1.40 to 1
December 31, 2000 and at all times thereafter 1.50 to 1
(c) the Funded Debt to EBITDA Ratio, as of the last day of each
Fiscal Quarter falling in the periods set forth below, to be greater than
the ratio set forth opposite such period:
Fiscal Quarters ending Maximum Funded Debt to
in the following periods EBITDA Ratio
------------------------ ----------------------
Closing Date through December 30, 1999 5.25 to 1
December 31, 1999 through June 29, 2000 5.00 to 1
June 30, 2000 through December 30, 2000 4.65 to 1
December 31, 2000 through June 29, 2001 4.25 to 1
June 30, 2001 through December 30, 2001 3.90 to 1
December 31, 2001 and at all times thereafter 3.50 to 1
SECTION 7.2.5. INVESTMENTS. The Borrower will not, and will not permit
any of its Subsidiaries to, make, incur, assume or suffer to exist any
Investment in any other Person, except:
(a) Investments of the Borrower existing on the Effective Date and
identified in ITEM 7.2.5(A) ("Existing Investments") of the Disclosure
Schedule;
(b) Investments of the Borrower in any Guarantor (other than
Investments in Guest Building, L.L.C. and Xxxxxxxxxxx Building, L.L.C. that
are not used in the ordinary course of business to maintain, improve or
repair the real properties owned by them) and any Investment of any
Guarantor in the Borrower or any other Guarantors (other than Investments
in Guest Building, L.L.C. and Xxxxxxxxxxx Building, L.L.C. that are not
used in the ordinary course of business to maintain, improve or repair the
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real properties owned by them);
(c) Cash Equivalent Investments;
(d) without duplication, Investments permitted as Capital Expenditures
pursuant to SECTION 7.2.7;
(e) Investments made after the Effective Date in Subsidiaries to the
extent such Subsidiary has complied with the requirements of SECTION 7.1.8;
(f) Investments in accounts and chattel paper (as defined in the
U.C.C.), and notes receivable acquired in the ordinary course of business;
(g) Investments consisting of stock, obligations or securities
received in settlement of debts created in the ordinary course of business
or in satisfaction of judgments;
(h) Investments consisting of Permitted Acquisitions made in
compliance with SECTION 7.2.10;
(i) loans or advances to employees in an aggregate amount not to
exceed $1,000,000 at any one time outstanding; and
(j)any other Investments in an aggregate amount at any one time not to
exceed $500,000;
PROVIDED, HOWEVER, that
(i) any Investment which when made complies with the requirements
of the definition of the term "CASH EQUIVALENT INVESTMENT" may
continue to be held notwithstanding that such Investment if made
thereafter would not comply with such requirements; and
(ii) no Investment otherwise permitted by CLAUSE (I) shall be
permitted to be made if, immediately before or after giving effect
thereto, any Default shall have occurred and be continuing.
SECTION 7.2.6. RESTRICTED PAYMENTS, ETC.
(a) On and at all times after the Effective Date, the Borrower
(i) will not declare, pay or make any dividend or distribution (in
cash, property or obligations) on any shares of any class of capital stock
or other ownership interests (now or hereafter outstanding) ("Equity") in
the Borrower or on any warrants, options or other rights with respect to
any Equity (now or hereafter outstanding) in the Borrower (other than
dividends or distributions payable in shares of its common stock or
warrants to purchase shares of its common stock or split-ups or
reclassifications of its common stock into additional or other shares of
its common stock) or apply, or permit any of its Subsidiaries to apply, any
of its funds, property or assets to the purchase, redemption, sinking fund
or other retirement of, or agree or permit any of its Subsidiaries to
purchase or redeem, any Equity (now or hereafter outstanding) in the
Borrower, or warrants, options or other rights with respect to any Equity
(now or hereafter outstanding) in the Borrower; PROVIDED, HOWEVER, that
(A) during the period that the Borrower is disregarded or is
treated as a pass through entity for U.S. federal income tax purposes
and after such period to the extent relating to liability for such
period, the Borrower may make cash distributions to the Parent for the
benefit of
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the Taxpayers, in respect of each Estimation Period, in an aggregate
amount not to exceed the Permitted Quarterly Tax Distribution;
PROVIDED, that the amount of distributions made pursuant to this
clause (A) will be excluded in the calculation of the amount of
distributions pursuant to clause (B) below; and PROVIDED, FURTHER,
that (1) within ten days following the Parent's filing of its required
federal income tax return for the immediately preceding taxable year,
the Tax Amounts CPA shall file with the Agent a written statement
indicating in reasonable detail the calculation of the True-up Amount,
(2) in the case of a True-up Amount due to the Taxpayers, the
Permitted Quarterly Tax Distribution payable in respect of such
Estimation Period shall be increased by such True-up Amount and (3) in
the case of a True-up Amount due to the Borrower, the Permitted
Quarterly Tax Distribution payable in respect of the immediately
following Estimation Period shall be reduced by such True-up Amount
and the excess, if any, of the True-up Amount over such Permitted
Quarterly Tax Distribution shall be applied to reduce the immediately
following Permitted Quarterly Tax Distributions until such True-up
Amount is entirely offset;
(B) the Borrower may make additional distributions in any Fiscal
Year in an aggregate amount which does not exceed one-third of the
amount that the Term Loans and Revolving Loans were prepaid in such
Fiscal Year pursuant to SECTION 3.1.2(C)(B), so long as (i) at the
time of such distribution and after giving effect thereto, no Default
shall be continuing, (ii) after giving effect to such distribution,
the ratio of the aggregate outstanding principal amount of all Funded
Debt of the Borrower and its Subsidiaries on the date of such
distribution (other than Senior Notes) to EBITDA for the period of
four consecutive Fiscal Quarters ending most recently prior to the
date of such distribution does not exceed 2.00 to 1;
(C) so long as at the time of such distribution and after giving
effect thereto no Default shall be continuing, the Borrower may make
distributions to the Parent to enable to the Parent to repurchase
options granted to its employees to purchase common stock of the
Parent, so long as the aggregate amount paid by the Borrower for such
purposes does not exceed $1,000,000; and
(D) so long as at the time of such distribution and after giving
effect thereto no Default shall be continuing, the Borrower may make
distributions to the Parent to enable the Parent to satisfy
obligations to employees of the Obligors that are then due and payable
by the Parent under stock appreciation rights outstanding on the date
hereof, and
(ii) will not, and will not permit any of its Subsidiaries to, make
any deposit for any of the purposes described in the preceding CLAUSE
(A)(I).
(b) The Borrower will not, nor will it permit any of its Subsidiaries to,
do any of the following if any Loans are then outstanding:
(i) make any voluntary prepayment or voluntary redemption of principal
of any Indebtedness evidenced by the Senior Notes (except for a refinancing
permitted under SECTION 7.2.2(G)); or
(ii) defease, purchase or otherwise acquire any Indebtedness evidenced
by the Senior Notes; or
(iii) make any deposit for any of the purposes described in the
preceding clause (b)(i) or (ii);
PROVIDED, that the Borrower may make (x) voluntary prepayments or redemptions of
principal of the Senior Notes in any year in an aggregate amount not to exceed
one-third of the aggregate amount of prepayments of Term Loans and Revolving
Loans made by the Borrower in such year pursuant to SECTION 3.1.2(C)(B) and (y)
mandatory
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prepayments or redemptions of the Senior Notes so long as no Loans are then
outstanding.
SECTION 7.2.7. CAPITAL EXPENDITURES, ETC. The Borrower will not, and will
not permit any of its Subsidiaries to, make or, commit to make, without
duplication, Capital Expenditures in any Fiscal Year, in excess of the sum of
the following
(a) $5,000,000;
PLUS
(b) any amount permitted to be expended in respect of Capital Expenditures
in the immediately preceding Fiscal Year pursuant to clause (a) above but
not so expended.
SECTION 7.2.8. RENTAL OBLIGATIONS. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into at any time any arrangement which
does not create a Capitalized Lease Liability and which involves the leasing by
the Borrower or any of its Subsidiaries from any lessor of any real or personal
property (or any interest therein), except arrangements which, together with all
other such arrangements which shall then be in effect, will not require the
payment of an aggregate amount of rentals by the Borrower and such Subsidiaries
in excess of (excluding escalations resulting from a rise in the consumer price
or similar index) $2,500,000 for any Fiscal Year; PROVIDED, HOWEVER, that any
calculation made for purposes of this Section shall exclude any amounts required
to be expended for maintenance and repairs, insurance, taxes, assessments, and
other similar charges.
SECTION 7.2.9. TAKE OR PAY CONTRACTS. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into or be a party to any arrangement
for the purchase of materials, supplies, other property or services if such
arrangement by its express terms requires that payment be made by the Borrower
or any such Subsidiary regardless of whether such materials, supplies, other
property or services are delivered or furnished to it.
SECTION 7.2.10. CONSOLIDATION, MERGER, ETC. The Borrower will not, and
will not permit any of its Subsidiaries to, liquidate or dissolve, consolidate
or amalgamate with, or merge into or with, any other Person, or purchase or
otherwise acquire all or any substantial part of the assets or stock of any
Person (or of any division thereof); PROVIDED, HOWEVER, that:
(a) any future Subsidiaries of the Borrower may merge with and into
the Borrower with the Borrower being the survivor of such merger or a
wholly-owned Subsidiary of the Borrower may merge with and into another
wholly-owned Subsidiary of the Borrower with the prior written consent of
the Agent,
(b) the Borrower may consummate the Acquisition,
(c) the Borrower may consummate the G&H Acquisition, and
(d) the Borrower or any of its Subsidiaries may make Permitted
Acquisitions so long as such Permitted Acquisition is either (x) financed
with the proceeds of Revolving Loans as provided in SECTION 4.10, or (y)
financed with Net Disposition Proceeds, Net Equity Proceeds or Net Debt
Proceeds pursuant to and in accordance with SECTION 3.1.2(C).
SECTION 7.2.11. ASSET DISPOSITIONS, ETC. The Borrower will not, and will
not permit any of its Subsidiaries to, sell, transfer, lease, contribute or
otherwise convey or dispose of, or grant options, warrants or other rights with
respect to, all or any part of its assets (including accounts receivable and
capital stock of Subsidiaries) to any Person, except
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(a) if such sale, transfer, lease, contribution or conveyance is of
Inventory in the ordinary course of its business;
(b) if such disposition is a Permitted Disposition (subject to
compliance with SECTION 3.1.2(C)), so long as:
(i) such disposition is not a disposition of any material part
of the assets of or the capital stock of any of X.X. Xxxxxxx
Manufacturing Co., Inc., Gits Manufacturing Company, Inc., Marine
Industries Company, Xxxxxx Lock, Inc. or ESP Lock Products Inc.
(collectively, the "MATERIAL SUBSIDIARIES"), and
(ii) such disposition is either:
(x) a disposition of any of the assets or capital stock of
any of the Subsidiaries of the Borrower on the date hereof other
than the Material Subsidiaries (collectively, the "IMMATERIAL
SUBSIDIARIES"), or
(y) a disposition of assets where the EBITDA generated by
such assets during the 12-month period most recently ended prior
to the date of such disposition (the "CALCULATION PERIOD"),
together with the EBITDA generated during the Calculation Period
by all other assets disposed of during the Calculation Period
(other than dispositions of Immaterial Subsidiaries), does not
exceed 10% of EBITDA for the Calculation Period.
(c) if such assets are worn or obsolete, so long as the net book value
of such assets, together with the net book value of all other assets sold,
transferred, leased, contributed or conveyed by the Borrower or any of its
Subsidiaries pursuant to this CLAUSE (C) after the date of this Agreement,
does not exceed $1,000,000 in the aggregate.
Any Immaterial Subsidiary disposed of pursuant to this Section shall be released
of its obligations under this Agreement and any other Loan Documents to which it
is a party.
SECTION 7.2.12. MODIFICATION OF CERTAIN AGREEMENTS. Neither the Borrower
nor the Guarantors will consent to any amendment, supplement or other
modification of any of the terms or provisions contained in, or applicable to,
any Organic Document or the Senior Notes, other than any such amendment,
supplement or other modification which is immaterial and which could not
materially adversely affect the Agent or any Lender.
SECTION 7.2.13. TRANSACTIONS WITH AFFILIATES. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into, or cause, suffer or
permit to exist any arrangement or contract with, any of its other Affiliates
unless such arrangement or contract is on fair and reasonable terms, is an
arrangement or contract of the kind which would be entered into by a prudent
Person in the position of the Borrower or such Subsidiary with a Person which is
not one of its Affiliates.
SECTION 7.2.14. NEGATIVE PLEDGES, RESTRICTIVE AGREEMENTS, ETC. The
Borrower will not, and will not permit any of its Subsidiaries to, enter into
any agreement (excluding this Agreement and any other Loan Document)
prohibiting:
(a) the creation or assumption of any Lien upon its properties,
revenues or assets, whether now owned or hereafter acquired, or the ability
of the Borrower or any other Obligor to amend or otherwise modify this
Agreement or any other Loan Document; or
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(b) the ability of any Subsidiary of the Borrower to make any
payments, directly or indirectly, to the Borrower by way of dividends,
advances, repayments of loans or advances, reimbursements of management and
other intercompany charges, expenses and accruals or other returns on
investments, or any other agreement or arrangement which restricts the
ability of any such Subsidiary to make any payment, directly or indirectly,
to the Borrower.
SECTION 7.2.15. MANAGEMENT AND DIRECTOR FEES, EXPENSES, ETC. The Borrower
will not, and will not permit any of its Subsidiaries to, pay management,
advisory, consulting or other similar fees, except that the Borrower may pay the
following (but only if, after giving effect thereto, no Default shall have
occurred and be continuing):
(a)The following fees:
(i) a Management Fee in an amount not to exceed $900,000 (the
"Base Fee") in any Fiscal Year;
(ii) an annual additional payment (the "Additional Fee") in
respect of any Fiscal Year, which Additional Fee shall be payable on
the later of March 31 of the following year or the date of the
completion of the Borrower's audited financial statements for such
year, and which Additional Fee shall not exceed $300,000 with respect
to Fiscal Year 1999; and
(iii) reasonable out of pocket expenses incurred in connection
with services performed under the Management Agreement;
PROVIDED, HOWEVER, that at the time of payment of the Additional Fee, the
Interest Coverage Ratio shall be equal to or greater than (i) 2.0 to 1 for
Fiscal Years ended on or prior to December 31, 1999 and (ii) 2.25 to 1 for
Fiscal Years ended after December 31, 1999 after giving effect to such
payment; PROVIDED, FURTHER, that (A) the Base Fee, the Additional Fee, or
any portion thereof, may be deferred until such time as payment is
permitted pursuant to the preceding clause, (B) for each fiscal year,
beginning in Fiscal Year 2000, the Additional Fee may be increased by up to
15% of the aggregate amount of the Base Fee and the then current amount of
the Additional Fee, (C) the percentage increase to the aggregate amount of
the Management Fees payable under the Management Agreement in any Fiscal
Year compared to the prior Fiscal Year shall not exceed the percentage
increase in EBITDA for such fiscal year as compared to the prior fiscal
year and (D) notwithstanding the foregoing, the aggregate amount of all
increases to the Additional Fee shall not exceed $400,000.
(b)An advisory fee to Millbrook Capital Management Inc. in connection
with the Merger in an amount not to exceed $900,000.
SECTION 7.2.16. ENVIRONMENTAL LIENS. The Borrower will not, and will not
permit any of its Subsidiaries to, allow any Lien imposed pursuant to any law,
rule, regulation or order relating to any Hazardous Material (including the
disposal thereof) to be imposed or to remain on any real property owned or
operated by the Borrower or any of its Subsidiaries, except as contested in good
faith by appropriate proceedings for which adequate reserves have been
established and are being maintained on its books.
SECTION 7.2.17. FISCAL YEAR END. Neither the Borrower nor any Guarantor
shall not change its fiscal year to end on any date other than on the 31st day
of December.
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ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. LISTING OF EVENTS OF DEFAULT. Each of the following events
or occurrences described in this SECTION 8.1 shall constitute an "EVENT OF
DEFAULT".
SECTION 8.1.1. NON-PAYMENT OF OBLIGATIONS. The Borrower shall default
(a) in the payment or prepayment when due of any principal of any
Loan;
(b) in the payment when due of any interest on any Loan and such
default shall remain unremedied for a period in excess of two Business
Days;
(c) in the payment when due of any fees and such default shall remain
unremedied for a period in excess of three Business Days; or
(d) in the payment when due of any other Obligation and such default
shall continue unremedied for a period of 10 Business Days.
SECTION 8.1.2. BREACH OF WARRANTY. Any representation or warranty other
Obligor made or deemed to be made hereunder or in any other Loan Document
executed by it or any other writing or certificate furnished by or on behalf
other Obligor to the Agent or any Lender pursuant to this Agreement or any such
other Loan Document (including any certificates delivered pursuant to ARTICLE V)
is or shall be incorrect when made, deemed made or furnished in any material
respect.
SECTION 8.1.3. NON-PERFORMANCE OF CERTAIN COVENANTS AND OBLIGATIONS. The
Borrower shall default in the due performance and observance of any of their
obligations under CLAUSE (E) of SECTION 7.1.1, SECTION 7.1.7, SECTION 7.1.8 or
SECTION 7.2 or any other Obligor shall default in the performance of any of its
obligations in respect of such Sections as such Sections are incorporated by
reference or otherwise in any Loan Document to which such Obligor is a party
(PROVIDED that any default under SECTION 7.2.4 shall be deemed to be cured if
(x) subsequent to the date of such default (that is, the date as of which the
applicable financial test is determined) Loans have been prepaid (as
contemplated by clause (a) of the definition of "Funded Debt to EBITDA Ratio")
and/or EBITDA has been increased (as contemplated by CLAUSE (E) of the
definition of EBITDA), in each case in an amount such that, if such prepayment
or increase in EBITDA had occurred immediately prior to the date of such default
such default would not have occurred and (y) the Agent shall have received a
certificate from the chief financial officer of the Borrower demonstrating the
foregoing to the satisfaction of the Agent).
SECTION 8.1.4. NON-PERFORMANCE OF OTHER COVENANTS AND OBLIGATIONS. Any
Obligor shall default in the due performance and observance of (a) any agreement
contained in SECTION 7.1.1 not covered in SECTION 8.1.3 and such default shall
continue unremedied for a period of 10 days, or (b) any other agreement
contained herein or in any other Loan Document (other than items covered by
SECTION 8.1.3) executed by it, and such default shall continue unremedied for a
period of 30 days after any officer of such Obligor has actual knowledge thereof
or notice thereof shall have been given to any such Obligor by the Agent or any
Lender.
SECTION 8.1.5. DEFAULT ON OTHER INDEBTEDNESS. A default shall occur in
the payment when due, whether by acceleration or otherwise, of any Indebtedness
(other than Indebtedness described in SECTION 8.1.1) of its Subsidiaries or any
other Obligor having a principal amount, individually or in the aggregate, in
excess of $2,000,000; or a default shall occur in the performance or observance
of any obligation or condition with respect to such Indebtedness if the effect
of such default in performance or observance is to accelerate the maturity of
any such Indebtedness or such default in performance or observance shall
continue unremedied for any applicable period of time sufficient to permit the
holder or holders of such Indebtedness, or any trustee or agent for such
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holders, to cause such Indebtedness to become due and payable prior to its
expressed maturity.
SECTION 8.1.6. JUDGMENTS. Any judgment or order for the payment of money
in excess of $2,000,000 shall be rendered against the Borrower or any of its
Subsidiaries or any other Obligor and either
(a) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order; or
(b) there shall be any period of 30 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending
appeal, bond or otherwise, shall not be in effect.
SECTION 8.1.7. PENSION PLANS. Any of the following events shall occur
with respect to any Pension Plan
(a) the institution of any steps by the Borrower or any member of its
Controlled Group, any other Obligor, or any other Person to terminate a
Pension Plan if, as a result of such termination, the Borrower or any such
member could be required to make a contribution to such Pension Plan, or
could reasonably expect to incur a liability or obligation to such Pension
Plan, in excess of $250,000; or
(b) a contribution failure occurs with respect to any Pension Plan
sufficient to give rise to a Lien on property of its Controlled Group under
Section 302(f) of ERISA.
SECTION 8.1.8. CHANGE IN CONTROL. Any Change in Control shall occur.
SECTION 8.1.9. BANKRUPTCY, INSOLVENCY, ETC. The Borrower or any of its
Subsidiaries or any other Obligor shall
(a) generally fail to pay debts as they become due, or admit in
writing its inability to pay debts as they become due;
(b) apply for, consent to, or acquiesce in, the appointment of a
trustee, receiver, sequestrator, or other custodian for the Borrower or any
of its Subsidiaries or any other Obligor or any property of any thereof, or
make a general assignment for the benefit of creditors;
(c) in the absence of such application, consent or acquiescence,
permit or suffer to exist the involuntary appointment of a trustee,
receiver, sequestrator or other custodian for the Borrower or any of its
Subsidiaries or any other Obligor or for a substantial part of the property
of any thereof, and such trustee, receiver, sequestrator or other custodian
shall not be discharged within 60 days;
(d) permit or suffer to exist the involuntary commencement of, or
voluntarily commence, any bankruptcy, reorganization, debt arrangement, or
other case or proceeding under any bankruptcy or insolvency laws, or permit
or suffer to exist the involuntary commencement of, or voluntarily
commence, any dissolution, winding up or liquidation proceeding, in each
case, by or against the Borrower or any of its Subsidiaries or any other
Obligor, PROVIDED that, if not commenced by the Borrower or such Subsidiary
or any other Obligor, such proceeding shall be consented to or acquiesced
in by the Borrower or such Subsidiary or any other Obligor, or shall result
in the entry of an order for relief or shall remain for 60 days
undismissed; or
(e) take any corporate or partnership action authorizing, or in
furtherance of, any of the foregoing.
SECTION 8.1.10. IMPAIRMENT OF SECURITY, ETC. Without the consent of the
Lenders, any Loan Document,
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or any Lien granted thereunder, shall (except in accordance with its terms), in
whole or in part, terminate, cease to be effective or cease to be the legally
valid, binding and enforceable obligation of the Borrower or any other Obligor
party thereto; the Borrower, any other Obligor or any other party shall,
directly or indirectly, contest in any manner such effectiveness, validity,
binding nature or enforceability; or any Lien securing any Obligation shall, in
whole or in part, cease to be a perfected first priority Lien.
SECTION 8.2. ACTION IF BANKRUPTCY. If any Event of Default described in
CLAUSES (B) through (D) of SECTION 8.1.9 shall occur, the Commitments (if not
theretofore terminated) shall automatically terminate and the outstanding
principal amount of all outstanding Loans and all other Obligations shall
automatically be and become immediately due and payable, without presentment,
notice or demand.
SECTION 8.3. ACTION IF OTHER EVENT OF DEFAULT. If any Event of Default
(other than any Event of Default described in CLAUSES (B) through (D) of SECTION
8.1.9) shall occur for any reason, whether voluntary or involuntary, and be
continuing, the Agent, upon the direction of the Required Lenders, shall by
notice to the Borrower declare all or any portion of the outstanding principal
amount of the Loans and other Obligations to be due and payable and/or the
Commitments (if not theretofore terminated) to be terminated, whereupon the full
unpaid amount of such Loans and other Obligations which shall be so declared due
and payable shall be and become immediately due and payable, without further
notice, demand or presentment, and/or, as the case may be, the Commitments shall
terminate.
ARTICLE IX
GUARANTY
SECTION 9.1. THE GUARANTY. Each of the Guarantors hereby jointly and
severally, absolutely, unconditionally and irrevocably guarantees the full and
prompt payment when due, whether at stated maturity, by acceleration or
otherwise (including all amounts which would have become due but for the
operation of the automatic stay under Section 362(a) of the Federal Bankruptcy
Code, 11 U.S.C. Section 362(a), and the operation of Sections 502(b) and 506(b)
of the Federal Bankruptcy Code, 11 U.S.C. Section 502(b) and Section 506(b)), of
the following (collectively, the "GUARANTEED OBLIGATIONS"),
(a) all Obligations of each other Guarantor and each other Obligor to
the Agent and each of the Lenders now or hereafter existing under this
Agreement and each other Loan Document, whether for principal, interest,
fees, expenses or otherwise; and
(b) all other Obligations to the Agent and each of the Lenders now or
hereafter existing under any of the Loan Documents, whether for principal,
interest, fees, expenses or otherwise.
The obligations of each Guarantor under this ARTICLE IX constitute a guaranty of
payment when due and not of collection, and each Guarantor specifically agrees
that it shall not be necessary or required that the Agent, any Lender or any
holder of any Note exercise any right, assert any claim or demand or enforce any
remedy whatsoever against the Borrower or any other Obligor (or any other
Person) before or as a condition to the obligations of the Guarantors under this
ARTICLE IX.
SECTION 9.2. GUARANTY UNCONDITIONAL. The obligations of each Guarantor
under this ARTICLE IX shall be construed as a continuing, absolute,
unconditional and irrevocable guaranty of payment and shall remain in full force
and effect until all the Guaranteed Obligations have been indefeasibly paid in
full in cash and all Commitments shall have permanently terminated. Each
Guarantor guarantees that the Guaranteed Obligations will be paid strictly in
accordance with the terms of the agreement, instrument or document under which
they arise, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Agent or any of the Lenders with respect thereto. The liability of the
Guarantors hereunder
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shall be absolute, irrevocable and unconditional irrespective of:
(a) any lack of validity, legality or enforceability of this
Agreement, the Notes, any Rate Protection Agreement with a Lender or any
other Loan Document or any other agreement or instrument relating to any
thereof;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations, or any compromise,
renewal, extension, acceleration or release with respect thereto, or any
other amendment or waiver of or any consent to departure from this
Agreement, the Notes, any Rate Protection Agreement with a Lender or any
other Loan Document;
(c) any addition, exchange, release, impairment or non-perfection of
any collateral, or any release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Guaranteed
Obligations;
(d) the failure of the Agent or any Lender
(i) to assert any claim or demand or to enforce any right or
remedy against the Borrower, any other Obligor or any other Person
(including any other guarantor) under the provisions of this
Agreement, any Note, any Rate Protection Agreement with a Lender or
any other Loan Document or otherwise, or
(ii) to exercise any right or remedy against any other guarantor
of, or collateral securing, any of the Guaranteed Obligations;
(e) any amendment to, rescission, waiver, or other modification of, or
any consent to departure from, any of the terms of this Agreement, any
Note, any Rate Protection Agreement with a Lender or any other Loan
Document;
(f) any defense, set-off or counter-claim which may at any time be
available to or be asserted by the Borrower or any other Obligor against
the Agent or any Lender;
(g) any reduction, limitation, impairment or termination of the
Guaranteed Obligations for any reason, including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to
(and each Guarantor hereby waives any right to or claim of) any defense or
setoff, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality, nongenuineness, irregularity, compromise or
unenforceability of, or any other event or occurrence affecting, the
Guaranteed Obligations or otherwise; or
(h) any other circumstance which might otherwise constitute a defense
available to, or a legal or equitable discharge of, the Borrower, any other
Obligor or any surety or guarantor.
SECTION 9.3. REINSTATEMENT IN CERTAIN CIRCUMSTANCES. If at any time any
payment in whole or in part of any of the Guaranteed Obligations is rescinded or
must be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of the Borrower, any other Obligor or otherwise, each Guarantor's
obligations under this ARTICLE IX with respect to such payment shall be
reinstated as though such payment had been due but not made at such time.
SECTION 9.4. WAIVER BY THE GUARANTORS. Each Guarantor irrevocably waives
promptness, diligence, notice of acceptance hereof, presentment, demand, protest
and any other notice with respect to any of the Guaranteed Obligations, as well
as any requirement that at any time any action be taken by any Person against
the
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Borrower or any other Person.
SECTION 9.5. POSTPONEMENT OF SUBROGATION, ETC. The Guarantors will not
exercise any rights which they may acquire by way of rights of subrogation by
any payment made hereunder or otherwise, until the prior payment, in full and in
cash, of all Guaranteed Obligations. Any amount paid to the Guarantors on
account of any such subrogation rights prior to the payment in full of all
Guaranteed Obligations shall be held in trust for the benefit of the Lenders and
each holder of a Note and shall immediately be paid to the Agent and credited
and applied against the Guaranteed Obligations, whether matured or unmatured, in
accordance with the terms of this Agreement; PROVIDED, HOWEVER, that if
(a) the Guarantors have made payment to the Lenders and each holder of
a Note of all or any part of the Guaranteed Obligations, and
(b) all Guaranteed Obligations have been paid in full and all
Commitments have been permanently terminated,
each Lender and each holder of a Note agrees that, at each Guarantor's request,
the Agent, on behalf of the Lenders and the holders of the Notes, will execute
and deliver to each Guarantor appropriate documents (without recourse and
without representation or warranty) necessary to evidence the transfer by
subrogation to each Guarantor of an interest in the Guaranteed Obligations
resulting from such payment by each Guarantor. In furtherance of the foregoing,
for so long as any Guaranteed Obligations or Commitments remain outstanding,
each Guarantor shall refrain from taking any action or commencing any proceeding
against the Borrower (or its successors or assigns, whether in connection with a
bankruptcy proceeding or otherwise) to recover any amounts in respect of
payments to any Lender or any holder of a Note.
SECTION 9.6. STAY OF ACCELERATION. If acceleration of the time for
payment of any amount payable by the Borrower under this Agreement or any Note
is stayed upon the occurrence of any event referred to in SECTION 8.1.9 with
respect to the Borrower, all such amounts otherwise subject to acceleration
under the terms of this Agreement shall nonetheless be payable by the Guarantors
hereunder forthwith.
SECTION 9.7. LIMITATION ON LIABILITY. Any term or provision of this
Agreement or any other Loan Document to the contrary notwithstanding, the
obligations of each Guarantor in respect of the Guaranteed Obligations are
limited to the maximum amount as will result in the obligation of such Guarantor
in respect of the Guaranteed Obligations not constituting a fraudulent
conveyance or fraudulent transfer under federal or state law.
ARTICLE X
THE AGENT
SECTION 10.1. ACTIONS. Each Lender hereby appoints SG as Agent under and
for purposes of this Agreement, the Notes and each other Loan Document. Each
Lender authorizes the Agent to act on behalf of such Lender under this
Agreement, the Notes and each other Loan Document and, in the absence of other
written instructions from the Required Lenders received from time to time by the
Agent (with respect to which the Agent agrees that it will comply, except as
otherwise provided in this Section or as otherwise advised by counsel), to
exercise such powers hereunder and thereunder as are specifically delegated to
or required of the Agent by the terms hereof and thereof, together with such
powers as may be reasonably incidental thereto. Without limiting the effect of
the preceding sentences of this SECTION 10.1, each Lender authorizes the Agent
to act as collateral agent and to hold and accept title to all liens and
security interests granted to the Agent by the Borrower or any other Obligor for
the ratable benefit of the Agent and the Lenders, in order to exercise remedies
on behalf of the Lenders in connection with the enforcement of such liens and
security interests in accordance with the provisions of the Loan Documents.
Each Lender hereby indemnifies (which indemnity shall survive any termination of
this
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Agreement) the Agent, PRO RATA according to such Lender's Percentage, from and
against any and all liabilities, obligations, losses, damages, claims, costs or
expenses of any kind or nature whatsoever which may at any time be imposed on,
incurred by, or asserted against, the Agent in any way relating to or arising
out of this Agreement, the Notes and any other Loan Document, including
reasonable attorneys' fees, and as to which the Agent is not reimbursed by the
Borrower or any other Obligor; PROVIDED, HOWEVER, that no Lender shall be liable
for the payment of any portion of such liabilities, obligations, losses,
damages, claims, costs or expenses which are determined by a court of competent
jurisdiction in a final proceeding to have resulted solely from the gross
negligence or wilful misconduct of the Agent. The Agent shall not be required
to take any action hereunder, under the Notes or under any other Loan Document,
or to prosecute or defend any suit in respect of this Agreement, the Notes or
any other Loan Document, unless it is indemnified hereunder to its satisfaction.
If any indemnity in favor of the Agent shall be or become, in the determination
of the Agent, inadequate, the Agent may call for additional indemnification from
the Lenders and cease to do the acts indemnified against hereunder until such
additional indemnity is given.
SECTION 10.2. FUNDING RELIANCE, ETC. Unless the Agent shall have been
notified by telephone, confirmed in writing, by any Lender by 5:00 p.m.
(New York City time), on the day prior to a Borrowing that such Lender will not
make available the amount which would constitute its Percentage of such
Borrowing on the date specified therefor, the Agent may assume that such Lender
has made such amount available to the Agent and, in reliance upon such
assumption, make available to the Borrower a corresponding amount. If and to
the extent that such Lender shall not have made such amount available to the
Agent, such Lender and the Borrower severally agree to repay the Agent forthwith
on demand such corresponding amount together with interest thereon, for each day
from the date the Agent made such amount available to the Borrower to the date
such amount is repaid to the Agent at the interest rate applicable at the time
to Loans comprising such Borrowing.
SECTION 10.3. EXCULPATION. Neither the Agent nor any of its directors,
officers, employees or agents shall be liable to any Lender for any action taken
or omitted to be taken by it under this Agreement or any other Loan Document, or
in connection herewith or therewith, except for its own wilful misconduct or
gross negligence, nor responsible for any recitals or warranties herein or
therein, nor for the effectiveness, enforceability, validity or due execution of
this Agreement or any other Loan Document, nor for the creation, perfection or
priority of any Liens purported to be created by any of the Loan Documents, or
the validity, genuineness, enforceability, existence, value or sufficiency of
any collateral security, nor to make any inquiry respecting the performance by
the Borrower of its obligations hereunder or under any other Loan Document. Any
such inquiry which may be made by the Agent shall not obligate it to make any
further inquiry or to take any action. The Agent shall be entitled to rely upon
advice of counsel concerning legal matters and upon any notice, consent,
certificate, statement or writing which the Agent believes to be genuine and to
have been presented by a proper Person.
SECTION 10.4. SUCCESSOR. The Agent may resign as such at any time upon at
least 30 days' prior notice to the Borrower and all Lenders. If no successor
Agent shall have been appointed by the Required Lenders, and shall have accepted
such appointment, within 30 days after the retiring Agent's giving notice of
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent, which shall be one of the Lenders or a commercial banking
institution organized under the laws of the U.S. (or any State thereof) or a
U.S. branch or agency of a commercial banking institution, and having a combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
be entitled to receive from the retiring Agent such documents of transfer and
assignment as such successor Agent may reasonably request, and shall thereupon
succeed to and become vested with all rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations under this Agreement. After any retiring Agent's resignation
hereunder as the Agent, the provisions of
(a) this ARTICLE X shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was the Agent under this Agreement;
and
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(b) SECTION 11.3 and SECTION 11.4 shall continue to inure to its
benefit.
SECTION 10.5. CREDIT EXTENSIONS BY SG. SG shall have the same rights and
powers with respect to (x) the Loans made by it or any of its Affiliates, and
(y) the Notes held by it or any of its Affiliates as any other Lender and may
exercise the same as if it were not the Agent. SG and each of its Affiliates
may accept deposits from, lend money to, and generally engage in any kind of
business with, the Borrower or any Subsidiary or Affiliate of the Borrower as if
it were not the Agent hereunder.
SECTION 10.6. CREDIT DECISIONS. Each Lender acknowledges that it has,
independently of the Agent and each other Lender, and based on such Lender's
review of the financial information of the Borrower, this Agreement, the other
Loan Documents (the terms and provisions of which being satisfactory to such
Lender) and such other documents, information and investigations as such Lender
has deemed appropriate, made its own credit decision to extend its Commitments.
Each Lender also acknowledges that it will, independently of the Agent and each
other Lender, and based on such other documents, information and investigations
as it shall deem appropriate at any time, continue to make its own credit
decisions as to exercising or not exercising from time to time any rights and
privileges available to it under this Agreement or any other Loan Document.
SECTION 10.7. LOAN DOCUMENTS, ETC. Each Lender hereby authorizes the
Agent to enter into the applicable Loan Documents and to take all action
contemplated thereby. Each Lender agrees that no Lender shall have any right
individually to seek to realize upon the security granted by any Loan Document,
it being understood and agreed that such rights and remedies may be exercised
solely by the Agent for the benefit of the Lenders and the Agent upon the terms
of the Loan Documents. Subject to the provisions of the Security Agreements and
the Pledge Agreements, the Agent shall determine (after consultation with the
Required Lenders) the manner in which proceeds of Collateral will be applied to
the Obligations (after the payment of fees and expenses as set forth in the Loan
Documents).
SECTION 10.8. COPIES, ETC. The Agent shall give prompt notice to each
Lender of each notice or request given to the Agent by the Borrower and required
to be delivered to the Lenders pursuant to the terms of this Agreement (unless
concurrently delivered to the Lenders by the Borrower). The Agent will
distribute to each Lender each document or instrument received for its account
and copies of all other communications received by the Agent from the Borrower
for distribution to the Lenders by the Agent in accordance with the terms of
this Agreement.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1. WAIVERS, AMENDMENTS, ETC. The provisions of this Agreement
and of each other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented to
by the Borrower and the Agent (acting only at the direction or with the
authority of the Required Lenders); PROVIDED, HOWEVER, that no such amendment,
modification or waiver which would:
(a) modify any requirement hereunder that any particular action be
taken by all the Lenders or by the Required Lenders shall be effective
unless consented to by each Lender;
(b) modify this SECTION 11.1, change the definition of "REQUIRED
LENDERS", increase any Commitment Amount or the Percentage of any Lender,
reduce any fees described in ARTICLE III, change the time for payment of
fees to the Lenders described in ARTICLE III, release or subordinate all or
any substantial part of the Collateral, except as otherwise specifically
provided in any Loan Document, or release any Obligor from its obligations
hereunder, shall be made without the consent of each Lender affected
thereby;
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(c) extend the due date for, or reduce the amount of, any scheduled
repayment under CLAUSES (A), (B), (C) or (D) of SECTION 3.1.2 of principal
of, or interest on, any Loan or Reimbursement Obligation (or reduce the
principal amount of or rate of interest on any Loan or Reimbursement
Obligation) or extend the Revolving Loan Commitment Termination Date
without the consent of the holder of that Note evidencing such Loan;
(d) increase the Stated Amount of any Letter of Credit unless
consented to by the Issuer thereof; or
(e) affect adversely the interests, rights or obligations of the Agent
in its capacity as Agent or the Issuer in its capacity as Issuer, without
the consent of the Agent or the Issuer, as the case may be.
No failure or delay on the part of the Agent, any Lender or the holder of
any Note in exercising any power or right under this Agreement or any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice to or demand on
the Borrower in any case shall entitle it to any notice or demand in similar or
other circumstances. No waiver or approval by the Agent, any Lender or the
holder of any Note under this Agreement or any other Loan Document shall, except
as may be otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder.
The remedies provided in this Agreement are cumulative and not exclusive of
remedies provided by law.
SECTION 11.2. NOTICES. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing and addressed, delivered or transmitted to such party at its address or
telecopier number set forth on SCHEDULE III hereto (or set forth in a Lender
Assignment Agreement) or at such other address or telecopier number as may be
designated by such party in a notice to the other parties given in accordance
with this Section. Any notice, if mailed and properly addressed and sent return
receipt requested with postage prepaid, shall be deemed given three Business
Days after posting; any notice, if sent by prepaid overnight express shall be
deemed delivered on the next Business Day; any notice, if transmitted by
telecopier, shall be deemed given when sent, with confirmation of receipt; and
any notice, if transmitted by hand, shall be deemed received when delivered.
SECTION 11.3. PAYMENT OF COSTS AND EXPENSES. The Borrower agrees to pay
on demand all expenses of the Agent (including the reasonable fees and
out-of-pocket expenses of counsel to the Agent, including any legal counsel and
consultants, if any, who may be retained in connection with the transactions
contemplated hereby by the Agent and including those fees and/or other
consideration described in the Fee Letter) in connection with
(a) the negotiation, preparation, execution and delivery of this
Agreement and of each other Loan Document, including schedules and
exhibits, and any amendments, waivers, consents, supplements or other
modifications to this Agreement or any other Loan Document as may from time
to time hereafter be required, and the Lenders' and the Agent's
consideration of their rights and remedies hereunder or in connection
herewith from time to time whether or not the transactions contemplated
hereby or thereby are consummated;
(b) the filing, recording, refiling or rerecording of the Pledge
Agreements, the Mortgages, the Security Agreements (and any supplements
thereto) and any other security instruments executed in connection with the
transactions contemplated hereby and/or U.C.C. financing statements
relating thereto and all amendments, supplements and modifications to any
thereof and any and all other documents or instruments of further assurance
required to be filed or recorded or refiled or rerecorded by the terms
hereof or of the Pledge Agreements, the Mortgages or the Security
Agreements or such other documents; and
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(c) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document.
The Borrower further agrees to pay, and to save the Agent and the Lenders
harmless from all liability for, any stamp or other taxes which may be payable
in connection with the execution or delivery of this Agreement, the Borrowings
and other Credit Extensions hereunder, or the issuance of the Notes or any other
Loan Documents. The Borrower also agrees to reimburse the Agent and each Lender
upon demand for all out-of-pocket expenses (including attorneys' fees and legal
expenses, including allocated fees and expenses of internal counsel) incurred by
the Agent or such Lender in connection with (x) the negotiation of any
restructuring or "work-out", whether or not consummated, of any Obligations and
(y) the enforcement of any Obligations (including the Obligations of the
Guarantors under ARTICLE IX). The Borrower also agrees to reimburse the Agent
on demand for all administration, audit and monitoring expenses incurred in
connection with the Borrowing Base Amount and determinations in respect thereof.
The Borrower further agrees to reimburse the Agent on demand for all other
administration, audit and monitoring expenses incurred after the occurrence of
an Event of Default in connection with this Agreement and the other Loan
Documents.
SECTION 11.4. INDEMNIFICATION. In consideration of the execution and
delivery of this Agreement by each Lender and the extension of the Commitments,
the Borrower hereby indemnifies, exonerates and holds free and harmless the
Agent and each Lender and each of their respective Affiliates and each of their
respective officers, directors, employees and agents (collectively, the
"INDEMNIFIED PARTIES") from and against any and all actions, causes of action,
suits, losses, costs, liabilities and damages, and expenses incurred in
connection therewith (irrespective of whether any such Indemnified Party is a
party to the action for which indemnification hereunder is sought), including
reasonable attorneys' fees and disbursements (including allocated fees and
expenses of internal counsel) (collectively, the "INDEMNIFIED LIABILITIES"),
incurred by the Indemnified Parties or any of them as a result of, or arising
out of, or relating to
(a) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Loan or with any Letter of
Credit;
(b) the entering into and performance of this Agreement and any other
Loan Document by any of the Indemnified Parties (including any action
brought by or on behalf of the Borrower as the result of any determination
by the Required Lenders pursuant to ARTICLE V not to fund any Borrowing);
(c) any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by the Borrower or any of its
Subsidiaries of all or any portion of the stock, partnership interests or
assets of any Person, whether or not the Agent or such Lender is party
thereto;
(d) any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to the
protection of the environment or the Release by the Borrower or any of its
Subsidiaries of any Hazardous Material;
(e) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real
property owned or operated by the Borrower or any of its Subsidiaries of
any Hazardous Material (including, without limitation, any losses,
liabilities, damages, injuries, costs, expenses or claims asserted or
arising under any Environmental Law, the costs of defending and/or
counterclaiming or claiming over against third parties in respect of any
action or matter, and any cost, liability or damage arising out of a
settlement of any action entered into by the Agent), regardless of whether
caused by, or within the control of, the Borrower or any such Subsidiary;
(f) Environmental Laws relating to the Borrower or any of its
Subsidiaries, including the assertion of any lien thereunder;
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(g) any order, consent, decree, settlement, judgment or verdict
arising from the deposit, storage, disposal, burial, dumping, injection,
spilling, leaking, or other placement or release in, on or from the Realty
of any Hazardous Material (including without limitation any order under the
Environmental Laws to clean up or decommission), whether or not such
deposit, storage, disposal, burial, dumping, injecting, spillage, leaking
or other placement or release in, on or from the Realty of any Hazardous
Material:
(i) results by, through or under the Borrower or any of its
Subsidiaries;
(ii) occurred with the knowledge and consent of the Borrower or
any of its Subsidiaries; or
(iii) occurred before or after the Effective Date, whether with
or without the knowledge of Borrower or any of its Subsidiaries; or
(h) the failure to maintain insurance coverage required by SECTION
7.1.4;
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's gross
negligence or wilful misconduct. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Borrower hereby agrees to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
SECTION 11.5. SURVIVAL. The obligations of the Borrower under SECTIONS
4.3, 4.4, 4.5, 4.6, 11.3 and 11.4, and the obligations of the Lenders under
SECTION 10.1, shall in each case survive any termination of this Agreement, the
payment in full of all the Obligations and the termination of all the
Commitments. The representations and warranties made by each Obligor in this
Agreement and in each other Loan Document shall survive the execution and
delivery of this Agreement and each such other Loan Document.
SECTION 11.6. SEVERABILITY. Any provision of this Agreement or any other
Loan Document which is prohibited or unenforceable in any jurisdiction shall, as
to such provision and such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Agreement or such other Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 11.7. HEADINGS. The various headings of this Agreement and of
each other Loan Document are inserted for convenience only and shall not affect
the meaning or interpretation of this Agreement or such other Loan Document or
any provisions hereof or thereof.
SECTION 11.8. EXECUTION IN COUNTERPARTS, EFFECTIVENESS, ETC. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be an original and all of which shall constitute together but one
and the same agreement. This Agreement shall become effective when counterparts
hereof executed on behalf of the Borrower and each initial Lender (or notice
thereof satisfactory to the Agent) shall have been received by the Agent and
notice thereof shall have been given by the Agent to the Borrower and each
Lender.
SECTION 11.9. GOVERNING LAW; ENTIRE AGREEMENT. THIS AGREEMENT AND THE
NOTES SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK. This Agreement, the Notes and the other Loan
Documents constitute the entire understanding among the parties hereto with
respect to the subject matter hereof and supersede any prior agreements, written
or oral, with respect thereto.
SECTION 11.10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; PROVIDED, HOWEVER, that:
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(a) neither the Borrower nor any Guarantor may assign or transfer its
rights or obligations hereunder without the prior written consent of the
Agent and all Lenders; and
(b) the rights of sale, assignment and transfer of the Lenders are
subject to SECTION 11.11.
SECTION 11.11. SALE AND TRANSFER OF LOANS AND NOTES; PARTICIPATIONS IN
LOANS AND NOTES. Each Lender may assign, or sell participations in, its Loans
and Commitments to one or more other Persons in accordance with this SECTION
11.11.
SECTION 11.11.1. ASSIGNMENTS. (a) Any Lender, upon notice to the Borrower
and with the written consent of the Borrower and the Agent (which consents shall
not be unreasonably withheld or delayed), may at any time assign and delegate
all or any fraction of such Lender's Loans, Commitments and Letter of Credit
participations to one or more commercial banks or other financial institutions
(each Person to whom such assignment and delegation is to be made being
hereinafter referred to as an "ASSIGNEE LENDER"), all or any fraction of such
Lender's total Loans, Commitments and Letter of Credit participations in a
minimum aggregate amount of $5,000,000 (or, if less, the total of such Lender's
Commitment Amount); PROVIDED, HOWEVER, that (x) each such assignment shall be of
the same percentage of such Lender's Revolving Loans, Revolving Loan Commitment,
Letter of Credit Commitment, Term Loans and Term Loan Commitment, and (y) each
other Obligor and the Agent shall be entitled to continue to deal solely and
directly with such Lender in connection with the interests so assigned and
delegated to an Assignee Lender until
(i) written notice of such assignment and delegation, together with
payment instructions, addresses and related information with respect to
such Assignee Lender, shall have been given to the Borrower and the Agent
by such Lender and such Assignee Lender;
(ii) such Assignee Lender shall have executed and delivered to the
Borrower and the Agent a Lender Assignment Agreement, accepted by the
Agent; and
(iii) the processing fees described below shall have been paid.
From and after the date that the Agent accepts such Lender Assignment Agreement,
(x) the Assignee Lender thereunder shall be deemed automatically to have become
a party hereto and to the extent that rights and obligations hereunder have been
assigned and delegated to such Assignee Lender in connection with such Lender
Assignment Agreement, shall have the rights and obligations of a Lender
hereunder and under the other Loan Documents, and (y) the assignor Lender, to
the extent that rights and obligations hereunder have been assigned and
delegated by it in connection with such Lender Assignment Agreement, shall be
released from its obligations hereunder and under the other Loan Documents.
Within five Business Days after its receipt of notice that the Agent has
received an executed Lender Assignment Agreement, the Borrower shall execute and
deliver to the Agent (for delivery to the relevant Assignee Lender) new Notes
evidencing such Assignee Lender's assigned Loans and Commitments and, if the
assignor Lender has retained Loans and Commitments hereunder, replacement Notes
in the principal amount of the Loans and Commitments retained by the assignor
Lender hereunder (such Notes to be in exchange for, but not in payment of, those
Notes then held by such assignor Lender). Each such Note shall be dated the
date of the predecessor Notes. The assignor Lender shall xxxx the predecessor
Notes "exchanged" and deliver them to the Borrower. Accrued interest on that
part of the predecessor Notes evidenced by the new Notes, and accrued fees,
shall be paid as provided in the Lender Assignment Agreement. Accrued interest
on that part of the predecessor Notes evidenced by the replacement Notes shall
be paid to the assignor Lender. Accrued interest and accrued fees shall be paid
at the same time or times provided in the predecessor Notes and in this
Agreement. Such assignor Lender or such Assignee Lender must also pay a
processing fee to the Agent upon delivery of any Lender Assignment Agreement in
the amount of $3,500. Any attempted assignment and delegation not made in
accordance with this SECTION 11.11.1 shall be null and void.
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(b) Notwithstanding CLAUSE (A), any Lender may assign and pledge all or any
portion of its Loans and Notes and other rights to a Federal Reserve Bank as
collateral security; PROVIDED, HOWEVER, that no such assignment under this
CLAUSE (B) shall release the assignor Lender from any of its obligations
hereunder.
SECTION 11.11.2. PARTICIPATIONS. (a) Any Lender may at any time without
the consent of the Borrower or the Agent (but with prior written notice to the
Borrower and the Agent) sell to one or more commercial banks or other Persons
(each of such commercial banks and other Persons being herein called a
"PARTICIPANT") participating interests in any of the Loans, Commitments, or
other interests of such Lender hereunder; PROVIDED, HOWEVER, that
(i) no participation contemplated in this SECTION 11.11.2 shall
relieve such Lender from its Commitments or its other obligations hereunder
or under any other Loan Document;
(ii) such Lender shall remain solely responsible for the performance
of its Commitments and such other obligations;
(iii) the Borrower and each other Obligor and the Agent shall continue
to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and each of the other
Loan Documents;
(iv) no Participant, unless such Participant is an Affiliate of such
Lender, or is itself a Lender, shall be entitled to require such Lender to
take or refrain from taking any action hereunder or under any other Loan
Document, except that such Lender may agree with any Participant that such
Lender will not, without such Participant's consent, take any actions of
the type described in CLAUSE (A), (B) or (c) of SECTION 11.1; and
(v) the Borrower shall not be required to pay any amount under CLAUSE
(B) of this Section that is greater than the amount which it would have
been required to pay had no participating interest been sold.
(b)The Borrower acknowledges and agrees that each Participant, for purposes
of SECTIONS 4.3, 4.4, 4.5, 4.6, 11.3 and 11.4, shall be considered a Lender,
subject to CLAUSE (V) above.
SECTION 11.11.3. CERTAIN OTHER PROVISIONS. (a) The Borrower authorizes
each Lender to disclose to any participant or assignee (each, a "TRANSFEREE")
and any prospective Transferee, any and all financial and other information in
such Lender's possession concerning the Borrower or any of its Subsidiaries
which has been delivered to such Lender by any such Person pursuant to or in
connection with this Agreement or which has been delivered to such Lender by any
such Person in connection with such Lender's credit evaluation of the Borrower
or any of its Subsidiaries prior to entering into this Agreement.
(b) If, pursuant to this Section, any interest in this Agreement or any
Loan or Note is transferred to any Transferee which is organized under the laws
of any jurisdiction other than the United States or any State thereof, the
transferor Lender shall cause such Transferee (other than any Participant), and
may cause any Participant, concurrently with the effectiveness of such transfer,
(i) to represent to the transferor Lender (for the benefit of the transferor
Lender, the Agent and the Borrower) that under applicable law and treaties, no
taxes will be required to be withheld by the Agent, the Borrower or the
transferor Lender with respect to any payments to be made to such Transferee in
respect of the Loans, (ii) to furnish to the transferor Lender, the Agent and
the Borrower either U.S. Internal Revenue Service Form 4224 or U.S. Internal
Revenue Service Form 1001 (wherein such Transferee claims entitlement to whole
or partial exemption from U.S. Federal withholding tax on all interest payments
hereunder) and (iii) to agree (for the benefit of the transferor Lender, the
Agent and the Borrower) to provide the transferor Lender, the Agent and the
Borrower a new Form 4224 or Form 1001 upon the obsolescence of any previously
delivered form and comparable statements in accordance with applicable U.S. laws
and regulations and amendments duly executed and completed by such Transferee,
and to comply from time to time with all applicable
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U.S. laws and regulations with regard to such withholding tax exemption.
SECTION 11.12. OTHER TRANSACTIONS. Nothing contained herein shall
preclude either the Agent or any other Lender from engaging in any transaction,
in addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Affiliates in which the Borrower or such
Affiliate is not restricted hereby from engaging with any other Person.
SECTION 11.13. CERTAIN COLLATERAL AND OTHER MATTERS. (a) The Agent is
authorized on behalf of all the Lenders, without the necessity of any notice to
or further consent from the Lenders, from time to time to take any action with
respect to any Collateral or the Loan Documents which may be necessary to
perfect and maintain perfected the security interest in and Liens upon the
Collateral granted pursuant to the Loan Documents.
(b) The Lenders irrevocably authorize the Agent, at its option and in its
discretion, to release any security interest or Lien granted to or held by the
Agent upon any Collateral (i) upon termination of the Commitments and Letters of
Credit and payment in full in cash of all principal of and interest on the
Loans, all fees payable pursuant to SECTIONS 3.3 and 11.3, all Reimbursement
Obligations (including interest thereon) and all other fees, costs and expenses
that are payable under this Agreement or under any other Loan Document and have
been invoiced (in which case the Lenders hereby authorize the Agent to execute,
and the Agent agrees to execute, reasonable releases in connection with this
Agreement (other than, in any event, as to items stated to survive the
termination of this Agreement)); (ii) constituting property sold or to be sold
or disposed of as part of or in connection with any disposition permitted
hereunder; (iii) constituting property in which neither the Borrower nor any of
its Subsidiaries owned any interest at the time the security interest and/or
Lien was granted or at any time thereafter; (iv) constituting property leased to
the Borrower or any Subsidiary of the Borrower under a lease which has expired
or been terminated in a transaction permitted under this Agreement or is about
to expire and which has not been, and is not intended by the Borrower or such
Subsidiary to be, renewed or extended; (v) consisting of an instrument
evidencing Indebtedness or other debt instrument, if the Indebtedness evidenced
thereby has been paid in full; or (vi) if approved, authorized or ratified in
writing by the Required Lenders or, if required by SECTION 11.1, each Lender.
Upon request by the Agent at any time, the Lenders will confirm in writing the
Agent's authority to release particular types or items of collateral pursuant to
this Section.
SECTION 11.14. CONFIDENTIAL INFORMATION. The Agent and each Lender agree
to hold all non-public information (which has been identified as such by the
Borrower to the Agent and each Lender) obtained pursuant to this Agreement and
the other Loan Documents in accordance with its customary procedures for
handling confidential information, PROVIDED that disclosure of such confidential
information may be made (a) to the Affiliates, examiners, directors,
shareholders, accountants, auditors, counsel and other professional advisors of
the Agent and each Lender, (b) in connection with any assignment or
participation to an Assignee Lender or Participant, as the case may be, so long
as such Assignee Lender or Participant has previously agreed to these
confidentiality provisions, (c) as required or requested by any governmental
agency, authority or representative, or pursuant to any court order, legal
process or applicable law, rule or regulation, (d) in connection with any
litigation to which one or more of the Lenders or the Agent is a party, (e) if
such information subsequently becomes public or (f) if such information is
disclosed by a Person other than the Agent or such Lender that is not known by
the Agent or such Lender to be bound by an obligation of confidentiality or
secrecy to any Obligor.
SECTION 11.15. FORUM SELECTION; SERVICE OF PROCESS; CONSENT TO
JURISDICTION ETC. TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE
LENDERS, THE BORROWER OR THE GUARANTORS MAY BE BROUGHT AND MAINTAINED IN ANY
UNITED STATES FEDERAL OR NEW YORK STATE COURTS SITTING IN THE CITY OF NEW YORK;
PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
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COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE AGENT'S OPTION, IN THE
COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
EACH OF THE BORROWER AND THE GUARANTORS HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS
TO THE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURTS
SITTING IN THE CITY OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH SUCH LITIGATION. FORCE 10 MARINE LTD. HEREBY AGREES THAT
SERVICE OF ALL WRITS, PROCESS AND SUMMONSES IN ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN THE STATE OF NEW YORK MAY BE MADE UPON THE BORROWER, IN
CARE OF MILLBROOK CAPITAL MANAGEMENT INC., PRESENTLY LOCATED AT 000 XXXX 00XX
XXXXXX, XXX XXXX, XXX XXXX 00000, U.S.A., AND FORCE 10 MARINE LTD. HEREBY
CONFIRMS AND AGREES THAT THE BORROWER HAS BEEN DULY AND IRREVOCABLY APPOINTED AS
ITS AGENT AND TRUE AND LAWFUL ATTORNEY-IN-FACT IN ITS NAME, PLACE AND STEAD TO
ACCEPT SUCH SERVICE OF ANY AND ALL SUCH WRITS, PROCESS AND SUMMONSES, AND AGREES
THAT THE FAILURE OF THE BORROWER TO GIVE ANY NOTICE OF ANY SUCH SERVICE OF
PROCESS TO FORCE 10 MARINE LTD. SHALL NOT IMPAIR OR AFFECT THE VALIDITY OF SUCH
SERVICE OR OF ANY JUDGMENT BASED THEREON. THE BORROWER HEREBY ACCEPTS SUCH
APPOINTMENT FOR PURPOSES HEREIN. EACH OF THE BORROWER AND THE GUARANTORS
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL,
POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK.
EACH OF THE BORROWER AND THE GUARANTORS HEREBY EXPRESSLY AND IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR
HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE BORROWER OR ANY
GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY
COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT
PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW,
SUCH BORROWER OR GUARANTOR, AS THE CASE MAY BE, HEREBY IRREVOCABLY WAIVES SUCH
IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
SECTION 11.16. WAIVER OF JURY TRIAL, ETC. THE AGENT, THE LENDERS, THE
BORROWER AND THE GUARANTORS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS, THE BORROWER OR
THE GUARANTORS. EACH OF THE BORROWER AND THE GUARANTORS ACKNOWLEDGES AND AGREES
THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND
EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND
THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS
ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT. IN NO EVENT
SHALL ANY LENDER OR THE AGENT BE LIABLE FOR ANY CONSEQUENTIAL DAMAGES WHICH MAY
BE ALLEGED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 11.17. JUDGMENT CURRENCY. This is an international loan
transaction in which the specification of Dollars and payment in New York City
is of the essence, and the obligations of the Borrower under
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this Agreement to make payment to (or for the account of) a Lender in Dollars
shall not be discharged or satisfied by any tender or recovery pursuant to any
judgment expressed in or converted into any other currency or in another place
except to the extent that such tender or recovery results in the effective
receipt by such Lender in New York City of the full amount of Dollars payable to
such Lender under this Agreement. If for the purpose of obtaining judgment in
any court it is necessary to convert a sum due hereunder in Dollars into another
currency (in this SECTION 11.17 called the "JUDGMENT CURRENCY"), the rate of
exchange that shall be applied shall be that at which in accordance with normal
banking procedures the Agent could purchase such Dollars at its New York City
office with the Judgment Currency on the Business Day next preceding the day on
which such judgment is rendered. The obligation of the Borrower in respect of
any such sum due from it to the Agent or any Lender hereunder or under any other
Loan Document (in this SECTION 11.17 called an "ENTITLED PERSON") shall,
notwithstanding the rate of exchange actually applied in rendering such
judgment, be discharged only to the extent that on the Business Day following
receipt by such Entitled Person of any sum adjudged to be due hereunder in the
Judgment Currency such Entitled Person may in accordance with normal banking
procedures purchase and transfer Dollars to New York City with the amount of the
Judgment Currency so adjudged to be due; and the Borrower hereby, as a separate
obligation and notwithstanding any such judgment, agrees to indemnify such
Entitled Person against, and to pay such Entitled Person on demand, in Dollars,
the amount (if any) by which the sum originally due to such Entitled Person in
Dollars hereunder exceeds the amount of the Dollars so purchased and
transferred.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
BORROWER:
KEY COMPONENTS, LLC,
as the Borrower
By:
----------------------------------
Title:
GUARANTORS:
X.X. XXXXXXX MANUFACTURING CO., INC.,
as a Guarantor
By:
----------------------------------
Title:
XXXXXX LOCK, INC.,
as a Guarantor
By:
----------------------------------
Title:
ESP LOCK PRODUCTS, INC.,
as a Guarantor
By:
----------------------------------
Title:
KCI ACQUISITION CORP.,
as a Guarantor
By:
----------------------------------
Title:
VALLEY FORGE CORPORATION,
as a Guarantor
By:
----------------------------------
Title:
CRUISING EQUIPMENT COMPANY,
as a Guarantor
By:
----------------------------------
Title:
FORCE 10 MARINE LTD.,
as a Guarantor
By:
----------------------------------
Title:
GITS MANUFACTURING COMPANY, INC.,
as a Guarantor
By:
----------------------------------
Title:
XXXXXXXXXXX MARINE PRODUCTS, INC.,
as a Guarantor
By:
----------------------------------
Title:
ATLANTIC GUEST, INC.,
as a Guarantor
By:
----------------------------------
Title:
HEART INTERFACE CORPORATION,
as a Guarantor
By:
----------------------------------
Title:
MARINE INDUSTRIES COMPANY,
as a Guarantor
By:
----------------------------------
Title:
MULTIPLEX TECHNOLOGY, INC.,
as a Guarantor
By:
----------------------------------
Title:
XXXXXX ELECTRIC CORPORATION,
as a Guarantor
By:
----------------------------------
Title:
VFC ACQUISITION COMPANY, INC.,
as a Guarantor
By:
----------------------------------
Title:
VALLEY FORGE INTERNATIONAL CORPORATION
(FSC), as a Guarantor
By:
----------------------------------
Title:
XXXXXXXXXXX BUILDING, L.L.C.,
as a Guarantor
By:
----------------------------------
Title:
GUEST BUILDING, L.L.C.,
as a Guarantor
By:
----------------------------------
Title:
AGENT:
SOCIETE GENERALE,
as Agent
By:
----------------------------------
Title:
LENDERS:
SOCIETE GENERALE
By:
----------------------------------
Title:
SCHEDULE I
DISCLOSURE SCHEDULE
ITEM 5.1.16 ONGOING VALLEY FORGE DEBT
See attached.
ITEM 6.5 CERTAIN MATERIAL LIABILITIES.
See attached.
ITEM 6.7 LITIGATION.
See attached.
ITEM 6.9 OWNERSHIP OF PROPERTIES.
See attached.
ITEM 6.11 EMPLOYEE BENEFIT PLANS.
See attached.
ITEM 6.12 ENVIRONMENTAL MATTERS.
See attached.
ITEM 6.15 OWNERSHIP OF CAPITAL STOCK
See attached.
ITEM 6.17 ABSENCE OF DEFAULTS.
See attached.
ITEM 7.1.13 EXCLUDED REAL PROPERTY
See attached.
ITEM 7.2.2(b) INDEBTEDNESS TO BE PAID.
See attached.
ITEM 7.2.2(c) ONGOING INDEBTEDNESS.
See attached.
ITEM 7.2.3 EXISTING LIENS.
See attached.
ITEM 7.2.5(a) EXISTING INVESTMENTS.
See attached.
SCHEDULE II
PERCENTAGES
Revolving
Loan Term Loan
Lender Commitment Commitment
------ ---------- ----------
SOCIETE GENERALE 100% 100%
TOTAL 100.00% 100.00%
======= =======
SCHEDULE III
ADMINISTRATIVE INFORMATION
BORROWER:
KEY COMPONENTS, LLC
c/o Millbrook Capital Management Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
GUARANTORS:
X.X. XXXXXXX MANUFACTURING CO., INC.
00 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
XXXXXX LOCK, INC.
00 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
KEY COMPONENTS FINANCE CORP.
c/o Millbrook Capital Management Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ESP LOCK PRODUCTS INC.
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
KCI ACQUISITION CORP.
c/o Millbrook Capital Management Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
VALLEY FORGE CORPORATION
c/o Millbrook Capital Management Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
CRUISING EQUIPMENT COMPANY
c/o Millbrook Capital Management Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
FORCE 10 MARINE LTD.
c/o Millbrook Capital Management Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
GITS MANUFACTURING COMPANY, INC.
c/o Millbrook Capital Management Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
XXXXXXXXXXX MARINE PRODUCTS, INC.
c/o Millbrook Capital Management Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ATLANTIC GUEST, INC.
c/o Millbrook Capital Management Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
HEART INTERFACE CORPORATION
c/o Millbrook Capital Management Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
MARINE INDUSTRIES COMPANY
c/o Millbrook Capital Management Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
MULTIPLEX TECHNOLOGY, INC.
c/o Millbrook Capital Management Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
XXXXXX ELECTRIC CORPORATION
c/o Millbrook Capital Management Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
VFC ACQUISITION COMPANY, INC.
c/o Millbrook Capital Management Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
VALLEY FORGE INTERNATIONAL CORPORATION (FSC)
c/o Millbrook Capital Management Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
GUEST BUILDING, L.L.C.
c/o Millbrook Capital Management Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
XXXXXXXXXXX BUILDING, L.L.C.
c/o Millbrook Capital Management Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
AGENT:
SOCIETE GENERALE
0000 Xxxxxx xx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Loan Notices:
Attention: Xxxx Xxxxxx
Telecopier No.: 000-000-0000
Telephone No.: 000-000-0000
Letter of Credit Notices:
Attention: Xxxx Xxxxx
Telecopier No.: 000-000-0000
Telephone No.: 000-000-000
LENDERS:
SOCIETE GENERALE
Domestic, LIBOR and
Notice Office:
0000 Xxxxxx xx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxx
Telecopier No.: 000-000-0000
Telephone No.: 000-000-0000
