EXHIBIT 10.34
Loan and Security Agreement
by and among
CONGRESS FINANCIAL CORPORATION
and
FOOTHILL CAPITAL CORPORATION
as Lenders
and
TEREX CORPORATION
XXXXX MATERIAL HANDLING COMPANY
KOEHRING CRANES, INC.
and
PPM CRANES, INC.
as Borrowers
Dated as of: May 9, 1995
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS 1
SECTION 2. CREDIT FACILITIES 19
2.1 Revolving Loans 19
2.2 Letter of Credit Accommodations 21
2.3 Availability Reserves 24
SECTION 3. INTEREST AND FEES 24
3.1 Interest 24
3.2 Closing Fee 26
3.3 Servicing Fee 27
3.4 Unused Line Fee 27
3.5 Changes in Laws and Increased Costs of Loans 27
SECTION 4. CONDITIONS PRECEDENT 28
4.1 Conditions Precedent to Initial Revolving Loans
and Letter of Credit Accommodations 28
4.2 Conditions Precedent to All Revolving Loans and
Letter of Credit Accommodations 32
SECTION 5. GRANT OF SECURITY INTEREST 33
SECTION 6. COLLECTION AND ADMINISTRATION 34
6.1 Borrowers' Loan Accounts 34
6.2 Statements 34
6.3 Collection of Accounts 34
6.4 Payments 36
6.5 Authorization to Make Loans 36
6.6 Use of Proceeds 37
SECTION 7. COLLATERAL REPORTING AND COVENANTS 37
7.1 Collateral Reporting 37
7.2 Accounts Covenants 38
7.3 Inventory Covenants 40
7.4 Power of Attorney 42
7.5 Right to Cure 43
7.6 Access to Premises 43
7.7 Irrevocable License to Use Equipment and
Intellectual Property 44
SECTION 8. REPRESENTATIONS AND WARRANTIES 44
8.1 Corporate Existence, Power and Authority; Subsidiaries 44
8.2 Financial Statements; No Material Adverse Change. 45
8.3 Chief Executive Office; Collateral Locations. 45
8.4 Priority of Liens; Title to Properties 45
8.5 Tax Returns 46
8.6 Litigation 46
8.7 Compliance with Other Agreements and Applicable Laws 46
8.8 Accuracy and Completeness of Information. 47
8.9 Acquisition of Purchased Stock. 47
8.10 Issuance of Senior Secured Notes. 48
8.11 Employee Benefits 48
8.12 Survival of Warranties; Cumulative 49
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS 50
9.1 Maintenance of Existence 50
9.2 New Collateral Locations 50
9.3 Compliance with Laws, Regulations, Etc 51
9.4 Payment of Taxes and Claims 51
9.5 Insurance 51
9.6 Financial Statements and Other Information 52
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc 54
9.8 Encumbrances 56
9.9 Indebtedness 57
9.10 Loans, Investments, Guarantees, Etc. 61
9.11 Dividends and Redemptions 66
9.12 Transactions with Affiliates 68
9.13 Costs and Expenses 68
9.14 Compliance with ERISA 69
9.15 Further Assurances 70
SECTION 10. EVENTS OF DEFAULT AND REMEDIES 70
10.1 Events of Default 70
10.2 Remedies 73
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW 75
11.1 Governing Law; Choice of Forum; Service of Process;
Jury Trial Waiver 75
11.2 Waiver of Notices 77
11.3 Amendments and Waivers 77
11.4 Waiver of Counterclaims 77
11.5 Indemnification 77
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS 78
12.1 Appointment of Lenders' Agent 78
12.2 Appointment of Borrowers' Agent 78
12.3 Term
79
12.4 Notices 81
12.5 Partial Invalidity 81
12.6 Successors 81
12.7 Participant's Security Interest 82
12.8 Entire Agreement 82
12.9 Confidentiality 82
INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A Information Certificate of Borrowers
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated as of May 9, 1995 is entered into
by and among (a) Congress Financial Corporation, a California corporation
("Congress") and Foothill Capital Corporation, a California corporation
("Foothill"; Congress and Foothill are each individually a "Lender" and
collectively, "Lenders"), (b) Foothill, in its capacity as agent for Lenders
("Lenders' Agent"; as hereinafter further defined), (c) Terex Corporation, a
Delaware corporation ("Terex"), Xxxxx Material Handling Company, a Kentucky
corporation ("Xxxxx"), Koehring Cranes, Inc., a Delaware corporation
("Koehring") and PPM Cranes, Inc., a Delaware corporation ("PPM US"; Terex,
Xxxxx, Koehring and PPM US are each individually a "Borrower" and collectively,
"Borrowers") and (d) Terex in its capacity as agent for itself as a Borrower
and for the other Borrowers ("Borrowers' Agent"; as hereinafter further
defined).
W I T N E S S E T H:
WHEREAS, Borrowers have requested that Lenders and Lenders' Agent enter
into certain financing arrangements with Borrowers and Borrowers' Agent
pursuant to which Lenders' Agent on behalf of Lenders may make loans and
provide other financial accommodations to Borrowers; and
WHEREAS, Lenders' Agent and Lenders are willing to make such loans and
provide such financial accommodations on the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
All terms used herein which are defined in Article 1 or Article 9 of the
Uniform Commercial Code shall have the meanings given therein unless otherwise
defined in this Agreement. All references to the plural herein shall also mean
the singular and to the singular shall also mean the plural. All references to
Borrowers shall, unless the context otherwise expressly provides, mean any one
or more of Borrowers. All references to Lenders shall, unless the context
otherwise expressly provides, mean either or both Lenders. All references to
Borrowers and Borrowers' Agent, Lenders and Lenders' Agent pursuant to the
definitions set forth above, or to any other person herein, shall include their
respective successors and assigns. The words "hereof", "herein", "hereunder",
"this Agreement" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not any particular provision of this
Agreement and as this Agreement now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced. An Event of
Default shall exist or continue or be continuing until such Event of Default is
waived in accordance with Section 11.3. Any accounting term used herein unless
otherwise defined in this Agreement shall have the meanings customarily given
to such term in accordance with GAAP. For purposes of this Agreement, the
following terms shall have the respective meanings given to them below:
1.1 "Accounts" shall mean, individually and collectively, as to a
Borrower, all of such Borrower's now owned and hereafter acquired rights to
payment for the prior, concurrent or future sale, lease or other disposition of
Inventory or rendition of services, whether or not evidenced by an instrument
or chattel paper and whether or not earned by performance, except to the extent
that any such right to payment arises from the rendition by a Borrower to any
of its subsidiaries or any other Borrower or any of its subsidiaries, of
management services, accounting services, administrative services or other
services unrelated to the sale, lease or other disposition of Inventory and not
directly related to the manufacture or maintenance of Inventory.
1.2 "Adjusted Eurodollar Rate" shall mean, with respect to each Interest
Period for any Eurodollar Rate Loan, the rate per annum (rounded upwards, if
necessary, to the next one-sixteenth (1/16) of one (1%) percent) determined by
dividing (1) the Eurodollar Rate for such Interest Period by (2) a percentage
equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes hereof,
"Reserve Percentage" shall mean the reserve percentage, expressed as a decimal,
prescribed by any United States or foreign banking authority for determining
the reserve requirement which is or would be applicable to deposits of United
States dollars in a non-United States or an international banking office of
Reference Bank used to fund a Eurodollar Rate Loan or any Eurodollar Rate Loan
made with the proceeds of such deposit, whether or not the Reference Bank
actually holds or has made any such deposits or loans. The Adjusted Eurodollar
Rate shall be adjusted on and as of the effective day of any change in the
Reserve Percentage.
1.3 "Applicable Inventory Percentage" shall mean, as to any type or
category of Inventory, the lesser of (i) forty-five (45%) percent, or (ii) the
amount, expressed as a percentage of Borrower's cost of such Inventory, as
shall equal eighty (80%) percent of the appraised orderly liquidation value of
such Inventory, as shown in the appraisal report delivered to Lenders' Agent in
compliance with the provisions of Section 4.1(i) hereof.
1.4 "Availability Reserves" shall mean, as of any date of determination,
such amounts as Lenders' Agent may from time to time establish and revise in
good faith reducing the amount of Revolving Loans and Letter of Credit
Accommodations which would otherwise be available to Borrowers under the
lending formula(s) provided for herein: (a) to reflect events, conditions,
contingencies or risks which, as determined by Lenders' Agent or Lenders in
good faith, do or may (i) adversely affect either (A) any Collateral, the
rights of the Lenders' Agent or Lenders in any Collateral of any Borrower or
any other property which is security for the Obligations or its value or (B)
the security interests and other rights of Lenders' Agent or Lenders in the
Collateral of any Borrower (including the enforceability, perfection and
priority thereof) or (ii) adversely affect in any material respect the assets
(other than any Collateral) or business of any Borrower or any Obligor, (b) to
reflect the good faith belief of Lenders' Agent or Lenders that any collateral
report or financial information furnished by or on behalf of any Borrower or
any Obligor to Lenders' Agent or Lenders is or may have been incomplete,
inaccurate or misleading in any material respect or (c) in respect of any state
of facts which Lenders' Agent or Lenders determine in good faith constitutes an
Event of Default or may, with notice or passage of time or both, constitute an
Event of Default.
1.5 "Blocked Accounts" shall have the meaning set forth in Section 6.3
hereof.
1.6 "Board of Directors" shall mean the board of directors or any duly
constituted committee of any corporation or of a corporate general partner of a
partnership and any similar body empowered to direct the affairs of any other
entity.
1.7 "Borrowers' Agent" shall mean Terex Corporation, a Delaware
corporation, in its capacity as agent for Borrowers hereunder, and any
successor or replacement agent for Borrowers appointed by Borrowers and
approved by Lenders' Agent in writing, and its successors and assigns.
1.8 "Business Day" or "business day" shall mean (a) for the Prime Rate
Loans, any day other than a Saturday, Sunday, or other day on which commercial
banks are authorized or required to close under the laws of the State of New
York or the Commonwealth of Pennsylvania, and a day on which the Reference
Bank, Lenders' Agent and both Lenders are open for the transaction of business,
(b) for all Eurodollar Rate Loans, any such day as described in clause (a)
above in this definition of Business Day, excluding any day on which banks are
closed for dealings in dollar deposits in the London interbank market or other
applicable Eurodollar Rate market, and (c) for all other purposes hereof, any
such day as described in clause (a) above.
1.9 "Change of Control" shall mean (i) the liquidation or dissolution of
any Borrower or the adoption of a plan by the stockholders of any Borrower
relating to the dissolution or liquidation of such Borrower, or (ii) the
acquisition by any Person or group (as such term is used in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended), except for any Person or
group owning in excess of forty (40%) percent of the voting power of the Voting
Stock of any Borrower on the date hereof, of a direct or indirect majority in
interest (more than fifty (50%) percent) of the voting power of the Voting
Stock of any Borrower by way of purchase, merger or consolidation or otherwise,
or (iii) during any period of two (2) consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of any Borrower
(which includes any new directors whose election by such Board of Directors or
whose nomination for election by the stockholders of such Borrower was approved
by a vote of at least 66-2/3% of the directors then still in office who were
either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of such Borrower.
1.10 "Code" shall mean the Internal Revenue Code of 1986, as the same now
exists or may from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.11 "Co-Lending Agreement" shall mean the Co-Lending and Agency Agreement
dated on or about the date hereof among Lenders and Lenders' Agent as the same
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.12 "Collateral" shall have the meaning set forth in Section 5 hereof.
1.13 "Commitment Percentage" shall mean, as to a Lender, its pro rata
share of the Maximum Credit, the Revolving Loans and Letter of Credit
Accommodations, equal to the Commitment Percentage set forth for such Lender on
the signature pages hereof, as such percentage may from time to time be amended
or deemed amended in connection with any increase in the Maximum Credit, or
pursuant to the Co-Lending Agreement or otherwise.
1.14 "Confidential Information" shall mean non-public information supplied
by Borrowers to Lenders and Lenders' Agent the disclosure of which is
restricted by the provisions of Section 12.9 hereof.
1.15 "Consolidated Net Income" shall mean, with respect to any person (the
referent person) for any period, the aggregate of the Net Income of such person
and its consolidated subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP; provided, however that (i) the Net Income of any
person that is accounted for by the equity method of accounting will be
included only to the extent of the amount of dividends or distributions paid
during such period to the referent person or a consolidated subsidiary of the
referent person, (ii) the Net Income of any person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition will
be excluded, and (iii) the Net Income of any non-consolidated subsidiary will
not be included to the extent that declarations of dividends or similar
distributions by that subsidiary are not at the time permitted, directly or
indirectly, by operation of the terms of its organization documents or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that non-consolidated subsidiary or its owners.
1.16 "Eligible Accounts" shall mean, as to a Borrower, Accounts created by
such Borrower which are and continue to be acceptable to Lenders' Agent based
on the criteria set forth below. In general, Accounts shall be Eligible
Accounts if:
(a) such Accounts arise from the actual and bona fide sale and
delivery of goods by such Borrower or rendition of services by such Borrower in
the ordinary course of its business which transactions are completed in
accordance with the terms and provisions contained in any documents related
thereto;
(b) such Accounts are not unpaid more than sixty (60) days from the
original due date thereof or more than one hundred and twenty (120) days after
the date of the original invoice for them, except for such longer periods of
reasonable duration as to any Account with respect to which payment is covered
by the terms of an outstanding and unexpired letter of credit that in all other
respects complies with the requirements of Section 1.16(f)(ii)(A) hereof;
(c) such Accounts are not owed by any account debtor as to which
more than fifty (50%) percent of the aggregate amount thereof are unpaid more
than sixty (60) days past the original due date thereof or are unpaid more than
one hundred and twenty (120) days after the date of the original invoice for
them;
(d) such Accounts comply with the terms and conditions contained in
Section 7.2(c) of this Agreement;
(e) such Accounts do not arise from sales on consignment, guaranteed
sale, sale and return, sale on approval, or other terms under which payment by
the account debtor may be conditional or contingent; provided, however, that,
no Account where the account debtor is a dealer of Inventory shall be deemed
ineligible solely because a Borrower has a buy-back arrangement with such
account debtor effective upon the termination by Borrower of such account
debtor as a dealer, but upon such termination (or any other termination of or
by such account debtor as a dealer) such dealer's Accounts shall become
ineligible;
(f) such Accounts are payable in the United States of America in
United States dollars and (i) the chief executive office of the account debtor
with respect to such Accounts is located in the United States of America,
Canada or Puerto Rico, or (ii) at the option of Lenders' Agent (subject to such
lending formula with respect thereto as Lenders' Agent may determine) if
either: (A) the account debtor has delivered to such Borrower an irrevocable
letter of credit issued or confirmed by a bank reasonably satisfactory to
Lenders' Agent, sufficient to cover such Account, in form and substance
satisfactory to Lenders' Agent and, if required by Lenders' Agent, the original
of such letter of credit has been delivered to Lenders' Agent or a bailee for
Lenders' Agent or Lenders and the issuer thereof notified of the assignment of
the proceeds of such letter of credit to Lenders' Agent, or (B) such Account is
subject to credit insurance payable to Lenders' Agent issued by an insurer
reasonably acceptable and on terms and in an amount acceptable to Lenders'
Agent, or (C) such Account is payable under a sight draft against delivery of
documents of title and accepted by a bank reasonably satisfactory to Lenders'
Agent, and on terms and conditions acceptable to Lenders' Agent, or (D) such
Account is otherwise acceptable in all respects to Lenders' Agent with respect
to the creditworthiness of the account debtor and the ability of the Lenders'
Agent to collect such Accounts; provided, however, that the eligibility
criteria described in clauses (A), (B) and (C) will be determined by Lenders'
Agent in a manner substantially consistent with the procedures in effect under
Terex's and Xxxxx'x financing arrangements with Foothill being terminated in
connection herewith;
(g) such Accounts do not consist of progress xxxxxxxx, xxxx and hold
invoices or retainage invoices, except as to xxxx and hold invoices, if
Lenders' Agent shall have received an agreement in writing from the account
debtor, in form and substance satisfactory to Lenders' Agent, confirming the
unconditional obligation of the account debtor to take the goods related
thereto and pay such invoice;
(h) the account debtor with respect to such Accounts (x) has not
asserted a counterclaim, defense or dispute, and (y) does not engage in
transactions which give rise to, any right of setoff against such Accounts,
unless in the case of clause (y) such account debtor has entered into a written
agreement in favor of Lenders' Agent, for the benefit of Lenders, and in form
and substance reasonably satisfactory to Lenders' Agent, pursuant to which such
account debtor agrees not to assert any setoff against Accounts owed to any
Borrower;
(i) there are no facts, events or occurrences which Lenders' Agent
believes in good faith would impair the validity, enforceability or
collectability of such Accounts or reduce the amount payable or delay payment
thereunder;
(j) such Accounts are subject to the first priority, valid and
perfected security interest of Lenders' Agent for itself as agent and for the
benefit of Lenders, and any goods giving rise thereto are not, and were not at
the time of the sale thereof, subject to any liens or security interests except
those permitted in this Agreement;
(k) neither the account debtor nor any officer or director of the
account debtor with respect to such Accounts is affiliated with any Borrower
directly or indirectly by virtue of family membership, ownership, control or
management;
(l) the account debtors with respect to such Accounts are not any
foreign government, the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, unless, upon
request of Lenders' Agent, the Federal Assignment of Claims Act of 1940, as
amended or any similar State, local or foreign law, if applicable, has been
complied with in a manner reasonably satisfactory to Lenders' Agent;
(m) there are no proceedings or actions which are threatened or
pending against the account debtors with respect to such Accounts which might
result in any material adverse change in any such account debtor's financial
condition;
(n) such Accounts of a single account debtor or its affiliates do
not constitute more than fifteen (15%) percent of all otherwise Eligible
Accounts (but the portion of such Accounts not in excess of such percentage may
be deemed Eligible Accounts);
(o) such Accounts are owed by account debtors whose total
indebtedness to all Borrowers in the aggregate or to any one Borrower, does not
exceed the applicable credit limit(s) with respect to such account debtors as
established by Lenders' Agent from time to time (but the portion of such
Accounts not in excess of such credit limit may still be deemed Eligible
Accounts);
(p) such Accounts are not Floor Plan Accounts; and
(q) such Accounts are owed by account debtors deemed creditworthy at
all times by Lenders' Agent, as determined by Lenders' Agent in good faith.
General criteria for Eligible Accounts may be established and revised from time
to time by Lenders' Agent in good faith. Any Accounts which are not Eligible
Accounts shall nevertheless be part of the Collateral.
1.17 "Eligible Inventory" shall mean, as to a Borrower, Inventory
consisting of finished goods held for resale in the ordinary course of the
business of such Borrower, parts held for resale or to be incorporated into
finished goods, and raw materials for such finished goods which are deemed
acceptable to Lenders' Agent in its good faith judgment based on the criteria
set forth below. In general, Eligible Inventory shall not include (a)
work-in-process; (b) spare parts for Equipment; (c) packaging and shipping
materials; (d) supplies used or consumed in such Borrower's business; (e)
Inventory at premises other than those located in the United States of America;
(f) Inventory at premises other than those owned and controlled by such
Borrower, except if Lender shall have received an agreement in writing from the
person in possession of such Inventory and/or the owner or operator of such
premises in form and substance satisfactory to Lenders' Agent acknowledging the
first priority security interest of Lenders' Agent, for itself as agent and for
the benefit of Lenders, in the Inventory, waiving or subordinating in favor of
Lenders' Agent and Lenders security interests and claims by such person against
the Inventory and permitting Lenders' Agent and Lenders access to, and, subject
to such limitations and costs reasonably acceptable to Lenders' Agent, the
right to remain on, the premises so as to exercise the rights and remedies of
Lenders and of Lenders' Agent and otherwise deal with the Collateral; (g)
Inventory subject to a security interest or lien in favor of any person other
than Lenders' Agent for itself as agent and for the benefit of Lenders, except
those permitted in this Agreement; (h) xxxx and hold goods; (i) unserviceable
or obsolete Inventory; (j) slow moving Inventory of parts or raw materials or
any product or category of finished goods which has not been the subject of a
sale in the ordinary course of business of such Borrower within a reasonable
period of time as determined in good faith by Lenders' Agent after consultation
with such Borrower or Borrowers' Agent; (k) Inventory which is not subject to
the first priority, valid and perfected security interest of Lenders' Agent for
itself as agent and for the benefit of Lenders; (l) returned inventory (unless
such inventory is first quality and is unused), damaged and/or defective
Inventory; (m) Inventory purchased or sold on consignment; and (n) Inventory
which Lenders' Agent determines, in good faith, for any other reason, is not
acceptable for lending purposes. General criteria for Eligible Inventory may
be established and revised from time to time by Lenders' Agent in good faith.
Any Inventory which is not Eligible Inventory shall nevertheless be part of the
Collateral.
1.18 "Equipment" shall mean, collectively, as to a Borrower, all of such
Borrower's now owned and hereafter acquired equipment and fixtures used in the
conduct of a Borrower's business and located in the United States, including,
without limitation, all manufacturing, assembly, distribution, data processing
and office equipment and all machinery, furniture, furnishings, appliances and
trade fixtures.
1.19 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, as the same now exists or may hereafter from time to time
be amended, modified, recodified or supplemented, together with all rules,
regulations and interpretations thereunder or related thereto.
1.20 "ERISA Affiliate" shall mean any person required to be aggregated
with a Borrower or any of its Subsidiaries under Sections 414(b), 414(c),
414(m) or 414(o) of the Code.
1.21 "Eurodollar Rate Loans" shall mean any Revolving Loans or portion
thereof on which interest is payable based on the Adjusted Eurodollar Rate in
accordance with the terms hereof.
1.22 "Eurodollar Rate" shall mean with respect to the Interest Period for
a Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the next one-sixteenth (1/16) of one (1%) percent) at which Reference Bank is
offered deposits of United States dollars in the London interbank market (or
other Eurodollar Rate market selected by Borrowers' Agent and approved by
Lenders' Agent) on or about 11:00 a.m. (Pacific Time) two (2) Business Days
prior to the commencement of such Interest Period in amounts substantially
equal to the principal amount of the Eurodollar Rate Loans requested by
Borrowers' Agent on behalf of and available to one or more Borrowers in
accordance with this Agreement, with a maturity of comparable duration to the
Interest Period selected by Borrowers' Agent.
1.23 "Event of Default" shall have the meaning set forth in Section 10.1
hereof.
1.24 "Excess Availability" shall mean the amount, as determined by
Lenders' Agent, calculated at any time, equal to:
(a) the lesser of (i) the amount of the Revolving Loans available to
any and all of Borrowers as of such time based on the applicable lending
formulas multiplied by the Net Amount of Eligible Accounts and the Value of
Eligible Inventory as determined by Lenders' Agent, and subject to the
Inventory Loan Limit, any other sublimits and Availability Reserves from time
to time established by Lenders' Agent hereunder and (ii) the Maximum Credit,
plus
(b) the amount of all unrestricted cash balances in deposit accounts
of Borrowers at banks within the United States, less outstanding checks or
other payment instruments or orders, minus
(c) the aggregate amount of Net Asset Sale Proceeds from time to
time realized, less an amount equal to the aggregate amount of funds used by
Terex or its subsidiaries at any time after a transaction giving rise to Net
Asset Sale Proceeds either (A) to make investments or to repay Indebtedness as
described in clauses (iii)(a) or (b) of Section 4.10 of the Note Indenture (as
in effect on the date hereof), to the extent such use of funds relieves Terex
from the obligation to make an Excess Proceeds Offer (as defined in the Note
Indenture as in effect on the date hereof) in respect of such Net Asset Sale
Proceeds, or (B) to purchase Senior Secured Notes pursuant to a Net Proceeds
Purchase; minus
(d) the sum of: (i) the amount of all then outstanding and unpaid
Obligations, plus (ii) the aggregate amount of all then outstanding and unpaid
trade payables of any and all Borrowers, which are past due at such time for a
period in excess of ninety (90) days past the original due date for such trade
payables, unless such past due trade payables are subject to a written
agreement extending the original due date, provided the applicable Borrower is
then current under such agreement.
1.25 "Financing Agreements" shall mean, collectively, this Agreement and
all notes, guarantees, security agreements and other agreements, documents and
instruments now or at any time hereafter executed and/or delivered by any
Borrower or any Obligor in connection with this Agreement, as the same now
exist or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.26 "Floor Plan Accounts" shall mean all Accounts which are either (i)
owed to a Borrower by a franchise dealer or other purchaser or lessor who has
incurred or is otherwise liable for any Indebtedness covered by a Floor Plan
Guaranty, or (ii) are payable directly to such Borrower by a floor plan lender
or other person who finances the purchase of the Inventory giving rise to such
Account.
1.27 "Floor Plan Guaranty" shall mean the guarantee by a Borrower of, or
other arrangement under which Borrower may be liable, in whole or in part, for
Indebtedness incurred by a franchise dealer, or other purchaser or lessor, for
the purchase or lease of inventory manufactured or sold by any Borrower or any
of its subsidiaries, the proceeds of which Indebtedness is used solely to pay
the purchase price of inventory sold by such Borrower or such subsidiary to
such franchise dealer and any related fees and expenses (including finance
fees); provided, that (i) to the extent commercially practicable, the
Indebtedness so guaranteed is secured by a perfected first priority lien on
such inventory and the proceeds thereof in favor of the holder of such
Indebtedness and (ii) if such Borrower or such subsidiary is required to make
payment with respect to such guarantee, such Borrower or such subsidiary will
have the right to receive either (a) title to such inventory, (b) a valid
assignment of a first priority perfected lien in such inventory and the
proceeds thereof or (c) the net proceeds of any resale of such inventory.
1.28 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect on the date hereof as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Boards which are applicable to the
circumstances under determination consistently applied.
1.29 "Hedging Obligations" shall mean, with respect to any person, the
obligations of such person under any of the following agreements or
arrangements to the extent that the primary purpose thereof is reduction of
risk to Borrowers of interest rate fluctuations relating to its customary
business and not interest rate speculation: (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such person against fluctuations
in interest rates.
1.30 "Indebtedness" of any person shall mean (without duplication) (i) all
indebtedness of such person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such person to pay the deferred purchase price of
property or services (other than trade payables on customary terms incurred in
the ordinary course of business), (iv) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (v) all obligations of such Person as
lessee under capitalized leases, (vi) all obligations, contingent or otherwise,
of such Person under bankers' acceptance and letter of credit facilities, (vii)
all obligations of such Person in respect of Hedging Obligations, (viii) all
Indebtedness of others guaranteed by such person, including Floor Plan
Guaranties, and (ix) all Indebtedness of the type referred to in clauses (i)
through (viii) above secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any lien on
property (including, without limitation, accounts and contract rights) owned by
such Person, even though such person has not assumed or become liable for the
payment of such Indebtedness, provided however, that the amount of such
Indebtedness shall (to the extent such person has not assumed or become liable
for the payment of such Indebtedness) be the lesser of (x) the fair market
value of such property at the time of determination and (y) the amount of such
Indebtedness. The amount of Indebtedness of any Person at any date shall be
the outstanding balance at such date of all unconditional obligations as
described above and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations at
such date; provided, further, that (A) in the case of each of clauses (i), (ii)
(iii) above, the amount of such Indebtedness will be the amount that would
appear as a liability on the balance sheet of such Person prepared in
accordance with GAAP, and (B) obligations of the Borrowers relating to existing
or future common stock appreciation rights, including, without limitation,
obligations evidenced by the Common Stock Appreciation Rights Agreement (as in
effect on the date hereof) entered into by Terex in favor of the original
purchasers of the Senior Secured Notes in connection with their purchase of
Senior Secured Notes, shall not be considered Indebtedness, but for purposes of
Section 9 hereof, such obligations shall be treated as if such obligations
constituted Indebtedness hereunder.
1.31 "Information Certificate" shall mean, the Information Certificate of
Borrowers containing material information with respect to each Borrower, its
business and assets, as such Information Certificate has been provided by or on
behalf of each Borrower to Lenders and Lenders' Agent in connection with the
preparation of this Agreement and the other Financing Agreements and the
financing arrangements provided for herein.
1.32 "Insolvent" shall mean with respect to any person, that such person
(i) is engaged in business or a transaction, or is about to engage in business
or a transaction, for which any property remaining with such person is an
unreasonably small capital, or (ii) has incurred, or intends to incur, or
believes that it will incur, debts that are or would be beyond such person's
ability to pay as such debts mature.
1.33 "Intellectual Property" shall mean, collectively, as to a Borrower,
all of such Borrower's now owned and hereafter acquired (a) common law and
statutory trademarks, service marks, trade names, trademark and service xxxx
registrations, applications for trademark or service xxxx registrations,
corporate names, company names, business names, fictitious business names,
trade styles, logos, other source or business identifiers, copyrights, designs
and all registrations and recordings thereof, including, without limitation,
registrations, recordings and applications in the United States Patent and
Trademark Office, United States Register of Copyrights, or in any similar
office or agency of the United States, any state thereof, or any county or any
political subdivision thereof, together with all goodwill associated therewith,
(b) United States and foreign patents and patent applications, (c) utility
models, industrial models, designs, know-how, blue prints, drawings and all
other forms of industrial intellectual property, (d) all grants issued by or
applications pending in the United States Patent and Trademark Office or in any
other country or political subdivision thereof, (e) all extensions, reissues,
continuations, continuations-in-part, and divisions thereof, and (f) all
proceeds of the foregoing (including, without limitation, license royalties and
proceeds of infringement suits).
1.34 "Interest Coverage Ratio" shall have the meaning ascribed to such
term as set forth in the Note Indenture, as in effect on the date hereof.
1.35 "Interest Period" shall mean for any Eurodollar Rate Loan, a period
of approximately one (1), two (2), or three (3) months duration as Borrowers'
Agent may elect, the exact duration to be determined in accordance with the
customary practice in the applicable Eurodollar Rate market; provided, that,
Borrowers' Agent may not elect an Interest Period which will end after the last
day of the then current term of this Agreement.
1.36 "Interest Rate" shall mean, as to Prime Rate Loans, a rate of one and
three quarter (1.75%) percent per annum in excess of the Prime Rate and, as to
Eurodollar Rate Loans, a rate of three and three-quarters (3.75%) percent per
annum in excess of the Adjusted Eurodollar Rate (based on the Eurodollar Rate
applicable for the Interest Period selected by Borrowers' Agent as in effect
three (3) Business Days after the date of receipt by Lenders' Agent of the
request of Borrowers' Agent for such Eurodollar Rate Loans in accordance with
the terms hereof, whether such rate is higher or lower than any rate previously
quoted to Borrowers' Agent or Borrowers); provided, that, the Interest Rate
shall mean the rate of three and three-quarters (3.75%) percent per annum in
excess of the Prime Rate as to Prime Rate Loans and the rate of five and
three-quarters (5.75%) percent per annum in excess of the Adjusted Eurodollar
Rate as to Eurodollar Rate Loans, at the option of Lenders' Agent, without
notice (a) for the period on and after the date of termination or non-renewal
hereof, or the date of the occurrence of any Event of Default, and for so long
as such Event of Default is continuing and until such time as all Obligations
are paid in full (notwithstanding entry of any judgment against any Borrower)
and (b) on the Revolving Loans at any time outstanding in excess of the amounts
available to any Borrower under Section 2 (whether or not such excess(es),
arise or are made with or without knowledge or consent of Lenders or Lenders'
Agent and whether made before or after an Event of Default) and, provided,
further, that, each of the Interest Rates set forth above shall be reduced by
one-quarter of one (.25%) percent per annum if Terex, together with its
subsidiaries, on a consolidated basis, has a positive Net Income for its full
fiscal year ending on or about December 31, 1995, as reported on its audited
financial statements for such period delivered in accordance with, and meeting
the requirements of, Section 9.6(a) hereof. Such Interest Rate changes, if
applicable, to become effective as to Prime Rate Loans, as of the first day of
the month immediately following the month in which Lenders' Agent receives such
audited financial statements, and as to Eurodollar Rate Loans only as to those
Interest Periods commencing on or after the first day of the month immediately
following the month in which Lenders' Agent receives such audited financial
statements.
1.37 "Inventory" shall mean, as to a Borrower, all of such Borrower's now
owned and hereafter acquired goods (including, without limitation, goods in the
possession of such Borrower or of a bailee or other person for sale, storage,
transit, processing, use or otherwise, and supplies, finished goods, parts and
components located in the United States, Canada or Puerto Rico or in transit to
the United States, Canada or Puerto Rico) which are: (a) held for sale or
lease, (b) furnished or to be furnished under contracts of services, or (c) raw
materials, work-in-process or materials used or consumed in its business.
1.38 "Inventory Loan Limit" shall mean, at any time, as to all Borrowers
on an aggregate basis, the amount equal to (A) $55,000,000 minus (B) the
Applicable Inventory Percentage(s) of the cost of Eligible Inventory to be
acquired under then-undrawn Letter of Credit Accommodations for the purpose of
purchasing Eligible Inventory.
1.39 "Investments" shall mean, with respect to any person, all investments
by such person in other persons (including affiliates) in the forms of loans,
guarantees, advances or capital contributions, purchases or other acquisitions
for consideration of Indebtedness, equity interests, common stock appreciation
rights, or other securities, the acquisition of all or a substantial part of
the assets or business of a person, and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP
(excluding (i) commission, travel and similar advances to officers and
employees of such person made in the ordinary course of business and (ii) bona
fide accounts receivable arising from the sale of goods or services in the
ordinary course of business on customary terms consistent with past practice).
1.40 "Lenders' Agent" shall mean Foothill Capital Corporation, a
California corporation, in its capacity as agent for Lenders hereunder and
pursuant to the Co-Lending Agreement, and its successors and assigns, and any
successor or replacement agent for the Lenders appointed pursuant to the
Co-Lending Agreement, and its successors and assigns.
1.41 "Letter of Credit Accommodations" shall mean the letters of credit,
acceptances, merchandise purchase or other guaranties which are from time to
time either (a) issued or opened by either of Lenders or Lenders' Agent for the
account of a Borrower or any Obligor or (b) with respect to which Lenders'
Agent or either or both of Lenders has agreed to indemnify the issuer or
guaranteed to the issuer the performance by a Borrower of its obligations to
such issuer. Without limiting the foregoing, all existing letters of credit,
acceptances, merchandise purchase or other guaranties issued, opened or
indemnified by Foothill for the account of Terex or Xxxxx pursuant to
Foothill's financing arrangements with such entities, as in effect immediately
prior to the effectiveness hereof, shall be deemed to be and constitute Letter
of Credit Accommodations issued, opened or indemnified (as the case may be) on
the date hereof, and subject to all provisions hereof applicable to Letter of
Credit Accommodations hereunder.
1.42 "Loans" shall mean the Revolving Loans.
1.43 "Maximum Credit" shall mean, as to all Borrowers on an aggregate
basis, the lesser of (i) $100,000,000 or (ii) the sum of (A) $60,000,000, plus
(B) the aggregate amount of any commitments to participate in the Lenders'
interests in the financing arrangements hereunder obtained by Lenders after the
date hereof from Participants acceptable to a Lender who have entered into
participation agreements with such Lender on terms satisfactory to such Lender.
1.44 "Net Amount of Eligible Accounts" shall mean the gross amount of
Eligible Accounts less (a) sales, excise or similar taxes included in the
amount thereof and (b) returns, discounts, claims, credits and allowances of
any nature at any time issued, owing, granted, outstanding, available or
claimed with respect thereto.
1.45 "Net Asset Sale Proceeds" shall have the meaning ascribed to the term
"Net Proceeds" in the Note Indenture, as in effect on the date hereof.
1.46 "Net Income" shall mean, with respect to any person for any period,
the net income (loss) of such Person for such period, determined in accordance
with GAAP, excluding, any gain (but not loss), together with any related
provision for taxes on such gain (but not loss), realized in connection with
any sales of assets and dispositions pursuant to sale and leaseback
transactions, and excluding any extraordinary gain (but not loss), together
with any related provision for taxes on such gain (but not loss).
1.47 "Net Proceeds Purchase" shall mean a purchase by Terex of the Senior
Secured Notes pursuant to a mandatory offer by Terex in respect of Net Asset
Sale Proceeds, as and to the extent required pursuant to Section 4.10 of the
Note Indenture as in effect on the date hereof.
1.48 "Note Indenture" shall mean the Indenture, dated of even date
herewith, by and among Terex, as issuer, the Guarantors named therein and the
Note Trustee, in connection with and governing the rights of the holders of the
Senior Secured Notes, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
1.49 "Note Trustee" shall mean United States Trust Company of New York, a
New York corporation, acting in its capacity as trustee or as collateral agent
on behalf of the holders of the Senior Secured Notes pursuant to the Note
Indenture and the agreements delivered in connection therewith, and its
successors and assigns (and including, without limitation, any successor,
replacement, assignee or additional person at any time acting as trustee and/or
collateral agent for the benefit of the holders of the Senior Secured Notes).
1.50 "Obligations" shall mean any and all Revolving Loans, Letter of
Credit Accommodations and all other obligations, liabilities and indebtedness
of every kind, nature and description owing by any or all Borrowers to Lenders'
Agent and/or either or both of Lenders arising under or in connection with this
Agreement, including principal, interest, charges, fees, costs and expenses,
however evidenced, whether as principal, surety, endorser, guarantor or
otherwise, arising under or in connection with this Agreement, whether now
existing or hereafter arising, whether arising before, during or after the
initial or any renewal term of this Agreement or after the commencement of any
case with respect to any or all Borrowers under the United States Bankruptcy
Code or any similar statute (including, without limitation, the payment of
interest and other amounts which would accrue and become due but for the
commencement of such case), whether direct or indirect, absolute or contingent,
joint or several, due or not due, primary or secondary, liquidated or
unliquidated, secured or unsecured.
1.51 "Obligor" shall mean any guarantor, endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the owner
of any property which is security for the Obligations, other than any of
Borrowers.
1.52 "Old Senior Notes" shall mean, individually and collectively, the
following (as the same now exist): (a) the 13% Senior Secured Notes due 1996
issued by Terex pursuant to an Indenture dated as of July 31, 1992, payable to
the order of the holders thereof in the original principal amount of
$160,000,000 and (b) the 13.5% Senior Subordinated Notes due 1997, issued by
Terex pursuant to an Indenture dated as of June 30, 1987, payable to the
holders thereof in the original principal amount of $50,000,000.
1.53 "Old Trustees" shall mean United States Trust Company of New York and
Bank of America Illinois, in their capacity as trustees for the Old Senior
Notes.
1.54 "Participant" shall mean any person which at any time participates
with either or both of Lenders in respect of the Revolving Loans, the Letter of
Credit Accommodations or other Obligations or any portion thereof.
1.55 "Payment Account" shall have the meaning set forth in Section 6.3
hereof.
1.56 "Person" or "person" shall mean any individual, sole proprietorship,
partnership, limited liability company, a limited liability partnership,
corporation (including, without limitation, any corporation which elects
subchapter S status under the Code, business trust, unincorporated association,
joint stock corporation, trust, joint venture or other entity or any government
or any agency or instrumentality or political subdivision thereof.
1.57 "Prime Rate" shall mean the rate from time to time publicly announced
by CoreStates Bank, N.A., or its successors, at its office in Philadelphia,
Pennsylvania, as its prime rate, whether or not such announced rate is the best
rate available at such bank.
1.58 "Prime Rate Loans" shall mean any Revolving Loans or portion thereof
on which interest is payable based on the Prime Rate in accordance with the
terms thereof.
1.59 "Purchase Agreements" shall mean, individually and collectively, the
Share Purchase Agreement, dated October 19, 1994, presently between TCI, as
assignee of New Terex Holdings UK Limited, a corporation formed under the laws
of the United Kingdom, and Seller, as amended through the date hereof, and all
other agreements of transfer as are referred to therein and all side letters
with respect thereto and all agreements, documents and instruments executed
and/or delivered in connection therewith as all of the foregoing now exist or
may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced.
1.60 "Purchased Stock" shall mean all of the issued and outstanding shares
of common stock of Legris Industries, Inc., a Delaware corporation and 99.18%
of the capital shares of P.P.M., S.A., a societe anonyme organized under the
laws of France.
1.61 "Receivables" shall mean, as to a Borrower, all of such Borrower's
now owned and hereafter acquired (a) Accounts, (b) general intangibles for
money due or to become due (including, without limitation, intercompany
obligations) which arise from the sale, lease or other disposition of Inventory
or rendition of services, except to the extent any of the foregoing arise from
rendition by such Borrower to any of its subsidiaries or any other Borrower or
its subsidiaries, of management services, accounting services, administrative
services or other services unrelated to the sale, lease or other disposition of
Inventory and not directly related to the manufacture or maintenance of
Inventory, (c) chattel paper and instruments evidencing indebtedness which
arise from the sale, lease or other disposition of Inventory or rendition of
services, except to the extent any of the foregoing arise from rendition by
such Borrower to any of its subsidiaries or any other Borrower or its
subsidiaries, of management services, accounting services, administrative
services or other services unrelated to the sale, lease or other disposition of
Inventory and not directly related to the manufacture or maintenance of
Inventory, (d) interest, late charges, collection fees and other sums owed in
connection with the foregoing, and (e) interests in Inventory (including,
without limitation, returned, repossessed and reclaimed goods) which give rise
to any of the foregoing.
1.62 "Records" shall mean, as to a Borrower, all of such Borrower's
present and future books of account, purchase and sale agreements, invoices,
ledger cards, bills of lading and other shipping evidence, statements,
correspondence, memoranda, credit files and other data relating to the
Collateral or any account debtor, together with the tapes, disks, diskettes and
other data and software storage media and devices, file cabinets or containers
in or on which the foregoing are stored (including any rights of such Borrower
with respect to the foregoing maintained with or by any other person).
1.63 "Reference Bank" shall mean CoreStates Bank, N.A., or such other bank
as Lenders may from time to time designate.
1.64 "Revolving Loans" shall mean the loans now or hereafter made by
Lenders' Agent for and on behalf of Lenders to or for the benefit of any or all
of Borrowers on a revolving basis (involving advances, repayments and
readvances) as set forth in Section 2.1 hereof.
1.65 "Seller" shall mean either one or both of Legris Industries, S.A., a
societe anonyme organized under the laws of France, and Potain S.A., a societe
anonyme organized under the laws of France, and their successors and assigns.
1.66 "Senior Secured Notes" shall mean, individually and collectively, the
13 1/4% Senior Secured Notes due 2002 issued by Terex pursuant to the Note
Indenture, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.67 "Subsidiary" or "subsidiary" shall mean, with respect to any Person,
(i) any corporation, association or other business entity of which more than
fifty (50%) percent of the total voting power of shares of Voting Stock thereof
is at the time owned or controlled, directly or indirectly, by such Person or
one or more of the other Subsidiaries of that Person or a combination thereof
and (ii) any partnership in which such Person or any of its Subsidiaries is a
general partner.
1.68 "TCI" shall mean Terex Cranes, Inc., a Delaware corporation, and its
successors and assigns.
1.69 "Uniform Commercial Code" or "UCC" shall mean the Uniform Commercial
Code of the State of New York.
1.70 "Value" shall mean, as determined by Lenders' Agent in good faith,
with respect to Inventory, the lower of (a) cost computed on a
first-in-first-out basis in accordance with GAAP or (b) market value.
1.71 "Voting Stock" shall mean with respect to any Person, (i) one or more
classes of capital stock of such Person having general voting powers to elect
at least a majority of the board of directors, managers or trustees of such
Person (irrespective of whether or not at the time capital stock of any other
class or classes have or might have voting power by reason of the happening of
any contingency) and (ii) any capital stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
capital stock of such Person described in clause (i) above.
SECTION 2. CREDIT FACILITIES
2.1 Revolving Loans.
(a) Subject to, and upon the terms and conditions contained herein,
each of the Lenders severally, but not jointly, agrees to make Revolving Loans
to the respective Borrowers through Lenders' Agent, and authorizes and appoints
Lenders' Agent to make such Revolving Loans to the respective Borrowers, for
the account of and as agent for Lenders, from time to time in an amount equal
to such Lender's pro rata share, based on its Commitment Percentage, of the
amounts requested by each such Borrower or by Borrowers' Agent on behalf of and
as agent for each such Borrower, up to the amount equal to the sum of:
(i) (A) with respect to each of Terex, Koehring and PPM US,
seventy five (75%) percent of its respective Net Amount of Eligible Accounts,
and (B) with respect to Xxxxx, seventy (70%) percent of its Net Amount of
Eligible Accounts, plus
(ii) the Applicable Inventory Percentage(s) of the Value of
Eligible Inventory of such Borrower, less
(iii) any Availability Reserves established as to such Borrower
in accordance with this Agreement.
(b) Lenders' Agent, may, in its discretion, from time to time, upon
not less than five (5) days' prior notice to Borrowers' Agent, (i) reduce the
lending formula with respect to Eligible Accounts for any Borrower to the
extent that Lenders' Agent determines in good faith that: (A) the dilution with
respect to the Accounts for such Borrower for any period (based on the ratio of
(1) the aggregate amount of reductions in Accounts for such Borrower other than
as a result of payments in cash to (2) the aggregate amount of total sales of
such Borrower) has increased in any material respect or may be reasonably
anticipated to increase in any material respect above historical levels, or (B)
the general creditworthiness of account debtors of such Borrower has declined
or (ii) reduce the lending formula(s) with respect to Eligible Inventory for
any Borrower to the extent that Lenders' Agent determines in good faith that:
(A) the number of days of the turnover of the Inventory of such Borrower for
any period has changed in any material adverse respect or (B) the liquidation
value of the Eligible Inventory of such Borrower, or any category thereof, has
decreased, or (C) the nature and quality of the Inventory of such Borrower has
deteriorated in any material respect or the mix of such Inventory has changed
materially and adversely. In determining whether to reduce the lending
formula(s), Lenders' Agent may consider events, conditions, contingencies or
risks which are also considered in determining Eligible Accounts, Eligible
Inventory or in establishing Availability Reserves.
(c) Except in the discretion of Lenders' Agent, the aggregate amount
of the Revolving Loans and the Letter of Credit Accommodations outstanding at
any time to all Borrowers shall not exceed the Maximum Credit and the aggregate
Revolving Loans outstanding at any time to all Borrowers based on the aggregate
Value of Eligible Inventory of all Borrowers shall not exceed the Inventory
Loan Limit at such time. Subject to the terms and conditions of this
Agreement, the respective Borrowers may borrow, shall repay, and may reborrow
such amounts (if any) as are determined in good faith by Lenders' Agent to be
available to them as Revolving Loans and Letter of Credit Accommodations. In
the event that the outstanding amount of any component of the Revolving Loans,
or the aggregate amount of the outstanding Revolving Loans and Letter of Credit
Accommodations, exceed the amounts available under the lending formulas, the
Inventory Loan Limit, the sublimits for Letter of Credit Accommodations set
forth in Section 2.2(c) or the Maximum Credit, as applicable, such event shall
not limit, waive or otherwise affect any rights of Lenders or Lenders' Agent in
that circumstance or on any future occasions and Borrowers shall, upon demand
by Lenders' Agent upon Borrowers' Agent, which may be made at any time or from
time to time, immediately repay to Lenders' Agent the entire amount of any such
excess(es) for which payment is demanded.
2.2 Letter of Credit Accommodations.
(a) Subject to, and upon the terms and conditions contained herein,
at the request of Borrowers' Agent on behalf of a Borrower, Lenders' Agent
agrees, as agent for Lenders for their several, but not joint, credit risk on a
pro rata basis in accordance with their Commitment Percentages, to provide or
arrange for Letter of Credit Accommodations for the account of such Borrower
containing terms and conditions acceptable to Lenders' Agent and the issuer
thereof. Any payments made by Lenders' Agent to any issuer thereof and/or
related parties in connection with the Letter of Credit Accommodations shall
constitute additional Revolving Loans to such Borrower pursuant to this Section
2.
(b) In addition to any charges, fees or expenses charged by any bank
or issuer in connection with the Letter of Credit Accommodations, each Borrower
for whose account a Letter of Credit Accommodation is issued shall pay to
Lenders' Agent for the benefit of Lenders a letter of credit fee at a rate
equal to two (2%) percent per annum on the daily outstanding balance of the
Letter of Credit Accommodations for each month (or part thereof), payable in
arrears as of the first day of each month for the immediately preceding month.
Such letter of credit fee shall be calculated on the basis of a three hundred
sixty (360) day year and actual days elapsed and the Obligation of such
Borrower to pay such fee shall survive the termination or non-renewal of this
Agreement.
(c) No Letter of Credit Accommodations shall be available unless on
the date of the proposed issuance of any Letter of Credit Accommodations for
the account of a Borrower, the Revolving Loans available to such Borrower
(subject, without limitation, to the Maximum Credit, the Inventory Loan Limit
and any Availability Reserves) are equal to or greater than: (i) if the
proposed Letter of Credit Accommodation is for the purpose of purchasing
Eligible Inventory, the sum of (A) one hundred (100%) percent minus the
Applicable Inventory Percentage(s), multiplied by the cost of such Eligible
Inventory, plus (B) freight, taxes, duty and other amounts which Lenders' Agent
estimates must be paid in connection with such Inventory upon arrival and for
delivery to one of such Borrower's locations for Eligible Inventory within the
United States and (ii) if the proposed Letter of Credit Accommodation is for
any other purpose, an amount equal to one hundred (100%) percent of the face
amount thereof and all other commitments and obligations made or incurred by
Lenders' Agent or Lenders with respect thereto. Effective on the issuance of
each Letter of Credit Accommodation, the amount of Revolving Loans which might
otherwise be available to such Borrower shall be reduced by the applicable
amount set forth in Section 2.2(c)(i) or Section 2.2(c)(ii).
(d) Except in the discretion of Lenders' Agent, (i) the aggregate
amount of all outstanding Letter of Credit Accommodations to all Borrowers and
all other commitments and obligations made or incurred by Lenders' Agent in
connection therewith, shall not at any time exceed $15,000,000 and (ii) the
amount of all outstanding Letter of Credit Accommodations for the purpose of
purchasing Eligible Inventory for all Borrowers and all other commitments and
obligations made or incurred by Lenders' Agent and Lenders in connection
therewith shall not at any time exceed: (A) the Inventory Loan Limit minus (B)
the amount of the then outstanding Revolving Loans based on Eligible Inventory
pursuant to Section 2.1(a)(ii) hereof. At any time an Event of Default exists
or has occurred and is continuing, upon request by Lenders' Agent, Borrowers
will either furnish cash collateral to secure the reimbursement obligations to
the issuer in connection with any Letter of Credit Accommodations or furnish
cash collateral to Lenders' Agent for the Letter of Credit Accommodations, and
in either case, the Revolving Loans otherwise available to any Borrower shall
not be reduced as provided in Section 2.2(c) to the extent of such cash
collateral.
(e) Borrowers shall indemnify and hold Lenders' Agent and each of
Lenders harmless from and against any and all losses, claims, damages,
liabilities, costs and expenses which Lenders' Agent or either or both Lenders
may suffer or incur in connection with any Letter of Credit Accommodations and
any documents, drafts or acceptances relating thereto, including, but not
limited to, any losses, claims, damages, liabilities, costs and expenses due to
any action taken by any issuer or correspondent with respect to any Letter of
Credit Accommodation; provided, however, that Borrowers shall have no
obligation to indemnify a Lender or Lenders' Agent for any such losses, claims,
damages, liabilities, costs and expenses to the extent directly caused by the
willful misconduct or gross negligence of such Lender or Lenders' Agent
otherwise entitled to be indemnified and held harmless, as determined by a
final, non-appealable judgment of a court of competent jurisdiction. Borrowers
assume all risks with respect to the acts or omissions of the drawer under or
beneficiary of any Letter of Credit Accommodation and for such purposes the
drawer or beneficiary shall be deemed the agent for the Borrowers. Borrowers
assume all risks for, and agree to pay, all foreign, Federal, State and local
taxes, duties and levies relating to any goods subject to any Letter of Credit
Accommodations or any documents, drafts or acceptances thereunder. Borrowers
hereby release and hold Lenders and Lenders' Agent harmless from and against
any acts, waivers, errors, delays or omissions, whether caused by Lenders or
Lenders' Agent, by any issuer or correspondent or otherwise with respect to or
relating to any Letter of Credit Accommodation, except any of the foregoing
directly caused by the willful misconduct or gross negligence of such Lender or
Lenders' Agent otherwise to be released and held harmless, as determined by a
final, non-appealable judgment of a court of competent jurisdiction. The
provisions of this Section 2.2(e) shall survive the payment of Obligations and
the termination or non-renewal of this Agreement.
(f) Nothing contained herein shall be deemed or construed to grant
Borrowers' Agent or any Borrower any right or authority to pledge the credit of
Lenders' Agent or Lenders in any manner. Neither Lenders' Agent nor either of
Lenders shall have liability of any kind with respect to any Letter of Credit
Accommodation provided by an issuer other than Lenders' Agent or either of
Lenders unless Lenders' Agent or either or both Lenders has, in accordance
herewith, duly executed and delivered to such issuer the application or a
guarantee or indemnification in writing with respect to such Letter of Credit
Accommodation. Borrowers shall be bound by any interpretation made in good
faith by Lenders' Agent or by the issuer or correspondent under or in
connection with any Letter of Credit Accommodation or any documents, drafts or
acceptances thereunder, notwithstanding that such interpretation may be
inconsistent with any instructions of Borrowers or Borrowers' Agent. At any
time an Event of Default exists or has occurred and is continuing, Lenders'
Agent shall have the sole and exclusive right and authority in good faith, to,
and Borrowers and Borrowers' Agent shall not (i) approve or resolve any
questions of non-compliance of documents, (ii) give any instructions as to
acceptance or rejection of any documents or goods, (iii) execute any and all
applications for steamship or airway guaranties, indemnities or delivery
orders. At any time an Event of Default exists or has occurred and is
continuing, Lenders' Agent shall have the sole and exclusive right and
authority in good faith, to, and Borrowers and Borrowers' Agent shall not at
any time (x) grant any extensions of the maturity of, time of payment for, or
time of presentation of, any drafts, acceptances, or documents, or (y) agree to
any amendments, renewals, extensions, modifications, changes or cancellations
of any of the terms or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or any letters
of credit included in the Collateral. Lenders' Agent may take such actions
either in its own name or in any Borrower's name, or in the name of Lenders'
Agent or in the name of Borrowers' Agent.
(g) Nothing herein contained in Section 2.2(f) or elsewhere in this
Agreement shall in any event operate to restrict the rights of any issuer of a
Letter of Credit Accommodation or correspondent thereof at any time or to
render Lenders or Lenders' Agent liable for any exercise of rights by an issuer
or correspondent thereof.
(h) Any rights, remedies, duties or obligations granted or
undertaken by any Borrower or Borrowers' Agent to any issuer or correspondent
in any application for any Letter of Credit Accommodation, or any other
agreement in favor of any issuer or correspondent relating to any Letter of
Credit Accommodation, shall be deemed to have been granted or undertaken by
such Borrower or Borrowers' Agent on behalf of such Borrower, to Lenders'
Agent. Any duties or obligations undertaken by a Lender or Lenders' Agent to
any issuer or correspondent in any application for any Letter of Credit
Accommodation, or any other agreement by a Lender or Lenders' Agent in favor of
any issuer or correspondent relating to any Letter of Credit Accommodation,
shall be deemed to have also been undertaken in favor of Lenders and Lenders'
Agent by the Borrower for whose account the Letter of Credit Accommodation was
issued and to apply in all respects to such Borrower.
2.3 Availability Reserves. All Revolving Loans otherwise available to
Borrowers pursuant to the lending formulas and subject to the Maximum Credit,
the Inventory Loan Limit and other applicable limits hereunder shall be subject
to the continuing right of Lenders' Agent to establish and revise Availability
Reserves in accordance with this Agreement.
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Borrowers shall pay to Lenders' Agent, for the benefit of
Lenders, interest on the outstanding principal amount of the non-contingent
Obligations at the Interest Rate. All interest accruing hereunder on and after
the date of, and during the continuance of, any Event of Default, or after
termination or non-renewal hereof, shall be payable on demand.
(b) Borrowers' Agent may from time to time request that Prime Rate
Loans be converted to Eurodollar Rate Loans or that any existing Eurodollar
Rate Loans continue for an additional Interest Period. Such request from
Borrowers' Agent shall specify the amount of the Prime Rate Loans which will
constitute Eurodollar Rate Loans (subject to the limits set forth below) and
the Interest Period to be applicable to such Eurodollar Rate Loans. Subject to
the terms and conditions contained herein, three (3) Business Days after
receipt by Lenders' Agent of such a request from Borrowers' Agent, such Prime
Rate Loans shall be converted to Eurodollar Rate Loans or such Eurodollar Rate
Loans shall continue, as the case may be, provided, that, (i) no Event of
Default, or event which with notice or passage of time or both would constitute
an Event of Default, exists or has occurred and is continuing, (ii) no party
hereto shall have sent, pursuant to the terms hereof, any notice of termination
or non-renewal of this Agreement, (iii) Borrowers' Agent shall have complied
with such customary procedures as are established by Lenders' Agent and
specified by Lenders' Agent to Borrowers' Agent from time to time for requests
by Borrowers' Agent for Eurodollar Rate Loans, (iv) no more than five (5)
Interest Periods may be in effect at any one time, (v) the aggregate amount of
the Eurodollar Rate Loans must be in an amount not less than $5,000,000 or an
integral multiple of $1,000,000 in excess thereof, (vi) the maximum amount of
the Eurodollar Rate Loans at any time requested by Borrowers' Agent shall not
exceed the amount equal to eighty (80%) percent of the lowest principal amount
of the Revolving Loans which it is anticipated will be outstanding during the
applicable Interest Period, as determined in good faith by Lenders' Agent (but
with no obligation of Lenders' Agent to make such Revolving Loans) and (vii)
Lenders' Agent shall have determined that the Interest Period or Adjusted
Eurodollar Rate is available to Lenders' Agent through the Reference Bank and
can be readily determined as of the date of the request for such Eurodollar
Rate Loan by Borrowers' Agent. Any request by Borrowers' Agent to convert
Prime Rate Loans to Eurodollar Rate Loans or to continue any existing
Eurodollar Rate Loans shall be irrevocable. Notwithstanding anything to the
contrary contained herein, Lenders' Agent and Reference Bank shall not be
required to purchase United States dollar deposits in the London interbank
market or other applicable Eurodollar Rate market to fund any Eurodollar Rate
Loans, but the provisions hereof shall be deemed to apply as if Lender and
Reference Bank had purchased such deposits to fund the Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to Prime
Rate Loans upon the last day of the applicable Interest Period, unless Lenders'
Agent has received and approved a request to continue such Eurodollar Rate
Loans at least three (3) Business Days prior to such last day in accordance
with the terms hereof. Any Eurodollar Rate Loans shall, at the option of
Lenders' Agent, upon notice by Lenders' Agent to Borrowers' Agent, convert to
Prime Rate Loans in the event that (i) an Event of Default or event which with
the notice or passage of time or both would constitute an Event of Default,
shall exist and be continuing, (ii) this Agreement shall terminate or not be
renewed, or (iii) the aggregate principal amount of the Prime Rate Loans which
have previously been converted to Eurodollar Rate Loans or existing Eurodollar
Rate Loans continued, as the case may be, at the beginning of an Interest
Period shall at any time during such Interest Period exceed either (A) the
aggregate principal amount of the Revolving Loans then outstanding, or (B) the
amount of the Revolving Loans then available to Borrowers under Section 2
hereof. Borrowers shall pay to Lenders' Agent, upon demand by Lenders' Agent
(or Lenders' Agent may, at its option, charge any loan account of Borrowers)
any amounts required to compensate Lenders' Agent, Lenders, the Reference Bank
or any Participant for any out-of-pocket loss, cost or expense incurred by such
person, as a result of the conversion of Eurodollar Rate Loans to Prime Rate
Loans pursuant to any of the foregoing.
(d) Interest shall be payable by Borrowers to Lenders' Agent, for
the benefit of Lenders, monthly in arrears, not later than the first day of
each calendar month and shall be calculated on the basis of a three hundred
sixty (360) day year and actual days elapsed. The Interest Rate on
non-contingent Obligations (other than Eurodollar Rate Loans) shall increase or
decrease by an amount equal to each increase or decrease in the Prime Rate
effective on the first day of the month after any change in such Prime Rate is
announced based on the Prime Rate in effect on the last day of the month in
which any such change occurs. In no event shall charges constituting interest
payable by Borrowers to Lenders' Agent, for the benefit of Lenders, exceed the
maximum amount or the rate permitted under any applicable law or regulation,
and if any such part or provision of this Agreement is in contravention of any
such law or regulation, such part or provision shall be deemed amended to
conform thereto.
3.2 Closing Fee. Borrowers shall pay to Lenders' Agent, for the benefit
of Lenders, as a closing fee, the amount of $1,250,000, which fee, subject to
adjustment below, shall be fully earned as of the date hereof, of which (i) the
sum of $300,000 previously paid to Lenders as a commitment fee shall be
credited against such closing fee, (ii) the sum of $75,000 shall be due and
payable on the date hereof, and (iii) the sum of $875,000 shall be due and
payable in amounts equal to five-eighths of one percent (.625%) of each
increase in the Maximum Credit above $60,000,000 payable upon receipt by
Borrowers' Agent of written advice of such increase by Lenders' Agent, and the
balance thereof shall be due and payable one (1) year from the date hereof;
provided, that the portion of such amount payable under clause (iii) one (1)
year from the date hereof shall be adjusted so that the aggregate closing fee
payable under this Section 3.2 shall equal one and one-quarter (1.25%) percent
of the highest Maximum Credit in effect at any time on or after the date
hereof, and the amount to be paid under clause (iii), as so adjusted, shall
become immediately due and payable without notice or demand, at the option of
Lenders' Agent upon the occurrence of an Event of Default or upon termination
hereof.
3.3 Servicing Fee. Borrowers shall pay to Lenders' Agent, monthly, for
the benefit of Lenders and Lenders' Agent, a servicing fee in an amount equal
to $15,000 in respect of Lenders' and Lenders' Agent's services for each month
(or part thereof) while this Agreement remains in effect and for so long
thereafter as any of the Obligations are outstanding, which fee shall be fully
earned as of and payable in advance on the date hereof and on the first day of
each month hereafter.
3.4 Unused Line Fee. Borrowers shall pay to Lenders' Agent monthly, for
the benefit of Lenders, an unused line fee at a rate equal to one-quarter of
one (.25%) percent per annum calculated upon the amount by which the average
daily principal balance of the outstanding Revolving Loans and Letter of Credit
Accommodations during the immediately preceding month (or part thereof) while
this Agreement is in effect and for so long thereafter as any of the
Obligations are outstanding is less than (i) $50,000,000 for all months (or
parts thereof) during the period from the date hereof through the first
anniversary of the date hereof, and (ii) $75,000,000 (or such lesser amount,
not below $60,000,000, as shall equal the Maximum Credit from time to time in
effect) for all months (or parts thereof) during the period after the first
anniversary of the date hereof, which fee under this Section 3.4 shall be
payable on the first day of each month in arrears.
3.5 Changes in Laws and Increased Costs of Loans.
(a) Notwithstanding anything to the contrary contained herein, all
Eurodollar Rate Loans shall, upon notice by Lenders' Agent to Borrowers' Agent,
convert to Prime Rate Loans in the event that (i) any change in applicable law
or regulation (or the interpretation or administration thereof) shall either
(A) make it unlawful for any of Lenders' Agent, Lenders, Reference Bank or any
Participant to make or maintain Eurodollar Rate Loans or to comply with the
terms hereof in connection with the Eurodollar Rate Loans, by an amount deemed
in good faith by Lenders' Agent to be material, or (B) shall result in the
increase in the costs to any of Lenders' Agent, Lenders, Reference Bank or any
Participant of making or maintaining any Eurodollar Rate Loans or (C) reduce
the amounts received or receivable by Lenders' Agent or Lenders or any
Participant in respect thereof, by an amount deemed by Lenders' Agent to be
material or (ii) the cost to any of Lenders' Agent, Lenders, Reference Bank or
any Participant, which is determined by Lenders' Agent to be attributable in
good faith to making or maintaining any Eurodollar Rate Loans, shall otherwise
increase by an amount deemed by Lenders' Agent to be material. In the
circumstances described in clauses (i)(B), (i)(C) or (ii), in lieu of
conversion to Prime Rate Loans, Borrowers shall have the option, for the
balance of the Interest Period(s) for then outstanding Eurodollar Rate Loans,
of paying any and all increased costs and expenses incurred in good faith by
any of Lenders' Agent, Lenders, the Reference Bank or any Participant, together
with the aggregate amount received or receivable by Lenders' Agent and Lenders
which has been reduced in respect of such Eurodollar Rate Loans. In the event
of any conversion of Eurodollar Rate Loans to Prime Rate Loans, Borrowers shall
pay to Lenders' Agent, upon demand by Lenders' Agent (or Lenders' Agent may, at
its option, charge any loan account of Borrowers) any amounts determined in
good faith by Lenders' Agent to be required to compensate any of Lenders'
Agent, Lenders, the Reference Bank or any Participant for any out-of-pocket
loss, cost or expense incurred in good faith by such person as a result of the
foregoing, including, without limitation, any such loss, cost or expense
incurred in good faith by reason of the liquidation or reemployment of deposits
or other funds acquired by such person to make or maintain the Eurodollar Rate
Loans or any portion thereof. A certificate of Lenders' Agent setting forth
the basis for the determination of such amount necessary to compensate such
person as aforesaid shall be delivered to Borrowers' Agent and shall be
conclusive, absent manifest error.
(b) If any payments or prepayments in respect of the Eurodollar Rate
Loans are received by Lenders' Agent other than on the last day of the
applicable Interest Period (whether pursuant to acceleration, upon maturity or
otherwise), including any payments pursuant to the application of collections
under Section 6.3 or any other payments made with the proceeds of Collateral,
Borrowers shall pay to Lenders' Agent for the benefit of Lenders, upon demand
by Lenders' Agent (or Lenders' Agent may, at its option, charge to any loan
account of any Borrower) any amounts determined in good faith by Lenders' Agent
to be required to compensate Lenders' Agent, Lenders, the Reference Bank or any
Participant for any out-of-pocket loss, cost or expense incurred in good faith
by such person as a result of such prepayment or payment, including, without
limitation, any loss, cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such person to make or
maintain such Eurodollar Rate Loans or any portion thereof.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Revolving Loans and Letter of Credit
Accommodations. Each of the following is a condition precedent to Lenders'
Agent making the initial Revolving Loans and providing the initial Letter of
Credit Accommodations hereunder:
(a) Lenders' Agent shall have received, in form and substance
satisfactory to Lenders' Agent and Lenders, all releases, terminations and such
other documents as Lenders' Agent may request to evidence and effectuate the
termination by the existing lender or lenders to Borrowers of their respective
financing arrangements with any Borrowers and the termination and release by it
or them, as the case may be, of any interest in and to any assets and
properties of Borrowers and each Obligor, duly authorized, executed and
delivered by it or each of them, including, but not limited to UCC termination
statements or other lien discharges for all UCC financing statements and other
instruments evidencing or creating any lien previously filed by it or any of
them or their predecessors, as secured party or lien holder and any Borrower,
as debtor or grantor relating to any of the Collateral, or relating to any
other property of Borrowers except for those financing statements and other
instruments creating or evidencing security interests in or liens upon
property, other than the Collateral, evidencing security interests permitted by
the terms hereof;
(b) Lenders' Agent shall have received, in form and substance
satisfactory to Lenders' Agent and Lenders, evidence that (i) Terex has
completed the issuance of all of the Senior Secured Notes pursuant to the terms
of the Note Indenture and the Offering Circular with respect thereto previously
delivered to Lenders (except for the non-fulfillment of any terms thereof or
waiver of any conditions precedent contained therein that are disclosed to and
consented to in writing by Lenders and Lenders' Agent), (ii) Terex has received
gross cash proceeds in an amount not less than $250,000,000 from the issuance
of the Senior Secured Notes and the related common stock appreciation rights
and (iii) such cash proceeds received by Terex have been (x) deposited with the
Old Trustees, in trust, for application solely to the defeasance and redemption
of all of the Old Senior Notes, and (y) applied to the purchase price of the
Purchased Stock payable pursuant to the Purchase Agreements, the repayment of
the debt of the Sellers as provided under the Purchase Agreements and a portion
of costs, fees and expenses incurred in connection with such defeasance and
redemption, such repayment of debt and the issuance of the Senior Secured
Notes;
(c) Lenders' Agent shall have received, in form and substance
satisfactory to Lenders' Agent and Lenders, a pro-forma consolidated and
consolidating balance sheet of each of the Borrowers and their subsidiaries
reflecting the initial transactions contemplated hereunder, including, but not
limited to, (i) the consummation of the acquisition of the Purchased Stock by
TCI from Seller and the other transactions contemplated by the Purchase
Agreements, (ii) the consummation of the issuance by Terex of the Senior
Secured Notes, (iii) the defeasance and redemption by Terex of the Old Senior
Notes and (iv) the Revolving Loans and Letter of Credit Accommodations provided
by Lenders' Agent to Borrowers on the date hereof and the use of the proceeds
of the Revolving Loans as provided herein, accompanied by a certificate, dated
of even date herewith, of the chief financial officer of Terex, stating that
such pro-forma balance sheet represents the reasonable, good faith opinion of
such officer as to the subject matter thereof as of the date of such
certificate;
(d) Lenders' Agent shall have received, in form and substance
satisfactory to Lenders' Agent and Lenders, evidence that Lenders' Agent has,
for itself as agent and for the benefit of Lenders, valid perfected and first
priority security interests in and liens upon the Collateral and any other
property which is intended to be security for the Obligations or the liability
of any Obligor in respect thereof, subject only to the security interests and
liens permitted herein or in the other Financing Agreements;
(e) Lenders' Agent shall have received, in form and substance
satisfactory to Lenders' Agent and Lenders, evidence that the Purchase
Agreements have been duly executed and delivered by and to the appropriate
parties thereto and the transactions contemplated under the terms of the
Purchase Agreements have been consummated prior to, or contemporaneously with,
the execution of this Agreement;
(f) Lenders' Agent shall have received, in form and substance
satisfactory to Lenders' Agent and Lenders, evidence that Terex has contributed
as an equity capital contribution to TCI all of the assets owned and used by
Terex exclusively in the business of its Koehring Cranes and its Marklift
divisions, which in turn will be contributed by TCI as an equity capital
contribution to Koehring, a wholly owned subsidiary of TCI;
(g) no material adverse change shall have occurred in the assets,
business or prospects of any Borrower since the date of Lenders' latest field
examination and no change or event shall have occurred which would impair the
ability of any Borrower or any Obligor to perform its obligations hereunder or
under any of the other Financing Agreements to which it is a party or of
Lenders' Agent or Lenders to enforce the Obligations or realize upon the
Collateral;
(h) Lenders' Agent and Lenders shall have completed a field review
of the Records and such other information with respect to the Collateral as
Lenders' Agent or either Lender may require to determine the amount of
Revolving Loans available to the respective Borrowers, the results of which
shall be satisfactory to Lenders and Lenders' Agent, not more than three (3)
Business Days prior to the date hereof;
(i) Lenders' Agent shall have received a written report of an
appraisal conducted at Borrowers' expense, by an appraiser acceptable to
Lenders, addressed to Lenders or on which Lenders are expressly permitted to
rely, in form, scope and methodology satisfactory to both Lenders, setting
forth the orderly liquidation values of each type or category of Inventory of
Borrowers, and expressing such values as a percentage of Borrowers' cost of
such inventory.
(j) Lenders' Agent shall have received, in form and substance
satisfactory to Lenders' Agent and Lenders, all consents, waivers,
acknowledgments and other agreements from third persons which Lenders' Agent or
either Lender may deem necessary or desirable in order to permit, protect and
perfect its security interests in and liens upon the Collateral or to
effectuate the provisions or purposes of this Agreement and the other Financing
Agreements, including, without limitation, acknowledgements by lessors,
mortgagees and warehousemen of the security interests of Lenders' Agent and
Lenders in the Collateral, waivers or subordinations in favor of Lenders and
Lenders' Agent by such persons of any security interests, liens or other claims
by such persons to the Collateral and agreements permitting Lenders' Agent and
Lenders access to, and, subject to limitations and costs reasonably acceptable
to Lenders' Agent, the right to remain on, the premises to exercise its rights
and remedies and otherwise deal with the Collateral;
(k) Borrowers shall have, in the aggregate, Excess Availability, as
determined by Lenders' Agent as of the date hereof, in an amount not less than
$25,000,000, after giving effect to the application of the initial Revolving
Loans and Letter of Credit Accommodations hereunder and after provision for
payment of all fees and expenses of the transactions contemplated by this
Agreement, the Purchase Agreements and the Offering Circular relating to the
Senior Secured Notes; provided, however, that in determining Excess
Availability solely for purposes of determining whether the condition set forth
in this Section 4.1(k) is satisfied, the amount calculated under clause (a) of
the definition of Excess Availability shall be the amount calculated under
clause (a)(i) of such definition, even if the Maximum Credit (as referred to in
clause (a)(ii) of such definition) is a lesser amount as of the date hereof;
(l) Lenders' Agent shall have received, in form and substance
satisfactory to Lenders' Agent and Lenders, an intercreditor agreement executed
and delivered by Note Trustee in favor of Lenders and Lenders' Agent, as
acknowledged and agreed to by Borrowers, with respect to the relative priority
of the respective security interests and pledges with respect to the property
of Borrowers held by, respectively, the Note Trustee and by Lenders' Agent for
itself as agent and for the benefit of Lenders, and providing for certain
restrictions on the enforcement by the Note Trustee of certain rights and
remedies of Note Trustee on behalf of the holders of the Senior Secured Notes
and related matters, duly authorized, executed and acknowledged by Lenders,
Note Trustee and Borrowers;
(m) Lenders' Agent shall have received, in form and substance
satisfactory to Lenders' Agent and Lenders, an absolute and unconditional
continuing guarantee by each of the Borrowers of payment and performance of the
Obligations of each of the other Borrowers, and an absolute and unconditional
continuing guarantee by CMH Acquisition Corp. and Legris-US of payment and
performance of the Obligations of the Borrowers;
(n) Lenders' Agent shall have received, in form and substance
satisfactory to Lenders' Agent and Lenders, blocked account or lockbox
agreements with such banks as are acceptable to Lenders' Agent and Lenders;
(o) Lenders' Agent shall have received evidence of insurance and
loss payee endorsements required hereunder and under the other Financing
Agreements, in form and substance satisfactory to Lenders' Agent and Lenders,
and certificates of insurance policies and/or endorsements naming Lenders'
Agent as loss payee for the benefit of Lenders;
(p) Lenders' Agent shall have received, in form and substance
satisfactory to Lenders' Agent and Lenders, such opinion letters of counsel to
Borrowers and Obligors with respect to the Financing Agreements, the Purchase
Agreements, the issuance of the Senior Secured Notes pursuant to the Note
Indenture and such other matters as either Lender or Lenders' Agent may
request; and
(q) the other Financing Agreements and all instruments and documents
hereunder and thereunder shall have been duly executed and delivered to
Lenders' Agent, in form and substance satisfactory to Lenders and Lenders'
Agent.
4.2 Conditions Precedent to All Revolving Loans and Letter of Credit
Accommodations. Each of the following is an additional condition precedent to
Lenders' Agent making Revolving Loans and/or providing Letter of Credit
Accommodations to Borrowers, including the initial Revolving Loans and Letter
of Credit Accommodations and any future Revolving Loans and Letter of Credit
Accommodations:
(a) all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct in all material respects
with the same effect as though such representations and warranties had been
made on and as of the date of the making of each such Revolving Loan or
providing each such Letter of Credit Accommodation and after giving effect
thereto (except that, if any such representation or warranty is expressly
stated to have been made as of a specified date, such representation or
warranty shall be deemed repeated and shall be true in all material respects as
of such specified date); and
(b) no Event of Default and no event or condition which, with notice
or passage of time or both, would constitute an Event of Default, shall exist
or have occurred and be continuing on and as of the date of the making of such
Revolving Loan or providing each such Letter of Credit Accommodation and after
giving effect thereto.
SECTION 5. GRANT OF SECURITY INTEREST
To secure payment and performance of all Obligations, each Borrower hereby
grants to Lenders' Agent, for itself as agent and for the benefit of Lenders, a
continuing security interest in, a lien upon, and a right of set off against,
and hereby assigns as security to Lenders' Agent, for itself as agent and for
the benefit of Lenders, the following property and interests in property,
whether now owned or hereafter acquired or existing, and wherever located
(collectively, the "Collateral"):
5.1 all of such Borrower's Receivables (including, but not limited to,
Accounts);
5.2 all present and future monies, securities, credit balances, cash
collateral, deposits, deposit accounts and other property of such Borrower, to
the extent constituting proceeds of Receivables or Inventory or Loans, now or
hereafter held or received by or in transit to either Lender or Lenders' Agent
or any depository bank or institution;
5.3 all present and future liens, security interests, rights, remedies,
interests and documents of such Borrower in, to and in respect of Receivables
and Inventory, including, without limitation, (a) rights and remedies under or
relating to guaranties, warranties, contracts of suretyship, letters of credit
and credit and other insurance related thereto, (b) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of
such Borrower with respect to the Receivables as an unpaid vendor, lienor or
secured party and (c) deposits by and property of account debtors or other
persons securing the obligations of account debtors with respect to the
Receivables;
5.4 all of such Borrower's present and future agreements or arrangements
with sales agents, sales representatives, distributors, warehousemen and
subcontractors or the like with respect to the sale, lease, disposition,
storage, processing or manufacture of Inventory or with respect to Receivables;
5.5 all Inventory of such Borrower;
5.6 all Records of such Borrower; and
5.7 all products and proceeds of the foregoing, in any form, including,
without limitation, all cash collections and other cash proceeds of any
Receivables, all items or remittances in any form issued in payment of any
Receivables (including, without limitation, checks, drafts and other
instruments), insurance proceeds and all claims against third parties for loss
or damage to or destruction of any or all of the foregoing.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrowers' Loan Accounts. Lenders' Agent shall maintain one or more
loan account(s) on its books in which shall be recorded (a) all Revolving
Loans, Letter of Credit Accommodations and other Obligations and the
Collateral, (b) all payments made by or on behalf of Borrowers and (c) all
other appropriate debits and credits as provided in this Agreement, including,
without limitation, fees, charges, costs, expenses and interest. All entries
in the loan account(s) shall be made in accordance with Lenders' Agent's
customary practices as in effect from time to time.
6.2 Statements. Lenders' Agent shall render to Borrowers' Agent each
month a statement setting forth the balance in the Borrowers' loan account(s)
maintained by Lenders' Agent for Borrowers pursuant to the provisions of this
Agreement, including principal, interest, fees, costs and expenses. Each such
statement shall be subject to subsequent adjustment by Lenders' Agent but
shall, absent manifest errors or omissions, be considered correct and deemed
accepted by Borrowers and Borrowers' Agent and conclusively binding upon
Borrowers and Borrowers' Agent as an account stated except to the extent that
Lenders' Agent receives a written notice from Borrowers' Agent on behalf of any
Borrower of any specific exceptions of such Borrower thereto within thirty (30)
days after the date such statement has been mailed by Lenders' Agent. Until
such time as Lenders' Agent shall have rendered to Borrowers' Agent a written
statement as provided above, the balance in Borrowers' loan account(s) shall be
presumptive evidence of the amounts due and owing by Borrowers to Lenders'
Agent for the benefit of Lenders.
6.3 Collection of Accounts.
(a) Borrowers shall establish and maintain, at their expense,
blocked accounts or lockboxes and related blocked accounts (in either case,
"Blocked Accounts"), as Lenders' Agent may specify, with such banks as are
reasonably acceptable to Lenders' Agent into which Borrowers shall promptly
deposit and direct their account debtors to directly remit all payments on
Accounts and all payments constituting proceeds of Inventory or other
Collateral in the identical form in which such payments are made, whether by
cash, check or other manner. The banks at which the Blocked Accounts are
established shall enter into an agreement, in form and substance satisfactory
to Lenders' Agent, providing that all items received or deposited in the
Blocked Accounts are the property of Lenders, that the depository bank has no
lien upon, or right to setoff against, the Blocked Accounts, the items received
for deposit therein, or the funds from time to time on deposit therein and that
the depository bank will wire, or otherwise transfer, in immediately available
funds, on a daily basis, upon receipt of instructions from Borrowers' Agent (or
the applicable Borrower) or Lenders' Agent, all funds received or deposited
into the Blocked Accounts to such bank account of Lenders' Agent (and only to
such account) as Lenders' Agent may from time to time designate for such
purpose ("Payment Account"). Borrowers agree that all payments made to such
Blocked Accounts or other funds received and collected by Lenders' Agent,
whether on the Accounts or as proceeds of Inventory or other Collateral shall
be the property of Lenders.
(b) For purposes of calculating interest on the Obligations, such
payments or other funds received will be applied (conditional upon final
collection) to the Obligations one (1) Business Day following the date of
receipt of immediately available funds by Lenders' Agent in the Payment
Account. For purposes of calculating the amount of the Revolving Loans
available to Borrowers, such payments will be applied (conditional upon final
collection) to the Obligations on the Business Day of receipt by Lenders' Agent
in the Payment Account, if such payments are received within sufficient time
(in accordance with Lenders' Agent's usual and customary practices as in effect
from time to time) to credit the respective Borrowers' loan accounts on such
day, and if not, then on the next Business Day.
(c) Each Borrower and all of its affiliates, subsidiaries,
shareholders, directors, employees or agents shall, acting as trustee for
Lenders, receive, as the property of Lenders, any monies, checks, notes, drafts
or any other payment relating to and/or proceeds of Receivables or other
Collateral which come into their possession or under their control and
immediately upon receipt thereof, shall deposit or cause the same to be
deposited in the Blocked Accounts, or remit the same or cause the same to be
remitted, in kind, to Lenders' Agent. In no event shall the same be commingled
with any Borrower's own funds. Borrowers agree to reimburse Lenders and
Lenders' Agent on demand for any amounts owed or paid to any bank at which a
Blocked Account is established or any other bank or person involved in the
transfer of funds to or from the Blocked Accounts arising out of any payments
by a Lender or Lenders' Agent to or indemnification of such bank or person.
The obligation of Borrowers to reimburse Lenders and Lenders' Agent for such
amounts pursuant to this Section 6.3 shall survive the termination or
non-renewal of this Agreement.
6.4 Payments. All Obligations shall be payable to the Payment Account as
provided in Section 6.3 or such other place as Lenders' Agent may designate
from time to time. Lenders' Agent and Lenders may apply payments received or
collected from Borrowers or for the account of Borrowers (including, without
limitation, the monetary proceeds of collections of or realization upon any
Collateral) to such of the Obligations, whether or not then due, in such order
and manner as Lenders' Agent or Lenders determine. At the option of Lenders'
Agent, all principal, interest, fees, costs, expenses and other charges
provided for in this Agreement or the other Financing Agreements may be charged
directly to the loan account(s) of Borrowers. Borrowers shall make all
payments on the Obligations to Lenders' Agent for the benefit of Lenders, free
and clear of, and without deduction or withholding for or on account of, any
setoff, counterclaim, defense, duties, taxes, levies, imposts, fees,
deductions, withholding, restrictions or conditions of any kind. If after
receipt of any payment of, or proceeds of Collateral applied to the payment of,
any of the Obligations, Lenders' Agent or a Lender is required to surrender or
return such payment or proceeds to any Person for any reason, then the
Obligations intended to be satisfied by such payment or proceeds shall be
reinstated and continue and this Agreement shall continue in full force and
effect as if such payment or proceeds had not been received by Lenders' Agent
and such Lender. Borrowers shall be liable to pay to Lenders' Agent and
Lenders, and do hereby indemnify and hold Lenders' Agent and Lenders harmless
for, the amount of any payments or proceeds surrendered or returned. This
Section 6.4 shall remain effective notwithstanding any contrary action which
may be taken by Lenders' Agent or Lenders in reliance upon such payment or
proceeds. This Section 6.4 shall survive the payment of the Obligations and
the termination or non-renewal of this Agreement.
6.5 Authorization to Make Loans. Lenders' Agent is authorized to make
the Revolving Loans and provide the Letter of Credit Accommodations based upon
telephonic or other instructions received from anyone purporting to be an
officer of a Borrower or of Borrowers' Agent or other authorized person or, at
the discretion of Lenders' Agent, if such Revolving Loans are necessary to
satisfy any Obligations. All requests for Revolving Loans or Letter of Credit
Accommodations hereunder shall specify the date on which the requested advance
is to be made or Letter of Credit Accommodations established (which day shall
be a Business Day) and the amount of the requested Revolving Loan. Requests
received after 12:00 Noon Pacific Time on any day shall be deemed to have been
made as of the opening of business on the immediately following Business Day.
All Revolving Loans and Letter of Credit Accommodations under this Agreement
shall be conclusively presumed to have been made to, and at the request of and
for the benefit of, Borrowers when deposited to the credit of any Borrower or
otherwise disbursed or established in accordance with the instructions of
Borrowers' Agent or any Borrower or in accordance with the terms and conditions
of this Agreement.
6.6 Use of Proceeds. Borrowers shall use the initial proceeds of the
Revolving Loans provided by Lenders' Agent to Borrowers hereunder only for:
(a) payments to each of the persons listed in the disbursement direction letter
furnished by Borrowers to Lenders' Agent on the date hereof in connection with
the satisfaction of all or a portion of the outstanding obligations of
Borrowers to their existing working capital lender(s), if any, and other
existing creditors arising in the ordinary course of business as of the date
hereof, (b) costs, expenses and fees incurred in connection with the
preparation, negotiation, execution and delivery of this Agreement and the
other Financing Agreements, (c) costs, expenses and fees incurred in connection
with the issuance of the Senior Secured Notes and the defeasance and redemption
of the Old Senior Notes, (d) the deposit of sums with the Old Trustees, in
trust, for application solely to the defeasance and redemption of all of the
Old Senior Notes, but only to the extent that additional sums are necessary to
be deposited for such purposes following the application of the proceeds of
issuance of the Senior Secured Notes to the payments required under the
Purchase Agreements and to deposits with the Old Trustees for such purposes,
and (e) general operating and working capital. All other Revolving Loans made
or Letter of Credit Accommodations provided by Lenders' Agent to Borrowers
pursuant to the provisions hereof shall be used by Borrowers only for general
operating, working capital and other proper corporate purposes of Borrowers not
otherwise prohibited by the terms hereof. None of the proceeds will be used,
directly or indirectly, for the purpose of purchasing or carrying any margin
security or for the purposes of reducing or retiring any indebtedness which was
originally incurred to purchase or carry any margin security or for any other
purpose which might cause any of the Revolving Loans or Letter of Credit
Accommodations to be considered a "purpose credit" within the meaning of
Regulation G of the Board of Governors of the Federal Reserve System, as
amended.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 Collateral Reporting. Borrowers or Borrowers' Agent shall provide
Lenders' Agent with the following documents with respect to each Borrower or
itemized by Borrower, in a form satisfactory to Lenders' Agent and Lenders: (a)
on a regular basis as required by Lenders' Agent, a schedule of Accounts; (b)
on the following periodic bases or, after the occurrence and during the
continuance of an Event of Default, more frequently as Lenders' Agent may
request, (i) monthly perpetual Inventory reports, (ii) monthly reports of all
Inventory by category, (iii) weekly reports of finished goods Inventory, and
(iv) monthly agings of accounts payable, (c) upon reasonable request by
Lenders' Agent, and at all times upon request by Lenders' Agent after the
occurrence and during the continuance of an Event of Default, (i) copies of
customer statements and credit memos, remittance advices and reports, and
copies of deposit slips and bank statements, (ii) copies of shipping and
delivery documents, and (iii) copies of purchase orders, invoices and delivery
documents for Inventory acquired by each Borrower; (d) agings of accounts
receivable on a monthly basis or more frequently as Lenders' Agent may request;
and (e) such other reports as to the Collateral as Lenders' Agent shall
reasonably request from time to time. In the case of those of the foregoing
reports that are to be delivered on a monthly basis, such reports shall be
delivered as soon as practicable following the end of each fiscal month, but in
any event within ten (10) Business Days after the end of such month. If any
Borrower's records or reports of the Collateral are prepared or maintained by
an accounting service, contractor, shipper or other agent, such Borrower hereby
irrevocably authorizes such service, contractor, shipper or agent to deliver
such records, reports, and related documents to Lenders' Agent and to follow
instructions from Lenders' Agent with respect to further services at any time
that an Event of Default exists or has occurred and is continuing.
7.2 Accounts Covenants.
(a) Each Borrower or Borrowers' Agent shall notify Lenders' Agent
promptly of: (i) any material delay in such Borrower's performance of any of
its obligations to any account debtor or the assertion of any claims, offsets,
defenses or counterclaims by any account debtor, or any disputes with account
debtors, or any settlement, adjustment or compromise thereof, (ii) all material
adverse information known to such Borrower or Borrowers' Agent, relating to the
financial condition of any account debtor of such Borrower and (iii) any event
or circumstance which, to such Borrower's knowledge, would cause Lenders' Agent
to consider any then existing Accounts as no longer constituting Eligible
Accounts. No credit, discount, allowance or extension or agreement for any of
the foregoing shall be granted to any account debtor without consent of
Lenders' Agent, except in the ordinary course of such Borrower's business in
accordance with practices and policies previously disclosed in writing to
Lenders' Agent. So long as no Event of Default exists or has occurred and is
continuing, each Borrower may settle, adjust or compromise any claim, offset,
counterclaim or dispute with its account debtors. At any time that an Event of
Default exists or has occurred and is continuing, Lenders' Agent shall, at its
option, have the exclusive right to settle, adjust or compromise any claim,
offset, counterclaim or dispute with account debtors or grant any credits,
discounts or allowances.
(b) Without limiting the other reporting obligations of Borrowers
hereunder, each Borrower or Borrowers' Agent shall promptly report on a
separate basis to Lenders' Agent any return by an account debtor of such
Borrower of parts having a sales price in excess of $250,000 or of Inventory,
other than parts, having a sales price in excess of $500,000. At any time that
Inventory is returned, reclaimed or repossessed, the related Account shall not
be deemed an Eligible Account. In the event any account debtor of any Borrower
returns Inventory when an Event of Default exists or has occurred and is
continuing, such Borrower shall, upon request by Lenders' Agent, (i) hold the
returned Inventory in trust for Lenders, (ii) segregate all returned Inventory
from all of its other property, (iii) dispose of the returned Inventory solely
according to instructions of Lenders' Agent, and (iv) not issue any credits,
discounts or allowances with respect thereto without prior written consent of
Lenders' Agent.
(c) With respect to each Account: (i) the amounts shown on any
invoice delivered to Lenders' Agent or schedule thereof delivered to Lenders'
Agent shall be true and complete, (ii) no payments shall be made thereon except
payments immediately delivered to Lenders' Agent pursuant to the terms of this
Agreement, (iii) no credit, discount, allowance or extension or agreement for
any of the foregoing shall be granted to any account debtor except as reported
to Lenders' Agent in accordance with this Agreement and provided such credits,
discounts, allowances or extensions are made or given in the ordinary course of
the respective Borrowers' business in accordance with past practices or
pursuant to policies previously disclosed to Lenders' Agent, (iv) there shall
be no setoffs, deductions, contracts, defenses, counterclaims or disputes
existing or asserted with respect thereto except as reported to Lenders' Agent
in accordance with the terms of this Agreement, (v) none of the transactions
giving rise thereto will violate any applicable State or Federal laws or
regulations, all documentation relating thereto will be legally sufficient
under such laws and regulations and all such documentation will be legally
enforceable in accordance with its terms, subject to the effect on
enforceability of (A) any bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and (B) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(d) Lenders' Agent shall have the right at any time or times, in the
name of Lenders' Agent or in the name of a nominee of Lenders' Agent, to verify
the validity, amount or any other matter relating to any Account or other
Collateral, by mail, telephone, facsimile transmission or otherwise.
(e) Borrowers' Agent or Borrowers shall deliver or cause to be
delivered to Lender, with appropriate endorsement and assignment, with full
recourse to Borrowers, all chattel paper and instruments which are part of the
Collateral which any Borrower now owns or may at any time acquire immediately
upon any Borrower's receipt thereof, except as Lenders' Agent may otherwise
agree in writing.
(f) Lenders' Agent may, at any time or times that an Event of
Default exists or has occurred and is continuing, (i) notify any or all account
debtors that the Accounts have been assigned to Lenders' Agent and that
Lenders' Agent has a security interest therein for the benefit of Lenders, and
Lenders' Agent may direct any or all account debtors to make payment of
Accounts directly to Lenders' Agent for the benefit of Lenders, (ii) extend the
time of payment of, compromise, settle or adjust for cash, credit, return of
merchandise or otherwise, and upon any commercially reasonable terms or
conditions, any and all Accounts or other obligations included in the
Collateral and thereby discharge or release the account debtor or any other
party or parties in any way liable for payment thereof without affecting any of
the Obligations, (iii) demand, collect or enforce payment of any Accounts or
such other obligations, but without any duty to do so, and neither Lenders nor
Lenders' Agent shall be liable for any failure to collect or enforce the
payment thereof nor for the negligence of its or their agents or attorneys with
respect thereto, provided that such agents or attorneys are selected by the
Lenders or Lenders' Agent with due care, and (iv) take whatever other action
Lenders' Agent may deem necessary or desirable for the protection of its and
Lenders' interests. At any time that an Event of Default exists or has
occurred and is continuing, at the request of Lenders' Agent, all invoices and
statements sent to any account debtor shall state that the Accounts and such
other obligations have been assigned to Lenders' Agent and are payable directly
and only to Lenders' Agent and Borrower shall deliver to Lenders' Agent such
originals of documents evidencing the sale and delivery of goods or the
performance of services giving rise to any Accounts as Lenders' Agent may
require.
7.3 Inventory Covenants. With respect to the Inventory: (a) each
Borrower shall at all times maintain inventory records reasonably satisfactory
to Lenders and Lenders' Agent, keeping correct and accurate records itemizing
and describing the kind, type, quality and quantity of Inventory, such
Borrower's cost therefor and daily withdrawals therefrom and additions thereto;
(b) with respect to Inventory counting (i) each Borrower shall conduct a
physical count of its Inventory at least once each year, unless such Borrower's
cycle counts of Inventory during such year are reasonably acceptable to Lender
as to scope, methodology and frequency and are at least ninety-five (95%)
percent accurate when compared with such Borrower's Inventory accounting
records, (ii) Borrowers shall conduct a physical inventory at any time or times
as Lenders' Agent may request after and during the continuance of an Event of
Default, and (iii) promptly following such physical inventory or each cycle
count, upon request by Lenders' Agent, each Borrower shall supply Lenders'
Agent with a report in the form and with such specificity as may be reasonably
satisfactory to Lenders' Agent and Lenders concerning such physical count or
cycle count; (c) no Borrower shall remove any Inventory from the locations set
forth or permitted herein, without the prior written consent of Lenders' Agent,
except for sales of Inventory in the ordinary course of such Borrower's
business and except to move Inventory directly from one location set forth or
permitted herein to another such location; (d) upon request by Lenders' Agent,
each Borrower shall, at its expense, no more than once in any twelve (12) month
period, but at any time or times as Lenders' Agent or either Lender may request
after and during the continuance of an Event of Default, deliver or cause to be
delivered to Lenders' Agent written reports of appraisals as to the Inventory
in form, scope and methodology acceptable to Lenders' Agent and by an appraiser
acceptable to Lenders, addressed to Lenders' Agent and Lenders or upon which
Lenders' Agent and Lenders are expressly permitted to rely; (e) each Borrower
shall produce, use, store and maintain its Inventory, with all reasonable care
and caution and in accordance with applicable standards of any insurance and in
conformity with applicable laws (including, but not limited to, the
requirements of the Federal Fair Labor Standards Act of 1938, as amended, and
all rules, regulations and orders related thereto); (f) each Borrower assumes
all responsibility and liability arising from or relating to the production,
use, sale or other disposition of its Inventory; (g) no Borrower shall sell
Inventory to any customer on approval, or any other basis which entitles the
customer to return or may obligate any Borrower to repurchase such Inventory,
except in the ordinary course of business in accordance with past practices or
policies previously disclosed in writing to Lenders' Agent; (h) each Borrower
shall keep its Inventory in good and saleable condition except for Inventory,
separately reported to Lender, as to which it is commercially uneconomical to
do so or which is obsolete (all Inventory so reported to be excluded from
Eligible Inventory); and (i) no Borrower shall, without prior written notice to
Lenders' Agent, acquire or accept any Inventory on consignment or approval,
except if the acquisition or acceptance of any such Inventory so acquired is
separately reported in writing to Lenders' Agent upon receipt thereof by such
Borrower, and provided such Inventory is readily identifiable or is segregated
from other Inventory (but Lenders' Agent may, in its discretion, establish
Availability Reserves to cover possible claims by the consignor as to such
consigned Inventory or the products or the proceeds thereof).
7.4 Power of Attorney. Each Borrower hereby irrevocably designates and
appoints Lenders' Agent (and all persons designated by Lenders' Agent) as such
Borrower's true and lawful attorney-in-fact, and authorizes Lenders' Agent, in
such Borrower's name or in the name of Lenders' Agent, to: (a) at any time an
Event of Default or event which with notice or passage of time or both would
constitute an Event of Default exists or has occurred and is continuing (i)
demand payment on Accounts or other proceeds of Inventory or other Collateral,
(ii) enforce payment of Accounts by legal proceedings or otherwise, (iii)
exercise all of such Borrower's rights and remedies to collect any Account or
other Collateral, (iv) sell or assign any Account upon such terms, for such
amount and at such time or times as Lenders' Agent deems advisable and
commercially reasonable, (v) settle, adjust, compromise, extend or renew an
Account, (vi) discharge and release any Account on commercially reasonable
terms, (vii) prepare, file and sign such Borrower's name on any proof of claim
in bankruptcy or other similar document against an account debtor, (viii)
notify the post office authorities to change the address for delivery of such
Borrower's mail to an address designated by Lenders' Agent, and open and
dispose of all mail addressed to such Borrower, and (ix) do all acts and things
which are necessary, in the determination of Lenders' Agent, to fulfill such
Borrower's Obligations under this Agreement and the other Financing Agreements
and (b) at any time to (i) take control of any item of payment or proceeds
thereof deposited or received for credit to the Blocked Accounts or
constituting part of the Collateral, (ii) have access to any lockbox to which
such Borrower's customer remittances are sent and the contents thereof, (iii)
endorse such Borrower's name upon any items of payment or proceeds thereof
deposited or received for credit to the Blocked Accounts or constituting part
of the Collateral, and transfer the same to or deposit the same in the account
of Lenders' Agent for application to the Obligations, (iv) endorse such
Borrower's name upon any chattel paper, document, instrument, invoice, or
similar document or agreement relating to any Account or any goods pertaining
thereto or any other Collateral, (v) sign such Borrower's name on any
verification of Accounts and notices thereof to account debtors and (vi)
execute in such Borrower's name and file any UCC financing statements or
amendments thereto, provided the Collateral covered by any new financing
statement so executed and filed does not include, and the Collateral
description of any existing financing statement, so amended, is not expanded to
include, any property other than the Collateral. Each Borrower hereby releases
Lenders' Agent and Lenders and their officers, employees and, to the extent
selected with due care, their agents, from any liabilities arising from any act
or acts under this power of attorney and in furtherance thereof, whether of
omission or commission, except as a result of their own gross negligence,
wilful misconduct, actual fraud or bad faith, as determined pursuant to a final
non-appealable order of a court of competent jurisdiction.
7.5 Right to Cure. Lenders' Agent may, at its option, (a) cure any
default by any Borrower under any agreement with a third party or pay or bond
on appeal any judgment entered against any Borrower if any Event of Default
shall have occurred and be continuing (including, but not limited to, any Event
of Default by reason of such default or judgment), (b) discharge taxes, liens,
security interests or other encumbrances at any time levied on or existing with
respect to the Collateral and (c) pay any amount, incur any expense or perform
any act which, in the good faith judgment of Lenders' Agent, is necessary or
appropriate to preserve, protect, insure or maintain the Collateral and the
rights of Lenders' Agent and Lenders with respect thereto. Lenders' Agent may
add any amounts so expended to the Obligations and charge such Borrower's
account therefor, such amounts to be repayable by such Borrower on demand.
Lenders' Agent shall be under no obligation to effect such cure, payment or
bonding and shall not, by doing so, be deemed to have assumed any obligation or
liability of any Borrower. Any payment made or other action taken by Lenders'
Agent under this Section shall be without prejudice to any right to assert an
Event of Default hereunder and to proceed accordingly.
7.6 Access to Premises. From time to time as requested by Lenders' Agent
or either of Lenders, at the cost and expense of Borrowers, (a) Lenders' Agent,
Lenders and their designees shall have complete access to all of Borrowers'
premises during normal business hours and after reasonable notice to Borrowers'
Agent, or at any time and without notice to Borrowers or Borrowers' Agent if an
Event of Default has occurred that is continuing, for the purposes of
inspecting, verifying and auditing the Collateral and all of Borrowers' books
and records, including, without limitation, the Records, and (b) Borrowers
shall promptly furnish to Lenders and Lenders' Agent such copies of such books
and records or extracts therefrom as a Lender or Lenders' Agent may reasonably
request, and (c) use during normal business hours such of Borrowers' personnel,
equipment, supplies and premises as may be reasonably necessary for the
foregoing and if an Event of Default exists or has occurred that is continuing
for the collection of Accounts and realization of other Collateral; provided,
that in exercising the rights under clauses (b) and (c) of this Section,
Lenders' Agent, Lenders and their designees will, unless an Event of Default
has occurred that is continuing, use reasonable efforts not to unnecessarily
interfere with the conduct of Borrowers' business.
7.7 Irrevocable License to Use Equipment and Intellectual Property. Each
Borrower hereby grants Lenders and Lenders' Agent an irrevocable non-exclusive
license, without charge (a) to use after the occurrence and during the
continuance of an Event of Default, any of the Equipment consisting of
computers or other data processing equipment relating to the storage or
processing of records, documents or files pertaining to the Collateral and use
any other Equipment to handle, deal with or dispose of any Collateral pursuant
to the rights and remedies of Lenders and Lenders' Agent as set forth in this
Agreement and the other Financing Agreements, the Uniform Commercial Code of
any applicable jurisdiction and other applicable law, provided that such use of
Equipment by Lenders or Lenders' Agent shall not damage such Equipment; and (b)
to use after the occurrence and during the continuance of an Event of Default,
any of the Intellectual Property marked or stamped on any Collateral or
otherwise required to collect or realize on any Collateral. Such license shall
be irrevocable and shall continue until the Obligations have been indefeasibly
paid and satisfied and this Agreement and all other Financing Agreements have
been terminated. Solely as between the Lenders and Lenders' Agent, on the one
hand, and the Note Trustee on the other hand, the exercise by Lenders or
Lenders' Agent of their rights pursuant to the license granted in this Section
shall be subject to the terms of the Intercreditor Agreement executed and
delivered pursuant to Section 4.1 hereof.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Borrowers hereby, jointly and severally, represent and warrant to
Lenders' Agent and Lenders the following (which shall survive the execution and
delivery of this Agreement), the truth and accuracy of which are a continuing
condition of the making of Revolving Loans and providing Letter of Credit
Accommodations by Lenders' Agent to Borrowers:
8.1 Corporate Existence, Power and Authority; Subsidiaries. Each
Borrower is a corporation duly organized and in good standing under the laws of
its state of incorporation and is duly qualified as a foreign corporation and
in good standing in all states or other jurisdictions where the nature and
extent of the business transacted by it or the ownership of assets makes such
qualification necessary, except for those jurisdictions in which the failure to
so qualify would not have a material adverse effect on such Borrower's
financial condition, results of operation or business or the rights of Lenders'
Agent or Lenders in or to any of the Collateral. The execution, delivery and
performance of this Agreement, the other Financing Agreements and the
transactions contemplated hereunder and thereunder are all within each
Borrower's corporate powers, have been duly authorized by all necessary
corporate and shareholder action and are not in contravention of law or the
terms of each Borrower's certificate of incorporation, by-laws, or other
organizational documentation, or any indenture, material agreement or material
undertaking to which any Borrower is a party or by which any Borrower or its
property are bound. This Agreement and the other Financing Agreements
constitute legal, valid and binding obligations of Borrowers enforceable in
accordance with their respective terms, subject to the effect on enforceability
of (a) any bankruptcy, insolvency, reorganization, moratorium or similar laws
effecting enforcement of creditors' rights generally and (b) the application
of general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). Borrowers do not have any
subsidiaries except as set forth on the Information Certificate and except for
any inactive subsidiary believed by Borrowers in good faith to have assets and
liabilities of less than $10,000.
8.2 Financial Statements; No Material Adverse Change. All financial
statements relating to Borrowers which have been or may hereafter be delivered
by Borrowers to Lenders' Agent or either or both Lenders have been prepared
consistent with GAAP and fairly present the financial condition and the results
of operation of Borrowers as at the dates and for the periods set forth
therein, except for footnotes and any departures from GAAP indicated therein.
Except as disclosed in any interim financial statements furnished by Borrowers
to both Lenders prior to the date of this Agreement, there has been no material
adverse change in the assets, liabilities, properties and condition, financial
or otherwise, of any Borrower, since the date of the most recent audited
financial statements furnished by Borrowers to both Lenders prior to the date
of this Agreement.
8.3 Chief Executive Office; Collateral Locations. The chief executive
office of each Borrower and each Borrower's Records concerning Accounts are
located only at its address set forth below and its only other places of
business and the only other locations of Collateral, if any, are (i) the
addresses set forth in the Information Certificate, subject to the right of
Borrowers to establish new locations in accordance with Section 9.2 below, (ii)
Inventory which is in transit to one of such addresses or such new locations so
established, and (iii) Inventory located at dealers not reported to Lenders'
Agent under Section 9.2 and not included in any Collateral report delivered at
any time to Lenders' Agent, in amounts not to exceed $25,000 at any one dealer
location or $300,000 for all such unreported dealer locations for all Borrowers
in the aggregate. The Information Certificate correctly identifies for each
Borrower any of such existing locations which are not owned by such Borrower
and sets forth the owners and/or operators thereof.
8.4 Priority of Liens; Title to Properties. The security interests and
liens granted to Lenders' Agent for itself as agent and for the benefit of
Lenders under this Agreement and the other Financing Agreements constitute
valid and perfected first priority liens and security interests in and upon the
Collateral subject only to the liens indicated on the Information Certificate
and the other liens permitted under Section 9.8 hereof. Each Borrower has good
and marketable title to all of its properties and assets subject to no liens,
mortgages, pledges, security interests, encumbrances or charges of any kind,
except those granted to Lenders' Agent for itself as agent and for the benefit
of Lenders and such others as are specifically listed on the Information
Certificate or permitted under Section 9.8 hereof.
8.5 Tax Returns. Borrower has filed, or caused to be filed, in a timely
manner all tax returns, reports and declarations which are required to be filed
by it (without requests for extension except as previously disclosed in writing
to Lenders' Agent). All information in such tax returns, reports and
declarations is complete and accurate in all material respects. Each Borrower
has paid or caused to be paid all taxes due and payable or claimed due and
payable in any assessment received by it, except taxes the validity of which
are being contested in good faith by appropriate proceedings diligently pursued
and available to such Borrower and with respect to which reserves have been set
aside on its books in accordance with GAAP. Adequate provision has been made
for the payment of all accrued and unpaid Federal, State, county, local,
foreign and other taxes whether or not yet due and payable and whether or not
disputed.
8.6 Litigation. Except as set forth for the respective Borrowers on the
Information Certificate, there is no present investigation by any governmental
agency pending, or to the best of any Borrower's knowledge threatened, against
or affecting any Borrower, its assets or business and there is no action, suit,
proceeding or claim by any Person pending, or to the best of any Borrower's
knowledge threatened, against any Borrower or its assets or goodwill, or
against or affecting any transactions contemplated by this Agreement, which has
a reasonable likelihood of success and which, if adversely determined against
any Borrower, would result in any material adverse change in the assets or
business of such Borrower or would impair the ability of any Borrower to
perform its obligations hereunder or under any of the other Financing
Agreements to which it is a party or of Lenders' Agent or Lenders to enforce
any Obligations or realize upon any Collateral.
8.7 Compliance with Other Agreements and Applicable Laws. No Borrower is
in default in any material respect under, or in violation in any material
respect of any of the terms of, any agreement, contract, instrument, lease or
other commitment to which it is a party or by which it or any of its assets are
bound, and each Borrower is in compliance in all material respects with all
applicable provisions of laws, rules, regulations, licenses, permits, approvals
and orders of any foreign, Federal, State or local governmental authority,
except where such default, violation or failure to so comply would not have a
material adverse effect on the business or assets of such Borrower or impair
the value of any Collateral or the rights of Lenders' Agent or Lenders therein
or thereto.
8.8 Accuracy and Completeness of Information. All information furnished
by or on behalf of any Borrower in writing to Lenders' Agent or Lenders in
connection with this Agreement or any of the other Financing Agreements or any
transaction contemplated hereby or thereby, including, without limitation, all
information on the Information Certificate is true and correct in all material
respects on the date as of which such information is dated or certified and
does not omit any material fact necessary in order to make such information not
misleading. No event or circumstance has occurred which has had or could
reasonably be expected to have a material adverse effect on the business,
assets or prospects of any Borrower, which has not been fully and accurately
disclosed to Lenders' Agent in writing.
8.9 Acquisition of Purchased Stock.
(a) The Purchase Agreements and the transactions contemplated
thereunder have been duly executed, delivered and performed in accordance with
their terms by the respective parties thereto in all material respects,
including the fulfillment (not merely the waiver, except as may be disclosed to
Lenders' Agent and consented to in writing by Lenders' Agent) of all conditions
precedent set forth therein, and giving effect to the terms of the Purchase
Agreements and the assignments to be executed and delivered by Seller
thereunder, TCI acquired and has good and marketable title to the Purchased
Stock, free and clear of all claims, liens, pledges and encumbrances of any
kind, except for the security interests and pledges of the Purchased Stock in
favor of the Note Trustee pursuant to the Note Indenture, and except as
disclosed in the Information Certificate.
(b) All actions and proceedings required by the Purchase Agreements,
applicable law or regulation (including, but not limited to, compliance with
the Xxxx-Xxxxx-Xxxxxx Anti-Trust Improvements Act of 1976, as amended) and the
transactions required thereunder have been duly and validly taken and
consummated.
(c) No court of competent jurisdiction has issued any injunction,
restraining order or other order which prohibits consummation of the
transactions described in the Purchase Agreements and no governmental or other
action or proceeding has been threatened or commenced, seeking any injunction,
restraining order or other order which seeks to void or otherwise modify the
transactions described in the Purchase Agreements.
(d) Borrowers' Agent has delivered, or caused to be delivered, to
Lender true, correct and complete copies of the Purchase Agreements.
8.10 Issuance of Senior Secured Notes.
(a) The Note Indenture and the transactions contemplated thereunder
and under the Offering Circular with respect thereto have been duly executed,
delivered and performed in accordance with their terms by the respective
parties thereto in all material respects, including the fulfillment (not merely
the waiver, except as may be disclosed to Lenders' Agent and consented to in
writing by Lenders' Agent) of all conditions precedent set forth therein, and
giving effect to the terms of the Note Indenture and the Offering Circular with
respect thereto, Terex has issued all of the Senior Secured Notes and has
applied the cash proceeds received therefrom as provided in Section 4.1(b)
hereof.
(b) All actions and proceedings required by the Note Indenture and
in connection with the Issuance by Terex of the Senior Secured Notes,
applicable law or regulation have been taken and the transactions required
thereunder have been duly and validly taken and consummated.
(c) No court of competent jurisdiction has issued any injunction,
restraining order or other order which prohibits consummation of the
transactions described in the Note Indenture and the Offering Circular with
respect thereto and no governmental or other action or proceeding has been
threatened or commenced, seeking any injunction, restraining order or other
order which seeks to void or otherwise modify the transactions described in the
Note Indenture and the Offering Circular with respect thereto.
(d) Borrowers' Agent has delivered, or caused to be delivered, to
Lender true, correct and complete copies of the Offering Circular, Note
Indenture and specimen Senior Secured Notes.
8.11 Employee Benefits. Except as otherwise disclosed on the Information
Certificate:
(a) No Borrower has engaged in any transaction in connection with
which such Borrower or any of its ERISA Affiliates could be subject to either a
civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Code, including any accumulated funding deficiency
described in Section 8.11(c) hereof and any deficiency with respect to vested
accrued benefits described in Section 8.11(d) hereof.
(b) No liability to the Pension Benefit Guaranty Corporation has
been or is expected by any Borrower to be incurred with respect to any employee
benefit plan of any Borrower or any of its ERISA Affiliates. There has been no
reportable event (within the meaning of Section 4043(c) of ERISA) for which
reporting was not waived by regulations of the Pension Benefit Guaranty
Corporation or any other event or condition with respect to any employee
benefit plan of any Borrower or any of its ERISA Affiliates which presents a
risk of termination of any such plan by the Pension Benefit Guaranty
Corporation.
(c) Full payment has been made of all amounts which any Borrower or
any of its ERISA Affiliates is required under Section 302 of ERISA and Section
412 of the Code to have paid under the terms of each employee benefit plan as
contributions to such plan as of the last day of the most recent fiscal year of
such plan ended prior to the date hereof, and no accumulated funding deficiency
(as defined in Section 302 of ERISA and Section 412 of the Code), whether or
not waived, exists with respect to any employee benefit plan, including any
penalty or tax described in Section 8.8(a) hereof and any deficiency with
respect to vested accrued benefits described in Section 8.11(d) hereof.
(d) The current value of all vested accrued benefits under all
employee benefit plans maintained by any Borrower that are subject to Title IV
of ERISA does not exceed the current value of the assets of such plans
allocable to such vested accrued benefits. The terms "current value" and
"accrued benefit" have the meanings specified in ERISA.
(e) No Borrower or any of its ERISA Affiliates is obligated to
contribute to any "multiemployer plan" (as such term is defined in Section
4001(a)(3) of ERISA) that is subject to Title IV of ERISA nor has it incurred
or received any notice with respect to withdrawal liability.
8.12 Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be deemed
to have been made again to Lenders' Agent and Lenders on the date of each
additional borrowing or other credit accommodation hereunder (except with
respect to any representation or warranty expressly stated to have been made as
of a specified date, which shall nevertheless be deemed to have been repeated
to be true as of that specified date) and shall be conclusively presumed to
have been relied on by Lenders' Agent and Lenders regardless of any
investigation made or information possessed by Lenders' Agent or Lenders. The
representations and warranties set forth herein shall be cumulative and in
addition to any other representations or warranties which any Borrower shall
now or hereafter give, or cause to be given, to Lenders or Lenders' Agent.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence. Each Borrower shall at all times preserve,
renew and keep in full, force and effect its corporate existence and rights and
franchises with respect thereto and maintain in full force and effect all
permits, licenses, trademarks, tradenames, approvals, authorizations, leases
and contracts necessary to carry on the business as presently or proposed to be
conducted. Each Borrower shall give Lenders' Agent thirty (30) days prior
written notice of any proposed change in its corporate name, which notice shall
set forth the new name and such Borrower shall deliver to Lenders' Agent a copy
of the amendment to the Certificate of Incorporation of such Borrower providing
for the name change certified by the Secretary of State of the jurisdiction of
incorporation of such Borrower as soon as it is available.
9.2 New Collateral Locations.
(a) Any Borrower may, in the ordinary course of business, open,
maintain or move Inventory to any new location within the continental United
States, Canada or Puerto Rico, provided such Borrower or Borrowers' Agent (i)
gives Lenders' Agent thirty (30) days prior written notice of the intended
opening of any such new location and (ii) the Borrower opening such new
location executes and delivers, or causes to be executed and delivered, to
Lenders and Lenders' Agent such agreements, documents, and instruments as
Lenders' Agent may deem reasonably necessary or desirable to protect their
interests in the Collateral at such location, including, without limitation,
UCC financing statements; and
(b) Any Borrower may, in the ordinary course of business, open,
maintain or move Inventory to a location outside of the continental United
States, Canada and Puerto Rico, provided that (i) in addition to periodic
reporting required elsewhere herein, separate written notice thereof shall be
given by Borrowers or Borrowers' Agent to Lenders' Agent as soon as practicable
after the aggregate cost of Inventory so moved to a location outside the
continental United States, Canada and Puerto Rico exceeds $300,000 since the
last periodic Inventory report, (ii) the amount of Eligible Inventory of the
Borrower(s) that own(s) such Inventory is reduced by the amount of the net
reduction of Eligible Inventory (if any) resulting from such transaction, and
(iii) after giving effect to such reduction (if any), the Loans and Letter of
Credit Accommodations would not exceed the amounts available under the lending
formulas and subject to the sublimits set forth in this Agreement.
9.3 Compliance with Laws, Regulations, Etc. Each Borrower shall, at all
times, comply in all material respects with all laws, rules, regulations,
licenses, permits, approvals and orders of any Federal, State or local
governmental authority applicable to it, the non-compliance with which would
either (i) have a material adverse effect upon the business or assets of such
Borrower, unless being diligently contested in good faith by appropriate
proceedings available to such Borrower and with respect to which adequate
reserves have been set aside on its books, or (ii) have an adverse effect on
the value of any Collateral or the rights of the Lenders' Agent or Lenders
therein or thereto.
9.4 Payment of Taxes and Claims. Each Borrower shall duly pay and
discharge all taxes, assessments, contributions and governmental charges upon
or against it or its properties or assets, except for taxes the validity of
which are being contested in good faith by appropriate proceedings diligently
pursued and available to such Borrower and with respect to which reserves have
been set aside on its books in accordance with GAAP. Each Borrower shall be
liable for any tax or penalties imposed on either or both Lenders or Lenders'
Agent as a result of the financing arrangements provided for herein and each
Borrower agrees to indemnify and hold Lenders and Lenders' Agent harmless with
respect to the foregoing, and to pay to Lenders' Agent the amount thereof,
within two (2) Business Days after demand, accompanied by a reasonable
description of the claim, and until paid to such Lenders' Agent and Lenders
such amount shall be added to and deemed part of the Revolving Loans, provided,
that, nothing contained herein shall be construed to require any Borrower to
pay any income or franchise taxes attributable to the income of Lenders or
Lenders' Agent from any amounts charged or paid hereunder to Lenders or
Lenders' Agent. The foregoing indemnity shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.
9.5 Insurance. Each Borrower shall, at all times, maintain with
financially sound and reputable insurers insurance with respect to the
Collateral against loss or damage and all other insurance of the kinds and in
the amounts customarily insured against or carried by corporations of
established reputation engaged in the same or similar businesses and similarly
situated; provided, that Borrowers may self-insure as to liability or other
insurable risks, other than damage, loss or other casualty risks affecting any
Collateral. Said policies of insurance shall be satisfactory to Lenders' Agent
and Lenders as to form, amount and insurer. Each Borrower shall furnish
certificates, policies or endorsements to Lenders' Agent as Lenders' Agent
shall require as proof of such insurance, and, if any Borrower fails to do so,
Lenders' Agent is authorized, but not required, to obtain such insurance at the
expense of such Borrower. All policies shall provide for at least thirty (30)
days prior written notice to Lenders' Agent of any cancellation or reduction of
coverage and that Lenders' Agent may act as attorney for Borrowers in
obtaining, and at any time an Event of Default exists or has occurred and is
continuing, adjusting, settling, amending and canceling such insurance. Each
Borrower shall cause Lenders' Agent to be named as a loss payee for the benefit
of Lenders and each Lender and Lenders' Agent as an additional insured (but
without any liability for any premiums) under such insurance policies and each
Borrower shall obtain non-contributory lender's loss payable endorsements to
all insurance policies in form and substance satisfactory to Lenders' Agent and
Lenders. Such lender's loss payable endorsements shall specify that the
proceeds of such insurance relating to casualties to the Collateral shall be
payable to Lenders' Agent, for the benefit of Lenders, as its interests may
appear and further specify that Lenders' Agent shall be paid regardless of any
act or omission by Borrowers or any of their affiliates. At its option,
Lenders' Agent may apply any insurance proceeds received by Lenders' Agent at
any time to the cost of replacement of Collateral and/or to payment of the
Obligations, whether or not then due, in any order and in such manner as
Lenders' Agent may determine or hold such proceeds as cash collateral for the
Obligations.
9.6 Financial Statements and Other Information.
(a) Each Borrower shall keep proper books and records in which true
and complete entries shall be made of all dealings or transactions of or in
relation to its Collateral and the business of such Borrower and its
subsidiaries (if any) consistent with GAAP and Borrowers' Agent shall furnish
or cause to be furnished to Lenders' Agent: (i) within thirty (30) days after
the end of each calendar month (other than the third, sixth, ninth and twelfth
calendar months), and within forty-five (45) days after the end of each of the
third, sixth, ninth and twelfth calendar months, monthly unaudited consolidated
and consolidating financial statements of Terex and its subsidiaries (including
in each case balance sheets, statements of income and loss, statements of cash
flow and statements of shareholders' equity), all in reasonable detail, fairly
presenting the financial position and the results of the operations of Terex
and its subsidiaries as of the end of and through such fiscal month and (ii)
within ninety (90) days after the end of each fiscal year, audited consolidated
financial statements of Terex and its subsidiaries (including in each case
balance sheets, statements of income and loss, statements of cash flow and
statements of shareholders' equity), and the accompanying notes thereto, all in
reasonable detail, fairly presenting the financial position and the results of
the operations of Terex and its subsidiaries as of the end of and for such
fiscal year, together with the opinion, in accordance with generally accepted
auditing standards, of independent certified public accountants, which
accountants shall be an independent accounting firm selected by Terex and
reasonably acceptable to Lenders' Agent and Lenders, stating that such
financial statements have been prepared in accordance with GAAP, and present
fairly in all material respects the results of operations and financial
condition of Terex and its subsidiaries as of the end of and for the fiscal
year then ended (or containing such other expression of the auditor's opinion
from time to time prescribed by generally accepted auditing standards having
essentially the same meaning).
(b) Borrowers' Agent shall promptly notify Lenders' Agent in writing
of the details of (i) any loss, damage, investigation, action, suit, proceeding
or claim of which it or any Borrower has knowledge, relating to the Collateral
or any other property which is security for the Obligations and involving an
amount in excess of $250,000, or which would result in any material adverse
change in any Borrower's business, properties, assets, goodwill or condition,
financial or otherwise and (ii) the occurrence of any Event of Default or event
which, with the passage of time or giving of notice or both, would constitute
an Event of Default.
(c) Borrowers' Agent shall promptly after the sending or filing
thereof furnish or cause to be furnished to Lenders' Agent copies of all
reports which any Borrower sends to its stockholders generally and copies of
all publicly available reports and registration statements which any Borrower
files with the Securities and Exchange Commission, any national securities
exchange or the National Association of Securities Dealers, Inc.
(d) Borrowers' Agent shall furnish or cause to be furnished to
Lenders' Agent such budgets, forecasts, projections and other information
respecting the Collateral of each Borrower and the business of each Borrower,
as Lenders' Agent or either Lender may, from time to time, reasonably request
subject to the provisions of Section 12.9 (as applicable). Lenders' Agent and
Lenders are hereby authorized to deliver a copy of any financial statement or
any other information relating to the business of any Borrower to any court or
other government agency or to any Participant or assignee or prospective
Participant or assignee. Each Borrower hereby irrevocably authorizes and
directs all accountants or auditors to deliver to Lenders' Agent, at Borrowers'
expense, copies of the financial statements of Borrowers (or any of them) and
any reports or management letters prepared by such accountants or auditors on
behalf of Borrowers and to disclose to Lenders' Agent such information as they
may have regarding the business of Borrowers (or any of them). Any documents,
schedules, invoices or other papers delivered to Lenders' Agent may be
destroyed or otherwise disposed of by Lenders' Agent one (1) year after the
same are delivered to Lenders' Agent, except as otherwise designated by
Borrowers' Agent to Lenders' Agent in writing.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. No Borrower
shall, directly or indirectly:
(a) merge into or with or consolidate with any other Person or
permit any other Person to merge into or with or consolidate with it, except
that one or more Borrowers or one or more subsidiaries of a Borrower may merge
with and into a Borrower, provided that:
(i) no Event of Default has occurred that is continuing or
would occur as a consequence thereof, and no event has occurred that is
continuing or condition exists or would occur or exist as a consequence
thereof, that would, with notice or passage of time, or both, constitute an
Event of Default, and, without limiting the generality of the foregoing, no
Indebtedness, liens, security, interests or encumbrances shall exist after
giving effect to such merger that are not permitted under Sections 9.8 or 9.9
hereof;
(ii) the surviving entity of such merger shall be an entity
that is a Borrower hereunder prior to such merger;
(iii) the surviving Borrower shall have a net worth, determined
in accordance with GAAP, on a pro forma basis as of the date of such merger and
after giving effect thereto, not less than the net worth, determined in
accordance with GAAP, of such surviving Borrower immediately prior to such
merger;
(iv) Lenders' Agent may, in its sole discretion (with the
consent of both Lenders in their sole discretion), but shall have no obligation
to, consider as Eligible Accounts or Eligible Inventory any Accounts or
Inventory acquired by the surviving Borrower from a merged subsidiary, that is
not a Borrower prior to such merger, as a result of such merger or thereafter
acquired or arising out of the conduct of the business so acquired through such
merger, but all such Accounts or Inventory shall nevertheless be and remain
part of the Collateral, subject to a valid and perfected first priority
perfected lien and security interest securing the Obligations in favor of
Lenders' Agent for itself as agent and for the benefit of Lenders under this
Agreement;
(v) the surviving Borrower shall execute and deliver to
Lenders' Agent such additional agreements, documents and instruments pursuant
to Section 9.15 hereof and of the kind referred to in Section 4.1(j) hereof as
Lenders' Agent shall reasonably request in connection with and upon the
consummation of such merger;
(vi) the merger shall not violate any provision of the Note
Indenture; and
(vii) Lenders' Agent shall receive not less than thirty (30)
days' prior written notice of any such proposed merger, accompanied by a
certificate signed by any one of the Chief Executive Officer, Chief Financial
Officer, Executive Vice President or Senior Vice President of Terex describing
the transaction in reasonable detail and demonstrating compliance through the
date of the certificate, and describing the steps to be taken to comply
thereafter, with all requirements of this Section 9.7(a) (including this
proviso), together with such other matters with respect thereto as Lenders'
Agent shall reasonably require, or
(b) sell, assign, lease, transfer, abandon or otherwise dispose of
any stock or Indebtedness to any other Person or any of its assets to any other
Person, except for (i) sales of Inventory in the ordinary course of business
including sales of Inventory to subsidiaries of Borrowers to the extent
permitted under Section 9.12 hereof, (ii) the disposition or abandonment of
worn-out or obsolete Equipment or Equipment no longer used or useful in the
business of such Borrower, (iii) sales of assets, other than any Collateral,
consistent with past practices, (iv) sales of assets, other than any
Collateral, which would not have a material adverse effect on a Borrower's
ability to perform its Obligations hereunder or upon the value of any
Collateral or the rights of Lenders' Agent or Lenders therein or thereto, (v)
the sale or lease by one Borrower to its subsidiaries or to another Borrower or
its subsidiaries of assets, other than Collateral, for fair consideration, (vi)
the issuance and sale by such Borrower of its own equity securities (subject to
Section 10.1(j) hereof), and (vii) the issuance and sale by such Borrower of
its own debt securities, to the extent such Indebtedness is permitted in
Section 9.9 hereof, or
(c) form or acquire any subsidiaries, except in connection with
transactions and for purposes not prohibited by the terms hereof, or
(d) wind up, liquidate or dissolve, or
(e) agree to do any of the foregoing.
9.8 Encumbrances. No Borrower shall create, incur, assume or suffer to
exist any security interest, mortgage, pledge, lien, charge or other
encumbrance of any nature whatsoever on any of its assets or properties,
including, without limitation, any Collateral, except:
(a) liens and security interests of Lenders' Agent for itself as
agent and for the benefit of Lenders;
(b) liens securing the payment of taxes, either not yet overdue or
the validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to such Borrower and with respect
to which reserves have been set aside on its books in accordance with GAAP;
(c) non-consensual statutory liens (other than liens pursuant to
ERISA or environmental laws or securing the payment of taxes) arising in the
ordinary course of such Borrower's business to the extent:
(i) such liens secure indebtedness which is not overdue for a
period of more than thirty (30) days, or
(ii) such liens secure indebtedness relating to claims or
liabilities which are fully insured and being defended at the sole cost and
expense and at the sole risk of the insurer or being contested in good faith by
appropriate proceedings diligently pursued and available to such Borrower,
in each case under clauses (i) and (ii), prior to the commencement of
foreclosure or other similar proceedings and with respect to which reserves
have been set aside on its books in accordance with GAAP;
(d) liens on property, other than any Collateral, incurred in the
ordinary course of business in respect of Hedging Obligations;
(e) liens on property, other than any Collateral, securing surety or
appeal bonds, performance bonds, insurance obligations, or other obligations of
a like nature incurred in the ordinary course of business;
(f) liens on property, other than any Collateral, arising by reason
of any judgment, decree or order of any court with respect to which such
Borrower is then in good faith prosecuting an appeal or other proceedings for
review, the existence of which judgment, order or decree is not an Event of
Default under this Agreement;
(g) encumbrances on or with respect to real property consisting of
zoning restrictions, survey exceptions, utility easements, access licenses,
rights of way, easements of ingress or egress over real property of a Borrower
or restrictions of record on the use of real property, minor defects in title
to real property, mechanics' liens and vendors' liens on real property, in each
case to the extent the same do not interfere in any material respect with the
ordinary conduct of the business of such Borrower and do not impair the value
of any Collateral or the rights of Lenders' Agent or Lenders therein or
thereto;
(h) liens upon, or deposits of, property other than any Collateral,
made in connection with or to secure the performance of tenders, bids, and
government contracts and leases and subleases;
(i) pledges or deposits of property, other than any Collateral,
under worker's compensation, unemployment or other social security legislation;
(j) purchase money security interests in Equipment of such Borrower
(including capital leases) and purchase money mortgages on real estate, so long
as such security interests and mortgages do not apply to any property of such
Borrower other than the Equipment of such Borrower or real estate so acquired,
and the indebtedness secured thereby does not exceed the cost of the Equipment
or real estate so acquired, as the case may be;
(k) security interests and liens securing Indebtedness permitted
pursuant to Section 9.9(h) hereof or securing any extension, renewal or
replacement of such Indebtedness to the extent permitted under Section 9.9(k)
hereof; and
(l) the security interests and liens set forth on the Information
Certificate.
9.9 Indebtedness. No Borrower shall incur, create, assume, become or be
liable in any manner with respect to, or permit to exist, any Indebtedness,
except:
(a) the Obligations;
(b) performance bonds, surety bonds and insurance premium
obligations, to the extent incurred in the ordinary course of business;
(c) Hedging Obligations;
(d) Indebtedness arising out of sale and leaseback transactions not
involving any property which is part of the Collateral and not otherwise
prohibited by this Agreement;
(e) Indebtedness owed by such Borrower to any of its subsidiaries or
to any other Borrower or any of its subsidiaries, which Indebtedness is
outstanding as of the date hereof or arises after the date hereof to the extent
permitted by Section 9.10 hereof;
(f) Floor Plan Guaranties;
(g) purchase money Indebtedness (including capital leases) to the
extent not incurred or secured by liens (including capital leases) in violation
of any other provision of this Agreement;
(h) Indebtedness of Terex not to exceed the principal amount of
$250,000,000 evidenced by the Senior Secured Notes of Terex, as in effect on
the date hereof, and, to the extent provided for in the Senior Notes or the
Note Indenture as such instruments are in effect on the date hereof, interest
thereon at the rate provided for in the Senior Secured Notes and any penalties
or liquidated damages with respect thereto, Indebtedness of the other Borrowers
as guarantors of such Indebtedness of Terex and obligations of Terex evidenced
by the Common Stock Appreciation Rights Agreement referred to in clause (x)(C)
of the proviso to this Section 9.9(h) and any guarantees thereof by the other
Borrowers; provided, that:
(w) except as permitted in Section 9.10, Terex shall only make
regularly scheduled payments of principal and interest, or other mandatory
payments in respect of such Indebtedness in accordance with the terms of the
Senior Secured Notes and Note Indenture, each as in effect on the date hereof;
(x) Borrowers shall not, directly or indirectly:
(A) amend, modify, alter or change any of the
material terms of the Senior Secured Notes, the Note Indenture or any
agreements, documents or instruments executed and/or delivered in connection
therewith, including, but not limited to, any terms thereof relating to
payments, redemptions or amortization, financial covenants, defaults, or any
collateral therefor, except to the extent any such amendments, modification,
alterations or changes shall make any such terms no less favorable to Borrowers
in the reasonable determination of Lenders' Agent, or
(B) except to the extent permitted under Section 9.10
hereof, redeem, retire, defease, purchase or otherwise acquire any such
Indebtedness, or set aside or otherwise deposit or invest any sums for such
purpose, or
(C) make any payment, other than in shares of its
common stock, upon the exercise by the holders thereof, of the common stock
appreciation rights issued to the original purchasers of the Senior Secured
Notes, pursuant to the Common Stock Appreciation Rights Agreement entered into
by such purchasers and Terex in connection with their purchase of the Senior
Secured Notes, except that Terex may make cash payments upon the exercise of
such common stock appreciation rights, provided that (1) no Event of Default
has occurred that is continuing or would occur as a consequence thereof, and no
event has occurred that is continuing or condition exists or would occur or
exist as a consequence thereof that would, with notice or passage of time, or
both, constitute an Event of Default, (2) such cash payments are made following
the delivery to Lenders' Agent of the audited annual financial statements of
Terex and its subsidiaries for the immediately preceding year in the form
required by Section 9.6(a) hereof and do not exceed an amount equal to (I)
fifty (50%) percent of the Consolidated Net Income of Terex for the year ended
immediately preceding the year in which such payment is made, less (II) the
amount of Terex's Consolidated Net Income for such immediately preceding year
previously designated for or used to satisfy a condition of a transaction under
Section 9 of this Agreement that is limited, in whole or in part, by
Consolidated Net Income of Terex, (3) at all times during the period of thirty
(30) consecutive days immediately preceding such cash payment and after giving
effect thereto, Borrowers shall have maintained and shall have Excess
Availability of not less than $25,000,000 in the aggregate, and (4) Lenders'
Agent shall receive not less than ten (10) days' prior written notice of any
proposed cash payment in respect of such common stock appreciation rights,
accompanied by a certificate signed by any of the Chief Executive Officer,
Chief Financial Officer, Executive Vice President or Senior Vice President of
Terex, describing the transaction and demonstrating compliance through the date
of the certificate, and describing the steps to be taken to comply thereafter,
with all requirements of this provision, together with such other matters with
respect thereto as Lenders' Agent shall reasonably require; and
(y) Terex shall furnish to Lenders' Agent copies of all
certificates, required notices, demands, claims, notice of default or
acceleration, requests for amendments, waivers or consents or other material
notices, either received from the Note Trustee or any of the holders of the
Senior Secured Notes, or on their behalf, promptly after receipt thereof, or
sent by Terex or any guarantor thereof, or on its behalf, to any of the holders
of the Senior Secured Notes, or any representative of the holders, (including,
but not limited to, the Note Trustee or other collateral agent or trustee)
promptly after the sending thereof, as the case may be;
(i) Indebtedness incurred by a Borrower for money borrowed by such
Borrower, if the Interest Coverage Ratio for the four full fiscal quarters most
recently ended prior to the date on which such additional Indebtedness is
incurred, as shown on the internal financial statements of Borrowers delivered
to Lenders' Agent in the form required by Section 9.6(a), would have been at
least equal to the ratio set forth below opposite the period in which such
incurrence occurs, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred at the beginning of such four-quarter period:
Period Ratio
The date hereof through May 15, 1996 2.25:1
May 16, 1996 through May 15, 1997 2.50:1
May 16, 1997 and thereafter 2.75:1
provided, however, that, in the case of such additional Indebtedness permitted
by this Section 9.9(i), such Indebtedness has a final scheduled maturity beyond
the term of this Agreement (either initial or renewal, as the case may be) then
in effect at the time that such Indebtedness is incurred;
(j) Indebtedness of a Borrower for intercompany loans from another
Borrower to the extent permitted under Section 9.10 or from a subsidiary of
such Borrower or of another Borrower; and
(k) Indebtedness issued in exchange for, or the proceeds of which
are contemporaneously used to extend, refinance, renew, replace or refund, any
Indebtedness permitted pursuant to the terms of this Agreement, on terms not
materially less favorable to the Borrowers or to the Lender and Lenders' Agent
than the terms of the Indebtedness so extended, refinanced, renewed, replaced
or refunded (including for this purpose in the case of any of the foregoing
with respect to the Indebtedness evidenced by the Senior Secured Notes, the
protections afforded to the Lenders and Lenders' Agent pursuant to an
intercreditor agreement no less favorable to Lenders and Lenders' Agent than
that executed and delivered pursuant to Section 4.1(l) hereof).
9.10 Loans, Investments, Guarantees, Etc. No Borrower shall, directly or
indirectly, make any loans or advance money or property to any person, or
invest in (by capital contribution, dividend or otherwise), or, in the case of
certain subsidiaries as set forth in clause (C) of the proviso to this Section
9.10, continue an existing Investment in any such subsidiary, or purchase or
repurchase the stock, obligations or Indebtedness or all or a substantial part
of the assets or property of any person, or guarantee, assume, endorse, or
otherwise become responsible for (directly or indirectly) the Indebtedness,
performance, obligations or dividends of any Person or make any other
Investment, or agree to do any of the foregoing, except:
(a) the endorsement of instruments for collection or deposit in the
ordinary course of business;
(b) Investments reported as of the end of each month to Lenders'
Agent in:
(i) direct obligations of the United States of America or any
agency thereof, or obligations guaranteed by the United States of America or
any agency thereof, in each case having a maturity not beyond one year,
(ii) time deposit accounts, certificates of deposit and money
market deposits, in each case having a maturity not beyond one year, issued by
a bank or trust company which is organized under the laws of the United States
of America or any state thereof whose debt is rated "A" (or such similar
rating) or higher by at least one nationally recognized statistical rating
organization (as defined in Rule 436 under the Securities Act of 1933, as
amended) or which is otherwise satisfactory to Lenders' Agent,
(iii) repurchase obligations with a term of not more than thirty
(30) days for underlying securities of the types described in clause (i) above
entered into with a bank meeting the qualifications described in clause (ii)
above,
(iv) commercial paper with a rating of "P-1" (or higher)
according to Xxxxx'x Investors Service, Inc. or "A-1" (or higher) according to
Standard and Poor's Corporation, and
(v) money-market funds sponsored by any registered broker
dealer or mutual fund distributor, which invest solely in one or more of the
securities referred to in clauses (i), (ii), (iii) or (iv) or that are
otherwise satisfactory to Lenders' Agent;
(c) Investments consisting of:
(i) the redemption, purchase, retirement or other acquisition,
out of legally available funds, of any equity interests in the Borrowers or in
any of their subsidiaries in exchange for, or out of the proceeds of, the
substantially concurrent sale (other than to a Borrower or a subsidiary of a
Borrower) of other equity interests in Borrowers or in any of their
subsidiaries, or
(ii) the redemption, repurchase or repayment of any Indebtedness
permitted to be incurred pursuant to this Agreement (other than the Senior
Secured Notes), concurrently with the receipt by such Borrower of, and out of
the proceeds of, any refinancing, in no greater outstanding amount and on terms
no less favorable to such Borrower than the terms of such Indebtedness
refinanced, or
(iii) the redemption, purchase, retirement or other repayment of
the Senior Secured Notes, and payments, to the extent not prohibited by clause
(x)(C) of the proviso to Section 9.9(h) hereof, to the holders of the common
stock appreciation rights described in such clause (x)(C) upon the exercise
thereof, or
(iv) the purchase or redemption of the Series A Preferred Stock
of Terex outstanding on the date hereof;
(d) Investments in a subsidiary of a Borrower formed primarily for
the purpose of financing purchases and leases of inventory manufactured by the
Borrowers or any of their subsidiaries of up to an aggregate amount so
invested, in cash and/or in property, other than Collateral, having an
aggregate fair market value, not to exceed $3,000,000 so invested on or after
the date hereof in cash or in such property by all Borrowers on a combined
basis;
(e) Investments by Terex in shares of capital stock of Fruehauf
Trailer Corporation in satisfaction of outstanding Indebtedness of Fruehauf
Trailer Corporation to Terex in the aggregate amount of up to $2,000,000;
(f) Investments, not otherwise permitted under this Section 9.10,
that do not exceed, in the aggregate for all Borrowers, on a combined basis,
the sum of (A) $8,000,000 in such Investments made at any time or times on or
after the date hereof, such $8,000,000 amount under this clause (A) to be
reduced by the aggregate amount of dividends paid by Terex as permitted under
Section 9.11(a)(x) hereof, plus (B) in any fiscal year and following the
delivery to Lenders' Agent of the audited annual financial statements of Terex
and its subsidiaries in the form required by Section 9.6(a) hereto for the
preceding fiscal year, an amount equal to (x) fifty (50%) percent of the
Consolidated Net Income of Terex for such immediately preceding fiscal year,
less (y) the amount of Terex's Consolidated Net Income for such immediately
preceding fiscal year previously designated for or used to satisfy a condition
of a transaction under Section 9 of this Agreement that is limited, in whole or
in part, by Consolidated Net Income of Terex;
(g) intercompany loans by a Borrower to Terex, in cash, the proceeds
of which are used to pay interest and liquidated damages (if any) when due, and
principal when due at regularly scheduled maturity on May 15, 2002, in each
case pursuant to the Senior Secured Notes as in effect on the date hereof;
(h) intercompany loans by a Borrower to its subsidiaries or to
another Borrower or its subsidiaries, in cash, made contemporaneously with the
funding of, and the proceeds of which are used to fund, an Investment otherwise
permitted under this Section 9.10 or dividends otherwise permitted under
Section 9.11 hereof;
(i) intercompany loans in cash by one Borrower to any of its
subsidiaries or to another Borrower or any of its subsidiaries for working
capital purposes in the ordinary course of business and consistent with past
practices, including repayment thereof in the ordinary course of business;
(j) Floor Plan Guaranties;
(k) in the case of a Borrower other than Terex, the guarantee by
such Borrower of the Indebtedness and obligations permitted under Section
9.9(h) hereof; and
(l) the guarantees by and other Indebtedness of such Borrower set
forth in the Information Certificate;
Provided, however, that no such loan, advance, guarantee or other Investment
otherwise permitted under any of subsections (c) through (h) of this Section
9.10 shall be made unless:
(A) at the time of such loan, advance, guarantee or other
Investment, other than an Investment in the form of a Net Proceeds Purchase, no
Event of Default has occurred that is continuing or would occur as a
consequence thereof, and no event has occurred that is continuing or condition
exists or would occur or exist as a consequence thereof, that would, with
notice or passage of time, or both, constitute an Event of Default;
(B) in the case of any such advance, loan or other Investment
described in Sections 9.10(c)(iii), (c)(iv), (f) or (h) to be made in cash, at
all times during the period of thirty (30) consecutive days immediately
preceding the disbursement or funding thereof and immediately after giving
effect thereto, Borrowers shall, in the aggregate, have Excess Availability of
not less than $25,000,000, except that:
(1) in the case of Investments by Terex in the form of
redemptions by Terex of the Senior Secured Notes made with the proceeds of the
substantially concurrent sale by Terex or its subsidiaries of capital stock in
any of Terex or its subsidiaries, there shall be no such Excess Availability
requirement under this clause (B),
(2) in the case of Investments by Terex in the form of a
Net Proceeds Purchase, there shall be no such Excess Availability requirement
under this clause (B),
(3) in the case of the first $3,000,000 of Investments
made by any one or more Borrowers in the aggregate as permitted under Section
9.10(f) hereof, the amount of Excess Availability required under this clause
(B) shall be $10,000,000 in lieu of $25,000,000;
(C) in the case of any Investment in a subsidiary of any
Borrower organized under the laws of the United States, Puerto Rico or Canada,
whether existing, acquired or newly formed in connection with such Investment
or as a result thereof, other than a subsidiary which shall be (but only for so
long as such subsidiary shall remain) a Non-Restricted Subsidiary (as defined
in the Note Indenture, as in effect on the date hereof), and expressly
including, for purposes of this clause (C), at the option of Lenders' Agent,
the continuance of any Investment existing on the date hereof in any such
subsidiary, such subsidiary shall execute and deliver to Lenders' Agent an
absolute and unconditional guarantee of payment and performance of the
Obligations of Borrowers (in the form of the guarantees delivered pursuant to
Section 4.1 hereof), together with (i) a general security agreement granting to
Lenders' Agent for itself as agent and on behalf of Lenders, a continuing
security interest in and lien upon all property of the types which would be
Collateral if owned by a Borrower, (ii) UCC financing statements and (iii) such
agreements, document and instruments as Lenders' Agent shall reasonably require
of the kind referred to in Sections 4.1(j) and 9.15 hereof; provided, further,
that such guarantee and/or security interests and liens shall be released or
subordinated by Lenders' Agent in favor of a non-affiliated lender who enters
into a bona fide working capital facility with such subsidiary (w) secured
solely by such subsidiary's Accounts and Inventory, (x) providing loans to such
subsidiary in an amount sufficient to cover all or a substantial portion of
such subsidiary's anticipated working capital requirements, (y) as to which
working capital facility, the Indebtedness incurred thereunder or in connection
therewith and the security interests and liens securing such Indebtedness do
not and shall not violate the terms of the Note Indenture, and (z) as to which
working capital facility, the lender providing such working capital facility
has a bona fide requirement that the Lenders and Lenders' Agent release or
subordinate such guarantee and/or security interests and liens as well as a
requirement for the concurrent release or subordination (on an equivalent
basis) of all guaranties, security interests and liens in the Accounts and
Inventory of such subsidiary held by or for the benefit of the holders of the
Senior Secured Notes;
(D) the loan, advance, guarantee or other Investment will not
violate any of the provisions of the Note Indenture;
(E) in the case of an Investment consisting of the acquisition
by a Borrower of all or a substantial part of the assets or business of a
person (other than a Borrower), Lenders' Agent, may, in its sole discretion
(with the consent of both Lenders in their sole discretion), but shall have no
obligation to consider as Eligible Accounts or Eligible Inventory any Accounts
or Inventory so acquired by a Borrower or thereafter acquired or arising out of
the conduct of the business so acquired, but all such Accounts or Inventory
shall nevertheless be and remain part of the Collateral, subject to a valid and
perfected first priority perfected lien and security interest securing the
Obligations in favor of Lenders' Agent for itself as agent and for the benefit
of Lenders under this Agreement;
(F) in the case of an Investment in the form of a Net Proceeds
Purchase, if, at the time of such Investment, an Event of Default has occurred
and is continuing, no proceeds of the Loans or Letter of Credit Accommodations
shall be used by Terex or the other Borrowers to make such Investment or to
provide funds to Terex to make such Investment; and
(G) Lenders' Agent receives not less than twenty (20) days'
prior written notice of any proposed transaction under subsections (c), (d),
(f) or (h) of this Section 9.10, and not less than five (5) days' prior written
notice of any proposed transaction under subsection (e) of this Section 9.10,
in each case accompanied by a certificate signed by any one of the Chief
Executive Officer, Chief Financial Officer, Executive Vice President or Senior
Vice President of Terex describing the proposed transaction in reasonable
detail and demonstrating compliance through the date of the certificate, and
describing the steps to be taken to comply thereafter, with all requirements of
this Section 9.10, together with such other matters with respect thereto as
Lenders' Agent shall reasonably require.
9.11 Dividends and Redemptions. No Borrower shall, directly or
indirectly:
(a) declare or pay any dividends on account of any shares of class
of capital stock now or hereafter outstanding (or set aside or otherwise
deposit or invest any sums for such purpose), other than (i) dividends payable
solely in the form of capital stock of a Borrower or its subsidiaries, and (ii)
dividends in cash declared and paid, in the same fiscal year, out of legally
available funds therefor, by one Borrower to its parent (if a Borrower
hereunder) or by Terex to its shareholders, limited to dividends declared and
paid after delivery to Lenders' Agent, in the form required pursuant to Section
9.6(a), of the audited annual financial statements of Terex and subsidiaries
and the unaudited consolidating financial statements of Terex and subsidiaries
for the fiscal year most recently ended prior to the date of such declaration
and payment, in an amount or amounts not to exceed in the aggregate the sum of
(x) $3,000,000 of such dividends declared and paid at any time by Terex on or
after the date hereof, such $3,000,000 amount to be reduced (but not below
zero) by the amount of Investments made by any one or more Borrowers as
permitted under Section 9.10(f)(A) hereof, plus (y) fifty (50%) percent of the
respective Consolidated Net Income of the payor for such prior fiscal year,
less (without duplication) (z) the amount of such payor's Consolidated Net
Income for such immediately preceding fiscal year previously designated for or
used to satisfy a condition of a transaction under Section 9 of this Agreement
that is limited, in whole or in part, by Consolidated Net Income of such payor
or Terex, as the case may be; provided, however, that no cash dividends shall
be permitted under this Section 9.11(a), unless:
(A) at the time of declaration and payment of any such
dividend, no Event of Default has occurred that is continuing or would occur as
a consequence thereof, and no event has occurred or condition exists, or would
occur or exist as a consequence thereof, that would, with notice or passage of
time, or both, constitute an Event of Default;
(B) in the case of a cash dividend by Terex, at all times
during the period of thirty (30) consecutive days immediately preceding the
payment of any dividend, and after giving effect thereto, Borrowers shall have
maintained and shall have, in the aggregate, Excess Availability of not less
than $25,000,000; and
(C) Lenders' Agent shall have received not less than thirty
(30) days' prior written notice of any proposed cash dividend under this
Section 9.11, accompanied by a certificate signed by the Chief Executive
Officer, Chief Financial Officer, Executive Vice President or Senior Vice
President of Terex, describing the transaction in reasonable detail and
demonstrating compliance through the date of the certificate, and describing
the steps to be taken to comply thereafter, with all requirements of this
Section 9.11, together with such other matters with respect thereto as Lenders'
Agent shall reasonably require; or
(b) redeem, retire, defease, purchase or otherwise acquire any
shares of any class of capital stock (or set aside or otherwise deposit or
invest any sums for such purpose) for any consideration other than capital
stock of a Borrower or its subsidiaries or apply or set apart any sum, or make
any other distribution (by reduction of capital or otherwise) in respect of any
such shares or agree to do any of the foregoing, other than as permitted under
Section 9.10(c) (including the satisfaction of the conditions contained in the
proviso to Section 9.10);
9.12 Transactions with Affiliates.
(a) No Borrower shall enter into any transaction for the purchase,
sale or exchange of property or the rendering of any service to or by any
affiliate, except in the ordinary course of and pursuant to the reasonable
requirements of such Borrower's business in accordance with past practices and
upon fair and reasonable terms no less favorable to such Borrower than such
Borrower would obtain in a comparable arm's length transaction with an
unaffiliated person; provided, however, that no sales, transfers or deliveries
of Inventory to any affiliate that is not a Borrower shall be made unless (i)
prior written notice thereof is given by Borrowers or Borrowers' Agent to
Lenders' Agent, who shall thereupon reduce the amount of Eligible Inventory of
the selling Borrower(s) by the amount of the net reduction of Eligible
Inventory resulting from such transaction, and (ii) after giving effect to such
reduction, the Loans and Letter of Credit Accommodations would not exceed the
amounts available under the lending formulas and subject to the sublimits set
forth in this Agreement.
(b) Nothing in Section 9.12(a) shall prohibit Borrowers from
entering into employment agreements in the ordinary course of business.
9.13 Costs and Expenses. Borrowers shall pay to Lenders' Agent and
Lenders on demand all filing fees, taxes and all reasonable costs and expenses
paid or payable in connection with the preparation, negotiation, execution,
delivery, recording, administration, collection, liquidation, enforcement and
defense of the Obligations, and the rights of Lender and Lenders' Agent in the
Collateral, this Agreement, the other Financing Agreements and all other
documents related hereto or thereto, including any amendments, supplements or
consents which may hereafter be contemplated (whether or not executed) or
entered into in respect hereof and thereof, including, but not limited to: (a)
all out-of-pocket costs and expenses of filing or recording (including Uniform
Commercial Code financing statement filing taxes and fees, documentary taxes,
intangibles taxes and mortgage recording taxes and fees, if applicable); (b)
all insurance premiums, appraisal fees and search fees; (c) reasonable costs
and expenses of remitting loan proceeds, collecting checks and other items of
payment, and establishing and maintaining the Blocked Accounts, together with
customary and reasonable charges and fees of Lenders' Agent with respect
thereto; (d) charges, fees or expenses charged by any bank or issuer in
connection with the Letter of Credit Accommodations; (e) costs and expenses of
preserving and protecting the Collateral; (f) costs and expenses paid or
incurred in connection with obtaining payment of the Obligations, enforcing the
security interests and liens of Lenders' Agent for itself as agent and for the
benefit of Lenders, selling or otherwise realizing upon the Collateral, and
otherwise enforcing the provisions of this Agreement and the other Financing
Agreements or defending any claims made or threatened against Lenders' Agent or
either or both Lenders arising out of the transactions contemplated hereby and
thereby (including, without limitation, preparations for and consultations
concerning any such matters); provided, that Borrowers shall not be liable for
the costs of defending claims asserted (x) by a Borrower against Lenders' Agent
or either or both Lenders which claims are successfully established pursuant to
a final, non-appealable judgment of a court of competent jurisdiction rendered
in favor of such Borrower against a Lender or Lenders' Agent, or (y) by a
person, other than a Borrower, against Lenders' Agent or either or both
Lenders, which claims result in a final, non-appealable judgment rendered in
favor of such person against a Lender or Lenders' Agent, and which judgment
clearly sets forth the basis for liability as the willful misconduct, bad faith
or gross negligence of such Lender or Lenders' Agent; (g) all reasonable
out-of-pocket expenses and costs heretofore and from time to time hereafter
incurred by Lenders or Lenders' Agent during the course of periodic field
examinations of the Collateral and Borrowers' operations, plus a per diem
charge at the rate of $600 per person per day for examiners of Lenders' Agent
and of Lenders in the field and office; (h) the reasonable fees and
disbursements of outside counsel (including legal assistants) to Lenders' Agent
in connection with any of the foregoing and (i) the reasonable fees and
disbursements of outside counsel (including legal assistants) to either or both
Lenders or any Participant in connection with any of the foregoing (other than
legal fees and disbursements of counsel (including legal assistants) of a
Participant incurred to become a Participant.
9.14 Compliance with ERISA. No Borrower shall with respect to any
"employee benefit plans" maintained by such Borrower or any of its ERISA
Affiliates:
(a) (i) terminate any of such employee benefit plans so as to incur
any liability to the Pension Benefit Guaranty Corporation established pursuant
to ERISA, (ii) allow or suffer to exist any prohibited transaction involving
any of such employee benefit plans or any trust created thereunder which would
subject any Borrower or such ERISA Affiliates to a tax or penalty or other
liability on prohibited transactions imposed under Section 4975 of the Code or
ERISA, (iii) fail to pay to any such employee benefit plan any contribution
which it is obligated to pay under Section 302 of ERISA, Section 412 of the
Code or the terms of such plan, (iv) allow or suffer to exist any accumulated
funding deficiency, whether or not waived, with respect to any such employee
benefit plan, (v) allow or suffer to exist any occurrence of a reportable event
or any other event or condition which presents a material risk of termination
by the Pension Benefit Guaranty Corporation of any such employee benefit plan
that is a single employer plan, which termination could result in any liability
to the Pension Benefit Guaranty Corporation or (vi) incur any withdrawal
liability with respect to any multiemployer pension plan.
(b) As used in this Section 9.14, the term "employee benefit plans",
"accumulated funding deficiency" and "reportable event" shall have the
respective meanings assigned to them in ERISA, and the term "prohibited
transaction" shall have the meaning assigned to it in Section 4975 of the Code
and ERISA.
9.15 Further Assurances. At the request of Lenders' Agent at any time and
from time to time, each Borrower shall, at its expense, duly execute and
deliver, or cause to be duly executed and delivered, such further agreements,
documents and instruments, and do or cause to be done such further acts as may
be necessary or proper to evidence, perfect, maintain and enforce the security
interests and the priority thereof in the Collateral and to otherwise
effectuate the provisions or purposes of this Agreement or any of the other
Financing Agreements. Lenders' Agent or either Lender may at any time and from
time to time request a certificate from an officer of any or all Borrowers
representing that all conditions precedent to the making of Revolving Loans and
providing Letter of Credit Accommodations contained herein are satisfied. In
the event of such request by Lenders' Agent or either Lender, Lenders' Agent
may, at its option, cease to make any further Revolving Loans or provide any
further Letter of Credit Accommodations until Lenders' Agent has received such
certificate and, in addition, Lenders' Agent has determined that such
conditions are satisfied. Where permitted by law, each Borrower hereby
authorizes Lenders' Agent to execute and file one or more UCC financing
statements with respect to the Collateral signed only by Lenders' Agent.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence or existence of any one or more of
the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) (i) Borrower fails to pay when due any of the Obligations or
(ii) Borrower fails to perform any of the terms, covenants, conditions or
provisions contained in this Agreement or any of the other Financing Agreements
other than as described in Section 10.1(a)(i), and, in the case of a failure to
comply with the terms, covenants, conditions or provisions contained in:
(1) Section 9.1, to the extent such failure consists
solely of a failure to be qualified as a foreign corporation to do business in
a jurisdiction, such failure shall continue for a period of sixty (60) days, or
(2) Section 9.2(a), Lenders' Agent shall fail to receive
notice of such new location within twenty (20) days after the opening or
establishment thereof (but such twenty (20) day period shall not apply if any
of the Inventory at such new location is included in any Collateral report
delivered to Lenders' Agent), or
(3) the first sentence of Section 9.4, such failure shall
continue for a period of thirty (30) days, or
(4) Section 9.6(a)(i), to the extent such failure consists
solely of a failure to deliver timely financial statements for the third,
sixth, ninth or twelfth calendar months, such failure shall continue for a
period of five (5) days, or
(5) Section 9.6(a)(ii), to the extent such failure
consists solely of a failure to deliver timely the annual audited financial
statements of Terex and its subsidiaries, such failure shall continue for a
period of ten (10) days, or
(6) Section 9.14, such failure shall continue for a period
of thirty (30) days;
provided, that, such specified periods in clauses (1) through (6) above shall
not apply in the case of: (A) any failure to observe any such term, covenant,
condition or provision which is not capable of being cured at all or within
such specified periods or which has been the subject of a prior failure within
a six (6) month period or (B) an intentional breach by Borrower or any Obligor
of any such term, covenant, condition or provision or (C) any failure which
adversely affects any Collateral or its value or the rights or interests of
Lenders' Agent and Lenders therein or thereto; or
(b) any representation, warranty or statement of fact made by any
Borrower to either or both Lenders or Lenders' Agent in this Agreement, the
other Financing Agreements or any other agreement, schedule, confirmatory
assignment or otherwise shall when made or deemed made be false or misleading
in any material respect;
(c) any Obligor revokes, terminates or fails to perform any of the
terms, covenants, conditions or provisions of any guarantee, endorsement or
other agreement of such party in favor of Lenders;
(d) (i) any judgment for the payment of money is rendered against
any Borrower or any Obligor in excess of $1,000,000 for any one Borrower or
Obligor in any one case, or in excess of $2,000,000 in the aggregate for all
Borrowers and Obligors, and shall remain undischarged or unvacated for a period
in excess of forty-five (45) days or execution shall at any time not be
effectively stayed, or (ii) any judgment other than for the payment of money,
or injunction, attachment, garnishment or execution is rendered against any
Borrower or any Obligor or any of their assets which would either (A) have a
material adverse effect upon the business or assets of such Borrower or Obligor
or (B) have an adverse effect on the value of any Collateral or the rights of
Lenders' Agent or the Lenders therein or thereto;
(e) any Obligor (being a natural person or a general partner of an
Obligor which is a partnership) dies or any Borrower or any Obligor, which is a
partnership or corporation, dissolves or suspends or discontinues doing
business;
(f) any Borrower or any Obligor becomes Insolvent, makes an
assignment for the benefit of creditors or makes or sends notice of a bulk
transfer;
(g) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law
or in equity) is filed against any Borrower or any Obligor or all or any part
of its properties and such petition or application is not dismissed within
forty (45) days after the date of its filing or any Borrower or any Obligor
shall file any answer admitting or not contesting such petition or application
or indicates its consent to, acquiescence in or approval of, any such action or
proceeding or the relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by any Borrower or any Obligor or for all or any part of
its property;
(i) (A) any default by any Borrower or any Obligor under any
agreement, document or instrument relating to any indebtedness for borrowed
money owing to any person other than Lenders (including but not limited to the
Senior Secured Notes and the Note Indenture), or any capitalized lease
obligations, contingent indebtedness in connection with any guarantee, letter
of credit, indemnity or similar type of instrument in favor of any person other
than Lenders, in any case where such indebtedness, obligations or contingent
indebtedness is in an amount in excess of $4,000,000, which default results in
a demand for payment or acceleration of any of the foregoing indebtedness,
obligations, or contingent indebtedness, or (B) any default by any Borrower or
any Obligor under any material contract, lease, license or other obligation to
any person other than Lenders and other than under an agreement, document or
instrument referred to in clause (A), which default continues for more than the
applicable cure period, if any, with respect thereto;
(j) any Change of Control;
(k) the indictment or threatened indictment of any Borrower or any
Obligor under any criminal statute, or commencement or threatened commencement
of criminal or civil proceedings against any Borrower or any Obligor, pursuant
to which statute or proceedings the penalties or remedies sought or available
include forfeiture of any material portion of the property of any Borrower or
any Obligor or any Collateral;
(l) there shall be a material adverse change in the business or
assets of any Borrower or any Obligor after the date hereof; or
(m) there shall be an event of default under any of the other
Financing Agreements.
10.2 Remedies.
(a) At any time an Event of Default exists or has occurred and is
continuing, Lenders' Agent and Lenders shall have all rights and remedies
provided in this Agreement, the other Financing Agreements, the Uniform
Commercial Code and other applicable law, all of which rights and remedies may
be exercised without notice to or consent by any Borrower or any Obligor,
except as such notice or consent is expressly provided for hereunder or
required by applicable law. All rights, remedies and powers granted to Lenders
and Lenders' Agent hereunder, under any of the other Financing Agreements, the
Uniform Commercial Code or other applicable law, are cumulative, not exclusive
and enforceable, in Lenders' and Lenders' Agent's discretion, alternatively,
successively, or concurrently on any one or more occasions, and shall include,
without limitation, the right to apply to a court of equity for an injunction
to restrain a breach or threatened breach by any Borrower of this Agreement or
any of the other Financing Agreements. Lenders' Agent or Lenders may, at any
time or times, proceed directly against any Borrower or any Obligor to collect
the Obligations without prior recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event of Default
exists or has occurred and is continuing, Lenders' Agent may, in its discretion
and without limitation, (i) by notice to Borrowers' Agent accelerate the
payment of all Obligations and demand immediate payment thereof to Lenders'
Agent, for the benefit of Lenders, by any or all Borrowers or Obligors
(provided, that, upon the occurrence of any Event of Default described in
Sections 10.1(g) and 10.1(h), all Obligations shall automatically become
immediately due and payable), (ii) with or without judicial process or the aid
or assistance of others, enter upon any premises on or in which any of the
Collateral may be located and take possession of the Collateral or complete
processing, manufacturing and repair of all or any portion of the Collateral,
(iii) require any Borrower, at such Borrower's expense, to assemble and make
available to Lenders any part or all of the Collateral at any place and time
designated by Lenders or Lenders' Agent, (iv) collect, foreclose, receive,
appropriate, setoff and realize upon any and all Collateral, (v) remove any or
all of the Collateral from any premises on or in which the same may be located
for the purpose of effecting the sale, foreclosure or other disposition thereof
or for any other purpose, (vi) sell, lease, transfer, assign, deliver or
otherwise dispose of any and all Collateral (including, without limitation,
entering into contracts with respect thereto, public or private sales at any
exchange, broker's board, at any office of either Lender or Lenders' Agent or
elsewhere) at such prices or terms as Lenders or Lenders' Agent may deem
reasonable, for cash, upon credit or for future delivery, with the Lenders
having the right to purchase the whole or any part of the Collateral at any
such public sale, all of the foregoing being free from any right or equity of
redemption of any Borrower, which right or equity of redemption is hereby
expressly waived and released by each Borrower and/or (vii) terminate this
Agreement. If any of the Collateral is sold or leased by either or both
Lenders or Lenders' Agent upon credit terms or for future delivery, the
Obligations shall not be reduced as a result thereof until payment therefor is
finally collected by Lenders or Lenders' Agent. Unless the Collateral involved
in a sale or other disposition by Lenders or Lenders' Agent is perishable or
threatens to decline speedily in value or is of a type customarily sold in a
recognized market, ten (10) days prior notice of disposition of such Collateral
by Lenders or Lenders' Agent, designating the time and place of any public sale
or the time after which any private sale or other intended disposition of any
Collateral is to be made, shall be given to Borrowers' Agent and shall be
deemed to be reasonable notice thereof and Borrowers waive any other notice.
In the event either or both Lenders or Lenders' Agent institutes an action to
recover any Collateral or seeks recovery of any Collateral by way of
prejudgment remedy, Borrowers waive the posting of any bond which might
otherwise be required.
(c) Lenders' Agent and Lenders may apply the cash proceeds of
Collateral actually received by Lenders' Agent or Lenders from any collection
of Receivables, sale, lease, foreclosure or other disposition of the Collateral
to payment of the Obligations, in whole or in part and in such order as
Lenders' Agent or the recipient Lender may elect, whether or not then due.
Borrowers shall remain liable to Lenders' Agent and Lenders for the payment of
any deficiency with interest at the highest rate provided for herein and all
costs and expenses of collection or enforcement, including attorneys' fees and
legal expenses.
(d) Without limiting the foregoing, upon the occurrence of an Event
of Default or an event which with notice or passage of time or both would
constitute an Event of Default, Lenders' Agent may, at its option, without
notice, (i) cease making Revolving Loans or arranging for Letter of Credit
Accommodations or reduce the lending formulas or amounts of Revolving Loans and
Letter of Credit Accommodations available to any or all Borrowers and/or (ii)
terminate any provision of this Agreement providing for any future Revolving
Loans or Letter of Credit Accommodations to be made by Lenders' Agent to any or
all Borrowers.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this Agreement
and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto, whether in contract, tort, equity or
otherwise, shall be governed by the internal laws of the State of New York
(without giving effect to principles of conflicts of law).
(b) Each of Borrower, Lenders' Agent and Lenders irrevocably
consents and submits to the non-exclusive jurisdiction of the Supreme Court of
the State of New York and the United States District Court for the Southern
District of New York and waives any objection based on venue or forum non
conveniens with respect to any action instituted therein arising under this
Agreement or any of the other Financing Agreements or in any way connected with
or related or incidental to the dealings of the parties hereto in respect of
this Agreement or any of the other Financing Agreements or the transactions
related hereto or thereto, in each case whether now existing or hereafter
arising, and whether in contract, tort, equity or otherwise, and agree that any
dispute with respect to any such matters shall be heard only in the courts
described above (except that Lenders' Agent and each Lender shall have the
right to bring any action or proceeding against any Borrower or its property in
the courts of any other jurisdiction which Lenders' Agent or such Lender deems
necessary or appropriate in order to realize on the Collateral or to otherwise
enforce its rights against any Borrower or its property).
(c) Each Borrower hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth on
the signature pages hereof and service so made shall be deemed to be completed
five (5) days after the same shall have been so deposited in the U.S. mails,
or, at the option of Lenders' Agent or either Lender, by service upon Borrower
in any other manner provided under the rules of any such courts. Within thirty
(30) days after such service, such Borrower shall appear in answer to such
process, failing which Borrower shall be deemed in default and judgment may be
entered against such Borrower for the amount of the claim and other relief
requested.
(d) EACH BORROWER, LENDERS' AGENT AND EACH LENDER HEREBY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i)
ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii)
IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING
AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR
OTHERWISE. EACH BORROWER, LENDERS' AGENT AND EACH LENDER HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT BORROWER OR LENDERS' AGENT OR
EITHER LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Neither Lenders' Agent nor Lenders shall have any liability to
any Borrower (whether in tort, contract, equity or otherwise) for losses
suffered by any Borrower in connection with, arising out of, or in any way
related to the transactions or relationships contemplated by this Agreement, or
any act, omission or event occurring in connection herewith, unless it is
determined by a final and non-appealable judgment or court order binding on
such Lender or Lenders' Agent, that the losses were the result of acts or
omissions constituting such Lenders' or Lenders' Agent's own gross negligence,
willful misconduct or bad faith. In any such litigation, each of Lenders'
Agent and Lenders shall be entitled to the benefit of the rebuttable
presumption that it acted in good faith and with the exercise of ordinary care
in the performance by it of the terms of this Agreement.
11.2 Waiver of Notices. Each Borrower hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and commercial paper, included in or evidencing any
of the Obligations or the Collateral, and any and all other demands and notices
of any kind or nature whatsoever with respect to the Obligations, the
Collateral and this Agreement, except such as are expressly provided for
herein. No notice to or demand on any Borrower which Lenders' Agent or either
Lender may elect to give shall entitle such Borrower or any other Borrower to
any other or further notice or demand in the same, similar or other
circumstances.
11.3 Amendments and Waivers. Neither this Agreement nor any provision
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement, signed, in the case of amendments or
modifications, by authorized officers of Borrowers or Borrowers' Agent, both
Lenders and Lenders' Agent, and signed, in the case of waivers or discharges in
favor of Borrowers, by authorized officers of both Lenders and Lenders' Agent.
Neither the Lenders nor Lenders' Agent shall, by any act, delay, omission or
otherwise be deemed to have expressly or impliedly waived any of its rights,
powers and/or remedies unless such waiver shall be in writing and signed by an
authorized officer of such person. Any such waiver shall be enforceable only
to the extent specifically set forth therein. A waiver by Lenders' Agent or by
Lenders of any right, power and/or remedy on any one occasion shall not be
construed as a bar to or waiver of any such right, power and/or remedy which
Lenders' Agent or the Lenders would otherwise have on any future occasion,
whether similar in kind or otherwise.
11.4 Waiver of Counterclaims. Each Borrower waives all rights to
interpose any claims, deductions, setoffs or counterclaims of any nature (other
then compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom
relating hereto or thereto.
11.5 Indemnification. Each Borrower shall indemnify and hold each of the
Lenders and Lenders' Agent, and their directors, agents, employees and counsel,
harmless from and against any and all losses, claims, damages, liabilities,
costs or expenses imposed on, incurred by or asserted against any of them in
connection with any litigation, investigation, claim or proceeding commenced or
threatened related to the negotiation, preparation, execution, delivery,
enforcement, performance or administration of this Agreement, any other
Financing Agreements, or any undertaking or proceeding related to any of the
transactions contemplated hereby or any act, omission, event or transaction
related or attendant thereto, including, without limitation, amounts paid in
settlement, court costs, and the reasonable fees and expenses of counsel, but
excluding any such losses, claims, damages, liabilities, costs and expenses
directly caused to be incurred by reason of the gross negligence, willful
misconduct or bad faith of the person otherwise to be indemnified and held
harmless under this Section, as determined by a final, non-appealable judgment
of a court of competent jurisdiction. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in this Section may be unenforceable
because it violates any law or public policy, each Borrower shall pay the
maximum portion which it is permitted to pay under applicable law to Lenders'
Agent and Lenders in satisfaction of indemnified matters under this Section.
The foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
12.1 Appointment of Lenders' Agent. Each of the Lenders hereby appoints
the Lenders' Agent hereunder and the Lenders' Agent hereby agrees to act in
such capacity as agent for the Lenders under this Agreement and the other
Financing Agreements. Lenders' Agent shall have and may exercise such powers
as are delegated to the Lenders' Agent by the terms hereof, subject to the
Co-Lending Agreement. Borrowers acknowledge that the rights, powers, duties
and liabilities of Lenders' Agent set forth herein are subject to the
provisions of the Co-Lending Agreement. Subject to the Co-Lending Agreement,
each of the Lenders hereby authorizes, consents and directs each of the
Borrowers and Borrowers' Agent to deal with the Lenders' Agent as the true and
lawful agent of such Lenders to the extent set forth herein and in any other
circumstances where directed by both Lenders in writing.
12.2 Appointment of Borrowers' Agent.
(a) Each Borrower hereby irrevocably appoints Terex as Borrowers'
Agent hereunder, and Terex hereby agrees to act in such capacity as agent for
such Borrower hereunder. Each Borrower further irrevocably authorizes
Borrowers' Agent to take such action on such Borrowers' behalf and to exercise
such rights and powers hereunder as are delegated to Borrowers' Agent by the
terms hereof, together with such rights and powers as are reasonably incidental
thereto.
(b) Borrowers' Agent is hereby expressly and irrevocably authorized
by each Borrower, without hereby limiting any implied or express authority, (i)
to give and receive on behalf of such Borrower all notices and other materials
delivered or provided to be delivered by Lenders' Agent or Lenders to such
Borrower or by such Borrower to Lenders' Agent or Lenders pursuant to the
Financing Agreements, (ii) to request Revolving Loans and Letter of Credit
Accommodations on behalf of such Borrower, and (iii) to pay, on behalf of such
Borrower, all Obligations at any time due Lenders' Agent for the benefit of
Lenders pursuant to the terms of this Agreement.
12.3 Term.
(a) This Agreement and the other Financing Agreements shall become
effective as of the date set forth on the first page hereof and shall continue
in full force and effect for a term ending on the date three (3) years from the
date hereof (the "Renewal Date"), and from year to year thereafter, unless
sooner terminated pursuant to the terms hereof; provided, that, Lenders and
Lenders' Agent may, at their joint option, extend the Renewal Date to the date
four (4) years from the date hereof by giving Borrowers' Agent notice signed by
Lenders' Agent and both Lenders at least sixty (60) days prior to the third
anniversary of this Agreement. Either of Lenders or all (but not less than
all) Borrowers (subject to the right of Lenders and Lenders' Agent to extend
the Renewal Date as provided above) may terminate this Agreement and the other
Financing Agreements effective on the Renewal Date or on the anniversary of the
Renewal Date in any year by giving to the other parties at least sixty (60)
days prior written notice; provided, that, this Agreement and all other
Financing Agreements must be terminated simultaneously. Upon the effective
date of termination or non-renewal of the Financing Agreements, Borrowers shall
pay to Lenders' Agent, in full, for the benefit of Lenders, all outstanding and
unpaid Obligations and shall furnish cash collateral to Lenders' Agent in such
amounts as Lenders' Agent determines are reasonably necessary to secure Lenders
and Lenders' Agent from loss, cost, damage or expense, including reasonable
attorneys' fees and legal expenses, in connection with any contingent
Obligations, including issued and outstanding Letter of Credit Accommodations
and checks or other payments provisionally credited to the Obligations and/or
as to which Lenders' Agent or Lenders have not yet received final and
indefeasible payment. Such cash collateral shall be remitted by wire transfer
in Federal funds to such bank account of Lenders' Agent, as Lenders' Agent may,
in its discretion, designate in writing to Borrowers' Agent for such purpose.
Interest shall be due until and including the next business day, if the amounts
so paid by Borrowers to the bank account designated by Lenders' Agent are
received in such bank account later than 12:00 noon, Pacific Time.
(b) No termination of this Agreement or the other Financing
Agreements shall relieve or discharge any Borrower of its respective duties,
obligations and covenants under this Agreement or the other Financing
Agreements until all Obligations have been fully and finally discharged and
paid, and the continuing security interest of Lenders' Agent for itself and for
the benefit of Lenders in the Collateral of each Borrower and the rights and
remedies of Lenders' Agent and Lenders hereunder, under the other Financing
Agreements and applicable law, shall remain in effect until all such
Obligations have been fully and finally discharged and paid. Thereupon,
Lenders and Lenders' Agent shall, at the request of Borrowers or Borrowers'
Agent, execute and deliver to Borrowers' Agent or Borrowers, at Borrowers' cost
and expense, such UCC termination statements as are necessary to evidence the
discharge and release of any then remaining Collateral.
(c) If for any reason this Agreement is terminated prior to the end
of the then current term or renewal term of this Agreement, in view of the
impracticality and extreme difficulty of ascertaining actual damages and by
mutual agreement of the parties as to a reasonable calculation of Lenders' lost
profits as a result thereof, Borrowers, jointly and severally, agree to pay to
Lenders' Agent for the benefit of Lenders, upon the effective date of such
termination, an early termination fee in the amount set forth below if such
termination is effective in the period indicated:
Amount Period
(i) 3% of Maximum Credit May 9, 1995 to and including May 9,
1996
(ii) 2% of Maximum Credit May 10, 1996 to and including May 9,
1997
(iii) 1% of Maximum Credit May 10, 1997 to and including the
ninety-first day preceding the third
anniversary of the date hereof ("Third
Anniversary")
(iv) 1/2 of 1% of Maximum the ninetieth day prior
Credit to the Third Anniversary to and
including the sixty-first day prior to
the Third Anniversary
(v) 1/4 of 1% of Maximum the sixtieth day prior
Credit to the Third Anniversary to and
including the thirty-first day prior
to the Third Anniversary
(vi) 0% the thirtieth day prior to the Third
Anniversary to and including the Third
Anniversary
Such early termination fee shall be presumed to be the amount of damages
sustained by Lenders as a result of such early termination and Borrowers agree
that it is reasonable under the circumstances currently existing. The early
termination fee provided for in this Section 12.3 shall be deemed included in
the Obligations.
12.4 Notices. All notices, requests and demands hereunder shall be in
writing and (a) made to Lenders or Lenders' Agent by sending it to Lenders'
Agent at its address set forth below and to Borrowers or Borrowers' Agent by
sending it to Borrowers' Agent at its chief executive office set forth below,
or to such other address as either party may designate by written notice to the
other in accordance with this provision, and (b) deemed to have been given or
made: if delivered in person, immediately upon delivery; if by telex, telegram
or facsimile transmission, immediately upon sending and upon confirmation of
receipt; if by nationally recognized overnight courier service with
instructions to deliver the next business day, one (1) business day after
sending; and if by certified mail, return receipt requested, five (5) days
after mailing.
12.5 Partial Invalidity. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
12.6 Successors.
(a) This Agreement, the other Financing Agreements and any other
document referred to herein or therein shall be binding upon and inure to the
benefit of and be enforceable by Lenders, Lenders' Agent, Borrowers, Borrowers'
Agent and their respective successors and assigns, except that no Borrower may
assign its rights under this Agreement, the other Financing Agreements and any
other document referred to herein or therein without the prior written consent
of Lenders and Lenders' Agent. Subject to the Co-Lending Agreement, Lenders'
Agent or Lenders may, after notice to Borrowers' Agent, assign their rights and
delegate their obligations under this Agreement and the other Financing
Agreements and further may assign, or sell participations in, all or any part
of the Loans, the Letter of Credit Accommodations or any other interest herein
to another financial institution or other person, in which event, the assignee
or Participant shall have, to the extent of such assignment or participation,
the same rights and benefits as it would have if it were a Lender hereunder,
except as otherwise provided by the terms of such assignment or participation.
(b) Notwithstanding anything to the contrary contained in Section
12.6(a), Lenders will not, without the consent of Borrowers' Agent, provide
Confidential Information to a prospective Participant or grant a participation
in the Financing Agreements to a prospective Participant who is engaged in a
business directly competitive with the business of any Borrower, provided,
however, that if a Lender discloses to Borrowers' Agent its intention to
provide Confidential Information to a prospective Participant and Borrowers'
Agent fails to notify such Lender within two (2) Business Days following such
disclosure that such proposed Participant is engaged in a business directly
competitive with the business of a specified Borrower, such Lender shall be
free to furnish Confidential Information and grant a participation in the
Financing Agreements to such prospective Participant to the extent and on such
terms as such Lender shall determine.
12.7 Participant's Security Interest. If a Participant shall at any time
participate with Lenders in the Revolving Loans, Letter of Credit
Accommodations or other Obligations, each Borrower hereby grants to such
Participant and such Participant shall have and is hereby given, a continuing
lien on and security interest in any money, securities and other property of
each Borrower in the custody or possession of the Participant, including the
right of setoff, to the extent of the Participant's participation in the
Obligations, and such Participant shall be deemed to have the same right of
setoff to the extent of its participation in the Obligations, as it would have
if it were a direct lender.
12.8 Entire Agreement. This Agreement, the other Financing Agreements,
any supplements hereto or thereto, and any instruments or documents delivered
or to be delivered in connection herewith or therewith represents the entire
agreement and understanding concerning the subject matter hereof and thereof
between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written.
12.9 Confidentiality.
(a) Lenders and Lenders' Agent shall use all reasonable efforts to
keep confidential, in accordance with their customary procedures for handling
confidential information and safe and sound lending practices, any non-public
information supplied to it by Borrowers pursuant to this Agreement which is
clearly and conspicuously marked as confidential at the time such information
is furnished by Borrowers to Lenders and Lenders' Agent, provided, that,
nothing contained herein shall restrict the disclosure of any such information:
(i) to the extent required by statute, rule, regulation, subpoena or court
order, (ii) to bank examiners and other regulators, auditors and/or
accountants, (iii) in connection with any litigation to which a Lender or
Lenders' Agent is a party, (iv) to any assignee or Participant (or prospective
assignee or Participant) so long as such assignee or Participant (or
prospective assignee or Participant) shall have first agreed in writing to
treat such information as confidential in accordance with this Section 12.9, or
(v) to counsel for a Lender or Lenders' Agent or any Participant or assignee
(or prospective Participant or assignee).
(b) In no event shall this Section 12.9 or any other provision of
this Agreement or applicable law be deemed: (i) to apply to or restrict
disclosure of information that has been or is made public by any Borrower or
any third party without breach of this Section 12.9 or otherwise become
generally available to the public other than as a result of a disclosure in
violation hereof, (ii) to apply to or restrict disclosure of information that
was or becomes available to a Lender or Lenders' Agent on a non-confidential
basis from a person other than a Borrower, (iii) require either Lender or
Lenders' Agent to return any materials furnished by a Borrower to Lenders or
Lenders' Agent, or (iv) prevent a Lender or Lenders' Agent from responding to
routine informational requests in accordance with the Code of Ethics for the
Exchange of Credit Information promulgated by The Xxxxxx Xxxxxx Associates or
other applicable industry standards relating to the exchange of credit
information. The obligations of Lenders and Lenders' Agent under this Section
12.9 shall supersede and replace the obligations (if any) of Lenders or
Lenders' Agent under any confidentiality letter signed prior to the date
hereof.
IN WITNESS WHEREOF, Lenders, Lenders' Agent, Borrowers and Borrowers'
Agent have caused these presents to be duly executed as of the day and year
first above written.
LENDERS BORROWERS
CONGRESS FINANCIAL CORPORATION TEREX CORPORATION, individually as a
Borrower and as Borrowers' Agent
By: Xxx Xxxx By: Xxxxxx X. Xxxxxxxxx
Title: Senior Vice President Title: Secretary
Commitment Percentage: 58.3333%
Address: Chief Executive Office:
1133 Avenue of the Americas 000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000 Xxxxxxxx, Xxxxxxxxxxx 00000
FOOTHILL CAPITAL CORPORATION, XXXXX MATERIAL HANDLING
individually as a Lender and COMPANY
as Lenders' Agent
By: Xxxxxxx Xxxx By: Xxxxxx X. Xxxxxxxxx
Title: Senior Vice President Title: Secretary
Commitment Percentage: 41.6667%
Address: Chief Executive Office:
00000 Xxxxx Xxxxxx Xxxxxxxxx 000 Xxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxxx 0000 Xxxxxxxxx, Xxxxxxxx 00000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
KOEHRING CRANES, INC.
By: Xxxxxx X. Xxxxxxxxx
Title: Secretary
Chief Executive Office:
000 00xx Xxxxxx, X.X.
Xxxxxxx, Xxxx 00000
PPM CRANES, INC.
By: Xxxxxx X. Xxxxxxxxx
Title: Secretary
Chief Executive Office:
Xxxxxxx 000 Xxxx
Xxxxxxxx Center for Business
and Industry
Xxxxxx, Xxxxx Xxxxxxxx 00000
