Exhibit 10.1
EXECUTION COPY
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CREDIT AGREEMENT
among
PRECISION PARTNERS, INC.,
as Borrower,
The Several Guarantors From Time to Time Hereof,
The Several Lenders
from Time to Time Parties Hereto.
CITICORP U.S.A., INC.,
as Administrative Agent
NATIONSBANK, N.A.,
as Syndication Agent,
and
SUNTRUST BANK, ATLANTA,
as Documentation Agent,
Dated as of March 19, 1999
XXXXXXX XXXXX XXXXXX INC.,
as Arranger
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TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS........................................................................................1
1.1 Defined Terms......................................................................................1
1.2 Other Definitional Provisions.....................................................................30
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS...................................................................31
2.1 Term Commitments..................................................................................31
2.2 Revolving Commitments; Borrowing Base Prepayments.................................................31
2.3 Procedure for Borrowing; Scheduled Repayments.....................................................31
2.4 Commitment Fees, etc..............................................................................33
2.5 Termination or Reduction of Commitments...........................................................33
2.6 Optional Prepayments..............................................................................33
2.7 Mandatory Prepayments and Commitment Reductions...................................................33
2.8 Conversion and Continuation Options...............................................................35
2.9 Limitations on Eurodollar Tranches................................................................35
2.10 Interest Rates and Payment Dates..................................................................36
2.11 Computation of Interest and Fees..................................................................36
2.12 Inability to Determine Interest Rate..............................................................37
2.13 Pro Rata Treatment and Payments...................................................................37
2.14 Requirements of Law...............................................................................39
2.15 Taxes.............................................................................................40
2.16 Indemnity.........................................................................................41
2.17 Change of Lending Office..........................................................................42
2.18 Replacement of Lenders............................................................................42
SECTION 3. LETTERS OF CREDIT.................................................................................43
3.1 L/C Commitment....................................................................................43
3.2 Procedure for Issuance of Letter of Credit........................................................43
3.3 Fees and Other Charges............................................................................44
3.4 L/C Participations................................................................................44
3.5 Reimbursement Obligation of the Borrower..........................................................45
3.6 Indemnification; Nature of Issuing Lender's Duties................................................45
3.7 Letter of Credit Payments.........................................................................47
3.8 Applications......................................................................................47
SECTION 4. REPRESENTATIONS AND WARRANTIES....................................................................47
4.1 Financial Condition...............................................................................47
4.2 No Change.........................................................................................49
4.3 Corporate Existence; Compliance with Law..........................................................49
4.4 Corporate Power; Authorization; Enforceable Obligations...........................................50
4.5 No Legal Bar......................................................................................50
4.6 Litigation........................................................................................50
4.7 No Default........................................................................................50
4.8 Ownership of Property; Liens......................................................................50
4.9 Intellectual Property.............................................................................51
4.10 Taxes.............................................................................................51
4.11 Federal Regulations...............................................................................51
4.12 Labor Matters.....................................................................................51
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4.13 ERISA.............................................................................................51
4.14 Investment Company Act; Other Regulations.........................................................52
4.15 Subsidiaries......................................................................................52
4.16 Use of Proceeds...................................................................................52
4.17 Environmental Matters.............................................................................52
4.18 Accuracy of Information, etc......................................................................54
4.19 Security Documents................................................................................54
4.20 Solvency..........................................................................................55
4.21 Senior Debt.......................................................................................55
4.22 Year 2000 Matters.................................................................................55
4.23 Regulation H......................................................................................56
4.24 Licenses and Permits; Compliance with Laws........................................................56
SECTION 5. CONDITIONS PRECEDENT..............................................................................56
5.1 Conditions to Initial Extension of Credit.........................................................56
5.2 Conditions to Each Extension of Credit............................................................62
SECTION 6. AFFIRMATIVE COVENANTS.............................................................................62
6.1 Financial Statements..............................................................................62
6.2 Certificates; Other Information...................................................................63
6.3 Payment of Obligations............................................................................65
6.4 Maintenance of Existence; Compliance..............................................................65
6.5 Maintenance of Property; Insurance................................................................65
6.6 Inspection of Property; Books and Records; Discussions............................................65
6.7 Notices...........................................................................................66
6.8 Environmental Laws................................................................................67
6.9 Additional Collateral, etc........................................................................68
6.10 Year 2000 Matters.................................................................................70
6.11 Post-Closing Surveys..............................................................................70
SECTION 7. NEGATIVE COVENANTS................................................................................70
7.1 Financial Condition Covenants.....................................................................70
7.2 Indebtedness......................................................................................72
7.3 Liens.............................................................................................73
7.4 Fundamental Changes...............................................................................75
7.5 Disposition of Property...........................................................................75
7.6 Restricted Payments...............................................................................76
7.7 Investments.......................................................................................76
7.8 Modifications of Certain Instruments..............................................................78
7.9 Transactions with Affiliates......................................................................78
7.10 Sales and Leasebacks..............................................................................78
7.11 Changes in Fiscal Periods.........................................................................78
7.12 Negative Pledge Clauses...........................................................................78
7.13 Clauses Restricting Precision Group Member Distributions..........................................78
7.14 Lines of Business.................................................................................79
7.15 Amendments to Acquisition Documents...............................................................79
7.16 Designated Senior Debt Provisions.................................................................79
7.17 Limitation on Holdco Business.....................................................................79
SECTION 8. EVENTS OF DEFAULT.................................................................................80
SECTION 9. THE AGENTS........................................................................................83
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9.1 Appointment.......................................................................................83
9.2 Delegation of Duties..............................................................................84
9.3 Exculpatory Provisions............................................................................84
9.4 Reliance by Agents................................................................................84
9.5 Notice of Default.................................................................................85
9.6 Non-Reliance on Any Agent and Other Lenders.......................................................85
9.7 Indemnification...................................................................................86
9.8 Agent in Its Individual Capacity..................................................................86
9.9 Successor Agents..................................................................................86
9.10 Authorization to Release Liens....................................................................87
SECTION 10. MISCELLANEOUS.....................................................................................87
10.1 Amendments and Waivers............................................................................87
10.2 Notices...........................................................................................88
10.3 No Waiver; Cumulative Remedies....................................................................89
10.4 Survival of Representations and Warranties........................................................89
10.5 Payment of Expenses and Taxes.....................................................................90
10.6 Successors and Assigns; Participations and Assignments............................................91
10.7 Adjustments; Setoff...............................................................................93
10.8 Counterparts......................................................................................93
10.9 Severability......................................................................................94
10.10 Integration.......................................................................................94
10.11 Governing Law.....................................................................................94
10.12 Submission to Jurisdiction; Waivers...............................................................94
10.13 Acknowledgments...................................................................................95
10.14 Confidentiality...................................................................................95
10.15 Waivers of Jury Trial.............................................................................95
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ANNEX:
A Pricing Grid
SCHEDULES:
1.1A Commitments
0.xX Mortgaged Property
4.4 Consents, Authorizations, Filings and Notices
4.15 Subsidiaries
4.19(a) UCC Filing Jurisdictions - Security Agreement
4.19(b) UCC Filing Jurisdictions - Securities Pledge Agreement
4.19(c) Mortgage Recording Jurisdictions
5.1 (b) Precision Reorganization
5.1(e) Indebtedness
7.2(d) Existing Indebtedness
7.3(f) Existing Liens
7.5 Certain Property to Be Sold
7.7 Existing Investments
EXHIBITS:
A-1 Form of Holdco Guarantee
A-2 Form of Subsidiary Guarantee
B-1 Form of Borrowing Base Certificate
B-2 Form of Compliance Certificate
C-1 Form of Closing Certificate
C-2 Form of Solvency Certificate
C-3 Form of Environmental Certificate
D Form of Mortgage
E Form of Assignment and Acceptance
F Form of Legal Opinion of Xxxxx, Day, Xxxxxx & Xxxxx
G Form of Exemption Certificate
H-1 Form of Notice of Borrowing
H-2 Form of Notice of Conversion/Continuation
I Form of Security Agreement
J Form of Local Counsel Opinion
K Form of Securities Pledge Agreement
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CREDIT AGREEMENT, dated as of March 19, 1999, among PRECISION
PARTNERS, INC., a Delaware corporation (the "BORROWER"), PRECISION PARTNERS
HOLDING COMPANY, a Delaware corporation, MID STATE MACHINE PRODUCTS, a Maine
corporation, GALAXY INDUSTRIES CORPORATION, a Michigan corporation, CERTIFIED
FABRICATORS, INC., a California corporation, CALBRIT DESIGN, INC., a California
corporation, GENERAL AUTOMATION, INC., an Illinois corporation, and NATIONWIDE
PRECISION PRODUCTS CORP., a New York corporation, the several banks and other
financial institutions or entities from time to time parties to this Agreement
(the "LENDERS"), CITICORP U.S.A., INC., as administrative agent, NATIONSBANK,
N.A., as syndication agent, and SUNTRUST BANK, ATLANTA, as documentation agent.
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the terms listed
in this Section 1.1 shall have the respective meanings set forth in this
Section 1.1.
"ACQUISITION AGREEMENTS": the collective reference to the
Galaxy Acquisition Agreement, the Mid State Acquisition Agreement, the Certified
Fabricators Acquisition Documentation, the General Automation Acquisition
Documentation and the Nationwide Acquisition Documentation.
"ACQUISITION DOCUMENTATION": collectively, (a) the Acquisition
Agreements and all schedules, exhibits and annexes thereto and all side letters
and agreements affecting the terms thereof or entered into in connection
therewith and (b) the employment agreements entered into on September 30, 1998
with S. Xxxxxxx Xxxxxxxxx and Xxxxxxx Xxxxx, in each case as amended,
supplemented or otherwise modified from time to time in accordance with
Section 7.15.
"ACQUISITIONS" means, collectively, the Certified Acquisition,
the General Automation Acquisition and the Nationwide Acquisition.
"ADJUSTMENT DATE": as defined in the Pricing Grid.
"ADMINISTRATIVE AGENT": Citicorp U.S.A., Inc., together with
its affiliates, as the administrative agent for the Lenders under this Agreement
and the other Loan Documents, together with any of its successors.
"AFFILIATE": as to any Person, any other Person that, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person means
the power, directly or indirectly, either to (a) vote 10% or more of the
securities having ordinary voting power for the election of directors (or
persons performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
"AGENT-RELATED PERSONS": the Agents, and any successor agent
pursuant to Section 9.9, together with their respective Affiliates (including,
in the case of Citicorp U.S.A., Inc., as a Lender and Xxxxxxx Xxxxx Barney Inc.,
as Arranger), and the officers, directors, employees, agents, advisors and
attorneys-in-fact of such Persons and Affiliates.
"AGENTS": means the Administrative Agent, Syndication Agent
and Documentation Agent.
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"AGGREGATE EXPOSURE": with respect to any Lender at any time,
an amount equal to (a) until the Closing Date, the aggregate amount of such
Lender's Commitments at such time and (b) thereafter, the sum of (i) the
aggregate then unpaid principal amount of such Lender's Term Loans and (ii) the
amount of such Lender's Revolving Commitments then in effect or, in the case of
Revolving Lenders, if the Revolving Commitments have been terminated, the amount
of such Lender's Revolving Extensions of Credit then outstanding.
"AGGREGATE EXPOSURE PERCENTAGE": with respect to any Lender at
any time, the ratio (expressed as a percentage) of such Lender's Aggregate
Exposure at such time to the Aggregate Exposure of all Lenders at such time.
"AGREEMENT": this Credit Agreement, as amended, supplemented
or otherwise modified from time to time.
"APPLICABLE MARGIN": a rate PER ANNUM equal to 225 bps in the
case of Eurodollar Loans and 200 bps in the case of Base Rate Loans; PROVIDED,
that on and after the date that is three months after the Closing Date, the
Applicable Margin will be determined pursuant to the Pricing Grid.
"APPLICATION": an application, in such form as the Issuing
Lender may specify from time to time, requesting the Issuing Lender to open a
Letter of Credit.
"ASSET SALE": (a) any Disposition of property or series of
related Dispositions of property (excluding any such Disposition permitted by
clause (a), (b), (c) or (d) of Section 7.5) that yields net proceeds after all
reasonable third-party transaction costs to the Precision Group Members (valued
at the initial principal amount thereof in the case of non-cash proceeds
consisting of notes or other debt securities and valued at fair market value in
the case of other non-cash proceeds) in excess of $1,000,000 and (b) any sale or
issuance by any Precision Group Member (other than Holdco) of its Capital Stock
(excluding sales or issuances to a Wholly Owned Qualified Precision Group
Member).
"ASSIGNEE": as defined in Section 10.6(c).
"ASSIGNMENT AND ACCEPTANCE": an Assignment and Acceptance,
substantially in the form of Exhibit E.
"ASSIGNOR": as defined in Section 10.6(c).
"AVAILABLE REVOLVING COMMITMENT": as to any Revolving Lender
at any time, an amount equal to the excess, if any, of (a) such Lender's
Revolving Commitment then in effect over (b) such Lender's Revolving Extensions
of Credit then outstanding.
"BANK OF AMERICA": Bank of America National Trust and Savings
Association.
"BASE RATE": a fluctuating interest rate PER ANNUM in effect
from time to time, which rate PER ANNUM shall at all times be equal to the
higher of (a) the rate of interest announced publicly by Citibank, N.A. in New
York, New York, from time to time, as Citibank, N.A.'s base rate and (b) 0.50%
PER ANNUM above the Federal Funds Effective Rate. Each change in any interest
rate provided for herein based upon the Base Rate resulting from a change in the
Base Rate shall take effect at the time of such change in the Base Rate.
"BASE RATE LOANS": Loans the rate of interest applicable to
which is based upon the Base Rate.
"BENEFITTED LENDER": as defined in Section 10.7(a).
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"BOARD": the Board of Governors of the Federal Reserve System
of the United States (or any successor).
"BORROWER": as defined in the preamble hereto.
"BORROWING BASE": as of any date of determination, an amount
equal to the sum of (a) 85% of Eligible Receivables as of such date and (b) 50%
of Eligible Inventory as of such date.
"BORROWING BASE CERTIFICATE": a certificate substantially in
the form of Exhibit B-1.
"BORROWING DATE": any Business Day specified by the Borrower
as a date on which the Borrower requests the relevant Lenders to make Loans
hereunder.
"BUSINESS": as defined in Section 4.17(b).
"BUSINESS DAY": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to close, PROVIDED, that with respect to notices and determinations in
connection with, and payments of principal and interest on, Eurodollar Loans,
such day is also a day for trading by and between banks in Dollar deposits in
the interbank eurodollar market
"CAPITAL ASSET EXCHANGE": a substantially contemporaneous
exchange, or series of related exchanges, of assets constituting property, plant
or equipment for like-kind assets that are useful in the business of the
Precision Group Members and that have a fair market value (determined in good
faith by the Borrower) at least equal to the fair market value of the exchanged
assets; PROVIDED that no Capital Asset Exchange shall exceed $3,000,000 in fair
market value.
"CAPITAL EXPENDITURES": for any period, with respect to any
Person, the aggregate of all expenditures by such Person and its Subsidiaries
for the acquisition or leasing (pursuant to a capital lease) of fixed or capital
assets or additions to equipment (including replacements, capitalized repairs
and improvements during such period) that should be capitalized under GAAP on a
consolidated balance sheet of such Person and its Subsidiaries.
"CAPITAL LEASE OBLIGATIONS": as to any Person, the obligations
of such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property or a
combination thereof which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
"CAPITAL STOCK": any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the foregoing.
"CARLISLE GROUP": the collective reference to Carlisle
Enterprises and its Control Investment Affiliates.
"CASH EQUIVALENTS": means (a) securities issued or directly
and fully guaranteed or insured by the United States or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities of not more than twelve
months from the date of acquisition, (b) U.S. dollar denominated time deposits
and certificates of deposit of (i) any Lender, (ii) any domestic commercial bank
of recognized standing having capital and surplus in excess of $500,000,000 or
(iii) any bank whose short-term
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commercial paper rating from S&P is at least A-1 or the equivalent thereof or
from Xxxxx'x is at least P-1 or the equivalent thereof (any such bank being an
"APPROVED BANK"), in each case with maturities of not more than 270 days from
the date of acquisition, (c) commercial paper and variable or fixed rate notes
issued by any Approved Bank (or by the parent company thereof) or any variable
rate notes issued by, or guaranteed by, any domestic corporation rated A-1 (or
the equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or
better by Moody's and maturing within six months of the date of acquisition, (d)
repurchase agreements entered into by any Person with a bank or trust company
(including any of the Lenders) or recognized securities dealers having capital
and surplus in excess of $500,000,000 for direct obligations issued by or fully
guaranteed by the Untied States in which such Person shall have a perfected
first priority security interest (subject to no other Liens) and having, on the
date of purchase thereof, a fair market value of at least 100% of the amount of
the repurchase obligations, (e) Investments, classified in accordance with GAAP
as current assets, in money market investment programs registered under the
Investment Company Act of 1940, as amended, which are administered by reputable
financial institutions having capital of at least $500,000,000 and the
portfolios of which are limited to Investments of the character described in the
foregoing clauses (a) through (d) and (f) securities with maturities of six
months or less from the date of acquisition backed by standby letters of credit
issued by any Lender or any commercial bank satisfying the requirements of
clause (b)(ii) or (iii).
"CERTIFIED ACQUISITION": the acquisition by the Borrower of
100% of the Capital Stock of Certified Fabricators pursuant to the Certified
Fabricators Acquisition Documentation and on terms satisfactory to the
Administrative Agent.
"CERTIFIED FABRICATORS": the collective reference to Certified
Fabricators, Inc., a California corporation, and Calbrit Design, Inc., a
California corporation.
"CERTIFIED FABRICATORS ACQUISITION DOCUMENTATION": the
documentation effecting the Certified Acquisition, including all schedules,
exhibits and annexes thereto and all side letters and agreements affecting the
terms thereof and entered into in connection therewith.
"CITICORP USA": Citicorp U.S.A., Inc.
"CLOSING DATE": the date on which the conditions precedent set
forth in Section 5.1 shall have been satisfied, which date is March 19, 1999.
"CODE": the Internal Revenue Code of 1986, as amended from
time to time.
"COLLATERAL": all property of the Loan Parties, now owned or
hereafter acquired, of whatever kind or nature pledged as collateral for the
obligations under any Security Document.
"COLLATERAL ASSIGNMENT": the Collateral Assignment of
Sublease, Subordination, Non-disturbance and Attornment to be executed and
delivered by Nationwide in favor of and for the benefit of the Administrative
Agent for the benefit of the Lenders.
"COMMITMENT": as to any Lender, the sum of the Term Commitment
and the Revolving Commitment of such Lender.
"COMMITMENT FEE RATE": 50 bps PER ANNUM; PROVIDED, that on and
after the date that is three months after the Closing Date, the Commitment Fee
Rate will be determined pursuant to the Pricing Grid.
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"COMMONLY CONTROLLED ENTITY": an entity, whether or not
incorporated, that is under common control with the Borrower within the meaning
of Section 4001 of ERISA or is part of a group that includes the Borrower and
that is treated as a single employer under Section 414 of the Code.
"COMPLIANCE CERTIFICATE": a certificate duly executed by a
Responsible Officer substantially in the form of Exhibit B-2.
"CONFIDENTIAL INFORMATION MEMORANDUM": a Confidential
Information Memorandum relating to the credit facilities contemplated by this
Agreement in the form approved by the Borrower and provided to potential
Lenders.
"CONSOLIDATED CURRENT ASSETS": at any date, all amounts (other
than cash and Cash Equivalents) that would, in conformity with GAAP, be set
forth opposite the caption "total current assets" (or any like caption) on a
consolidated balance sheet of any Person at such date.
"CONSOLIDATED CURRENT LIABILITIES": at any date, all amounts
that would, in conformity with GAAP, be set forth opposite the caption "total
current liabilities" (or any like caption) on a consolidated balance sheet of
any Person at such date, but excluding (a) the current portion of any Funded
Debt of such Person and (b) without duplication of clause (a) above, all
Indebtedness consisting of Revolving Loans to the extent otherwise included
therein.
"CONSOLIDATED EBITDA": for any Person for any period,
Consolidated Net income for such period PLUS, without duplication and to the
extent reflected as a charge in the statement of such Consolidated Net Income
for such period, the sum of (a) income tax expense, (b) interest expense,
amortization or write-off of debt discount and debt issuance costs and
commissions, discounts and other fees and charges associated with Indebtedness
(including the Loans and any Subordinated Indebtedness), (c) depreciation and
amortization expense, (d) amortization of intangibles (including, but not
limited to, goodwill) and organization costs, (e) accruals for or expenses of
performance-based bonus payments made to S. Xxxxxxx Xxxxxxxxx pursuant to his
employment agreement in an aggregate amount not to exceed $3,000,000 and
performance-based bonus payments made to Xxxxxxx Xxxxx pursuant to his
employment agreement in an aggregate amount not to exceed $3,000,000, (f) any
extraordinary, unusual or non-recurring expenses (including expenses incurred in
connection with the Acquisitions and any Permitted Acquisition) or losses
(including, whether or not otherwise includable as a separate item in the
statement of such Consolidated Net Income for such period, non-cash losses on
sales of assets outside of the ordinary course of business) acceptable to the
Lenders, PROVIDED that any cash amounts referred to in this clause (f)
(excluding any amounts referred to in the first parenthetical) shall not, in the
aggregate, exceed $1,500,000 for any fiscal year of the Borrower, (g) management
fees described in the first parenthetical of Section 7.9, and (h) any other
non-cash charges, and MINUS, to the extent included in the statement of such
Consolidated Net Income for such period, the sum of (a) interest income, (b) any
extraordinary, unusual or nonrecurring income or gains (including, whether or
not otherwise includable as a separate item in the statement of such
Consolidated Net Income for such period, gains on the sales of assets outside of
the ordinary course of business) and (c) any other noncash income, all as
determined on a consolidated basis. For the purposes of calculating Consolidated
EBITDA for any period of four consecutive fiscal quarters (each, a "REFERENCE
PERIOD") pursuant to any determination of the Consolidated Leverage Ratio, if
during such Reference Period any Precision Group Member shall have made a
Material Disposition or Material Acquisition, Consolidated EBITDA for such
Reference Period shall be calculated after giving PRO FORMA effect thereto,
reasonably acceptable to the Administrative Agent, as if such Material
Disposition or Material Acquisition occurred on the first day of such Reference
Period.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO": for any Person for
any period, the ratio of (a) Consolidated EBITDA for such period to (b)
Consolidated Fixed Charges for such period, with Consolidated Fixed Charges
calculated after giving PRO FORMA effect to the incurrence or discharge of any
Fixed Charge with relation to
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any Material Acquisition or Material Disposition during such period as if such
incurrence or discharge had occurred on the first day of such period.
"CONSOLIDATED FIXED CHARGES": for any Person for any period,
the sum (without duplication) of (a) Consolidated Interest Expense for such
period, (b) Consolidated Lease Expense for such period, (c) total cash tax
expense of such Person for such period, (d) scheduled payments made during such
period on account of principal of Indebtedness of such Person (including
scheduled principal payments in respect of the Term Loans) and (e) Capital
Expenditures for such period.
"CONSOLIDATED INTEREST COVERAGE RATIO": for any Person for any
period, the ratio of (a) Consolidated EBITDA for such period to (b) Consolidated
Interest Expense for such period, with Consolidated Interest Expense calculated
after giving effect to the incurrence or repayment of any Indebtedness of such
Person with relation to any Material Acquisition or Material Disposition during
such period as if such incurrence or repayment had occurred on the first day of
such period.
"CONSOLIDATED INTEREST EXPENSE": for any Person for any
period, total cash interest expense (including that attributable to Capital
Lease Obligations) of such Person on a consolidated basis for such period with
respect to all outstanding Indebtedness of such Person (including all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing and net costs under Hedge Agreements
in respect of such Indebtedness to the extent such net costs are allocable to
such period in accordance with GAAP).
"CONSOLIDATED LEASE EXPENSE": for any Person for any period,
the aggregate amount of fixed and contingent rentals payable by such Person for
such period with respect to capital leases of real and personal property,
determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED LEVERAGE RATIO": as at the last day of any
period for any Person, the ratio of (a) Consolidated Total Debt on such day to
(b) Consolidated EBITDA for such period.
"CONSOLIDATED NET INCOME": for any period for any Person, the
consolidated net income (or loss) of such Person, determined on a consolidated
basis in accordance with GAAP; PROVIDED that there shall be excluded (a) except
as otherwise expressly provided herein, the income (or deficit) of any Person
accrued prior to the date it becomes a Subsidiary of such Person or is merged
into or consolidated with such Person, (b) the income (or deficit) of any Person
in which such Person has an ownership interest, except to the extent that any
such income is actually received by such Person in the form of dividends or
similar distributions, and (c) the undistributed earnings of any Subsidiary of
such Person to the extent that the distribution of such earnings to such Person
is not at the time permitted by the terms of any Contractual Obligation or
Requirement of Law applicable to such Subsidiary.
"CONSOLIDATED SENIOR LEVERAGE RATIO": as at the last day of
any period, the ratio of (a) Consolidated Total Senior Debt on such day to (b)
Consolidated EBITDA for such period.
"CONSOLIDATED TOTAL DEBT": at any date for any Person, the
aggregate principal amount of all Indebtedness less Excess Cash Balances of such
Person at such date, determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED TOTAL SENIOR DEBT": at any date for any Person,
the aggregate principal amount of all Indebtedness of such Person at such date
other than Subordinated Indebtedness, less Excess Cash Balances, determined on a
consolidated basis in accordance with GAAP.
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"CONSOLIDATED WORKING CAPITAL": at any date for any Person,
the excess of Consolidated Current Assets on such date over Consolidated Current
Liabilities on such date.
"CONTRACTUAL OBLIGATION": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"CONTROL": as to any Person, the ability of any other Person,
directly or indirectly, to exclusively direct or cause the direction of the
management and policies of the first Person, whether by contract or otherwise.
"CONTROL INVESTMENT AFFILIATE": as to any Person, any other
Person that (a) directly or indirectly, is in Control of, is Controlled by, or
is under common Control with, such Person and (b) is organized by such Person
primarily for the purpose of making equity or debt investments in one or more
companies.
"DEFAULT": any of the events specified in Section 8, whether
or not any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"DISPOSITION": with respect to any property, any sale, lease,
sale and leaseback, assignment, conveyance, transfer or other disposition
thereof (including by way of merger or consolidation and any sale- leaseback
transaction). The terms "DISPOSE" and "DISPOSED OF" shall have correlative
meanings.
"DOCUMENTATION AGENT": Sun Trust, as the documentation agent
for the Lenders under this Agreement and the other Loan Documents, together with
any of its successors.
"DOLLARS" and "$": dollars in lawful currency of the United
States.
"DOMESTIC SUBSIDIARY": any Subsidiary of the Borrower
organized under the laws of any jurisdiction within the United States.
"ELIGIBLE ACCOUNT DEBTOR": each of General Electric
Corporation, Caterpillar Inc., Daimler Chrysler Corporation, New Venture Gear,
Mannesmann (Rexroth), LucasVarity (Xxxxxx-Xxxxx), Boeing and Xerox Corporation.
"ELIGIBLE INVENTORY": all inventory of the Precision Group
Members ("INVENTORY"), other than Ineligible Inventory (as defined below),
valued at the lower of cost or market value (in each case determined in
accordance with GAAP), reduced by the value of reserves which have been recorded
by any Precision Group Member with respect to obsolete, slow-moving or excess
Inventory. For the purposes of this definition, an item of Inventory shall
constitute "Ineligible Inventory" if:
(a) such item of Inventory is not assignable or a first
priority security interest in such item of Inventory in favor of the
Administrative Agent for the benefit of the Lenders has not been
obtained and fully perfected by filing Uniform Commercial Code
financing statements against the relevant Precision Group Member;
(b) such item of Inventory is subject to any Lien whatsoever,
other than Liens in favor of the Administrative Agent for the benefit
of the Lenders;
(c) such item of Inventory (i) is damaged or not in good
condition and not saleable consistent with past practices (to the
extent not provided for by reserves as described above) or (ii) does
not meet all
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material standards imposed by any Governmental Authority having
regulatory authority over such item of Inventory, its use or its sale;
(d) such item of Inventory is not currently either readily
usable or saleable, at prices approximating at least the cost thereof,
in the normal course of the business of the relevant Precision Group
Member (to the extent not provided for by reserves as described above);
(e) any event shall have occurred or any condition shall exist
with respect to such item of Inventory which would substantially impede
the ability of the relevant Precision Group Member to continue to use
or sell such item of Inventory in the normal course of business;
(f) any claim disputing the title of the relevant Precision
Group Member to, or right to possession of or dominion over, such item
of Inventory shall have been asserted;
(g) any representation or warranty contained in this Agreement
or in any other Loan Document applicable to either Inventory in general
or to any such specific item of Inventory has been breached with
respect to such item of Inventory;
(h) the relevant Precision Group Member does not have good and
marketable title as sole owner of such item of Inventory;
(i) such item of Inventory has been consigned to other
Persons, or is located at, or in the possession of, a vendor of any
Precision Group Member, or is in transit to or from, or held or stored
by, third parties, unless (i) the Person holding such Inventory has
entered into an agreement, satisfactory in form and substance to the
Administrative Agent, providing for the waiver or subordination of any
applicable Lien on the part of such Person with respect to such
Inventory and providing the Administrative Agent with the right to
repossess such Inventory upon the occurrence and during the continuance
of an Event of Default and (ii) in the case of consigned inventory, the
relevant Precision Group Member, in its capacity as consignor, shall
have filed appropriate Uniform Commercial Code financing statements
with respect to such Inventory;
(j) such item of Inventory is located on a leasehold as to
which the lessor has not entered into a landlord's waiver and consent,
satisfactory in form and substance to the Administrative Agent,
providing a waiver of any applicable Lien and providing the
Administrative Agent with the right to receive notice of default, the
right to repossess such item of Inventory at any time upon the
occurrence or during the continuance of a Default or Event of Default
and such other rights as may be acceptable to the Administrative Agent;
provided, however, an item of Inventory shall not constitute
"Ineligible Inventory" if (i) with respect to each of the Mortgaged
Properties located in the state of California, there has been no Lien
(either statutorily or at common law) created, incurred or imposed upon
any Inventory by the landlord or (ii) with respect to the Mortgaged
Properties located in the state of California as of the Closing Date,
the landlord has delivered to Administrative Agent within 30 days of
the Closing Date a letter whereby such landlord has agreed to provide
Administrative Agent with a notice of default by Certified Fabricators
under its lease;
(k) such item of Inventory is located outside one of the
states of the United States;
(l) such item of Inventory is evidenced by an Account;
(m) such item of Inventory is subject to any licensing,
patent, royalty, trademark, trade name or copyright agreements with any
third party from whom any Precision Group Member has received notice of
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a dispute in respect of any such agreement, other than such claim which
such Precision Group Member reasonably believes to be immaterial or
without merit;
(n) except in the case of Inventory owned by Galaxy,
Nationwide and Certified, such item of Inventory consists of packing,
packaging and/or shipping supplies or materials; or
(o) such item of Inventory has been otherwise determined by
the Administrative Agent (after consultation with the Borrower),
exercising its commercially reasonable discretion, to be unacceptable
because the Administrative Agent believes that such item of Inventory
is not readily saleable under the customary terms on which it is
usually sold (to the extent not provided for by reserves as specified
above).
"ELIGIBLE RECEIVABLES": the gross outstanding balance,
determined in accordance with GAAP and stated on a basis consistent with the
historical practices of the Precision Group Members as of the Closing Date, of
accounts receivable of any Precision Group Member arising out of sales of goods
or services made by any Precision Group Member in the ordinary course of
business ("ACCOUNTS"), other than Ineligible Accounts (as defined below), less
all finance charges, late fees and other fees that are unearned, and less the
value of any accrual which has been recorded by any Precision Group Member with
respect to downward price adjustments. For the purposes of this definition, an
Account shall constitute an "Ineligible Account" if:
(a) the Precision Group Members have not complied with all
material Requirements of Law, including, without limitation, all laws,
rules, regulations and orders of any governmental or judicial authority
relating to truth in lending, billing practices, fair credit reporting,
equal credit opportunity, debt collection practices and consumer debtor
protection, applicable to such Account (or any related contracts) or
affecting the collectability of such Account;
(b) such Account is not assignable or a first priority
security interest in such Account in favor of the Administrative Agent
for the benefit of the Lenders has not been obtained and fully
perfected by filing Uniform Commercial Code financing statements
against the relevant Precision Group Member;
(c) such Account is subject to any Lien whatsoever, other than
Liens in favor of the Administrative Agent for the benefit of the
Lenders;
(d) the relevant Precision Group Member, in order to be
entitled to collect such Account, is required to perform any additional
service for, or perform or incur any additional obligation to, the
Account debtor in respect of such Account;
(e) such Account does not constitute a legal, valid and
binding irrevocable payment obligation of the Account debtor in respect
of such Account to pay the balance thereof in accordance with its terms
or is subject to any defense, setoff, recoupment or counterclaim;
(f) the Account debtor in respect of such Account is a
Precision Group Member or an Affiliate, division or employee of any
Precision Group Member;
(g) such Account is an account of any Governmental Authority,
unless all rights of the relevant Precision Group Member with respect
to such Account have been assigned to the Administrative Agent in
accordance with the Assignment of Claims Act of 1940, as amended;
(h) an estimated or actual loss has been recognized in respect
of such Account, as determined in accordance with the usual business
practices of the relevant Precision Group Member (each such Account, a
"DEFAULTED ACCOUNT");
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(i) 20% or more of the aggregate outstanding amount of all
Accounts from the Account debtor in respect of such Account and its
Affiliates constitutes Defaulted Accounts;
(j) any representation or warranty contained in this Agreement
or in any other Loan Documents applicable either to Accounts in general
or to any such specific Account has been breached with respect to such
Account;
(k) 50% or more of the outstanding amount of all Accounts from
the Account debtor in respect of such Account has become ineligible;
(l) the Account debtor in respect of such Account has filed a
petition for relief under the United States Bankruptcy Code (or similar
action under any successor law or under any comparable law), made a
general assignment for the benefit of creditors, had filed against it
any petition or other application for relief under the United States
Bankruptcy Code (or similar action under any successor law or under any
comparable law), failed, suspended business operations, become
insolvent, called a meeting of its creditors for the purpose of
obtaining any financial concession or accommodation, or had or suffered
a receiver or a trustee to be appointed for all or a significant
portion of its assets or affairs, in each case except to the extent
such matters have been dismissed or terminated or otherwise ceased to
be applicable;
(m) any portion of such Account has remained unpaid for a
period exceeding 90 days from the due date (but only to the extent of
such overdue portion) or any Precision Group Member has reason to
believe such Account is uncollectable;
(n) the sale represented by such Account is to an Account
debtor organized or located outside one of the states of the United
States;
(o) the Account debtor in respect of such Account is a
supplier or creditor of any Precision Group Member (but only to the
extent of the lesser of (i) the amount owing from such Account debtor
to the relevant Precision Group Member pursuant to Accounts that are
otherwise eligible and (ii) the amount owing to such Account debtor by
the relevant Precision Group Member);
(p) such Account is not denominated in Dollars or is payable
outside the United States;
(q) the sale represented by such Account is on a guaranteed
sale, sale-or-return, consignment, or sale on approval basis or is
subject to any right of return, setoff or chargeback;
(r) the relevant Precision Group Member, or any other party to
such Account, is in default in the performance or observance of any of
the terms thereof in any material respect;
(s) the relevant Precision Group Member does not have good and
marketable title to such Account as sole owner of such Account;
(t) such Account does not arise from the sale and delivery of
goods or rendition of services in the ordinary course of business to
the Account debtor in respect of such Account;
(u) such Account is on terms other than those normal or
customary in the business of the relevant Precision Group Member;
(v) such Account has associated payment terms exceeding 100
days from invoice date;
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(w) except in the case of Accounts owing by any Eligible
Account Debtor, if such Account were to constitute an Eligible
Receivable, more than 15% of all Eligible Receivables would be owing
from the Account debtor in respect of such Account or any of its
Affiliates, in which case only that portion of the Eligible Receivables
owing from such Account debtor representing amounts in excess of 15% of
all Eligible Receivables shall constitute Ineligible Accounts;
(x) any amounts payable under or in connection with such
Account are evidenced by chattel paper, promissory notes or other
instruments, unless such chattel paper, promissory notes or instruments
have been endorsed and delivered to the Administrative Agent;
(y) such Account has been paid by a check which has been
returned for insufficient funds if such check is in an amount of at
least $100,000; or
(z) such Account has been placed with an attorney or other
third party for collection.
"ENVIRONMENTAL CERTIFICATE": a certificate duly executed by a
Responsible Officer substantially in the form of Exhibit C-3.
"ENVIRONMENTAL LAWS": any and all foreign, Federal, state,
local or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment as
now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"EUROCURRENCY LIABILITIES": the meaning specified in
Regulation D of the Board, as in effect from time to time.
"EURODOLLAR LOANS": Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"EURODOLLAR RATE": for any Interest Period for each Eurodollar
Tranche, an interest rate PER ANNUM equal to the rate PER ANNUM obtained by
DIVIDING (a) the average (rounded upward to the nearest whole multiple of 1/16
of 1% PER ANNUM, if such average is not such a multiple) of the rates PER ANNUM
at which deposits in U.S. Dollars are offered by the principal office of each of
the Reference Banks in London, England to prime banks in the London interbank
market at approximately 10:00 A.M. (New York time) three Business Days before
the first day of such Interest Period in an amount substantially equal to such
Eurodollar Tranche and for a period equal to such Interest Period by (b) a
percentage equal to 100% MINUS the Eurodollar Rate Reserve Percentage for such
Interest Period. The Eurodollar Rate for each Interest Period for each
Eurodollar Tranche shall be determined by the Administrative Agent on the basis
of applicable rates furnished to and received by the Administrative Agent from
the Reference Banks two Business Days before the first day of such Interest
Period, SUBJECT, HOWEVER, to the provisions of Section 2.13.
"EURODOLLAR RATE RESERVE PERCENTAGE": for any Interest Period
for each Eurodollar Tranche the reserve percentage (if any) applicable three
Business Days before the first day of such Interest Period under regulations
issued from time to time by the Board of Governors of the Federal Reserve System
(or any successor) for determining the maximum reserve requirement (including,
without limitation, any emergency, supplemental or other marginal reserve
requirement) for a member bank of the Federal Reserve System in New York City
with deposits exceeding $1,000,000,000 with respect to liabilities or assets
consisting of or including Eurocurrency
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Liabilities (or with respect to any other category of liabilities that includes
deposits by reference to which the interest rate on Eurodollar Tranche is
determined) having a term equal to such Interest Period.
"EURODOLLAR TRANCHE": the collective reference to Eurodollar
Loans the then current Interest Periods with respect to all of which begin on
the same date and end on the same later date (whether or not such Loans shall
originally have been made on the same day).
"EVENT OF DEFAULT": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
"EXCESS CASH BALANCES": at any date for any Person, the
greater of (i) zero and (ii) existing cash balances minus $250,000.
"EXCESS CASH FLOW": for any fiscal year of the Precision Group
Members, the excess, if any, of (a) the sum, without duplication, of (i)
Consolidated Net Income for such fiscal year, (ii) an amount equal to the amount
of all non-cash charges (including depreciation and amortization) deducted in
arriving at such Consolidated Net Income, (iii) decreases in Consolidated
Working Capital for such fiscal year, and (iv) an amount equal to the aggregate
net non-cash loss on the Disposition of property by the Precision Group Members
during such fiscal year (other than sales of inventory in the ordinary course of
business), to the extent deducted in arriving at such Consolidated Net Income,
over (b) the sum, without duplication, of (i) an amount equal to the amount of
all non-cash income included in arriving at such Consolidated Net Income, (ii)
the aggregate amount actually paid by the Precision Group Members in cash during
such fiscal year on account of Capital Expenditures (excluding the principal
amount of Indebtedness (other than Revolving Loans) incurred in connection with
such expenditures and any such expenditures financed with the proceeds of any
Reinvestment Deferred Amount), (iii) the aggregate amount of all prepayments of
Revolving Loans during such fiscal year to the extent accompanying permanent
optional reductions of the Revolving Commitments and all optional prepayments of
the Term Loans during such fiscal year, (iv) the aggregate amount of all
regularly scheduled principal payments of Funded Debt (including the Term Loans)
of the Precision Group Members made during such fiscal year (including any such
payments resulting from scheduled permanent reductions of any revolving credit
facility), (v) increases in Consolidated Working Capital for such fiscal year,
and (vi) an amount equal to the aggregate net non-cash gain on the Disposition
of property by the Precision Group Members during such fiscal year (other than
sales of inventory in the ordinary course of business), to the extent included
in arriving at such Consolidated Net Income.
"EXCESS CASH FLOW APPLICATION DATE": as defined in
Section 2.7(c).
"EXCLUDED FOREIGN SUBSIDIARY": any Foreign Subsidiary in
respect of which either (a) the pledge of all of the Capital Stock of such
Subsidiary as Collateral or (b) the guaranteeing by such Subsidiary of the
Obligations, would, in the good faith judgment of the Borrower, result in
adverse tax consequences to the Precision Group Members.
"EXISTING CREDIT FACILITY": the credit facility, dated as of
September 30, 1998 and as amended to the date hereof, among the Borrower, Galaxy
Hold Co., Inc., Mid State Holding Co., Inc., the lenders party thereto and Bank
of America National Trust and Savings Association, as administrative agent.
"FACILITY": each of (a) the Term Commitments and the Term
Loans made thereunder (the "TERM FACILITY") and (b) the Revolving Commitments
and the extensions of credit made thereunder (the "REVOLVING FACILITY").
"FEDERAL FUNDS EFFECTIVE RATE": for any period, a fluctuating
interest rate PER ANNUM equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with
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members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for such day for such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by it.
"FOREIGN SUBSIDIARY": any Subsidiary of Precision that is not
a Domestic Subsidiary.
"FUNDED DEBT": as to any Person, all Indebtedness of such
Person that matures more than one year from the date of its creation or matures
within one year from such date but is renewable or extendible, at the option of
such Person, to a date more than one year from such date or arises under a
revolving credit or similar agreement that obligates the lender or lenders to
extend credit during a period of more than one year from such date, including
all current maturities and current sinking fund payments in respect of such
Indebtedness whether or not required to be paid within one year from the date of
its creation and, in the case of the Borrower, Indebtedness in respect of the
Loans.
"FUNDING OFFICE": the office of the Administrative Agent
specified in Section 10.2 or such other office as may be specified from time to
time by the Administrative Agent as its funding office by written notice to the
Borrower and the Lenders.
"GAAP": generally accepted accounting principles in the United
States as in effect from time to time, except that for purposes of Section 7.1,
GAAP shall be determined on the basis of such principles in effect on the date
hereof and consistent with those used in the preparation of the most recent
audited financial statements delivered pursuant to Section 4.1 (b). In the event
that any "Accounting Change" (as defined below) shall occur and such change
results in a change in the method of calculation of financial covenants,
standards or terms in this Agreement, then the Borrower and the Administrative
Agent agree to enter into negotiations in order to amend such provisions of this
Agreement so as to equitably reflect such Accounting Changes with the desired
result that the criteria for evaluating the financial condition of the Precision
Group Members shall be the same after such Accounting Changes as if such
Accounting Changes had not been made. Until such time as such an amendment shall
have been executed and delivered by the Borrower, the Administrative Agent and
the Required Lenders, all financial covenants, standards and terms in this
Agreement shall continue to be calculated or construed as if such Accounting
Changes had not occurred. "ACCOUNTING CHANGES" refers to changes in accounting
principles required by the promulgation of any rule, regulation, pronouncement
or opinion by the Financial Accounting Standards Board of the American Institute
of Certified Public Accountants or, if applicable, the SEC.
"GALAXY": Galaxy Industries Corporation, a Michigan
corporation.
"GALAXY ACQUISITION": the acquisition of 100% of the Capital
Stock of Galaxy pursuant to the Galaxy Acquisition Agreement.
"GALAXY ACQUISITION AGREEMENT": the Merger Agreement, dated as
of September 30, 1998, among Galaxy, the Persons listed on Schedule I thereto,
Galaxy Hold Co., Inc. and Galaxy Acquisition, Inc.
"GENERAL AUTOMATION": GA Acquisition Illinois, Inc., an
Illinois corporation to be renamed General Automation, Inc. after the General
Automation Acquisition.
"GENERAL AUTOMATION ACQUISITION": the acquisition by General
Automation of substantially all of the assets and certain of the liabilities of
General Automation, Inc., an Illinois corporation, on terms satisfactory to the
Administrative Agent.
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"GENERAL AUTOMATION ACQUISITION DOCUMENTATION": the
documentation effecting the General Automation Acquisition, including all
schedules, annexes and exhibits thereto and all side letters and agreements
affecting the terms thereof or entered into in connection therewith.
"GOVERNMENTAL AUTHORITY": any nation or government, any state
or other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).
"GUARANTEES": the Holdco Guarantee and the Subsidiary
Guarantees, substantially in the form of Exhibits A-1 and A-2, respectively, as
the same may be amended, supplemented or otherwise modified from time to time.
"GUARANTEE OBLIGATION": as to any Person (the "GUARANTEEING
PERSON"), any obligation of (a) the guaranteeing person or (b) another Person
(including any bank under any letter of credit) to induce the creation of which
the guaranteeing person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "PRIMARY OBLIGATIONS")
of any other third Person (the "PRIMARY OBLIGOR") in any manner, whether
directly or indirectly, including any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (1) for the purchase or payment of any such primary obligation or
(2) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; PROVIDED, HOWEVER, that the term "Guarantee Obligation" shall not
include endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Guarantee Obligation of any guaranteeing
person shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such guaranteeing person
may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by the
Borrower in good faith.
"GUARANTORS": the collective reference to Holdco and the
Subsidiary Guarantors.
"XXXXXX GROUP": the collective reference to Xxxxxx & Co. and
its Control Investment Affiliates.
"HEDGE AGREEMENTS": all swaps, caps, collars or similar
arrangements providing for protection against fluctuations in interest rates,
currency exchange rates or commodities prices or the exchange of nominal
interest obligations, either generally or under specific contingencies.
"HOLDCO" means Precision Partners Holding Company, a Delaware
corporation.
"HOLDCO GUARANTEE": the guarantee by Holdco, substantially in
the form of Exhibit A-1.
"HOLDCO PREFERRED" means the up to $27 million initial
liquidation preference amount of preferred equity issued by Holdco and not
paying or accruing dividends.
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"INDEBTEDNESS": of any Person means, without duplication:
(a) all obligations of such Person for borrowed money; (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments; (c) all obligations of such Person under conditional sale or other
title retention agreements relating to property or assets purchased by such
Person; (d) all obligations of such Person issued or assumed as the deferred
purchase price of property or services (excluding trade accounts payable and
accrued obligations incurred in the ordinary course of business); (e) all
Indebtedness of others 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 owned or acquired by such person, whether or not the obligations
secured thereby have been assumed (provided that the amount of such Indebtedness
will be limited to the value of the properly subject to such Lien); (f) all
guarantees by such Person of Indebtedness of others; (g) all Capital Lease
Obligations of such Person; (h) all net payment obligations of such Person in
respect of Hedge Agreements; (i) all obligations of such Person with respect to
redeemable preferred Capital Stock (or Capital Stock convertible or exchangeable
for redeemable preferred stock or Indebtedness) issued by such Person as to
which dividends are required to be paid in cash, with the amount of Indebtedness
represented thereby being equal to the greater of its voluntary or involuntary
purchase price or liquidation preference and maximum repurchase price; and (j)
all obligations of such Person as an account party in respect of letters of
credit and bankers' acceptances. The Indebtedness of any Person shall include
the Indebtedness of any partnership in which such Person is a general partner.
"INSOLVENCY": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"INSOLVENT": pertaining to a condition of Insolvency.
"INTELLECTUAL PROPERTY": the collective reference to all
rights, priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including copyrights, copyright licenses, patents, patent licenses, trademarks,
trademark licenses, technology, know-how and processes, and all rights to xxx at
law or in equity for any infringement or other impairment thereof, including the
right to receive all proceeds and damages therefrom.
"INTEREST PAYMENT DATE": (a) as to any Base Rate Loan, the
last Business Day of each March, June, September and December to occur while
such Loan is outstanding and the final maturity date of such Loan, (b) as to any
Eurodollar Loan having an Interest Period of three months or less, the last day
of such Interest Period, (c) as to any Eurodollar Loan having an Interest Period
longer than three months, each day that is three months, or a whole multiple
thereof, after the first day of such Interest Period and the last day of such
Interest Period and (d) as to any Loan (other than any Revolving Loan that is a
Base Rate Loan), the date of any repayment or prepayment made in respect
thereof.
"INTEREST PERIOD": as to any Eurodollar Loan, (a) initially,
the period commencing on the borrowing or conversion date, as the case may be,
with respect to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and (b) thereafter,
each period commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower by irrevocable notice to the
Administrative Agent not less than three Business Days prior to the last day of
the then current Interest Period with respect thereto; PROVIDED that all of the
foregoing provisions relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless the result of such extension
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would be to carry such Interest Period into another calendar month, in
which event such Interest Period shall end on the immediately preceding
Business Day;
(ii) the Borrower may not select an Interest Period for a
particular Facility that would extend beyond the Scheduled Revolving
Termination Date or beyond the date final payment is due on the Term
Loans, as the case may be; and
(iii) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month.
"INVESTMENTS": as defined in Section 7.7.
"ISSUING LENDER": Bank of America, in its capacity as issuer
under the Existing Credit Facility of the Letter of Credit outstanding on the
Closing Date, and Citicorp USA, in its capacity as issuer of any other Letter of
Credit hereunder.
"L/C COMMITMENT": $2,000,000.
"L/C FEE PAYMENT DATE": the last Business Day of each
March, June, September and December and the last day of the Revolving
Commitment Period.
"L/C OBLIGATIONS": at any time, an amount equal to the sum of
(a) the aggregate then undrawn and unexpired amount of the then outstanding
Letters of Credit and (b) the aggregate amount of drawings under Letters of
Credit that have not then been reimbursed pursuant to Section 3.5.
"L/C PARTICIPANTS": the collective reference to all the
Revolving Lenders other than the Issuing Lender.
"LENDERS": as defined in the preamble hereto.
"LETTERS OF CREDIT": as defined in Section 3.1(a).
"LIEN": any mortgage, deed of trust, pledge, hypothecation,
assignment, claim, charge, deposit arrangement, encumbrance, lien (statutory or
other), charge or other security interest or any preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
(including any conditional sale or other title retention agreement and any
capital lease having substantially the same economic effect as any of the
foregoing) or any filing of any financing statement under the Uniform Commercial
Code or any other similar notice of Lien under any similar notice or recording
statute of any Governmental Authority, including any easement, right-of-way or
other encumbrance on title to real property, in each of the foregoing cases
whether voluntary or imposed by law, and any agreement to give any of the
foregoing.
"LOAN": any loan made by any Lender pursuant to this
Agreement.
"LOAN DOCUMENTS": this Agreement, the Letters of Credit, the
Security Documents and the Notes and each of the other documents, agreements,
instruments, opinions and certificates now or hereafter executed and delivered
in connection herewith and therewith.
"LOAN PARTIES": the collective reference to Holdco, the
Borrower and each Subsidiary Guarantor.
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"MAJORITY FACILITY LENDERS": with respect to any Facility, the
holders of more than 50% of that portion of the Aggregate Exposure allocated to
such Facility.
"MATERIAL ACQUISITION" means any acquisition of property or
series of related acquisitions of property that (a) constitutes assets
comprising all or substantially all of an operating unit of a business or
constitutes all or substantially all of the common stock of a Person and (b)
involves the payment of consideration by the Precision Group Members in excess
of $3,000,000.
"MATERIAL ADVERSE EFFECT": (a) a materially adverse effect on
the business, condition (financial or otherwise), operations, performance or
properties of the Precision Group Members, taken as a whole, (b) a material
impairment of the ability of the Precision Group Members, taken as a whole, to
perform their collective obligations under the Loan Documents, or (c) a material
impairment of the rights of or benefits available to the Administrative Agent
and the Lenders under the Loan Documents.
"MATERIAL DISPOSITION": means any Disposition of property or
series of related Dispositions of property that yields gross proceeds to the
Precision Group Members in excess of $3,000,000.
"MATERIALS OF ENVIRONMENTAL CONCERN": any pollutant,
contaminant, gasoline or petroleum (including crude oil or any fraction thereof)
or petroleum products or any hazardous, toxic or other substances, materials,
wastes, constituents or chemicals defined or regulated under any applicable
Environmental Law, including without limitation, asbestos, polychlorinated
biphenyls and urea-formaldehyde insulation.
"MID STATE": Mid State Machine Products, a Maine corporation.
"MID STATE ACQUISITION": the acquisition of 100% of the
Capital Stock of Mid State pursuant to the Mid State Acquisition Agreement.
"MID STATE ACQUISITION AGREEMENT": the Redemption and Merger
Agreement, dated as of September 17, 1998, among Mid State, S. Xxxxxxx
Xxxxxxxxx, Mid State Holding Co., Inc. and Mid State Acquisition, Inc.
"MID STATE FOUNDATION": Mid State Foundation, a foundation
organized under the laws of the State of Maine.
"MORTGAGED PROPERTIES": the real properties listed on Schedule
1.1B, as to which the Administrative Agent for the benefit of the Lenders shall
be granted a Lien pursuant to the Mortgages.
"MORTGAGES": each of the fee and leasehold mortgages and deeds
of trust made by any Loan Party in favor of or for the benefit of the
Administrative Agent for the benefit of the Lenders, substantially in the form
of Exhibit D (with such changes thereto as shall be advisable under the law of
the jurisdiction in which such mortgage or deed of trust is to be recorded and
which shall include, without limitation, the Collateral Assignment), as the same
may be amended, supplemented or otherwise modified from time to time.
"MULTIEMPLOYER PLAN": a Plan that is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"NATIONSBANK": NationsBank, N.A.
"NATIONWIDE": Nationwide Acquisition Delaware, Inc., a
Delaware corporation to be renamed Nationwide Precision Products Corp. after the
Nationwide Acquisition.
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"NATIONWIDE ACQUISITION": the acquisition by Nationwide of
substantially all of the assets and certain of the liabilities of Nationwide
Precision Products Corporation, a New York corporation, on terms satisfactory to
the Administrative Agent.
"NATIONWIDE ACQUISITION DOCUMENTATION": the documentation
effecting the Nationwide Acquisition including all schedules, annexes and
exhibits thereto and all side letters and agreements affecting terms thereof or
entered into in connection therewith.
"NET CASH PROCEEDS": (a) in connection with any Asset Sale or
any Recovery Event, the proceeds thereof in the form of cash and Cash
Equivalents (including any such proceeds received by way of deferred payment of
principal pursuant to a note or installment receivable or purchase price
adjustment receivable or otherwise, but only as and when received) of such Asset
Sale or Recovery Event, net of attorneys' fees, accountants' fees, investment
banking fees, amounts required to be applied to the repayment of Indebtedness
secured by a Lien expressly permitted hereunder on any asset that is the subject
of such Asset Sale or Recovery Event (other than any Lien pursuant to a Security
Document) and other customary fees and expenses actually incurred in connection
therewith and net of taxes paid or reasonably estimated to be payable currently
as a result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), and (b) in connection with any
issuance or sale of equity securities or debt securities or instruments or the
incurrence of loans, the cash proceeds received from such issuance or
incurrence, net of attorneys' fees, investment banking fees, accountants' fees,
underwriting discounts and commissions and other customary fees and expenses
actually incurred in connection therewith.
"NON-EXCLUDED TAXES": as defined in Section 2.16(a).
"NON-U.S. LENDER": as defined in Section 2.16(d).
"NOTES": the collective reference to any promissory note
evidencing Loans.
"OBLIGATIONS": the unpaid principal of and interest on
(including interest accruing after the maturity of the Loans and Reimbursement
Obligations and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) the Loans and all other
obligations and liabilities of the Borrower to the Agents or to any Lender (or,
in the case of Hedge Agreements, any affiliate of any Lender), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, this
Agreement, any other Loan Document, the Letters of Credit, any Hedge Agreement
entered into with any Lender or any affiliate of any Lender or any other
document made, delivered or given in connection herewith or therewith, whether
on account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses (including all fees, charges and disbursements of counsel to the
Agents or to any Lender that are required to be paid by the Borrower pursuant
hereto) or otherwise.
"OTHER TAXES": any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement or any other
Loan Document.
"PARTICIPANT": as defined in Section 10.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).
-19-
"PERMITTED ACQUISITIONS": One or more acquisitions (whether by
asset acquisition or the acquisition of Capital Stock of the target) of a
Person, division or line of business as an entirety, PROVIDED that: (i) no
Default or Event of Default shall have occurred and be continuing (and none
shall occur as a result of such acquisition); (ii) no single acquisition exceeds
$15 million calculated on the basis of the value ("Value") of the Person,
division or line of business being so acquired, including assumed Indebtedness;
(iii) the aggregate Value for all such acquisitions during a twelve month period
shall not exceed $60 million; (iv) the subject acquisition is of a Person,
division or business line similar to the businesses of the Borrower; (v) the
substantive terms and conditions of such acquisition are acceptable to the
Administrative Agent and (vi) after giving effect to such acquisitions, the
Borrower will be in PRO FORMA compliance with the covenants set forth in
Section 7.1.
"PERMITTED INVESTORS": the collective reference to the
Carlisle Group, the Xxxxxx Group and the Xxxxxxxx Group.
"PERMITTED LIENS": as defined in Section 7.3.
"PERMITTED SENIOR SUBORDINATED ADD-ON INDEBTEDNESS":
Indebtedness of the Borrower issued in original aggregate principal amount not
to exceed $60 million in a form and pursuant to terms substantially similar to
the Senior Subordinated Notes, the proceeds of which are used solely to fund
Permitted Acquisitions.
"PERSON": an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
"PLAN": at a particular time, any employee benefit plan that
is covered by Title IV of ERISA or Section 412 of the Code or Section 302 of
ERISA and in respect of which the Borrower or a Commonly Controlled Entity is
(or, if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"PRECISION": Precision Partners L.L.C., a Delaware limited
liability company.
"PRECISION GROUP MEMBERS": the collective reference to the
Borrower and each direct or indirect Subsidiary of the Borrower.
"PRECISION REORGANIZATION": the corporate reorganization of
Precision as set forth in the organizational structure flip-book previously
delivered to the Administrative Agent and set forth as Schedule 5.1(b).
"PRICING GRID": the pricing grid attached hereto as Annex A.
"PRIOR LIENS": Liens which, pursuant to the provisions of any
Security Document, are or may be superior to the Lien of such Security Document.
"PRO FORMA FINANCIAL STATEMENTS": as defined in
Section 4.l(a).
"PROJECTIONS": as defined in Section 6.2(c).
"PROPERTIES": as defined in Section 4.17(a).
"RECOVERY EVENT": shall mean, with respect to any property,
real or personal, of any Person, any loss of title with respect to real property
or any loss of or damage to or destruction of, or any condemnation or other
taking (including by any Governmental Authority) of, such property (including
real property) for which such Person
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receives insurance proceeds or proceeds of a condemnation award or other
compensation. "Recovery Event" shall include but not be limited to any taking of
any Mortgaged Property or real property of any Loan Party or any part thereof,
in or by condemnation or other eminent domain proceedings pursuant to any law,
general or special, or by reason of the temporary requisition of the use or
occupancy of any Mortgaged Property or real property of any Loan Party or any
part thereof, by any Governmental Authority, civil or military.
"REFERENCE BANKS": Citicorp U.S.A., Inc.
"REFERENCE RATE": the rate of interest in effect for such day
as publicly announced from time to time by Citibank, N.A. in New York, New York,
as its "reference rate". The "reference rate" is a rate set by Citibank, N.A.
based upon various factors including Citibank, N.A.'s costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate. Any change in the reference rate announced by Citibank, N.A. shall take
effect at the opening of business on the day specified in the public
announcement of such change.
"REGISTER": as defined in Section 10.6(d).
"REGULATION U": Regulation U of the Board as in effect from
time to time.
"REIMBURSEMENT OBLIGATION": the obligation of the Borrower to
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn under
Letters of Credit.
"REINVESTMENT DEFERRED AMOUNT": with respect to any
Reinvestment Event, the aggregate Net Cash Proceeds received by any Precision
Group Member in connection therewith that are not applied to prepay the Term
Loans or reduce the Revolving Commitments pursuant to Section 2.7(c) as a result
of the delivery of a Reinvestment Notice.
"REINVESTMENT EVENT": any Asset Sale or Recovery Event in
respect of which the Borrower has delivered a Reinvestment Notice.
"REINVESTMENT NOTICE": a written notice executed by a
Responsible Officer stating that no Event of Default has occurred and is
continuing and that the Borrower (directly or indirectly through another
Precision Group Member) intends and expects to use all or a specified portion of
the Net Cash Proceeds (i) in connection with an Asset Sale to acquire assets
useful in its business or (ii) in connection with a Recovery Event to perform a
Restoration (as defined in the applicable Security Document).
"REINVESTMENT PREPAYMENT AMOUNT": with respect to any
Reinvestment Event, the Reinvestment Deferred Amount relating thereto less any
amount expended prior to the relevant Reinvestment Prepayment Date to acquire
assets useful in the business of the Precision Group Members.
"REINVESTMENT PREPAYMENT DATE": with respect to any
Reinvestment Event, the earlier of (a) the date occurring twelve months after
such Reinvestment Event and (b) the date on which the Borrower shall have
determined not to, or shall have otherwise ceased to, acquire assets useful in
the business of the Precision Group Members with all or any portion of the
relevant Reinvestment Deferred Amount.
"REORGANIZATION": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
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"REPORTABLE EVENT": any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the thirty day notice
period is waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of
PBGC Reg. Section 4043.
"REQUIRED LENDERS": at any time, the holders of more than 50%
of (a) until the Closing Date, the Commitments then in effect and (b)
thereafter, the sum of (i) the aggregate unpaid principal amount of the Term
Loans then outstanding and (ii) the Revolving Commitments then in effect or, in
the case of the Revolving Facility, if the Revolving Commitments have been
terminated, the Total Revolving Extensions of Credit then outstanding.
"REQUIRED PREPAYMENT LENDERS": the Majority Facility Lenders
in respect of each Facility.
"REQUIREMENT OF LAW": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"RESPONSIBLE OFFICER": the chief executive officer, president
or chief financial officer of the Borrower, but in any event, with respect to
financial matters, the chief financial officer of the Borrower.
"RESTRICTED PAYMENTS": as defined in Section 7.6.
"REVOLVING COMMITMENT": as to any Lender, the obligation of
such Lender, if any, to make Revolving Loans and participate in Letters of
Credit in an aggregate principal and/or face amount not to exceed the amount set
forth under the heading "Revolving Commitment" opposite such Lender's name on
Schedule 1.1A or in the Assignment and Acceptance pursuant to which such Lender
became a party hereto, as the same may be changed from time to time pursuant to
the terms hereof.
"REVOLVING COMMITMENT PERIOD": the period from and including
the Closing Date to the Scheduled Revolving Termination Date.
"REVOLVING EXTENSIONS OF CREDIT": as to any Revolving Lender
at any time, an amount equal to the sum of (a) the aggregate principal amount of
all Revolving Loans held by such Lender then outstanding and (b) such Lender's
Revolving Percentage of the L/C Obligations then outstanding.
"REVOLVING LENDER": each Lender that has a Revolving
Commitment or that holds Revolving Loans.
"REVOLVING LOANS": as defined in Section 2.2(a).
"REVOLVING PERCENTAGE": as to any Revolving Lender at any
time, the percentage which such Lender's Revolving Commitment then constitutes
of the Total Revolving Commitments (or, at any time after the Revolving
Commitments shall have expired or terminated, the percentage which the aggregate
principal amount of such Lender's Revolving Loans then outstanding constitutes
of the aggregate principal amount of the Revolving Loans then outstanding).
"XXXXXXXX GROUP": the collective reference to Xxxxxxxx Xxxx &
Xxxxxx and its Control Investment Affiliates.
"SCHEDULED REVOLVING TERMINATION DATE": March 31, 2005.
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"SEC": the Securities and Exchange Commission, any successor
thereto and any analogous Governmental Authority.
"SECURITIES PLEDGE AGREEMENT": the Securities Pledge Agreement
to be executed and delivered by Holdco as of the Closing Date, substantially in
the form of Exhibit K hereto, as the same may be amended, supplemented or
otherwise modified from time to time.
"SECURITY AGREEMENT": the Security Agreement to be executed
and delivered by the Borrower and each Subsidiary Guarantor, substantially in
the form of Exhibit I, as the same may be amended, supplemented or otherwise
modified from time to time.
"SECURITY DOCUMENTS": the collective reference to the Holdco
Guarantee, Subsidiary Guarantees, the Security Agreement, the Securities Pledge
Agreement, the Mortgages and all other security documents hereafter delivered to
the Administrative Agent granting a Lien on any property of any Person to secure
the obligations and liabilities of any Loan Party under any Loan Document.
"SENIOR SUBORDINATED INDENTURE" means the Indenture pursuant
to which the Borrower issued the Senior Subordinated Notes.
"SENIOR SUBORDINATED NOTES" means the 12% Senior Subordinated
Notes due 2009 issued by the Borrower on or immediately prior to the date of the
initial funding hereunder, the proceeds of which will be used to pay a portion
of the consideration payable in connection with the Acquisitions.
"SINGLE EMPLOYER PLAN": any Plan that is covered by Title IV
of ERISA, but that is not a Multiemployer Plan.
"SOLVENCY CERTIFICATE": a certificate duly executed by a
Responsible Officer substantially in the form of Exhibit C-2.
"SOLVENT": when used with respect to any Person, means that,
as of any date of determination, (a) the amount of the "present fair saleable
value" of the assets of such Person will, as of such date, exceed the amount of
all "liabilities of such Person, contingent or otherwise," as of such date, as
such quoted terms are determined in accordance with applicable federal and state
laws governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim," and
(ii) "claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured, or (y)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
"SPONSORS": the collective reference to Xxxxxxxx Xxxx &
Xxxxxx, Xxxxxxxx Enterprises and Xxxxxx & Co.
"SUBORDINATED INDEBTEDNESS": any Indebtedness which is
subordinate or junior in right of payment to the Loans by the express terms of
such Indebtedness or pursuant to a separate written agreement, in each case in
form and substance satisfactory to the Required Lenders.
-23-
"SUBSIDIARY": as to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of the relevant Precision Group Member. Mid
State Foundation shall not constitute a Subsidiary for the purposes of this
Agreement and the other Loan Documents.
"SUBSIDIARY GUARANTEE": each guarantee by a Subsidiary
Guarantor, substantially in the form of Exhibit A-2.
"SUBSIDIARY GUARANTOR": each Subsidiary of the Borrower, other
than Mid State Foundation and any Excluded Foreign Subsidiary.
"SUNTRUST": SunTrust Bank, Atlanta.
"SYNDICATION AGENT": NationsBank, as the syndication agent for
the Lenders under this Agreement and the other Loan Documents, together with any
of its Successors.
"TERM COMMITMENT": as to any Lender, the obligation of such
Lender, if any, to make Term Loans to the Borrower hereunder in an aggregate
principal amount not to exceed the amount set forth under the heading "TERM
COMMITMENT" opposite such Lender's name on Schedule 1.1A.
"TERM LENDER": each Lender that has a Term Commitment or that
holds Term Loans.
"TERM LOANS": as defined in Section 2.1.
"TERM PERCENTAGE": as to any Term Lender at any time, the
percentage which such Lender's Term Commitment then constitutes of the aggregate
Term Commitments (or, at any time after the Term Commitments have terminated,
the percentage which the aggregate principal amount of such Lender's Term Loans
then outstanding constitutes of the aggregate principal amount of the Term Loans
then outstanding).
"TOTAL REVOLVING COMMITMENTS": at any time, the aggregate
amount of the Revolving Commitments then in effect. The amount of the Total
Revolving Commitment as of the Closing Date is $25,000,000, including the L/C
Commitment.
"TOTAL REVOLVING EXTENSIONS OF CREDIT": at any time, the
aggregate amount of the Revolving Extensions of Credit of the Revolving Lenders
outstanding at such time.
"TRANSFEREE": any Assignee or Participant.
"TYPE": as to any Loan, its nature as a Base Rate Loan or a
Eurodollar Loan.
"UNAPPLIED EXCESS CASH FLOW": with respect to any fiscal year
of the Precision Group Members, an amount equal to 50% of the Excess Cash Flow
for such fiscal year.
"UNIFORM CUSTOMS": the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be amended from time to time.
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"UNITED STATES": the United States of America.
"WHOLLY OWNED QUALIFIED PRECISION GROUP MEMBER": any Loan
Party that is a Wholly Owned Subsidiary of the Borrower.
"WHOLLY OWNED SUBSIDIARY": as to any Person, any other Person
all of the Capital Stock of which (other than directors' qualifying shares
required by law) is owned by such Person directly and/or through other Wholly
Owned Subsidiaries.
"YEAR 2000 PROBLEM": the inability of computers, as well as
embedded microchips in non- computing devices, to perform properly
date-sensitive functions with respect to certain dates prior to and after
December 31, 1999.
1.2 OTHER DEFINITIONAL PROVISIONS. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in the other Loan Documents or any certificate or other
document made or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto, (i)
accounting terms relating to the Precision Group Members not deLmed in Section
1.1 and accounting terms partly defined in Section 1.1, to the extent not
defined, shall have the respective meanings given to them under GAAP, (ii) the
words "include," "includes" and "including" shall be deemed to be followed by
the phrase "without limitation" and (iii) the words "asset" and "property" shall
be construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, Capital Stock,
securities, revenues, accounts, leasehold interests and contract rights.
(c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 TERM COMMITMENTS. Subject to the terms and conditions
hereof, each Term Lender severally agrees to make a term loan (a "TERM LOAN") to
the Borrower on the Closing Date in an amount not to exceed the Term Commitment
of such Lender. The Term Loans may from time to time be Eurodollar Loans or Base
Rate Loans, as determined by the Borrower and notified to the Administrative
Agent in accordance with Sections 2.3 and 2.9. The Term Commitments shall
automatically terminate on the Closing Date (after giving effect to the
borrowings thereunder made on such date).
2.2 REVOLVING COMMITMENTS; BORROWING BASE PREPAYMENTS. (a)
Subject to the terms and conditions hereof, each Revolving Lender severally
agrees to make revolving credit loans ("REVOLVING LOANS") to the Borrower from
time to time during the Revolving Commitment Period in an aggregate principal
amount at any one time outstanding which, when added to such Lender's Revolving
Percentage of the L/C Obligations then outstanding, does not exceed the amount
of such Lender's Revolving Commitment. During the Revolving Commitment Period
the Borrower may use the Revolving Commitments by borrowing, prepaying the
Revolving Loans in whole or in part, and reborrowing, all in accordance with the
terms and conditions hereof. The Revolving Loans may from time to time be
Eurodollar Loans or Base Rate Loans, as determined by the Borrower and notified
to the Administrative Agent in accordance with Sections 2.3 and 2.9.
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(b) If on any date (including any date on which a Borrowing
Base Certificate is delivered pursuant to Section 6.2(e)) the Total Revolving
Extensions of Credit as of such date exceed the then applicable Borrowing Base,
then, without notice or demand, the Borrower shall, on such date, prepay the
Revolving Loans and, if necessary, cash collateralize the Letters of Credit by
depositing an amount equal to such excess in a cash collateral account
established with the Administrative Agent for the benefit of the Lenders on
terms and conditions satisfactory to the Administrative Agent
2.3 PROCEDURE FOR BORROWING; SCHEDULED REPAYMENTS. The
Borrower shall give the Administrative Agent irrevocable notice in the form of
Exhibit H-1 (which notice must be received by the Administrative Agent prior to
(a) 12:00 Noon, New York City time, three Business Days prior to the requested
Borrowing Date, in the case of Eurodollar Loans, or (b) 11:00 A.M., New York
City time, on the requested Borrowing Date, in the case of Base Rate Loans),
specifying (i) the amount and Type of Loans to be borrowed, (ii) the requested
Borrowing Date and (iii) in the case of Eurodollar Loans, the respective amounts
of each such Type of Loan and the respective lengths of the initial Interest
Period therefor. Any Loans made on the Closing Date shall initially be Base Rate
Loans and, unless otherwise agreed by the Administrative Agent in its sole
discretion, no Loan may be made as, converted into or continued as a Eurodollar
Loan having an Interest Period in excess of one month prior to the date that is
60 days after the Closing Date. Each borrowing shall be in an amount equal to
(x) in the case of Base Rate Loans, $500,000 or a whole multiple of $100,000 in
excess thereof (or, if the then aggregate unutilized Commitments under the
relevant Facility are less than $500,000, such lesser amount) and (y) in the
case of Eurodollar Loans, $500,000 or a whole multiple of $100,000 in excess
thereof. Upon receipt of any such notice from the Borrower, the Administrative
Agent shall promptly notify each relevant Lender thereof. Each relevant Lender
will make the amount of its PRO RATA share of each borrowing available to the
Administrative Agent for the account of the Borrower at the Funding Office prior
to 12:00 Noon, New York City time, on the Borrowing Date requested by the
Borrower in funds immediately available to the Administrative Agent. Such
borrowing will then be made available to the Borrower by the Administrative
Agent crediting the account of the Borrower on the books of such office with the
aggregate of the amounts made available to the Administrative Agent by the
relevant Lenders and in like funds as received by the Administrative Agent.
(a) The Term Loans of each Term Lender shall mature in 20
quarterly installments, each of which shall be in an amount equal to such
Lender's Term Percentage multiplied by the amount set forth below opposite such
installment:
INSTALLMENT PRINCIPAL AMOUNT
----------- ----------------
June 30, 2000 $ 805,000.00
September 30, 2000 $ 805,000.00
December 31, 2000 $ 805,000.00
March 31, 2001 $ 805,000.00
June 30, 2001 $ 920,000.00
September 30, 2001 $ 920,000.00
December 31, 2001 $ 920,000.00
March 31, 2002 $ 920,000.00
June 30, 2002 $ 1,150,000.00
September 30, 2002 $ 1,150,000.00
December 31, 2002 $ 1,150,000.00
March 31, 2003 $ 1,150,000.00
June 30, 2003 $ 1,380,000.00
September 30, 2003 $ 1,380,000.00
December 31, 2003 $ 1,380,000.00
March 31, 2004 $ 1,380,000.00
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INSTALLMENT PRINCIPAL AMOUNT
----------- ----------------
June 30, 2004 $ 1,495,000.00
September 30, 2004 $ 1,495,000.00
December 31, 2004 $ 1,495,000.00
March 31, 2005 $ 1,495,000.00
(b) The Borrower shall repay all outstanding Revolving Loans
on the Scheduled Revolving Termination Date.
2.4 COMMITMENT FEES, ETC. (a) The Borrower agrees to pay to
the Administrative Agent for the account of each Revolving Lender a commitment
fee for the period from and including the Closing Date to the date the Revolving
Commitments have been terminated, computed at the Commitment Fee Rate on the
actual daily amount of the Available Revolving Commitment of such Lender during
the period for which payment is made, payable quarterly in arrears on the last
Business Day of each March, June, September and December and on the date the
Revolving Commitments have been terminated, commencing on the first of such
dates to occur after the date hereof.
(b) The Borrower agrees to pay to the Administrative Agent the
fees in the amounts and on the dates previously agreed to in writing by the
Borrower and the Administrative Agent.
2.5 TERMINATION OR REDUCTION OF COMMITMENTS. The Borrower
shall have the right, upon not less than two Business Days' notice to the
Administrative Agent, to terminate the Commitments under any Facility or, from
time to time, to reduce the amount of such Commitments; PROVIDED that no such
termination or reduction of Revolving Commitments shall be permitted if, after
giving effect thereto and to any prepayments of the Revolving Loans made on the
effective date thereof, the Total Revolving Extensions of Credit would exceed
the Total Revolving Commitments. Any such reduction shall be in an amount equal
to $500,000, or a whole multiple thereof, and shall reduce permanently the
relevant Commitments then in effect
2.6 OPTIONAL PREPAYMENTS. The Borrower may at any time and
from time to time prepay the Loans, in whole or in part, without premium or
penalty, upon irrevocable notice delivered to the Administrative Agent at least
two Business Days prior thereto in the case of Eurodollar Loans and at least one
Business Day prior thereto in the case of Base Rate Loans, which notice shall
specify the date and amount of prepayment and whether the prepayment is of
Eurodollar Loans or Base Rate Loans; PROVIDED, that if a Eurodollar Loan is
prepaid on any day other than the last day of the Interest Period applicable
thereto, the Borrower shall also pay any amounts owing pursuant to Section 2.16.
Upon receipt of any such notice the Administrative Agent shall promptly notify
each relevant Lender thereof. If any such notice is given, the amount specified
in such notice shall be due and payable on the date specified therein, together
with (except in the case of Revolving Loans that are Base Rate Loans) accrued
interest to such date on the amount prepaid. Partial prepayments of Term Loans
and Revolving Loans shall be in an aggregate principal amount equal to (a) in
the case of Base Rate Loans, $100,000 or a whole multiple thereof and (b) in the
case of Eurodollar Loans, $500,000 or a whole multiple of $100,000 in excess
thereof.
2.7 MANDATORY PREPAYMENTS AND COMMITMENT REDUCTIONS. (a)
Unless the Required Prepayment Lenders shall otherwise agree, if any Capital
Stock shall be issued or sold by Holdco or the Borrower or if any Indebtedness
shall be incurred by any Precision Group Member (excluding any Indebtedness
incurred in accordance with Section 7.2), an amount equal to 50% of the Net Cash
Proceeds thereof (in the case of Capital Stock) or 100% of the Net Cash Proceeds
thereof (in the case of Indebtedness) shall be applied on the date of such
issuance or incurrence first towards the prepayment of the Term Loans and then
towards the reduction of the Revolving Commitments as set forth in Section
2.7(e); PROVIDED, that no such prepayment will be required with respect to any
capital contribution made by any Sponsor directly or indirectly to Holdco (and
contributed as common equity to the
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Borrower) for the purpose of funding a particular Capital Expenditure or
Permitted Acquisition if such proceeds are used for such Capital Expenditure or
Permitted Acquisition substantially concurrently with the making of such capital
contribution.
(b) Unless the Required Prepayment Lenders shall otherwise
agree, if on any date any Precision Group Member shall receive Net Cash Proceeds
from any Asset Sale or Recovery Event, then, unless a Reinvestment Notice shall
be delivered in respect thereof, such Net Cash Proceeds shall be applied on such
date first towards the prepayment of the Term Loans and then towards the
reduction of the Revolving Commitments as set forth in Section 2.7(d); PROVIDED,
that, notwithstanding the foregoing, (i) the aggregate Net Cash Proceeds of
Asset Sales and Recovery Events that may be excluded from the foregoing
requirement pursuant to a Rein-vestment Notice shall not exceed $5,000,000 in
any fiscal year of the Precision Group Members and (ii) on each Reinvestment
Prepayment Date, an amount equal to the Reinvestment Prepayment Amount with
respect to the relevant Reinvestment Event shall be applied toward the
prepayment of the Term Loans and the reduction of the Commitments as set forth
in Section 2.7(d).
(c) Unless the Required Prepayment Lenders shall otherwise
agree, if, for any fiscal year of the Precision Group Members commencing with
the fiscal year ending December 31, 1999, there shall be Excess Cash Flow, the
Borrower shall, on the relevant Excess Cash Flow Application Date, apply 50% of
such Excess Cash Flow first towards the prepayment of the Term Loans and then
towards the reduction of the Revolving Commitments as set forth in Section
2.7(d); PROVIDED that no such prepayment will be required for so long as the
Consolidated Leverage Ratio then in effect is less than 3.0 to 1.0. Each such
prepayment and commitment reduction shall be made on a date (an "EXCESS CASH
FLOW APPLICATION DATE") no later than five days after the earlier of (i) the
date on which the financial statements of the Precision Group Members referred
to in Section 6.1 (a), for the final year with respect to which such prepayment
is made, are required to be delivered to the Lenders and (ii) the date such
financial statements are actually delivered.
(d) Amounts to be applied in connection with prepayments and
Commitment reductions made pursuant to Section 2.7 shall be applied, first to
prepay the Term Loans and, second, to reduce permanently the Revolving
Commitments. Amounts applied to prepay Term Loans shall reduce future
amortization payments on a PRO RATA basis. Any such reduction of the Revolving
Commitments shall be accompanied by prepayment of the Revolving Loans to the
extent, if any, that the Total Revolving Extensions of Credit exceed the amount
of the Total Revolving Commitments as so reduced, PROVIDED that if the aggregate
principal amount of Revolving Loans then outstanding is less than the amount of
such excess (because L/C Obligations constitute a portion thereof), the Borrower
shall, to the extent of the balance of such excess, replace outstanding Letters
of Credit and/or deposit an amount in cash in a cash collateral account
established with the Administrative Agent for the benefit of the Lenders on
terms and conditions satisfactory to the Administrative Agent. The application
of any prepayment pursuant to Section 2.7 shall be made, FIRST, to Base Rate
Loans and, SECOND, to Eurodollar Loans. Each prepayment of the Loans under
Section 2.7 (except in the case of Revolving Loans that are Base Rate Loans)
shall be accompanied by accrued interest to the date of such prepayment on the
amount prepaid.
(e) Concurrently with the application of any amount pursuant
to this Section 2.7, the Borrower shall furnish to the Administrative Agent a
certificate setting forth in reasonable detail a calculation of the amount
required to be so applied.
2.8 CONVERSION AND CONTINUATION OPTIONS. (a) The Borrower may
elect from time to time to convert Eurodollar Loans to Base Rate Loans by giving
the Administrative Agent irrevocable notice of such election in the form of
Exhibit H-2 no later than 12:00 Noon, New York City time, one Business Day prior
to the effective date thereof, PROVIDED that any such conversion of Eurodollar
Loans may only be made on the last day of an Interest Period with respect
thereto. The Borrower may elect from time to time to convert Base Rate Loans to
Eurodollar Loans by giving the Administrative Agent at least three Business
Days' prior irrevocable notice of such
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election in the form of Exhibit H-2 no later than 12:00 Noon, New York City
time, three Business Days prior to the effective date thereof, PROVIDED that no
Base Rate Loan under a particular Facility may be converted into a Eurodollar
Loan when any Event of Default has occurred and is continuing and the
Administrative Agent or the Majority Facility Lenders in respect of such
Facility have determined in its or their sole discretion not to permit such
conversions. Upon receipt of any such notice the Administrative Agent shall
promptly notify each relevant Lender thereof.
(b) Any Eurodollar Loan may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving irrevocable notice to the Administrative Agent in the form of
Exhibit H-2, and in accordance with the applicable provisions of the term
"Interest Period" set forth in Section 1.1, of the length of the next Interest
Period to be applicable to such Loans, PROVIDED that no Eurodollar Loan under a
particular Facility may be continued as such when any Event of Default has
occurred and is continuing and the Administrative Agent has or the Majority
Facility Lenders in respect of such Facility have determined in its or their
sole discretion not to permit such continuations, and PROVIDED, FURTHER, that if
the Borrower shall fail to give any required notice as described above in this
paragraph or if such continuation is not permitted pursuant to the preceding
proviso such Loans shall be automatically converted to Base Rate Loans on the
last day of such then expiring Interest Period. Upon receipt of any such notice
the Administrative Agent shall promptly notify each relevant Lender thereof.
2.9 LIMITATIONS ON EURODOLLAR TRANCHES. Notwithstanding
anything to the contrary in this Agreement, all borrowings, conversions and
continuations of Eurodollar Loans hereunder and all selections of Interest
Periods hereunder shall be in such amounts and be made pursuant to such
elections so that (a) after giving effect thereto, the aggregate principal
amount of the Eurodollar Loans comprising each Eurodollar Tranche shall be equal
to $500,000 or a whole multiple of $100,000 in excess thereof and (b) no more
than six Eurodollar Tranches shall be outstanding at any one time.
2.10 INTEREST RATES AND PAYMENT DATES. (a) Each Eurodollar
Loan shall bear interest for each day during each Interest Period with respect
thereto at a rate PER ANNUM equal to the Eurodollar Rate determined for such day
plus the Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate PER
ANNUM equal to the Base Rate plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any
Loan or Reimbursement Obligation shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), all outstanding Loans and
Reimbursement Obligations (whether or not overdue) shall bear interest at a rate
PER ANNUM equal to (x) in the case of the Loans, the rate that would otherwise
be applicable thereto pursuant to the foregoing provisions of this Section PLUS
200 bps or (y) in the case of Reimbursement Obligations, the rate applicable to
Base Rate Loans under the Revolving Facility plus 200 bps, and (ii) if all or a
portion of any interest payable on any Loan or Reimbursement Obligation or any
commitment fee or other amount payable hereunder shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise), such overdue
amount shall bear interest at a rate PER ANNUM equal to the rate then applicable
to Base Rate Loans under the relevant Facility PLUS 200 bps (or, in the case of
any such other amounts that do not relate to a particular Facility, the rate
then applicable to Base Rate Loans under the Revolving Facility plus 200 bps),
in each case, with respect to clauses (i) and (ii) above, from the date of such
non-payment until such amount is paid in full (as well after as before
judgment).
(d) Interest shall be payable in arrears on each Interest
Payment Date, PROVIDED that interest accruing pursuant to paragraph (c) of this
Section shall be payable from time to time on demand.
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2.11 COMPUTATION OF INTEREST AND FEES. (a) Interest and fees
payable pursuant hereto shall be calculated on the basis of a 360-day year for
the actual days elapsed, except that, with respect to Base Rate Loans the rate
of interest on which is calculated on the basis of the Prime Rate, the interest
thereon shall be calculated on the basis of a 365- (or 366-, as the case may be)
day year for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of each determination
of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a
change in the Base Rate or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective. The Administrative Agent shall as soon as practicable notify the
Borrower and the relevant Lenders of the effective date and the amount of each
such change in interest rate.
(b) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and the Lenders in the absence of
manifest error. The Administrative Agent shall, at the request of the Borrower,
deliver to the Borrower a statement showing the quotations used by the
Administrative Agent in determining any interest rate pursuant to
Section 2.11(a).
2.12 INABILITY TO DETERMINE INTEREST RATE. If prior to the
first day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that,
by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period, or
(b) the Administrative Agent shall have received notice from
the Majority Facility Lenders in respect of the relevant Facility that
the Eurodollar Rate determined or to be determined for such Interest
Period will not adequately and fairly reflect the cost to such Lenders
(as conclusively certified by such Lenders) of making or maintaining
their affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the relevant Lenders as soon as practicable thereafter. If such
notice is given, (x) any Eurodollar Loans under the relevant Facility requested
to be made on the first day of such Interest Period shall be made as Base Rate
Loans, (y) any Loans under the relevant Facility that were to have been
converted on the first day of such Interest Period to Eurodollar Loans shall be
continued as Base Rate Loans and (z) any outstanding Eurodollar Loans under the
relevant Facility shall be converted, on the last day of the then current
Interest Period, to Base Rate Loans. Until such notice has been withdrawn by the
Administrative Agent, no further Eurodollar Loans under the relevant Facility
shall be made or continued as such, nor shall the Borrower have the right to
convert Loans under the relevant Facility to Eurodollar Loans.
2.13 PRO RATA TREATMENT AND PAYMENTS. (a) Each borrowing by
the Borrower from the Lenders hereunder, each payment by the Borrower on account
of any commitment fee and any reduction of the Commitments of the Lenders shall
be made PRO RATA according to the respective Term Percentages or Revolving
Percentages, as the case may be, of the relevant Lenders.
(b) Each payment (including each prepayment) by the Borrower
on account of principal of and interest on the Term Loans shall be made PRO RATA
according to the respective outstanding principal amounts of the Term Loans then
held by the Term Lenders. The amount of each principal prepayment of the Term
Loans shall be applied to reduce the then remaining installments of the Term
Loans PRO RATA based upon the then remaining principal amount thereof. Amounts
prepaid on account of the Term Loans may not be reborrowed.
(c) Each payment (including each prepayment) by the Borrower
on account of principal of and interest on the Revolving Loans shall be made PRO
RATA according to the respective outstanding principal amounts of the Revolving
Loans then held by the Revolving Lenders.
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(d) All payments (including prepayments) to be made by the
Borrower hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without setoff or counterclaim and shall be made prior
to 12:00 Noon, New York City time, on the due date thereof to the Administrative
Agent, for the account of the Lenders, at the Funding Office, in Dollars and in
immediately available funds. The Administrative Agent shall distribute such
payments to the Lenders promptly upon receipt in like funds as received. If any
payment hereunder (other than payments on the Eurodollar Loans) becomes due and
payable on a day other than a Business Day, such payment shall be extended to
the next succeeding Business Day. If any payment on a Eurodollar Loan becomes
due and payable on a day other than a Business Day, the maturity thereof shall
be extended to the next succeeding Business Day unless the result of such
extension would be to extend such payment into another calendar month, in which
event such payment shall be made on the immediately preceding Business Day. In
the case of any extension of any payment of principal pursuant to the preceding
two sentences, interest thereon shall be payable at the then applicable rate
during such extension.
(e) Unless the Administrative Agent shall have been notified
in writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal to the daily average Federal Funds Effective Rate for the period
until such Lender makes such amount immediately available to the Administrative
Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this paragraph shall be conclusive in the
absence of manifest error. If such Lender's share of such borrowing is not made
available to the Administrative Agent by such Lender within three Business Days
of such Borrowing Date, the Administrative Agent shall also be entitled to
recover such amount with interest thereon at the rate PER ANNUM applicable to
Base Rate Loans under the relevant Facility, on demand, from the Borrower.
(f) Unless the Administrative Agent shall have been notified
in writing by the Borrower prior to the date of any payment being made hereunder
that the Borrower will not make such payment to the Administrative Agent, the
Administrative Agent may assume that the Borrower is making such payment, and
the Administrative Agent may, but shall not be required to, in reliance upon
such assumption, make available to the Lenders their respective PRO RATA shares
of a corresponding amount. If such payment is not made to the Administrative
Agent by the Borrower within three Business Days of such required date, the
Administrative Agent shall be entitled to recover, on demand, from each Lender
to which any amount which was made available pursuant to the preceding sentence,
such amount with interest thereon at the rate PER ANNUM equal to the daily
average Federal Funds Effective Rate. Nothing herein shall be deemed to limit
the rights of the Administrative Agent or any Lender against the Borrower.
2.14 REQUIREMENTS OF LAW. (a) If the adoption of or any change
in any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement, any Letter of Credit, any Application
or any Eurodollar Loan made by it, or change the basis of taxation of
payments to such Lender in respect thereof (except for Non-Excluded
Taxes covered by Section 2.15 and changes in the rate of tax on the
overall net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of
advances,
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loans or other extensions of credit by, or any other acquisition of
funds by, any office of such Lender that is not otherwise included in
the determination of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount that such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such Lender for
such increased cost or reduced amount receivable. If any Lender becomes entitled
to claim any additional amounts pursuant to this paragraph, it shall promptly
notify the Borrower (with a copy to the Administrative Agent) of the event by
reason of which it has become so entitled.
(b) If any Lender shall have determined that the adoption of
or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under or in respect of any Letter of
Credit to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time, after
submission by such Leader to the Borrower (with a copy to the Administrative
Agent) of a written request therefor, the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender for such reduction;
PROVIDED that the Borrower shall not be required to compensate a Lender pursuant
to this paragraph for any amounts incurred more than six months prior to the
date that such Lender notifies the Borrower of such Lender's intention to claim
compensation therefor, and PROVIDED FURTHER that, if the circumstances giving
rise to such claim have a retroactive effect, then such six-month period shall
be extended to include the period of such retroactive effect.
(c) A certificate as to any additional amounts payable
pursuant to this Section submitted by any Lender to the Borrower (with a copy to
the Administrative Agent) shall be conclusive in the absence of manifest error.
The obligations of the Borrower pursuant to this Section shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
2.15 TAXES. (a) All payments made by the Borrower under this
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on the Administrative Agent or any Lender as a result
of a present or former connection between the Administrative Agent or such
Lender and the jurisdiction of the Governmental Authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Administrative Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any other Loan Document). If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("NON-EXCLUDED TAXES") or Other Taxes are required to be withheld
from any amounts payable to the Administrative Agent or any Lender hereunder,
the amounts so payable to the Administrative Agent or such Lender shall be
increased to the extent necessary to yield to the Administrative Agent or such
Lender (after payment of all Non-Excluded Taxes and Other Taxes) interest or any
such other amounts payable hereunder at the rates or in the amounts specified in
this Agreement, PROVIDED, HOWEVER, that the Borrower shall not be required to
increase any such amounts payable to any Lender with respect to any Non-Excluded
Taxes (i) that are attributable to such Lender's failure to comply with the
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requirements of paragraph (d) or (e) of this Section or (ii) that are United
States withholding taxes imposed on amounts payable to such Lender at the time
the Lender becomes a party to this Agreement, except to the extent that such
Lender's assignor (if any) was entitled, at the time of assignment, to receive
additional amounts from the Borrower with respect to such Non-Excluded Taxes
pursuant to this paragraph.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable
by the Borrower, as promptly as possible thereafter the Borrower shall send to
the Administrative Agent for its own account or for the account of the relevant
Lender, as the case may be, a certified copy of an original official receipt
received by the Borrower showing payment thereof. If the Borrower fails to pay
any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing
authority or fails to remit to the Administrative Agent the required receipts or
other required documentary evidence, the Borrower shall indemnify the
Administrative Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Administrative Agent or any Lender as a
result of any such failure.
(d) Each Lender (or Transferee) that is not a citizen or
resident of the United States of America, a corporation, partnership or other
entity created or organized in or under the laws of the United States of America
(or any jurisdiction thereof), or any estate or trust that is subject to federal
income taxation regardless of the source of its income (a "NON-U.S. LENDER")
shall deliver to the Borrower and the Administrative Agent (or, in the case of a
Participant, to the Lender from which the related participation shall have been
purchased) two copies of either U.S. Internal Revenue Service Form 1001 or Form
4224, or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", a statement substantially in the form of
Exhibit G and a Form W-8, or any subsequent versions thereof or successors
thereto, properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or a reduced rate of, U.S. federal withholding tax on
all payments by the Borrower under this Agreement and the other Loan Documents.
Such forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of any Participant, on or
before the date such Participant purchases the related participation). In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose). Notwithstanding any
other provision of this paragraph, a Non-U.S. Lender shall not be required to
deliver any form pursuant to this paragraph that such Non-U.S. Lender is not
legally able to deliver.
(e) A Lender that is entitled to an exemption from or
reduction of non-U.S. withholding tax under the law of the jurisdiction in which
the Borrower is located, or any treaty to which such jurisdiction is a party,
with respect to payments under this Agreement shall deliver to the Borrower
(with a copy to the Administrative Agent), at the time or times prescribed by
applicable law or reasonably requested by the Borrower, such properly completed
and executed documentation prescribed by applicable law as will permit such
payments to be made without withholding or at a reduced rate, PROVIDED that such
Lender is legally entitled to complete, execute and deliver such documentation
and in such Lender's judgment such completion, execution or submission would not
materially prejudice the legal position of such Lender.
(f) The agreements in this Section shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
2.16 INDEMNITY. The Borrower agrees to indemnify each Lender
and to hold each Lender harmless from any loss or expense that such Lender may
sustain or incur as a consequence of (a) default by the
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Borrower in making a borrowing of, conversion into or continuation of Eurodollar
Loans after the Borrower has given a notice requesting the same in accordance
with the provisions of this Agreement, (b) default by the Borrower in making any
prepayment of or conversion from Eurodollar Loans after the Borrower has given a
notice thereof in accordance with the provisions of this Agreement or (c) the
making of a prepayment of Eurodollar Loans on a day that is not the last day of
an Interest Period with respect thereto. Such indemnification may include an
amount equal to the excess, if any, of (i) the amount of interest that would
have accrued on the amount so prepaid, or not so borrowed, convened or
continued, for the period from the date of such prepayment or of such failure to
borrow, convert or continue to the last day of such Interest Period (or, in the
case of a failure to borrow, convert or continue, the Interest Period that would
have commenced on the date of such failure) in each case at the applicable rate
of interest for such Loans provided for herein (excluding, however, the
Applicable Margin included therein, if any) OVER (ii) the amount of interest (as
reasonably determined by such Lender) that would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurodollar market. A certificate as to any
amounts payable pursuant to this Section submitted to the Borrower by any Lender
shall be conclusive in the absence of manifest error. This covenant shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
2.17 CHANGE OF LENDING OFFICE. Each Lender agrees that, upon
the occurrence of any event giving rise to the operation of Section 2.14 or
2.15(a) with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; PROVIDED, that such
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and PROVIDED, FURTHER, that nothing in this Section shall affect
or postpone any of the obligations of any Borrower or the rights of any Lender
pursuant to Section 2.14 or 2.15(a).
2.18 REPLACEMENT OF LENDERS. The Borrower shall be permitted
to replace any Lender that (a) requests reimbursement for amounts owing pursuant
to Section 2.14 or 2.15(a) or (b) defaults in its obligation to make Loans
hereunder, with a replacement financial institution; PROVIDED that (i) such
replacement does not conflict with any Requirement of Law, (ii) no Event of
Default shall have occurred and be continuing at the time of such replacement,
(iii) prior to any such replacement, such Lender shall have taken no action
under Section 2.17 so as to eliminate the continued need for payment of amounts
owing pursuant to Section 2.14 or 2.15(a), (iv) the replacement financial
institution shall purchase, at par, all Loans and other amounts owing to such
replaced Lender on or prior to the date of replacement, (v) the Borrower shall
be liable to such replaced Lender under Section 2.16 if any Eurodollar Loan
owing to such replaced Lender shall be purchased other than on the last day of
the Interest Period relating thereto, (vi) the replacement financial
institution, if not already a Lender, shall be reasonably satisfactory to the
Administrative Agent, (vii) the replaced Lender shall be obligated to make such
replacement in accordance with the provisions of Section 10.6 (provided that,
unless such replacement Lender agrees to pay such fee, the Borrower shall be
obligated to pay the registration and processing fee referred to therein),
(viii) until such time as such replacement shall be consummated, the Borrower
shall pay all additional amounts (if any) required pursuant to Section 2.14 or
2.15(a), as the case may be, and (ix) any such replacement shall not be deemed
to be a waiver of any rights that the Borrower, the Administrative Agent or any
other Lender shall have against the replaced Lender.
SECTION 3. LETTERS OF CREDIT
3.1 L/C COMMITMENT. (a) Subject to the terms and conditions
hereof, the Issuing Lender, in reliance on the agreements of the other Revolving
Lenders set forth in Section 3.4(a), agrees to issue standby letters of credit
("LETTERS OF CREDIT") for the account of the Borrower on any Business Day during
the Revolving Commitment Period in such form as may be approved from time to
time by the Issuing Lender; PROVIDED that the Issuing Lender shall have no
obligation to issue any Letter of Credit if after giving effect to such
issuance, (i) the
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L/C Obligations would exceed the L/C Commitment or (ii) the aggregate amount of
the Available Revolving Commitments would be less than zero. Each Letter of
Credit shall (i) be denominated in Dollars and (ii) expire no later than the
earlier of (x) the first anniversary of its date of issuance and (y) the date
that is five Business Days prior to the Scheduled Revolving Termination Date,
PROVIDED that any Letter of Credit with a one-year term may provide for the
renewal thereof for additional one-year periods (which shall in no event extend
beyond the date referred to in clause (y) above).
(b) Each Letter of Credit shall be subject to the Uniform
Customs and, to the extent not inconsistent therewith, the laws of the State of
New York.
(c) The Issuing Lender shall not at any time be obligated to
issue any Letter of Credit hereunder if such issuance would conflict with, or
cause the Issuing Lender or any L/C Participant to exceed any limits imposed by,
any applicable Requirement of Law.
(d) The Letter of Credit outstanding on the Closing Date,
issued by Bank of America pursuant to the Existing Credit Facility, shall
continue to be outstanding pursuant to the terms of this Agreement.
3.2 PROCEDURE FOR ISSUANCE OF LETTER OF CREDIT. The Borrower
may from time to time request that the Issuing Lender issue a Letter of Credit
by delivering to the Issuing Lender at its address for notices specified herein
an Application therefor, with a copy to the Administrative Agent, completed to
the satisfaction of the Issuing Lender, and such other certificates, documents
and other papers and information as the Issuing Lender may request. Upon receipt
of any Application, the Issuing Lender will process such Application and the
certificates, documents and other papers and information delivered to it in
connection therewith in accordance with its customary procedures and shall
promptly issue the Letter of Credit requested thereby (but in no event shall the
Issuing Lender be required to issue any Letter of Credit earlier than three
Business Days after its receipt of the Application therefor and all such other
certificates, documents and other papers and information relating thereto) by
issuing the original of such Letter of Credit to the beneficiary thereof or as
otherwise may be agreed to by the Issuing Lender and the Borrower. The Issuing
Lender shall furnish a copy of such Letter of Credit to the Borrower promptly
following the issuance thereof. The Issuing Lender shall promptly furnish to the
Administrative Agent, which shall in turn promptly furnish to the Lenders,
notice of the issuance of each Letter of Credit (including the amount thereof).
Any amendment to an outstanding Letter of Credit shall be effected pursuant to
procedures comparable to those specified in this Section 3.2.
3.3 FEES AND OTHER CHARGES. (a) The Borrower will pay a fee on
all outstanding Letters of Credit at a PER ANNUM rate equal to the Applicable
Margin then in effect with respect to Eurodollar Loans under the Revolving
Facility, shared ratably among the Revolving Lenders and payable to the
Administrative Agent for the account of the Revolving Lenders quarterly in
arrears on each L/C Fee Payment Date after the issuance date. In addition, the
Borrower shall pay to the Issuing Lender for its own account a fronting fee of
1/4 of 1% PER ANNUM on the undrawn and unexpired amount of each Letter of
Credit, payable quarterly in arrears on each L/C Fee Payment Date after the
issuance date.
(b) In addition to the foregoing fees, the Borrower shall pay
or reimburse the Issuing Lender for such normal and customary costs and expenses
as are incurred or charged by the Issuing Lender in issuing, negotiating,
effecting payment under, amending or otherwise administering any Letter of
Credit.
3.4 L/C PARTICIPATIONS. (a) The Issuing Lender irrevocably
agrees to grant and hereby grants to each L/C Participant, and, to induce the
Issuing Leader to issue Letters of Credit hereunder, each L/C Participant
irrevocably agrees to accept and purchase and hereby accepts and purchases from
the Issuing Lender, on the terms and conditions hereinafter stated, for such L/C
Participant's own account and risk an undivided interest equal to such L/C
Participant's Revolving Percentage in the Issuing Lender's obligations and
rights under each Letter of
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Credit issued hereunder and the amount of each draft paid by the Issuing Lender
thereunder. Each L/C Participant unconditionally and irrevocably agrees with the
Issuing Lender that, if a draft is paid under any Letter of Credit for which the
Issuing Lender is not reimbursed in full by the Borrower in accordance with the
terms of this Agreement, such L/C Participant shall pay to the Issuing Lender
upon demand at the Issuing Lender's address for notices specified herein an
amount equal to such L/C Participant's Revolving Percentage of the amount of
such draft, or any part thereof that is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant
to the Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed
portion of any payment made by the Issuing Lender under any Letter of Credit is
paid to the Issuing Lender within three Business Days after the date such
payment is due, such L/C Participant shall pay to the Issuing Lender on demand
an amount equal to the product of (i) such amount, times (ii) the daily average
Federal Funds Effective Rate during the period from and including the date such
payment is required to the date on which such payment is immediately available
to the Issuing Lender, times (iii) a fraction the numerator of which is the
number of days that elapse during such period and the denominator of which is
360. If any such amount required to be paid by any L/C Participant pursuant to
Section 3.4(a) is not made available to the Issuing Lender by such L/C
Participant within three Business Days after the date such payment is due, the
Issuing Lender shall be entitled to recover from such L/C Participant, on
demand, such amount with interest thereon calculated from such due date at the
rate PER ANNUM applicable to Base Rate Loans under the Revolving Facility. A
certificate of the Issuing Lender submitted to any L/C Participant with respect
to any amounts owing under this Section shall be conclusive in the absence of
manifest error.
(c) Whenever, at any time after the Issuing Lender has made
payment under any Letter of Credit and has received from any L/C Participant its
PRO RATA share of such payment in accordance with Section 3.4(a), the Issuing
Lender receives any payment related to such Letter of Credit (whether directly
from the Borrower or otherwise, including proceeds of collateral applied thereto
by the Issuing Lender), or any payment of interest on account thereof, the
Issuing Lender will distribute to such L/C Participant its PRO RATA share
thereof; PROVIDED, HOWEVER, that in the event that any such payment received by
the Issuing Lender shall be required to be returned by the Issuing Lender, such
L/C Participant shall return to the Issuing Lender the portion thereof
previously distributed by the Issuing Lender to it.
3.5 REIMBURSEMENT OBLIGATION OF THE BORROWER. The Borrower
agrees to reimburse the Issuing Lender on each date on which the Issuing Lender
notifies the Borrower of the date and amount of a draft presented under any
Letter of Credit and paid by the Issuing Lender for the amount of (a) such draft
so paid and (b) any taxes, fees, charges or other costs or expenses incurred by
the Issuing Lender in connection with such payment. Each such payment shall be
made to the Issuing Lender at its address for notices specified herein in lawful
money of the United States and in immediately available funds. Interest shall be
payable on any and all amounts remaining unpaid by the Borrower under this
Section from the date such amounts become payable (whether at stated maturity,
by acceleration or otherwise) until payment in full at the rate set forth in (i)
until the second Business Day following the date of the applicable drawing,
Section 2.11 (b) and (ii) thereafter, Section 2.11(c).
3.6 INDEMNIFICATION; NATURE OF ISSUING LENDER'S DUTIES.
(a) In addition to its other obligations under this Section 3,
the Borrower hereby agrees to pay, and protect, indemnify and save each Lender
harmless from and against, any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable attorneys' fees) that
such lender may incur or be subject to as a consequence, direct or indirect, of
(A) the issuance of any Letter of Credit or (B) the failure of such Lender to
honor a drawing under a Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
government or Governmental Authority (all such acts or omissions, herein called
"GOVERNMENT ACTS").
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(b) As between the Borrower and the Lenders (including the
Issuing Lender), the Borrower shall assume all risks of the acts, omissions or
misuse of any Letter of Credit by the beneficiary thereof. No Lender (including
the Issuing Lender) shall be responsible: (A) for the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted by
any party in connection with the application for and issuance of any Letter of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, that may prove to be invalid or
ineffective for any reason; (C) for errors, omissions, interruptions or delays
in transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (D) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under a Letter of Credit or of the proceeds thereof; and (E) for any
consequences arising from causes beyond the control of such Lender, including,
without limitation, any Government Acts. None of the above shall affect, impair,
or prevent the vesting of the Issuing Lender's rights or powers hereunder.
(c) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by any
Lender (including the Issuing Lender), under or in connection with any Letter of
Credit or the related certificates, if taken or omitted in good faith, shall not
put such Lender under any resulting liability to the Borrower or any other Loan
Party. It is the intention of the parties that this Credit Agreement shall be
construed and applied to protect and indemnify each Lender (including the
Issuing Lender) against any and all risks involved in the issuance of the
Letters of Credit, all of which risks are hereby assumed by the Borrower (on
behalf of itself and each of the other Credit Parties), including, without
limitation, any and all Government Acts. No lender (including the Issuing
Lender) shall, in any way be, be liable for any failure by such Lender or anyone
else to pay any drawing under any Letter of Credit as a result of any Government
Acts or any other cause beyond the control of such Lender.
(d) Nothing in this Section 3.6 is intended to limit the
reimbursement obligations of the Borrower contained elsewhere herein. Unless all
Letters of Credit are cash collateralized in amounts and pursuant to
arrangements satisfactory to the Issuing Lender or secured by back-up standby
letters of credit in form and substance, and issued by an issuer satisfactory to
the Issuing Lender (in either case to the extent and in a manner reasonably
satisfactory to the Agent and the Issuing Lender), the obligations of the
Borrower under this Section 3.6 shall survive the termination of this Credit
Agreement. No act or omission of any current or prior beneficiary of a Letter of
Credit shall in any way affect or impair the rights of the Lenders (including
the Issuing Lender) to enforce any right, power or benefit under this Credit
Agreement.
(e) Notwithstanding anything to the contrary contained in this
Section 3.6, the Borrower shall have no obligation to indemnify any Lender
(including the Issuing Lender) in respect of any liability incurred by such
Lender (A) arising solely out of the gross negligence or willful misconduct of
such Lender, as determined by a court of competent jurisdiction, or (B) caused
by such Lender's failure to pay under any Letter of Credit after presentation to
it of a request strictly complying with the terms and conditions of such Letter
of Credit, as determined by a court of competent jurisdiction, unless such
payment is prohibited by any law, regulation, court order or decree.
3.7 LETTER OF CREDIT PAYMENTS. If any draft shall be presented
for payment under any Letter of Credit, the Issuing Lender shall promptly notify
the Borrower of the date and amount thereof. The responsibility of the Issuing
Lender to the Borrower in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are substantially in conformity with such
Letter of Credit.
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3.8 APPLICATIONS. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into this
Agreement and to make the Loans and issue or participate in the Letters of
Credit, Holdco and the Borrower hereby jointly and severally represent and
warrant to the Agents and each Lender that:
4.1 FINANCIAL CONDITION. (a) The unaudited PRO FORMA
consolidated balance sheet and statements of income and cash flows of the
Borrower as at, or for the period ending, December 31, 1998 (but using October
31, 1998 latest twelve month figures for Certified) (the "PRO FORMA FINANCIAL
STATEMENTS"), copies of which have heretofore been furnished to each Lender,
have been prepared giving effect (as if such events had occurred on such date or
at the beginning of such period, as applicable) to (i) the consummation of the
Acquisitions, (ii) the loans to be made on the Closing Date and the use of
proceeds thereof and (iii) the payment of fees and expenses in connection with
the foregoing. The Pro Forma Financial Statements have been prepared based on
the best information available to the Borrower as of the date of delivery
thereof, and present fairly in all material respects on a PRO FORMA basis the
estimated financial position of the Borrower as at, or for the period ending,
December 31, 1998 (but using October 31, 1998 latest twelve month figures for
Certified), assuming that the events specified in the preceding sentence had
actually occurred at such date or at the beginning of such period, as
applicable.
(b) The unaudited consolidated balance sheets of Galaxy as at
August 31, 1996, August 31, 1997 and August 31, 1998 and the related
consolidated statements of earnings and of retained earnings stockholders'
equity and cash flows for the fiscal years ended on such date reviewed by Rehman
Xxxxxx, CPAs and Consultants, P.C. (with respect to the August 31, 1996
financial statements) and Jenkens, Magnus, Xxxx & Xxxxxxx (with respect to the
August 31, 1997 financial statements), present fairly in all material respects
the consolidated financial condition of Galaxy as at such date, and the
consolidated results of its operations and its consolidated retained earnings,
stockholders' equity and cash flows for the respective fiscal years then ended.
The unaudited consolidated balance sheet of Galaxy as at September 30, 1998, and
the related unaudited consolidated statements of earnings and retained earnings,
stockholders' equity and cash flows for the one-month period ended on such date,
present fairly in all material respects the consolidated financial condition of
Galaxy as at such date, and the consolidated results of its operations and its
consolidated cash flows for the one-month period then ended (subject to normal
year-end audit adjustments). During the period from September 30, 1998 to and
including the date hereof there has been no Disposition by Galaxy of any
material part of its business or property.
(c) The audited consolidated balance sheets of Mid State as at
December 31, 1995, December 31, 1996 and December 31, 1997, reported on by and
accompanied by an unqualified report from Xxxxx, Xxxxxx & Xxxxx LLC and the
audited consolidated balance sheet of Mid State as at September 30, 1998,
reported on by and accompanied by an unqualified report from Xxxxxx & Young LLP,
and the related consolidated statements of earnings and of retained earnings,
stockholders' equity and cash flows for the fiscal years ended on such dates
(for nine months in the case of the September 30, 1998 balance sheet), present
fairly in all material respects the consolidated financial condition of Mid
State as at such date, and the consolidated results of its operations and its
consolidated retained earnings, stockholders' equity and cash flows for the
respective fiscal years then ended. All such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as approved by the
aforementioned firm of accountants and disclosed therein). During the period
from September 30, 1998 to and including the date hereof there has been no
Disposition by Mid State of any material part of its business or property.
(d) The audited balance sheets of the entity to be acquired in
the General Automation Acquisition as at December 31, 1997 and December 31,
1998, and the related statements of earnings and of retained earnings,
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stockholders' equity and cash flows for the fiscal years ended on such dates and
December 31, 1996 reported on by and accompanied by an unqualified report from
Ernst & Young LLP, present fairly in all material respects the financial
condition of such entity as at such date, and the results of its operations and
its retained earnings, stockholders' equity and cash flows for the respective
fiscal years then ended. All such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by the
aforementioned firm of accountants and disclosed therein). During the period
from December 31, 1998 to and including the date hereof there has been no
Disposition by the entity to be acquired in the General Automation Acquisition
of any material part of the business or property of such entity.
(e) The audited combined balance sheets of the entities to be
acquired in the Certified Acquisition as at October 31, 1997 and October 31,
1998, and the related combined statements of earnings and of retained earnings,
stockholders' equity and cash flows for the fiscal years ended on such dates and
on October 31, 1996 reported on by and accompanied by an unqualified report from
Ernst & Young LLP, present fairly in all material respects the combined
financial condition of such entities as at such date, and the combined results
of its operations and its combined retained earnings, stockholders' equity and
cash flows for the respective fiscal years then ended. All such financial
statements, including the related schedules and notes thereto, have been
prepared in accordance with GAAP applied consistently throughout the periods
involved (except as approved by the aforementioned firm of accountants and
disclosed therein). During the period from October 31, 1998 to and including the
date hereof there has been no Disposition by the entities to be acquired in the
Certified Acquisition of any material part of the business or property of such
entities.
(f) The audited balance sheets of the entity to be acquired in
the Nationwide Acquisition as at December 31, 1998, May 31, 1998, and May 31,
1997, and the related statements of earnings and of retained earnings,
stockholders' equity and cash flows for the fiscal years ended on such dates and
May 31, 1996 reported on by and accompanied by unqualified reports from Ernst &
Young LLP and Insero, Kasperski, Xxxxxxx & Co., P.C., present fairly in all
material respects the financial condition of such entity as at such date, and
the results of its operations and its retained earnings, stockholders' equity
and cash flows for the respective fiscal years then ended (for seven months in
the case of the December 31, 1998 balance sheet). All such financial statements,
including the related schedules and notes thereto, have been prepared in
accordance with GAAP applied consistently throughout the periods involved
(except as approved by the aforementioned firm of accountants and disclosed
therein). During the period from December 31, 1998 to and including the date
hereof there has been no Disposition by the entities to be acquired in the
Nationwide Acquisition of any material part of the business or property of such
entities.
(g) As of the Closing Date, the Precision Group Members do not
have any material Guarantee obligations, contingent liabilities and liabilities
for taxes, or any long-term leases or unusual forward or long-term commitments,
including any interest rate or foreign currency swap or exchange transaction or
other obligation in respect of derivatives, that are not reflected in the most
recent financial statements referred to in paragraph (b) or (c) above, as the
case may be, other than obligations pursuant to the Loan Documents.
4.2 NO CHANGE. Since October 31, 1998 there has been no
development or event that has had or could reasonably be expected to have a
Material Adverse Effect.
4.3 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each Loan Party
(a) is duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization, (b) has the corporate power and authority,
and the legal right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged,
(c) is duly qualified as a foreign corporation and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification except as, in the
aggregate, could not reasonably be expected to have a Material
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Adverse Effect and (d) is in compliance with all Requirements of Law except to
the extent that the failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
4.4 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
Each Loan Party has the corporate power and authority, and the legal right, to
make, deliver and perform the Loan Documents to which it is a party and, in the
case of the Borrower, to borrow hereunder. Each Loan Party has taken all
necessary corporate action to authorize the execution, delivery and performance
of the Loan Documents to which it is a party and, in the case of the Borrower,
to authorize the borrowings on the terms and conditions of this Agreement. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the Acquisitions and the borrowings hereunder or with the
execution, delivery, performance, validity or enforceability of this Agreement
or any of the Loan Documents, except (i) consents, authorizations, filings and
notices described in Schedule 4.4, which consents, authorizations, filings and
notices have been obtained or made and are in full force and effect, except as
disclosed in Schedule 4.4 and (ii) the filings referred to in Section 4.19. Each
Loan Document has been duly executed and delivered on behalf of each Loan Party
party thereto. This Agreement constitutes, and each other Loan Document upon
execution will constitute, a legal, valid and binding obligation of each Loan
Party party thereto, enforceable against each such Loan Party in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
4.5 NO LEGAL BAR. The execution, delivery and performance of
this Agreement and the other Loan Documents, the issuance of Letters of Credit,
the borrowings hereunder and the use of the proceeds thereof will not violate
any Requirement of Law or any Contractual Obligation of any Precision Group
Member and will not result in, or require, the creation or imposition of any
Lien on any of their respective properties or revenues pursuant to any
Requirement of Law or any such Contractual Obligation (other than the Liens
created by the Security Documents). No Requirement of Law or Contractual
Obligation applicable to any Precision Group Member could reasonably be expected
to have a Material Adverse Effect.
4.6 LITIGATION. No litigation, investigation or proceeding of
or before any arbitrator or Governmental Authority is pending or, to the
knowledge of the Borrower, threatened by or against any Loan Party or against
any of its properties or revenues (a) with respect to any of the Loan Documents
or any of the transactions contemplated hereby or thereby or (b) that could
reasonably be expected to have a Material Adverse Effect.
4.7 NO DEFAULT. No Loan Party is in default under or with
respect to any of its Contractual Obligations in any respect that could
reasonably be expected to have a Material Adverse Effect. No Default or Event of
Default has occurred and is continuing.
4.8 OWNERSHIP OF PROPERTY; LIENS. Each Loan Party (i) has good
and marketable title to all the real properties owned in fee or acquired after
the date thereof and (ii) has valid leasehold interests in all leased real
properties and is in possession of the real properties purported to be leased
thereunder, in each case, free and clear of all Liens, except Liens of the type
described as Prior Liens in the Mortgages. Title to all property other than real
property is held by each respective Loan Party free and clear of all Liens
except for Prior Liens and other Liens expressly permitted to exist on such type
of property by the terms of the applicable Security Document.
4.9 INTELLECTUAL PROPERTY. Each Loan Party owns, or is
licensed to use, all Intellectual Property necessary for the conduct of its
business as currently conducted. No material claim has been asserted and is
pending by any Person challenging or questioning the use of any Intellectual
Property or the validity or effectiveness of any Intellectual Property, nor does
the Borrower know of any valid basis for any such claim. The use of Intellectual
Property by each Precision Group Member does not infringe on the rights of any
Person in any material respect.
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4.10 TAXES. Each Loan Party has filed or caused to be filed
all Federal, state and other material tax returns that are required to be filed
and has paid all taxes shown to be due and payable on said returns or on any
assessments made against it or any of its property and all other taxes, fees or
other charges imposed on it or any of its property by any Governmental Authority
(other than any the amount or validity of which are currently being contested in
good faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of the relevant Loan Party,
PROVIDED that in the case of Galaxy any such reserves made prior to the Closing
Date need not be in conformity with GAAP so long as they are in a reasonable
amount); no tax Lien has been filed, and, to the knowledge of Holdco and the
Borrower, no claim is being asserted, with respect to any such tax, fee or other
charge.
4.11 FEDERAL REGULATIONS. No part of the proceeds of any Loans
will be used for "buying" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U as now and from time to
time hereafter in effect or for any purpose that violates the provisions of the
Regulations of the Board. If requested by any Lender or the Administrative
Agent, the Borrower will furnish to the Administrative Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR Form
G-3 or FR Form U-l, as applicable, referred to in Regulation U.
4.12 LABOR MATTERS. Except as, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect: (a) there are no
strikes or other labor disputes against any Precision Group Member pending or,
to the knowledge of the Borrower, threatened; (b) hours worked by and payment
made to employees of the Precision Group Members have not been in violation of
the Fair Labor Standards Act or any other applicable Requirement of Law dealing
with such matters; and (c) all payments due from any Precision Group Member on
account of employee health and welfare insurance have been paid or accrued as a
liability on the books of the relevant Precision Group Member.
4.13 ERISA. Neither a Reportable Event nor an "accumulated
funding deficiency" (within the meaning of Section 412 of the Code or Section
302 of ERISA) has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Plan, and
each Plan has complied in all material respects with the applicable provisions
of ERISA and the Code. No termination of a Single Employer Plan has occurred,
and no Lien in favor of the PBGC or a Plan has arisen, during such five-year
period. The present value of all accrued benefits under each Single Employer
Plan (based on those assumptions used to fund such Plans) did not, as of the
last annual valuation date prior to the date on which this representation is
made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits by a material amount. Neither the Borrower nor any
Commonly Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan that has resulted or could reasonably be expected to result
in a material liability under ERISA, and neither the Borrower nor any Commonly
Controlled Entity would become subject to any material liability under ERISA if
the Borrower or any such Commonly Controlled Entity were to withdraw completely
from all Multiemployer Plans as of the valuation date most closely preceding the
date on which this representation is made or deemed made. No such Multiemployer
Plan is in Reorganization or Insolvent.
4.14 INVESTMENT COMPANY ACT; OTHER REGULATIONS. No Loan Party
is an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
No Loan Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) that limits its ability to incur Indebtedness.
4.15 SUBSIDIARIES. Except as disclosed to the Administrative
Agent by the Borrower in writing from time to time after the Closing Date, (a)
Schedule 4.15 sets forth the name and jurisdiction of incorporation of each
Subsidiary of the Borrower and, as to each such Subsidiary, the percentage of
each class of Capital Stock owned by the Borrower or any Precision Group Member,
(b) there are no outstanding subscriptions, options, warrants, calls, rights or
other agreements or commitments (other than directors' qualifying shares) of any
nature
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relating to any Capital Stock of any Precision Group Member, except as created
by the Loan Documents, and (c) there are no outstanding subscriptions, options,
warrants, calls, rights or other agreements or commitments (other than stock
options granted to employees or directors) of any nature relating to any Capital
Stock of Holdco.
4.16 USE OF PROCEEDS. The proceeds of the Term Loans shall be
used to finance a portion of the purchase price for the Acquisitions and to
refinance the Existing Credit Facility. The proceeds of the Revolving Loans
shall be used for working capital and general corporate purposes.
4.17 ENVIRONMENTAL MATTERS. Except as, in the aggregate, could
not reasonably be expected to have a Material Adverse Effect:
(a) the facilities and properties owned, leased or operated by
any Precision Group Member (the "PROPERTIES") do not contain, and have
not previously contained, any Materials of Environmental Concern in
amounts or concentrations or under circumstances that constitute or
constituted a violation of, or could give rise to liability under, any
Environmental Law;
(b) no Precision Group Member has received or is aware of any
claim or notice of violation, alleged violation, non-compliance,
liability or potential liability under any Environmental Law of or by
any Precision Group Member or with regard to any of the Properties or
the business operated by the Precision Group Members (the "BUSINESS"),
nor does the Borrower have knowledge or reason to believe that any such
claim or notice will be received or is being threatened;
(c) Materials of Environmental Concern have not been
transported or disposed of by any Precision Group Member or from any of
the Properties or in connection with the Business in violation of or in
a manner or to a location that could give rise to liability under any
Environmental Law, nor have any Materials of Environmental Concern been
used, handled, generated, treated, stored or disposed of or released
at, on, under or from any of the Properties in violation of, or in a
manner that could give rise to liability under, any applicable
Environmental Law;
(d) no judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Borrower, threatened
under any Environmental Law to which any Precision Group Member is or
will be named as a party, nor are there any consent decrees or other
decrees, consent orders, administrative orders or other orders, or
other administrative or judicial requirements or agreements outstanding
which impose any requirements or obligations upon or among Precision
Group Members under any Environmental Law;
(e) there has been no release or threat of release of
Materials of Environmental Concern at, on, under or from any of the
Properties, or arising from or related to the operations of the
Precision Group Members in connection with any of the Properties or
otherwise in connection with the Business, in violation of or in
amounts, in a manner or under circumstances that could give rise to
liability under Environmental Laws;
(f) each of the Properties and all operations at the
Properties are in compliance, and have in the last five years been in
compliance, with all applicable Environmental Laws, and there are no
Materials of Environmental Concern at, on, under or emanating from the
Properties or in violation of any Environmental Law with respect to the
Properties or the Business;
(g) no Precision Group Member has assumed any liability of any
other Person under Environmental Laws;
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(h) there is no lien imposed on any of the Properties or any
other assets of any Precision Group Member under any Environmental Law;
and
(i) all material environmental investigations, studies, audits
or assessments which have been conducted and which are in the
possession, custody or control of any Precision Group Member relating
(i) to the current or prior business, operations, facilities or
Properties of any Precision Group Member or any of their respective
predecessors in interest or (ii) to any facility, Properties or other
asset now or previously owned, operated, leased or used by any
Precision Group Member or any of their respective predecessors in
interest have been made available to Lenders.
4.18 ACCURACY OF INFORMATION, ETC. No statement or information
contained in this Agreement, any other Loan Document, the Confidential
Information Memorandum, or any other document, certificate or statement
furnished by or on behalf of any Loan Party to the Administrative Agent or the
Lenders, or any of them, for use in connection with the transactions
contemplated by this Agreement or the other Loan Documents, contained as of the
date such statement, information, document or certificate was so furnished any
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements contained herein or therein not misleading. The
projections and PRO FORMA financial information contained in the materials
referenced above are based upon good faith estimates and assumptions believed by
management of the Borrower to be reasonable at the time made, it being
recognized by the Lenders that such financial information as it relates to
future events is not to be viewed as fact and that actual results during the
period or periods covered by such financial information may differ from the
projected results set forth therein by a material amount. As of the date hereof,
the representations and warranties contained in the Acquisition Documentation
are true and correct in all material respects. There is no fact known to any
Loan Party that could reasonably be expected to have a Material Adverse Effect
that has not been expressly disclosed herein, in the other Loan Documents, the
Confidential Information Memorandum or in any other documents, certificates and
statements furnished to the Administrative Agent and the Lenders for use in
connection with the transactions contemplated hereby and by the other Loan
Documents.
4.19 SECURITY DOCUMENTS. (a) The Security Agreement is
effective to create in favor of the Administrative Agent, for the benefit of the
Agents and the Lenders, a legal, valid and enforceable security interest in the
Collateral described therein and proceeds thereof. In the case of the Pledged
Stock described in the Security Agreement, when stock certificates representing
such Pledged Stock are delivered to the Administrative Agent, and in the case of
the other Collateral described in the Security Agreement, when financing
statements and other filings specified on Schedule 4.19(a) in appropriate form
are filed in the offices specified on Schedule 4.19(a), the Security Agreement
shall constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the Borrower and the Subsidiary Guarantors in such
Collateral and the proceeds thereof, in each case to the extent a Lien on the
relevant Collateral may be perfected by taking any of the actions of the type
referred to in this paragraph (a), as security for the Secured Obligations (as
defined in the Security Agreement), in each case prior and superior in right to
any other Person (except for Prior Liens and other Liens expressly permitted to
exist on such type of property by the terms of the Security Agreement).
(b) The Securities Pledge Agreement is effective to create in
favor of the Administrative Agent, for the benefit of the Agents and the
Lenders, a legal, valid and enforceable security interest in the Collateral
described therein and proceeds thereof. In the case of the Pledged Stock
described in the Securities Pledge Agreement, when stock certificates
representing such Pledged Stock are delivered to the Administrative Agent, and
in the case of the other Collateral described in the Security Agreement, when
financing statements and other filings specified on Schedule 4.19(b) in
appropriate form are filed in the offices specified on Schedule 4.19(b), the
Securities Pledge Agreement shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of Holdco in such Collateral
and the proceeds thereof, in each case to the extent a Lien on the relevant
Collateral may be perfected by taking any of the actions of the type referred to
in this paragraph (b), as security for the Secured Obligations (as defined in
the Security Pledge Agreement), in each case prior and superior in right to
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any other Person (except for Liens expressly permitted to exist on such type of
property by the terms of the Securities Pledge Agreement).
(c) Each of the Mortgages is effective to create in favor of
the Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable Lien on the Mortgaged Properties described therein and proceeds
thereof and when the Mortgages are filed in the offices specified on Schedule
4.19(c), each such Mortgage except for the Collateral Assignment shall
constitute a fully perfected first priority Lien on, and security interest in,
all right title and interest of the applicable Loan Parties in the Mortgaged
Properties and the proceeds thereof, as security for the Secured Obligations (as
defined in the relevant Mortgage), in each case prior and superior in right to
any other Person (except for Prior Liens and other Liens expressly permitted to
exist on such type of property by the terms of the relevant Mortgage).
(d) Except with respect to Prior Liens and other Liens
expressly permitted by the terms of the applicable Security Document and the
Liens created by the Security Documents, there is no currently effective
financing statement, security agreement, chattel mortgage, real estate mortgage
or other document filed or recorded with any filing records, registry, or other
public office, that purports to cover, affect or give notice of any present or
possible future Lien on, or security interest in, any assets or Property of any
Loan Party or rights thereunder.
4.20 SOLVENCY. Each Loan Party is, and after giving effect to
any Acquisition and the incurrence of all Indebtedness and obligations being
incurred in connection herewith and therewith will be and will continue to be,
Solvent.
4.21 SENIOR DEBT. If any Loan Party has issued, or may issue,
Subordinated Indebtedness, the Obligations of such Loan Party will constitute
"Senior Debt" (or such equivalent term) of such Loan Party with respect to such
Subordinated Indebtedness; the Obligations of each Loan Party constitute such
Senior Debt with respect to the Senior Subordinated Notes.
4.22 YEAR 2000 MATTERS. Each of the Loan Parties is making a
commercially reasonable effort (i) to assess all areas within its and each of
its Subsidiaries' businesses and operations that could be adversely affected by
the Year 2000 Problem and (ii) to develop and implement a plan for addressing
the Year 2000 Problem on a timely basis. Each Loan Party believes that all
computer applications that are material to its or any of its Subsidiaries'
business and operations are reasonably expected on a timely basis to be able to
perform properly date-sensitive functions for all dates before and after January
1, 2000 (that is, be "YEAR 2000 COMPLIANT"). The Borrower reasonably believes
that the Year 2000 Problem, including costs of redemption, could not reasonably
be expected to have a Material Adverse Effect.
4.23 REGULATION H. No Mortgage encumbers improved real
property that is located in an area that has been identified by the Secretary of
Housing and Urban Development as an area having special flood hazards and in
which flood insurance has been made available under the National Flood Insurance
Act of 1968.
4.24 LICENSES AND PERMITS; COMPLIANCE WITH LAWS. The Loan
Parties hold all governmental permits, licenses, authorizations, consents and
approvals (none of which has been modified or rescinded and all of which are in
full force and effect) (collectively, the "PERMITS") necessary for the Loan
Party to own, lease, and operate their respective Properties and to carry on
their respective businesses as now being conducted, except for Permits the
failure of which to obtain could not reasonably be expected to have a Material
Adverse Effect.
The business of the Loan Parties are not being conducted in
violation of any applicable requirement of law, permit, concession, grant or
other authorization of any Governmental Authority, except for violations that
could not reasonably be expected to have a Material Adverse Effect.
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SECTION 5. CONDITIONS PRECEDENT
5.1 CONDITIONS TO INITIAL EXTENSION OF CREDIT. The agreement
of each Lender to make the initial extension of credit requested to be made by
it is subject to the satisfaction, prior to or concurrently with the making of
such extension of credit on the Closing Date, of the following conditions
precedent:
(a) CREDIT AGREEMENT; GUARANTEES, ETC. The Administrative
Agent shall have received (i) this Agreement, executed and delivered by
the Agents, Holdco, the Borrower and each Person listed on Schedule 1.1
A, (ii) the Guarantees, executed and delivered by Holdco and each
Subsidiary Guarantor, and (iii) a Borrowing Base Certificate, dated the
Closing Date and setting forth a calculation of the Borrowing Base as
of February 28, 1999.
(b) PRECISION REORGANIZATION. The Precision Reorganization
shall have occurred on the terms set forth on Schedule 5.1(b). The
Administrative Agent shall be satisfied with the tax and organizational
effects of the Precision Reorganization.
(c) ACQUISITION, ETC. The following transactions shall have
been consummated and each of the Acquisitions shall have been
consummated without any amendment or waiver not approved by the Lenders
or all conditions to consummation have been met, but for the financing
as a result of this transaction, and in each case on terms and
conditions reasonably satisfactory to the Administrative Agent:
(i) the General Automation Acquisition Documentation,
the Nationwide Acquisition Documentation and the Certified
Fabricators Acquisition Documentation shall be reasonably
acceptable to the Administrative Agent; and
(ii) the Administrative Agent shall have received
satisfactory evidence that the fees and expenses to be
incurred by such Companies in connection with the Acquisitions
and the financing thereof shall not exceed $10,000,000.
(d) SENIOR SUBORDINATED NOTES. The Borrower shall have
received gross proceeds of $100 million from the issuance of the Senior
Subordinated Notes. The terms and conditions of the Senior Subordinated
Notes (including, without limitation, as to maturity, interest rate,
events of default, subordination and covenants) shall be satisfactory
to the Administrative Agent.
(e) REPAYMENT OF EXISTING INDEBTEDNESS. Except as set forth in
Schedule 5.1(e) hereto, all Indebtedness of the Borrower and Holdco
shall have been repaid in full, and all obligations thereunder and
security interests relating thereto shall have been discharged, and the
Administrative Agent shall have received satisfactory evidence of such
repayment and discharge; PROVIDED, that, as to Indebtedness of the
Borrower which is to be repaid upon Closing with proceeds hereof
(including the Existing Credit Facility), the Administrative Agent
shall have received satisfactory evidence in the form of definitive
payoff letters verifying that all obligations thereunder and security
interests relating thereto shall be repaid and discharged immediately
upon receipt by the lenders thereunder (or their agents) of the amounts
stated in such payoff letters.
(f) REVOLVING DRAW-DOWN. After giving effect to the
Acquisitions and the making of any extensions of credit hereunder on
the Closing Date, the Total Revolving Extensions of Credit outstanding
shall not exceed $1,000,000.
(g) PRO FORMA EBITDA; CONSOLIDATED LEVERAGE RATIO. At December
31, 1998 (but using October 31, 1998 latest twelve month figures for
Certified), after giving effect to the Acquisitions, the
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issuance of the Senior Subordinated Notes, the extension of credit
hereunder and the repayment of Indebtedness in connection therewith,
Consolidated EBITDA shall be no less than $29.9 million and the
Consolidated Leverage Ratio shall not exceed 4.1 to 1.
(h) FINANCIAL STATEMENTS; ETC. The Administrative Agent shall
have received (i) the Pro Forma Financial Statements, (ii) the
financial statements referred to in Section 4.1 (b) through (f), (iii)
projected financial statements, (which in each case shall be
satisfactory to the Administrative Agent), (iv) a certificate of a
Responsible Officer of the Borrower demonstrating in reasonable detail
that, after giving effect to the Acquisitions, the Borrower shall be in
PRO FORMA compliance with the covenants set forth in Section 7.1(a),
(b) and (c), and (v) a Solvency Certificate.
(i) LEGAL AND CAPITAL STRUCTURE. The Lenders and their counsel
shall be satisfied with the capitalization, structure and equity
ownership of the Borrower and Holdco after the Acquisitions, including
a minimum total common equity investment in the Borrower of $42
million; PROVIDED that if any portion of any investment in Holdco is
not in the form of common equity, the terms thereof shall be
satisfactory to the Administrative Agent.
(j) APPROVALS. All governmental and third party approvals
(including landlords' and other consents) necessary in connection with
the Acquisitions, the continuing operations of the Precision Group
Members and the transactions contemplated hereby shall have been
obtained and be in full force and effect, and all applicable waiting
periods shall have expired without any action being taken or threatened
by any competent authority that would restrain, prevent or otherwise
impose adverse conditions on the Acquisitions or the financing
contemplated hereby.
(k) LIEN SEARCHES. The Administrative Agent shall have
received the results of a Requests for Information (Form UCC-11), tax
lien, judgment lien and pending lawsuit searches or equivalent reports
or lien search reports, each of a recent date listing all effective
financing statements, lien notices or comparable documents that name
any Loan Party as debtor in each of the jurisdictions where assets of
the Loan Parties are located (after giving effect to the Acquisitions)
and each such Loan Party's principal place of business is located, and
such search shall reveal no liens on any of the assets of the Loan
Parties except for Prior Liens or discharged on or prior to the Closing
Date pursuant to documentation satisfactory to the Administrative
Agent.
(l) ENVIRONMENTAL AUDIT. The Administrative Agent shall have
received (i) an environmental audit with respect to the real properties
of the Precision Group Members specified by the Administrative Agent
and (ii) an Environmental Certificate.
(m) FEES. The Lenders and the Administrative Agent shall have
received all fees required to be paid, and all expenses for which
invoices have been presented (including the reasonable fees and
expenses of legal counsel), on or before the Closing Date. All such
amounts will be paid with proceeds of Loans made on the Closing Date
and will be reflected in the funding instructions given by the Borrower
to the Administrative Agent on or before the Closing Date.
(n) CLOSING CERTIFICATES. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of each
Loan Party, dated the Closing Date, substantially in the form of
Exhibit C, with appropriate insertions and attachments.
(o) LEGAL OPINIONS. The Administrative Agent shall have
received the following executed legal opinions:
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(i) the legal opinion of Xxxxx, Day, Xxxxxx & Xxxxx,
counsel to the Precision Group Members, substantially in the
form of Exhibit F;
(ii) to the extent consented to by the relevant
counsel, each legal opinion, if any, delivered in connection
with the Acquisition Agreements, accompanied by a reliance
letter in favor of the Lenders; and
(iii) the legal opinion of local counsel to the
Precision Group Members, substantially in the form of Exhibit
J, in each jurisdiction where Collateral is located in form
and substance reasonably satisfactory to Administrative Agent.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.
(p) PLEDGED STOCK; STOCK POWERS; PLEDGED NOTES. The
Administrative Agent shall have received (i) the certificates
representing the shares of Capital Stock pledged pursuant to any
Security Document, together with an undated stock power for each such
certificate executed in blank by a duly authorized officer of the
pledgor thereof and (ii) each promissory note (if any) pledged to the
Administrative Agent pursuant to the Security Agreement endorsed
(without recourse) in blank (or accompanied by an executed transfer
form in blank) by the pledgor thereof.
(q) FILINGS, REGISTRATIONS AND RECORDINGS. Each document
(including any Uniform Commercial Code financing statement or United
States Patent, Trademark and Copyright office filings) required by the
Security Documents or under law or reasonably requested by the
Administrative Agent to be filed, registered or recorded in order to
create in favor of the Administrative Agent, for the benefit of the
Lenders, a perfected Lien on the Collateral described therein, prior
and superior in right to any other Person (other than with respect to
Liens expressly permitted by any Security Document), shall be in proper
form for filing, registration or recordation.
(r) MORTGAGES, ETC.
(i) The Administrative Agent shall have received a
Mortgage, duly authorized, executed and delivered encumbering
each Mortgaged Property in favor of Administrative Agent, for
the benefit of the Agents and the Lenders, in form for
recording office of each jurisdiction where each such
Mortgaged Property is situated, together with such other
instruments as shall be necessary or appropriate (in the
reasonable judgment of the Administrative Agent) to create a
Lien under applicable law, all of which shall be in form and
substance reasonably satisfactory to Administrative Agent,
which Mortgage (other than the Collateral Assignment) and
other instruments shall be effective to create a first
priority Lien on such Mortgaged Property subject to no Liens
other than Prior Liens applicable to such Mortgaged Property.
(ii) The Administrative Agent shall have received,
and the title insurance company issuing the policy referred to
in clause (iii) below (the "TITLE INSURANCE COMPANY") shall
have received, maps or plats of an as-built survey of the
sites of the Mortgaged Properties certified to the
Administrative Agent and the Title Insurance Company in a
manner satisfactory to them, dated a date satisfactory to the
Administrative Agent and the Title Insurance Company by an
independent professional licensed land surveyor satisfactory
to the Administrative Agent and the Title Insurance Company,
which maps or plats and the surveys on which they are based
shall be made in accordance with the Minimum Standard Detail
Requirements for Land Title Surveys jointly established and
adopted by the American Land Title Association and the
American
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Congress on Surveying and Mapping in 1992, and, without
limiting the generality of the foregoing, there shall be
surveyed and shown on such maps, plats or surveys the
following: (A) the locations on such sites of all the
buildings, structures and other improvements and the
established building setback lines; (B) the lines of streets
abutting the sites and width thereof; (C) all access and other
easements appurtenant to the sites; (D) all roadways, paths,
driveways, easements, encroachments and overhanging
projections and similar encumbrances affecting the site,
whether recorded, apparent from a physical inspection of the
sites or otherwise known to the surveyor; (E) any
encroachments on any adjoining property by the building
structures and improvements on the sites; (F) if the site is
described as being on a filed map, a legend relating the
survey to said map; and (G) the flood zone designations, if
any, in which the Mortgaged Properties are located.
(iii) The Administrative Agent shall have received in
respect of each Mortgaged Property a mortgagee's title
insurance policy (or policies) or marked up unconditional
binder for such incurrence. Each such policy shall (A) be in
an amount satisfactory to the Administrative Agent; (B) be
issued at ordinary rates; (C) insure that the Mortgage insured
thereby creates a valid first Lien on such Mortgaged Property
free and clear of all defects and encumbrances, except as
disclosed therein; (D) name the Administrative Agent for the
benefit of the Lenders as the insured thereunder; (E) be in
the form of ALTA Loan Policy - 1970 (Amended 10/17/70 and
10/17/84) (or equivalent policies); (F) contain such
endorsements and affirmative coverage as the Administrative
Agent may reasonably request (including, without limitation,
endorsements on matters relating to usury, first loss, last
dollar, zoning, contiguity, revolving credit, doing business,
road access, variable rate and so-called comprehensive
coverage over covenants and restrictions); (G) contain no
exceptions to title other than exceptions for Prior Liens (as
set forth in the applicable Mortgage) and other exceptions
reasonably acceptable to Administrative Agent; and (H) be
issued by title companies satisfactory to the Administrative
Agent (including any such title companies acting as
co-insurers or reinsurers, at the option of the Administrative
Agent). The Administrative Agent shall have received evidence
satisfactory to it that all premiums in respect of each such
policy, all charges for mortgage recording tax, and all
related expenses, if any, have been paid.
(iv) The Administrative Agent shall have received,
for each parcel of Mortgaged Property located in an area
identified by the Federal Emergency Management Agency as an
area having special flood hazards pursuant to the National
Flood Insurance Act of 1968 or the Flood Disaster Protection
Act of 1973, each as amended, or any successor laws, flood
insurance with policy limits and deductibles in such amounts
as set forth under the Mortgage relating to that parcel of
Mortgaged Property, and, if no such amount has been
established, in such amounts as would be maintained by a
prudent operator of property similar in use and configuration
to such parcel of Mortgaged Property and located in the
locality where such parcel of Mortgaged Property is located.
(v) The Administrative Agent shall have received a
copy of all recorded documents referred to, or listed as
exceptions to title in, the title policy or policies referred
to in clause (iii) above and a copy of all other material
documents affecting the Mortgaged Properties.
(vi) The Administrative Agent shall have received an
officer's certificate or other evidence reasonably
satisfactory to the Administrative Agent that as of the date
thereof to such officer's knowledge there (x) has been issued
and is in effect a valid and proper certificate of occupancy
or other local equivalent, if any, for the use then being made
of such Mortgaged Property and that there is not outstanding
any citation, violation or similar notice indicating that
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such Mortgaged Property contains conditions which are not in
compliance (except where non-compliance would not result in a
material impairment of the value or utility of such Mortgaged
Property) with local codes or ordinances relating to building
or fire safety or structural soundness, (y) has not occurred
any Recovery Event affecting all or any material portion of
any Mortgaged Property and (z) are no disputes regarding
boundary lines, location, encroachment or possession of any
portions of such Mortgaged Property and no state of facts
existing which could give rise to any such claim.
(s) INSURANCE. The Administrative Agent shall have received
insurance certificates satisfying the requirements of the Security
Documents.
(t) SECURITY AGREEMENT AND SECURITIES PLEDGE AGREEMENT. The
Administrative Agent shall have received a Security Agreement executed
and delivered by the Borrower, each Subsidiary Guarantor and the
Administrative Agent in substantially the form of Exhibit I and the
Administrative Agent shall have received a Securities Pledge Agreement
executed and delivered by Holdco, in substantially the form of Exhibit
K.
(u) NO DEFAULT. No Default or Event of Default shall have
occurred and be continuing on the date of issuance or after giving
effect to (1) the Senior Subordinated Notes, (2) any extensions of
credit requested to be made on such date, (3) the General Automation
Acquisition, (4) the Nationwide Acquisition and (5) the Certified
Acquisition.
(v) COVENANT COMPLIANCE. After giving effect to the issuance
of the Senior Subordinated Notes, the Acquisitions and the payment of
related fees and expenses, the Borrower shall be in PRO FORMA
compliance with the Financial covenants set forth in Section 7.1 (a),
(b) and (c).
5.2 CONDITIONS TO EACH EXTENSION OF CREDIT. The agreement of
each Lender to make any extension of credit requested to be made by it on any
date (including its initial extension of credit) is subject to the satisfaction
of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by any Loan Party in or pursuant to
the Loan Documents shall be true and correct in all material respects
on and as of such date as if made on and as of such date, except for
any such representation and warranty that expressly relates solely to a
particular date, in which case such representation and warranty shall
have been true and correct on and as of such particular date.
(b) NO DEFAULT. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
extensions of credit requested to be made on such date.
(c) CREDIT LIMITATION. In the case of extensions of credit
under the Revolving Facility, after giving effect to such extension of
credit, the Total Revolving Extensions of Credit shall not exceed the
Borrowing Base then in effect.
Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section 5.3 have been satisfied.
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SECTION 6. AFFIRMATIVE COVENANTS
The Loan Parties hereby jointly and severally agree that, so
long as the Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other amount is owing to any Lender or the
Administrative Agent hereunder, each Loan Party shall and, to the extent
applicable, shall cause each other Loan Party to:
6.1 FINANCIAL STATEMENTS. Furnish to the Administrative Agent
and each Lender:
(a) as soon as available, but in any event within 90 days
after the end of each fiscal year of the Borrower, a copy of the
audited consolidated balance sheet and unaudited consolidating balance
sheet of the Borrower as at the end of such year and the related
audited consolidated statements of income and of cash flows and the
unaudited consolidating statements of income and cash flows for such
year, setting forth in each case in comparative form the figures for
the previous year, with such audited financial statements reported on
without a "going concern" or like qualification or exception,
qualification arising out of the scope of the audit or qualification as
to possible errors generated by financial reporting and related systems
due to the Year 2000 Problem, by Ernst & Young or other independent
certified public accountants of nationally recognized standing;
(b) as soon as available, but in any event not later than 45
days after the end of each of the first three quarterly periods of each
fiscal year of the Borrower, the unaudited consolidated and
consolidating balance sheets of the Borrower as at the end of such
quarter and the related unaudited consolidated and consolidating
statements of income and of cash flows for such quarter and the portion
of the fiscal year through the end of such quarter, setting forth in
each case in comparative form the figures for the previous year,
certified by a Responsible Officer as being fairly stated in all
material respects (subject to normal year-end audit adjustments); and
(c) as soon as available, but in any event not later than 45
days after the end of each month occurring during each fiscal year of
the Borrower (other than the third, sixth, ninth and twelfth such
month), the unaudited consolidated and consolidating balance sheets of
the Borrower as at the end of such month and the related unaudited
consolidated and consolidating statements of income and of cash flows
for such month and the portion of the fiscal year through the end of
such month, setting forth in each case in comparative form the figures
for the previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end
audit adjustments).
All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the cast may be,
and disclosed therein).
6.2 CERTIFICATES; OTHER INFORMATION. Furnish to the
Administrative Agent (with sufficient copies for each Lender) or, in the case of
clause (i) below, to the relevant Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1 (a), a certificate of the independent
certified public accountants reporting on such financial statements
stating that in making the examination necessary therefor no knowledge
was obtained of any Default or Event of Default, except as specified in
such certificate;
(b) concurrently with the delivery of any financial statements
pursuant to Section 6.1, (i) a certificate of a Responsible Officer
stating that, to the best of each such Responsible Officer's knowledge,
each Loan Party during such period has observed or performed all of its
covenants and other agreements,
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and satisfied every condition, contained in this Agreement and the
other Loan Documents to which it is a party to be observed, performed
or satisfied by it, and that such Responsible Officer has obtained no
knowledge of any Default or Event of Default except as specified in
such certificate and (ii) in the case of quarterly or annual financial
statements, (x) a Compliance Certificate containing all information and
calculations necessary for determining compliance by the Borrower with
the provisions of this Agreement referred to therein as of the last day
of the fiscal quarter or fiscal year of the Precision Group Members, as
the case may be, and (y) to the extent not previously disclosed to the
Administrative Agent, a listing of each new Subsidiary of the Borrower,
of any new county or state within the United States where any Loan
Party keeps inventory or equipment and of any new fee-owned real
property or Intellectual Property acquired by any Loan Party since the
date of the most recent list delivered pursuant to this clause (y) (or,
in the case of the first such list so delivered, since the Closing
Date);
(c) as soon as available, and in any event no later than 60
days after the end of each fiscal year of the Borrower, a detailed
consolidated and consolidating budget for the following fiscal year
(including projected consolidated and consolidating balance sheets of
the Borrower as of the end of the following fiscal year, the related
consolidated and consolidating statements of projected cash flow,
projected changes in financial position and projected income and a
description of the underlying assumptions applicable thereto), and, as
soon as available, significant revisions, if any, of such budget and
projections with respect to such fiscal year (collectively, the
"PROJECTIONS"), which Projections shall in each case be accompanied by
a certificate of a Responsible Officer stating that such Projections
are based on reasonable estimates, information and assumptions and that
such Responsible Officer has no reason to believe that such Projections
are incorrect or misleading in any material respect;
(d) within 45 days after the end of each fiscal quarter of the
Borrower, a narrative discussion and analysis of the financial
condition and results of operations of the Borrower for such fiscal
quarter and for the period from the beginning of the then current
fiscal year to the end of such fiscal quarter, as compared to the
portion of the Projections covering such periods and to the comparable
periods of the previous year;
(e) as soon as practicable, but in no event later than 15 days
after the end of each month, a Borrowing Base Certificate, certifying
in reasonable detail the Borrowing Base as of the last day of such
month;
(f) (i) promptly upon sending or receipt, copies of any and
all management letters, and correspondence relating to management
letters, sent or received by any Loan Party to or from its auditors and
(ii) no later than June 30, 1999, a copy of the Precision Group
Members' plan, timetable and budget to address the Year 2000 Problem,
together with periodic updates thereof and expenses incurred to date,
any third party assessment of the Precision Group Members' Year 2000
remediation efforts, and any Year 2000 contingency plans;
(g) no later than 10 Business Days prior to the effectiveness
thereof, copies of substantially final drafts of any proposed
amendment, supplement, waiver or other modification with respect to the
Acquisition Documentation;
(h) within five days after the same are sent, copies of all
financial statements and reports that any Loan Party sends to the
holders of any class of its debt securities or public equity securities
and, within five days after the same are filed, copies of all financial
statements and reports that any Loan Party may make to, or file with,
the SEC; and
(i) promptly, such additional financial and other information
as any Lender may from time to time reasonably request.
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6.3 PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its material obligations of whatever nature, except where the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of the relevant Precision Group Member.
6.4 MAINTENANCE OF EXISTENCE; COMPLIANCE. (a) (i) Preserve,
renew and keep in full force and effect its corporate existence and (ii) take
all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business, except, in each
case, as otherwise permitted by Section 7.4 and except, in the case of clause
(ii) above, to the extent that failure to do so could not reasonably be expected
to have a Material Adverse Effect; and (b) comply with all Contractual
Obligations and Requirements of Law except to the extent that failure to comply
therewith could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.
6.5 MAINTENANCE OF PROPERTY; INSURANCE. (a) Keep all property
useful and necessary in its business in good working order and condition,
ordinary wear and tear excepted, and (b) maintain with financially sound and
reputable insurance companies insurance on all its property in at least such
amounts and against at least such risks (but including in any event public
liability, product liability (effective by April 1, 1999) and business
interruption) as are usually insured against in the same general area by
companies engaged in the same or a similar business.
6.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS.
(a) Keep proper books of records and account in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities and (b)
permit representatives of any Lender to visit and inspect any of its properties
and examine and make abstracts from any of its books and records at any
reasonable time and as often as may reasonably be desired and to discuss the
business, operations, properties and financial and other condition of the
Precision Group Members with officers and employees of the Precision Group
Members and with its independent certified public accountants.
6.7 NOTICES. Promptly give notice to the Administrative Agent
and each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of any Loan Party or (ii) litigation, investigation or
proceeding that may exist at any time between any Loan Party and any
Governmental Authority, that in either case, if not cured or if
adversely determined, as the case may be, could reasonably be expected
to have a Material Adverse Effect;
(c) any litigation or proceeding affecting any Loan Party in
which the amount involved is $500,000 or more and not covered by
insurance or in which injunctive or similar relief is sought;
(d) any environmental matter of the type described in Section
4.17 (whether or not such matter could reasonably be expected to have a
Material Adverse Effect) affecting any Loan Party in which the amount
involved is $500,000 or more and not covered by insurance;
(e) the following events, as soon as possible and in any event
within 30 days after Holdco or the Borrower knows or has reason to know
thereof: (i) the occurrence of any Reportable Event with respect to any
Plan, a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan or any withdrawal
from, or the termination, Reorganization or Insolvency of, any
Multiemployer Plan or (ii) the institution of proceedings or the taking
of any other action by the PBGC or
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the Borrower or any Commonly Controlled Entity or any Multiemployer
Plan with respect to the withdrawal from, or the termination,
Reorganization or Insolvency of, any Plan;
(f) any event or condition which, on any day, to the knowledge
of the Borrower, has caused the Borrowing Base to change since the date
of the most recent Borrowing Base Certificate delivered pursuant to
Section 6.2(e) if as a result of such change the Total Revolving
Extensions of Credit exceed the Borrowing Base determined as of such
day; and
(g) any development or event that has had or could reasonably
be expected to have a Material Adverse Effect.
Each notice pursuant to this Section 6.7 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the relevant Loan Party proposes to take with
respect thereto.
6.8 ENVIRONMENTAL LAWS. (a) Comply in all material respects
with, and ensure compliance in all material respects by all tenants and
subtenants, if any, with, all applicable Environmental Laws, and obtain and
comply in all material respects with and maintain, and ensure that all tenants
and subtenants obtain and comply in all material respects with and maintain, any
and all licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws.
(b) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws.
(c) In the event of the presence of any Materials of
Environmental Concern at, on, under or emanating from any Properties which could
reasonably be expected to result in liability under or a violation of any
Environmental Law, in each case which could reasonably be expected to have a
Material Adverse Effect, the applicable Precision Group Member shall undertake,
and/or cause any of their respective tenants or occupants to undertake, at their
sole expense, any action required pursuant to Environmental Laws to mitigate and
eliminate such presence; PROVIDED, HOWEVER, that no Precision Group Member shall
be required to comply with any order or directive of any Governmental Authority
which is being contested in good faith and by proper proceedings so long as it
has maintained adequate reserves with respect to such compliance to the extent
required in accordance with GAAP.
(d) Each Precision Group Member shall promptly notify the
Administrative Agent of the occurrence of any event specified in clause (c) of
this Section 6.8 and shall periodically thereafter keep the Administrative Agent
informed of any material actions taken in response to such event and the results
of such actions.
(e) At the written request of Administrative Agent at any time
and from time to time, each Precision Group Member shall provide, at such
Precision Group Member's sole cost and expense, an environmental site assessment
(including, without limitation, the results of any soil, groundwater or other
testing conducted if the Administrative Agent directs that such testing be
conducted) concerning any Properties or any real property hereafter owned,
leased or operated by any Precision Group Member, conducted by an environmental
consulting firm proposed by such Precision Group Member and approved by the
Administrative Agent indicating the presence or absence of Materials of
Environmental Concern and the potential cost of any required investigation or
other response or any corrective action in connection with any Materials of
Environmental Concern on, at, under or emanating from such Properties and real
properties; PROVIDED, HOWEVER, that such request may be made only if (a) there
has occurred and is continuing an Event of Default, (b) the Administrative Agent
reasonably believes that any
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Precision Group Member or any Properties and real property is not in material
compliance with Environmental Law or (c) circumstances exist that reasonably
could be expected to form the basis of a claim under any Environmental Law
against such Precision Group Member or any such Properties or real property
which could materially and adversely affect the business, condition (financial
or otherwise), operations, performance or properties of any Precision Group
Member. If any Precision Group Member fails to provide the same within 60 days
after such request was made, the Administrative Agent may but is under no
obligation to conduct the same, and such Precision Group Member shall grant and
hereby grants to the Administrative Agent and its agents access to such
Properties and real property and specifically grants the Administrative Agent an
irrevocable non-exclusive license, subject to the rights of tenants, to
undertake such an assessment, all at such Precision Group Member's sole cost and
expense.
6.9 ADDITIONAL COLLATERAL, ETC. (a) With respect to any
property acquired after the Closing Date by any Precision Group Member (other
than (x) any property described in paragraph (b), (c) or (d) below, (y) any
property subject to a Lien expressly permitted by Section 7.3(g,) and (z)
property acquired by Mid State Foundation or any Excluded Foreign Subsidiary) as
to which the Administrative Agent, for the benefit of the Lenders, does not have
a perfected Lien, promptly (i) execute and deliver to the Administrative Agent
such amendments to the Security Agreement, the Securities Pledge Agreement, any
Mortgage or such other documents as the Administrative Agent deems necessary or
advisable to grant to the Administrative Agent, for the benefit of the Lenders,
a security interest in such property and (ii) take all actions necessary or
advisable to grant to the Administrative Agent, for the benefit of the Lenders,
a perfected first priority security interest in such property, including the
filing of Uniform Commercial Code financing statements in such jurisdictions as
may be required by the Security Agreement, the Securities Pledge Agreement, any
Mortgage or by law or as may be requested by the Administrative Agent.
(b) With respect to any fee interest in any real property
having a value (together with improvements thereof) of at least $250,000
acquired after the Closing Date by any Precision Group Member (other than (x)
any such real property subject to a Lien expressly permitted by Section 7.3(g)
and (y) real property acquired by any Excluded Foreign Subsidiary), promptly (i)
execute and deliver a first priority Mortgage, in favor of the Administrative
Agent, for the benefit of the Lenders, covering such real property, (ii) if
requested by the Administrative Agent, provide the Lenders with (x) title and
extended coverage insurance covering such real property in an amount at least
equal to the purchase price of such real property (or such other amount as shall
be reasonably specified by the Administrative Agent) as well as a current ALTA
survey thereof, together with a surveyor's certificate and (y) any consents or
estoppels reasonably deemed necessary or advisable by the Administrative Agent
in connection with such mortgage or deed of trust, each of the foregoing in form
and substance reasonably satisfactory to the Administrative Agent and (iii)
deliver to the Administrative Agent legal opinions relating to the matters
described above, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Administrative Agent. In addition, the
relevant Precision Group Member shall cause the relevant documents described
above to be delivered in respect of the leasehold properties of Mid State
promptly after the earlier of (i) the date on which its purchase option in
respect thereof is exercised and (ii) the date that is 30 days after the Closing
Date.
(c) With respect to any new Subsidiary (other than an Excluded
Foreign Subsidiary) created or acquired after the Closing Date by a Precision
Group Member (which, for the purposes of this paragraph (c), shall include any
existing Subsidiary that ceases to be an Excluded Foreign Subsidiary), promptly
(i) execute and deliver to the Administrative Agent a securities pledge
amendment to the Security Agreement as the Administrative Agent deems necessary
or advisable to grant to the Administrative Agent, for the benefit of the
Lenders, a perfected first priority security interest in the Capital Stock of
such new Subsidiary that is owned by any Precision Group Member, (ii) deliver to
the Administrative Agent the certificates representing such Capital Stock,
together with undated stock powers, in blank, executed and delivered by a duly
authorized officer of the relevant Precision Group Member, (iii) cause such new
Subsidiary (A) to execute and deliver to Administrative Agent a joinder
agreement to the Security Agreement or the Securities Pledge Agreement, as
applicable, (B) to take such actions necessary or advisable to grant to the
Administrative Agent for the benefit of the Lenders a perfected security
interest (subject only to Liens
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permitted by the applicable Security Document) in the Collateral described in
the Security Agreement or the Securities Pledge Agreement, as applicable, with
respect to such new Subsidiary, including the filing of Uniform Commercial Code
financing statements in such jurisdictions as may be required by the Security
Agreement or the Securities Pledge Agreement, as applicable, or by law or as may
be requested by the Administrative Agent, and (C) to deliver to the
Administrative Agent a certificate of such Subsidiary, substantially in the form
of Exhibit C-1, with appropriate insertions and attachments, and (iv) if
requested by the Administrative Agent, deliver to the Administrative Agent legal
opinions relating to the matters described above, which opinions shall be in
form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
(d) With respect to any new Excluded Foreign Subsidiary
created or acquired after the Closing Date by any Precision Group Member,
promptly (i) execute and deliver to the Administrative Agent a securities pledge
amendment to the Security Agreement or the Securities Pledge Agreement, as
applicable, as the Administrative Agent deems necessary or advisable to grant to
the Administrative Agent, for the benefit of the Lenders, a perfected first
priority security interest in the Capital Stock of such new Subsidiary that is
owned by any Precision Group Member (other than by any Precision Group Member
that is a Foreign Subsidiary) (PROVIDED that in no event shall more than 65% of
the total outstanding Capital Stock of any such new Subsidiary be required to be
so pledged), (ii) deliver to the Administrative Agent the certificates
representing such Capital Stock, together with undated stock powers, in blank,
executed and delivered by a duly authorized officer of the relevant Precision
Group Member, and take such other action as may be necessary or, in the opinion
of the Administrative Agent, desirable to perfect the Administrative Agent's
security interest therein, and (iii) deliver to the Administrative Agent legal
opinions relating to the matters described above, which opinions shall be in
form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
6.10 YEAR 2000 MATTERS. No later than June 30, 1999, deliver
to the Lenders a report reasonably satisfactory to the Administrative Agent
demonstrating that each Precision Group Member has developed feasible
contingency plans adequately to ensure uninterrupted and unimpaired business
operation in the event of failure of its own or a third party's systems or
equipment due to the Year 2000 Problem, including those of vendors, customers
and suppliers, as well as a general failure of or interruption in its
communications and delivery infrastructure.
6.11 POST-CLOSING SURVEYS. As soon as reasonably possible but
in no event later than one month after the Closing Date, the Borrower shall, and
shall cause each of its applicable Subsidiary Guarantors to, obtain and deliver
to the Administrative Agent, counsel to the Administrative Agent and the title
company, with respect to the Mortgaged Properties located at (i) 0000 Xxxxxxx
Xxxxxx, Xxxxx Xxxx, XX 00000, (ii) 0000 Xxxxxxx Xxxxxx, Xxxxx Xxxx, XX 00000,
(iii) 00000 Xxxxxxxxx Xxxx, Xxxxxxxx, XX 00000, (iv) 000 Xxxx Xxxx Xxxxx, Xxxx
xx Xxxxxxxxx, XX 00000 and (v) 0000 Xxxxxx Xxxxxx, Xxxxxx, XX 00000, a survey
sufficient to cause the title company to (a) remove the survey and unrecorded
easements exceptions from, and (b) issue, zoning, survey and so-called
comprehensive endorsements to, the title commitments and/or title policies
coveting such Mortgaged Properties.
SECTION 7. NEGATIVE COVENANTS
The Loan Parties hereby jointly and severally agree that, so
long as the Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other amount is owing to any Lender or the
Administrative Agent hereunder, each Loan Party shall not, and shall not permit
any other Loan Party to, directly or indirectly:
7.1 FINANCIAL CONDITION COVENANTS.
(a) CONSOLIDATED LEVERAGE RATIO. Permit the Consolidated
Leverage Ratio of the Borrower as at the last day of any period of four
consecutive fiscal quarters ending during any period set forth below (i) if the
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Consolidated Senior Leverage Ratio at such time is less than or equal to 2.0 to
1.0, to exceed the ratio set forth below in column A opposite such period, or
(ii) if the Consolidated Senior Leverage Ratio at such time is greater than 2.0
to 1.0, to exceed the ratio set forth below in column B opposite such period:
Consolidated
PERIOD LEVERAGE RATIO
---------- ----------------
A B
Closing Date - December 31, 1999 5.50 to 1.0 1.90 5.00 to 1.0
January 1, 2000 - December 31, 2000 5.00 to 1.0 4.75 to 1.0
January 1, 2001 - December 31, 2001 4.50 to 1.0 4.25 to 1.0
January 1, 2002 - and thereafter 4.50 to 1.0 3.75 to 1.0
(b) CONSOLIDATED INTEREST COVERAGE RATIO. Permit the
Consolidated Interest Coverage Ratio of the Borrower for any period of four
consecutive fiscal quarters ending during any period set forth below (i) if the
Consolidated Senior Leverage Ratio at the end of any such period for four
consecutive fiscal quarters is less than or equal to 2.0 to 1.0, the ratio shall
not be less than that set forth below in column A opposite such period, or (ii)
if the Consolidated Senior Leverage Ratio is greater than 2.0 to 1.0, the ratio
shall not be less than that set forth below in column B opposite such period:
Consolidated
PERIOD INTEREST COVERAGE RATIO
------------ ----------------------------
A B
Closing Date - March 31, 1999 1.90 to 1.0 1.90 to 1.0
April 1, 1999 - December 31, 1999 2.00 to 1.0 2.00 to 1.0
January 1, 2000 - December 31, 2000 2.00 to 1.0 2.25 to 1.0
January 1, 2001 - December 31, 2001 2.25 to 1.0 2.50 to 1.0
January 1, 2002 - and thereafter 2.50 to 1.0 2.75 to 1.0
(c) CONSOLIDATED FIXED CHARGE COVERAGE RATIO. Permit the
Consolidated Fixed Charge Coverage Ratio of the Borrower (i) for the quarter
ending March 31, 1999 to be less than 0.9 to 1.0; (ii) for the two quarters
ending June 30, 1999, to be less than 1.0 to 1.0; (iii) for the three quarters
ending September 30, 1999, to be less than 1.0 to 1.0; and (iv) for any period
of four consecutive fiscal quarters ending at and after December 31, 1999, to be
less than 1.0 to 1.0.
(d) CAPITAL EXPENDITURES. Permit the aggregate amount of
Capital Expenditures made by the Precision Group Members to exceed the amounts
set forth below:
YEAR CAPITAL EXPENDITURES
----- ---------------------
Closing Date - December 31, 1999 $10,500,000
January 1, 2000 - December 31, 2000 $10,500,000
January 1, 2001 - December 31, 2001 $11,000,000
JANUARY 1, 2002 - DECEMBER 31, 2002 $12,000,000
JANUARY 1, 2003 - DECEMBER 31, 2003 $12,000,000
JANUARY 1, 2004 AND THEREAFTER $13,000,000
PROVIDED, HOWEVER, that up to an aggregate of $1 million at any one time of
unused Capital Expenditures amounts may be carried forward to future periods;
and, PROVIDED, FURTHER, that the limits set forth above following the Senior
Subordinated Notes shall apply to Capital Expenditures made by the Precision
Group Members for the full applicable period. In addition, should any Precision
Group Member make an acquisition of the property, assets or
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capital stock of any entity, the Capital Expenditures limits set forth above
shall be increased (i) in the annual period in which such acquisition is
effected, by an amount equal to the product of the number of whole fiscal
quarters remaining in such annual period and 6% of consolidated net revenue
(calculated in accordance with GAAP) of such acquired entity for its most recent
four quarter fiscal period ending prior to the date of such acquisition and (ii)
in subsequent annual periods, by an amount equal to 6% of the consolidated net
revenue (calculated in accordance with GAAP) of the acquired entity for the
12-month period ending on the December 31 prior to the start of each such
subsequent annual period.
7.2 INDEBTEDNESS. Create, issue, incur, assume, become liable
in respect of or suffer to exist any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan
Document;
(b) Indebtedness (including, if applicable, Indebtedness under
any Subordinated Note) of any Wholly Owned Qualified Precision Group
Member to the Borrower or any other Wholly Owned Qualified Precision
Group Member;
(c) Guarantee Obligations incurred in the ordinary course of
business by any Precision Group Member of obligations of the Borrower
or any Wholly Owned Qualified Precision Group Member;
(d) Indebtedness outstanding on the date hereof and listed on
Schedule 7.2(d) and any refinancings, refundings, renewals,
replacements or extensions thereof (without increasing, or shortening
the maturity of, the principal amount thereof on the date hereof);
(e) Indebtedness (including, without limitation, Capital Lease
Obligations) secured by Liens permitted by Section 7.3(g) in an
aggregate principal amount not to exceed $2.5 million at any one time
outstanding;
(f) Indebtedness consisting of promissory notes issued in lieu
of cash payment of bonuses to chief executive officers of Galaxy and
Mid State under their employment agreements as in effect on September
30, 1998;
(g) Indebtedness of the Borrower and the guarantors thereof
under the Senior Subordinated Notes in an aggregate principal amount
not to exceed $100,000,000;
(h) Indebtedness of the Borrower and the guarantors thereof
consisting of Permitted Senior Subordinated Add-On Indebtedness in
aggregate principal amount not to exceed $60 million at any one time
outstanding;
(i) Indebtedness in connection with any Hedge Agreements
entered into to protect the Company from fluctuations in interest rates
on its outstanding indebtedness;
(j) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument drawn
against insufficient funds in the ordinary course of business; provided
that such Indebtedness is extinguished within 3 Business Days of its
incurrence;
(k) Guarantee Obligations in respect of the Senior
Subordinated Notes or the Permitted Senior Subordinated Add-On
Indebtedness;
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(l) Indebtedness up to $1,000,000 in respect of performance
bonds, bid bonds, appeal bonds, surety bonds and similar obligations
and trade-related letters of credit, including any of the foregoing
incurred to secure health, safety and environmental obligations in the
ordinary course of business, and any extension, renewal or refinancing
of the foregoing; and
(m) additional Indebtedness of the Precision Group Members in
an aggregate principal amount (for the Precision Group Members taken
together) not to exceed $5.0 million at any one time outstanding.
7.3 LIENS. (i) Create, incur, assume or suffer to exist any
Lien upon or with respect to any Collateral except for Prior Liens, Liens in
favor of the Administrative Agent for the benefit of the Lenders and other Liens
expressly permitted by the terms of the applicable Security Documents and (ii)
create, incur, assume or suffer to exist any Lien upon any of their respective
property that does not constitute Collateral, whether now owned or hereafter
acquired, or sell any such property subject to an understanding or agreement,
contingent or otherwise, to repurchase such property (including the sale of
accounts receivable with recourse to any Loan Party) or assign any right to
receive income, except for Liens expressly permitted by the applicable Security
Document and except for the following, which are herein collectively referred to
as "PERMITTED LIENS":
(a) Liens for taxes, assessments or other governmental charges
or liens that are not yet delinquent or are for less than $1,000,000 in
the aggregate, that are being contested in good faith by appropriate
proceedings; PROVIDED that adequate reserves with respect thereto are
maintained on the books of the relevant Precision Group Member in
conformity with GAAP;
(b) (i) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, suppliers', sellers', landlords' or other like Liens and
(ii) Liens that have not been registered in accordance with applicable
law, in each case arising in the ordinary course of business and not
overdue for a period of more than 30 days or that are being contested
in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation;
(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, customs or performance bonds,
government contracts or other obligations of a like nature incurred in
the ordinary course of business and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions, title defects or
irregularities, governmental restrictions on the use of property and
other similar encumbrances incurred in the ordinary course of business
that, in the aggregate, are not substantial in amount and that do not
in any case materially detract from the value of the property subject
thereto or materially interfere with the ordinary conduct of the
business of the Precision Group Members;
(f) Liens in existence on the date hereof listed on Schedule
7.3(f) (including extensions and renewals); PROVIDED that no such Lien
is spread to cover any additional property (or category of property,
other than proceeds) after the Closing Date and that the principal
amount of Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of any Precision Group Member
incurred pursuant to Section 7.2(e) to finance the acquisition of fixed
or capital assets; PROVIDED that (i) such Liens shall be created
substantially simultaneously with the acquisition of such fixed or
capital assets, (ii) such Liens do not at
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any time encumber any property other than the property financed by such
Indebtedness and (iii) the amount of Indebtedness secured thereby is
not increased;
(h) any interest or title of a lessor under any lease entered
into by any Precision Group Member in the ordinary course of its
business and coveting only the assets so leased;
(i) Liens not otherwise permitted by this Section so long as
neither (i) the aggregate outstanding principal amount of the
obligations secured thereby nor (ii) the aggregate fair market value
(determined as of the date such Lien is incurred) of the assets subject
thereto exceeds (for the Precision Group Members taken together)
$500,000 at any one time;
(j) Liens existing on property or assets of any Wholly Owned
Subsidiary of the Borrower prior to the acquisition thereof by the
Borrower; PROVIDED that (i) any such Lien is not created in
contemplation of or in connection with the acquisition of such
Wholly-Owned Subsidiary, (ii) such Lien does not apply to any other
property or asset of the Borrower or any other Loan Party and (iii) the
Indebtedness secured by such Lien is permitted to be incurred
hereunder;
(k) Liens to secure other Indebtedness permitted under Section
7.2(i);
(l) Liens securing judgments for the payment of money in an
aggregate amount not in excess of $1,500,000 (except to the extent
covered by insurance, which coverage has been affirmed by the insurer),
unless such judgments shall remain undischarged for a period of more
than 30 consecutive days during which execution shall not be
effectively stayed;
(m) any leases or subleases to other persons of properties or
assets owned or leased by a Precision Group Member;
(n) Liens that are contractual rights of setoff (i) relating
to the establishment of depository relations with banks not given in
connection with the issuance of Indebtedness or (ii) pertaining to
pooled deposit and/or sweep accounts of a Precision Group Member to
permit satisfaction of overdraft or similar obligations incurred in the
ordinary course of business of such Precision Group Member;
(o) Liens on proceeds and products and (to the extent
constituting a trade-in, substitution or casualty replacement)
replacements of, chattel paper and other evidences of ownership of, and
accessions to, and general intangibles directly relating to, property
to the extent they relate to liens on such property to the extent they
relate to Liens on such property that are permitted by any other
provision of this Section 7.3;
(p) Liens in favor of the Borrower or any Subsidiary
Guarantor;
(q) Liens in favor of the Trustee under the Senior
Subordinated Indenture; and
(r) other general Liens not to exceed $1,000,000.
7.4 FUNDAMENTAL CHANGES. Enter into any merger, consolidation
or amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or Dispose of, all or substantially all of its
property or business, except that:
(a) any Precision Group Member may be merged or consolidated
with or into the Borrower (PROVIDED that the Borrower shall be the
continuing or surviving corporation) or, except in the case of the
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Borrower, with or into any Wholly Owned Qualified Precision Group
Member (PROVIDED that a Wholly Owned Qualified Precision Group Member
shall be the continuing or surviving corporation); and
(b) any Precision Group Member may Dispose of any or all of
its assets (upon voluntary liquidation or otherwise) to the Borrower
or, except in the case of the Borrower, to any Wholly Owned Qualified
Precision Group Member.
7.5 DISPOSITION OF PROPERTY. Dispose of any of its property,
whether now owned or hereafter acquired, or issue or sell any shares of its
Capital Stock to any Person, except:
(a) (i) the Disposition of obsolete or worn out property in
the ordinary course of business and (ii) the Disposition of the
property listed on Schedule 7.5;
(b) the sale of inventory in the ordinary course of business;
(c) Dispositions permitted by Section 7.4(b);
(d) (i) the sale or issuance of any Precision Group Member's
Capital Stock to any Wholly Owned Qualified Precision Group Member or
the Borrower, or (ii) the issuance of Capital Stock of Holdco to
Holdco's parent and employees of the Precision Group Members;
(e) the Disposition of other property having a fair market
value not to exceed $500,000 in the aggregate for any fiscal year of
the Precision Group Members;
(f) sales, leases or other dispositions of equipment or real
or personal property (other than inventory sold in the ordinary course
of business), of a Precision Group Member determined by the Board of
Directors or senior management of such Precision Group Member to be no
longer useful or necessary in the operation of the business of
Precision Group Member; PROVIDED that the Net Proceeds thereof shall be
applied in accordance with Section 2.7(b);
(g) sales, leases or other dispositions of inventory of a
Precision Group Member not made in the ordinary course of business
determined by the Board of Directors or senior management of such
Precision Group Member to be obsolete; PROVIDED that the Net Cash
Proceeds thereof shall be applied in accordance with Section 2.7(b);
and
(h) sales, leases or other dispositions of assets through
Capital Asset Exchanges.
7.6 RESTRICTED PAYMENTS. (i) Make any principal payment on, or
purchase, defease, repurchase, redeem or otherwise acquire or retire for value,
prior to any scheduled maturity, scheduled repayment or scheduled sinking fund
payment, any Indebtedness, or (ii) declare or pay any dividend (other than
dividends payable solely in common stock of the Person making such dividend) on,
or make any payment on account of or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any Capital Stock of any Precision Group Member, whether now or
hereafter outstanding, or make any other distribution in respect thereof either
directly or indirectly, whether in cash or property or in obligations of any
Precision Group Member (collectively, "RESTRICTED PAYMENTS"), except that (x)
any Precision Group Member may make Restricted Payments to any Wholly Owned
Qualified Precision Group Member or the Borrower and (y) the Borrower may make
payments to Holdco to pay management and advisory fees to the Xxxxxxxx Group and
the Carlisle Group in an aggregate amount not to exceed $800,000 in any fiscal
year or acquisition transaction fees payable to Xxxxxxxx Group, Carlisle Group
and Xxxxxx Group pursuant to past practice and the Acquisitions.
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7.7 INVESTMENTS. Make any advance, loan, extension of credit
(by way of guaranty or otherwise) or capital contribution to, or purchase any
Capital Stock, bonds, notes, debentures or other debt securities of, or any
assets constituting a business unit of, or make any other investment in, any
other Person (all of the foregoing, "INVESTMENTS"), except:
(a) extensions of trade credit in the ordinary course of
business;
(b) investments in Cash Equivalents;
(c) Guarantee Obligations permitted by Section 7.2;
(d) loans and advances to employees of the Precision Group
Members in the ordinary course of business (including for travel,
entertainment and relocation expenses) in an aggregate amount for the
Precision Group Members not to exceed $500,000 at any one time
outstanding;
(e) (i) the Certified Acquisition, (ii) the General Automation
Acquisition and the Nationwide Acquisition if made in connection with
the Senior Subordinated Notes and (iii) Permitted Acquisitions;
(f) intercompany loans in the ordinary course of business by
any Precision Group Member in any Person that, prior to such loan, is a
Wholly Owned Qualified Precision Group Member or the Borrower;
(g) any endorsement of a check or other medium of payment for
deposit or collection, or any similar transaction, in each case in the
ordinary course of business;
(h) Investments acquired by any Precision Group Member in
connection with a Disposition permitted by Section 7.5;
(i) Investments by any Precision Group Member in Hedge
Agreements other than for speculative purposes;
(j) Investments acquired by any Precision Group Member (i) in
exchange for any other Investment held by any Precision Group Member in
connection with or as a result of a bankruptcy, workout, reorganization
or recapitalization of the issuer of such other Investment or (ii) as a
result of the foreclosure by any Precision Group Member with respect to
any secured Investment or other transfer of title with respect to any
secured Investment in default;
(k) existing Investments described on Schedule 7.7;
(l) loans in an aggregate amount of up to $1,000,000 made to
holders of Capital Stock of Precision (other than the Sponsors) to
finance the purchase of Capital Stock of Precision, so long as
promissory notes are issued in connection therewith and pledged as
Collateral pursuant to the appropriate Security Document;
(m) loans and advances to management of the Precision Group
Members to purchase Capital Stock of any Precision Group Member not to
exceed $2,000,000 at any one time outstanding, provided that such
Capital Stock is pledged to the lender of such Indebtedness on
customary terms; and
(n) any other investments approved by the Required Lenders.
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7.8 MODIFICATIONS OF CERTAIN INSTRUMENTS. Amend, modify, waive
or otherwise change, or consent or agree to any material amendment,
modification, waiver or other change to, any of the terms of the Indebtedness of
any Precision Group Member or the Holdco Preferred; PROVIDED, HOWEVER, that
Holdco may engage in stock splits and reclassifications in respect of the Holdco
Preferred.
7.9 TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including any purchase, sale, lease or exchange of property, the rendering of
any service or the payment of any management, advisory or similar fees (other
than management and advisory fees payable to the Xxxxxxxx Group and the Carlisle
Group in an aggregate amount not to exceed $800,000 in any fiscal year or
acquisition transaction fees payable to the Xxxxxxxx Group, the Carlisle Group
and the Xxxxxx Group pursuant to past practice and the Acquisitions), with any
Affiliate (other than Wholly Owned Qualified Precision Group Members) unless
such transaction is (a) otherwise permitted under this Agreement, (b) in the
ordinary course of business of the relevant Precision Group Member and (c) upon
fair and reasonable terms no less favorable to the relevant Precision Group
Member than it would obtain in a comparable arm's-length transaction with a
Person that is not an Affiliate.
7.10 SALES AND LEASEBACKS. Enter into any arrangement
providing for the leasing to any Precision Group Member of real or personal
property that has been or is to be (a) sold or transferred by any Precision
Group Member or (b) constructed or acquired by a third party in anticipation of
a program of leasing to any Precision Group Member.
7.11 CHANGES IN FISCAL PERIODS. Permit the fiscal year of the
Precision Group Members to end on a day other than December 31 or change the
Precision Group Members' method of determining fiscal quarters, except that
Galaxy shall be permitted to have a fiscal year end of August 31, to change such
fiscal year end to December 31 and to correspondingly change its fiscal quarter
end dates.
7.12 NEGATIVE PLEDGE CLAUSES. Enter into or suffer to exist or
become effective any agreement that prohibits or limits the ability of any
Precision Group Member to create, incur, assume or suffer to exist any Lien upon
any of its property or revenues, whether now owned or hereafter acquired, other
than (a) this Agreement and the other Loan Documents and (b) any agreements
governing any purchase money Liens or Capital Lease Obligations otherwise
permitted hereby (in which case, any prohibition or limitation shall only be
effective against the assets financed thereby).
7.13 CLAUSES RESTRICTING PRECISION GROUP MEMBER DISTRIBUTIONS.
Enter into or suffer to exist or become effective any consensual encumbrance or
restriction, other than this Agreement and the other Loan Documents, on the
ability of any Precision Group Member to (a) make Restricted Payments in respect
of any Capital Stock of such Precision Group Member held by, or pay any
Indebtedness owed to, any other Precision Group Member, (b) make loans or
advances to, or other Investments in, any other Precision Group Member or (c)
transfer any of its assets to any other Precision Group Member, except for such
encumbrances or restrictions existing under or by reason of (i) any restrictions
existing under the Loan Documents, (ii) in the case of clause (c) above,
customary non-assignment clauses in leases and other contracts entered into in
the ordinary course of business and (iii) any restrictions with respect to a
Precision Group Member imposed pursuant to an agreement that has been entered
into in connection with the Disposition of all or substantially all of the
Capital Stock or assets of such Precision Group Member that is otherwise
permitted hereby.
7.14 LINES OF BUSINESS. (a) Enter into any business, either
directly or through any other Precision Group Member, except for those
businesses in which the Precision Group Members are engaged on the date of this
Agreement (after giving effect to the Acquisition) or that are reasonably
related thereto or (b) permit Mid State Foundation to engage in any business
activities other than those directly associated with operating a charitable
foundation.
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7.15 AMENDMENTS TO ACQUISITION DOCUMENTS. (a) Amend,
supplement or otherwise modify (pursuant to a waiver or otherwise) the terms and
conditions of the indemnities, licenses, purchase price adjustments or executive
bonus payments (collectively, "SPECIFIED PROVISIONS") contained in the
Acquisition Documentation such that after giving effect thereto such Specified
Provisions shall be materially less favorable to the interests of the Loan
Parties or the Lenders with respect thereto or (b) otherwise amend, supplement
or otherwise modify the terms and conditions of the Acquisition Documentation or
any such other documents except for any such amendment, supplement or
modification that could not reasonably be expected to have a Material Adverse
Effect.
7.16 DESIGNATED SENIOR DEBT PROVISIONS. If any Subordinated
Indebtedness issued by a Loan Party contains provisions which enable such Loan
Party to designate specifically any "Senior Debt" (or comparable term as defined
therein) for the purpose of giving payment blockage notices or any other purpose
beneficial to the lenders, or holders, of any such "Senior Debt", such Loan
Party shall so designate Indebtedness hereunder and not any other Indebtedness,
whether or not such other Indebtedness may constitute "Senior Debt" of such Loan
Party.
7.17 LIMITATION ON HOLDCO BUSINESS. Holdco will not engage in
businesses other than the holding of the Capital Stock of Precision Partners,
Inc., the issuance of unsecured subordinated promissory notes with respect to
the consummation of the Acquisitions and the granting of options in respect of
its Capital Stock in respect of employee benefit plans of the Precision Group
Members.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of any Loan
or Reimbursement Obligation when due in accordance with the terms
hereof; or the Borrower shall fail to pay any interest on any Loan or
Reimbursement Obligation, or any other amount payable hereunder or
under any other Loan Document, within five days after any such interest
or other amount becomes due in accordance with the terms hereof; or
(b) any representation or warranty made or deemed made by any
Loan Party herein or in any other Loan Document or that is contained in
any certificate, document or financial or other statement furnished by
it at any time under or in connection with this Agreement or any such
other Loan Document shall prove to have been inaccurate in any material
respect on or as of the date made or deemed made; or
(c) any Loan Party shall default in the observance or
performance of any agreement contained in clause (i) or (ii) of Section
6.4(a), Section 6.7(a) or Section 7 of this Agreement or Sections 5(e)
and 10 of the Security Agreement; or
(d) any Loan Party shall default in the observance or
performance of any other agreement contained in this Agreement or any
other Loan Document (other than as provided in paragraphs (a) through
(c) of this Section), and such default shall continue unremedied for a
period of 30 days after notice to the Borrower from the Administrative
Agent or the Required Lenders; or
(e) any Precision Group Member shall (i) default in making any
payment of any principal of any Indebtedness (including any Guarantee
Obligation, but excluding the Loans) on the scheduled or original due
date with respect thereto; or (ii) default in making any payment of any
interest on any such Indebtedness beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness
was created; or (iii) default in the observance or performance of any
other agreement or condition relating to any such Indebtedness or
contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist,
the effect of which default or
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other event or condition is to cause, or to permit the holder or
beneficiary of such Indebtedness (or a trustee or agent on behalf of
such holder or beneficiary) to cause, with the giving of notice if
required, such Indebtedness to become due prior to its stated maturity
or (in the case of any such Indebtedness constituting a Guarantee
Obligation) to become payable; PROVIDED, that a default, event or
condition described in clause (i), (ii) or (iii) of this paragraph (e)
shall not at any time constitute an Event of Default unless, at such
time, one or more defaults, events or conditions of the type described
in clauses (i), (ii) and (iii) of this paragraph (e) shall have
occurred and be continuing with respect to Indebtedness the outstanding
principal amount of which exceeds in the aggregate $1,500,000; or
(f) (i) any Loan Party shall commence any case, proceeding or
other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization
or relief of debtors, seeking to have an order for relief entered with
respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to
it or its debts, or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or
any substantial part of its assets, or any Loan Party shall make a
general assignment for the benefit of its creditors; or (ii) there
shall be commenced against any Loan Party any case, proceeding or other
action of a nature referred to in clause (i) above that (A) results in
the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a
period of 60 days; or (iii) there shall be commenced against any Loan
Party any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, dismount or similar process against
all or any substantial part of its assets that results in the entry of
an order for any such relief that shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the
entry thereof; or (iv) any Loan Party shall take any action in
furtherance of, or indicating its consent to, approval of or
acquiescence in, any of the acts set forth in clause (i), (ii), or
(iii) above; or (v) any Loan Party shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as
they become due; or
(g) (i) any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any "accumulated finding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan or any Lien in favor of the PBGC or a Plan
shall arise on the assets of the Borrower or any Commonly Controlled
Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Required
Lenders, likely to result in the termination of such Plan for purposes
of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (v) the Borrower or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Required
Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (i) through
(vi) above, such event or condition, together with all other such
events or conditions, if any, could, in the sole judgment of the
Required Lenders, reasonably be expected to have a Material Adverse
Effect; or
(h) one or more judgments or decrees shall be entered against
any Precision Group Member involving in the aggregate a liability (not
paid or fully covered by insurance as to which the relevant insurance
company has acknowledged coverage) of $1,500,000 or more, and all such
judgments or decrees shall not have been vacated, discharged, stayed or
bonded pending appeal within 30 days from the entry thereof; or
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(i) any Guarantee shall cease, for any reason, to be in full
force and effect or any Loan Party or any Affiliate of any Loan Party
shall so assert; or
(j) (i) any of the Security Documents shall cease, for any
reason, to be in full force and effect, or any Loan Party or any
Affiliate of any Loan Party shall so assert, or any Lien created by any
of the Security Documents shall cease to be enforceable and of the same
effect and priority purported to be created thereby or (ii) Precision
shall fail to cause any of its new Subsidiaries to comply with Section
6.9(c); or
(k) (i) the Permitted Investors shall cease to have the power
to Control Holdco; (ii) any of the Carlisle Group, the Xxxxxx Group or
the Xxxxxxxx Group shall cease to own of record and beneficially an
amount of Capital Stock of Precision equal in the aggregate to at least
51% of the amount of Capital Stock of Precision owned by such Group of
record and beneficially as of the Closing Date; (iii) any "person" or
"group" (as such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")),
excluding the Permitted Investors, shall become, or obtain rights
(whether by means of warrants, options or otherwise) to become, the
"beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5 under the
Exchange Act), directly or indirectly, of more than 20% of the
outstanding Capital Stock of Holdco; or (iv) Holdco shall cease to own,
of record and beneficially, directly or indirectly, 100% of each class
of outstanding Capital Stock of the Borrower, in each case free and
clear of all Liens (except Permitted Liens and Liens created by the
Security Agreement); or
(l) Holdco shall (i) conduct, transact or otherwise engage in,
or commit to conduct, transact or otherwise engage in, any business or
operations other than those incidental to its ownership of the Capital
Stock of the Borrower, (ii) incur, create, assume or suffer to exist
any Indebtedness or other liabilities or financial, obligations, except
(x) nonconsensual obligations imposed by operation of law, (y) pursuant
to the Loan Documents to which it is a party and (z) obligations with
respect to its Capital Stock, or (iii) own, lease, manage or otherwise
operate any properties or assets other than the ownership of shares of
Capital Stock of any other Precision Group Member;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents (including all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) shall immediately
become due and payable, and (B) if such event is any other Event of Default,
either or both of the following actions may be taken: (i) with the consent of
the Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Borrower
declare the Revolving Commitments to be terminated forthwith, whereupon the
Revolving Commitments shall immediately terminate; and (ii) with the consent of
the Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Borrower,
declare the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement and the other Loan Documents (including all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) to be due and payable forthwith, whereupon the same shall
immediately become due and payable. With respect to all Letters of Credit with
respect to which presentment for honor shall not have occurred at the time of an
acceleration pursuant to this paragraph, the Borrower shall at such time deposit
an amount equal to the aggregate then undrawn and unexpired amount of such
Letters of Credit in a cash collateral account established with the
Administrative Agent for the benefit of the Lenders on terms and conditions
satisfactory to the Administrative Agent. Amounts held in such cash collateral
account shall be applied by the Administrative Agent to the payment of drafts
drawn under such Letters of Credit, and the unused portion thereof after all
such Letters of Credit shall have expired or been fully drawn upon, if any,
shall be applied to repay other obligations of the
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Borrower hereunder and under the other Loan Documents. After all such Letters of
Credit shall have expired or been fully drawn upon, all Reimbursement
Obligations shall have been satisfied and all other obligations of the Borrower
hereunder and under the other Loan Documents shall have been paid in full, the
balance, if any, in such cash collateral account shall be returned to the
Borrower (or such other Person as may be lawfully entitled thereto). Except as
expressly provided above in this Section, presentment, demand, protest and all
other notices of any kind are hereby expressly waived by the Borrower.
SECTION 9. THE AGENTS
9.1 APPOINTMENT. Each Lender hereby irrevocably designates and
appoints the Agents as the agent of such Lender under this Agreement and the
other Loan Documents, and each such Lender irrevocably authorizes each Agent, in
such capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to such Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement or any other Loan Document, no Agent shall have any
duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against any Agent.
Without limiting the foregoing, the use of the term "agent" with respect to each
Agent is used as a matter of market custom and is intended to create or reflect
only an administrative relationship between independent contracting parties.
The Issuing Lender shall act on behalf of the Lenders with
respect to Letters of Credit. It is understood and agreed that the Issuing
Lender (a) shall have all of the benefits and immunities (i) provided to the
Agents in this Section 9 with respect to acts taken or omissions suffered by the
Issuing Lender in connection with Letters of Credit as fully as if the term
"Agent", as used in this Section 9, included the Issuing Lender with respect to
such acts or omissions and (ii) as additionally provided in this Agreement and
(b) shall, with respect to the Revolving Lenders, (i) have all of the benefits
of the provisions of Section 9.7 as fully as if the term "Agent", as used in
Section 9.7, included the Issuing Lender and (ii) have all of the benefits of
the provisions of Sections 9.3 and 9.6 as fully as if the term "Agent-Related
Persons", as used in Sections 9.3 and 9.6, included the Issuing Lender.
9.2 DELEGATION OF DUTIES. Each Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. No Agent shall be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
9.3 EXCULPATORY PROVISIONS. None of the Agent-Related Persons
shall be (i) liable for any action lawfully taken or omitted to be taken by any
of them under or in connection with this Agreement or any other Loan Document or
the transactions contemplated hereby (except to the extent that any of the
foregoing are found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from such Person's own gross negligence
or willful misconduct) or (ii) responsible in any manner to any of the Lenders
for any recitals, statements, representations or warranties made by any Loan
Party or any officer thereof contained in this Agreement or any other Loan
Document or in any certificate, report, statement or other document referred to
or provided for in, or received by any Agent-Related Person under or in
connection with, this Agreement or any other Loan Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document or for any failure of any Loan Party to
perform its obligations hereunder or thereunder. No Agent-Related Person shall
be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of any Loan Party. The Administrative Agent shall maintain a
record of the principal amount of the Loans and L/C Obligations from time to
time outstanding and the
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respective amounts thereof owing to each Lender. Any records maintained by any
Agent-Related Person setting forth the names and addresses of the Lenders and
the Commitments of, and the principal amount of the Loans owing to, each Lender
from time to time shall be conclusive, in the absence of manifest error.
9.4 RELIANCE BY AGENTS. Each Agent shall be entitled to rely,
and shall be fully protected in relying, upon any instrument, writing,
resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or
telephone message, statement, order or other document or conversation believed
by it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), independent
accountants and other experts selected by such Agent. The Administrative Agent
may deem and treat the payee of any Note as the owner thereof for all purposes
unless a written notice of assignment, negotiation or transfer thereof shall
have been filed with the Administrative Agent. Each Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Required Lenders (or, if so specified by this Agreement, all Lenders) as it
deems appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
Each Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement and the other Loan Documents in accordance
with a request of the Required Lenders (or, if so specified by this Agreement,
all Lenders), and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all future holders of the
Loans.
9.5 NOTICE OF DEFAULT. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Administrative Agent has received notice from a
Lender or the Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that the Administrative Agent receives such a notice, the Administrative
Agent shall give notice thereof to the Lenders. The Administrative Agent shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders (or, if so specified by this
Agreement, all Lenders); PROVIDED that unless and until the Administrative Agent
shall have received such directions, the Administrative Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Lenders.
9.6 NON-RELIANCE ON ANY AGENT AND OTHER LENDERS. Each Lender
expressly acknowledges that none of the Agent-Related Persons has made any
representations or warranties to it and that no act by any Agent-Related Person
hereafter taken, including any review of the affairs of a Loan Party or any
affiliate of a Loan Party, shall be deemed to constitute any representation or
warranty by any Agent-Related Person to any Lender. Each Lender represents to
each Agent that it has, independently and without reliance upon any
Agent-Related Person or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Loan Parties and their affiliates and all
applicable bank regulatory laws relating to the transactions contemplated hereby
and made its own decision to enter into this Agreement and to extend credit to
the Borrower hereunder. Each Lender also represents that it will, independently
and without reliance upon any Agent-Related Person or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their affiliates. Except for notices,
reports and other documents expressly required to be furnished to the Lenders by
the Administrative Agent hereunder, no Agent-Related Person shall have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any affiliate of
a Loan Party which may come into the possession of any of the Agent-Related
Persons.
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9.7 INDEMNIFICATION. Whether or not the transactions
contemplated hereby are consummated, the Lenders agree to indemnify each Agent
and its respective officers, directors, trustees, professional advisors,
employees, affiliates, agents and controlling persons (each, a "SECTION 9.7
INDEMNITEE") (to the extent not reimbursed by the Borrower and without limiting
the obligation of the Borrower to do so), ratably according to their respective
Aggregate Exposure Percentages in effect on the date on which indemnification is
sought under this Section 9.7 (or, if indemnification is sought after the date
upon which the Commitments shall have terminated and the Loans shall have been
paid in full, ratably in accordance with such Percentages immediately prior to
such date), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including, without limitation, at
any time following the payment of the Loans) be imposed on, incurred by or
asserted against such Section 9.7 indemnitee in any way relating to or arising
out of, the Commitments, this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by such Section
9.7 indemnitee under or in connection with any of the foregoing; PROVIDED that
no Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements which are found by a final and nonappealable decision
of a court of competent jurisdiction to have resulted from the relevant Section
9.7 indemnitee's gross negligence or willful misconduct. The agreements in this
Section 9.7 shall survive the repayment of the Loans and all other amounts
payable hereunder.
9.8 AGENT IN ITS INDIVIDUAL CAPACITY. Each Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Precision Group Members as though such Agent were not
an Agent hereunder and under the other Loan Documents and without notice to or
consent of the Lenders. The Lenders acknowledge that, pursuant to such
activities, each Agent and its Affiliates may receive information regarding the
Precision Group Members or their Affiliates (including information that may be
subject to confidentiality obligations in favor of the Precision Group Members
or their Affiliates) and acknowledge that neither any Agent nor its Affiliates
shall be under an obligation to provide such information to them. With respect
to its Loans made or renewed by it and with respect to any Letter of Credit
issued or participated in by it, each Agent shall have the same rights and
powers under this Agreement and the other Loan Documents as any Lender and may
exercise the same as though it were not an Agent, and the terms "Lender" and
"Lenders" shall include each Agent in its individual capacity.
9.9 SUCCESSOR AGENTS. Each Agent may resign as an Agent upon
30 days' notice to the Lenders and the Borrower. If an Agent shall resign under
this Agreement and the other Loan Documents, then the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall be approved by the Borrower (which approval shall not be
unreasonably withheld or delayed), whereupon such successor agent shall succeed
to the rights, powers and duties of such Agent hereunder. If no successor agent
is appointed prior to the effective date of the resignation of the an Agent,
such Agent may appoint, after consulting with the Lenders and the Borrower, a
successor agent from among the Lenders. Effective upon such appointment by the
Required Lenders or by an Agent, and the term "Administrative Agent,"
"Documentation Agent" or "Syndication Agent," as the case may be, shall mean
such successor agent effective upon such appointment and approval, and the
former Agent's rights, powers and duties as such Agent shall be terminated,
without any other or further act or deed on the part of such former Agent or any
of the parties to this Agreement or any holders of the Loans. After any retiring
Agent's resignation as an Agent, the provisions of this Section 9 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was an
Agent under this Agreement and the other Loan Documents. If no successor agent
has accepted appointment as an Agent by the date which is 30 days following a
retiring Agent's notice of resignation, the retiring an Agent's resignation
shall nevertheless thereupon become effective and the Lenders shall assume and
perform all of the duties of such Agent hereunder until such time, if any, as
the Required Lenders appoint a successor agent as provided for above.
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9.10 AUTHORIZATION TO RELEASE LIENS. The Administrative Agent
is hereby irrevocably authorized by each of the Lenders to release any Lien
covering any property of the Precision Group Members that is the subject of a
Disposition which is permitted by this Agreement or which has been consented to
in accordance with Section 10.1.
SECTION 10. MISCELLANEOUS
10.1 AMENDMENTS AND WAIVERS. Neither this Agreement, any other
Loan Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 10.1. The
Required Lenders and each Loan Party party to the relevant Loan Document may,
or, with the written consent of the Required Lenders, the Administrative Agent
and each Loan Party party to the relevant Loan Document may, from time to time,
(a) enter into written amendments, supplements or modifications hereto and to
the other Loan Documents for the purpose of adding any provisions to this
Agreement or the other Loan Documents or changing in any manner the rights of
the Lenders or of the Loan Parties hereunder or thereunder or (b) waive, on such
terms and conditions as the Required Lenders or the Administrative Agent, as the
case may be, may specify in such instrument, any of the requirements of this
Agreement or the other Loan Documents or any Default or Event of Default and its
consequences; PROVIDED, HOWEVER, that no such waiver and no such amendment,
supplement or modification shall (i) forgive the principal amount or extend the
final scheduled date of maturity of any Loan, extend the scheduled date of any
amortization payment in respect of any Term Loan, reduce the stated rate of any
interest or fee payable hereunder or extend the scheduled date of any payment
thereof, or increase the amount or extend the expiration date of any Lender's
Revolving Commitment, in each case without the consent of each Lender directly
affected thereby; (ii) amend, modify or waive any provision of Section 2.2(b) or
increase any percentage specified in the definition of Borrowing Base, in each
case without the written consent of all Revolving Lenders; (iii) reduce any
percentage specified in the definition of Required Lenders, Majority Facility
Lenders or Required Prepayment Lenders, or consent to the assignment or transfer
by any Precision Group Member of any of its rights and obligations under this
Agreement and the other Loan Documents, in each case without the written consent
of all Lenders, (iv) except in connection with any Disposition permitted hereby
or approved by the Required Lenders, release any significant part of the
Collateral or release any significant Subsidiary Guarantor from its obligations
under the Guarantee or any Security Document, in each case without the written
consent of all Lenders; (v) reduce the percentage specified in the definition of
Majority Facility Lenders with respect to any Facility without the written
consent of all Lenders under such Facility; (vi) amend, modify or waive any
provision of Section 9 relating to any Agent without the written consent of such
Agent; or (vii) amend, modify or waive any provision of Section 3 without the
written consent of the Issuing Lender. Notwithstanding anything to the contrary
in this Section 10.1, any amendment, supplement or modification to this
Agreement made in order to provide additional financing under this Agreement in
connection with any Investment permitted hereby or otherwise approved by the
Required Lenders, including pursuant to increases in the amount of any Facility
or the addition of new facilities (together with changes made to accommodate any
such increased Facility or new facility, including those relating to payment
application matters and voting matters), may be effected with the approval of
the Majority Facility Lenders under each Facility. Any waiver and any amendment,
supplement or modification made in accordance with this Section 10.1 shall apply
equally to each of the Lenders and shall be binding upon the Loan Parties, the
Lenders, the Agents and all future holders of the Loans. In the case of any
waiver, the Loan Parties, the Lenders and the Agents shall be restored to their
former position and rights hereunder and under the other Loan Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.
10.2 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of Holdco, the
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Borrower and the Agents, and as set forth in an administrative questionnaire
delivered to the Administrative Agent in the case of the Lenders, or to such
other address as may be hereafter notified by the respective parties hereto:
The Borrower and Holdco: Precision Partners, Inc.
0000 Xxxxx XxXxxxxx Xxxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxx Xxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
The Administrative Agent:
For notices of borrowing, payments
and other administrative matters:
Citicorp U.S.A., Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxxx Xxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
For all other notices (including Compliance Certificates and
notices with respect to amendments and waivers):
Citicorp U.S.A., Inc.
Global Loans Support Services
0 Xxxxx Xxx
Xxxxx 000
Xxx Xxxxxx, XX 00000
Attention: Xxxxxxxxx Xxxxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
The Syndication Agent: NationsBank, N.A.
NationsBank Corporate Center
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Xxxx X. X'Xxxxx
The Documentation Agent: SunTrust Bank, Atlanta
00 Xxxx Xxxxx
00xx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxx
PROVIDED that any notice, request or demand to or upon any Agent or the Lenders
shall not be effective until received.
10.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise
and no delay in exercising, on the part of any Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Loan
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Documents shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
10.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans and other extensions of credit hereunder.
10.5 PAYMENT OF EXPENSES AND TAXES. Each of Holdco and the
Borrower agrees (a) to pay or reimburse the Administrative Agent for all its
out-of-pocket costs and expenses incurred in connection with the development,
preparation and execution of, and any amendment, supplement or modification to,
this Agreement and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including the reasonable fees and
disbursements of counsel to the Administrative Agent and filing and recording
fees and expenses, with statements with respect to the foregoing to be submitted
to the Borrower prior to the Closing Date (in the case of amounts to be paid on
the Closing Date) and from time to time thereafter on a quarterly basis or such
other periodic basis as the Administrative Agent shall deem appropriate, (b) to
pay or reimburse each Lender and each Agent for all its costs and expenses
incurred in connection with the enforcement or preservation of any rights under
this Agreement, the other Loan Documents and any such other documents, including
the fees and disbursements of counsel to each Lender and of counsel to such
Agent, (c) to pay, indemnify, and hold each Lender and each Agent harmless from,
any and all recording and filing fees and any and all liabilities with respect
to, or resulting from any delay in paying, stamp, excise and other taxes, if
any, that may be payable or determined to be payable in connection with the
execution and delivery of, or consummation or administration of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement, the other Loan
Documents and any such other documents, and (d) to pay, indemnify, and hold each
Lender and each Agent and their respective officers, directors, employees,
affiliates, agents and controlling persons (each, an "INDEMNITEE") harmless from
and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other Loan Documents and
any such other documents, including any of the foregoing relating to the use of
proceeds of the Loans or the violation of, noncompliance with or liability
under, any Environmental Law applicable to the operations of the Precision Group
Members or any of the Properties and the reasonable fees and expenses of legal
counsel in connection with claims, actions or proceedings by any Indemnitee
against any Loan Party under any Loan Document (all the foregoing in this clause
(d), collectively, the "INDEMNIFIED LIABILITIES"); PROVIDED that Holdco and the
Borrower shall have no obligation hereunder to any Indemnitee with respect to
Indemnified Liabilities to the extent such Indemnified Liabilities are found by
a final and nonappealable decision of a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of such Indemnitee.
Without limiting the foregoing, and to the extent permitted by applicable law,
Holdco and the Borrower agree not to assert and to cause the other Precision
Group Members not to assert, and hereby waives and agrees to cause the other
Precision Group Members to so waive, all rights for contribution or any other
rights of recovery with respect to all claims, demands, penalties, frees,
liabilities, settlements, damages, costs and expenses of whatever kind or
nature, under or related to Environmental Laws, that any of them might have by
statute or otherwise against any Indemnitee. All amounts due under this Section
10.5 shall be payable not later than 15 days after written demand therefor.
Statements payable by Holdco or the Borrower pursuant to this Section 10.5 shall
be submitted to Xxx Xxxxxx (Telephone No. (000) 000-0000) (Telecopy No. (619)
565-4660), at the address of the Borrower set forth in Section 10.2, or to such
other Person or address as may be hereafter designated by the Borrower in a
written notice to the Administrative Agent. The agreements in this Section 10.5
shall survive repayment of the Loans and all other amounts payable hereunder.
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10.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS.
(a) This Agreement shall be binding upon and inure to the benefit of Holdco, the
Borrower, the Subsidiary Guarantors, the Lenders, the Agents, all future holders
of the Loans and their respective successors and assigns.
(b) Any Lender may, without the consent of the Borrower, in
accordance with applicable law, at any time sell to one or more banks, financial
institutions or other entities (each, a "PARTICIPANT") participating interests
in any Loan owing to such Lender, any Commitment of such Lender or any other
interest of such Lender hereunder and under the other Loan Documents. In the
event of any such sale by a Lender of a participating interest to a Participant,
such Lender's obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Lender shall remain solely responsible
for the performance thereof, such Lender shall remain the holder of any such
Loan for all purposes under this Agreement and the other Loan Documents, and the
Borrower and the Administrative Agent shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations under
this Agreement and the other Loan Documents, in no event shall any Participant
under any such participation have any right to approve any amendment or waiver
of any provision of any Loan Document, or any consent to any departure by any
Loan Party therefrom, except to the extent that such amendment, waiver or
consent would reduce the principal of, or interest on, the Loans or any fees
payable hereunder, or postpone the date of the final maturity of the Loans, in
each case to the extent subject to such participation. The Borrower agrees that
if amounts outstanding under this Agreement and the Loans are due or unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall, to the maximum extent
permitted by applicable law, be deemed to have the right of setoff in respect of
its participating interest in amounts owing under this Agreement to the same
extent as if the amount of its participating interest were owing directly to it
as a Lender under this Agreement; PROVIDED that, in purchasing such
participating interest, such Participant shall be deemed to have agreed to share
with the Lenders the proceeds thereof as provided in Section 10.7(a) as fully as
if it were a Lender hereunder. The Borrower also agrees that each Participant
shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 with respect
to its participation in the Commitments and the Loans outstanding from time to
time as if it was a Lender; PROVIDED that, in the case of Section 2.16, such
Participant shall have complied with the requirements of said Section; and
PROVIDED, FURTHER, that no Participant shall be entitled to receive any greater
amount pursuant to any such Section than the transferor Lender would have been
entitled to receive in respect of the amount of the participation transferred by
such transferor Lender to such Participant had no such transfer occurred.
(c) Any Lender (an "ASSIGNOR") may, in accordance with
applicable law, at any time and from time to time assign to any Lender or any
affiliate thereof or, with the consent of the Borrower (which consent shall not
be unreasonably withheld or delayed), the Issuing Lender (in the case of
assignments of Revolving Commitments) and the Administrative Agent, to an
additional bank, financial institution or other entity (an "ASSIGNEE") all or
any part of its rights and obligations under this Agreement pursuant to an
Assignment and Acceptance, executed by such Assignee, such Assignor and any
other Person whose consent is required pursuant to this paragraph, and delivered
to the Administrative Agent for its acceptance and recording in the Register;
PROVIDED that no such assignment to an Assignee (other than any Lender or any
affiliate thereof) shall be in an aggregate principal amount of less than
$5,000,000 (other than in the case of an assignment of all of a Lender's
interests under this Agreement), unless otherwise agreed by the Borrower and the
Administrative Agent. Any such assignment need not be ratable as among the
Facilities. Upon such execution, delivery, acceptance and recording, from and
after the effective date determined pursuant to such Assignment and Acceptance,
(x) the Assignee thereunder shall be a party hereto and, to the extent provided
in such Assignment and Acceptance, have the rights and obligations of a Lender
hereunder with a Commitment and/or Loans as set forth therein, and (y) the
Assignor thereunder shall, to the extent provided in such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all of an Assignor's rights and
obligations under this Agreement, such Assignor shall cease to be a party
hereto). Notwithstanding any provision of this Section 10.6, the consent of the
Borrower shall not be required for any assignment that occurs when an Event of
Default pursuant to Section 8(a) or 8(f) shall have occurred and be continuing
with respect to the Borrower.
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(d) The Administrative Agent shall, on behalf of the Borrower,
maintain at its address referred to in Section 10.2 a copy of each Assignment
and Acceptance delivered to it and a register (the "REGISTER") for the
recordation of the names and addresses of the Lenders and the Commitment of, and
the principal amount of the Loans owing to, each Lender from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, each other Loan Party, the Administrative Agent and the
Lenders shall treat each Person whose name is recorded in the Register as the
owner of the Loans and any Notes evidencing the Loans recorded therein for all
purposes of this Agreement. Any assignment of any Loan, whether or not evidenced
by a Note, shall be effective only upon appropriate entries with respect thereto
being made in the Register (and each Note shall expressly so provide).
(e) Upon its receipt of an Assignment and Acceptance executed
by an Assignor, an Assignee and any other Person whose consent is required by
Section 10.6(c), together with payment to the Administrative Agent of a
registration and processing fee of $4,000, the Administrative Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) record the information
contained therein in the Register on the effective date determined pursuant
thereto.
(f) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section 10.6 concerning assignments of
Loans and Notes relate only to absolute assignments and that such provisions do
not prohibit assignments creating security interests, including any pledge or
assignment by a Lender of any Loan or Note to any Federal Reserve Bank in
accordance with applicable law.
(g) The Borrower, upon receipt of written notice from the
relevant Lender, agrees to issue Notes to any Lender requiring Notes to
facilitate transactions of the type described in paragraph (f) above.
10.7 ADJUSTMENTS; SETOFF. (a) Except to the extent that this
Agreement expressly provides for payments to be allocated to a particular Lender
or to the Lenders under a particular Facility, if any Lender (a "BENEFITTED
LENDER") shall, at any time after the Loans and other amounts payable hereunder
shall immediately become due and payable pursuant to Section 8, receive any
payment of all or part of the Obligations owing to it or receive any collateral
in respect thereof (whether voluntarily or involuntarily, by setoff, pursuant to
events or proceedings of the nature referred to in Section 8(f), or otherwise),
in a greater proportion than any such payment to or collateral received by any
other Lender, if any, in respect of the Obligations owing to such other Lender,
such Benefitted Lender shall purchase for cash from the other Lenders a
participating interest in such portion of the Obligations owing to each such
other Lender, or shall provide such other Lenders with the benefits of any such
collateral, as shall be necessary to cause such Benefitted Lender to share the
excess payment or benefits of such collateral ratably with each of the Lenders;
PROVIDED, HOWEVER, that if all or any portion of such excess payment or benefits
is thereafter recovered from such Benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to
Holdco or the Borrower, any such notice being expressly waived by Holdco and the
Borrower to the extent permitted by applicable law, upon any amount becoming due
and payable by Holdco or the Borrower hereunder (whether at the stated maturity,
by acceleration or otherwise), to set off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by such Lender or any branch or
agency thereof to or for the credit or the account of Holdco or the Borrower, as
the case may be. Each Lender agrees promptly to notify the Borrower and the
Administrative Agent after any such setoff and application made by such Lender;
PROVIDED that the failure to give such notice shall not affect the validity of
such setoff and application.
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10.8 COUNTERPARTS. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. Delivery of an executed signature page of this
Agreement by facsimile transmission shall be effective as delivery of a manually
executed counterpart hereof. A set of the copies of this Agreement signed by all
the parties shall be lodged with the Borrower and the Administrative Agent.
10.9 SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10 INTEGRATION. This Agreement and the other Loan Documents
represent the agreement of Holdco, the Borrower, the Subsidiary Guarantors, the
Agents and the Lenders with respect to the subject matter hereof, and there are
no promises, undertakings, representations or warranties by any Agent or any
Lender relative to subject matter hereof not expressly set forth or referred to
herein or in the other Loan Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 SUBMISSION TO JURISDICTION; WAIVERS. Each of Holdco and
the Borrower hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgment
in respect thereof, to the non-exclusive general jurisdiction of the
courts of the State of New York, the courts of the United States for
the Southern District of New York, and appellate courts from any
thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or
that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to Holdco or the Borrower, as the case may be, at its address
set forth in Section 10.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this Section any special, exemplary, punitive or
consequential damages.
10.13 ACKNOWLEDGMENTS. Each of Holdco and the Borrower hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
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(b) neither any Agent nor any Lender has any fiduciary
relationship with or duty to Holdco or the Borrower arising out of or
in connection with this Agreement or any of the other Loan Documents,
and the relationship between Agents and Lenders, on one hand, and
Holdco and the Borrower, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among Holdco, the Borrower and
the Lenders.
10.14 CONFIDENTIALITY. Each Agent and each Lender agrees to
keep confidential all non-public information provided to it by any Loan Party
pursuant to this Agreement and the other Loan Documents that is designated by
such Loan Party as confidential; PROVIDED that nothing herein shall prevent any
Agent or any Lender from disclosing any such information (a) to any other Agent,
any other Lender or any affiliate of any Lender, (b) to any Transferee or
prospective Transferee that agrees to comply with the provisions of this
Section, (c) to its employees, directors, agents, attorneys, accountants and
other professional advisors or those of any of its affiliates, (d) upon the
request or demand of any Governmental Authority, (e) in response to any order of
any court or other Governmental Authority or as may otherwise be required
pursuant to any Requirement of Law, (f) if requested or required to do so in
connection with any litigation or similar proceeding, (g) that has been publicly
disclosed, (h) to the National Association of Insurance Commissioners or any
similar organization or any nationally recognized rating agency that requires
access to information about a Lender's investment portfolio in connection with
ratings issued with respect to such Lender, or (i) in connection with the
exercise of any remedy hereunder or under any other Loan Document.
10.15 WAIVERS OF JURY TRIAL. HOLDCO, THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
-75-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
PRECISION PARTNERS, INC.
By: /s/ X. X. XXXXXX
-------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
PRECISION PARTNERS HOLDING COMPANY
By: /s/ X. X. XXXXXX
-------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
MID STATE MACHINE PRODUCTS
By: /s/ X. X. XXXXXX
------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
GALAXY INDUSTRIES CORPORATION
By: /s/ X. X. XXXXXX
-----------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
NATIONWIDE PRECISION PRODUCTS CORP.
By: /s/ X. X. XXXXXX
-----------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
GENERAL AUTOMATION, INC.
By: /s/ X. X. XXXXXX
-------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
CERTIFIED FABRICATORS, INC.
By: /s/ X. X. XXXXXX
-------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
CALBRIT DESIGN. INC.
By: /s/ X. X. XXXXXX
------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
CITICORP U.S.A. INC.
as Administrative Agent
By: /s/ XXXXXXX XXXX
--------------------------------------
Name: XXXXXXX X. XXXX
Title: ATTORNEY IN FACT
CITICORP U.S.A.. INC.
as a Lender and as Issuing Lender
By: /s/ XXXXXXX XXXX
-------------------------------------
Name: XXXXXXX X. XXXX
Title: ATTORNEY IN FACT
NATIONSBANK, N.A., as Syndication Agent
By: /s/ XXXX X. X'XXXXX
--------------------------------------
Name: Xxxx X. X'Xxxxx
Title: Senior Vice President
NATIONSBANK, N.A., as a Lender
and as Issuing Lender
By: /s/ XXXX X. X'XXXXX
-------------------------------------
Name: Xxxx X. X'Xxxxx
Title: Senior Vice President
SUNTRUST BANK, ATLANTA
as Documentation Agent
By: /s/ X. X. XXXX
-------------------------------------
Name: Xxxxx X. Xxxx
Title: Director
SUNTRUST BANK, ATLANTA
as a Lender
By: /s/ X.X. XXXX
-------------------------------------
Name: Xxxxx X. Xxxx
Title: Director
SUNTRUST BANK, ATLANTA
as Documentation Agent
By: /s/ X. XXXXX
-------------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
SUNTRUST BANK, ATLANTA
as a Lender
By: /s/ X. XXXXX
-------------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
[EXHIBIT A-1]
FORM OF HOLDCO GUARANTEE
GUARANTEE, dated as of March 19, 1999 ("Guarantee"), by Precision
Partners Holding Company, a Delaware corporation ("Guarantor"), in favor and for
the benefit of Citicorp U.S.A., Inc., having an office at 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000-0000, in its capacity as Administrative Agent (in such
capacities and together with any successors in such capacity, the
"Administrative Agent") for the ratable benefit of the lending institutions (the
"Lenders") from time to time party to the Credit Agreement (as hereinafter
defined).
RECITALS:
A. Pursuant to the Credit Agreement, dated as of March 19, 1999 (as
amended from time to time, the "Credit Agreement"), among PRECISION PARTNERS
INC., a Delaware Corporation (the "Borrower"), the guarantors from time to time
thereunder, the Lenders, the Administrative Agent, NATIONSBANK, N.A., as
Syndication Agent, and SUNTRUST BANK, ATLANTA, as Documentation Agent (together
with the Syndication Agent and the Administrative Agent, the "Agents"), the
Lenders have agreed (i) to make to or for the account of the Borrower certain
Term Loans up to an aggregate principal amount of $23,000,000 and certain
Revolving Loans up to an aggregate principal amount of $25,000,000 and (ii) to
issue certain Letters of Credit for the account of the Borrower. Capitalized
terms used herein and not otherwise defined shall have the meanings ascribed
thereto in the Credit Agreement.
B. It is a condition to the obligations of the Lenders to make the
Loans under the Credit Agreement and a condition to the Issuing Lender issuing
Letters of Credit under the Credit Agreement that the Guarantor shall have
executed and delivered this Guarantee and that this Guarantee shall be in full
force and effect.
C. This Guarantee is given by the Guarantor in favor of the
Administrative Agent for its benefit and the benefit of the Lenders to guarantee
all of the Obligations of the Borrower in accordance with the terms of the
Credit Agreement.
D. All of the Guarantor's obligations hereunder shall be secured
pursuant to the Security Documents to which the Guarantor is a party.
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Guarantor hereby agrees as follows:
1. Guarantee. (a) To induce the Lenders to execute and deliver the
Credit Agreement and to make the Loans and issue the Letters of Credit upon the
terms and conditions set forth in the Credit Agreement, and in consideration
thereof, the Guarantor hereby unconditionally and irrevocably (i) guarantees to
the Lenders and their respective successors, indorsees, transferees and assigns,
the prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) and at all times thereafter of the
Obligations of the Borrower (including amounts which would become due but for
the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code); and (ii) agrees to pay any and all reasonable expenses (including
reasonable attorneys' fees and disbursements) which may be paid or incurred by
the Lenders or the Agents in
-2-
enforcing any rights with respect to, or collecting, any or all of the
Obligations and/or enforcing any rights with respect to, or collecting against,
the Guarantor under this Guarantee (collectively, the "Guaranteed Obligations").
(b) The Guarantor agrees that this Guarantee constitutes a guarantee
of payment when due and not of collection and waives any right to require that
any resort be had by the Agents or any Lender to any of the security held for
payment of any of the Guaranteed Obligations or to any balance of any deposit
account or credit on the books of the Agents or any Lender in favor of the
Borrower or any other Person.
(c) No payment or payments made by the Guarantor or any other Person
or received or collected by the Lenders (or the Agents on behalf of the Lenders)
from the Guarantor or any other Person by virtue of any action or proceeding or
any set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Guaranteed Obligations shall be deemed to
modify, release or otherwise affect the liability or obligations of the
Guarantor hereunder which shall, notwithstanding any such payment or payments
other than payments on the Guaranteed Obligations made to the Lenders (or the
Agents on behalf of the Lenders) by the Guarantor or any other Person or
payments received or collected by the Lenders (or the Administrative Agent or
Agents on behalf of the Lenders) from the Guarantor or any other Person, remain
liable for the Guaranteed Obligations until the Guaranteed Obligations are paid
in full in cash or cash equivalents.
2. Waiver by Guarantor. The Guarantor hereby waives absolutely and
irrevocably any claim which it may have against the Borrower or any of its
respective Affiliates by reason of any payment to the Agents, Administrative
Agent or any Lender, or to any other Person pursuant to or in respect of this
Guarantee, including any claims by way of subrogation, contribution,
reimbursement, indemnity or otherwise, until the Guaranteed Obligations have
been paid in full.
3. Consent by Guarantor. The Guarantor hereby consents and agrees
that, without the necessity of any reservation of rights against the Guarantor
and without notice to or further assent by the Guarantor, any demand for payment
of any of the Guaranteed Obligations made by the Agents, or any Lender may be
rescinded by the Lenders (or the Agents on behalf of the Lenders) and any of the
Guaranteed Obligations continued, and the Guaranteed Obligations, or the
liability of any other party upon or for any part thereof, or any collateral
security or guarantee therefor or right of offset with respect thereto, may,
from time to time, in whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by the Lenders (or the
Agents on behalf of the Lenders); and the Credit Agreement or any other Loan
Document, or other guarantee or documents in connection therewith, or any of
them, may be amended, modified, supplemented or terminated, in whole or in part,
as the Lenders (or the Agents on behalf of the Lenders) may deem advisable from
time to time (in accordance with the terms thereof); and any Guarantee or right
of offset or any collateral may be sold, exchanged, waived, surrendered or
released, all without the necessity of any reservation of rights against the
Guarantor and without notice to or further assent by the Guarantor, which will
remain bound hereunder, notwithstanding any such renewal, extension,
modification, acceleration, compromise, amendment, supplement, termination,
sale, exchange, waiver, surrender or release. Neither the Lenders nor the Agents
shall have any obligation to protect, secure, perfect or insure any collateral
or property at any time held as security for the Guaranteed Obligations or this
Guarantee. When making any demand hereunder against the Guarantor, the Agents or
the Lenders may, but shall be under no obligation to, make a similar demand on
any other Loan Party or any such other guarantor, and any failure by the Agents
or the Lenders to make any such demand or to collect any payments from such
other Loan Party
-3-
or any such other guarantor or any release of such other Loan Party or any such
other guarantor or of the Guarantor's obligations or liabilities hereunder shall
not impair or affect the rights and remedies, express or implied, or as a matter
of law, of the Agents or the Lenders against the Guarantor hereunder. For the
purposes hereof "demand" shall include the commencement and continuance of any
legal proceedings.
4. Waivers: Successors and Assigns. The Guarantor waives any and all
notice of the creation, renewal, extension or accrual of any of the Guaranteed
Obligations and notice of or proof of reliance by the Lenders upon this
Guarantee or acceptance of this Guarantee, and the Guaranteed Obligations shall
conclusively be deemed to have been created, contracted or incurred in reliance
upon this Guarantee, and all dealings between the Guarantor and any other Loan
Party, on the one hand, and the Lenders, on the other hand, shall likewise be
conclusively presumed to have been had or consummated in reliance upon this
Guarantee. The Guarantor waives diligence, presentment, protest, demand for
payment and notice of default or non-payment to or upon any Loan Party or the
Guarantor with respect to the Guaranteed Obligations. This Guarantee shall be
construed as a continuing, absolute and unconditional Guarantee of payment
without regard to the validity, regularity or enforceability of the Credit
Agreement, the other Loan Documents, any of the Guaranteed Obligations or any
guarantee therefor or right of offset with respect thereto at any time or from
time to time held by the Lenders and without regard to any defense (other than
the defense of payment), set off or counterclaim which may at any time be
available to or be asserted by any Loan Party against the Lenders, or by any
other circumstance whatsoever (with or without notice to or knowledge of the
Guarantor) which constitutes, or might be construed to constitute, an equitable
or legal discharge of the Guaranteed Obligations, or of the Guarantor under this
Guarantee, in bankruptcy or in any other instance, and the obligations and
liabilities of the Guarantor hereunder shall not be conditioned or contingent
upon the pursuit by the Lenders or any other Person at any time of any right or
remedy against any Loan Party or against any other Person which may be or become
liable or obligated in respect of all or any part of the Guaranteed Obligations
or against any collateral security or guarantee therefor or right of offset with
respect thereto. This Guarantee shall remain in full force and effect and be
binding in accordance with and to the extent of its terms upon the Guarantor and
the successors and assigns thereof, and shall inure to the benefit of the
Lenders, and their respective successors, indorsees, transferees and assigns
permitted under the Credit Agreement (including each holder from time to time of
Guaranteed Obligations) until all of the Guaranteed Obligations and the
obligations of the Guarantor under this Guarantee shall have been satisfied by
payment in full in Cash or Cash Equivalents, notwithstanding that from time to
time during the term of the Credit Agreement any Loan Party may be released from
all of its Guaranteed Obligations thereunder.
5. Guarantee Secured. Payment under this Guarantee is secured by
pledges, encumbrances and mortgages of Collateral pursuant to applicable
Security Documents in accordance with the Credit Agreement. Reference is hereby
made to the Credit Agreement and the applicable Security Documents for a
description of the Collateral pledged and the right of the respective parties to
such property, to secure all the obligations of the Guarantor hereunder.
6. Rights of Set-Oft. The Lenders, and the Agents on behalf of the
Lenders, are each hereby irrevocably authorized upon the occurrence and during
the continuance of an Event of Default without notice to the Guarantor (any such
notice being expressly waived by the Guarantor to the extent permitted by
applicable law) to set off and appropriate and apply any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect or contingent or matured or unmatured, at any time held or
owing by the Lenders to or for the credit or the account of the Guarantor, or
any part
-4-
thereof, in such amounts as the Lenders, or the Agents on behalf of the Lenders,
may elect, against and on account of the obligations and liabilities of the
Guarantor to the Lenders, in any currency, whether arising hereunder or
otherwise, as the Lenders, or the Agents on behalf of the Lenders, may elect,
whether or not the Lenders, or the Agents on behalf of the Lenders, have made
any demand for payment but only to the extent that such obligations, liabilities
and claims shall have become due and payable (whether as stated, by acceleration
or otherwise). The Lenders, or the Agents on behalf of the Lenders, agree to
notify the Guarantor promptly of any such set-off and the application made by
the Lenders, or the Agents on behalf of the Lenders; provided, that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of the Lenders, or the Agents or Administrative Agent on
behalf of the Lenders, under this Section 6 are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which the
Lenders, or the Agents on behalf of the Lenders, may otherwise have.
7. Effectiveness; Reinstatement. This Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Guaranteed Obligations is rescinded or must
otherwise be restored or returned by the Lenders upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of any Loan Party, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, any Loan Party or any substantial part of
its property, or otherwise, all as though such payments had not been made.
8. Payments of Guaranteed Obligations. The Guarantor hereby
guarantees that the Guaranteed Obligations will be paid for the ratable benefit
of the Lenders without set-off or counterclaim in lawful currency of the United
States of America at the office of the Administrative Agent located at 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000. The Guarantor shall make any payments
required hereunder upon receipt of written notice thereof from the Agents or
Administrative Agent or any Lender; provided, however, that the failure of the
Agents or Administrative Agent or any Lender to give such notice shall not
affect Guarantor's obligations hereunder.
9. Default. a) To the extent permitted by applicable law, if the
Borrower has failed to pay or perform when due its Obligations, accounting for
any time periods provided in the Credit Agreement for cure of such failure to
pay or perform, then all of the Guaranteed Obligations with respect to the
Borrower shall be immediately due and payable by the Guarantor, regardless of
whether the payment of the Guaranteed Obligations has been accelerated.
b) To the extent permitted by applicable law, if the Guarantor's
Obligations, if any, under the Credit Agreement are accelerated, then all of the
Guaranteed Obligations shall be immediately due and payable by the Guarantor,
regardless of whether the Borrower is in default with respect to its
Obligations.
10. Representations and Warranties. To induce the Lenders to enter
into the Credit Agreement and to make Loans and to issue the Letter of Credit,
the Guarantor represents and warrants to each Lender that the following
statements are true, correct and complete on and as of the Closing Date:
A. Organization and Powers. (a) The Guarantor is a duly organized
and validly existing corporation in good standing under the laws of the
jurisdiction of its organization and has the corporate power and authority to
own its property and assets and to transact the business in which it is
currently engaged. (b) The Guarantor has duly qualified as a foreign corporation
and is in good standing in all jurisdictions in which the conduct of its
business or the ownership of its properties requires such
-5-
qualification, except where the failure to be so qualified would not have a
Material Adverse Effect. (c) The Guarantor has the corporate power and authority
and all governmental licenses, authorizations, consents and approvals necessary
for the Guarantor to own and carry on its business as now conducted, without
limitation, those in compliance with or required by the Environmental Laws other
than such licenses, authorizations, consents and approvals the failure to obtain
could not reasonably be expected to have a Material Adverse Effect. (d) The
Guarantor has all authority to enter into each of the Security Documents to
which it is or is to be a party and to carry out the transactions contemplated
thereby and to execute and deliver this Guarantee.
B. No Violations. Neither the execution, delivery or performance by
the Guarantor of any of the Loan Documents to which it is, or is to be, a party,
nor compliance with any of the terms and provisions thereof, nor the
consummation of any of the transactions contemplated therein, nor the grant and
perfection of the security interests pursuant to the Security Documents (a) will
contravene any provision of any law, statute, rule, regulation, order, writ,
injunction or decree of any Governmental Authority, (b) will conflict or be
inconsistent with or result in any breach of, any of the terms, covenants,
conditions or provisions of, or constitute (with notice or lapse of time or
both) a default under any material contractual obligation of the Guarantor, or
(other than as contemplated by the Security Documents) result in the creation or
imposition of (or the obligation to create or impose), any Lien upon any of the
property or assets of the Guarantor pursuant to any material contractual
obligation or (c) will violate any provision of the organizational documents of
the Guarantor.
C. Approvals. The execution, delivery and performance by the
Guarantor of the Loan Documents to which it is, or is to be, a party do not and
will not require any, consent or authorization of, filing with, notice to, or
other action to, with or by, any Governmental Authority or other Person except
as set forth in Section 4.4 of the Credit Agreement. All consents and approvals
from or notices to or filings with any Governmental Authority or other Person
required to be obtained by Guarantor have been obtained and are in full force
and effect except as disclosed in Schedule 4.4 of the Credit Agreement.
D. Binding Obligation. This Guarantee constitutes the legal, valid
and binding obligation of the Guarantor, enforceable against the Guarantor in
accordance with its terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally or by equitable principles (whether
enforcement is sought by proceedings in equity or at law).
E. Investment Company. The Guarantor is not an "investment company"
or a company "controlled" by an "investment company" (as each of such quoted
terms is defined or used in the Investment Company Act of 1940, as amended) or
subject to regulation under any Requirement of Law (other than Regulation X of
the Board) limiting its ability to incur indebtedness for money borrowed or
guarantee such indebtedness as contemplated hereby or by any other Credit
Document.
11. Ratable Sharing. The Lenders by acceptance of this Guarantee
agree among themselves that with respect to all amounts received by them which
are applicable to the payment of obligations of the Guarantor under this
Guarantee, if the Lenders, or the Agents or Administrative Agent on behalf of
the Lenders, exercise their rights hereunder, including, without limitation,
acceleration of the obligations of the Guarantor hereunder, equitable adjustment
will be made so that, in effect, all such amounts will be shared among the
Lenders pro rata based on the relative outstanding Guaranteed Obligations.
-6-
12. Merger. If the Guarantor shall merge into or consolidate with
another corporation, or liquidate, wind up or dissolve itself in a transaction
not prohibited by the Credit Agreement, or if all of the stock of the Guarantor
shall be sold or otherwise disposed of in a manner not prohibited by the Credit
Agreement, the Guarantor hereby covenants and agrees, that upon any such merger,
consolidation, liquidation, or dissolution, the guarantee given in this
Guarantee and the due and punctual performance and observance of all of the
covenants and conditions of the Credit Agreement to be performed by the
Guarantor, shall be expressly assumed (in the event that the Guarantor is not
the surviving corporation in the merger) by supplemental agreements
substantially similar to this Guarantee reasonably satisfactory in form to the
Administrative Agent by the corporation or corporations formed by such
consolidation, or into which the Guarantor shall have been merged, or by the
corporation or corporations which shall have acquired such property. In
addition, the Guarantor shall deliver to the Administrative Agent an Officers'
Certificate and an opinion of counsel, each stating that such merger,
consolidation or transfer and such supplemental agreements comply with this
Guarantee and that all conditions precedent herein provided relating to such
transaction have been complied with. In case of any such consolidation, merger,
sale or conveyance and upon the assumption by the successor corporation or
corporations, by supplemental agreements substantially similar to this guarantee
executed and delivered to the Lenders or the Agents or Administrative Agent and
reasonably satisfactory in form to the Administrative Agent of the guarantee
given in this Guarantee and the due and punctual performance of all of the
covenants and conditions of the Credit Agreement to be performed by the
Guarantor, such successor corporation or corporations shall succeed to and be
substituted for the Guarantor, with the same effect as if it or they had been
named herein as a Guarantor.
13. No Waiver. (a) No failure to exercise and no delay in
exercising, on the part of the Lenders, or the Agents or Administrative Agent on
behalf of the Lenders, any right, power or privilege hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power
or privilege preclude any other or further exercise thereof, or the exercise of
any other power or right. The rights and remedies herein provided are cumulative
and not exclusive of any rights or remedies provided by law. (b) In the event
the Lenders, the Agents or the Administrative Agent on behalf of the Lenders,
shall have instituted any proceeding to enforce any right, power or remedy under
this Guarantee by sale or otherwise, and such proceeding shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to the Lenders, the Agents or the Administrative Agent on behalf of the Lenders,
then and in every such case, the Guarantor, the Lenders and the Agents or the
Administrative Agent on behalf of the Lenders, and each Lender shall be restored
to its respective former position and rights hereunder, and all rights, remedies
and powers of the Lenders, and the Agents or the Administrative Agent on behalf
of the Lenders, shall continue as if no such proceeding had been instituted.
14. Notices. All notices, demands, instructions or other
communications required or permitted to be given to or made upon any party
hereto shall be given in accordance with the provisions of the Credit Agreement
and at the address either set forth therein or as provided on the signature page
hereof.
15. Amendments, Waivers, etc. No provision of this Guarantee shall
be waived, amended, terminated or supplemented except by a written instrument
executed by the Guarantor and the Administrative Agent, on behalf of the Lenders
and the other Agents.
16. Notice of Exercise. Upon exercise of its rights hereunder, the
Lenders, or the Agents or Administrative Agent on behalf of the Lenders, as the
case may be, shall provide written notice
-7-
on the date of such exercise to the Lenders, or the Agents or the Administrative
Agent on behalf of the Lenders, as the case may be, of such exercise; provided,
however, that the failure by the Agents, the Administrative Agent, or any of the
Lenders to provide such written notice shall not in any way relieve the
Guarantor of its obligations under this Guarantee.
17. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
18. Submission to Jurisdiction; Waivers. The Guarantor hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Guarantee and any Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the
State of New York, the courts of the United States for the Southern
District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Guarantor as provided in Section 14 hereof;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred
to in this Section any special, exemplary, punitive or consequential
damages.
19. WAIVERS OF JURY TRIAL. THE GUARANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS GUARANTEE, THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
20. Severability of Provisions. Any provision of this Guarantee
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
21. Headings. The Section headings used in this Guarantee are for
convenience of reference only and shall not affect the construction of this
Guarantee.
22. Future Advances. This Guarantee shall guarantee the payment of
any amounts advanced from time to time pursuant to the Credit Agreement.
-8-
23. Counterparts. This Guarantee and any amendments, waivers,
consents or supplements may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument.
-9-
IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be
duly executed and delivered by its duly authorized officer on the day and year
first above written.
PRECISION PARTNERS HOLDING
COMPANY
By: ______________________
Name:
Title:
[EXHIBIT A-2]
FORM OF GUARANTEE
OF
[SUBSIDIARY]
GUARANTEE, dated as of March 19, 1999 ("Guarantee"), by
[SUBSIDIARY], a [ ] corporation ("Guarantor"), in favor and for the benefit of
CITICORP U.S.A., INC., having an office at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000-0000, in its capacity as Administrative Agent (in such capacities and
together with any successors in such capacity, the "Administrative Agent") for
the ratable benefit of the lending institutions (the "Lenders") from time to
time party to the Credit Agreement (as hereinafter defined).
RECITALS:
A. Pursuant to the Credit Agreement, dated as of March 19, 1999 (as
amended from time to time, the "Credit Agreement"), among PRECISION PARTNERS
INC., a Delaware Corporation (the "Borrower"), the guarantors from time to time
thereunder, the Lenders, the Administrative Agent, NATIONSBANK, N.A., as
Syndication Agent, and SUNTRUST BANK, ATLANTA, as Documentation Agent (together
with the Syndication Agent and the Administrative Agent, the "Agents"), the
Lenders have agreed (i) to make to or for the account of the Borrower certain
Term Loans up to an aggregate principal amount of $23,000,000 and certain
Revolving Loans up to an aggregate principal amount of $25,000,000 and (ii) to
issue certain Letters of Credit for the account of the Borrower. Capitalized
terms used herein and not otherwise defined shall have the meanings ascribed
thereto in the Credit Agreement.
B. It is a condition to the obligations of the Lenders to make the
Loans under the Credit Agreement and a condition to any Lender issuing Letters
of Credit under the Credit Agreement that the Guarantor shall have executed and
delivered this Guarantee and that this Guarantee shall be in full force and
effect.
C. This Guarantee is given by the Guarantor in favor of the
Administrative Agent for its benefit and the benefit of the Lenders to guarantee
all of the Obligations of the Borrower in accordance with the terms of the
Credit Agreement.
D. All of the Guarantor's obligations hereunder shall be secured
pursuant to the Security Documents to which the Guarantor is a party.
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Guarantor hereby agrees as follows:
1. Guarantee. (a) To induce the Lenders to execute and deliver the
Credit Agreement and to make the Loans and issue the Letters of Credit upon the
terms and conditions set forth in the Credit Agreement, and in consideration
thereof, the Guarantor hereby unconditionally and irrevocably (i) guarantees to
the Lenders and their respective successors, indorsees, transferees and assigns,
the prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) and at all times thereafter of the
Obligations of the Borrower (including
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amounts which would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code); and (ii) agrees to pay any and all
reasonable expenses (including reasonable attorneys' fees and disbursements)
which may be paid or incurred by the Lenders or the Agents in enforcing any
rights with respect to, or collecting, any or all of the Obligations and/or
enforcing any rights with respect to, or collecting against, the Guarantor under
this Guarantee (collectively, the "Guaranteed Obligations").
(b) The Guarantor agrees that this Guarantee constitutes a guarantee
of payment when due and not of collection and waives any right to require that
any resort be had by the Agents or any Lender to any of the security held for
payment of any of the Guaranteed Obligations or to any balance of any deposit
account or credit on the books of the Agents, or any Lender in favor of the
Borrower or any other Person.
(c) No payment or payments made by the Guarantor or any other Person
or received or collected by the Lenders (or the Agents on behalf of the Lenders)
from the Guarantor or any other Person by virtue of any action or proceeding or
any set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Guaranteed Obligations shall be deemed to
modify, release or otherwise affect the liability or obligations of the
Guarantor hereunder which shall, notwithstanding any such payment or payments
other than payments on the Guaranteed Obligations made to the Lenders (or the
Agents on behalf of the Lenders) by the Guarantor or any other Person or
payments on the Guaranteed Obligations received or collected by the Lenders (or
the Agents on behalf of the Lenders) from the Guarantor or any other Person,
remain liable for the Guaranteed Obligations until the Guaranteed Obligations
are paid in full in cash or cash equivalents, subject to the provisions of
Section 1(d) hereof.
(d) Notwithstanding any other provisions of this Guarantee, the
maximum aggregate amount of Guaranteed Obligations which Guarantor agrees to
guarantee pursuant to this Guarantee shall equal the lesser of (i) the excess of
the fair saleable value of the property of the Guarantor over the total
liabilities of the Guarantor (including the maximum amount reasonably expected
to become due in respect of contingent liabilities, other than any such
contingent liabilities under the Credit Agreement and the other Loan Documents),
such excess to be determined on the date of this Guarantee or the date on which,
from time to time, such enforcement or realization is effected, whichever is
higher and (ii) that amount of Guaranteed Obligations which does not result in a
violation of applicable laws relating to fraudulent conveyance, after giving
effect to the value of any rights to subrogation, reimbursement, indemnification
or contribution (including without limitation rights to contribution from any
other Subsidiary Guarantor that has guaranteed the Guaranteed Obligations)
whether by agreement or under applicable law. The obligations of the Guarantor
hereunder shall be joint and several with the obligations of each other
Subsidiary Guarantor. Subject to the preceding sentences, the Guarantor
understands, agrees and confirms that this is a guarantee of payment when due
and not of collection and that each Lender may, from time to time, enforce this
Guarantee up to the full amount of the Guaranteed Obligations owed to such
Lender without proceeding against any other Loan Party, against any security for
the Guaranteed Obligations, against any other guarantor or under any other
guarantee covering the Guaranteed Obligations.
Each Subsidiary Guarantor that makes a payment or distribution under
its Guarantee shall be entitled to a contribution from each other Subsidiary
Guarantor in an amount pro rata, based on the net assets of each Subsidiary
Guarantor.
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2. Waiver by Guarantor. The Guarantor hereby waives absolutely and
irrevocably any claim which it may have against the Borrower or any of its
respective Affiliates by reason of any payment to the Agents, Administrative
Agent or any Lender, or to any other Person pursuant to or in respect of this
Guarantee, including any claims by way of subrogation, contribution,
reimbursement, indemnity or otherwise, until the Guaranteed Obligations are paid
in full.
3. Consent by Guarantor. The Guarantor hereby consents and agrees
that, without the necessity of any reservation of rights against the Guarantor
and without notice to or further assent by the Guarantor, any demand for payment
of any of the Guaranteed Obligations made by the Agents or any Lender may be
rescinded by the Lenders (or the Agents on behalf of the Lenders) and any of the
Guaranteed Obligations continued, and the Guaranteed Obligations, or the
liability of any other party upon or for any part thereof, or any collateral
security or guarantee therefor or right of offset with respect thereto, may,
from time to time, in whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by the Lenders (or the
Agents on behalf of the Lenders); and the Credit Agreement or any other Loan
Document, or other guarantee or documents in connection therewith, or any of
them, may be amended, modified, supplemented or terminated, in whole or in part,
as the Lenders (or the Agents on behalf of the Lenders) may deem advisable from
time to time (in accordance with the terms thereof); and any Guarantee or right
of offset or any collateral may be sold, exchanged, waived, surrendered or
released, all without the necessity of any reservation of rights against the
Guarantor and without notice to or further assent by the Guarantor, which will
remain bound hereunder, notwithstanding any such renewal, extension,
modification, acceleration, compromise, amendment, supplement, termination,
sale, exchange, waiver, surrender or release. Neither the Lenders nor the Agents
shall have any obligation to protect, secure, perfect or insure any collateral
or property at any time held as security for the Guaranteed Obligations or this
Guarantee. When making any demand hereunder against the Guarantor, the Agents or
the Lenders may, but shall be under no obligation to, make a similar demand on
any other Loan Party or any such other guarantor, and any failure by the Agents
or the Lenders to make any such demand or to collect any payments from such
other Loan Party or any such other guarantor or any release of such other Loan
Party or any such other guarantor or of the Guarantor's obligations or
liabilities hereunder shall not impair or affect the rights and remedies,
express or implied, or as a matter of law, of the Agents or the Lenders against
the Guarantor hereunder. For the purposes hereof "demand" shall include the
commencement and continuance of any legal proceedings.
4. Waivers; Successors and Assigns. The Guarantor waives any and all
notice of the creation, renewal, extension or accrual of any of the Guaranteed
Obligations and notice of or proof of reliance by the Lenders upon this
Guarantee or acceptance of this Guarantee, and the Guaranteed Obligations shall
conclusively be deemed to have been created, contracted or incurred in reliance
upon this Guarantee, and all dealings between the Guarantor and any other Loan
Party, on the one hand, and the Lenders, on the other hand, shall likewise be
conclusively presumed to have been had or consummated in reliance upon this
Guarantee. The Guarantor waives diligence, presentment, protest, demand for
payment and notice of default or non-payment to or upon any Loan Party or the
Guarantor with respect to the Guaranteed Obligations. This Guarantee shall be
construed as a continuing, absolute and unconditional Guarantee of payment
without regard to the validity, regularity or enforceability of the Credit
Agreement, the other Loan Documents, any of the Guaranteed Obligations or any
guarantee therefor or right of offset with respect thereto at any time or from
time to time held by the Lenders and without regard to any defense (other than
the defense of payment), set off or counterclaim which may at any time be
available to or be asserted by any Loan Party against the Lenders, or by any
other circumstance whatsoever (with or without notice to or knowledge of the
Guarantor) which constitutes, or might be construed to constitute, an equitable
or legal discharge of the Guaranteed Obligations, or of the Guarantor under this
Guarantee, in bankruptcy or in any other instance, and the obligations and
liabilities
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of the Guarantor hereunder shall not be conditioned or contingent upon the
pursuit by the Lenders or any other Person at any time of any right or remedy
against any Loan Party or against any other Person which may be or become liable
or obligated in respect of all or any part of the Guaranteed Obligations or
against any collateral security or guarantee therefor or right of offset with
respect thereto. This Guarantee shall remain in full force and effect and be
binding in accordance with and to the extent of its terms upon the Guarantor and
the successors and assigns thereof, and shall inure to the benefit of the
Lenders, and their respective successors, indorsees, transferees and assigns
permitted under the Credit Agreement (including each holder from time to time of
Guaranteed Obligations) until all of the Guaranteed Obligations and the
obligations of the Guarantor under this Guarantee shall have been satisfied by
payment in full in Cash or Cash Equivalents, notwithstanding that from time to
time during the term of the Credit Agreement any Loan Party may be released from
all of its Guaranteed Obligations thereunder.
5. Guarantee Secured. Payment under this Guarantee is secured by
pledges, encumbrances and mortgages of Collateral pursuant to applicable
Security Documents in accordance with the Credit Agreement. Reference is hereby
made to the Credit Agreement and the applicable Security Documents for a
description of the Collateral pledged and the right of the respective parties to
such property, to secure all the obligations of the Guarantor hereunder.
6. Rights of Set-Off. The Lenders, and the Agents on behalf of the
Lenders, are each hereby irrevocably authorized upon the occurrence and during
the continuance of an Event of Default without notice to the Guarantor (any such
notice being expressly waived by the Guarantor to the extent permitted by
applicable law) to set off and appropriate and apply any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect or contingent or matured or unmatured, at any time held or
owing by the Lenders to or for the credit or the account of the Guarantor, or
any part thereof, in such amounts as the Lenders, or the Agents on behalf of the
Lenders, may elect, against and on account of the obligations and liabilities of
the Guarantor to the Lenders, in any currency, whether arising hereunder or
otherwise, as the Lenders, or the Agents on behalf of the Lenders, may elect,
whether or not the Lenders, or the Agents on behalf of the Lenders, have made
any demand for payment but only to the extent that such obligations, liabilities
and claims shall have become due and payable (whether as stated, by acceleration
or otherwise). The Lenders, or the Agents on behalf of the Lenders, agree to
notify the Guarantor promptly of any such set-off and the application made by
the Lenders, or the Agents on behalf of the Lenders; provided, that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of the Lenders, or the Agents on behalf of the Lenders,
under this Section 6 are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which the Lenders, or the Agents on
behalf of the Lenders, may otherwise have.
7. Effectiveness; Reinstatement. This Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Guaranteed Obligations is rescinded or must
otherwise be restored or returned by the Lenders upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of any Loan Party, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, any Loan Party or any substantial part of
its property, or otherwise, all as though such payments had not been made.
8. Payments of Guaranteed Obligations. The Guarantor hereby
guarantees that the Guaranteed Obligations will be paid for the ratable benefit
of the Lenders without set-off or counterclaim in lawful currency of the United
States of America at the office of the Administrative Agent located at 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000. The Guarantor shall make any payments
required
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hereunder upon receipt of written notice thereof from the Agents or
Administrative Agent or any Lender; provided, however, that the failure of the
Agents or Administrative Agent or any Lender to give such notice shall not
affect Guarantor's obligations hereunder.
9. Default. a) To the extent permitted by applicable law, if the
Borrower has failed to pay or perform when due its Obligations, accounting for
any time periods provided in the Credit Agreement for cure of such failure to
pay or perform, then all of the Guaranteed Obligations with respect to the
Borrower shall be immediately due and payable by the Guarantor, regardless of
whether the payment of the Guaranteed Obligations has been accelerated.
b) To the extent permitted by applicable law, if the Guarantor's
Obligations, if any, under the Credit Agreement are accelerated, then all of
Guaranteed Obligations shall be immediately due and payable by the Guarantor,
regardless of whether the Borrower is in default with respect to its
Obligations.
10. Representations and Warranties. To induce the Lenders to enter
into the Credit Agreement and to make Loans and to issue the Letter of Credit,
the Guarantor represents and warrants to each Lender that the following
statements are true, correct and complete on and as of the Closing Date:
A. Organization and Powers. (a) The Guarantor is a duly organized
and validly existing corporation in good standing under the laws of the
jurisdiction of its organization and has the corporate power and authority to
own its property and assets and to transact the business in which it is
currently engaged. (b) The Guarantor has duly qualified as a foreign corporation
and is in good standing in all jurisdictions in which the conduct of its
business or the ownership of its properties requires such qualification, except
where the failure to be so qualified would not have a Material Adverse Effect.
(c) The Guarantor has the corporate power and authority and all governmental
licenses, authorizations, consents and approvals necessary for the Guarantor to
own and carry on its business as now conducted, including, without limitation,
those in compliance with or required by the Environmental Laws other than such
licenses, authorizations, consents and approvals the failure to obtain could not
reasonably be expected to have a Material Adverse Effect. (d) The Guarantor has
the corporate authority to enter into each of the Security Documents to which it
is or is to be a party and to carry out the transactions contemplated thereby
and to execute and deliver this Guarantee.
B. No Violations. Neither the execution, delivery or performance by
the Guarantor of any of the Loan Documents to which it is, or is to be, a party,
nor compliance with any of the terms and provisions thereof, nor the
consummation of any of the transactions contemplated therein, nor the grant and
perfection of the security interests pursuant to the Security Documents (a) will
contravene any provision of any law, statute, rule, regulation, order, writ,
injunction or decree of any Governmental Authority, (b) will conflict or be
inconsistent with or result in any breach of, any of the terms, covenants,
conditions or provisions of, or constitute (with notice or lapse of time or
both) a default under any material contractual obligation of the Guarantor, or
(other than as contemplated by the Security Documents) result in the creation or
imposition of (or the obligation to create or impose), any Lien upon any of the
property or assets of the Guarantor pursuant to any material contractual
obligation or (c) will violate any provision of the organizational documents of
the Guarantor.
C. Approvals. The execution, delivery and performance by the
Guarantor of the Loan Documents to which it is, or is to be, a party do not and
will not require any consent or authorization of, filing with, notice to, or
other action to, with or by, any Governmental Authority or other Person except
as set forth in Section 4.4 of the Credit Agreement. All consents and approvals
from or notices to
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or filings with any Governmental Authority or other Person required to be
obtained by Guarantor have been obtained and are in full force and effect except
as disclosed in Schedule 4.4 of the Credit Agreement.
D. Binding Obligation. This Guarantee constitutes the legal, valid
and binding obligation of the Guarantor, enforceable against the Guarantor in
accordance with its terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally or by equitable principles (whether
enforcement is sought by proceedings in equity or at law).
E. Investment Company. The Guarantor is not an "investment company"
or a company "controlled" by an "investment company" (as each of such quoted
terms is defined or used in the Investment Company Act of 1940, as amended) or
subject to regulation under any Requirement of Law (other than Regulation X of
the Board) limiting its ability to incur indebtedness for money borrowed or
guarantee such indebtedness as contemplated hereby or by any other Credit
Document.
11. Ratable Sharing. The Lenders by acceptance of this Guarantee
agree among themselves that with respect to all amounts received by them which
are applicable to the payment of obligations of the Guarantor under this
Guarantee, if the Lenders, or the Agents or Administrative Agent on behalf of
the Lenders, exercise their rights hereunder, including, without limitation,
acceleration of the obligations of the Guarantor hereunder, equitable adjustment
will be made so that, in effect, all such amounts will be shared among the
Lenders pro rata based on the relative outstanding Guaranteed Obligations.
12. Merger. If the Guarantor shall merge into or consolidate with
another corporation, or liquidate, wind up or dissolve itself in a transaction
not prohibited by the Credit Agreement, or if all of the stock of the Guarantor
shall be sold or otherwise disposed of in a manner not prohibited by the Credit
Agreement, the Guarantor hereby covenants and agrees, that upon any such merger,
consolidation, liquidation, or dissolution, the guarantee given in this
Guarantee and the due and punctual performance and observance of all of the
covenants and conditions of the Credit Agreement to be performed by the
Guarantor, shall be expressly assumed (in the event that the Guarantor is not
the surviving corporation in the merger) by supplemental agreements
substantially similar to this guarantee reasonably satisfactory in form to the
Administrative Agent, by the corporation or corporations formed by such
consolidation, or into which the Guarantor shall have been merged, or by the
corporation or corporations which shall have acquired such property. In
addition, the Guarantor shall deliver to the Administrative Agent on behalf of
the Lenders, an Officers' Certificate stating that such merger, consolidation or
transfer and such supplemental agreements comply with this Guarantee and that
all conditions precedent herein provided relating to such transaction have been
complied with. In case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor corporation or corporations, by
supplemental agreements substantially similar to this guarantee executed and
delivered to the Administrative Agent on behalf of the Lenders, and reasonably
satisfactory in form to the Administrative Agent of the guarantee given in this
Guarantee and the due and punctual performance of all of the covenants and
conditions of the Credit Agreement to be performed by the Guarantor, such
successor corporation or corporations shall succeed to and be substituted for
the Guarantor, with the same effect as if it or they had been named herein as a
Guarantor.
13. No Waiver. (a) No failure to exercise and no delay in
exercising, on the part of the Lenders, or the Agents or Administrative Agent on
behalf of the Lenders, any right, power or privilege hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any right,
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power or privilege preclude any other or further exercise thereof, or the
exercise of any other power or right. The rights and remedies herein provided
are cumulative and not exclusive of any rights or remedies provided by law. (b)
In the event the Lenders, the Agents or the Administrative Agent on behalf of
the Lenders, shall have instituted any proceeding to enforce any right, power or
remedy under this Guarantee by sale or otherwise, and such proceeding shall have
been discontinued or abandoned for any reason or shall have been determined
adversely to the Lenders, the Agents or the Administrative Agent on behalf of
the Lenders, then and in every such case, the Guarantor, the Lenders, the Agents
or the Administrative Agent on behalf of the Lenders, and each Lender shall be
restored to its respective former position and rights hereunder, and all rights,
remedies and powers of the Lenders and the Agents or the Administrative Agent on
behalf of the Lenders, shall continue as if no such proceeding had been
instituted.
14. Notices. All notices, demands, instructions or other
communications required or permitted to be given to or made upon any party
hereto shall be given in accordance with the provisions of the Credit Agreement
and at the address either set forth therein or as provided on the signature page
hereof.
15. Amendments, Waivers, etc. No provision of this Guarantee shall
be waived, amended, terminated or supplemented except by a written instrument
executed by the Guarantor and the Agents or Administrative Agent, on behalf of
the Lenders and the other Agents.
16. Notice of Exercise. Upon exercise of its rights hereunder, the
Lenders, or the Agents or Administrative Agent on behalf of the Lenders, as the
case may be, shall provide written notice on the date of such exercise to the
Lenders, or the Agents or the Administrative Agent on behalf of the Lenders, as
the case may be, of such exercise; provided, however, that the failure by the
Agents, the Administrative Agent, or any of the Lenders to provide such written
notice shall not in any way relieve the Guarantor of its obligations under this
Guarantee.
17. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
18. Submission to Jurisdiction; Waivers. The Guarantor hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Guarantee and any Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the
State of New York, the courts of the United States for the Southern
District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
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(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Guarantor as provided in Section 14 hereof;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred
to in this Section any special, exemplary, punitive or consequential
damages.
19. WAIVERS OF JURY TRIAL. THE GUARANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS GUARANTEE, THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
20. Severability of Provisions. Any provision of this Guarantee
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
21. Headings. The Section headings used in this Guarantee are for
convenience of reference only and shall not affect the construction of this
Guarantee.
22. Future Advances. This Guarantee shall guarantee the payment of
any amounts advanced from time to time pursuant to the Credit Agreement.
23. Counterparts. This Guarantee and any amendments, waivers,
consents or supplements may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be
duly executed and delivered by its duly authorized officer on the day and year
first above written.
[GUARANTOR]
By: ___________________
Name:
Title:
[EXHIBIT B-1]
FORM OF BORROWING BASE CERTIFICATE
Citicorp U.S.A., Inc.
as Administrative Agent
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
This certificate is delivered pursuant to Section 6.2(e) of the
Credit Agreement dated as of March 19, 1999 (as amended from time to time, the
"Credit Agreement") among PRECISION PARTNERS INC., a Delaware Corporation (the
"Borrower"), the Guarantors from time to time thereunder, the several banks and
other financial institutions or entities from time to time parties to the Credit
Agreement (the "Lenders"), CITICORP U.S.A., INC.. as Administrative Agent,
NATIONSBANK, N.A., as Syndication Agent, and SUNTRUST BANK. ATLANTA. as
Documentation Agent. Capitalized terms defined in the Credit Agreement and not
otherwise defined herein are used herein as therein defined.
The undersigned hereby certifies that (s)he is an officer of the
Borrower and that, as such, is authorized to execute this certificate on behalf
of the Precision Group Members and further certifies that:
(a) For purposes of this Certificate, the date of determination of
the Borrowing Base is[ ], [ ].
(b) the amounts set forth below are a true and correct statement of
the calculation of the Borrowing-Base in accordance with the provisions of the
Credit Agreement:
Gross Accounts ___________
Less Accounts to which the following apply:
1. the Precision Group Members have not complied ___________
with all material Requirements of Law, including,
without limitation, all laws, rules, regulations and
orders of any governmental or judicial authority
relating to truth in lending, billing practices, fair
credit reporting, equal credit opportunity, debt
collection practices and consumer debtor protection,
applicable to such Account (or any related contracts)
or affecting the collectibility of such Account;
2. such Account is not assignable or a first ___________
priority security interest in such Account in favor of
the Administrative Agent for the benefit of the
Lenders has not been obtained and fully perfected by
filing Uniform Commercial Code financing statements
against the rele-
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vant Precision Group Member;
3. such Account is subject to any Lien ___________
whatsoever, other than Liens in favor of the
Administrative Agent for the benefit of the Lenders;
4. the relevant Precision Group Member, in order ___________
to be entitled to collect such Account, is required to
perform any additional service for, or perform or
incur any additional obligation to, the Account debtor
in respect of such Account;
5. such Account does not constitute a legal ___________
valid, and binding irrevocable payment obligation of
the Account debtor in respect of such Account to pay
the balance thereof in accordance with its terms or is
subject to any defense, setoff, recoupment or
counterclaim;
6. the Account debtor in respect of such Account ___________
is a Precision Group Member or an Affiliate, division
or employee of any Precision Group Member;
7. such Account is an account of any ___________
Governmental Authority, unless all rights of the
relevant Precision Group Member with respect to such
Account have been assigned to the Administrative Agent
in accordance with the Assignment of Claims Act of
1940, as amended;
8. an estimated or actual loss has been ___________
recognized in respect of such Account, as determined
in accordance with the usual business practices of the
Relevant Precision Group Member (each such Account, a
"Defaulted Account");
9. 20% or more of the aggregate outstanding ___________
amount of all Accounts from the Account debtor in
respect of such Account and its Affiliates constitute
Defaulted Accounts;
10. any representation or warranty contained in ___________
the Credit Agreement or in any other Loan Documents
applicable either to Accounts in general or to any
such specific Account has been breached with respect
to such Account;
11. 50% or more of the outstanding amount of all ___________
Accounts from the Account debtor in respect of such
Account have become ineligible;
B1-2
12. the Account debtor in respect of such ___________
Account has filed a petition for relief under the
United States Bankruptcy Code (or similar action under
any successor law or under any comparable law), made a
general assignment for the benefit of creditors, had
filed against it any petition or other application for
relief under the United States Bankruptcy Code (or
similar action under any successor law or under any
comparable law), failed, suspended business
operations, become insolvent, called a meeting of its
creditors for the purpose of obtaining any financial
concession or accommodation, or had or suffered a
receiver or a trustee to be appointed for all or a
significant portion of its assets or affairs, in each
case except to the extent such matters have been
dismissed or terminated or otherwise ceased to be
applicable;
13. any portion of such Account has remained ___________
unpaid for a period exceeding 90 days from the due
date (but only to the extent of such overdue portion)
or any Precision Group Member has reason to believe
such Account is uncollectible;
14. the sale represented by such Account is to ___________
an Account debtor organized or located outside one of
the states of the United States;
15. the Account debtor in respect of such ___________
Account is a supplier or creditor of any Precision
Group Member (but only to the extent of the lesser of
(i) the amount owing from such Account debtor to the
relevant Precision Group Member, pursuant to Accounts
that are otherwise eligible and (ii) the amount owing
to such Account debtor by the relevant Precision Group
Member);
16. such Account is not denominated in Dollars ___________
or is payable outside the United States;
17. the sale represented by such Account is on a ___________
guaranteed sale, sale-or-return, consignment, or sale
on approval basis or is subject to any right of
return, setoff or charge-back;
18. the relevant Precision Group Member, or any ___________
other party to such Account, is in default in the
performance or observance of any of the terms thereof
in any material respect;
19. the relevant Precision Group Member does not ___________
have good and marketable title to such Account as sole
owner of such Account;
B1-3
20. Such Account does not arise from the sale ___________
and delivery of goods or rendition of services in the
ordinary cause of business to the Account debtor in
respect of such Account;
21. such Account is on terms other than those ___________
normal or customary in the business of the relevant
Precision Group Member;
22. such Account has associated payment terms ___________
exceeding 100 days from invoice date;
23. except in the case of Accounts owing by any ___________
Eligible Account Debtor, if such Account were to
constitute an Eligible Receivable, more than 15% of
all Eligible Receivables would be owing from the
Account debtor in respect of such Account or any of
its Affiliates in which case only that portion of
Eligible Receivables owing from such Account debtor
representing amounts in excess of 15% of all Eligible
Receivables shall constitute Ineligible Accounts;
24. any amounts payable under or in connection ___________
with such Account are evidenced by chattel paper,
promissory notes or other instruments, unless such
chattel paper, promissory notes or instruments have
been endorsed and delivered to the Administrative
Agent;
25. such Account has been paid by a check which ___________
has been returned for insufficient funds if such check
is in an amount of at least $100,000; or
26. such Account has been placed with an ___________
attorney or other third party for collection.
Less any other reserves in respect thereof: ___________
Total Eligible Receivables: ___________
Gross Inventory ___________
Less reserves for obsolete, slow-moving or ___________
excess Inventory:
Less Inventory to which the following is ___________
applicable:
1. such item of Inventory is not assignable or a ___________
first priority security interest in such item of
Inventory in favor of the Xxxxxxxxxx-
X0-0
tive Agent for the benefit of the Lenders has not been
obtained and fully perfected by filing Uniform
Commercial Code financing statements against the
relevant Precision Group Member;
2. such item of Inventory is subject to any Lien ___________
whatsoever, other than Liens in favor of the
Administrative Agent for the benefit of the Lenders;
3. such item of Inventory (i) is damaged or not ___________
in good condition and not saleable consistent with
past practices (to the extent not provided for by
reserves as described above) or (ii) does not meet all
material standards imposed by any Governmental
Authority having regulatory authority over such item
of Inventory, its use or its sale;
4. such item of Inventory is not currently ___________
either readily usable or salable, at prices
approximating at least the cost thereof, in the normal
course of the business of the relevant Precision Group
Member (to the extent not provided for by reserves as
described above);
5. any event shall have occurred or any ___________
condition shall exist with respect to such item of
Inventory which would substantially impede the ability
of the relevant Precision Group Member to continue to
use or sell such item of Inventory in the normal
course of business;
6. any claim disputing the title of the relevant ___________
Precision Group Member to, or right to possession of
or dominion over, such item of Inventory shall have
been asserted;
7. any representation or warranty contained in ___________
the Credit Agreement or in any other Loan Document
applicable to either Inventory in general or to any
such specific item of Inventory has been breached with
respect to such item of Inventory;
8. the relevant Precision Group Member does not ___________
have good and marketable title as sole owner of such
item of Inventory;
9. such item of Inventory has been consigned to ___________
other Persons, or is located at, or in the possession
of, a vendor of any Precision Group Member, or is in
transit to or from, or held or stored by, third
parties, unless (i) the Person holding such Inventory
has entered into an agreement, satisfactory in form
and substance to the Administrative Agent, providing
for the waiver or subordination of any applicable Lien
on the part of such Person with respect to such
Inventory and providing the Administrative Agent with
the right to repossess such Inventory
B1-5
upon the occurrence and during the continuance of an
Event of Default and (ii) in the case of consigned
inventory, the relevant Precision Group Member, in its
capacity as consignor, shall have filed appropriate
Uniform Commercial Code financing statements with
respect to such Inventory;
10. such item of Inventory is located on a ___________
leasehold as to which the lessor has not entered into
a landlord's waiver and consent, satisfactory in form
and substance to the Administrative Agent, providing a
waiver of any applicable Lien and providing the
Administrative Agent with the right to receive notice
of default, the right to repossess such item of
Inventory at any time upon the occurrence or during
the continuance of a Default or Event of Default and
such other rights as may be acceptable to the
Administrative Agent;
11. such item of Inventory is located outside ___________
one of the states of the United States;
12. such item of Inventory is evidenced by an ___________
Account;
13. such item of Inventory is subject to any ___________
licensing, patent, royalty, trademark, trade name or
copyright agreements with any third party from whom
any Precision Group Member has received notice of a
dispute in respect of any such agreement other than
such claims which such Precision Group Member
reasonably believes to be immaterial or without merit;
14. except in the case of Inventory owned by ___________
Galaxy, Nationwide and Certified, such item of
Inventory consists of packing, packaging and/or
shipping supplies or materials; or
15. such item of Inventory has been otherwise ___________
determined by the Administrative Agent (after
consultation with the Borrower), exercising its
commercially reasonable discretion, to be unacceptable
because the Administrative Agent believes that such
item of Inventory is not readily salable under the
customary terms on which it is usually sold (to the
extent not provided for by reserves as specified
above).
Less other reserves in respect thereof: ___________
Total Eligible Inventory: ___________
Borrowing Base for such date:
85% of Eligible Receivables ___________
B1-6
50% of Eligible Inventory + ___________
Total ___________
Total Revolving Extensions of Credit
Total Loans outstanding ___________
Total L/C Obligations outstanding + ___________
Total ___________
Excess/(Deficit) (Borrowing Base - Total Revolving
Extensions of Credit): ___________
IN WITNESS WHEREOF, I have hereto executed this certificate on
behalf of the Borrower:
By:_________________________
Name:
Title:
B1-7
[EXHIBIT B-2]
FORM OF COMPLIANCE CERTIFICATE
Pursuant to Section 6.2(b) of the Credit Agreement, dated as of
March 19, 1999, (the "Credit Agreement"), among PRECISION PARTNERS INC., a
Delaware Corporation (the "Borrower"), the Guarantors from time to time
thereunder, the several banks and other financial institutions or entities from
time to time parties to the Credit Agreement (the "Lenders"), CITICORP U.S.A.,
INC., as Administrative Agent, NATIONSBANK, N.A., as Syndication Agent. and
SUNTRUST BANK, ATLANTA, as Documentation Agent, the undersigned, [ ],
the [Title] of the Borrower(1) does hereby certify on behalf of the Precision
Group Members that
(i) to the best of the undersigned's knowledge, during the period from
[_________] to [________] (the "Reporting Period")(2):
(A) no Subsidiary has been formed or acquired (or, if any such
Subsidiary has been formed or acquired, the Precision Group
Members have complied with the requirements of the Credit
Agreement with respect thereto),
(B) None of the Loan Parties has changed its name, its principal
place of business or its chief executive office without
complying with the requirements of the Credit Agreement and
the Security Documents with respect thereto,
(C) Other than as previously disclosed by the Borrower on Annex C
of the Security Agreement or on Annex B to a prior Compliance
Certificate, there is no location within the United States
where any Loan Party keeps inventory or equipment (other than
as set forth on Annex B hereto). Other than as previously
disclosed by the Borrower on Schedules III, IV or V to the
Security Agreement or on Annex C to a prior Compliance
Certificate, no Intellectual Property has been acquired by any
Loan Party (other than as set forth on Annex C hereto).
(D) each Loan Party has observed or performed all of its covenants
and other agreements, and satisfied every condition, contained
in the Credit Agreement and the other Loan Documents to be
observed, performed or satisfied by it, and
---------------------------
(1) Individual providing this Certificate must be a Responsible Officer.
(2) Reporting period should encompass period from first day of the current
(or, in the case of annual financial statements, immediately preceding)
fiscal year to the date of the financial statements being delivered.
B2-1
(E) no Default or Event of Default has occurred [except
__________]; and
(ii) as of the date of the financial statements being delivered in
connection herewith, the Precision Group Members were in compliance
with the covenants set forth in Section 7.1 of the Credit Agreement
and the calculations of such covenant compliance set forth on Annex
A hereto are based upon such financial statements and are true and
correct;
(iii) check one:
______ (A) no prepayment based on Excess Cash Flow is required
because the Consolidated Leverage Ratio currently in effect
is less than 3.0 to 1.0; or
______ (B) the Excess Cash Flow for the fiscal year ending [____]
was $_________ and the calculations to support the
determination of the amount of such Excess Cash Flow for
such period are set forth on Annex A hereto, are based upon
such financial statements and are true and correct; and
[(iv) the aggregate payments made pursuant to Section 7.8 during the
fiscal year ending were $________.]
Unless otherwise defined herein, capitalized terms defined in the
Credit Agreement and used in this Certificate and the Annexes attached hereto
shall have the meanings given to them in the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
certificate as of the day and year set forth below.
PRECISION PARTNERS INC.
By:____________________
Name:
Title:
Date: [ ], [ ]
B2-2
ANNEX A TO
COMPLIANCE CERTIFICATE
I. Section 2.8 - Excess Cash Flow
For any fiscal year of the Precision Group Members commencing with
the fiscal year ending December 31, 1999, unless the Required Prepayment Lenders
shall otherwise agree, the Borrower shall apply 50% of the Excess Cash Flow (if
any) toward the prepayment of the Term Loans and the reduction of the Revolving
Credit Commitments pursuant to Section 2.8(d):
"Excess Cash Flow" for the fiscal year ending[______] equals:
(a)(i) the Consolidated Net Income (or loss) of the
Precision Group Members, determined on a
consolidated basis in accordance with GAAP ___________
MINUS the income (or deficit) of any Person
accrued prior to the date it becomes a Precision
Group Member or is merged into or consolidated
with any Precision Group Member ___________
MINUS the income (or deficit) of any Person
(other than a Precision Group Member) in which
any Precision Group Member has an ownership
interest, except to the extent that any such
income is actually received by a Precision Group
Member in the form of dividends or similar
distributions and ___________
MINUS the undistributed earnings of any Precision
Group Member (other than the Borrower) to the
extent that the distribution of such earnings to
the Borrower is not at the time permitted by the
terms of any Contractual Obligation or
Requirement of Law applicable to such Precision
Group Member ___________
(ii) PLUS an amount equal to the amount of all
non-cash charges deducted in arriving at the
Consolidated Net Income ___________
(iii) PLUS decreases in Consolidated Working Capital ___________
(iv) PLUS an amount equal to the aggregate net
non-cash loss on Disposition of property by the
Precision Group Members (other than sales of
inventory in the ordinary course of business), to
the extent deducted in arriving at such
Consolidated Net Income ___________
LESS
(b) the sum, without duplication, of-
page 1 of Annexes to Compliance Certificate
(i) An amount equal to the amount of all non-cash
income included in arriving at the Consolidated
Net Income ___________
(ii) PLUS the aggregate amount actually paid by the
Precision Group Members in cash during such
fiscal year on account of Capital Expenditures
(excluding the principal amount of Indebtedness
(other than Revolving Loans) incurred in
connection with such expenditures and any such
expenditures financed with the proceeds of any
Reinvestment Deferred Amount) ___________
(iii) PLUS the aggregate amount of all prepayments of
Revolving Loans during-such fiscal year to the
extent accompanying permanent optional reductions
of the Revolving Commitments and all optional
prepayments of the Term Loans during such fiscal
year ___________
(iv) PLUS the aggregate amount of all regularly
scheduled principal payments of Funded Debt
(including the Term Loans) of the Precision Group
Members made during such fiscal year (including
any such payments resulting from scheduled
permanent reductions of any revolving credit
facility) ___________
(v) PLUS increases in Consolidated Working Capital
for such fiscal year ___________
(vi) PLUS an amount equal to the aggregate net
non-cash gain on the Disposition of property by
the Precision Group Members during such fiscal
year (other than sales of inventory in the
ordinary course of business), to the extent
included in arriving at the Consolidated Net
Income ___________
page 2 of Annexes to Compliance Certificate
II. Section 7.1 - Financial Covenants
A. The Consolidated Leverage Ratio as of [_________], calculated in
accordance with the Credit Agreement is [ . ] to 1.0.
B. The Consolidated Interest Coverage Ratio as of [_______], for
four consecutive quarters calculated in accordance with the
Credit Agreement is [ . ] to 1.0.
C. The Consolidated Fixed Charge Coverage Ratio as of [_______],
for four consecutive quarters calculated in accordance with the
Credit Agreement is [ . ] to 1.0.
D. Capital Expenditures made during the fiscal year
ending [ ]: ___________
III. Section 7.2 - Permitted Indebtedness
(1) Aggregate Indebtedness secured by Liens permitted
by Section 7.3(g) of the Credit Agreement (in an
aggregate principal amount not to exceed
$2,500,000 at any one time outstanding) ___________
(2) Indebtedness of the Borrower under the Senior
Subordinated Notes (not to exceed an aggregate
principal amount of $100,000,000) ___________
(3) Indebtedness of the Borrower consisting of
Permitted Senior Subordinated Add-On Indebtedness
(not to exceed an aggregate principal amount of
$60,000,000 at any one time outstanding) ___________
IV. Section 7.3 - Liens
(1) Liens not otherwise permitted by Section 7.3 of
the Credit Agreement so long as neither (i) the
aggregate outstanding principal amount of the
obligations secured thereby nor (ii) the
aggregate fair market value (determined as of the
date such Lien is incurred) of the assets subject
thereto exceeds (for the Precision Group Members
taken together) $500,000 at any one time ___________
(2) Liens securing judgments for the payment of money
in an aggregate amount not in excess of
$1,500,000 (except to the extent covered by
insurance, which coverage has been affirmed by
the insurer), unless such judgments shall remain
undischarged for a period of more than
page 3 of Annexes to Compliance Certificate
30 consecutive days during which execution shall
not be effectively stayed ___________
(3) Other general Liens not to exceed $1,000,000 ___________
V. Section 7.5 - Disposition of Assets
Aggregate fair market value of Dispositions (not to
exceed $500,000) ___________
VI. Section 7.7 - Permissible Investments, Loans and Advances
(1) Aggregate loans and advances to employees of the
Precision Group Members in the ordinary course or
business (including, without limitation, for
travel, entertainment and relocation expenses)
(not to exceed $500,000 at any one time
outstanding) ___________
(2) Loans in an aggregate amount of up to $1,000,000
made to holders of Capital Stock of Precision
(other than the Sponsors) to finance the purchase
of Capital Stock of Precision, so long as
promissory notes are issued in connection
therewith and pledged as Collateral pursuant to
the appropriate Security Document ___________
(3) loans and advances to management of the Precision
Group Members to purchase Capital Stock of any
Precision Group Member not to exceed $2,000,000
at any one time outstanding, provided that such
Capital Stock is pledged to the lender of such
Indebtedness on customary terms ___________
page 4 of Annexes to Compliance Certificate
ANNEX B TO
COMPLIANCE CERTIFICATE
LOAN PARTY LOCATIONS
(OTHER THAN DISCLOSED IN THE SECURITY AGREEMENT OR PRIOR COMPLIANCE
CERTIFICATES)
page 5 of Annexes to Compliance Certificate
ANNEX C TO
COMPLIANCE CERTIFICATE
COPYRIGHTS AND COPYRIGHT LICENSES
(OTHER THAN DISCLOSED IN THE SECURITY AGREEMENT OR PRIOR COMPLIANCE
CERTIFICATES)
PATENTS AND PATENT LICENSES
(OTHER THAN DISCLOSED IN THE SECURITY AGREEMENT OR PRIOR COMPLIANCE
CERTIFICATES)
TRADEMARKS AND TRADEMARK LICENSES
(OTHER THAN DISCLOSED IN THE SECURITY AGREEMENT OR PRIOR COMPLIANCE
CERTIFICATES)
page 6 of Annexes to Compliance Certificate
[EXHIBIT C-1]
FORM OF CLOSING CERTIFICATE
Pursuant to Section 5.1(n) of the Credit Agreement, dated as of
March 19, 1999 (the "Credit Agreement"), among PRECISION PARTNERS INC., a
Delaware Corporation (the "Borrower"), the Guarantors from time to time
thereunder, the several banks and other financial institutions or entities from
time to time parties to the Credit Agreement (the "Lenders"), CITICORP U.S.A.,
INC., as Administrative Agent, NATIONSBANK, N.A., as Syndication Agent, and
SUNTRUST BANK, ATLANTA, as Documentation Agent, the undersigned, of [ ], the
[title] of the [Loan Party], (the "Company"), hereby certifies as follows:
1. The representations and warranties of the Company set forth in
the Credit Agreement and each of the other Loan Documents to which it is a party
or which are contained in any certificate, document or financial or other
statement furnished pursuant to or in connection with the Credit Agreement or
any Loan Document are true and correct in all material respects on and as of the
date hereof with the same effect as if made on the date hereof, except for
representations and warranties expressly stated to relate to a specific earlier
date, in which case such representations and warranties are true and correct in
all material respects as of such earlier date;
2. No Default or Event of Default has occurred and is continuing as
of the date hereof or will occur after giving effect to the making of the Loans
and the issuance of the Letters of Credit requested to be made and/or issued on
the date hereof or the consummation of each of the transactions contemplated by
the Loan Documents; and
3. [ ] is, and at all times since [ ], has been, the duly
elected and qualified [Assistant] Secretary of the Company. The signature set
forth on the signature line for such officer below is such officer's true and
genuine signature;
and the undersigned [Assistant] Secretary of the Company hereby
certifies as follows:
C1-1
A) There are no liquidation or dissolution proceedings pending or to
the knowledge of the [title] of the Company threatened against the Company or
any of its Subsidiaries, nor has any other event occurred affecting or
threatening the corporate existence of the Company or any of its Subsidiaries;
B) Attached hereto as Exhibit A is a true and complete copy of
resolutions duly adopted by the Board of Directors of the Company on
_____________, 1999; such resolutions have not in any way been amended,
modified, revoked or rescinded and have been in full force and effect since
their adoption to and including the date hereof and are now in full force and
effect; such resolutions are the only corporate proceedings of the Company now
in force relating to or affecting the matters referred to therein;
C) attached hereto as Exhibit B is a true and complete copy of the
By-laws of the Company as in effect at all times since ________ ___, 19__, to
and including the date hereof; and
D) attached hereto as Exhibit C is a true and complete copy of the
Certificate of Incorporation of the Company as in effect at all times since
[ ], to and including the date hereof.
E) The following persons are now duly elected and qualified officers
of the Company, holding the offices indicated next to their respective names
below, and such officers have held such offices with the Company at all times
since [ ], to and including the date hereof, and the signatures appearing
opposite their respective names below are the true and genuine signatures of
such officers, and each of such officers is duly authorized to execute and
deliver on behalf of the Company, the Loan Documents to which it is a party and
any certificate or other document to be delivered by the Company pursuant to any
such Loan Document:
Name Office Signature
---- ------ ---------
_________________
_________________
_________________
Unless otherwise defined herein, capitalized terms which are defined
in the Credit Agreement and used herein are so used as so defined.
C1-2
IN WITNESS WHEREOF, the undersigned have hereunto set our names.
[NAME OF COMPANY]
By:_____________________
Name:
Title:
[NAME OF COMPANY]
By:______________________
Name:
Title:
Date: March 19, 1999
C1-3
[Exhibit C-2]
FORM OF SOLVENCY CERTIFICATE
March 19, 1999
CITICORP U.S.A., INC.,
as Administrative Agent, and
The Lenders Party to the Credit
Agreement Referenced Below
Ladies and Gentlemen:
Pursuant to Section 5.1(h) of the Credit Agreement, dated as of
March 19, 1999 (as amended from time to time, the "Credit Agreement"), among
PRECISION PARTNERS INC., a Delaware Corporation (the "Borrower"), the Guarantors
from time to time thereunder, the several banks and other financial institutions
or entities from time to time parties to the Credit Agreement (the "Lenders"),
CITICORP U.S.A., INC., as Administrative Agent, NATIONSBANK, N.A., as
Syndication Agent, and SUNTRUST BANK, ATLANTA, as Documentation Agent.
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to them in the Credit Agreement):
1. For purposes of delivering this certificate, the undersigned has:
(a) consulted with other officers of the Loan Parties
responsible for financial and accounting functions concerning
contingent liabilities; and
(b) made such other investigations and inquiries as such
officer has deemed appropriate.
2. Based upon the foregoing, the undersigned has concluded that, as
of the date hereof, before and after giving effect to the Acquisitions, the
incurrence of the Loans by the Borrower in an amount equal to the sum of the
total Term Commitment and total Revolving Commitment, the execution of the
Guarantees, the grant of the security interests in the Collateral (the "Full
Transactions"):
(a) the fair value and the present fair saleable value of the
respective assets of Holdco, the Borrower and each of its
Subsidiaries exceeds its respective stated liabilities and
identified contingent liabilities; and
C2-1
(b) the fair value and present fair saleable value of the
respective assets of Holdco, the Borrower and each of its
Subsidiaries exceeds its respective probable liability on its
debts (including identified contingent liabilities) as such
debts become absolute and matured; and
(c) Holdco, the Borrower and each of its Subsidiaries will be
able to pay its respective debts as they mature; and
(d) neither Holdco, the Borrower nor any of its Subsidiaries
will have unreasonably small capital for the respective
business in which it is engaged and is proposed to be engaged
following the consummation of the Full Transactions; and
(e) neither Holdco, the Borrower nor any of its Subsidiaries
expects that final judgments against it in actions for money
damages with respect to pending or threatened litigation will
be rendered at a time when, or in an amount such that, it will
be unable to satisfy any such judgments promptly in accordance
with their terms (taking into account the maximum reasonable
amount of such judgments in any such actions and the earliest
reasonable time at which such judgments might be rendered and
the cash available to it after taking into account all other
anticipated uses of the cash (including the payments on or in
respect of debts (including identified contingent
liabilities))).
3. To the best knowledge of the undersigned; neither Holdco, the
Borrower nor any of its Subsidiaries is entering into the arrangements
contemplated by the Credit Agreement or the Loan Documents or intends to make
any transfer or incur any obligations thereunder, with actual intent to hinder,
delay or defraud either present or future creditors.
4. To the best knowledge of the undersigned. neither Holdco, the
Borrower nor any of its Subsidiaries intends to incur, or believes or reasonably
should believe that such Person will incur, debts beyond such Person's ability
to pay as they become due.
This Certificate is being delivered by the undersigned only in his
capacity as an officer of the Borrower, and not individually as of the date
hereof.
PRECISION PARTNERS INC.
By: _________________________________
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
C2-2
[EXHIBIT C-3]
FORM OF ENVIRONMENTAL CERTIFICATE
The undersigned does hereby certify as of this 19th day of March,
1999, to the best of his knowledge after due inquiry, as follows:
1. This Certificate is delivered pursuant to Section 5.1(1) of the
Credit Agreement, dated as of March 19, 1999 (as amended from time to time, the
"Credit Agreement"), among PRECISION PARTNERS INC., a Delaware Corporation (the
"Borrower"), the Guarantors from time to time thereunder, the several banks and
other financial institutions or entities from time to time parties to the Credit
Agreement (the "Lenders"), CITICORP U.S.A., INC., as Administrative Agent,
NATIONSBANK, N.A., as Syndication Agent, and SUNTRUST BANK, ATLANTA, as
Documentation Agent. Capitalized terms used and not otherwise defined herein
shall have the meanings assigned to them in the Credit Agreement).
2. After giving effect to the transactions contemplated by the
Acquisitions, each Loan Party and its Subsidiaries is in compliance with
Environmental Laws to the extent contemplated by Section 6.8 of the Credit
Agreement.
3. All information furnished to the Agents by or on behalf of any
Loan Party relating to the matters addressed in Section 4.17 of the Credit
Agreement, taken as a whole, is true and accurate in all material respects and
not incomplete by omitting to state anything necessary to make such information
not misleading, taken as a whole, nor has any Loan Party withheld any material
information from the Agents.
The undersigned officer has made or has caused to be made such
examination or investigation as is necessary to enable him to express his
opinions and make the certifications contained in this Certificate.
This Certificate is being delivered by the undersigned officer only
in his capacity as an officer of the Borrower, and not individually.
C3-1
IN WITNESS WHEREOF. the undersigned officer has caused this
Certificate to be duly executed and delivered as of the date hereof.
PRECISION PARTNERS INC.
By: _______________________
Name:
Title:
C3-2
Exhibit D to Credit Agreement
===============================================================================
TERM LOAN AND REVOLVING CREDIT MORTGAGE,
ASSIGNMENT OF LEASES, SECURITY AGREEMENT
AND FIXTURE FILING
BY
----------------------------
Mortgagor,
TO
CITICORP U.S.A., INC.,
as Administrative Agent,
Mortgagee
Relating to Premises in:
__________ County, __________
$____________________
Dated as of: March __, 1999
===============================================================================
This instrument prepared by and,
after recording, please return to:
Xxxxxxx X. Xxxxxxx, Esq.
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
------------------------
TABLE OF CONTENTS
Section Heading Page
------- ------- ----
INTRODUCTION ............................................................ 1
RECITALS ................................................................ 1
GRANTING CLAUSES ........................................................ 2
COVENANTS ............................................................... 4
ARTICLE I WARRANTIES, REPRESENTATIONS AND
COVENANTS OF MORTGAGOR ........................................ 5
1.1 Payment ......................................................... 5
1.2 Authority and Validity .......................................... 5
1.3 Good Title ...................................................... 5
1.4 Recording Documentation To Assure Security
Interest; Fees and Expenses ................................... 7
1.5 Payment of Taxes, Insurance Premiums,
Assessments; Compliance with Law and
Insurance Requirements ......................................... 7
1.6 Certain Tax Law Changes ......................................... 11
1.7 Required Insurance Policies ..................................... 11
1.8 Failure To Make Certain Payments ................................ 14
1.9 Inspection ...................................................... 14
1.10 Mortgagor To Maintain Improvements .............................. 15
1.11 Mortgagor's Obligations with Respect to
Leases ......................................................... 15
1.12 Transfer Restrictions ........................................... 18
1.13 Destruction; Condemnation ....................................... 19
1.14 Alterations ..................................................... 23
1.15 Hazardous Material .............................................. 24
1.16 Asbestos ........................................................ 25
1.17 Books and Records, Other Information ............................ 26
1.18 No Claims Against Mortgagee ..................................... 26
1.19 Utility Services ................................................ 26
ARTICLE II ASSIGNMENT OF LEASES; SECURITY
AGREEMENT; ASSIGNMENT AGREEMENT .............................. 27
2.1 Assignment of Leases, Rents, Issues and
Profits ........................................................ 27
2.2 Security Interest in Personal Property .......................... 29
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ARTICLE III EVENTS OF DEFAULT AND REMEDIES .............................. 30
3.1 Events of Default ............................................... 30
3.2 Remedies in Case of an Event of Default ......................... 30
3.3 Sale of Mortgaged Property if Event of
Default Occurs; Proceeds of Sale ............................... 32
3.4 Additional Remedies in Case of an Event of
Default
3.5 Legal Proceedings After an Event of Default ..................... 35
3.6 Remedies Not Exclusive .......................................... 36
ARTICLE IV CERTAIN DEFINITIONS .......................................... 37
ARTICLE V MISCELLANEOUS ................................................. 38
5.1 Severability of Provisions ...................................... 38
5.2 Notices ......................................................... 38
5.3 Covenants To Run with the Land .................................. 38
5.4 Headings ........................................................ 38
5.5 Limitation on Interest Payable .................................. 38
5.6 Indemnity ....................................................... 39
5.7 GOVERNING LAW; TERMS ............................................ 40
5.8 No Merger ....................................................... 40
5.9 Modification in Writing ......................................... 41
5.10 No Credit for Payment of Taxes or
Impositions ................................................... 41
5.11 Stamp and Other Taxes ........................................... 41
5.12 Estoppel Certificates ........................................... 41
5.13 Additional Security ............................................. 42
5.14 Release ......................................................... 42
5.15 Certain Expenses of Mortgagee ................................... 42
5.16 Expenses of Collection .......................................... 43
5.17 Business Days ................................................... 43
5.18 Relationship .................................................... 43
5.19 Concerning Mortgagee ............................................ 44
5.20 Future Advances ................................................. 45
5.21 Waiver of Stay .................................................. 45
5.22 Continuing Security Interest; Assignment ........................ 45
5.23 Obligations Absolute ............................................ 46
5.24 Mortgagee's Right To Sever Indebtedness ......................... 46
SIGNATURE
ACKNOWLEDGMENTS
SCHEDULE A LEGAL DESCRIPTION
SCHEDULE B PRIOR LIENS
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TERM LOAN AND REVOLVING CREDIT MORTGAGE,
ASSIGNMENT OF LEASES, SECURITY AGREEMENT
AND FIXTURE FILTNG
TERM LOAN AND REVOLVING CREDIT MORTGAGE, ASSIGNMENT OF LEASES,
SECURITY AGREEMENT AND FIXTURE FILING ("Mortgage"), dated as of March ___, 1999,
made by __________________________, a ___________ corporation, having an office
at _________________________, as mortgagor, assignor and debtor (in such
capacities and together with any successors in such capacities, "Mortgagor"), in
favor of CITICORP U.S.A., INC., having an office at 000 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, as mortgagee, assignee and secured party (in such capacities and
together with any successors in such capacities, "Mortgagee") as agent for the
lending institutions (the "Lenders") from time to time party to the Credit
Agreement (as hereinafter defined)
RECITALS
A. Pursuant to a certain credit agreement, dated as of the date
hereof (as amended, amended and restated, supplemented, or otherwise modified
from time to time, the "Credit Agreement"; capitalized terms used herein and not
defined shall have the meanings assigned to them in the Credit Agreement), among
Precision Partners, Inc., a Delaware corporation (the "Borrower"), Mortgagor,
the Subsidiary Guarantors, Holding, the Lenders, Citicorp U.S.A., Inc., as
administrative agent for the Lenders ("Administrative Agent"), NationsBank,
N.A., as syndication agent ("Syndication Agent"), SunTrust Bank, Atlanta, as
documentation agent ("Documentation Agent"; together with Administrative Agent
and Syndication Agent, collectively, the "Agents"), the Lenders have agreed (i)
to make to or for the account of Borrower certain Term Loans up to an aggregate
principal amount of $23,000,000 and certain Revolving Loans up to an aggregate
principal amount of $25,000,000 and (ii) to issue certain Letters of Credit for
the account of Borrower.
B. Mortgagor is the owner of the Mortgaged Property (as hereinafter
defined).
C. It is a condition to the obligations of the Lenders to make the
Loans under the Credit Agreement and a condition to any Lender issuing Letters
of Credit under the Credit Agreement that Mortgagor execute and deliver the
applicable Loan Documents, including this Mortgage.
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D. This Mortgage is given by Mortgagor in favor of Mortgagee for its
benefit and the benefit of the Lenders and the Agents (collectively, the
"Secured Parties") to secure the payment and performance in full when due,
whether at stated maturity, by acceleration or otherwise (including, without
limitation, the payment of interest and other amounts which would accrue and
become due but for the filing of a petition in bankruptcy or the operation of
the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss.
362(a)), of (i) all Obligations of Borrower now existing or hereafter arising
under or in respect of the Credit Agreement (including, without limitation,
Borrower's obligation to pay principal, interest and all other charges, fees,
expenses, commissions, reimbursements, premiums, indemnities and other payments
related to or in respect of the Obligations contained in the Credit Agreement),
(ii) all Obligations of Mortgagor now existing or hereafter arising under or in
respect of the Credit Agreement (including, without limitation, Mortgagor's
obligation to pay principal, interest and all other charges, fees, expenses,
commissions, reimbursements, premiums, indemnities and other payments related to
or in respect of the Obligations contained in the Credit Agreement) and (iii)
without duplication of the amounts described in clauses (i) and (ii), all
Obligations of Mortgagor now existing or hereafter arising under or in respect
of this Mortgage or any other Security Document, including, without limitation,
with respect to all charges, fees, expenses, commissions, reimbursements,
premiums, indemnities and other payments related to or in respect of the
Obligations contained in this Mortgage or in any other Security Document, in
each case whether in the regular course of business or otherwise (the
obligations described in clauses (i), (ii) and (iii), collectively, the "Secured
Obligations").
GRANTING CLAUSES:
For and in consideration of the sum of Ten Dollars ($10.00) and
other valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Mortgagor hereby grants, mortgages, bargains, sells, assigns and
conveys to Mortgagee, and hereby grants to Mortgagee, a security interest in and
upon, all Mortgagor's right, title and interest in, to and under the following
property, whether now owned or held or hereafter acquired from time to time
(collectively, the "Mortgaged Property"):
A. Any and all present estates or interest of Mortgagor in the land
described in Schedule A, together with all Mortgagor's reversionary rights in
and to any and all ease-
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ments, rights-of-way, sidewalks, strips and gores of land, drives, roads, curbs,
streets, ways, alleys, passages, passageways, sewer rights, waters, water
courses, water rights, and all power, air, light and other rights, estates,
titles, interests, privileges, liberties, servitudes, licenses, tenements,
hereditaments and appurtenances whatsoever, in any way belonging, relating or
appertaining thereto, or any part thereof, or which hereafter shall in any way
belong, relate or be appurtenant thereto (collectively, the "Land");
B. Any and all estates or interests of Mortgagor in the buildings,
structures and other improvements and any and all Alterations (as hereinafter
defined) now or hereafter located or erected on the Land, including, without
limitation, attachments, walks and ways (collectively, the "Improvements";
together with the Land, the "Premises");
C. Any and all permits, certificates, approvals and authorizations,
however characterized, issued or in any way furnished in connection with the
Premises, whether necessary or not for the operation and use of the Premises,
including, without limitation, building permits, certificates of occupancy,
environmental certificates, industrial permits or licenses and certificates of
operation;
D. Any and all interest of Mortgagor in all machinery, apparatus,
equipment, fittings, fixtures, improvements and articles of personal property of
every kind and nature whatsoever now or hereafter attached or affixed to the
Premises or used in connection with the use and enjoyment of the Premises or the
maintenance or preservation thereof, including, without limitation, all utility
systems, fire sprinkler and alarm systems, HVAC equipment, boilers, electronic
data processing, telecommunications or computer equipment, refrigeration,
electronic monitoring, water or lighting systems, power, sanitation, waste
removal, elevators, maintenance or other systems or equipment, and all other
articles used or useful in connection with the use or operation of any part of
the Premises (collectively, the "Equipment");
E. All Mortgagor's right, title and interest as landlord,
franchisor, licensor or grantor, in all leases and subleases of space, franchise
agreements, licenses, occupancy or concession agreements now existing or
hereafter entered into relating in any manner to the Premises or the Equipment
and any and all amendments, modifications, supplements and renewals of any
thereof (each such lease, license or agreement, together with any such
amendment, modification, supplement or
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renewal, a "Lease"), whether now in effect or hereafter coming into effect,
including, without limitation, all rents, additional rents, cash, guaranties,
letters of credit, bonds, sureties or securities deposited thereunder to secure
performance of the lessee's, franchisee's, licensee's or obligee's obligations
thereunder, revenues, earnings, profits and income, advance rental payments,
payments incident to assignment, sublease or surrender of a Lease, claims for
forfeited deposits and claims for damages, now due or hereafter to become due,
with respect to any Lease, any indemnification against, or reimbursement for,
sums paid and costs and expenses incurred by Mortgagor under any Lease or
otherwise, and any award in the event of the bankruptcy of any tenant under or
guarantor of a Lease (collectively, the "Rents");
F. All general intangibles and contract rights relating to the
Premises and the Equipment and all reserves, deferred payments, deposits,
refunds and claims of every kind or character relating thereto (collectively,
the "Contract Rights");
G. All drawings, plans, specifications, file materials, operating
and maintenance records, catalogues, tenant lists, correspondence, advertising
materials, operating manuals, warranties, guaranties, appraisals, studies and
data relating to the Premises or the Equipment or the construction of any
Alteration or the maintenance of any Permit (as hereinafter defined); and
H. All proceeds of the conversion, voluntary or involuntary, of any
of the foregoing into cash or liquidated claims, including, without limitation,
proceeds of insurance and condemnation or other awards or payments and refunds
of real estate taxes and assessments, including interest thereon (collectively,
"Proceeds");
TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee, for the
purpose of securing the payment and performance of the Secured Obligations.
COVENANTS
Mortgagor warrants, represents and covenants to and for the benefit
of Mortgagee as follows:
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ARTICLE I
WARRANTIES, REPRESENTATIONS AND
COVENANTS OF MORTGAGOR
SECTION 1.1 Payment. Mortgagor shall pay as and when the same shall
become due, whether at its stated maturity, by acceleration or otherwise, each
and every amount payable by Mortgagor under the Loan Documents.
SECTION 1.2 Authority and Validity. Mortgagor represents, warrants
and covenants that (i) Mortgagor is duly authorized to execute and deliver this
Mortgage, and all corporate and governmental consents, authorizations and
approvals necessary or required thereof or have been duly and effectively taken
or obtained, (ii) this Mortgage is a legal, valid, binding and enforceable
obligation of Mortgagor and (iii) Mortgagor has full corporate power and lawful
authority to execute and deliver this Mortgage and to mortgage and grant a
security interest in the Mortgaged Property as contemplated herein.
SECTION 1.3 Good Title
1.3.1 Mortgagor represents, warrants and covenants that (i)
Mortgagor has good and marketable fee simple title to the Premises and the
landlord's interest and estate under or in respect of the Leases and good title
to the interest it purports to own in and to each of the Permits, the Equipment
and the Contract Rights, in each case subject to no deed of trust, mortgage,
pledge, security interest, encumbrance, lien, lease, license, easement,
assignment, collateral assignment or charge of any kind, including, without
limitation, any conditional sale or other title retention agreement or lease in
the nature thereof, any filing or agreement to file a financing statement as
debtor under the Uniform Commercial Code or any similar statute or any
subordination arrangement in favor of any party other than Mortgagor
(collectively, "Liens"; each, a "Lien"), except for those Liens identified on
Schedule B (collectively, the "Prior Liens"), (ii) Mortgagor will keep in effect
all rights and appurtenances to or that constitute a part of the Mortgaged
Property, (iii) Mortgagor will protect, preserve and defend its interest in the
Mortgaged Property and title thereto, (iv) Mortgagor will comply with each of
the terms, conditions and provisions of any obligation of Mortgagor which is
secured by the Mortgaged Property or the noncompliance with which may result in
the imposition of a Lien on the Mortgaged Property, (v) Mortgagor will appear
and defend
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the Lien and security interests created and evidenced hereby and the validity
and priority of this Mortgage in any action or proceeding affecting or
purporting to affect the Mortgaged Property or any of the rights of Mortgagee
hereunder, (vi) this Mortgage creates and constitutes a valid and enforceable
first Lien on the Mortgaged Property, and, to the extent any of the Mortgaged
Property shall consist of personality, a first security interest in the
Mortgaged Property, which first Lien and first security interest are and will be
subject only to (a) Prior Liens (but not to extensions, amendments, supplements
or replacements of Prior Liens unless consented to by Mortgagee) and (b) Liens
hereafter created and which, pursuant to the provisions of Section 1.12, are
superior to the Lien and security interests created and evidenced hereby, and
Mortgagor does now and will forever warrant and defend to Mortgagee and all its
successors and assigns such title and the validity and priority of the Lien and
security interests created and evidenced hereby against the claims of all
persons and parties whomsoever, (vii) there has been issued and there remain in
effect each and every certificate of occupancy or use or other Permit currently
required for the existing use and occupancy by Mortgagor and its tenants of the
Premises and (viii) the Premises comply in all respects with all local zoning,
land use, set back or other development and use requirements of Governmental
Authorities.
1.3.2 Mortgagor, immediately upon obtaining knowledge of the
pendency of any proceedings for the eviction of Mortgagor from the Mortgaged
Property or any part thereof by paramount title or otherwise questioning
Mortgagor's title to the Mortgaged Property as warranted in this Mortgage, or of
any condition that might reasonably be expected to give rise to any such
proceedings, shall notify Mortgagee thereof. Mortgagee may participate in such
proceedings, and Mortgagor will deliver or cause to be delivered to Mortgagee
all instruments requested by Mortgagee to permit such participation. In any such
proceedings Mortgagee may be represented by counsel satisfactory to Mortgagee at
the expense of Mortgagor. If, upon the resolution of such proceedings, Mortgagor
shall suffer a loss of the Mortgaged Property or any part thereof or interest
therein and title insurance proceeds shall be payable in connection therewith,
such proceeds are hereby assigned to and shall be paid to Mortgagee to be
applied as Net Cash Proceeds to the payment of the Secured Obligations in
accordance with the provisions of Section 2.8(c) of the Credit Agreement.
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SECTION 1.4 Recording Documentation To Assure Security Interest;
Fees and Expenses.
1.4.1 Mortgagor shall, forthwith after the execution and delivery of
this Mortgage and thereafter, from time to time, cause this Mortgage and any
financing statement, continuation statement or similar instrument relating to
any thereof or to any property intended to be subject to the Lien of this
Mortgage to be filed, registered and recorded in such manner and in such places
as may be required by any present or future law in order to publish notice of
and fully to protect the validity and priority thereof or the Lien hereof
purported to be created upon the Mortgaged Property and the interest and rights
of Mortgagee therein. Mortgagor shall pay or cause to be paid all taxes and fees
incident to such filing, registration and recording, and all expenses incident
to the preparation, execution and acknowledgment thereof, and of any instrument
of further assurance, and all Federal or state stamp taxes or other taxes,
duties and charges arising out of or in connection with the execution and
delivery of such instruments.
1.4.2 Mortgagor shall, at the sole cost and expense of Mortgagor,
do, execute, acknowledge and deliver all and every such further acts, deeds,
conveyances, mortgages, assignments, notices of assignment, transfers, financing
statements, continuation statements and assurances as Mortgagee shall from time
to time request, which may be necessary in the judgment of Mortgagee from time
to time to assure, perfect, convey, assign, mortgage, transfer and confirm unto
Mortgagee, the property and rights hereby conveyed or assigned or which
Mortgagor may be or may hereafter become bound to convey or assign to Mortgagee
or for carrying out the intention or facilitating the performance of the terms
of this Mortgage or the filing, registering or recording of this Mortgage. In
the event Mortgagor shall fail after demand to execute any instrument required
to be executed by Mortgagor under this subsection 1.4.2, Mortgagee may execute
the same as the attorney-in-fact for Mortgagor, such power of attorney being
coupled with an interest and irrevocable.
SECTION 1.5 Payment of Taxes, Insurance Premiums, Assessments;
Compliance with Law and Insurance Requirements.
1.5.1 Unless and to the extent contested by Mortgagor in accordance
with the provisions of subsection 1.5.5 hereof, Mortgagor shall pay and
discharge, or cause to be paid and discharged, from time to time when the same
shall become
-8-
due, all real estate and other taxes, special assessments, levies, permits,
inspection and license fees, all premiums for insurance, all water and sewer
rents and charges and all other public charges imposed upon or assessed against
the Mortgaged Property or any part thereof or upon the Rents. Mortgagor shall,
upon Mortgagee's request, deliver to Mortgagee, receipts evidencing the payment
of all such taxes, assessments, levies, fees, rents and other public charges
imposed upon or assessed against the Mortgaged Property or any part thereof or
the Rents.
1.5.2 From and after the occurrence and during the continuance of an
Event of Default (as hereinafter defined), at the option and upon the request of
Mortgagee, Mortgagor shall deposit with Mortgagee, on the first day of each
month, an amount estimated by Mortgagee to be equal to one-twelfth of the annual
taxes, assessments and other items required to be discharged by Mortgagor under
subsection 1.5.1. Such amounts shall be held by Mortgagee without interest to
Mortgagor and applied to the payment of the obligations in respect of which such
amounts were deposited, in such priority as Mortgagee shall determine, on or
before the respective dates on which such obligations or any part thereof would
become delinquent. Nothing contained in this Section 1.5 shall (i) affect any
right or remedy of Mortgagee under any provision of this Mortgage or of any
statute or rule of law to pay any such amount as provided above from its own
funds and to add the amount so paid, together with interest at a rate per annum
(the "Default Rate") equal to the highest rate then payable under the Loan
Agreement during such time that any amount remains outstanding, to the Secured
Obligations or (ii) relieve Mortgagor of its obligations to make or provide for
the payment of the annual taxes, assessments and other charges required to be
discharged by Mortgagor under subsection 1.5.1. Mortgagor hereby grants to
Mortgagee a security interest in all sums held pursuant to this subsection 1.5.2
to secure payment and performance of the Secured Obligations. During the
continuance of any Event of Default, Mortgagee may, at its option, apply all or
any part of the sums held pursuant to this subsection 1.5.2 to payment and
performance of the Secured Obligations. Mortgagor shall redeposit with Mortgagee
an amount equal to all amounts so applied as a condition to the cure, if any, of
such Event of Default in addition to fulfillment of any other required
conditions.
1.5.3 Unless and to the extent contested by Mortgagor in accordance
with the provisions of subsection 1.5.5, Mortgagor shall timely pay, or cause to
be paid, all lawful
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claims and demands of mechanics, materialmen, laborers, government agencies
administering worker's compensation insurance, old age pensions and social
security benefits and all other claims, judgments, demands or amounts of any
nature which, if unpaid, might result in, or permit the creation of, a Lien on
the Mortgaged Property or any part thereof, or on the Rents or which might
result in forfeiture of all or any part of the Mortgaged Property.
1.5.4 Mortgagor shall maintain, or cause to be maintained, in full
force and effect all permits, certificates, authorizations, consents, approvals,
licenses, franchises or other instruments now or hereafter required by any
Governmental Authority to operate or use and occupy the Premises and the
Equipment for its intended uses (collectively, "Permits"; each, a "Permit").
Unless and to the extent contested by Mortgagor in accordance with the
provisions of subsection 1.5.5 hereof, Mortgagor shall comply with all
requirements set forth in the Permits and all requirements of any law,
ordinance, rule, regulation or similar statute or case law (collectively,
"Requirements of Law") of any Governmental Authority applicable to all or any
part of the Mortgaged Property or the condition, use or occupancy of all or any
part thereof or any recorded deed of restriction, declaration, covenant running
with the land or otherwise, now or hereafter in force. Mortgagor shall not
initiate, join in, or consent to any change in the zoning or any other permitted
use classification of the Premises without the prior written consent of
Mortgagee.
1.5.5 Mortgagor may at its own expense contest the amount or
applicability of any of the obligations described in subsections 1.5.1, 1.5.3 or
1.5.4 by appropriate legal proceedings, prosecution of which operates to prevent
the collection or enforcement thereof and the sale or forfeiture of the
Mortgaged Property or any part thereof to satisfy such obligations; provided
however, that in connection with such contest, Mortgagor shall, at the option of
Mortgagee, have made provision for the payment or performance of such contested
obligation on Mortgagor's books if and to the extent required by GAAP or
deposited with Mortgagee to hold for the benefit of Mortgagor a sum sufficient
to pay and discharge such obligation and Mortgagee's estimate of all interest
and penalties related thereto. Any such deposit (and any income earned thereon)
not otherwise used to pay such obligation, interest or penalties shall be
promptly returned to Mortgagor. Notwithstanding the foregoing provisions of this
subsection 1.5.5, (i) no contest of any such obligations may be pursued
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by Mortgagor if such contest would expose Mortgagee or any Lender to any
possible criminal liability or, unless Mortgagor shall have furnished a bond or
other security thereof or satisfactory to Mortgagee or such Lender, as the case
may be, any additional civil liability for failure to comply with such
obligations and (ii) if at any time payment or performance of any obligation
contested by Mortgagor pursuant to this subsection 1.5.5 shall become necessary
to prevent the delivery of a tax or similar deed conveying the Mortgaged
Property or any portion thereof because of nonpayment or nonperformance,
Mortgagor shall pay or perform the same, in sufficient time to prevent the
delivery of such tax or similar deed or such termination or forfeiture.
1.5.6 Mortgagor shall not take any action that could be the basis
for termination, revocation or denial of any insurance coverage required to be
maintained under this Mortgage or that could be the basis for a defense to any
claim under any insurance policy maintained in respect of the Premises or the
Equipment and Mortgagor shall otherwise comply in all respects with the
requirements of any insurer that issues a policy of insurance in respect of the
Premises or the Equipment; provided, however, that Mortgagor may, at its own
expense and after notice to Mortgagee, (i) contest the applicability or
enforceability of any such requirements by appropriate legal proceedings,
prosecution of which does not constitute a basis for cancellation or revocation
of any insurance coverage required under Section 1.7 hereof or (ii) cause the
insurance policy containing any such requirement to be replaced by a new policy
complying with the provisions of Section 1.7.
1.5.7 Mortgagor shall, promptly upon receipt of any written notice
regarding any failure by Mortgagor to pay or discharge any of the obligations
described in subsection 1.5.1, 1.5.3, 1.5.4 or 1.5.6, furnish a copy of such
notice to Mortgagee.
1.5.8 In the event that the proceeds of any tax claim are paid after
Mortgagee has exercised its right to foreclose the Lien of this Mortgage, such
proceeds shall be paid to Mortgagee to satisfy any deficiency remaining after
such foreclosure. Mortgagee shall retain its interest in the proceeds of any tax
claim during any redemption period. The amount of any such proceeds in excess of
any deficiency claim of Mortgagee shall reasonably promptly be released to
Mortgagor.
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SECTION 1.6 Certain Tax Law Changes. In the event of the passage
after the date of this Mortgage of any law deducting from the value of real
property, for the purpose of taxation, amounts in respect of any Lien thereon or
changing in any way the laws for the taxation of mortgages or debts secured by
mortgages for state or local purposes or the manner of the collection of any
such taxes, and imposing a tax, either directly or indirectly, on this Mortgage
or any other Loan Document, Mortgagor shall promptly pay to Mortgagee such
amount or amounts as may be necessary from time to time to pay such tax.
SECTION 1.7 Required Insurance Policies.
1.7.1 Mortgagor shall maintain in respect of the Premises and the
Equipment the following insurance coverages:
(i) Physical hazard insurance on an "all risk" basis covering,
without limitation, hazards commonly covered by fire and extended
coverage, lightning, windstorm, civil commotion, hail, riot, strike,
water damage, sprinkler leakage, collapse and malicious mischief, in an
amount equal to the full replacement cost of the Improvements and all
Equipment, with such deductibles as Mortgagee may from time to time
require, and, if Mortgagee shall not have imposed any such requirements,
with such deductibles as would be maintained by a prudent operator of
property similar in use and configuration to the Premises and located in
the locality where the Premises are located. "Full replacement cost"
means the Cost of Construction (as hereinafter defined) to replace the
Improvements and the Equipment, exclusive of depreciation, excavation,
foundation and footings, as determined from time to time (but not less
frequently than once every twelve (12) months) by a Person selected by
Mortgagor and reasonably acceptable to Mortgagee;
(ii) Comprehensive general liability insurance against claims for
bodily injury, death or property damage occurring on, in or about the
Premises and any adjoining streets, sidewalks and passageways, and
covering any and all claims, including, without limitation, all legal
liability to the extent insurable imposed upon Mortgagee and all court
costs and attorneys' fees, arising out of or connected with the
possession, use, leasing, operation or condition of the Premises with
policy limits and deductibles in such amounts as Mortgagee may from time
to time require, and, if Mortgagee shall not
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have imposed such requirements, in such amounts as from time to time would
be maintained by a prudent operator of property similar in use and
configuration to the Premises and located in the locality where the
Premises are located;
(iii) Worker's compensation insurance as required by the laws of the
state where the Premises are located to protect Mortgagor and Mortgagee
against claims for injuries sustained in the course of employment at the
Premises;
(iv) Explosion insurance in respect of any boilers and similar
apparatus located on the Premises or comprising any Equipment, with policy
limits and deductibles in such amounts as Mortgagee may from time to time
require, and, if Mortgagee shall not have imposed any such requirements,
in such amounts as would be maintained by a prudent operator of property
similar in use and configuration to the Premises and the Equipment and
located in the locality where the Premises and Equipment are located;
(v) Business interruption insurance and/or loss of "rental value"
insurance covering one year of loss, the term "rental value" to mean the
sum of (a) the total estimated gross rental income from tenant occupation
of the Improvements as furnished and equipped under Leases and (b) the
total amount of all other charges which are the legal obligation of the
tenants, lessees and sublessees of the Premises under Leases;
(vi) If the Premises are located in an area identified by the
Federal Emergency Management Agency as an area having special flood
hazards pursuant to the National Flood Insurance Act of 1968 or the Flood
Disaster Protection Act of 1973, each as amended, or any successor laws,
flood insurance with policy limits and deductibles in such amounts as
Mortgagee may from time to time reasonably require, and, if Mortgagee
shall not have imposed any such requirements, in such amounts as would be
maintained by a prudent operator of property similar in use and
configuration to the Premises and located in the locality where the
Premises are located; and
(vii) Such other insurance, against such risks and with policy
limits and deductibles in such amounts as Mortgagee may from time to time
require, and, if no such
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requirements shall have been imposed, in such amounts as would be
maintained by a prudent operator of property similar in use and
configuration to the Premises and located in the locality where the
Premises are located.
1.7.2 All insurance policies required by this Section 1.7 shall be
in form satisfactory to Mortgagee. All insurance policies in respect of the
coverages required by subsections 1.7.1(i), 1.7.1(iv), 1.7.1(v), 1.7.1(vi) and,
if applicable, 1.7.l(vii), shall be in amounts at least sufficient to prevent
coinsurance liability, and all losses thereunder shall be payable to Mortgagee,
as loss payee, pursuant to a standard non-contributory New York mortgagee
endorsement. All insurance policies in respect of the coverages required by
subsections 1.7.1(ii) and, if applicable, 1.7.1(vii) shall name Mortgagee as an
additional insured. Each policy of insurance required under this Section 1.7
shall provide that it may not be modified, reduced, cancelled or otherwise
terminated without at least thirty (30) days' prior written notice to Mortgagee
and shall permit Mortgagee to pay any premium thereof or within thirty (30) days
after receipt of any notice stating that such premium has not been paid when
due. All insurance policies required hereunder shall provide that all losses
thereunder shall be payable notwithstanding any act or negligence of Mortgagor
or its agents or employees which otherwise might have resulted in a forfeiture
of all or a part of such insurance payments. The policy or policies of such
insurance or certificates of insurance evidencing the required coverages, and
all renewals or extensions thereof, shall be delivered to Mortgagee. Settlement
of any claim under any of the insurance policies referred to in this Section
1.7, if such claim involves (in the reasonable judgment of Mortgagee) loss in
excess of $250,000, shall require the prior written approval of Mortgagee, and
Mortgagor shall use reasonable efforts to cause each such policy to contain a
provision to such effect.
1.7.3 At least ten (10) days prior to the expiration of any
insurance policy required by this Section 1.7, a policy or policies renewing or
extending such expiring policy or renewal or extension certificates or other
reasonable evidence of renewal or extension and that the applicable policies are
in full force and effect shall be delivered to Mortgagee.
1.7.4 Mortgagor shall not purchase separate insurance policies
concurrent in form or contributing in the event of loss with those policies
required to be maintained under this Section 1.7, unless Mortgagee is included
thereon as a
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named insured and, if applicable, with loss payable to Mortgagee under an
endorsement containing the provisions described in subsection 1.7.2. Mortgagor
shall immediately notify Mortgagee whenever any such separate insurance policy
is obtained and shall promptly deliver to Mortgagee the policy or certificate
evidencing such insurance.
1.7.5 Mortgagor shall, immediately upon receipt of any written
notice of any failure by Mortgagor to pay any insurance premium in respect of
any insurance policy required to be maintained under this Section 1.7, furnish a
copy of such notice to Mortgagee.
1.7.6 In the event that the proceeds of any insurance claim are paid
after Mortgagee has exercised its right to foreclose the Lien of this Mortgage,
such proceeds shall be paid to Mortgagee to satisfy any deficiency remaining
after such foreclosure. Mortgagee shall retain its interest in the policies of
insurance required to be maintained pursuant to this Mortgage during any
redemption period.
SECTION 1.8 Failure To Make Certain Payments. If Mortgagor shall
fail to perform any of the covenants contained in this Mortgage, including,
without limitation, Mortgagor's covenants to (i) pay the premiums in respect of
all required insurance coverages, (ii) pay taxes and assessments, (iii) make
repairs, (iv) discharge liens and encumbrances or (v) pay or perform any
obligations of Mortgagor under the Leases, Mortgagee may, but shall not be
obligated to, make advances to perform such covenant on Mortgagor's behalf, and
all sums so advanced shall be included in the Secured Obligations and, to the
extent permitted by applicable law, shall be secured hereby. Mortgagor shall
repay on demand all sums so advanced by Mortgagee on behalf of Mortgagor, with
interest at the Default Rate from the date of payment by Mortgagee to the date
of reimbursement. Neither the provisions of this Section 1.8 nor any action
taken by Mortgagee pursuant to the provisions of this Section 1.8 shall prevent
any such failure to observe any covenant contained in this Mortgage from
constituting an Event of Default. Mortgagee shall not be bound to inquire into
the validity of any tax, lien or imposition which Mortgagor fails to pay as and
when required hereby and which Mortgagor does not contest in accordance with the
terms hereof.
SECTION 1.9 Inspection. Mortgagor shall permit Mortgagee, by its
agents, accountants and attorneys, to visit and inspect the Premises at such
reasonable times as may be requested by Mortgagee.
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SECTION 1.10 Mortgagor To Maintain Improvements. Mortgagor shall not
commit or suffer any waste on the Premises or with respect to any Equipment or
make any change in the use of the Premises or any Equipment. Mortgagor
represents and warrants that (i) the Premises are served by all utilities
required or necessary for the current use thereof, (ii) all streets necessary to
serve the Premises are completed and serviceable and have been dedicated and
accepted as such by the appropriate Governmental Authorities and (iii) Mortgagor
has access to the Premises from public roads sufficient to allow Mortgagor and
its tenants and invitees to conduct its and their businesses at the Premises in
accordance with sound commercial practices. Mortgagor shall, at all times,
maintain the Premises and Equipment in good, safe and insurable operating order,
condition and repair and shall make all repairs, structural or nonstructural,
when necessary. Mortgagor shall (a) except as permitted in Section 1.14, not
alter the occupancy or use of all or any part of the Premises without the prior
written consent of Mortgagee and (b) do all other acts which from the character
or use of the Premises and Equipment may be necessary or appropriate to maintain
and preserve their value. Mortgagor shall not remove, demolish or alter, except
as permitted in Section 1.14, the design or structural character of any
Improvement now or hereafter erected upon all or any part of the Premises, or
permit any such removal, demolition or alteration, without the prior written
consent of Mortgagee, except that items constituting Equipment may be removed if
such removal is temporary and for the purpose of making repairs or such items
are immediately replaced with similar items of Equipment having a value and
utility for their intended purposes that is not less than the value and such
utility of the Equipment so removed.
SECTION 1.11 Mortgagor's Obligations with Respect to Leases.
1.11.1 Subject to the provisions of subsection 1.11.2 herein,
Mortgagor will manage and operate the Mortgaged Property in a reasonably prudent
manner and will not without the prior written consent of Mortgagee enter into
any Lease of all or any part of the Premises.
1.11.2 Mortgagor shall not:
(i) receive or collect, or permit the receipt or collection of, any
rental or other payments under any Lease more than one month in advance of
the respective period in respect of which they are to accrue, except
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that (a) in connection with the execution and delivery of any Lease or of
any amendment to any Lease, rental payments thereunder may be collected
and received in advance in an amount not in excess of one month's rent
and/or a reasonable security deposit may be required thereunder and (b)
Mortgagor may receive and collect escalation and other charges in
accordance with the terms of each Lease;
(ii) assign, transfer or hypothecate (other than to Mortgagee
hereunder) any rental or other payment under any Lease whether then due or
to accrue in the future, the interest of Mortgagor as lessor under any
Lease or the rents, issues, revenues, profits or other income of the
Mortgaged Property;
(iii) enter into any Lease after the date hereof that does not
contain terms to the effect as follows:
(a) such Lease and the rights of the tenant thereunder
(including, without limitation, any options to purchase or rights of
first offer or refusal) shall be subject and subordinate to the
rights of Mortgagee under and the Lien of this Mortgage;
(b) such Lease has been assigned as collateral security by
Mortgagor as landlord thereunder to Mortgagee under this Mortgage;
(c) in the case of any foreclosure hereunder, the rights and
remedies of the tenant in respect of any obligations of any
successor landlord thereunder shall be limited to the equity
interest of such successor landlord in the Premises and any
successor landlord shall not (1) be liable for any act, omission or
default of any prior landlord under the Lease, (2) be required to
make or complete any tenant improvements or capital improvements or
repair, restore, rebuild or replace the demised premises or any part
thereof in the event of damage, casualty or condemnation or (3) be
required to pay any amounts to tenant arising under the Lease prior
to such successor landlord taking possession;
(d) the tenant's obligation to pay rent and any additional
rent shall not be subject to any abatement, deduction, counterclaim
or setoff as against any mortgagee or purchaser upon the foreclo-
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sure of any of the Premises or the giving or granting of a deed in
lieu thereof by reason of a landlord default occurring prior to such
foreclosure or delivery of such deed and such mortgagee or purchaser
will not be bound by any advance payments of rent in excess of one
month or any security deposits unless such security was actually
received by Mortgagee (or in the case of a letter of credit, was
properly transferred in negotiable form);
(e) the tenant agrees to attorn, at the option of Mortgagee or
any purchaser of the Premises, upon a foreclosure of the Premises or
the giving or granting of a deed in lieu thereof; and
(f) the tenant agrees to give notice to Mortgagee of any
default by landlord under the Lease and Mortgagee shall have a
reasonable time to cure, should Mortgagee so elect, any default of
landlord prior to tenant exercising any rights of tenant to
terminate or cancel such Lease.
(iv) enter into any amendment or modification of any Lease which
would change the unexpired term thereof or decrease the amount of the
rents or other amounts payable thereunder or impair the value or utility
of the Mortgaged Property or the security provided by this Mortgage;
(v) enter into any further lease or sublease of the property subject
to any Lease without the prior written consent of Mortgagee, unless such
Lease is not amended in any respect and the primary obligor under such
Lease is not released in any respect from its responsibilities and
liabilities under such Lease as a result of such lease or sublease;
(vi) terminate (whether by exercising any contractual right of
Mortgagor to recapture leased space or otherwise) or permit the
termination of any Lease or accept surrender of all or any portion of the
space demised under any Lease prior to the end of the term thereof or
accept assignment of any Lease to Mortgagor unless:
(a) the tenant under such Lease has not paid the equivalent of
two months' rent and Mortgagor has made reasonable efforts to
collect such rent; or
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(b) Mortgagor shall deliver to Mortgagee an Officer's
Certificate to the effect that Mortgagor has entered into a new
Lease (or Leases) for the space covered by the terminated or
assigned Lease with a term (or terms) which expire(s) no earlier
than the date on which the terminated or assigned Lease was to
expire (excluding renewal options), and with a tenant (or tenants)
having a creditworthiness (as reasonably determined by Mortgagor)
sufficient to pay the rent and other charges due under the new Lease
(or Leases), and the tenant(s) shall have commenced paying rent,
including all operating expenses and other amounts payable under the
new Lease (or Leases) without any abatement or concession; or
(vii) waive, excuse, condone or in any manner discharge or release
any tenants of or from the obligations of such tenants under their
respective Leases or guarantors of tenants from obligations under any
guarantees of the Leases except in the ordinary and prudent course of
business with due regard for the security afforded Mortgagee thereby.
1.11.3 Mortgagor shall timely perform and observe all the terms,
covenants and conditions required to be performed and observed by Mortgagor
under each Lease and shall at all times do all things necessary to require
performance by the lessee, franchisee, licensee or grantee under each Lease of
all obligations, covenants and agreements by such party to be performed
thereunder. Mortgagor shall promptly notify Mortgagee of the receipt of any
notice from any lessee under any Lease claiming that Mortgagor is in default in
the performance or observance of any of the terms, covenants or conditions
thereof to be performed or observed by Mortgagor and will cause a copy of each
such notice to be promptly delivered to Mortgagee.
SECTION 1.12 Transfer Restrictions. Except as provided in Section
1.11, Mortgagor may not, without the prior written consent of Mortgagee, further
mortgage, encumber, hypothecate, sell, convey or assign all or any part of the
Mortgaged Property or suffer any of the foregoing to occur by operation of law
or otherwise. Notwithstanding the provisions of the foregoing sentence, so long
as no Event of Default shall have occurred and be continuing, Mortgagor shall
have the right to suffer, in respect of the Mortgaged Property, the Liens in
respect of amounts payable or obligations to be performed by Mortgagor pursuant
to subsections 1.5.1, 1.5.3 and
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1.5.4; provided, however, that such amounts are not yet due and payable or are
being contested in accordance with the provisions of subsection 1.5.5. Each of
the Liens and other transfers permitted by this Section 1.12 shall in all
respects be subject and subordinate in priority to the Lien and security
interests created and evidenced hereby except to the extent the law or
regulation creating or authorizing such Lien provides that such Lien must be
superior to the Lien and security interest created and evidenced hereby.
SECTION 1.13 Destruction; Condemnation.
1.13.1 Destruction; Insurance Proceeds. If there shall occur any
damage to, or loss or destruction of, the Improvements, Equipment, or any part
of any thereof (each, a "Destruction"), Mortgagor shall promptly send to
Mortgagee a notice setting forth the nature and extent of such Destruction. The
proceeds of any insurance payable in respect of such Destruction are hereby
assigned and shall be paid to Mortgagee. All such proceeds, together with any
interest earned thereon, less the amount of any expenses incurred in litigating,
arbitrating, compromising or settling any claim arising out of such Destruction
(the "Net Proceeds"), shall be applied in accordance with the provisions of
subsections 1.13.3, 1.13.4 and 1.13.5.
1.13.2 Condemnation; Assignment of Award. If there shall occur any
taking of the Mortgaged Property or any part thereof, in or by condemnation or
other eminent domain proceedings pursuant to any law, general or special, or by
reason of the temporary requisition of the use or occupancy of the Mortgaged
Property or any part thereof, by any Governmental Authority, civil or military
(each, a "Taking"), Mortgagor shall immediately notify Mortgagee upon receiving
notice of such Taking or commencement of proceedings therefor. Mortgagee may
participate in any proceedings or negotiations which might result in any Taking,
and Mortgagor shall deliver or cause to be delivered to Mortgagee all
instruments requested by it to permit such participation. Mortgagee may be
represented by counsel satisfactory to it at the expense of Mortgagor in
connection with any such participation. Mortgagor shall pay all fees, costs and
expenses incurred by Mortgagee in connection with any Taking and in seeking and
obtaining any award or payment on account thereof. Any proceeds, award or
payment in respect of any Taking are hereby assigned and shall be paid to
Mortgagee. Mortgagor shall take all steps necessary to notify the condemning
authority of such assignment. Such proceeds, award or payment, together with any
interest
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earned thereon, less the amount of any expenses incurred in litigating,
arbitrating, compromising or settling any claim arising out of such Taking (the
"Net Award"), shall be applied in accordance with the provisions of subsections
1.13.3, 1.13.4 and 1.13.5.
1.13.3 Restoration. In the event Mortgagor is permitted or required
to apply a Net Award or Net Proceeds, in accordance with the provisions of
Section 2.7(c) of the Credit Agreement and such Net Award or Net Proceeds is in
an amount less than or equal to $250,000, Mortgagor shall apply such Net Award
or Net Proceeds to perform a restoration (each, a "Restoration") of the Premises
and Equipment. In the event Mortgagor elects to perform a Restoration, Mortgagor
shall give written notice (each, a "Restoration Election Notice") of such
election to Mortgagee within thirty (30) days after the date that Mortgagor
receives notice of collection by Mortgagee of the applicable Net Proceeds or Net
Award, as the case may be. In the event Mortgagee does not receive a Restoration
Election Notice within such 30-day period, Mortgagee may apply any such Net
Proceeds or Net Award held by Mortgagee to the payment of the Secured
Obligations in accordance with the provisions of Section 2.7(c) of the Credit
Agreement or, at the option of Mortgagee, may continue to hold such Net Proceeds
or Net Award as additional collateral to secure the performance by Mortgagor of
the Secured Obligations. In the event Mortgagor elects to perform any
Restoration contemplated by this subsection 1.13.3, Mortgagee shall release such
Net Award or Net Proceeds to Mortgagor as soon as practicable following receipt
of a Restoration Election Notice but in no event more than fifteen (15) days
following such receipt. Mortgagor shall, within fifteen (15) days following the
date of its receipt of any proceeds in respect of a Destruction or Taking, as
the case may be, commence and diligently continue to perform the Restoration of
that portion or portions of the Improvements and Equipment subject to such
Destruction or affected by such Taking so that, upon the completion of the
Restoration, the Premises and Equipment will be in the same condition and shall
be of at least equal value and utility for its intended purposes as the Premises
and Equipment was immediately prior to such Destruction or Taking. Mortgagor
shall so complete such Restoration with its own funds to the extent that the
amount of any Net Award or Net Proceeds is insufficient for such purpose.
1.13.4 Major Restoration. In the event Mortgagor is permitted or
required to apply a Net Award or Net Proceeds in accordance with the provisions
of Section 2.7(c) of the
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Credit Agreement and such Net Award or Net Proceeds is in an amount greater than
$250,000, Mortgagee shall apply such Net Award or Net Proceeds, as the case may
be, to perform a Restoration of the Premises and Equipment. In the event a
Restoration is to be performed under this subsection 1.13.4, Mortgagee shall not
release any part of the Net Award or the Net Proceeds except in accordance with
the provisions of subsection 1.13.5, and Mortgagor shall, prior to commencing
any work to effect a Restoration of the Premises and Equipment, promptly (but in
no event later than ninety (90) days following any Destruction or Taking)
furnish to Mortgagee:
(i) complete plans and specifications (the "Plans and
Specifications") for the Restoration;
(ii) a certificate (an "Architect's Certificate") of an independent,
reputable architect or engineer acceptable to Mortgagee and licensed in
the state where the Premises is located (a) listing all permits and
approvals required by law in connection with the Restoration, (b) stating
that all permits and approvals required by law to commence work in
connection with the Restoration have been obtained, (c) stating that the
Plans and Specifications have been reviewed and approved by the signatory
thereto, (d) stating such signatory's estimate (an "Estimate") of the
costs of completing the Restoration and (e) stating that upon completion
of such Restoration in accordance with the Plans and Specifications, the
value and utility of the Premises and the Equipment will be approximately
equal to or greater than the value and utility thereof immediately prior
to the Destruction or Taking relating to such Restoration; and
(iii) if the Estimate exceeds the Net Proceeds or Net Award, as the
case may be, a surety bond for, guarantee of, or irrevocable letter of
credit (a "Letter of Credit") or other irrevocable and unconditional
commitment to provide funds (each, a "Commitment") for the payment of the
excess cost of such Restoration, payable to or in favor of Mortgagee, as
Administrative Agent, which bond, guaranty, Letter of Credit or Commitment
(A) shall be signed by a surety or sureties or guarantor(s), as the case
may be, acceptable to Mortgagee and, in the case of a Letter of Credit or
Commitment, shall be provided by a Lender or other financial institution
having capital and surplus in excess of $500 million as shown in its most
recent available statement of financial condition and (B) shall be in an
amount not less than the excess of the
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amount of the Estimate over the amount of the Net Award or Net Proceeds,
as the case may be, then held by Mortgagee for application toward the
cost of such Restoration.
Mortgagee shall have the right to review and approve the Plans and
Specifications. Promptly upon any approval of the Plans and Specifications by
Mortgagee, Mortgagor shall commence and diligently continue to perform the
Restoration in accordance with such approved Plans and Specifications. Mortgagor
shall so complete such Restoration with its own funds to the extent that the
amount of any Net Award or Net Proceeds is insufficient for such purpose.
1.13.5 Restoration Advances Following Destruction or Taking of
Mortgaged Property. In the event Mortgagor shall be required or permitted to
perform a Restoration of the Premises and Equipment as provided in subsection
1.13.4, Mortgagee shall apply any Net Proceeds or the Net Award held by
Mortgagee on account of the applicable Destruction or Taking to the payment of
the cost of performing such Restoration and shall pay portions of the same, from
time to time, to Mortgagor or, at Mortgagee's option, exercised from time to
time, directly to the contractors, subcontractors, materialmen, laborers,
engineers, architects, and other persons rendering services or material for such
Restoration, subject to the following conditions:
(i) Each request for payment shall be made on at least ten (10)
days' prior notice to Mortgagee and shall be accompanied by an Architect's
Certificate stating (a) that all the Restoration work then completed has
been done in compliance with the Plans and Specifications, as approved by
Mortgagee, and in accordance with all provisions of law, (b) the sums
requested are required to reimburse Mortgagor for payments by Mortgagor
to, or are due to, the contractors, subcontractors, materialmen, laborers,
engineers, architects, or other persons rendering services or materials
for the Restoration, and that, when added to the sums, if any, previously
paid out by Mortgagee, such sums do not exceed the cost of the Restoration
to the date of such Architect's Certificate, (c) whether or not the
Estimate continues to be accurate, and if not, what the entire cost of
such Restoration is then estimated to be, and (d) that the amount of the
Net Proceeds or Net Award, as the case may be, remaining after giving
effect to such payment will be sufficient on completion of the Restoration
to pay for the same in full
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(including, in detail, an estimate by trade of the remaining costs of
completion);
(ii) Each request for payment shall be accompanied by an opinion of
counsel to Mortgagor (which counsel shall be independent and acceptable to
Mortgagee), or a title insurance policy, binder or endorsement in form and
substance satisfactory to Mortgagee confirming that (a) all Liens (other
than Prior Liens) covering that part of the Restoration previously paid
for, if any, have been waived and (b) there has not been filed with
respect to all or any part of the Premises any Lien (other than Prior
Liens) which is not discharged of record and which could have priority
over the Lien of this Mortgage in respect of any part of the Secured
Obligations; and
(iii) The final request for any payment after the Restoration has
been completed shall be accompanied by an Architect's Certificate listing
all certificates, permits, licenses, waivers, other documents, or any
combination of the foregoing required by law in connection with or as a
result of such Restoration and stating that all of the same have been
obtained.
In the event that there shall be any surplus after application of
the Net Award or the Net Proceeds to Restoration of the Improvements and the
Equipment, such surplus shall be applied as Net Cash Proceeds in accordance with
Section 2.7(b) of the Credit Agreement or, at the option of Mortgagee, shall be
held by Mortgagee as additional collateral to secure the performance by
Mortgagor of the Secured Obligations.
SECTION 1.14 Alterations. Mortgagor shall not, without the prior
written consent of Mortgagee, make any addition, modification or change (each,
an "Alteration"), structural or nonstructural, to the Premises that costs more
to effect than $100,000. Whether or not Mortgagee has consented to the making of
any Alteration, Mortgagor shall (i) complete each Alteration promptly, in a good
and workmanlike manner and in compliance with all applicable local laws,
ordinances and requirements and (ii) pay when due all claims for labor performed
and materials furnished in connection with such Alteration, unless contested in
accordance with the provisions of subsection 1.5.5.
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SECTION 1.15 Hazardous Material.
1.15.1 Mortgagor represents and warrants that (i) it has obtained
all permits, licenses and other authorizations which are required with respect
to the ownership and operation of its business and the Mortgaged Property under
any and all applicable Environmental Laws, (ii) it is in compliance with all
terms and conditions of the required permits, licenses and authorizations, and
is also in compliance with Environmental Laws, including, without limitation,
all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in the
Environmental Laws, (iii) there is no civil, criminal or administrative action,
suit, demand, claim, hearing, notice or violation, investigation, proceeding,
notice of demand letter pending or threatened against it or any subsidiary under
the Environmental Laws which could result in a fine, penalty or other cost or
expense and (iv) there are no past or present events, conditions, circumstances,
activities, practices, incidents, actions or plans which may reasonably be
expected to interfere with or prevent compliance with the Environmental Laws, or
which may give rise to any common law or legal liability, including, without
limitation, liability under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, or any other Environmental
Law or related common law theory or otherwise form the basis of any claim,
action, demand, suit, proceeding, hearing or notice of violation, study or
investigation, based on or related to the manufacture, processing, distribution,
use, generation, treatment, storage, disposal, transport or handling, or the
emission, discharge, release or threatened release into the environment, of any
Hazardous Materials which could result in a fine, penalty or other cost or
expense.
1.15.2 Mortgagor shall (i) materially comply with any and all
present and future Environmental Laws, (ii) not release, store, treat, handle,
generate, discharge or dispose of any Hazardous Materials on, under or from the
Mortgaged Property in violation of or in a manner that could result in any
material liability under any present and future Environmental Law and (iii) take
all necessary steps to initiate and expeditiously complete all remedial,
corrective and other action to eliminate any such effect. In the event Mortgagor
fails to comply with the covenants in the preceding sentence, Mortgagee may, in
addition to any other remedies set forth herein, as agent for and at Mortgagor's
sole cost and expense, cause any necessary remediation, removal or response
action relating to Hazardous Materials to be taken and Mortgagor
-25-
shall provide to Mortgagee and its agents and employees access to the Mortgaged
Property for such purpose. Any costs or expenses incurred by Mortgagee for such
purpose shall be immediately due and payable by Mortgagor and shall bear
interest at the Default Rate. Mortgagee shall have the right at any time that
the Secured Obligations are outstanding, at the sole cost and expense of
Mortgagor, to conduct an environmental audit of the Mortgaged Property by such
persons or firms appointed by Mortgagee, and Mortgagor shall cooperate in all
respects in the conduct of such environmental audit, including, without
limitation, by providing access to the Mortgaged Property and to all records
relating thereto. To the extent that any environmental audit identifies
conditions which violate, or could be expected to give rise to liability or
obligations under, Environmental Laws, Mortgagor agrees to expeditiously correct
any such violation or respond to conditions giving rise to such liability or
obligations in a manner which complies with the Environmental Laws and mitigates
associated health and environmental risks. Mortgagor shall indemnify and hold
Mortgagee and each Lender harmless from and against all loss, cost, damage
(including, without limitation, consequential damages) or expense (including,
without limitation, reasonable attorneys' and consultants' fees and
disbursements and the allocated costs of staff counsel) that Mortgagee or such
Lender may sustain by reason of the assertion against Mortgagee or such Lender
by any party of any claim relating to such Hazardous Materials on, under or from
the Mortgaged Property or actions taken with respect thereto as authorized
hereunder. The foregoing indemnification shall survive repayment of all Secured
Obligations and any release or assignment of this Mortgage.
SECTION 1.16 Asbestos. Mortgagor shall not install nor permit to be
installed in or removed from the Mortgaged Property, asbestos or any
asbestos-containing material (collectively, "ACM") except in compliance with all
applicable Environmental Laws, and with respect to any ACM currently present in
the Mortgaged Property, Mortgagor shall promptly either Ci) remove any ACM which
such Environmental Laws require to be removed or (ii) otherwise comply with such
Environmental Laws with respect to such ACM, all at Mortgagor's sole cost and
expense. If Mortgagor shall fail so to remove any ACM or otherwise comply with
such laws or regulations, Mortgagee may, in addition to any other remedies set
forth herein, take reasonable or necessary steps to eliminate any ACM from the
Mortgaged Property or otherwise comply with applicable law, regulations or
orders and Mortgagor shall provide to Mortgagee and its agents and employees
access to the Mortgaged Property for
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such purpose. Any costs or expenses incurred by Mortgagee for such purpose shall
be immediately due and payable by Mortgagor and bear interest at the Default
Rate. Mortgagor shall indemnify and hold Mortgagee and each Lender harmless from
and against all loss, cost, damage (including, without limitation, consequential
damages) and expense (including, without limitation, reasonable attorneys' and
consultants' fees and disbursements and the allocated costs of staff counsel)
that Mortgagee or such Lender may sustain, as a result of the presence of any
ACM and any removal thereof or compliance with all applicable Environmental
Laws. The foregoing indemnification shall survive repayment of all Secured
Obligations and any release or assignment of this Mortgage.
SECTION 1.17 Books and Records. Other Information.
1.17.1 Mortgagor shall keep proper books of record and account in
which full, true and correct entries shall be made of all dealings or
transactions of or in relation to the Mortgaged Property and the business and
affairs of Mortgagor relating to the Mortgaged Property. Mortgagee and its
authorized representatives shall have the right at reasonable times and upon
reasonable notice to examine the books and records of Mortgagor relating to the
operation of the Mortgaged Property.
1.17.2 Mortgagor shall, at any and all times, within a reasonable
time after written request by Mortgagee, furnish or cause to be furnished to
Mortgagee, in such manner and in such detail as may be reasonably requested by
Mortgagee, additional information with respect to the Mortgaged Property.
SECTION 1.18 No Claims Against Mortgagee. Nothing contained in this
Mortgage shall constitute any consent or request by Mortgagee, express or
implied, for the performance of any labor or services or the furnishing of any
materials or other property in respect of the Premises or any part thereof, nor
as giving Mortgagor any right, power or authority to contract for or permit the
performance of any labor or services or the furnishing of any materials or other
property in such fashion as would permit the making of any claim against
Mortgagee in respect thereof or any claim that any Lien based on the performance
of such labor or services or the furnishing of any such materials or other
property is prior to the Lien of this Mortgage.
SECTION 1.19 Utility Services. Mortgagor shall pay, or cause to be
paid, when due all charges for all public
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or private utility services, all public or private rail and highway services,
all public or private communication services, all sprinkler systems, all
protective services and any other services of whatever kind or nature at any
time rendered to or in connection with the Premises or any part thereof, shall
comply with all contracts relating to any such services and shall do all other
things required for the maintenance and continuance of all such services to the
extent required to fulfill the obligations set forth in Section 1.10.
ARTICLE II
ASSIGNMENT OF LEASES; SECURITY AGREEMENT;
ASSIGNMENT AGREEMENT
SECTION 2.1 Assignment of Leases, Rents, Issues and Profits.
2.1.1 Mortgagor absolutely, presently and irrevocably assigns,
transfers and sets over to Mortgagee, and grants to Mortgagee subject to the
terms and conditions hereof, all Mortgagor's estate, right, title, interest,
claim and demand as landlord to collect rent and other sums due under all
existing Leases and any other Leases, including, without limitation, all
extensions of the terms of the Leases (such assigned rights, "Mortgagor's
Interest"), as follows:
(i) the immediate and continuing right to receive and collect Rents
payable by all tenants or other parties pursuant to the Leases;
(ii) all claims, rights, powers, privileges and remedies of
Mortgagor, whether provided for in any Lease or arising by statute or at
law or in equity or otherwise, consequent on any failure on the part of
any tenant to perform or comply with any term of any Lease;
(iii) all rights to take all actions upon the happening of a default
under any Lease as shall be permitted by such Lease or by law, including,
without limitation, the commencement, conduct and consummation of
proceedings at law or in equity; and
(iv) the full power and authority, in the name of Mortgagor or
otherwise, to enforce, collect, receive and receipt for any and all of the
foregoing and to do any and all other acts and things whatsoever which
Mortgagor
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or any landlord is or may be entitled to do under the Leases.
2.1.2 Any Rents receivable by Mortgagee hereunder, after payment of
all proper costs and charges, shall be applied to all amounts due and owing
under and as provided in this Mortgage and the Credit Agreement. Mortgagee shall
be accountable to Mortgagor only for Rents actually received by Mortgagee
pursuant to this assignment. The collection of such Rents and the application
thereof shall not cure or waive any Event of Default or waive, modify or affect
notice of Event of Default or invalidate any act done pursuant to such notice.
2.1.3 So long as no Event of Default shall have occurred and be
continuing, Mortgagor shall have a license to collect and apply the Rents and to
enforce the obligations of tenants under the Leases. Immediately upon the
occurrence and during the continuance of any Event of Default, the license
granted in the immediately preceding sentence shall cease and terminate, with or
without any notice, action or proceeding or the intervention of a receiver
appointed by a court. Upon such Event of Default and during the continuance
thereof, Mortgagee may, to the fullest extent permitted by the Leases, (i)
exercise any of Mortgagor's rights under the Leases, (ii) enforce the Leases,
(iii) demand, collect, xxx for, attach, levy, recover, receive, compromise and
adjust, and make, execute and deliver receipts and releases for all Rents or
other payments that may then be or may thereafter become due, owing or payable
with respect to the Leases and (iv) generally, do, execute and perform any other
act, deed, matter or thing whatsoever that ought to be done, executed and
performed in and about or with respect to the Leases, as fully as allowed or
authorized by Mortgagor's Interest.
2.1.4 Upon the occurrence and during the continuance of an Event of
Default, Mortgagor shall, at the direction of Mortgagee, further authorize and
direct the tenant under each Lease to pay directly to, or as directed by,
Mortgagee all Rents accruing or due under its Lease without proof to the tenant
of the occurrence and continuance of such Event of Default. Mortgagor hereby
authorizes the tenant under each Lease to rely upon and comply with any notice
or demand from Mortgagee for payment of Rents to Mortgagee and Mortgagor shall
have no claim against any tenant for Rents paid by such tenant to Mortgagee
pursuant to such notice or demand.
2.1.5 Mortgagor at its sole cost and expense shall use commercially
reasonable efforts to enforce the Leases in
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accordance with their terms. Neither this Mortgage nor any action or inaction on
the part of Mortgagee shall release any tenant under any Lease, any guarantor of
any Lease or Mortgagor from any of their respective obligations under the Leases
or constitute an assumption of any such obligation on the part of Mortgagee. No
action or failure to act on the part of Mortgagor shall adversely affect or
limit the rights of Mortgagee under this Mortgage or, through this Mortgage,
under the Leases.
2.1.6 All rights, powers and privileges of Mortgagee herein set
forth are coupled with an interest and are irrevocable, subject to the terms and
conditions hereof, and Mortgagor shall not take any action under the Leases or
otherwise which is inconsistent with this Mortgage or any of the terms hereof
and any such action inconsistent herewith or therewith shall be void. Mortgagor
shall, from time to time, upon request of Mortgagee, execute all instruments and
further assurances and all supplemental instruments and take all such action as
Mortgagee from time to time may reasonably request in order to perfect, preserve
and protect the interests intended to be assigned to Mortgagee hereby.
2.1.7 Mortgagor shall not, unilaterally or by agreement,
subordinate, amend, modify, extend, discharge, terminate, surrender, waive or
otherwise change any term of any of the Leases in any manner which would violate
this Mortgage. If the Leases shall be amended as permitted hereby, they shall
continue to be subject to the provisions hereof without the necessity of any
further act by any of the parties hereto.
2.1.8 Nothing contained herein shall operate or be construed to (i)
obligate Mortgagee to perform any of the terms, covenants or conditions
contained in the Leases or otherwise to impose any obligation upon Mortgagee
with respect to the Leases (including, without limitation, any obligation
arising out of any covenant of quiet enjoyment contained in the Leases in the
event that any tenant under a Lease shall have been joined as a party defendant
in any action by which the estate of such tenant shall be terminated) or (ii)
place upon Mortgagee any responsibility for the operation, control, care,
management or repair of the Premises.
SECTION 2.2 Security Interest in Personal Property.
2.2.1 This Mortgage shall constitute a security agreement and shall
create and evidence a security interest or common law Lien in all the Equipment
and in all the other
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items of Mortgaged Property in which a security interest may be granted or a
common law pledge created pursuant to the Uniform Commercial Code as in effect
in the state in which the Premises are located or under the common law in such
state collectively, "Personal Property").
2.2.2 Upon the occurrence of any Event of Default, in addition to
the remedies set forth in Article III, Mortgagee shall have the power to sell
the Personal Property in accordance with the Uniform Commercial Code as enacted
in the state in which the Premises are located or under other applicable law. It
shall not be necessary that any Personal Property offered be physically present
at any such sale or constructively in the possession of Mortgagee or the person
conducting the sale.
2.2.3 Upon the occurrence and during the continuance of any Event of
Default, Mortgagee may sell the Personal Property or any part thereof at public
or private sale with notice to Mortgagor as hereinafter provided. The proceeds
of any such sale, after deducting all expenses of Mortgagee in taking, storing,
repairing and selling the Personal Property (including, without limitation,
attorneys' fees and legal expenses), shall be applied in the manner set forth in
subsection 3.3.3. At any sale, public or private, of the Personal Property or
any part thereof, Mortgagee may purchase any or all of the Personal Property
offered at such sale.
2.2.4 Mortgagee shall give Mortgagor reasonable notice of any sale
of any of the Personal Property pursuant to the provisions of this Section 2.2.
Notwithstanding the provisions of Section 5.2, any such notice shall
conclusively be deemed to be reasonable and effective if such notice is mailed
at least five (5) days prior to any sale, by first class or certified mail,
postage prepaid, to Mortgagor at its address determined in accordance with the
provisions of Section 5.2.
ARTICLE III
EVENTS OF DEFAULT AND REMEDIES
SECTION 3.1 Events of Default. It shall be an Event of Default
hereunder if there shall have occurred and be continuing an Event of Default
under the Credit Agreement.
SECTION 3.2 Remedies in Case of an Event of Default. If any Event of
Default shall have occurred and be
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continuing, Mortgagee may at its option, in addition to any other action
permitted under this Mortgage or the Credit Agreement or by law, statute or in
equity, take one or more of the following actions:
3.2.1 by written notice to Mortgagor, declare the entire unpaid
amount of the Secured Obligations to be due and payable immediately;
3.2.2 personally, or by its agents or attorneys, (i) enter into and
upon and take possession of all or any part of the Premises together with the
books, records and accounts of Mortgagor relating thereto and, exclude
Mortgagor, its agents and servants wholly therefrom, (ii) use, operate, manage
and control the Premises and the Equipment and conduct the business thereof,
(iii) maintain and restore the Premises and the Equipment, (iv) make all
necessary or proper repairs, renewals and replacements and such useful
Alterations thereto and thereon as Mortgagee may deem advisable, (v) manage,
lease and operate the Premises and carry on the business thereof and exercise
all rights and powers of Mortgagor with respect thereto either in the name of
Mortgagor or otherwise or (vi) collect and receive all earnings, revenues,
rents, issues, profits and income of the Mortgaged Property and every part
thereof. Mortgagee shall be under no liability for or by reason of any such
taking of possession, entry, removal or holding, operation or management except
that any amounts so received by Mortgagee shall be applied as follows:
FIRST: to pay costs and expenses (including, without limitation,
attorneys' fees and expenses) of so entering upon, taking possession of,
holding, operating and managing the Mortgaged Property or any part
thereof, and any taxes, assessments or other charges which Mortgagee may
consider necessary or desirable to pay, and any other amounts due to
Mortgagee;
SECOND: without duplication of amounts applied pursuant to clause
FIRST above, to the indefeasible payment in full in cash of the Secured
Obligations in accordance with the terms of the Credit Agreement; and
THIRD: the balance, if any, to the Person lawfully entitled thereto
(including Mortgagor or its successors or assigns), if all conditions to
the release of this Mortgage shall have been fulfilled, but if any such
condition shall not have been fulfilled, to be held by Mortgagee and
thereafter applied to any future payments re-
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quired to be made in accordance with clauses FIRST and SECOND above.
3.2.3 with or without entry, personally or by its agents or
attorneys, (i) sell the Mortgaged Property and all estate, right, title and
interest, claim and demand therein at one or more sales in one or more parcels,
in accordance with the provisions of Section 3.3 or (ii) institute and prosecute
proceedings for the complete or partial foreclosure of the Lien and security
interests created and evidenced hereby; or
3.2.4 take such steps to protect and enforce its rights whether by
action, suit or proceeding at law or in equity for the specific performance of
any covenant, condition or agreement in the Credit Agreement and the other Loan
Documents, or in aid of the execution of any power granted in this Mortgage, or
for any foreclosure hereunder, or for the enforcement of any other appropriate
legal or equitable remedy or otherwise as Mortgagee shall elect.
SECTION 3.3 Sale of Mortgaged Property if Event of Default Occurs;
Proceeds of Sale.
3.3.1 If any Event of Default shall have occurred and be continuing,
Mortgagee may institute an action to foreclose this Mortgage or take such
other action as may be permitted and available to Mortgagee at law or in equity
for the enforcement of the Credit Agreement and realization on the Mortgaged
Property and proceeds thereon through power of sale or to final judgment and
execution thereof for the Secured Obligations, and in furtherance thereof
Mortgagee may sell the Mortgaged Property at one or more sales, as an entirety
or in parcels, at such time and place, upon such terms and after such notice
thereof as may be required or permitted by law or statute or in equity.
Mortgagee may execute and deliver to the purchaser at such sale a conveyance of
the Mortgaged Property in fee simple and an assignment or conveyance of all
Mortgagor's Interest in the Leases and the Mortgaged Property, each of which
conveyances and assignments shall contain recitals as to the Event of Default
upon which the execution of the power of sale herein granted depends, and
Mortgagor hereby constitutes and appoints Mortgagee the true and lawful attorney
in fact of Mortgagor to make any such recitals, sale, assignment and conveyance,
and all of the acts of Mortgagee as such attorney in fact are hereby ratified
and confirmed. Mortgagor agrees that such recitals shall be binding and
conclusive upon Mortgagor and that any assignment or conveyance to be made by
Mortgagee shall divest Mortgagor of all right,
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title, interest, equity and right of redemption, including any statutory
redemption, in and to the Mortgaged Property. The power and agency hereby
granted are coupled with an interest and are irrevocable by death or
dissolution, or otherwise, and are in addition to any and all other remedies
which Mortgagee may have hereunder, at law or in equity. So long as the Secured
Obligations, or any part thereof, remain unpaid, Mortgagor agrees that
possession of the Mortgaged Property by Mortgagor, or any person claiming under
Mortgagor, shall be as tenant, and, in case of a sale under power or upon
foreclosure as provided in this Mortgage, Mortgagor and any person in possession
under Mortgagor, as to whose interest such sale was not made subject, shall, at
the option of the purchaser at such sale, then become and be tenants holding
over, and shall forthwith deliver possession to such purchaser, or be summarily
dispossessed in accordance with the laws applicable to tenants holding over. In
case of any sale under this Mortgage by virtue of the exercise of the powers
herein granted, or pursuant to any order in any judicial proceeding or
otherwise, the Mortgaged Property may be sold as an entirety or in separate
parcels in such manner or order as Mortgagee in its sole discretion may elect.
One or more exercises of powers herein granted shall not extinguish or exhaust
such powers, until the entire Mortgaged Property is sold or all amounts secured
hereby are paid in full.
3.3.2 In the event of any sale made under or by virtue of this
Article III, the entire principal of, and interest in respect of the Secured
Obligations, if not previously due and payable, shall, at the option of
Mortgagee, immediately become due and payable, anything in this Mortgage to the
contrary notwithstanding.
3.3.3 The proceeds of any sale made under or by virtue of this
Article III, together with any other sums which then may be held by Mortgagee
under this Mortgage, whether under the provisions of this Article III or
otherwise, shall be applied as follows:
FIRST: to pay the costs and expenses incurred by Mortgagee in
enforcing its remedies under this Mortgage;
SECOND: to pay the costs and expenses of the sale and of any
receiver of the Mortgaged Property or any part thereof appointed pursuant
to subsection 3.5.2;
THIRD: without duplication of the amounts applied pursuant to
clauses FIRST and SECOND above, to the inde-
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feasible payment in full in cash of the Secured Obligations in accordance
with the terms of the Credit Agreement; and
FOURTH: the balance, if any, to the Person lawfully entitled thereto
(including Mortgagor or its successors or assigns).
3.3.4 Mortgagee (on behalf of any Lender or on its own behalf) or
any Lender or any of their respective Affiliates may bid for and acquire the
Mortgaged Property or any part thereof at any sale made under or by virtue of
this Article III and, in lieu of paying cash therefor, may make settlement for
the purchase price by crediting against the purchase price the unpaid amounts
(whether or not then due) owing to Mortgagee, or such Lender in respect of the
Secured Obligations, after deducting from the sales price the expense of the
sale and the reasonable costs of the action or proceedings and any other sums
that Mortgagee or such Lender is authorized to deduct under this Mortgage.
3.3.5 Mortgagee may adjourn from time to time any sale by it to be
made under or by virtue of this Mortgage by announcement at the time and place
appointed for such sale or for such adjourned sale or sales, and, Mortgagee,
without further notice or publication, may make such sale at the time and place
to which the same shall be so adjourned.
3.3.6 If the Premises is comprised of more than one parcel of land,
Mortgagee may take any of the actions authorized by this Section 3.3 in respect
of any or a number of individual parcels.
SECTION 3.4 Additional Remedies in Case of an Event of Default.
3.4.1 Mortgagee shall be entitled to recover judgment as aforesaid
either before, after or during the pendency of any proceedings for the
enforcement of the provisions of this Mortgage, and the right of Mortgagee to
recover such judgment shall not be affected by any entry or sale hereunder, or
by the exercise of any other right, power or remedy for the enforcement of the
provisions of this Mortgage, or the foreclosure of, or absolute conveyance
pursuant to, this Mortgage. In case of proceedings against Mortgagor in
insolvency or bankruptcy or any proceedings for its reorganization or involving
the liquidation of its assets, Mortgagee shall be entitled to prove the whole
amount of principal and interest and
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other payments, charges and costs due in respect of the Secured Obligations to
the full amount thereof without deducting therefrom any proceeds obtained from
the sale of the whole or any part of the Mortgaged Property; provided, however,
that in no case shall Mortgagee receive a greater amount than the aggregate of
such principal, interest and such other payments, charges and costs (with
interest at the Default Rate) from the proceeds of the sale of the Mortgaged
Property and the distribution from the estate of Mortgagor.
3.4.2 Any recovery of any judgment by Mortgagee and any levy of any
execution under any judgment upon the Mortgaged Property shall not affect in any
manner or to any extent the Lien and security interests created and evidenced
hereby upon the Mortgaged Property or any part thereof, or any conveyances,
powers, rights and remedies of Mortgagee hereunder, but such conveyances,
powers, rights and remedies shall continue unimpaired as before.
3.4.3 Any moneys collected by Mortgagee under this Section 3.4 shall
be applied in accordance with the provisions of subsection 3.3.3.
SECTION 3.5 Legal Proceedings After an Event of Default.
3.5.1 After the occurrence of any Event of Default and immediately
upon the commencement of any action, suit or legal proceedings to obtain
judgment for the Secured Obligations or any part thereof, or of any proceedings
to foreclose the Lien and security interest created and evidenced hereby or
otherwise enforce the provisions of this Mortgage or of any other proceedings in
aid of the enforcement of this Mortgage, Mortgagor shall enter its voluntary
appearance in such action, suit or proceeding.
3.5.2 Upon the occurrence and during the continuance of an Event of
Default, Mortgagee shall be entitled forthwith as a matter of right,
concurrently or independently of any other right or remedy hereunder either
before or after declaring the Secured Obligations or any part thereof to be due
and payable, to the appointment of a receiver without giving notice to any party
and without regard to the adequacy or inadequacy of any security for the Secured
Obligations or the solvency or insolvency of any person or entity then legally
or equitably liable for the Secured Obligations or any portion thereof.
Mortgagor hereby consents to the appointment of such receiver. Notwithstanding
the appointment of any receiver,
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Mortgagee shall be entitled as pledgee to the possession and control of any
cash, deposits or instruments at the time held by or payable or deliverable
under the terms of the Credit Agreement to Mortgagee.
3.5.3 Mortgagor shall not (i) at any time insist upon, or plead, or
in any manner whatsoever claim or take any benefit or advantage of any stay or
extension or moratorium law, any exemption from execution or sale of the
Mortgaged Property or any part thereof, wherever enacted, now or at any time
hereafter in force, which may affect the covenants and terms of performance of
this Mortgage, (ii) claim, take or insist on any benefit or advantage of any law
now or hereafter in force providing for the valuation or appraisal of the
Mortgaged Property, or any part thereof, prior to any sale or sales of the
Mortgaged Property which may be made pursuant to this Mortgage, or pursuant to
any decree, judgment or order of any court of competent jurisdiction or (iii)
after any such sale or sales, claim or exercise any right under any statute
heretofore or hereafter enacted to redeem the property so sold or any part
thereof. To the extent permitted by applicable law, Mortgagor hereby expressly
(i) waives all benefit or advantage of any such law or laws, including, without
limitation, any statute of limitations applicable to this Mortgage, (ii) waives
any and all rights to trial by jury in any action or proceeding related to the
enforcement of this Mortgage, (iii) waives any objection which it may now or
hereafter have to the laying of venue of any action, suit or proceeding brought
in connection with this Mortgage and further waives and agrees not to plead that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum and (iv) covenants not to hinder, delay or impede the
execution of any power granted or delegated to Mortgagee by this Mortgage but to
suffer and permit the execution of every such power as though no such law or
laws had been made or enacted. Mortgagee shall not be liable for any incorrect
or improper payment made pursuant to this Article III in the absence of gross
negligence or willful misconduct.
SECTION 3.6 Remedies Not Exclusive. No remedy conferred upon or
reserved to Mortgagee by this Mortgage is intended to be exclusive of any other
remedy or remedies, and each and every such remedy shall be cumulative and shall
be in addition to every other remedy given under this Mortgage or now or
hereafter existing at law or in equity. Any delay or omission of Mortgagee to
exercise any right or power accruing on any Event of Default shall not impair
any such right or power and shall not be construed to be a waiver of or
acquiescence
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in any such Event of Default. Every power and remedy given by this Mortgage
may be exercised from time to time concurrently or independently, when and as
often as may be deemed expedient by Mortgagee in such order and manner as
Mortgagee, in its sole discretion, may elect. If Mortgagee accepts any moneys
required to be paid by Mortgagor under this Mortgage after the same become
due, such acceptance shall not constitute a waiver of the right either to
require prompt payment, when due, of all other sums secured by this Mortgage
or to declare an Event of Default with regard to subsequent defaults. If
Mortgagee accepts any moneys required to be paid by Mortgagor under this
Mortgage in an amount less than the sum then due, such acceptance shall be
deemed an acceptance on account only and on the condition that it shall not
constitute a waiver of the obligation of Mortgagor to pay the entire sum then
due, and Mortgagor's failure to pay the entire sum then due shall be and
continue to be a default hereunder notwithstanding acceptance of such amount
on account.
ARTICLE IV
CERTAIN DEFINITIONS
The following terms shall have the following respective meanings:
"Cost of Construction" means the sum, so far as it relates to the
reconstructing, renewing, restoring or replacing of the Improvements, of (i)
obligations incurred or assumed by Mortgagor or undertaken by tenants
pursuant to the terms of the Leases for labor, materials and other expenses
and to contractors, builders and materialmen; (ii) the cost of contract bonds
and of insurance of all kinds that may reasonably be deemed by Mortgagor to
be desirable or necessary during the course of construction; (iii) the
expenses incurred or assumed by Mortgagor for test borings, surveys,
estimates, any Plans and Specifications and preliminary investigations
therefor or, and for supervising construction, as well as for the performance
of all other duties required by or reasonably necessary for proper
construction; (iv) ad valorem property taxes levied upon the Premises during
performance of any Restoration; and (v) any costs or other charges in
connection with obtaining title insurance and counsel opinions that may be
required or necessary in connection with a Restoration.
"Governmental Authority" shall mean any federal, state, local or
foreign court, agency, authority, board, bu-
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xxxx, commission, department, office or instrumentality of any nature whatsoever
or any governmental or quasi-governmental unit, whether now or hereafter in
existence, or any officer or official thereof, having jurisdiction over the
Mortgagor or the Mortgaged Property.
ARTICLE V
MISCELLANEOUS
SECTION 5.1 Severability of Provisions. Any provision of this
Mortgage which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 5.2 Notices. Unless otherwise provided herein or in the
Credit Agreement, any notice or other communication herein required or permitted
to be given shall be given in the manner set forth in the Credit Agreement, if
to Mortgagor or Mortgagee, addressed to it at the address set forth in the
Credit Agreement, or as to either party at such other address as shall be
designated by such party in a written notice to the other party complying as to
delivery with the terms of this Section 5.2; provided, however, that notices to
Mortgagee shall not be effective until received by Mortgagee.
SECTION 5.3 Covenants To Run with the Land. All of the grants,
covenants, terms, provisions and conditions in this Mortgage shall run with the
Land and shall apply to, and bind the successors and assigns of, Mortgagor. If
there shall be more than one mortgagor, the covenants and warranties hereof
shall be joint and several.
SECTION 5.4 Headings. The Section headings used in this Mortgage are
for convenience of reference only and shall not affect the construction of this
Mortgage.
SECTION 5.5 Limitation on Interest Payable. It is the intention of
the parties to conform strictly to the usury laws, whether state or federal,
that are applicable to the transaction of which this Mortgage is a part. All
agreements between Mortgagor and Mortgagee whether now existing or hereafter
arising and whether oral or written, are hereby ex-
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pressly limited so that in no contingency or event whatsoever shall the amount
paid or agreed to be paid by Mortgagor for the use, forbearance or detention of
the money to be loaned under the Credit Agreement or any related document, or
for the payment or performance of any covenant or obligation contained herein or
in the Credit Agreement or any related document, exceed the maximum amount
permissible under applicable federal or state usury laws. If under any
circumstances whatsoever fulfillment of any such provision, at the time
performance of such provision shall be due, shall involve exceeding the limit of
validity prescribed by law, then the obligation to be fulfilled shall be reduced
to the limit of such validity. If under any circumstances Mortgagor shall have
paid an amount deemed interest by applicable law, which would exceed the highest
lawful rate, such amount that would be excessive interest under applicable usury
laws shall be applied to the reduction of the principal amount owing in respect
of the Secured Obligations and not to the payment of interest, or if such
excessive interest exceeds the unpaid balance of principal and any other amounts
due hereunder, the excess shall be refunded to Mortgagor. All sums paid or
agreed to be paid for the use, forbearance or detention of the principal under
any extension of credit by Mortgagee shall, to the extent permitted by
applicable law, and to the extent necessary to preclude exceeding the limit of
validity prescribed by law, be amortized, prorated, allocated and spread from
the date of this Mortgage until payment in full of the Secured Obligations so
that the actual rate of interest on account of such principal amounts is uniform
throughout the term hereof.
SECTION 5.6 Indemnity. Mortgagor agrees to indemnify, pay and hold
harmless Mortgagee and each of the Secured Parties and the officers, directors,
employees, agents and Affiliates of Mortgagee and each of the Secured Parties
(collectively called the "Indemnitees") from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs (including, without limitation, settlement costs), expenses or
disbursements of any kind or nature whatsoever (including, without limitation,
reasonable fees and disbursements of counsel for such Indemnitees in connection
with any investigative, administrative or judicial proceeding commenced or
threatened, whether or not such Indemnitee shall be designated a party thereto),
which may be imposed on, incurred by or asserted against that Indemnities, in
any manner relating to or arising out of this Mortgage or any other Loan
Document (including, without limitation, any misrepresentation by Mortgagor in
this Mortgage or any other Loan Document) (the "Indemnified Li-
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abilities"); provided, however, that Mortgagor shall have no obligation to an
Indemnitee hereunder with respect to Indemnified Liabilities if it has been
determined by a final decision (after all appeals and the expiration of time to
appeal) by a court of competent jurisdiction that such Indemnified Liability
arose from the gross negligence or willful misconduct of that Indemnitee. To the
extent that the undertaking to indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, Mortgagor shall contribute the maximum portion which it is
permitted to pay and satisfy under applicable law, to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any
of them. The obligations of Mortgagor contained in this Section 5.6 shall
survive the termination of this Mortgage and the discharge of Mortgagor's other
obligations under this Mortgage and the other Loan Documents. Any amount paid by
any Indemnitee as to which such Indemnitee has the right to reimbursement shall
constitute Secured Obligations secured by the Mortgaged Property.
SECTION 5.7 GOVERNING LAW; TERMS. THIS MORTGAGE SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE IN WHICH THE PREMISES ARE LOCATED, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
MORTGAGED PROPERTY ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN SUCH
STATE. MORTGAGOR AGREES THAT SERVICE OF PROCESS IN ANY PROCEEDING MAY BE
EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY
SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PAID, TO MORTGAGOR AT ITS ADDRESS
PROVIDED FOR IN SECTION 5.2 HEREOF EXCEPT THAT UNLESS OTHERWISE PROVIDED BY
APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF
SERVICE OF PROCESS. IF ANY AGENT APPOINTED BY MORTGAGOR REFUSES TO ACCEPT
SERVICE, MORTGAGOR HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE
SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF MORTGAGEE TO BRING
PROCEEDINGS AGAINST MORTGAGOR IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 5.8 No Merger. The rights and estate created by this
Mortgage shall not, under any circumstances, be held to have merged into any
other estate or interest now owned or hereafter acquired by Mortgagee unless
Mortgagee shall have consented to such merger in writing.
-41-
SECTION 5.9 Modification in Writing. No amendment, modification,
supplement, termination or waiver of or to any provision of this Mortgage, nor
consent to any departure by Mortgagor therefrom, shall be effective unless the
same shall be done in accordance with the terms of the Credit Agreement and
unless in writing and signed by Mortgagee. Any amendment, modification or
supplement of or to any provision of this Mortgage, any waiver of any provision
of this Mortgage and any consent to any departure by Mortgagor from the terms of
any provision of this Mortgage shall be effective only in the specific instance
and for the specific purpose for which made or given. Except where notice is
specifically required by this Mortgage or any other Loan Document, no notice to
or demand on Mortgagor in any case shall entitle Mortgagor to any other or
further notice or demand in similar or other circumstances.
SECTION 5.10 No Credit for Payment of Taxes or Impositions.
Mortgagor shall not be entitled to any credit against the principal, premium, if
any, or interest payable under the Credit Agreement, and Mortgagor shall not be
entitled to any credit against any other sums which may become payable under the
terms thereof or hereof, by reason of the payment of any tax or other
impositions on the Mortgaged Property or any part thereof.
SECTION 5.11 Stamp and Other Taxes. Subject to the provisions of
subsection 1.5.5 relating to permitted contests, Mortgagor shall pay any United
States documentary stamp taxes, with interest and fines and penalties, and any
mortgage recording taxes, with interest and fines and penalties, that may
hereafter be levied, imposed or assessed under or upon or by reason of this
Mortgage or the Secured Obligations or any instrument or transaction affecting
or relating to either thereof and in default thereof Mortgagee may advance the
same and the amount so advanced shall be payable by Mortgagor to Mortgagee
within ten (10) days after demand therefor, together with interest thereon at
the Default Rate.
SECTION 5.12 Estoppel Certificates. Mortgagor shall, from time to
time, upon thirty (30) days' prior written request of Mortgagee, execute,
acknowledge and deliver to Mortgagee a certificate signed by an authorized
officer or officers stating that this Mortgage, the Credit Agreement and the
other Loan Documents are unmodified and in full force and effect (or, if there
have been modifications, that this Mortgage, the Credit Agreement or such Loan
Document, as applicable, is in full force and effect as modified and setting
forth
-42-
such modifications) and stating the date to which principal and interest have
been paid on the Loans.
SECTION 5.13 Additional Security. Without notice to or consent of
Mortgagor and without impairment of the Lien and rights created by this
Mortgage, Mortgagee may accept (but Mortgagor shall not be obligated to furnish)
from Mortgagor or from any other Person or Persons, additional security for the
Secured Obligations. Neither the giving of this Mortgage nor the acceptance of
any such additional security shall prevent Mortgagee from resorting, first, to
such additional security, and, second, to the security created by this Mortgage
without affecting Mortgagee's Lien and rights under this Mortgage.
SECTION 5.14 Release. The Mortgaged Property shall be released from
the Lien of this Mortgage in accordance with the provisions of the Credit
Agreement or at such time as all Secured Obligations have been paid in full and
the Commitments of the Lenders to make any Loan or issue any Letter of Credit
under the Credit Agreement shall have expired or been sooner terminated.
Mortgagee, on the written request and at the expense of Mortgagor, will execute
and deliver such proper instruments of release and satisfaction or assignment as
may reasonably be requested to evidence such release or assignment, and any such
instrument, when duly executed by Mortgagee and duly recorded by Mortgagor in
the places where this Mortgage is recorded, shall conclusively evidence the
release or assignment of this Mortgage.
SECTION 5.15 Certain Expenses of Mortgagee. If any action, suit or
other proceeding affecting the Mortgaged Property or any part thereof be
commenced, in which action, suit or proceeding Mortgagee is made a party or
participates or in which the right to use the Mortgaged Property or any part
thereof is threatened, or in which it becomes necessary in the judgment of
Mortgagee to defend or uphold the Lien of this Mortgage (including, without
limitation, any action, suit or proceeding to establish or uphold the compliance
of the Improvements with any Requirements of Law), then all amounts paid or
incurred by Mortgagee for the expense of any such action, suit or other
proceeding or to protect its rights therein (whether or not it is made or
becomes a party thereto) or otherwise to enforce or defend the rights and Lien
created by this Mortgage, shall be paid by Mortgagor upon demand together with
interest at the Default Rate from the date of the payment or incurring thereof
to the date of repayment, and any such amount and the interest thereon shall be
a Lien on the Mortgaged Property, prior to any right, or right to, interest
-43-
in, or claim upon the Mortgaged Property attaching or accruing subsequent to or
otherwise subordinate to the Lien of this Mortgage, and the same shall be deemed
to be secured hereby. All other amounts paid, advanced or incurred by Mortgagee
in order to secure and protect the Lien of this Mortgage or other security
provided hereunder shall be a like Lien on the Mortgaged Property and be deemed
to be secured hereby.
SECTION 5.16 Expenses of Collection. Mortgagor will upon demand pay
to Mortgagee the amount of any and all expenses, including the fees and expenses
of its counsel and the fees and expenses of any experts and agents, which
Mortgagee may incur in connection with (i) the collection of the Secured
Obligations, (ii) the enforcement and administration of this Mortgage, (iii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Mortgaged Property, (iv) the exercise or
enforcement of any of the rights of Mortgagee or any Secured Party hereunder or
(v) the failure by Mortgagor to perform or observe any of the provisions hereof.
All amounts payable by Mortgagor under this Section 5.16 shall be due upon
demand and shall be part of the Secured Obligations. Mortgagor's obligations
under this Section shall survive the termination of this Mortgage and the
discharge of Mortgagor's other obligations hereunder.
SECTION 5.17 Business Days. In the event any time period or any date
provided in this Mortgage ends or falls on a day other than a Business Day, then
such time period shall be deemed to end and such date shall be deemed to fall on
the next succeeding Business Day, and performance herein may be made on such
Business Day, with the same force and effect as if made on such other day.
SECTION 5.18 Relationship. The relationship of Mortgagee to
Mortgagor hereunder is strictly and solely that of lender and borrower and
mortgagor and mortgagee and nothing contained in the Credit Agreement, this
Mortgage or any other document or instrument now existing and delivered in
connection therewith or otherwise in connection with the Secured Obligations is
intended to create, or shall in any event or under any circumstance be construed
as creating a partnership, joint venture, tenancy-in-common, joint tenancy or
other relationship of any nature whatsoever between Mortgagee and Mortgagor
other than as lender and borrower and mortgagor and mortgagee.
-44-
SECTION 5.19 Concerning Mortgagee.
5.19.1 Mortgagee shall be entitled to rely upon any written notice,
statement, certificate, order or other document or any telephone message
believed by it to be genuine and correct and to have been signed, sent or made
by the proper person, and, with respect to all matters pertaining to this
Mortgage and its duties hereunder, upon advice of counsel selected by it.
5.19.2 With respect to any of its rights and obligations as a
Lender, Mortgagee shall have and may exercise the same rights and powers
hereunder. The term "Lenders," "Lender" or any similar terms shall, unless the
context clearly otherwise indicates, include Mortgagee in its individual
capacity as a Lender. Mortgagee may accept deposits from, lend money to, and
generally engage in any kind of banking, trust or other business with Mortgagor
or any entity related to or affiliated with Mortgagor to the same extent as if
Mortgagee were not acting as administrative agent.
5.19.3 If any item of Mortgaged Property also constitutes collateral
granted to Mortgagee under any other deed of trust, mortgage, security
agreement, pledge or instrument of any type, in the event of any conflict
between the provisions of this Mortgage and the provisions of such other deed of
trust, mortgage, security agreement, pledge or instrument of any type in respect
of such collateral, Mortgagee, in its sole discretion, shall select which
provision or provisions shall control.
5.19.4 Mortgagee has been appointed as Administrative Agent pursuant
to the Credit Agreement. The actions of Mortgagee hereunder are subject to the
provisions of the Credit Agreement. Mortgagee shall have the right hereunder to
make demands, to give notices, to exercise or refrain from exercising any
rights, and to take or refrain from taking action (including, without
limitation, the release or substitution of Mortgaged Property), in accordance
with this Mortgage and the Credit Agreement. Mortgagee may resign and a
successor Mortgagee may be appointed in the manner provided in the Credit
Agreement. Upon the acceptance of any appointment as Mortgagee by a successor
Mortgagee, that successor Mortgagee shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Mortgagee
under this Mortgage, and the retiring Mortgagee shall thereupon be discharged
from its duties and obligations under this Mortgage. After any retiring
Mortgagee's resignation, the provi-
-45-
sions of this Mortgage shall inure to its benefit as to any actions taken or
omitted to be taken by it under this Mortgage while it was Mortgagee.
SECTION 5.20 Future Advances. This Mortgage may secure future
advances. The maximum aggregate amount of all advances of principal under the
Credit Agreement that may be outstanding hereunder at any time is $48,000,000.
SECTION 5.21 Waiver of Stay.
5.21.1 Mortgagor agrees that in the event that Mortgagor or any
property or assets of Mortgagor shall hereafter become the subject of a
voluntary or involuntary proceeding under the Bankruptcy Code or Mortgagor shall
otherwise be a party to any federal or state bankruptcy, insolvency, moratorium
or similar proceeding to which the provisions relating to the automatic stay
under Section 362 of the Bankruptcy Code or any similar provision in any such
law is applicable, then, in any such case, whether or not Mortgagee has
commenced foreclosure proceedings under this Mortgage, Mortgagee shall be
entitled to relief from any such automatic stay as it relates to the exercise of
any of the rights and remedies (including, without limitation, any foreclosure
proceedings) available to Mortgagee as provided in this Mortgage or in any other
Security Document.
5.21.2 Mortgagee shall have the right to petition or move any court
having jurisdiction over any proceeding described in subsection 5.21.1 for the
purposes provided therein, and Mortgagor agrees (i) not to oppose any such
petition or motion and (ii) at Mortgagor's sole cost and expense, to assist and
cooperate with Mortgagee, as may be requested by Mortgagee from time to time, in
obtaining any relief requested by Mortgagee, including, without limitation, by
filing any such petitions supplemental petitions, requests for relief,
documents, instruments or other items from time to time requested by Mortgagee
or any such court.
SECTION 5.22 Continuing Security Interest; Assignment. This Mortgage
shall create a continuing security interest in the Mortgaged Property and shall
(i) be binding upon Mortgagor, its successors and assigns and (ii) inure,
together with the rights and remedies of Mortgagee hereunder, to the benefit of
Mortgagee and the other Secured Parties and each of their respective successors,
transferees and assigns; no other Persons (including, without limitation, any
other creditor of Mortgagor) shall have any interest herein or any right or
-46-
benefit with respect hereto. Without limiting the generality of the foregoing
clause (ii), any Lender may assign or otherwise transfer any indebtedness held
by it secured by this Mortgage to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to such
Lender, herein or otherwise, subject however, to the provisions of the Credit
Agreement.
SECTION 5.23 Obligations Absolute. All obligations of Mortgagor
hereunder shall be absolute and unconditional irrespective of:
(i) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of Mortgagor or any
other Credit Party;
(ii) any lack of validity or enforceability of the Credit Agreement,
any Letter of Credit, any other Loan Document, or any other agreement or
instrument relating thereto;
(iii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Credit
Agreement, any Letter of Credit, any other Loan Document, or any other
agreement or instrument relating thereto;
(iv) any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to any
departure from any guarantee, for all or any of the Secured Obligations;
(v) any exercise or non-exercise, or any waiver of any right,
remedy, power or privilege under or in respect of this Mortgage or any
other Loan Document except as specifically set forth in a waiver granted
pursuant to the provisions of Section 5.9 hereof; or
(vi) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, Mortgagor.
SECTION 5.24 Mortgagee's Right To Sever Indebtedness.
5.24.1 Mortgagor acknowledges that (a) the Mortgaged Property does
not constitute the sole source of security
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for the payment and performance of the Secured Obligations and that the Secured
Obligations are also secured by property of Mortgagor and its Affiliates in
other jurisdictions (all such property, collectively, the "Collateral"), (b) the
number of such jurisdictions and the nature of the transaction of which this
instrument is a part are such that it would have been impracticable for the
parties to allocate to each item of Collateral a specific loan amount and to
execute in respect of such item a separate credit agreement or hedge agreement
and (c) Mortgagor intends that Mortgagee have the same rights with respect to
the Mortgaged Property, in foreclosure or otherwise, that Mortgagee would have
had if each item of Collateral had been secured, mortgaged or pledged pursuant
to a separate credit agreement or hedge agreement, mortgage or security
instrument. In furtherance of such intent, Mortgagor agrees that Mortgagee may
at any time by notice (an "Allocation Notice") to Mortgagor allocate a portion
(the "Allocated Indebtedness") of the Secured Obligations to the Mortgaged
Property and sever from the remaining Secured Obligations the Allocated
Indebtedness. From and after the giving of an Allocation Notice with respect to
the Mortgaged Property, the Secured Obligations hereunder shall be limited to
the extent set forth in the Allocation Notice and (as so limited) shall, for all
purposes, be construed as a separate loan obligation of Mortgagor unrelated to
the other transactions contemplated by the Credit Agreement, any other Loan
Document or any document related to any thereof. To the extent that the proceeds
on any foreclosure of the Mortgaged Property shall exceed the Allocated
Indebtedness, such proceeds shall belong to Mortgagor and shall not be available
hereunder to satisfy any Secured Obligations of Mortgagor other than the
Allocated Indebtedness. In any action or proceeding to foreclose the Lien of
this Mortgage or in connection with any power of sale foreclosure or other
remedy exercised under this Mortgage commenced after the giving by Mortgagee of
an Allocation Notice, the Allocation Notice shall be conclusive proof of the
limits of the Secured Obligations hereby secured, and Mortgagor may introduce,
by way of defense or counterclaim, evidence thereof in any such action or
proceeding. Notwithstanding any provision of this Section 5.24, the proceeds
received by Mortgagee pursuant to this Mortgage shall be applied by Mortgagee in
accordance with the provisions of subsection 3.3.3 hereof.
5.24.2 Mortgagor hereby waives to the greatest extent permitted
under law the right to a discharge of any of the Secured Obligations under any
statute or rule of law now or hereafter in effect which provides that
foreclosure of the Lien of this Mortgage or other remedy exercised under this
-48-
Mortgage constitutes the exclusive means for satisfaction of the Secured
Obligations or which makes unavailable a deficiency judgment or any subsequent
remedy because Mortgagee elected to proceed with a power of sale foreclosure or
such other remedy or because of any failure by Mortgagee to comply with laws
that prescribe conditions to the entitlement to a deficiency judgment. In the
event that, notwithstanding the foregoing waiver, any court shall for any reason
hold that Mortgagee is not entitled to a deficiency judgment, Mortgagor shall
not (a) introduce in any other jurisdiction such judgment as a defense to
enforcement against Mortgagor of any remedy in the Credit Agreement or any other
Loan Document or (b) seek to have such judgment recognized or entered in any
other jurisdiction, and any such judgment shall in all events be limited in
application only to the state or jurisdiction where rendered.
5.24.3 In the event any instrument in addition to the Allocation
Notice is necessary to effectuate the provisions of this Section 5.24,
including, without limitation, any amendment to this Mortgage, any substitute
promissory note or affidavit or certificate of any kind, Mortgagee may execute,
deliver or record such instrument as the attorney-in-fact of Mortgagor. Such
power of attorney is coupled with an interest and is irrevocable.
5.24.4 Notwithstanding anything set forth herein to the contrary,
the provisions of this Section 5.24 shall be effective only to the maximum
extent permitted by law.
-S1-
IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be duly
executed and delivered under seal the day and year first above written.
________________________________________
Mortgagor
By:_____________________________________
Name:
Title:
ACKNOWLEDGMENT
STATE OF ____________)
) ss.
COUNTY OF ___________)
I, the undersigned, a notary public in and for said County, in the
State aforesaid, DO HEREBY CERTIFY that ________________________________
personally known to me to be the ______________________ of _________________, a
_____________ corporation, and personally known to me to be the same person
whose name is subscribed to the foregoing instrument, appeared before me this
day in person and acknowledged that as such __________________________, he/she
signed and delivered the said instrument and caused the corporate seal of said
corporation to be affixed thereto, pursuant to authority given by the Board of
Directors of said corporation, as his/her free and voluntary act and as the free
and voluntary act and deed of said corporation, for the uses and purposes
therein set forth.
GIVEN under my hand and official seal this day of ____________,
19_____
_____________________________________
Notary Public
My commission expires:________________
Schedule A
[Legal Description]
[to come from title policy]
Schedule B
(Prior Liens)
[to come from title policy]
[EXHIBIT E]
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement, dated as of March 19,
1999 (as amended from time to time, the "Credit Agreement"), among PRECISION
PARTNERS INC., a Delaware Corporation (the "Borrower"), the Guarantors from time
to time thereunder, the several banks and other financial institutions or
entities from time to time parties to the Credit Agreement (the "Lenders"),
CITICORP U.S.A., INC., as Administrative Agent, NATIONSBANK, N.A., as
Syndication Agent, and SUNTRUST BANK, ATLANTA, as Documentation Agent.
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to them in the Credit Agreement.
11. The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse, from
the Assignor, effective as of the Effective Date set forth below (but not prior
to the registration of the information contained herein in the Register pursuant
to Section 10.6(d) of the Credit Agreement), the interests set forth below (the
"Assigned Interest") in the Assignor's rights and obligations under the Credit
Agreement, including, without limitation, the amounts and percentages set forth
below of the Loans owing to the Assignor which are outstanding on the Effective
Date. Each of the Assignor and the Assignee hereby makes and agrees to be bound
by all the representations, warranties and agreements set forth in Section
10.6(b) and (c) of the Credit Agreement, a copy of which has been received by
each such party. From and after the Effective Date (i) the Assignee shall be a
party to and be bound by the provisions of the Credit Agreement and, to the
extent of the interests assigned by this Assignment and Acceptance, have the
rights and obligations of a Lender thereunder and under the Loan Documents and
(ii) the Assignor shall, to the extent of the interests assigned by this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.
12. The Assignor hereby instructs the Administrative Agent to make
all payments from and including the Effective Date hereof in respect of the
interest assigned hereby, directly to the Assignee. The Assignor and the
Assignee agree that all interest and fees accrued up to, but not including, the
Effective Date of the assignment and delegation being made hereby are the
property of the Assignor, and not the Assignee. The Assignee agrees that, upon
receipt of any such interest or fees accrued up to the Effective Date, or any
other payments in respect of the interest assigned hereby applicable to the
period prior to the Effective Date, the Assignee will promptly remit the same to
the Assignor in the same funds received by the Assignee.
13. The Assignor and the Assignee agree that all interest and fees
accruing from and after the Effective Date of the assignment and delegation
being made hereby are the property of the Assignee, and not the Assignor. The
Assignor agrees that, upon receipt of any such interest or fees accruing from
and after the Effective Date or any other payments in respect of the interest
assigned hereby applicable to the period from and after the Effected Date, the
Assignor will promptly remit the same to the Assignee in the same funds received
by the Assignor.
E-1
14. This assignment shall be made without recourse to or warranty by
the Assignor, except as set forth herein. Assignee represents and warrants that
it is a Person to which assignments are permitted pursuant to Section 10.6 of
the Credit Agreement. Assignor represents and warrants, as of the Effective
Date, that it is the legal and beneficial owner of the interest being assigned
and delegated by it hereunder and that such interest is free and clear of any
pledge, encumbrance or other adverse claim or interest created by Assignor.
15. This Assignment and Acceptance is being delivered to the
Administrative Agent together with (i) if the Assignee is organized under the
laws of a jurisdiction outside the United States, the forms specified in Section
2.15(d) of the Credit Agreement, duly completed and executed by such Assignee,
and (ii) if the Assignee is not already a Lender under the Credit Agreement, an
Administrative Questionnaire in the form of Annex I hereto.
16. This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of New York.
Date of Assignment: [ ]
Legal Name of Assignor: [ ]
Legal Name of Assignee: [ ]
Assignee's Address for Notices:
[
]
Phone: [ ]
Fax: [ ]
Attention: [ ]
Effective Date of Assignment: [ ]
Term Percentage
Term Commitment Principal Amount Assigned (to 8 decimal places)
--------------- ------------------------- ---------------------
[$ ] [ ]
Revolving Percentage
Revolving Commitment Principal Amount Assigned (to 8 decimal places)
-------------------- ------------------------- ---------------------
[$ ] [ ]
E-2
The terms set forth above are
hereby agreed to: Accepted(3)
[ASSIGNOR], CITICORP U.S.A., INC., as Administrative Agent
as Assignor
By: _____________________ By: ______________________________
Name: Name
Title: Title:
[ASSIGNEE], PRECISION PARTNERS INC.
as Assignee
By: _____________________ By: ______________________________
Name: Name
Title: Title:
---------------------
(3) To be completed to the extent consents are required under Section 10.6 of
the Credit Agreement.
E-3
ANNEX I
ADMINISTRATIVE QUESTIONNAIRE
BORROWER: Precision Partners Inc.
OPERATIONS LETTER OF CREDIT LEGAL
LOAN CONTACT CONTACT COUNSEL
---- ------- ------- -------
OFFICER
-------
NAME: __________ __________ __________ __________
___ ___ ___ ___
TITLE: __________ __________ __________ __________
___ ___ ___ ___
ADDRESS: __________ __________ __________ __________
___ ___ ___ ___
__________ __________ __________ __________
___ ___ ___ ___
__________ __________ __________ __________
___ ___ ___ ___
TELEPHONE: __________ __________ __________ __________
___ ___ ___ ___
FACSIMILE #: __________ __________ __________ __________
___ ___ ___ ___
E-MAIL __________ __________ __________ __________
ADDRESS: ___ ___ ___ ___
[ASSIGNEE]
By: ____________________________________
Name:
Title:
E-4
ANNEX B
PAYMENT INSTRUCTIONS
BORROWER: Precision Partners Inc.
U.S. DOLLARS (FED WIRE INSTR)
-----------------------------
Pay to: _____________________________
_____________________________
(Name of Bank)
_____________________________
(Address)
_____________________________
(City, State, Zip)
__________ _____________
(ABA#) (Account #)
_____________________________
(Attention)
PAYMENT INSTRUCTIONS
U.S. DOLLARS (FED WIRE INSTRUCTIONS)
------------------------------------
Pay to: [ ]
[ ]
ABA #
Attn: Commercial Lending Services Dept.
Ref: [ ]
[ASSIGNEE]
By: ____________________________________
Name:
Title:
E-5
EXHIBIT F
[Letterhead of Xxxxx, Day, Xxxxxx & Xxxxx]
March 19, 1999
Citicorp U.S.A., Inc., as Administrative Agent,
and the Lenders Referred to Below
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Re: Credit Agreement among Calbrit Design, Inc., Certified
Fabricators, Inc., Galaxy Industries Corporation, General
Automation, Inc., Mid State Machine Products, Nationwide
Precision Products Corp., Precision Partners Holding Company,
Precision Partners, Inc., the Lenders named therein, and
Citicorp U.S.A., Inc., as Administrative Agent, NationsBank,
N.A., as Syndication Agent and Sun Trust Bank, Atlanta, as
Documentation Agent
Ladies and Gentlemen:
We have acted as special New York, California, Illinois and Texas counsel
for Precision Partners, Inc., a Delaware corporation (the "Borrower"), Calbrit
Design, Inc., a California corporation ("Calbrit Design"), Certified
Fabricators, Inc., a California corporation ("Certified Fabricators"), Galaxy
Industries Corporation, a Michigan corporation ("Galaxy Industries"), General
Automation, Inc., an Illinois corporation ("General Automation"), Mid State
Machine Products, a Maine corporation ("Mid State Machine"), Nationwide
Precision Products Corp., a New York corporation ("Nationwide") and Precision
Partners Holding Company, a Delaware corporation ("Precision Holding"), in
connection with the Credit Agreement, dated as of the date hereof (the "Credit
Agreement"), among the Borrower, Calbrit Design, Certified Fabricators, Galaxy
Industries, General Automation, Mid State Machine, Nationwide, Precision
Holding, the lenders named therein (collectively, the "Lenders"), Citicorp
U.S.A., Inc., as administrative agent for the Lenders (in such capacity, the
"Administrative Agent"), NationsBank. N.A., as Syndication Agent, and Sun Trust
Bank, Atlanta, as Documentation Agent.
Calbrit Design, Certified Fabricators, Galaxy Industries, General
Automation, Mid State Machine and Nationwide are referred to herein collectively
as the "Precision Subsidiaries" and each individually as a "Precision
Subsidiary." The Precision Subsidiaries and Precision Holding are referred to as
the "Precision Parties" and each as a "Precision Party." The Borrower and the
Precision Parties are referred to herein collectively as the "Loan Parties" and
each individually as a "Loan Party."
This opinion letter is delivered to you pursuant to Section 5.1(o) of the
Credit Agreement. Capitalized terms used herein and not otherwise defined herein
have the meanings assigned to such terms in the Credit Agreement. The Uniform
Commercial Code, as amended and in effect in the State of New York, is referred
to herein as the "NY UCC." The Uniform Commercial Code, as
amended and in effect in the State of California, is referred to herein as the
"CA UCC." The Uniform Commercial Code, as amended and in effect in the State of
Illinois, is referred to herein as the "IL UCC." The Uniform Commercial Code, as
amended and in effect in the State of Texas, is referred to herein as the "TX
UCC." The NY UCC, the CA UCC, the IL UCC and TX UCC, as applicable, are referred
to herein collectively as the "UCC" and section references to the UCC used
herein are to the comparable sections of the NY UCC, CA UCC, IL UCC and TX UCC.
With your permission, all assumptions and statements of reliance herein
have been made without any independent investigation or verification on our part
except to the extent otherwise expressly stated, and we express no opinion with
respect to the subject matter or accuracy of the assumptions or items upon which
we have relied. This opinion letter is subject to, and is to be construed in
accordance with, the principles and limitations set forth in the Special Report
by the TriBar Opinion Committee, U.C.C. Security Interest Opinions, 49 Bus. Law.
362 (1993).
In connection with the opinions expressed herein, we have examined such
documents, records and matters of law as we have deemed necessary for the
purposes of this opinion. We have examined, among other documents, the
following:
(a) An executed copy of the Credit Agreement;
(b) An executed copy of the Holdco Guarantee;
(c) An executed copy of the Guarantee by each Precision Subsidiary;
(d) An executed copy of the Security Agreement;
(e) An executed copy of the Securities Pledge Agreement;
(f) An executed copy of the Collateral Assignment of Sublease,
Subordination, Non-disturbance and Attornment Agreement assigning
the sublease of the premises located at 000 Xxxx Xxxx Xxxxx,
Xxxxxxxxx, Xxx Xxxx (the "New York Collateral Assignment");
(g) An executed copy of the respective mortgages encumbering the
premises located at 0000 Xxxxxxx Xxxxxx, Xxxxx Xxxx, Xxxxxxxxxx,
0000 Xxxxxx Xxxxxx, Xxxxx Xxxx, Xxxxxxxxxx, 0000 Xxxxxx Xxxx., Xxxxx
Xxxx, Xxxxxxxxxx and 00000 Xxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxx,
respectively (the "California Mortgages");
(h) An executed copy of the respective mortgages encumbering the
premises located at 0000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxx and 0000
Xxxxx Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxx, respectively (the "Illinois
Mortgages");
(i) Unfiled copies of certain UCC-1 financing statements naming the
Borrower (collectively, the "Borrower Financing Statements") or a
Precision Party (collectively, the "Precision Party Financing
Statements," and together with the Borrower Financing Statements,
the "Financing Statements"), as the case may be, as debtor and the
Administrative Agent as secured party, forms of which are
2
attached hereto as Annex A, which Borrower Financing
Statements we understand will be filed in the office of the
Secretary of State of Texas (the "Borrower Filing Office") and
which Precision Party Financing Statements we understand will be
filed, as the case may be, in the offices shown on Annex C
attached hereto (collectively, the "Precision Party Filing
Offices" and collectively with the Borrower Filing Office, the
"Filing Offices"); and
(j) The respective Officer's Certificates of the Borrower and each of
the Loan Parties delivered to us in connection with this opinion
letter (as to each such company, the "Officer's Certificate," and,
collectively, the "Officer's Certificates").
The documents referred to in items (a) through (e) above are referred to
herein collectively as the "Non-Mortgage Documents." The documents referred to
in items (f) through (h) above are referred to herein collectively as the
"Mortgages." The documents referred to in items (a) through (h) above are
referred to herein collectively as the "Documents."
In all such examinations, we have assumed the legal capacity of all
natural persons executing documents, the genuineness of all signatures, the
authenticity of original and certified documents and the conformity to original
or certified copies of all copies submitted to us as conformed or reproduction
copies. As to various questions of fact relevant to the opinions expressed
herein, we have relied upon, and assume the accuracy of, representations and
warranties contained in the Documents and certificates and oral or written
statements and other information of or from representatives of the Loan Parties
and others and assume compliance on the part of all parties to the Documents
with their covenants and agreements contained therein. In connection with the
opinions expressed in clause (a) of paragraph 1 below, we have relied solely
upon certificates of public officials. With respect to the opinions expressed in
clauses (i) and (iii)(A) of paragraph 2 below, our opinions are limited (x) to
our actual knowledge, if any, of the specially regulated business activities and
properties of each Loan Party based solely upon the Officer's Certificate for
such Loan Party and (y) to our review of only those laws and regulations that,
in our experience, are normally applicable to transactions of the type
contemplated by the Documents.
Based upon the foregoing, and subject to the limitations, qualifications
and assumptions set forth herein, we are of the opinion that:
1. Each of the Borrower, Calbrit Design, Certified Fabricators, General
Automation, Nationwide, and Precision Holding (the "Specified Loan Parties" and
each a "Specified Loan Party") (a) is a corporation validly existing and in good
standing under the laws of the state of its formation and (b) has the corporate
power and authority to execute, deliver and perform its obligations under the
Documents to which it is a party. All of the issued and outstanding capital
stock of each Precision Subsidiary is held of record by the Borrower.
2. The execution and delivery by each Specified Loan Party to the
Administrative Agent and the Lenders of the Documents to which such Specified
Loan Party is a party, and the performance of its obligations thereunder and the
granting of the security interests provided for in the Security Agreement, the
Securities Pledge Agreement and the Mortgages to which such Specified Loan Party
is a party have been duly authorized by all necessary corporate action by each
such Specified Loan Party. The execution and delivery to the Administrative
Agent and the
3
Lenders by each Loan Party of each of the Documents to which it is a party,
and the performance of its obligations thereunder, and the granting by each
Loan Party of the security interests provided for in the Security Agreement,
the Securities Pledge Agreement and the Mortgages to which such Loan Party is
a party (i) do not require under present law any filing or registration by
any Loan Party, with, or approval, permit, authorization, license or consent
to any Loan Party of, any governmental agency or authority of the State of
New York, the State of California, the State of Delaware pursuant to the
General Corporation Law of the State of Delaware (the "DGCL"), the State of
Texas, the State of Illinois or the United States of America that has not
been made or obtained, except for such filings, registrations, approvals,
permits, authorizations, licenses and consents (A) required in the ordinary
course of business in connection with the performance by any Loan Party of
its obligations under certain covenants contained in the Documents, (B)
required to perfect the security interests and liens created under the
Security Agreement, the Securities Pledge Agreement and the Mortgages, and
(C) required pursuant to securities and other laws that may be applicable to
the disposition of any Collateral, and (ii) do not contravene any provision
of the Certificate of Incorporation or Articles of Association, as the case
may be, or the bylaws of the Specified Loan Parties, and (iii) do not violate
(A) any present law, or present regulation of any governmental agency or
authority, of the States of New York, California, Texas or Illinois or of the
United States of America in each case known by us to be applicable to any
Loan Party or its property, except as disclosed on Schedule 4.4 to the Credit
Agreement, (B) the DGCL or (C) any agreement binding upon any Loan Party or
its respective property, except as disclosed on Schedule 4.4 to the Credit
Agreement, or any court decree or order binding upon any Loan Party or its
respective property (this opinion being limited (x) to those agreements,
decrees or orders listed on Annex B hereto and (y) in that we express no
opinion with respect to any violation not ascertainable from the face of any
such agreement, decree or order, or arising under or based upon any cross
default provision insofar as it relates to a default under an agreement not
listed on Annex B, or arising under or based upon any covenant of a financial
or numerical nature or requiring computation), and (iv) will not result in or
require the creation or imposition of any security interest or lien pursuant
to the provisions of any agreement binding upon any Loan Party on its
properties other than the security interests created by the Security
Agreement, the Securities Pledge Agreement and the Mortgages to which such
Specified Loan Party is a party and any rights of set-off or other liens in
favor of the Administrative Agent or the Lenders arising under any of the
Documents or applicable law (this opinion being limited to those agreements
listed on Annex B).
3. Each of the Documents has been duly executed and delivered on behalf of
each Specified Loan Party that is a party thereto, and each of the Non-Mortgage
Documents and the New York Collateral Assignment constitutes an obligation of
each Loan Party that is a party thereto enforceable against such Loan Party
under the laws of the State of New York in accordance with its terms.
4. The borrowings by the Borrower under the Credit Agreement and the
application of the proceeds thereof as provided in the Credit Agreement will not
violate Regulation U or X of the Board of Governors of the Federal Reserve
System.
5. The Borrower is not an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or a "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company," or of a "subsidiary company" of a
4
"holding company," within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
6. Upon the making of the initial loans under the Credit Agreement, the
provisions of the Security Agreement are sufficient to create in favor of the
Administrative Agent for the benefit of the Lenders a valid security interest in
all right, title and interest of the Loan Parties in those items and types of
Pledged Collateral (as defined in the Security Agreement and the Securities
Pledge Agreement) in which a security interest may be created under Article 9 of
the NY UCC (such Pledged Collateral hereinafter called the "Article 9
Collateral").
7. Upon creation of such security interest in the Article 9 Collateral and
due filing of the Financing Statements with the Filing Offices, the
Administrative Agent will have, for the benefit of the Lenders, a perfected
security interest in that portion of the Article 9 Collateral in which a
security interest is perfected by filing a financing statement under the Uniform
Commercial Code as in effect in each of the states where a relevant Filing
Office is located.
8. Upon the making of the initial loans under the Credit Agreement, the
Security Agreement and the Securities Pledge Agreement, together with physical
delivery of the certificated securities identified on Schedule I-A to the
Security Agreement and Schedule I to the Securities Pledge Agreement (the
"Pledged Securities") to the Administrative Agent, for the benefit of the
Lenders, in the State of New York creates in favor of the Administrative Agent,
for the benefit of the Lenders, as security for the Secured Obligations (as
defined in the Security Agreement and the Securities Pledge Agreement) a
perfected security interest under the NY UCC in each Loan Party's right, title
and interest in the Pledged Securities pledged and so delivered by such Loan
Party.
9. Upon the making of the initial loans under the Credit Agreement, the
Security Agreement, together with physical delivery of the instruments
identified in Schedule II to the Security Agreement (the "Pledged Notes") to the
Administrative Agent for the benefit of the Lenders, in the State of New York,
creates in favor of the Administrative Agent, for the benefit of the Lenders, as
security for the Secured Obligations (as defined in the Security Agreement), a
perfected security interest under the NY UCC in each Loan Party's right, title
and interest in the Pledged Notes pledged and so delivered by such Loan Party.
10. The obligations of the Borrower under the Credit Agreement and the
obligations of each Precision Subsidiary under its respective Subsidiary
Guarantee constitute Senior Debt and Guarantor Senior Debt, respectively, as
defined in the Senior Subordinated Indenture.
11. A court of the State of Texas applying Texas law should enforce the
choice of law provisions contained in the Loan Documents and apply the law of
the State of New York to the Loan Documents. The opinion expressed in this
paragraph 11 is based upon Section 35.51 of the Tex. Bus. & Com. Code Xxx.,
which became effective on September 1, 1993. To our knowledge, no court has yet
construed this statute, and our opinion is therefore limited by any subsequent
judicial interpretation thereof. For purposes of the opinion expressed in this
paragraph 11, we (i) express no opinion as to the determination of the law
governing any issue relating to the transfer, creation, nature or recordation of
any interest in real property, or the method for foreclosure on real property,
or any issue that a statute of the United States provides is governed by the
laws of another jurisdiction, and (ii) have assumed that (A) the Loan Documents
constitute the
5
valid and binding obligation of each of the parties thereto (other than the
Company and the Guarantors) enforceable against each of such parties in
accordance with its terms, and (B) payments delivered to the Administrative
Agent pursuant to the Credit Agreement will be delivered in the State of New
York, the Administrative Agent is a resident of the State of New York and
maintains its principal office in the State of New York from which it
conducted a substantial part of the negotiations relating to the Loan
Documents and the transactions contemplated thereby, and/or a substantial
part of such negotiations, including the execution of the Loan Documents by
the Administrative Agent, occurred in the State of New York.
12. While we are aware of no case that presents facts identical to those
involved in the transactions contemplated by the Loan Documents, and
consequently cannot provide an unqualified opinion with respect to this matter,
we believe that, in a properly presented case, an Illinois court or a federal
court applying Illinois law would, under the conflict of laws principles
observed by the courts of Illinois, give effect to the parties' choice of the
law of the State of New York set forth in the Loan Documents. In arriving at
this conclusion, we have relied upon Illinois state and federal case law, which
provides that parties to a multijurisdictional transaction are free to designate
the law that will govern any future dispute arising out of the contract.
Wonderlic Agency, Inc. v. Acceleration Corp., 624 F. Supp. 801, 803 (N.D. Ill.
1984); Xxxxxx v. Nationwide Life Ins. Co., 59 Ill. 2d 522, 529, 322 N.E.2d 454,
458 (Ill. 1975); Xxxxxx/Xxxxxx x. Basins, Inc., 217 Ill. App. 3d 958, 578 N.E.2d
37, 40 (Ill. App.), appeal denied, 142 Ill. 2d 653, 584 N.E.2d 129 (Ill. 1991).
Courts applying Illinois law have held that express choice of law provisions are
valid and should be enforced unless the choice of law provision contravenes
Illinois public policy or there is no reasonable relationship between the chosen
forum and the parties or the transaction. Xxxxxxxxxxx v. Shearson Xxxxxx Xxxxxx,
20 X.0x 000, 000 (0xx Xxx. 0000), rev'd on other grounds, 000 X. Xx. 0000
(1995); Hartford x. Xxxxx Int'l Security Services, 172 Ill. App. 3d 184, 187,
526 N.E.2d 463, 464 (Ill. App. 1988), appeal denied, 124 Ill. 2d 562, 535 N.E.2d
914 (Ill. 1989); Potomac Leasing Co. v. Chuck's Pub, Inc., 156 Ill. App. 3d 755,
509 N.E.2d 751, 753-55 (Ill. App. 1987). Based on the current applicable case
law, we do not anticipate that a court applying Illinois law would find that any
of these exceptions apply to the Loan Documents, and that, in the present
circumstances, we believe that the parties' stipulation that the law of New York
should control should be given effect except to the extent that the Loan
Documents address rights or remedies relating to property interests having their
situs in Illinois or deal with matters subject to Illinois regulation. This
opinion is based upon our understanding that the transactions provided for in
the Loan Documents were negotiated primarily in New York, the principal Loan
Documents were executed, delivered and are to be performed primarily in New
York, and the Administrative Agent has its chief place of business in the State
of New York.
13. The choice of law provisions set forth in the Loan Documents that
select the law of the State of New York as the governing law for such Loan
Documents are enforceable under the laws of the State of California, subject to
the qualifications set forth in this paragraph below.
(a) The California Supreme Court has upheld express contractual
choice of law provisions with respect to substantive (as opposed to
procedural) matters between and among sophisticated parties to a
commercial transaction where the jurisdiction whose law has been chosen to
govern has a substantial relationship to the transaction or there is
another reasonable basis for the parties' choice of law and the
application of the law of the chosen jurisdiction would not be contrary to
a fundamental policy of the State of California.
6
Nedlloyd Lines B.V. v. Superior Court, 3 Cal. 4th 459, 84 P.2d 1148, 11
Cal. Rptr. 2d 330 (1992). The Nedlloyd court took a position contrary
to that of certain prior decisions of intermediate appellate courts of
the State of California and federal courts sitting in, and applying the
laws of, the State of California that distinguished between contractual
and tortious claims. The Nedlloyd court held that "a valid choice-of-law
clause, which provides that a specified body of law 'governs' the
'agreement' between the parties, encompasses all causes of action
arising from or related to that agreement, regardless of how they are
characterized, including tortious breaches of duties emanating from the
agreement or the legal relationships it creates." Nedlloyd at 470. Thus,
we express no opinion as to the substantive law that would be applied in
an action between or among parties to the Loan Documents if a court were
to characterize the issue at stake as one that does not arise from or
relate to the Loan Documents.
(b) The California Supreme Court has not set forth all of the
factors to be considered in determining the existence of a substantial
relationship to a transaction, but some of the factors considered by
intermediate appellate and federal courts sitting in, and applying the
laws of the State of California include, inter alia: (i) the place of
performance of the agreement; (ii) the place of execution of the
agreement; (iii) the location from which and to which proceeds are
disbursed; (iv) the place of the last act which effectuated the agreement;
(v) the location of the parties; (vi) the place where the terms of the
agreement were negotiated; (vii) the existence of a choice of law clause;
and (viii) the sophistication of the parties and commercial nature of the
transaction. No case expressly analyzes all of these factors in deciding
whether, on the facts before the court, a substantial relationship exists,
but it is clear that ultimately the determination is fact-intensive. It is
our understanding that, and our opinion concerning enforceability of the
choice of law provisions in the Loan Documents will be governed by the law
of the State of New York is based upon, the following assumptions: (I) the
transactions contemplated by the Loan Documents will be performed in
substantial part in the State of New York; (II) the Loan Documents will be
executed and delivered in the State of New York and effectuated in
substantial part in the State of New York; (III) the Loan Documents were
negotiated primarily in the State of New York; and (IV) the Administrative
Agent has its chief place of business in the State of New York.
(c) We further advise you that, in evaluating whether the
application of the law of the chosen state is violative of a fundamental
California policy, California courts and federal courts sitting in, and
applying the laws of, the State of California should evaluate each
individual issue separately. It is impossible to determine in the abstract
whether any individual claim will violate a fundamental policy of the
State of California, and we are not in a position to opine that any and
all matters that could be raised would not be violative of a fundamental
public policy of the State of California. Thus, we cannot and do not opine
that the choice of law provisions contained within the Loan Documents will
be upheld in every instance.
(d) In particular with respect to obtaining of or enforcement of any
deficiency judgement, we direct your attention to the limitations and
qualifications set forth above in this letter; and with respect to usury,
we note that the case law in California is divided as to whether
California has a strong or fundamental public policy against usury. See,
e.g., Ury
7
v. Jeweler's Acceptance Corp., 227 Cal. App. 2d 11, 38 Cal. Rptr. 376
(1964); and Sarlot-Kantarjian v. First-Pennsylvania Mortgage Trust, 599
F.2d 915 (9th Cir. 1995). But see, e.g., Gamer x. xxXxxx Galore Forgan,
Inc., 65 Cal. App. 3d 280, 135 Cal. Rptr. 230 (1976); and Mencor
Enterprises, Inc. v. Hets Equities Corporation, 190 Cal. App. 3d 432,
235 Cal. Rptr. 464 (1987).
To our Actual Knowledge, there is no pending litigation, governmental
proceeding or investigation that (A) seeks to restrain, enjoin, prevent the
consummation of or otherwise challenge the transactions contemplated by the
Documents or (B) questions the legality or validity of any of the Documents or
seeks to recover damages or obtain other relief in connection with the
Documents.
As used herein, "Actual Knowledge" has the meaning provided for the
"Opinion Giver's Actual Knowledge" in the Legal Opinion Accord of the ABA
Section of Business Law (1991).
The opinions set forth above are subject to the following qualifications:
(A) Our opinions above as to enforceability are subject to (i) applicable
bankruptcy, insolvency, reorganization, fraudulent transfer, voidable
preference, moratorium or similar laws, and related judicial doctrines, from
time to time in effect affecting creditors' rights and remedies generally, (ii)
general principles of equity (including, without limitation, standards of
materiality, good faith, fair dealing and reasonableness, equitable defenses and
limits on the availability of equitable remedies), whether such principles are
considered in a proceeding at law or in equity, and (iii) the qualification that
certain provisions of the Documents may be unenforceable in whole or in part
under the laws (including judicial decisions) of the State of New York or the
United States of America.
(B) We express no opinion as to the enforceability of any provision in the
Documents:
(i) permitting the Administrative Agent, any Lender or any other
person or entity to sell or otherwise dispose of, or purchase, any
collateral subject thereto, or enforce any other right or remedy
thereunder (including without limitation any self-help or taking-
possession remedy), except in compliance with the UCC and other applicable
federal, state, local and foreign laws;
(ii) establishing standards for the performance of the obligations
of good faith, diligence, reasonableness and care prescribed by the UCC or
of any of the obligations referred to in Section 9-501(3) of the UCC;
(iii) limiting the ability of any Loan Party or other person or
entity to transfer voluntarily or involuntarily (by way of sale, creation
of a security interest, attachment, levy, garnishment or other judicial
process) its right, title or interest in or to any Collateral subject
thereto or other property, including as contemplated by 9-311 and 9-318 of
the UCC;
(iv) waiving any rights to trial by jury;
8
(v) relating to indemnification, contribution or exculpation in
connection with violations of any securities laws or statutory duties or
public policy, or in connection with willful, reckless or unlawful acts or
gross negligence of the indemnified or exculpated party or the party
receiving contribution;
(vi) providing that any person or entity purchasing a participation
from a Lender or other person or entity pursuant thereto may exercise
set-off or similar rights with respect to such participation or that any
Lender or other person or entity may exercise set-off rights other than
in accordance with and pursuant to applicable law;
(vii) relating to forum selection to the extent that the forum is a
federal court;
(viii) relating to forum selection to the extent that any relevant
action or proceeding does not arise out of or relate to such Document or
to the extent that the enforceability of any such provision is to be
determined by any court other than a court of the State of New York or
relates to a choice of any forum other than the State of New York;
(ix) relating to choice of governing law to the extent that the
enforceability of any such provision is to be determined by any court
other than a court of the State of New York or the State of Texas other
than the Mortgages which choose a governing law other than the law of the
State of New York;
(x) specifying that provisions thereof may be waived only in
writing, to the extent that an oral agreement or an implied agreement by
trade practice or course of conduct has been created that modifies any
provision of the Documents;
(xi) relating to exculpation of any party in connection with its own
negligence that a court would determine in the circumstances under
applicable law to be unfair or insufficiently explicit; or
(xii) giving any person or entity the power to accelerate
obligations or foreclose upon collateral without any notice to the
obligor.
(C) Our opinions as to enforceability are subject to the effect of
generally applicable rules of law that:
(i) limit the availability of a remedy under certain circumstances
when another remedy has been elected;
(ii) may, where less than all of a contract may be unenforceable,
limit the enforceability of the balance of the contract to circumstances
in which the unenforceable portion is not an essential part of the agreed
exchange;
(iii) govern and afford judicial discretion regarding the
determination of damages and entitlement to attorneys' fees and other
costs; and
9
(iv) may permit a party that has materially failed to render or
offer performance required by the contract to cure that failure unless (a)
permitting a cure would unreasonably hinder the aggrieved party from
making substitute arrangements for performance, or (b) it was important in
the circumstances to the aggrieved party that performance occur by the
date stated in the contract.
(D) We express no opinion as to the enforceability of (i) any purported
waiver, release, variation, disclaimer, consent or other agreement to similar
effect (all of the foregoing, collectively, a "Waiver") by any Loan Party under
any of the Documents to the extent limited by Sections 1-102(3) or 9-501(3) of
the UCC or other provisions of applicable law (including judicial decisions), or
to the extent that such a Waiver applies to a right, claim, duty, defense or
ground for discharge otherwise existing or occurring as a matter of law
(including judicial decisions), except to the extent that such a Waiver is
effective under and is not prohibited by or void or invalid under Section 9-501
of the UCC or other provisions of applicable law (including judicial decisions)
or (ii) any Waiver in the Documents insofar as it relates to causes or
circumstances that would operate as a discharge or release of, or defense
available to, any Loan Party thereunder as a matter of law (including judicial
decisions), except to the extent that such a Waiver is effective under and is
not prohibited by or void or invalid under applicable law (including judicial
decisions).
(E) We express no opinion as to the enforceability, creation or perfection
of the security interests purported or intended to be created or perfected
pursuant to any Document in any item of Collateral (other than the Pledged
Securities and Pledged Notes) subject to any restriction on or prohibition
against transfer in any security, instrument or document evidencing or relating
to such item.
(F) Our security interest opinions are subject to the effect thereon of
Sections 9-307, 9-314 and 9-315 of the UCC and do not apply to any Collateral
constituting consumer goods or inventory of a retail merchant as defined in
Section 9102(f) of the CA UCC.
(G) We express no opinion as to the application of, and our opinions above
are subject to the effect, if any, of, any applicable fraudulent conveyance,
fraudulent transfer, fraudulent obligation or preferential transfer law, any
applicable bulk sale or transfer law, and any law governing the liquidation or
dissolution of, or the distribution of assets of, any person or entity
(including, without limitation, any law relating to the payment of dividends or
other distributions on capital stock or the repurchase of capital stock).
(H) Provisions in a guarantee that provide that the guarantor's liability
thereunder shall not be affected by actions or failures to act on the part of
the recipient of the guarantee or by amendments or waivers of provisions of
documents governing the guaranteed obligations might not be enforceable under
circumstances in which such actions, failures to act, amendments or waivers so
radically change the essential nature of the terms and conditions of the
guaranteed obligations that, in effect, a new contract has arisen between such
recipient and the primary obligor on whose behalf the guarantee was issued. We
also bring to your attention that guarantors may have the rights and remedies of
a "debtor" under the UCC.
(I) We note that the obligations of the Loan Parties are intended to be
secured both by personal property and by the California Mortgages, describing
interests in real property situated in
10
the State of California. We express no opinions in this letter concerning the
California Mortgages except to the extent set forth in paragraphs 2 and 3.
Please refer to the separate opinion letter of even date herewith issued by
our Los Angeles, California office for our opinions expressed concerning the
California Mortgages and the assumptions, qualifications and limitations on
those opinions. Furthermore, we advise you that the assumptions,
qualifications and limitations set forth in the opinion letter of even date
herewith issued by our Los Angeles, California office may be applicable to
limit the rights and remedies available to the Lenders under the Documents
which are the subject of this opinion letter.
(J) We have made no examination of and express no opinion as to (i) the
nature or extent of any Loan Party's rights in or title to any of the Pledged
Collateral purported to be conveyed or encumbered by any Document, (ii) the
accuracy of any description of Pledged Collateral, (iii) except to the extent
noted in paragraphs 3, 6-9 above, the enforceability, creation or perfection of
liens or security interests purported or intended to be created or perfected
pursuant to any Document; (iv) the priority of liens or security interests
purported or intended to be created or perfected pursuant to any Document; (v)
the existence of any liens, restrictions, easements or encumbrances on any
Pledged Collateral purported to be encumbered by a Document; or (vi) the
transferability of or effectiveness of any permit, license, franchise or
certificate or other rights or privileges with respect to any Pledged Collateral
(other than the Pledged Notes and Pledged Securities).
(K) For purposes of our opinions above insofar as they relate to Mid State
Machine and Galaxy Industries, we have assumed (i) that each of Mid State
Machine and Galaxy Industries is a corporation existing and in good standing in
its jurisdiction of incorporation, has all requisite power and authority, and
has obtained all requisite corporate, shareholder, third party and governmental
authorizations, consents and approvals, and made all requisite filings and
registrations, necessary to execute, deliver and perform the Documents to which
it is a party and to grant the security interests contemplated thereby (except
to the extent noted in paragraph 2 above), and that such execution, delivery,
performance and grant will not violate or conflict with any law, rule,
regulation, order, decree, judgment, instrument or agreement binding upon or
applicable to Mid State Machine or Galaxy Industries or their respective
properties (except to the extent noted in paragraph 2 above), and (ii) the
Documents to which each of Mid State Machine and Galaxy Industries are a party
have been duly authorized, executed and delivered by each of Mid State Machine
and Galaxy Industries.
(L) To the extent it may be relevant to the opinions expressed herein, we
have assumed that the parties to the Documents other than the Loan Parties have
the power to enter into and perform such documents and to consummate the
transactions contemplated thereby and that such documents have been duly
authorized, executed and delivered by, and constitute legal, valid and binding
obligations of, such parties.
We are admitted to practice in the States of New York, California, Texas
and Illinois. The opinions expressed herein are limited to the federal laws of
the United States of America and the laws of the State of New York and, to the
extent relevant to the opinions expressed in paragraphs 1, 2, 3, 11, 12 and 13
above, the DGCL and the laws of the States of California, Illinois and Texas,
each as currently in effect (except that only the laws of the State of Texas are
implicated by the opinions in paragraph 11, only the laws of the State of
Illinois are implicated by the opinions in paragraph 12 and only the laws of the
State of California are implicated by the opinions in
11
paragraph 13). Our opinions in paragraphs 6, 8 and 9 are limited to Article 9
of the NY UCC and our opinions in paragraph 7 are limited to Article 9 of the
UCC. Because of the foregoing limitations, opinion paragraphs 6 through 9 do
not address (i) laws of jurisdictions other than the States of New York,
California, Illinois and Texas or laws of the States of New York, California,
Illinois and Texas except that paragraph 7 addresses Article 9 of the NY UCC,
the CA UCC, the IL UCC and the TX UCC and paragraphs 6, 8 and 9 address
Article 9 of the NY UCC, (ii) collateral of a type not subject to Article 9
of the UCC, or (iii) under Section 9-103 of the UCC what law governs
perfection of the security interests granted in the collateral covered by
this opinion letter. We express no opinion with respect to any Article 9
Collateral of a type described in Section 9-401(1)(a) or (b) of the UCC.
We express no opinion as to the compliance or noncompliance, or the effect
of the compliance or noncompliance, of the Administrative Agent, Documentation
Agent, Syndication Agent or any Lender with any state or federal laws or
regulations applicable to it by reason of its status as or affiliation with a
federally insured depository institution.
The opinions expressed herein are solely for the benefit of the addressees
hereof and their successors and assigns in connection with the transaction
referred to herein and may not be relied on by such addressees for any other
purpose or in any manner or for any purpose by any other person or entity.
Very truly yours,
/s/ Xxxxx, Day, Xxxxxx & Xxxxx
12
ANNEX A
FINANCING STATEMENTS
ANNEX B
AGREEMENTS, ORDERS AND DECREES
Certified Fabricators, Inc. / Calbrit Designs, Inc.
(1) Lease between Certified Fabricators, Inc. and Certified Fabricators
(the general partnership) for 0000 Xxxxxxx, Xxxxx Xxxx, XX, dated
1/30/98
(2) Lease between Certified Fabricators, Inc. and Certified Fabricators
(the general partnership) for 0000 Xxxxxxx, Xxxxx Xxxx, XX, dated
12/29/97
(3) Lease between Certified Fabricators, Inc. and Certified Fabricators
(the general partnership) for 0000 Xxxxxxx, Xxxxx Xxxx, XX, dated
5/16/97
(4) Lease between Certified Fabricators, Inc. and Certified Fabricators
(the general partnership) for 0000 Xxxxxx, Xxxxx Xxxx, XX, dated
3/19/97
(5) Lease between Xxxxxxx Xxxxxxx Living Trust and Certified
Fabricators, Inc. for 00000 Xxxxxxxxx Xxxx, Xxxxxxxx, dated 2/22/95.
(6) Lease for office property at 0000 Xxxxxxxxxx Xxxx. #000, Xxxxx Xxxx
between Urban Properties, Inc. and Certified Fabricators, Inc.,
dated 3/17/97
(7) Stock Purchase Agreement, with exhibits and schedules thereto by and
among Certified Fabricators, Inc., Calbrit Design, Inc., and their
stockholders and Precision Partners, Inc. dated 2/19/99
(8) Employment Agreement with Xxxx Xxxxxxx, dated 3/19/99
Galaxy Industries Corporation
(1) Business Property Lease by and between G & L Associates, Inc. as
Lessor and Galaxy Precision Machining Co. as Lessee regarding the
property at 0000 Xxxxxx Xxxxx, Xxxxxxxx xx Xxxxxx, Xxxxxx of Xxxxx,
State of Michigan, dated 4/10/97
(2) Merger Agreement among Galaxy Industries Corporation, Xxxxxxx Xxxxx
Galaxy Holding Co., Inc., Xxxxxx X. Xxxxxx Revocable Living Trust,
Xxxxx X. Xxxxxx Revocable Living Trust, Xxxxxxx Xxxxxx, Xxxxxx
Xxxxxx, and Galaxy Acquisition, Inc., with exhibits and schedules
thereto, dated 9/30/98
(3) Employment Agreement with Xxx Xxxxx, dated 9/30/98
General Automation, Inc.
(1) Asset Purchase Agreement, by and among General Automation, Inc., Xxx
Xxxxx and Precision Partners Holding Company with exhibits and
schedules thereto, dated 2/5/99
(2) Employment Agreement with Xxx Xxxxx, dated 3/19/99
Mid State Machine Products
(1) General Electric gas turbine systems sourcing operation by and
between General Electric and Mid State, dated 12/1/98
(2) Lease, by and between, S. Xxxxxxx Xxxxxxxxx and Xxxx Xxxxxxxxx and
Precision Partners Management Corp., for premises known as 0000
Xxxxx Xxxxx, Xxxxxxx, Xxxxx, dated 11/01/98
(3) Redemption and Merger Agreement among Mid State Machine Products, S.
Xxxxxxx Xxxxxxxxx, Mid State Holdings Co, Inc. and Mid State
Acquisition Inc., with exhibits and schedules thereto, dated 9/17/98
(4) Employment Agreement with S. Xxxxxxx Xxxxxxxxx, dated 9/30/98
Nationwide Precision Products Corp.
(1) Lease for real property located at 000 Xxxx Xxxx Xxxxx Xxxxxxxxx.
Xxx Xxxx, dated 3/19/99.
(2) Asset Purchase Agreement between Nationwide Precision Products
Corp., Nationwide Acquisition Delaware, Inc. and Xxxx Nucitilli,
Xxxxxx Nucitilli, and Xxxxxxx Nucitilli, with exhibits and schedules
thereto, dated 2/11/99
(3) Employment Agreement with Xxx Xxxxxxx, dated 3/19/99
Precision Partners, Inc.
(1) Consent to Sublease by and among Crescent Real Estate Funding Two,
LP and Xxxxxxxx Laboratories, Inc. and Precision Partners Management
Corp., dated 10/27/98
(2) Senior Subordinated Indenture
2
ANNEX C
FILING OFFICES
Name of Pledgor Filing Location
1. Calbrit Design, Inc. Secretary of State of Texas
Secretary of State of California
Orange County, California
2. Certified Fabricators, Inc. Secretary of State of Texas
Secretary of State of California
Orange County, California
Los Angeles County, California
3. Galaxy Industries Corporation Secretary of State of Texas
4. General Automation, Inc. Secretary of State of Texas
Secretary of State of Illinois
Xxxx County, Illinois
5. Mid State Machine Products Secretary of State of Texas
6. Nationwide Precision Products Secretary of State of Texas
Corporation Secretary of State of New York
Monroe County, New York
7. Precision Partners, Inc. Secretary of State of Texas
8. Precision Partners Holding Company Secretary of State of Texas
[EXHIBIT G]
FORM OF EXEMPTION CERTIFICATE
Reference is made to the Credit Agreement, dated as of March 19, 1999 as
amended, supplemented or otherwise modified from time to time, the ("Credit
Agreement") among PRECISION PARTNERS INC., a Delaware Corporation (the
"Borrower"), the Guarantors from time to time thereunder, the several banks and
other financial institutions or entities from time to time parties to the Credit
Agreement (the "Lenders"), CITICORP U.S.A., INC., as Administrative Agent,
NATIONSBANK, N.A., as Syndication Agent, and SUNTRUST BANK, ATLANTA, as
Documentation Agent. Capitalized terms used herein that are not defined herein
shall have the meanings ascribed to them in the Credit Agreement.
_______________________________ (the "Non-U.S. Lender") is providing this
certificate pursuant to Section 2.15(d) of the Credit Agreement. The Non-U.S.
Lender hereby represents and warrants that:
17. The Non-U.S. Lender is the sole record and beneficial owner of the
[Loans] [L/C Obligations] in respect of which it is providing this certificate.
18. The Non-U.S. Lender is not a "bank" for purposes of Section
881(c)(3)(A) of the Internal Revenue Code of 1986, as amended (the "Code"). In
this regard, the Non-U.S. Lender further represents and warrants that:
(a) the Non-U.S. Lender is not subject to regulatory or other legal
requirements as a bank in any jurisdiction; and
(b) the Non-U.S. Lender has not been treated as a bank for purposes of any
tax, securities law or other filing or submission made to any Governmental
Authority, any application made to a rating agency or qualification for
any exemption from tax, securities law or other legal requirements;
19. The Non-U.S. Lender is not a 10-percent shareholder of the Borrower
within the meaning of Section 881(c)(3)(B) of the Code; and
20. The Non-U.S. Lender is not a controlled foreign corporation receiving
interest from a related person within the meaning of Section 881(c)(3)(C) of the
Code.
G-1
IN WITNESS WHEREOF, the undersigned has duly executed this certificate.
[NAME OF NON-U.S. LENDER]
By:________________________
Name:
Title:
Date: __________________
G-2
[EXHIBIT H-1]
FORM OF NOTICE OF BORROWING
Date: _____________,____
Citicorp U.S.A., Inc.
as Administrative Agent
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
RE: Credit Agreement dated as of March 19, 1999 (the "Credit Agreement") among
PRECISION PARTNERS INC., a Delaware Corporation (the "Borrower"), the
Guarantors from time to time thereunder, the several banks and other
financial institutions or entities from time to time parties to the Credit
Agreement (the "Lenders"), CITICORP U.S.A., INC., as Administrative Agent,
NATIONSBANK, N.A., as Syndication Agent, and SUNTRUST BANK, ATLANTA, as
Documentation Agent
Ladies and Gentlemen:
The undersigned, the Borrower, refers to the Credit Agreement, the
capitalized terms defined herein being used herein as therein defined, and
hereby gives you notice irrevocably, pursuant to Section 2.3 of the Credit
Agreement, of the borrowing specified below:
21.
22. The Business Day of the proposed borrowing is ___________, ____.
23. The amount of the proposed borrowing is $__________.
24. The borrowing to be comprised of $__________ of [Base Rate][Eurodollar]
Loans.
25. If applicable: The duration of the Interest Period for the Eurodollar
Loans included in the borrowing shall be _____ months.
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the proposed Borrowing Date, before and
after giving effect thereto and to the application of the proceeds therefrom:
H1-1
(i) the representations and warranties of the Borrower contained in
Section 4 of the Credit Agreement are true and correct as though made on and as
of such date (except to the extent such representations and warranties relate to
an earlier date, in which case they are true and correct as of such date);
(ii) no Default or Event of Default has occurred and is continuing, or
would result from such proposed borrowing;
(iii) the proposed borrowing will not cause the aggregate principal amount
of all outstanding Revolving Loans plus the aggregate amount of the L/C
Obligations to exceed the combined Revolving Commitments of the Lenders; and
(iv) the proposed borrowing will not cause the aggregate principal amount
of all outstanding Revolving Loans plus the aggregate amount of the L/C
Obligations to exceed the Borrowing Base.
PRECISION PARTNERS INC.
By:________________________
Name:
Title:
H1-2
[EXHIBIT H-2]
FORM OF NOTICE OF CONVERSION/CONTINUATION
Date: __________, ____
Citicorp U.S.A., Inc.
as Administrative Agent
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
RE: Credit Agreement dated as of March 19, 1999 (the "Credit Agreement") among
PRECISION PARTNERS INC., a Delaware Corporation (the "Borrower"), the
Guarantors from time to time thereunder, the several banks and other
financial institutions or entities from time to time parties to the Credit
Agreement (the "Lenders"), CITICORP U.S.A., INC., as Administrative Agent,
NATIONSBANK, N.A., as Syndication Agent, and SUNTRUST BANK, ATLANTA, as
Documentation Agent.
Ladies and Gentlemen:
The undersigned, Precision Partners Inc. (the "Borrower"), refers to the
Credit Agreement, the capitalized terms being used herein as therein defined,
and hereby gives you notice irrevocably, pursuant to Section 2.8 of the Credit
Agreement, of the [conversion] [continuation] of the Loans specified herein,
that:
26. The Conversion/Continuation Date is
27. The aggregate amount of the Loans to be [converted] [continued] is
$__________.
28. The Loans are to be [converted into] (continued as] [Eurodollar]
[Base Rate] Loans.
H2-1
29.
30. [If applicable: The duration of the Interest Period for the Loans
included in the [conversion] [continuation] shall be ___ months].
PRECISION PARTNERS INC.
By:________________________
Name:
Title:
H2-2
Exhibit I to
Credit Agreement
================================================================================
PRECISION PARTNERS, INC.
as Borrower
and
THE OTHER PLEDGORS PARTY HERETO
------------------
SECURITY AGREEMENT
Dated as of March 19, 1999
------------------
CITICORP U.S.A., INC.
as Administrative Agent
================================================================================
Table of Contents
Page
----
RECITALS ..................................................................... 1
AGREEMENT .................................................................... 2
Section 1. Pledge ....................................................... 2
Section 2. Secured Obligations .......................................... 7
Section 3. No Release ................................................... 7
Section 4. Perfection; Supplements; Further Assurances; Use of
Pledged Collateral ..................................... 8
Section 5. Representations, Warranties and Covenants .................... 9
Section 6. Special Provisions Concerning General Collateral .............14
Section 7. Special Provisions Concerning Securities Collateral ..........16
Section 8. Special Provisions Concerning Intellectual Property
Collateral .............................................18
Section 9. Special Provisions Concerning Financial Accounts .............21
Section 10. Transfers and Other Liens ...................................23
Section 11. Reasonable Care .............................................23
Section 12. Remedies upon Default; Obtaining the Pledged Collateral
upon Event of Default ..................................23
Section 13. Application of Proceeds .....................................27
Section 14. Expenses ....................................................27
Section 15. No Waiver, Cumulative Remedies ..............................28
Section 16. Administrative Agent ........................................28
Section 17. Administrative Agent May Perform; Administrative Agent
Appointed Attorney-in-Fact .............................28
Section 18. Indemnity ...................................................29
Section 19. Modification in Writing .....................................29
Section 20. Termination; Release ........................................30
Section 21. Notices .....................................................30
Section 22. Continuing Security Interest; Assignment ....................30
Section 23. GOVERNING LAW; TERMS ........................................30
Section 24. CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER
OF JURY TRIAL ..........................................31
Section 25. Severability of Provisions ..................................31
Section 26. Execution in Counterparts ...................................31
Section 27. Headings ....................................................31
Section 28. Obligations Absolute ........................................31
Section 29. Administrative Agent's Right to Sever Indebtedness ..........32
Section 30. Future Advances .............................................33
SIGNATURES
SCHEDULE I-A INITIAL PLEDGED SHARES
SCHEDULE I-B INITIAL PLEDGED INTERESTS
SCHEDULE II INITIAL INTERCOMPANY NOTES
SCHEDULE III INITIAL PATENTS
SCHEDULE IV INITIAL TRADEMARKS
SCHEDULE V INITIAL COPYRIGHTS
SCHEDULE VI INITIAL LICENSES
-i-
SCHEDULE VII INITIAL FINANCIAL ACCOUNTS
ANNEX A FINANCING STATEMENTS AND OTHER NECESSARY FILINGS, UCC FILINGS,
PATENT AND TRADEMARK FILINGS, AND OTHER FILINGS
ANNEX B PRIOR LIENS
ANNEX C LOCATIONS OF PLEDGORS
EXHIBIT 1 FORM OF ISSUER ACKNOWLEDGMENT
EXHIBIT 2 FORM OF FINANCIAL ACCOUNT CONSENT AGREEMENT
EXHIBIT 3 FORM OF SECURITIES PLEDGE AGREEMENT
EXHIBIT 4 FORM OF JOINDER AGREEMENT
-ii-
SECURITY AGREEMENT
SECURITY AGREEMENT (the "Agreement"), dated as of March 19, 1999
made by PRECISION PARTNERS, INC., a Delaware corporation having an office at
0000 X. XxxXxxxxx Xxxx., Xxxxx 000, Xxxxxx, Xxxxx 00000 (the "Borrower"), and
EACH OF THE SUBSIDIARY GUARANTORS LISTED ON THE SIGNATURE PAGES HERETO OR FROM
TIME TO TIME PARTY HERETO BY EXECUTION OF A JOINDER AGREEMENT (collectively, the
"Subsidiary Guarantors"), as pledgors, assignors and debtors (the Borrower,
together with the Subsidiary Guarantors, in such capacities and together with
any successors in such capacities, the "Pledgors", and each, a "Pledgor"), in
favor of CITICORP U.S.A., INC., having an office at 000 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, in its capacity as administrative agent for the lending
institutions (the "Lenders") from time to time party to the Credit Agreement (as
hereinafter defined), as pledgee, assignee and secured party (in such capacity
and together with any successors in such capacity, the "Administrative Agent").
RECITALS:
A. Pursuant to a certain credit agreement, dated as of the date
hereof (as amended, amended and restated, supplemented or otherwise modified
from time to time, the "Credit Agreement"; capitalized terms used herein and not
defined herein shall have the meanings assigned to them in the Credit
Agreement), among the Borrower, the Subsidiary Guarantors, Precision Partners
Holding Company ("Holding"), the Lenders, the Administrative Agent, NationsBank,
N.A., as syndication agent ("Syndication Agent"), and Sun-Trust Bank, Atlanta,
as the documentation agent ("Documentation Agent"; together with Administrative
Agent and Syndication Agent, collectively, the "Agents"), the Lenders have
agreed (i) to make to or for the account of the Borrower certain Term Loans up
to an aggregate principal amount of $23,000,000 and certain Revolving Loans up
to an aggregate principal amount of $25,000,000 and (ii) to issue certain
Letters of Credit for the account of the Borrower.
B. Each of Holding and the Subsidiary Guarantors has executed and
delivered to the Administrative Agent a certain guarantee instrument (each, a
"Guarantee") pursuant to which, among other things, each of Holding and the
Subsidiary Guarantors has guaranteed the obligations of the Borrower under the
Credit Agreement and the other Loan Documents, and each of Holding and the
Subsidiary Guarantors desires that its Guarantee be secured hereunder.
C. Each Pledgor is or will be the legal and/or beneficial owner of
the Pledged Collateral (as hereinafter defined) to be pledged by it hereunder.
D. It is a condition to the obligations of the Lenders to make the
Loans under the Credit Agreement and a condition to any Lender issuing Letters
of Credit under the Credit Agreement that each Pledgor execute and deliver the
applicable Loan Documents, including this Agreement.
E. This Agreement is given by each Pledgor in favor of the
Administrative Agent for its benefit and the benefit of the Lenders and the
Agents (collectively, the "Secured Parties") to secure the payment and
performance of all of the Secured Obligations (as defined in Section 2).
-2-
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Pledgors and the Administrative Agent hereby agree as follows:
Section 1. Pledge. As collateral security for the payment and
performance when due of all the Secured Obligations, each Pledgor hereby
pledges, assigns, transfers and grants to the Administrative Agent for its
benefit and the benefit of the Secured Parties, a continuing first priority
security interest in and to and pledge of, subject only to Prior Liens, all of
the right, title and interest of such Pledgor in, to and under the following
property, wherever located, whether now existing or hereafter arising or
acquired from time to time (collectively, the "Pledged Collateral"):
(a) all "accounts", as such term is defined in the Uniform
Commercial Code as in effect from time to time in any applicable
jurisdiction (the "UCC"), and in any event including, without limitation,
all of such Pledgor's rights to any and all (i) accounts, accounts
receivable, margin accounts, futures positions, book debts, instruments,
documents, contracts, contract rights, choses in action, notes, drafts,
acceptances, chattel paper and other forms of obligations and receivables
now or hereafter owned or held by or payable to such Pledgor relating in
any way to or arising from the sale or lease of goods or the rendering of
services by such Pledgor or any other party, including the right to
payment of any interest or finance charge with respect thereto, together
with all merchandise represented by any of the accounts, (ii) all such
merchandise that may be reclaimed or repossessed or returned to such
Pledgor, (iii) all of such Pledgor's rights as an unpaid vendor, including
stoppage in transit, reclamation, replevin and sequestration, (iv) all
assets pledged, assigned, hypothecated or granted to, and all letters of
credit, guarantee claims, Liens, and security interests held by, Pledgor
to secure payment of any accounts and which are delivered for or on behalf
of any account debtor, (v) all accessions to all of the foregoing
described properties and interests in properties, (vi) all powers of
attorney for the execution of any evidence of indebtedness or security or
other writing in connection with the foregoing, (vii) all evidences of the
filing of financing statements and other statements and the registration
of other instruments in connection therewith and amendments thereto,
notices to other creditors or secured parties and certificates from filing
or other registration offices, (viii) all guarantees, endorsements and
indemnifications on, or of, any of the foregoing, (ix) all customer lists
and invoices and (x) all general intangibles arising out of such Pledgor's
rights in any goods, the sale of which give rise to any of the foregoing
(collectively, the "Receivables");
(b) all "inventory", as such term is defined in the UCC, of such
Pledgor wherever located and of every class, kind and description and, in
any event including, without limitation, (i) all goods, merchandise, raw
materials, work-in-process, returned goods, finished goods, samples and
consigned goods (to the extent of the consignee's interest therein),
materials and supplies of any kind or nature which are or might be used in
connection with the manufacture, printing, publication, packing, shipping,
advertising, selling or finishing of any such goods and all other
products, goods, materials and supplies, (ii) all inventory as is
temporarily out of such Pledgor's custody or possession, items in transit
and any returns and repossessions upon any Receivables and (iii) all
substitutions therefor or replacements thereof, and all additions and
accessions thereto (collectively, the "Inventory");
(c) any and all sale, service, performance and equipment or property
lease contracts, agreements and grants (whether written or oral, or third
party or intercompany), and any other document (whether written or oral,)
between such Pledgor and third parties, and all assignments, amend-
-3-
ments, restatements, supplements, extensions, renewals, replacements or
modifications thereof, including, without limitation, Acquisition
Documentation (collectively, the "Contracts", and each, a "Contract");
(d) all "equipment", as such term is defined in the UCC, and, in any
event including, without limitation, all machinery, apparatus, equipment,
office machinery, electronic data-processing equipment, computers and
computer hardware and software (whether owned or licensed), furniture,
conveyors, tools, materials, storage and handling equipment, automotive
equipment, motor vehicles, tractors, trailers and other like property,
whether or not the title thereto is governed by a certificate of title or
ownership, and all other equipment of every kind and nature owned by such
Pledgor or in which such Pledgor may have any interest (to the extent of
such interest) and all modifications, renewals, improvements, alterations,
repairs, substitutions, attachments, additions, accessions and other
property now or hereafter affixed thereto or used in connection therewith,
all replacements and all parts therefor and together with all substitutes
for any of the foregoing (collectively, the "Equipment");
(e) all "general intangibles", as such term is defined in the UCC,
and, in any event including, without limitation, (i) all of such Pledgor's
rights, title and interest in, to and under all Contracts, (ii) all
manuals, blueprints, know-how, warranties and records in connection with
the Equipment; (iii) any and all other rights, claims, choses-in-action
and causes of action of such Pledgor against any other Person and the
benefits of any and all collateral or other security given by any other
Person in connection therewith; (iv) all lists, books, records, ledgers,
print-outs, files (whether in printed form or stored electronically),
tapes and other papers or materials containing information relating to any
of the Pledged Collateral including, without limitation, all customer
lists, identification of suppliers, data, plans, blueprints, specification
designs, drawings, recorded knowledge, surveys, engineering reports, test
reports, manuals, standards, processing standards, performance standards,
catalogs, research data, computer and automatic machinery software and
programs and the like pertaining to operations by such Pledgor or the
Pledged Collateral, field repair data, sales data and other information
relating to sales of products now or hereafter manufactured, distributed
or franchised by such Pledgor, accounting information pertaining to such
Pledgor's operations or any of the Pledged Collateral and all media in
which or on which any of the information or knowledge or data or records
relating to such operations or any of the Pledged Collateral may be
recorded or stored and all computer programs used for the compilation or
printout of such information, knowledge, records or data; (v) all
licenses, consents, permits, variances, certifications and approvals of
any federal, state, local, foreign or other governmental or administrative
(including self-regulatory) body, instrumentality, department or agency or
any court, tribunal, administrative hearing body, arbitration panel,
commission or other similar dispute-resolving body including, without
limitation, those governing the regulation and protection of the
environment (each, a "Governmental Authority") (or any Person acting on
behalf of a Governmental Authority) now or hereafter held by such Pledgor
pertaining to operations now or hereafter conducted by such Pledgor or any
Pledged Collateral now or hereafter held by such Pledgor, and (vi) all
rights to refund or indemnification to the extent the foregoing relate to
any Pledged Collateral and income tax refunds to the extent relating to
any Pledged Collateral, claims for tax or other refunds against any city,
county or state or federal government, or any agency or authority or other
subdivision thereof relating to any Pledged Collateral (collectively, the
"Intangibles");
(f) all insurance policies held by such Pledgor or naming such
Pledgor as insured, additional insured or loss payee (including, without
limitation, casualty insurance, liability insurance, property insurance
and business interruption insurance), all such insurance policies entered
into after the date hereof other than insurance policies (or certificates
of insurance evidencing such insurance poli-
-4-
cies) relating to health and welfare insurance and life insurance policies
in which such Pledgor is not named as beneficiary (i.e., insurance
policies that are not "Key Man" insurance policies) and all rights, claims
and recoveries relating thereto (including all dividends, returned
premiums and other rights to receive money in respect of any of the
foregoing) (collectively, the "Insurance Policies");
(g) such Pledgor's right to receive the surplus funds, if any, which
are payable to such Pledgor following the termination of any employee
pension plan and the satisfaction of all liabilities of participants and
beneficiaries under such plan in accordance with applicable law
(collectively, the "Pension Plan Reversions");
(h) the issued and outstanding shares of capital stock of each
Person described in Schedule I-A annexed hereto and each other corporation
hereafter acquired or formed by such Pledgor (which are and shall remain
at all times until this Agreement terminates, certificated shares),
including the certificates representing the Pledged Shares and any
interest of such Pledgor in the entries on the books of any financial
intermediary pertaining to the Pledged Shares and all Additional Shares
(as hereinafter defined) (collectively, the "Pledged Shares"); provided,
however, that such Pledgor shall not be required to pledge shares
possessing more than 65% of the voting power of all classes of capital
stock entitled to vote of any Subsidiary which is a controlled foreign
corporation (as defined in Section 957(a) of the Internal Revenue Code of
1986, as amended from time to time (the "Tax Code")) and, in any event,
shall not be required to pledge the shares of stock of any Subsidiary
otherwise required to be pledged pursuant to this subsection 1(h) to the
extent that such pledge would constitute an investment of earnings in
United States property under Section 956 (or a successor provision) of the
Tax Code, which investment would trigger an increase in the gross income
of a United States shareholder of such Pledgor pursuant to Section 951 (or
a successor provision) of the Tax Code;
(i) all additional shares of capital stock of whatever class of any
issuer of the Pledged Shares from time to time acquired by such Pledgor in
any manner (which are and shall remain at all times until this Agreement
terminates, certificated shares), including the certificates representing
such additional shares and any interest of such Pledgor in the entries on
the books of any financial intermediary pertaining to such additional
shares (collectively, the "Additional Shares");
(j) all membership interests and/or partnership interests, as
applicable, of each Person described in Schedule I-B annexed hereto and
each other limited liability company or partnership hereafter acquired or
formed by such Pledgor, together with all rights, privileges, authority
and powers of such Pledgor in and to each such Person or under the
membership or partnership agreement of each such Person (the "Operative
Agreements"), and the certificates, instruments and agreements, if any,
representing such membership or partnership interests (collectively, the
"Initial Pledged Interests");
(k) all options, warrants, rights, agreements, additional membership
or partnership interests or other interests relating to each such Person
described in clause (j) above or any interest in any such Person,
including, without limitation, any right relating to the equity or
membership or partnership interests in any such Person or under the
Operative Agreement of any such Person, from time to time acquired by such
Pledgor in any manner and the certificates, instruments and agreements, if
any, representing such additional interests (collectively, the "Additional
Interests"; together with the Initial Pledged Interests, the "Pledged
Interests"; the Pledged Interests, together with the Pledged Shares and
the items or types of Pledged Collateral described in subsection 1(n) of
this Agreement, collectively, the "Pledged Securities");
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(l) all intercompany notes described in Schedule II annexed hereto
(and each other intercompany note hereafter acquired by such Pledgor) and
all certificates or instruments evidencing such intercompany notes and all
proceeds thereof, all accessions thereto and substitutions therefor
(collectively, the "Intercompany Notes");
(m) all dividends, cash, options, warrants, rights, instruments,
distributions, returns of capital or principal, income, interest, profits
and other property, interests (debt or equity) or proceeds, including as a
result of a split, revision, reclassification or other like change of the
Pledged Securities, from time to time received, receivable or otherwise
distributed to such Pledgor in respect of or in exchange for any or all of
the Pledged Securities or Intercompany Notes (collectively,
"Distributions");
(n) without affecting the obligations of such Pledgor under any
provision prohibiting such action hereunder or under the Credit Agreement,
in the event of any consolidation or merger in which any Person listed in
Schedule I-A or Schedule I-B annexed hereto is not the surviving entity,
all shares of each class of the capital stock of the successor corporation
or interests or certificates of the successor limited liability company or
partnership owned by such Pledgor (unless such successor is such Pledgor
itself) formed by or resulting from such consolidation or merger;
(o) all patents issued or assigned to and all patent applications
and registrations made by such Pledgor, including, without limitation, the
patents, patent applications, registrations and recordings listed in
Schedule III annexed hereto, together with any and all (i) rights and
privileges arising under applicable law with respect to such Pledgor's use
of any patents, (ii) inventions and improvements described and claimed
therein, (iii) reissues, divisions, continuations, renewals, extensions
and continuations-in-part thereof, (iv) income, fees, royalties, damages,
claims and payments now and hereafter due and/or payable thereunder and
with respect thereto, including, without limitation, damages and payments
for past, present or future infringements thereof, (v) rights
corresponding thereto throughout the world, and (vi) rights to xxx for
past, present and future infringements thereof (collectively, the
"Patents");
(p) all trademarks (including service marks), logos, federal and
state trademark registrations and applications made by such Pledgor,
common law trademarks and trade names owned by or assigned to such Pledgor
and all registrations and applications for the foregoing, including,
without limitation, the registrations and applications listed in Schedule
IV annexed hereto, together with any and all (i) rights and privileges
arising under applicable law with respect to such Pledgor's use of any
trademarks, (ii) reissues, continuations, extensions and renewals thereof,
(iii) income, fees, royalties, damages and payments now and hereafter due
and/or payable thereunder and with respect thereto, including, without
limitation, damages, claims and payments for past, present or future
infringements thereof, (iv) rights corresponding thereto throughout the
world and (v) rights to xxx for past, present and future infringements
thereof (collectively, the "Trademarks");
(q) all copyrights (whether statutory or common law) owned by or
assigned to such Pledgor, including, without limitation, the copyrights,
registrations and applications listed in Schedule V annexed hereto,
together with any and all (i) rights and privileges arising under
applicable law with respect to such Pledgor's use of any copyrights, (ii)
reissues, renewals, continuations and extensions thereof, (iii) income,
fees, royalties, damages, claims and payments now and hereafter due and/or
payable with respect thereto, including, without limitation, damages and
payments for past, present or future infringements thereof, (iv) rights
corresponding thereto throughout the world and (v) rights to xxx for past,
present and future infringements thereof (collectively, the "Copyrights");
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(r) all license and distribution agreements and covenants not to xxx
with any other party with respect to any Patent, Trademark, or Copyright,
whether such Pledgor is a licensor or licensee, distributor or distributee
under any such license or distribution agreement including, without
limitation, the license and distribution agreements listed in Schedule VI
annexed hereto, along with any and all (i) renewals, extensions,
supplements and continuations thereof, (ii) income, fees, royalties,
damages, claims and payments now and hereafter due and/or payable
thereunder and with respect thereto, including, without limitation,
damages and payments for past, present or future infringements or
violations thereof, (iii) rights to xxx for past, present and future
infringements or violations thereof and (iv) any other rights to use,
exploit or practice any or all of the Patents, Trademarks or Copyrights
(collectively, the "Licenses");
(s) the entire goodwill connected with such Pledgor's business
including, without limitation, (i) all goodwill connected with the use of
and symbolized by any of the Intellectual Property Collateral (as
hereinafter defined) in which such Pledgor has any interest, (ii) all
know-how, trade secrets, customer lists, proprietary information,
inventions, methods, procedures, formulae, descriptions, name plates,
catalogs, confidential information, consulting agreements, engineering
contracts and such other assets which relate to such goodwill and (iii)
all product lines of such Pledgor's business (collectively, the
"Goodwill");
(t) all financial accounts and all investment property (as defined
in the UCC) of such Pledgor, including, without limitation, (i) the
financial accounts maintained with the financial institutions (each such
financial institution, or any financial institution which shall satisfy
the conditions set forth in subsection 9(b) of this Agreement, a
"Financial Intermediary") identified in Schedule VII annexed hereto, (ii)
all moneys, financial assets (as defined in the UCC), checks, drafts,
securities and instruments deposited or required to be deposited in such
accounts, (iii) all investments and all certificates and instruments, if
any, from time to time representing or evidencing any other property from
time to time received, receivable or otherwise distributed in respect of
or in exchange for any or all of the foregoing items listed under
subclauses (i) and (ii), and (iv) each consent or other agreement from
time to time entered into by such Pledgor with any financial institution
at which any of the financial accounts is maintained and all rights of
such Pledgor under each such consent or agreement;
(u) all "documents", as such term is defined in the UCC, including,
without limitation, all receipts of such Pledgor covering, evidencing or
representing Inventory or Equipment (collectively, the "Documents");
(v) all "instruments", as such term is defined in the UCC,
including, without limitation, all promissory notes, drafts, bills of
exchange or acceptances (collectively, the "Instruments");
(w) any and all other property or assets of such Pledgor whether
tangible or intangible, fixed or liquid; and
(x) all "proceeds", as such term is defined in the UCC or under
other relevant law, and in any event including, without limitation, any
and all (i) proceeds of any insurance (except payments made to a Person
which is not a party to this Agreement), indemnity, warranty, guaranty or
claim payable to the Administrative Agent or to such Pledgor from time to
time with respect to any of the Pledged Collateral, (ii) payments (in any
form whatsoever) made or due and payable to such Pledgor from time to time
in connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Pledged Collateral by any
Governmental Authority (or any Person acting on
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behalf of a Governmental Authority), (iii) instruments representing
obligations to pay amounts in respect of the Pledged Collateral, (iv)
products of the Pledged Collateral and (v) other amounts from time to time
paid or payable under or in connection with any of the Pledged Collateral
(collectively, the "Proceeds");
provided, however, that Pledged Collateral shall not include any items of
property described in Granting Clauses (c), (e), (v) and (r) to the extent that
such Pledgor is expressly prohibited from granting a Lien thereon or applicable
law provides for the involuntary forfeiture thereof in the event that a Lien is
granted thereon without the consent of the appropriate Person or Governmental
Authority; provided, further, that in the event of the termination or
elimination of any prohibition or requirement for any consent contained in any
law, rule, regulation, contract, license, franchise, authorization, agreement,
grant or other document, or upon the granting of any consent, the items of
property so excluded from the definition of Pledged Collateral by virtue of the
immediately preceding proviso shall (without any act or delivery by any Person)
constitute Pledged Collateral hereunder;
The Pledged Securities, the Intercompany Notes, the Distributions
and the Proceeds relating thereto are collectively referred to as the
"Securities Collateral". The Patents, Trademarks, Copyrights, Licenses, Goodwill
and the Proceeds relating thereto are collectively referred to as the
"Intellectual Property Collateral". The property described in clause (t) above
and the Proceeds relating thereto are collectively referred to as the "Financial
Account Collateral". The Pledged Collateral other than the Securities
Collateral, the Intellectual Property Collateral and the Financial Account
Collateral is collectively referred to as the "General Collateral".
Section 2. Secured Obligations. This Agreement secures, and the
Pledged Collateral is collateral security for, the payment and performance in
full when due, whether at stated maturity, by acceleration or otherwise
(including, without limitation, the payment of interest and other amounts which
would accrue and become due but for the filing of a petition in bankruptcy or
the operation of the automatic stay under Section 362(a) of the Bankruptcy Code,
11 U.S.C. ss. 362(a)), of (i) all Obligations of the Borrower now existing or
hereafter arising under or in respect of the Credit Agreement (including,
without limitation, the obligations of the Borrower to pay principal, interest
and all other charges, fees, expenses, commissions, reimbursements, premiums,
indemnities and other payments related to or in respect of the Obligations
contained in the Credit Agreement), (ii) all Obligations of Holding and the
Subsidiary Guarantors now existing or hereafter arising under or in respect of
the Credit Agreement (including, without limitation, the obligations of Holding
and each Subsidiary Guarantor to pay principal, interest and all other charges,
fees, expenses, commissions, reimbursements, premiums, indemnities and other
payments related to or in respect of the Obligations contained in the Credit
Agreement) and (iii) without duplication of the amounts described in clauses (i)
and (ii) above, all Obligations of the Pledgors now existing or hereafter
arising under or in respect of this Agreement or any other Security Document,
including, without limitation, all charges, fees, expenses, commissions,
reimbursements, premiums, indemnities and other payments related to or in
respect of the Obligations contained in this Agreement or in any other Security
Document, in each case whether in the regular course of business or otherwise
(the obligations described in clauses (i), (ii) and (iii) of this Section 2,
collectively, the "Secured Obligations").
Section 3. No Release. Nothing set forth in this Agreement shall
relieve any Pledgor from the performance of any term, covenant, condition or
agreement on such Pledgor's part to be performed or observed under or in respect
of any of the Pledged Collateral or from any liability to any Person under or in
respect of any of the Pledged Collateral or shall impose any obligation on the
Administrative Agent or any other Secured Party to perform or observe any such
term, covenant, condition or agreement on such Pledgor's part to be so performed
or observed or shall impose any liability on the Administrative Agent or any
other Secured Party for any act or omission on the part of such Pledgor relating
thereto or for any breach of any representation or warranty on the part of such
Pledgor contained in this Agreement or any other Loan Document, or under or in
respect of
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the Pledged Collateral or made in connection herewith or therewith, except upon
any exercise of remedies pursuant to Section 12 whereby such Pledgor no longer
has any rights, title or interest in or to such Pledged Collateral. The
obligations of each Pledgor referred to in this Section 3 shall survive the
termination of this Agreement and the discharge of such Pledgor's other
obligations under this Agreement and the other Loan Documents.
Section 4. Perfection; Supplements; Further Assurances; Use of
Pledged Collateral.
(a) Delivery of Certificated Securities Collateral. All
certificates, agreements or instruments representing or evidencing the
Securities Collateral, to the extent not previously delivered to the
Administrative Agent, shall immediately upon receipt thereof by any
Pledgor be delivered to and held by or on behalf of the Administrative
Agent pursuant hereto. All certificated Securities Collateral shall be in
suitable form for transfer by delivery or shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Administrative Agent. The Administrative
Agent shall have the right, at any time upon the occurrence and during the
continuance of any Event of Default and without notice to any Pledgor, to
endorse, assign or otherwise transfer to or to register in the name of the
Administrative Agent or any of its nominees or endorse for negotiation any
or all of the Securities Collateral, without any indication that such
Securities Collateral is subject to the security interest hereunder. In
addition, the Administrative Agent shall have the right at any time after
the occurrence and during the continuance of a Default to exchange
certificates representing or evidencing Pledged Securities for
certificates of smaller or larger denominations.
(b) Perfection of Uncertificated Securities Collateral. If any
issuer of Pledged Securities is organized in a jurisdiction which does not
permit the use of certificates to evidence equity ownership, or if any of
the Pledged Securities are at any time not evidenced by certificates of
ownership, then each applicable Pledgor shall, to the extent permitted by
applicable law, record such pledge on the equity-holder register or the
books of the issuer, cause the issuer to execute and deliver to the
Administrative Agent an acknowledgment of the pledge of such Pledged
Securities substantially in the form of Exhibit 1 annexed hereto, execute
any customary pledge forms or other documents necessary or appropriate to
complete the pledge and give the Administrative Agent the right to
transfer such Pledged Securities pursuant to the terms hereof and provide
to the Administrative Agent an opinion of counsel, in form and substance
satisfactory to the Administrative Agent, confirming such pledge.
(c) Financing Statements and Other Filings. The only filings,
registrations and recordings necessary and appropriate to create,
preserve, protect and perfect the security interest granted by each
Pledgor to the Administrative Agent pursuant to this Agreement in respect
of the Pledged Collateral are listed in Annex A annexed hereto. All such
filings, registrations and recordings have been filed, registered and
recorded contemporaneously with the execution of the Loan Documents. Each
Pledgor agrees that at any time and from time to time, it will execute
and, at the sole cost and expense of the Pledgors file and refile, or
permit the Administrative Agent to file and refile, such financing
statements, continuation statements and other documents (including,
without limitation, this Agreement), in form reasonably acceptable to the
Administrative Agent, in such offices (including, without limitation, the
United States Patent and Trademark Office and the United States Copyright
Office) as the Administrative Agent may reasonably deem necessary or
appropriate, wherever required or permitted by law in order to perfect,
continue and maintain a valid, enforceable, first priority security
interest, subject only to Prior Liens, in the Pledged Collateral as
provided herein and to preserve the other rights and interests granted to
the Administrative Agent hereunder, as against third parties, with respect
to any Pledged Collateral. Each Pledgor authorizes the Administrative
Agent to file any such financing or
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continuation statement or other document without the signature of such
Pledgor where permitted by law.
(d) Motor Vehicles. At any time after the occurrence and during the
continuance of an Event of Default, each Pledgor shall, upon the request
of the Administrative Agent, deliver to the Administrative Agent originals
of the certificates of title or ownership for the motor vehicles (and any
other Equipment covered by certificates of title or ownership owned by it)
with the Administrative Agent listed therein as lienholder; provided,
however, that each Pledgor shall not be obligated to deliver to the
Administrative Agent originals of the certificates of title or ownership
for the motor vehicles (and any other Equipment covered by certificates of
title owned by it) if the originals have been previously delivered to the
lienholder of a Prior Lien.
(e) Supplements; Further Assurances. Each Pledgor agrees to do such
further acts and things, and to execute and deliver to the Administrative
Agent such additional assignments, agreements, supplements, powers and
instruments, as the Administrative Agent may reasonably deem necessary or
appropriate, wherever required or permitted by law, in order to perfect,
preserve and protect the security interest in the Pledged Collateral as
provided herein and the rights and interests granted to the Administrative
Agent hereunder, to carry into effect the purposes of this Agreement or
better to assure and confirm unto the Administrative Agent or permit the
Administrative Agent to exercise and enforce its respective rights, powers
and remedies hereunder with respect to any Pledged Collateral. Without
limiting the foregoing, each Pledgor shall make, execute, endorse,
acknowledge, file or refile and/or deliver to the Administrative Agent
from time to time such lists, descriptions and designations of the Pledged
Collateral, copies of warehouse receipts, receipts in the nature of
warehouse receipts, bills of lading, documents of title, vouchers,
invoices, schedules, confirmatory assignments, supplements, additional
security agreements, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, reports and other
assurances or instruments or the Administrative Agent deems reasonably
necessary or appropriate. The Administrative Agent may institute and
maintain, in its own name or in the name of any Pledgor, such suits and
proceedings as the Administrative Agent may be advised by counsel shall be
reasonably necessary or expedient to prevent any impairment of the
security interest in or perfection of the Pledged Collateral. All of the
foregoing shall be at the sole cost and expense of the Pledgors.
(f) Use and Pledge of Pledged Collateral. Unless an Event of Default
shall have occurred and be continuing, the Administrative Agent shall from
time to time execute and deliver, upon written request of any Pledgor and
at the sole cost and expense of the Pledgors, any and all instruments,
certificates or other documents, in a form reasonably requested by such
Pledgor, necessary or appropriate in the reasonable judgment of such
Pledgor to enable such Pledgor to continue to exploit, license, use, enjoy
and protect the Pledged Collateral, except as may be prohibited by the
terms of this Agreement or the Credit Agreement. The Pledgors and the
Administrative Agent acknowledge that this Agreement is intended to grant
to the Administrative Agent for the benefit of the Secured Parties a
security interest in and Lien upon the Pledged Collateral and shall not
constitute or create a present assignment of any of the Pledged
Collateral.
Section 5. Representations; Warranties and Covenants. Each Pledgor
represents, warrants and covenants as follows:
(a) Perfection Actions; Prior Liens. Upon the completion of the
deliveries, filings and other actions contemplated in subsections 4(a)
through 4(c) hereof and subsections 9(a) and 9(b)
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hereof, the security interest granted to the Administrative Agent for the
benefit of the Secured Parties pursuant to this Agreement in and to the
Pledged Collateral (other than Pledged Collateral covered by certificates
of title or ownership) will constitute a perfected security interest
therein, superior and prior to the rights of all other Persons therein
other than with respect to (i) the Liens identified on Annex B relating to
the items of Pledged Collateral identified on such annex, (ii) Subordinate
Liens (as hereinafter defined) of the type described in clauses (g), (h),
(j), (l), (m), (n) and (r) of the definition of Permitted Liens on
Pledged Collateral acquired after the date hereof and that attached prior
to the Lien granted hereunder or upon the acquisition of such Pledged
Collateral and (iii) Subordinate Liens (as hereinafter defined) of the
type described in clauses (a) and (b) of the definition of Permitted Liens
which created or authorized under any law or regulation of any applicable
Governmental Authority if and to the extent that the law or regulation
creating or authorizing such Lien provides that such Lien is superior to
the Lien and security interest created and evidenced hereby (the Liens
described in clauses (i), (ii) and (iii), "Prior Liens").
(b) No Liens. Such Pledgor is as of the date hereof, and, as to
Pledged Collateral acquired by it from time to time after the date hereof,
such Pledgor will be, the sole direct and beneficial owner of all Pledged
Collateral pledged by it hereunder free from any Lien or other right,
title or interest of any Person other than (i) Prior Liens, (ii) the Lien
and security interest created by this Agreement and (iii) Subordinate
Liens. Pledgor shall defend the Pledged Collateral pledged by it hereunder
against all claims and demands of all Persons at any time claiming any
interest therein adverse to the Administrative Agent or any other Secured
Party. There is no agreement, and Pledgor shall not enter into any
agreement or take any other action, that would result in the imposition of
any other Lien, restrict the transferability of any of the Pledged
Collateral or otherwise impair or conflict with such Pledgor's obligations
or the rights of the Administrative Agent hereunder.
"Subordinate Liens" shall mean (A) with respect to the General
Collateral, Permitted Liens applicable to such Pledged Collateral
(provided, however, that with respect to Liens of the type described in
clauses (a) and (b) of the definition of Permitted Liens, such applicable
Pledgor shall comply with the provisions of subsection 5(o) of this
Agreement) and (B) with respect to all other Pledged Collateral, Liens of
the type described in clauses (a) and (l) of the definition of Permitted
Liens (provided, however, that with respect to Liens of the type described
in clauses (a) and (l) of the definition of Permitted Liens, such
applicable Pledgor shall comply with the provisions of subsection 5(o) of
this Agreement).
(c) Other Financing Statements. There is no (nor will be any) valid
or effective financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) covering or purporting to
cover any interest of any kind in the Pledged Collateral other than those
relating to (i) Prior Liens, (ii) this Agreement and (iii) Subordinate
Liens, and so long as any of the Secured Obligations remain unpaid or the
Commitments of the Lenders to make any Loan or to issue any Letter of
Credit shall not have expired or been sooner terminated, no Pledgor shall
execute, authorize or permit to be filed in any public office any
financing statement (or similar statement or instrument of registration
under the law of any jurisdiction) or statements relating to any Pledged
Collateral, except, in each case, financing statements filed or to be
filed in respect of and covering the security interests granted by such
Pledgor pursuant to this Agreement and financing statements relating to
Prior Liens or Subordinate Liens.
(d) Chief Executive Office; Change of Name. The chief executive
office of such Pledgor is located at the address indicated next to its
name in Annex C annexed hereto. Such Pledgor shall not
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move its chief executive office, except to such new location as such
Pledgor may establish in accordance with the last sentence of this
subsection 5(d). Such Pledgor shall not establish a new location for its
chief executive office nor shall it change its name until (i) it shall
have given the Administrative Agent not less than thirty (30) days' prior
written notice of its intention so to do, clearly describing such new
location or name and providing such other information in connection
therewith as the Administrative Agent may reasonably request and (ii) with
respect to such new location or name, such Pledgor shall have taken all
action reasonably satisfactory to the Administrative Agent to maintain the
perfection and priority of the security interest of the Administrative
Agent for the benefit of the Secured Parties in the Pledged Collateral
intended to be granted hereby, including, without limitation, obtaining
waivers of landlord's or warehouseman's liens with respect to such new
location.
(e) Location of Equipment. All Equipment held on the date hereof by
such Pledgor is located at the addresses indicated next to its name in
Annex C annexed hereto. All Equipment now held or subsequently acquired
shall be kept at one or more of the locations listed in Annex C annexed
hereto, or such new location as such Pledgor may establish if (i) it shall
have given to the Administrative Agent at least thirty (30) days' prior
written notice of its intention so to do, clearly describing such new
location and providing such other information in connection therewith as
the Administrative Agent may reasonably request, and (ii) with respect to
such new location, such Pledgor shall have taken all action reasonably
satisfactory to the Administrative Agent to maintain the perfection and
priority of the security interest of the Administrative Agent for the
benefit of the Secured Parties in the Pledged Collateral intended to be
granted hereby, including, without limitation, obtaining waivers of
landlord's or warehouseman's liens with respect to such new location.
(f) Due Authorization and Issuance. All of the Pledged Shares have
been, and to the extent hereafter issued will be upon such issuance, duly
authorized, validly issued and fully paid and non-assessable. All of the
Initial Pledged Interests have been fully paid for, and there is no amount
or other obligation owing by any Pledgor to any issuer of the Initial
Pledged Interests in exchange for or in connection with the issuance of
the Initial Pledged Interests or any Pledgor's status as a partner or a
member of any issuer of the Initial Pledged Interests.
(g) No Violations, etc. The pledge of the Pledged Securities
pursuant to this Agreement does not violate Regulation T, U or X of the
Federal Reserve Board.
(h) No Options, Warrants, etc. There are no options, warrants,
calls, rights, commitments or agreements of any character to which such
Pledgor is a party or by which it is bound obligating such Pledgor to
issue, deliver or sell or cause to be issued, delivered or sold,
additional Pledged Securities or obligating such Pledgor to grant, extend
or enter into any such option, warrant, call, right, commitment or
agreement. There are no voting trusts or other agreements or
understandings to which such Pledgor is a party with respect to the
transfer, voting or exercise of any other right of the equity interests of
any issuer of the Pledged Securities.
(i) No Claims. Such Pledgor owns or has rights to use all the
Pledged Collateral pledged by it hereunder and all rights with respect to
any of the foregoing used in, necessary for or material to such Pledgor's
business as currently conducted and as contemplated to be conducted
pursuant to the Loan Documents, except for Permits the failure to obtain
which could not reasonably be expected to have a Material Adverse Effect.
The use by such Pledgor of such Pledged Collateral and all such rights
with respect to the foregoing do not infringe on the rights of any Person
in any material respect. No
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material claim has been made and remains outstanding that such Pledgor's
use of any Pledged Collateral does or may violate the rights of any third
Person.
(j) Authorization, Enforceability. Such Pledgor has the corporate
power and authority and the legal right to pledge and grant a security
interest in all the Pledged Collateral pledged by it pursuant to this
Agreement, and this Agreement constitutes the legal, valid and binding
obligation of such Pledgor, enforceable against such Pledgor in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally or by equitable
principles (whether enforcement is sought by proceedings in equity or at
law).
(k) No Conflicts, Consents, etc. Neither the execution and delivery
of this Agreement by each Pledgor nor the consummation of the transactions
herein contemplated nor the fulfillment of the terms hereof (i) violates
any charter or by-laws or other organizational document of such Pledgor or
any issuer of Pledged Securities, (ii) violates the terms of any
agreement, indenture, mortgage, deed of trust, equipment lease, instrument
or other document to which such Pledgor is a party, or by which it may be
bound or to which any of its properties or assets may be subject, which
violation or conflict would have a Material Adverse Effect, or a material
adverse effect on the value of the Pledged Collateral or an adverse effect
on the security interests hereunder, (iii) conflicts with any law, order,
rule or regulation applicable to any such Pledgor of any Governmental
Authority having jurisdiction over such Pledgor or its property, or (iv)
results in or requires the creation or imposition of any Lien (other than
the Lien contemplated hereby) upon or with respect to any of the property
now owned or hereafter acquired by such Pledgor. No consent of any party
(including, without limitation, equityholders or creditors of such Pledgor
or any account debtor under a Receivable) and no consent, authorization,
approval, license or other action by, and no notice to or filing with, any
Governmental Authority or regulatory body or other Person is required for
(x) the pledge by such Pledgor of the Pledged Collateral pledged by it
pursuant to this Agreement or for the execution, delivery or performance
of this Agreement by such Pledgor, (y) the exercise by the Administrative
Agent of the rights provided for in this Agreement or (z) the exercise by
the Administrative Agent of the remedies in respect of the Pledged
Collateral pursuant to this Agreement except for the filings contemplated
hereby. In the event that the Administrative Agent desires to exercise any
remedies, voting or consensual rights or attorney-in-fact powers set forth
in this Agreement and determines it reasonably necessary to obtain any
approvals or consents of any Governmental Authority or any other Person
therefor, then, upon the reasonable request of the Administrative Agent,
such Pledgor agrees to use its best efforts to assist and aid the
Administrative Agent to obtain as soon as practicable any reasonably
necessary approvals or consents for the exercise of any such remedies,
rights and powers.
(l) Pledged Collateral. All information set forth herein, including
the schedules and annexes attached hereto, and all information contained
in any documents, schedules and lists heretofore delivered to any Secured
Party in connection with this Agreement, in each case, relating to the
Pledged Collateral, is accurate and complete in all material respects. The
Pledged Collateral described on the schedules attached hereto constitutes
all of the property of such type of Pledged Collateral owned or held by
the Pledgors.
(m) Insurance. No Pledgor shall take any action that impairs the
rights of the Administrative Agent or any Secured Party in the Pledged
Collateral. Each Pledgor shall at all times keep the Inventory and
Equipment insured, at such Pledgor's own expense, against fire, theft and
all other risks to which the Pledged Collateral may be subject and are
usually insured against in the same general area
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by companies engaged in the same or a similar business, in such amounts
and with such deductibles as would be maintained by a prudent operator in
the same general area as such Pledgor of businesses similar to the
business of such Pledgor. Each policy or certificate with respect to such
insurance shall be endorsed to the Administrative Agent's reasonable
satisfaction for the benefit of the Administrative Agent (including,
without limitation, by naming the Administrative Agent as an additional
named insured as the Administrative Agent may reasonably request) and such
policy or certificate shall be delivered to the Administrative Agent. Each
such policy shall state that it cannot be cancelled without 30 days' prior
written notice to the Administrative Agent At least 30 days prior to the
expiration of any such policy of insurance, each Pledgor shall deliver to
the Administrative Agent an extension or renewal policy or an insurance
certificate evidencing renewal or extension of such policy. If any Pledgor
shall fail to insure such Pledged Collateral to the Administrative Agent's
reasonable satisfaction, the Administrative Agent shall have the right
(but shall be under no obligation) to advance funds to procure or renew or
extend such insurance, and such Pledgor agrees to reimburse the
Administrative Agent for all costs and expenses thereof, with interest on
all such funds from the date advanced until paid in full at the highest
rate then in effect under the Credit Agreement.
(n) Insurance Proceeds. Any proceeds of insurance received by any
Pledgor shall be applied by it as provided in Section 2.7(b) of the Credit
Agreement. In the event that any Pledgor is permitted to and elects to
apply such proceeds to the repair or replacement of any item of Pledged
Collateral, such Pledgor shall upon its receipt of such proceeds promptly
commence and diligently continue to perform such repair or promptly effect
such replacement. Upon the occurrence and during the continuance of any
Event of Default, the Administrative Agent shall have the option to apply
any proceeds of insurance received by any Pledgor in respect of the
Pledged Collateral toward the payment of the Secured Obligations in
accordance with Section 13 hereof or to continue to hold such proceeds as
additional collateral to secure the performance by the Pledgors of the
Secured Obligations.
(o) Payment of Taxes; Compliance with Laws; Claims. Each Pledgor
shall pay prior to the date on which any penalties would attach thereto
all property and other taxes, assessments and governmental charges or
levies imposed upon, and all claims (including claims for labor,
materials, warehousing and supplies) against, the Pledged Collateral. Each
Pledgor shall comply with all laws, rules and regulations applicable to
the Pledged Collateral the failure to comply with which would have a
Material Adverse Effect. Notwithstanding the foregoing, each Pledgor may
at its own expense contest the amount or applicability of any of the
obligations described in the preceding sentences of this subsection 5(o)
by appropriate legal or administrative; provided, however, that in
connection with such contest, such Pledgor shall (i) have made provision
for the payment of such contested amount on such Pledgor's books if and to
the extent required by generally accepted accounting principles, and (ii)
during the continuance of a Default at the option and upon the request of
the Administrative Agent, have deposited with the Administrative Agent a
sum sufficient to pay and discharge such obligation and the Administrative
Agent's estimate of all interest and penalties related thereto.
Notwithstanding the foregoing provisions of this subsection 5(o), (x) no
contest of any such obligation may be pursued by such Pledgor if such
contest would expose the Administrative Agent or any other Secured Party
to (A) any possible criminal liability or (B) unless such Pledgor shall
have furnished a bond or, other security therefor reasonably satisfactory
to the Administrative Agent, any other affected Secured Party, any
additional civil liability for failure to comply with such obligation and
(y) if at any time payment of any obligation imposed upon such Pledgor by
this subsection 5(o) shall become necessary to prevent the imposition of
remedies because of non-payment, such Pledgor shall pay the same in
sufficient time to prevent the imposition of remedies in respect of such
default or prospective default.
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Section 6. Special Provisions Concerning General Collateral.
(a) Special Representations and Warranties. As of the time when each
of its Receivables arises, each Pledgor shall be deemed to have
represented and warranted that such Receivable and all records, papers and
documents relating thereto (i) are genuine and correct and in all material
respects what they purport to be, (ii) represent the legal, valid and
binding obligation of the account debtor, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability, evidencing indebtedness
unpaid and owed by such account debtor, arising out of the performance of
labor or services or the sale or lease and delivery of the merchandise
listed therein or out of an advance or a loan, not subject to the
fulfillment of any contract or condition whatsoever or to any defenses,
set-offs or counterclaims except with respect to refunds, returns and
allowances in the ordinary course of business, or stamp or other taxes,
(iii) will, in the case of a Receivable, except for the original or
duplicate original invoice sent to a purchaser evidencing such purchaser's
account, be the only original writings evidencing and embodying such
obligation of the account debtor named therein, and (iv) are in compliance
and conform with, in all material respects, all applicable federal, state
and local laws and applicable laws of any relevant foreign jurisdiction.
(b) Maintenance of Records. Each Pledgor shall keep and maintain at
its own cost and expense complete records of each Receivable, in a manner
consistent with prudent business practice, including, without limitation,
records of all payments received, all credits granted thereon, all
merchandise returned and all other documentation relating thereto. Each
Pledgor shall, at such Pledgor's sole cost and expense, upon the
Administrative Agent's demand made at any time after the occurrence and
during the continuance of any Event of Default, deliver all tangible
evidence of Receivables, including, without limitation, all documents
evidencing Receivables and any books and records relating thereto to the
Administrative Agent or to its representatives (copies of which evidence
and books and records may be retained by such Pledgor). Upon the
occurrence and during the continuance of any Event of Default, the
Administrative Agent may transfer a full and complete copy of any
Pledgor's books, records, credit information, reports, memoranda and all
other writings relating to the Receivables to and for the use by any
Person that has acquired or is contemplating acquisition of an interest in
the Receivables or the Administrative Agent's security interest therein
without the consent of any Pledgor.
(c) Legend. Each Pledgor shall legend, at the request of the
Administrative Agent made at any time after the occurrence of any Event of
Default and in form and manner satisfactory to the Administrative Agent,
the Receivables and the other books, records and documents of such Pledgor
evidencing or pertaining to the Receivables with an appropriate reference
to the fact that the Receivables have been assigned to the Administrative
Agent for the benefit of the Secured Parties and that the Administrative
Agent has a security interest therein.
(d) Modification of Terms, etc. No Pledgor shall rescind or cancel
any indebtedness evidenced by any Receivable or modify any material term
thereof or make any adjustment with respect thereto except in the ordinary
course of business consistent with prudent business practice, or extend or
renew any such indebtedness except in the ordinary course of business
consistent with prudent business practice or compromise or settle any
material dispute, claim, suit or legal proceeding relating thereto or sell
any Receivable or interest therein without the prior written consent of
the Administrative Agent. Each Pledgor shall timely fulfill all
obligations on its part to be fulfilled under or in connection with the
Receivables.
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(e) Collection. Each Pledgor shall cause to be collected from the
account debtor of each of the Receivables, as and when due (including,
without limitation, Receivables that are delinquent, such Receivables to
be collected in accordance with generally accepted commercial collection
procedures), any and all amounts owing under or on account of such
Receivable, and apply forthwith upon receipt thereof all such amounts as
are so collected to the outstanding balance of such Receivable, except
that any Pledgor may, with respect to a Receivable, allow in the ordinary
course of business (i) a refund or credit due as a result of returned or
damaged or defective merchandise and (ii) such extensions of time to pay
amounts due in respect of Receivables and such other modifications of
payment terms or settlements in respect of Receivables as shall be
commercially reasonable in the circumstances, all in accordance with such
Pledgor's ordinary course of business consistent with its collection
practices as in effect from time to time. The costs and expenses
(including, without limitation, reasonable attorneys' fees) of collection,
in any case, whether incurred by any Pledgor, the Administrative Agent or
any Secured Party, shall be paid by the Pledgors.
(f) Instruments. Each Pledgor shall deliver to the Administrative
Agent, within five days after receipt thereof by such Pledgor, any
Instrument evidencing Receivables which is in the principal amount of
$100,000 or more. Any Instrument delivered to the Administrative Agent
pursuant to this subsection 6(f) shall be appropriately endorsed (if
applicable) to the order of the Administrative Agent, as agent for the
Secured Parties, and shall be held by the Administrative Agent as further
security hereunder; provided however, that so long as no Default shall
have occurred and be continuing, the Administrative Agent shall, promptly
upon request of such Pledgor, make appropriate arrangements for making any
Instrument pledged by such Pledgor available to such Pledgor for purposes
of presentation, collection or renewal (any such arrangement to be
effected, to the extent deemed reasonably appropriate by the
Administrative Agent, against trust receipt or like document).
(g) Cash Collateral. Upon the occurrence and during the continuance
of any Event of Default, if the Administrative Agent so directs, each
Pledgor shall cause all payments on account of the Receivables to be held
by the Administrative Agent as cash collateral in accordance with the
provisions of subsections 9(e) and 9(f) hereof. Without notice to or
assent by any Pledgor, the Administrative Agent may apply any or all
amounts then or thereafter held as cash collateral in the manner provided
in subsections 9(e) and 9(f). The costs and expenses (including, without
limitation, reasonable attorneys fees) of collection, whether incurred by
the Administrative Agent or any Secured Party, shall be paid by the
Pledgors.
(h) Maintenance of Equipment. Each Pledgor shall cause the Equipment
that is useful and necessary in its business to be maintained and
preserved in good condition, repair and working order, as when new,
ordinary wear and tear excepted, to the extent consistent with current
business practice in accordance with any manufacturer's manual, and shall
forthwith, or in the case of any loss or damage which (individually or in
the aggregate) exceeds $100,000 to any of such Equipment (of which prompt
notice shall be given to the Administrative Agent) as quickly as
commercially practicable after the occurrence thereof, make or cause to be
made all repairs, replacements and other improvements in connection
therewith which are necessary or desirable in the conduct of such
Pledgor's business.
(i) Warehouse Receipts Non-Negotiable. If any warehouse receipt or
receipt in the nature of a warehouse receipt is issued after the date
hereof with respect to any of the Inventory, the applicable Pledgor shall
not permit such warehouse receipt or receipt in the nature thereof to be
"negotiable" (as such term is used in Section 7-104 of the UCC or under
other relevant law).
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(j) Consents to Assignment of Contracts. To the extent that any
material contract or other agreement or any Pledgor would constitute a
Contract hereunder but for the exclusions contained in the provisos in the
definition of "Contracts" hereunder, such Pledgor shall use its reasonable
best efforts to cause the counterparty thereto to deliver the consent
contemplated in the provisos of such definition within 30 days after the
date hereof. For purposes of this subsection 6(j), "best efforts" shall
not require such Obligor to pay or cause to be paid any renumeration to
any such counterparty in order to obtain such consent to the extent that
it would be commercially unreasonable to do so.
(k) Fair Labor Standards Act. Any goods now or hereafter produced by
each Pledgor included in the Pledged Collateral have been and will be
produced in substantial compliance with the requirements of the Fair Labor
Standards Act of 1938, as amended.
Section 7. Special Provisions Concerning Securities Collateral.
(a) Pledge of Additional Securities. Each Pledgor shall, upon
obtaining any Pledged Securities or Intercompany Notes of any Person,
accept the same in trust for the benefit of the Administrative Agent and
promptly (and in any event within five Business Days) deliver to the
Administrative Agent a pledge amendment, duly executed by such Pledgor, in
substantially the form of Exhibit 3 annexed hereto (each, a "Pledge
Amendment"), and the certificates and other documents required under
subsections 4(a) and 4(b) in respect of the additional Pledged Securities
or Intercompany Notes that are to be pledged pursuant to this Agreement,
and confirming the attachment of the Lien hereby created on and in respect
of such additional property. Each Pledgor hereby authorizes the
Administrative Agent to attach each Pledge Amendment to this Agreement and
agrees that all Pledged Securities or Intercompany Notes listed on any
Pledge Amendment delivered to the Administrative Agent shall for all
purposes hereunder be considered Pledged Collateral.
(b) Voting Rights; Distributions; etc.
(i) So long as no Event of Default shall have occurred and be
continuing:
(A) Each Pledgor shall be entitled to exercise any and
all voting and other consensual rights pertaining to the
Securities Collateral or any part thereof for any purpose not
inconsistent with the terms or purposes of this Agreement or
any other Loan Document; provided, however, that no Pledgor
shall in any event exercise such rights in any manner which
may have an adverse effect on the value of the Pledged
Collateral or the security intended to be provided by this
Agreement.
(B) Each Pledgor shall be entitled to receive and
retain, and to utilize free and clear of the Lien of this
Agreement, any and all Distributions, but only if and to the
extent made in accordance with the provisions of the Credit
Agreement, provided however, that any and all such
Distributions consisting of rights or interests in the form of
securities shall be forthwith delivered to the Administrative
Agent to hold as Pledged Collateral and shall, if received by
any Pledgor, be received in trust for the benefit of the
Administrative Agent, be segregated from the other property or
funds of such Pledgor and be forthwith delivered to the
Administrative Agent as Pledged Collateral in the same form as
so received (with any necessary endorsement).
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(C) The Administrative Agent shall be deemed without
further action or formality to have granted to each Pledgor
all necessary consents relating to voting rights and shall, if
necessary, upon written request of any Pledgor and at the sole
cost and expense of the Pledgors, from time to time execute
and deliver (or cause to be executed and delivered) to such
Pledgor all such instruments as such Pledgor may reasonably
request in order to permit such Pledgor to exercise the voting
and other rights which it is entitled to exercise pursuant to
subsection 7(b)(i)(A) hereof and to receive the Distributions
which it is authorized to receive and retain pursuant to
subsection 7(b)(i)(B) hereof.
(ii) Upon the occurrence and during the continuance of any
Event of Default:
(A) All rights of each Pledgor to exercise the voting
and other consensual rights it would otherwise be entitled to
exercise pursuant to subsection 7(b)(i)(A) hereof without any
action or the giving of any notice shall cease, and all such
rights shall thereupon become vested in the Administrative
Agent, which shall thereupon have the sole right to exercise
such voting and other consensual rights.
(B) All rights of each Pledgor to receive Distributions
which it would otherwise be authorized to receive and retain
pursuant to subsection 7(b)(i)(B) hereof shall cease and all
such rights shall thereupon become vested in the
Administrative Agent, which shall thereupon have the sole
right to receive and hold as Pledged Collateral such
Distributions.
(iii) Each Pledgor shall, at its sole cost and expense, from
time to time execute and deliver to the Administrative Agent
appropriate instruments as the Administrative Agent may reasonably
request in order to permit the Administrative Agent to exercise the
voting and other rights which it may be entitled to exercise
pursuant to subsection 7(b)(ii)(A) hereof and to receive all
Distributions which it may be entitled to receive under subsection
7(b)(ii)(B) hereof.
(iv) All Distributions that are received by any Pledgor
contrary to the provisions of subsection 7(b)(ii)(B) hereof shall be
received in trust for the benefit of the Administrative Agent, shall
be segregated from other funds of such Pledgor and shall immediately
be paid over to the Administrative Agent as Pledged Collateral in
the same form as so received (with any necessary endorsement).
(c) No New Securities. Each Pledgor shall cause each issuer of the
Pledged Securities not to issue any stock or other securities or equity
interests in addition to or in substitution for the Pledged Securities
issued by such issuer, except to such Pledgor.
(d) Operative Agreements. Each Pledgor has delivered to the
Administrative Agent true, correct and complete copies of the Operative
Agreements. The Operative Agreements are in full force and effect, have
not as of the date hereof been amended or modified, and there is no
existing default by any party thereunder or any event that, with the
giving of notice of passage of time or both, would constitute a default by
any party thereunder. Each Pledgor shall deliver to the Administrative
Agent a copy of any notice of default given or received by it under any
Operative Agreement within ten (10) days after such Pledgor gives or
receives such notice. No Pledgor will terminate or agree to terminate any
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Operative Agreement or make any amendment or modification to any Operative
Agreement that may have an adverse effect on the value of the Pledged
Interests or the security intended to be provided by this Agreement.
(e) Defaults, etc. Such Pledgor is not in default in the payment of
any portion of any mandatory capital contribution, if any, required to be
made under any agreement to which such Pledgor is a party relating to the
Pledged Securities pledged by it, and such Pledgor is not in violation of
any other material provisions of any such agreement to which such Pledgor
is a party, or otherwise in default or violation thereunder. No Pledged
Securities pledged by such Pledgor are subject to any defense, offset or
counterclaim, nor have any of the foregoing been asserted or alleged
against such Pledgor by any Person with respect thereto, and as of the
date hereof, there are no certificates, instruments, documents or other
writings (other than the Operative Agreements and certificates, if any,
delivered to the Administrative Agent) that evidence any Pledged
Securities of such Debtor.
Section 8. Special Provisions Concerning Intellectual Property
Collateral.
(a) Grant of License. For the purpose of enabling the Administrative
Agent, during the continuance of an Event of Default, to exercise rights
and remedies under Section 12 hereof at such time as the Administrative
Agent shall be lawfully entitled to exercise such rights and remedies, and
for no other purpose, each Pledgor hereby grants to the Administrative
Agent, to the extent assignable, an irrevocable, non-exclusive license
(exercisable without payment of royalty or other compensation to such
Pledgor) to use, assign, license or sublicense any of the Intellectual
Property Collateral now owned or hereafter acquired by such Pledgor,
wherever the same may be located, including in such license reasonable
access to all media in which any of the licensed items may be recorded or
stored and to all computer programs used for the compilation or printout
hereof.
(b) Registrations. Except pursuant to licenses and other user
agreements entered into by any Pledgor in the ordinary course of business,
that are listed in Schedule VI annexed hereto, on and as of the date
hereof (i) each Pledgor owns and possesses the right to use, and has done
nothing to authorize or enable any other Person to use, any Copyright,
Patent or Trademark listed in Schedules III, IV and V, and (ii) all
registrations listed in Schedules III, IV and V are valid and in full
force and effect
(c) No Violations or Proceedings. To each Pledgor's knowledge, on
and as of the date hereof, (i) except as set forth in Schedule VI annexed
hereto, there is no violation by others of any right of such Pledgor with
respect to any Copyright, Patent or Trademark listed in Schedules III, IV
and V annexed hereto, respectively, pledged by it under the name of such
Pledgor, (ii) such Pledgor is not infringing, in any material respect,
upon any Copyright, Patent or Trademark of any other Person and (iii) no
proceedings have been instituted or are pending against such Pledgor or,
to such Pledgor's knowledge, threatened, and no material claim against
such Pledgor has been received by such Pledgor, alleging any such
violation, except as may be set forth in Schedule VI.
(d) Protection of Administrative Agent's Security. On a continuing
basis, each Pledgor shall, at its sole cost and expense, (i) promptly
following its becoming aware thereof, notify the Administrative Agent of
(A) any adverse determination in any proceeding in the United States
Patent and Trademark Office or the United States Copyright Office with
respect to any Patent, Trademark or Copyright or (B) the institution of
any proceeding or any adverse determination in any federal, state or local
court or administrative body regarding such Pledgor's claim of ownership
in or right to use any of the Intellectual Property Collateral, its right
to register the Intellectual Property Collateral or its right to
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keep and maintain such registration in full force and effect, (ii)
maintain and protect the Intellectual Property Collateral necessary for
the operation of such Pledgor's business as presently conducted and as
contemplated by the Credit Agreement, (iii) not permit to lapse or become
abandoned any Intellectual Property Collateral necessary for the operation
of such Pledgor's business as presently conducted and as contemplated by
the Credit Agreement, and not settle or compromise any pending or future
litigation or administrative proceeding with respect to the Intellectual
Property Collateral necessary for the operation of such Pledgor's business
as presently conducted, in each case, without the consent of the
Administrative Agent, (iv) upon such Pledgor obtaining knowledge thereof,
promptly notify the Administrative Agent in writing of any event which may
reasonably be expected to adversely affect the value or utility of the
Intellectual Property Collateral or any portion thereof necessary for the
operation of such Pledgor's business as presently conducted, the ability
of such Pledgor or the Administrative Agent to dispose of the Intellectual
Property Collateral or any portion thereof or the rights and remedies of
the Administrative Agent in relation thereto, including, without
limitation, a levy or threat of levy or any legal process against the
Intellectual Property Collateral or any portion thereof, (v) not license
the Intellectual Property Collateral other than licenses entered into by
such Pledgor in, or incidental to, the ordinary course of business, or
amend or permit the amendment of any of the licenses in a manner that
adversely affects the right to receive payments thereunder, or in any
manner that would impair the value of the Intellectual Property Collateral
or the Lien on the Intellectual Property Collateral intended to be granted
to the Administrative Agent for the benefit of the Secured Parties,
without the consent of the Administrative Agent, (vi) until the
Administrative Agent exercises its rights to make collection, diligently
keep adequate records respecting the Intellectual Property Collateral and
(vii) furnish to the Administrative Agent from time to time statements and
amended schedules further identifying and describing the Intellectual
Property Collateral and such other materials evidencing or reports
pertaining to the Intellectual Property Collateral as the Administrative
Agent may from time to time reasonably request, all in reasonable detail.
(e) After-Acquired Property. If any Pledgor shall, at any time
before the Secured Obligations have been paid in full or the Commitments
of the Lenders to make any Loan or to issue any Letter of Credit have
expired or been sooner terminated (i) obtain any rights to any additional
Intellectual Property Collateral or (ii) become entitled to the benefit of
any additional Intellectual Property Collateral or any renewal or
extension thereof, including any reissue, division, continuation, or
continuation-in-part of any Patent, or any improvement on any Patent, the
provisions of this Agreement shall automatically apply thereto and any
such item enumerated in clauses (i) or (ii) of this subsection 8(e) with
respect to such Pledgor shall automatically constitute Intellectual
Property Collateral if such would have constituted Intellectual Property
Collateral at the time of execution of this Agreement and be subject to
the Lien created by this Agreement without further action by any party
other than actions required to perfect such Lien. Each Pledgor shall
promptly provide to the Administrative Agent written notice of any of the
foregoing. Each Pledgor agrees, promptly following a request by the
Administrative Agent, to confirm the attachment of the Lien created by
this Agreement to any rights described in clauses (i) and (ii) of this
subsection 8(e) if such would have constituted Intellectual Property
Collateral at the time of execution of this Agreement by execution of an
instrument in form reasonably acceptable to the Administrative Agent.
(f) Modifications. Each Pledgor authorizes the Administrative Agent
to modify this Agreement by amending Schedules III, IV, V and VI hereto to
include any future Intellectual Property Collateral of such Pledgor,
including, without limitation, any of the items listed in subsection 8(e).
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(g) Applications. Each Pledgor shall file and prosecute diligently
all applications for the Patents, the Trademarks or the Copyrights now or
hereafter pending that would be necessary to the operation of such
Pledgor's business as presently conducted and as contemplated by the
Credit Agreement to which any such applications pertain, and shall do all
acts necessary to preserve and maintain all rights in the Intellectual
Property Collateral necessary to the operation of such Pledgor's business
as presently conducted and as contemplated by the Credit Agreement. Any
and all costs and expenses incurred in connection with any such actions
shall be borne by the Pledgors. No Pledgor shall abandon any right to file
a Patent, Trademark or Copyright application, or any pending Patent,
Trademark or Copyright application or any Patent, Trademark or Copyright
necessary for the operation of such Pledgor's business as presently
conducted and as contemplated by the Credit Agreement without the consent
of the Administrative Agent
(h) Litigation.
(i) Unless there shall occur and be continuing any Event of
Default, each Pledgor shall have the right to commence and prosecute
in its own name, as the party in interest, for its own benefit and
at the sole cost and expense of the Pledgors, such applications for
protection of the Intellectual Property Collateral and suits,
proceedings or other actions for infringement, counterfeiting,
unfair competition, dilution or other damage as are in its
reasonable business judgment necessary to protect the Intellectual
Property Collateral necessary for the operation of such Pledgor's
business as presently conducted. Each Pledgor shall promptly notify
the Administrative Agent in writing as to the commencement and
prosecution of any such actions, or threat thereof relating to the
Intellectual Property Collateral, and shall provide to the
Administrative Agent such information with respect thereto as may be
reasonably requested by the Administrative Agent. Each Pledgor shall
indemnify and hold harmless each Secured Party for any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, expenses or disbursements (including reasonable
attorneys' fees and expenses) of any kind whatsoever which may be
imposed on, incurred by or asserted against such Secured Party in
connection with or in any way arising out of such suits, proceedings
or other actions.
(ii) Upon the occurrence and during the continuance of any
Event of Default, the Administrative Agent shall have the right but
shall in no way be obligated to file applications for protection of
the Intellectual Property Collateral and/or bring suit in the name
of any Pledgor, the Administrative Agent or the Secured Parties to
enforce the Intellectual Property Collateral and any license
thereunder. In the event of such suit, each Pledgor shall, at the
request of the Administrative Agent, do any and all lawful acts and
execute any and all documents requested by the Administrative Agent
in aid of such enforcement and the Pledgors shall promptly, upon
demand, reimburse and indemnify the Administrative Agent, as the
case may be, for all costs and expenses (including reasonable fees
and expenses of counsel) incurred by the Administrative Agent in the
exercise of its rights under this subsection 8(h). In the event that
the Administrative Agent shall elect not to bring suit to enforce
the Intellectual Property Collateral, each Pledgor agrees, at the
request of the Administrative Agent, to use all reasonable measures,
whether by action, suit, proceeding or otherwise, to prevent the
infringement, counterfeiting or other diminution in value of any of
the Intellectual Property Collateral by others and for that purpose
agrees to diligently maintain any action, suit or proceeding against
any person so infringing necessary to prevent such infringement
unless such Pledgor has determined that such Intellectual Property
Collateral that is the subject of any pending or contemplated
infringement or enforcement action or proceeding does not contain
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or represent any value or utility (other than of an immaterial
nature), consistent with prudent business practice.
Section 9. Special Provisions Concerning Financial Accounts. At any
time after the occurrence and during the continuance of a Default until such
time as such Default has been cured, and upon the request of the Administrative
Agent, each Pledgor shall comply with the following covenants and make the
following representations and warranties:
(a) Financial Accounts. Each Pledgor shall, within 30 days of the
written request by the Administrative Agent, notify each Financial
Intermediary that any Financial Account Collateral maintained with such
Financial Intermediary by such Pledgor is under the exclusive dominion and
control of the Administrative Agent and that all moneys, financial assets,
checks, drafts, securities, instruments and other property deposited with
such Financial Intermediary are to be held by such Financial Intermediary
for the benefit of the Administrative Agent. Each Pledgor shall, within
one Business Day of actual receipt thereof, deposit any payment received
by it into a financial account that is subject to a financial account
consent agreement substantially in the form of Exhibit 2 annexed hereto
(each such agreement, a "Financial Account Consent Agreement" and each
financial account subject to a Financial Account Consent Agreement, an
"Approved Financial Account") or into the Concentration Account referred
to in subsection (b) below. In addition, all Persons that owe money to any
Pledgor in excess of $100,000 in the aggregate shall be directed to remit
their payments to an Approved Financial Account. If any Pledgor is unable
to obtain a Financial Account Consent Agreement from any Financial
Intermediary, then such Pledgor shall terminate all financial accounts
maintained with such Financial Intermediary and transfer all moneys,
financial assets, checks, drafts, securities, instruments and other
property deposited therein to another Approved Financial Account.
(b) Concentration Account. The Pledgors will establish a
concentration account or sub-account (the "Concentration Account") with
the Administrative Agent into which all Financial Account Collateral of
the Pledgors shall be deposited by 12:00 p.m. New York time on each
Business Day, subject to the provisions of subsection 9(c). Each Pledgor
hereby agrees that the Concentration Account is under the exclusive
dominion and control of the Administrative Agent and all moneys,
instruments, securities and other property received in the Concentration
Account are to be held for the benefit of the Administrative Agent on
behalf of the Secured Parties. Each Pledgor hereby transfers to the
Administrative Agent the exclusive dominion and control over the
Concentration Account. Notwithstanding the foregoing, the Administrative
Agent shall be permitted to designate a Lender that has executed and
delivered a Financial Account Consent Agreement and has agreed to be a
collateral sub-agent for the Administrative Agent to be the banking or
financial institution for the Concentration Account.
(c) Dispositions from Concentration Account. Until an Event of
Default shall have occurred and be continuing, each Pledgor is hereby
authorized by the Administrative Agent to direct on any Business Day the
disposition of any and all moneys, financial assets, checks, drafts,
securities, instruments and other property deposited in the Concentration
Account into one or more Approved Financial Accounts for use by such
Pledgor in a manner permitted by the Credit Agreement. The Administrative
Agent shall make such disposition by 2:00 p.m. New York time on each such
date.
(d) Revocation of Withdrawal Right. Upon the occurrence and during
the continuance of any Event of Default, the authorization of the Pledgors
under subsection 9(c) shall be revoked and all deposits maintained in the
Concentration Account or with any Financial Intermediary, and any
additional moneys, financial assets, checks, drafts, securities,
instruments and other property subsequently
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maintained with any Financial Intermediary, shall be transferred to a
collateral account or sub-account maintained by the Administrative Agent
(or a Lender that agrees to be a collateral subagent for the
Administrative Agent) in its name as Administrative Agent for the Secured
Parties (the "Collateral Account"). All such deposits in any such
Collateral Account shall constitute "Pledged Collateral" for all purposes
of this Agreement and shall be held by the Administrative Agent as Pledged
Collateral for the Secured Obligations or applied to the payment of the
Secured Obligations in accordance with Section 13 of this Agreement. The
costs and expenses (including reasonable attorney's fees) of collection,
whether incurred by any Pledgor or the Administrative Agent (or any
sub-agent), shall be borne by the Pledgors.
(e) Deposits to Collateral Account. Each Pledgor shall deposit into
the Collateral Account from time to time (i) the cash proceeds of any of
the Pledged Collateral or any Real Property that is subject to a Mortgage
(including pursuant to any disposition thereof), (ii) the cash proceeds of
any Recovery Event or loss of title with respect to any Real Property that
is subject to a Mortgage (including proceeds of casualty events and
proceeds of insurance covering the Pledged Collateral or any Real Property
that is subject to a Mortgage), (iii) any cash in respect of any Pledged
Collateral which the Administrative Agent is entitled to pursuant to
subsection 6(g) or subsection 7(b)(ii) hereof and (iv) any additional
amounts that such Pledgor desires to pledge to the Administrative Agent
for the benefit of the Secured Parties as additional collateral security
hereunder or which such Pledgor is required to pledge as additional
collateral security hereunder pursuant to the Loan Documents.
(f) Application of Amounts in Collateral Account. The balance from
time to time in the Collateral Account shall constitute part of the
Pledged Collateral hereunder and shall not constitute payment of the
Secured Obligations until applied as hereinafter provided. So long as no
Event of Default has occurred and is continuing or will result therefrom,
the Administrative Agent shall remit the collected balance outstanding to
the credit of the Collateral Account to or upon the order of the
respective Pledgor, in periodic installments, if applicable, within two
Business Days of (i) submission of reasonable evidence that such amount is
to be applied as permitted by Section 2.7(b) of the Credit Agreement and
(ii) with respect to any cash proceeds on deposit in the Collateral
Account relating to any Real Property that is subject to a Mortgage,
satisfaction of the conditions relating thereto set forth in such
Mortgage. At any time following the occurrence and during the continuance
of an Event of Default, however, the Administrative Agent may (and, if
instructed by the Lenders as specified in the Credit Agreement, shall) in
its (or their) discretion apply or cause to be applied (subject to
collection) the balance from time to time outstanding to the credit of the
Collateral Account to the payment of the Secured Obligations in the manner
specified in Section 13 hereof subject, however, in the case of amounts
deposited in the Letter of Credit Liabilities Sub-Account, to the
provisions of subsection 9(h) hereof). The balance from time to time in
the Collateral Account shall be subject to withdrawal only as provided
herein.
(g) Investment of Balance in Collateral Account. Amounts on deposit
in the Collateral Account shall be invested from time to time in such
Permitted Investments as the respective Pledgor (or, after the occurrence
and during the continuance of an Event of Default, the Administrative
Agent) shall determine, which Permitted Investments shall be held in the
name and be under the control of the Administrative Agent (or any
sub-agent); provided, however, that at any time after the occurrence and
during the continuance of an Event of Default, the Administrative Agent
may (and, if instructed by the Lenders as specified in the Credit
Agreement, shall) in its (or their) discretion at any time and from time
to time elect to liquidate any such Permitted Investments and to apply or
cause to be applied the
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proceeds thereof to the payment of the Secured Obligations in the manner
specified in Section 13 hereof.
(h) Cover for Letter of Credit Liabilities. Amounts deposited into
the Collateral Account as cover for liabilities in respect of Letters of
Credit under the Credit Agreement pursuant to Section 3 thereof shall be
held by the Administrative Agent in a separate sub-account designated as
the "Letter of Credit Liabilities Sub-Account" (the "Letter of Credit
Liability Sub-Account") and, notwithstanding any other provision of this
Agreement to the contrary, all amounts held in the Letter of Credit
Liabilities Sub-Account shall constitute collateral security first for the
liabilities in respect of Letters of Credit outstanding from time to time
and second as collateral security for the other Secured Obligations
hereunder until such time as all Letters of Credit shall have been
terminated and all of the liabilities in respect of Letters of Credit have
been paid in full.
Section 10. Transfers and Other Liens. No Pledgor shall (a) sell,
convey, assign or otherwise dispose of, or grant any option with respect to, any
of the Pledged Collateral pledged by it hereunder except as permitted by the
Credit Agreement, (b) create or permit to exist any Lien upon or with respect to
any of the Pledged Collateral pledged by it hereunder other than (i) Prior
Liens, (ii) the Liens and security interest granted to the Administrative Agent
under this Agreement and (iii) Subordinate Liens or (c) permit any issuer of the
Pledged Securities to merge, consolidate or change its legal form, unless (i)
permitted by the Credit Agreement or (ii) all of the outstanding equity
interests of the surviving or resulting entity are, upon such merger or
consolidation, pledged hereunder and no cash, securities or other property is
distributed in respect of the outstanding equity interests of any other entity
that was merged into or consolidated with such issuer.
Section 11. Reasonable Care. The Administrative Agent shall be
deemed to have exercised reasonable care in the custody and preservation of the
Pledged Collateral in its possession if such Pledged Collateral is accorded
treatment substantially equivalent to that which the Administrative Agent, in
its individual capacity, accords its own property consisting of similar
instruments or interests, it being understood that neither the Administrative
Agent nor any of the Secured Parties shall have responsibility for (i)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to any Securities Collateral,
whether or not the Administrative Agent or any other Secured Party has or is
deemed to have knowledge of such matters, or (ii) taking any necessary steps to
preserve rights against any Person with respect to any Pledged Collateral.
Section 12. Remedies upon Default; Obtaining the Pledged Collateral
upon Event of Default.
(a) If any Event of Default shall have occurred and be continuing,
then and in every such case, the Administrative Agent may:
(i) Personally, or by agents or attorneys, immediately take
possession of the Pledged Collateral or any part thereof, from any
Pledgor or any other Person who then has possession of any part
thereof with or without notice or process of law so long as no
breach of the peace occurs, and for that purpose may enter upon any
Pledgor's premises where any of the Pledged Collateral is located,
remove such Pledged Collateral, remain present at such premises to
receive copies of all communications and remittances relating to the
Pledged Collateral and use in connection with such removal and
possession any and all services, supplies, aids and other facilities
of any Pledgor;
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(ii) Demand, xxx for, collect or receive any money or property
at any time payable or receivable in respect of the Pledged
Collateral, including, without limitation, instructing the obligor
or obligors on any agreement, instrument or other obligation
(including, without limitation, the Receivables and Contracts)
constituting part of the Pledged Collateral to make any payment
required by the terms of such instrument or agreement directly to
the Administrative Agent, and in connection with any of the
foregoing, compromising, settling, extending the time for payment
and making other modifications with respect thereto; provided,
however, that in the event that any such payments are made directly
to any Pledgor, prior to receipt by any such obligor of such
instruction, such Pledgor shall segregate all amounts received
pursuant thereto in a separate account and pay the same promptly to
the Administrative Agent;
(iii) Sell, assign, grant a license to use or otherwise
liquidate, or direct any Pledgor to sell, assign, grant a license to
use or otherwise liquidate, any or all investments made in whole or
in part with the Pledged Collateral or any part thereof, and take
possession of the proceeds of any such sale, assignment, license or
liquidation;
(iv) Take possession of the Pledged Collateral or any part
thereof, by directing any Pledgor in writing to deliver the same to
the Administrative Agent at any place or places so designated by the
Administrative Agent that is reasonably convenient to such Pledgor
and the Administrative Agent, in which event such Pledgor shall at
its own expense: (A) forthwith cause the same to be moved to the
place or places designated by the Administrative Agent that is
reasonably convenient to such Pledgor and the Administrative Agent
and there delivered to the Administrative Agent, (B) store and keep
any Pledged Collateral so delivered to the Administrative Agent at
such place or places pending further action by the Administrative
Agent, and (C) while the Pledged Collateral shall be so stored and
kept, provide such security and maintenance services as shall be
necessary to protect the same and to preserve and maintain such
Pledged Collateral in good condition, ordinary wear and tear
excepted. Each Pledgor's obligation to deliver the Pledged
Collateral is of the essence of this Agreement;
(v) Withdraw all moneys, instruments, securities and other
property in any financial account of any Pledgor for application to
the Secured Obligations as provided in Section 13 hereof;
(vi) Retain and apply the Distributions to the Secured
Obligations as provided in Section 13 hereof; and
(vii) Exercise any and all rights as beneficial and legal
owner of the Pledged Collateral, including, without limitation,
perfecting assignment of and exercising any and all voting,
consensual and other rights and powers with respect to any Pledged
Collateral.
Upon application to a court of equity having jurisdiction, the
Administrative Agent shall be entitled to a decree requiring specific
performance by any Pledgor of such obligation.
(b) Remedies; Disposition of the Pledged Collateral.
(i) Upon the occurrence and during the continuance of any
Event of Default, the Administrative Agent may from time to time
exercise in respect of the Pledged Collateral,
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in addition to the other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured
party on default under the UCC, and the Administrative Agent may
also in its sole discretion, without notice except as specified
below, sell, assign or grant a license to use the Pledged Collateral
or any part thereof in one or more parcels at public or private
sale, at any exchange, broker's board or at any of the
Administrative Agent's offices or elsewhere, for cash, on credit or
for future delivery, and at such price or prices and upon such other
terms as the Administrative Agent may deem commercially reasonable.
The Administrative Agent or any other Secured Party or any of their
respective Affiliates may be the purchaser, licensee, assignee or
recipient of any or all of the Pledged Collateral at any such sale
and shall be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any portion
of the Pledged Collateral sold, assigned or licensed at such sale,
to use and apply any of the Secured Obligations owed to such Person
as a credit on account of the purchase price of any Pledged
Collateral payable by such Person at such sale. Each purchaser,
assignee, licensee or recipient at any such sale shall acquire the
property sold, assigned or licensed absolutely free from any claim
or right on the part of any Pledgor, and each Pledgor hereby waives,
to the fullest extent permitted by law, all rights of redemption,
stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or
hereafter enacted. The Administrative Agent shall not be obligated
to make any sale of Pledged Collateral regardless of notice of sale
having been given. The Administrative Agent may adjourn any public
or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned. Each
Pledgor hereby waives, to the fullest extent permitted by law, any
claims against the Administrative Agent arising by reason of the
fact that the price at which any Pledged Collateral may have been
sold, assigned or licensed at such a private sale was less than the
price which might have been obtained at a public sale, even if the
Administrative Agent accepts the first offer received and does not
offer such Pledged Collateral to more than one offeree.
(ii) Each Pledgor acknowledges and agrees that, to the extent
notice of sale shall be required by law, ten days' written notice to
such Pledgor of the time and place of any public sale or of the time
after which any private sale or other intended disposition is to
take place shall be commercially reasonable notification of such
matters. No notification need be given to any Pledgor if it has
signed, after the occurrence of an Event of Default, a statement
renouncing or modifying any right to notification of sale or other
intended disposition.
(c) Waiver of Notice and Claims. Each Pledgor hereby waives, to the
fullest extent permitted by applicable law, notice or judicial hearing in
connection with the Administrative Agent's taking possession or the
Administrative Agent's disposition of any of the Pledged Collateral,
including, without limitation, any and all prior notice and hearing for
any prejudgment remedy or remedies and any such right which such Pledgor
would otherwise have under law, and each Pledgor hereby further waives, to
the fullest extent permitted by applicable law: (i) all damages occasioned
by such taking of possession, except to the extent caused by gross
negligence or willful misconduct of the Administrative Agent, any Secured
Party or any agent or employee thereof, (ii) all other requirements as to
the time, place and terms of sale or other requirements with respect to
the enforcement of the Administrative Agent's rights hereunder, and (iii)
all rights of redemption, appraisal, valuation, stay, extension or
moratorium now or hereafter in force under any applicable law. The
Administrative Agent shall not be liable for any incorrect or improper
payment made pursuant to this Section 12 in the absence of gross
negligence or willful misconduct Any sale of, or the grant of options to
purchase, or any other realiza-
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tion upon, any Pledged Collateral shall operate to divest all right,
title, interest, claim and demand, either at law or in equity, of the
applicable Pledgor therein and thereto, and shall be a perpetual bar both
at law and in equity against such Pledgor and against any and all Persons
claiming or attempting to claim the Pledged Collateral so sold, optioned
or realized upon, or any part thereof, from, through or under such
Pledgor.
(d) Certain Sales of Pledged Collateral. Each Pledgor recognizes
that, by reason of certain prohibitions contained in law, rules,
regulations or orders of any foreign Governmental Authority, the
Administrative Agent may be compelled, with respect to any sale of all or
any part of the Pledged Collateral, to limit purchasers to those who meet
the requirements of such foreign Governmental Authority. Each Pledgor
acknowledges that any such sales may be at prices and on terms less
favorable to the Administrative Agent than those obtainable through a
public sale without such restrictions, and, notwithstanding such
circumstances, agrees that any such restricted sale shall be deemed to
have been made in a commercially reasonable manner and that, except as may
be required by applicable law, the Administrative Agent shall have no
obligation to engage in public sales.
(e) Each Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended (the "Securities
Act"), and applicable state securities laws, the Administrative Agent may
be compelled, with respect to any sale of all or any part of the
Securities Collateral, to limit purchasers to Persons who will agree,
among other things, to acquire such Securities Collateral for their own
account, for investment and not with a view to the distribution or resale
thereof. Each Pledgor acknowledges that any such private sales may be at
prices and on terms less favorable to the Administrative Agent than those
obtainable through a public sale without such restrictions (including,
without limitation, a public offering made pursuant to a registration
statement under the Securities Act), and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have
been made in a commercially reasonable manner and that the Administrative
Agent shall have no obligation to engage in public sales and no obligation
to delay the sale of any Securities Collateral for the period of time
necessary to permit the issuer thereof to register it for a form of public
sale requiring registration under the Securities Act or under applicable
state securities laws, even if such issuer would agree to do so.
(f) Notwithstanding the foregoing, each Pledgor shall, upon the
occurrence and during the continuance of any Event of Default, at the
request of the Administrative Agent, for the benefit of the Administrative
Agent, cause any registration, qualification under or compliance with any
federal or state securities law or laws to be effected with respect to all
or any part of the Securities Collateral as soon as practicable and at the
sole cost and expense of the Pledgors. Each Pledgor will use its best
efforts to cause such registration to be effected (and be kept effective)
and will use its best efforts to cause such qualification and compliance
to be effected (and be kept effective) as may be so requested and as would
permit or facilitate the sale and distribution of such Securities
Collateral, including, without limitation, registration under the
Securities Act (or any similar statute then in effect), appropriate
qualifications under applicable blue sky or other state securities laws
and appropriate compliance with any other government requirements. Each
Pledgor shall cause the Administrative Agent to be kept advised in writing
as to the progress of each such registration, qualification or compliance
and as to the completion thereof, shall furnish to the Administrative
Agent such number of prospectuses, offering circulars or other documents
incident thereto as the Administrative Agent from time to time may
request, and shall indemnify and shall cause the issuer of the Securities
Collateral to indemnify the Administrative Agent and all others
participating in the distribution of such Securities Collateral against
all claims, losses, damages and liabilities caused by any untrue statement
(or alleged untrue statement) of a
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material fact contained therein (or in any related registration statement,
notification or the like) or by any omission (or alleged omission) to
state therein (or in any related registration statement, notification or
the like) a material fact required to be stated therein or necessary to
make the statements therein not misleading.
(g) If the Administrative Agent determines to exercise its right to
sell any or all of the Securities Collateral, upon written request, the
applicable Pledgor shall from time to time furnish to the Administrative
Agent all such information as the Administrative Agent may request in
order to determine the number of securities included in the Securities
Collateral which may be sold by the Administrative Agent as exempt
transactions under the Securities Act and the rules of the Securities and
Exchange Commission thereunder, as the same are from time to time in
effect.
Section 13. Application of Proceeds. The proceeds received by the
Administrative Agent in respect of any sale of, collection from or other
realization upon all or any part of the Pledged Collateral pursuant to the
exercise by the Administrative Agent of its remedies as a secured creditor as
provided in Section 12 hereof shall be applied, together with any other sums
then held by the Administrative Agent pursuant to this Agreement, promptly by
the Administrative Agent as follows:
First, to the payment of all costs and expenses, fees, commissions
and taxes of such sale, collection or other realization, including,
without limitation, reasonable compensation to the Administrative Agent
and its agents and counsel, and all expenses, liabilities and advances
made or incurred by the Administrative Agent in connection therewith,
together with interest on each such amount at the highest rate then in
effect under the Credit Agreement from and after the date such amount is
due, owing or unpaid until paid in full;
Second, to the payment of all other costs and expenses of such sale,
collection or other realization, including, without limitation, reasonable
compensation to the Lenders and their agents and counsel and all costs,
liabilities and advances made or incurred by the Lenders in connection
therewith, together with interest on each such amount at the highest rate
then in effect under the Credit Agreement from and after the date such
amount is due, owing or unpaid until paid in full;
Third, without duplication of amounts applied pursuant to clauses
First and Second above, to the indefeasible payment in full in cash, pro
rata, of interest, principal and other amounts constituting Secured
Obligations in accordance with the terms of the Credit Agreement; and
Fourth, the balance, if any, to the Person lawfully entitled thereto
(including the Pledgors or their respective successors or assigns).
In the event that any such proceeds are insufficient to pay in full
the items described in clauses First through Third of this Section 13, the
Pledgors shall remain liable for any deficiency.
Section 14. Expenses. Each Pledgor will upon demand pay to the
Administrative Agent the amount of any and all expenses, including the
reasonable fees and expenses of its counsel and the fees and expenses of any
experts and agents which the Administrative Agent may incur in connection with
(a) the collection of the Secured Obligations, (b) the enforcement and
administration of this Agreement, (c) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the Pledged
Collateral, (d) the exercise or enforcement of any of the rights of the
Administrative Agent or any Secured Party hereunder or (e) the failure by any
Pledgor to perform or observe any of the provisions hereof. All amounts payable
by any Pledgor under
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this Section 14 shall be due upon demand and shall be part of the Secured
Obligations. Each Pledgor's obligations under this Section 14 shall survive the
termination of this Agreement and the discharge of such Pledgor's other
obligations hereunder.
Section 15. No Waiver; Cumulative Remedies.
(a) No failure on the part of the Administrative Agent to exercise,
no course of dealing with respect to, and no delay on the part of the
Administrative Agent in exercising, any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
remedy; nor shall the Administrative Agent be required to look first to,
enforce or exhaust any other security, collateral or guaranties. The
remedies herein provided are cumulative and are not exclusive of any
remedies provided by law.
(b) In the event that the Administrative Agent shall have instituted
any proceeding to enforce any right, power or remedy under this Agreement
by foreclosure, sale, entry or otherwise, and such proceeding shall have
been discontinued or abandoned for any reason or shall have been
determined adversely to the Administrative Agent, then and in every such
case, the Pledgors, the Administrative Agent and each other Secured Party
shall be restored to their respective former positions and rights
hereunder with respect to the Pledged Collateral, and all rights, remedies
and powers of the Administrative Agent and the other Secured Parties shall
continue as if no such proceeding had been instituted.
Section 16. Administrative Agent. The Administrative Agent has been
appointed as Administrative Agent pursuant to the Credit Agreement. The actions
of the Administrative Agent hereunder are subject to the provisions of the
Credit Agreement. The Administrative Agent shall have the right hereunder to
make demands, to give notices, to exercise or refrain from exercising any
rights, and to take or refrain from taking action (including, without
limitation, the release or substitution of Pledged Collateral), in accordance
with this Agreement and the Credit Agreement. The Administrative Agent may
employ agents and attorneys-in-fact in connection herewith and shall not be
liable for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it in good faith. The Administrative Agent may resign and a
successor Administrative Agent may be appointed in the manner provided in the
Credit Agreement. Upon the acceptance of any appointment as the Administrative
Agent by a successor Administrative Agent, that successor Administrative Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent under this Agreement,
and the retiring Administrative Agent shall thereupon be discharged from its
duties and obligations under this Agreement. After any retiring Administrative
Agent's resignation, the provisions of this Agreement shall inure to its benefit
as to any actions taken or omitted to be taken by it under this Agreement while
it was the Administrative Agent.
Section 17. Administrative Agent May Perform; Administrative Agent
Appointed Attorney-in-Fact. If any Pledgor shall fail to do any act or thing
that it has covenanted to do hereunder or if any warranty on the part of any
Pledgor contained herein shall be breached, the Administrative Agent may (but
shall not be obligated to) do the same or cause it to be done or remedy any such
breach, and may expend funds for such purpose. Any and all amounts so expended
by the Administrative Agent shall be paid by the Pledgors promptly upon demand
therefor, with interest at the highest rate then in effect under the Credit
Agreement during the period from and including the date on which such funds were
so expended to the date of repayment. Each Pledgor's obligations under this
Section 17 shall survive the termination of this Agreement and the discharge of
such Pledgor's other obligations under this Agreement, the Credit Agreement and
the other Loan Documents.
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Each Pledgor hereby appoints the Administrative Agent its attorney-in-fact, with
full authority in the place and stead of such Pledgor and in the name of such
Pledgor, or otherwise, from time to time after the occurrence and during the
continuance of a Default in the Administrative Agent's discretion to take any
action and to execute any instrument consistent with the terms of this Agreement
and the other Loan Documents which the Administrative Agent may deem necessary
or advisable to accomplish the purposes of this Agreement. The foregoing grant
of authority is a power of attorney coupled with an interest and such
appointment shall be irrevocable for the term of this Agreement. Each Pledgor
hereby ratifies all that such attorney shall lawfully do or cause to be done by
virtue hereof.
Section 18. Indemnity.
(a) Indemnity. Each Pledgor agrees to indemnify, pay and hold
harmless the Administrative Agent and each of the other Secured Parties
and the officers, directors, employees, agents and Affiliates of the
Administrative Agent and each of the other Secured Parties (collectively,
the "Indemnitees") from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs (including, without limitation, settlement costs), expenses
or disbursements of any kind or nature whatsoever (including, without
limitation, the reasonable fees and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or not such
Indemnitee shall be designated a party thereto) which may be imposed on,
incurred by, or asserted against that Indemnitee, in any manner relating
to or arising out of this Agreement or any other Loan Document (including,
without limitation, any misrepresentation by any Pledgor in this Agreement
or any other Loan Document) (the "indemnified liabilities"); provided,
however, that no Pledgor shall have any obligation to an Indemnitee
hereunder with respect to indemnified liabilities if it has been
determined by a final decision (after all appeals and the expiration of
time to appeal) of a court of competent jurisdiction that such indemnified
liability arose from the gross negligence or willful misconduct of that
Indemnitee. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in the preceding sentence may be unenforceable because
it is violative of any law or public policy, each Pledgor shall contribute
the maximum portion which it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all indemnified
liabilities incurred by the Indemnitees or any of them.
(b) Survival. The obligations of the Pledgors contained in this
Section 18 shall survive the termination of this Agreement and the
discharge of the Pledgors' other obligations under this Agreement and
under the other Loan Documents.
(c) Reimbursement. Any amounts paid by any Indemnitee as to which
such Indemnitee has the right to reimbursement shall constitute Secured
Obligations secured by the Pledged Collateral.
Section 19. Modification in Writing. No amendment, modification,
supplement, termination or waiver of or to any provision of this Agreement, nor
consent to any departure by any Pledgor therefrom, shall be effective unless the
same shall be made in accordance with the terms of the Credit Agreement and
unless in writing and signed by the Administrative Agent. Any amendment,
modification or supplement of or to any provision of this Agreement, any waiver
of any provision of this Agreement and any consent to any departure by any
Pledgor from the terms of any provision of this Agreement shall be effective
only in the specific instance and for the specific purpose for which made or
given. Except where notice is specifically required by this Agreement or any
other Loan Document, no notice to or demand on any Pledgor in any case shall
entitle any Pledgor to any other or further notice or demand in similar or other
circumstances.
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Section 20. Termination; Release. When all the Secured Obligations
have been paid in full and the Commitments of the Lenders to make any Loan or to
issue any Letter of Credit under the Credit Agreement shall have expired or been
sooner terminated, this Agreement shall terminate. Upon termination of this
Agreement or any release of Pledged Collateral in accordance with the provisions
of the Credit Agreement, the Administrative Agent shall, upon the request and at
the sole cost and expense of the Pledgors, forthwith assign, transfer and
deliver to Pledgor, against receipt and without recourse to or warranty by the
Administrative Agent, such of the Pledged Collateral to be released (in the case
of a release) as may be in possession of the Administrative Agent and as shall
not have been sold or otherwise applied pursuant to the terms hereof, and, with
respect to any other Pledged Collateral, proper documents and instruments
(including UCC-3 termination statements or releases) acknowledging the
termination of this Agreement or the release of such Pledged Collateral, as the
case may be.
Section 21. Notices. Unless otherwise provided herein or in the
Credit Agreement, any notice or other communication herein required or permitted
to be given shall be given in the manner set forth in the Credit Agreement, as
to any Pledgor, addressed to it at the address of the Borrower set forth in the
Credit Agreement and as to the Administrative Agent, addressed to it at the
address set forth in the Credit Agreement, or in each case at such other address
as shall be designated by such party in a written notice to the other party
complying as to delivery with the terms of this Section 21.
Section 22. Continuing Security Interest; Assignment. This Agreement
shall create a continuing security interest in the Pledged Collateral and shall
(i) be binding upon the Pledgors, their respective successors and assigns and
(ii) inure, together with the rights and remedies of the Administrative Agent
hereunder, to the benefit of the Administrative Agent and the other Secured
Parties and each of their respective successors, transferees and assigns. No
other Persons (including, without limitation, any other creditor of any Pledgor)
shall have any interest herein or any right or benefit with respect hereto.
Without limiting the generality of the foregoing clause (ii), any Lender may
assign or otherwise transfer any indebtedness held by it secured by this
Agreement to any other Person, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to such Lender, herein
or otherwise, subject however, to the provisions of the Credit Agreement. Each
Affiliate of the Borrower which from time to time after the initial date of this
Agreement is required under the Credit Agreement to pledge any assets to the
Administrative Agent for the benefit of the Secured Parties may become a party
hereto upon execution and delivery to the Administrative Agent of a joinder
agreement substantially in the form attached hereto as Exhibit 4 and upon such
execution and delivery shall be deemed to be a "Guarantor" and a "Pledgor" for
all purposes hereunder.
Section 23. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, EXCLUDING (TO THE GREATEST EXTENT PERMITTED BY LAW) ANY RULE
OF LAW THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER
THAN THE STATE OF NEW YORK, AND EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR PLEDGED COLLATERAL, ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF NEW YORK.
Section 24. CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER
OF JURY TRIAL. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PLEDGOR WITH RESPECT
TO THIS AGREEMENT MAY BE BROUGHT IN THE SUPREME COURT OF THE STATE OF NEW YORK
SITTING IN NEW YORK COUNTY, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK AND APPELLATE COURTS OF ANY THEREOF, AND BY
-31-
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PLEDGOR ACCEPTS FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND IRREVOCABLY AGREES TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. EACH PLEDGOR AGREES
THAT SERVICE OF PROCESS IN ANY PROCEEDING MAY BE EFFECTED BY MAILING A COPY
THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF
MAIL), POSTAGE PREPAID, TO BORROWER AT ITS ADDRESS SET FORTH IN THE CREDIT
AGREEMENT OR AT SUCH OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENT SHALL HAVE
BEEN NOTIFIED PURSUANT THERETO. IF ANY AGENT APPOINTED BY ANY PLEDGOR REFUSES TO
ACCEPT SERVICE, SUCH PLEDGOR HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL
CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE
ADMINISTRATIVE AGENT TO BRING PROCEEDINGS AGAINST ANY PLEDGOR IN THE COURTS OF
ANY OTHER JURISDICTION. THE PLEDGORS AND THE ADMINISTRATIVE AGENT HEREBY
IRREVOCABLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
Section 25. Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 26. Execution in Counterparts. This Agreement and any
amendments, waivers, consents or supplements hereto may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original,
but all such counterparts together shall constitute one and the same agreement.
Section 27. Headings. The Section headings used in this Agreement
are for convenience of reference only and shall not affect the construction of
this Agreement.
Section 28. Obligations Absolute. All obligations of each Pledgor
hereunder shall be absolute and unconditional irrespective of:
(a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of any Pledgor;
(b) any lack of validity or enforceability of the Credit Agreement,
any Letter of Credit or any other Loan Document, or any other agreement or
instrument relating thereto;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Credit
Agreement, any Letter of Credit or any other Loan Document, or any other
agreement or instrument relating thereto;
(d) any pledge, exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to any
departure from any guarantee, for all or any of the Secured Obligations;
-32-
(e) any exercise, non-exercise or waiver of any right, remedy, power
or privilege under or in respect of this Agreement or any other Loan
Document except as specifically set forth in a waiver granted pursuant to
the provisions of Section 19 hereof; or
(f) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, any Pledgor.
Section 29. Administrative Agent's Right to Sever Indebtedness.
(a) Each Pledgor acknowledges that (i) the Pledged Collateral does
not constitute the sole source of security for the payment and performance
of the Secured Obligations and that the Secured Obligations may also be
secured by other types of property of the Pledgors in other jurisdictions
(all such property, collectively, the "Collateral"), (ii) the number of
such jurisdictions and the nature of the transaction of which this
instrument is a part are such that it would have been impracticable for
the parties to allocate to each item of Collateral a specific loan amount
and to execute in respect of such item a separate credit agreement and
(iii) each Pledgor intends that the Administrative Agent have the same
rights with respect to the Pledged Collateral, in any judicial proceeding
relating to the exercise of any right or remedy hereunder or otherwise,
that the Administrative Agent would have had if each item of Collateral
had been pledged or encumbered pursuant to a separate credit agreement and
security instrument. In furtherance of such intent, each Pledgor agrees to
the greatest extent permitted by law that the Administrative Agent may at
any time by notice (an "Allocation Notice") to such Pledgor allocate a
portion of the Secured Obligations (the "Allocated Indebtedness") to all
or a specified portion of the Pledged Collateral and sever from the
remaining Secured Obligations the Allocated Indebtedness. From and after
the giving of an Allocation Notice with respect to any of the Pledged
Collateral, the Secured Obligations hereunder shall be limited to the
extent set forth in the Allocation Notice and (as so limited) shall, for
all purposes, be construed as a separate credit obligation of such Pledgor
unrelated to the other transactions contemplated by the Credit Agreement,
any other Loan Document or any document related to any thereof. To the
extent that the proceeds of any judicial proceeding relating to the
exercise of any right or remedy hereunder of the Pledged Collateral shall
exceed the Allocated Indebtedness, such proceeds shall belong to such
Pledgor and shall not be available hereunder to satisfy any Secured
Obligations of such Pledgor other than the Allocated Indebtedness. In any
action or proceeding to exercise any right or remedy under this Agreement
which is commenced after the giving by the Administrative Agent of an
Allocation Notice, the Allocation Notice shall be conclusive proof of the
limits of the Secured Obligations hereby secured, and such Pledgor may
introduce, by way of defense or counterclaim, evidence thereof in any such
action or proceeding. Notwithstanding any provision of this Section 29 the
proceeds received by the Administrative Agent pursuant to this Agreement
shall be applied by the Administrative Agent in accordance with the
provisions of Section 13 hereof.
(b) Each Pledgor hereby waives to the greatest extent permitted
under law the right to a discharge of any of the Secured Obligations under
any statute or rule of law now or hereafter in effect which provides that
the exercise of any particular right or remedy as provided for herein (by
judicial proceedings or otherwise) constitutes the exclusive means for
satisfaction of the Secured Obligations or which makes unavailable any
further judgment or any other right or remedy provided for herein because
the Administrative Agent elected to proceed with the exercise of such
initial right or remedy or because of any failure by the Administrative
Agent to comply with laws that prescribe conditions to the entitlement to
such subsequent judgment or the availability of such subsequent right or
remedy. In the event that, notwithstanding the foregoing waiver, any court
shall for any reason hold that such subsequent judgment or action is not
available to the Administrative Agent, no Pledgor shall (i) introduce in
-33-
any other jurisdiction any judgment so holding as a defense to enforcement
against such Pledgor of any remedy in the Credit Agreement or any other
Loan Document or (ii) seek to have such judgment recognized or entered in
any other jurisdiction, and any such judgment shall in all events be
limited in application only to the state or jurisdiction where rendered
and only with respect to the collateral referred to in such judgment.
(c) In the event any instrument in addition to the Allocation Notice
is necessary to effectuate the provisions of this Section 29, including,
without limitation, any amendment to this Agreement, any substitute
promissory note or affidavit or certificate of any kind, the
Administrative Agent may execute and deliver such instrument as the
attorney-in-fact of any Pledgor. Such power of attorney is coupled with an
interest and is irrevocable.
(d) Notwithstanding anything set forth herein to the contrary, the
provisions of this Section 29 shall be effective only to the maximum
extent permitted by law.
Section 30. Future Advances. This Agreement shall secure the payment
of any amounts advanced from time to time pursuant to the Credit Agreement.
-S1-
IN WITNESS WHEREOF, the Pledgors and the Administrative Agent have
caused this Agreement to be duly executed and delivered by their duly authorized
officers as of the date first above written.
PRECISION PARTNERS, INC.,
as Pledgor
By: ___________________________________
Name:
Title:
MID STATE MACHINE PRODUCTS,
as Pledgor
By: ___________________________________
Name:
Title:
GALAXY INDUSTRIES CORPORATION,
as Pledgor
By: ___________________________________
Name:
Title:
CERTIFIED FABRICATORS, INC.,
as Pledgor
By: ___________________________________
Name:
Title:
CALBRIT DESIGN, INC.,
as Pledgor
By: ___________________________________
Name:
Title:
-S2-
GENERAL AUTOMATION, INC.,
as Xxxxxxx
By: ___________________________________
Name:
Title:
NATIONWIDE PRECISION PRODUCTS
CORP., as Pledgor
By: ___________________________________
Name:
Title:
CITICORP U.S.A., INC..
as Administrative Agent
By: ___________________________________
Name:
Title:
SCHEDULE I-A
Initial Pledged Shares
Pledgor: _________________
PERCENTAGE OF
ALL ISSUED
CAPITAL OR
NUMBER OTHER EQUITY
CLASS CERTIFICATE OF INTERESTS OF
ISSUER OF STOCK NO(S). SHARES ISSUER
------ -------- ------ ------ -------------
Note: A separate sheet should be used for each Pledgor pledging shares.
SCHEDULE I-B
Initial Pledged Interests
Pledgor: _________________
PERCENTAGE OF
ALL ISSUED
CAPITAL OR
TYPE NUMBER OTHER EQUITY
OF CERTIFICATE OF INTERESTS OF
ISSUER INTEREST NO(S). SHARES ISSUER
------ -------- ------ ------ -------------
Note: A separate sheet should be used for each Pledgor pledging interests.
SCHEDULE II
Initial Intercompany Notes
Pledgor: _________________
PRINCIPAL DATE OF INTEREST MATURITY
ISSUER AMOUNT ISSUANCE RATE DATE
------ --------- -------- -------- --------
Note: A separate sheet should be used for each Pledgor pledging notes.
SCHEDULE III
Initial Patents
Pledgor: _________________
Registrations:
REGISTRATION REGISTRATION
NUMBER DATE COUNTRY DESCRIPTION
------------ ------------ ------- -----------
Applications:
APPLICATION APPLICATION
NUMBER DATE COUNTRY DESCRIPTION
----------- ------------ ------- -----------
Note: A separate sheet should be used for each Pledgor pledging Patents.
SCHEDULE IV
Initial Trademarks
Pledgor: _________________
Registrations:
REGISTRATION REGISTRATION
NUMBER DATE COUNTRY DESCRIPTION
------------ ------------ ------- -----------
Applications:
APPLICATION APPLICATION
NUMBER DATE COUNTRY DESCRIPTION
----------- ------------ ------- -----------
Note: A separate sheet should be used for each Pledgor pledging Trademarks.
SCHEDULE V
Initial Copyrights
Pledgor: _________________
DATE COUNTRY DESCRIPTION
---- ------- -----------
Note: A separate sheet should be used for each Pledgor pledging Copyrights.
SCHEDULE VI
Initial Licenses
Pledgor: _________________
Note: A separate sheet should be used for each Pledgor pledging Licenses.
SCHEDULE VII
Initial Financial Accounts
Pledgor: _________________
NAME OF ADDRESS ACCOUNT
FINANCIAL AND ABA NAME AND
INSTITUTION NUMBER NUMBER
----------- ------- --------
ANNEX A
Financial Statements and Other Necessary Filings
UCC Filing
Patent and Trademark Filings
Other Filings
ANNEX B
Prior Liens
Secured Party Jurisdiction Location Date Number Comment
------------- ------------ -------- ---- ------ -------
ANNEX C
Locations of Pledgors
Chief Executive Tax ID
Pledgor Office Number Other Locations
------- --------------- ------ ---------------
Note: A separate sheet should be used for each Pledgor pledging Financial
Accounts.
EXHIBIT 1
Form of Issuer Acknowledgment
The undersigned hereby (i) acknowledges receipt of a copy of that
certain security agreement (as amended, amended and restated, supplemented or
otherwise modified from time to time, the "Agreement"; capitalized terms used
herein but not defined herein have the meanings given such terms in the
Agreement), dated as of March ___, 1999, among Precision Partners, Inc., the
Subsidiary Guarantors and Citicorp U.S.A., Inc., as Administrative Agent (in
such capacity and together with any successors in such capacity, the
"Administrative Agent"), (ii) agrees promptly to note on its books the security
interests granted and confirmed under the Agreement, (iii) agrees that it will
comply with instructions of the Administrative Agent with respect to the
applicable Securities Collateral without further consent by the applicable
Pledgor, (iv) agrees to notify the Administrative Agent upon obtaining knowledge
of any interest in favor of any Person in the applicable Securities Collateral
that is adverse to the interest of the Administrative Agent therein and (v)
waives any right or requirement at any time hereafter to receive a copy of the
Agreement in connection with the registration of any Securities Collateral
thereunder in the name of the Administrative Agent or its nominee or the
exercise of voting rights by the Administrative Agent or its nominee.
[NAME OF ISSUER]
By: __________________________________
Name:
Title:
Note: This form should be signed by each issuer of uncertificated Securities
Collateral.
EXHIBIT 2
Form of Financial Account Consent Agreement
[Name of Pledgor]
[Address of Pledgor]
[Date]
[Name and
address of
Financial Institution]
Ladies and Gentlemen:
We refer to account numbers ___________ and _____________ (the
"Financial Accounts") maintained with [Name of Financial Institution] (the
"Financial Institution") by [Name of Pledgor] (the "Company") and into which
certain moneys, instruments, securities and other property are or may be
deposited from time to time. The Company has granted to Citicorp U.S.A., Inc. as
administrative agent (in such capacity and together with any successors in such
capacity, the "Administrative Agent") for the benefit of the Secured Parties
under, and as defined in, that certain security agreement (as amended, amended
and restated, supplemented or otherwise modified from time to time, the
"Agreement"), dated as of March ____, 1999, among Precision Partners, Inc. (the
"Borrower"), the subsidiary guarantors from time to time party thereto and the
Administrative Agent, a security interest in all moneys, instruments, securities
and other property deposited therein and all certificates or other instruments,
if any, representing or evidencing the Financial Accounts. It is a condition to
the continued maintenance of the Financial Accounts with the Financial
Institution that the Financial Institution agrees to this letter agreement.
The parties hereto agree as follows:
1. The Financial Institution hereby confirms that the Company has
established with it the Financial Accounts. The Financial Institution hereby
agrees that from and after the date hereof the Financial Accounts shall be under
the exclusive dominion and control of the Administrative Agent and all moneys,
instruments, securities and other property of the Company received in connection
therewith, whether or not deposited in the Financial Accounts, shall be held
solely for the benefit of the Administrative Agent. Except as otherwise provided
herein, the Financial Accounts shall be subject to written instructions only
from the Administrative Agent.
2. The Financial Institution hereby agrees to do the following:
(a) follow its usual operating procedures for the handling of any
remittance received in the Financial Accounts that contains restrictive
endorsements, irregularities, such as a variance between the written and
numerical amounts, undated or postdated items, missing signature and
incorrect payee;
-2-
(b) endorse and process all eligible checks and other remittance
items not covered by subparagraph (a) above and deposit such checks and
other remittance items in the Financial Accounts; and
(c) maintain a record of all checks and other remittance items
received in the Financial Accounts and, in addition to providing the
Company with photostats, vouchers and enclosures of checks and other
remittance items received on a daily basis, as well as a monthly
statement, furnish to the Administrative Agent, free of any service charge
payable by the Administrative Agent, its regular Lender statement with
respect to the Financial Accounts, with the words "________________, as
the Administrative Agent, Re: [Name of Borrower]" included thereon so that
there is no confusion as to ownership of the Financial Accounts and so
that the Administrative Agent is able to properly identify the Financial
Accounts.
3. [The Financial Institution hereby agrees that no later than 12:00
p.m. on each business day on which transactions may be made with respect to the
Financial Accounts, without further notice or instruction of any kind, to
transfer (by wire transfer) the total of all immediately available funds or
credits in each Financial Account to the concentration account, account no.
_________________, ABA # ___________, reference: [Name of Borrower] (the
"Concentration Account") maintained by the Company with the Administrative Agent
at its office located at ______________________.]
[The Administrative Agent hereby instructs the Financial Institution
to follow the instructions of the Company with respect to the disposition of any
and all moneys, instruments, securities and other property deposited in the
Financial Accounts as directed by the Company unless and until the Financial
Institution has received written instructions to the contrary from the
Administrative Agent, in which case the Financial Institution agrees to follow
such instructions from the Administrative Agent.]
The Financial Institution hereby agrees that the Administrative
Agent will be entitled to all rights and remedies to which a person in control
of "financial assets" (within the meaning of Section 8-102(a)(9) of the Uniform
Commercial Code as in effect in the State of New York (the "UCC")) is entitled
pursuant to Part 5 of Article 8 of the UCC and Article 9 of the UCC, and [,
subject to the provisions of the immediately preceding paragraph,] the Financial
Institution agrees to follow the instructions of the Administrative Agent with
respect to the disposition of any and all moneys, instruments, securities, and
other property deposited in the Financial Accounts.
Without limiting the foregoing, if at any time the Financial
Institution shall receive an "entitlement order" (within the meaning of Section
8-102(a)(8) of the UCC) issued by the Administrative Agent and relating to the
Financial Accounts, the Financial Institution shall comply with such entitlement
order without further consent of the Borrower, the Company or any other person
or entity. The Financial Institution hereby agrees that it shall be a
"securities intermediary" within the meaning of Section 8-102(a)(14) of the UCC
and that the Financial Accounts shall be maintained as "securities accounts" (as
such term is defined in Section 8-501(a) of the UCC) to the extent that any
"investment property" (as defined in Section 9-115 of the UCC) is maintained in
or in respect of the Financial Accounts and that each item of investment
property credited to a Financial Account shall be treated as a financial asset.
The Financial Institution further agrees that all securities or other investment
property underlying any financial assets credited to any Financial Account shall
be registered in the name of the Financial Institution, endorsed to it or in
blank or credited to another securities account maintained in its name.
-3-
4. Except for the claims and interest of the Administrative Agent
and the Company in the Financial Accounts, the Financial Institution hereby
acknowledges that it does not know of any claim to, or interest in, the
Financial Accounts or in any financial asset credited thereto. If any person or
entity asserts any lien, encumbrance or adverse claim (including any writ,
garnishment, judgment, warrant of attachment, execution or similar process)
against the Financial Accounts or in any financial asset carried therein, the
Financial Institution will promptly notify the Administrative Agent, the
Borrower and the Company thereof.
5. The Financial Institution hereby waives and agrees not to assert,
claim or endeavor to exercise, and by executing this letter agreement bars and
estops itself from asserting, claiming or exercising, and the Financial
Institution acknowledges that it has not heretofore received a notice from any
other party asserting, claiming or exercising, any right of setoff, banker's
lien or other purported form of claim with respect to the Financial Accounts and
funds from time to time therein. The Financial Institution shall have no rights
in the Financial Accounts or the funds therein. To the extent that it may ever
have any such rights, the Financial Institution hereby expressly subordinates
all such rights to all rights of the Administrative Agent.
6. The Financial Institution shall not be liable for any action
taken or omitted by it with respect to the Financial Accounts on the
instructions of the Administrative Agent, except to the extent of any gross
negligence or willful misconduct on the part of the Financial Institution, and
the Financial Institution shall not have any duty or responsibility to ascertain
whether any such instructions are consistent with the Agreement or the other
Loan Documents relating thereto. The Financial Institution may rely on any
certificate, statement, request, agreement or other instrument it believes in
good faith to be genuine and to have been signed or presented by or on behalf of
the Administrative Agent. In maintaining the Financial Accounts hereunder, the
Financial Institution may consult with counsel and shall be fully protected with
respect to any action taken or omitted by it in good faith on advice of counsel
and shall have no liability hereunder except for its bad faith, willful
misconduct or gross negligence with respect to its obligations hereunder.
7. The Company agrees to indemnify the Financial Institution against
and save the Financial Institution harmless from any and all claims,
liabilities, reasonable costs and expenses, including reasonable out-of-pocket
fees and expenses of counsel, for anything done or omitted by the Financial
Institution in good faith in connection with this letter agreement, including
reasonable costs and expenses of defending itself against any claim or
liability; provided, however, that the Financial Institution shall not have the
right to be indemnified hereunder for its bad faith, gross negligence or willful
misconduct.
8. The Financial Institution may terminate this letter agreement
only upon thirty days' prior written notice to that effect to the Company and
the Administrative Agent and by canceling the Financial Accounts maintained with
it and transferring all funds, if any, in such Financial Accounts to another
Financial Account pursuant to the instructions of the Administrative Agent.
After any such termination, the Financial Institution shall nonetheless remain
obligated promptly to transfer to the Concentration Account anything from time
to time received in respect of the Financial Accounts.
9. This letter agreement shall be binding upon the parties hereto
and their respective successors and assigns. This letter agreement may be
executed in counterparts, each of which will be deemed an original and all of
which taken together shall constitute one and the same instrument.
-S1-
THE "SECURITIES INTERMEDIARY'S JURISDICTION" WITHIN THE MEANING OF
SECTION 8-110(E) OF THE UCC IS AND SHALL CONTINUE TO BE THE STATE OF NEW YORK.
THIS LETTER AGREEMENT SHALL BE GOVERNED BY THE LAWS OF the STATE OF NEW YORK,
EXCLUDING (TO THE GREATEST EXTENT PERMITTED BY LAW) ANY RULE OF LAW THAT WOULD
CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF
NEW YORK.
Very truly yours,
[NAME OF PLEDGOR]
By: ____________________________________
Name:
Title:
CITICORP U.S.A., INC.,
as Administrative Agent
By: ____________________________________
Name:
Title:
Acknowledged and agreed to
as of the date first above written.
[FINANCIAL INSTITUTION]
By: ____________________________
Name:
Title:
EXHIBIT 3
Form of Securities Pledge Amendment
PLEDGE AMENDMENT
This Pledge Amendment, dated ______________, is delivered pursuant
to Section 7 of the Agreement referred to below. The undersigned hereby agrees
that this Pledge Amendment may be attached to the Security Agreement, dated as
of March ___, 1999, among the undersigned, certain other Pledgors and Citicorp
U.S.A., Inc., as the Administrative Agent (the "Agreement"; capitalized terms
used herein and not defined shall have the meanings assigned to them in the
Agreement). The undersigned hereby pledges, assigns, transfers and grants to the
Administrative Agent for its benefit and the benefit of the Secured Parties, a
first priority security interest in and to all of the undersigned's rights,
title and interest in and to the Pledged Securities and/or Intercompany Notes
listed on this Pledge Amendment and agrees that such Pledged Securities and/or
Intercompany Notes shall be deemed to be and shall become part of the Pledged
Collateral and shall secure all Secured Obligations.
_______________________________________
as Pledgor
By: __________________________________
Name:
Title:
Pledged Securities
PERCENTAGE OF ALL
NUMBER ISSUED CAPITAL OR
CLASS PAR CERTIFICATE OF OTHER EQUITY
ISSUER OF STOCK VALUE NO(S). SHARES INTERESTS OF ISSUER
------ -------- ----- ----------- ------ -------------------
Intercompany Notes
ISSUER PRINCIPAL DATE OF INTEREST MATURITY]
------ AMOUNT ISSUANCE RATE DATE]
--------- --------
EXHIBIT 4
Form of Joinder Agreement
[Name of New Pledgor]
[Address of New Pledgor]
[Date]
Citicorp U.S.A., Inc.,
as Administrative Agent
___________________________
___________________________
Attention: ________________
Ladies and Gentlemen:
Reference is made to the Security Agreement (the "Agreement"), dated
as of March ___, 1999, made by Precision Partners, Inc., (the "Borrower"), each
of the Subsidiary Guarantors listed on the signature pages thereto or from time
to time party thereto by execution of a joinder agreement and Citicorp U.S.A.,
Inc., as administrative agent for the Secured Parties. Capitalized terms used
herein but not otherwise defined herein have the meanings given such terms in
the Agreement.
This letter supplements the Agreement and is delivered by the
undersigned, ______________ (the "New Pledgor"), pursuant to Section 22 of the
Agreement. The New Pledgor hereby agrees to be bound as a Guarantor and as a
Pledgor by all of the terms, covenants and conditions set forth in the Agreement
to the same extent that it would have been bound if it had been a signatory to
the Agreement on the execution date of the Agreement. The New Pledgor hereby
makes each of the representations and warranties and agrees to each of the
covenants applicable to the Pledgors contained in the Agreement.
The New Pledgor hereby pledges, assigns, transfers and grants to the
Administrative Agent, for its benefit and the Secured Parties, a first priority
security interest in and to all of its right, title and interest in and to the
Pledged Collateral.
Attached hereto are supplements to each of the schedules and annexes
to the Agreement with respect to the New Pledgor. Such supplements shall be
deemed to be part of the Agreement.
This agreement and any amendments, waivers, consents or supplements
hereto may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed to be an original, but all such counterparts together shall
constitute one and the same agreement.
-2-
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, EXCLUDING (TO THE
GREATEST EXTENT PERMITTED BY LAW) ANY RULE OF LAW THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
-S1-
IN WITNESS WHEREOF, the New Pledgor has caused this Agreement to be
executed and delivered by its duly authorized officer as of the date first above
written.
[NEW PLEDGOR]
By:________________________________
Name:
Title:
AGREED TO AND ACCEPTED:
Citicorp U.S.A., Inc.,
as Administrative Agent
By: _____________________
Name:
Title:
(Schedules and Annexes to be attached]
Exhibit J
to the Credit
Agreement
[FORM OF OPINION OF LOCAL COUNSEL]
January __, 1999
Citicorp U.S.A., Inc.,
as Administrative Agent
and
The Lenders which are signatories to the
Credit Agreement referenced herein
Ladies and Gentlemen:
We have acted as special counsel in the state of [ ]
(the "State") to Precision Partners, Inc., a [ ] corporation
("Borrower") and each of the entities set forth in Schedule A annexed hereto
(the "State Entities"; together with Borrower, the "Obligors"), in connection
with (i) the consummation of the transactions contemplated by that certain
credit agreement dated as of January __, 1999 (the "Credit Agreement"; unless
otherwise defined herein, capitalized terms used herein have the meanings
assigned to them in the Credit Agreement), among Borrower, the Subsidiary
Guarantors, Holding, the lending institutions which are signatories to the
Credit Agreement (collectively, the "Lenders"), Syndication Agent, Documentation
Agent, and Citicorp U.S.A., Inc., as administrative agent for the Lenders (in
such capacities, the "Administrative Agent"; together with Syndication Agent and
Documentation Agent, the "Agents") and (ii) the execution and delivery today and
the consummation of the transactions contemplated by each of the Security
Documents, including, without limitation, the UCC-1 financing statements
(collectively, the "Financing Statements") relating to the Collateral, naming
the Obligors as debtors thereunder and Citicorp U.S.A., Inc., as Administrative
Agent and secured party thereunder.
There has been furnished to us for review the final forms of (i) the
Credit Agreement, (ii) the Security Documents and (iii) the Financing Statements
(collectively, the "Documents"). We have reviewed such instruments, documents
and agreements as we have deemed necessary or appropriate to enable us to render
the opinions hereinafter set forth.
In rendering the opinions hereinafter set forth, we have assumed
that (i) there has occurred due execution and delivery of the Documents and all
documentation in connection
-2-
therewith and (ii) each of the Obligors owns the Collateral pledged by it
pursuant to the Security Documents.
In addition, the opinions contained in Paragraphs 2 and 3 below are
qualified to the extent that enforceability of any of the Security Documents may
be limited by (i) bankruptcy, insolvency, moratorium, reorganization or other
laws relating to creditors' rights generally, and (ii) general principles of
equity, whether considered in an action at law or in equity.
Subject to the foregoing assumptions and qualifications, we are of
the opinion that:
1. Neither the Agents nor the Lenders are required (a) to be
qualified to transact business, file any designation for service of process, or
file any reports or pay any taxes in the State, (b) to comply with any statutory
or regulatory requirement applicable only to financial institutions chartered or
qualified to do business in the State, in each case, solely by reason of the
execution and delivery of any of the Documents or by reason of the participation
in any of the transactions under or contemplated by the Documents, including,
without limitation, the making and receipt of payments pursuant thereto and the
exercise of any remedy thereunder. If it were determined that any such
qualification and filing were required, the validity of the Documents would not
be affected thereby, but if the Agents or the Lenders were not qualified, the
Agents or the Lenders, in the event they institute remedies without the
Administrative Agent, as the case may be, would be precluded from enforcing
their respective rights in the courts of the State until such time as they are
qualified to transact business in the State. The lack of qualification, however,
would not result in any waiver of rights or remedies pending such qualification.
2. The Mortgages create and constitute (i) a valid first mortgage
lien on the real property described therein (the "Real Property"), (ii) a valid
security interest in such of the Mortgaged Property (the "UCC Property") as is
subject to the provisions of Article 9 of the Uniform Commercial Code as in
effect in the State (the "UCC") and (iii) a valid common law lien on or pledge
of such of the Mortgaged Property as is not UCC Property or Real Property (such
property, together with the UCC Property, the "Personal Property"). The
Mortgages are enforceable against the mortgagors named therein in accordance
with their terms. The Mortgages have been duly recorded by the Recorder of
[ ] County.
-3-
3. Assuming that the Security Agreement is governed by the law of
the State for the purpose of rendering the opinions set forth in this paragraph,
the Security Agreement creates and constitutes a valid security interest in,
lien on or pledge of the Pledged Collateral (as defined therein) and is
enforceable against the pledgor named therein in accordance with its terms.
4. The Financing Statements relating to (i) the Mortgages have been
properly filed with the Office of the Secretary of State and with the Recorder
of [ ] County and (ii) the Security Agreement has been properly
filed with the Office of the Secretary of State and with the Recorder of
[ ] County. The security interest, lien or pledge created by each
Security Document is duly perfected. The Financing Statements adequately
identify the Pledged Collateral described therein to provide sufficient notice
to third parties of the security interest referenced therein.
5. The recording of the Mortgages and the filing of the Financing
Statements with the recorders and in the offices described above are the only
actions, recordings or filings necessary to publish notice and protect the
validity of and to establish of record the rights of the parties under the
Documents, except (i) that continuation statements under the UCC are required to
be filed within [ ] months prior to the expiration of
[ ] years from the date of filing of the Financing Statements,
and (ii) that a security interest in or pledge of [specify collateral] cannot be
perfected by filing Financing Statements or recording a Mortgage, but must be
perfected by taking physical possession thereof.
6. The priority of the mortgage lien on the Real Property created by
the Mortgages with respect to any extension of credit (each, a "Further
Advance') secured thereby made or deemed to have been made after the date of
recording of the Mortgages, will be the same as the priority of the Mortgages
applicable on such date of recording and such priority will not be affected by
the rights in and to the Real Property of any third party whose interest in the
Real Property attached thereto after the date of such recording but prior to the
date of such Further Advance.
7. Subject to appropriate continuation of perfection under the UCC
as set forth in paragraph 5 above, the priority of the security interest in,
lien on or pledge of the Personal Property and the Pledged Collateral created by
the Security Agreement with respect to any Further Advance secured
-4-
thereby made or deemed to have been made after the date of execution and
delivery of the Security Agreement will be the same as the priority of the
Security Agreement applicable on the date of execution and delivery thereof and
such priority will not be affected by the rights in and to the Personal Property
or Pledged Collateral of any third party whose interest in the Personal Property
or Pledged Collateral attached thereto after the date of such execution and
delivery but prior to the date of such Further Advance.
8. The execution, delivery, recordation and performance by the
Agents, the Lenders and the Obligors of the Documents to which each is a party
(i) will not violate any existing law, governmental rule or regulation of the
State and (ii) do not require any license, permit, authorization, consent or
other approval of, any exemption by, or any registration, recording of filing
with, any court, administrative agency or other governmental authority of the
State, except for the filing of the Financing Statements as set forth in
paragraph 4.
9. Neither the Agents nor the Lenders shall be liable for any loss,
cost, expense or liability (including, without limitation, clean-up, corrective
action or response costs, penalties, fines or other impositions of governmental
agencies and judgments of private or public litigants) in respect of any matter
arising out of or relating to or under any Environmental Laws of the State by
reason of the execution and delivery of or participation in any of the
transactions under or contemplated by any of the Documents, including, without
limitation, the making and receipt of payments pursuant thereto and the exercise
of any remedy under any of the Documents. The laws of the State do not provide
for a statutory or regulatory lien in favor of any governmental entity for
liability under the Environmental Laws of the State. Under the laws of the
State, there are no statutory or regulatory requirements which will be imposed
on the Agents or the Lenders relating to the granting of a mortgage or security
interest in the Real Property that (i) require any notification or certification
to the State or any applicable political subdivision thereof of such mortgage or
security interest, or (ii) in the event of a discharge of any Hazardous
Materials (as defined in the Mortgages), impose responsibility or liability on
the part of the Agents or any of the Lenders for the undertaking of remedial
measures to alleviate environmental contamination resulting from such discharge.
-5-
10. The Administrative Agent is permitted under the laws of the
State without naming all of the Lenders in any applicable legal proceeding to
exercise remedies under the Documents for the realization of any of the
Collateral in its own name, as administrative agent.
11. No taxes or other charges, including, without limitation,
intangible or documentary stamp taxes, mortgage or recording taxes, transfer
taxes or similar charges, are payable to the State or to any jurisdiction
therein on account of the execution and delivery of the Documents or the
creation of the indebtedness evidenced or secured by any of the Documents or the
recording or filing of any of the Security Documents, except for nominal filing
or recording fees, which filing or recording fees have been paid.
12. The zoning classification of the Real Property is
[ ]. The Real Property, including the current uses and
configurations thereof, complies in all respects with all applicable state and
local planning, zoning and land development laws, regulations and ordinances.
13. All Permits (as defined in the Mortgages) in respect of the use
and occupancy of the Real Property are in full force and effect and are
sufficient to permit the current use and occupancy of the Real Property by the
Obligors.
14. No official violation notices or similar instruments have been
issued in respect of the Real Property.
15. The Secured Obligations (as defined in each Security Document)
do not violate any of the usury laws, regulations or ordinances of the State, or
of any other applicable political subdivision or locality within the State.
16. The transfer of all or any portion of the Collateral in
connection with the exercise of any remedy under the Mortgages, including,
without limitation, by way of judicial foreclosure, will not restrict, affect or
impair the liability of the Obligors with respect to the indebtedness secured
thereby or the beneficiary's rights or remedies to the foreclosure or
enforcement of any other security interest or liens securing such indebtedness.
The laws of the State do not require a lienholder to elect to pursue its
remedies either against mortgaged real property or personal property where such
lienholder holds security interests and liens on both real and personal property
of debtor.
-6-
17. A state or federal court in the State applying the State's
choice of law principles will give effect to the provisions in the Documents
(other than the Mortgages) which select the laws of the State of New York as the
governing law thereof and will apply such laws, rather than the laws of the
State, to the enforceability, construction and application thereof.
We are admitted to practice in the State. We express no opinion as
to matters under or involving the laws of any jurisdiction other than the laws
of the United States and the State and its political subdivisions.
The foregoing opinions may be relied on by any successor or assignee
of your interest under the Documents, but may not be relied upon or distributed
to any other person without our consent.
Very truly yours,
-7-
Schedule A
List of State Entities
[List out all State Entities with assets or offices in the State]
Exhibit K to
Credit Agreement
================================================================================
PRECISION PARTNERS HOLDING COMPANY
as Pledgor
--------------------
SECURITIES PLEDGE AGREEMENT
Dated as of March 19, 1999
--------------------
CITICORP U.S.A., INC.
as Administrative Agent
================================================================================
Table of Contents
Page
----
RECITALS .................................................................... 1
AGREEMENT ................................................................... 1
Section 1. Pledge ........................................................ 2
Section 2. Secured Obligations ........................................... 3
Section 3. No Release .................................................... 3
Section 4. Perfection; Supplements; Further Assurances; Use of
Pledged Collateral ............................................ 4
Section 5. Representations, Warranties and Covenants ..................... 5
Section 6. Special Provisions Concerning Securities Collateral ........... 7
Section 7. Transfers and Other Liens ..................................... 9
Section 8. Reasonable Care ............................................... 10
Section 9. Event of Default and Remedies ................................. 10
Section 10. Application of Proceeds ...................................... 12
Section 11. Expenses ..................................................... 13
Section 12. No Waiver; Cumulative Remedies ............................... 13
Section 13. Administrative Agent ......................................... 14
Section 14. Administrative Agent May Perform; Administrative Agent
Appointed Attorney-in-Fact .............................. 14
Section 15. Indemnity .................................................... 14
Section 16. Modification in Writing ...................................... 15
Section 17. Termination; Release ......................................... 15
Section 18. Notices ...................................................... 15
Section 19. Continuing Security Interest; Assignment ..................... 16
Section 20. GOVERNING LAW; TERMS ......................................... 16
Section 21. CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER
OF JURY TRIAL ............................................ 16
Section 22. Severability of Provisions ................................... 17
Section 23. Execution in Counterparts .................................... 17
Section 24. Headings ..................................................... 17
Section 25. Obligations Absolute ......................................... 17
Section 26. Future Advances .............................................. 17
SIGNATURES
SCHEDULE I-A INITIAL PLEDGED SHAPES
SCHEDULE I-B INITIAL PLEDGED INTERESTS
ANNEX A FINANCING STATEMENTS AND OTHER NECESSARY FILINGS, UCC FILINGS, AND
OTHER FILINGS
ANNEX B LOCATIONS OF PLEDGOR
EXHIBIT 1 FORM OF ISSUER ACKNOWLEDGMENT
EXHIBIT 2 FORM OF SECURITIES PLEDGE AGREEMENT
EXHIBIT 3 FORM OF JOINDER AGREEMENT
-i-
SECURITIES PLEDGE AGREEMENT
SECURITIES PLEDGE AGREEMENT (the "Agreement'), dated as of March 19,
1999 made by PRECISION PARTNERS HOLDING COMPANY, a Delaware corporation (in such
capacity and together with any successors in such capacity, "Pledgor") in favor
of CITICORP U.S.A., INC., having an office at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, in its capacity as administrative agent for the lending institutions
(the "Lenders") from time to time party to the Credit Agreement (as hereinafter
defined), as pledgee, assignee and secured party (in such capacity and together
with any successors in such capacity, the "Administrative Agent").
RECITALS:
A. Pursuant to a certain credit agreement, dated as of the date
hereof (as amended, amended and restated, supplemented or otherwise modified
from time to time, the "Credit Agreement"; capitalized terms used herein and not
defined herein shall have the meanings assigned to them in the Credit
Agreement), among Precision Partners, Inc. (the "Borrower"), the Subsidiary
Guarantors, Pledgor, the Lenders, the Administrative Agent, NationsBank, N.A.,
as syndication agent ("Syndication Agent"), and SunTrust Bank, Atlanta, as the
documentation agent ("Documentation Agent"; together with Administrative Agent
and Syndication Agent, collectively, the "Agents"), the Lenders have agreed (i)
to make to or for the account of the Borrower certain Term Loans up to an
aggregate principal amount of $23,000,000 and certain Revolving Loans up to an
aggregate principal amount of $25,000,000 and (ii) to issue certain Letters of
Credit for the account of the Borrower.
B. Pledgor has executed and delivered to the Administrative Agent a
certain guarantee instrument (each, a "Guarantee") pursuant to which, among
other things, Pledgor has guaranteed the obligations of the Borrower under the
Credit Agreement and the other Loan Documents, and Pledgor desires that its
Guarantee be secured hereunder.
C. Pledgor is or will be the legal and/or beneficial owner of the
Pledged Collateral (as hereinafter defined) to be pledged by it hereunder.
D. It is a condition to the obligations of the Lenders to make the
Loans under the Credit Agreement and a condition to any Lender issuing Letters
of Credit under the Credit Agreement that Pledgor execute and deliver the
applicable Loan Documents, including this Agreement.
E. This Agreement is given by Pledgor in favor of the Administrative
Agent for its benefit and the benefit of the Lenders and the Agents
(collectively, the "Secured Parties") to secure the payment and performance of
all of the Secured Obligations (as defined in Section 2).
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Pledgor and the Administrative Agent hereby agree as follows:
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Section 1. Pledge. As collateral security for the payment and
performance when due of all the Secured Obligations, Pledgor hereby pledges,
assigns, transfers and grants to the Administrative Agent for its benefit and
the benefit of the Secured Parties, a continuing first priority security
interest in and to and pledge of all of the right, title and interest of Pledgor
in, to and under the following property, wherever located, whether now existing
or hereafter arising or acquired from time to time (collectively, the "Pledged
Collateral"):
(a) the issued and outstanding shares of capital stock of each
Person described in Schedule I-A annexed hereto and each other corporation
hereafter acquired or formed by Pledgor (which are and shall remain at all
times until this Agreement terminates, certificated shares), including the
certificates representing the Pledged Shares and any interest of Pledgor
in the entries on the books of any financial intermediary pertaining to
the Pledged Shares and all Additional Shares (as hereinafter defined)
(collectively, the "Pledged Shares"); provided, however, that Pledgor
shall not be required to pledge shares possessing more than 65% of the
voting power of all classes of capital stock entitled to vote of any
Subsidiary which is a controlled foreign corporation (as defined in
Section 957(a) of the Internal Revenue Code of 1986, as amended from time
to time (the "Tax Code")) and, in any event, shall not be required to
pledge the shares of stock of any Subsidiary otherwise required to be
pledged pursuant to this subsection 1(a) to the extent that such pledge
would constitute an investment of earnings in United States property under
Section 956 (or a successor provision) of the Tax Code, which investment
would trigger an increase in the gross income of a United States
shareholder of Pledgor pursuant to Section 951, (or a successor provision)
of the Tax Code;
(b) all additional shares of capital stock of whatever class of any
issuer of the Pledged Shares from time to time acquired by Pledgor in any
manner (which are and shall remain at all times until this Agreement
terminates, certificated shares), including the certificates representing
such additional shares and any interest of Pledgor in the entries on the
books of any financial intermediary pertaining to such additional shares
(collectively, the "Additional Shares");
(c) all membership interests and/or partnership interests, as
applicable, of each Person described in Schedule I-B annexed hereto and
each other limited liability company or partnership hereafter acquired or
formed by Pledgor, together with all rights, privileges, authority and
powers of Pledgor in and to each such Person or under the membership or
partnership agreement of each such Person (the "Operative Agreements"),
and the certificates, instruments and agreements, if any, representing
such membership or partnership interests (collectively, the "Initial
Pledged Interests");
(d) all options, warrants, rights, agreements, additional membership
or partnership interests or other interests relating to each such Person
described in clause (c) above or any interest m any such Person,
including, without limitation, any right relating to the equity or
membership or partnership interests in any such Person or under the
Operative Agreement of any such Person, from time to time acquired by
Pledgor in any manner and the certificates, instruments and agreements, if
any, representing such additional interests (collectively, the "Additional
Interests"; together with the Initial Pledged Interests, the "Pledged
Interests"; the Pledged Interests, together with the Pledged Shares and
the items or types of Pledged Collateral described in subsection 1(f) of
this Agreement, collectively, the "Pledged Securities");
(e) all dividends, cash, options, warrants, rights, instruments,
distributions, returns of capital or principal, income, interest, profits
and other property, interests (debt or equity) or proceeds, including as a
result of a split, revision, reclassification or other like change of the
Pledged Securities,
-3-
from time to time received, receivable or otherwise distributed to Pledgor
in respect of or in exchange for any or all of the Pledged Securities
(collectively, "Distributions");
(f) without affecting the obligations of Pledgor under any provision
prohibiting such action hereunder or under the Credit Agreement, in the
event of any consolidation or merger in which any Person listed in
Schedule I-A or Schedule I-B annexed hereto is not the surviving entity,
all shares of each class of the capital stock of the successor corporation
or interests or certificates of the successor limited liability company or
partnership owned by Pledgor (unless such successor is Pledgor itself)
formed by or resulting from such consolidation or merger; and
(g) all "proceeds", as such term is defined in the UCC or under
other relevant law, and in any event including, without limitation, any
and all (i) proceeds of any insurance (except payments made to a Person
which is not a party to this Agreement), indemnity, warranty, guaranty or
claim payable to the Administrative Agent or to Pledgor from time to time
with respect to any of the Pledged Collateral, (ii) payments (in any form
whatsoever) made or due and payable to Pledgor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Pledged Collateral by any
Governmental Authority (or any Person acting on behalf of a Governmental
Authority), (iii) instruments representing obligations to pay amounts in
respect of the Pledged Collateral, (iv) products of the Pledged
Collateral and (v) other amounts from time to time paid or payable under
or in connection with any of the Pledged Collateral (collectively, the
"Proceeds").
The Pledged Securities, the Distributions and the Proceeds relating
thereto are collectively referred to as the "Securities Collateral".
Section 2. Secured Obligations. This Agreement secures, and the
Pledged Collateral is collateral security for, the payment and performance in
full when due, whether at stated maturity, by acceleration or otherwise
(including, without limitation, the payment of interest and other amounts which
would accrue and become due but for the filing of a petition in bankruptcy or
the operation of the automatic stay under Section 362(a) of the Bankruptcy Code,
11 U.S.C. ss. 362(a)), of (i) all Obligations of the Borrower now existing or
hereafter arising under or in respect of the Credit Agreement (including,
without limitation, the obligations of the Borrower to pay principal, interest
and all other charges, fees, expenses, commissions, reimbursements, premiums,
indemnities and other payments related to or in respect of the Obligations
contained in the Credit Agreement), (ii) all Obligations of Pledgor and the
Subsidiary Guarantors now existing or hereafter arising under or in respect of
the Credit Agreement (including, without limitation, the obligations of Pledgor
and each Subsidiary Guarantor to pay principal, interest and all other charges,
fees, expenses, commissions, reimbursements, premiums, indemnities and other
payments related to or in respect of the Obligations contained in the Credit
Agreement) and (iii) without duplication of the amounts described in clauses (i)
and (ii) above, all Obligations of Pledgor now existing or hereafter arising
under or in respect of this Agreement or any other Security Document, including,
without limitation, all charges, fees, expenses, commissions, reimbursements,
premiums, indemnities and other payments related to or in respect of the
Obligations contained in this Agreement or in any other Security Document, in
each case whether in the regular course of business or otherwise (the
obligations described in clauses (i), (ii) and (iii) of this Section 2,
collectively, the "Secured Obligations").
Section 3. No Release. Nothing set forth in this Agreement shall
relieve Pledgor from the performance of any term, covenant, condition or
agreement on Pledgor's part to be performed or observed under or in respect of
any of the Pledged Collateral or from any liability to any Person under or in
respect of any of the Pledged Collateral or shall impose any obligation on the
Administrative Agent or any other Secured Party to perform or observe any such
term, covenant, condition or agreement on Pledgor's part to be so performed or
-4-
observed or shall impose any liability on the Administrative Agent or any other
Secured Party for any act or omission on the part of Pledgor relating thereto or
for any breach of any representation or warranty on the part of Pledgor
contained in this Agreement or any other Loan Document, or under or in respect
of the Pledged Collateral or made in connection herewith or therewith, except
upon any exercise of remedies pursuant to Section 9 whereby Pledgor no longer
has any rights, title or interest in or to such Pledged Collateral. The
obligations of Pledgor referred to in this Section 3 shall survive the
termination of this Agreement and the discharge of Pledgor's other obligations
under this Agreement and the other Loan Documents.
Section 4. Perfection; Supplements; Further Assurances; Use of
Pledged Collateral.
(a) Delivery of Certificated Securities Collateral. All
certificates, agreements or instruments representing or evidencing the
Securities Collateral, to the extent not previously delivered to the
Administrative Agent, shall immediately upon receipt thereof by Pledgor be
delivered to and held by or on behalf of the Administrative Agent pursuant
hereto. All certificated Securities Collateral shall be in suitable form
for transfer by delivery or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Administrative Agent. The Administrative Agent shall
have the right, at any time upon the occurrence and during the continuance
of any Event of Default and without notice to Pledgor, to endorse, assign
or otherwise transfer to or to register in the name of the Administrative
Agent or any of its nominees or endorse for negotiation any or all of the
Securities Collateral, without any indication that such Securities
Collateral is subject to the security interest hereunder. In addition, the
Administrative Agent shall have the right at any time after the occurrence
and during the continuance of a Default to exchange certificates
representing or evidencing Pledged Securities for certificates of smaller
or larger denominations.
(b) Perfection of Uncertificated Securities Collateral. If any
issuer of Pledged Securities is organized in a jurisdiction which does not
permit the use of certificates to evidence equity ownership, or if any of
the Pledged Securities are at any time not evidenced by certificates of
ownership, then Pledgor shall, to the extent permitted by applicable law,
record such pledge on the equityholder register or the books of the
issuer, cause the issuer to execute and deliver to the Administrative
Agent an acknowledgment of the pledge of such Pledged Securities
substantially in the form of Exhibit 1 annexed hereto, execute any
customary pledge forms or other documents necessary or appropriate to
complete the pledge and give the Administrative Agent the right to
transfer such Pledged Securities pursuant to the terms hereof and provide
to the Administrative Agent an opinion of counsel, in form and substance
satisfactory to the Administrative Agent, confirming such pledge.
(c) Financing Statements and Other Filings. The only filings,
registrations and recordings necessary and appropriate to create,
preserve, protect and perfect the security interest granted by Pledgor to
the Administrative Agent pursuant to this Agreement in respect of the
Pledged Collateral are listed in Annex A annexed hereto. All such filings,
registrations and recordings have been filed, registered and recorded
contemporaneously with the execution of the Loan Documents. Pledgor agrees
that at any time and from time to time, it will execute and, at the sole
cost and expense of the Pledgor file and refile, or permit the
Administrative Agent to file and refile, such financing statements,
continuation statements and other documents (including, without
limitation, this Agreement), in form reasonably acceptable to the
Administrative Agent, in such offices as the Administrative Agent may
reasonably deem necessary or appropriate, wherever required or permitted
by law in order to perfect, continue and maintain a valid, enforceable,
first priority security interest in the Pledged Collateral as provided
herein and to preserve the other rights and interests granted to the
Administrative Agent hereunder, as against third parties, with respect to
any Pledged Collateral. Pledgor authorizes the Administrative Agent to
-5-
file any such financing or continuation statement or other document
without the signature of Pledgor where permitted by law.
(d) Supplements; Further Assurances. Pledgor agrees to do such
further acts and things, and to execute and deliver to the Administrative
Agent such additional assignments, agreements, supplements, powers and
instruments, as the Administrative Agent may reasonably deem necessary or
appropriate, wherever required or permitted by law, in order to perfect,
preserve and protect the security interest in the Pledged Collateral as
provided herein and the rights and interests granted to the Administrative
Agent hereunder, to carry into effect the purposes of this Agreement or
better to assure and confirm unto the Administrative Agent or permit the
Administrative Agent to exercise and enforce its respective rights, powers
and remedies hereunder with respect to any Pledged Collateral. Without
limiting the foregoing, Pledgor shall make, execute, endorse, acknowledge,
file or refile and/or deliver to the Administrative Agent from time to
time such lists, descriptions and designations of the Pledged Collateral,
schedules, confirmatory assignments, supplements, additional security
agreements, conveyances, financing statements, transfer endorsements,
powers of attorney, certificates, reports and other assurances or
instruments the Administrative Agent deems reasonably necessary or
appropriate. The Administrative Agent may institute and maintain, in its
own name or in the name of Pledgor, such suits and proceedings as the
Administrative Agent may be advised by counsel shall be reasonably
necessary or expedient to prevent any impairment of the security interest
in or perfection of the Pledged Collateral. All of the foregoing shall be
at the sole cost and expense of Pledgor.
(e) Use and Pledge of Pledged Collateral. Unless an Event of Default
shall have occurred and be continuing, the Administrative Agent shall from
time to time execute and deliver, upon written request of Pledgor and at
the sole cost and expense of Pledgor, any and all instruments,
certificates or other documents, in a form reasonably requested by
Pledgor, necessary or appropriate in the reasonable judgment of Pledgor to
enable Pledgor to continue to exploit, license, use, enjoy and protect the
Pledged Collateral, except as may be prohibited by the terms of this
Agreement or the Credit Agreement. Pledgor and the Administrative Agent
acknowledge that this Agreement is intended to grant to the Administrative
Agent for the benefit of the Secured Parties a security interest in and
Lien upon the Pledged Collateral and shall not constitute or create a
present assignment of any of the Pledged Collateral.
Section 5. Representations, Warranties and Covenants. Pledgor
represents, warrants and covenants as follows:
(a) Perfection Actions; Prior Liens. Upon the completion of the
deliveries, filings and other actions contemplated in subsections 4(a)
through 4(c) hereof, the security interest granted to the Administrative
Agent for the benefit of the Secured Parties pursuant to this Agreement in
and to the Pledged Collateral will constitute a perfected security
interest therein, superior and prior to the rights of all other Persons.
(b) No Liens. Pledgor is as of the date hereof, and, as to Pledged
Collateral acquired by it from time to time after the date hereof, Pledgor
will be, the sole direct and beneficial owner of all Pledged Collateral
pledged by it hereunder free from any Lien or other right, title or
interest of any Person other than the Lien and security interest created
by this Agreement. Pledgor shall defend the Pledged Collateral pledged by
it hereunder against all claims and demands of all Persons at any time
claiming any interest therein adverse to the Administrative Agent or any
other Secured Party. There is no agreement, and Pledgor shall not enter
into any agreement or take any other action, that would result
-6-
in the imposition of any other Lien, restrict the transferability of any
of the Pledged Collateral or otherwise impair or conflict with Pledgor's
obligations or the rights of the Administrative Agent hereunder.
(c) Other Financing Statements. There is no (nor will be any) valid
or effective financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) covering or purporting to
cover any interest of any kind in the Pledged Collateral other than those
relating to this Agreement, and so long as any of the Secured Obligations
remain unpaid or the Commitments of the Lenders to make any Loan or to
issue any Letter of Credit shall not have expired or been sooner
terminated, Pledgor shall not execute, authorize or permit to be filed in
any public office any financing statement (or similar statement or
instrument of registration under the law of any jurisdiction) or
statements relating to any Pledged Collateral, except, in each case,
financing statements filed or to be filed in respect of and covering the
security interests granted by Pledgor pursuant to this Agreement.
(d) Chief Executive Office; Change of Name. The chief executive
office of Pledgor is located at the address indicated next to its name in
Annex B annexed hereto. Pledgor shall not move its chief executive office,
except to such new location as Pledgor may establish in accordance with
the last sentence of this subsection 5(d). Pledgor shall not establish a
new location for its chief executive office nor shall it change its name
until (i) it shall have given the Administrative Agent not less than
thirty (30) days' prior written notice of its intention to do so, clearly
describing such new location or name and providing such other information
in connection therewith as the Administrative Agent may reasonably request
and (ii) with respect to such new location or name, Pledgor shall have
taken all action reasonably satisfactory to the Administrative Agent to
maintain the perfection and priority of the security interest of the
Administrative Agent for the benefit of the Secured Parties in the Pledged
Collateral intended to be granted hereby.
(e) Due Authorization and Issuance. All of the Pledged Shares have
been, and to the extent hereafter issued will be upon such issuance, duly
authorized, validly issued and fully paid and non-assessable. All of the
Initial Pledged Interests have been fully paid for, and there is no amount
or other obligation owing by Pledgor to any issuer of the Initial Pledged
Interests in exchange for or in connection with the issuance of the
Initial Pledged Interests or Pledgor's status as a partner or a member of
any issuer of the Initial Pledged Interests.
(f) No Violations, etc. The pledge of the Pledged Securities
pursuant to this Agreement does not violate Regulation T, U or X of the
Federal Reserve Board.
(g) No Options, Warrants, etc. There are no options, warrants,
calls, rights, commitments or agreements of any character to which Pledgor
is a party or by which it is bound obligating Pledgor to issue, deliver or
sell or cause to be issued, delivered or sold, additional Pledged
Securities or obligating Pledgor to grant, extend or enter into any such
option, warrant, call, right, commitment or agreement. There are no voting
trusts or other agreements or understandings to which Pledgor is a party
with respect to the transfer, voting or exercise of any other right of the
equity interests of any issuer of the Pledged Securities.
(h) No Claims. Pledgor owns or has rights to use all the Pledged
Collateral pledged by it hereunder.
(i) Authorization, Enforceability. Pledgor has the corporate power
and authority and the legal right to pledge and grant a security interest
in all the Pledged Collateral pledged by it pursuant to
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this Agreement, and this Agreement constitutes the legal, valid and
binding obligation of Pledgor, enforceable against Pledgor in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally or by equitable
principles (whether enforcement is sought by proceedings in equity or at
law).
(j) No Conflicts, Consents, etc. Neither the execution and delivery
of this Agreement by Pledgor nor the consummation of the transactions
herein contemplated nor the fulfillment of the terms hereof (i) violates
any charter or by-laws or other organizational document of Pledgor or any
issuer of Pledged Securities, (ii) violates the terms of any agreement,
indenture, mortgage, deed of trust, equipment lease, instrument or other
document to which Pledgor is a party, or by which it may be bound or to
which any of its properties or assets may be subject, which violation or
conflict would have a Material Adverse Effect, or a material adverse
effect on the value of the Pledged Collateral or an adverse effect on the
security interests hereunder, (iii) conflicts with any law, order, rule or
regulation applicable to any Pledgor of any Governmental Authority having
jurisdiction over Pledgor or its property, or (iv) results in or requires
the creation or imposition of any Lien (other than the Lien contemplated
hereby) upon or with respect to any of the property now owned or hereafter
acquired by Pledgor. No consent of any party (including, without
limitation, equityholders or creditors of Pledgor or any account debtor
under a Receivable) and no consent, authorization, approval, license or
other action by, and no notice to or filing with, any Governmental
Authority or regulatory body or other Person is required for (x) the
pledge by Pledgor of the Pledged Collateral pledged by it pursuant to this
Agreement or for the execution, delivery or performance of this Agreement
by Pledgor, (y) the exercise by the Administrative Agent of the rights
provided for in this Agreement or (z) the exercise by the Administrative
Agent of the remedies in respect of the Pledged Collateral pursuant to
this Agreement except for the filings contemplated hereby. In the event
that the Administrative Agent desires to exercise any remedies, voting or
consensual rights or attorney-in-fact powers set forth in this Agreement
and determines it reasonably necessary to obtain any approvals or consents
of any Governmental Authority or any other Person therefor, then, upon the
reasonable request of the Administrative Agent, Pledgor agrees to use its
best efforts to assist and aid the Administrative Agent to obtain as soon
as practicable any reasonably necessary approvals or consents for the
exercise of any such remedies, rights and powers.
(k) Pledged Collateral. All information set forth herein, including
the schedules and annexes attached hereto, and all information contained
in any documents, schedules and lists heretofore delivered to any Secured
Party in connection with this Agreement, in each case, relating to the
Pledged Collateral, is accurate and complete in all material respects. The
Pledged Collateral described on the schedules attached hereto constitutes
all of the property of such type of Pledged Collateral owned or held by
Pledgor.
(l) No Impairment. Pledgor shall not take any action that impairs
the rights of the Administrative Agent or any Secured Party in the Pledged
Collateral.
Section 6. Special Provisions Concerning Securities Collateral.
(a) Pledge of Additional Securities. Pledgor shall, upon obtaining
any Pledged Securities of any Person, accept the same in trust for the
benefit of the Administrative Agent and promptly (and in any event within
five Business Days) deliver to the Administrative Agent a pledge
amendment, duly executed by Pledgor, in substantially the form of Exhibit
2 annexed hereto (each, a "Pledge Amendment"), and the certificates and
other documents required under subsections 4(a) and 4(b) in respect of
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the additional Pledged Securities that are to be pledged pursuant to this
Agreement, and confirming the attachment of the Lien hereby created on and
in respect of such additional property. Pledgor hereby authorizes the
Administrative Agent to attach each Pledge Amendment to this Agreement and
agrees that all Pledged Securities listed on any Pledge Amendment
delivered to the Administrative Agent shall for all purposes hereunder be
considered Pledged Collateral.
(b) Voting Rights; Distributions; etc.
(i) So long as no Event of Default shall have occurred and be
continuing:
(A) Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the
Securities Collateral or any part thereof for any purpose not
inconsistent with the terms or purposes of this Agreement or
any other Loan Document; provided, however, that Pledgor shall
not in any event exercise such rights in any manner which may
have an adverse effect on the value of the Pledged Collateral
or the security intended to be provided by this Agreement.
(B) Pledgor shall be entitled to receive and retain, and
to utilize free and clear of the Lien of this Agreement, any
and all Distributions, but only if and to the extent made in
accordance with the provisions of the Credit Agreement;
provided, however, that any and all such Distributions
consisting of rights or interests in the form of securities
shall be forthwith delivered to the Administrative Agent to
hold as Pledged Collateral and shall, if received by Pledgor,
be received in trust for the benefit of the Administrative
Agent, be segregated from the other property or funds of
Pledgor and be forthwith delivered to the Administrative Agent
as Pledged Collateral in the same form as so received (with
any necessary endorsement).
(C) The Administrative Agent shall be deemed without
further action or formality to have granted to Pledgor all
necessary consents relating to voting rights and shall, if
necessary, upon written request of Pledgor and at the sole
cost and expense of the Pledgor, from time to time execute and
deliver (or cause to be executed and delivered) to Pledgor all
such instruments as Pledgor may reasonably request in order to
permit Pledgor to exercise the voting and other rights which
it is entitled to exercise pursuant to subsection 6(b)(i)(A)
hereof and to receive the Distributions which it is authorized
to receive and retain pursuant to subsection 6(b)(i)(B)
hereof.
(ii) Upon the occurrence and during the continuance of any
Event of Default
(A) All rights of Pledgor to exercise the voting and
other consensual rights it would otherwise be entitled to
exercise pursuant to subsection 6(b)(i)(A) hereof without any
action or the giving of any notice shall cease, and all such
rights shall thereupon become vested in the Administrative
Agent, which shall thereupon have the sole right to exercise
such voting and other consensual rights.
(B) All rights of Pledgor to receive Distributions which
it would otherwise be authorized to receive and retain
pursuant to subsection 6(b)(i)(B) hereof shall cease and all
such rights shall thereupon become vested in the
Administrative Agent,
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which shall thereupon have the sole right to receive and hold
as Pledged Collateral such Distributions.
(iii) Pledgor shall, at its sole cost and expense, from time
to time execute and deliver to the Administrative Agent appropriate
instruments as the Administrative Agent may reasonably request in
order to permit the Administrative Agent to exercise the voting and
other rights which it may be entitled to exercise pursuant to
subsection 6(b)(ii)(A) hereof and to receive all Distributions which
it may be entitled to receive under subsection 6(b)(ii)(B) hereof.
(iv) All Distributions that are received by Pledgor contrary
to the provisions of subsection 6(b)(ii)(B) hereof shall be received
in trust for the benefit of the Administrative Agent, shall be
segregated from other funds of Pledgor and shall immediately be paid
over to the Administrative Agent as Pledged Collateral in the same
form as so received (with any necessary endorsement).
(c) No New Securities. Pledgor shall cause each issuer of the
Pledged Securities not to issue any stock or other securities or equity
interests in addition to or in substitution for the Pledged Securities
issued by such issuer, except to Pledgor.
(d) Operative Agreements. Pledgor has delivered to the
Administrative Agent true, correct and complete copies of the Operative
Agreements. The Operative Agreements are in full force and effect, have
not as of the date hereof been amended or modified, and there is no
existing default by any party thereunder or any event that, with the
giving of notice of passage of time or both, would constitute a default by
any party thereunder. Pledgor shall deliver to the Administrative Agent a
copy of any notice of default given or received by it under any Operative
Agreement within ten (10) days after Pledgor gives or receives such
notice. Pledgor will not terminate or agree to terminate any Operative
Agreement or make any amendment or modification to any Operative Agreement
that may have an adverse effect on the value of the Pledged Interests or
the security intended to be provided by this Agreement.
(e) Defaults, etc. Pledgor is not in default in the payment of any
portion of any mandatory capital contribution, if any, required to be made
under any agreement to which Pledgor is a party relating to the Pledged
Securities pledged by it, and Pledgor is not in violation of any other
material provisions of any such agreement to which Pledgor is a party, or
otherwise in default or violation thereunder. No Pledged Securities
pledged by Pledgor are subject to any defense, offset or counterclaim, nor
have any of the foregoing been asserted or alleged against Pledgor by any
Person with respect thereto, and as of the date hereof, there are no
certificates, instruments, documents or other writings (other than the
Operative Agreements and certificates, if any, delivered to the
Administrative Agent) that evidence any Pledged Securities of Pledgor.
Section 7. Transfers and Other Liens. Pledgor shall not (a) sell,
convey, assign or otherwise dispose of, or grant any option with respect to, any
of the Pledged Collateral pledged by it hereunder except as permitted by the
Credit Agreement, (b) create or permit to exist any Lien upon or with respect to
any of the Pledged Collateral pledged by it hereunder other than the Liens and
security interest granted to the Administrative Agent under this Agreement or
(c) permit any issuer of the Pledged Securities to merge, consolidate or change
its legal form, unless (i) permitted by the Credit Agreement or (ii) all of the
outstanding equity interests of the surviving or resulting entity are, upon such
merger or consolidation, pledged hereunder and no cash, secu-
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rities or other property is distributed in respect of the outstanding equity
interests of any other entity that was merged into or consolidated with such
issuer.
Section 8. Reasonable Care. The Administrative Agent shall be deemed
to have exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if such Pledged Collateral is accorded treatment
substantially equivalent to that which the Administrative Agent, in its
individual capacity, accords its own property consisting of similar instruments
or interests, it being understood that neither the Administrative Agent nor any
of the Secured Parties shall have responsibility for (i) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relating to any Securities Collateral, whether or not the
Administrative Agent or any other Secured Party has or is deemed to have
knowledge of such matters, or (ii) taking any necessary steps to preserve rights
against any Person with respect to any Pledged Collateral.
Section 9. Event of Default and Remedies.
(a) Remedies Upon Event of Default. If any Event of Default shall
have occurred and be continuing, then and in every such case, the
Administrative Agent may:
(i) Retain and apply the Distributions to the Secured
Obligations as provided in Section 16 hereof; and
(ii) Exercise any and all rights as beneficial and legal owner
of the Pledged Collateral, including, without limitation, perfecting
assignment of and exercising any and all voting, consensual and
other rights and powers with respect to any Pledged Collateral.
(iii) In addition to the other rights and remedies provided
for herein or otherwise available to it, all the rights and remedies
of a secured party on default under the UCC, and the Administrative
Agent may also in its sole discretion, without notice except as
specified below, sell or assign the Pledged Collateral or any part
thereof in one or more parcels at public or private sale, at any
exchange, broker's board or at any of the Administrative Agent's
offices or elsewhere, for cash, on credit or for future delivery,
and at such price or prices and upon such other terms as the
Administrative Agent may deem commercially reasonable. The
Administrative Agent or any other Secured Party or any of their
respective Affiliates may be the purchaser, licensee, assignee or
recipient of any or all of the Pledged Collateral at any such sale
and shall be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any portion
of the Pledged Collateral sold or assigned at such sale, to use and
apply any of the Secured Obligations owed to such Person as a credit
on account of the purchase price of any Pledged Collateral payable
by such Person at such sale. Each purchaser, assignee or recipient
at any such sale shall acquire the property sold or assigned
absolutely free from any claim or right on the part of Pledgor, and
Pledgor hereby waives, to the fullest extent permitted by law, all
rights of redemption, stay and/or appraisal which it now has or may
at any time in the future have under any rule of law or statute now
existing or hereafter enacted. The Administrative Agent shall not be
obligated to make any sale of Pledged Collateral regardless of
notice of sale having been given. The Administrative Agent may
adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so
adjourned. Pledgor hereby waives, to the fullest extent permitted by
law, any claims against the Administrative Agent arising by reason
of the fact that the price at which any Pledged
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Collateral may have been sold or assigned at such a private sale was
less than the price which might have been obtained at a public sale,
even if the Administrative Agent accepts the first offer received
and does not offer such Pledged Collateral to more than one offeree.
Pledgor acknowledges and agrees that, to the extent notice of sale
shall be required by law, ten days' written notice to Pledgor of the
time and place of any public sale or of the time after which any
private sale or other intended disposition is to take place shall be
commercially reasonable notification of such matters. No
notification need be given to Pledgor if it has signed, after the
occurrence of an Event of Default, a statement renouncing or
modifying any right to notification of sale or other intended
disposition.
(b) Specific Performance. Upon application to a court of equity
having jurisdiction, the Administrative Agent shall be entitled to a
decree requiring specific performance by Pledgor of such obligation.
(c) Waiver of Notice and Claims. Pledgor hereby waives, to the
fullest extent permitted by applicable law, notice or judicial hearing in
connection with the Administrative Agent's taking possession or the
Administrative Agent's disposition of any of the Pledged Collateral,
including, without limitation, any and all prior notice and hearing for
any prejudgment remedy or remedies and any such right which Pledgor would
otherwise have under law, and Pledgor hereby further waives, to the
fullest extent permitted by applicable law: (i) all damages occasioned by
such taking of possession, except to the extent caused by gross negligence
or willful misconduct of the Administrative Agent, any Secured Party or
any agent or employee thereof, (ii) all other requirements as to the time,
place and terms of sale or other requirements with respect to the
enforcement of the Administrative Agent's rights hereunder, and (iii) all
rights of redemption, appraisal, valuation, stay, extension or moratorium
now or hereafter in force under any applicable law. The Administrative
Agent shall not be liable for any incorrect or improper payment made
pursuant to this Section 19 in the absence of gross negligence or willful
misconduct. Any sale of, or the grant of options to purchase, or any other
realization upon, any Pledged Collateral shall operate to divest all
right, title, interest, claim and demand, either at law or in equity, of
Pledgor therein and thereto, and shall be a perpetual bar both at law and
in equity against Pledgor and against any and all Persons claiming or
attempting to claim the Pledged Collateral so sold, optioned or realized
upon, or any part thereof, from, through or under Pledgor.
(d) Certain Sales of Pledged Collateral. Pledgor recognizes that, by
reason of certain prohibitions contained in law, rules, regulations or
orders of any foreign Governmental Authority, the Administrative Agent may
be compelled, with respect to any sale of all or any part of the Pledged
Collateral, to limit purchasers to those who meet the requirements of such
foreign Governmental Authority. Pledgor acknowledges that any such sales
may be at prices and on terms less favorable to the Administrative Agent
than those obtainable through a public sale without such restrictions,
and, notwithstanding such circumstances, agrees that any such restricted
sale shall be deemed to have been made in a commercially reasonable manner
and that, except as may be required by applicable law, the Administrative
Agent shall have no obligation to engage in public sales.
(e) Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended (the "Securities
Act"), and applicable state securities laws, the Administrative Agent may
be compelled, with respect to any sale of all or any part of the
Securities Collateral, to limit purchasers to Persons who will agree,
among other things, to acquire such Securities Collateral for their own
account, for investment and not with a view to the distribution or resale
thereof. Pledgor acknowledges that any such private sales may be at prices
and on terms less favorable to the Administrative
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Agent than those obtainable through a public sale without such
restrictions (including, without limitation, a public offering made
pursuant to a registration statement under the Securities Act), and,
notwithstanding such circumstances, agrees that any such private sale
shall be deemed to have been made in a commercially reasonable manner and
that the Administrative Agent shall have no obligation to engage in public
sales and no obligation to delay the sale of any Securities Collateral for
the period of time necessary to permit the issuer thereof to register it
for a form of public sale requiring registration under the Securities Act
or under applicable state securities laws, even if such issuer would agree
to do so.
(f) Notwithstanding the foregoing, Pledgor shall, upon the
occurrence and during the continuance of any Event of Default, at the
request of the Administrative Agent, for the benefit of the Administrative
Agent, cause any registration, qualification under or compliance with any
federal or state securities law or laws to be effected with respect to all
or any part of the Securities Collateral as soon as practicable and at the
sole cost and expense of Pledgor. Pledgor will use its best efforts to
cause such registration to be effected (and be kept effective) and will
use its best efforts to cause such qualification and compliance to be
effected (and be kept effective) as may be so requested and as would
permit or facilitate the sale and distribution of such Securities
Collateral, including, without limitation, registration under the
Securities Act (or any similar statute then in effect), appropriate
qualifications under applicable blue sky or other state securities laws
and appropriate compliance with any other government requirements. Pledgor
shall cause the Administrative Agent to be kept advised in writing as to
the progress of each such registration, qualification or compliance and as
to the completion thereof, shall furnish to the Administrative Agent such
number of prospectuses, offering circulars or other documents incident
thereto as the Administrative Agent from time to time may request, and
shall indemnify and shall cause the issuer of the Securities Collateral to
indemnify the Administrative Agent and all others participating in the
distribution of such Securities Collateral against all claims, losses,
damages and liabilities caused by any untrue statement (or alleged untrue
statement) of a material fact contained therein (or in any related
registration statement, notification or the like) or by any omission (or
alleged omission) to state therein (or in any related registration
statement, notification or the like) a material fact required to be stated
therein or necessary to make the statements therein not misleading.
(g) If the Administrative Agent determines to exercise its right to
sell any or all of the Securities Collateral, upon written request,
Pledgor shall from time to time furnish to the Administrative Agent all
such information as the Administrative Agent may request in order to
determine the number of securities included in the Securities Collateral
which may be sold by the Administrative Agent as exempt transactions under
the Securities Act and the rules of the Securities and Exchange Commission
thereunder, as the same are from time to time in effect.
Section 10. Application of Proceeds. The proceeds received by the
Administrative Agent in respect of any sale of, collection from or other
realization upon all or any part of the Pledged Collateral pursuant to the
exercise by the Administrative Agent of its remedies as a secured creditor as
provided in Section 9 hereof shall be applied, together with any other sums then
held by the Administrative Agent pursuant to this Agreement, promptly by the
Administrative Agent as follows:
First, to the payment of all costs and expenses, fees, commissions
and taxes of such sale, collection or other realization, including,
without limitation, reasonable compensation to the Administrative Agent
and its agents and counsel, and all expenses, liabilities and advances
made or incurred by the Administrative Agent in connection therewith,
together with interest on each such amount at the highest rate then in
effect under the Credit Agreement from and after the date such amount is
due, owing or unpaid until paid in full;
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Second, to the payment of all other costs and expenses of such sale,
collection or other realization, including, without limitation, reasonable
compensation to the Lenders and their agents and counsel and all costs,
liabilities and advances made or incurred by the Lenders in connection
therewith, together with interest on each such amount at the highest rate
then in effect under the Credit Agreement from and after the date such
amount is due, owing or unpaid until paid in full;
Third, without duplication of amounts applied pursuant to clauses
First and Second above, to the indefeasible payment in full in cash, pro
rata, of interest, principal and other amounts constituting Secured
Obligations in accordance with the terms of the Credit Agreement; and
Fourth, the balance, if any, to the Person lawfully entitled thereto
(including Pledgor or its respective successors or assigns).
In the event that any such proceeds are insufficient to pay in full
the items described in clauses First through Third of this Section 13, Pledgor
shall remain liable for any deficiency.
Section 11. Expenses. Pledgor will upon demand pay to the
Administrative Agent the amount of any and all expenses, including the
reasonable fees and expenses of its counsel and the fees and expenses of any
experts and agents which the Administrative Agent may incur in connection with
(a) the collection of the Secured Obligations, (b) the enforcement and
administration of this Agreement, (c) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the Pledged
Collateral, (d) the exercise or enforcement of any of the rights of the
Administrative Agent or any Secured Party hereunder or (e) the failure by
Pledgor to perform or observe any of the provisions hereof. All amounts payable
by Pledgor under this Section 11 shall be due upon demand and shall be part of
the Secured Obligations. Pledgor's obligations under this Section 11 shall
survive the termination of this Agreement and the discharge of Pledgor's other
obligations hereunder.
Section 12. No Waiver; Cumulative Remedies.
(a) No failure on the part of the Administrative Agent to exercise,
no course of dealing with respect to, and no delay on the part of the
Administrative Agent in exercising, any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
remedy; nor shall the Administrative Agent be required to look first to,
enforce or exhaust any other security, collateral or guaranties. The
remedies herein provided are cumulative and are not exclusive of any
remedies provided by law.
(b) In the event that the Administrative Agent shall have instituted
any proceeding to enforce any right, power or remedy under this Agreement
by foreclosure, sale, entry or otherwise, and such proceeding shall have
been discontinued or abandoned for any reason or shall have been
determined adversely to the Administrative Agent, then and in every such
case, Pledgor, the Administrative Agent and each other Secured Party shall
be restored to their respective former positions and rights hereunder with
respect to the Pledged Collateral, and all rights, remedies and powers of
the Administrative Agent and the other Secured Parties shall continue as
if no such proceeding had been instituted.
Section 13. Administrative Agent. The Administrative Agent has been
appointed as Administrative Agent pursuant to the Credit Agreement. The actions
of the Administrative Agent hereunder are subject to the provisions of the
Credit Agreement. The Administrative Agent shall have the right hereunder to
make
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demands, to give notices, to exercise or refrain from exercising any rights, and
to take or refrain from taking action (including, without limitation, the
release or substitution of Pledged Collateral), in accordance with this
Agreement and the Credit Agreement. The Administrative Agent may employ agents
and attorneys-in-fact in connection herewith and shall not be liable for the
negligence or misconduct of any such agents or attorneys-in-fact selected by it
in good faith. The Administrative Agent may resign and a successor
Administrative Agent may be appointed in the manner provided in the Credit
Agreement. Upon the acceptance of any appointment as the Administrative Agent by
a successor Administrative Agent, that successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Administrative Agent under this Agreement, and the
retiring Administrative Agent shall thereupon be discharged from its duties and
obligations under this Agreement. After any retiring Administrative Agent's
resignation, the provisions of this Agreement shall inure to its benefit as to
any actions taken or omitted to be taken by it under this Agreement while it was
the Administrative Agent.
Section 14. Administrative Agent May Perform; Administrative Agent
Appointed Attorney-in-Fact. If Pledgor shall fail to do any act or thing that it
has covenanted to do hereunder or if any warranty on the part of Pledgor
contained herein shall be breached, the Administrative Agent may (but shall not
be obligated to) do the same or cause it to be done or remedy any such breach,
and may expend funds for such purpose. Any and all amounts so expended by the
Administrative Agent shall be paid by Pledgor promptly upon demand therefor,
with interest at the highest rate then in effect under the Credit Agreement
during the period from and including the date on which such funds were so
expended to the date of repayment. Pledgor's obligations under this Section 14
shall survive the termination of this Agreement and the discharge of Pledgor's
other obligations under this Agreement, the Credit Agreement and the other Loan
Documents. Pledgor hereby appoints the Administrative Agent its
attorney-in-fact, with full authority in the place and stead of Pledgor and in
the name of Pledgor, or otherwise, from time to time after the occurrence and
during the continuance of a Default in the Administrative Agent's discretion to
take any action and to execute any instrument consistent with the terms of this
Agreement and the other Loan Documents which the Administrative Agent may deem
necessary or advisable to accomplish the purposes of this Agreement. The
foregoing grant of authority is a power of attorney coupled with an interest and
such appointment shall be irrevocable for the term of this Agreement. Pledgor
hereby ratifies all that such attorney shall lawfully do or cause to be done by
virtue hereof.
Section 15. Indemnity.
(a) Indemnity. Pledgor agrees to indemnify, pay and hold harmless
the Administrative Agent and each of the other Secured Parties and the
officers, directors, employees, agents and Affiliates of the
Administrative Agent and each of the other Secured Parties (collectively,
the "Indemnitees") from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs (including, without limitation, settlement costs), expenses
or disbursements of any kind or nature whatsoever (including, without
limitation, the reasonable fees and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or not such
Indemnitee shall be designated a party thereto) which may be imposed on,
incurred by, or asserted against that Indemnitee, in any manner relating
to or arising out of this Agreement or any other Loan Document (including,
without limitation, any misrepresentation by Pledgor in this Agreement or
any other Loan Document) (the "indemnified liabilities"); provided,
however, that Pledgor shall not have any obligation to an Indemnitee
hereunder with respect to indemnified liabilities if it has been
determined by a final decision (after all appeals and the expiration of
time to appeal) of a court of competent jurisdiction that such indemnified
liability arose from the gross negligence or willful misconduct of that
Indemnitee. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in the preceding sentence may be unenforceable because
it is
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violative of any law or public policy, Pledgor shall contribute the
maximum portion which it is permitted to pay and satisfy under applicable
law to the payment and satisfaction of all indemnified liabilities
incurred by the Indemnitees or any of them.
(b) Survival. The obligations of Pledgor contained in this Section
15 shall survive the termination of this Agreement and the discharge of
Pledgor's other obligations under this Agreement and under the other Loan
Documents.
(c) Reimbursement. Any amounts paid by any Indemnitee as to which
such Indemnitee has the right to reimbursement shall constitute Secured
Obligations secured by the Pledged Collateral.
Section 16. Modification in Writing. No amendment, modification,
supplement, termination or waiver of or to any provision of this Agreement, nor
consent to any departure by Pledgor therefrom, shall be effective unless the
same shall be made in accordance with the terms of the Credit Agreement and
unless in writing and signed by the Administrative Agent. Any amendment,
modification or supplement of or to any provision of this Agreement, any waiver
of any provision of this Agreement and any consent to any departure by Pledgor
from the terms of any provision of this Agreement shall be effective only in the
specific instance and for the specific purpose for which made or given. Except
where notice is specifically required by this Agreement or any other Loan
Document, no notice to or demand on Pledgor in any case shall entitle Pledgor to
any other or further notice or demand in similar or other circumstances.
Section 17. Termination; Release. When all the Secured Obligations
have been paid in full and the Commitments of the Lenders to make any Loan or to
issue any Letter of Credit under the Credit Agreement shall have expired or been
sooner terminated, this Agreement shall terminate. Upon termination of this
Agreement or any release of Pledged Collateral in accordance with the provisions
of the Credit Agreement, the Administrative Agent shall, upon the request and at
the sole cost and expense of Pledgor, forthwith assign, transfer and deliver to
Pledgor, against receipt and without recourse to or warranty by the
Administrative Agent, such of the Pledged Collateral to be released (in the case
of a release) as may be in possession of the Administrative Agent and as shall
not have been sold or otherwise applied pursuant to the terms hereof, and, with
respect to any other Pledged Collateral, proper documents and instruments
(including UCC-3 termination statements or releases) acknowledging the
termination of this Agreement or the release of such Pledged Collateral, as the
case may be.
Section 18. Notices. Unless otherwise provided herein or in the
Credit Agreement, any notice or other communication herein required or permitted
to be given shall be given in the manner set forth in the Credit Agreement, as
to Pledgor, addressed to it at the address of the Borrower set forth in the
Credit Agreement and as to the Administrative Agent, addressed to it at the
address set forth in the Credit Agreement, or in each case at such other address
as shall be designated by such party in a written notice to the other party
complying as to delivery with the terms of this Section 18.
Section 19. Continuing Security Interest; Assignment. This Agreement
shall create a continuing security interest in the Pledged Collateral and shall
(i) be binding upon Pledgor, its successors and assigns and (ii) inure, together
with the rights and remedies of the Administrative Agent hereunder, to the
benefit of the Administrative Agent and the other Secured Parties and each of
their respective successors, transferees and assigns. No other Persons
(including, without limitation, any other creditor of Pledgor) shall have any
interest herein or any right or benefit with respect hereto. Without limiting
the generality of the foregoing clause (ii), any Lender may assign or otherwise
transfer any indebtedness held by it secured by this Agreement to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to
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such Lender, herein or otherwise, subject however, to the provisions of the
Credit Agreement. Each Affiliate of the Borrower which from time to time after
the initial date of this Agreement is required under the Credit Agreement to
pledge any assets to the Administrative Agent for the benefit of the Secured
Parties may become a party hereto upon execution and delivery to the
Administrative Agent of a joinder agreement substantially in the form attached
hereto as Exhibit 3, and upon such execution and delivery shall be deemed to be
a "Guarantor" and a "Pledgor" for all purposes hereunder.
Section 20. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, EXCLUDING (TO THE GREATEST EXTENT PERMITTED BY LAW) ANY RULE
OF LAW THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER
THAN THE STATE OF NEW YORK, AND EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR PLEDGED COLLATERAL, ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF NEW YORK.
Section 21. CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER
OF JURY TRIAL. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR WITH RESPECT TO
THIS AGREEMENT MAY BE BROUGHT IN THE SUPREME COURT OF THE STATE OF NEW YORK
SITTING IN NEW YORK COUNTY, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK AND APPELLATE COURTS OF ANY THEREOF, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, PLEDGOR ACCEPTS FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND IRREVOCABLY AGREES TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. PLEDGOR AGREES THAT
SERVICE OF PROCESS IN ANY PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF
BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL),
POSTAGE PREPAID, TO BORROWER AT ITS ADDRESS SET FORTH IN THE CREDIT AGREEMENT OR
AT SUCH OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENT SHALL HAVE BEEN NOTIFIED
PURSUANT THERETO. IF ANY AGENT APPOINTED BY PLEDGOR REFUSES TO ACCEPT SERVICE,
PLEDGOR HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT
NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE ADMINISTRATIVE AGENT TO
BRING PROCEEDINGS AGAINST PLEDGOR IN THE COURTS OF ANY OTHER JURISDICTION.
PLEDGOR AND THE ADMINISTRATIVE AGENT HEREBY IRREVOCABLY WAIVE ALL RIGHT TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 22. Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 23. Execution in Counterparts. This Agreement and any
amendments, waivers, consents or supplements hereto may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original,
but all such counterparts together shall constitute one and the same agreement.
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Section 24. Headings. The Section headings used in this Agreement
are for convenience of reference only and shall not affect the construction of
this Agreement.
Section 25. Obligations Absolute. All obligations of Pledgor
hereunder shall be absolute and unconditional irrespective of:
(a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of Pledgor;
(b) any lack of validity or enforceability of the Credit Agreement,
any Letter of Credit or any other Loan Document, or any other agreement or
instrument relating thereto;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Credit
Agreement, any Letter of Credit or any other Loan Document, or any other
agreement or instrument relating thereto;
(d) any pledge, exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to any
departure from any guarantee, for all or any of the Secured Obligations;
(e) any exercise, non-exercise or waiver of any right, remedy, power
or privilege under or in respect of this Agreement or any other Loan
Document except as specifically set forth in a waiver granted pursuant to
the provisions of Section 16 hereof; or
(f) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, Pledgor.
Section 26. Future Advances. This Agreement shall secure the payment
of any amounts advanced from time to time pursuant to the Credit Agreement.
-S1-
IN WITNESS WHEREOF, Pledgor and the Administrative Agent have caused
this Agreement to be duly executed and delivered by their duly authorized
officers as of the date first above written.
PRECISION PARTNERS HOLDING COMPANY,
as Pledgor
By: _________________________________
Name:
Title:
CITICORP U.S.A., INC.,
as Administrative Agent
By: _________________________________
Name:
Title:
SCHEDULE I-A
Initial Pledged Shares
Pledgor: ______________________
PERCENTAGE OF
ALL ISSUED
CAPITAL OR
NUMBER OTHER EQUITY
CLASS CERTIFICATE OF INTERESTS OF
ISSUER OF STOCK NO(S). SHARES ISSUER
------ -------- ------ ------ -------------
Note: A separate sheet should be used for each Pledgor pledging shares.
SCHEDULE I-B
Initial Pledged Interests
Pledgor: _____________________
PERCENTAGE OF
ALL ISSUED
CAPITAL OR
TYPE NUMBER OTHER EQUITY
OF CERTIFICATE OF INTERESTS OF
ISSUER INTEREST NO(S). SHARES ISSUER
------ -------- ----------- ------ -------------
ANNEX A
Financing Statements and Other Necessary Filings
UCC Filing
Other Filings
ANNEX B
Locations of Pledgor
Chief Executive Tax ID
Pledgor Office Number Other Locations
------- --------------- ------ ---------------
Note: A separate sheet should be used for each Pledgor pledging Financial
Accounts.
-S1-
EXHIBIT 1
Form of Issuer Acknowledgement
The undersigned hereby (i) acknowledges receipt of a copy of that
certain securities pledge agreement (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Agreement";
capitalized terms used herein but not defined herein have the meanings given
such terms in the Agreement), dated as of March ___, 1999, among Precision
Partners Holding Company and Citicorp U.S.A., Inc., as Administrative Agent (in
such capacity and together with any successors in such capacity, the
"Administrative Agent"), (ii) agrees promptly to note on its books the security
interests granted and confirmed under the Agreement, (iii) agrees that it will
comply with instructions of the Administrative Agent with respect to the
applicable Securities Collateral without further consent by Pledgor, (iv) agrees
to notify the Administrative Agent upon obtaining knowledge of any interest in
favor of any Person in the applicable Securities Collateral that is adverse to
the interest of the Administrative Agent therein and (v) waives any right or
requirement at any time hereafter to receive a copy of the Agreement in
connection with the registration of any Securities Collateral thereunder in the
name of the Administrative Agent or its nominee or the exercise of voting rights
by the Administrative Agent or its nominee.
[NAME OF ISSUER]
By: ___________________________________
Name:
Title:
EXHIBIT 2
Form of Securities Pledge Amendment
PLEDGE AMENDMENT
This Pledge Amendment, dated ______________, is delivered pursuant
to Section 6 of the Agreement referred to below. The undersigned hereby agrees
that this Pledge Amendment may be attached to the Securities Pledge Agreement,
dated as of March ___, 1999, among the undersigned and Citicorp U.S.A., Inc., as
the Administrative Agent (the "Agreement"; capitalized terms used herein and not
defined shall have the meanings assigned to them in the Agreement). The
undersigned hereby pledges, assigns, transfers and grants to the Administrative
Agent for its benefit and the benefit of the Secured Parties, a first priority
security interest in and to all of the undersigned's rights, title and interest
in and to the Pledged Securities listed on this Pledge Amendment and agrees that
such Pledged Securities shall be deemed to be and shall become part of the
Pledged Collateral and shall secure all Secured Obligations.
PRECISION PARTNERS HOLDING COMPANY,
as Pledgor
By: ___________________________________
Name:
Title:
Pledged Securities
------------------
PERCENTAGE OF ALL
NUMBER ISSUED CAPITAL OR
CLASS PAR CERTIFICATE OF OTHER EQUITY
ISSUER OF STOCK VALUE NO(S). SHARES INTERESTS OF ISSUER
------ -------- ----- ----------- ------ -------------------
EXHIBIT 3
Form of Joinder Agreement
[Name of New Pledgor]
[Address of New Pledgor]
[Date]
Citicorp U.S.A., Inc.,
as Administrative Agent
___________________________
___________________________
Attention: ________________
Ladies and Gentlemen:
Reference is made to the Securities Pledge Agreement (the
"Agreement"), dated as of March ___, 1999, made by Precision Partners Holding
Company ("Pledgor") and Citicorp U.S.A., Inc., as administrative agent for the
Secured Parties. Capitalized terms used herein but not otherwise defined herein
have the meanings given such terms in the Agreement.
This letter supplements the Agreement and is delivered by the
undersigned, ______________ (the "New Pledgor"), pursuant to Section 19 of the
Agreement. The New Pledgor hereby agrees to be bound as a Guarantor and as a
Pledgor by all of the terms, covenants and conditions set forth in the Agreement
to the same extent that it would have been bound if it had been a signatory to
the Agreement on the execution date of the Agreement. The New Pledgor hereby
makes each of the representations and warranties and agrees to each of the
covenants applicable to Pledgor contained in the Agreement.
The New Pledgor hereby pledges, assigns, transfers and grants to the
Administrative Agent, for its benefit and the Secured Parties, a first priority
security interest in and to all of its right, title and interest in and to the
Pledged Collateral.
Attached hereto are supplements to each of the schedules and annexes
to the Agreement with respect to the New Pledgor. Such supplements shall be
deemed to be part of the Agreement
This agreement and any amendments, waivers, consents or supplements
hereto may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed to be an original, but all such counterparts together shall
constitute one and the same agreement.
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. EXCLUDING (TO
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THE GREATEST EXTENT PERMITTED BY LAW) ANY RULE OF LAW THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
-S1-
IN WITNESS WHEREOF, the New Pledgor has caused this Agreement to be
executed and delivered by its duly authorized officer as of the date first above
written.
[NEW PLEDGOR]
By: ____________________________
Name:
Title:
AGREED TO AND ACCEPTED:
Citicorp U.S.A., Inc.,
as Administrative Agent
By: _____________________
Name:
Title:
[Schedules and Annexes to be attached]
