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EXHIBIT 10.14
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$25,000,000
CREDIT AGREEMENT
AMONG
FRICTION PRODUCTS CO.
HAWK BRAKE, INC.
XXXXXX, INC.
XXXXXXXXXX PRODUCTS CORPORATION
XXXXX METAL STAMPINGS, INC.
X.X. XXXXXXX HOLDINGS, INC.
X.X. XXXXXXX CORP.
XXXXXXX FRICTION PRODUCTS U.K. CORP.
AS BORROWERS
EACH OF THE FINANCIAL INSTITUTIONS
INITIALLY A SIGNATORY HERETO,
TOGETHER WITH THOSE ASSIGNEES
PURSUANT TO SECTION 11.8 HEREOF
AS LENDERS
WITH
HAWK CORPORATION
AS HAWK FUNDS ADMINISTRATOR
AND
BT COMMERCIAL CORPORATION,
AS AGENT
DATED AS OF NOVEMBER 27, 1996
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TABLE OF CONTENTS
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ARTICLE 1. DEFINITIONS......................................................................................... 1
1.1 GENERAL DEFINITIONS............................................................... 1
1.2 ACCOUNTING TERMS AND DETERMINATIONS............................................... 17
1.3 OTHER TERMS; HEADINGS............................................................. 18
ARTICLE 2. REVOLVING LOANS..................................................................................... 18
2.1 COMMITMENTS....................................................................... 18
2.2 BORROWING OF REVOLVING LOANS...................................................... 18
2.3 NOTICE OF REQUEST FOR LENDER ADVANCES............................................. 19
2.4 PERIODIC SETTLEMENT OF AGENT ADVANCES;
INTEREST AND FEES; STATEMENTS..................................................... 20
2.5 SHARING OF PAYMENTS............................................................... 21
2.6 DEFAULTING LENDERS................................................................ 21
2.7 ALLOCATION OF REVOLVING LOANS AND
EXPENSES.......................................................................... 22
ARTICLE 3. LETTERS OF CREDIT................................................................................... 23
3.1 ISSUANCE OF LETTERS OF CREDIT..................................................... 23
3.2 TERMS OF LETTERS OF CREDIT........................................................ 24
3.3 NOTICE OF ISSUANCE................................................................ 24
3.4 LENDERS' PARTICIPATION............................................................ 24
3.5 PAYMENTS OF AMOUNTS DRAWN UNDER LETTERS
OF CREDIT......................................................................... 25
3.6 PAYMENT BY LENDERS................................................................ 25
3.7 OBLIGATIONS ABSOLUTE.............................................................. 25
3.8 AGENT'S EXECUTION OF APPLICATIONS AND
OTHER ISSUING BANK DOCUMENTATION;
RELIANCE ON CREDIT AGREEMENT BY ISSUING
BANK.............................................................................. 25
ARTICLE 4. COMPENSATION, REPAYMENT AND REDUCTION OF COMMITMENTS................................................ 26
4.1 INTEREST ON REVOLVING LOANS....................................................... 26
4.2 UNUSED LINE FEE................................................................... 27
4.3 LETTER OF CREDIT FEES............................................................. 27
4.4 INTEREST AND LETTER OF CREDIT FEES
AFTER EVENT OF DEFAULT............................................................ 28
4.5 COLLATERAL MONITORING FEE......................................................... 28
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4.6 EXPENSES.......................................................................... 28
4.7 MANDATORY PAYMENT OF REVOLVING LOANS;
REDUCTIONS OF COMMITMENTS......................................................... 28
4.8 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS
OF ACCOUNT........................................................................ 28
4.9 PAYMENT PROCEDURES................................................................ 29
4.10 COLLECTION OF ACCOUNTS............................................................ 29
4.11 DISTRIBUTION AND APPLICATION OF
COLLECTIONS AND OTHER AMOUNTS..................................................... 30
4.12 CALCULATIONS...................................................................... 30
4.13 SPECIAL PROVISIONS RELATING TO LIBOR
RATE LOANS........................................................................ 30
4.14 INDEMNIFICATION IN CERTAIN EVENTS................................................. 34
ARTICLE 5. CONDITIONS PRECEDENT................................................................................ 35
5.1 CONDITIONS PRECEDENT TO INITIAL
REVOLVING LOAN AND LETTER OF CREDIT............................................... 35
5.2 CONDITIONS PRECEDENT TO ALL REVOLVING
LOANS AND LETTERS OF CREDIT....................................................... 36
ARTICLE 6. REPRESENTATIONS AND WARRANTIES...................................................................... 37
6.1 ORGANIZATION AND QUALIFICATION.................................................... 37
6.2 AUTHORITY......................................................................... 38
6.3 ENFORCEABILITY.................................................................... 38
6.4 NO CONFLICT....................................................................... 38
6.5 CONSENTS AND FILINGS.............................................................. 38
6.6 GOVERNMENT REGULATION............................................................. 38
6.7 SOLVENCY.......................................................................... 39
6.8 RIGHTS IN COLLATERAL; PRIORITY OF LIENS........................................... 39
6.9 FINANCIAL DATA.................................................................... 39
6.10 LOCATIONS OF OFFICES, RECORDS AND
INVENTORY......................................................................... 39
6.11 SUBSIDIARIES; OWNERSHIP OF STOCK.................................................. 40
6.12 NO JUDGMENTS OR LITIGATION........................................................ 40
6.13 NO DEFAULTS....................................................................... 40
6.14 LABOR MATTERS..................................................................... 41
6.15 COMPLIANCE WITH LAW............................................................... 41
6.16 ERISA............................................................................. 41
6.17 COMPLIANCE WITH ENVIRONMENTAL LAWS................................................ 41
6.18 INTELLECTUAL PROPERTY............................................................. 42
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6.19 LICENSES AND PERMITS.............................................................. 42
6.20 TAXES AND TAX RETURNS............................................................. 42
6.21 MATERIAL CONTRACTS................................................................ 43
6.22 ACCURACY AND COMPLETENESS OF
INFORMATION....................................................................... 43
6.23 NO CHANGE......................................................................... 44
ARTICLE 7. AFFIRMATIVE COVENANTS............................................................................... 44
7.1 FINANCIAL REPORTING............................................................... 44
7.2 COLLATERAL REPORTING.............................................................. 45
7.3 NOTIFICATION REQUIREMENTS......................................................... 46
7.4 CORPORATE EXISTENCE............................................................... 48
7.5 BOOKS AND RECORDS; INSPECTIONS.................................................... 48
7.6 INSURANCE......................................................................... 48
7.7 TAXES............................................................................. 49
7.8 COMPLIANCE WITH LAWS.............................................................. 49
7.9 USE OF PROCEEDS................................................................... 49
7.10 FISCAL YEAR....................................................................... 49
7.11 MAINTENANCE OF PROPERTY........................................................... 49
7.12 ERISA DOCUMENTS................................................................... 49
7.13 ENVIRONMENTAL AND OTHER MATTERS................................................... 50
7.14 FURTHER ACTIONS................................................................... 51
7.15 DEPOSIT OF COLLECTIONS AND OTHER
PROCEEDS OF COLLATERAL.............................................................51
ARTICLE 8. NEGATIVE COVENANTS.................................................................................. 51
8.1 INTEREST COVERAGE................................................................. 51
8.2 CAPITAL EXPENDITURES.............................................................. 51
8.3 ADDITIONAL INDEBTEDNESS........................................................... 52
8.4 LIENS............................................................................. 53
8.5 CONTINGENT OBLIGATIONS............................................................ 54
8.6 SALE OF ASSETS.................................................................... 54
8.7 RESTRICTED PAYMENTS............................................................... 54
8.8 INVESTMENTS....................................................................... 55
8.9 AFFILIATE TRANSACTIONS............................................................ 55
8.10 ADDITIONAL NEGATIVE PLEDGES....................................................... 56
8.11 ADDITIONAL SUBSIDIARIES........................................................... 56
ARTICLE 9. EVENTS OF DEFAULT AND REMEDIES...................................................................... 56
9.1 EVENTS OF DEFAULT................................................................. 56
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9.2 ACCELERATION, TERMINATION OF
COMMITMENTS AND CASH COLLATERALIZATION............................................ 57
9.3 RESCISSION OF ACCELERATION........................................................ 58
9.4 REMEDIES.......................................................................... 58
9.5 RIGHT OF SETOFF................................................................... 59
9.6 LICENSE OF USE OF SOFTWARE AND OTHER
INTELLECTUAL PROPERTY............................................................. 59
9.7 APPLICATION OF PROCEEDS; SURPLUS;
DEFICIENCIES...................................................................... 59
ARTICLE 10. THE AGENT.......................................................................................... 59
10.1 APPOINTMENT OF AGENT............................................................. 59
10.2 NATURE OF DUTIES OF AGENT........................................................ 60
10.3 LACK OF RELIANCE ON AGENT........................................................ 60
10.4 CERTAIN RIGHTS OF THE AGENT...................................................... 61
10.5 RELIANCE BY AGENT................................................................ 61
10.6 INDEMNIFICATION OF AGENT......................................................... 61
10.7 THE AGENT IN ITS INDIVIDUAL CAPACITY............................................. 62
10.8 HOLDERS OF NOTES................................................................. 62
10.9 SUCCESSOR AGENT.................................................................. 62
10.10 COLLATERAL MATTERS............................................................... 63
ARTICLE 11. MISCELLANEOUS...................................................................................... 64
11.1 GOVERNING LAW.................................................................... 64
11.2 SUBMISSION TO JURISDICTION....................................................... 65
11.3 SERVICE OF PROCESS............................................................... 65
11.4 JURY TRIAL....................................................................... 65
11.5 LIMITATION OF LIABILITY.......................................................... 66
11.6 DELAYS........................................................................... 66
11.7 NOTICES.......................................................................... 66
11.8 ASSIGNMENTS AND PARTICIPATIONS................................................... 66
11.9 CONFIDENTIALITY.................................................................. 68
11.10 INDEMNIFICATION.................................................................. 68
11.11 AMENDMENTS AND WAIVERS........................................................... 69
11.12 COUNTERPARTS AND EFFECTIVENESS................................................... 70
11.13 SEVERABILITY..................................................................... 70
11.14 MAXIMUM RATE..................................................................... 70
11.15 ENTIRE AGREEMENT; SUCCESSORS AND
ASSIGNS.......................................................................... 71
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11.16 JOINT AND SEVERAL LIABILITY OF
BORROWERS................................................................ 71
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ANNEXES
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ANNEX I List of Lenders; Commitment Amounts;
Applicable Lending Offices
SCHEDULES
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SCHEDULE A Closing Document List
SCHEDULE B Disclosure Schedules
SCHEDULE B, PART 6.1 States in which Qualified
SCHEDULE B, PART 6.9 Contingent Obligations and Other
Liabilities
SCHEDULE B, PART 6.10 Chief Executive Offices; Locations
of Collateral
SCHEDULE B, PART 6.11 Subsidiaries
SCHEDULE B, PART 6.12 Pending Judgments, Litigation and
other Claims
SCHEDULE B, PART 6.14 Labor Contracts
SCHEDULE B, PART 6.16 Plans
SCHEDULE B, PART 6.17 Environmental Matters
SCHEDULE B, PART 6.20 Tax Matters; Tax Sharing Agreements
SCHEDULE B, PART 6.21 Material Contracts
SCHEDULE B, PART 8.3 Existing Indebtedness
SCHEDULE B, PART 8.4 Existing Liens
SCHEDULE B, PART 8.8 Existing Investments
SCHEDULE B, PART 8.9 Other Affiliate Transactions
EXHIBITS
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EXHIBIT A Form of Borrowing Base Certificate
EXHIBIT B Form of Notice of Borrowing
EXHIBIT C Form of Revolving Note
EXHIBIT D Form of Notice of Continuation
EXHIBIT E Form of Notice of Conversion
EXHIBIT F Form of Compliance Certificate
EXHIBIT G Form of Assignment and Assumption
Agreement
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THIS CREDIT AGREEMENT ("CREDIT AGREEMENT") is entered into as of
November 27, 1996, among FRICTION PRODUCTS CO., an Ohio corporation ("FRICTION
PRODUCTS"), HAWK BRAKE, INC., an Ohio corporation ("HAWK BRAKE"), XXXXXX, INC.,
a Delaware corporation ("XXXXXX"), XXXXXXXXXX PRODUCTS CORPORATION, a Delaware
corporation ("XXXXXXXXXX"), XXXXX METAL STAMPINGS, INC., an Ohio corporation
("XXXXX"), X.X. XXXXXXX HOLDINGS, INC., a Delaware corporation ("XXXXXXX
HOLDINGS"), X.X. XXXXXXX CORP., a Delaware corporation ("XXXXXXX CORP.") and
XXXXXXX FRICTION PRODUCTS U.K. CORP., a Delaware corporation ("XXXXXXX
FRICTION") (Friction Products, Hawk Brake, Helsel, Hutchinson, Logan, Wellman
Holdings, Xxxxxxx Corp. and Xxxxxxx Friction each sometimes hereinafter referred
to individually as a "BORROWER" and collectively as the "BORROWERS"); each
financial institution identified on ANNEX I (together with its successors and
permitted assigns, hereinafter referred to individually as a "LENDER" and
collectively as the "LENDERS"); HAWK CORPORATION, a Delaware corporation,
formerly known as The Hawk Group of Companies, Inc. ("HAWK"), acting in its
capacity as borrowing agent hereunder for the Borrowers (Hawk, in such capacity,
the "HAWK FUNDS ADMINISTRATOR"); and BT COMMERCIAL CORPORATION, a Delaware
corporation (in its individual capacity, hereinafter referred to as "BTCC"),
acting in its capacity as agent for the Lenders (in such capacity, together with
its successors in such capacity, hereinafter referred to as the "AGENT").
ARTICLE 1. DEFINITIONS.
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1.1 GENERAL DEFINITIONS.
ACCOUNT has the meaning set forth in the Security Agreement.
AFFILIATE of a Person means another Person who directly or indirectly
controls, is controlled by, is under common control with or is a director or
officer of, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to vote five percent (5%) or
more of the securities having ordinary voting power for the election of
directors or the direct or indirect power to direct the management and policies
of a business.
AGENT ADVANCES has the meaning set forth in SECTION 2.2.
ALLOCATION ACCOUNT has the meaning set forth in SECTION 2.7(b).
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APPLICABLE LENDING OFFICE means, with respect to each Lender, such
Lender's LIBOR Lending Office in the case of a LIBOR Rate Loan, and such
Lender's Domestic Lending Office in the case of a Prime Rate Loan.
ASSIGNMENT AND ASSUMPTION AGREEMENT has the meaning set forth in
SECTION 11.8(b).
AUDITORS means a nationally recognized firm of independent public
accountants selected by the Borrowers and reasonably satisfactory to the Agent;
PROVIDED, THAT for purposes of this Credit Agreement, the firm of Ernst & Young
LLP shall be deemed to be satisfactory to the Agent.
BANKRUPTCY CODE means Title 11 of the U.S. Code (11 U.S.C. Sections 101
et seq.), as amended from time to time, and any successor statute.
BENEFIT PLAN means a "defined benefit plan" (as defined in Section
3(35) of ERISA) for which any Borrower, any Subsidiary of any Borrower or any
ERISA Affiliate has been an "employer" (as defined in Section 3(5) of ERISA)
within the past six years.
BORROWER AGENCY AGREEMENT means that certain Contribution and Agency
Agreement of even date herewith among Hawk, in its capacity as borrowing agent
for the Borrower's hereunder and under the other Credit Documents.
BORROWING means a borrowing of Revolving Loans of the same Type by the
Hawk Funds Administrator for the joint and several account of the Borrowers from
(or, in the case of Agent Advances, on behalf of) the Lenders on a pro rata
basis on a given date (whether pursuant to SECTION 2.2 or resulting from
continuations or conversions of Revolving Loans on a given date pursuant to
SECTIONS 4.13(a) and (b), respectively) having, in the case of LIBOR Loans, the
same Interest Period.
BORROWING BASE means, at any time, the sum at such time of:
(a) eighty-five percent (85%) of Eligible Accounts
Receivable, PLUS
(b) the lesser of $16,000,000 and sixty percent (60%)
of Eligible Inventory.
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In addition, the Agent, in the exercise of its Permitted Discretion,
may (i) establish and increase or decrease reserves against Eligible Accounts
Receivable and Eligible Inventory, (ii) reduce the advance rates provided for in
this definition, or restore such advance rates to any level equal to or below
the advance rates in effect as of the date of this Credit Agreement, and (iii)
impose additional restrictions (or eliminate the same) to the standards of
eligibility set forth in the definitions of "ELIGIBLE ACCOUNTS RECEIVABLE" and
"ELIGIBLE INVENTORY."
BORROWING BASE CERTIFICATE means a certificate of the Hawk Funds
Administrator concerning the Borrowing Base, in each case provided under SECTION
7.2 and substantially in the form of EXHIBIT A.
BT ACCOUNT has the meaning set forth in SECTION 4.10.
BUSINESS DAY means any day that is neither a Saturday nor a Sunday nor
a day on which commercial banks in Chicago, Illinois are required or permitted
by law to be closed and, when used in connection with LIBOR Rate Loans, this
definition will also exclude any day on which commercial banks are not open for
dealing in United States dollar deposits in the London (U.K.) interbank market.
CAPITAL EXPENDITURES means, for any Person for any period, the sum of
all expenditures which have been, or should have been, capitalized by such
Person for financial statement purposes in accordance with GAAP during such
period (whether payable in cash or other property or accrued as a liability),
including the capitalized portion of capital leases and that portion of
Investments made by such Person allocable to property, plant or equipment.
Capital Expenditures shall exclude (i) production tooling expenses otherwise
capitalized in accordance with GAAP, (ii) expenditures representing all or any
part of the purchase price payable on account of the Xxxxxxxxxx Acquisition and
(iii) proceeds of a casualty loss applied to the repair or replacement of the
property affected by the casualty loss. "CASUALTY LOSS", as used herein, means,
for any Person, (i) the loss, damage, or destruction of any asset or property
owned or used by such Person, (ii) the condemnation, confiscation, or other
taking, in whole or in part, of any such asset or property, or (iii) the
diminishment of the use of any such asset or property so as to render
impracticable or unreasonable the use thereof for its intended purpose.
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CASH EQUIVALENTS means, as to any Person, (i) 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 six
months from the date of acquisition, (ii) time deposits and certificates of
deposit of any commercial bank organized under the laws of the United States,
any State thereof or the District of Columbia having, or which is the principal
banking subsidiary of, a bank holding company organized under the laws of the
United States, any State thereof, or the District of Columbia having, capital,
surplus and undivided profits aggregating in excess of $100,000,000 and having a
long-term unsecured debt rating of at least "B+" or the equivalent thereof from
Standard & Poor's Corporation ("S&P") or "B-2" or the equivalent thereof from
Xxxxx'x Investors Service, Inc. ("MOODY'S"), with maturities of not more than
six months from the date of acquisition by such Person, (iii) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in CLAUSE (i) above entered into with any bank meeting the
qualifications specified in CLAUSE (ii) above, (iv) commercial paper issued by
any Person incorporated in the United States rated at least A-1 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's
and in each case maturing not more than six months after the date of acquisition
by such Person, (v) investments in money market funds substantially all of whose
assets are comprised of securities of the types described in clauses (i) through
(iv) above, and (vi) investments in other United States treasury securities,
federal agency securities, money market instruments, fixed rate mortgages
adjustable-rate mortgages, tax-exempt municipal notes and tax-exempt municipal
bonds, in each case disclosed in writing to the Agent by the Hawk Funds
Administrator prior to the Closing Date.
CHANGE OF CONTROL has the meaning set forth in the Senior Note
Indenture.
CLOSING DATE means the date of execution and delivery of this Credit
Agreement by all of the parties hereto.
CLOSING DOCUMENT LIST has the meaning set forth in SECTION 5.1.
CODE has the meaning set forth in SECTION 1.3.
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COLLATERAL means the Accounts, Inventory and other personal property
identified in the Collateral Documents as security for the Obligations.
COLLATERAL ACCESS AGREEMENT means an agreement in form and substance
reasonably satisfactory to the Agent pursuant to which a mortgagee or lessor of
real property on which Collateral is stored or otherwise located, or a
warehouseman, processor or other bailee of Inventory, acknowledges the Liens of
the Agent and, in the case of any such agreement with a mortgagee or lessor,
permits the Agent access to and use of such real property for a reasonable
amount of time following the occurrence and during the continuance of an Event
of Default to assemble, complete and sell any Collateral stored or otherwise
located thereon.
COLLATERAL DOCUMENTS means, collectively, the Security Agreement and
all other documents, agreements and instruments pursuant to which Liens are now
or hereafter granted to the Agent to secure any or all of the Obligations.
COLLECTIONS means all cash, funds, checks, notes, instruments and any
other form of remittance tendered by account debtors in payment of Accounts of
any Borrower.
COMMITMENT of a Lender means such Lender's commitment, on the terms and
subject to the conditions set forth herein, to make Revolving Loans and to
participate in Letters of Credit, up to the amount set forth below its name on
ANNEX I (as amended from time to time pursuant to SECTION 11.8(b)), as such
amount may be reduced from time to time in accordance with the terms and
provisions of this Credit Agreement.
CONSOLIDATED ENTITY means Hawk and those of its Subsidiaries (including
in any event each of the Borrowers) consolidated with it for purposes of
financial reporting.
CONSOLIDATED NET INCOME means the consolidated net income of the
Consolidated Entity.
CONTINGENT OBLIGATION means, with respect to any Person, any direct,
indirect, contingent or non-contingent guaranty or obligation of such Person
for the Indebtedness of another Person, except for endorsements in the ordinary
course of business.
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CREDIT DOCUMENTS means, collectively, this Credit Agreement, the
Revolving Notes, the Letters of Credit, each of the Collateral Documents and all
other documents, agreements and instruments now or hereafter executed in
connection herewith or therewith in each case as modified, amended, extended,
restated or supplemented from time to time.
CREDIT PARTIES means, collectively, the Borrowers and Hawk,
individually and in its capacity as Hawk Funds Administrator.
CURRENCY AGREEMENT means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement protecting against
fluctuations in currency values.
DEFAULT means an event, condition or default which with the giving of
notice, the passage of time or both would be an Event of Default.
DEFAULTING LENDER has the meaning set forth in SECTION 2.6.
DISBURSEMENT ACCOUNT means the operating account of the Hawk Funds
Administrator maintained with the Disbursement Account Bank.
DISBURSEMENT ACCOUNT BANK means Bankers Trust Company or any other
financial institution selected from time to time by the Agent and reasonably
acceptable to the Hawk Funds Administrator.
DOMESTIC LENDING OFFICE means, with respect to any Lender, the office
of such Lender specified as its "DOMESTIC LENDING OFFICE" on ANNEX I, as such
annex may be amended from time to time, which office shall in any event be
located in the United States.
EBITDA means, for any period, Consolidated Net Income (excluding
extraordinary items) for such period, PLUS (a) all Interest Expense, income tax
expense, depreciation and amortization (including amortization of any goodwill
or other intangibles) for such period; MINUS or PLUS (without double counting)
(b) gains and losses attributable to any fixed asset sales; PLUS or MINUS (c)
any other non-cash charges or gains which have been subtracted or added in
calculating such Consolidated Net Income.
ELIGIBLE ACCOUNTS RECEIVABLE means Accounts of the respective Borrowers
deemed by the Agent in the exercise of its Permitted Discretion to be eligible
for inclusion in the calculation of the Borrowing Base. In determining the
amount to be so included, the
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face amount of such Accounts shall be reduced by the amount of all returns,
discounts, deductions, claims, credits, charges, or other allowances. Unless
otherwise approved in writing by the Agent, no Account of any Borrower shall be
deemed to be an Eligible Account Receivable if:
(a) it arises out of a sale made by such Borrower to an
Affiliate of such Borrower or to any other Borrower; or
(b) it is unpaid more than 90 days after the original date of
invoice; or
(c) it is from the same account debtor or its Affiliate and fifty
percent (50%) or more of all Accounts from that account debtor
(and its Affiliates) are ineligible under (c) above; or
(d) when aggregated with all other Accounts of an account debtor,
the Account exceeds twenty-five percent (25%) in face value of
all Accounts of all Borrowers then outstanding, to the extent
of such excess, unless supported by an irrevocable letter of
credit satisfactory to the Agent (as to form, substance and
issuer) and assigned to and directly drawable by the Agent; or
(e) the account debtor for the Account is a creditor of such
Borrower, has or has asserted a right of setoff against
such Borrower, has disputed its liability or made any
claim with respect to the Account or any other Account
which has not been resolved, but in each of the foregoing
cases, solely to the extent of the amount of such actual
or asserted right of setoff, or the amount of such
dispute or claim, as the case may be; or
(f) the account debtor is (or the assets of the account
debtor are) the subject of an Insolvency Event; or
(g) the Account is not payable in United States dollars or the
account debtor for the Account is located outside the
continental United States, unless the Account is supported by
an irrevocable letter of credit satisfactory to the Agent (as
to form, substance and issuer) and assigned to and directly
drawable by the Agent; or
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(h) the sale to the account debtor is on a guaranteed sale,
sale-and-return, sale on approval or consignment basis or made
pursuant to any other written agreement providing for
repurchase or return; or
(i) the account debtor is the United States of America or any
department, agency or instrumentality thereof, unless such
Borrower duly assigns its rights to payment of such Account to
the Agent pursuant to the Assignment of Claims Act of 1940, as
amended (31 U.S.C. Sections 3727 et seq.); or
(j) the goods giving rise to such Account have not been shipped
and delivered to and accepted by the account debtor, the
services giving rise to such Account have not been performed
and accepted or the Account otherwise does not represent a
final sale; or
(k) the Account does not comply with all Requirements of Law,
including, without limitation, the Federal Consumer Protection
Act, the Federal Truth-in-Lending Act and Regulation Z; or
(l) the Account is subject to any adverse security deposit,
progress payment or other similar advance made by or for
the benefit of the applicable account debtor; or
(m) the Account is not subject to a valid and perfected first
priority Lien in favor of the Agent or does not otherwise
conform to the representations and warranties contained in the
Credit Documents.
ELIGIBLE INVENTORY means the aggregate amount of Inventory of the
respective Borrowers deemed by the Agent in the exercise of its Permitted
Discretion to be eligible for inclusion in the calculation of the Borrowing
Base. In determining the amount to be so included, Inventory shall be valued at
the lower of cost or market on a basis consistent with the Borrowers' current
and historical accounting practice. Unless otherwise approved in writing by the
Agent, no Inventory of any Borrower shall be deemed Eligible Inventory if:
(a) it is not owned solely by such Borrower or such Borrower
does not have good, valid and marketable title thereto;
or
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(b) it is not located in the United States; or
(c) it is not located on property owned by a Borrower or by a
third party that has executed and delivered a Collateral
Access Agreement and, in the case of Inventory located on
property owned by such a third party, it is segregated or
otherwise separately identifiable from goods of others, if
any, stored on such property; or
(d) it is not subject to a valid and perfected first priority Lien
in favor of the Agent, except, with respect to such Inventory
stored at locations other than locations owned by a Borrower,
for Liens for unpaid rent or normal and customary warehousing
charges; or
(e) it consists of goods returned or rejected by such Borrower's
customers or goods in transit to third parties (other than to
warehouse sites covered by a Collateral Access Agreement); or
(f) it is not first-quality finished goods, is obsolete or slow
moving, or does not otherwise conform to the representations
and warranties contained in the Credit Documents.
ERISA means the Employee Retirement Income Security Act of 1974, 29
U.S.C. Sections 1000 et seq., amendments thereto, successor statutes, and
regulations or guidance promulgated thereunder.
ERISA AFFILIATE means any entity required to be aggregated with any
Borrower or any Subsidiary of any Borrower under Sections 414(b), (c), (m) or
(o) of the Internal Revenue Code.
EVENT OF DEFAULT has the meaning set forth in ARTICLE 9.
EXPENSES means all reasonable costs and expenses of the Agent incurred
in connection with the Credit Documents and the transactions contemplated
therein, including, without limitation, (i) the costs of conducting record
searches, examining collateral, opening bank accounts and lockboxes, depositing
checks, and receiving and transferring funds (including charges for checks for
which there are insufficient funds), (ii) the reasonable fees and expenses of
legal counsel and paralegals (including the allocated cost of internal counsel
and paralegals), accountants, appraisers and other consultants, experts or
advisors retained by the Agent,
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(iii) expenses incurred in connection with the assignments of or sales of
participations in the Revolving Loans, (iv) the cost of title insurance
premiums, real estate survey costs, and fees and taxes in connection with the
filing of financing statements, and (v) the costs of preparing and recording
Collateral Documents, releases of Collateral, and waivers, amendments, and
terminations of any of the Credit Documents. EXPENSES also means all reasonable
costs and expenses (including the reasonable fees and expenses of legal counsel
and other professionals) paid or incurred by the Agent and any Lender (i) during
the continuance of an Event of Default, (ii) in enforcing or defending its
respective rights under or in respect of this Credit Agreement, the Credit
Documents or any other document or instrument now or hereafter executed and
delivered in connection herewith or therewith, (iii) collecting the Revolving
Loans, (iv) foreclosing or otherwise collecting upon the Collateral or any part
thereof and (v) in obtaining any legal, accounting or other advice in connection
with any of the foregoing.
EXPIRATION DATE means November 27, 1999.
FEDERAL FUNDS RATE means, for any period, a fluctuating interest rate
per annum for each day during such period equal to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by the Agent.
FEDERAL RESERVE BOARD means the Board of Governors of the Federal
Reserve System or any Governmental Authority succeeding to its functions.
FEES means, collectively, the Unused Line Fee, the Letter of Credit
Fees, the L/C Facing Fee, the Issuing Bank Fees, the Collateral Monitoring Fee
and the other fees provided for in that certain letter dated November 1, 1996
between BTCC and Hawk.
FINANCIAL STATEMENTS means the consolidated and consolidating balance
sheets, statements of operations, statements of cash flows and statements of
changes in shareholder's equity of the
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Consolidated Entity for the period specified, prepared in accordance with GAAP
and consistently with prior practices.
GAAP means generally accepted accounting principles in the United
States as in effect from time to time.
GOVERNING DOCUMENTS means certificates or articles of incorporation,
by-laws and other similar organizational or governing documents.
GOVERNMENTAL AUTHORITY means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
HAWK FUNDS ADMINISTRATOR means Hawk acting in its capacity as borrowing
agent for the Borrowers pursuant the Borrower Agency Agreement.
HAWK MERGER means the merger, in a tax-free reorganization, of Hawk
Holding Corp., a Delaware corporation, with and into Hawk pursuant to the Hawk
Merger Documents.
HAWK PREFERRED STOCK means, collectively, Hawk's (i) preferred stock
series A, liquidation preference $1,000.00 per share, (ii) preferred stock
series B, liquidation preference $1,000.00 per share, and (iii) preferred stock
series C, liquidation preference $1,000.00 per share.
HAWK MERGER DOCUMENTS means, collectively, that certain Merger
Agreement and Plan of Reorganization dated as of November 21, 1996, between Hawk
and Hawk Holding Corp., a Delaware corporation, and all other documents,
agreements and instruments executed in connection therewith.
XXXXXX DOCUMENTS means, collectively, the Xxxxxx Note and all other
documents, agreements and instruments entered into relating to the issuance by
Xxxxxx of the Xxxxxx Note.
XXXXXX NOTE means that certain Secured Promissory Note in the original
principal amount of $500,000, issued by Xxxxxx and payable to Helco, Inc..
HIGHEST LAWFUL RATE means, at any given time during which any
Obligations shall be outstanding hereunder, the maximum nonusurious
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interest rate that at any time or from time to time may be contracted for,
taken, reserved, charged or received on such Obligations, under the laws of the
State of Illinois (or the law of any other jurisdiction whose laws may be
mandatorily applicable notwithstanding other provisions of this Credit Agreement
and any of the other Credit Documents), or under applicable federal laws which
may presently or hereafter be in effect and which allow a higher maximum
nonusurious interest rate than under the State of Illinois (or such other
jurisdiction's) law, in any case after taking into account, to the extent
permitted by applicable law, any and all relevant payments or charges under this
Credit Agreement and any other Credit Documents executed in connection herewith,
and any available exemptions, exceptions and exclusions.
XXXXXXXXXX ACQUISITION means the acquisition by Hawk or Xxxxxxxxxx of
all of the issued and outstanding capital stock of Xxxxxxxxxx Foundry Products
Company.
INDEBTEDNESS of a Person means, without duplication, (a) indebtedness
for borrowed money or for the deferred purchase price of property or services
(other than trade liabilities incurred in the ordinary course of business and
payable in accordance with customary practices), whether on open account or
evidenced by a note, bond, debenture or similar instrument, (b) obligations
under capital leases, (c) reimbursement obligations for letters of credit,
banker's acceptances or other credit accommodations, whether drawn or undrawn,
(d) liabilities, as determined by the Agent, under any Interest Rate Agreement
or Currency Agreement, (e) Contingent Obligations and (f) Indebtedness secured
by any Lien on any property of that Person, even if that Person has not assumed
such Indebtedness.
INITIAL FUNDING DATE means the date on which the initial Borrowing is
advanced or the initial Letter of Credit is issued, whichever occurs earlier.
INSOLVENCY EVENT means, with respect to any Person, the occurrence of
any of the following: (a) such Person shall be adjudicated insolvent or
bankrupt, or generally fail to pay, or admit in writing its inability to pay,
its debts as they become due, (b) the voluntary commencement of any proceeding
or the filing of any petition under any bankruptcy, insolvency or similar law,
(c) the seeking of dissolution or reorganization or the appointment of a
receiver, trustee, custodian or liquidator for it or a substantial portion of
its property, assets or business or to
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effect a plan or other arrangement with its creditors, (d) the filing of any
answer admitting the jurisdiction of the court and the material allegations of
an involuntary petition filed against it in any bankruptcy, insolvency or
similar proceeding, (e) the making by such Person of a general assignment for
the benefit of its creditors, or the consent to, or acquiescence in the
appointment of, a receiver, trustee, custodian or liquidator for a substantial
portion of such Person's property, assets or business. INSOLVENCY EVENT shall
also mean, with respect to any Person, the occurrence of any of the following:
an involuntary proceeding or involuntary petition shall be commenced or filed
against such Person under any bankruptcy, insolvency or similar law seeking the
dissolution or reorganization of it or the appointment of a receiver, trustee,
custodian or liquidator for it or of a substantial part of its property, assets
or business, or any writ, judgment, warrant of attachment, execution or similar
process shall be issued or levied against a substantial part of its property,
assets or business, and such proceedings or petitions shall not be dismissed, or
such writ, judgment, warrant of attachment, execution or similar process shall
not be released, vacated or fully bonded, within thirty (30) days after
commencement, filing, or levy, as the case may be, or any order for relief shall
be entered in any such proceeding.
INTEREST EXPENSE means, for any period, (a) the aggregate consolidated
expense of the Consolidated Entity for interest on Indebtedness for such period,
including, without limitation, (i) amortization of original issue discount, (ii)
incurrence fees (to the extent included in interest expense), (iii) the interest
portion of any deferred payment obligation, (iv) the interest component of any
capital lease obligation, MINUS (b) the aggregate interest income of the
Consolidated Entity for such period.
INTEREST PERIOD means, for any LIBOR Rate Loan, the period commencing
on the date of such Borrowing and ending on the last day of the period selected
by the Hawk Funds Administrator pursuant to the provisions below. The duration
of each such Interest Period shall be one, two, three or six months, in each
case as the Hawk Funds Administrator may, in an appropriate Notice of Borrowing,
Notice of Continuation or Notice of Conversion, select; PROVIDED, THAT the Hawk
Funds Administrator may not select any Interest Period that ends after the
Expiration Date. Whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding Business Day; PROVIDED,
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THAT if such extension would cause the last day of such Interest Period to occur
in the next following calendar month, the last day of such Interest Period shall
occur on the next preceding Business Day.
INTEREST RATE AGREEMENT means any interest rate protection or hedge
agreement, including, without limitation, interest rate future, option, swap,
and cap agreements.
INTERNAL REVENUE CODE means the Internal Revenue Code of 1986,
amendments thereto, successor statutes, and regulations or guidance promulgated
thereunder.
INVENTORY has the meaning set forth in the Security Agreement.
INVESTMENT means all expenditures made and all liabilities incurred
(contingently or otherwise) for or in connection with the acquisition of stock
or Indebtedness of, or for loans, advances, capital contributions or similar
transfers of property to, or acquisition of substantially all the assets of, a
Person. In determining the aggregate amount of Investments outstanding at any
particular time, (i) the amount of any Investment represented by a guaranty
shall be taken at not less than the principal amount of the obligations
guaranteed and outstanding; (ii) there shall be deducted in respect of each such
Investment any amount received as a return of capital (but only by repurchase,
redemption, retirement, repayment, liquidating dividend or liquidating
distribution); (iii) there shall not be deducted in respect of any Investment
any amounts received as earnings on such Investment, whether as dividends,
interest or otherwise; and (iv) there shall not be deducted from the aggregate
amount of Investments any decrease in the market value thereof.
ISSUING BANK means Bankers Trust Company or any Lender or other
financial institution that is acceptable to the Agent and the Borrowers which
may at any time issue or be requested to issue a Letter of Credit for the
account of any Borrower.
ISSUING BANK FEES has the meaning set forth in SECTION 4.3(b).
L/C FACING FEE has the meaning set forth in SECTION 4.3(a).
LENDER ADVANCES has the meaning set forth in SECTION 2.2.
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LETTER OF CREDIT FEE has the meaning set forth in SECTION 4.3(a).
LETTER OF CREDIT OBLIGATIONS means, without duplication, the sum of the
aggregate undrawn face amount of all Letters of Credit outstanding (including
guarantees with respect to Currency Agreements), PLUS the aggregate amount of
all drawings under Letters of Credit for which the Borrowers have not reimbursed
the Issuing Bank, PLUS the aggregate amount of all payments made by Lenders to
the Issuing Bank for their participations in Letters of Credit (including
guarantees with respect to Currency Agreements), for which the Borrowers have
not reimbursed the Lenders.
LETTER OF CREDIT REQUEST has the meaning set forth in SECTION 3.3.
LETTERS OF CREDIT means all letters of credit and guarantees with
respect to Currency Agreements issued for the account of any Borrower under
ARTICLE 3 and all amendments, renewals, extensions or replacements thereof.
LIBOR LENDING OFFICE means, with respect to any Lender, the office of
such Lender specified as its "LIBOR LENDING OFFICE" opposite its name on ANNEX
I, as such annex may be amended from time to time (or, if no such office is
specified, its Domestic Lending Office).
LIBOR RATE means, with respect to any Interest Period for each LIBOR
Rate Loan comprising part of the same Borrowing, an interest rate per annum
equal to the rate (rounded upward to the nearest whole multiple of one-sixteenth
(1/16) of one percent (1.00%) per annum, if such rate is not such a whole
multiple of one-sixteenth (1/16) of one percent (1.00%)) of the offered
quotation, if any, to first class banks in the London (U.K.) interbank market by
Bankers Trust Company for United States dollar deposits of amounts in
immediately available funds comparable to the principal amount of the LIBOR Rate
Loan of BTCC for which the LIBOR Rate is being determined with maturities
comparable to the Interest Period for which such LIBOR Rate will apply as of
approximately 10:00 a.m. Chicago time two (2) Business Days prior to the
commencement of such Interest Period.
LIBOR RATE LOAN means a Revolving Loan that bears interest as provided
in SECTION 4.1(b) hereof.
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LIEN means any lien, claim, charge, pledge, security interest,
assignment, hypothecation, deed of trust, mortgage, lease, conditional sale,
retention of title, or other preferential arrangement having substantially the
same economic effect as any of the foregoing, whether voluntary or imposed by
law.
LINE OF CREDIT means the aggregate revolving line of credit extended
pursuant to this Credit Agreement by the Lenders to the Borrowers for Revolving
Loans and Letters of Credit, in an amount up to $25,000,000, as such amount may
be reduced from time to time pursuant to the respective terms and provisions
hereof.
LOAN ACCOUNT has the meaning set forth in SECTION 4.8.
LOCKBOXES has the meaning set forth in SECTION 4.10.
LOCKBOX ACCOUNT has the meaning set forth in SECTION 4.10.
LOCKBOX AGREEMENT has the meaning set forth in SECTION 4.10.
LOCKBOX BANK has the meaning set forth in SECTION 4.10.
MAJORITY LENDERS means those Lenders holding in the aggregate more than
fifty-percent (50%) of the total Commitments, or if the Commitments are
terminated, those Lenders owed more than fifty-percent (50%) of the Revolving
Loans and Letter of Credit Obligations then outstanding.
MATERIAL ADVERSE EFFECT means a material adverse effect on (i) the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of the Credit Parties taken as a whole, (ii)
the ability of any Credit Party to perform its obligations under the Credit
Documents to which it is a party, or on the ability of the Agent or the Lenders
to enforce the Obligations or realize upon the Collateral, or (iii) the value of
the Collateral or the amount which the Agent or the Lenders would be likely to
receive (after giving consideration to delays in payment and costs of
enforcement) in the liquidation of such Collateral.
MATERIAL CONTRACT means any contract or other arrangement to which a
Credit Party or any Subsidiary of a Credit Party is a party (other than the
Credit Documents) for which breach, nonperformance, cancellation or failure to
renew could reasonably be expected to have a Material Adverse Effect.
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MOODY'S means Xxxxx'x Investors Services, Inc., or any successor
thereto.
MULTIEMPLOYER PLAN means a "multiemployer plan" (as defined in Section
4001(a) (3) of ERISA) to which a Borrower, any Subsidiary of Borrower or any
ERISA Affiliate has contributed within the past six years or with respect to
which a Borrower or any Subsidiary of a Borrower could reasonably be expected to
incur any liability.
NOTE DOCUMENTS means, collectively, the Senior Note Documents, the
Subordinated Note Documents and the Xxxxxx Note Documents, in each case as in
effect on the date hereof and as amended, restated, supplemented or otherwise
modified from to time to time hereafter in accordance with the terms and
provisions hereof.
NOTICE OF BORROWING means an irrevocable and binding notice delivered
by the Hawk Funds Administrator to the Agent either by telephone or by facsimile
transmission (and if by telephone, promptly confirmed in writing), of the
request by the Hawk Funds Administrator, for and on behalf of the Borrowers, for
a Borrowing, which notice shall be substantially in the form of EXHIBIT B.
NOTICE OF CONTINUATION has the meaning set forth in SECTION 4.13(a).
NOTICE OF CONVERSION has the meaning set forth in SECTION 4.13(b).
OBLIGATIONS means the unpaid principal and interest hereunder
(including interest accruing on or after the occurrence of an Insolvency Event)
in respect of Revolving Loans, reimbursement obligations under Letters of
Credit, Fees, Expenses and all other obligations and liabilities of the
Borrowers to the Agent, the Issuing Bank or any of the Lenders under this Credit
Agreement, the Revolving Notes or any of the other Credit Documents.
OLD BT DEBT means the Indebtedness evidenced by the $79,000,000 Credit
Agreement dated as of June 30, 1995, as amended, by and among Hawk, various
financial institutions and Bankers Trust Company, as agent.
PERMITTED ACQUISITION means the purchase or other acquisition by a
Borrower or any Subsidiary of a Borrower, in a single or series of transactions,
of (a) all or substantially all of the issued and outstanding capital stock of
any other Person, or (b)
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all or substantially all of the assets of any other Person, or all or
substantially all of the assets comprising one or more business units of any
other Person; PROVIDED, THAT, in each case, before and after giving effect
thereto, there shall be unused availability under the Borrowing Base in an
amount equal to at least twenty percent (20%) of the Line of Credit in effect at
such time.
PERMITTED DISCRETION means the Agent's judgment exercised in good faith
based upon its consideration of any factor that is reasonable from the
perspective of an asset-based secured lender which the Agent believes in good
faith will or could reasonably be expected to affect the value of any
Collateral, including any Inventory or Accounts of any Borrower or the amount
which the Agent and the Lenders would be likely to receive (after giving
consideration to delays in payment and costs of enforcement) in the liquidation
of such Collateral.
PERMITTED LIENS means the Liens referred to in CLAUSES (a) through (i)
of SECTION 8.4.
PERSON means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, entity, party or government (including any
division, agency or department thereof), and its successors, heirs and assigns.
PLAN means any Benefit Plan, Multiemployer Plan, or Retiree Health
Plan, or any employee benefit plan, fund, program or arrangement, whether oral
or written, maintained or contributed to by any Borrower or any Subsidiary of
any Borrower, or with respect to which any of them could reasonably be expected
to incur liability.
PRIME LENDING RATE means the rate which Bankers Trust Company announces
as its prime lending rate, from time to time. The Prime Lending Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. Bankers Trust Company and each of the Lenders
may make commercial loans or other loans at rates of interest at, above or below
the Prime Lending Rate.
PRIME RATE LOAN means a Revolving Loan that bears interest as provided
in SECTION 4.1(a) hereof.
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PROPORTIONATE SHARE of a Lender means a fraction, expressed as a
percentage, obtained by dividing its Commitment by the Line of Credit or, if the
Commitments are terminated, by dividing its then outstanding Revolving Loans and
Letter of Credit participations by the then outstanding aggregate Revolving
Loans and Letter of Credit Obligations.
PURCHASE MONEY LIENS has the meaning set forth in SECTION 8.3(f).
REGISTER has the meaning set forth in SECTION 11.8(c).
REGULATION D means Regulation D of the Federal Reserve Board, as in
effect from time to time.
REGULATION G means Regulation G of the Federal Reserve Board, as in
effect from time to time.
REGULATION Z means Regulation Z of the Federal Reserve Board, as in
effect from time to time.
REPORTABLE EVENT means any of the events described in Section 4043 of
ERISA and the regulations thereunder.
REQUIREMENT OF LAW means, with respect to any Person, (a) the Governing
Documents of such Person, (b) any law, treaty, rule or regulation or
determination of an arbitrator, court or other Governmental Authority binding on
such Person, or (c) any franchise, license, lease, permit, certificate,
authorization, qualification, easement, right of way, right or approval binding
on a Person or any of its property.
RETIREE HEALTH PLAN means an "employee welfare benefit plan" within the
meaning of Section 3(1) of ERISA, and any other plan, program or arrangement,
whether oral or written, that provides benefits to persons after termination of
employment, other than as required by Section 601 of ERISA.
REVOLVING LOANS has the meaning set forth in SECTION 2.1.
REVOLVING NOTE means a promissory note of the Borrowers payable to the
order of any Lender, substantially in the form of EXHIBIT C, as amended,
restated, supplemented or otherwise modified from time to time, and including
all notes issued in replacement of, or in substitution or exchange for, any
Revolving Note.
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S&P means Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc., or any successor thereto.
SECURITY AGREEMENT means the Security Agreement of even date herewith
executed by the Borrowers in favor Agent.
SENIOR NOTE DOCUMENTS means, collectively, the Senior Note Indenture,
the Senior Notes and all other documents, agreements and instruments executed
and delivered pursuant thereto or in connection therewith.
SENIOR NOTE INDENTURE means the 10-1/4% Senior Note Indenture dated as
of November 27, 1996, between Hawk and Bank One Trust Company, NA, in its
capacity as trustee thereunder.
SENIOR NOTES means the 10-1/4% Senior Notes Due 2003 of Hawk issued
pursuant to the Senior Note Indenture.
SETTLEMENT DATE has the meaning set forth in SECTION 2.4.
SUBORDINATED NOTE DOCUMENTS means, collectively, the Subordinated Note
Purchase Agreement, the Subordinated Notes, the Subordinated Noteholder Warrant
Documents and all other documents, agreements and instruments entered into
relating to the issuance by Hawk of the Subordinated Notes and the Subordinated
Noteholder Warrants, respectively.
SUBORDINATED NOTE PURCHASE AGREEMENT means, collectively, the separate
and several Senior Subordinated Note and Warrant Purchase Agreements, each dated
as of June 30, 1995, entered into by and between Hawk and each of Connecticut
General Life Insurance Company and Cigna Mezzanine Partners III, L.P.,
respectively, as amended pursuant to that certain First Amendment to Note and
Warrant Purchase Agreement dated as of November 27,1996, by and between Hawk and
each of Connecticut General Life Insurance Company and Cigna Mezzanine Partners
III, L.P.
SUBORDINATED NOTEHOLDER WARRANT AGREEMENT means that certain Warrant
Agreement dated as of June 30, 1995, among Hawk, Connecticut General Life
Insurance Company and Cigna Mezzanine Partners III, L.P..
SUBORDINATED NOTEHOLDER WARRANT DOCUMENTS means, collectively, the
Subordinated Noteholder Warrants, the Subordinated Noteholder Warrant
Agreement and all other documents, agreements and
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instruments entered into relating to the issuance by Hawk of the
Subordinated Noteholder Warrants.
SUBORDINATED NOTEHOLDER WARRANTS means, collectively, the warrants for
the purchase of the common stock of Hawk issued to the holders of the
Subordinated Notes on or about June 30, 1995.
SUBORDINATED NOTES means, collectively, the unsecured 12% Senior
Subordinated Notes Due 2005 of Hawk.
SUBSIDIARY of a Person means a corporation or other entity in which
that Person directly or indirectly owns or controls the shares of stock or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or appoint other managers of such corporation or other
entity; PROVIDED, THAT, notwithstanding the foregoing, neither The X.X. Xxxxxxx
Company of Canada Limited, a corporation organized under the laws of the
Province of Ontario, Canada, nor X. X. Xxxxxxx S.p.A, a corporation organized
under the laws of Italy, shall be deemed to be a Subsidiary of any Credit Party
for purposes of this Credit Agreement or any of the other Credit Documents.
TERMINATION EVENT means (i) a Reportable Event with respect to any
Benefit Plan or Multiemployer Plan; (ii) the withdrawal of any Borrower, any
Subsidiary of any Borrower or any ERISA Affiliate from a Benefit Plan during a
plan year in which it was a "substantial employer" (as defined in Section
4001(a) (2) of ERISA); (iii) the providing of notice of intent to terminate a
Benefit Plan in a distress termination (as described in Section 4041 (c) of
ERISA); (iv) the institution by the Pension Benefit Guaranty Corporation of
proceedings to terminate a Benefit Plan or Multiemployer Plan; (v) any event or
condition (a) which could reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Benefit Plan or Multiemployer Plan, or (b) that may result in
termination of a Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi)
the partial or complete withdrawal, within the meaning of Sections 4203 and 4205
of ERISA, of a Borrower, any Subsidiary of a Borrower or any ERISA Affiliate
from a Multiemployer Plan.
TYPE means a LIBOR Rate Loan or a Prime Rate Loan.
UNUSED LINE FEE has the meaning set forth in SECTION 4.2.
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1.2 ACCOUNTING TERMS AND DETERMINATIONS.
------------------------------------
Unless otherwise defined or specified herein, all accounting terms used
in this Credit Agreement shall be construed in accordance with GAAP, applied on
a basis consistent in all material respects with the Financial Statements
referred to in SECTION 6.9. All accounting determinations for purposes of
determining compliance with the financial covenants contained in ARTICLE 8 shall
be made in accordance with GAAP as in effect on the Closing Date and applied on
a basis consistent in all material respects with the audited Financial
Statements delivered to the Agent on or before the Closing Date. The Financial
Statements required to be delivered hereunder from and after the Closing Date,
and all financial records, shall be maintained in accordance with GAAP. If GAAP
shall change from the basis used in preparing the audited Financial Statements
delivered to the Agent on or before the Closing Date, the certificates required
to be delivered pursuant to SECTION 7.1 demonstrating compliance with the
covenants contained herein shall include, at the election of the Borrowers or
upon the request of the Majority Lenders, calculations setting forth the
adjustments necessary to demonstrate that the Borrowers are in compliance with
the financial covenants based upon GAAP as in effect on the Closing Date.
1.3 OTHER TERMS; HEADINGS.
----------------------
Terms used herein and not otherwise defined in ARTICLE 1 that are
defined in the Uniform Commercial Code in effect in the State of Illinois (the
"CODE") shall have the meanings given in the Code. Each of the words "hereof,"
"herein," and "hereunder" refer to this Credit Agreement as a whole. An Event of
Default shall "continue" or be "continuing" until such Event of Default has been
waived in accordance with SECTION 11.11 hereof. References to Articles,
Sections, Annexes, Schedules, and Exhibits are internal references to this
Credit Agreement, and to its attachments, unless otherwise specified. The
headings and the Table of Contents are for convenience only and shall not affect
the meaning or construction of any provision of this Credit Agreement.
ARTICLE 2. REVOLVING LOANS.
----------------
2.1 COMMITMENTS.
------------
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Subject to the terms and conditions set forth in this Credit Agreement,
and in reliance on the representations and warranties of the Borrowers set forth
herein, on and after the Closing Date and to but excluding the Expiration Date,
each Lender severally agrees to make loans and advances to the Borrowers on a
joint and several basis (each a "REVOLVING LOAN") in an amount not to exceed at
any time its Proportionate Share of the lesser at such time of (a) the Line of
Credit and (b) the Borrowing Base MINUS, in each case, the then outstanding
Letter of Credit Obligations. The Revolving Loans of each Lender shall be
evidenced by a Revolving Note dated as of the Closing Date and executed by each
of the Borrowers in the maximum amount of such Lender's Commitment.
2.2 BORROWING OF REVOLVING LOANS.
-----------------------------
Revolving Loans may be made available to the Hawk Funds Administrator
for the account of the Borrowers directly by the Lenders ("LENDER ADVANCES") or,
in the circumstances described in SECTION 2.2(b), from the Agent acting on
behalf of the Lenders ("AGENT ADVANCES").
(a) LENDER ADVANCES. Subject to the determination by the Agent
and the Lenders that the conditions for borrowing contained in SECTION
5.2 are satisfied, upon receipt of a Notice of Borrowing from the Hawk
Funds Administrator received by the Agent before 12:00 noon Chicago
time on a Business Day, Lender Advances of Revolving Loans shall be
made to the extent of each Lender's Proportionate Share of the
requested Borrowing.
(b) AGENT ADVANCES. The Agent is authorized by the Lenders,
but is not obligated, to make Agent Advances upon a receipt of any
Notice of Borrowing received by the Agent before 3:00 P.M. Chicago time
on a Business Day. Agent Advances shall be subject to periodic
settlement with the Lenders under SECTION 2.4. Agent Advances may be
made only in the following circumstances:
(i) NORMAL COURSE AGENT ADVANCES. For
administrative convenience, the Agent may, but is not
obligated, to make Agent Advances up to the amount available
for borrowing under SECTION 2.1 in reliance upon the actual or
deemed representations of the Borrowers under SECTION 5.2 that
the conditions for borrowing are satisfied.
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(ii) OTHER AGENT ADVANCES. When the conditions for
borrowing under SECTION 5.2 cannot be fulfilled, and
notwithstanding the Borrowing Base limitation of SECTION 2.1,
the Agent may, but is not obligated, to continue to make Agent
Advances for seven (7) Business Days or until sooner
instructed by the Majority Lenders to cease, in an aggregate
amount at any time not to exceed $2,000,000.
(c) DISBURSEMENT OF REVOLVING LOANS. The proceeds of
Revolving Loans shall be transmitted: (x) in the circumstances
described in SECTION 3.5, by the Agent directly to the Issuing Bank,
and (y) in all other circumstances, by the Agent or Lenders, as the
case may be, to the Disbursement Account.
(d) NOTICES OF BORROWING. Notices of Borrowing may be given
under this Section by telephone or facsimile transmission, and, if by
telephone, promptly confirmed in writing. The Hawk Funds Administrator
shall specify in each Notice of Borrowing whether the conditions for
the requested Borrowing are satisfied. The Borrowers may request one or
more Borrowings of Revolving Loans constituting Prime Rate Loans on the
same Business Day. Each Notice of Borrowing for LIBOR Rate Loans shall
be given not later than noon Chicago time on the third Business Day
prior to the proposed Borrowing. Each Notice of Borrowing shall, unless
otherwise specifically provided herein, consist entirely of Revolving
Loans of the same Type and, if such Borrowing is to consist of LIBOR
Rate Loans, shall be in an aggregate amount of not less than $2,000,000
or an integral multiple of $1,000,000 in excess thereof. The right of
the Borrowers to choose LIBOR Rate Loans is subject to the provisions
of SECTION 4.13. Once given, a Notice of Borrowing is irrevocable and
binding on the Borrowers. The Hawk Funds Administrator shall provide to
the Agent a list, with specimen signatures, of officers and other
Persons, if any, authorized to request Revolving Loans. The Agent is
entitled to rely upon such list until it is replaced by the Hawk Funds
Administrator.
2.3 NOTICE OF REQUEST FOR LENDER ADVANCES.
--------------------------------------
Subject to the last sentence of this Section, the Agent shall give each
Lender prompt notice by telephone or facsimile transmission of a Notice of
Borrowing that is received pursuant to SECTION 2.2(a) and is to be satisfied by
Lender Advances. No later than 3:00 P.M. Chicago time on the date of receipt of
such notice,
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each Lender shall make available for the account of its Applicable Lending
Office to the Agent at the Agent's address for deposit into the Disbursement
Account, its Proportionate Share of such Borrowing in immediately available
funds. Unless the Agent receives contrary written notice prior to any such
Borrowing, it is entitled to assume that each Lender will make available its
Proportionate Share of the Borrowing and in reliance upon that assumption, but
without any obligation to do so, may advance such Proportionate Share on behalf
of the Lender, without the necessity of giving daily notice to each Lender of
the receipt of a Notice of Borrowing.
2.4 PERIODIC SETTLEMENT OF AGENT ADVANCES; INTEREST AND FEES;
---------------------------------------------------------
STATEMENTS.
-----------
(a) THE SETTLEMENT DATE; ALLOCATION OF INTEREST AND FEES. The
amount of each Lender's Proportionate Share of Revolving Loans shall be
computed weekly (or more frequently in the Agent's discretion) and
shall be adjusted upward or downward based on all Revolving Loans
(including Agent Advances) and repayments received by the Agent as of
5:00 P.M. Chicago time on the last Business Day of the period specified
by the Agent (such date, the "SETTLEMENT DATE").
(b) SUMMARY STATEMENTS; SETTLEMENTS. The Agent shall deliver
to each of the Lenders promptly after the Settlement Date a summary
statement of the account of outstanding Revolving Loans (including
Agent Advances) for the period, the amount of repayments received for
the period, and the amount allocated to each Lender of the interest and
Unused Line Fee for the period. After application of payments under
SECTION 4.11, as reflected on the summary statement, (i) the Agent
shall transfer to each Lender its allocated share of interest and
Unused Line Fee, and its Proportionate Share of repayments received by
the Agent in respect of the period covered by such summary statement;
and (ii) each Lender shall transfer to the Agent, or the Agent shall
transfer to each Lender, such amounts as are necessary to insure that,
after giving effect to all such transfers, the amount of Revolving
Loans made by each Lender shall be equal to such Lender's Proportionate
Share of the aggregate amount of Revolving Loans outstanding as of such
Settlement Date. If the summary statement requires transfers to be made
to the Agent by the Lenders and is received by the Lenders prior to
12:00 noon Chicago time on a Business Day, such transfers shall be made
in immediately available funds no later than 3:00 P.M. Chicago time
that day;
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and, if received after 12:00 noon Chicago time, then no later than 3:00
P.M. Chicago time on the next Business Day. The obligation of each
Lender to transfer such funds is irrevocable, unconditional and without
recourse to or warranty by the Agent.
(c) DISTRIBUTION OF INTEREST AND UNUSED LINE FEES. Interest on
the Revolving Loans (including Agent Advances) and the Unused Line Fee
shall be allocated by the Agent to each Lender (i) in the case of
interest, in accordance with the Revolving Loans actually advanced by
and repaid to such Lender and (ii) in the case of the Unused Line Fee,
in accordance with the Proportionate Share of such Lender. Interest
shall accrue from and including the date Revolving Loans are advanced
and to but excluding the date such Revolving Loans are either repaid by
the Borrowers or, if later, actually settled under this Section.
Promptly after the end of each month, the Agent shall distribute to
each Lender its portion, allocated as provided above, of the interest
and Unused Line Fee which has been received by the Agent during such
month.
2.5 SHARING OF PAYMENTS.
--------------------
If any Lender shall obtain any payment (whether made voluntarily or
involuntarily, or through the exercise of any right of set-off, or otherwise) on
account of the Revolving Loans made by it or its participation in the Letter of
Credit Obligations in excess of its Proportionate Share of payments on account
of the Revolving Loans or Letter of Credit Obligations obtained by all the
Lenders, such Lender shall forthwith purchase from the other Lenders such
participations in the Revolving Loans made by them or in their participation in
Letters of Credit as shall be necessary to cause such purchasing Lender to share
the excess payment ratably with each of them; PROVIDED, THAT if all or any
portion of such excess payment is thereafter recovered from such purchasing
Lender, such purchase from each other Lender shall be rescinded and each such
other Lender shall repay to the purchasing Lender the purchase price to the
extent of such recovery, together with an amount equal to such other Lender's
ratable share (according to the proportion of (i) the amount of such Lender's
required repayment to (ii) the total amount so recovered from the purchasing
Lender) of any interest or other amount paid or payable by the purchasing Lender
in respect to the total amount so recovered. The Borrowers agree that any Lender
so purchasing a participation from another Lender pursuant to this SECTION 2.5,
to the fullest extent permitted by
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law, may exercise all of its rights of payment (including the right of set-off)
with respect to such participation as fully as if such Lender were the direct
creditor of the Borrowers in the amount of such participation.
2.6 DEFAULTING LENDERS.
-------------------
(a) A Lender who fails to pay the Agent its Proportionate
Share of any Revolving Loans (including Agent Advances) made available
by the Agent on such Lender's behalf, or who fails to pay any other
amounts owing by it to the Agent, is a "DEFAULTING LENDER." The Agent
is entitled to recover from such Defaulting Lender all such amounts
owing by such Defaulting Lender on demand. If the Defaulting Lender
does not pay such amounts on the Agent's demand, the Agent shall
promptly notify the Hawk Funds Administrator and the Borrowers shall
pay such amounts to the Agent (to the extent the Agent has made such
amounts available to or for the account of the Borrowers) within five
(5) Business Days of the receipt by the Hawk Funds Administrator of
such notice. In addition, the Defaulting Lender or the Borrowers shall
pay to the Agent for its own account interest on such amount for each
day from the date it was made available by the Agent to the Borrowers
to the date it is recovered by the Agent at a rate per annum equal to
(x) the overnight Federal Funds Rate PLUS the Expenses and losses, if
any, incurred as a result of the Defaulting Lender's failure to perform
its obligations, if paid by the Defaulting Lender, or (y) the then
applicable rate of interest calculated under SECTION 4.1, if paid by
the Borrowers. Nothing herein shall be deemed to relieve any Lender of
its obligation to fulfill its commitments hereunder or to prejudice any
rights which the Borrowers may have against any Lender as a result of
any default by such Lender hereunder.
(b) The failure of any Lender to fund its Proportionate Share
of a Revolving Loan shall not relieve any other Lender of its
obligation to fund its Proportionate Share of a Revolving Loan.
Conversely, no Lender shall be responsible for the failure of another
Lender to fund its Proportionate Share of a Revolving Loan.
(c) The Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by the Borrowers to the
Agent for the Defaulting Lender's benefit; nor shall a
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Defaulting Lender be entitled to the sharing of any payments hereunder.
Amounts payable to a Defaulting Lender shall instead be paid to or
retained by the Agent. The Agent may hold and, in its discretion,
re-lend to the Borrowers the amount of all such payments received by it
for the account of such Lender. For purposes of voting or consenting to
matters with respect to the Credit Documents and determining
Proportionate Shares, such Defaulting Lender shall be deemed not to be
a "LENDER" and such Lender's Commitment shall be deemed to be zero
(-0-). This section shall remain effective with respect to such Lender
until (x) the Obligations shall have been declared or shall have become
immediately due and payable or (y) the Majority Lenders, the Agent and
the Borrowers shall have waived such Lender's default in writing. The
operation of this Section shall not be construed to increase or
otherwise affect the Commitment of any Lender, or relieve or excuse the
performance by the Borrowers of their respective duties and obligations
hereunder.
2.7 ALLOCATION OF REVOLVING LOANS AND EXPENSES.
-------------------------------------------
(a) The Borrowers maintain an integrated cash management
system reflecting their interdependence on one another and the mutual benefits
shared among them as a result of their respective operations. In order to
efficiently fund and operate their respective businesses and minimize the number
of Borrowings which they will make under this Credit Agreement and thereby
reduce the administrative costs and record keeping required in connection
therewith, including the necessity to enter into and maintain separately
identified and monitored borrowing facilities, the Borrowers have requested, and
the Agent and the Lenders have agreed that, subject to SECTION 11.16, (i) all
Revolving Loans will be advanced to and for the account of the Borrowers on a
joint and several basis to the Disbursement Account and (ii) all Letters of
Credit will be issued pursuant to an application therefor executed by the Hawk
Funds Administrator on behalf and for the account of the Borrower or Borrowers
specified by the Hawk Funds Administrator in such application. Each of the
Borrowers hereby acknowledges that it will be receiving a direct benefit from
each Revolving Loan made and each Letter of Credit issued pursuant to this
Credit Agreement.
(b) In order to track more precisely the respective recipients
of the proceeds of each Revolving Loan and the Borrower receiving the primary
benefit from the issuance of each Letter of
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Credit, and to assist the Hawk Funds Administrator, the Borrowers, the Agent and
the Lenders in administering the Revolving Loans and the Letters of Credit, each
of the Borrowers has agreed with the Agent and the Lenders to cause the Hawk
Funds Administrator to establish and maintain, and the Hawk Funds Administrator
hereby agrees to establish and maintain, accounts with respect to each Borrower
(each Borrower's "ALLOCATION ACCOUNT") in which the Hawk Funds Administrator
shall record its good faith allocation to each of the Borrowers of (w) the
proceeds, if any, of each Revolving Loan received by or for the account of such
Borrower, (x) payments made to the Agent on account of the Obligations of such
Borrower, (y) the aggregate face amount of all outstanding Letters of Credit
covering goods which such Borrower will receive and (z) all previously
unallocated Expenses.
(c) As soon as available, but not later than thirty (30) days
after the last Business Day of each month ending after the Initial Funding Date,
the Hawk Funds Administrator shall deliver to the Agent and each Borrower a
report prepared by or under the supervision of the chief financial officer of
the Hawk Funds Administrator, and certified by such officer, setting forth with
respect to each Borrower the balance of the Allocation Account of such Borrower
as of the end of, and all activity occurring in such Allocation Account during,
such month. Absent demonstrable error, each such monthly statement shall be
final, conclusive and binding on the respective Borrowers.
ARTICLE 3. LETTERS OF CREDIT.
------------------
3.1 ISSUANCE OF LETTERS OF CREDIT.
------------------------------
Subject to the terms and conditions hereof and in reliance on the
representations and warranties of the Borrowers set forth herein, the Agent
shall cause the Issuing Bank to issue Letters of Credit hereunder at the request
of the Hawk Funds Administrator and for its account, as more specifically
described below. The Agent shall not be obligated to cause the Issuing Bank to
issue any Letter of Credit if:
(a) issuance of the requested Letter of Credit (i) would cause
the Letter of Credit Obligations then outstanding to exceed $5,000,000
or (ii) would cause the sum of the Revolving Loans PLUS the Letter of
Credit Obligations then outstanding
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to exceed the lesser of (x) the Line of Credit and (y) the
Borrowing Base, in each case then in effect; or
(b) issuance of the Letter of Credit is enjoined, restrained
or prohibited by any Governmental Authority, Requirement of Law or any
request or directive of any Governmental Authority (whether or not
having the force of law) or would impose upon the Agent or the Issuing
Bank any material restriction, reserve, capital requirement, loss, cost
or expense (for which the Agent or the Issuing Bank is not otherwise
compensated) not in effect or known as of the Closing Date.
3.2 TERMS OF LETTERS OF CREDIT.
---------------------------
The proposed amount, terms and conditions, and form of each Letter of
Credit (and of any drafts or acceptances thereunder) shall be subject to
approval by the Issuing Bank. The term of each standby Letter of Credit shall
not exceed 360 days, but may be subject to annual renewal. The term of each
documentary Letter of Credit shall not exceed 120 days. No Letter of Credit
shall have an expiry date later than five (5) Business Days prior to the
Expiration Date.
3.3 NOTICE OF ISSUANCE.
-------------------
A request for issuance of a Letter of Credit (a "LETTER OF CREDIT
REQUEST") shall be given in writing. A Letter of Credit Request must be received
by the Agent no later than 1:00 P.M. Chicago time at least three (3) Business
Days (or such shorter period as may be agreed to by the Issuing Bank) in advance
of the proposed date of issuance.
3.4 LENDERS' PARTICIPATION.
-----------------------
Immediately upon issuance or amendment of any Letter of Credit, each
Lender shall be deemed to have irrevocably and unconditionally purchased and
received from the Issuing Bank, with out recourse or warranty, an undivided
interest and participation in all rights and obligations under such Letter of
Credit (other than fees and other amounts owing to the Issuing Bank) in
accordance with such Lender's Proportionate Share.
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3.5 PAYMENTS OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT.
--------------------------------------------------
The Agent shall notify the Hawk Funds Administrator of the receipt by
the Agent of notice from the Issuing Bank of a draft or other presentation for
payment or drawing under a Letter of Credit not later than 11:00 A.M. Chicago
time on the Business Day immediately prior to the date on which the Issuing Bank
intends to honor such drawing. Unless the procedures set forth in SECTION 9.2(c)
shall be applicable, the Hawk Funds Administrator shall be deemed to have
concurrently given a Notice of Borrowing to the Agent to make a Revolving Loan
in the amount of and at the time of such drawing (which Revolving Loan shall be
a Prime Rate Loan), the proceeds of which shall be applied directly by the Agent
to reimburse the Issuing Bank for the amount of such drawing.
3.6 PAYMENT BY LENDERS.
-------------------
If a Revolving Loan is not made in an amount sufficient to reimburse
the Issuing Bank in full for the amount of any draw under a Letter of Credit,
the Agent shall promptly notify each Lender of the unreimbursed amount of such
drawing and of such Lender's respective participation therein. Each Lender shall
make available to the Agent, for the account of the Issuing Bank, the amount of
its participation in immediately available funds not later than 1:00 P.M.
Chicago time on the next Business Day after such Lender receives notice from the
Agent of the amount of such Lender's participation in such unreimbursed amount.
If any Lender fails to make available to the Agent the amount of such Lender's
participation, the Issuing Bank shall be entitled to recover such amount on
demand from such Lender together with interest at the Federal Funds Rate for the
first three Business Days and thereafter at the Prime Lending Rate. For each
Letter of Credit, the Agent shall promptly distribute to each Lender which has
funded the amount of its participation its Proportionate Share of all payments
subsequently received by the Agent from the Borrowers in reimbursement of
honored drawings.
3.7 OBLIGATIONS ABSOLUTE.
---------------------
The joint and several obligations of the Borrowers to reimburse the
Lenders under SECTION 3.5 hereof shall be unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this Credit Agreement
under all circumstances including, without limitation, upon the occurrence and
during the continuance of an Event of Default.
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3.8 AGENT'S EXECUTION OF APPLICATIONS AND OTHER ISSUING BANK
--------------------------------------------------------
DOCUMENTATION; RELIANCE ON CREDIT AGREEMENT BY ISSUING
------------------------------------------------------
BANK.
-----
The Agent shall be authorized to execute, deliver and perform on behalf
of the Lenders such letter of credit applications, shipping indemnities, letter
of credit modifications and consents and other undertakings for the benefit of
the Issuing Bank as may be reasonably necessary or appropriate in connection
with the issuance or modification of Letters of Credit requested by the
Borrowers hereunder. The Lenders, the Agent, the Borrowers and the Hawk Funds
Administrator all expressly agree that the terms of this ARTICLE 3 and various
other provisions of this Credit Agreement identifying the Issuing Bank are also
intended to benefit the Issuing Bank and the Issuing Bank shall be entitled to
enforce the provisions hereof which are for its benefit.
ARTICLE 4. COMPENSATION, REPAYMENT AND REDUCTION
-------------------------------------
OF COMMITMENTS.
---------------
4.1 INTEREST ON REVOLVING LOANS.
----------------------------
(a) Interest on the unpaid principal amount of Revolving Loans
which are Prime Rate Loans shall be payable monthly in arrears, on the
first Business Day of each month, at an interest rate per annum equal
to the Prime Lending Rate PLUS one percent (1.0%) calculated on the net
balances owing to the Agent and the Lenders at the close of business
each day during such month. The rate hereunder shall change each day
the Prime Lending Rate changes.
(b) Interest on the unpaid principal amount of Revolving Loans
which are LIBOR Rate Loans shall be payable on the earliest to occur of
(i) the last day of each Interest Period with respect to such LIBOR
Rate Loans, (ii) ninety (90) days following the commencement of such
LIBOR Rate Loans, (iii) the date of conversion of such LIBOR Rate Loans
(or a portion thereof) to a Prime Rate Loan and (iv) the maturity of
such LIBOR Rate Loans, at an interest rate per annum equal during the
Interest Period for such LIBOR Rate Loans to the LIBOR Rate for the
Interest Period in effect for such LIBOR Rate Loans PLUS two and
one-quarter percent (2.25%). After maturity of such LIBOR Rate Loans
(whether by acceleration or
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otherwise), interest shall be payable upon demand. The Agent upon
determining the LIBOR Rate for any Interest Period shall promptly
notify the Hawk Funds Administrator and the Lenders by telephone
(confirmed promptly in writing) or in writing thereof. Each
determination by the Agent of an interest rate hereunder shall be
conclusive and binding for all purposes, absent demonstrable error.
(c) Notwithstanding the provisions of SECTION 4.1(b), the
Borrowers shall pay to each Lender, so long as and to the extent such
Lender shall be required under regulations of the Board of Governors of
the Federal Reserve System to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency
Liabilities, additional interest on the unpaid principal amount of each
Revolving Loan comprised of LIBOR Rate Loans of such Lender, from the
date of such LIBOR Rate Loan until such principal amount is paid in
full, at an interest rate per annum equal at all times to the remainder
obtained by subtracting (i) the LIBOR Rate for the applicable Interest
Period for such LIBOR Rate Loan from (ii) the rate obtained by dividing
such LIBOR Rate by a percentage equal to 1 MINUS the stated maximum
rate (stated as a decimal) applicable two (2) Business Days before the
first day of such Interest Period of all reserves, if any, required to
be maintained against "EUROCURRENCY LIABILITIES" as specified in
Regulation D (or against any other category of liabilities which
includes deposits by reference to which the interest rate on LIBOR Rate
Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any Lender
to United States residents) having a term equal to the Interest Period
applicable to such LIBOR Rate Loan. Such Lender shall as soon as
practicable provide notice to the Agent and the Hawk Funds
Administrator of any such additional interest arising in connection
with such LIBOR Rate Loan, which notice shall be conclusive and
binding, absent demonstrable error.
4.2 UNUSED LINE FEE.
----------------
The Borrowers shall pay to the Agent, for the ratable benefit of the
Lenders, a non-refundable fee (the "UNUSED LINE FEE") equal to one-half of one
percent (0.50%) per annum of the unused portion of the Line of Credit (with any
outstanding Letters of Credit constituting usage of the Line of Credit). The
Unused Line Fee shall accrue daily from the Closing Date until the Expiration
Date,
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and shall be due and payable monthly in arrears, on the first Business Day of
each month and on the Expiration Date.
4.3 LETTER OF CREDIT FEES.
----------------------
(a) The Agent, for the ratable benefit of the Lenders, shall
be entitled to charge to the account of the Borrowers on the first
Business Day of each month, a fee (the "LETTER OF CREDIT FEE"), in an
amount equal to two percent (2.0%) per annum of the daily weighted
average undrawn amount of Letters of Credit outstanding during the
immediately preceding month. In addition, the Agent, for its own
account, shall be entitled to charge to the account of the Borrowers on
the date of issuance of any standby Letter of Credit, a facing fee
equal to one-half of one percent (0.50%) on the initial face amount of
each such standby Letter of Credit (the "L/C FACING FEE").
(b) The Agent shall also be entitled to charge to the account
of the Borrowers, as and when incurred by the Agent or any Lender, the
customary charges, fees, costs and expenses charged to the Agent or any
Lender for the Borrower's account by any Issuing Bank (the "ISSUING
BANK FEES") in connection with the issuance, transfer, drawing,
amendment or negotiation of any Letters of Credit by the Issuing Bank.
Each determination by the Agent of Letter of Credit Fees, L/C Facing
Fees, Issuing Bank Fees and other fees, costs and expenses charged
under this Section shall be conclusive and binding for all purposes,
absent manifest error.
4.4 INTEREST AND LETTER OF CREDIT FEES AFTER EVENT OF
-------------------------------------------------
DEFAULT.
--------
From the date of occurrence of an Event of Default until the earlier of
the date upon which (i) all Obligations shall have been paid and satisfied in
full or (ii) such Event of Default shall have been waived, interest on the
Revolving Loans and Letter of Credit Fees on Letter of Credit Obligations shall
each be payable on demand at a rate per annum equal to, with respect to the
Revolving Loans, the rate in effect under SECTION 4.1, PLUS two percent (2%),
and with respect to the Letter of Credit Obligations, the rate at which Letter
of Credit Fees are charged pursuant to the first sentence of SECTION 4.3(a),
PLUS two percent (2%).
4.5 COLLATERAL MONITORING FEE.
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The Borrowers shall pay to the Agent, for its own account, a
non-refundable annual collateral monitoring fee (the "COLLATERAL MONITORING
FEE") in the amount of $25,000. The Collateral Monitoring Fee shall be fully
earned and payable on the Closing Date and on each anniversary thereof.
4.6 EXPENSES.
---------
The Borrowers shall reimburse the Expenses of the Agent or any Lender,
as the case may be, within five (5) Business Days of Agent's written demand
therefor.
4.7 MANDATORY PAYMENT OF REVOLVING LOANS; REDUCTIONS OF
---------------------------------------------------
COMMITMENTS.
------------
(a) Except during the period described in SECTION 2.2(b)(ii),
the aggregate outstanding principal amount of Revolving Loans PLUS
Letter of Credit Obligations at any time in excess of the lesser at
such time of (i) the Line of Credit and (ii) the Borrowing Base, shall
be immediately due and payable without the necessity of any demand.
(b) On the Expiration Date, the Commitment of each
Lender shall automatically reduce to zero (-0-) and may not be
reinstated.
(c) The Borrowers may reduce or terminate the Line of Credit
in whole or in part at any time and from time to time; PROVIDED, THAT
each such reduction must be in an amount not less than $5,000,000 (and
in increments of $1,000,000 in excess thereof). Once reduced, no
portion of the Line of Credit so reduced may be reinstated. If the
Borrowers seek to reduce the Line of Credit to less than $10,000,000,
then the Line of Credit shall be reduced to zero (-0-).
4.8 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF ACCOUNT.
---------------------------------------------------
The Agent shall maintain an account on its books in the name of the
Borrowers (the "LOAN ACCOUNT") in which the Borrowers will be charged with all
loans and advances made by the Lenders to the Borrowers or for the account of
the Borrowers, including the Revolving Loans and all Letter of Credit
Obligations, the Fees, the Expenses and any other Obligations, as and when such
payments become due. The Loan Account will be credited with all payments
received by the Agent from the Borrowers or for the account of the
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Borrowers, including all amounts received in the BT Account from the Lockbox
Banks. After the end of each month, the Agent shall send the Hawk Funds
Administrator a monthly statement accounting for the charges, loans, advances
and other transactions occurring among and between the Agent, the Lenders and
the Borrowers during that month, PROVIDED, THAT the failure of the Agent to send
such statement to the Hawk Funds Administrator shall not relieve the Borrowers
of any Obligations. Absent demonstrable error, each monthly statement shall be
an account stated and shall be final, conclusive and binding on the Borrowers.
4.9 PAYMENT PROCEDURES.
-------------------
Payments of Fees, principal of and interest on the Revolving Loans and
Expenses payable to the Agent or any Lender shall be made in each case not later
than 2:00 P.M. Chicago time on the day when due, in immediately available
dollars, to the offices of the Agent, at the address set forth in SECTION 11.7,
or as the Agent may otherwise direct the Hawk Funds Administrator. The Borrowers
hereby authorize the Agent to charge the Loan Account with the amount of all
payments to be made hereunder and under the other Credit Documents, including
all Fees and Expenses, as and when such payments become due. The joint and
several obligations of the Borrowers to the Lenders with respect to such
payments shall be discharged by making such payments to the Agent pursuant to
this Section or by the charging of the Loan Account by the Agent.
4.10 COLLECTION OF ACCOUNTS.
-----------------------
Borrowers shall at all times maintain lockboxes ("LOCKBOXES") and shall
instruct all account debtors on the Accounts of the respective Borrowers to
remit all Collections to the Lockboxes. No later than the earlier to occur of
(i) the Initial Funding Date and (ii) January 31, 1997, the Borrowers, the Agent
and financial institutions selected by the Borrowers and acceptable to the Agent
(each a "LOCKBOX BANK") shall enter into agreements in form and substance
reasonably satisfactory to Agent, PROVIDED, THAT Agent agrees that Key Bank is
acceptable to Agent as a Lockbox Bank (each a "LOCKBOX AGREEMENT"), which, among
other things, shall provide for the opening of an account for the deposit of
Collections (a "LOCKBOX ACCOUNT") at each Lockbox Bank. All Collections, all
other cash payments made for Inventory and all other payments of any kind
constituting proceeds of Collateral and received by or for the account the
respective Borrowers from any Person, promptly upon receipt shall be deposited
into a Lockbox Account in the identical
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form in which such payment was made, whether by cash or check. Termination of
such arrangements shall also be subject to approval by the Agent. Upon the terms
and subject to the conditions set forth in the Lockbox Agreements, from and
after the Initial Funding Date, during any period of time when either (i) an
Event of Default has occurred and is continuing, or (ii) unused availability
under the Borrowing Base is less than $5,000,000, the Agent may, in its sole
discretion, cause all available amounts held in each Lockbox Account to be wired
each Business Day into an account (the ("BT ACCOUNT") maintained by the Agent
with Bankers Trust Company. Amounts received in the BT Account from the Lockbox
Banks shall be credited to the Loan Account and distributed and applied as set
forth in SECTION 4.11.
4.11 DISTRIBUTION AND APPLICATION OF COLLECTIONS AND OTHER
-----------------------------------------------------
AMOUNTS.
--------
All Collections received by the Agent, and all other amounts received
by the Borrowers and delivered to the Agent, shall be credited to the Loan
Account, unless an Event of Default has occurred and is continuing, in which
case such Collections and other amounts shall be distributed and applied in the
following order: FIRST, to the payment of any Fees, Expenses or other
Obligations due and payable to the Agent under any of the Credit Documents,
including Agent Advances and any other amounts advanced by the Agent on behalf
of the Lenders; SECOND, to the payment of any Fees, Expenses or other
Obligations due and payable to the Issuing Bank under any of the Credit
Documents; THIRD, to the ratable payment of any Fees, Expenses or other
Obligations due and payable to the Lenders under any of the Credit Documents
other than those Obligations specifically referred to in this Section; FOURTH,
to the ratable payment of interest due on the Revolving Loans; and, FIFTH, to
the ratable payment of principal due on the Revolving Loans.
4.12 CALCULATIONS.
-------------
All calculations of (i) interest hereunder and (ii) Fees, including,
without limitation, Unused Line Fees and Letter of Credit Fees, shall be made by
the Agent, on the basis of a year of 360 days, or, if such computation would
cause the interest and fees chargeable hereunder to exceed the Highest Lawful
Rate, 365/366 days, in each case for the actual number of days elapsed
(including the first day but excluding the last day) occurring in the period for
which such interest or Fees are payable. Each determination by
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the Agent of an interest rate, Fee or other payment hereunder shall be
conclusive and binding for all purposes, absent manifest error.
4.13 SPECIAL PROVISIONS RELATING TO LIBOR RATE LOANS.
------------------------------------------------
(a) CONTINUATION. With respect to any Borrowing consisting of
LIBOR Rate Loans, the Borrowers may, subject to the provisions of
SECTION 4.13(c), elect to maintain such Borrowing or any portion
thereof as consisting of LIBOR Rate Loans by selecting a new Interest
Period for such Borrowing, which new Interest Period shall commence on
the last day of the immediately preceding Interest Period. Each
selection of a new Interest Period shall be made by notice given not
later than noon Chicago time on the third Business Day prior to the
date of any such continuation relating to LIBOR Rate Loans, by the Hawk
Funds Administrator to the Agent. Such notice by the Hawk Funds
Administrator of a continuation (a "NOTICE OF CONTINUATION") shall be
by telephone or facsimile transmission, and if by telephone, promptly
confirmed in writing, substantially in the form of EXHIBIT D, in each
case specifying (i) the date of such continuation, (ii) the Type of
Revolving Loans subject to such continuation, (iii) the aggregate
amount of Revolving Loans subject to such continuation and (iv) the
duration of the selected Interest Period. The Borrowers may elect to
maintain more than one Borrowing consisting of LIBOR Rate Loans by
combining such Borrowings into one Borrowing and selecting a new
Interest Period pursuant to this SECTION 4.13(a). If the Borrowers
shall fail to select a new Interest Period for any Borrowing consisting
of LIBOR Rate Loans in accordance with this SECTION 4.13(a), such
Revolving Loans will automatically, on the last day of the then
existing Interest Period therefor, convert into Prime Rate Loans. The
Agent shall give each Lender prompt notice by telephone or facsimile
transmission of each Notice of Continuation.
(B) CONVERSION. The Borrowers may on any Business Day (so long
as no Default or Event of Default has occurred and is continuing), upon
notice (each such notice, a "NOTICE OF CONVERSION") given to the
Agent, and subject to the provisions of SECTION 4.13(c), convert the
entire amount of or a portion of all Revolving Loans of one Type
comprising the same Borrowing into Revolving Loans of another Type;
PROVIDED, THAT any conversion of any LIBOR Rate Loans into Revolving
Loans of another Type shall be made on, and only on, the last day of an
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Interest Period for such LIBOR Rate Loans and, upon conversion of any
Prime Rate Loans into Revolving Loans of another Type, the Borrowers
shall pay accrued interest to the date of conversion on the principal
amount converted. Each such Notice of Conversion shall be given not
later than Noon Chicago time on the Business Day prior to the date of
any proposed conversion into Prime Rate Loans and on the third Business
Day prior to the date of any proposed conversion into LIBOR Rate Loans.
Subject to the restrictions specified above, each Notice of Conversion
shall be by telephone or facsimile transmission, and if by telephone,
promptly confirmed in writing, substantially in the form of EXHIBIT E,
in each case specifying (i) the requested date of such conversion, (ii)
the Type of Revolving Loans to be converted (iii) the portion of such
Type of Revolving Loan to be converted, (iv) the Type of Revolving
Loans such Revolving Loans are to be converted into and (v) if such
conversion is into LIBOR Rate Loans, the duration of the Interest
Period of such Revolving Loan. Each conversion shall be in an aggregate
amount of not less than $5,000,000 or an integral multiple of
$1,000,000 in excess thereof. The Borrowers may elect to convert the
entire amount of or a portion of all Revolving Loans of one Type
comprising more than one Borrowing into Revolving Loans of another Type
by combining such Borrowings into one Borrowing; PROVIDED, THAT if the
Borrowings so combined consist of LIBOR Rate Loans, such Loans shall
have Interest Periods ending on the same date.
(c) CERTAIN LIMITATIONS ON LIBOR RATE LOANS. The right
of the Borrowers to maintain, select, continue or convert
LIBOR Rate Loans shall be limited as follows:
(i) If the Agent is advised by Bankers Trust
Company that it is not offering United States dollar deposits
(in the applicable amounts) in the London interbank market,
or the Agent determines that adequate and fair means do not
otherwise exist for ascertaining the LIBOR Rate or LIBOR Rate
Loans comprising any requested Borrowing, continuation or
conversion, the right of the Borrowers to select or maintain
LIBOR Rate Loans for such Borrowing or any subsequent
Borrowing shall be suspended until the Agent shall notify the
Hawk Funds Administrator and the Lenders that the
circumstances causing such suspension no longer exists, and
each Revolving Loan shall be made as a Prime Rate Loan.
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(ii) If the Majority Lenders shall, at least one
Business Day before the date of any requested Borrowing,
continuation or conversion, notify the Agent that the LIBOR
Rate for Revolving Loans comprising such Borrowing will not
adequately reflect the cost to such Lenders of making or
funding their respective Revolving Loans for such Borrowing,
the right of the Borrowers to select LIBOR Rate Loans for such
Borrowing shall be suspended until the Agent shall notify the
Hawk Funds Administrator and the Lenders that the
circumstances causing such suspension no longer exist, and
each Revolving Loan comprising such Borrowing and each other
Borrowing requested during such period of suspension shall be
made as a Prime Rate Loan.
(iii) If at any time any Lender determines (which
determination shall, absent manifest error, be conclusive and
binding on all parties) that the making, continuation or
conversion of any Revolving Loan as a LIBOR Rate Loan by such
Lender has become unlawful or impermissible by reason of
compliance by that Lender with any law, governmental rule,
regulation or order of any Governmental Authority (whether or
not having the force of law), then, and in any such event,
such Lender may give notice of that determination in writing,
to the Agent and the Hawk Funds Administrator and the Agent
shall promptly transmit the notice to each other Lender. Until
such Lender gives notice otherwise, the right of the Borrowers
to select LIBOR Rate Loans from that Lender shall be suspended
and each Revolving Loan made by that Lender, notwithstanding
the Type of Revolving Loan made by the other Lenders, shall be
a Prime Rate Loan and each LIBOR Rate Loan outstanding from
that Lender shall automatically, on the last day of the
existing Interest Period therefor (or earlier, if so required
under such law, rule, regulation or order), convert to a Prime
Rate Loan.
(iv) No Agent Advance shall be made as a LIBOR Rate
Loan.
(v) No Revolving Loans may be made, continued or
converted as or to LIBOR Rate Loans at any time that a Default
or Event of Default shall have occurred and be continuing.
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(d) COMPENSATION.
------------
(i) Each Notice of Continuation and Notice of
Conversion shall be irrevocable by and binding on the
Borrowers. In the case of any Borrowing, continuation or
conversion that the related Notice of Borrowing, Notice of
Continuation or Notice of Conversion specifies is to be
comprised of LIBOR Rate Loans, the Borrowers shall indemnify
each Lender against any loss, cost or expense incurred by such
Person as a result of any failure to fulfill, on or before the
date for such Borrowing, continuation or conversion specified
in such Notice of Borrowing, Notice of Continuation or Notice
of Conversion, the applicable conditions set forth in ARTICLE
5, including, without limitation, any loss (excluding loss of
anticipated profits), cost or expense incurred by reason of
the liquidation or re-employment of deposits or other funds
acquired by such Lender to fund the Revolving Loan to be made
by such Lender as part of such Borrowing, continuation or
conversion.
(ii) If any payment of principal of, or conversion
or continuation of, any LIBOR Rate Loan is made other than on
the last day of the Interest Period for such Loan as a result
of a payment, prepayment, conversion or continuation of such
Loan or acceleration of the maturity of the Revolving Notes or
for any other reason, the Borrowers shall, upon demand by any
Lender (with a copy of such demand to the Agent), pay to the
Agent for the account of such Lender any amounts required to
compensate such Lender for any additional losses, costs or
expenses which it may reasonably incur as a result of such
payment, including, without limitation, any loss (excluding
loss of anticipated profits), cost or expense incurred by
reason of the liquidation or re-employment of deposits or
other funds acquired by any Lender to fund or maintain such
Loan.
(iii) Calculation of all amounts payable to a Lender
under this SECTION 4.13(d) shall be made as though such Lender
elected to fund all LIBOR Rate Loans by purchasing United
States dollar deposits in its LIBOR Lending Office's interbank
Eurodollar market.
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4.14 INDEMNIFICATION IN CERTAIN EVENTS.
----------------------------------
(a) INCREASED COSTS. If after the Closing Date, either (i) any
change in or in the interpretation of any law or regulation is
introduced, including, without limitation, with respect to reserve
requirements applicable to the Agent, to any of the Lenders, Bankers
Trust Company or any other affiliated banking or financial institution
from whom any of the Lenders borrows funds or obtains credit (a
"FUNDING BANK"), or (ii) the Agent, a Funding Bank or any of the
Lenders complies with any future guideline or request from any central
bank or other Governmental Authority proposed or promulgated after the
date of the Agreement or (iii) the Agent, a Funding Bank or any of the
Lenders determines that the adoption of any applicable law, rule or
regulation regarding capital adequacy or any change therein, or any
change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with
the interpretation or administration thereof announced after the date
of this Credit Agreement has or would have the effect described below,
or the Agent, a Funding Bank or any of the Lenders complies with any
request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable
agency announced after the date of this Credit Agreement and in the
case of any event set forth in this clause (iii), such adoption, change
or compliance has or would have the direct or indirect effect of
reducing the rate of return on any of such Person's capital as a
consequence of its obligations hereunder to a level below that which
such Person could have achieved but for such adoption, change or
compliance (taking into consideration such Person's policies with
respect to capital adequacy) by an amount deemed by such Person to be
material, and any of the foregoing events described in CLAUSES (i),
(ii) OR (iii) increases the cost to the Agent, or any of the Lenders of
(A) funding or maintaining any Commitment or (B) issuing, causing the
issuance of making or maintaining any Letter of Credit or of purchasing
or maintaining any participation therein, or reduces the amount
receivable in respect thereof by the Agent or any Lender, then the
Borrowers shall upon demand by the Agent at any time within one hundred
eighty (180) days after the date on which an officer of the Agent, such
Funding Bank or such Lender, as the case may be, responsible for
overseeing this Credit Agreement knows or has reason to know of its
right to additional compensation under
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this SECTION 4.14(a), pay to the Agent, for the account of such Lender
or, as applicable, the Agent or a Funding Bank, additional amounts
sufficient to reimburse the Agent, such Funding Bank and such Lender
against such increase in cost or reduction in amount receivable;
PROVIDED, HOWEVER, that if the Agent or any such Lender or Funding
Bank, as the case may be, fails to deliver such demand within such 180
day period, such entity shall only be entitled to additional
compensation for any such costs incurred from and after the date that
is one hundred eighty (180) days prior to the date the Borrowers
received such demand; and PROVIDED FURTHER, HOWEVER, that before making
any such demand, the Agent and each Lender agree to use reasonable
efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different Applicable Lending Office if the
making of such a designation would avoid the need for, or reduce the
amount of, such increased cost and would not, in the reasonable
judgment of such Lender, be otherwise disadvantageous to such Lender. A
certificate as to the amount of such increased cost, and setting forth
in reasonable detail the calculation thereof, shall be submitted to the
Hawk Funds Administrator by the Agent, or the applicable Lender or
Funding Bank, and shall be conclusive absent demonstrable error.
(b) Each Lender will promptly notify the Agent, and the Agent
will promptly notify the Hawk Funds Administrator, of any event of
which it has knowledge that would entitle such entity to additional
compensation under this SECTION 4.14. Neither the Agent nor any Lender
shall request any additional compensation under this SECTION 4.14
unless it is generally making similar requests of other borrowers
similarly situated, and the Agent and each Lender agrees to use a
reasonable basis for calculating amounts allocable to its commitment to
lend or its Loans and Letter of Credit Obligations, if any, hereunder.
ARTICLE 5. CONDITIONS PRECEDENT.
---------------------
5.1 CONDITIONS PRECEDENT TO INITIAL REVOLVING LOAN AND LETTER
---------------------------------------------------------
OF CREDIT.
----------
The obligation of each Lender to fund its Proportionate Share of the
initial Borrowing (or, if it shall occur earlier, the obligation of the Agent to
cause the issuance by the Issuing Bank of the initial Letter of Credit and of
each Lender to purchase a
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participation therein) is in each case subject to the satisfaction or waiver of
the following conditions precedent:
(a) CLOSING DOCUMENTS. The Agent and the Lenders shall have
received each of the agreements, opinions, reports, approvals,
consents, certificates and other documents set forth on the List of
Closing Documents attached hereto as SCHEDULE A (the "CLOSING DOCUMENT
LIST").
(b) FEES AND EXPENSES. All Fees and Expenses payable by the
Borrowers hereunder on or before the Initial Funding Date shall have
been paid in full.
(c) HAWK MERGER. The Hawk Merger shall have been
consummated, and shall have become effective, in each case pursuant to
the Hawk Merger Documents and all applicable Requirements of Law.
(d) ISSUANCE OF SENIOR NOTES. Hawk shall have received gross
cash proceeds of at least $100,000,000 from the issuance of the Senior
Notes and shall have used such proceeds to repay in full all of the Old
BT Debt and all documents, agreements and instruments evidencing and/or
executed in connection with the Old BT Debt shall have terminated and
shall be of no further force or effect.
(e) AMENDMENT OF SUBORDINATED NOTE DOCUMENTS. The
Subordinated Note Documents shall have been amended to permit the
issuance of the Senior Notes and the other transactions contemplated
by the Senior Note Documents.
(f) NO DEFAULT UNDER NOTE DOCUMENTS. Before and after giving
effect to the funding of such Borrowing or to the issuance of such
Letter of Credit, as the case may be, no default under any of the Note
Documents shall have occurred and be continuing.
(g) NOTE DOCUMENTS. Borrowers shall have delivered or caused
to be delivered to the Agent true and correct copies of the Note
Documents (certified as such by an officer of the Hawk Funds
Administrator), and all of the respective terms and conditions thereof
shall be in form and substance reasonably satisfactory to the Agent and
the Majority Lenders.
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(h) OTHER DOCUMENTS. Borrowers shall have delivered or caused
to be delivered to the Agent, in each case in form and substance
satisfactory to Agent, (i) all information required pursuant to SECTION
7.2 and (ii) such other business and/or financial and data and other
information as the Agent shall reasonably request.
(i) OFFICER'S CERTIFICATE. The Agent shall have received a
certificate dated the Initial Funding Date signed on behalf of the Hawk
Funds Administrator and each of the Borrowers by the Chairman or Vice
Chairman of the Hawk Funds Administrator stating that all of the
conditions set forth in SECTIONS 5.1(c) through (g), and SECTIONS
5.2(a) through (c), inclusive, have been satisfied on and as of such
date.
5.2 CONDITIONS PRECEDENT TO ALL REVOLVING LOANS AND LETTERS
-------------------------------------------------------
OF CREDIT.
----------
The obligation of each Lender to fund its Proportionate Share of any
requested Revolving Loan (or of the Agent to cause the Issuing Bank to issue any
requested Letter of Credit and of each Lender to purchase a participation
therein) is in each case subject to the satisfaction of the conditions precedent
set forth below. Each Notice of Borrowing, each Letter of Credit Request and
each issuance by any Borrower of a check drawn against, or request for transfer
from, the Disbursement Account shall constitute a representation and warranty to
the Agent and each Lender by the Borrowers that such conditions are satisfied.
(a) All representations and warranties contained in
this Credit Agreement and the other Credit
Documents are true and correct in all material
respects on and as of the date of such Notice of
Borrowing, Letter of Credit Request, or issuance of
a check drawn against, or request for transfer
from, the Disbursement Account both before and
after giving effect thereto and to the application
of the proceeds thereof, in each case as if then
made, other than representations and warranties
that expressly relate solely to an earlier date (in
which case such representations and warranties
shall have been true and accurate in all material
respects on and as of such earlier date);
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(b) No Default or Event of Default shall have occurred or
could reasonably be expected to result from the
making of the requested Revolving Loan or the
issuance of the requested Letter of Credit, which has
not been waived; and
(c) Since December 31, 1995 no event has occurred which
has had or could reasonably be expected to have a
Material Adverse Effect.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES.
-------------------------------
To induce the Agent and the Lenders to enter into this Credit Agreement
and to induce the Lenders to make the Loans and other financial accommodations
described herein, each of the Borrowers hereby represents and warrants to the
Agent and the Lenders that, after giving effect to the events described in
SECTIONS 5.1(d) and (e), the representations and warranties contained in this
ARTICLE 6 are true and correct. Such representations and warranties, and all
other representations and warranties made by the Borrowers in any other Credit
Documents, shall survive the execution and delivery of this Credit Agreement and
such other Credit Documents.
6.1 ORGANIZATION AND QUALIFICATION.
-------------------------------
Each Credit Party and each Subsidiary of each Credit Party (i) are
corporations duly organized, validly existing and in good standing under the
laws of the respective states or other jurisdictions of their incorporation,
(ii) have the power and authority to own their respective properties and assets
and to transact their respective businesses in which they presently are, or
propose to be, engaged and (iii) are duly qualified and are authorized to do
business and are in good standing in each of the respective jurisdictions where
they presently are, or propose to be, engaged in business, in each case, except
where any failures to do so could not reasonably be expected singly or in the
aggregate to have a Material Adverse Effect. SCHEDULE B, PART 6.1 lists all
jurisdictions in which each Credit Party and each Subsidiary of each Credit
Party are qualified to do business as foreign corporations.
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6.2 AUTHORITY.
----------
Each Credit Party and each Subsidiary of each Credit Party has the
requisite corporate power and authority to execute, deliver and perform the
respective Credit Documents to which they are parties. All corporate action
necessary for the execution, delivery and performance of any of the Credit
Documents by each Credit Party and each Subsidiary of each Credit Party which is
a party thereto has been taken.
6.3 ENFORCEABILITY.
---------------
This Credit Agreement and each of the other Credit Documents are the
legal, valid and binding obligations of each Credit Party and each Subsidiary of
each Credit Party which are parties thereto, enforceable in accordance with
their respective terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency or similar laws affecting creditors' rights generally,
and (ii) general principles of equity.
6.4 NO CONFLICT.
The execution, delivery and performance of each Credit Document by each
Credit Party and each Subsidiary of each Credit Party which are parties thereto
are not in contravention of (i) the Governing Documents of such Persons, or (ii)
any Requirement of Law, or (iii) any material indenture, contract, agreement or
instrument or other commitment to which any or all of such Persons are parties
or by which any of such Persons or any of its properties are bound, including,
in any event, any of the Note Documents, and will not, except as contemplated
herein, result in the imposition of any Liens upon any of the properties of any
of such Persons.
6.5 CONSENTS AND FILINGS.
---------------------
No consent, authorization, permit or filing is required in connection
with the execution, delivery and performance of this Credit Agreement or any
Credit Document by any Credit Party or any Subsidiary of any Credit Party which
are parties thereto, or in connection with the continuing operations of such
Persons, except (i) those that have been obtained or made and (ii) filings
necessary to create, perfect or retain the perfection of Liens against the
Collateral.
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6.6 GOVERNMENT REGULATION.
----------------------
No Borrower nor any Subsidiary of any Borrower is subject to regulation
under the Public Utility Holding Company Act of 1935, the Investment Company Act
of 1940, or any other similar Requirement of Law that limits the respective
abilities of such Persons to incur indebtedness or consummate the transactions
contemplated in this Credit Agreement and the other Credit Documents.
6.7 SOLVENCY.
---------
The fair saleable value of the assets of the Consolidated Entity
exceeds all its probable liabilities, including those to be incurred pursuant to
this Credit Agreement and the other Credit Documents. The Consolidated Entity
(i) does not have unreasonably small capital in relation to the business in
which it is or proposes to be engaged and (ii) has not incurred and does not
believe that it will incur, after giving effect to the transactions contemplated
by this Credit Agreement, debts beyond its ability to pay as such debts become
due.
6.8 RIGHTS IN COLLATERAL; PRIORITY OF LIENS.
----------------------------------------
All property constituting Collateral is owned or leased by the
respective Borrowers, free and clear of any and all Liens in favor of third
parties, other than Permitted Liens. Upon the proper filing of the UCC financing
and termination statements, in each case listed in the Closing Document List,
the security interests granted pursuant to the Credit Documents constitute valid
and enforceable first, prior (subject to Permitted Liens) and perfected Liens on
the Collateral, to the extent such Liens can be perfected by the filing of such
financing statements.
6.9 FINANCIAL DATA.
---------------
The Borrowers have provided or caused to be provided to the Agent and
each of the Lenders complete and accurate copies of the audited and unaudited
Financial Statements included in the Offering Memorandum dated November 22,
1996, relating to the Senior Notes. All such Financial Statements have been
prepared in accordance with GAAP consistently applied throughout the periods
involved and fairly present in all material respects the respective consolidated
financial positions, results of operations and cash flows of Persons indicated
for each of the periods covered subject, in the
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case of interim Financial Statements, to normal year-end audit adjustments. The
Consolidated Entity has no Contingent Obligation (or any other material
liabilities which were not incurred by the Borrowers in the ordinary course of
business) which is not reflected in such Financial Statements or the footnotes
thereto, or is not otherwise disclosed on SCHEDULE B, PART 6.9.
6.10 LOCATIONS OF OFFICES, RECORDS AND INVENTORY.
--------------------------------------------
(a) The address of the principal place of business and, if there is
more than one principal place of business, the chief executive office, of each
Borrower is set forth on SCHEDULE B, PART 6.10(a), as the same may be amended
after the Closing Date in accordance with SECTION 11.11. The books and records
of each Borrower, and all its chattel paper, if any, and records of Accounts,
are maintained exclusively at one or more of such locations.
(b) There is no location in which any Borrower has any Collateral
(except for vehicles and Inventory in transit and Inventory with an aggregate
book value for all Borrowers not exceeding $4,000,000, delivered to
third-parties for processing and similar services) other than those locations
identified on SCHEDULE B, PART 6.10(b), as the same may be amended after the
Closing Date in accordance with SECTION 11.11. A complete list of the legal name
and address of each warehouse at which Inventory of any Borrower is stored is
set forth on SCHEDULE B, PART 6.10(b), as the same may be amended after the
Closing Date in accordance with SECTION 11.11. None of the receipts received and
to be received by any Borrower from any warehouseman state that the Inventory
covered thereby is to be delivered to bearer or to the order of a named Person
or to a named Person and such named Person's assigns, in each case other than
such Borrower.
6.11 SUBSIDIARIES; OWNERSHIP OF STOCK.
---------------------------------
As of the Closing Date, (i) the only direct or indirect Subsidiaries of
the respective Credit Parties are those listed on SCHEDULE B, PART 6.11, (ii)
each Credit Party is the record and beneficial owner of all of the respective
shares of capital stock of each of its Subsidiaries listed on SCHEDULE B, PART
6.11, (iii) there are no proxies, irrevocable or otherwise, with respect to such
shares, and no equity securities of any of such Subsidiaries are or may become
required to be issued by reason of any options, warrants, scrip, rights to
subscribe to, calls or commitments of
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any character whatsoever relating to, or securities or rights convertible into
or exchangeable for, shares of any capital stock of any such Subsidiary, and
(iv) there are no contracts, commitments, understandings or arrangements by
which any such Subsidiary is or may become bound to issue additional shares of
its capital stock or securities convertible into or exchangeable for such
shares. All of such shares so owned by any Credit Party are owned by such Credit
Party free and clear of any Liens.
6.12 NO JUDGMENTS OR LITIGATION.
---------------------------
No judgments, orders, writs or decrees are outstanding against any
Credit Party or any Subsidiary of any Credit Party, nor is there now pending or,
to any Credit Party's knowledge, threatened, any litigation, contested claim,
investigation, arbitration, or governmental proceeding by or against any Credit
Party or any Subsidiary of any Credit Party other than (i) as set forth on
SCHEDULE B, PART 6.12, or (ii) with respect to matters arising after the Closing
Date, that singly or in the aggregate could not reasonably be expected to have a
Material Adverse Effect.
6.13 NO DEFAULTS.
------------
No Credit Party nor any Subsidiary of any Credit Party is in default
under (i) the Note Documents or (ii) any term of any other indenture, contract,
lease, agreement, instrument or commitment to which any of them is a party or by
which any of them is bound, in the case of the items described in CLAUSE (ii)
above, the default under which singly or in the aggregate could reasonably be
expected to have a Material Adverse Effect. No Credit Party knows of any dispute
regarding any such indenture, contract, lease, agreement, instrument or other
commitment.
6.14 LABOR MATTERS.
--------------
SCHEDULE B, PART 6.14 accurately sets forth all labor union contracts
to which any Borrower or any Subsidiary of any Borrower is a party as of the
Closing Date (including their dates of expiration). There are no existing or, to
the knowledge of any Borrower, threatened strikes, lockouts or other disputes
relating to any collective bargaining or similar agreement to which any Borrower
or any Subsidiary of any Borrower is a party that singly or in the aggregate
could reasonably be expected to have a Material Adverse Effect.
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6.15 COMPLIANCE WITH LAW.
--------------------
No Credit Party nor any Subsidiary of any Credit Party has violated or
failed to comply in any material respect with any Requirements of Law.
6.16 ERISA.
------
No Borrower, no Subsidiary of any Borrower and no ERISA Affiliate
maintains or contributes to any Plan other than those listed on SCHEDULE B, PART
6.16. Each Plan has been and is maintained and funded in accordance with its
terms and in compliance with all applicable provisions of ERISA and the Internal
Revenue Code. Each Borrower, each Subsidiary of a Borrower and each ERISA
Affiliate has fulfilled all contribution obligations for each Plan (including
obligations related to the minimum funding standards of ERISA and the Internal
Revenue Code). No Termination Event has occurred nor has any other event
occurred that may result in a Termination Event. No Borrower, no Subsidiary of
any Borrower, no ERISA Affiliate, and no fiduciary of any Plan is subject to any
direct or indirect liability with respect to any Plan under any Requirement of
Law or agreement. No Borrower, no Subsidiary of a Borrower and no ERISA
Affiliate, is required to provide security to any Plan under Section 401(a)(29)
of the Internal Revenue Code.
6.17 COMPLIANCE WITH ENVIRONMENTAL LAWS.
-----------------------------------
Except as disclosed on SCHEDULE B, PART 6.17 or, with respect to
matters arising after the Closing Date, as could not singly or in the aggregate
reasonably be expected to have a Material Adverse Effect, (i) the operations of
each Borrower and each Subsidiary of each Borrower comply with all applicable
federal, state and local environmental, health and safety statutes, regulations,
directions, ordinances, criteria and guidelines; (ii) no Borrower has received
notice that any of the operations of such Borrower or any of its Subsidiaries is
the subject of any judicial or administrative proceeding alleging the violation
of any federal, state or local environmental, health or safety statute,
regulation, direction, ordinance, criteria or guideline; (iii) none of the
operations of such Borrower or any of its Subsidiaries is the subject of any
federal or state investigation evaluating whether such Borrower or any of its
Subsidiaries disposed of any hazardous or toxic waste, substance or constituent
or other substance at any site that may require remedial action, or any federal
or state investigation
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evaluating whether any remedial action is needed to respond to a release of any
hazardous or toxic waste, substance or constituent or other substance into the
environment; (iv) no Borrower nor any Subsidiary of any Borrower has filed any
notice under any federal or state law indicating past or present treatment,
storage or disposal of a hazardous or toxic waste, substance or constituent or
reporting a spill or release of a hazardous or toxic waste, substance or
constituent or other substance into the environment; and (v) no Borrower nor any
Subsidiary of any Borrower has any contingent liability of which the Borrower
has knowledge, in connection with any release or potential release of any
hazardous or toxic waste, substance or constituent or other substance into the
environment, nor has the Borrower or any of its Subsidiaries received any
notice, letter or other indication of potential liability arising from the
disposal of any hazardous or toxic waste, substance or constituent or other
substance into the environment.
6.18 INTELLECTUAL PROPERTY.
----------------------
Each Borrower and each Subsidiary of each Borrower possesses such
assets, licenses, patents, patent applications, copyrights, service marks,
trademarks and trade names as are necessary or advisable to continue to conduct
their respective present and proposed business activities.
6.19 LICENSES AND PERMITS.
---------------------
Each Borrower and each Subsidiary of each Borrower has obtained and
holds in full force and effect, all franchises, licenses, leases, permits,
certificates, authorizations, qualifications, easements, rights of way and
other rights and approvals which are necessary or advisable for the operation of
its business as presently conducted and as proposed to be conducted, except
where the failure to obtain and hold any of the foregoing singly or in the
aggregate could not reasonably be expected to have a Material Adverse Effect.
6.20 TAXES AND TAX RETURNS.
----------------------
(a) Except as set forth on SCHEDULE B, PART 6.20, all income
tax returns required to be filed by each Credit Party and each
Subsidiary of each Credit Party have been timely filed. The information
filed is complete and accurate in all material respects. All deductions
taken in such income tax
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returns are appropriate and in accordance with applicable laws and
regulations, except deductions that may have been disallowed but are
being challenged in good faith and for which adequate reserves have
been made in accordance with GAAP.
(b) All taxes, assessments, fees and other governmental
charges for periods beginning prior to the date hereof, other than such
taxes, assessments, fees and other governmental charges that are not
yet due and payable, have been timely paid and no Credit Party nor any
Subsidiary of any Credit Party has any liability for taxes in excess of
the amounts so paid or reserves so established.
(c) Except as set forth in SCHEDULE B, PART 6.20, no material
deficiencies for taxes have been claimed, proposed or assessed by any
taxing or other Governmental Authority against any Credit Party or any
Subsidiary of any Credit Party and no tax liens have been filed. Except
as set forth in SCHEDULE B, PART 6.20, there are no pending or, to the
knowledge of any Credit Party, threatened audits, investigations or
claims for or relating to any liability for taxes and there are no
matters under discussion with any Governmental Authority which could
reasonably be expected to result in a material additional liability for
taxes. As of the Closing Date, either the federal income tax returns of
Hawk have been audited by the Internal Revenue Service and such audits
have been closed, or the period during which any assessments may be
made by the Internal Revenue Service has expired without waiver or
extension for all years up to and including the fiscal year of Hawk
ended December 31, 1996. Except as set forth in SCHEDULE B, PART 6.20,
as of the Closing Date, no extension of a statute of limitations
relating to taxes, assessments, fees or other governmental charges is
in effect with respect to any Credit Party or any Subsidiary of any
Credit Party.
(d) Except as set forth on SCHEDULE B, PART 6.20, no Credit
Party nor any Subsidiary of any Credit Party has any obligation under
any written tax sharing agreement or agreement regarding payments in
lieu of taxes.
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6.21 MATERIAL CONTRACTS.
-------------------
SCHEDULE B, PART 6.21, contains a true, correct and complete list of
all the Material Contracts in effect on the Closing Date. Except as described on
SCHEDULE B, PART 6.21, no Material Contract contains any burdensome restrictions
on any Credit Party or any Subsidiary of any Credit Party or any of their
respective properties that could prevent such Credit Party or Subsidiary from
conducting its business as conducted on the Closing Date. As of the Closing
Date, all of the Material Contracts are in full force and effect, and no
defaults currently exist thereunder by any Credit Party or Subsidiary of a
Credit Party that is a party thereto, or to the knowledge of any Credit Party,
any other party thereto.
6.22 ACCURACY AND COMPLETENESS OF INFORMATION.
-----------------------------------------
All factual information furnished by or on behalf of any Credit Party
or any Subsidiary of any Credit Party in writing to the Agent or any Lender for
purposes of or in connection with this Credit Agreement or any Credit Documents
or any transaction contemplated hereby or thereby, is or will be true and
accurate in all material respects on the date as of which such information is
dated or certified and, taken as a whole, is not incomplete by omitting to state
any material fact necessary to make such information not misleading at such
time.
6.23 NO CHANGE.
----------
Since December 31, 1995, no event has occurred which has had or could
reasonably be expected to have a Material Adverse Effect.
ARTICLE 7. AFFIRMATIVE COVENANTS.
----------------------
Until termination of this Credit Agreement and payment and satisfaction
of all Obligations due hereunder:
7.1 FINANCIAL REPORTING.
--------------------
The Credit Parties shall timely deliver to each Lender the following
information:
(a) AUDITOR'S ENGAGEMENT LETTER. As soon as available,
but in any event not later than the earlier of (i) 15 days
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prior to the end of each fiscal year or (ii) prior to the date the
Auditors commence work on the preparation of the annual audited
Financial Statement, a copy of the engagement letter between the Credit
Parties and their Auditors, which engagement letter shall notify such
Auditors that such annual audited Financial Statement will be delivered
by the Credit Parties to the Agent and Lenders, and stating that Agent
and Lenders shall be entitled to rely thereon with respect to the
transactions which are the subject of this Agreement.
(b) ANNUAL FINANCIAL STATEMENTS. As soon as available, but not
later than 90 days after each fiscal year end: (i) the annual audited
consolidated, and unaudited consolidating, Financial Statements of the
Consolidated Entity; (ii) a comparison in reasonable detail to the
prior year annual audited Financial Statements; (iii) the Auditors'
unqualified opinion, "Management Letter" (if any) and statement
indicating whether the Auditors have obtained knowledge of the
existence of any Default or Event of Default during their audit; (iv) a
narrative discussion of the consolidated financial condition and
results of operations and the consolidated liquidity and capital
resources of the Consolidated Entity for such fiscal year, prepared by
the chief financial officer of Hawk; and (v) a compliance certificate
substantially in the form of EXHIBIT F with an attached schedule of
calculations demonstrating compliance with the financial covenants set
forth in ARTICLE 8.
(c) MONTHLY AND ANNUAL PROJECTIONS. Not later than 45 days
after each fiscal year end, beginning with the fiscal year ended
December 31, 1996, monthly projections of the financial condition and
results of operations of the Consolidated Entity for the next
succeeding year, and annual projections for each succeeding fiscal year
thereafter, through and including the fiscal year in which the
Expiration Date will occur, in each case containing projected
consolidating balance sheets, statements of operations, statements of
cash flows and statements of changes in shareholders equity.
(d) QUARTERLY FINANCIAL STATEMENTS. As soon as available,
but not later than 45 days after each end of each of the first three
fiscal quarters, and 90 days after the end of the last fiscal quarter:
(i) Financial Statements of the Consolidated Entity as of the fiscal
quarter then ended, and
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for the fiscal year to date; (ii) a comparison in reasonable detail to
the Financial Statements for the corresponding periods of the prior
fiscal year; (iii) the certification of the chief executive officer or
chief financial officer of Hawk that such Financial Statements have
been prepared in accordance with GAAP (subject to year-end audit
adjustments); (iv) a narrative discussion of the consolidated financial
condition and results of operations and the consolidated liquidity and
capital resources of the Consolidated Entity for such fiscal quarter
and fiscal year to date, prepared by the chief financial officer of
Hawk; and (v) a compliance certificate substantially in the form of
EXHIBIT F with an attached schedule of calculations demonstrating
compliance with the financial covenants set forth in ARTICLE 8.
(e) MONTHLY FINANCIAL STATEMENTS. As soon as available, but
not later than 90 days after the end of the last month in each fiscal
year, 45 days after end of the last month in each fiscal quarter and 30
days after the end of each other month: (i) a balance sheet for the
Consolidated Entity as at the end of such month and for the fiscal year
to date and statements of operations and cash flows for such month and
for the fiscal year to date; (ii) a comparison to the balance sheet,
statement of operations and statement of cash flows for the same
periods in the prior year; (iii) a certification by the chief executive
officer or chief financial officer of Hawk that such balance sheet,
statement of operations and statement of cash flows have been prepared
in accordance with GAAP (subject to year-end audit adjustments); and
(iv) a compliance certificate substantially in the form of EXHIBIT F
with an attached schedule of calculations demonstrating compliance with
the financial covenants set forth in ARTICLE 8.
(f) PUBLIC REPORTING. Promptly upon their becoming available,
copies of all regular and periodic reports, proxy statements and other
materials, if any, filed by any Borrower with the Securities and
Exchange Commission, or any Governmental Authority succeeding to any or
all of the functions of such Commission, or with any national
securities exchange, or distributed to the stockholders of any
Borrower.
7.2 COLLATERAL REPORTING.
---------------------
The Credit Parties shall timely deliver or cause to be delivered to the
Agent the following certificates and reports:
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(a) MONTHLY BORROWING BASE CERTIFICATES. Monthly, within
fifteen (15) Business Days after the last Business Day of each month,
and at any other time reasonably requested by the Agent, a Borrowing
Base Certificate, which shall be: (i) substantially in the form of
EXHIBIT A, detailing the Eligible Accounts Receivable and Eligible
Inventory, in each case of each of the Borrowers, as of each Friday of
the immediately preceding week (if a weekly Borrowing Base
Certificate), or as of the last Business Day of the immediately
preceding month (if a monthly Borrowing Base Certificate), or as of
such other date as the Agent may request; and (ii) prepared by or under
the supervision of the chief executive officer or chief financial
officers of each Borrower and certified by such officer subject only to
adjustment upon completion of the normal annual audit of physical
inventory. Each Borrowing Base Certificate shall have attached to it
such additional schedules and other information as the Agent may
reasonably request, including, without limitation, an aging of
Accounts.
(b) APPRAISALS. When requested by the Agent, (i) so long as an
Event of Default shall not have occurred and be continuing, no more
than once in any fiscal year of the Consolidated Entity and (ii) upon
the occurrence and during the continuance of an Event of Default, at
any time, a report of Inventory of each Borrower, based upon a physical
count, which shall describe each Borrower's Inventory by category and
by item (in reasonable detail) and report the then appraised value (at
lower of cost or market) of such Inventory.
(c) FURTHER ASSURANCES. When requested by the Agent, any
further information regarding the Collateral, business affairs and
financial condition of Hawk, any other Credit Party or any Subsidiary
of any Credit Party.
7.3 NOTIFICATION REQUIREMENTS.
--------------------------
The Credit Parties shall timely give to the Agent and each of the
Lenders the following notices:
(a) NOTICE OF DEFAULTS. Promptly, and in any event within five
(5) Business Days after becoming aware of the occurrence of a Default
or Event of Default, a certificate of the chief executive officer or
chief financial officer of the Hawk Funds Administrator specifying the
nature thereof and the
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proposed response of the Credit Parties with respect thereto, each in
reasonable detail.
(b) PROCEEDINGS OR ADVERSE CHANGES. Promptly, and in any event
within five (5) Business Days after any Credit Party becomes aware of
(i) any proceedings being instituted or threatened to be instituted by
or against such Credit Party or any of its Subsidiaries in any federal,
state, local or foreign court or before any commission or other
regulatory body (federal, state, local or foreign), which singly or in
the aggregate could reasonably be expected to have a Material Adverse
Effect, (ii) any order, judgment or decree in excess of $1,000,000
being entered against such Credit Party or any of its Subsidiaries or
any of their respective properties or assets or (iii) any actual or
prospective change, development or event which has had or could
reasonably be expected to have a Material Adverse Effect, a written
statement describing such proceeding, order, judgment, decree, change,
development or event and any action being taken with respect thereto by
such Credit Party or such Subsidiary.
(c) ERISA NOTICES. (i) Promptly, and in any event within
thirty (30) days after any Borrower, any Subsidiary of any Borrower or
any ERISA Affiliate knows or has reason to know that a Termination
Event has occurred, a written statement of the chief financial officer
of Hawk Funds Administrator describing such Termination Event and any
action that is being taken with respect thereto by such Borrower, such
Subsidiary or such ERISA Affiliate, and any action taken or threatened
by the Internal Revenue Service, Department of Labor or Pension Benefit
Guaranty Corporation. Each Borrower, each Subsidiary of each Borrower
and each ERISA Affiliate shall be deemed to know all facts known by the
administrator of any Benefit Plan of which it is the plan sponsor; (ii)
promptly, and in any event within three (3) Business Days after the
filing thereof with the Internal Revenue Service, a copy of each
funding waiver request filed with respect to any Benefit Plan and all
communications received by any Borrower, any Subsidiary of any Borrower
or any ERISA Affiliate with respect to such request; and (iii)
promptly, and in any event within three (3) Business Days after receipt
by any Borrower, any Subsidiary of any Borrower or any ERISA Affiliate,
of the PBGC's intention to terminate a Benefit Plan or to have a
trustee appointed to administer a Benefit Plan, copies of each such
notice.
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(d) ENVIRONMENTAL AND HEALTH AND SAFETY NOTICES. Promptly, and
in any event within thirty (30) days after receipt by any Credit Party
or any Subsidiary of any Credit Party of any notice, complaint or order
alleging any actual or prospective violation of any environmental,
health or safety Requirement of Law or alleging responsibility for
costs of a cleanup, together with a copy of such notice, complaint, or
order and a written statement describing any action being taken with
respect thereto by such Credit Party or Subsidiary.
(e) MATERIAL CONTRACTS. Promptly, and in any event within
thirty (30) days after any Material Contract of any Credit Party or any
Subsidiary of any Credit Party is terminated or amended or any new
Material Contract is entered into, a written statement describing such
event, with copies of amendments or new contracts, and an explanation
of any actions being taken with respect thereto.
(f) COLLATERAL MATTERS. At least thirty (30) Business Days
prior written notice to the Agent of any additional location of any
Collateral of any Borrower or in the location of the chief executive
office or places of business of any Borrower or any Subsidiary of any
Borrower from the respective locations specified in SCHEDULE B, PART
6.10. At least twenty (20) Business Days prior to any such change, the
Borrowers shall cause to be executed and delivered to the Agent any
financing statements or other documents reasonably required by the
Agent, all in form and substance reasonably satisfactory to the Agent.
7.4 CORPORATE EXISTENCE.
--------------------
Each Credit Party shall, and shall cause each of its Subsidiaries to,
(i) maintain its corporate existence (except that Subsidiaries of a Borrower may
merge with each other and with such Borrower, PROVIDED, THAT the Agent receives
five (5) Business Days prior written notice thereof), (ii) maintain in full
force and effect all licenses, bonds, franchises, leases, trademarks and
qualifications to do business, and all patents, contracts and other similar
rights necessary or advisable for the profitable conduct of their businesses,
(iii) continue in, and limit their operations to, the same general lines of
business as presently conducted by them and (iv) in the case of each Credit
Party, maintain all material terms and provisions of its corporate charter and
bylaws in the form in effect on the Closing Date.
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7.5 BOOKS AND RECORDS; INSPECTIONS.
-------------------------------
Each Borrower agrees to maintain, and to cause each of its Subsidiaries
to maintain, books and records pertaining to the Collateral in such detail, form
and scope as is consistent with good business practice. Each Borrower agrees
that the Agent, or its agents, may enter upon the premises of such Borrower or
any of its Subsidiaries at any time and from time to time, during normal
business hours and upon reasonable notice under the circumstances, and at any
time at all upon the occurrence and during the continuance of an Event of
Default, under the supervision of an officer of such Borrower for the purposes
of (i) inspecting and verifying the Collateral, (ii) inspecting and/or copying
(at the expense of such Borrower) any and all records pertaining thereto, and
(iii) discussing the affairs, finances and business of such Borrower with the
Auditors or any officers, employees and directors of such Borrower.
7.6 INSURANCE.
----------
Each Borrower agrees to maintain, and to cause each of its Subsidiaries
to maintain, public liability insurance, fire and extended coverage insurance
and replacement value insurance on the Collateral under such policies of
insurance, with such insurance companies, in such amounts and covering such
risks as are at all times satisfactory to the Agent in its commercially
reasonable judgment. All policies covering the Collateral are to name the Agent
as an additional insured and/or the loss payee in case of loss, and are to
contain such other provisions as the Agent may reasonably require to fully
protect the Agent's interest in the Collateral and to any payments to be made
under such policies.
7.7 TAXES.
------
Each Credit Party agrees to pay, when due, and to cause each of its
Subsidiaries to pay when due, all taxes lawfully levied or assessed against such
Credit Party, such Subsidiary or any of the Collateral before any penalty or
interest accrues thereon; PROVIDED, THAT, unless such taxes have become a
federal tax or ERISA Lien on any of the assets of such Credit Party or such
Subsidiary, no such tax need be paid if the same is being contested, in good
faith, by appropriate proceedings promptly instituted and diligently conducted
and if an adequate reserve or
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other appropriate provision shall have been made therefor as required in order
to be in conformity with GAAP.
7.8 COMPLIANCE WITH LAWS.
---------------------
Each Credit Party agrees to comply, and to cause each of its
Subsidiaries to comply, in all material respects with all Requirements of Law
applicable to the Collateral or any part thereof, or to the operation of its
business or its assets generally, unless such Credit Party contests any such
Requirements of Law in a reasonable manner and in good faith.
7.9 USE OF PROCEEDS.
----------------
Proceeds of the Revolving Loans shall be used by the Borrowers solely
for ongoing working capital requirements and other general corporate purposes,
including Permitted Acquisitions; PROVIDED, THAT no Borrower shall use any
portion of the proceeds of any Revolving Loans for the purpose of purchasing or
carrying any "margin stock" (as defined in Regulation G) in any manner which
violates the provisions of Regulation G or X or of the terms and conditions of
this Credit Agreement or any other Credit Document.
7.10 FISCAL YEAR.
------------
Each Credit Party agrees to maintain, and to cause each of its
Subsidiaries to maintain, its fiscal year as a year ending December 31st.
7.11 MAINTENANCE OF PROPERTY.
------------------------
Each Borrower agrees to keep, and to cause each of its Subsidiaries to
keep, all property useful and necessary to their respective businesses in good
working order and condition (ordinary wear and tear excepted) in accordance with
their past operating practices.
7.12 ERISA DOCUMENTS.
----------------
Each Borrower will cause to be delivered to the Agent, upon the Agent's
request, each of the following: (i) a copy of each Plan (or, where any such plan
is not in writing, complete description thereof) (and if applicable, related
trust agreements or other funding instruments) and all amendments thereto, all
written interpretations thereof and written descriptions thereof that have
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been distributed to employees or former employees of such Borrower or any of its
Subsidiaries; (ii) the most recent determination letter issued by the Internal
Revenue Service with respect to each Benefit Plan; (iii) for the three most
recent plan years, Annual Reports on Form 5500 Series required to be filed with
any governmental agency for each Benefit Plan; (iv) all actuarial reports
prepared for the last three plan years for each Benefit Plan; (v) a listing of
all Multiemployer Plans, with the aggregate amount of the most recent annual
contributions required to be made by such Borrower or any ERISA Affiliate to
each such plan and copies of the collective bargaining agreements requiring such
contributions; (vi) any information that has been provided to such Borrower or
any ERISA Affiliate regarding withdrawal liability under any Multiemployer Plan;
and (vii) the aggregate amount of the most recent annual payments made to former
employees of such Borrower or any ERISA Affiliate under any Retiree Health Plan.
7.13 ENVIRONMENTAL AND OTHER MATTERS.
--------------------------------
(a) Each Credit Party and each of its Subsidiaries will
conduct their businesses so as to comply in all material respects with
all environmental, land use, occupational, safety or health laws,
regulations, directions, ordinances, criteria and guidelines in all
jurisdictions in which any of them is or may at any time be doing
business, except to the extent that such Credit Party or such
Subsidiary is contesting, in good faith by appropriate legal
proceedings, any such law, regulation, direction, ordinance, criteria,
guideline, or interpretation thereof or application thereof; PROVIDED,
THAT such Credit Party and each of its Subsidiaries shall comply with
the order of any court or other Governmental Authority relating to such
laws unless such Credit Party or such Subsidiary shall currently be
prosecuting an appeal or proceedings for review and shall have secured
a stay of enforcement or execution or other arrangement postponing
enforcement or execution pending such appeal or proceedings for review.
(b) If the Agent reasonably believes, or the Majority Lenders
reasonably believe, that the facts or circumstances evidence or suggest
that any Credit Party or any Subsidiary of any Credit Party is in
material non-compliance with any environmental law and that such
non-compliance could reasonably be expected to have a Material Adverse
Effect, then at the written request of the Agent or the Majority
Lenders,
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which request shall specify in reasonable detail the basis therefor, at
any time and from time to time, such Credit Party will provide at its
sole cost and expense a Phase I or Phase II environmental site
assessment report or update report concerning the site owned, operated
or leased by such Credit Party or such Subsidiary in respect of which
such material non-compliance is believed to have occurred and be
continuing, such report to be prepared by an environmental consulting
firm approved by the Agent and the Majority Lenders, indicating the
presence, release or absence of hazardous materials on or from such
site and the potential cost of any removal, remedial or corrective
action in connection with any such hazardous materials on such site.
7.14 FURTHER ACTIONS.
----------------
Each Credit Party shall take, and shall cause each of its Subsidiaries
to take, all such further actions and execute all such further documents and
instruments as the Agent may at any time determine in its sole discretion to be
necessary or desirable to further carry out and consummate the transactions
contemplated by the Credit Documents, to cause the execution, delivery and
performance of the Credit Documents to be duly authorized and to perfect or
protect the Liens (and the priority status thereof) of the Agent on the
Collateral.
7.15 DEPOSIT OF COLLECTIONS AND OTHER PROCEEDS OF COLLATERAL.
--------------------------------------------------------
From and after January 31, 1997, Borrowers shall cause all Collections
on all Accounts of Borrowers, and all other cash payments made for Inventory of
Borrowers, and all other payments of any kind constituting proceeds of
Collateral received by or for the account any Borrower from any Person, promptly
upon receipt thereof to be deposited into a Lockbox Account or the BT Account in
the identical form in which such payment was made, whether by cash or check.
ARTICLE 8. NEGATIVE COVENANTS.
-------------------
Until termination of this Credit Agreement and payment and satisfaction
of all Obligations due hereunder, each Credit Party shall comply with, and,
where required, shall cause each of its Subsidiaries to comply with, the
following covenants:
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8.1 INTEREST COVERAGE.
------------------
The Credit Parties shall not permit the "INTEREST COVERAGE RATIO" (as
hereinafter defined), determined as of March 31, 1997 and the last day of each
fiscal quarter of the Consolidated Entity ending thereafter, in each case for
the twelve-month period ending on such date, to be less than 1.0 to 1.0. For
purposes hereof, "INTEREST COVERAGE RATIO" means, for any period, the ratio of
(i) EBITDA MINUS, Capital Expenditures MINUS income taxes paid in cash, to (ii)
Interest Expense, in each case for such period.
8.2 CAPITAL EXPENDITURES.
---------------------
The Borrowers shall not make payments for Capital Expenditures in the
aggregate for all Borrowers during the fiscal year of the Consolidated Entity
ending December 31, 1997, and during any fiscal year of the Consolidated Entity
ending thereafter, in an amount greater than $10,000,000; PROVIDED, THAT (i) to
the extent that all or any portion of such amount is not used in any fiscal
year, up to seventy-five percent (75%) of such amount may be carried forward to
the immediately following fiscal year to be used for Capital Expenditures and
(ii) the aggregate amount of payments for Capital Expenditures made by Borrowers
in any fiscal year shall be determined without giving effect to any such
payments made with all or any part of the net cash proceeds of the sale of the
owned real property of certain Borrowers located in Solon, Ohio and LaVergne,
Tennessee, respectively.
8.3 ADDITIONAL INDEBTEDNESS.
------------------------
No Credit Party nor any Subsidiary of any Credit Party shall directly
or indirectly incur, create, assume or suffer to exist any Indebtedness other
than:
(a) Indebtedness under the Credit Documents;
(b) Indebtedness evidenced by the Senior Notes, in an
aggregate principal amount not exceeding $100,000,000 (as
reduced by any repayments of principal thereof on or after the
Closing Date);
(c) Indebtedness evidenced by the Subordinated Notes, in
an aggregate principal amount not exceeding $30,000,000 (as reduced
by any repayments of principal thereof on or after the Closing Date);
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(d) Indebtedness evidenced by the Xxxxxx Note, in an
aggregate principal amount not exceeding $375,000 (as reduced
by any repayments of principal thereof on or after the Closing
Date);
(e) Indebtedness in the ordinary course of business under
Interest Rate Agreements, Currency Agreements and commodity agreements
entered into in the ordinary course of business to protect against
fluctuations in the prices of raw materials and not for speculative
purposes, in each case in form and substance reasonably satisfactory to
the Agent;
(f) Indebtedness described on SCHEDULE B, PART 8.3;
(g) Indebtedness secured by purchase money Liens on equipment
acquired after the date of this Credit Agreement not to exceed
$5,000,000 in the aggregate for all of the Credit Parties outstanding
at any one time ("PURCHASE MONEY LIENS") so long as (i) such
Indebtedness shall be from parties and on terms and conditions
satisfactory to the Agent, (ii) each Purchase Money Lien shall attach
only to the property to be acquired, (iii) a description shall have
been furnished to the Agent for any item of equipment for which the
purchase price is greater than $1,000,000, and (iv) the debt incurred
shall not exceed one hundred percent (100%) of the purchase price of
the item or items of equipment purchased;
(h) intercompany loans and advances permitted pursuant
to SECTION 8.8;
(i) Indebtedness represented by performance, completion,
guarantee, surety and similar bonds provided by a Borrower or a
Subsidiary of a Borrower in the ordinary course of business consistent
with past practice;
(j) Indebtedness not otherwise permitted to be incurred
under this SECTION 8.3, in an aggregate amount not to exceed
for all Borrowers $5,000,000 at any time outstanding; and
(k) Indebtedness refinancing, in whole or in part, any
Indebtedness incurred under CLAUSES (b), (c), (d) and (f) of this
SECTION 8.3; PROVIDED, THAT, the terms of any such refinancing
Indebtedness are no more restrictive in any material respect than the
terms of the Indebtedness so refinanced; and PROVIDED FURTHER, THAT the
principal amount of
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such refinancing Indebtedness shall not be increased above the
outstanding principal amount thereof immediately prior to such
refinancing.
8.4 LIENS.
------
No Credit Party nor any Subsidiary of any Credit Party shall directly
or indirectly create, incur, assume, or suffer to exist any Lien on any of its
property now owned or hereafter acquired except:
(a) Liens granted to the Agent under the Credit
Documents;
(b) Liens listed on SCHEDULE B, PART 8.4;
(c) Purchase Money Liens permitted under SECTION 8.3;
(d) Liens of warehousemen, mechanics, materialmen, workers,
repairmen, common carriers, or landlords, liens for taxes, assessments
or other governmental charges, and other similar Liens arising by
operation of law, in each case for amounts that are not yet due and
payable or that are being diligently contested in good faith by a
Credit Party or Subsidiary of a Credit Party, so long as the Agent has
been notified thereof and adequate reserves are maintained by such
Person for their payment in accordance with GAAP;
(e) Attachment or judgment Liens not to exceed an aggregate of
$250,000 for all of the Credit Parties, excluding amounts (i) bonded to
the reasonable satisfaction of the Agent or (ii) covered by insurance
to the reasonable satisfaction of the Agent;
(f) Deposits or pledges to secure obligations under workmen's
compensation, social security or similar laws, under unemployment
insurance, or to secure public or statutory obligations;
(g) Deposits or pledges to secure bids, tenders, contracts
(other than contracts for the payment of money), leases, statutory
obligations, surety and appeal bonds and other obligations of like
nature arising in the ordinary course of business;
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(h) Easements, rights-of-way, restrictions and other similar
encumbrances on title to, or restrictions on the use of, real property,
which, in the aggregate, do not materially detract from the value of
the item of property subject thereto or materially interfere with the
ordinary conduct of the business of any Credit Party or any Subsidiary
of any Party;
(i) Liens on property and assets of a Person existing at the
time such Person is merged into or consolidated with any Borrower or
any Subsidiary of any Borrower or becomes a Subsidiary of any Borrower
or any of its Subsidiaries in accordance with the terms of the Credit
Agreement, PROVIDED, THAT such Liens were not created in contemplation
of such merger, consolidation or acquisition, as the case may be, and
do not extend to or cover any property or assets other than the
property and assets of the Person being merged into or consolidated
with such Borrower or such Subsidiary or being acquired by such
Borrower or such Subsidiary, as the case may be, and PROVIDED FURTHER,
THAT any Indebtedness secured by such Liens shall not otherwise be
prohibited under the terms of this Credit Agreement;
(j) Liens on property and assets of Xxxxxx securing the
Indebtedness evidenced by the Xxxxxx Note; and
(k) Extensions and renewals of any of the foregoing so long as
the aggregate amount of extended or renewed Liens are not increased and
are on terms and conditions no more restrictive than the terms and
conditions of the Liens extended or renewed.
8.5 CONTINGENT OBLIGATIONS.
-----------------------
No Credit Party nor any Subsidiary of any Credit Party shall directly
or indirectly incur, assume, or suffer to exist any Contingent Obligation,
excluding Contingent Obligations for Indebtedness permitted to be incurred under
SECTION 8.3, and Investments permitted under Section 8.8.
8.6 SALE OF ASSETS.
---------------
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, sell, lease, assign, transfer or otherwise dispose of any assets
other than (i) Inventory in the ordinary course of business; (ii) obsolete or
worn out property disposed of
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in the ordinary course of business; and (iii) dispositions of assets not
otherwise permitted under this SECTION 8.6, PROVIDED, THAT, (a) such
dispositions are for fair value and (b) at least seventy-five percent (75%) of
the aggregate consideration is paid in cash at the time of disposition and is
thereupon delivered to the Agent for application to the outstanding principal
balance of the Revolving Loans.
8.7 RESTRICTED PAYMENTS.
--------------------
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, (a) declare or pay any dividend (other than dividends payable
solely in capital stock of such Person) 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 shares of any
class of capital stock of such Person or any warrants, options or rights to
purchase any such capital stock, 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 such Person or any of its
Subsidiaries; (b) make any optional payment or optional prepayment on or
optional redemption (including, without limitation, by making payments to a
sinking or analogous fund) or optional repurchase of any Indebtedness (other
than Indebtedness pursuant to this Credit Agreement); PROVIDED, THAT,
notwithstanding the foregoing:
(i) any Subsidiary of a Borrower may declare and pay dividends
to such Borrower or any other Subsidiary of such Borrower;
(ii) Borrowers may make distributions to Hawk to permit Hawk to pay
Federal, state and local income taxes attributable to the operations of
the Borrowers; PROVIDED, THAT such distributions do not exceed actual
payments by Hawk in respect of such taxes;
(iii) so long as before and after giving effect thereto no Default
or Event of Default shall have occurred and be continuing, Borrowers
may make distributions to Hawk to permit Hawk to pay its franchise
taxes and reasonable administrative expenses (including reasonable
professional fees and expenses);
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(iv) so long as before and after giving effect thereto no Default or
Event of Default shall have occurred and be continuing, Borrowers may
make distributions to Hawk to permit Hawk (x) to make regularly
scheduled payments of interest on the Senior Notes and Subordinated
Notes, respectively, and (y) to make regularly scheduled dividend
payments on the Hawk Preferred Stock; PROVIDED, THAT the proceeds of
such distributions are so used by Hawk within one Business Day of its
receipt thereof; and
(v) so long as (x) before and after giving effect thereto no
Default or Event of Default shall have occurred and be continuing, and
(y) no proceeds of any Loans are used to fund or otherwise finance all
or any part of any such purchase, Borrowers may make open market or
private purchases of the Senior Notes.
8.8 INVESTMENTS.
------------
No Credit Party shall, or shall permit any of its Subsidiaries to,
directly or indirectly, make any Investment in any Person, whether in cash,
securities, or other property of any kind including, without limitation, any
Subsidiary or Affiliate of any Credit Party, other than:
(a) excluding Investments permitted pursuant to CLAUSE (f) of
this SECTION 8.8, advances or loans made in the ordinary course of
business not to exceed $500,000 outstanding at any time to any one
Person and $1,000,000 in the aggregate for all Credit Parties
outstanding at any one time;
(b) Loans, Investments and advances between a Borrower
and any other Borrower and loans to, and other Investments in, a
Borrower by Hawk; provided, that each loan to, and other Investment in,
any Borrower by Hawk shall be subordinated in right and time of payment
to the prior indefeasible payment in full in cash of all Obligations;
(c) Cash Equivalents;
(d) Investments in account debtors received in connection with
the bankruptcy or reorganization, or in settlement of delinquent
obligations of customers, in the ordinary course of business and in
accordance with applicable collection and credit policies established
by such Credit Party or such Subsidiary, as the case may be;
(e) Loans, Investments and other advances between a Credit
Party and any shareholder of a Credit Party, to the
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extent existing on the date hereof and expressly set forth in
SCHEDULE B, PART 8.8;
(f) Investments in connection with Permitted
Acquisitions; and
(g) such other Investments as the Agent may approve in
writing in the exercise of its sole discretion.
8.9 AFFILIATE TRANSACTIONS.
-----------------------
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, enter into any transaction with (including, without limitation,
the purchase, sale or exchange of property or the rendering of any service to)
any Subsidiary or Affiliate of any Borrower, except in the ordinary course of
and pursuant to the reasonable requirements of such Borrower's or such
Subsidiary's business, as the case may be, and upon fair and reasonable terms no
less favorable in any material respect to Borrower or such Subsidiary than could
be obtained in a comparable arm's-length transaction with an unaffiliated
Person, except for transactions otherwise permitted under SECTIONS 8.7 and 8.8
or set forth on SCHEDULE B, PART 8.9;
8.10 ADDITIONAL NEGATIVE PLEDGES.
----------------------------
No Credit Party shall, or shall permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective, (a) any prohibition or restriction (including any agreement to
provide equal and ratable security to any other Person in the event a Lien is
granted to or for the benefit of the Agent and the Lenders) on the creation or
existence of any Lien upon the assets of such Borrower or any of its
Subsidiaries; or (b) any contractual obligation which may restrict or inhibit
the Agent's rights or ability to sell or otherwise dispose of the Collateral or
any part thereof after the occurrence of an Event of Default.
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8.11 ADDITIONAL SUBSIDIARIES.
------------------------
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, form or acquire any new Subsidiaries; PROVIDED, THAT Borrowers
may form or acquire new Subsidiaries in connection with a Permitted Acquisition,
so long as, (i) one hundred percent (100%) of the issued and outstanding capital
stock of each such Subsidiary is held at all times beneficially and of record by
a Borrower and (ii) effective upon such formation or acquisition, as the case
may be, (x) such Subsidiary is joined as a party to this Credit Agreement, as a
Borrower, is joined as a party to the Security Agreement, as a Grantor, and is
joined as a party to all other Credit Documents, and (y) Borrower shall have
taken all action necessary to cause the Lien granted by such Subsidiary to the
Agent under the Security Agreement to be perfected in all applicable
jurisdictions.
8.12 CHANGES TO NOTE DOCUMENTS.
--------------------------
No Credit Party shall, or shall permit any of its Subsidiaries to,
amend, restate, supplement or otherwise modify in any respect any of the Note
Documents, except for any of the foregoing which could not singly or in the
aggregate reasonably be expected to have a Material Adverse Effect and in any
event which (i) do not result in any increase in the amount of any payment or
distribution by any Credit Party or any Subsidiary of any Credit Party to any
Person thereunder or in connection therewith, (ii) are not otherwise prohibited
by the respective terms of this Credit Agreement or any of the other Credit
Documents, and (iii) do not materially increase the respective obligations of
any Credit Party or any Subsidiary of any Credit Party, or confer additional
rights on any other Person, in each case thereunder or in connection therewith.
ARTICLE 9. EVENTS OF DEFAULT AND REMEDIES.
-------------------------------
9.1 EVENTS OF DEFAULT.
------------------
The occurrence of any of the following events shall constitute an event
of default (each an "EVENT OF DEFAULT") hereunder:
(a) FAILURE TO PAY. The Borrowers shall fail to pay (i) any
principal of any Revolving Loan when the same shall become due and
payable, or (ii) any interest, Fees, Expenses or other amounts payable
under the Credit Documents within three (3) Business Days after the
same shall become due and payable.
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(b) BREACH OF CERTAIN COVENANTS. Any Credit Party shall
fail to comply with any covenant contained in ARTICLE 7 or
ARTICLE 8.
(c) BREACH OF REPRESENTATION OR WARRANTY. Any representation
or warranty made or deemed to be made by any Credit Party or any
Borrower in this Credit Agreement or in any other Credit Document (and
in any statement or certificate given under this Credit Agreement or
any other Credit Document), shall be false or misleading in any
material respect when made or deemed to be made.
(d) BREACH OF OTHER COVENANTS. Any Credit Party shall fail to
comply with any covenant contained in this Credit Agreement or any
other Credit Document, other than as set forth in SECTION 9.1(b), and
such failure shall continue for five (5) days after its occurrence.
(e) DISSOLUTION. Except for the merger or consolidation of a
Borrower with any other Borrower, any Credit Party shall dissolve,
wind up or otherwise cease its business.
(f) INSOLVENCY EVENT. Any Credit Party shall become the
subject of an Insolvency Event.
(g) CHANGE OF CONTROL. A Change of Control shall occur.
(h) CROSS DEFAULT. A default or event of default shall occur
(and continue beyond any applicable grace period) under (i) the Xxxxxx
Note or (ii) any other note, agreement or instrument evidencing any
other Indebtedness of any Credit Party or any Subsidiary of any Credit
Party, which default or event of default permits the acceleration of
its maturity, PROVIDED, THAT, in the case of notes, agreements or
instruments referred to in CLAUSE (ii) above, the aggregate principal
amount of all such Indebtedness for which the default or event of
default has occurred exceeds $5,000,000.
(i) FAILURE OF ENFORCEABILITY OF CREDIT DOCUMENTS; SECURITY.
Any covenant, agreement or obligation of any Credit Party contained in
or evidenced by any of the Credit Documents shall cease to be
enforceable, or shall be determined to be unenforceable, in accordance
with its terms; any Credit Party shall deny or disaffirm its
obligations under any of the Credit Documents or any Liens granted in
connection therewith;
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or, any Liens granted on any of the Collateral shall be determined to
be void, voidable, invalid or unperfected, are subordinated or not
given the priority contemplated by this Credit Agreement.
9.2 ACCELERATION, TERMINATION OF COMMITMENTS AND CASH
-------------------------------------------------
COLLATERALIZATION.
------------------
Upon the occurrence and during the continuance of any Event of Default,
without prejudice to the rights of the Agent or any Lender to enforce its claims
against the Credit Parties:
(a) ACCELERATION. Upon the written request of the Majority
Lenders and by delivery of written notice to the Hawk Funds
Administrator from the Agent, all Obligations shall be immediately due
and payable (except with respect to any Event of Default set forth in
SECTION 9.1(f), in which case all Obligations shall automatically
become immediately due and payable without the necessity of any request
of the Majority Lenders or notice or other demand to the Hawk Funds
Administrator or any of the Borrowers) without presentment, demand,
protest or any other action or obligation of the Agent or any Lender.
(b) TERMINATION OF COMMITMENTS. Upon the written request of
the Majority Lenders, and by delivery of written notice to the Hawk
Funds Administrator from the Agent (except with respect to any Event of
Default set forth in SECTION 9.1(f)), in which case all of the
Commitments shall automatically and immediately terminate without the
necessity of any request of the Majority Lenders or notice or other
demand to the Hawk Funds Administrator or any of the Borrowers) the
Commitments shall be immediately terminated and, at all times
thereafter, all Revolving Loans made by any Lender pursuant to this
Credit Agreement shall be at such Lender's sole discretion, unless such
Event of Default is waived in accordance with SECTION 11.11, in which
case the Commitments shall be automatically reinstated.
(c) CASH COLLATERALIZATION. On demand of the Agent or the
Majority Lenders, the Borrowers shall immediately deposit with the
Agent for each Letter of Credit then outstanding, cash or Cash
Equivalents in an amount equal to 110% of the greatest amount drawable
thereunder. Such deposit shall be held by the Agent and used to
reimburse the Issuing Bank for
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the amount of each drawing made under such Letters of Credit, as and
when each such drawing is made.
9.3 RESCISSION OF ACCELERATION.
---------------------------
After acceleration of the maturity of all or any part of the
Obligations, if the Borrowers pay all accrued interest and all principal due
(other than by reason of the acceleration) and all Events of Default are waived
in accordance with SECTION 11.11, the Majority Lenders may elect in their sole
discretion, to rescind the acceleration and return to the Borrowers any cash
collateral, if any, deposited with the Agent pursuant to SECTION 9.2(c). (This
Section is intended only to bind all of the Lenders to a decision of the
Majority Lenders and not to confer any right on the Borrowers, even if the
described conditions for the Majority Lenders' election may be met.)
9.4 REMEDIES.
---------
Upon the occurrence and during the continuance of an Event of Default,
upon the written request and at the direction of the Majority Lenders, the Agent
may exercise any rights and remedies available to it under applicable law
(including under the Code) and under the Collateral Documents. The foregoing
rights and remedies are not intended to be exhaustive and the full or partial
exercise of any right or remedy shall not preclude the full or partial exercise
of any other right or remedy available under this Credit Agreement, any other
Credit Document, at equity or at law.
9.5 RIGHT OF SETOFF.
----------------
In addition to and not in limitation of all rights of offset that any
Lender may have under applicable law, upon the occurrence and during the
continuance of any Event of Default, and whether or not any Lender has made any
demand or the Obligations of any Credit Party have matured, each Lender shall
have the right to appropriate and apply to the payment of the Obligations of
such Credit Party all deposits and other obligations then or thereafter owing by
such Lender to such Credit Party. Each Lender exercising such rights shall
notify the Agent thereof and any amount received as a result of the exercise of
such rights shall be shared by the Lenders in accordance with SECTION 2.5.
9.6 LICENSE OF USE OF SOFTWARE AND OTHER INTELLECTUAL
-------------------------------------------------
PROPERTY.
---------
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Unless expressly prohibited by the licensor thereof, if any, the Agent
is hereby granted a license to use all computer software programs, data bases,
processes and materials used by the Borrowers in connection with their
respective businesses or in connection with any Collateral. The Agent agrees not
to use any such license prior to the occurrence of an Event of Default.
9.7 APPLICATION OF PROCEEDS; SURPLUS; DEFICIENCIES.
-----------------------------------------------
The net cash proceeds resulting from the Agent's exercise of any of the
foregoing rights against any Collateral (after deducting all of the Agent's
Expenses related thereto) shall be applied by the Agent to the payment of the
Obligations, whether due or to become due, in the order set forth in SECTION
4.11. The Borrowers shall remain liable to the Agent and the Lenders for any
deficiencies, and the Agent and the Lenders in turn agree to remit to the
Borrowers or its successors or assigns, any surplus resulting therefrom.
ARTICLE 10. THE AGENT.
----------
10.1 APPOINTMENT OF AGENT.
---------------------
(a) Each Lender hereby designates BTCC as Agent to act as
herein specified. Each Lender hereby irrevocably authorizes, and each
holder of any Revolving Note, by the acceptance of such Note, shall be
deemed irrevocably to authorize the Agent to take such action on its
behalf under the provisions of this Credit Agreement and the other
Credit Documents and any other instruments and agreements referred to
herein and therein and to exercise such powers and to perform such
duties hereunder and thereunder as are specifically delegated to or
required of the Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto. The Agent shall hold all
Collateral and all payments of principal, interest, Fees (other than
Fees that are exclusively for the account of the Agent), charges and
Expenses received pursuant to this Credit Agreement or any other Credit
Document for the ratable benefit of the Lenders. The Agent may perform
any of its duties hereunder by or through its agents or employees.
(b) Other than rights of the Credit Parties under SECTION
10.9, the provisions of this ARTICLE 10 are for the benefit of the
Agent and the Lenders only and none of the
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Credit Parties or any other Persons shall have any rights as a third
party beneficiary of any of the provisions hereof. In performing its
functions and duties under this Credit Agreement and the other Credit
Documents, the Agent shall act only for the Lenders and does not assume
and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for any Credit Party.
10.2 NATURE OF DUTIES OF AGENT.
--------------------------
The Agent has no duties or responsibilities except those expressly set
forth in the Credit Documents. Neither the Agent nor any of its officers,
directors, employees or agents shall be liable for any action taken or omitted
hereunder or in connection herewith, unless caused by its or their gross
negligence or willful misconduct. The duties of the Agent shall be mechanical
and administrative in nature; the Agent shall not have by reason of this Credit
Agreement or any of the other Credit Documents a fiduciary relationship in
respect of any Lender or any participant of any Lender; and nothing in this
Credit Agreement or any other Credit Document, expressed or implied, is intended
to or shall be so construed as to impose upon the Agent any obligations in
respect of this Credit Agreement or any other Credit Document, except as
expressly set forth herein or therein.
10.3 LACK OF RELIANCE ON AGENT.
--------------------------
(a) Independently and without reliance upon the Agent, each
Lender, to the extent it deems appropriate, has made and shall continue
to make (i) its own independent investigation of the financial or other
condition and affairs of each Credit Party in connection with the
taking or not taking of any action in connection herewith and (ii) its
own appraisal of the creditworthiness of each Credit Party, and, except
as expressly provided in this Credit Agreement, the Agent shall have no
duty or responsibility, either initially or on a continuing basis, to
provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the making of the
Revolving Loans or at any time or times thereafter.
(b) The Agent shall not be responsible to any Lender for any
recitals, statements, information, representations or warranties herein
or in any document, certificate or other writing delivered in
connection herewith or for the execution,
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effectiveness, genuineness, validity, enforceability, collectibility,
priority or sufficiency of this Credit Agreement or any of the other
Credit Documents or the financial or other condition of any Credit
Party. The Agent shall not be required to make any inquiry concerning
either the performance or observance of any other terms, provisions or
conditions of this Credit Agreement or any of the other Credit
Documents, or the financial condition of any Credit Party, or the
existence or possible existence of any Default or Event of Default,
unless specifically requested to do so in writing by any Lender.
10.4 CERTAIN RIGHTS OF THE AGENT.
----------------------------
The Agent shall have the right to request instructions from the Lenders
by notice to each of such Lenders. If the Agent shall request instructions from
the Lenders with respect to any act or action (including the failure to act) in
connection with this Credit Agreement, the Agent shall be entitled to refrain
from such act or taking such action unless and until the Agent shall have
received instructions from such Lenders, and the Agent shall not incur liability
to any Person by reason of so refraining. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against the Agent as a result
of the Agent acting or refraining from acting hereunder in accordance with the
instructions of the requisite Lenders required to give such instructions
hereunder. The Agent may give any notice required under ARTICLE 9 hereof without
the consent of any of the Lenders unless otherwise directed by the Majority
Lenders in writing and will, at the direction of the Majority Lenders, give any
such notice required under ARTICLE 9.
10.5 RELIANCE BY AGENT.
------------------
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, statement, certificate,
telex, teletype or telecopier message, cablegram, radiogram, order or other
documentary, facsimile or telephone message believed by it to be genuine and
correct and to have been signed, sent or made by the proper person. The Agent
may consult with legal counsel (including counsel for the Credit Parties with
respect to matters concerning the Credit Parties), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by
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it in good faith in accordance with the advice of such counsel, accountants or
experts.
10.6 INDEMNIFICATION OF AGENT.
-------------------------
To the extent the Agent is not reimbursed and indemnified by the
Borrowers, each Lender will reimburse and indemnify the Agent, in proportion to
its respective Commitment, for and against all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses (including
counsel fees and disbursements) or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in
performing its duties hereunder, in any way relating to or arising out of this
Credit Agreement; PROVIDED, THAT no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Agent's gross
negligence or willful misconduct.
10.7 THE AGENT IN ITS INDIVIDUAL CAPACITY.
-------------------------------------
With respect to its obligation to lend under this Credit Agreement, the
Revolving Loans made by it and the Revolving Notes issued to it and its
participation in Letters of Credit issued hereunder, the Agent shall have the
same rights and powers hereunder as any other Lender or holder of a Revolving
Note or participation interests and may exercise the same as though it was not
performing the duties specified herein; and the terms "Lenders," "Lenders,"
"Majority Lenders," "holders of Revolving Notes," or any similar terms shall,
unless the context clearly otherwise indicates, include the Agent in its
individual capacity. The Agent may accept deposits from, lend money to, acquire
equity interests in, and generally engage in any kind of banking, trust,
financial advisory or other business with any Credit Party or any Affiliate of
any Credit Party as if it were not performing the duties specified herein, and
may accept fees and other consideration from any Credit Party for services in
connection with this Credit Agreement and otherwise without having to account
for the same to the Lenders.
10.8 HOLDERS OF NOTES.
-----------------
The Agent may deem and treat the payee of any Revolving Note as the
owner thereof for all purposes hereof unless and until a written notice of the
assignment or transfer thereof shall have
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been filed with the Agent. Any request, authority or consent of any Person who,
at the time of making such request or giving such authority or consent, is the
holder of any Revolving Note, shall be conclusive and binding on any subsequent
holder, transferee or assignee of such Revolving Note or of any Revolving Note
or Revolving Notes issued in exchange therefor.
10.9 SUCCESSOR AGENT.
----------------
(a) The Agent may, upon five (5) Business Days' notice to the
Lenders and the Hawk Funds Administrator, resign at any time (effective
upon the appointment of a successor Agent pursuant to the provisions of
this SECTION 10.9) by giving written notice thereof to the Lenders and
the Hawk Funds Administrator. Upon any such resignation, the Majority
Lenders shall have the right, upon five (5) days' notice and approval
by the Credit Parties (which approval shall not be unreasonably
withheld or delayed) to appoint a successor Agent. If no successor
Agent shall have been so appointed by the Majority Lenders and accepted
such appointment, within thirty (30) days after the retiring Agent's
giving of notice of resignation, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent, which shall be a bank or a
trust company or other financial institution which maintains an office
in the United States, or a commercial bank organized under the laws of
the United States of America or of any State thereof, or any Affiliate
of such bank or trust company or other financial institution which is
engaged in the banking business, having a combined capital and surplus
of at least $500,000,000.
(b) Upon the acceptance of any appointment as Agent hereunder
by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations under this Credit Agreement and the other Credit
Documents. After any retiring Agent's resignation hereunder as Agent,
the provisions of this ARTICLE 10 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under or
in connection with this Credit Agreement.
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10.10 COLLATERAL MATTERS.
-------------------
(a) Each Lender authorizes and directs the Agent to enter into
the Collateral Documents for the benefit of the Lenders. Each Lender
hereby agrees, and each holder of any Revolving Note by the acceptance
thereof will be deemed to agree, that, except as otherwise set forth
herein or in the other Credit Documents, any action taken by the
Majority Lenders in accordance with the provisions of this Credit
Agreement and the other Credit Documents, and the exercise by the
Majority Lenders of the powers set forth herein or therein, together
with such other powers as are reasonably incidental thereto, shall be
authorized and binding upon all of the Lenders. The Agent is hereby
authorized on behalf of all of the Lenders, without the necessity of
any notice to or further consent from any Lender, from time to time so
long as an Event of Default shall not then exist, to take any action
with respect to any Collateral or Collateral Documents which may be
necessary to perfect and maintain the perfection of the Liens upon the
Collateral granted pursuant to the Collateral Documents.
(b) The Lenders hereby authorize the Agent, at its option and
in its discretion, to release any Lien granted to or held by the Agent
upon any Collateral (i) upon termination of the Commitments and payment
and satisfaction of all of the Obligations at any time arising under or
in respect of this Credit Agreement or the other Credit Documents or
the transactions contemplated hereby or thereby or (ii) if approved,
authorized or ratified in writing by the Majority Lenders, unless such
release is required to be approved by all of the Lenders pursuant to
SECTION 11.11. Upon request by the Agent at any time, the Lenders will
confirm in writing the Agent's authority to release particular types or
items of Collateral pursuant to this SECTION 10.10.
(c) The Agent shall have no obligation whatsoever to the
Lenders or to any other Person to assure that the Collateral exists or
is owned by any Borrower or is cared for, protected or insured or that
the Liens granted to the Agent in or pursuant to any of the Collateral
Documents have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular
priority, or to exercise or to continue exercising at all or in any
manner or under any duty of care, disclosure or fidelity any of the
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rights, authorities and powers granted or available to the Agent in
this SECTION 10.10 or in any of the Collateral Documents, it being
understood and agreed that in respect of the Collateral, or any act,
omission or event related thereto, the Agent may act in any manner it
may deem appropriate, in its sole discretion, given the Agent's own
interest in the Collateral as one of the Lenders and that the Agent
shall have no duty or liability whatsoever to the Lenders, except for
its gross negligence or willful misconduct. The Agent agrees to conduct
or cause to be conducted at least one audit of the Collateral during
each year that this Credit Agreement shall remain in effect.
10.11 ACTIONS WITH RESPECT TO DEFAULTS.
---------------------------------
In addition to the Agent's right to take actions on its own accord as
permitted under this Credit Agreement, the Agent shall take such action with
respect to a Default or Event of Default as shall be directed by the Majority
Lenders; PROVIDED, THAT until the Agent shall have received such directions, the
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 and in the best interests of the Lenders.
10.12 DELIVERY OF INFORMATION.
------------------------
The Agent shall not be required to deliver to any Lender originals or
copies of any documents, instruments, notices, communications or other
information received by the Agent from any of the Credit Parties or any
Subsidiary of any of the Credit Parties, the Majority Lenders, any Lender or any
other Person under or in connection with this Credit Agreement or any other
Credit Document except (i) as specifically provided in this Credit Agreement or
any other Credit Document and (ii) as specifically requested from time to time
in writing by any Lender with respect to a specific document, instrument, notice
or other written communication received by and in the possession of the Agent at
the time of receipt of such request and then only in accordance with such
specific request.
ARTICLE 11. MISCELLANEOUS.
--------------
11.1 GOVERNING LAW.
--------------
THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS CREDIT AGREEMENT
AND EACH OF THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED
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IN ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS OF THE STATE OF ILLINOIS,
WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS.
11.2 SUBMISSION TO JURISDICTION.
---------------------------
ALL DISPUTES AMONG THE LENDERS AND THE CREDIT PARTIES (OR THE AGENT OR
HAWK FUNDS ADMINISTRATOR, RESPECTIVELY, ACTING ON THEIR BEHALF), WHETHER
SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE
AND FEDERAL COURTS LOCATED IN CHICAGO, ILLINOIS, AND THE COURTS TO WHICH AN
APPEAL THEREFROM MAY BE TAKEN; PROVIDED, HOWEVER, THAT THE AGENT ON BEHALF OF
THE LENDERS, SHALL HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO
PROCEED AGAINST THE HAWK FUNDS ADMINISTRATOR OR ANY CREDIT PARTY OR THEIR
RESPECTIVE PROPERTIES IN ANY LOCATION REASONABLY SELECTED BY THE AGENT IN GOOD
FAITH TO ENABLE THE AGENT TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER IN FAVOR OF THE AGENT. THE HAWK FUNDS ADMINISTRATOR AND
EACH OF THE OTHER CREDIT PARTIES AGREE THAT NONE OF SUCH PERSONS WILL ASSERT ANY
PERMISSIVE COUNTERCLAIMS, SETOFFS OR CROSS-CLAIMS IN ANY PROCEEDING BROUGHT BY
THE AGENT OR ANY LENDER. THE HAWK FUNDS ADMINISTRATOR AND EACH OF THE OTHER
CREDIT PARTIES WAIVE ANY OBJECTION THAT ANY OF SUCH PERSONS MAY HAVE TO THE
LOCATION OF THE COURT IN WHICH THE AGENT OR ANY LENDER HAS COMMENCED A
PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON FORUM NON CONVENIENS.
11.3 SERVICE OF PROCESS.
-------------------
EACH OF THE HAWK FUNDS ADMINISTRATOR AND THE OTHER CREDIT PARTIES
HEREBY WAIVES PERSONAL SERVICE UPON IT AND, AS ADDITIONAL SECURITY FOR THE
OBLIGATIONS, HEREBY IRREVOCABLY DESIGNATES AND APPOINTS CT CORPORATION SYSTEM,
WITH AN OFFICE ON THE DATE HEREOF AT 000 XXXXX XXXXXXX XXXXXX, XXXXXXX, XXXXXXXX
00000, AND SUCH OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY SUCH PERSON WHICH
IRREVOCABLY AGREE IN WRITING TO SO SERVE AS ITS AGENT, TO RECEIVE ON ITS BEHALF
SERVICE OF ALL PROCESS ISSUED BY ANY COURT IN ANY LEGAL ACTION OR OTHER
PROCEEDING WITH RESPECT TO THIS CREDIT AGREEMENT OR ANY OTHER CREDIT DOCUMENT,
SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY SUCH PERSON TO BE EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT. A COPY OF ANY SUCH PROCESS SO SERVED SHALL BE
MAILED BY REGISTERED MAIL TO THE HAWK FUNDS ADMINISTRATOR AT ITS ADDRESS
PROVIDED HEREIN 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 THE HAWK FUNDS ADMINISTRATOR OR ANY OTHER CREDIT
PARTIES REFUSES TO ACCEPT
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SERVICE, EACH SUCH PERSON HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL
CONSTITUTE SUFFICIENT NOTICE AND EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF AGENT OR ANY LENDER TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR SHALL LIMIT THE RIGHT OF AGENT
OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE HAWK FUNDS ADMINISTRATOR OR ANY
OTHER CREDIT PARTY IN THE COURTS OF ANY OTHER JURISDICTION.
11.4 JURY TRIAL.
-----------
THE HAWK FUNDS ADMINISTRATOR, EACH OF THE OTHER CREDIT PARTIES, THE
AGENT AND THE LENDERS HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY. INSTEAD, ANY
DISPUTES WILL BE RESOLVED IN A BENCH TRIAL.
11.5 LIMITATION OF LIABILITY.
------------------------
NEITHER THE AGENT NOR ANY LENDER SHALL HAVE ANY LIABILITY TO THE HAWK
FUNDS ADMINISTRATOR OR ANY OTHER CREDIT PARTY (WHETHER SOUNDING IN TORT,
CONTRACT, OR OTHERWISE) FOR LOSSES SUFFERED BY ANY SUCH PERSON IN CONNECTION
WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THE TRANSACTIONS OR RELATIONSHIPS
CONTEMPLATED BY THIS CREDIT AGREEMENT, OR ANY OF THE OTHER CREDIT DOCUMENTS, OR
ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS
DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OR COURT ORDER BINDING ON THE
AGENT OR ANY SUCH LENDER, THAT THE LOSSES WERE THE RESULT OF ACTS OR OMISSIONS
CONSTITUTING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
11.6 DELAYS.
-------
No delay or omission of the Agent or the Lenders in exercising any
right or remedy hereunder shall impair any such right or operate as a waiver
thereof.
11.7 NOTICES.
--------
Except as otherwise provided herein, all notices and correspondences
hereunder shall be in writing and sent by certified or registered mail, return
receipt requested, or by overnight delivery service, with all charges prepaid,
if to the Agent or any of the Lenders, then to BT Commercial Corporation, 000
Xxxxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Credit Department, if to
the Hawk Funds Administrator or any other Credit Party, then to Hawk Corporation
at 000 Xxxxxx Xxxxxx, Xxxxx 00-0000, Xxxxxxxxx,
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Ohio 44114-2301, Attention: President, or by facsimile transmission, promptly
confirmed in writing sent by first class mail, if to the Agent, or any of the
Lenders, at (000) 000-0000 and if to the Hawk Funds Administrator or any other
Credit Party at (000) 000-0000. All such notices and correspondence shall be
deemed given (i) if sent by certified or registered mail, three Business Days
after being postmarked, (ii) if sent by overnight delivery service, when
received at the above stated addresses or when delivery is refused and (iii) if
sent by telex or facsimile transmission, when receipt of such transmission is
acknowledged.
11.8 ASSIGNMENTS AND PARTICIPATIONS.
-------------------------------
(a) BORROWER ASSIGNMENT. Neither the Hawk Funds Administrator
nor any of the other Credit Parties shall have any right to assign this
Credit Agreement or any of the other Credit Documents, or any rights or
obligations hereunder or thereunder, without the prior written consent
of the Agent and the Lenders.
(b) LENDER ASSIGNMENTS. Each Lender may assign to one or more
banks or other financial institutions all or a portion of its rights
and obligations under this Credit Agreement, the Revolving Notes and
the other Credit Documents, with the consent of the Agent and, solely
in the case of such assignments to a bank or other financial
institution not disclosed by the Agent to the Hawk Funds Administrator
prior to the Closing Date as a potential assignee, the consent of the
Hawk Funds Administrator (which consent, in the case of the Hawk Funds
Administrator, shall not be unreasonably withheld or delayed); and upon
execution and delivery to the Agent, for its acceptance and recording
in the Register, of an agreement in substantially the form of EXHIBIT G
(an "ASSIGNMENT AND ASSUMPTION AGREEMENT"), together with surrender of
any Revolving Note or Revolving Notes subject to such assignment and a
processing and recordation fee of $2,500, such assignment shall be
effective and ANNEX I hereto shall be deemed to be modified
accordingly. No such assignment shall be for less than $5,000,000 of
the Commitments unless it is to another Lender or is an assignment of
all of such Lender's rights and obligations under this Credit
Agreement. (This Section does not apply to branches and Affiliates of a
Lender, it being understood that a Lender may make, carry or transfer
Revolving Loans at or for the
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account of any of its branch offices or Affiliates without
consent of the Agent.)
(c) AGENT'S REGISTER. The Agent shall maintain a register of
the names and addresses of the Lenders, their Commitments, and the
principal amount of their Revolving Loans (the "REGISTER") at the
address specified for the Agent in SECTION 11.7. The Agent shall also
maintain a copy of each Assignment and Assumption Agreement delivered
to and accepted by it, and modify the Register to give effect to each
Assignment and Assumption Agreement. Upon its receipt of each
Assignment and Assumption Agreement and surrender of the affected
Revolving Note or Revolving Notes, the Agent will give prompt notice
thereof to the Hawk Funds Administrator and deliver to the Hawk Funds
Administrator a copy of the Assignment and Assumption Agreement and the
surrendered Revolving Note or Revolving Notes. Within five Business
Days after its receipt of such notice, the Borrowers shall execute and
deliver to the Agent a substitute Revolving Note or Revolving Notes to
the order of the assignee in the amount of the Commitment or
Commitments assumed by it and to the assignor in the amount of the
Commitment or Commitments retained by it, if any. Such substitute
Revolving Note or Revolving Notes shall re-evidence the Indebtedness
outstanding under the surrendered Revolving Note or Revolving Notes and
shall be dated as of the Closing Date. The Agent shall be entitled to
rely upon the Register exclusively for purposes of identifying the
Lenders hereunder. The Register shall be available for inspection by
the Credit Parties and the Lenders (or any of them) at any reasonable
time and from time to time upon reasonable notice to the Agent.
(d) PARTICIPATIONS. Each Lender may sell participations
(without the consent of the Agent, any Credit Party or any other
Lender) to one or more parties in or to all or a portion of its rights
and obligations under this Credit Agreement, the Revolving Notes and
the other Credit Documents. Notwithstanding a Lender's sale of a
participation interest, its obligations hereunder shall remain
unchanged. The Credit Parties, the Agent, and the other Lenders shall
continue to deal solely and directly with such Lender. No participant
shall have rights to approve any amendment or waiver of this Credit
Agreement or any of the other Credit Documents except to the extent
such amendment or waiver would (i) increase the participant's
obligation in respect of the Commitment of the
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Lender from whom the participant purchased its participation interest;
(ii) reduce the principal of, or stated rate or amount of interest on,
the Revolving Loans subject to such participation, (iii) postpone any
maturity date fixed for final payment of principal of the Revolving
Loans subject to the participation interest, and (iv) release any
guarantor of the Obligations or all or a substantial portion of the
Collateral, other than when otherwise permitted hereunder.
11.9 CONFIDENTIALITY.
----------------
Each Lender agrees that it will not disclose to any Person, without the
prior consent of the Hawk Funds Administrator, any information with respect to
any of the Credit Parties or any Subsidiary of any of the Credit Parties which
is furnished pursuant to this Credit Agreement and which is designated by the
respective Credit Parties to the Lenders in writing as confidential, PROVIDED,
THAT, each Lender may disclose any such information (a) to its employees,
auditors, or counsel, or to another Lender if the disclosing Lender or such
disclosing Lender's holding or parent company in its sole discretion determines
that any such party should have access to such information, (b) as has become
generally available to the public, (c) as may be required in any report,
statement or testimony submitted to any Governmental Authority having or
claiming to have jurisdiction over such Lender, (d) as may be required or
appropriate in response to any summons or subpoena or in connection with any
litigation, (e) in order to comply with any Requirement of Law, and (f) to any
actual or prospective transferee or participant, PROVIDED, FURTHER, that in each
such case, prior to such disclosure such prospective or actual transferee or
participant has agreed to preserve the confidentiality of such information on
terms substantially similar to those set forth in the SECTION 11.9 or on terms
otherwise satisfactory to the Hawk Funds Administrator. The Agent and each of
the Lenders acknowledge that the Credit Parties have designated the respective
information to be provided pursuant to SECTIONS 7.1(c) and 7.1(e) as
confidential.
11.10 INDEMNIFICATION.
----------------
The Borrowers hereby jointly and severally indemnify and agree to defend
and hold harmless the Agent and each of the Lenders and their respective
directors, officers, agents, employees and counsel from and against any and all
losses, claims, damages, liabilities, deficiencies, judgments or expenses
incurred by any of them (except
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to the extent that it is finally judicially determined to have resulted from
their own gross negligence or willful misconduct) arising out of or by reason of
(a) any litigations, investigations, claims or proceedings which arise out of or
are in any way related to (i) this Credit Agreement or the transactions
contemplated hereby, (ii) the issuance of the Letters of Credit, (iii) the
failure of the Issuing Bank to honor a drawing under any Letter of Credit, as a
result of any act or omission, whether rightful or wrongful, of any present or
future de jure or de facto government or Governmental Authority, (iv) any actual
or proposed use by any Borrower of the proceeds of the Revolving Loans or (v)
the Agent's or the Lenders' entering into this Credit Agreement, the other
Credit Documents or any other agreements and documents relating hereto,
including, without limitation, amounts paid in settlement, court costs and the
fees and disbursements of counsel incurred in connection with any such
litigation, investigation, claim or proceeding or any advice rendered in
connection with any of the foregoing and (b) any remedial or other action taken
by any of the Borrowers or any of the Lenders in connection with compliance by
any of the Borrowers or any Subsidiary of any of the Borrowers, or any of their
respective properties, with any federal, state or local environmental laws,
acts, rules, regulations, orders, directions, ordinances, criteria or
guidelines.
11.11 AMENDMENTS AND WAIVERS.
-----------------------
No amendment or waiver of any provision of this Credit Agreement, any
part of SCHEDULE B, or any other Credit Document shall be effective unless in
writing and signed by the Majority Lenders (or by the Agent on their behalf),
except that:
(a) the consent of all the Lenders is required to (i) increase
the Commitments, (ii) reduce the principal of, or interest on, any
Revolving Note, any Letter of Credit reimbursement obligations or any
Fees hereunder (other than Fees that are exclusively for the account of
the Agent), (iii) postpone any date fixed for any payment in respect of
principal of, or interest on, any Revolving Note, any Letter of Credit
reimbursement obligations or any Fees hereunder, (iv) change the
percentage of the Commitments, or any minimum requirement necessary for
the Lenders or the Majority Lenders to take any action hereunder, (v)
amend or waive this SECTION 11.11(a), or change the definition of
Majority Lenders or (vi) except as otherwise expressly provided in this
Credit Agreement, and other than in connection with the financing,
refinancing, sale
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or other disposition of any asset of a Borrower permitted under this
Credit Agreement, release any Liens in favor of the Agent on any of the
Collateral; and
(b) the consent of the Agent shall be required for any
amendment, waiver or consent affecting the rights or duties of the Agent
under any Credit Document, in addition to the consent of the Lenders
otherwise required by this Section.
Neither the consent of the Hawk Funds Administrator nor any other Credit
Party shall be required for any amendment, modification or waiver of the
provisions of ARTICLE 10 (other than SECTION 10.9). The Hawk Funds
Administrator, the other Credit Parties and the Lenders each hereby authorize
the Agent to modify this Credit Agreement by unilaterally amending or
supplementing ANNEX I to reflect assignments of the Commitments. Notwithstanding
the foregoing, the Credit Parties may amend SCHEDULE B, PARTS 6.1, 6.10 and
6.14, without the consent of the Majority Lenders.
11.12 COUNTERPARTS AND EFFECTIVENESS.
-------------------------------
This Credit Agreement and any waiver or amendment hereto may be executed
in any number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. This
Credit Agreement shall become effective on the date on which all of the parties
hereto shall have signed a copy hereof (whether the same or different copies)
and shall have delivered the same to the Agent.
11.13 SEVERABILITY.
-------------
In case any provision in or obligation under this Credit Agreement, the
Revolving Notes or any of the other Credit Documents shall be invalid, illegal
or unenforceable in any jurisdiction, the validity, legality and enforceability
of the remaining provisions or obligations, or of such provision or obligation
in any other jurisdiction, shall not in any way be affected or impaired thereby.
11.14 MAXIMUM RATE.
-------------
Notwithstanding anything to the contrary contained elsewhere in this
Credit Agreement or in any other Credit Document, the Borrowers, the Agent, and
the Lenders hereby agree that all agreements among them under this Credit
Agreement and the other Credit Documents, whether now existing or hereafter
arising and whether written or oral, are expressly limited so that in no
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contingency or event whatsoever shall the amount paid, or agreed to be paid, to
the Agent or any Lender for the use, forbearance, or detention of the money
loaned to the Borrowers and evidenced hereby or thereby or for the performance
or payment of any covenant or obligation contained herein or therein, exceed the
Highest Lawful Rate. If due to any circumstance whatsoever, fulfillment of any
provisions of this Credit Agreement or any of the other Credit Documents at the
time performance of such provision shall be due shall exceed the Highest Lawful
Rate, then, automatically, the obligation to be fulfilled shall be modified or
reduced to the extent necessary to limit such interest to the Highest Lawful
Rate, and if from any such circumstance any Lender should ever receive anything
of value deemed interest by applicable law which would exceed the Highest Lawful
Rate, such excessive interest shall be applied pursuant to the terms hereof to
the reduction of the principal amount then outstanding hereunder or on account
of any other then outstanding Obligations and not to the payment of interest, or
if such excessive interest exceeds the principal unpaid balance then outstanding
hereunder and such other then outstanding Obligations, such excess shall be
refunded to the Borrowers. All sums paid or agreed to be paid to the Agent or
any Lender for the use, forbearance, or detention of the Obligations and other
Indebtedness of the Borrowers to the Agent or any Lender, to the extent
permitted by applicable law, shall be amortized, prorated, allocated and spread
throughout the full term of such Indebtedness, until payment in full thereof, so
that the actual rate of interest on account of all such Indebtedness does not
exceed the Highest Lawful Rate throughout the entire term of such Indebtedness.
The terms and provisions of this SECTION 11.14 shall control over every other
provision of this Credit Agreement, the other Credit Documents, and all
agreements among the Borrower, the Agent and the Lenders.
11.15 ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS.
-----------------------------------------
This Credit Agreement and the other Credit Documents constitute the
entire agreement among the Credit Parties, the Agent and the Lenders, supersede
any prior agreements among them, and shall bind and benefit each of such Persons
and their respective successors and permitted assigns.
11.16 JOINT AND SEVERAL LIABILITY OF BORROWERS.
-----------------------------------------
Each of the Borrowers shall be jointly and severally liable hereunder
and under each of the other Credit Documents with respect
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to all Obligations, regardless of which of the Borrowers actually receives the
proceeds of the Revolving Loans or the benefit of any other extensions of credit
hereunder, or the manner in which the Hawk Funds Administrator, the Borrowers,
the Agent or the Lenders account therefor in their respective books and records.
Notwithstanding the foregoing, (a) each Borrower's obligations and liabilities
with respect to proceeds of Revolving Loans which it receives or Letters of
Credit issued for its account, and related fees, costs and expenses, and (b)
each Borrower's obligations and liabilities arising as a result of the joint and
several liability of the Borrowers hereunder with respect to proceeds of
Revolving Loans received by, or Letters of Credit issued for the account of, any
of the other Borrowers, together with the related fees, costs and expenses,
shall be separate and distinct obligations, both of which are primary
obligations of such Borrower. Neither the joint and several liability of, nor
the Liens granted to the Agent under the Collateral Documents by, any of the
Borrowers shall be impaired or released by any action or inaction on the part of
the Agent or any Lender, or any other event or condition with respect to any
other Borrower, including any such action or inaction or other event or
condition, which might otherwise constitute a defense available to, or a
discharge of, such Borrower, or a guarantor or surety of or for any or all of
the Obligations.
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IN WITNESS WHEREOF, the respective parties hereto have caused this
Credit Agreement to be executed and delivered by their duly authorized officers
as of the date first set forth above.
HAWK CORPORATION, a Delaware
corporation, individually and in its
capacity as Hawk Funds Administrator
By: _______________________________
Name: _____________________________
Title: ____________________________
Credit Agreement
99
BORROWERS:
FRICTION PRODUCTS CO.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxxx
-----------------------------
Title: Vice President-Finance
----------------------------
HAWK BRAKE, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxxx
-----------------------------
Title: Vice President-Finance
----------------------------
XXXXXX, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxxx
-----------------------------
Title: Vice President-Finance
----------------------------
XXXXXXXXXX PRODUCTS CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxxx
-----------------------------
Title: Vice President-Finance
----------------------------
XXXXX METAL STAMPINGS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxxx
-----------------------------
Title: Vice President-Finance
----------------------------
Credit Agreement
100
X.X. XXXXXXX HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxxx
-----------------------------
Title: Vice President-Finance
----------------------------
X.X. XXXXXXX CORP.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxxx
-----------------------------
Title: Vice President-Finance
----------------------------
XXXXXXX FRICTION PRODUCTS U.K. CORP.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxxx
-----------------------------
Title: Vice President-Finance
----------------------------
Credit Agreement
101
BT COMMERCIAL CORPORATION,
individually and in its
capacity as Agent
By: /S/ Xxxxx X. Xxxxxxx
-----------------------------------
Xxxxx X. Xxxxxxx
Senior Vice President
Credit Agreement
102
ANNEX I
TO
CREDIT AGREEMENT
DATED AS OF NOVEMBER 27, 1996
LIST OF LENDERS; COMMITMENT
AMOUNTS; APPLICABLE LENDING OFFICES
1. BT COMMERCIAL CORPORATION
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
COMMITMENT AMOUNT: $25,000,000
DOMESTIC LENDING OFFICE: 000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
LIBOR LENDING OFFICE: 000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Credit Agreement
