Exhibit 10.21
[Execution]
LOAN AND SECURITY AGREEMENT
by and among
C&D TECHNOLOGIES, INC.
C&D TECHNOLOGIES (DATEL), INC.
C&D TECHNOLOGIES (CPS) LLC
as Borrowers
and
C&D CHARTER HOLDINGS, INC.
C&D DYNAMO CORP.
DYNAMO ACQUISITION CORP.
C&D INTERNATIONAL INVESTMENT HOLDINGS INC.
DATEL HOLDING CORPORATION
as Guarantors
THE LENDERS AND ISSUING BANK FROM TIME TO TIME PARTY HERETO
WACHOVIA BANK, NATIONAL ASSOCIATION
as Administrative Agent
WACHOVIA CAPITAL MARKETS, LLC
as Sole Lead Arranger, Manager and Bookrunner
Dated: December 7, 2005
TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS....................................................................................1
SECTION 2. CREDIT FACILITIES..............................................................................31
2.1 Loans..............................................................................................31
2.2 Letters of Credit..................................................................................32
2.3 Mandatory Prepayments..............................................................................35
2.4 Commitments........................................................................................37
2.5 Joint and Several Liability........................................................................37
SECTION 3. INTEREST AND FEES..............................................................................38
3.1 Interest...........................................................................................38
3.2 Fees...............................................................................................40
3.3 Changes in Laws and Increased Costs of Loans.......................................................41
SECTION 4. CONDITIONS PRECEDENT...........................................................................43
4.1 Conditions Precedent to Initial Loans and Letters of Credit........................................43
4.2 Conditions Precedent to All Loans and Letters of Credit............................................46
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST......................................................46
5.1 Grant of Security Interest.........................................................................46
5.2 Perfection of Security Interests...................................................................48
SECTION 6. COLLECTION AND ADMINISTRATION..................................................................52
6.1 Borrowers' Loan Accounts...........................................................................52
6.2 Statements.........................................................................................52
6.3 Collection of Accounts.............................................................................52
6.4 Payments...........................................................................................54
6.5 Taxes..............................................................................................55
6.6 Authorization to Make Loans........................................................................57
6.7 Use of Proceeds....................................................................................58
6.8 Appointment of Administrative Borrower as Agent for Requesting
Loans and Receipts of Loans and Statements.........................................................58
6.9 Pro Rata Treatment.................................................................................59
6.10 Sharing of Payments, Etc..........................................................................59
6.11 Settlement Procedures.............................................................................60
6.12 Obligations Several; Independent Nature of Lenders' Rights........................................62
6.13 Bank Products.....................................................................................62
SECTION 7. COLLATERAL REPORTING AND COVENANTS.............................................................63
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7.1 Collateral Reporting...............................................................................63
7.2 Accounts Covenants.................................................................................64
7.3 Inventory Covenants................................................................................65
7.4 Equipment and Real Property Covenants..............................................................65
7.5 Power of Attorney..................................................................................66
7.6 Right to Cure......................................................................................67
7.7 Access to Premises.................................................................................67
SECTION 8. REPRESENTATIONS AND WARRANTIES.................................................................67
8.1 Corporate Existence, Power and Authority...........................................................67
8.2 Name; State of Organization; Chief Executive Office; Collateral Locations..........................68
8.3 Financial Statements; No Material Adverse Change...................................................68
8.4 Priority of Liens; Title to Properties.............................................................69
8.5 Tax Returns........................................................................................69
8.6 Litigation.........................................................................................69
8.7 Compliance with Other Agreements and Applicable Laws...............................................70
8.8 Environmental Compliance...........................................................................70
8.9 Employee Benefits..................................................................................71
8.10 Bank Accounts.....................................................................................71
8.11 Intellectual Property.............................................................................72
8.12 Subsidiaries; Affiliates; Capitalization; Solvency................................................72
8.13 Labor Disputes....................................................................................73
8.14 Restrictions on Subsidiaries......................................................................73
8.15 Material Contracts................................................................................73
8.16 Payable Practices.................................................................................74
8.17 Interrelated Businesses...........................................................................74
8.18 Accuracy and Completeness of Information..........................................................74
8.19 Survival of Warranties; Cumulative................................................................74
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS.............................................................74
9.1 Maintenance of Existence...........................................................................74
9.2 New Collateral Locations...........................................................................75
9.3 Compliance with Laws, Regulations, Etc.............................................................75
9.4 Payment of Taxes and Claims........................................................................76
9.5 Insurance..........................................................................................77
9.6 Financial Statements and Other Information.........................................................77
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc............................................80
9.8 Encumbrances.......................................................................................83
9.9 Indebtedness.......................................................................................84
9.10 Loans, Investments, Etc...........................................................................91
9.11 Restricted Payments...............................................................................92
9.12 Transactions with Affiliates......................................................................93
9.13 Compliance with ERISA.............................................................................93
9.14 End of Fiscal Years; Fiscal Quarters..............................................................94
9.15 Change in Business................................................................................94
9.16 Limitation of Restrictions Affecting Subsidiaries.................................................94
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9.17 Fixed Charge Coverage Ratio.......................................................................95
9.18 License Agreements................................................................................95
9.19 Foreign Assets Control Regulations, Etc...........................................................96
9.20 Certain Other Real Property.......................................................................96
9.21 Costs and Expenses................................................................................97
9.22 Further Assurances................................................................................97
SECTION 10. EVENTS OF DEFAULT AND REMEDIES................................................................97
10.1 Events of Default.................................................................................97
10.2 Remedies..........................................................................................97
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS.............................................................100
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver............................103
11.2 Waiver of Notices................................................................................105
11.3 Amendments and Waivers...........................................................................105
11.4 Waiver of Counterclaims..........................................................................107
11.5 Indemnification..................................................................................107
11.6 Currency Indemnity...............................................................................108
SECTION 12. THE AGENT....................................................................................109
12.1 Appointment, Powers and Immunities...............................................................109
12.2 Reliance by Agent................................................................................109
12.3 Events of Default................................................................................109
12.4 Wachovia in Its Individual Capacity..............................................................110
12.5 Indemnification..................................................................................110
12.6 Non-Reliance on Agent and Other Lenders..........................................................111
12.7 Failure to Act...................................................................................111
12.8 Additional Loans.................................................................................111
12.9 Concerning the Collateral and the Related Financing Agreements...................................112
12.10 Field Audit, Examination Reports and Other Information; Disclaimer by Lenders...................112
12.11 Collateral Matters..............................................................................112
12.12 Agency for Perfection...........................................................................114
12.13 Successor Agent.................................................................................115
12.14 Other Agent Designations........................................................................115
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS.............................................................115
13.1 Term.............................................................................................115
13.2 Interpretative Provisions........................................................................116
13.3 Notices..........................................................................................118
13.4 Partial Invalidity...............................................................................119
13.5 Confidentiality..................................................................................119
13.6 Successors.......................................................................................120
13.7 Assignments; Participations......................................................................120
13.8 Entire Agreement.................................................................................122
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13.9 USA Patriot Act..................................................................................123
13.10 Counterparts, Etc...............................................................................123
v
INDEX
TO
EXHIBITS AND SCHEDULES
Exhibit A Form of Assignment and Acceptance
Exhibit B Information Certificate
Exhibit C Form of Compliance Certificate
Schedule 1.41 EBITDA Adjustments
Schedule 1.57 Existing Lenders
Schedule 1.58 Existing Letters of Credit
Schedule 1.139 Term Loan Documents
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LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated December 7, 2005 is entered into by
and among C&D Technologies, Inc., a Delaware corporation ("Parent"), C&D
Technologies (Datel), Inc., a Delaware corporation ("Datel"), C&D Technologies
(CPS) LLC, a Delaware limited liability company ("CPS, and together with Parent
and Datel, each individually a "Borrower" and collectively, "Borrowers" as
hereinafter further defined), C&D Charter Holdings, Inc., a Delaware corporation
("Charter"), C&D Dynamo Corp., a Delaware corporation ("Dynamo"), Dynamo
Acquisition Corp., a Delaware corporation ("Acquisition"), C&D International
Investment Holdings Inc., a Delaware corporation ("International") and Datel
Holding Corporation, a Delaware corporation ("Datel Holding", and together with
Charter, Dynamo, Acquisition and International, each individually a "Guarantor"
and collectively, "Guarantors" as hereinafter further defined), the parties
hereto from time to time as lenders, whether by execution of this Agreement or
an Assignment and Acceptance (each individually, a "Lender" and collectively,
"Lenders" as hereinafter further defined) and Wachovia Bank, National
Association, a national banking association, in its capacity as agent for
Lenders (in such capacity, "Agent" as hereinafter further defined).
W I T N E S S E T H:
WHEREAS, Borrowers and Guarantors have requested that Agent and Lenders
enter into financing arrangements with Borrowers pursuant to which Lenders may
make loans and provide other financial accommodations to Borrowers; and
WHEREAS, each Lender is willing to agree (severally and not jointly) to
make such loans and provide such financial accommodations to Borrowers on a pro
rata basis according to its Commitment (as defined below) on the terms and
conditions set forth herein and Agent is willing to act as agent for Lenders on
the terms and conditions set forth herein and the other Financing Agreements;
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
1.1 "Accounts" shall mean, as to each Borrower and Guarantor, all present
and future rights of such Borrower and Guarantor to payment of a monetary
obligation, whether or not earned by performance, which is not evidenced by
chattel paper or an instrument, (a) for property that has been or is to be sold,
leased, licensed, assigned, or otherwise disposed of, (b) for services rendered
or to be rendered, (c) for a secondary obligation incurred or to be incurred, or
(d) arising out of the use of a credit or charge card or information contained
on or for use with the card.
1.2 "Adjusted Eurodollar Rate" shall mean, with respect to each Interest
Period for any Eurodollar Rate Loan comprising part of the same borrowing
(including conversions, extensions and renewals), the rate per annum determined
by dividing (a) the London Interbank Offered Rate for such Interest Period by
(b) a percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For
purposes hereof, "Reserve Percentage" shall mean for any day, that percentage
(expressed as a decimal) which is in effect from time to time under Regulation D
of the Board of Governors of the Federal Reserve System (or any successor), as
such regulation may be amended from time to time or any successor regulation, as
the maximum reserve requirement (including, without limitation, any basic,
supplemental, emergency, special, or marginal reserves) applicable with respect
to Eurocurrency liabilities as that term is defined in Regulation D (or against
any other category of liabilities that includes deposits by reference to which
the interest rate of Eurodollar Loans is determined), whether or not any Lender
has any Eurocurrency liabilities subject to such reserve requirement at that
time. Eurodollar Loans shall be deemed to constitute Eurocurrency liabilities
and as such shall be deemed subject to reserve requirements without benefits of
credits for proration, exceptions or offsets that may be available from time to
time to a Lender. The Adjusted Eurodollar Rate shall be adjusted automatically
on and as of the effective date of any change in the Reserve Percentage.
1.3 "Administrative Borrower" shall mean C&D Technologies, Inc., a
Delaware corporation in its capacity as Administrative Borrower on behalf of
itself and the other Borrowers pursuant to Section 6.8 hereof and it successors
and assigns in such capacity.
1.4 "Affiliate" shall mean, with respect to a specified Person, any other
Person which directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with such Person, and
without limiting the generality of the foregoing, includes (a) any Person which
beneficially owns or holds five (5%) percent or more of any class of Voting
Stock of such Person or other equity interests in such Person, (b) any Person of
which such Person beneficially owns or holds five (5%) percent or more of any
class of Voting Stock or in which such Person beneficially owns or holds five
(5%) percent or more of the equity interests and (c) any director or executive
officer of such Person. For the purposes of this definition, the term "control"
(including with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of Voting
Stock, by agreement or otherwise.
1.5 "Agent" shall mean Wachovia Bank, National Association, in its
capacity as agent on behalf of Lenders pursuant to the terms hereof and any
replacement or successor agent hereunder.
1.6 "Agent Payment Account" shall mean account no. 5000000030279 of Agent
at Wachovia, or such other account of Agent as Agent may from time to time
designate to Administrative Borrower as the Agent Payment Account for purposes
of this Agreement and the other Financing Agreements.
1.7 "Applicable L/C Rate" shall mean the applicable percentage set forth
under the heading "Applicable L/C Rate" in the table contained in the definition
of "Applicable Margin".
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1.8 "Applicable Margin" shall mean, at any time, as to the Interest Rate
for Prime Rate Loans and the Interest Rate for Eurodollar Rate Loans, the
applicable percentage (on a per annum basis) set forth below if the Quarterly
Average Excess Availability for the immediately preceding calendar quarter is at
or within the amounts indicated for such percentage:
----------------------------------------------------------------------------------------------------------------
Applicable
Applicable Margin for
Quarterly Average Margin for Eurodollar Rate Applicable L/C
Excess Availability Prime Rate Loans Loans Rate
----------------------------------------------------------------------------------------------------------------
Tier 1 Greater than $45,000,000 0% 1.50% 1.50%
----------------------------------------------------------------------------------------------------------------
Tier 2 Less than or equal to $45,000,000 and .25% 1.75% 1.75%
greater than $35,000,000
----------------------------------------------------------------------------------------------------------------
Tier 3 Less than or equal to $35,000,000 and .50% 2.00% 2.00%
greater than $25,000,000
----------------------------------------------------------------------------------------------------------------
Tier 4 Less than or equal to $25,000,000 .75% 2.25% 2.25%
----------------------------------------------------------------------------------------------------------------
provided, that, (i) the Applicable Margin shall be calculated and established
once each calendar quarter and shall remain in effect until adjusted thereafter
after the end of such calendar quarter, (ii) each adjustment of the Applicable
Margin shall be effective as of the first day of a calendar quarter based on the
Quarterly Average Excess Availability for the immediately preceding calendar
quarter, and (iii) the Applicable Margin for the first two (2) full calendar
quarters after the date hereof shall be the amount for Tier 2 set forth above.
1.9 "Assignment and Acceptance" shall mean an Assignment and Acceptance
substantially in the form of Exhibit A attached hereto (with blanks
appropriately completed) delivered to Agent in connection with an assignment of
a Lender's interest hereunder in accordance with the provisions of Section 13.7
hereof.
1.10 "Availability Block" shall mean $10,000,000; provided, that, (a) on
and after the receipt by Agent of the deliveries referred to in Section
9.6(a)(ii) hereof with respect to the fiscal month of Borrowers ending March 31,
2006, in accordance with such Section 9.6(ii) and (b) as of the date of such
deliveries no Default or Event of Default shall exist or have occurred and be
continuing, the Availability Block shall be zero ($0).
1.11 "Bank Product Provider" shall mean any Lender, Affiliate of any
Lender or other financial institution (in each case as to any Lender, Affiliate
or other financial institution to the extent approved by Agent) that provides
any Bank Products to Borrowers or Guarantors.
1.12 "Bank Products" shall mean any one or more of the following types or
services or facilities provided to a Borrower by Agent or a Bank Product
Provider: (a) credit cards or stored value cards or (b) cash management or
related services, including (i) the automated clearinghouse transfer of funds
for the account of a Borrower pursuant to agreement or overdraft for any
accounts of Borrowers maintained at Agent or any Bank Product Provider that are
subject to the control of Agent pursuant to any Deposit Account Control
Agreement to which Agent, such Affiliate of Agent, Lender or Affiliate of Lender
is a party, as applicable, and (ii) controlled disbursement services and (iii)
Hedge Agreements if and to the extent permitted hereunder. Any of the foregoing
shall only be included in the definition of the term "Bank
3
Products" to the extent that the Lender, its Affiliate or the other financial
institution has been approved by Agent.
1.13 "Blocked Accounts" shall have the meaning set forth in Section 6.3
hereof.
1.14 "Borrowers" shall mean, collectively, the following (together with
their respective successors and assigns): (a) C&D Technologies, Inc., a Delaware
corporation; (b) C&D Technologies (Datel), Inc., a Delaware corporation; (c) C&D
Technologies (CPS) LLC, a Delaware limited liability company ("CPS") and (d) any
other Person that at any time after the date hereof becomes a Borrower; each
sometimes being referred to herein individually as a "Borrower".
1.15 "Borrowing Base" shall mean, at any time, the amount equal to:
(a) the amount equal to:
(i) eighty-five (85%) percent of the Eligible Accounts, plus
(ii) the lesser of
(A) the Inventory Loan Limit or
(B) the sum of:
(1) the lesser of seventy (70%) percent multiplied
by the Value of the Eligible Inventory consisting of finished goods or ninety
(90%) percent of the Net Recovery Percentage multiplied by the Value of such
Eligible Inventory, plus
(2) the lesser of twenty (20%) percent multiplied
by the Value of the Eligible Inventory consisting of raw materials or ninety
(90%) percent of the Net Recovery Percentage multiplied by the Value of such
Inventory, plus
(iii) Equipment Availability, minus
(b) Reserves.
For purposes only of applying the Inventory Loan Limit, Agent may treat the then
undrawn amounts of outstanding Letters of Credit for the purpose of purchasing
Eligible Inventory as Loans to the extent Agent is in effect basing the issuance
of the Letter of Credit on the Value of the Eligible Inventory being purchased
with such Letter of Credit. In determining the actual amounts of such Letter of
Credit to be so treated for purposes of the Inventory Loan Limit, the
outstanding Loans and Reserves shall be attributed first to any components of
the lending formulas set forth above that are not subject to such sublimit,
before being attributed to the components of the lending formulas subject to
such sublimit. The amounts of Eligible Inventory shall, at Agent's option, be
determined based on the lesser of the amount of Inventory set forth in the
general ledger of Borrowers or the perpetual inventory record maintained by
Borrowers.
1.16 "Business Day" shall mean any day other than a Saturday, Sunday, or
other day on which commercial banks are authorized or required to close under
the laws of the State of New
4
York or the State of North Carolina, and a day on which Agent is open for the
transaction of business, except that if a determination of a Business Day shall
relate to any Eurodollar Rate Loans, the term Business Day shall also exclude
any day on which banks are closed for dealings in dollar deposits in the London
interbank market or other applicable Eurodollar Rate market.
1.17 "Canadian Dollars" and "C$" shall each mean the lawful currency of
Canada.
1.18 "Canadian Pension Plan" shall mean any plan, program or arrangement
(other than the Canada/Quebec Pension Plan) that is a pension plan for the
purposes of any applicable pension benefits legislation or any tax laws of
Canada or a Province or Territory thereof, whether or not registered under any
such laws, which is maintained or contributed to by, or to which there is or may
be an obligation to contribute by, any Borrower or Guarantor in respect of any
Person's employment in Canada with such Borrower or Guarantor.
1.19 "Capital Expenditures" shall mean, with respect to any Person, all
expenditures made and liabilities incurred for the acquisition of assets which
are not, in accordance with GAAP, treated as expense items for such Person in
the year made or incurred or as a prepaid expense applicable to a future year or
years.
1.20 "Capital Leases" shall mean, as applied to any Person, any lease of
(or any agreement conveying the right to use) any property (whether real,
personal or mixed) by such Person as lessee which in accordance with GAAP, is
required to be reflected as a liability on the balance sheet of such Person.
1.21 "Capital Stock" shall mean, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
such Person's capital stock or partnership, limited or unlimited liability
company or other equity interests at any time outstanding, and any and all
rights, warrants or options exchangeable for or convertible into such capital
stock or other interests (but excluding any debt security that is exchangeable
for or convertible into such capital stock).
1.22 "Cash Dominion Event" shall mean that (a) a Default or Event of
Default shall exist or have occurred and be continuing or (b) Excess
Availability shall be less than $20,000,000 for any three (3) consecutive days.
1.23 "Cash Dominium Termination" shall mean, after the occurrence of a
Cash Dominion Event, that Excess Availability is equal to or greater than
$20,000,000 for each of ninety (90) consecutive days and no Default or Event of
Default shall exist or have occurred and be continuing at any time during such
period of ninety (90) consecutive days and including the last day of such
period.
1.24 "Cash Equivalents" shall mean, at any time, (a) any evidence of
Indebtedness with a maturity date of ninety (90) days or less issued or directly
and fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof or the Government of Canada or any province thereof;
provided, that, the full faith and credit of the United States of America or the
Government of Canada or any province thereof, as the case may be, is pledged in
support thereof; (b) certificates of deposit or bankers' acceptances with a
maturity of ninety (90) days or less of any financial institution that is a
member of the Federal Reserve System or any
5
Canadian chartered bank and rated A (or the then equivalent grade) or better by
U.S. rating agency or Dominion, Bond Rating Service Limited, as applicable,
having combined capital and surplus and undivided profits of not less than
$1,000,000,000; (c) commercial paper (including variable rate demand notes) with
a maturity of ninety (90) days or less issued by a corporation (except an
Affiliate of any Borrower or Guarantor) organized under the laws of any State of
the United States of America, the District of Columbia or a province of Canada
and rated at least A-1 by Standard & Poor's Ratings Service, a division of The
XxXxxx-Xxxx Companies, Inc. or at least P-1 by Xxxxx'x Investors Service, Inc.;
(d) repurchase obligations with a term of not more than thirty (30) days for
underlying securities of the types described in clause (a) above entered into
with any financial institution having combined capital and surplus and undivided
profits of not less than $1,000,000,000; (e) repurchase agreements and reverse
repurchase agreements relating to marketable direct obligations issued or
unconditionally guaranteed by the United States of America or issued by any
governmental agency thereof and backed by the full faith and credit of the
United States of America or by the Government of Canada or any province thereof,
in each case maturing within ninety (90) days or less from the date of
acquisition; provided, that, the terms of such agreements comply with the
guidelines set forth in the Federal Financial Agreements of Depository
Institutions with Securities Dealers and Others, as adopted by the Comptroller
of the Currency on October 31, 1985; and (f) investments in money market funds
and mutual funds which invest substantially all of their assets in securities of
the types described in clauses (a) through (e) above.
1.25 "Change of Control" shall mean (a) the transfer (in one transaction
or a series of transactions) of all or substantially all of the assets of any
Borrower or Guarantor to any Person or group (as such term is used in Section
13(d)(3) of the Exchange Act), other than as permitted in Section 9.7 hereof;
(b) the liquidation or dissolution of any Borrower or Guarantor or the adoption
of a plan by the stockholders of any Borrower or Guarantor relating to the
dissolution or liquidation of such Borrower or Guarantor, other than as
permitted in Section 9.7 hereof; (c) the acquisition by any Person or group (as
such term is used in Section 13(d)(3) of the Exchange Act) of more than forty
(40%) percent of beneficial ownership, directly or indirectly, of the voting
power of the total outstanding Voting Stock of Parent or the Board of Directors
of Parent; (d) during any period of two (2) consecutive years, individuals who
at the beginning of such period constituted the Board of Directors of Parent
(together with any new directors whose nomination for election by the
stockholders of Parent was approved by a vote of at least a majority of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of Parent then still in office; or (e) the failure of Parent to own
directly or indirectly one hundred (100%) percent of the voting power of the
total outstanding Voting Stock of any other Borrower or Guarantor.
1.26 "Code" shall mean the Internal Revenue Code of 1986, as the same now
exists or may from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.27 "Collateral" shall have the meaning set forth in Section 5 hereof.
1.28 "Collateral Access Agreement" shall mean an agreement in writing, in
form and substance reasonably satisfactory to Agent, from any lessor of premises
to any Borrower or Guarantor, or any other person to whom any Collateral is
consigned or who has custody, control
6
or possession of any such Collateral or is otherwise the owner or operator of
any premises on which any of such Collateral is located, in favor of Agent and
Term Loan Agent with respect to the Collateral at such premises or otherwise in
the custody, control or possession of such lessor, consignee or other person.
1.29 "Commitment" shall mean, at any time, as to each Lender, the
principal amount set forth below such Lender's signature on the signatures pages
hereto designated as the Commitment or on Schedule 1 to the Assignment and
Acceptance Agreement pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of Section 13.7 hereof, as the same may be
adjusted from time to time in accordance with the terms hereof; sometimes being
collectively referred to herein as "Commitments".
1.30 "Consolidated Net Income" shall mean, with respect to any Person for
any period, the aggregate of the net income (loss) of such Person, for such
period (excluding to the extent included therein any extraordinary and/or one
time or unusual and non-recurring gains (including any gains resulting from the
sale or disposition of Inventory the value of which was written down on the
books of such Person prior to such sale or disposition and which has previously
been added back to EBITDA) or any non-cash losses) after deducting all charges
which should be deducted before arriving at the net income (loss) for such
period and, without duplication, after deducting the Provision for Taxes for
such period, all as determined in accordance with GAAP. For the purposes of this
definition, net income excludes any gain or non-cash loss, together with any
related Provision for Taxes for such gain or non-cash loss, realized upon the
sale or other disposition of any assets that are not sold in the ordinary course
of business (including, without limitation, dispositions pursuant to sale and
leaseback transactions) or of any Capital Stock of such Person and any net
income realized or loss incurred as a result of changes in accounting principles
or the application thereof to such Person.
1.31 "Convertible Note Documents" shall mean, collectively, the
Convertible Note Indenture, the Convertible Notes and any agreements, documents
or instruments executed and delivered in connection therewith.
1.32 "Convertible Note Indenture" shall mean the Indenture, dated as of
November 21, 2005, by and between C&D Technologies, Inc. and The Bank of New
York, as Trustee, with respect to 5.25% Convertible Notes Due November 1, 2025
in the aggregate principal amount of $75,000,000, as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
1.33 "Convertible Notes" shall mean, collectively, the 5.25% Convertible
Notes due November 1, 2025 issued by Parent pursuant to the Convertible Note
Indenture.
1.34 "Credit Facility" shall mean the Loans and Letters of Credit provided
to or for the benefit of any Borrower pursuant to Sections 2.1 and 2.2 hereof.
1.35 "Currency Exchange Convention" shall mean in the calculation of the
US Dollar Equivalent, a procedure used by Agent or a Lender to value in US
Dollars (a) the obligations or assets of any Borrower or Guarantor that are
originally measured in Canadian Dollars or any other currency and (b) any other
amount expressed in Canadian Dollars or any other currency,
7
other than US Dollars, in each case by using the Exchange Rate for the purchase
of US Dollars with Canadian Dollars or such other currency, as the case may be.
1.36 "Datel Mortgage" shall mean the Mortgage and Security Agreement,
dated August 27, 1997, by Datel in favor of Sun Life Assurance Company of Canada
(U.S.) on the Real Property of Datel located in Mansfield, Massachusetts which
secures the obligations of Datel under the Mortgage Note, dated August 27, 1997,
in favor of Sun Life Assurance Company of Canada (U.S.) in the original
principal amount of $6,850,000, which Mortgage Note matures in August, 2007.
1.37 "Default" shall mean an act, condition or event which with notice or
passage of time or both would constitute an Event of Default.
1.38 "Defaulting Lender" shall have the meaning set forth in Section 6.11
hereof.
1.39 "Deposit Account Control Agreement" shall mean an agreement in
writing, in form and substance reasonably satisfactory to Agent, by and among
Agent, Term Loan Agent, the Borrower or Guarantor with a deposit account at any
bank and the bank at which such deposit account is at any time maintained which
provides that such bank will comply with instructions originated by Agent or
Term Loan Agent directing disposition of the funds in the deposit account
without further consent by such Borrower or Guarantor and has such other terms
and conditions as Agent may reasonably require.
1.40 "Domestic Subsidiary" shall mean any direct or indirect Subsidiary of
a Borrower or Guarantor, other than a Foreign Subsidiary.
1.41 "EBITDA" shall mean, as to any Person, with respect to any period, an
amount equal to: (a) the Consolidated Net Income of such Person for such period,
plus (b) depreciation, amortization (including the write-off of goodwill and
intangibles) and other non-cash charges (including, but not limited to, imputed
interest, deferred compensation and non-cash stock option expenses) for such
period (to the extent deducted in the computation of Consolidated Net Income of
such Person), all in accordance with GAAP, plus (c) Interest Expense for such
period (to the extent deducted in the computation of Consolidated Net Income of
such Person), plus (d) the Provision for Taxes for such period (to the extent
deducted in the computation of Consolidated Net Income of such Person), plus (e)
the agreed upon adjustments as set forth in Schedule 1.41 hereto, including an
adjustment of up to $500,000 for each fiscal year of Borrowers and Guarantors in
respect of foreign exchange forward points.
1.42 "Eligible Accounts" shall mean Accounts created by a Borrower that in
each case satisfy the criteria set forth below as determined by Agent. Accounts
shall be Eligible Accounts if:
(a) such Accounts arise from the actual and bona fide sale and
delivery of goods by such Borrower or rendition of services by such Borrower in
the ordinary course of its business which transactions are completed in
accordance with the terms and provisions contained in any documents related
thereto;
8
(b) such Accounts are not unpaid more than sixty (60) days after the
original due date thereof or more than one hundred twenty (120) days after the
date of the original invoice for them;
(c) such Accounts comply with the terms and conditions contained in
Section 7.2(b) of this Agreement;
(d) such Accounts do not arise from sales on consignment, guaranteed
sale, sale and return, sale on approval, or other terms under which payment by
the account debtor may be conditional or contingent;
(e) the chief executive office of the account debtor with respect to
such Accounts is located in the United States of America or Canada (provided,
that, at any time promptly upon Agent's request, such Borrower shall execute and
deliver, or cause to be executed and delivered, such other agreements, documents
and instruments as may be required by Agent to perfect the security interests of
Agent in those Accounts of an account debtor with its chief executive office or
principal place of business in Canada in accordance with the applicable laws of
the Province or Territory of Canada in which such chief executive office or
principal place of business is located and take or cause to be taken such other
and further actions as Agent may request to enable Agent as secured party with
respect thereto to collect such Accounts under the applicable Federal,
Provincial or Territorial laws of Canada) or, at Agent's option, if the chief
executive office and principal place of business of the account debtor with
respect to such Accounts is located other than in the United States of America
or Canada, then if either: (i) the account debtor has delivered to such Borrower
an irrevocable letter of credit issued or confirmed by a bank satisfactory to
Agent and payable only in US Dollars, sufficient to cover such Account, in form
and substance satisfactory to Agent and if required by Agent, the original of
such letter of credit has been delivered to Agent or Agent's agent and the
issuer thereof, and such Borrower has complied with the terms of Section 5.2(f)
hereof with respect to the assignment of the proceeds of such letter of credit
to Agent or naming Agent as transferee beneficiary thereunder, as Agent may
specify, or (ii) such Account is otherwise acceptable in all respects to Agent
(subject to such lending formula with respect thereto as Agent may determine);
(f) such Accounts do not consist of progress xxxxxxxx (such that the
obligation of the account debtors with respect to such Accounts is conditioned
upon such Borrower's satisfactory completion of any further performance under
the agreement giving rise thereto), xxxx and hold invoices or retainage
invoices, except as to xxxx and hold invoices, if Agent shall have received an
agreement in writing from the account debtor, in form and substance satisfactory
to Agent, confirming the unconditional obligation of the account debtor to take
the goods related thereto and pay such invoice;
(g) the account debtor with respect to such Accounts has not
asserted a counterclaim, defense or dispute and is not owed or does not claim to
be owed any amounts that may give rise to any right of setoff or recoupment
against such Accounts (but the portion of the Accounts of such account debtor in
excess of the amount at any time and from time to time owed by such Borrower to
such account debtor or claimed owed by such account debtor may be deemed
Eligible Accounts);
9
(h) there are no facts, events or occurrences which would impair the
validity, enforceability or collectability of such Accounts or reduce the amount
payable or delay payment thereunder;
(i) such Accounts are subject to the first priority, valid and
perfected security interest of Agent and any goods giving rise thereto are not,
and were not at the time of the sale thereof, subject to any liens except those
permitted in this Agreement that are subject to an intercreditor agreement in
form and substance satisfactory to Agent between the holder of such security
interest or lien and Agent;
(j) neither the account debtor nor any officer or employee of the
account debtor with respect to such Accounts is an officer, employee, agent or
other Affiliate of any Borrower or Guarantor;
(k) the account debtors with respect to such Accounts are not any
foreign government, the United States of America, any State, political
subdivision, department, agency or instrumentality thereof or Her Majesty in
right of Canada or any provincial, territorial or local Canadian governmental
entity, or any Canadian ministry, unless, (i) if the account debtor is the
United States of America, any State, political subdivision, department, agency
or instrumentality thereof, upon Agent's request, the Federal Assignment of
Claims Act of 1940, as amended or any similar State or local law, if applicable,
has been complied with in a manner satisfactory to Agent or (ii) if the account
debtor is Her Majesty in right of Canada or any provincial, territorial or local
Canadian governmental entity, or any Canadian ministry, unless such Borrower has
assigned its rights to payment of such Account to Agent pursuant to and in
accordance with the Financial Administration Act, R.S.C. 185, c.F-11, as
amended, or any similar applicable provincial, territorial or local law,
regulation or requirement to the extent applicable thereto;
(l) there are no proceedings or actions which are threatened or
pending against the account debtors with respect to such Accounts which might
result in any material adverse change in any such account debtor's financial
condition (including, without limitation, any bankruptcy, dissolution,
liquidation, reorganization or similar proceeding);
(m) the aggregate amount of such Accounts owing by a single account
debtor do not constitute more than fifteen (15%) percent of the aggregate amount
of all otherwise Eligible Accounts (but the portion of the Accounts not in
excess of the applicable percentages may be deemed Eligible Accounts);
(n) such Accounts are not owed by an account debtor who has Accounts
unpaid more than sixty (60) days past the due date for them which constitute
more than fifty (50%) percent of the total Accounts of such account debtor;
(o) the account debtor is not located in a state requiring the
filing of a Notice of Business Activities Report or similar report in order to
permit such Borrower to seek judicial enforcement in such State of payment of
such Account, unless such Borrower has qualified to do business in such state or
has filed a Notice of Business Activities Report or equivalent report for the
then current year or such failure to file and inability to seek judicial
enforcement is capable of being remedied without any material delay or material
cost;
10
(p) such Accounts are owed by account debtors whose total
indebtedness to such Borrower does not exceed the credit limit with respect to
such account debtors as determined by such Borrower from time to time, to the
extent such credit limit as to any account debtor is established consistent with
the current practices (taken as a whole) of such Borrower as of the date hereof,
or if modified in any material respect after the date hereof, as is otherwise
acceptable to Agent in good faith (but the portion of the Accounts not in excess
of such credit limit may be deemed Eligible Accounts); and
(q) such Accounts are owed by account debtors deemed creditworthy at
all times by Agent in good faith.
The criteria for Eligible Accounts set forth above may only be changed and any
new criteria for Eligible Accounts may only be established by Agent in good
faith based on either: (i) an event, condition or other circumstance arising
after the date hereof, or (ii) an event, condition or other circumstance
existing on the date hereof to the extent Agent has no written notice thereof
from a Borrower prior to the date hereof, in either case under clause (i) or
(ii) which adversely affects or could reasonably be expected to adversely affect
the Accounts in the good faith determination of Agent. Any Accounts that are not
Eligible Accounts shall nevertheless be part of the Collateral.
1.43 "Eligible Inventory" shall mean, as to each Borrower, Inventory of
such Borrower consisting of finished goods held for resale in the ordinary
course of the business of such Borrower and raw materials for such finished
goods, that in each case satisfy the criteria set forth below as determined by
Agent. Eligible Inventory shall not include: (a) work-in-process; (b) components
which are not part of finished goods; (c) spare parts for equipment; (d)
packaging and shipping materials; (e) supplies used or consumed in such
Borrower's business; (f) Inventory at premises other than those owned or leased
and controlled by any Borrower; (g) Inventory subject to a security interest or
lien in favor of any Person other than Agent except those permitted in this
Agreement that are subject to an intercreditor agreement in form and substance
satisfactory to Agent between the holder of such security interest or lien and
Agent; (h) xxxx and hold goods; (i) unserviceable, obsolete or slow moving
Inventory; (j) Inventory that is not subject to the first priority, valid and
perfected security interest of Agent; (k) returned, damaged and/or defective
Inventory; (l) Inventory purchased or sold on consignment (m) Inventory located
outside the United States of America or Canada and (n) Inventory which may
become subject to the claims of a supplier pursuant to Section 81.1 of the
Bankruptcy and Insolvency Act (Canada), R.S.C. 1985, c.B-3, as amended, or any
applicable provincial or territorial laws granting revendication or similar
rights to unpaid suppliers to the extent of such claims.
The criteria for Eligible Inventory set forth above may only be changed and any
new criteria for Eligible Inventory may only be established by Agent in good
faith based on either: (i) an event, condition or other circumstance arising
after the date hereof, or (ii) an event, condition or other circumstance
existing on the date hereof to the extent Agent has no written notice thereof
from a Borrower prior to the date hereof, in either case under clause (i) or
(ii) which adversely affects or could reasonably be expected to adversely affect
the Inventory in the good faith determination of Agent. Any Inventory that is
not Eligible Inventory shall nevertheless be part of the Collateral.
1.44 "Eligible Transferee" shall mean (a) any Lender; (b) the parent
company of any Lender and/or any Affiliate of such Lender which is at least
fifty (50%) percent owned by such Lender or its parent company; (c) any person
(whether a corporation, partnership, trust or
11
otherwise) that is engaged in the business of making, purchasing, holding or
otherwise investing in bank loans and similar extensions of credit in the
ordinary course of its business and is administered or managed by a Lender or
with respect to any Lender that is a fund which invests in bank loans and
similar extensions of credit, any other fund that invests in bank loans and
similar extensions of credit and is managed by the same investment advisor as
such Lender or by an Affiliate of such investment advisor, and in each case is
approved by Agent; and (d) any other commercial bank, financial institution or
"accredited investor" (as defined in Regulation D under the Securities Act of
1933) approved by Agent; provided, that, (i) neither any Borrower nor any
Guarantor or any Affiliate of any Borrower or Guarantor shall qualify as an
Eligible Transferee and (ii) no Person to whom any Indebtedness which is in any
way subordinated in right of payment to any other Indebtedness of any Borrower
or Guarantor shall qualify as an Eligible Transferee, except as Agent may
otherwise specifically agree.
1.45 "Environmental Laws" shall mean all foreign, Federal, State and local
laws (including common law), legislation, rules, codes, licenses, permits
(including any conditions imposed therein), authorizations, judicial or
administrative decisions, injunctions or agreements between any Borrower or
Guarantor and any Governmental Authority, (a) relating to pollution and the
protection, preservation or restoration of the environment (including air, water
vapor, surface water, ground water, drinking water, drinking water supply,
surface land, subsurface land, plant and animal life or any other natural
resource), or to human health or safety, (b) relating to the exposure to, or the
use, storage, recycling, treatment, generation, manufacture, processing,
distribution, transportation, handling, labeling, production, release or
disposal, or threatened release, of Hazardous Materials, or (c) relating to all
laws with regard to recordkeeping, notification, disclosure and reporting
requirements respecting Hazardous Materials. The term "Environmental Laws"
includes (i) the Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Federal Superfund Amendments and Reauthorization Act,
the Federal Water Pollution Control Act of 1972, the Federal Clean Water Act,
the Federal Clean Air Act, the Federal Resource Conservation and Recovery Act of
1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal
Solid Waste Disposal and the Federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water
Act of 1974, (ii) applicable state counterparts to such laws and (iii) any
common law or equitable doctrine that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Materials.
1.46 "Equipment" shall mean, as to each Borrower and Guarantor, all of
such Borrower's and Guarantor's now owned and hereafter acquired equipment,
wherever located, including machinery, data processing and computer equipment
(whether owned or licensed and including embedded software), vehicles, tools,
furniture, fixtures, all attachments, accessions and property now or hereafter
affixed thereto or used in connection therewith, and substitutions and
replacements thereof, wherever located.
1.47 "Equipment Availability" shall mean $10,000,000; provided, that,
effective on the first day of the month immediately after the date hereof and
continuing on the first day of each consecutive month thereafter, the Equipment
Availability shall be reduced by the amount equal to $277,777.
12
1.48 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, together with all rules, regulations and interpretations thereunder or
related thereto.
1.49 "ERISA Affiliate" shall mean any person required to be aggregated
with any Borrower, any Guarantor or any of its or their respective Domestic
Subsidiaries under Sections 414(b), 414(c), 414(m) or 414(o) of the Code.
1.50 "ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043(c) of ERISA or the regulations issued thereunder, with respect to a
Pension Plan, other than events as to which the requirement of notice has been
waived in regulations by the Pension Benefit Guaranty Corporation; (b) the
adoption of any amendment to a Pension Plan that would require the provision of
security (other than the posting of a bond or the provision of a letter of
credit, in either case in an amount not to exceed $1,500,000) pursuant to
Section 401(a)(29) of the Code or Section 307 of ERISA; (c) a complete or
partial withdrawal by any Borrower, Guarantor or any ERISA Affiliate from a
Multiemployer Plan or a cessation of operations which is treated as such a
withdrawal or notification that a Multiemployer Plan is in reorganization which
could reasonably be expected to result in liability of any Borrower in excess of
$1,500,000; (d) the filing of a notice of intent to terminate, the treatment of
a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA,
or the commencement of proceedings by the Pension Benefit Guaranty Corporation
to terminate a Pension Plan; (e) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Plan; (f) the imposition
of any liability under Title IV of ERISA, other than the Pension Benefit
Guaranty Corporation premiums due but not delinquent under Section 4007 of
ERISA, upon any Borrower, Guarantor or any ERISA Affiliate in excess of
$1,500,000 and (g) any other event or condition with respect to a Plan including
any Pension Plan subject to Title IV of ERISA maintained, or contributed to, by
any ERISA Affiliate that could reasonably be expected to result in liability of
any Borrower in excess of $1,500,000.
1.51 "Eurodollar Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof.
1.52 "Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 10.1 hereof.
1.53 "Excess Availability" shall mean, the amount, as determined by Agent,
calculated at any date, equal to: (a) the lesser of: (i) the Borrowing Base and
(ii) the Maximum Credit(in each case under (i) or (ii) after giving effect to
any Reserves other than any Reserves in respect of Letter of Credit
Obligations), minus (b) the sum of: (i) the amount of all then outstanding and
unpaid Obligations (but not including for this purpose Obligations arising
pursuant to any guarantees in favor of Agent and Lenders of the Obligations or
the then outstanding aggregate principal amount of any outstanding Letter of
Credit Obligations), plus (ii) the amount of all Reserves then established in
respect of Letter of Credit Obligations.
1.54 "Excess Closing Availability" shall mean, the amount, as determined
by Agent, calculated as of the date hereof, equal to: (a) the lesser of: (i) the
Borrowing Base and (ii) the Maximum Credit (in each case under (i) or (ii) after
giving effect to any Reserves other than any Reserves in respect of Letter of
Credit Obligations), minus (b) the sum of: (i) the amount of all
13
then outstanding and unpaid Obligations (but not including for this purpose
Obligations arising pursuant to any guarantees in favor of Agent and Lenders of
the Obligations or the then outstanding aggregate principal amount of any
outstanding Letter of Credit Obligations), plus (ii) the amount of all Reserves
then established in respect of Letter of Credit Obligations, plus (iii) the
aggregate amount of all then outstanding and unpaid trade payables and other
obligations which are outstanding more than sixty (60) days past due as of the
end of the immediately preceding month or at Agent's option, as of a more recent
date based on such reports as Agent may from time to time specify (other than
trade payables or other obligations being contested or disputed by a Borrower in
good faith), plus (iv) without duplication, the amount of checks issued by
Borrowers to pay trade payables and other obligations which are more than sixty
(60) days past due as of the end of the immediately preceding month or at
Agent's option, as of a more recent date based on such reports as Agent may from
time to time specify (other than trade payables or other obligations being
contested or disputed by a Borrower in good faith), but not yet sent.
1.55 "Exchange Act" shall mean the Securities Exchange Act of 1934,
together with all rules, regulations and interpretations thereunder or related
thereto.
1.56 "Exchange Rate" shall mean the prevailing spot rate of exchange of
Reference Bank or if such rate is not available from Reference Bank, such other
bank as Agent may reasonably select for the purpose of conversion of one
currency to another, at or around 11:00 a.m. New York City time, on the date on
which any such conversion of currency is to be made under this Agreement.
1.57 "Existing Lenders" shall mean the lenders to Borrowers listed on
Schedule 1.57 hereto (and including Bank of America, N.A. in its capacity as
administrative agent acting for such lenders) and their respective predecessors,
successors and assigns.
1.58 "Existing Letters of Credit" shall mean, collectively, the letters of
credit issued for the account of a Borrower or Guarantor or for which such
Borrower or Guarantor is otherwise liable listed on Schedule 1.58 hereto, as the
same now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.59 "Extraordinary Receipts" shall mean any cash received by a Borrower
or any of its Subsidiaries not in the ordinary course of business (and not
consisting of proceeds from the sale of Inventory), including, without
limitation, (i) proceeds of insurance, (ii) condemnation awards (and payments in
lieu thereof), (iii) indemnity payments, (iv) foreign, United States, state or
local tax refunds, (v) pension plan reversions and (vi) judgments, proceeds of
settlements or other consideration of any kind in connection with any cause of
action; provided, that, if a Cash Dominion Event is not then in effect,
Extraordinary Receipts shall not include cash in the aggregate amount for all
Borrowers and their Subsidiaries of less than $500,000 received by them in any
fiscal year.
1.60 "Fee Letter" shall mean the letter agreement, dated of even date
herewith, by and among Borrowers, Guarantors and Agent, setting forth certain
fees payable by Borrowers to Agent for the benefit of itself and Lenders, as the
same now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
14
1.61 "Financing Agreements" shall mean, collectively, this Agreement and
all notes, guarantees, security agreements, deposit account control agreements,
investment property control agreements, intercreditor agreements and all other
agreements, documents and instruments now or at any time hereafter executed
and/or delivered by any Borrower or Guarantor in connection with this Agreement;
provided, that, in no event shall the term Financing Agreements be deemed to
include any Hedge Agreement.
1.62 "Fixed Charge Coverage Ratio" Fixed Charge Coverage Ratio" shall
mean, as to any Person, with respect to any period, the ratio of (a) the amount
equal to EBITDA of such Person for such period to (b) the Fixed Charges of such
Person for such period.
1.63 "Fixed Charges" shall mean, as to any Person, with respect to any
period, the sum of, without duplication, (a) all Interest Expense during such
period, plus (b) all Capital Expenditures during such period (other than, as to
Parent and its Subsidiaries, Capital Expenditures made with the proceeds of
Indebtedness permitted for such purpose hereunder), plus (c)) all regularly
scheduled (as determined at the beginning of the respective period) principal
payments in respect of Indebtedness for borrowed money (excluding payments in
respect of Loans which do not result in a reduction of the Maximum Credit and
excluding the final payment on August 31, 2007 of $4,860,984 contemplated to be
made in satisfaction of the Datel Mortgage on such date) and Indebtedness with
respect to Capital Leases (and without duplicating items (a) and (c) of this
definition, the interest component with respect to Indebtedness under Capital
Leases) during such period, plus (d) dividends and other distributions, and
repurchases and redemptions, in respect of Capital Stock paid during such
period, plus (e) cash costs paid under any Hedge Agreement, plus (f) taxes paid
during such period in cash, minus (g) Capital Expenditures of Shanghai in
respect of the Shanghai Project made on or prior to July 31, 2007 (i)
exclusively from amounts received in cash by Shanghai from the government of the
People's Republic of China as compensation in connection with the Shanghai
Disposition, in an aggregate amount not to exceed the US Dollar Equivalent of
US$18,000,000 and (ii) generated by earnings of Shanghai from operations in
China or Indebtedness incurred by Shanghai in China, in an aggregate amount not
to exceed the US Dollar Equivalent of US$9,000,000.
1.64 "Foreign Lender" shall mean any Lender that is organized under the
laws of a jurisdiction other than that in which a Borrower is resident for tax
purposes. For purposes of this definition, the United States of America, each
State thereof and the District of Columbia shall be deemed to constitute a
single jurisdiction.
1.65 "Foreign Subsidiary" shall mean, a direct or indirect Subsidiary of
Parent organized or incorporated under the laws of a jurisdiction other than a
state of the United States of America, the United States of America or its
territories or its possessions.
1.66 "Funding Bank" shall have the meaning given to such term in Section
3.3 hereof.
1.67 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination consistently applied, except that,
15
for purposes of Section 9.17 hereof, GAAP shall be determined on the basis of
such principles in effect on the date hereof and consistent with those used in
the preparation of the most recent audited financial statements delivered to
Agent prior to the date hereof.
1.68 "GmbH Note" shall mean the Term Note, dated August 2, 2005, by Datel
as maker in favor of C&D Technologies (Datel) GmbH as payee, in the original
principal amount of $2,144,000, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
1.69 "GmbH Subordination Agreement" shall mean the Subordination
Agreement, dated as of the date hereof, between C&D Technologies (Datel) GmbH
and Agent, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.70 "Governmental Authority" shall mean any nation or government, any
state, province, territory or other political subdivision thereof, any central
bank (or similar monetary or regulatory authority) thereof, and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
1.71 "Guarantors" shall mean, collectively, the following (together with
their respective successors and assigns): (a) C&D Charter Holdings, Inc., a
Delaware corporation; (b) C&D Dynamo Corp., a Delaware corporation; (c) Dynamo
Acquisition Corp., a Delaware corporation; (d) C&D International Investment
Holdings Inc., a Delaware corporation; and (e) Datel Holding Corporation, a
Delaware corporation; and (f) any other Person that at any time after the date
hereof becomes party to a guarantee in favor of Agent or any Lender or otherwise
liable on or with respect to the Obligations or who is the owner of any property
which is security for the Obligations (other than Borrowers); each sometimes
being referred to herein individually as a "Guarantor".
1.72 "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including hydrocarbons (including naturally
occurring or man-made petroleum and hydrocarbons), flammable explosives,
asbestos, urea formaldehyde insulation, radioactive materials, biological
substances, polychlorinated biphenyls, pesticides, herbicides and any other kind
and/or type of pollutants or contaminants (including materials which include
hazardous constituents), sewage, sludge, industrial slag, solvents and/or any
other similar substances, materials, or wastes and including any other
substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or
toxic under any Environmental Law).
1.73 "Hedge Agreement" shall mean an agreement between any Borrower or
Guarantor and a Bank Product Provider that is a rate swap agreement, basis swap,
forward rate agreement, commodity swap, forward commodity contracts, interest
rate option, forward foreign exchange agreement, spot foreign exchange
agreement, rate cap agreement rate, floor agreement, rate collar agreement,
currency swap agreement, cross-currency rate swap agreement, currency option,
any other similar agreement (including any option to enter into any of the
foregoing or a master agreement for any the foregoing together with all
supplements thereto) for the purpose of protecting against or managing exposure
to fluctuations in interest or exchange rates, currency
16
valuations or commodity prices; sometimes being collectively referred to herein
as "Hedge Agreements".
1.74 "Indebtedness" shall mean, with respect to any Person, any liability,
whether or not contingent, (a) in respect of borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion thereof) or evidenced by bonds, notes, debentures or similar
instruments; (b) representing the balance deferred and unpaid of the purchase
price of any property or services (other than an account payable to a trade
creditor (whether or not an Affiliate) incurred in the ordinary course of
business of such Person and payable in accordance with customary trade
practices); (c) all obligations as lessee under leases which have been, or
should be, in accordance with GAAP recorded as Capital Leases; (d) any
contractual obligation, contingent or otherwise, of such Person to pay or be
liable for the payment of any indebtedness described in this definition of
another Person, including, without limitation, any such indebtedness, directly
or indirectly guaranteed, or any agreement to purchase, repurchase, or otherwise
acquire such indebtedness, obligation or liability or any security therefor, or
to provide funds for the payment or discharge thereof, or to maintain solvency,
assets, level of income, or other financial condition; (e) all obligations with
respect to redeemable stock and redemption or repurchase obligations under any
Capital Stock or other equity securities issued by such Person; (f) all
reimbursement obligations and other liabilities of such Person with respect to
surety bonds (whether bid, performance or otherwise), letters of credit,
banker's acceptances, drafts or similar documents or instruments issued for such
Person's account; (g) all indebtedness of such Person in respect of indebtedness
of another Person for borrowed money or indebtedness of another Person otherwise
described in this definition which is secured by any consensual lien, security
interest, collateral assignment, conditional sale, mortgage, deed of trust, or
other encumbrance on any asset of such Person, whether or not such obligations,
liabilities or indebtedness are assumed by or are a personal liability of such
Person, all as of such time; (h) all obligations, liabilities and indebtedness
of such Person (marked to market) arising under swap agreements, cap agreements
and collar agreements and other agreements or arrangements designed to protect
such person against fluctuations in interest rates or currency or commodity
values; (i) all obligations owed by such Person under License Agreements with
respect to non-refundable, advance or minimum guarantee royalty payments; (j)
indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer to the extent such Person is liable therefor
as a result of such Person's ownership interest in such entity, except to the
extent that the terms of such indebtedness expressly provide that such Person is
not liable therefor or such Person has no liability therefor as a matter of law
and (k) the principal and interest portions of all rental obligations of such
Person under any synthetic lease or similar off-balance sheet financing where
such transaction is considered to be borrowed money for tax purposes but is
classified as an operating lease in accordance with GAAP.
1.75 "Information Certificate" shall mean, collectively, the Information
Certificates of Borrowers and Guarantors constituting Exhibit B hereto
containing material information with respect to Borrowers and Guarantors, their
respective businesses and assets provided by or on behalf of Borrowers and
Guarantors to Agent in connection with the preparation of this Agreement and the
other Financing Agreements and the financing arrangements provided for herein.
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1.76 "Intellectual Property" shall mean, as to each Borrower and
Guarantor, such Borrower's and Guarantor's now owned and hereafter arising or
acquired: patents, patent rights, patent applications, copyrights, works which
are the subject matter of copyrights, copyright applications, copyright
registrations, trademarks, servicemarks, corporate, company, business or trade
names, trade styles, know-how, trade dress, tag lines, derivative works,
business identifiers, trademark and service xxxx applications, and licenses and
rights to use any of the foregoing and all applications, registrations and
recordings relating to any of the foregoing as may be filed in the United States
Copyright Office, the United States Patent and Trademark Office, the Canadian
Intellectual Property Office or in any similar office or agency of the United
States or Canada, any State, Province or Territory thereof, any political
subdivision thereof or in any other country or jurisdiction, together with all
rights and privileges arising under applicable law with respect to any
Borrower's or Guarantor's use of any of the foregoing; all extensions, renewals,
reissues, divisions, continuations, and continuations-in-part of any of the
foregoing; all rights to xxx for past, present and future infringement of any of
the foregoing; inventions, trade secrets, formulae, processes, compounds,
drawings, designs, logos, blueprints, surveys, reports, manuals, and operating
standards; goodwill (including any goodwill associated with any trademark or
servicemark, or the license of any trademark or servicemark); customer and other
lists in whatever form maintained; trade secret rights, copyright rights, rights
in works of authorship, domain names and domain name registration; software and
contract rights relating to computer software programs, in whatever form created
or maintained.
1.77 "Interest Expense" shall mean, for any period, as to any Person, as
determined in accordance with GAAP, the total interest expense of such Person,
whether paid or accrued during such period (including the interest component of
Capital Leases for such period), including, without limitation, discounts in
connection with the sale of any Accounts and bank fees, commissions, discounts
and other fees and charges owed with respect to letters of credit, banker's
acceptances or similar instruments.
1.78 "Interest Period" shall mean for any Eurodollar Rate Loan that is not
a Swing Line Loan, a period of approximately one (1), two (2), or three (3)
months duration as any Borrower (or Administrative Borrower on behalf of such
Borrower) may elect, the exact duration to be determined in accordance with the
customary practice in the applicable Eurodollar Rate market; provided, that,
such Borrower (or Administrative Borrower on behalf of such Borrower) may not
elect an Interest Period which will end after the last day of the then-current
term of this Agreement.
1.79 "Interest Rate" shall mean,
(a) as to Swing Line Loans and Revolving Loans that are Prime Rate
Loans, a rate equal to the Prime Rate plus the Applicable Margin for Prime Rate
Loans,
(b) as to Eurodollar Rate Loans that are not Swing Line Loans, a
rate equal to the Adjusted Eurodollar Rate plus the Applicable Margin for
Eurodollar Rate Loans (in each case, based on the London Interbank Offered Rate
applicable for the Interest Period selected by a Borrower, or by Administrative
Borrower on behalf of such Borrower, as in effect two (2) Business Days prior to
the commencement of the Interest Period whether such rate is higher or lower
than any rate previously quoted to any Borrower or Guarantor), and
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(c) as to Eurodollar Rate Loans that are Swing Line Loans, a rate
equal to the LIBOR Market Index Rate plus the Applicable Margin for Eurodollar
Rate Loans, whether such rate is higher or lower than any rate previously quoted
to any Borrower or Guarantor.
Notwithstanding anything to the contrary contained in this definition, the
Interest Rate shall mean the percentage per annum set forth above plus (in each
case) two (2%) percent per annum, at Agent's option, (i) for the period (A) from
and after the effective date of termination or non-renewal hereof until such
time as all Obligations are indefeasibly paid and satisfied in full in
immediately available funds, or (B) from and after the date of the occurrence of
any Event of Default, and for so long as such Event of Default is continuing as
determined by Agent and (ii) on the Loans at any time outstanding in excess of
the Borrowing Base or the Maximum Credit (whether or not such excess(es) arise
or are made with or without Agent's or any Lender's knowledge or consent and
whether made before or after an Event of Default).
1.80 "Inventory" shall mean, as to each Borrower and Guarantor, all of
such Borrower's and Guarantor's now owned and hereafter existing or acquired
goods, wherever located, which (a) are leased by such Borrower or Guarantor as
lessor; (b) are held by such Borrower or Guarantor for sale or lease or to be
furnished under a contract of service; (c) are furnished by such Borrower or
Guarantor under a contract of service; or (d) consist of raw materials, work in
process, finished goods or materials used or consumed in its business.
1.81 "Inventory Loan Limit" shall mean $30,000,000.
1.82 "Investment Property Control Agreement" shall mean an agreement in
writing, in form and substance satisfactory to Agent, by and among Agent, Term
Loan Agent, any Borrower or Guarantor (as the case may be) and any securities
intermediary, commodity intermediary or other person who has custody, control or
possession of any investment property of such Borrower or Guarantor
acknowledging that such securities intermediary, commodity intermediary or other
person has custody, control or possession of such investment property on behalf
of Agent and Term Loan Agent, that it will comply with entitlement orders
originated by Agent or Term Loan Agent with respect to such investment property,
or other instructions of Agent or Term Loan Agent, and with such other terms and
conditions as Agent may require.
1.83 "Issuing Bank" shall mean Wachovia or any Lender that is approved by
Agent that shall issue a Letter of Credit for the account of a Borrower and have
agreed in a manner satisfactory to Agent to be subject to the terms hereof as an
Issuing Bank.
1.84 "KK Notes" shall mean, collectively, each of the following (as the
same now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced): (a) the Term Note, dated December 15, 2004, by
Datel as maker in favor of C&D Technologies KK as payee, in the original
principal amount of $1,000,000 and (b) the Term Note, dated August 24, 2005, by
Datel as maker in favor of C&D Technologies KK as payee, in the original
principal amount of $400,000; each sometimes being referred to herein
individually as a "KK Note".
1.85 "KK Subordination Agreement" shall mean the Subordination Agreement,
dated as of the date hereof, between C&D Technologies KK and Agent, as the same
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
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1.86 "Lenders" shall mean the financial institutions who are signatories
hereto as Lenders and other persons made a party to this Agreement as a Lender
in accordance with Section 13.7 hereof, and their respective successors and
assigns; each sometimes being referred to herein individually as a "Lender".
1.87 "Letter of Credit Documents" shall mean, with respect to any Letter
of Credit, such Letter of Credit, any amendments thereto, any documents
delivered in connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in application or
applicable only to such Letter of Credit) governing or providing for (a) the
rights and obligations of the parties concerned or at risk or (b) any collateral
security for such obligations.
1.88 "Letter of Credit Limit" shall mean $15,000,000.
1.89 "Letter of Credit Obligations" shall mean, at any time, the sum of
(a) the aggregate undrawn amount of all Letters of Credit outstanding at such
time, plus (b) the aggregate amount of all drawings under Letters of Credit for
which Issuing Bank has not at such time been reimbursed, plus (c) without
duplication, the aggregate amount of all payments made by each Lender to Issuing
Bank with respect to such Lender's participation in Letters of Credit as
provided in Section 2.2 for which Borrowers have not at such time reimbursed the
Lenders, whether by way of a Revolving Loan or otherwise.
1.90 "Letters of Credit" shall mean all letters of credit (whether
documentary or stand-by and whether for the purchase of inventory, equipment or
otherwise) issued by an Issuing Bank for the account of any Borrower pursuant to
this Agreement, and all amendments, renewals, extensions or replacements thereof
and including, but not limited to, the Existing Letters of Credit.
1.91 "LIBOR Market Index Rate" shall mean the rate from time to time for
one (1) month U.S. Dollar deposits as reported on Telerate page 3750 as of 11:00
a.m., London time, on such day, or if such day is not a London business day,
then the immediately preceding London business day (or, if not so reported, then
as determined by Agent from another recognized source or interbank quotation).
1.92 "License Agreements" shall have the meaning set forth in Section 8.11
hereof.
1.93 "Loans" shall mean, collectively, the Revolving Loans and the Swing
Line Loans.
1.94 "London Interbank Offered Rate" shall mean, with respect to any
Eurodollar Rate Loan for the Interest Period applicable thereto, the rate of
interest per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in US Dollars at approximately 11:00 A.M. (London
time) two (2) Business Days prior to the first day of such Interest Period for a
term comparable to such Interest Period; provided, that, if more than one rate
is specified on Telerate Page 3750, the applicable rate shall be the arithmetic
mean of all such rates. If, for any reason, such rate is not available, the term
"London Interbank Offered Rate" shall mean, with respect to any Eurodollar Loan
for the Interest Period applicable thereto, the rate of interest per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters
Screen
20
LIBO Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 A.M. (London time) two (2) Business Days prior to the first
day of such Interest Period for a term comparable to such Interest Period;
provided, however, if more than one rate is specified on Reuters Screen LIBO
Page, the applicable rate shall be the arithmetic mean of all such rates.
1.95 "Material Adverse Effect" shall mean a material adverse effect on (a)
the financial condition, business, performance or operations of Borrowers; (b)
the legality, validity or enforceability of this Agreement or any of the other
Financing Agreements; (c) the legality, validity, enforceability, perfection or
priority of the security interests and liens of Agent upon the Collateral; (d)
the Collateral or its value; (e) the ability of any Borrower to repay the
Obligations or of any Borrower to perform its obligations under this Agreement
or any of the other Financing Agreements as and when to be performed; or (f) the
ability of Agent or any Lender to enforce the Obligations or realize upon the
Collateral or otherwise with respect to the rights and remedies of Agent and
Lenders under this Agreement or any of the other Financing Agreements.
1.96 "Material Contract" shall mean (a) any contract or other agreement
(other than the Financing Agreements), written or oral, of any Borrower or
Guarantor involving monetary liability of or to any Person in an amount in
excess of $2,500,000 in any fiscal year and (b) any other contract or other
agreement (other than the Financing Agreements), whether written or oral, to
which any Borrower or Guarantor is a party as to which the breach,
nonperformance, cancellation or failure to renew by any party thereto would have
a Material Adverse Effect.
1.97 "Maximum Credit" shall mean the amount of $75,000,000.
1.98 "Mortgages" shall mean, individually and collectively, each of the
following (as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) the Mortgage,
Security Agreement, Fixture Filing and Assignment of Leases, Rents and Profits,
dated of even date herewith, by Parent in favor of Agent and/or Wachovia as
collateral agent for Lenders and Term Loan Lenders with respect to the Real
Property and related assets of such Borrower located in Attica, Indiana, (b) the
Mortgage, Security Agreement, Fixture Filing and Assignment of Leases, Rents and
Profits, dated of even date herewith, by Parent in favor of Agent and/or
Wachovia as collateral agent for Lenders and Term Loan Lenders with respect to
the Real Property and related assets of such Borrower located in Huguenot, New
York, (c) the Mortgage, Security Agreement, Fixture Filing and Assignment of
Leases, Rents and Profits,, dated of even date herewith, by Parent in favor of
Agent and/or Wachovia as collateral agent for Lenders and Term Loan Lenders with
respect to the Real Property and related assets of such Borrower located in
Milwaukee, Wisconsin and (d) any mortgage, deed of trust or deed to secure debt
executed and delivered after the date hereof by any Borrower or Guarantor with
respect to any other Real Property of such Borrower or Guarantor in favor of
Agent and/or Wachovia as collateral agent for Lenders and Term Loan Lenders,
including any such agreement or instrument delivered pursuant to Section 9.20
hereof.
1.99 "Multiemployer Plan" shall mean a "multi-employer plan" as defined in
Section 4001(a)(3) of ERISA which is or was at any time during the current year
or the immediately preceding six (6) years contributed to by any Borrower,
Guarantor or any ERISA Affiliate or with respect to which any Borrower,
Guarantor or any ERISA Affiliate may incur any liability.
21
1.100 "Net Cash Proceeds" shall mean, with respect to any sale, lease,
transfer or other disposition of any asset or the sale or issuance of any
Indebtedness by any Person, the aggregate amount of cash received from time to
time (whether as initial consideration or through payment or disposition of
deferred consideration) by or on behalf of such Person in connection with such
transaction after deducting therefrom only (without duplication) (a) reasonable
and customary brokerage commissions, underwriting fees and discounts, legal
fees, accountant's fees, investment banking fees, finder's fees, other similar
fees and commissions and reasonable out-of-pocket expenses, (b) the amount of
taxes reasonably estimated by such Person to be actually and reasonably
attributable to such transaction, and (c) the amount of any Indebtedness secured
by a security interest, lien or other encumbrance (other than a security
interest, lien or other encumbrance created under any Financing Agreements) on
such asset that, by the terms of such transaction, is required to be repaid upon
such disposition, in each case to the extent, but only to the extent, that the
amounts so deducted are actually paid to a Person that, except in the case of
reasonable out-of-pocket expenses, is not an Affiliate of such Person or any
Affiliate of any Borrower and, in each case, are properly attributable to such
transaction or to the asset that is the subject thereof.
1.101 "Net Recovery Percentage" shall mean the fraction, expressed as a
percentage, (a) the numerator of which is the amount equal to the amount of the
recovery in respect of the Inventory at such time on a "net orderly liquidation
value" basis as set forth in the most recent acceptable appraisal of Inventory
received by Agent in accordance with Section 7.3, net of operating expenses,
liquidation expenses and commissions, and (b) the denominator of which is the
applicable original cost of the aggregate amount of the Inventory subject to
such appraisal.
1.102 "Obligations" shall mean (a) any and all Revolving Loans, Swing Line
Loans, Letter of Credit Obligations and all other obligations, liabilities and
indebtedness of every kind, nature and description owing by any or all of
Borrowers to Agent or any Lender and/or any of their Affiliates or any Issuing
Bank, including principal, interest, charges, fees, costs and expenses, however
evidenced, whether as principal, surety, endorser, guarantor or otherwise,
arising under this Agreement or any of the other Financing Agreements or on
account of any Letter of Credit and all other Letter of Credit Obligations,
whether now existing or hereafter arising, whether arising before, during or
after the initial or any renewal term of this Agreement or after the
commencement of any case with respect to such Borrower under the United States
Bankruptcy Code or any similar statute (including the payment of interest and
other amounts which would accrue and become due but for the commencement of such
case, whether or not such amounts are allowed or allowable in whole or in part
in such case), whether direct or indirect, absolute or contingent, joint or
several, due or not due, primary or secondary, liquidated or unliquidated, or
secured or unsecured and (b) for purposes only of Section 5.1 hereof and subject
to the priority in right of payment set forth in Section 6.4 hereof, all
obligations, liabilities and indebtedness of every kind, nature and description
owing by any or all of Borrowers or Guarantors to Agent or any Bank Product
Provider arising under or pursuant to any Bank Products, whether now existing or
hereafter arising; provided, that, (i) as to any obligations, liabilities and
indebtedness arising under or pursuant to a Hedge Agreement, such obligations,
liabilities and indebtedness shall only be included within the Obligations if
upon Agent's request, Agent shall have entered into an agreement, in form and
substance satisfactory to Agent, with the Bank Product Provider that is a
counterparty to such Hedge Agreement, as acknowledged and agreed to by Borrowers
and Guarantors, providing for the delivery to Agent
22
by such counterparty of information with respect to the amount of such
obligations and providing for the other rights of Agent and such Bank Product
Provider in connection with such arrangements and (ii) any Bank Product
Provider, other than Wachovia and its Affiliates and other than in connection
with a Hedge Agreement, shall have delivered written notice to Agent that (A)
such Bank Product Provider has entered into a transaction to provide Bank
Products to a Borrower and Guarantor and (B) the obligations arising pursuant to
such Bank Products provided to Borrowers and Guarantors constitute Obligations
entitled to the benefits of the security interest of Agent granted hereunder,
and Agent shall have accepted such notice in writing and (iii) in no event shall
any Bank Product Provider to whom such obligations, liabilities or indebtedness
are owing be deemed a Lender for purposes hereof to the extent of and as to such
obligations, liabilities or indebtedness other than for purposes of Section 5.1
hereof and other than for purposes of Sections 12.1, 12.2, 12.3(b), 12.6, 12.7,
12.9, 12.12 and 13.6 hereof and in no event shall such obligations be included
in the Obligations to the extent that the effect is that the value of the
Collateral (as determined by Agent) is less than the Obligations and in no event
shall the approval of any such person be required in connection with the release
or termination of any security interest or lien of Agent.
1.103 "Other Taxes" shall have the meaning given to such term in Section
6.5 hereof.
1.104 "Parent" shall mean C&D Technologies, Inc., a Delaware corporation,
and its successors and assigns.
1.105 "Participant" shall mean any financial institution that acquires and
holds a participation in the interest of any Lender in any of the Loans and
Letters of Credit in conformity with the provisions of Section 13.7 of this
Agreement governing participations.
1.106 "Pension Plan" shall mean a pension plan (as defined in Section 3(2)
of ERISA) subject to Title IV of ERISA which any Borrower or Guarantor sponsors,
maintains, or to which any Borrower, Guarantor or ERISA Affiliate makes, is
making, or is obligated to make contributions, other than a Multiemployer Plan;
provided, that, the term "Pension Plan" as used herein shall not include any
Canadian Pension Plan.
1.107 "Permitted Investments" shall mean each of the following:
(a) the endorsement of instruments for collection or deposit in the
ordinary course of business;
(b) Investments in cash or Cash Equivalents; provided, that, (i) at
any time on and after a Cash Dominion Event and for so long as the same is
continuing, no Loans are then outstanding and (ii) the terms and conditions of
Section 5.2 hereof shall have been satisfied with respect to the deposit
account, investment account or other account in which such cash or Cash
Equivalents are held, except that this clause (ii) shall not apply to
Investments by Borrowers in cash or Cash Equivalents maintained at any such time
in accounts at financial institutions outside the United States to the extent
that the aggregate amount maintained in all such accounts is less than the US
Dollar Equivalent of US$1,000,000;
(c) Investments by a Borrower or Guarantor in a Borrower or
Guarantor, in each case after the date hereof; provided, that, (i) to the extent
that such Investment gives rise to any
23
Indebtedness, such Indebtedness is permitted hereunder and (ii) to the extent
that such Investment gives rise to the issuance of any shares of Capital Stock,
such issuance is permitted hereunder;
(d) the existing Investments of each Borrower and Guarantor as of
the date hereof in its Subsidiaries that are not Borrowers or Guarantors;
provided, that, no Borrower or Guarantor shall have any further obligations or
liabilities to make any capital contributions or other additional investments or
other payments to or in or for the benefit of any of such Subsidiaries;
(e) loans and advances by any Borrower or Guarantor to employees of
such Borrower or Guarantor not to exceed the principal amount of $500,000 in the
aggregate at any time outstanding for: (i) reasonably and necessary work-related
travel or other ordinary business expenses to be incurred by such employee in
connection with their work for such Borrower or Guarantor and (ii) reasonable
and necessary relocation expenses of such employees (including home mortgage
financing for relocated employees);
(f) loans or advances to, or investments in, Foreign Subsidiaries by
any Borrower or Guarantor not to exceed the aggregate principal amount at any
time outstanding equal to the lesser of (i) the US Dollar Equivalent of
US$1,000,000 and (ii) the US Dollar Equivalent of US$1,000,000 minus the
aggregate principal amount of all guarantees by Borrowers and Guarantors
pursuant to Section 9.9(f) hereof; provided, that, (A) Excess Availability shall
have been not less than $30,000,000, for each of the thirty (30) consecutive
days immediately prior to the date of any such loan or advance and after giving
effect to such loan or advance Excess Availability shall be not less than
$30,000,000 and (B) as of the date of any such loan, advance, or investment no
Default or Event of Default shall exist or have occurred and be continuing;
(g) stock or obligations issued to any Borrower or Guarantor by any
Person (or the representative of such Person) in respect of Indebtedness of such
Person owing to such Borrower or Guarantor in connection with the insolvency,
bankruptcy, receivership or reorganization of such Person or a composition or
readjustment of the debts of such Person; provided, that, the original of any
such stock or instrument evidencing such obligations shall be promptly delivered
to Agent, upon Agent's request, together with such stock power, assignment or
endorsement by such Borrower or Guarantor as Agent may request;
(h) obligations of account debtors to any Borrower or Guarantor
arising from Accounts which are past due evidenced by a promissory note made by
such account debtor payable to such Borrower or Guarantor; provided, that,
promptly upon the receipt of the original of any such promissory note by such
Borrower or Guarantor, such promissory note shall be endorsed to the order of
Agent by such Borrower or Guarantor and promptly delivered to Agent as so
endorsed;
(i) loans by Borrowers to customers of Borrowers in an aggregate
amount at any time outstanding not to exceed the US Dollar Equivalent of
US$500,000;
1.108 "Person" or "person" shall mean any individual, sole proprietorship,
partnership, corporation (including any corporation which elects subchapter S
status under the Code), limited or unlimited liability company, limited
liability partnership, business trust, unincorporated
24
association, joint stock corporation, trust, joint venture or other entity or
any government or any agency or instrumentality or political subdivision
thereof.
1.109 "Plan" shall mean an employee benefit plan (as defined in Section
3(3) of ERISA) which any Borrower or Guarantor sponsors, maintains, or to which
it makes, is making, or is obligated to make contributions, or in the case of a
Multiemployer Plan has made contributions at any time during the immediately
preceding six (6) plan years or with respect to which any Borrower or Guarantor
may incur liability.
1.110 "PPSA" shall mean the Personal Property Security Act (Ontario), the
Civil Code of Quebec or any other applicable Canadian Federal, Provincial or
Territorial statute pertaining to the granting, perfecting, priority or ranking
of security interests, liens, hypothecs or other encumbrances on personal
property, and any successor statutes, together with any regulations thereunder,
in each case as in effect from time to time. References to sections of the PPSA
shall be construed to also refer to any successor sections.
1.111 "Prime Rate" shall mean the rate from time to time publicly
announced by Wachovia, or its successors, as its prime rate, whether or not such
announced rate is the best rate available at such bank.
1.112 "Prime Rate Loans" shall mean any Loans or portion thereof on which
interest is payable based on the Prime Rate in accordance with the terms
thereof.
1.113 "Priority Payables" shall mean, as to any Borrower or Guarantor at
any time, (a) the full amount of the liabilities of such Borrower or Guarantor
at such time which (i) have a trust imposed to provide for payment or a security
interest, pledge, lien, hypothec or charge ranking or capable of ranking senior
to or pari passu with security interests, liens, hypothecs or charges securing
the Obligations on any of the Eligible Accounts or Eligible Inventory of such
Borrower or Guarantor under Federal, Provincial, Territorial, county, district,
municipal, or local law in Canada or (ii) have a right imposed to provide for
payment ranking or capable of ranking senior to or pari passu with the
Obligations under local or national law, regulation or directive, including, but
not limited to, claims for unremitted and/or accelerated rents, taxes, wages,
withholdings taxes, VAT and other amounts payable to an insolvency
administrator, employee withholdings or deductions and vacation pay, workers'
compensation obligations, government royalties or pension fund obligations in
each case to the extent such trust, or security interest, lien, hypothec or
charge has been or may be imposed and (b) the amount equal to the percentage
applicable to Inventory in the calculation of the Borrowing Base multiplied by
the aggregate Value of the Eligible Inventory which Agent, in good faith,
considers is or may be subject to retention of title by a supplier or a right of
a supplier to recover possession thereof under Federal, Provincial, Territorial,
county, district, municipal, or local law in Canada, where such supplier's right
has priority over the security interests, liens, hypothecs or charges securing
the Obligations, including, without limitation, Eligible Inventory subject to a
right of a supplier to repossess goods pursuant to Section 81.1 of the
Bankruptcy and Insolvency Act (Canada) or any applicable laws granting
revendication or similar rights to unpaid suppliers or any similar laws of
Canada or any other applicable jurisdiction (provided, that, to the extent such
Inventory has been identified and has been excluded from Eligible Inventory, the
amount owing to the supplier shall not be considered a Priority Payable).
25
1.114 "Pro Rata Share" shall mean as to any Lender, the fraction
(expressed as a percentage) the numerator of which is such Lender's Commitment
and the denominator of which is the aggregate amount of all of the Commitments
of Lenders, as adjusted from time to time in accordance with the provisions of
Section 13.7 hereof; provided, that, if the Commitments have been terminated,
the numerator shall be the unpaid amount of such Lender's Loans and its interest
in the Letters of Credit and the denominator shall be the aggregate amount of
all unpaid Loans and Letters of Credit.
1.115 "Provision for Taxes" shall mean an amount equal to all taxes
imposed on or measured by net income, whether Federal, State, county or local,
and whether foreign or domestic, that are paid or payable by any Person in
respect of any period in accordance with GAAP.
1.116 "Quarterly Average Excess Availability" shall mean, at any time, the
daily average of the aggregate Excess Availability of Borrowers for the
immediately preceding calendar quarter as calculated by Agent.
1.117 "Real Property" shall mean all now owned and hereafter acquired real
property of each Borrower and Guarantor, including leasehold interests, together
with all buildings, structures, and other improvements located thereon and all
licenses, easements and appurtenances relating thereto, wherever located,
including the real property and related assets more particularly described in
the Mortgages.
1.118 "Receivables" shall mean all of the following now owned or hereafter
arising or acquired property of each Borrower and Guarantor: (a) all Accounts;
(b) all interest, fees, late charges, penalties, collection fees and other
amounts due or to become due or otherwise payable in connection with any
Account; (c) all payment intangibles of such Borrower or Guarantor; (d) letters
of credit, indemnities, guarantees, security or other deposits and proceeds
thereof issued payable to any Borrower or Guarantor or otherwise in favor of or
delivered to any Borrower or Guarantor in connection with any Account; or (e)
all other accounts, contract rights, chattel paper, instruments, notes, general
intangibles and other forms of obligations owing to any Borrower or Guarantor,
whether from the sale and lease of goods or other property, licensing of any
property (including Intellectual Property or other general intangibles),
rendition of services or from loans or advances by any Borrower or Guarantor or
to or for the benefit of any third person (including loans or advances to any
Affiliates or Subsidiaries of any Borrower or Guarantor) or otherwise associated
with any Accounts, Inventory or general intangibles of any Borrower or Guarantor
(including, without limitation, choses in action, causes of action, tax refunds,
tax refund claims, any funds which may become payable to any Borrower or
Guarantor in connection with the termination of any Plan or other employee
benefit plan and any other amounts payable to any Borrower or Guarantor from any
Plan or other employee benefit plan, rights and claims against carriers and
shippers, rights to indemnification, business interruption insurance and
proceeds thereof, casualty or any similar types of insurance and any proceeds
thereof and proceeds of insurance covering the lives of employees on which any
Borrower or Guarantor is a beneficiary).
1.119 "Records" shall mean, as to each Borrower and Guarantor, all of such
Borrower's and Guarantor's present and future books of account of every kind or
nature, purchase and sale agreements, invoices, ledger cards, bills of lading
and other shipping evidence, statements,
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correspondence, memoranda, credit files and other data relating to the
Collateral or any account debtor, together with the tapes, disks, diskettes and
other data and software storage media and devices including, internet storage
sites, file cabinets or containers in or on which the foregoing are stored
(including any rights of any Borrower or Guarantor with respect to the foregoing
maintained with or by any other person).
1.120 "Renewal Date" shall have the meaning set forth in Section 13.1
hereof.
1.121 "Register" shall have the meaning set forth in Section 13.7 hereof.
1.122 "Required Lenders" shall mean, at any time, those Lenders whose Pro
Rata Shares aggregate more than fifty (50%) percent or more of the aggregate of
the Commitments of all Lenders, or if the Commitments shall have been
terminated, Lenders to whom more than fifty (50%) percent of the then
outstanding Obligations are owing.
1.123 "Reserves" shall mean as of any date of determination, such amounts
as Agent may from time to time establish and revise in good faith reducing the
amount of Loans and Letters of Credit which would otherwise be available to any
Borrower under the lending formula(s) provided for herein: (a) to reflect
events, conditions, contingencies or risks which, as determined by Agent in good
faith and in accordance with its customary practices, adversely affect, or would
have a reasonable likelihood of adversely affecting, either (i) the Collateral
or any other property which is security for the Obligations, its value or the
amount that might be received by Agent from the sale or other disposition or
realization upon such Collateral, or (ii) the assets, business or prospects of
any Borrower or Guarantor or (iii) the security interests and other rights of
Agent or any Lender in the Collateral (including the enforceability, perfection
and priority thereof) or (b) to reflect Agent's good faith belief that any
collateral report or financial information furnished by or on behalf of any
Borrower or Guarantor to Agent is or may have been incomplete, inaccurate or
misleading in any material respect or (c) to reflect outstanding Letters of
Credit as provided in Section 2.2 hereof, (d) to reflect the amounts of Priority
Payables, or (e) as may be required pursuant to the Term Loan Intercreditor
Agreement, or (f) in respect of any state of facts which Agent determines in
good faith constitutes a Default or an Event of Default. Without limiting the
generality of the foregoing, Reserves may, at Agent's option, be established to
reflect: dilution with respect to the Accounts (based on the ratio of the
aggregate amount of non-cash reductions in Accounts for any period to the
aggregate dollar amount of the sales of such Borrower for such period) as
calculated by Agent for any period is or is reasonably anticipated to be greater
than five (5%) percent; returns, discounts, claims, credits and allowances of
any nature that are not paid pursuant to the reduction of Accounts; sales,
excise or similar taxes included in the amount of any Accounts reported to
Agent; a change in the turnover, age or mix of the categories of Inventory that
adversely affects the aggregate value of all Inventory; amounts due or to become
due to owners and lessors of premises where any Collateral is located, other
than for those locations where Agent has received a Collateral Access Agreement
that Agent has accepted in writing; obligations, liabilities or indebtedness
(contingent or otherwise) of Borrowers or Guarantors to a Bank Product Provider
arising under or in connection with any Hedge Agreement of any Borrower or
Guarantor with such Bank Product Provider or as such Person may otherwise
require in connection therewith to the extent that such obligations, liabilities
or indebtedness constitute Obligations as such term is defined herein or
otherwise receive the benefit of the security interest of Agent in any
Collateral; and wages due or to become due to employees of Borrowers and
Guarantors employed in Wisconsin, to the extent
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that any failure fully to pay such wages when due could give rise to a statutory
lien in any assets of Borrowers or Guarantors. The amount of any Reserve
established by Agent shall have a reasonable relationship to the event,
condition or other matter which is the basis for such reserve as determined by
Agent in good faith and in accordance with its customary practices and to the
extent that such Reserve is in respect of amounts that may be payable to third
parties, Agent may, at its option, deduct such Reserves from the Maximum Credit,
at any time that the Maximum Credit is less than the Borrowing Base. All
Reserves with respect to Obligations in respect of Bank Products shall be
deducted from the lesser of the Maximum Credit and the Borrowing Base. The
Reserves shall include in addition, and not in limitation, the Availability
Block.
1.124 "Restricted Payments" shall mean (a) any cash dividend or other cash
distribution, direct or indirect, on account of any shares of any class of
Capital Stock of Parent or any of its Subsidiaries, as the case may be, now or
hereafter outstanding, (b) any redemption, retirement, sinking fund or similar
payment on account of, or purchase or other acquisition for value, direct or
indirect, of any shares of any class of Capital Stock of Parent or any of its
Subsidiaries, except for any redemption, retirement, sinking funds or similar
payment payable solely in such shares of that class of stock or in any class of
stock junior to that class, (c) any cash payment made to redeem, purchase,
repurchase or retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire any shares of any class of Capital Stock of
Parent or any of its Subsidiaries now or hereafter outstanding, or (d) any
payment to any Affiliate of any Borrower except to the extent expressly
permitted in this Loan Agreement; sometimes being referred to herein
individually as a "Restricted Payment".
1.125 "Revolving Loans" shall mean the loans now or hereafter made by or
on behalf of any Lender or by Agent for the account of any Lender on a revolving
basis pursuant to the Credit Facility (involving advances, repayments and
readvances) as set forth in Section 2.1 hereof.
1.126 "Secured Parties" shall mean, collectively, (a) Agent, (b) Lenders,
(c) the Issuing Bank and (d) any Bank Product Provider; provided, that, (i) as
to any Bank Product Provider, only to the extent of the Obligations owing to
such Bank Product Provider and (ii) such parties are sometimes referred to
herein individually as a "Secured Party".
1.127 "Shanghai" shall mean Shanghai C&D Battery Company, Ltd., 000 Xxxxxx
Xx, Xxxxxx Xxxxxxxx, Xxxxxx Xxx Xxxx, Xxxxxxxx, 000000.
1.128 "Shanghai Disposition" shall mean any loss of, or any condemnation
or other taking for public use of, the real property currently occupied and/or
owned by Shanghai.
1.129 "Shanghai Project" shall mean the construction of new facilities for
use by Shanghai, including, without limitation, the purchase of any and all
required land rights, permits, designs, equipment and fixtures as a result of
the Shanghai Disposition.
1.130 "Solvent" shall mean, at any time with respect to any Person, that
at such time such Person (a) is able to pay its debts as they mature and has
(and has a reasonable basis to believe it will continue to have) sufficient
capital (and not unreasonably small capital) to carry on its business consistent
with its practices as of the date hereof, and (b) the assets and properties of
such Person at a fair valuation (and including as assets for this purpose at a
fair valuation all
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rights of subrogation, contribution or indemnification arising pursuant to any
guarantees given by such Person) are greater than the Indebtedness of such
Person, and including subordinated and contingent liabilities computed at the
amount which, such person has a reasonable basis to believe, represents an
amount which can reasonably be expected to become an actual or matured liability
(and including as to contingent liabilities arising pursuant to any guarantee
the face amount of such liability as reduced to reflect the probability of it
becoming a matured liability).
1.131 "Special Agent Advances" shall have the meaning set forth in Section
12.11 hereof.
1.132 "Subsidiary" or "subsidiary" shall mean, with respect to any Person,
any corporation, limited or unlimited liability company, limited liability
partnership or other limited or general partnership, trust, association or other
business entity of which an aggregate of at least a majority of the outstanding
Capital Stock or other interests entitled to vote in the election of the board
of directors of such corporation (irrespective of whether, at the time, Capital
Stock of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency), managers, trustees,
members or other controlling persons, or an equivalent controlling interest
therein, of such Person is, at the time, directly or indirectly, owned by such
Person and/or one or more subsidiaries of such Person.
1.133 "Swing Line Lender" shall mean Wachovia Bank, National Association,
in its capacity as lender of Swing Line Loans.
1.134 "Swing Line Loan Limit" shall mean $7,000,000.
1.135 "Swing Line Loans" shall have the meaning set forth in Section 2.1
hereof.
1.136 "Term Loan Agent" shall mean Ableco Finance LLC, a Delaware limited
liability company, in its capacity as agent acting for and on behalf of Term
Loan Lenders pursuant to the Term Loan Documents and any replacement or
successor agent thereunder.
1.137 "Term Loan Agreement" shall mean the Loan and Security Agreement,
dated of even date herewith, by and among Term Loan Agent, Term Loan Lenders,
Borrowers and Guarantors, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
1.138 "Term Loan Debt" shall mean all obligations, liabilities and
indebtedness of every kind, nature and description owing by Borrowers and
Guarantors to Term Loan Agent and Term Loan Lenders, including principal,
interest, charges, fees, premiums, indemnities, costs and expenses, however
evidenced, whether as principal, surety, endorser, guarantor or otherwise,
arising under or in connection with the Term Loan Documents.
1.139 "Term Loan Documents" shall mean, collectively, the following (as
the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced): (a) the Term Loan Agreement; (b) the
agreements, documents and instruments set forth on Schedule 1.139 hereto; and
(c) all other agreements, documents and instruments at any time executed and/or
delivered by any Borrower or Guarantor with, to or in favor of Term Loan
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Agent or Term Loan Lenders in connection therewith or related thereto; sometimes
being referred to herein individually as a "Term Loan Document".
1.140 "Term Loan Intercreditor Agreement" shall mean the Intercreditor
Agreement, dated of even date herewith, between Agent and Term Loan Agent, as
acknowledged and agreed to by Borrowers and Guarantors, as the same now exists
or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced.
1.141 "Term Loan Lenders" shall mean, collectively, the lenders from time
to time party to the Term Loan Agreement as lenders, and their respective
successors and assigns.
1.142 "UCC" shall mean the Uniform Commercial Code as in effect in the
State of New York and any successor statute, as in effect from time to time
(except that terms used herein which are defined in the Uniform Commercial Code
as in effect in the State of New York on the date hereof shall continue to have
the same meaning notwithstanding any replacement or amendment of such statute
except as Agent may otherwise determine).
1.143 "US Dollar Equivalent" shall mean at any time (a) as to any amount
denominated in US Dollars, the amount thereof at such time, and (b) as to any
amount denominated in an Alternative Currency or any other currency, the
equivalent amount in US Dollars calculated by Agent at such time using the
Currency Exchange Convention in effect on the Business Day of determination.
1.144 "US Dollars", "US$" and "$" shall each mean lawful currency of the
United States of America.
1.145 "Value" shall mean, as determined by Agent in good faith and in
accordance with its customary practices, with respect to Inventory, the lower of
(a) cost computed on a first-in first-out basis in accordance with GAAP or (b)
market value; provided, that, for purposes of the calculation of the Borrowing
Base, (i) the Value of the Inventory shall not include: (A) the portion of the
value of Inventory equal to the profit earned by any Affiliate on the sale
thereof to any Borrower or (B) write-ups or write-downs in value with respect to
currency exchange rates and (ii) notwithstanding anything to the contrary
contained herein, the cost of the Inventory shall be computed in the same manner
and consistent with the most recent appraisal of the Inventory received and
accepted by Agent prior to the date hereof, if any.
1.146 "Voting Stock" shall mean with respect to any Person, (a) one (1) or
more classes of Capital Stock of such Person having general voting powers to
elect at least a majority of the board of directors, managers or trustees of
such Person, irrespective of whether at the time Capital Stock of any other
class or classes have or might have voting power by reason of the happening of
any contingency, and (b) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
Capital Stock of such Person described in clause (a) of this definition.
1.147 "Wachovia" shall mean Wachovia Bank, National Association, in its
individual capacity, and its successors and assigns.
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1.148 "Weighted Average Life to Maturity" shall mean, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding principal amount of such Indebtedness into (b) the total of the
product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment.
SECTION 2. CREDIT FACILITIES
2.1 Loans.
(a) Subject to and upon the terms and conditions contained herein,
(i) each Lender severally (and not jointly) agrees to make its
Pro Rata Share of Revolving Loans to each Borrower from time to time in amounts
requested by such Borrower (or Administrative Borrower on behalf of such
Borrower), up to the aggregate amount outstanding for all Lenders at any time
equal to the lesser of: (i) the Borrowing Base at such time or (ii) the Maximum
Credit at such time; and
(ii) the Swing Line Lender agrees that it will make loans
("Swing Line Loans") to the Administrative Borrower for the account of the
applicable Borrower equal to the principal amount of the Swing Line Loan
requested by any Borrower (or Administrative Borrower on behalf of a Borrower),
to be made on such day; provided, that, the aggregate principal amount of the
Revolving Loans, Swing Line Loans and Letter of Credit Obligations outstanding
at any one time shall not exceed the Borrowing Base at such time and the
aggregate principal amount of the Swing Line Loans outstanding at any one time
shall not exceed the Swing Line Loan Limit.
(b) On the terms and subject to the conditions hereof, each Borrower
may from time to time borrow, prepay and reborrow Revolving Loans and Swing Line
Loans. No Lender shall be required to make any Revolving Loan, if, after giving
effect thereto the aggregate outstanding principal amount of all Revolving Loans
of such Lender, together with such Lender's Pro Rata Share of the aggregate
amount of all Swing Line Loans and Letter of Credit Obligations, would exceed
such Lender's Commitment. Swing Line Lender shall not be required to make Swing
Line Loans, if, after giving effect thereto, the aggregate outstanding principal
amount of all Swing Line Loans would exceed the then existing Swing Line Loan
Limit or unless otherwise agreed by Swing Line Lender, the sum of all Swing Line
Loans and Revolving Loans made by Swing Line Lender, plus Swing Line Lender's
Pro Rata Share of the aggregate amount of the then outstanding Letter of Credit
Obligations would exceed the Swing Line Lender's Commitment. Each Swing Line
Loan shall be subject to all of the terms and conditions applicable to other
Prime Rate Loans or Eurodollar Rate Loans, as applicable, funded by the Lenders,
except that all payments thereon shall be payable to the Swing Line Lender
solely for its own account. All Revolving Loans and Swing Line Loans shall be
subject to the settlement among Lenders as provided for in Section 6.11 hereof.
(c) Upon the making of a Swing Line Loan or a Special Agent Advance
(whether before or after the occurrence of a Default or Event of Default) or any
Loan by Agent as provided in Section 6.11, without further action by any party
hereto, each Lender shall be
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deemed to have irrevocably and unconditionally purchased and received from the
Swing Line Lender or Agent, without recourse or warranty, an undivided interest
and participation to the extent of such Lender's Pro Rata Share in such Swing
Line Loan, Special Agent Advance or other Loan. To the extent that there is no
settlement in accordance with Section 6.11 below, the Swing Line Lender or
Agent, as the case may be, may at any time, require the Lenders to fund their
participations. From and after the date, if any, on which any Lender has funded
its participation in any Swing Line Loan, Special Agent Advance or other Loan,
Agent shall promptly distribute to such Lender, such Lender's Pro Rata Share of
all payments of principal and interest received by Agent in respect of such
Swing Line Loan or Special Agent Advance or other Loan.
(d) Except in Agent's discretion, with the consent of all Lenders,
or as otherwise provided herein, (i) the aggregate amount of the Loans and the
Letter of Credit Obligations outstanding at any time shall not exceed the
Maximum Credit, (ii) the aggregate principal amount of the Revolving Loans,
Swing Line Loans and Letter of Credit Obligations outstanding at any time shall
not exceed the Borrowing Base, and (iii) the aggregate principal amount of Loans
outstanding at any time based on Eligible Inventory shall not exceed the
Inventory Loan Limit.
(e) In the event that (i) the aggregate amount of the Loans and the
Letter of Credit Obligations outstanding at any time exceed the Maximum Credit,
or (ii) except as otherwise provided herein, the aggregate principal amount of
the Revolving Loans, Swing Line Loans and Letter of Credit Obligations
outstanding exceed the Borrowing Base, or (iii) the aggregate principal amount
of Loans outstanding at any time based on Eligible Inventory exceeds the
Inventory Loan Limit, such event shall not limit, waive or otherwise affect any
rights of Agent or Lenders in such circumstances or on any future occasions and
Borrowers shall, upon demand by Agent, which may be made at any time or from
time to time, immediately repay to Agent the entire amount of any such
excess(es), and only such excess(es), for which payment is demanded.
2.2 Letters of Credit.
(a) Subject to and upon the terms and conditions contained herein
and in the Letter of Credit Documents, at the request of a Borrower (or
Administrative Borrower on behalf of such Borrower), Agent agrees to cause
Issuing Bank to issue, and Issuing Bank agrees to issue, for the account of such
Borrower one or more Letters of Credit, for the ratable risk of each Lender
according to its Pro Rata Share, containing terms and conditions acceptable to
Agent and Issuing Bank.
(b) The Borrower requesting such Letter of Credit (or Administrative
Borrower on behalf of such Borrower) shall give Agent and Issuing Bank three (3)
Business Days' prior written notice of such Borrower's request for the issuance
of a Letter of Credit. Such notice shall be irrevocable and shall specify the
original face amount of the Letter of Credit requested, the effective date
(which date shall be a Business Day and in no event shall be a date less than
ten (10) days prior to the end of the then current term of this Agreement) of
issuance of such requested Letter of Credit, whether such Letter of Credit may
be drawn in a single or in partial draws, the date on which such requested
Letter of Credit is to expire (which date shall be a Business Day and shall not
be more than one year from the date of issuance), the purpose for which such
Letter of Credit is to be issued, and the beneficiary of the requested Letter of
Credit.
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The Borrower requesting the Letter of Credit (or Administrative Borrower on
behalf of such Borrower) shall attach to such notice the proposed terms of the
Letter of Credit. The renewal or extension of any Letter of Credit shall, for
purposes hereof be treated in all respects the same as the issuance of a new
Letter of Credit hereunder.
(c) In addition to being subject to the satisfaction of the
applicable conditions precedent contained in Section 4 hereof and the other
terms and conditions contained herein, no Letter of Credit shall be available
unless each of the following conditions precedent have been satisfied in a
manner satisfactory to Agent: (i) the Borrower requesting such Letter of Credit
(or Administrative Borrower on behalf of such Borrower) shall have delivered to
Issuing Bank at such times and in such manner as Issuing Bank may require, an
application, in form and substance satisfactory to Issuing Bank and Agent, for
the issuance of the Letter of Credit and such other Letter of Credit Documents
as may be required pursuant to the terms thereof, and the form and terms of the
proposed Letter of Credit shall be satisfactory to Agent and Issuing Bank, (ii)
as of the date of issuance, no order of any court, arbitrator or other
Governmental Authority shall purport by its terms to enjoin or restrain money
center banks generally from issuing letters of credit of the type and in the
amount of the proposed Letter of Credit, and no law, rule or regulation
applicable to money center banks generally and no request or directive (whether
or not having the force of law) from any Governmental Authority with
jurisdiction over money center banks generally shall prohibit, or request that
Issuing Bank refrain from, the issuance of letters of credit generally or the
issuance of such Letter of Credit, (iii) after giving effect to the issuance of
such Letter of Credit, the Letter of Credit Obligations shall not exceed the
Letter of Credit Limit, and (iv) the Excess Availability of the Borrower
requesting such Letter of Credit, prior to giving effect to any Reserves with
respect to such Letter of Credit, on the date of the proposed issuance of any
Letter of Credit shall be equal to or greater than: (A) if the proposed Letter
of Credit is for the purpose of purchasing Eligible Inventory and the documents
of title with respect thereto are consigned to Issuing Bank, the sum of (1) the
percentage equal to one hundred (100%) percent minus the then applicable
percentage with respect to Eligible Inventory set forth in the definition of the
term Borrowing Base multiplied by the Value of such Eligible Inventory, plus (2)
freight, taxes, duty and other amounts which Agent estimates must be paid in
connection with such Inventory upon arrival and for delivery to one of such
Borrower's locations for Eligible Inventory within the United States of America
or Canada and (B) if the proposed Letter of Credit is for any other purpose or
the documents of title are not consigned to Issuing Bank in connection with a
Letter of Credit for the purpose of purchasing Inventory, an amount equal to one
hundred (100%) percent of the Letter of Credit Obligations with respect thereto.
Effective on the issuance of each Letter of Credit, a Reserve shall be
established in the applicable amount set forth in Section 2.2(c)(iv)(A) or
Section 2.2(c)(iv)(B).
(d) Except in Agent's discretion, with the consent of all Lenders,
the amount of all outstanding Letter of Credit Obligations shall not at any time
exceed the Letter of Credit Limit.
(e) Each Borrower shall reimburse immediately Issuing Bank for any
draw under any Letter of Credit issued for the account of such Borrower and pay
Issuing Bank the amount of all other charges and fees payable to Issuing Bank in
connection with any Letter of Credit issued for the account of such Borrower
immediately when due, irrespective of any claim, setoff, defense or other right
which such Borrower may have at any time against Issuing Bank or any other
Person. Each drawing under any Letter of Credit or other amount payable in
connection
33
therewith when due shall constitute a request by the Borrower for whose account
such Letter of Credit was issued to Agent for a Prime Rate Loan in the amount of
such drawing or other amount then due, and shall be made by Agent on behalf of
Lenders as a Loan (or Special Agent Advance, as the case may be). The date of
such Loan shall be the date of the drawing or as to other amounts, the due date
therefor. Any payments made by or on behalf of Agent or any Lender to Issuing
Bank and/or related parties in connection with any Letter of Credit shall
constitute additional Loans to such Borrower pursuant to this Section 2 (or
Special Agent Advances as the case may be).
(f) Borrowers and Guarantors shall indemnify and hold Agent and
Lenders harmless from and against any and all losses, claims, damages,
liabilities, costs and expenses which Agent or any Lender may suffer or incur in
connection with any Letter of Credit and any documents, drafts or acceptances
relating thereto, including any losses, claims, damages, liabilities, costs and
expenses due to any action taken by Issuing Bank or correspondent with respect
to any Letter of Credit, except for such losses, claims, damages, liabilities,
costs or expenses that are a direct result of the gross negligence or willful
misconduct of Agent or any Lender as determined pursuant to a final
non-appealable order of a court of competent jurisdiction. Each Borrower and
Guarantor assumes all risks with respect to the acts or omissions of the drawer
under or beneficiary of any Letter of Credit and for such purposes the drawer or
beneficiary shall be deemed such Borrower's agent. Each Borrower and Guarantor
assumes all risks for, and agrees to pay, all foreign, Federal, State and local
taxes, duties and levies relating to any goods subject to any Letter of Credit
or any documents, drafts or acceptances thereunder. Each Borrower and Guarantor
hereby releases and holds Agent and Lenders harmless from and against any acts,
waivers, errors, delays or omissions with respect to or relating to any Letter
of Credit, except for the gross negligence or willful misconduct of Agent or any
Lender as determined pursuant to a final, non-appealable order of a court of
competent jurisdiction. The provisions of this Section 2.2(f) shall survive the
payment of Obligations and the termination of this Agreement.
(g) In connection with Inventory purchased pursuant to any Letter of
Credit, Borrowers and Guarantors shall, at Agent's request, instruct all
suppliers, carriers, forwarders, customs brokers, warehouses or others receiving
or holding cash, checks, Inventory, documents or instruments in which Agent
holds a security interest that upon Agent's request, such items are to be
delivered to Agent and/or subject to Agent's order, and if they shall come into
such Borrower's or Guarantor's possession, to deliver them, upon Agent's
request, to Agent in their original form. Except as otherwise provided herein,
Agent shall not exercise such right to request such items so long as no Default
or Event of Default shall exist or have occurred and be continuing. Except as
Agent may otherwise specify, Borrowers and Guarantors shall designate Issuing
Bank as the consignee on all bills of lading and other negotiable and
non-negotiable documents.
(h) Each Borrower and Guarantor hereby irrevocably authorizes and
directs Issuing Bank to name such Borrower or Guarantor as the account party
therein and to deliver to Agent all instruments, documents and other writings
and property received by Issuing Bank pursuant to the Letter of Credit and to
accept and rely upon Agent's instructions and agreements with respect to all
matters arising in connection with the Letter of Credit or the Letter of Credit
Documents with respect thereto. Nothing contained herein shall be deemed or
construed to grant any Borrower or Guarantor any right or authority to pledge
the credit of Agent or any Lender in any
34
manner. Borrowers and Guarantors shall be bound by any reasonable interpretation
made in good faith by Agent, or Issuing Bank under or in connection with any
Letter of Credit Accommodation or any documents, drafts or acceptances
thereunder, notwithstanding that such interpretation may be inconsistent with
any instructions of any Borrower or Guarantor.
(i) Immediately upon the issuance or amendment of any Letter of
Credit, each Lender shall be deemed to have irrevocably and unconditionally
purchased and received, without recourse or warranty, an undivided interest and
participation to the extent of such Lender's Pro Rata Share of the liability
with respect to such Letter of Credit and the obligations of Borrowers with
respect thereto (including all Letter of Credit Obligations with respect
thereto). Each Lender shall absolutely, unconditionally and irrevocably assume,
as primary obligor and not as surety, and be obligated to pay to Issuing Bank
therefor and discharge when due, its Pro Rata Share of all of such obligations
arising under such Letter of Credit. Without limiting the scope and nature of
each Lender's participation in any Letter of Credit, to the extent that Issuing
Bank has not been reimbursed or otherwise paid as required hereunder or under
any such Letter of Credit, each such Lender shall pay to Issuing Bank its Pro
Rata Share of such unreimbursed drawing or other amounts then due to Issuing
Bank in connection therewith.
(j) The obligations of Borrowers to pay Letter of Credit Obligations
and the obligations of Lenders to make payments to Agent for the account of
Issuing Bank with respect to Letters of Credit shall be absolute, unconditional
and irrevocable and shall be performed strictly in accordance with the terms of
this Agreement under any and all circumstances, whatsoever, notwithstanding the
occurrence or continuance of any Default, Event of Default, the failure to
satisfy any other condition set forth in Section 4 or any other event or
circumstance. If such amount is not made available by a Lender when due, Agent
shall be entitled to recover such amount on demand from such Lender with
interest thereon, for each day from the date such amount was due until the date
such amount is paid to Agent at the interest rate then payable by any Borrower
in respect of Loans that are Prime Rate Loans. Any such reimbursement shall not
relieve or otherwise impair the obligation of Borrowers to reimburse Issuing
Bank under any Letter of Credit or make any other payment in connection
therewith.
2.3 Mandatory Prepayments. Notwithstanding the provisions of Section 6.4
hereof, so long as no Event of Default exists or has occurred and is continuing:
(a) Upon the receipt by any Borrower or any of its Subsidiaries of
any Extraordinary Receipts, Borrowers shall immediately prepay the Term Loan
Debt and the Obligations as set forth below, in an amount equal to 100% of such
Extraordinary Receipts, net of any reasonable expenses incurred in collecting
such Extraordinary Receipts;
(i) if such Extraordinary Receipts are the proceeds of
Inventory, Accounts, or Equipment, then such proceeds shall be applied, first,
to the outstanding principal amount of the Loans based on Equipment Availability
and the Equipment Availability shall thereupon be permanently reduced by the
amount of such proceeds applied to the outstanding principal amount of the Loans
based on Equipment Availability, second, to the outstanding principal amount of
the Loans and third, to the outstanding principal amount of the Term Loan Debt;
and
(ii) if such Extraordinary Receipts are the proceeds of any
Collateral (other than Inventory, Accounts, or Equipment), then such proceeds
shall be applied, first, to the
35
outstanding principal amount of the Loans based on Equipment Availability and
the Equipment Availability shall thereupon be permanently reduced by the amount
of such proceeds applied to the outstanding principal amount of the Loans based
on Equipment Availability (except to the extent that such proceeds consist of
tax refunds, judgments or pension reversions), and second, at Borrowers' option
to either (A) the outstanding principal amount of the Term Loan Debt or (B) the
outstanding principal amount of the Loans so long as (in the case of this clause
(B) only) Agent establishes and maintains a permanent Reserve in an amount equal
to the amount of such proceeds that are so applied by the prepayment of the
Loans;
provided, however, that (A) so long as no Default or an Event of Default has
occurred and is continuing, on the date such Person receives Extraordinary
Receipts consisting of insurance proceeds from one or more policies covering, or
proceeds from any judgment, settlement, condemnation or other cause of action in
respect of, the loss, damage, taking or theft of any property or assets, such
Extraordinary Receipts received by the Borrowers may, at the option of the
Borrowers, be applied to repair, refurbish or replace such property or assets or
acquire replacement property or assets for the property or assets so lost,
damaged or stolen or other property or assets used or useful in the business of
any Borrower for the property or assets so disposed, provided, that (x) the
Agent for the benefit of the Lenders has a first-priority Lien on such
replacement (or repaired or restored) property or assets, (y) the Borrowers
deliver a certificate to the Agent within 10 days after the date of receipt of
such Extraordinary Receipts stating that such Extraordinary Receipts shall be
used to repair or refurbish such property or assets or to acquire such
replacement property or assets for the property or assets so lost, damaged or
stolen or such other property or assets used or useful in the business of any
Borrower within 120 days after the date of receipt of such Extraordinary
Receipts that are not the proceeds of Real Property or 180 days after the date
of receipt of such Extraordinary Proceeds that are the proceeds of Real Property
(which certificate shall set forth an estimate of the Extraordinary Receipts to
be so expended), and (z) if such Extraordinary Receipts are the proceeds of Real
Property and aggregate $1,500,000 or more, the Borrowers shall obtain the prior
written consent of the Agent and (B) if all or any portion of such Extraordinary
Receipts are not so used within the 120-day or 180-day period, as applicable,
such unused Extraordinary Receipts shall be applied to prepay the Term Loan Debt
and the Obligations in accordance with this Section 2.3(a). Pending such
reinvestment, the Extraordinary Receipts shall be applied as a prepayment of
Loans.
(b) Upon the issuance or sale by any Borrower or any of its
Subsidiaries of Capital Stock of such Borrower or Subsidiary as permitted in
Sections 9.7(b)(iii) and (iv) hereof, or the issuance or incurrence by any
Borrower or any of its Subsidiaries of any Indebtedness of the type described in
Section 9.9(g), Borrowers shall immediately prepay the Term Loan Debt and the
Obligations, in an amount equal to 100% of the Net Cash Proceeds received by
such Person in connection therewith as follows: first, to the outstanding
principal amount of the Loans based on Equipment Availability, and second, at
Borrowers' option to either (A) the outstanding principal amount of the Term
Loan Debt or (B) the outstanding principal amount of the Revolving Loans so long
as (in the case of this clause (B) only) Agent establishes and maintains a
permanent Reserve in an amount equal to the amount of such Net Cash Proceeds
that are so applied by the prepayment of the Loans. The provisions of this
subsection (b) shall not be deemed to be implied consent to any such issuance,
incurrence or sale otherwise prohibited by the terms and conditions of this
Agreement.
36
(c) Upon the sale or disposition of any Collateral by any Borrower
or any of its Subsidiaries not otherwise permitted by the terms of this
Agreement but consented to by the Required Lenders, Borrowers shall immediately
prepay the Term Loan Debt and the Obligations as set forth below, in an amount
equal to 100% of the Net Cash Proceeds received by such Person in connection
with such sale or disposition:
(i) if such sale or disposition is of Inventory, Accounts or
Equipment, then such Net Cash Proceeds shall be applied, first, to the
outstanding principal amount of the Loans based on Equipment Availability and
the Equipment Availability shall thereupon be permanently reduced by the amount
of such proceeds applied to the outstanding principal amount of the Loans based
on Equipment Availability, second, to the outstanding principal amount of the
Loans and third, to the outstanding principal amount of the Term Loan Debt;
(ii) if such sale or disposition is of any Collateral (other
than Inventory, Accounts, or Equipment), then such Net Cash Proceeds shall be
applied, first, to the outstanding principal amount of the Loans based on
Equipment Availability and the Equipment Availability shall thereupon be
permanently reduced by the amount of such proceeds applied to the outstanding
principal amount of the Loans based on Equipment Availability (except to the
extent that such proceeds consist of tax refunds, judgments or pension
reversions), and second, at Borrower's option to either (A) the outstanding
principal amount of the Term Loan Debt or (B) outstanding principal amount of
the Loans so long as (in the case of this clause (B) only) Agent establishes and
maintains a permanent Reserve in an amount equal to the amount of such Net Cash
Proceeds that are so applied by the prepayment of the Loans.
(iii) All prepayments of the Term Loan Debt under this Section
2.3 shall be applied against the remaining installments (if any) of principal
due on the Term Loan Debt, in the inverse order of maturity. Notwithstanding
anything to the contrary in this Section 2.3, all prepayments of principal under
this Section 2.3 shall be made together with accrued and unpaid interest thereon
to the date of such prepayment.
2.4 Commitments. The aggregate amount of each Lender's Pro Rata Share of
the Loans and Letter of Credit Obligations shall not exceed the amount of such
Lender's Commitment, as the same may from time to time be amended in accordance
with the provisions hereof.
2.5 Joint and Several Liability. Each Borrower shall be jointly and
severally liable for all amounts due to Agent and Lenders under this Agreement
and the other Financing Agreements, regardless of which Borrower actually
receives the Loans or Letters of Credit hereunder or the amount of such Loans
received or the manner in which Agent or any Lender accounts for such Loans,
Letters of Credit or other extensions of credit on its books and records. All
references herein or in any of the other Financing Agreements to any of the
obligations of Borrowers to make any payment hereunder or thereunder shall
constitute joint and several obligations of Borrowers. The Obligations with
respect to Loans made to a Borrower, and the Obligations arising as a result of
the joint and several liability of a Borrower hereunder, with respect to Loans
made to another Borrower, shall be separate and distinct obligations, but all
such other Obligations shall be primary obligations of all Borrowers. The
Obligations arising as a result of the joint and several liability of a Borrower
hereunder with respect to Loans, Letters of Credit or other extensions of credit
made to each other Borrower shall, to the fullest extent
37
permitted by law, be unconditional irrespective of (a) the validity or
enforceability, avoidance or subordination of the Obligations of such other
Borrower or of any promissory note or other document evidencing all or any part
of the Obligations of such other Borrower, (b) the absence of any attempt to
collect the Obligations from such Borrower, any Obligor or any other security
therefor, or the absence of any other action to enforce the same, (c) the
waiver, consent, extension, forbearance or granting of any indulgence by Agent
or any Lender with respect to any provisions of any instrument evidencing the
Obligations of such other Borrower, or any part thereof, or any other agreement
now or hereafter executed by the other Borrower and delivered to Agent or any
Lender, (d) the failure by Agent or any Lender to take any steps to perfect and
maintain its security interest in, or to preserve its rights and maintain its
security or collateral for the Obligations of such other Borrower, (e) the
election of Agent and Lenders in any proceeding instituted under the Bankruptcy
Code, of the application of Section 1111(b)(2) of the Bankruptcy Code, (f) the
disallowance of all or any portion of the claim(s) of Agent or any Lender for
the repayment of the Obligations of such other Borrower under Section 502 of the
Bankruptcy Code, or (g) any other circumstances which might constitute a legal
or equitable discharge or defense of an Obligor or of such other Borrower. With
respect to the Obligations arising as a result of the joint and several
liability of a Borrower hereunder with respect to Loans, Letters of Credit or
other extensions of credit made to another Borrower hereunder, each Borrower
waives, until the Obligations shall have been paid in full and this Agreement
shall have been terminated, any right to enforce any right of subrogation or any
remedy which Agent or any Lender now has or may hereafter have against any
Borrower or Obligor and any benefit of, and any right to participate in, any
security or collateral given to Agent or any Lender. At any time an Event of
Default exists or has occurred and is continuing, Agent may proceed directly and
at once, without notice, against any Borrower to collect and recover the full
amount, or any portion of the Obligations, without first proceeding against the
other Borrower or any other Person, or against any security or collateral for
the Obligations. Each Borrower consents and agrees that Agent and Lenders shall
be under no obligation to xxxxxxxx any assets in favor of any Borrower or
against or in payment of any or all of the Obligations.
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Borrowers shall pay to Agent, for the benefit of Lenders,
interest on the outstanding principal amount of the Loans at the Interest Rate.
All interest accruing hereunder on and after the date of any Event of Default or
termination hereof shall be payable on demand.
(b) Each Borrower (or Administrative Borrower on behalf of such
Borrower) may from time to time request Eurodollar Rate Loans or may request
that Prime Rate Loans be converted to Eurodollar Rate Loans or that any existing
Eurodollar Rate Loans continue for an additional Interest Period. Such request
from a Borrower (or Administrative Borrower on behalf of such Borrower) shall
specify the amount of the Eurodollar Rate Loans or the amount of the Prime Rate
Loans to be converted to Eurodollar Rate Loans or the amount of the Eurodollar
Rate Loans to be continued (subject to the limits set forth below) and the
Interest Period to be applicable to such Eurodollar Rate Loans. Subject to the
terms and conditions contained herein, three (3) Business Days after receipt by
Agent of such a request from a Borrower (or Administrative Borrower on behalf of
such Borrower), such Eurodollar Rate Loans shall be made or Prime Rate Loans
shall be converted to Eurodollar Rate Loans or such Eurodollar Rate
38
Loans shall continue, as the case may be, provided, that, (i) no Default or
Event of Default shall exist or have occurred and be continuing, (ii) no party
hereto shall have sent any notice of termination of this Agreement, (iii) such
Borrower (or Administrative Borrower on behalf of such Borrower) shall have
complied with such customary procedures as are established by Agent and
specified by Agent to Administrative Borrower from time to time for requests by
Borrowers for Eurodollar Rate Loans, (iv) no more than four (4) Interest Periods
may be in effect at any one time, (v) the aggregate amount of the Eurodollar
Rate Loans must be in an amount not less than $5,000,000 or an integral multiple
of $1,000,000 in excess thereof, and (vi) Agent and each Lender shall have
determined that the Interest Period or Adjusted Eurodollar Rate is available to
Agent and such Lender and can be readily determined as of the date of the
request for such Eurodollar Rate Loan by such Borrower. Any request by or on
behalf of a Borrower for Eurodollar Rate Loans or to convert Prime Rate Loans to
Eurodollar Rate Loans or to continue any existing Eurodollar Rate Loans shall be
irrevocable. Notwithstanding anything to the contrary contained herein, Agent
and Lenders shall not be required to purchase United States Dollar deposits in
the London interbank market or other applicable Eurodollar Rate market to fund
any Eurodollar Rate Loans, but the provisions hereof shall be deemed to apply as
if Agent and Lenders had purchased such deposits to fund the Eurodollar Rate
Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to Prime
Rate Loans upon the last day of the applicable Interest Period, unless Agent has
received and approved a request to continue such Eurodollar Rate Loan at least
three (3) Business Days prior to such last day in accordance with the terms
hereof. Any Eurodollar Rate Loans shall, at Agent's option, upon notice by Agent
to Parent, be subsequently converted to Prime Rate Loans in the event that this
Agreement shall terminate or not be renewed. Borrowers shall pay to Agent, for
the benefit of Lenders, upon demand by Agent (or Agent may, at its option,
charge any loan account of any Borrower) any amounts required to compensate any
Lender or Participant for any loss (including loss of anticipated profits), cost
or expense incurred by such person, as a result of the conversion of Eurodollar
Rate Loans to Prime Rate Loans pursuant to any of the foregoing.
(d) Interest shall be payable by Borrowers to Agent, for the account
of Lenders, (i) monthly in arrears not later than the first day of each calendar
month with respect to all Loans which are Prime Rate Loans and (b) on the last
day of each Interest Period in respect of each Eurodollar Rate Loan; provided,
that, if Administrative Borrower has selected an Interest Period of six months,
then, in addition on the corresponding date of the third month of such Interest
Period, in each case, calculated on the basis of a three hundred sixty (360) day
year and actual days elapsed. The interest rate on non-contingent Obligations
(other than Eurodollar Rate Loans) shall increase or decrease by an amount equal
to each increase or decrease in the Prime Rate effective on the date of any
change in such Prime Rate. In no event shall charges constituting interest
payable by Borrowers to Agent and Lenders exceed the maximum amount or the rate
permitted under any applicable law or regulation, and if any such part or
provision of this Agreement is in contravention of any such law or regulation,
such part or provision shall be deemed amended to conform thereto.
(e) For purposes of disclosure under the Interest Act (Canada),
where interest is calculated pursuant thereto at a rate based upon a three
hundred sixty (360) day year or three hundred sixty-five (365) day year (the
"First Rate"), the rate or percentage of interest on a yearly
39
basis is equivalent to such First Rate multiplied by the actual number of days
in the year divided by three hundred sixty (360) or three hundred sixty-five
(365), as applicable.
(f) Notwithstanding the provisions of this Section 3 or any other
provision of this Agreement, in no event shall the aggregate "interest" (as that
term is defined in Section 347 of the Criminal Code (Canada)) with respect to
any Loans to a Borrower exceed the effective annual rate of interest on the
"credit advanced" (as defined therein) lawfully permitted under Section 347 of
the Criminal Code (Canada). The effective annual rate of interest for such
purpose shall be determined in accordance with generally accepted actuarial
practices and principles over the term of the applicable Loan to a Borrower, and
in the event of a dispute, a certificate of a Fellow of the Canadian Institute
of Actuaries appointed by Agent will be conclusive for the purposes of such
determination. A certificate of an authorized signing officer of Agent as to
each rate of interest payable hereunder from time to time shall be conclusive
evidence of such rate in the absence of manifest error.
3.2 Fees.
(a) Borrowers shall pay to Agent, for the account of Lenders,
monthly an unused line fee at a rate equal to the percentage (on a per annum
basis) set forth below calculated upon the amount by which the Maximum Credit
exceeds the average daily principal balance of the outstanding Loans and Letters
of Credit during the immediately preceding month (or part thereof) while the
Loan Agreement is in effect and for so long thereafter as any Obligations are
outstanding. Such fee shall be payable on the first day of each month in arrears
and shall be calculated based on a three hundred sixty (360) day year and actual
days elapsed. The percentage used for determining the unused line fee shall be
as set forth below if the Quarterly Average Excess Availability for the
immediately preceding fiscal quarter is at or within the amounts indicated for
such percentage:
---------------------------------------------------------------------
Quarterly Average Unused Line Fee
Excess Availability Percentage
---------------------------------------------------------------------
Tier 1 Greater than $45,000,000 .25%
---------------------------------------------------------------------
Tier 2 Less than or equal to $45,000,000 and .25%
greater than $35,000,000
---------------------------------------------------------------------
Tier 3 Less than or equal to $35,000,000 and .30%
greater than $25,000,000
---------------------------------------------------------------------
Tier 4 Equal to or less than $25,000,000 .30%
---------------------------------------------------------------------
provided, that, (i) the unused line fee percentage shall be calculated and
established based on the foregoing once each fiscal quarter, and (ii) the
applicable percentage for the first two (2) full calendar quarters after the
date hereof shall be the amount for Tier 2 set forth above.
(b) Borrowers shall pay to Agent, for the account of Lenders, a fee
at a rate equal to the Applicable L/C Rate on the average daily maximum amount
available to be drawn under all Letters of Credit for the immediately preceding
month (or part thereof), payable in arrears as of the first day of each
succeeding month, computed for each day from the date of issuance to the date of
expiration; except that Borrowers shall pay, at Agent's option, without notice,
such fee at
40
a rate two (2%) percent greater than the otherwise applicable rate on such
average daily maximum amount for: (i) the period from and after the date of
termination or non-renewal hereof until Lenders have received full and final
payment of all Obligations (notwithstanding entry of a judgment against any
Borrower or Guarantor) and (ii) the period from and after the date of the
occurrence of an Event of Default for so long as such Event of Default is
continuing as determined by Agent. Such letter of credit fees shall be
calculated on the basis of a three hundred sixty (360) day year and actual days
elapsed and the obligation of Borrowers to pay such fee shall survive the
termination or non-renewal of this Agreement. In addition to the letter of
credit fees provided above, Borrowers shall pay to Issuing Bank for its own
account (without sharing with Lenders) the letter of credit fronting and
negotiation fees agreed to by Borrowers and Issuing Bank from time to time and
the customary charges from time to time of Issuing Bank with respect to the
issuance, amendment, transfer, administration, cancellation and conversion of,
and drawings under, such Letters of Credit.
(c) Borrowers shall pay to Agent the other fees and amounts set
forth in the Fee Letter in the amounts and at the times specified therein. To
the extent payment in full of the applicable fee is received by Agent from
Borrowers on or about the date hereof, Agent shall pay to each Lender its share
of such fees in accordance with the terms of the arrangements of Agent with such
Lender.
3.3 Changes in Laws and Increased Costs of Loans.
(a) If after the date hereof, 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 any Lender or
any banking or financial institution from whom any Lender borrows funds or
obtains credit (a "Funding Bank"), or (ii) a Funding Bank or any Lender complies
with any future guideline or request from any central bank or other Governmental
Authority or (iii) a Funding Bank, any Lender or Issuing Bank determines in good
faith 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 has or would
have the effect described below, or a Funding Bank, any Lender or Issuing Bank
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, 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 Lender's or Issuing Bank's capital as a
consequence of its obligations hereunder to a level below that which such Lender
or Issuing Bank could have achieved but for such adoption, change or compliance
(taking into consideration the Funding Bank's or Lender's or Issuing Bank's
policies with respect to capital adequacy) by an amount deemed by such Lender or
Issuing Bank to be material, and the result of any of the foregoing events
described in clauses (i), (ii) or (iii) is or results in an increase in the cost
to any Lender or Issuing Bank of funding or maintaining the Loans, the Letters
of Credit or its Commitment, then Borrowers and Guarantors shall from time to
time upon demand by Agent pay to Agent additional amounts sufficient to
indemnify such Lender or Issuing Bank, as the case may be, against such
increased cost on an after-tax basis (after taking into account applicable
deductions and credits in respect of the amount indemnified). A certificate as
to the amount of such
41
increased cost shall be submitted to Administrative Borrower by Agent or the
applicable Lender and shall be conclusive, absent manifest error.
(b) If prior to the first day of any Interest Period, (i) Agent
shall have determined in good faith (which determination shall be conclusive and
binding upon Borrowers and Guarantors) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Adjusted Eurodollar Rate for such Interest Period, (ii) Agent
has received notice from the Required Lenders that the Adjusted Eurodollar Rate
determined or to be determined for such Interest Period will not adequately and
fairly reflect the cost to Lenders of making or maintaining Eurodollar Rate
Loans during such Interest Period, or (iii) Dollar deposits in the principal
amounts of the Eurodollar Rate Loans to which such Interest Period is to be
applicable are not generally available in the London interbank market, Agent
shall give telecopy or telephonic notice thereof to Administrative Borrower as
soon as practicable thereafter, and will also give prompt written notice to
Administrative Borrower when such conditions no longer exist. If such notice is
given (A) any Eurodollar Rate Loans requested to be made on the first day of
such Interest Period shall be made as Prime Rate Loans, (B) any Loans that were
to have been converted on the first day of such Interest Period to or continued
as Eurodollar Rate Loans shall be converted to or continued as Prime Rate Loans
and (C) each outstanding Eurodollar Rate Loan shall be converted, on the last
day of the then-current Interest Period thereof, to Prime Rate Loans. Until such
notice has been withdrawn by Agent, no further Eurodollar Rate Loans shall be
made or continued as such, nor shall any Borrower (or Administrative Borrower on
behalf of any Borrower) have the right to convert Prime Rate Loans to Eurodollar
Rate Loans.
(c) Notwithstanding any other provision herein, if the adoption of
or any change in any law, treaty, rule or regulation or final, non-appealable
determination of an arbitrator or a court or other Governmental Authority or in
the interpretation or application thereof occurring after the date hereof shall
make it unlawful for Agent or any Lender to make or maintain Eurodollar Rate
Loans as contemplated by this Agreement, (i) Agent or such Lender shall promptly
give written notice of such circumstances to Administrative Borrower (which
notice shall be withdrawn whenever such circumstances no longer exist), (ii) the
commitment of such Lender hereunder to make Eurodollar Rate Loans, continue
Eurodollar Rate Loans as such and convert Prime Rate Loans to Eurodollar Rate
Loans shall forthwith be canceled and, until such time as it shall no longer be
unlawful for such Lender to make or maintain Eurodollar Rate Loans, such Lender
shall then have a commitment only to make a Prime Rate Loan when a Eurodollar
Rate Loan is requested and (iii) such Lender's Loans then outstanding as
Eurodollar Rate Loans, if any, shall be converted automatically to Prime Rate
Loans on the respective last days of the then current Interest Periods with
respect to such Loans or within such earlier period as required by law. If any
such conversion of a Eurodollar Rate Loan occurs on a day which is not the last
day of the then current Interest Period with respect thereto, Borrowers and
Guarantors shall pay to such Lender such amounts, if any, as may be required
pursuant to Section 3.3(d) below.
(d) Borrowers and Guarantors shall indemnify Agent and each Lender
and to hold Agent and each Lender harmless from any loss or expense which Agent
or such Lender may sustain or incur as a consequence of (i) default by any
Borrower in making a borrowing of, conversion into or extension of Eurodollar
Rate Loans after such Borrower (or Administrative
42
Borrower on behalf of such Borrower) has given a notice requesting the same in
accordance with the provisions of this Agreement, (ii) default by any Borrower
in making any prepayment of a Eurodollar Rate Loan after such Borrower has given
a notice thereof in accordance with the provisions of this Agreement, and (iii)
the making of a prepayment of Eurodollar Rate Loans on a day which is not the
last day of an Interest Period with respect thereto. With respect to Eurodollar
Rate Loans, such indemnification may include an amount equal to the excess, if
any, of (A) the amount of interest which would have accrued on the amount so
prepaid, or not so borrowed, converted or extended, for the period from the date
of such prepayment or of such failure to borrow, convert or extend to the last
day of the applicable Interest Period (or, in the case of a failure to borrow,
convert or extend, the Interest Period that would have commenced on the date of
such failure) in each case at the applicable rate of interest for such
Eurodollar Rate Loans provided for herein over (B) the amount of interest (as
determined by such Agent or such Lender) which would have accrued to Agent or
such Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank Eurodollar market. This covenant
shall survive the termination or non-renewal of this Agreement and the payment
of the Obligations.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Loans and Letters of Credit. The
obligation of Lenders to make the initial Loans or of Issuing Bank to issue the
initial Letters of Credit hereunder is subject to the satisfaction of, or waiver
of, immediately prior to or concurrently with the making of such Loan or the
issuance of such Letter of Credit of each of the following conditions precedent:
(a) Agent shall have received, in form and substance satisfactory to
Agent, all releases, terminations and such other documents as Agent may request
to evidence and effectuate the termination by the Existing Lenders of their
respective financing arrangements with Borrowers and Guarantors and the
termination and release by it or them, as the case may be, of any interest in
and to any assets and properties of each Borrower and Guarantor, duly
authorized, executed and delivered by it or each of them, including, but not
limited to, (i) UCC and/or PPSA termination statements for all UCC and/or PPSA
financing statements previously filed by it or any of them or their
predecessors, as secured party and any Borrower or Guarantor, as debtor; and
(ii) satisfactions and discharges of any mortgages, deeds of trust or deeds to
secure debt by any Borrower or Guarantor in favor of it or any of them, in form
acceptable for recording with the appropriate Governmental Authority;
(b) all requisite corporate or other organizational action and
proceedings in connection with this Agreement and the other Financing Agreements
shall be reasonably satisfactory in form and substance to Agent, and Agent shall
have received all information and copies of all documents, including records of
requisite corporate action and proceedings which Agent may have requested in
connection therewith, such documents where requested by Agent or its counsel to
be certified by appropriate officers or Governmental Authority (and including a
copy of the certificate of incorporation or equivalent organizational document
of each Borrower and Guarantor certified by the Secretary of State (or
equivalent Governmental Authority) which shall set forth the same complete name
of such Borrower or Guarantor as is set forth herein and such document as shall
set forth the organizational identification number of each Borrower or
Guarantor, if one is issued in its jurisdiction of incorporation or formation,
as the case may be);
43
(c) no material adverse change shall have occurred in the assets,
business or prospects of Borrowers since the date of the latest financial
statements of Parent and its Subsidiaries received by Agent and no change or
event shall have occurred which would impair the ability of any Borrower or
Guarantor to perform its obligations hereunder or under any of the other
Financing Agreements to which it is a party or of Agent or any Lender to enforce
the Obligations or realize upon the Collateral;
(d) Agent shall have completed a field review of the Records and
such other information with respect to the Collateral as Agent may require to
determine the amount of Loans available to Borrowers (including, without
limitation, current perpetual inventory records and/or roll-forwards of Accounts
and Inventory through the date of closing and test counts of the Inventory in a
manner satisfactory to Agent, together with such supporting documentation as may
be necessary or appropriate, and other documents and information that will
enable Agent to accurately identify and verify the Collateral), the results of
which in each case shall be satisfactory to Agent, not more than three (3)
Business Days prior to the date hereof or such earlier date as Agent may agree;
(e) Agent shall have received, in form and substance satisfactory to
Agent, all consents, waivers, acknowledgments and other agreements from third
persons which Agent may deem necessary or desirable in order to permit, protect
and perfect its security interests in and liens upon the Collateral or to
effectuate the provisions or purposes of this Agreement and the other Financing
Agreements, including, without limitation, Collateral Access Agreements;
provided, that, the failure to deliver a Collateral Access Agreement as to a
specific leased location shall not be a condition to closing, so long as all
other conditions are met after giving effect to any Reserves established by
Agent in respect of amounts due or to become due to the owner or lessor thereof
as provided for in the definition of Eligible Inventory herein;
(f) Excess Closing Availability as determined by Agent, as of the
date hereof, shall be not less than $35,000,000 after giving effect to the
initial Loans made or to be made and Letters of Credit issued or to be issued in
connection with the initial transactions hereunder;
(g) the EBITDA of Parent and its Subsidiaries (on a consolidated
basis) for the twelve (12) calendar month period ended October 31, 2005 as
determined by Agent shall be not less than $27,000,000, less any non-cash
charges related to the write-off of goodwill and related tax adjustments;
(h) Agent shall have received, in form and substance satisfactory to
Agent, Deposit Account Control Agreements by and among Agent, Term Loan Agent,
each Borrower and Guarantor, as the case may be and each bank where such
Borrower (or Guarantor) has a deposit account (but not accounts used by any
Borrower or Guarantor for the payment of payroll and/or payroll taxes), in each
case, duly authorized, executed and delivered by such bank and Borrower or
Guarantor, as the case may be (or Agent shall be the bank's customer with
respect to such deposit account as Agent may specify);
(i) Agent shall have received evidence, in form and substance
satisfactory to Agent, that Agent has a valid perfected first priority security
interest in all of the Collateral located in the United States and valid,
perfected first priority security interest in and first ranking liens upon the
Collateral located in Canada;
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(j) Agent shall have received and reviewed lien and judgment search
results for the jurisdiction of organization of each Borrower and Guarantor, the
jurisdiction of the chief executive office of each Borrower and Guarantor and
all jurisdictions in which assets of Borrowers and Guarantors are located, which
search results shall be in form and substance satisfactory to Agent;
(k) Agent shall have received, in form and substance satisfactory to
Agent, title reports with respect to the Real Property of Borrowers to be
subject to the Mortgages as of the date hereof;
(l) Agent shall have received originals of the shares of the stock
certificates representing all of the issued and outstanding shares of the
Capital Stock of each Borrower and Guarantor (other than Parent) and each direct
Subsidiary of each Borrower or Guarantor; provided, that, in the case of a
direct Foreign Subsidiary of a Borrower or Guarantor that is a "controlled
foreign corporation" as such term is defined in Section 957(a) of the Code or a
successor provision thereof, Agent shall only have received sixty-five (65%)
percent of the Capital Stock of such direct Foreign Subsidiary owned by such
Borrower or Guarantor, in each case together with stock powers duly executed in
blank with respect thereto;
(m) Agent shall have received true, correct and complete copies of
each of the Term Loan Documents as duly authorized, executed and delivered by
each of the parties thereto, which shall be on terms and conditions acceptable
to Agent;
(n) Agent shall have received evidence, in form and substance
satisfactory to Agent, that Borrowers have received not less than $50,000,000 in
cash or other immediately available funds as proceeds of the initial loans under
the Term Loan Documents, prior to the deduction of any fees, costs or other
expenses incurred by Borrowers in connection with the Term Loan;
(o) Agent shall have received true, correct and complete copies of
the Convertible Note Documents as duly authorized, executed and delivered by the
parties thereto, which shall be in form and substance reasonably satisfactory to
Agent;
(p) Agent shall have received evidence, in form and substance
satisfactory to Agent, that Borrowers have received not less than $75,000,000 in
cash or other immediately available funds as aggregate gross proceeds of the
issuance of the Convertible Notes;
(q) Agent shall have received, in form and substance satisfactory to
Agent, the Term Loan Intercreditor Agreement, duly authorized, executed and
delivered by Term Loan Agent and each Borrower and Guarantor;
(r) Agent shall have received evidence of insurance and loss payee
endorsements required hereunder and under the other Financing Agreements, in
form and substance satisfactory to Agent, and certificates of insurance policies
and/or endorsements naming Agent as first loss payee, additional insured and
mortgagee;
(s) Agent shall have received, in form and substance satisfactory to
Agent, such opinion letters of counsel to Borrowers and Guarantors with respect
to the Financing Agreements
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and such other matters as Agent may request (and including opinion letters of
counsel to Borrowers and Guarantors qualified in the United States and Canada);
and
(t) the other Financing Agreements and all instruments and documents
hereunder and thereunder shall have been duly executed and delivered to Agent,
in form and substance satisfactory to Agent.
4.2 Conditions Precedent to All Loans and Letters of Credit.
(a) The obligation of Lenders to make the Loans, including the
initial Loans, or of Issuing Bank to issue any Letter of Credit, including the
initial Letters of Credit, is subject to the further satisfaction of, or waiver
of, immediately prior to or concurrently with the making of each such Loan or
the issuance of such Letter of Credit of each of the following conditions
precedent:
(i) all representations and warranties contained herein and in
the other Financing Agreements shall be true and correct with the same effect as
though such representations and warranties had been made on and as of the date
of the making of each such Loan or providing each such Letter of Credit and
after giving effect thereto, except to the extent that such representations and
warranties expressly relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on and as of
such earlier date);
(ii) no law, regulation, order, judgment or decree of any
Governmental Authority shall exist, and no action, suit, investigation,
litigation or proceeding shall be pending or threatened in any court or before
any arbitrator or Governmental Authority, which (A) purports to enjoin,
prohibit, restrain or otherwise affect (1) the making of the Loans or providing
the Letters of Credit, or (2) the consummation of the transactions contemplated
pursuant to the terms hereof or the other Financing Agreements or (B) has or has
a reasonable likelihood of having a Material Adverse Effect;
(iii) no Default or Event of Default shall exist or have
occurred and be continuing on and as of the date of the making of such Loan or
providing each such Letter of Credit and after giving effect thereto.
(b) In addition to the other conditions precedent to Agent and
Lenders making Loans and/or providing Letter of Credit Accommodations to a
Borrower set forth herein, the conditions to such Loans and Letter of Credit
Accommodations by Agent and Lenders shall also include that no requirement of
the Minister of National Revenue for payment pursuant to Section 224, or any
successor section, of the Income Tax Act (Canada) or Section 317, or any
successor section of the Excise Act (Canada) or any comparable provision of
similar legislation shall have been received by Agent or any other Person in
respect of a Borrower or otherwise issued in respect of a Borrower.
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST
5.1 Grant of Security Interest.
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(a) To secure payment and performance of all Obligations, each
Borrower and Guarantor hereby grants to Agent, for itself and the benefit of the
Secured Parties, a continuing security interest in, a lien upon, and a right of
set off against, and hereby assigns to Agent, for itself and the benefit of the
Secured Parties, as security, all personal and real property and fixtures, and
interests in property and fixtures, of each Borrower and Guarantor, whether now
owned or hereafter acquired or existing, and wherever located (together with all
other collateral security for the Obligations at any time granted to or held or
acquired by Agent or any Secured Party, collectively, the "Collateral"),
including:
(i) all Accounts;
(ii) all general intangibles, including, without limitation,
all Intellectual Property;
(iii) all goods, including, without limitation, Inventory and
Equipment;
(iv) all Real Property at any time subject to the Mortgages
and fixtures;
(v) all chattel paper, including, without limitation, all
tangible and electronic chattel paper;
(vi) all instruments, including, without limitation, all
promissory notes;
(vii) all documents;
(viii) all deposit accounts;
(ix) all letters of credit, banker's acceptances and similar
instruments and including all letter-of-credit rights;
(x) all supporting obligations and all present and future
liens, security interests, rights, remedies, title and interest in, to and in
respect of Receivables and other Collateral, including (A) rights and remedies
under or relating to guaranties, contracts of suretyship, letters of credit and
credit and other insurance related to the Collateral, (B) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, (C) goods described in invoices,
documents, contracts or instruments with respect to, or otherwise representing
or evidencing, Receivables or other Collateral, including returned, repossessed
and reclaimed goods, and (D) deposits by and property of account debtors or
other persons securing the obligations of account debtors;
(xi) all (A) investment property (including securities,
whether certificated or uncertificated, securities accounts, security
entitlements, commodity contracts or commodity accounts) and (B) monies, credit
balances, deposits and other property of any Borrower or Guarantor now or
hereafter held or received by or in transit to Agent, any Lender or its
Affiliates or at any other depository or other institution from or for the
account of any Borrower or Guarantor, whether for safekeeping, pledge, custody,
transmission, collection or otherwise;
(xii) all commercial tort claims, including, without
limitation, those identified in the Information Certificate;
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(xiii) to the extent not otherwise described above, all
Receivables;
(xiv) all Records; and
(xv) all products and proceeds of the foregoing, in any form,
including insurance proceeds and all claims against third parties for loss or
damage to or destruction of or other involuntary conversion of any kind or
nature of any or all of the other Collateral.
(b) Notwithstanding anything to the contrary contained in Section
5.1(a) above, the types or items of Collateral described in such Section shall
not include (i) the portion of the Capital Stock of any Foreign Subsidiary that
is a "controlled foreign corporation" (as such term is defined in Section 957(a)
of the Code or a successor provision thereof) in excess of sixty-five (65%)
percent of the voting power of all classes of Capital Stock of such issuer
entitled to vote (within the meaning of Treasury Regulation Section 1.956-2)
which is so owned by any Borrower or Guarantor, or (ii) the last day of the term
of any lease or sub-lease, oral or written, or any agreement therefor, now held
or hereafter acquired by any Borrower or Guarantor, but upon the sale of the
leasehold interest or any part thereof such Person shall stand possessed of such
last day in trust to assign the same as the Agent shall direct.
5.2 Perfection of Security Interests.
(a) Each Borrower and Guarantor irrevocably and unconditionally
authorizes Agent (or its agent) to file at any time and from time to time such
financing statements with respect to the Collateral naming Agent or its designee
as the secured party and such Borrower or Guarantor as debtor, as Agent may
require, and including any other information with respect to such Borrower or
Guarantor or otherwise required by part 5 of Article 9 of the Uniform Commercial
Code of such jurisdiction as Agent may determine, together with any amendment
and continuations with respect thereto, which authorization shall apply to all
financing statements filed on, prior to or after the date hereof. Each Borrower
and Guarantor hereby ratifies and approves all financing statements naming Agent
or its designee as secured party and such Borrower or Guarantor, as the case may
be, as debtor with respect to the Collateral (and any amendments with respect to
such financing statements) filed by or on behalf of Agent prior to the date
hereof and ratifies and confirms the authorization of Agent to file such
financing statements (and amendments, if any). Each Borrower and Guarantor
hereby authorizes Agent to adopt on behalf of such Borrower and Guarantor any
symbol required for authenticating any electronic filing. In the event that the
description of the collateral in any financing statement naming Agent or its
designee as the secured party and any Borrower or Guarantor as debtor includes
assets and properties of such Borrower or Guarantor that do not at any time
constitute Collateral, whether hereunder, under any of the other Financing
Agreements or otherwise, the filing of such financing statement shall
nonetheless be deemed authorized by such Borrower or Guarantor to the extent of
the assets and properties actually constituting Collateral and it shall not
render the financing statement ineffective or otherwise affect the financing
statement as it applies to any of the assets or properties constituting
Collateral. In no event shall any Borrower or Guarantor at any time file, or
permit or cause to be filed, any correction statement or termination statement
with respect to any financing statement (or amendment or continuation with
respect thereto) naming Agent or its designee as secured party and such Borrower
or Guarantor as debtor.
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(b) Each Borrower and Guarantor does not have any chattel paper
(whether tangible or electronic) or instruments as of the date hereof, except as
set forth in the Information Certificate. In the event that any Borrower or
Guarantor shall be entitled to or shall receive any chattel paper or instrument
after the date hereof, Borrowers and Guarantors shall promptly notify Agent
thereof in writing. Promptly upon the receipt thereof by or on behalf of any
Borrower or Guarantor (including by any agent or representative), such Borrower
or Guarantor shall deliver, or cause to be delivered to Agent, all tangible
chattel paper and instruments that such Borrower or Guarantor has or may at any
time acquire, accompanied by such instruments of transfer or assignment duly
executed in blank as Agent may from time to time specify, in each case except as
Agent may otherwise agree. At Agent's option, each Borrower and Guarantor shall,
or Agent may at any time on behalf of any Borrower or Guarantor, cause the
original of any such instrument or chattel paper to be conspicuously marked in a
form and manner acceptable to Agent with the following legend referring to
chattel paper or instruments as applicable: "This [chattel paper][instrument] is
subject to the security interest of Wachovia Bank, National Association and any
sale, transfer, assignment or encumbrance of this [chattel paper][instrument]
violates the rights of such secured party."
(c) In the event that any Borrower or Guarantor shall at any time
hold or acquire an interest in any electronic chattel paper or any "transferable
record" (as such term is defined in Section 201 of the Federal Electronic
Signatures in Global and National Commerce Act or in Section 16 of the Uniform
Electronic Transactions Act as in effect in any relevant jurisdiction), such
Borrower or Guarantor shall promptly notify Agent thereof in writing. Promptly
upon Agent's request, such Borrower or Guarantor shall take, or cause to be
taken, such actions as Agent may request to give Agent control of such
electronic chattel paper under Section 9-105 of the UCC and control of such
transferable record under Section 201 of the Federal Electronic Signatures in
Global and National Commerce Act or, as the case may be, Section 16 of the
Uniform Electronic Transactions Act, as in effect in such jurisdiction.
(d) Each Borrower and Guarantor does not have any deposit accounts
as of the date hereof, except as set forth in the Information Certificate.
Borrowers and Guarantors shall not, directly or indirectly, after the date
hereof open, establish or maintain any deposit account unless each of the
following conditions is satisfied: (i) Agent shall have received not less than
five (5) Business Days prior written notice of the intention of any Borrower or
Guarantor to open or establish such account which notice shall specify in
reasonable detail and specificity acceptable to Agent the name of the account,
the owner of the account, the name and address of the bank at which such account
is to be opened or established, the individual at such bank with whom such
Borrower or Guarantor is dealing and the purpose of the account, (ii) the bank
where such account is opened or maintained shall be acceptable to Agent, and
(iii) on or before the opening of such deposit account, such Borrower or
Guarantor shall as Agent may specify either (A) deliver to Agent a Deposit
Account Control Agreement with respect to such deposit account duly authorized,
executed and delivered by such Borrower or Guarantor and the bank at which such
deposit account is opened and maintained or (B) arrange for Agent to become the
customer of the bank with respect to the deposit account on terms and conditions
acceptable to Agent. The terms of this subsection (d) shall not apply to deposit
accounts specifically and exclusively used for payroll, payroll taxes and other
employee wage and benefit payments to or for the benefit of any Borrower's or
Guarantor's salaried employees.
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(e) No Borrower or Guarantor owns or holds, directly or indirectly,
beneficially or as record owner or both, any investment property, as of the date
hereof, or have any investment account, securities account, commodity account or
other similar account with any bank or other financial institution or other
securities intermediary or commodity intermediary as of the date hereof, in each
case except as set forth in the Information Certificate.
(i) In the event that any Borrower or Guarantor shall be
entitled to or shall at any time after the date hereof hold or acquire any
certificated securities, such Borrower or Guarantor shall promptly endorse,
assign and deliver the same to Agent, accompanied by such instruments of
transfer or assignment duly executed in blank as Agent may from time to time
specify; provided, that, if such certificated securities constitute shares of
Capital Stock of a Foreign Subsidiary constituting a "controlled foreign
corporation" (as such term is defined in Section 957(a) of the Code or a
successor provision thereof), then such Borrower or Guarantor shall not be
required to endorse, assign or deliver to Agent those certificates representing
the number of shares of the issuer thereof exceeding sixty-five (65%) percent of
the voting power of all classes of Capital Stock of such issuer entitled to vote
which is owned by any Borrower or Guarantor. If any securities, now or hereafter
acquired by any Borrower or Guarantor are uncertificated and are issued to such
Borrower or Guarantor or its nominee directly by the issuer thereof, such
Borrower or Guarantor shall immediately notify Agent thereof and shall as Agent
may request, cause the issuer to agree to comply with instructions from Agent as
to such securities, without further consent of any Borrower or Guarantor or such
nominee.
(ii) Borrowers and Guarantors shall not, directly or
indirectly, after the date hereof open, establish or maintain any investment
account, securities account, commodity account or any other similar account
(other than a deposit account) with any securities intermediary or commodity
intermediary unless each of the following conditions is satisfied: (A) Agent
shall have received not less than five (5) Business Days prior written notice of
the intention of such Borrower or Guarantor to open or establish such account
which notice shall specify in reasonable detail and specificity acceptable to
Agent the name of the account, the owner of the account, the name and address of
the securities intermediary or commodity intermediary at which such account is
to be opened or established, the individual at such intermediary with whom such
Borrower or Guarantor is dealing and the purpose of the account, (B) the
securities intermediary or commodity intermediary (as the case may be) where
such account is opened or maintained shall be acceptable to Agent, and (C) on or
before the opening of such investment account, securities account or other
similar account with a securities intermediary or commodity intermediary, such
Borrower or Guarantor shall as Agent may specify either (i) execute and deliver,
and cause to be executed and delivered to Agent, an Investment Property Control
Agreement with respect thereto duly authorized, executed and delivered by such
Borrower or Guarantor and such securities intermediary or commodity intermediary
or (ii) arrange for Agent to become the entitlement holder with respect to such
investment property on terms and conditions acceptable to Agent.
(f) Borrowers and Guarantors are not the beneficiary or otherwise
entitled to any right to payment under any letter of credit, banker's acceptance
or similar instrument as of the date hereof, except as set forth in the
Information Certificate. In the event that any Borrower or Guarantor shall be
entitled to or shall receive any right to payment under any letter of credit,
banker's acceptance or any similar instrument, whether as beneficiary thereof or
otherwise after
50
the date hereof, such Borrower or Guarantor shall promptly notify Agent thereof
in writing. Such Borrower or Guarantor shall immediately, as Agent may specify,
either (i) deliver, or cause to be delivered to Agent, with respect to any such
letter of credit, banker's acceptance or similar instrument, the written
agreement of the issuer and any other nominated person obligated to make any
payment in respect thereof (including any confirming or negotiating bank), in
form and substance satisfactory to Agent, consenting to the assignment of the
proceeds of the letter of credit to Agent by such Borrower or Guarantor and
agreeing to make all payments thereon directly to Agent or as Agent may
otherwise direct or (ii) cause Agent to become, at Borrowers' expense, the
transferee beneficiary of the letter of credit, banker's acceptance or similar
instrument (as the case may be).
(g) Borrowers and Guarantors do not have any commercial tort claims
as of the date hereof, except as set forth in the Information Certificate. In
the event that any Borrower or Guarantor shall at any time after the date hereof
have any commercial tort claims, such Borrower or Guarantor shall promptly
notify Agent thereof in writing, which notice shall (i) set forth in reasonable
detail the basis for and nature of such commercial tort claim and (ii) include
the express grant by such Borrower or Guarantor to Agent of a security interest
in such commercial tort claim (and the proceeds thereof). In the event that such
notice does not include such grant of a security interest, the sending thereof
by such Borrower or Guarantor to Agent shall be deemed to constitute such grant
to Agent. Upon the sending of such notice, any commercial tort claim described
therein shall constitute part of the Collateral and shall be deemed included
therein. Without limiting the authorization of Agent provided in Section 5.2(a)
hereof or otherwise arising by the execution by such Borrower or Guarantor of
this Agreement or any of the other Financing Agreements, Agent is hereby
irrevocably authorized from time to time and at any time to file such financing
statements naming Agent or its designee as secured party and such Borrower or
Guarantor as debtor, or any amendments to any financing statements, covering any
such commercial tort claim as Collateral. In addition, each Borrower and
Guarantor shall promptly upon Agent's request, execute and deliver, or cause to
be executed and delivered, to Agent such other agreements, documents and
instruments as Agent may require in connection with such commercial tort claim.
(h) Borrowers and Guarantors do not have any goods, documents of
title or other Collateral in the custody, control or possession of a third party
as of the date hereof, except (i) as set forth in the Information Certificate,
(ii) goods located in the United States in transit to a location of a Borrower
or Guarantor permitted herein in the ordinary course of business of such
Borrower or Guarantor in the possession of the carrier transporting such goods
and (iii) Pledged Securities (as defined in each Pledge Agreement, dated as of
the date hereof, made by certain Borrowers and Guarantors in favor of Agent or
in favor of Wachovia in its capacity as collateral agent pursuant to the Term
Loan Intercreditor Agreement) or other items of Collateral in the possession of
Agent. In the event that any goods, documents of title or other Collateral are
at any time after the date hereof in the custody, control or possession of any
other person not referred to in the Information Certificate or such carriers,
Borrowers and Guarantors shall promptly notify Agent thereof in writing.
Promptly upon Agent's request, Borrowers and Guarantors shall deliver to Agent a
Collateral Access Agreement duly authorized, executed and delivered by such
person and the Borrower or Guarantor that is the owner of such Collateral.
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(i) Borrowers and Guarantors shall take any other actions reasonably
requested by Agent from time to time to cause the attachment, perfection and
first priority of, and the ability of Agent to enforce, the security interest of
Agent in any and all of the Collateral, including, without limitation, (i)
executing, delivering and, where appropriate, filing financing statements and
amendments relating thereto under the UCC, PPSA or other applicable law, to the
extent, if any, that any Borrower's or Guarantor's signature thereon is required
therefor, (ii) causing Agent's name to be noted as secured party on any
certificate of title for a titled good if such notation is a condition to
attachment, perfection or priority of, or ability of Agent to enforce, the
security interest of Agent in such Collateral, (iii) complying with any
provision of any statute, regulation or treaty of the United States or Canada as
to any Collateral if compliance with such provision is a condition to
attachment, perfection or priority of, or ability of Agent to enforce, the
security interest of Agent in such Collateral, (iv) obtaining the consents and
approvals of any Governmental Authority or third party, including, without
limitation, any consent of any licensor, lessor or other person obligated on
Collateral, and taking all actions required by any earlier versions of the UCC,
PPSA or by other law, as applicable in any relevant jurisdiction.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrowers' Loan Accounts. Agent shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans, Letters of
Credit and other Obligations and the Collateral, (b) all payments made by or on
behalf of any Borrower or Guarantor and (c) all other appropriate debits and
credits as provided in this Agreement, including fees, charges, costs, expenses
and interest. All entries in the loan account(s) shall be made in accordance
with Agent's customary practices as in effect from time to time.
6.2 Statements. Agent shall render to Administrative Borrower each month a
statement setting forth the balance in the Borrowers' loan account(s) maintained
by Agent for Borrowers pursuant to the provisions of this Agreement, including
principal, interest, fees, costs and expenses. Each such statement shall be
subject to subsequent adjustment by Agent but shall, absent manifest errors or
omissions, be considered correct and deemed accepted by Borrowers and Guarantors
and conclusively binding upon Borrowers and Guarantors as an account stated
except to the extent that Agent receives a written notice from Administrative
Borrower of any specific exceptions of Administrative Borrower thereto within
forty-five (45) days after the date such statement has been received by Parent.
Until such time as Agent shall have rendered to Administrative Borrower a
written statement as provided above, the balance in any Borrower's loan
account(s) shall be presumptive evidence of the amounts due and owing to Agent
and Lenders by Borrowers and Guarantors.
6.3 Collection of Accounts.
(a) Borrowers shall establish and maintain, at their expense,
blocked accounts or lockboxes and related blocked accounts (in either case,
"Blocked Accounts"), as Agent may specify, with such banks as are acceptable to
Agent into which Borrowers shall promptly deposit and direct their respective
account debtors to directly remit all payments on Receivables and all payments
constituting proceeds of Inventory or other Collateral in the identical form in
which such payments are made, whether by cash, check or other manner. Borrowers
shall deliver, or cause to be delivered to Agent a Deposit Account Control
Agreement duly authorized, executed and delivered by each bank where a Blocked
Account is maintained as provided in Section 5.2
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hereof or at any time and from time to time Agent may become the bank's customer
with respect to any of the Blocked Accounts and promptly upon Agent's request,
Borrowers shall execute and deliver such agreements and documents as Agent may
require in connection therewith. Notwithstanding anything to the contrary
contained herein or in any Deposit Account Control Agreement, so long as no Cash
Dominion Event has occurred and is continuing, if any bank which is a party to a
Deposit Account Control Agreement with Agent exercises its right to terminate
such Deposit Account Control Agreement and remits any funds in the Blocked
Accounts subject to such Deposit Account Control Agreement to Agent, Agent
shall, upon Administrative Borrower's request, transfer such funds to the
operating account of Administrative Borrower to which proceeds of Loans are then
being transferred. Agent shall instruct the depository banks at which the
Blocked Accounts are maintained to transfer the funds on deposit in the Blocked
Accounts to such operating bank account of Borrowers as Borrowers may specify in
writing to Agent until such time as Agent shall notify the depository bank
otherwise. Without limiting any other rights or remedies of Agent or Lenders,
Agent may, at its option, instruct the depository banks at which the Blocked
Accounts are maintained to transfer all available funds received or deposited
into the Blocked Accounts to the Agent Payment Account at any time on or after a
Cash Dominion Event. Upon and after a Cash Dominion Event, and notwithstanding
anything to the contrary set forth in any Deposit Account Control Agreement,
Agent shall be authorized to direct all of the depository banks at which Blocked
Accounts are maintained to remit by federal funds wire transfer all funds
received or deposited into such Blocked Accounts and related deposit accounts to
the Agent Payment Account or as Agent may direct. Each Borrower and Guarantor
agrees that all payments made to such Blocked Accounts upon or after a Cash
Dominion Event or other funds received and collected by Agent or any Lender at
any time, whether in respect of the Receivables, as proceeds of Inventory or
other Collateral or otherwise shall be treated as payments to Agent and Lenders
in respect of the Obligations and therefore shall constitute the property of
Agent and Lenders to the extent of the then outstanding Obligations. Upon and
after Cash Dominion Termination, and unless and until a subsequent Cash Dominion
Event may occur, Agent shall immediately direct any and all banks which it had
previously notified to transfer funds to the Agent Payment Account or to Agent,
to cease transferring funds to the Agent Payment Account and to transfer the
funds on deposit in the Blocked Accounts to such operating bank account of
Borrowers as Borrowers may specify.
(b) For purposes of calculating the amount of the Loans available to
each Borrower, such payments will be applied (conditional upon final collection)
to the Obligations on the Business Day of receipt by Agent of immediately
available funds in the Agent Payment Account provided such payments and notice
thereof are received in accordance with Agent's usual and customary practices as
in effect from time to time and within sufficient time to credit such Borrower's
loan account on such day, and if not, then on the next Business Day. For the
purposes of calculating interest on the Obligations, such payments or other
funds received will be applied (conditional upon final collection) to the
Obligations on the date of receipt of immediately available funds by Agent in
the Agent Payment Account provided such payments or other funds and notice
thereof are received in accordance with Agent's usual and customary practices as
in effect from time to time and within sufficient time to credit such Borrower's
loan account on such day, and if not, then on the next Business Day. The
economic benefit of the timing in the application of payments (and the
administrative charge with respect thereto, if applicable) shall be for the sole
benefit of Agent.
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(c) Each Borrower and Guarantor and their respective employees,
agents and Subsidiaries shall, acting as trustee for Agent, receive, as the
property of Agent, any monies, checks, notes, drafts or any other payment
relating to and/or proceeds of Accounts or other Collateral which come into
their possession or under their control and immediately upon receipt thereof,
shall deposit or cause the same to be deposited in the Blocked Accounts, or
remit the same or cause the same to be remitted, in kind, to Agent. In no event
shall the same be commingled with any Borrower's or Guarantor's own funds.
Borrowers agree to reimburse Agent on demand for any amounts owed or paid to any
bank or other financial institution at which a Blocked Account or any other
deposit account or investment account is established or any other bank,
financial institution or other person involved in the transfer of funds to or
from the Blocked Accounts arising out of Agent's payments to or indemnification
of such bank, financial institution or other person. The obligations of
Borrowers to reimburse Agent for such amounts pursuant to this Section 6.3 shall
survive the termination of this Agreement.
6.4 Payments.
(a) All Obligations shall be payable to the Agent Payment Account as
provided in Section 6.3 or such other place as Agent may designate from time to
time. Subject to the other terms and conditions contained herein, Agent shall
apply payments received or collected from any Borrower or Guarantor or for the
account of any Borrower or Guarantor (including the monetary proceeds of
collections or of realization upon any Collateral) as follows: first, to pay any
fees, indemnities or expense reimbursements then due to Agent, Lenders and
Issuing Bank from any Borrower or Guarantor; second, to pay interest due in
respect of any Loans (and including any Special Agent Advances) or Letter of
Credit Obligations; third, to pay or prepay principal in respect of Special
Agent Advances; fourth, to pay principal due in respect of the Swing Line Loans;
fifth, to pay principal due in respect of the Revolving Loans and to pay
Obligations then due arising under or pursuant to any Hedge Agreements of a
Borrower or Guarantor with a Bank Product Provider (up to the amount of any then
effective Reserve established in respect of such Obligations), on a pro rata
basis; sixth, to pay or prepay any other Obligations whether or not then due, in
such order and manner as Agent determines or to be held as cash collateral in
connection with any Letter of Credit Obligations or other contingent Obligations
(but not including for this purpose any Obligations arising under or pursuant to
any Bank Products); and seventh, to pay or prepay any Obligations arising under
or pursuant to any Bank Products (other than to the extent provided for above)
on a pro rata basis. Notwithstanding anything to the contrary contained in this
Agreement, (i) unless so directed by Administrative Borrower, or unless a
Default or an Event of Default shall exist or have occurred and be continuing,
Agent shall not apply any payments which it receives to any Eurodollar Rate
Loans, except (A) on the expiration date of the Interest Period applicable to
any such Eurodollar Rate Loans or (B) in the event that there are no outstanding
Prime Rate Loans and (ii) to the extent any Borrower uses any proceeds of the
Loans or Letters of Credit to acquire rights in or the use of any Collateral or
to repay any Indebtedness used to acquire rights in or the use of any
Collateral, payments in respect of the Obligations shall be deemed applied first
to the Obligations arising from Loans and Letters of Credit that were not used
for such purposes and second to the Obligations arising from Loans and Letters
of Credit the proceeds of which were used to acquire rights in or the use of any
Collateral in the chronological order in which such Borrower acquired such
rights in or the use of such Collateral.
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(b) At Agent's option, all principal, interest, fees, costs,
expenses and other charges provided for in this Agreement or the other Financing
Agreements may be charged directly to the loan account(s) of any Borrower
maintained by Agent as and when the same become due and payable in accordance
with the terms hereof. If after receipt of any payment of, or proceeds of
Collateral applied to the payment of, any of the Obligations, Agent, any Lender
or Issuing Bank is required to surrender or return such payment or proceeds to
any Person for any reason, then the Obligations intended to be satisfied by such
payment or proceeds shall be reinstated and continue and this Agreement shall
continue in full force and effect as if such payment or proceeds had not been
received by Agent or such Lender. Borrowers and Guarantors shall be liable to
pay to Agent, and do hereby indemnify and hold Agent and Lenders harmless for
the amount of any payments or proceeds surrendered or returned. This Section
6.4(b) shall remain effective notwithstanding any contrary action which may be
taken by Agent or any Lender in reliance upon such payment or proceeds. This
Section 6.4 shall survive the payment of the Obligations and the termination of
this Agreement.
6.5 Taxes.
(a) Any and all payments by or on account of any of the Obligations
shall be made free and clear of and without deduction or withholding for or on
account of, any setoff, counterclaim, defense, duties, taxes, levies, imposts,
fees, deductions, charges, withholdings, liabilities, restrictions or conditions
of any kind, excluding (i) in the case of each Lender, Issuing Bank and Agent
(A) taxes measured by its net income, and franchise taxes imposed on it, by the
jurisdiction (or any political subdivision thereof) under the laws of which such
Lender, Issuing Bank or Agent (as the case may be) is organized and (B) any
United States withholding taxes payable with respect to payments under the
Financing Agreements under laws (including any statute, treaty or regulation) in
effect on the date hereof (or, in the case of an Eligible Transferee, the date
of the Assignment and Acceptance) applicable to such Lender, Issuing Bank or
Agent, as the case may be, but not excluding any United States withholding taxes
payable as a result of any change in such laws occurring after the date hereof
(or the date of such Assignment and Acceptance) and (ii) in the case of each
Lender, taxes measured by its net income, and franchise taxes imposed on it as a
result of a present or former connection between such Lender and the
jurisdiction of the Governmental Authority imposing such tax or any taxing
authority thereof or therein (all such non-excluded taxes, levies, imposts,
fees, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes").
(b) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which a
Borrower is resident for tax purposes, or any treaty to which such jurisdiction
is a party, with respect to payments hereunder or under any of the other
Financing Agreements shall, upon a Borrower's reasonable request, deliver to
such Borrower such properly completed and executed documentation prescribed by
applicable law as will permit such payments to be made without withholding or at
a reduced rate of withholding (but only if such Foreign Lender is legally
entitled to do so). Without limiting the generality of the foregoing, each
Foreign Lender agrees to deliver to Agent on or prior to the Closing Date, or in
the case of a Lender that is an assignee or transferee of an interest under this
Credit Agreement pursuant to Section 13.7 hereof (unless the respective Lender
was already a Lender hereunder immediately prior to such assignment or
transfer), on the date of such assignment or transfer to such Foreign Lender,
two accurate and complete original signed copies
55
of Internal Revenue Service Form X-0 XXX, X-0 ECI or W-8 IMY, as applicable (or
successor forms) certifying such Foreign Lender's entitlement to a complete
exemption from United States withholding tax with respect to payments to be made
hereunder or under the Financing Agreements. In the case of a Foreign Lender
claiming the benefits of the exemption for portfolio interest under section
881(c) of the Code, such Lender shall also provide a certificate to the effect
that such Foreign Lender is not (i) a "bank" within the meaning of section
881(c)(3)(A) of the Code, (ii) a "10 percent shareholder" of the Borrower within
the meaning of section 881(c)(3)(B) of the Code, or (iii) a "controlled foreign
corporation" described in section 881(c)(3)(C) of the Code. In addition, each
Foreign Lender agrees that it will deliver updated versions of the foregoing, as
applicable, whenever the previous certification has become obsolete or
inaccurate in any material respect, together with such other forms as may be
reasonably requested by Administrative Borrower in order to confirm or establish
the continued entitlement of such Foreign Lender to any such exemption from or
reduction in United States withholding tax with respect to payments hereunder or
under the other Financing Agreements. Notwithstanding anything to the contrary
contained in Section 6.5(a) hereof, (A) each Borrower shall be entitled, to the
extent it is required to do so by law, to deduct or withhold taxes imposed by
the United States (or any political subdivision or taxing authority thereof or
therein) from interest, fees or other amounts payable hereunder for the account
of any Foreign Lender to the extent attributable to the failure of such Foreign
Lender to provide U.S. Internal Revenue Service Forms claiming exemption from
such deduction or withholding in accordance with this Section 6.5(b) and (B) the
Borrowers shall not be obligated pursuant to this Section 6.5 to gross-up
payments to be made to a Foreign Lender in respect of taxes imposed by the
United States if such Foreign Lender has not provided to the Borrowers the
Internal Revenue Service Forms required to be provided to the Borrowers pursuant
to this Section 6.5(b). (Each Lender that is not a Foreign Lender agrees to
deliver to Agent on or prior to the date hereof, or in the case of any such
Lender that is an assignee or transferee of an interest under the Financing
Agreements pursuant to Section 13.7 hereof (unless the respective Lender was
already a Lender hereunder immediately prior to such assignment or transfer), on
the date of such assignment or transfer to such Lender, two accurate and
complete original signed copies of Internal Revenue Service Form W-9 or such
other documentation prescribed by law certifying that such Lender is not subject
to backup withholding.
(c) If any Taxes shall be required by law to be deducted from or in
respect of any sum payable in respect of the Obligations to any Lender, Issuing
Bank or Agent (i) the sum payable shall be increased as may be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 6.5), such Lender, Issuing Bank or
Agent (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the relevant Borrower or
Guarantor shall make such deductions, (iii) the relevant Borrower or Guarantor
shall pay the full amount deducted to the relevant taxing authority or other
authority in accordance with applicable law and (iv) the relevant Borrower or
Guarantor shall deliver to Agent evidence of such payment.
(d) In addition, each Borrower and Guarantor agrees to pay any
present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies of the United States or any political
subdivision thereof or any applicable foreign jurisdiction, and all liabilities
with respect thereto, in each case arising from any payment made hereunder or
under any of the other Financing Agreements or from the execution, delivery or
registration of, or
56
otherwise with respect to, this Agreement or any of the other Financing
Agreements (collectively, "Other Taxes").
(e) Each Borrower and Guarantor shall indemnify each Lender, Issuing
Bank and Agent for the full amount of Taxes and Other Taxes (including any Taxes
and Other Taxes imposed by any jurisdiction on amounts payable under this
Section 6.5) paid by such Lender, Issuing Bank or Agent (as the case may be) and
any liability (including for penalties, interest and expenses) arising therefrom
or with respect thereto, whether or not such Taxes or Other Taxes were correctly
or legally asserted. This indemnification shall be made within thirty (30) days
from the date such Lender, Issuing Bank or Agent (as the case may be) makes
written demand therefor. A certificate as to the amount of such payment or
liability delivered to Administrative Borrower by a Lender, Issuing Bank (with a
copy to Agent) or by Agent on its own behalf or on behalf of a Lender or Issuing
Bank, shall be conclusive absent manifest error. If an Agent, Issuing Bank or
Lender (or Transferee) receives a refund in respect of any Taxes or Other Taxes
for which Agent, Issuing Bank or such Lender has received payment from a
Borrower or Guarantor hereunder, Agent, Issuing Bank or such Lender, as the case
may be, shall credit to the loan account of the applicable Borrower a portion of
such refund (but only to the extent of indemnity payments made, or additional
amounts paid, by such Borrower or Guarantor, as applicable, under this Section
6.5 with respect to Taxes or Other Taxes giving rise to such refund) that such
Agent, Issuing Bank or Lender determines in good faith will leave it, after such
reimbursement, in no better or worse position than it would have been in if the
payment by such Borrower or Guarantor, whichever is applicable, had not been
required (taking into account all out-of-pocket expenses of the Agent, Issuing
Bank or Lender (or Transferee) and any taxes on such refund); provided that the
applicable Borrower or Guarantor, upon the request of such Agent, Issuing Bank
or Lender (or Transferee), agrees to repay the amount paid over to the Borrower
or Guarantor (plus penalties or interest) to such Agent, Issuing Bank or Lender
(or Transferee) in the event such Agent, Issuing Bank or Lender (or Transferee)
is required to repay such refund to the applicable taxation authority.
(f) As soon as practicable after any payment of Taxes or Other Taxes
by any Borrower or Guarantor, such Borrower or Guarantor shall furnish to Agent,
at its address referred to herein, the original or a certified copy of a receipt
evidencing payment thereof.
(g) Without prejudice to the survival of any other agreements of any
Borrower or Guarantor hereunder or under any of the other Financing Agreements,
the agreements and obligations of such Borrower or Guarantor contained in this
Section 6.5 shall survive the termination of this Agreement and the payment in
full of the Obligations.
(h) Any Lender claiming any additional amounts payable pursuant to
this Section 6.5 shall use its reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction of its
applicable lending office if the making of such a change would avoid the need
for, or reduce the amount of, any such additional amounts that would be payable
or may thereafter accrue and would not, in the sole determination of such
Lender, be otherwise disadvantageous to such Lender.
6.6 Authorization to Make Loans. Agent and Lenders are authorized to make
the Loans based upon telephonic or other instructions received from anyone
purporting to be an officer of Administrative Borrower or any Borrower or other
authorized person or, at the discretion of
57
Agent, if such Loans are necessary to satisfy any Obligations. All requests for
Loans or Letters of Credit hereunder shall specify the date on which the
requested advance is to be made (which day shall be a Business Day) and the
amount of the requested Loan. Requests received after 11:00 a.m. New York City
time on any day shall be deemed to have been made as of the opening of business
on the immediately following Business Day. All Loans and Letters of Credit under
this Agreement shall be conclusively presumed to have been made to, and at the
request of and for the benefit of, any Borrower or Guarantor when deposited to
the credit of any Borrower or Guarantor or otherwise disbursed or established in
accordance with the instructions of any Borrower or Guarantor or in accordance
with the terms and conditions of this Agreement.
6.7 Use of Proceeds. Borrowers shall use the initial proceeds of the Loans
and Letters of Credit hereunder only for: (a) payments to each of the persons
listed in the disbursement direction letter furnished by Borrowers to Agent on
or about the date hereof and (b) costs, expenses and fees in connection with the
preparation, negotiation, execution and delivery of this Agreement and the other
Financing Agreements. All other Loans made or Letters of Credit provided to or
for the benefit of any Borrower pursuant to the provisions hereof shall be used
by such Borrower only for general operating, working capital and other proper
corporate purposes of such Borrower not otherwise prohibited by the terms
hereof. None of the proceeds will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin security or for the purposes of
reducing or retiring any indebtedness which was originally incurred to purchase
or carry any margin security or for any other purpose which might cause any of
the Loans to be considered a "purpose credit" within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System, as amended.
6.8 Appointment of Administrative Borrower as Agent for Requesting Loans
and Receipts of Loans and Statements.
(a) Each Borrower hereby irrevocably appoints and constitutes
Administrative Borrower as its agent and attorney-in-fact to request and receive
Loans and Letters of Credit pursuant to this Agreement and the other Financing
Agreements from Agent or any Lender in the name or on behalf of such Borrower.
Agent and Lenders may disburse the Loans to such bank account of Administrative
Borrower or a Borrower or otherwise make such Loans to a Borrower and provide
such Letters of Credit to a Borrower as Administrative Borrower may designate or
direct, without notice to any other Borrower or Guarantor. Notwithstanding
anything to the contrary contained herein, Agent may at any time and from time
to time require that Loans to or for the account of any Borrower be disbursed
directly to an operating account of such Borrower.
(b) Administrative Borrower hereby accepts the appointment by
Borrowers to act as the agent and attorney-in-fact of Borrowers pursuant to this
Section 6.8. Administrative Borrower shall ensure that the disbursement of any
Loans to each Borrower requested by or paid to or for the account of Parent, or
the issuance of any Letter of Credit for a Borrower hereunder, shall be paid to
or for the account of such Borrower.
(c) Each Borrower and other Guarantor hereby irrevocably appoints
and constitutes Administrative Borrower as its agent to receive statements on
account and all other notices from Agent and Lenders with respect to the
Obligations or otherwise under or in connection with this Agreement and the
other Financing Agreements.
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(d) Any notice, election, representation, warranty, agreement or
undertaking by or on behalf of any other Borrower or any Guarantor by
Administrative Borrower shall be deemed for all purposes to have been made by
such Borrower or Guarantor, as the case may be, and shall be binding upon and
enforceable against such Borrower or Guarantor to the same extent as if made
directly by such Borrower or Guarantor.
(e) No purported termination of the appointment of Administrative
Borrower as agent as aforesaid shall be effective, except after ten (10) days'
prior written notice to Agent.
6.9 Pro Rata Treatment. Except to the extent otherwise provided in this
Agreement or as otherwise agreed by Lenders: (a) the making and conversion of
Loans shall be made among the Lenders based on their respective Pro Rata Shares
as to the Loans and (b) each payment on account of any Obligations to or for the
account of one or more of Lenders in respect of any Obligations due on a
particular day shall be allocated among the Lenders entitled to such payments
based on their respective Pro Rata Shares and shall be distributed accordingly.
6.10 Sharing of Payments, Etc.
(a) Each Borrower and Guarantor agrees that, in addition to (and
without limitation of) any right of setoff, banker's lien or counterclaim Agent
or any Lender may otherwise have, each Lender shall be entitled, at its option
(but subject, as among Agent and Lenders, to the provisions of Section 12.3(b)
hereof), to offset balances held by it for the account of such Borrower or
Guarantor at any of its offices, in US Dollars or in any other currency, against
any principal of or interest on any Loans owed to such Lender or any other
amount payable to such Lender hereunder, that is not paid when due (regardless
of whether such balances are then due to such Borrower or Guarantor), in which
case it shall promptly notify Administrative Borrower and Agent thereof;
provided, that, such Lender's failure to give such notice shall not affect the
validity thereof.
(b) If any Lender (including Agent) shall obtain from any Borrower
or Guarantor payment of any principal of or interest on any Loan owing to it or
payment of any other amount under this Agreement or any of the other Financing
Agreements through the exercise of any right of setoff, banker's lien or
counterclaim or similar right or otherwise (other than from Agent as provided
herein), and, as a result of such payment, such Lender shall have received more
than its Pro Rata Share of the principal of the Loans or more than its share of
such other amounts then due hereunder or thereunder by any Borrower or Guarantor
to such Lender than the percentage thereof received by any other Lender, it
shall promptly pay to Agent, for the benefit of Lenders, the amount of such
excess and simultaneously purchase from such other Lenders a participation in
the Loans or such other amounts, respectively, owing to such other Lenders (or
such interest due thereon, as the case may be) in such amounts, and make such
other adjustments from time to time as shall be equitable, to the end that all
Lenders shall share the benefit of such excess payment (net of any expenses that
may be incurred by such Lender in obtaining or preserving such excess payment)
in accordance with their respective Pro Rata Shares or as otherwise agreed by
Lenders. To such end all Lenders shall make appropriate adjustments among
themselves (by the resale of participation sold or otherwise) if such payment is
rescinded or must otherwise be restored.
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(c) Each Borrower and Guarantor agrees that any Lender purchasing a
participation (or direct interest) as provided in this Section may exercise, in
a manner consistent with this Section, all rights of setoff, banker's lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender were a direct holder of Loans or other amounts (as the case may be)
owing to such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to exercise
any right of setoff, banker's lien, counterclaims or similar rights or shall
affect the right of any Lender to exercise, and retain the benefits of
exercising, any such right with respect to any other Indebtedness or obligation
of any Borrower or Guarantor. If, under any applicable bankruptcy, insolvency or
other similar law, any Lender receives a secured claim in lieu of a setoff to
which this Section applies, such Lender shall, to the extent practicable, assign
such rights to Agent for the benefit of Lenders and, in any event, exercise its
rights in respect of such secured claim in a manner consistent with the rights
of Lenders entitled under this Section to share in the benefits of any recovery
on such secured claim.
6.11 Settlement Procedures.
(a) In order to administer the Credit Facility in an efficient
manner and to minimize the transfer of funds between Agent and Lenders, Agent
may, at its option, subject to the terms of this Section, make available, on
behalf of Lenders, the full amount of the Loans requested or charged to any
Borrower's loan account(s) or otherwise to be advanced by Lenders pursuant to
the terms hereof, without requirement of prior notice to Lenders of the proposed
Loans.
(b) With respect to all Loans made by Agent on behalf of Lenders as
provided in this Section, the amount of each Lender's Pro Rata Share of the
outstanding Loans shall be computed weekly, and shall be adjusted upward or
downward on the basis of the amount of the outstanding Loans as of 5:00 p.m. New
York City time on the Business Day immediately preceding the date of each
settlement computation; provided, that, Agent retains the absolute right at any
time or from time to time to make the above described adjustments at intervals
more frequent than weekly, but in no event more than twice in any week. Agent
shall deliver to each of the Lenders after the end of each week, or at such
lesser period or periods as Agent shall determine, a summary statement of the
amount of outstanding Loans for such period (such week or lesser period or
periods being hereinafter referred to as a "Settlement Period"). If the summary
statement is sent by Agent and received by a Lender prior to 12:00 p.m. New York
City time, then such Lender shall make the settlement transfer described in this
Section by no later than 3:00 p.m. New York City time on the same Business Day
and if received by a Lender after 12:00 p.m. New York City time, then such
Lender shall make the settlement transfer by not later than 3:00 p.m. New York
City time on the next Business Day following the date of receipt. If, as of the
end of any Settlement Period, the amount of a Lender's Pro Rata Share of the
outstanding Loans is more than such Lender's Pro Rata Share of the outstanding
Loans as of the end of the previous Settlement Period, then such Lender shall
forthwith (but in no event later than the time set forth in the preceding
sentence) transfer to Agent by wire transfer in immediately available funds the
amount of the increase. Alternatively, if the amount of a Lender's Pro Rata
Share of the outstanding Loans in any Settlement Period is less than the amount
of such Lender's Pro Rata Share of the outstanding Loans for the previous
Settlement Period, Agent shall forthwith transfer to such Lender by wire
transfer in immediately available funds the amount of the decrease. The
obligation of each of the Lenders to transfer such funds and effect such
settlement shall be
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irrevocable and unconditional and without recourse to or warranty by Agent.
Agent and each Lender agrees to xxxx its books and records at the end of each
Settlement Period to show at all times the dollar amount of its Pro Rata Share
of the outstanding Loans and Letters of Credit. Each Lender shall only be
entitled to receive interest on its Pro Rata Share of the Loans to the extent
such Loans have been funded by such Lender. Because the Agent on behalf of
Lenders may be advancing and/or may be repaid Loans prior to the time when
Lenders will actually advance and/or be repaid such Loans, interest with respect
to Loans shall be allocated by Agent in accordance with the amount of Loans
actually advanced by and repaid to each Lender and the Agent and shall accrue
from and including the date such Loans are so advanced to but excluding the date
such Loans are either repaid by Borrowers or actually settled with the
applicable Lender as described in this Section.
(c) To the extent that Agent has made any such amounts available and
the settlement described above shall not yet have occurred, upon repayment of
any Loans by a Borrower, Agent may apply such amounts repaid directly to any
amounts made available by Agent pursuant to this Section. In lieu of weekly or
more frequent settlements, Agent may, at its option, at any time require each
Lender to provide Agent with immediately available funds representing its Pro
Rata Share of each Loan, prior to Agent's disbursement of such Loan to Borrower.
In such event, all Loans under this Agreement shall be made by the Lenders
simultaneously and proportionately to their Pro Rata Shares. No Lender shall be
responsible for any default by any other Lender in the other Lender's obligation
to make a Loan requested hereunder nor shall the Commitment of any Lender be
increased or decreased as a result of the default by any other Lender in the
other Lender's obligation to make a Loan hereunder.
(d) If Agent is not funding a particular Loan to a Borrower (or
Administrative Borrower for the benefit of such Borrower) pursuant to Sections
6.11(a) and 6.11(b) above on any day, but is requiring each Lender to provide
Agent with immediately available funds on the date of such Loan as provided in
Section 6.11(c) above, Agent may assume that each Lender will make available to
Agent such Lender's Pro Rata Share of the Loan requested or otherwise made on
such day and Agent may, in its discretion, but shall not be obligated to, cause
a corresponding amount to be made available to or for the benefit of such
Borrower on such day. If Agent makes such corresponding amount available to a
Borrower and such corresponding amount is not in fact made available to Agent by
such Lender, Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest thereon for each day from the
date such payment was due until the date such amount is paid to Agent at the
Federal Funds Rate for each day during such period (as published by the Federal
Reserve Bank of New York or at Agent's option based on the arithmetic mean
determined by Agent of the rates for the last transaction in overnight Federal
funds arranged prior to 9:00 a.m. (New York City time) on that day by each of
the three leading brokers of Federal funds transactions in New York City
selected by Agent) and if such amounts are not paid within three (3) days of
Agent's demand, at the highest Interest Rate provided for in Section 3.1 hereof
applicable to Prime Rate Loans. During the period in which such Lender has not
paid such corresponding amount to Agent, notwithstanding anything to the
contrary contained in this Agreement or any of the other Financing Agreements,
the amount so advanced by Agent to or for the benefit of any Borrower shall, for
all purposes hereof, be a Loan made by Agent for its own account. Upon any such
failure by a Lender to pay Agent, Agent shall promptly thereafter notify
Administrative Borrower of such failure and Borrowers shall pay such
corresponding amount to Agent for its
61
own account within five (5) Business Days of Administrative Borrower's receipt
of such notice. A Lender who fails to pay Agent its Pro Rata Share of any Loans
made available by the Agent on such Lender's behalf, or any Lender who fails to
pay any other amount owing by it to Agent, is a "Defaulting Lender". Agent shall
not be obligated to transfer to a Defaulting Lender any payments received by
Agent for the Defaulting Lender's benefit, nor shall a Defaulting Lender be
entitled to the sharing of any payments hereunder (including any principal,
interest or fees). Amounts payable to a Defaulting Lender shall instead be paid
to or retained by Agent. Agent may hold and, in its discretion, relend to a
Borrower the amount of all such payments received or retained by it for the
account of such Defaulting Lender. For purposes of voting or consenting to
matters with respect to this Agreement and the other Financing Agreements and
determining Pro Rata 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 a Defaulting Lender until such
default is cured. 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 any Borrower or Guarantor of their duties and obligations
hereunder.
(e) Nothing in this Section or elsewhere in this Agreement or the
other Financing Agreements shall be deemed to require Agent to advance funds on
behalf of any Lender or to relieve any Lender from its obligation to fulfill its
Commitment hereunder or to prejudice any rights that any Borrower may have
against any Lender as a result of any default by any Lender hereunder in
fulfilling its Commitment.
6.12 Obligations Several; Independent Nature of Lenders' Rights. The
obligation of each Lender hereunder is several, and no Lender shall be
responsible for the obligation or commitment of any other Lender hereunder.
Nothing contained in this Agreement or any of the other Financing Agreements and
no action taken by the Lenders pursuant hereto or thereto shall be deemed to
constitute the Lenders to be a partnership, an association, a joint venture or
any other kind of entity. The amounts payable at any time hereunder to each
Lender shall be a separate and independent debt, and subject to Section 12.3
hereof, each Lender shall be entitled to protect and enforce its rights arising
out of this Agreement and it shall not be necessary for any other Lender to be
joined as an additional party in any proceeding for such purpose.
6.13 Bank Products. Borrowers and Guarantors, or any of their
Subsidiaries, may (but no such Person is required to) request that the Bank
Product Providers provide or arrange for such Person to obtain Bank Products
from Bank Product Providers, and each Bank Product Provider may, in its sole
discretion, provide or arrange for such Person to obtain the requested Bank
Products. Borrowers and Guarantors or any of their Subsidiaries that obtains
Bank Products shall indemnify and hold Agent, each Lender and their respective
Affiliates harmless from any and all obligations now or hereafter owing to any
other Person by any Bank Product Provider in connection with any Bank Products
other than for gross negligence or willful misconduct on the part of any such
indemnified Person. This Section 6.13 shall survive the payment of the
Obligations and the termination of this Agreement. Borrower and its Subsidiaries
acknowledge and agree that the obtaining of Bank Products from Bank Product
Providers (a) is in the sole discretion of such Bank Product Provider, and (b)
is subject to all rules and regulations of such Bank Product Provider. Each Bank
Product Provider shall be deemed a party hereto for purposes of any reference in
a Financing Agreement to the parties for whom Agent is acting, provided, that,
the rights of such Bank Product Provider hereunder and
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under any of the other Financing Agreements shall consist exclusively of such
Bank Product Provider's right to share in payments and collections out of the
Collateral as set forth herein. In connection with any such distribution of
payments and collections, Agent shall be entitled to assume that no amounts are
due to any Bank Product Provider unless such Bank Product Provider has notified
Agent in writing of any such liability owed to it as of the date of any such
distribution.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 Collateral Reporting.
(a) Borrowers shall provide Agent with the following documents in a
form satisfactory to Agent:
(i) on a regular basis as required by Agent, schedules of
sales made, credits issued and cash received;
(ii) as soon as possible after the end of each month (but in
any event within fifteen (15) Business Days after the end thereof), on a monthly
basis or more frequently as Agent may reasonably request, (A) perpetual
inventory reports, (B) inventory reports by location and category (and including
the amounts of Inventory and the value thereof at any leased locations and at
premises of warehouses, processors or other third parties), (C) agings of
accounts receivable (together with a reconciliation to the previous month's
aging and general ledger) and (D) agings of accounts payable (and including
information indicating the amounts owing to owners and lessors of leased
premises, warehouses, processors and other third parties from time to time in
possession of any Collateral);
(iii) upon Agent's request, (A) copies of customer statements,
purchase orders, sales invoices, credit memos, remittance advices and reports,
and copies of deposit slips and bank statements, (B) copies of shipping and
delivery documents, and (C) copies of purchase orders, invoices and delivery
documents for Inventory and Equipment acquired by any Borrower or Guarantor;
(iv) such other reports as to the Collateral as Agent shall
request from time to time.
(b) All of the documents, reports and schedules provided by
Borrowers to Agent hereunder for Receivables payable in any currency other than
US Dollars and Inventory located outside the United States of America shall set
forth the US Dollar Equivalent for the amount of the Receivables and Value of
the Inventory included in any such documents, reports or schedules. For purposes
hereof, Agent may, at its option, provide to Administrative Borrower, at least
five (5) Business Days prior to the date any such documents, reports or
schedules are required to be provided by Borrowers to Agent hereunder, the
Exchange Rates required to set forth the US Dollar Equivalent in such documents,
reports and schedules; provided, that, in the event Agent does not do so,
Borrowers shall use such rates of exchange with respect to the applicable
currencies as Borrowers use for such purpose in the ordinary course of business
consistent with current practices as of the date hereof and shall identify such
rates of exchange in any such documents, reports and schedules.
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(c) If any Borrower's or Guarantor's records or reports of the
Collateral are prepared or maintained by an accounting service, contractor,
shipper or other agent, such Borrower and Guarantor hereby irrevocably
authorizes such service, contractor, shipper or agent to deliver such records,
reports, and related documents to Agent and to follow Agent's instructions with
respect to further services at any time that an Event of Default exists or has
occurred and is continuing.
7.2 Accounts Covenants.
(a) Borrowers shall notify Agent promptly of: (i) any material delay
in any Borrower's performance of any of its material obligations to any account
debtor or the assertion of any material claims, offsets, defenses or
counterclaims by any account debtor, or any material disputes with account
debtors, or any settlement, adjustment or compromise thereof, (ii) all material
adverse information known to any Borrower or Guarantor relating to the financial
condition of any account debtor and (iii) any event or circumstance which, to
the best of any Borrower's or Guarantor's knowledge, would cause Agent to
consider any then existing Accounts as no longer constituting Eligible Accounts.
No credit, discount, allowance or extension or agreement for any of the
foregoing shall be granted to any account debtor without Agent's consent, except
in the ordinary course of a Borrower's or Guarantor's business and except as set
forth in the schedules delivered to Agent pursuant to Section 7.1(a) above. So
long as no Event of Default exists or has occurred and is continuing, Borrowers
and Guarantors shall be entitled to settle, adjust or compromise any claim,
offset, counterclaim or dispute with any account debtor in their sole and
absolute discretion. At any time that an Event of Default exists or has occurred
and is continuing, Agent shall, at its option, have the exclusive right to
settle, adjust or compromise any claim, offset, counterclaim or dispute with
account debtors or grant any credits, discounts or allowances.
(b) With respect to each Account: (i) the amounts shown on any
invoice delivered to Agent or schedule thereof delivered to Agent shall be true
and complete, (ii) no payments shall be made thereon except payments immediately
delivered to Agent pursuant to the terms of this Agreement, (iii) no credit,
discount, allowance or extension or agreement for any of the foregoing shall be
granted to any account debtor except as reported to Agent in accordance with
this Agreement and except for credits, discounts, allowances or extensions made
or given in the ordinary course of each Borrower's business, (iv) there shall be
no setoffs, deductions, contras, defenses, counterclaims or disputes existing or
asserted with respect thereto except as reported to Agent in accordance with the
terms of this Agreement, (v) none of the transactions giving rise thereto will
violate any applicable foreign, Federal, State or local laws or regulations, all
documentation relating thereto will be legally sufficient under such laws and
regulations and all such documentation will be legally enforceable in accordance
with its terms.
(c) Agent shall have the right at any time or times, but subject to
reasonable intervals consistent with Agent's customary practices, in Agent's
name or in the name of a nominee of Agent, to verify the validity, amount or any
other matter relating to any Receivables or other Collateral, by mail,
telephone, facsimile transmission or otherwise. Agent shall report to
Administrative Borrower, at Administrative Borrower's request, from time to time
in connection with any contacts with material customers of any Borrower, after
the making of such contacts by or on behalf of Agent.
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7.3 Inventory Covenants. With respect to the Inventory: (a) each Borrower
and Guarantor shall at all times maintain inventory records reasonably
satisfactory to Agent, keeping correct and accurate records itemizing and
describing the kind, type, quality and quantity of Inventory, such Borrower's or
Guarantor's cost therefor and daily withdrawals therefrom and additions thereto;
(b) Borrowers and Guarantors shall conduct a physical count of the Inventory at
least once each year or provide inventory cycle count data in form and substance
satisfactory to Agent at least once each year with respect to those of their
locations at which physical counts are not otherwise conducted (but at any time
or times as Agent may request on or after an Event of Default, Borrowers and
Guarantors shall conduct a physical count of the Inventory), and promptly
following such physical inventory and/or provision of cycle count data in form
and substance satisfactory to Agent, shall supply Agent with a report in the
form and with such specificity as may be satisfactory to Agent concerning such
physical count and/or cycle count data; (c) Borrowers and Guarantors shall not
remove any Inventory from the locations set forth or permitted herein, without
the prior written consent of Agent, except for sales of Inventory in the
ordinary course of its business and except to move Inventory directly from one
location set forth or permitted herein to another such location and except for
Inventory shipped from the manufacturer thereof to such Borrower or Guarantor
which is in transit to the locations set forth or permitted herein; (d) upon
Agent's request, Borrowers shall, at their expense, no more than once in any
twelve (12) month period, but at any time or times as Agent may request on or
after an Event of Default, deliver or cause to be delivered to Agent written
appraisals as to the Inventory in form, scope and methodology acceptable to
Agent and by an appraiser acceptable to Agent, addressed to Agent and Lenders
and upon which Agent and Lenders are expressly permitted to rely; (e) Borrowers
and Guarantors shall produce, use, store and maintain the Inventory with all
reasonable care and caution and in accordance with applicable standards of any
insurance and in conformity with applicable laws (including the requirements of
the Federal Fair Labor Standards Act of 1938, as amended and all rules,
regulations and orders related thereto); (f) none of the Inventory or other
Collateral constitutes farm products or the proceeds thereof; (g) each Borrower
and Guarantor assumes all responsibility and liability arising from or relating
to the production, use, sale or other disposition of the Inventory; (h)
Borrowers and Guarantors shall keep the Inventory in good and marketable
condition; and (i) Borrowers and Guarantors shall not, without prior written
notice to Agent or the specific identification of such Inventory in a report
with respect thereto provided by Administrative Borrower to Agent pursuant to
Section 7.1(a) hereof, acquire or accept any Inventory on consignment or
approval.
7.4 Equipment and Real Property Covenants. With respect to the Equipment
and Real Property: (a) upon Agent's request, Borrowers and Guarantors shall, at
their expense, no more than once in any twelve (12) month period, but at any
time or times as Agent may request on or after an Event of Default, deliver or
cause to be delivered to Agent written appraisals as to the Equipment and/or the
Real Property at any time subject to a Mortgage in form, scope and methodology
acceptable to Agent and by an appraiser acceptable to Agent, addressed to Agent
and upon which Agent is expressly permitted to rely; (b) Borrowers and
Guarantors shall keep the Equipment in good order, repair, running and
marketable condition (ordinary wear and tear excepted); (c) Borrowers and
Guarantors shall use the Equipment and Real Property with all reasonable care
and caution and in accordance with applicable standards of any insurance and in
conformity with all applicable laws; (d) the Equipment is and shall be used in
the business of Borrowers and Guarantors and not for personal, family, household
or farming use; (e) Borrowers and Guarantors shall not remove any Equipment from
the locations set forth or permitted herein,
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except for the sale or other disposition of Equipment in accordance with the
terms of this Agreement and except to the extent necessary to have any Equipment
repaired or maintained in the ordinary course of its business or to move
Equipment directly from one location set forth or permitted herein to another
such location and except for the movement of motor vehicles used by or for the
benefit of such Borrower or Guarantor in the ordinary course of business; (f)
the Equipment is now and shall remain personal property and Borrowers and
Guarantors shall not permit any of the Equipment to be or become a part of or
affixed to real property; and (g) each Borrower and Guarantor assumes all
responsibility and liability arising from the use of the Equipment and Real
Property.
7.5 Power of Attorney. Borrower and Guarantor hereby irrevocably
designates and appoints Agent (and all persons designated by Agent) as such
Borrower's and Guarantor's true and lawful attorney-in-fact, and authorizes
Agent, in such Borrower's, Guarantor's or Agent's name, to: (a) at any time an
Event of Default exists or has occurred and is continuing (i) demand payment on
Receivables or other Collateral, (ii) enforce payment of Receivables by legal
proceedings or otherwise, (iii) exercise all of such Borrower's or Guarantor's
rights and remedies to collect any Receivable or other Collateral, (iv) sell or
assign any Receivable upon such terms, for such amount and at such time or times
as the Agent deems advisable, (v) settle, adjust, compromise, extend or renew an
Account, (vi) discharge and release any Receivable, (vii) prepare, file and sign
such Borrower's or Guarantor's name on any proof of claim in bankruptcy or other
similar document against an account debtor or other obligor in respect of any
Receivables or other Collateral, (viii) notify the post office authorities to
change the address for delivery of remittances from account debtors or other
obligors in respect of Receivables or other proceeds of Collateral to an address
designated by Agent, and open and dispose of all mail addressed to such Borrower
or Guarantor and handle and store all mail relating to the Collateral; and (ix)
do all acts and things which are necessary, in Agent's determination, to fulfill
such Borrower's or Guarantor's obligations under this Agreement and the other
Financing Agreements and (b) at any time on or after a Cash Dominion Event and
for so long as the same is continuing to (i) take control in any manner of any
item of payment in respect of Receivables or constituting Collateral or
otherwise received in or for deposit in the Blocked Accounts or otherwise
received by Agent or any Lender and (ii) have access to any lockbox or postal
box into which remittances from account debtors or other obligors in respect of
Receivables or other proceeds of Collateral are sent or received, and (c) at any
time to (i) endorse such Borrower's or Guarantor's name upon any items of
payment in respect of Receivables or constituting Collateral or otherwise
received by Agent and any Lender and deposit the same in Agent's account for
application to the Obligations, (ii) endorse such Borrower's or Guarantor's name
upon any chattel paper, document, instrument, invoice, or similar document or
agreement relating to any Receivable or any goods pertaining thereto or any
other Collateral, including any warehouse or other receipts, or bills of lading
and other negotiable or non-negotiable documents, (iii) clear Inventory the
purchase of which was financed with a Letter of Credit through U.S. Customs or
foreign export control authorities in such Borrower's or Guarantor's name,
Agent's name or the name of Agent's designee, and to sign and deliver to customs
officials powers of attorney in such Borrower's or Guarantor's name for such
purpose, and to complete in such Borrower's or Guarantor's or Agent's name, any
order, sale or transaction, obtain the necessary documents in connection
therewith and collect the proceeds thereof, and (iv) sign such Borrower's or
Guarantor's name on any verification of Receivables and notices thereof to
account debtors or any secondary obligors or other obligors in respect thereof.
Each Borrower and Guarantor
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hereby releases Agent and Lenders and their respective officers, employees and
designees from any liabilities arising from any act or acts under this power of
attorney and in furtherance thereof, whether of omission or commission, except
as a result of Agent's or any Lender's own gross negligence or willful
misconduct as determined pursuant to a final non-appealable order of a court of
competent jurisdiction.
7.6 Right to Cure. Agent may, at its option, upon notice to Administrative
Borrower, (a) cure any default by any Borrower or Guarantor under any material
agreement with a third party that affects the Collateral, its value or the
ability of Agent to collect, sell or otherwise dispose of the Collateral or the
rights and remedies of Agent or any Lender therein or the ability of any
Borrower or Guarantor to perform its obligations hereunder or under any of the
other Financing Agreements, (b) pay or bond on appeal any judgment entered
against any Borrower or Guarantor, (c) discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing with respect
to the Collateral and (d) pay any amount, incur any expense or perform any act
which, in Agent's good faith judgment, is necessary or appropriate to preserve,
protect, insure or maintain the Collateral and the rights of Agent and Lenders
with respect thereto. Agent may add any amounts so expended to the Obligations
and charge any Borrower's account therefor, such amounts to be repayable by
Borrowers on demand. Agent and Lenders shall be under no obligation to effect
such cure, payment or bonding and shall not, by doing so, be deemed to have
assumed any obligation or liability of any Borrower or Guarantor. Any payment
made or other action taken by Agent or any Lender under this Section shall be
without prejudice to any right to assert an Event of Default hereunder and to
proceed accordingly.
7.7 Access to Premises. From time to time as requested by Agent, at the
cost and expense of Borrowers, (a) Agent or its designee shall have complete
access to all of each Borrower's and Guarantor's premises during normal business
hours and after notice to Parent, or at any time and without notice to
Administrative Borrower if an Event of Default exists or has occurred and is
continuing, for the purposes of inspecting, verifying and auditing the
Collateral and all of each Borrower's and Guarantor's books and records,
including the Records, and (b) each Borrower and Guarantor shall promptly
furnish to Agent such copies of such books and records or extracts therefrom as
Agent may request, and Agent or any Lender or Agent's designee may use during
normal business hours such of any Borrower's and Guarantor's personnel,
equipment, supplies and premises as may be reasonably necessary for the
foregoing and if an Event of Default exists or has occurred and is continuing
for the collection of Receivables and realization of other Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Each Borrower and Guarantor hereby represents and warrants to Agent,
Lenders and Issuing Bank the following (which shall survive the execution and
delivery of this Agreement):
8.1 Corporate Existence, Power and Authority. Each Borrower and Guarantor
is a corporation or limited liability company, as the case may be, duly
organized and in good standing under the laws of its jurisdiction of
organization and is duly qualified as a foreign corporation or limited liability
company, as the case may be, and in good standing in all states or other
jurisdictions where the nature and extent of the business transacted by it or
the ownership of assets makes such qualification necessary, except for those
jurisdictions in which the failure to so qualify would not have a Material
Adverse Effect. The execution, delivery and performance
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of this Agreement, the other Financing Agreements and the transactions
contemplated hereunder and thereunder (a) are all within each Borrower's and
Guarantor's organizational powers, (b) have been duly authorized, (c) are not in
contravention of law or the terms of any Borrower's or Guarantor's certificate
of incorporation, by laws, or other organizational documentation, or any
indenture, agreement or undertaking to which any Borrower or Guarantor is a
party or by which any Borrower or Guarantor or its property are bound and (d)
will not result in the creation or imposition of, or require or give rise to any
obligation to grant, any lien, security interest, charge or other encumbrance
upon any property of any Borrower or Guarantor other than in favor of Agent,
Lenders and/or Wachovia as collateral agent for the benefit of Lenders and Term
Loan Lenders. This Agreement and the other Financing Agreements to which any
Borrower or Guarantor is a party constitute legal, valid and binding obligations
of such Borrower and Guarantor enforceable in accordance with their respective
terms.
8.2 Name; State of Organization; Chief Executive Office; Collateral
Locations.
(a) The exact legal name of each Borrower and Guarantor is as set
forth on the signature page of this Agreement and in the Information
Certificate. No Borrower or Guarantor has, during the five years prior to the
date of this Agreement, been known by or used any other corporate or fictitious
name or been a party to any merger or consolidation, or acquired all or
substantially all of the assets of any Person, or acquired any of its property
or assets out of the ordinary course of business, except as set forth in the
Information Certificate.
(b) Each Borrower and Guarantor is an organization of the type and
organized in the jurisdiction set forth in the Information Certificate. The
Information Certificate accurately sets forth the organizational identification
number of each Borrower and Guarantor or accurately states that such Borrower or
Guarantor has none and accurately sets forth the federal employer identification
number of each Borrower and Guarantor.
(c) The chief executive office and mailing address of each Borrower
and Guarantor and each Borrower's and Guarantor's Records concerning Accounts
are located only at the address identified as such in Schedule 8.2 to the
Information Certificate and its only other places of business and the only other
locations of Collateral, if any, are the addresses set forth in Schedule 8.2 to
the Information Certificate, subject to the rights of any Borrower or Guarantor
to establish new locations in accordance with Section 9.2 below. The Information
Certificate correctly identifies any of such locations which are not owned by a
Borrower or Guarantor and sets forth the owners and/or operators thereof.
8.3 Financial Statements; No Material Adverse Change. All financial
statements relating to any Borrower or Guarantor which have been or may
hereafter be delivered by any Borrower or Guarantor to Agent and Lenders have
been prepared in accordance with GAAP (except as to any interim financial
statements, to the extent such statements are subject to normal year-end
adjustments and do not include any notes) and fairly present in all material
respects the financial condition and the results of operation of such Borrower
and Guarantor as at the dates and for the periods set forth therein. Except as
disclosed in any interim financial statements furnished by Borrowers and
Guarantors to Agent prior to the date of this Agreement, there has been no act,
condition or event which has had or is reasonably likely to have a Material
Adverse Effect since the date of the most recent audited financial statements of
any Borrower or Guarantor furnished by any Borrower or Guarantor to Agent prior
to the date of this Agreement.
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The projections dated November 9, 2005 for the fiscal years ending 2006 through
2010 that have been delivered to Agent or any projections hereafter delivered to
Agent have been prepared in light of the past operations of the businesses of
Borrowers and Guarantors and are based upon estimates and assumptions stated
therein, all of which Borrowers and Guarantors have determined to be reasonable
and fair in light of the then current conditions and current facts and reflect
the good faith and reasonable estimates of Borrowers and Guarantors of the
future financial performance of Parent and its Subsidiaries and of the other
information projected therein for the periods set forth therein.
8.4 Priority of Liens; Title to Properties. The security interests and
liens granted to Agent under this Agreement and the other Financing Agreements
constitute valid and perfected first priority liens and security interests in
and upon the Collateral subject only to the liens indicated on Schedule 8.4 to
the Information Certificate and the other liens permitted under Section 9.8
hereof. Each Borrower and Guarantor has good and marketable fee simple title to
or valid leasehold interests in all of its Real Property and good, valid and
merchantable title to all of its other properties and assets subject to no
liens, mortgages, pledges, security interests, encumbrances or charges of any
kind, except those granted to Agent and such others as are specifically listed
on Schedule 8.4 to the Information Certificate or permitted under Section 9.8
hereof.
8.5 Tax Returns.
(a) Each Borrower and Guarantor has filed, or caused to be filed, in
a timely manner all tax returns, reports and declarations which are required to
be filed by it. All information in such tax returns, reports and declarations is
complete and accurate in all material respects. Each Borrower and Guarantor has
paid or caused to be paid all taxes due and payable or claimed due and payable
in any assessment received by it, except taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to such Borrower or Guarantor and with respect to which adequate
reserves have been set aside on its books. Adequate provision has been made for
the payment of all accrued and unpaid Federal, State, county, local, foreign and
other taxes whether or not yet due and payable and whether or not disputed.
(b) None of Borrowers, Guarantors or any of their Affiliates has at
any time (i) utilized any loan proceeds or other financial accommodations under
the credit facility with Existing Lenders, in connection with or for the benefit
of any of their operations, assets or activities in Canada and (ii), whether in
a tax return, report, declaration or otherwise, asserted or claimed a right or
entitlement to a tax deduction, credit or similar benefit in respect of interest
accrued or accruing under the credit facility with Existing Lenders or the
transactions contemplated thereby, arising out of, in connection with or related
to any operations, assets or activities in Canada of Borrowers, Guarantors or
any of their Affiliates.
8.6 Litigation. Except as set forth on Schedule 8.6 to the Information
Certificate, (a) there is no investigation by any Governmental Authority
pending, or to the best of any Borrower's or Guarantor's knowledge threatened,
against or affecting any Borrower or Guarantor, its or their assets or business
and (b) there is no action, suit, proceeding or claim by any Person pending, or
to the best of any Borrower's or Guarantor's knowledge threatened, against any
Borrower or Guarantor or its or their assets or goodwill, or against or
affecting any
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transactions contemplated by this Agreement, in each case, which if adversely
determined against such Borrower or Guarantor has or could reasonably be
expected to have a Material Adverse Effect.
8.7 Compliance with Other Agreements and Applicable Laws.
(a) Borrowers and Guarantors are not in default in any respect
under, or in violation in any respect of the terms of, any material agreement,
contract, instrument, lease or other commitment to which it is a party or by
which it or any of its assets are bound. Borrowers and Guarantors are in
compliance with the requirements of all applicable laws, rules, regulations and
orders of any Governmental Authority relating to their respective businesses,
including, without limitation, those set forth in or promulgated pursuant to the
Occupational Safety and Health Act of 1970, as amended, the Fair Labor Standards
Act of 1938, as amended, ERISA, the Code, as amended, and the rules and
regulations thereunder, and all Environmental Laws, other than de minimus
non-compliance that could not reasonably be expected to have a Material Adverse
Effect.
(b) Borrowers and Guarantors have obtained all material permits,
licenses, approvals, consents, certificates, orders or authorizations of any
Governmental Authority required for the lawful conduct of its business (the
"Permits"). All of the Permits are valid and subsisting and in full force and
effect. There are no actions, claims or proceedings pending or to the best of
any Borrower's or Guarantor's knowledge, threatened that seek the revocation,
cancellation, suspension or modification of any of the Permits.
8.8 Environmental Compliance.
(a) Except as set forth on Schedule 8.8 to the Information
Certificate, Borrowers, Guarantors and any Subsidiary of any Borrower or
Guarantor have not generated, used, stored, treated, transported, manufactured,
handled, produced or disposed of any Hazardous Materials, on or off its premises
(whether or not owned by it) in any manner which at any time violates in any
material respect any applicable Environmental Law or Permit, and the operations
of Borrowers, Guarantors and any Subsidiary of any Borrower or Guarantor
complies in all material respects with all Environmental Laws and all Permits.
(b) Except as set forth on Schedule 8.8 to the Information
Certificate, there has been no investigation by any Governmental Authority or
any proceeding, complaint, order, directive, claim, citation or notice by any
Governmental Authority or any other person nor is any pending or to the best of
any Borrower's or Guarantor's knowledge threatened, with respect to any non
compliance with or violation of the requirements of any Environmental Law by any
Borrower or Guarantor and any Subsidiary of any Borrower or Guarantor or the
release, spill or discharge, threatened or actual, of any Hazardous Material or
the generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials or any other environmental,
health or safety matter, which adversely affects or could reasonably be expected
to adversely affect in any material respect any Borrower or Guarantor or its or
their business, operations or assets or any properties at which such Borrower or
Guarantor has transported, stored or disposed of any Hazardous Materials.
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(c) Except as set forth on Schedule 8.8 to the Information
Certificate, Borrowers, Guarantors and their Subsidiaries have no material
liability (contingent or otherwise) in connection with a release, spill or
discharge, threatened or actual, of any Hazardous Materials or the generation,
use, storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials.
(d) Borrowers, Guarantors and their Subsidiaries have all Permits
required to be obtained or filed in connection with the operations of Borrowers
and Guarantors under any Environmental Law and all of such licenses,
certificates, approvals or similar authorizations and other Permits are valid
and in full force and effect.
8.9 Employee Benefits.
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or State law. Each
Plan which is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the Internal Revenue Service and to the
best of any Borrower's or Guarantor's knowledge, nothing has occurred which
would cause the loss of such qualification. Each Borrower and its ERISA
Affiliates have made all required contributions to any Plan subject to Section
412 of the Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with
respect to any Plan.
(b) There are no pending, or to the best of any Borrower's or
Guarantor's knowledge, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan. There has been no prohibited
transaction (for which an exemption has not been obtained or with respect to
which transaction an exemption does not automatically apply) or violation of the
fiduciary responsibility rules with respect to any Plan.
(c) (i) Except as set forth on Schedule 8.9(c) to the Information
Certificate, no ERISA Event has occurred or is reasonably expected to occur;
(ii) based on the latest valuation of each Pension Plan and on the actuarial
methods and assumptions employed for such valuation (determined in accordance
with the assumptions used for funding such Pension Plan pursuant to Section 412
of the Code), the aggregate current value of accumulated benefit liabilities of
such Pension Plan under Section 4001(a)(16) of ERISA does not exceed the
aggregate current value of the assets of such Pension Plan; (iii) each Borrower
and Guarantor, and their ERISA Affiliates, have not incurred and do not
reasonably expect to incur, any liability under Title IV of ERISA with respect
to any Plan (other than premiums due and not delinquent under Section 4007 of
ERISA); (iv) each Borrower and Guarantor, and their ERISA Affiliates, have not
incurred and do not reasonably expect to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Section 4201 in excess of $1,500,000 or under
4243 of ERISA with respect to a Multiemployer Plan; and (v) each Borrower and
Guarantor, and their ERISA Affiliates, have not engaged in a transaction that
would be subject to Section 4069 or 4212(c) of ERISA.
8.10 Bank Accounts. All of the deposit accounts, investment accounts or
other accounts in the name of or used by any Borrower or Guarantor maintained at
any bank or other financial institution are set forth on Schedule 8.10 to the
Information Certificate, subject to the right of each Borrower and Guarantor to
establish new accounts in accordance with Section 5.2 hereof.
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8.11 Intellectual Property. Each Borrower and Guarantor owns or licenses
or otherwise has the right to use all Intellectual Property necessary for the
operation of its business as presently conducted or proposed to be conducted. As
of the date hereof, Borrowers and Guarantors do not have any Intellectual
Property registered, or subject to pending applications, in the United States
Patent and Trademark Office, the Canadian Intellectual Property Office or any
similar office or agency in the United States or Canada, any State, Province or
Territory thereof, any political subdivision thereof or in any other country,
other than those described in Schedule 8.11 to the Information Certificate and
has not granted any licenses with respect thereto other than as set forth in
Schedule 8.11 to the Information Certificate. No event has occurred which
permits or would permit after notice or passage of time or both, the revocation,
suspension or termination of such rights. To the best of any Borrower's and
Guarantor's knowledge, no slogan or other advertising device, product, process,
method, substance or other Intellectual Property or goods bearing or using any
Intellectual Property presently contemplated to be sold by or employed by any
Borrower or Guarantor infringes any patent, trademark, servicemark, tradename,
copyright, license or other Intellectual Property owned by any other Person
presently and no claim or litigation is pending or threatened against or
affecting any Borrower or Guarantor contesting its right to sell or use any such
Intellectual Property. Schedule 8.11 to the Information Certificate sets forth
all of the agreements or other arrangements of each Borrower and Guarantor
pursuant to which such Borrower or Guarantor has a license or other right to use
any trademarks, logos, designs, representations or other Intellectual Property
owned by another person as in effect on the date hereof and the dates of the
expiration of such agreements or other arrangements of such Borrower or
Guarantor as in effect on the date hereof (collectively, together with such
agreements or other arrangements as may be entered into by any Borrower or
Guarantor after the date hereof, collectively, the "License Agreements" and
individually, a "License Agreement"). No trademark, servicemark, copyright or
other Intellectual Property at any time used by any Borrower or Guarantor which
is owned by another person, or owned by such Borrower or Guarantor subject to
any security interest, lien, collateral assignment, pledge or other encumbrance
in favor of any person other than Agent and Term Loan Agent, is affixed to any
Eligible Inventory, except (a) to the extent permitted under the term of the
License Agreements listed on Schedule 8.11 to the Information Certificate and
(b) to the extent the sale of Inventory to which such Intellectual Property is
affixed is permitted to be sold by such Borrower or Guarantor under applicable
law (including the United States Copyright Act of 1976).
8.12 Subsidiaries; Affiliates; Capitalization; Solvency.
(a) Each Borrower and Guarantor does not have any direct or indirect
Subsidiaries or Affiliates and is not engaged in any joint venture or
partnership except as set forth in Schedule 8.12 to the Information Certificate.
(b) Except as set forth on Schedule 8.12 to the Information
Certificate, each Borrower and Guarantor is the record and beneficial owner of
all of the issued and outstanding shares of Capital Stock of each of the
Subsidiaries listed on Schedule 8.12 to the Information Certificate as being
owned by such Borrower or Guarantor and there are no proxies, irrevocable or
otherwise, with respect to such shares and no equity securities of any of the
Subsidiaries are or may become required to be issued by reason of any options,
warrants, rights to subscribe to, calls or commitments of any kind or nature and
there are no contracts, commitments, understandings or
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arrangements by which any Subsidiary is or may become bound to issue additional
shares of it Capital Stock or securities convertible into or exchangeable for
such shares.
(c) The issued and outstanding shares of Capital Stock of each
Borrower and Guarantor are directly and beneficially owned and held by the
persons indicated in the Information Certificate, and in each case all of such
shares have been duly authorized and are fully paid and non-assessable, free and
clear of all claims, liens, pledges and encumbrances of any kind, except as
disclosed in writing to Agent prior to the date hereof.
(d) After giving effect to the consummation of the transactions
contemplated by this Agreement, the other Financing Agreements and the Term Loan
Documents, each Borrower and Guarantor is Solvent and will continue to be
Solvent after the creation of the Obligations, the security interests of Agent
and Term Loan Agent and the other transaction contemplated hereunder.
8.13 Labor Disputes.
(a) Set forth on Schedule 8.13 to the Information Certificate is a
list (including dates of termination) of all collective bargaining or similar
agreements between or applicable to each Borrower and Guarantor and any union,
labor organization or other bargaining agent in respect of the employees of any
Borrower or Guarantor on the date hereof.
(b) There is (i) no significant unfair labor practice complaint
pending against any Borrower or Guarantor or, to the best of any Borrower's or
Guarantor's knowledge, threatened against it, before the National Labor
Relations Board, and no significant grievance or significant arbitration
proceeding arising out of or under any collective bargaining agreement is
pending on the date hereof against any Borrower or Guarantor or, to best of any
Borrower's or Guarantor's knowledge, threatened against it, and (ii) no
significant strike, labor dispute, slowdown or stoppage is pending against any
Borrower or Guarantor or, to the best of any Borrower's or Guarantor's
knowledge, threatened against any Borrower or Guarantor.
8.14 Restrictions on Subsidiaries. Except for restrictions contained in
this Agreement or any other agreement with respect to Indebtedness of any
Borrower or Guarantor permitted hereunder as in effect on the date hereof, there
are no contractual or consensual restrictions on any Borrower or Guarantor or
any of its Domestic Subsidiaries which prohibit or otherwise restrict (a) the
transfer of cash or other assets (i) between any Borrower or Guarantor and any
of its or their Subsidiaries or (ii) between any Domestic Subsidiaries of any
Borrower or Guarantor or (b) the ability of any Borrower or Guarantor or any of
its or their Domestic Subsidiaries to incur Indebtedness or grant security
interests to Agent or any Lender in the Collateral.
8.15 Material Contracts. Schedule 8.15 to the Information Certificate sets
forth all Material Contracts to which any Borrower or Guarantor is a party or is
bound as of the date hereof. Borrowers and Guarantors have delivered true,
correct and complete copies of such Material Contracts to Agent on or before the
date hereof. Borrowers and Guarantors are not in breach or in default in any
material respect of or under any Material Contract and have not received any
notice of the intention of any other party thereto to terminate any Material
Contract.
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8.16 Payable Practices. Each Borrower and Guarantor have not made any
material change in the historical accounts payable practices from those in
effect immediately prior to the date hereof.
8.17 Interrelated Businesses. Borrowers and Guarantors make up a related
organization of various entities constituting a single economic and business
enterprise so that Borrowers and Guarantors share an identity of interests such
that any benefit received by any one of them benefits the others. Borrowers and
Guarantors render services to or for the benefit of the other Borrowers and/or
Guarantors, as the case may be, purchase or sell and supply goods to or from or
for the benefit of the others, make loans, advances and provide other financial
accommodations to or for the benefit of the other Borrowers and Guarantors
(including inter alia, the payment by Borrowers and Guarantors of creditors of
the other Borrowers or Guarantors and guarantees by Borrowers and Guarantors of
indebtedness of the other Borrowers and Guarantors and provide administrative,
marketing, payroll and management services to or for the benefit of the other
Borrowers and Guarantors). Borrowers have a central merchandising group that
purchases substantially all of the Inventory on behalf of all Borrowers.
Borrowers and Guarantors have centralized legal services, certain common
officers and directors and generally do not provide consolidating financial
statements to creditors.
8.18 Accuracy and Completeness of Information. All information furnished
by or on behalf of any Borrower or Guarantor in writing to Agent or any Lender
in connection with this Agreement or any of the other Financing Agreements or
any transaction contemplated hereby or thereby, including all information on the
Information Certificate is true and correct in all material respects on the date
as of which such information is dated or certified and does not omit any
material fact necessary in order to make such information not misleading. No
event or circumstance has occurred which has had or could reasonably be expected
to have a Material Adverse Affect, which has not been fully and accurately
disclosed to Agent in writing prior to the date hereof.
8.19 Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be deemed
to have been made again to Agent and Lenders on the date of each additional
borrowing or other credit accommodation hereunder (except to the extent that
such representations and warranties expressly relate solely to an earlier date,
in which case such representations and warranties remain true and accurate on
and as of such earlier date) and shall be conclusively presumed to have been
relied on by Agent and Lenders regardless of any investigation made or
information possessed by Agent or any Lender. The representations and warranties
set forth herein shall be cumulative and in addition to any other
representations or warranties which any Borrower or Guarantor shall now or
hereafter give, or cause to be given, to Agent or any Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
Except as Agent and such Lenders whose consent is required pursuant to the
terms of this Agreement may otherwise agree in writing:
9.1 Maintenance of Existence.
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(a) Each Borrower and Guarantor shall at all times preserve, renew
and keep in full force and effect its corporate or limited liability existence,
as the case may be, and rights and franchises with respect thereto and maintain
in full force and effect all licenses, trademarks, tradenames, approvals,
authorizations, leases, contracts and Permits necessary to carry on the business
as presently or proposed to be conducted, except as to any Guarantor other than
Parent as permitted in Section 9.7 hereto.
(b) No Borrower or Guarantor shall change its name unless each of
the following conditions is satisfied: (i) Agent shall have received not less
than thirty (30) days prior written notice from Administrative Borrower of such
proposed change in its limited liability company or corporate name, which notice
shall accurately set forth the new name; and (ii) Agent shall have received a
copy of the amendment to the Certificate of Incorporation or other
organizational document of such Borrower or Guarantor providing for the name
change certified by the Secretary of State of the jurisdiction of incorporation
or organization of such Borrower or Guarantor as soon as it is available.
(c) No Borrower or Guarantor shall change its chief executive office
or its mailing address or organizational identification number (or if it does
not have one, shall not acquire one) unless Agent shall have received not less
than thirty (30) days' prior written notice from Administrative Borrower of such
proposed change, which notice shall set forth such information with respect
thereto as Agent may require and Agent shall have received such agreements as
Agent may reasonably require in connection therewith. Without the prior written
consent of Agent no Borrower or Guarantor shall change its type of organization,
jurisdiction of organization or other legal structure.
9.2 New Collateral Locations. Each Borrower and Guarantor may only open
any new location within the continental United States provided such Borrower or
Guarantor (a) gives Agent fifteen (15) days prior written notice of the intended
opening of any such new location and (b) executes and delivers, or causes to be
executed and delivered, to Agent such agreements, documents, and instruments as
Agent may deem reasonably necessary or desirable to protect its interests in the
Collateral at such location.
9.3 Compliance with Laws, Regulations, Etc.
(a) Each Borrower and Guarantor shall, and shall cause any
Subsidiary to, at all times, comply in all material respects with all laws,
rules, regulations, licenses, approvals, orders and other Permits applicable to
it and duly observe all requirements of any foreign, Federal, State or local
Governmental Authority.
(b) Borrowers and Guarantors shall give written notice to Agent
promptly upon any Borrower's or Guarantor's receipt of any notice of, or any
Borrower's or Guarantor's otherwise obtaining knowledge of, (i) the occurrence
of any event involving the release, spill or discharge, threatened or actual, of
any Hazardous Material or (ii) any investigation, proceeding, complaint, order,
directive, claims, citation or notice with respect to: (A) any non-compliance
with or violation of any Environmental Law by any Borrower or Guarantor or (B)
the release, spill or discharge, threatened or actual, of any Hazardous Material
other than in the ordinary course of business and other than as permitted under
any applicable Environmental Law. Copies of all environmental surveys, audits,
assessments, feasibility studies and results of remedial
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investigations shall be promptly furnished, or caused to be furnished, by such
Borrower or Guarantor to Agent. Each Borrower and Guarantor shall take prompt
action to respond to any material non-compliance with any of the Environmental
Laws and shall regularly report to Agent on such response.
(c) Without limiting the generality of the foregoing, whenever Agent
reasonably determines that there is non-compliance, or any condition which
requires any action by or on behalf of any Borrower or Guarantor in order to
avoid any non compliance, with any Environmental Law, Borrowers shall, at
Agent's request and Borrowers' expense: (i) cause an independent environmental
engineer reasonably acceptable to Agent to conduct such tests of the site where
non-compliance or alleged non compliance with such Environmental Laws has
occurred as to such non-compliance and prepare and deliver to Agent a report as
to such non-compliance setting forth the results of such tests, a proposed plan
for responding to any environmental problems described therein, and an estimate
of the costs thereof and (ii) provide to Agent a supplemental report of such
engineer whenever the scope of such non-compliance, or such Borrower's or
Guarantor's response thereto or the estimated costs thereof, shall change in any
material respect.
(d) Each Borrower and Guarantor shall indemnify and hold harmless
Agent and Lenders and their respective directors, officers, employees, agents,
invitees, representatives, successors and assigns, from and against any and all
losses, claims, damages, liabilities, costs, and expenses (including reasonable
attorneys' fees and expenses) directly or indirectly arising out of or
attributable to the use, generation, manufacture, reproduction, storage,
release, threatened release, spill, discharge, disposal or presence of a
Hazardous Material, including the costs of any required or necessary repair,
cleanup or other remedial work with respect to any property of any Borrower or
Guarantor and the preparation and implementation of any closure, remedial or
other required plans, except for any such losses, claims, damages, liabilities,
costs or expenses which are solely the result of the gross negligence or willful
misconduct of Agent or any Lender, as determined pursuant to a final,
non-appealable judgment of a court of competent jurisdiction. All
representations, warranties, covenants and indemnifications in this Section 9.3
shall survive the payment of the Obligations and the termination of this
Agreement.
9.4 Payment of Taxes and Claims.
(a) Each Borrower and Guarantor shall, and shall cause any
Subsidiary to, duly pay and discharge all taxes, assessments, contributions and
governmental charges upon or against it or its properties or assets, except for
taxes the validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to such Borrower, Guarantor or
Subsidiary, as the case may be, and with respect to which adequate reserves have
been set aside on its books to the extent required by GAAP.
(b) None of Borrowers, Guarantors or any of their Affiliates shall
at any time (i) utilize any Loans or Letters of Credit in connection with or for
the benefit of any of their operations, assets or activities in Canada, or (ii),
whether in a tax return, report, declaration or otherwise, assert or claim a
right or entitlement to a tax deduction, credit or similar benefit in respect of
interest accrued or accruing under the Financing Agreements or the transactions
contemplated thereby, arising out of, in connection with or related to any
operations, assets or activities in Canada of Borrowers, Guarantors or their
Affiliates.
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9.5 Insurance. Each Borrower and Guarantor shall, and shall cause any
Subsidiary to, at all times, maintain with financially sound and reputable
insurers insurance with respect to the Collateral against loss or damage and all
other insurance of the kinds and in the amounts customarily insured against or
carried by corporations of established reputation engaged in the same or similar
businesses and similarly situated. Said policies of insurance shall be
reasonably satisfactory to Agent as to form, amount and insurer. Borrowers and
Guarantors shall furnish certificates, policies or endorsements to Agent as
Agent shall reasonably require as proof of such insurance, and, if any Borrower
or Guarantor fails to do so, Agent is authorized, but not required, to obtain
such insurance at the expense of Borrowers. All policies shall provide for at
least thirty (30) days prior written notice to Agent of any cancellation or
reduction of coverage and that Agent may act as attorney for each Borrower and
Guarantor in obtaining, and at any time an Event of Default exists or has
occurred and is continuing, adjusting, settling, amending and canceling such
insurance. Borrowers and Guarantors shall cause Agent to be named as a first
loss payee, an additional insured and mortgagee (but without any liability for
any premiums) under such insurance policies and Borrowers and Guarantors shall
obtain non-contributory lender's loss payable endorsements to all insurance
policies in form and substance reasonably satisfactory to Agent. Such lender's
loss payable endorsements shall specify that the proceeds of such insurance
shall be payable to Agent as its interests may appear and further specify that
Agent and Lenders shall be paid regardless of any act or omission by any
Borrower, Guarantor or any of its or their Affiliates. Without limiting any
other rights of Agent or Lenders, any insurance proceeds received by Agent at
any time may be applied to payment of the Obligations, whether or not then due,
in any order and in such manner as Agent may determine. Upon application of such
proceeds to the Revolving Loans, Revolving Loans may be available subject and
pursuant to the terms hereof to be used for the costs of repair or replacement
of the Collateral lost or damages resulting in the payment of such insurance
proceeds.
9.6 Financial Statements and Other Information.
(a) Each Borrower and Guarantor shall, and shall cause any
Subsidiary to, keep proper books and records in which true and complete entries
shall be made of all dealings or transactions of or in relation to the
Collateral and the business of such Borrower, Guarantor and its Subsidiaries in
accordance with GAAP. Borrowers and Guarantors shall promptly furnish to Agent
and Lenders all such financial and other information as Agent shall reasonably
request relating to the Collateral and the assets, business and operations of
Borrowers and Guarantors, and Borrower shall notify the auditors and accountants
of Borrowers and Guarantors that Agent is authorized to obtain such information
directly from them. Without limiting the foregoing, Borrowers shall furnish or
cause to be furnished to Agent, the following:
(i) within thirty (30) days after the end of the fiscal months
of Parent and Subsidiaries ending as of the last day each of May, June, August,
September, November and December of each year, monthly unaudited consolidated
financial statements (including a schedule of capital expenditures, balance
sheets and statements of income and loss) and unaudited consolidating financial
statements (including balance sheets, statements of income and loss), all in
reasonable detail, fairly presenting in all material respects the financial
position and the results of the operations of Parent and its Subsidiaries as of
the end of and through such fiscal month, certified to be correct by the chief
financial officer or treasurer of Parent, subject to normal year-end adjustments
and accompanied by a compliance certificate substantially in the
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form of Exhibit C hereto, along with a schedule in form reasonably satisfactory
to Agent of the calculations used in determining, as of the end of such month,
whether Borrowers and Guarantors were in compliance with the covenant set forth
in Section 9.17 of this Agreement for such month,
(ii) on or before (A) April 30, 2006 with respect to the
fiscal month of Parent and its Subsidiaries ending on February 28, 2006, (B) May
15, 2006, with respect to the fiscal month of Parent and its Subsidiaries ending
on March 31, 2006, and (C) the date which is thirty-five (35) days after the end
of the fiscal months of Parent and its Subsidiaries ending as of the last day of
each of February and March, 2007 and as of the last day of each of February and
March thereafter, monthly unaudited consolidated financial statements (including
a schedule of capital expenditures, balance sheets, statements of income and
loss and statements of shareholders' equity) and unaudited consolidating
financial statements (including balance sheets and statements of income and
loss), all in reasonable detail, fairly presenting in all material respects the
financial position and the results of the operations of Parent and its
Subsidiaries as of the end of and through such fiscal month, certified to be
correct by the chief financial officer or treasurer of Parent, subject to normal
year-end adjustments and accompanied by a compliance certificate substantially
in the form of Exhibit C hereto, along with a schedule in form reasonably
satisfactory to Agent of the calculations used in determining, as of the end of
such month, whether Borrowers and Guarantors were in compliance with the
covenant set forth in Section 9.17 of this Agreement for such month,
(iii) within forty-five (45) days after the end of each fiscal
quarter, except as to each such fiscal quarter which is also the end of the
fiscal year of Parent and its Subsidiaries, (A) quarterly unaudited consolidated
financial statements (including a schedule of capital expenditures, balance
sheets, statements of income and loss and statements of cash flow) and unaudited
consolidating financial statements (including in each case balance sheets and
statements of income and loss) all in reasonable detail, fairly presenting in
all material respects the financial position and the results of the operations
of Parent and its Subsidiaries as of the end of and through such fiscal quarter
and (B) with respect to the last month of such fiscal quarter, unaudited
statements of income and loss, prepared on a consolidated and consolidating
basis, for such month, in each case, certified to be correct by the chief
financial officer or treasurer of Parent, subject to normal year-end adjustments
and accompanied by a compliance certificate substantially in the form of Exhibit
C hereto, along with a schedule in form reasonably satisfactory to Agent of the
calculations used in determining, as of the end of such quarter, whether
Borrowers and Guarantors were in compliance with the covenants set forth in
Section 9.17 of this Agreement for such quarter,
(iv) within ninety (90) days after the end of each fiscal
year, audited consolidated financial statements (including a schedule of capital
expenditures, balance sheets, statements of income and loss and unaudited
consolidating financial statements (including in each case balance sheets,
statements of income and loss and statements of cash flow) of Parent and its
Subsidiaries (including in each case balance sheets and statements of income and
loss), and the accompanying notes thereto, all in reasonable detail, fairly
presenting in all material respects the financial position and the results of
the operations of Parent and its Subsidiaries as of the end of and for such
fiscal year, together with the unqualified opinion of independent certified
public accountants with respect to the audited consolidated financial
statements, which accountants
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shall be an independent accounting firm selected by Administrative Borrower and
reasonably acceptable to Agent, that such audited consolidated financial
statements have been prepared in accordance with GAAP, and present fairly in all
material respects the results of operations and financial condition of Parent
and its Subsidiaries as of the end of and for the fiscal year then ended,
(v) at such time as available, but in no event later than
thirty (30) days after the first day of each fiscal year (commencing with the
fiscal year of Borrowers ending January 31, 2007), projected consolidated
financial statements (including forecasted balance sheets and statements of
income and loss, statements of cash flow, and statements of shareholders'
equity) of Parent and its Subsidiaries for such fiscal year, all in reasonable
detail, and in a format consistent with the projections delivered by Borrowers
to Agent prior to the date hereof, together with such supporting information as
Agent may reasonably request. Such projected financial statements shall be
prepared on a quarterly basis for the next succeeding year. Such projections
shall represent the reasonable best estimate by Borrowers and Guarantors of the
future financial performance of Parent and its Subsidiaries for the periods set
forth therein and shall have been prepared on the basis of the assumptions set
forth therein which Borrowers and Guarantors believe are fair and reasonable as
of the date of preparation in light of current and reasonably foreseeable
business conditions (it being understood that actual results may differ from
those set forth in such projected financial statements). Each year Borrowers
shall provide to Agent a semi-annual update with respect to such projections or
at any time a Default or Event of Default exists or has occurred and is
continuing, more frequently as Agent may require.
(b) Borrowers and Guarantors shall promptly notify Agent in writing
of the details of (i) any loss, damage, investigation, action, suit, proceeding
or claim relating to Collateral having a value of more than $750,000 or which if
adversely determined would result in any material adverse change in any
Borrower's or Guarantor's business, properties, assets, goodwill or condition,
financial or otherwise, (ii) any Material Contract being terminated or amended
or any new Material Contract entered into (in which event Borrowers and
Guarantors shall provide Agent with a copy of such Material Contract), (iii) any
order, judgment or decree in excess of $750,000 shall have been entered against
any Borrower or Guarantor any of its or their properties or assets, (iv) any
notification of a material violation of laws or regulations received by any
Borrower or Guarantor, (v) any ERISA Event, and (vi) the occurrence of any
Default or Event of Default.
(c) Promptly after the sending or filing thereof, Borrowers shall
send to Agent copies of (i) all reports which Parent or any of its Subsidiaries
sends to its security holders generally, (ii) all reports and registration
statements which Parent or any of its Subsidiaries files with the Securities
Exchange Commission, any national or foreign securities exchange or the National
Association of Securities Dealers, Inc., and such other reports as Agent may
hereafter specifically identify to Administrative Borrower that Agent will
require be provided to Agent, (iii) all press releases and all other statements
concerning material changes or developments in the business of a Borrower or
Guarantor made available by any Borrower or Guarantor to the public.
(d) Borrowers and Guarantors shall furnish or cause to be furnished
to Agent such budgets, forecasts, projections and other information respecting
the Collateral and the business of Borrowers and Guarantors, as Agent may, from
time to time, reasonably request. Agent is
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hereby authorized to deliver a copy of any financial statement or any other
information relating to the business of Borrowers and Guarantors to any court or
other Governmental Authority or to any Lender or Participant or prospective
Lender or Participant or any Affiliate of any Lender or Participant. Each
Borrower and Guarantor hereby irrevocably authorizes and directs all accountants
or auditors to deliver to Agent, at Borrowers' expense, copies of the financial
statements of any Borrower and Guarantor and any reports or management letters
prepared by such accountants or auditors on behalf of any Borrower or Guarantor
and to disclose to Agent and Lenders such information as they may have regarding
the business of any Borrower and Guarantor. Any documents, schedules, invoices
or other papers delivered to Agent or any Lender may be destroyed or otherwise
disposed of by Agent or such Lender one (1) year after the same are delivered to
Agent or such Lender, except as otherwise designated by Administrative Borrower
to Agent or such Lender in writing.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. Each Borrower
and Guarantor shall not, and shall not permit any Subsidiary to, directly or
indirectly,
(a) merge into or consolidate with any other Person or permit any
other Person to merge into or with or consolidate with it except that any
Domestic Subsidiary (other than a Borrower) may merge with and into or
consolidate with any other Domestic Subsidiary of Parent (other than a Borrower)
and any Foreign Subsidiary may merge with and into or consolidate with any other
Foreign Subsidiary; provided, that, each of the following conditions is
satisfied as determined by Agent: (A) Agent shall have received not less than
ten (10) Business Days' prior written notice of the intention of such
Subsidiaries to so merge or consolidate, which notice shall set forth in
reasonable detail satisfactory to Agent, the persons that are merging or
consolidating, which person will be the surviving entity, the locations of the
assets of the persons that are merging or consolidating, and the material
agreements and documents relating to such merger or consolidation, (B) Agent
shall have received such other information with respect to such merger or
consolidation as Agent may reasonably request, (C) as of the effective date of
the merger or consolidation and after giving effect thereto, no Default or Event
of Default shall exist or have occurred and be continuing, (D) Agent shall have
received, true, correct and complete copies of all agreements, documents and
instruments relating to such merger or consolidation, including, but not limited
to, the certificate or certificates of merger to be filed with each appropriate
Secretary of State (with a copy as filed promptly after such filing), and (E) in
the case of a Domestic Subsidiary, to the extent it is a Guarantor, the
surviving corporation shall expressly confirm, ratify and assume the Obligations
and the Financing Agreements to which it is a party in writing, in form and
substance satisfactory to Agent, and Borrowers and Guarantors shall execute and
deliver such other agreements, documents and instruments as Agent may request in
connection therewith,
(b) sell, issue, assign, lease, license, transfer, abandon or
otherwise dispose of any Capital Stock or Indebtedness to any other Person or
any of its assets to any other Person, except for
(i) sales of Inventory in the ordinary course of business,
(ii) the sale or other disposition of Equipment (including
worn-out or obsolete Equipment or Equipment no longer used or useful in the
business of any Borrower or Guarantor) so long as such sales or other
dispositions do not involve Equipment having an aggregate fair
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market value in excess of $750,000 for all such Equipment disposed of in any
fiscal year of Borrowers or as Agent may otherwise agree,
(iii) the issuance and sale by any Borrower or Guarantor of
Capital Stock of such Borrower or Guarantor after the date hereof; provided,
that, (A) Agent shall have received not less than ten (10) Business Days' prior
written notice of such issuance and sale by such Borrower or Guarantor, which
notice shall specify the parties to whom such shares are to be sold, the terms
of such sale, the total amount which it is anticipated will be realized from the
issuance and sale of such stock and the net cash proceeds which it is
anticipated will be received by such Borrower or Guarantor from such sale, (B)
such Borrower or Guarantor shall not be required to pay any cash dividends or
repurchase or redeem such Capital Stock or make any other payments in respect
thereof, except as otherwise permitted in Section 9.11 hereof, (C) the terms of
such Capital Stock, and the terms and conditions of the purchase and sale
thereof, shall not include any terms that include any limitation on the right of
any Borrower to request or receive Loans or Letters of Credit or the right of
any Borrower and Guarantor to amend or modify any of the terms and conditions of
this Agreement or any of the other Financing Agreements or otherwise in any way
relate to or affect the arrangements of Borrowers and Guarantors with Agent and
Lenders or are more restrictive or burdensome to any Borrower or Guarantor than
the terms of any Capital Stock in effect on the date hereof, (D) except as Agent
may otherwise agree in writing, and subject to the terms of the Term Loan
Intercreditor Agreement, all of the proceeds of the sale and issuance of such
Capital Stock shall be paid to Agent for application to the Obligations in such
order and manner as Agent may determine or at Agent's option, to be held as cash
collateral for the Obligations and (E) as of the date of such issuance and sale
and after giving effect thereto, no Default or Event of Default shall exist or
have occurred,
(iv) the issuance and sale by any Borrower or Guarantor of
Capital Stock of such Borrower or Guarantor after the date hereof; provided,
that, (A) Agent shall have received not less than ten (10) Business Days' prior
written notice of such issuance and sale by such Borrower or Guarantor (but not
of the conversion of Convertible Notes pursuant to and in accordance with
Convertible Note Indenture as in effect on the date hereof), which notice shall
specify the parties to whom such shares are to be sold, the terms of such sale,
the total amount which it is anticipated will be realized from the issuance and
sale of such stock and the net cash proceeds which it is anticipated will be
received by such Borrower or Guarantor from such sale, (B) such Borrower or
Guarantor shall not be required to pay any cash dividends or repurchase or
redeem such Capital Stock or make any other payments in respect thereof, (C) the
terms of such Capital Stock, and the terms and conditions of the purchase and
sale thereof, shall not include any terms that include any limitation on the
right of any Borrower to request or receive Loans or Letters of Credit or the
right of any Borrower and Guarantor to amend or modify any of the terms and
conditions of this Agreement or any of the other Financing Agreements or
otherwise in any way relate to or affect the arrangements of Borrowers and
Guarantors with Agent and Lenders or are more restrictive or burdensome to any
Borrower or Guarantor than the terms of any Capital Stock in effect on the date
hereof, (D) except as Agent may otherwise agree in writing, if as of the date of
such issuance and sale or after giving effect thereto, a Cash Dominion Event has
occurred and is continuing, all of the proceeds of the sale and issuance of such
Capital Stock shall be paid to Agent for application to the Obligations in such
order and manner as Agent may determine,
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(v) the issuance of Capital Stock of any Borrower or Guarantor
consisting of common stock pursuant to an employee stock option or grant or
similar equity plan or 401(k) plans of such Borrower or Guarantor for the
benefit of its employees, directors and consultants; provided, that, in no event
shall such Borrower or Guarantor be required to issue, or shall such Borrower or
Guarantor issue, Capital Stock pursuant to such stock plans or 401(k) plans
which would result in a Change of Control or other Event of Default,
(vi) the issuance of authorized but unissued treasury shares
of Capital Stock of Parent in favor of employees of Borrowers and Guarantors
having an aggregate value for all such treasury shares of Capital Stock so
issued in any fiscal year of Borrowers and Guarantors not to exceed $500,000, in
lieu of cash compensation otherwise payable to such employees,
(vii) the sale by Parent for cash and in an arm's-length
transaction of its right, title and interest in and to its fee simple interest
in the improved Real Property known as "#2 Plant" located in Xxxxx,
Pennsylvania; provided, that, (A) the Net Cash Proceeds in respect of the sale
of such Real Property shall be remitted to Agent upon the consummation of such
sale for application by Agent to the Obligations pursuant to and in accordance
with the terms of this Agreement and (B) on the date of such sale and after
giving effect thereto, no Default or Event of Default shall exist or have
occurred and be continuing.
(c) wind up, liquidate or dissolve except that any Guarantor (other
than Parent) may wind up, liquidate and dissolve; provided, that, each of the
following conditions is satisfied, (i) the winding up, liquidation and
dissolution of such Guarantor shall not violate any law or any order or decree
of any court or other Governmental Authority in any material respect and shall
not conflict with or result in the breach of, or constitute a default under, any
indenture, mortgage, deed of trust, or any other agreement or instrument to
which any Borrower or Guarantor is a party or may be bound, (ii) such winding
up, liquidation or dissolution shall be done in accordance with the requirements
of all applicable laws and regulations, (iii) effective upon such winding up,
liquidation or dissolution, all of the assets and properties of such Guarantor
shall be duly and validly transferred and assigned to a Borrower, free and clear
of any liens, restrictions or encumbrances other than the security interest and
liens of Agent, Term Loan Agent and/or Wachovia as collateral agent for Lenders
and Term Loan Lenders (and Agent shall have received such evidence thereof as
Agent may require) and Agent shall have received such deeds, assignments or
other agreements as Agent may request to evidence and confirm the transfer of
such assets of such Guarantor to a Borrower, (iv) Agent shall have received all
documents and agreements that any Borrower or Guarantor has filed with any
Governmental Authority or as are otherwise required to effectuate such winding
up, liquidation or dissolution, (v) no Borrower or Guarantor shall assume any
Indebtedness, obligations or liabilities as a result of such winding up,
liquidation or dissolution, or otherwise become liable in respect of any
obligations or liabilities of the entity that is winding up, liquidating or
dissolving, unless such Indebtedness is otherwise expressly permitted hereunder,
(vi) Agent shall have received not less than ten (10) Business Days prior
written notice of the intention of such Guarantor to wind up, liquidate or
dissolve, and (vii) as of the date of such winding up, liquidation or
dissolution and after giving effect thereto, no Default or Event of Default
shall exist or have occurred; or
(d) agree to do any of the foregoing.
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9.8 Encumbrances. Each Borrower and Guarantor shall not, and shall not
permit any Subsidiary to, create, incur, assume or suffer to exist any security
interest, mortgage, pledge, lien, charge or other encumbrance of any nature
whatsoever on any of its assets or properties, including the Collateral, or file
or permit the filing of, or permit to remain in effect, any financing statement
or other similar notice of any security interest or lien with respect to any
such assets or properties, except:
(a) the security interests and liens of Agent for itself and the
benefit of Secured Parties and the rights of setoff of Secured Parties provided
for herein or under applicable law;
(b) liens securing the payment of taxes, assessments or other
governmental charges or levies either not yet overdue or the validity of which
are being contested in good faith by appropriate proceedings diligently pursued
and available to such Borrower, or Guarantor or Domestic Subsidiary, as the case
may be and with respect to which adequate reserves have been set aside on its
books;
(c) non-consensual statutory liens (other than liens securing the
payment of taxes) arising in the ordinary course of such Borrower's, Guarantor's
or Domestic Subsidiary's business to the extent: (i) such liens secure
Indebtedness which is not overdue or (ii) such liens secure Indebtedness
relating to claims or liabilities which are fully insured and being defended at
the sole cost and expense and at the sole risk of the insurer or being contested
in good faith by appropriate proceedings diligently pursued and available to
such Borrower, Guarantor or such Domestic Subsidiary, in each case prior to the
commencement of foreclosure or other similar proceedings and with respect to
which adequate reserves have been set aside on its books;
(d) zoning restrictions, easements, licenses, covenants and other
restrictions affecting the use of Real Property which do not interfere in any
material respect with the use of such Real Property or ordinary conduct of the
business of such Borrower, Guarantor or such Domestic Subsidiary as presently
conducted thereon or materially impair the value of the Real Property which may
be subject thereto;
(e) purchase money security interests in Equipment (including
Capital Leases) and purchase money mortgages on Real Property to secure
Indebtedness permitted under Section 9.9(b) hereof;
(f) pledges and deposits of cash by any Borrower or Guarantor after
the date hereof in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security benefits
consistent with the current practices of such Borrower or Guarantor as of the
date hereof;
(g) pledges and deposits of cash by any Borrower or Guarantor after
the date hereof to secure the performance of tenders, bids, leases, trade
contracts (other than for the repayment of Indebtedness), statutory obligations
and other similar obligations in each case in the ordinary course of business
consistent with the current practices of such Borrower or Guarantor as of the
date hereof; provided, that, in connection with any performance bonds issued by
a surety or other person, the issuer of such bond shall have waived in writing
any rights in or to, or other interest in, any of the Collateral in an
agreement, in form and substance satisfactory to Agent;
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(h) liens arising from (i) operating leases and the precautionary
UCC or PPSA financing statement filings in respect thereof and (ii) equipment or
other materials which are not owned by any Borrower or Guarantor located on the
premises of such Borrower or Guarantor (but not in connection with, or as part
of, the financing thereof) from time to time in the ordinary course of business
and consistent with current practices of such Borrower or Guarantor and the
precautionary UCC or PPSA financing statement filings in respect thereof;
(i) the security interests in and liens upon the Collateral in favor
of Term Loan Agent to secure the Term Loan Debt to the extent permitted
hereunder; provided, that, such security interests in and liens upon the
Collateral in favor of Term Loan Agent are and shall at all times be subject and
subordinate to the security interests and liens therein of Agent pursuant to the
terms of the Term Loan Intercreditor Agreement;
(j) the security interests and liens securing Refinancing
Indebtedness to the extent permitted under Section 9.9(j) hereof;
(k) judgments and other similar liens arising in connection with
court proceedings that do not constitute an Event of Default; provided, that,
(i) such liens are being contested in good faith and by appropriate proceedings
diligently pursued, (ii) adequate reserves or other appropriate provision, if
any, as are required by GAAP have been made therefor, (iii) a stay of
enforcement of any such liens is in effect and (iv) Agent may establish a
Reserve with respect thereto; and
(l) the security interests and liens set forth on Schedule 8.4 to
the Information Certificate.
9.9 Indebtedness. Each Borrower and Guarantor shall not, and shall not
permit any Subsidiary to, incur, create, assume, become or be liable in any
manner with respect to, or permit to exist, any Indebtedness, or guarantee,
assume, endorse, or otherwise become responsible for (directly or indirectly),
the Indebtedness, performance, obligations or dividends of any other Person,
except:
(a) the Obligations;
(b) purchase money Indebtedness (including Capital Leases) arising
after the date hereof to the extent secured by purchase money security interests
in Equipment (including Capital Leases) and purchase money mortgages on Real
Property not to exceed $4,000,000 in the aggregate at any time outstanding so
long as such security interests and mortgages do not apply to any property of
such Borrower, Guarantor or Domestic Subsidiary other than the Equipment or Real
Property so acquired, and the Indebtedness secured thereby does not exceed the
cost of the Equipment or Real Property so acquired, as the case may be;
(c) guarantees by any Borrower or Guarantor of the Obligations of
the other Borrowers or Guarantors in favor of Agent for the benefit of Secured
Parties;
(d) the Indebtedness of any Borrower or Guarantor to any other
Borrower or Guarantor arising after the date hereof pursuant to loans by any
Borrower or Guarantor permitted under Section 9.10(b) hereof;
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(e) Indebtedness of any Borrower or Guarantor entered into in the
ordinary course of business pursuant to a Hedge Agreement; provided, that, (i)
such arrangements are not for speculative purposes, (ii) such Indebtedness shall
be unsecured, except to the extent such Indebtedness constitutes part of the
Obligations arising under or pursuant to Hedge Agreements with any Bank Product
Provider that are secured under the terms hereof or except to the extent secured
by pledges or deposits of cash as permitted under Section 9.8 hereof and (iii)
the terms and amounts of such Indebtedness shall be substantially similar to
those in effect under Hedge Agreements as of the date hereof, or otherwise shall
be reasonably acceptable to Agent;
(f) Indebtedness (i) of any Foreign Subsidiary arising after the
date hereof; provided, that, (A) as to any such Indebtedness, no Borrower or
Guarantor shall (except as provided in subclause (ii) of this clause (f)) be
directly or indirectly liable (by virtue of such Borrower or Guarantor being the
primary obligor on, guarantor of, or otherwise liable in any respect of such
Indebtedness), and (B) any default by a Foreign Subsidiary in respect of such
Indebtedness shall not constitute a default in respect of any Indebtedness of a
Borrower or Guarantor and (ii) in the form of unsecured guarantees by Borrowers
of Indebtedness of Foreign Subsidiaries in an aggregate amount at any time
outstanding not to exceed the lesser of (A) the US Dollar Equivalent of
US$1,000,000 and (B) the amount equal to the US Dollar Equivalent of
US$1,000,000 minus the aggregate outstanding amount of loans and advances by
Borrowers and Guarantors to Foreign Subsidiaries pursuant to Section 1.107(f)
hereof;
(g) unsecured Indebtedness of any Borrower or Guarantor arising
after the date hereof to any third person (but not to any other Borrower or
Guarantor); provided, that, each of the following conditions is satisfied as
determined by Agent: (i) such Indebtedness shall be on terms and conditions
acceptable to Agent and shall be subject and subordinate in right of payment to
the right of Agent and Lenders to receive the prior indefeasible payment and
satisfaction in full payment of all of the Obligations pursuant to the terms of
an intercreditor agreement between Agent and such third party, in form and
substance satisfactory to Agent, (ii) Agent shall have received not less than
ten (10) days prior written notice of the intention of such Borrower or
Guarantor to incur such Indebtedness, which notice shall set forth in reasonable
detail satisfactory to Agent the amount of such Indebtedness, the person or
persons to whom such Indebtedness will be owed, the interest rate, the schedule
of repayments and maturity date with respect thereto and such other information
as Agent may request with respect thereto, (iii) Agent shall have received true,
correct and complete copies of all agreements, documents and instruments
evidencing or otherwise related to such Indebtedness, (iv) except as Agent may
otherwise agree in writing, all of the proceeds of the loans or other
accommodations giving rise to such Indebtedness shall be paid to Agent for
application to the Obligations in such order and manner as Agent may determine
or at Agent's option, to be held as cash collateral for the Obligations, except
as the Term Loan Intercreditor Agreement may otherwise provide, (v) in no event
shall the aggregate principal amount of such Indebtedness incurred during the
term of this Agreement exceed $2,000,000, (vi) as of the date of incurring such
Indebtedness and after giving effect thereto, no Default or Event of Default
shall exist or have occurred, (vii) such Borrower and Guarantor shall not,
directly or indirectly, (A) amend, modify, alter or change the terms of such
Indebtedness or any agreement, document or instrument related thereto, except,
that, such Borrower or Guarantor may, after prior written notice to Agent,
amend, modify, alter or change the terms thereof so as to extend the maturity
thereof, or defer the timing of any payments in respect thereof, or to forgive
or cancel any portion of such Indebtedness (other than pursuant to
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payments thereof), or to reduce the interest rate or any fees in connection
therewith, or (B) redeem, retire, defease, purchase or otherwise acquire such
Indebtedness (except pursuant to regularly scheduled payments permitted herein),
or set aside or otherwise deposit or invest any sums for such purpose, and
(viii) Borrowers and Guarantors shall furnish to Agent all notices or demands in
connection with such Indebtedness either received by any Borrower or Guarantor
or on its behalf promptly after the receipt thereof, or sent by any Borrower or
Guarantor or on its behalf concurrently with the sending thereof, as the case
may be;
(h) Indebtedness of Borrowers and Guarantors to the Term Loan Agent
and Term Loan Lenders evidenced by or arising under the Term Loan Agreement and
the other Term Loan Documents (as in effect on the date hereof and as amended in
accordance with the provisions of this Agreement); provided, that:
(i) the principal amount of such Indebtedness shall not exceed
$50,000,000 (of which $50,000,000 is outstanding on the date hereof), less the
aggregate amount of all repayments, repurchases or redemptions thereof, whether
optional or mandatory, plus interest thereon at the rate provided in the Term
Loan Agreement as in effect on the date hereof,
(ii) as of the date hereof, no event of default, or event
which with notice or passage of time or both would constitute an event of
default exists, or has occurred and is continuing under the Term Loan Documents,
(iii) Agent shall have received true, correct and complete
copies of all of the Term Loan Documents and the Term Loan Intercreditor
Agreement, as duly authorized, executed and delivered by the parties thereto,
which shall be in form and substance satisfactory to Agent,
(iv) Borrowers and Guarantors shall not, directly or
indirectly, make, or be required to make, any payments in respect of such
Indebtedness, except, that, subject to the terms of the Term Loan Intercreditor
Agreement and Section 2.3 hereof, Borrowers and Guarantors may make mandatory
prepayments (as set forth in Section 2.3 of the Term Loan Agreement as in effect
on the date hereof) of principal and payments of interest, fees, expenses and
indemnities in respect of the Term Loan Debt in accordance with the terms of the
Term Loan Documents as in effect on the date hereof; provided, that, Borrowers
and Guarantors shall not make any prepayment pursuant to Section 2.3 of the Term
Loan Agreement unless as of the date of any such prepayment and after giving
effect thereto, no Event of Default shall exist or have occurred and be
continuing (it being understood that, for the avoidance of doubt, Borrowers and
Guarantors shall not make any voluntary prepayments of principal in respect of
the Term Loan Debt except: (A) with the proceeds of Refinancing Indebtedness
permitted under Section 9.9(j)) hereof or (B) if as of the date of any such
payment and after given effect thereto, Excess Availability shall have been not
less than $45,000,000 for each of the immediately preceding one hundred (100)
consecutive calendar days and not less than $45,000,000 as of the date of any
such payment and immediately after giving effect thereto;
(v) Borrowers and Guarantors shall not, directly or
indirectly, (A) amend, modify, alter or change any of the terms of such
Indebtedness or any of the Term Loan Documents as in effect on the date hereof,
except, that, Borrowers and Guarantors may, after prior written notice to Agent,
amend, modify, alter or change the terms thereof so long as any such amendment,
modification, alternation or change does not result in terms that are more
86
burdensome or restrictive than the terms of such Indebtedness as in effect on
the date hereof as determined by Agent in good faith or (B) redeem, retire,
defease, purchase or otherwise acquire such Indebtedness, or set aside or
otherwise deposit or invest any sums for such purpose, except with proceeds of
Refinancing Indebtedness with respect thereto permitted under Section 9.9(j)
below or as permitted in clause (iii) above, and
(vi) Borrowers and Guarantors shall furnish to Agent all
notices of default or demands for payment in connection with such Indebtedness
either received by such Borrower or Guarantor or on its behalf promptly after
the receipt thereof, and all such notices or demands sent by any Borrower or
Guarantor or on its behalf concurrently with the sending thereof, as the case
may be;
(i) Indebtedness of any Borrowers evidenced by or
arising under the Convertible Note Indenture as in effect on the date hereof,
provided, that:
(i) the aggregate principal amount of such Indebtedness
shall not exceed $75,000,000, less the aggregate amount of all repayments,
repurchases or redemptions thereof from and after such date, whether optional or
mandatory, plus interest thereon at the applicable rates provided in the
Convertible Note Indenture in effect on the date hereof;
(ii) Agent shall have received a true, correct and
complete copy of the Convertible Note Indenture as in effect on the day hereof;
(iii) such Indebtedness is and shall remain unsecured;
(iv) Borrowers and Guarantors shall not, directly or
indirectly, make, or be required to make, any payments in respect of such
Indebtedness, except, that, Borrowers may make regularly scheduled payments of
interest and fees, on an unaccelerated basis, in respect of such Indebtedness in
accordance with the terms of the Convertible Note Indenture as in effect on the
date hereof;
(v) Borrowers shall not , directly or indirectly, (A)
amend, modify, alter or change any of the material terms of such Indebtedness or
of any of the Convertible Note Indenture as in effect on the date hereof,
except, that, Borrowers may, after prior written notice to Agent, amend, modify,
alter or change the terms thereof so as to extend the maturity thereof or defer
the timing of any payments in respect thereof, or to forgive or cancel any
portion of such Indebtedness other than pursuant to payments thereof, or to
reduce the interest rate or any fees in connection therewith, or to make the
provisions thereof less restrictive or burdensome than the terms or conditions
of the Convertible Note Indenture as in effect on the date hereof, or (B) make
optional prepayments of principal or interest or redeem, retire, defease,
purchase or otherwise acquire such Indebtedness, or set aside or otherwise
deposit or invest any sums for such purpose;
(j) Indebtedness of Datel arising under the GmbH Note as in effect
on the date hereof; provided, that:
(i) the aggregate principal amount of such Indebtedness shall
not exceed $2,144,000, less the aggregate amount of all repayments, repurchases
or redemptions in respect
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of the GmbH Note, whether optional or mandatory, plus interest thereon at the
applicable rate provided thereunder in effect on the date hereof;
(ii) Agent shall have received a true, correct and complete
copy of the GmbH Note as in effect on the date hereof;
(iii) such Indebtedness is and shall be and remain unsecured
and shall be subject and subordinate in right of payment to the right of Agent
and Lenders to receive the prior indefeasible payment and satisfaction in full
of all Obligations pursuant to the GmbH Subordination Agreement;
(iv) Borrowers and Guarantors shall not, directly or
indirectly, make, or be required to make, any payments in respect of such
Indebtedness;
(v) Borrowers shall not , directly or indirectly, (A) amend,
modify, alter or change any of the material terms of such Indebtedness or of the
GmbH Note as in effect on the date hereof, except, that, Borrowers may, after
prior written notice to Agent, amend, modify, alter or change the terms thereof
so as to extend the maturity thereof or defer the timing of any payments in
respect thereof, or to forgive or cancel any portion of such Indebtedness other
than pursuant to payments thereof, or to reduce the interest rate or any fees in
connection therewith, or to make the provisions thereof less restrictive or
burdensome than the terms or conditions of the GmbH Note as in effect on the
date hereof, or (B) make optional prepayments of principal or interest or
redeem, retire, defease, purchase or otherwise acquire such Indebtedness, or set
aside or otherwise deposit or invest any sums for such purpose; and
(vi) Borrowers and Guarantors shall furnish to Agent all
notices of default or demands for payment in connection with such Indebtedness
either received by such Borrower or Guarantor or on its behalf promptly after
the receipt thereof, and all such notices or demands sent by any Borrower or
Guarantor or on its behalf concurrently with the sending thereof, as the case
may be;
(k) Indebtedness of Datel arising under the KK Notes, each as in
effect on the date hereof; provided, that:
(i) the aggregate principal amount of such Indebtedness shall
not exceed $1,400,000, less the aggregate amount of all repayments, repurchases
or redemptions in respect of the KK Notes, whether optional or mandatory, plus
interest thereon at the applicable rate provided thereunder in effect on the
date hereof;
(ii) Agent shall have received a true, correct and complete
copy of each KK Note as in effect on the date hereof;
(iii) such Indebtedness is and shall be and remain unsecured
and shall be subject and subordinate in right of payment to the right of Agent
and Lenders to receive the prior indefeasible payment and satisfaction in full
of all Obligations pursuant to the KK Subordination Agreement;
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(iv) Borrowers and Guarantors shall not, directly or
indirectly, make, or be required to make, any payments in respect of such
Indebtedness;
(v) Borrowers shall not , directly or indirectly, (A) amend,
modify, alter or change any of the material terms of such Indebtedness or of the
KK Notes, each as in effect on the date hereof, except, that, Borrowers may,
after prior written notice to Agent, amend, modify, alter or change the terms
thereof so as to extend the maturity thereof or defer the timing of any payments
in respect thereof, or to forgive or cancel any portion of such Indebtedness
other than pursuant to payments thereof, or to reduce the interest rate or any
fees in connection therewith, or to make the provisions thereof less restrictive
or burdensome than the terms or conditions of the KK Notes, each as in effect on
the date hereof, or (B) make optional prepayments of principal or interest or
redeem, retire, defease, purchase or otherwise acquire such Indebtedness, or set
aside or otherwise deposit or invest any sums for such purpose;
(vi) Borrowers and Guarantors shall furnish to Agent all
notices of default or demands for payment in connection with such Indebtedness
either received by such Borrower or Guarantor or on its behalf promptly after
the receipt thereof, and all such notices or demands sent by any Borrower or
Guarantor or on its behalf concurrently with the sending thereof, as the case
may be; and
(l) Indebtedness of any Borrower or Guarantor arising after the date
hereof issued in exchange for, or the proceeds of which are used to refinance,
replace or substitute for Indebtedness permitted under Sections 9.9(b), 9.9(g),
9.9(h) and 9.9(i) hereof (the "Refinancing Indebtedness"); provided, that, as to
any such Refinancing Indebtedness, each of the following conditions is
satisfied:
(i) Agent shall have received not less than ten (10) Business
Days' prior written notice of the intention to incur such Indebtedness, which
notice shall set forth in reasonable detail satisfactory to Agent, the amount of
such Indebtedness, the schedule of repayments and maturity date with respect
thereto and such other information with respect thereto as Agent may reasonably
request,
(ii) promptly upon Agent's request, Agent shall have received
true, correct and complete copies of all agreements, documents and instruments
evidencing or otherwise related to such Indebtedness, as duly authorized,
executed and delivered by the parties thereto,
(iii) the Refinancing Indebtedness shall have a Weighted
Average Life to Maturity and a final maturity equal to or greater than the
Weighted Average Life to Maturity and the final maturity, respectively, of the
Indebtedness being extended, refinanced, replaced, or substituted for,
(iv) the Refinancing Indebtedness shall rank in right of
payment no more senior than, and be at least as subordinated (if subordinated)
to, the Obligations as the Indebtedness being extended, refinanced, replaced or
substituted for,
(v) the Refinancing Indebtedness shall not include terms and
conditions with respect to any Borrower or Guarantor which are more burdensome
or restrictive in any material
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respect than those included in the Indebtedness so extended, refinanced,
replaced or substituted for,
(vi) such Indebtedness incurred by any Borrower or Guarantor
shall be at rates and with fees or other charges that are commercially
reasonable,
(vii) as of the date of incurring such Indebtedness and after
giving effect to such Indebtedness, no Default or Event of Default shall exist
or have occurred,
(viii) the principal amount of such Refinancing Indebtedness
shall not exceed the principal amount of the Indebtedness so extended,
refinanced, replaced or substituted for (plus the amount of refinancing fees and
expenses incurred in connection therewith outstanding on the date of such
event),
(ix) Borrowers and Guarantors may only make regularly
scheduled payments of principal, interest and fees, if any, in respect of such
Indebtedness to the extent such payments would have been permitted hereunder in
respect of the Indebtedness so extended, refinanced, replaced or substituted for
(and except as otherwise permitted below),
(x) Borrowers and Guarantors shall not, directly or
indirectly, (A) amend, modify, alter or change any terms of the agreements with
respect to such Refinancing Indebtedness, except that Borrowers and Guarantors
may, after prior written notice to Agent, amend, modify, alter or change the
terms thereof to the extent permitted with respect to the Indebtedness so
extended, refinanced, replaced or substituted for, or (B)redeem, retire,
defease, purchase or otherwise acquired such Indebtedness, or set aside or
otherwise deposit or invest any sums for such purpose (other than with
Refinancing Indebtedness to the extent permitted herein and to the extent
permitted with respect to the Indebtedness so extended, refinanced, replaced or
substituted for),
(xi) Borrowers and Guarantors shall furnish to Agent copies of
all material notices or demands in connection with Indebtedness received by any
Borrower or Guarantor or on its behalf promptly after the receipt thereof or
sent by any Borrower or Guarantor or on its behalf concurrently with the sending
thereof, as the case may be; and
(m) the Indebtedness set forth on Schedule 9.9 to the Information
Certificate; provided, that, (i) Borrowers and Guarantors may only make
regularly scheduled payments of principal and interest in respect of such
Indebtedness in accordance with the terms of the agreement or instrument
evidencing or giving rise to such Indebtedness as in effect on the date hereof,
(ii) Borrowers and Guarantors shall not, directly or indirectly, (A) amend,
modify, alter or change the terms of such Indebtedness or any agreement,
document or instrument related thereto as in effect on the date hereof except,
that, Borrowers and Guarantors may, after prior written notice to Agent, amend,
modify, alter or change the terms thereof so as to extend the maturity thereof,
or defer the timing of any payments in respect thereof, or to forgive or cancel
any portion of such Indebtedness (other than pursuant to payments thereof), or
to reduce the interest rate or any fees in connection therewith, or (B) redeem,
retire, defease, purchase or otherwise acquire such Indebtedness, or set aside
or otherwise deposit or invest any sums for such purpose, and (iii) Borrowers
and Guarantors shall furnish to Agent all notices or demands in connection with
such Indebtedness either received by any Borrower or Guarantor or on its
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behalf, promptly after the receipt thereof, or sent by any Borrower or Guarantor
or on its behalf, concurrently with the sending thereof, as the case may be.
9.10 Loans, Investments, Etc. Each Borrower and Guarantor shall not, and
shall not permit any Subsidiary to, directly or indirectly, make any loans or
advance money or property to any person, or invest in (by capital contribution,
dividend or otherwise) or purchase or repurchase the Capital Stock or
Indebtedness or all or a substantial part of the assets or property of any
person, or form or acquire any Subsidiaries, or agree to do any of the
foregoing, except:
(a) Permitted Investments;
(b) loans by a Borrower or Guarantor to another Borrower or
Guarantor after the date hereof; provided, that,
(i) as to all of such loans, (A) within thirty (30) days after
the end of each fiscal month, Borrowers shall provide to Agent a report in form
and substance satisfactory to Agent of the outstanding amount of such loans as
of the last day of the immediately preceding month and indicating any loans made
and payments received during the immediately preceding month, (B) the
Indebtedness arising pursuant to any such loan shall not be evidenced by a
promissory note or other instrument, unless the single original of such note or
other instrument is promptly delivered to Agent upon its request to hold as part
of the Collateral, with such endorsement and/or assignment by the payee of such
note or other instrument as Agent may require, (C) as of the date of any such
loan and after giving effect thereto, the Borrower or Guarantor making such loan
shall be Solvent, and (D) as of the date of any such loan and after giving
effect thereto, no Default or Event of Default shall exist or have occurred and
be continuing,
(ii) as to loans by a Guarantor to a Borrower, (A) the
Indebtedness arising pursuant to such loan shall be subject to, and subordinate
in right of payment to, the right of Agent and Lenders to receive the prior
final payment and satisfaction in full of all of the Obligations on terms and
conditions acceptable to Agent, (B) promptly upon Agent's request, Agent shall
have received a subordination agreement, in form and substance satisfactory to
Agent, providing for the terms of the subordination in right of payment of such
Indebtedness of such Borrower to the prior final payment and satisfaction in
full of all of the Obligations, duly authorized, executed and delivered by such
Guarantor and such Borrower, and (C) such Borrower shall not, directly or
indirectly make, or be required to make, any payments in respect of such
Indebtedness prior to the end of the then current term of this Agreement;
(c) the loans and advances set forth on Schedule 9.10 to the
Information Certificate; provided, that, as to such loans and advances,
Borrowers and Guarantors shall not, directly or indirectly, amend, modify, alter
or change the terms of such loans and advances or any agreement, document or
instrument related thereto and Borrowers and Guarantors shall furnish to Agent
all notices or demands in connection with such loans and advances either
received by any Borrower or Guarantor or on its behalf, promptly after the
receipt thereof, or sent by any Borrower or Guarantor or on its behalf,
concurrently with the sending thereof, as the case may be.
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9.11 Restricted Payments. Each Borrower and Guarantor shall not, and shall
not permit any Restricted Subsidiary to, declare or make, or agree to pay or
make, directly or indirectly, any Restricted Payment, except:
(a) Parent may make Restricted Payments with respect to its Capital
Stock payable solely in additional shares of its Capital Stock that satisfies
the requirements for issuance of Capital Stock by Parent under Section
9.7(b)(iii) hereof;
(b) Subsidiaries of Parent may make Restricted Payments to Parent;
(c) Borrowers and Guarantors may repurchase Capital Stock consisting
of common stock held by employees pursuant to any employee stock ownership plan
thereof upon the termination, retirement or death of any such employee in
accordance with the provisions of such plan, provided, that, as to any such
repurchase, each of the following conditions is satisfied: (i) as of the date of
the payment for such repurchase and after giving effect thereto, no Default or
Event of Default shall exist or have occurred and be continuing, (ii) such
repurchase shall be paid with funds legally available therefor, (iii) such
repurchase shall not violate any law or regulation or the terms of any
indenture, agreement or undertaking to which such Borrower or Guarantor is a
party or by which such Borrower or Guarantor or its or their property are bound,
(iv) the aggregate amount of all payments for such repurchases in any calendar
year shall not exceed $250,000 and (v) Excess Availability shall have been not
less than $30,000,000 for each of the thirty (30) consecutive days immediately
prior to the date of any such repurchase and after giving effect to such
repurchase, Excess Availability shall be not less than $30,000,000.
(d) Parent may make Restricted Payments for the purpose of paying
dividends and paying other distributions in respect of its Capital Stock or the
repurchase of its Capital Stock; provided, that, each of the following
conditions is satisfied as determined by Agent, (i) Administrative Borrower
shall have provided to Agent not less than ten (10) Business Days' prior written
notice (except in the case of the regularly scheduled quarterly dividend of
Parent to the extent declared and payable on or about the dates historically
declared and paid by Parent) of the intention of such Borrower or Guarantor to
pay such dividends or other distributions or make such other repurchases
(specifying the amount to be paid by Borrowers or Guarantors, (ii) such
dividends, distributions or repurchases shall paid with funds legally available
therefor, (iii) such dividends, distributions or repurchases shall not violate
any law or regulation or the terms of any indenture, agreement or undertaking to
which such Borrower or Guarantor is a party or by which such Borrower or
Guarantor or its or their property are bound, (iv) Excess Availability shall
have been not less than $30,000,000 for each of the thirty (30) consecutive days
immediately prior to the date of any such dividends, distributions or
repurchases and after giving effect to the payment of such dividends,
distributions or repurchases, Excess Availability shall be not less than
$30,000,000, (v) the aggregate amount of such dividends, distributions or
repurchases in any twelve (12) consecutive month period shall not exceed
$1,750,000 (as increased by an amount not to exceed $400,000 in such twelve (12)
consecutive month period equal to additional dividends, distributions or
repurchases in respect of convertible Capital Stock of Parent converted at the
election of the holders thereof to common Capital Stock of Parent) and (vi) as
of the date of any such dividends, distributions or repurchases and after giving
effect thereto, no Default or Event of Default shall exist or have occurred.
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9.12 Transactions with Affiliates. Each Borrower and Guarantor shall not,
directly or indirectly:
(a) purchase, acquire or lease any property from, or sell, transfer
or lease any property to, any officer, director or other Affiliate of such
Borrower or Guarantor, except in the ordinary course of and pursuant to the
reasonable requirements of such Borrower's or Guarantor's business (as the case
may be) and upon fair and reasonable terms no less favorable to such Borrower or
Guarantor than such Borrower or Guarantor would obtain in a comparable arm's
length transaction with an unaffiliated person; or
(b) make any payments (whether by dividend, loan or otherwise) of
management, consulting or other fees for management or similar services, or of
any Indebtedness owing to any officer, employee, shareholder, director or any
other Affiliate of such Borrower or Guarantor, except:
(i) reasonable compensation and other employee benefits to
officers, employees and directors for services rendered to such Borrower or
Guarantor in the ordinary course of business,
(ii) payments by any such Borrower or Guarantor to Parent for
actual and necessary reasonable out-of-pocket legal and accounting, insurance,
marketing, payroll and similar types of services paid for by Parent on behalf of
such Borrower or Guarantor, in the ordinary course of their respective
businesses or as the same may be directly attributable to such Borrower or
Guarantor and for the payment of taxes by or on behalf of Parent; and
(iii) Restricted Payments in respect of its Capital Stock
pursuant to and in accordance with the terms of Section 9.11(d) hereof.
9.13 Compliance with ERISA.
(a) Each Borrower and Guarantor shall, and shall cause each of its
ERISA Affiliates to: (i) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other Federal and
State law; (ii) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; (iii) not terminate any Pension Plan so as
to incur any material liability to the Pension Benefit Guaranty Corporation;
(iv) not allow or suffer to exist any prohibited transaction involving any Plan
or any trust created thereunder which would subject such Borrower, Guarantor or
such ERISA Affiliate to a material tax or other liability on prohibited
transactions imposed under Section 4975 of the Code or ERISA; (v) make all
required contributions to any Plan which it is obligated to pay under Section
302 of ERISA, Section 412 of the Code or the terms of such Plan; (vi) not allow
or suffer to exist any accumulated funding deficiency, whether or not waived,
with respect to any such Pension Plan; (vii) not engage in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA; or (viii) not allow or
suffer to exist any occurrence of a reportable event or any other event or
condition which presents a material risk of termination by the Pension Benefit
Guaranty Corporation of any Plan that is a single employer plan, which
termination could result in any material liability to the Pension Benefit
Guaranty Corporation.
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(b) Borrowers and Guarantors shall cause the Canadian Pension Plans
to be administered in accordance with the requirements of the applicable pension
plan texts, funding agreements, the Income Tax Act (Canada) and applicable
provincial pension benefits legislation. Each Borrower and Guarantor shall take
all action in a timely fashion as required by all applicable laws, rules,
regulations and orders of any Governmental Authority to eliminate any
deficiencies thereunder. Borrowers and Guarantors shall deliver to Agent a copy
of any order or notice from a Governmental Authority that related to a failure
to make a contribution to a Canadian Pension Plan within the prescribed time
period or the failure to file a Form 7 with the funding agent for such a plan
within the prescribed time period. Borrowers and Guarantors shall not accept
payment of any amount from the Canadian Pension Plan (other than amounts on
account of expenses reasonably incurred in connection with the operations of
such Canadian Pension Plan) without the prior written consent of Agent.
Borrowers and Guarantors shall not voluntarily terminate, or cause to be
terminated voluntarily, any of the Canadian Pension Plans, if such plan would
have a solvency deficiency on termination. Borrowers and Guarantors shall
promptly provide Agent with any documentation relating to the Canadian Pension
Plans as Agent may reasonably request. Borrowers and Guarantors shall notify
Agent within thirty (30) days of (i) the filing with a Governmental Authority of
an actuarial report that discloses an increase in the liabilities of any
Canadian Pension Plans that could reasonably be expected to have a Material
Adverse Effect, (ii) the establishment of a new registered pension plan, (iii)
commencing payment of contributions to the Canadian Pension Plan to which any
Borrower or US Guarantor had not previously been contributing.
9.14 End of Fiscal Years; Fiscal Quarters. Each Borrower and Guarantor
shall, for financial reporting purposes, cause its, and each of its
Subsidiaries' (a) fiscal years to end on January 31 of each year and (b) fiscal
quarters to end on April 30, July 31, October 31 and January 31 of each year.
9.15 Change in Business. Each Borrower and Guarantor shall not engage in
any business other than the business of such Borrower or Guarantor on the date
hereof and any business reasonably related, ancillary or complimentary to the
business in which such Borrower or Guarantor is engaged on the date hereof;
provided, that, as to those business lines specified in writing by
Administrative Borrower to Agent prior to the date hereof, a Borrower or
Guarantor, as the case may be, may, upon not less than sixty (60) days prior
written notice to Agent, discontinue or reduce any of such business lines.
9.16 Limitation of Restrictions Affecting Subsidiaries. Each Borrower and
Guarantor shall not, directly, or indirectly, create or otherwise cause or
suffer to exist any encumbrance or restriction which prohibits or limits the
ability of any Domestic Subsidiary of such Borrower or Guarantor to (a) pay
dividends or make other distributions or pay any Indebtedness owed to such
Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor; (b) make
loans or advances to such Borrower or Guarantor or any Subsidiary of such
Borrower or Guarantor, (c) transfer any of its properties or assets to such
Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor; or (d)
create, incur, assume or suffer to exist any lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired, other than
encumbrances and restrictions arising under (i) applicable law, (ii) this
Agreement or the Term Loan Agreement, (iii) customary provisions restricting
subletting or assignment of any lease governing a leasehold interest of such
Borrower or Guarantor or any Subsidiary of such Borrower or
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Guarantor, (iv) customary restrictions on dispositions of real property
interests found in reciprocal easement agreements of such Borrower or Guarantor
or any Subsidiary of such Borrower or Guarantor, (v) any agreement relating to
permitted Indebtedness incurred by a Subsidiary of such Borrower or Guarantor
prior to the date on which such Subsidiary was acquired by such Borrower or such
Guarantor and outstanding on such acquisition date, and (vi) the extension or
continuation of contractual obligations in existence on the date hereof;
provided, that, any such encumbrances or restrictions contained in such
extension or continuation are no less favorable to Agent and Lenders than those
encumbrances and restrictions under or pursuant to the contractual obligations
so extended or continued.
9.17 Fixed Charge Coverage Ratio. At any time that Excess Availability is
less than $15,000,000, the Fixed Charge Coverage Ratio of Parent and its
Subsidiaries (on a consolidated basis) for the last twelve (12) consecutive
fiscal month period most recently ended for which Agent has received financial
statements of Borrowers and Guarantors, shall be not less than 1.10:1.00.
9.18 License Agreements.
(a) Each Borrower and Guarantor shall (i) promptly and faithfully
observe and perform all of the material terms, covenants, conditions and
provisions of the material License Agreements to which it is a party to be
observed and performed by it, at the times set forth therein, if any, (ii) not
do, permit, suffer or refrain from doing anything that could reasonably be
expected to result in a default under or breach of any of the terms of any
material License Agreement, (iii) not cancel, surrender, modify, amend, waive or
release any material License Agreement in any material respect or any term,
provision or right of the licensee thereunder in any material respect, or
consent to or permit to occur any of the foregoing; except, that, subject to
Section 9.18(b) below, such Borrower or Guarantor may cancel, surrender or
release any material License Agreement in the ordinary course of the business of
such Borrower or Guarantor; provided, that, such Borrower or Guarantor (as the
case may be) shall give Agent not less than thirty (30) days prior written
notice of its intention to so cancel, surrender and release any such material
License Agreement, (iv) give Agent prompt written notice of any material License
Agreement entered into by such Borrower or Guarantor after the date hereof,
together with a true, correct and complete copy thereof and such other
information with respect thereto as Agent may request, (v) give Agent prompt
written notice of any material breach of any obligation, or any default, by any
party under any material License Agreement, and deliver to Agent (promptly upon
the receipt thereof by such Borrower or Guarantor in the case of a notice to
such Borrower or Guarantor and concurrently with the sending thereof in the case
of a notice from such Borrower or Guarantor) a copy of each notice of default
and every other notice and other communication received or delivered by such
Borrower or Guarantor in connection with any material License Agreement which
relates to the right of such Borrower or Guarantor to continue to use the
property subject to such License Agreement, and (vi) furnish to Agent, promptly
upon the request of Agent, such information and evidence as Agent may reasonably
require from time to time concerning the observance, performance and compliance
by such Borrower or Guarantor or the other party or parties thereto with the
material terms, covenants or provisions of any material License Agreement.
(b) Each Borrower and Guarantor will either exercise any option to
renew or extend the term of each material License Agreement to which it is a
party in such manner as will cause
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the term of such material License Agreement to be effectively renewed or
extended for the period provided by such option and give prompt written notice
thereof to Agent or give Agent prior written notice that such Borrower or
Guarantor does not intend to renew or extend the term of any such material
License Agreement or that the term thereof shall otherwise be expiring, not less
than sixty (60) days prior to the date of any such non-renewal or expiration. In
the event of the failure of such Borrower or Guarantor to extend or renew any
material License Agreement to which it is a party, Agent shall have, and is
hereby granted, the irrevocable right and authority, at its option, to renew or
extend the term of such material License Agreement, whether in its own name and
behalf, or in the name and behalf of a designee or nominee of Agent or in the
name and behalf of such Borrower or Guarantor, as Agent shall determine at any
time that an Event of Default shall exist or have occurred and be continuing.
Agent may, but shall not be required to, perform any or all of such obligations
of such Borrower or Guarantor under any of the License Agreements, including,
but not limited to, the payment of any or all sums due from such Borrower or
Guarantor thereunder. Any sums so paid by Agent shall constitute part of the
Obligations.
9.19 Foreign Assets Control Regulations, Etc. None of the requesting or
borrowing of the Loans or the requesting or issuance, extension or renewal of
any Letter of Credit or the use of the proceeds of any thereof will violate the
Trading With the Enemy Act (50 USC ss.1 et seq., as amended) (the "Trading With
the Enemy Act") or any of the foreign assets control regulations of the United
States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended) (the
"Foreign Assets Control Regulations") or any enabling legislation or executive
order relating thereto (including, but not limited to (a) Executive order 13224
of September 21, 2001 Blocking Property and Prohibiting Transactions With
Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079
(2001)) (the "Executive Order") and (b) the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 (Public Law 107-56). None of Borrowers or any of their Subsidiaries or
other Affiliates is or will become a "blocked person" as described in the
Executive Order, the Trading with the Enemy Act or the Foreign Assets Control
Regulations or engages or will engage in any dealings or transactions, or be
otherwise associated, with any such "blocked person".
9.20 Certain Other Real Property. At any time after the occurrence of a
Cash Dominion Event and prior to a Cash Dominion Termination, Agent in its
discretion may require that any Borrower or Guarantor shall execute and deliver
to Agent a mortgage, deed of trust or deed to secure debt, as Agent may
determine, with respect to any Real Property and fixtures and other property of
a Borrower or Guarantor of a kind and nature described in the Mortgages not
otherwise pledged to Agent and/or Wachovia as collateral agent for Lenders and
Term Loan Lenders, in form and substance substantially similar to the Mortgages
and as to any provisions relating to specific state laws satisfactory to Agent
and in form appropriate for recording in the real estate records of the
jurisdiction in which such Real Property, fixtures and other property is located
granting to Agent and/or Wachovia as collateral agent for Lenders and Term Loan
Lenders a first and only lien and mortgage on and security interest in such Real
Property, fixtures or other property (except (a) for the Real Property secured
by the Datel Mortgage, (b) as such Borrower or Guarantor would otherwise be
permitted to incur hereunder or under the Mortgages or (c) as otherwise
consented to in writing by Agent) and such other agreements, documents and
instruments as Agent may require in connection therewith.
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9.21 Costs and Expenses. Borrowers and Guarantors shall pay to Agent on
demand all costs, expenses, filing fees and taxes paid or payable in connection
with the preparation, negotiation, execution, delivery, recording, syndication,
administration, collection, liquidation, enforcement and defense of the
Obligations, Agent's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including: (a) all costs and expenses of filing or recording (including
Uniform Commercial Code financing statement filing taxes and fees, documentary
taxes, intangibles taxes and mortgage recording taxes and fees, if applicable);
(b) costs and expenses and fees for insurance premiums, environmental audits,
title insurance premiums, surveys, assessments, engineering reports and
inspections, appraisal fees and search fees, background checks, costs and
expenses of remitting loan proceeds, collecting checks and other items of
payment, and establishing and maintaining the Blocked Accounts, together with
Agent's customary charges and fees with respect thereto; (c) charges, fees or
expenses charged by any Issuing Bank in connection with any Letter of Credit;
(d) costs and expenses of preserving and protecting the Collateral; (e) costs
and expenses paid or incurred in connection with obtaining payment of the
Obligations, enforcing the security interests and liens of Agent, selling or
otherwise realizing upon the Collateral, and otherwise enforcing the provisions
of this Agreement and the other Financing Agreements or defending any claims
made or threatened against Agent or any Lender arising out of the transactions
contemplated hereby and thereby (including preparations for and consultations
concerning any such matters); (f) all out-of-pocket expenses and costs
heretofore and from time to time hereafter incurred by Agent during the course
of periodic field examinations of the Collateral and such Borrower's or
Guarantor's operations, plus a per diem charge at Agent's then standard rate for
Agent's examiners in the field and office (which rate as of the date hereof is
$850 per person per day); and (g) the reasonable fees and disbursements of
counsel (including legal assistants) to Agent in connection with any of the
foregoing.
9.22 Further Assurances. At the request of Agent at any time and from time
to time, Borrowers and Guarantors shall, at their expense, duly execute and
deliver, or cause to be duly executed and delivered, such further agreements,
documents and instruments, and do or cause to be done such further acts as may
be necessary or proper to evidence, perfect, maintain and enforce the security
interests and the priority thereof in the Collateral and to otherwise effectuate
the provisions or purposes of this Agreement or any of the other Financing
Agreements. Agent may at any time and from time to time request a certificate
from an officer of any Borrower or Guarantor representing that all conditions
precedent to the making of Loans and providing Letters of Credit contained
herein are satisfied. In the event of such request by Agent, Agent and Lenders
may, at Agent's option, cease to make any further Loans or provide any further
Letters of Credit until Agent has received such certificate and, in addition,
Agent has determined that such conditions are satisfied.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence or existence of any one or more of
the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
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(a) (i) any Borrower fails to pay any of the Obligations when due or
(ii) any Borrower or Guarantor fails to perform any of the covenants contained
in Sections 9.3, 9.4, 9.13, 9.14, 9.15, and 9.16 of this Agreement and such
failure shall continue for ten (10) days; provided, that, such ten (10) day
period shall not apply in the case of: any failure to observe any such covenant
which is not capable of being cured at all or within such ten (10) day period or
which has been the subject of a prior failure within a six (6) month period or
(iii) any Borrower or Guarantor fails to perform any of the terms, covenants,
conditions or provisions contained in this Agreement or any of the other
Financing Agreements other than those described in Sections 10.1(a)(i) and
10.1(a)(ii) above;
(b) any representation, warranty or statement of fact made by any
Borrower or Guarantor to Agent in this Agreement, the other Financing Agreements
or any other written agreement, schedule, confirmatory assignment or otherwise
shall when made or deemed made be false or misleading in any material respect;
(c) any Guarantor revokes or terminates or purports to revoke or
terminate or fails to perform any of the terms, covenants, conditions or
provisions of any guarantee, endorsement or other agreement of such party in
favor of Agent or any Lender;
(d) any judgment for the payment of money is rendered against any
Borrower or Guarantor in excess of $500,000 in any one case or in excess of
$1,000,000 in the aggregate (to the extent not covered by insurance where the
insurer has assumed responsibility in writing for such judgment) and shall
remain undischarged or unvacated for a period in excess of thirty (30) days or
execution shall at any time not be effectively stayed, or any judgment other
than for the payment of money, or injunction, attachment, garnishment or
execution is rendered against any Borrower or Guarantor or any of the Collateral
having a value in excess of $1,000,000;
(e) any Guarantor (being a natural person or a general partner of an
Guarantor which is a partnership) dies or any Borrower or Guarantor, which is a
partnership, limited liability company, limited liability partnership or a
corporation, dissolves or suspends or discontinues doing business;
(f) any Borrower or Guarantor makes an assignment for the benefit of
creditors, makes or sends notice of a bulk transfer;
(g) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or a petition, case, application or
proceeding under any bankruptcy or insolvency laws of Canada (including the
Bankruptcy and Insolvency Act (Canada) and the Companies' Creditors Arrangement
Act (Canada)) or under any insolvency, reorganization, receivership,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction now or hereafter in effect (whether at law or in equity) is filed
against any Borrower or Guarantor or all or any part of its properties and such
petition or application is not dismissed within thirty (30) days after the date
of its filing or any Borrower or Guarantor shall file any answer admitting or
not contesting such petition or application or indicates its consent to,
acquiescence in or approval of, any such action or proceeding or the relief
requested is granted sooner;
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(h) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or a petition, case, application or
proceeding under any bankruptcy or insolvency laws of Canada (including the
Bankruptcy and Insolvency Act (Canada) and the Companies' Creditors Arrangement
Act (Canada)) or under any insolvency, reorganization, receivership,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction now or hereafter in effect (whether at a law or equity) is filed by
any Borrower or Guarantor or for all or any part of its property;
(i) any default in respect of any Indebtedness of any Borrower or
Guarantor (other than Indebtedness owing to Agent and Lenders hereunder), in any
case in an amount in excess of $300,000, which default continues for more than
the applicable cure period, if any, with respect thereto or any default by any
Borrower or Guarantor under any Material Contract, which default continues for
more than the applicable cure period, if any, with respect thereto and/or is not
waived in writing by the other parties thereto;
(j) any material provision hereof or of any of the other Financing
Agreements shall for any reason cease to be valid, binding and enforceable with
respect to any party hereto or thereto (other than Agent) in accordance with its
terms, or any such party shall challenge the enforceability hereof or thereof,
or shall assert in writing, or take any action or fail to take any action based
on the assertion that any provision hereof or of any of the other Financing
Agreements has ceased to be or is otherwise not valid, binding or enforceable in
accordance with its terms, or any security interest provided for herein or in
any of the other Financing Agreements shall cease to be a valid and perfected
first priority security interest in any of the Collateral purported to be
subject thereto (except as otherwise permitted herein or therein);
(k) an ERISA Event shall occur which results in or could reasonably
be expected to result in liability of any Borrower in an aggregate amount in
excess of $1,500,000;
(l) any Change of Control;
(m) the indictment by any Governmental Authority, or as Agent may
reasonably and in good faith determine, the threatened indictment by any
Governmental Authority of any Borrower or Guarantor of which any Borrower,
Guarantor or Agent receives notice, in either case, as to which there is a
reasonable possibility of an adverse determination, in the good faith
determination of Agent, under any criminal statute, or commencement or
threatened commencement of criminal or civil proceedings against such Borrower
or Guarantor, pursuant to which statute or proceedings the penalties or remedies
sought or available include forfeiture of (i) any of the Collateral having a
value in excess of $500,000 or (ii) any other property of any Borrower or
Guarantor which is necessary or material to the conduct of its business;
(n) a requirement from the Minister of National Revenue for payment
pursuant to Section 224 or any successor section of the Income Tax Act (Canada)
or Section 317, or any successor section of the Excise Tax Act (Canada) or any
comparable provision of similar legislation shall have been received by Agent or
any Lender or any other Person in respect of any Borrower or Guarantor or
otherwise issued in respect of any Borrower or Guarantor involving an amount in
excess of the US Dollar Equivalent of $1,000,000;
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(o) there shall be a material adverse change in the business, assets
or prospects of any Borrower or Guarantor after the date hereof; or
(p) there shall be an event of default under any of the other
Financing Agreements.
10.2 Remedies.
(a) At any time an Event of Default exists or has occurred and is
continuing, Agent and Lenders shall have all rights and remedies provided in
this Agreement, the other Financing Agreements, the UCC, the PPSA and other
applicable law, all of which rights and remedies may be exercised without notice
to or consent by any Borrower or Guarantor, except as such notice or consent is
expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Agent and Lenders hereunder, under any of the
other Financing Agreements, the UCC the PPSA or other applicable law, are
cumulative, not exclusive and enforceable, in Agent's discretion, alternatively,
successively, or concurrently on any one or more occasions, and shall include,
without limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by any Borrower or Guarantor of this
Agreement or any of the other Financing Agreements. Subject to Section 12
hereof, Agent may, and at the direction of the Required Lenders shall, at any
time or times, proceed directly against any Borrower or Guarantor to collect the
Obligations without prior recourse to the Collateral. (b) Without limiting the
generality of the foregoing, at any time an Event of Default exists or has
occurred and is continuing, Agent may, at its option and shall upon the
direction of the Required Lenders, (i) upon notice to Administrative Borrower,
accelerate the payment of all Obligations and demand immediate payment thereof
to Agent for itself and the benefit of Lenders (provided, that, upon the
occurrence of any Event of Default described in Sections 10.1(g) and 10.1(h),
all Obligations shall automatically become immediately due and payable), and
(ii) terminate the Commitments whereupon the obligation of each Lender to make
any Loan and Issuing Bank to issue any Letter of Credit shall immediately
terminate (provided, that, upon the occurrence of any Event of Default described
in Sections 10.1(g) and 10.1(h), the Commitments and any other obligation of the
Agent or a Lender hereunder shall automatically terminate).
(c) Without limiting the foregoing, at any time an Event of Default
exists or has occurred and is continuing, Agent may, in its discretion (i) with
or without judicial process or the aid or assistance of others, enter upon any
premises on or in which any of the Collateral may be located and take possession
of the Collateral or complete processing, manufacturing and repair of all or any
portion of the Collateral, (ii) require any Borrower or Guarantor, at Borrowers'
expense, to assemble and make available to Agent any part or all of the
Collateral at any place and time designated by Agent, (iii) collect, foreclose,
receive, appropriate, setoff and realize upon any and all Collateral, (iv)
remove any or all of the Collateral from any premises on or in which the same
may be located for the purpose of effecting the sale, foreclosure or other
disposition thereof or for any other purpose, (v) sell, lease, transfer, assign,
deliver or otherwise dispose of any and all Collateral (including entering into
contracts with respect thereto, public or private sales at any exchange,
broker's board, at any office of Agent or elsewhere) at such prices or terms as
Agent may deem reasonable, for cash, upon credit or for future delivery, with
the Agent having the right to purchase the whole or any part of the Collateral
at any such public sale, all of the foregoing being free from any right or
equity of redemption of any Borrower or
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Guarantor, which right or equity of redemption is hereby expressly waived and
released by Borrowers and Guarantors and/or (vi) terminate this Agreement. If
any of the Collateral is sold or leased by Agent upon credit terms or for future
delivery, the Obligations shall not be reduced as a result thereof until payment
therefor is finally collected by Agent. If notice of disposition of Collateral
is required by law, ten (10) days prior notice by Agent to Administrative
Borrower designating the time and place of any public sale or the time after
which any private sale or other intended disposition of Collateral is to be
made, shall be deemed to be reasonable notice thereof and Borrowers and
Guarantors waive any other notice. In the event Agent institutes an action to
recover any Collateral or seeks recovery of any Collateral by way of prejudgment
remedy, each Borrower and Guarantor waives the posting of any bond which might
otherwise be required. At any time an Event of Default exists or has occurred
and is continuing, upon Agent's request, Borrowers will either, as Agent shall
specify, furnish cash collateral to Issuing Bank to be used to secure and fund
the reimbursement obligations to Issuing Bank in connection with any Letter of
Credit Obligations or furnish cash collateral to Agent for the Letter of Credit
Obligations. Such cash collateral shall be in the amount equal to one hundred
ten (110%) percent of the amount of the Letter of Credit Obligations plus the
amount of any fees and expenses payable in connection therewith through the end
of the latest expiration date of the Letters of Credit giving rise to such
Letter of Credit Obligations.
(d) At any time or times that an Event of Default exists or has
occurred and is continuing, Agent may, in its discretion, enforce the rights of
any Borrower or Guarantor against any account debtor, secondary obligor or other
obligor in respect of any of the Accounts or other Receivables. Without limiting
the generality of the foregoing, Agent may, in its discretion, at such time or
times (i) notify any or all account debtors, secondary obligors or other
obligors in respect thereof that the Receivables have been assigned to Agent and
that Agent has a security interest therein and Agent may direct any or all
account debtors, secondary obligors and other obligors to make payment of
Receivables directly to Agent, (ii) extend the time of payment of, compromise,
settle or adjust for cash, credit, return of merchandise or otherwise, and upon
any terms or conditions, any and all Receivables or other obligations included
in the Collateral and thereby discharge or release the account debtor or any
secondary obligors or other obligors in respect thereof without affecting any of
the Obligations, (iii) demand, collect or enforce payment of any Receivables or
such other obligations, but without any duty to do so, and Agent and Lenders
shall not be liable for any failure to collect or enforce the payment thereof
nor for the negligence of its agents or attorneys with respect thereto and (iv)
take whatever other action Agent may deem necessary or desirable for the
protection of its interests and the interests of Lenders. At any time that an
Event of Default exists or has occurred and is continuing, at Agent's request,
all invoices and statements sent to any account debtor shall state that the
Accounts and such other obligations have been assigned to Agent and are payable
directly and only to Agent and Borrowers and Guarantors shall deliver to Agent
such originals of documents evidencing the sale and delivery of goods or the
performance of services giving rise to any Accounts as Agent may require. In the
event any account debtor returns Inventory when an Event of Default exists or
has occurred and is continuing, Borrowers shall, upon Agent's request, hold the
returned Inventory in trust for Agent, segregate all returned Inventory from all
of its other property, dispose of the returned Inventory solely according to
Agent's instructions, and not issue any credits, discounts or allowances with
respect thereto without Agent's prior written consent.
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(e) To the extent that applicable law imposes duties on Agent or any
Lender to exercise remedies in a commercially reasonable manner (which duties
cannot be waived under such law), each Borrower and Guarantor acknowledges and
agrees that it is not commercially unreasonable for Agent or any Lender (i) to
fail to incur expenses reasonably deemed significant by Agent or any Lender to
prepare Collateral for disposition or otherwise to complete raw material or work
in process into finished goods or other finished products for disposition, (ii)
to fail to obtain third party consents for access to Collateral to be disposed
of, or to obtain or, if not required by other law, to fail to obtain consents of
any Governmental Authority or other third party for the collection or
disposition of Collateral to be collected or disposed of, (iii) to fail to
exercise collection remedies against account debtors, secondary obligors or
other persons obligated on Collateral or to remove liens or encumbrances on or
any adverse claims against Collateral, (iv) to exercise collection remedies
against account debtors and other persons obligated on Collateral directly or
through the use of collection agencies and other collection specialists, (v) to
advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature, (vi) to
contact other persons, whether or not in the same business as any Borrower or
Guarantor, for expressions of interest in acquiring all or any portion of the
Collateral, (vii) to hire one or more professional auctioneers to assist in the
disposition of Collateral, whether or not the collateral is of a specialized
nature, (viii) to dispose of Collateral by utilizing Internet sites that provide
for the auction of assets of the types included in the Collateral or that have
the reasonable capability of doing so, or that match buyers and sellers of
assets, (ix) to dispose of assets in wholesale rather than retail markets, (x)
to disclaim disposition warranties, (xi) to purchase insurance or credit
enhancements to insure Agent or Lenders against risks of loss, collection or
disposition of Collateral or to provide to Agent or Lenders a guaranteed return
from the collection or disposition of Collateral, or (xii) to the extent deemed
appropriate by Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist Agent in the collection
or disposition of any of the Collateral. Each Borrower and Guarantor
acknowledges that the purpose of this Section is to provide non-exhaustive
indications of what actions or omissions by Agent or any Lender would not be
commercially unreasonable in the exercise by Agent or any Lender of remedies
against the Collateral and that other actions or omissions by Agent or any
Lender shall not be deemed commercially unreasonable solely on account of not
being indicated in this Section. Without limitation of the foregoing, nothing
contained in this Section shall be construed to grant any rights to any Borrower
or Guarantor or to impose any duties on Agent or Lenders that would not have
been granted or imposed by this Agreement or by applicable law in the absence of
this Section.
(f) For the purpose of enabling Agent to exercise the rights and
remedies hereunder, each Borrower and Guarantor hereby grants to Agent, to the
extent assignable, an irrevocable, non-exclusive license (exercisable at any
time an Event of Default shall exist or have occurred and for so long as the
same is continuing) without payment of royalty or other compensation to any
Borrower or Guarantor, to use, assign, license or sublicense any of the
trademarks, service-marks, trade names, business names, trade styles, designs,
logos and other source of business identifiers and other Intellectual Property
and general intangibles now owned or hereafter acquired by any Borrower or
Guarantor, wherever the same maybe located, including in such license reasonable
access to all media in which any of the licensed items may be recorded or stored
and to all computer programs used for the compilation or printout thereof.
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(g) At any time an Event of Default exists or has occurred and is
continuing, Agent may apply the cash proceeds of Collateral actually received by
Agent from any sale, lease, foreclosure or other disposition of the Collateral
to payment of the Obligations, in whole or in part and in accordance with the
terms hereof, whether or not then due or may hold such proceeds as cash
collateral for the Obligations. Borrowers and Guarantors shall remain liable to
Agent and Lenders for the payment of any deficiency with interest at the highest
rate provided for herein and all costs and expenses of collection or
enforcement, including attorneys' fees and expenses.
(h) Without limiting the foregoing, upon the occurrence of a Default
or an Event of Default, (i) Agent and Lenders may, at Agent's option, and upon
the occurrence of an Event of Default at the direction of the Required Lenders,
Agent and Lenders shall, without notice, (A) cease making Loans or arranging for
Letters of Credit or reduce the lending formulas or amounts of Loans and Letters
of Credit available to Borrowers and/or (B) terminate any provision of this
Agreement providing for any future Loans to be made by Agent and Lenders or
Letters of Credit to be issued by Issuing Bank and (ii) Agent may, at its
option, establish such Reserves as Agent determines, without limitation or
restriction, notwithstanding anything to the contrary contained herein.
(i) Agent may seek the appointment of a receiver, receiver-manager
or keeper (a "Receiver") to take possession of all or any portion of the
Collateral or to operate same and, to the maximum extent permitted by law, may
seek the appointment of such a receiver without the requirement of prior notice
or a hearing. Any such Receiver shall, so far as concerns responsibility for
his/her acts, be deemed agent of the applicable Borrower or Guarantor and not
Agent and the Lenders, and Agent and the Lenders shall not be in any way
responsible for any misconduct, negligence or non-feasance on the part of any
such Receiver, his/her servants or employees. Subject to the provisions of the
instrument appointing him/her, any such Receiver shall have power to take
possession of Collateral, to preserve Collateral or its value, to carry on or
concur in carrying on all or any part of the business of the applicable Borrower
or Guarantor and to sell, lease, license or otherwise dispose of or concur in
selling, leasing, licensing or otherwise disposing of Collateral. To facilitate
the foregoing powers, any such Receiver may, to the exclusion of all others,
including the applicable Borrower or Guarantor, enter upon, use and occupy all
premises owned or occupied by the applicable Borrower or Guarantor wherein
Collateral may be situate, maintain Collateral upon such premises, borrow money
on a secured or unsecured basis and use Collateral directly in carrying on the
applicable Borrower's or Guarantor's business or as security for loans or
advances to enable the Receiver to carry on the applicable Borrower's or
Guarantor's business or otherwise, as such Receiver shall, in its discretion,
determine. Except as may be otherwise directed by Agent, all money received from
time to time by such Receiver in carrying out his/her appointment shall be
received in trust for and paid over to Agent. Every such Receiver may, in the
discretion of Agent, be vested with all or any of the rights and powers of Agent
and the Lenders. Agent may, either directly or through its nominees, exercise
any or all powers and rights given to a Receiver by virtue of the foregoing
provisions of this paragraph.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
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(a) The validity, interpretation and enforcement of this Agreement
and the other Financing Agreements (except as otherwise provided therein) and
any dispute arising out of the relationship between the parties hereto, whether
in contract, tort, equity or otherwise, shall be governed by the internal laws
of the State of New York but excluding any principles of conflicts of law or
other rule of law that would cause the application of the law of any
jurisdiction other than the laws of the State of New York.
(b) Borrowers, Guarantors, Agent, Lenders and Issuing Bank
irrevocably consent and submit to the non-exclusive jurisdiction of the Supreme
Court of the State of New York for New York County and the United States
District Court for the Southern District of New York, whichever Agent may elect,
and waive any objection based on venue or forum non conveniens with respect to
any action instituted therein arising under this Agreement or any of the other
Financing Agreements or in any way connected with or related or incidental to
the dealings of the parties hereto in respect of this Agreement or any of the
other Financing Agreements or the transactions related hereto or thereto, in
each case whether now existing or hereafter arising, and whether in contract,
tort, equity or otherwise, and agree that any dispute with respect to any such
matters shall be heard only in the courts described above (except that Agent and
Lenders shall have the right to bring any action or proceeding against any
Borrower or Guarantor or its or their property in the courts of any other
jurisdiction which Agent deems necessary or appropriate in order to realize on
the Collateral or to otherwise enforce its rights against any Borrower or
Guarantor or its or their property).
(c) Each Borrower and Guarantor hereby waives personal service of
any and all process upon it and consents that all such service of process may be
made by certified mail (return receipt requested) directed to its address, with
a copy to its counsel, in each case as set forth herein and service so made
shall be deemed to be completed five (5) days after the same shall have been so
deposited in the U.S. mails, or, at Agent's option, by service upon any Borrower
or Guarantor (or Administrative Borrower on behalf of such Borrower or
Guarantor) in any other manner provided under the rules of any such courts.
Within thirty (30) days after such service, such Borrower or Guarantor shall
appear in answer to such process, failing which such Borrower or Guarantor shall
be deemed in default and judgment may be entered by Agent against such Borrower
or Guarantor for the amount of the claim and other relief requested.
(d) BORROWERS, GUARANTORS, AGENT, LENDERS AND ISSUING BANK EACH
HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS
OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING
AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR
OTHERWISE. BORROWERS, GUARANTORS, AGENT, LENDERS AND ISSUING BANK EACH HEREBY
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL
BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY BORROWER, ANY GUARANTOR,
AGENT, ANY LENDER OR ISSUING BANK MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF
THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF
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THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Agent and Secured Parties shall not have any liability to any
Borrower or Guarantor (whether in tort, contract, equity or otherwise) for
losses suffered by such Borrower or Guarantor in connection with, arising out
of, or in any way related to the transactions or relationships contemplated by
this Agreement, or any act, omission or event occurring in connection herewith,
unless it is determined by a final and non-appealable judgment or court order
binding on Agent, such Lender and Issuing Bank, that the losses were the result
of acts or omissions constituting gross negligence or willful misconduct. In any
such litigation, Agent, Lenders and Issuing Bank shall be entitled to the
benefit of the rebuttable presumption that it acted in good faith and with the
exercise of ordinary care in the performance by it of the terms of this
Agreement. Each Borrower and Guarantor: (i) certifies that neither Agent, any
Lender, Issuing Bank nor any representative, agent or attorney acting for or on
behalf of Agent, any Lender or Issuing Bank has represented, expressly or
otherwise, that Agent, Lenders and Issuing Bank would not, in the event of
litigation, seek to enforce any of the waivers provided for in this Agreement or
any of the other Financing Agreements and (ii) acknowledges that in entering
into this Agreement and the other Financing Agreements, Agent, Lenders and
Issuing Bank are relying upon, among other things, the waivers and
certifications set forth in this Agreement and the other Financing Agreements.
11.2 Waiver of Notices. Each Borrower and Guarantor hereby expressly
waives demand, presentment, protest and notice of protest and notice of dishonor
with respect to any and all instruments and chattel paper, included in or
evidencing any of the Obligations or the Collateral, and any and all other
demands and notices of any kind or nature whatsoever with respect to the
Obligations, the Collateral and this Agreement, except such as are expressly
provided for herein. No notice to or demand on any Borrower or Guarantor which
Agent or any Lender may elect to give shall entitle such Borrower or Guarantor
to any other or further notice or demand in the same, similar or other
circumstances.
11.3 Amendments and Waivers.
(a) Neither this Agreement nor any other Financing Agreement nor any
terms hereof or thereof may be amended, waived, discharged or terminated unless
such amendment, waiver, discharge or termination is in writing signed by Agent
and the Required Lenders or at Agent's option, by Agent with the authorization
or consent of the Required Lenders, and as to amendments to any of the Financing
Agreements (other than with respect to any provision of Section 12 hereof), by
any Borrower and such amendment, waiver, discharger or termination shall be
effective and binding as to all Lenders and Issuing Bank only in the specific
instance and for the specific purpose for which given; except, that, no such
amendment, waiver, discharge or termination shall:
(i) reduce the interest rate or any fees or extend the time of
payment of principal, interest or any fees or reduce the principal amount of any
Loan or Letters of Credit, in each case without the consent of each Lender
directly affected thereby,
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(ii) increase the Commitment of any Lender over the amount
thereof then in effect or provided hereunder, in each case without the consent
of the Lender directly affected thereby,
(iii) release any Collateral (except as expressly required
hereunder or under any of the other Financing Agreements or applicable law and
except as permitted under Section 12.11(b) hereof), without the consent of Agent
and all of Lenders,
(iv) reduce any percentage specified in the definition of
Required Lenders, without the consent of Agent and all of Lenders,
(v) consent to the assignment or transfer by any Borrower or
Guarantor of any of their rights and obligations under this Agreement, without
the consent of Agent and all of Lenders,
(vi) amend, modify or waive any terms of this Section 11.3
hereof, without the consent of Agent and all of Lenders, or
(vii) increase the advance rates constituting part of the
Borrowing Base or increase the Inventory Loan Limit or the Letter of Credit
Limit, without the consent of Agent and all of Lenders.
(b) Agent, Lenders and Issuing Bank shall not, by any act, delay,
omission or otherwise be deemed to have expressly or impliedly waived any of its
or their rights, powers and/or remedies unless such waiver shall be in writing
and signed as provided herein. Any such waiver shall be enforceable only to the
extent specifically set forth therein. A waiver by Agent, any Lender or Issuing
Bank of any right, power and/or remedy on any one occasion shall not be
construed as a bar to or waiver of any such right, power and/or remedy which
Agent, any Lender or Issuing Bank would otherwise have on any future occasion,
whether similar in kind or otherwise.
(c) Notwithstanding anything to the contrary contained in Section
11.3(a) above, in connection with any amendment, waiver, discharge or
termination, in the event that any Lender whose consent thereto is required
shall fail to consent or fail to consent in a timely manner (such Lender being
referred to herein as a "Non-Consenting Lender"), but the consent of any other
Lenders to such amendment, waiver, discharge or termination that is required are
obtained, if any, then Wachovia shall have the right, but not the obligation, at
any time thereafter, and upon the exercise by Wachovia of such right, such
Non-Consenting Lender shall have the obligation, to sell, assign and transfer to
Wachovia or such Eligible Transferee as Wachovia may specify, the Commitment of
such Non-Consenting Lender and all rights and interests of such Non-Consenting
Lender pursuant thereto. Wachovia shall provide the Non-Consenting Lender with
prior written notice of its intent to exercise its right under this Section,
which notice shall specify on date on which such purchase and sale shall occur.
Such purchase and sale shall be pursuant to the terms of an Assignment and
Acceptance (whether or not executed by the Non-Consenting Lender), except that
on the date of such purchase and sale, Wachovia, or such Eligible Transferee
specified by Wachovia, shall pay to the Non-Consenting Lender (except as
Wachovia and such Non-Consenting Lender may otherwise agree) the amount equal
to: (i) the principal balance of the Loans held by the Non-Consenting Lender
outstanding as of the close of business
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on the business day immediately preceding the effective date of such purchase
and sale, plus (ii) amounts accrued and unpaid in respect of interest and fees
payable to the Non-Consenting Lender to the effective date of the purchase (but
in no event shall the Non-Consenting Lender be deemed entitled to any early
termination fee), minus (iii) the amount of the closing fee received by the
Non-Consenting Lender pursuant to the terms hereof or of any of the other
Financing Agreements multiplied by the fraction, the numerator of which is the
number of months remaining in the then current term of the Credit Facility and
the denominator of which is the number of months in the then current term
thereof. Such purchase and sale shall be effective on the date of the payment of
such amount to the Non-Consenting Lender and the Commitment of the
Non-Consenting Lender shall terminate on such date.
(d) The consent of Agent shall be required for any amendment, waiver
or consent affecting the rights or duties of Agent hereunder or under any of the
other Financing Agreements, in addition to the consent of the Lenders otherwise
required by this Section and the exercise by Agent of any of its rights
hereunder with respect to Reserves or Eligible Accounts or Eligible Inventory
shall not be deemed an amendment to the advance rates provided for in this
Section 11.3. The consent of Issuing Bank shall be required for any amendment,
waiver or consent affecting the rights or duties of Issuing Bank hereunder or
under any of the other Financing Agreements, in addition to the consent of the
Lenders otherwise required by this Section; provided, that, the consent of
Issuing Bank shall not be required for any other amendments, waivers or
consents. Notwithstanding anything to the contrary contained in Section 11.3(a)
above, (i) in the event that Agent shall agree that any items otherwise required
to be delivered to Agent as a condition of the initial Loans and Letters of
Credit hereunder may be delivered after the date hereof, Agent may, in its
discretion, agree to extend the date for delivery of such items or take such
other action as Agent may deem appropriate as a result of the failure to receive
such items as Agent may determine or may waive any Event of Default as a result
of the failure to receive such items, in each case without the consent of any
Lender and (ii) Agent may consent to any change in the type of organization,
jurisdiction of organization or other legal structure of any Borrower, Guarantor
or any of their Subsidiaries and amend the terms hereof or of any of the other
Financing Agreements as may be necessary or desirable to reflect any such
change, in each case without the approval of any Lender.
(e) The consent of Agent and any Bank Product Provider that is
providing Bank Products and has outstanding any such Bank Products at such time
that are secured hereunder shall be required for any amendment to the priority
of payment of Obligations arising under or pursuant to any Hedge Agreements of a
Borrower or Guarantor or other Bank Products as set forth in Section 6.4(a)
hereof. In no event shall the consent or approval of any Bank Product Provider
be required for any other amendment or waiver and any such other amendment or
waiver entered into in accordance with Section 11.3(a) shall be binding upon all
of the Secured Parties.
11.4 Waiver of Counterclaims. Each Borrower and Guarantor waives all
rights to interpose any claims, deductions, setoffs or counterclaims of any
nature (other then compulsory counterclaims) in any action or proceeding with
respect to this Agreement, the Obligations, the Collateral or any matter arising
therefrom or relating hereto or thereto.
11.5 Indemnification. Each Borrower and Guarantor shall, jointly and
severally, indemnify and hold Agent, each Lender and Issuing Bank, and their
respective officers,
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directors, agents, employees, advisors and counsel and their respective
Affiliates (each such person being an "Indemnitee"), harmless from and against
any and all losses, claims, damages, liabilities, costs or expenses (including
reasonable attorneys' fees and expenses) imposed on, incurred by or asserted
against any of them in connection with any litigation, investigation, claim or
proceeding commenced or threatened related to the negotiation, preparation,
execution, delivery, enforcement, performance or administration of this
Agreement, any other Financing Agreements, or any undertaking or proceeding
related to any of the transactions contemplated hereby or any act, omission,
event or transaction related or attendant thereto, including amounts paid in
settlement, court costs, and the fees and expenses of counsel except that
Borrowers and Guarantors shall not have any obligation under this Section 11.5
to indemnify an Indemnitee with respect to a matter covered hereby resulting
from the gross negligence or willful misconduct of such Indemnitee as determined
pursuant to a final, non-appealable order of a court of competent jurisdiction
(but without limiting the obligations of Borrowers or Guarantors as to any other
Indemnitee). To the extent that the undertaking to indemnify, pay and hold
harmless set forth in this Section may be unenforceable because it violates any
law or public policy, Borrowers and Guarantors shall pay the maximum portion
which it is permitted to pay under applicable law to Agent and Lenders in
satisfaction of indemnified matters under this Section. To the extent permitted
by applicable law, no Borrower or Guarantor shall assert, and each Borrower and
Guarantor hereby waives, any claim against any Indemnitee, on any theory of
liability for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement, any of the other Financing Agreements or any undertaking or
transaction contemplated hereby. No Indemnitee referred to above shall be liable
for any damages arising from the use by unintended recipients of any information
or other materials distributed by it through telecommunications, electronic or
other information transmission systems in connection with this Agreement or any
of the other Financing Agreements or the transaction contemplated hereby or
thereby. All amounts due under this Section shall be payable upon demand. The
foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
11.6 Currency Indemnity. If, for the purposes of obtaining judgment in any
court in any jurisdiction with respect to this Agreement or any of the other
Financing Agreements, it becomes necessary to convert into the currency of such
jurisdiction (the "Judgment Currency") any amount due under this Agreement or
under any of the other Financing Agreements in any currency other than the
Judgment Currency (the "Currency Due"), then conversion shall be made at the
Exchange Rate at which Agent is able, on the relevant date, to purchase the
Currency Due with the Judgment Currency prevailing on the Business Day before
the day on which judgment is given. In the event that there is a change in the
rate of Exchange Rate prevailing between the Business Day before the day on
which the judgment is given and the date of receipt by Agent of the amount due,
Borrowers will, on the date of receipt by Agent, pay such additional amounts, if
any, or be entitled to receive reimbursement of such amount, if any, as may be
necessary to ensure that the amount received by Agent on such date is the amount
in the Judgment Currency which when converted at the rate of exchange prevailing
on the date of receipt by Agent is the amount then due under this Agreement or
such other of the Financing Agreements in the Currency Due. If the amount of the
Currency Due which Agent is able to purchase is less than the amount of the
Currency Due originally due to it, Borrowers shall indemnify and save Agent
harmless from and against loss or damage arising as a result of such deficiency.
The indemnity contained herein shall constitute an obligation separate and
independent from the other
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obligations contained in this Agreement and the other Financing Agreements,
shall give rise to a separate and independent cause of action, shall apply
irrespective of any indulgence granted by Agent from time to time and shall
continue in full force and effect notwithstanding any judgment or order for a
liquidated sum in respect of an amount due under this Agreement or any of the
other Financing Agreements or under any judgment or order.
SECTION 12. THE AGENT
12.1 Appointment, Powers and Immunities. Each Lender and Issuing Bank
irrevocably designates, appoints and authorizes Wachovia to act as Agent
hereunder and under the other Financing Agreements with such powers as are
specifically delegated to Agent by the terms of this Agreement and of the other
Financing Agreements, together with such other powers as are reasonably
incidental thereto. Agent (a) shall have no duties or responsibilities except
those expressly set forth in this Agreement and in the other Financing
Agreements, and shall not by reason of this Agreement or any other Financing
Agreement be a trustee or fiduciary for any Lender; (b) shall not be responsible
to Secured Parties for any recitals, statements, representations or warranties
contained in this Agreement or in any of the other Financing Agreements, or in
any certificate or other document referred to or provided for in, or received by
any of them under, this Agreement or any other Financing Agreement, or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Financing Agreement or any other document referred
to or provided for herein or therein or for any failure by any Borrower or any
Guarantor or any other Person to perform any of its obligations hereunder or
thereunder; and (c) shall not be responsible to Secured Parties for any action
taken or omitted to be taken by it hereunder or under any other Financing
Agreement or under any other document or instrument referred to or provided for
herein or therein or in connection herewith or therewith, except for its own
gross negligence or willful misconduct as determined by a final non-appealable
judgment of a court of competent jurisdiction. Agent may employ agents and
attorneys in fact and shall not be responsible for the negligence or misconduct
of any such agents or attorneys in fact selected by it in good faith. Agent may
deem and treat the payee of any note as the holder thereof for all purposes
hereof unless and until the assignment thereof pursuant to an agreement (if and
to the extent permitted herein) in form and substance satisfactory to Agent
shall have been delivered to and acknowledged by Agent.
12.2 Reliance by Agent. Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopy, telex, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by Agent. As to any matters not expressly
provided for by this Agreement or any other Financing Agreement, Agent shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
or thereunder in accordance with instructions given by the Required Lenders or
all of Lenders as is required in such circumstance, and such instructions of
such Agents and any action taken or failure to act pursuant thereto shall be
binding on all Lenders.
12.3 Events of Default.
(a) Agent shall not be deemed to have knowledge or notice of the
occurrence of a Default or an Event of Default or other failure of a condition
precedent to the Loans and Letters
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of Credit hereunder, unless and until Agent has received written notice from a
Lender, or Borrower specifying such Event of Default or any unfulfilled
condition precedent, and stating that such notice is a "Notice of Default or
Failure of Condition". In the event that Agent receives such a Notice of Default
or Failure of Condition, Agent shall give prompt notice thereof to the Lenders.
Agent shall (subject to Section 12.7) take such action with respect to any such
Event of Default or failure of condition precedent as shall be directed by the
Required Lenders to the extent provided for herein; provided, that, unless and
until Agent shall have received such directions, Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to or by reason of such Event of Default or failure of condition precedent, as
it shall deem advisable in the best interest of Lenders. Without limiting the
foregoing, and notwithstanding the existence or occurrence and continuance of an
Event of Default or any other failure to satisfy any of the conditions precedent
set forth in Section 4 of this Agreement to the contrary, unless and until
otherwise directed by the Required Lenders, Agent may, but shall have no
obligation to, continue to make Loans and Issuing Bank may, but shall have no
obligation to, issue or cause to be issued any Letter of Credit for the ratable
account and risk of Lenders from time to time if Agent believes making such
Loans or issuing or causing to be issued such Letter of Credit is in the best
interests of Lenders.
(b) Except with the prior written consent of Agent, no Lender or
Issuing Bank may assert or exercise any enforcement right or remedy in respect
of the Loans, Letter of Credit Obligations or other Obligations, as against any
Borrower or Guarantor or any of the Collateral or other property of any Borrower
or Guarantor.
12.4 Wachovia in Its Individual Capacity. With respect to its Commitment
and the Loans made and Letters of Credit issued or caused to be issued by it
(and any successor acting as Agent), so long as Wachovia shall be a Lender
hereunder, it shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not acting as Agent, and the
term "Lender" or "Lenders" shall, unless the context otherwise indicates,
include Wachovia in its individual capacity as Lender hereunder. Wachovia (and
any successor acting as Agent) and its Affiliates may (without having to account
therefor to any Lender) lend money to, make investments in and generally engage
in any kind of business with Borrowers (and any of its Subsidiaries or
Affiliates) as if it were not acting as Agent, and Wachovia and its Affiliates
may accept fees and other consideration from any Borrower or Guarantor and any
of its Subsidiaries and Affiliates for services in connection with this
Agreement or otherwise without having to account for the same to Lenders.
12.5 Indemnification. Lenders agree to indemnify Agent and Issuing Bank
(to the extent not reimbursed by Borrowers hereunder and without limiting any
obligations of Borrowers hereunder) ratably, in accordance with their Pro Rata
Shares, for any and all claims of any kind and nature whatsoever that may be
imposed on, incurred by or asserted against Agent (including by any Lender)
arising out of or by reason of any investigation in or in any way relating to or
arising out of this Agreement or any other Financing Agreement or any other
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including the costs and expenses that Agent is
obligated to pay hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents; provided, that, no Lender shall be
liable for any of the foregoing to the extent it arises from the gross
negligence or willful misconduct of the party to be indemnified as determined by
a final non-
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appealable judgment of a court of competent jurisdiction. The foregoing
indemnity shall survive the payment of the Obligations and the termination or
non-renewal of this Agreement.
12.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees that it
has, independently and without reliance on Agent or other Lender, and based on
such documents and information as it has deemed appropriate, made its own credit
analysis of Borrowers and Guarantors and has made its own decision to enter into
this Agreement and that it will, independently and without reliance upon Agent
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any of the other Financing
Agreements. Agent shall not be required to keep itself informed as to the
performance or observance by any Borrower or Guarantor of any term or provision
of this Agreement or any of the other Financing Agreements or any other document
referred to or provided for herein or therein or to inspect the properties or
books of any Borrower or Guarantor. Agent will use reasonable efforts to provide
Lenders with any information received by Agent from any Borrower or Guarantor
which is required to be provided to Lenders or deemed to be requested by Lenders
hereunder and with a copy of any Notice of Default or Failure of Condition
received by Agent from any Borrower or any Lender; provided, that, Agent shall
not be liable to any Lender for any failure to do so, except to the extent that
such failure is attributable to Agent's own gross negligence or willful
misconduct as determined by a final non-appealable judgment of a court of
competent jurisdiction. Except for notices, reports and other documents
expressly required to be furnished to Lenders by Agent or deemed requested by
Lenders hereunder, Agent shall not have any duty or responsibility to provide
any Lender with any other credit or other information concerning the affairs,
financial condition or business of any Borrower or Guarantor that may come into
the possession of Agent.
12.7 Failure to Act. Except for action expressly required of Agent
hereunder and under the other Financing Agreements, Agent shall in all cases be
fully justified in failing or refusing to act hereunder and thereunder unless it
shall receive further assurances to its satisfaction from Lenders of their
indemnification obligations under Section 12.5 hereof against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
12.8 Additional Loans. Agent shall not make any Revolving Loans or Issuing
Bank provide any Letter of Credit to any Borrower on behalf of Lenders
intentionally and with actual knowledge that such Revolving Loans or Letter of
Credit would cause the aggregate amount of the total outstanding Revolving Loans
and Letters of Credit to such Borrower to exceed the Borrowing Base of such
Borrower, without the prior consent of all Lenders, except, that, Agent may make
such additional Revolving Loans or Issuing Bank may provide such additional
Letter of Credit on behalf of Lenders, intentionally and with actual knowledge
that such Revolving Loans or Letter of Credit will cause the total outstanding
Revolving Loans and Letters of Credit to such Borrower to exceed the Borrowing
Base of such Borrower, as Agent may deem necessary or advisable in its
discretion; provided, that: (a) the total principal amount of the additional
Revolving Loans or additional Letters of Credit to any Borrower which Agent may
make or provide after obtaining such actual knowledge that the aggregate
principal amount of the Revolving Loans equal or exceed the Borrowing Bases of
Borrowers, plus the amount of Special Agent Advances made pursuant to Section
12.11(a)(ii) hereof then outstanding, shall not exceed
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the aggregate amount equal to ten (10%) of the Maximum Credit and shall not
cause the total principal amount of the Revolving Loans and Letters of Credit to
exceed the Maximum Credit and (b) no such additional Revolving Loan or Letter of
Credit shall be outstanding more than ninety (90) days after the date such
additional Revolving Loan or Letter of Credit is made or issued (as the case may
be), except as the Required Lenders may otherwise agree. Each Lender shall be
obligated to pay Agent the amount of its Pro Rata Share of any such additional
Revolving Loans or Letters of Credit.
12.9 Concerning the Collateral and the Related Financing Agreements. Each
Lender authorizes and directs Agent to enter into this Agreement and the other
Financing Agreements. Each Lender agrees that any action taken by Agent or
Required Lenders in accordance with the terms of this Agreement or the other
Financing Agreements and the exercise by Agent or Required Lenders of their
respective powers set forth therein or herein, together with such other powers
that are reasonably incidental thereto, shall be binding upon all of the Secured
Parties.
12.10 Field Audit, Examination Reports and Other Information; Disclaimer
by Lenders. By signing this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report and report with respect to the Borrowing Base prepared or received by
Agent (each field audit or examination report and report with respect to the
Borrowing Base being referred to herein as a "Report" and collectively,
"Reports"), appraisals with respect to the Collateral and financial statements
with respect to Parent and its Subsidiaries received by Agent;
(b) expressly agrees and acknowledges that Agent (i) does not make
any representation or warranty as to the accuracy of any Report, appraisal or
financial statement or (ii) shall not be liable for any information contained in
any Report, appraisal or financial statement;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or any other party performing
any audit or examination will inspect only specific information regarding
Borrowers and Guarantors and will rely significantly upon Borrowers' and
Guarantors' books and records, as well as on representations of Borrowers' and
Guarantors' personnel; and
(d) agrees to keep all Reports confidential and strictly for its
internal use in accordance with the terms of Section 13.5 hereof, and not to
distribute or use any Report in any other manner.
12.11 Collateral Matters.
(a) Agent may, at its option, from time to time, at any time on or
after an Event of Default and for so long as the same is continuing or upon any
other failure of a condition precedent to the Loans and Letters of Credit
hereunder, make such disbursements and advances ("Special Agent Advances") which
Agent, in its sole discretion, (i) deems necessary or desirable either to
preserve or protect the Collateral or any portion thereof or (ii) to enhance the
likelihood or maximize the amount of repayment by Borrowers and Guarantors of
the Loans and other
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Obligations; provided, that, (A) the aggregate principal amount of the Special
Agent Advances pursuant to this clause (ii) outstanding at any time, plus the
then outstanding principal amount of the additional Loans and Letters of Credit
which Agent may make or provide as set forth in Section 12.8 hereof, shall not
exceed the amount equal to ten (10%) percent of the Maximum Credit and (B) the
aggregate principal amount of the Special Agent Advances pursuant to this clause
(ii) outstanding at any time, plus the then outstanding principal amount of the
Loans, shall not exceed the Maximum Credit, except at Agent's option, provided,
that, to the extent that the aggregate principal amount of Special Agent
Advances plus the then outstanding principal amount of the Loans exceed the
Maximum Credit the Special Agent Advances that are in excess of the Maximum
Credit shall be for the sole account and risk of Agent and notwithstanding
anything to the contrary set forth below, no Lender shall have any obligation to
provide its share of such Special Agent Advances in excess of the Maximum
Credit, or (iii) to pay any other amount chargeable to any Borrower or Guarantor
pursuant to the terms of this Agreement or any of the other Financing Agreements
consisting of (A) costs, fees and expenses and (B) payments to Issuing Bank in
respect of any Letter of Credit Obligations. The Special Agent Advances shall be
repayable on demand and together with all interest thereon shall constitute
Obligations secured by the Collateral. Special Agent Advances shall not
constitute Loans but shall otherwise constitute Obligations hereunder. Interest
on Special Agent Advances shall be payable at the Interest Rate then applicable
to Prime Rate Loans and shall be payable on demand. Without limitation of its
obligations pursuant to Section 6.11, each Lender agrees that it shall make
available to Agent, upon Agent's demand, in immediately available funds, the
amount equal to such Lender's Pro Rata Share of each such Special Agent Advance.
If such funds are not made available to Agent by such Lender, such Lender shall
be deemed a Defaulting Lender and Agent shall be entitled to recover such funds,
on demand from such Lender together with interest thereon for each day from the
date such payment was due until the date such amount is paid to Agent at the
Federal Funds Rate for each day during such period (as published by the Federal
Reserve Bank of New York or at Agent's option based on the arithmetic mean
determined by Agent of the rates for the last transaction in overnight Federal
funds arranged prior to 9:00 a.m. (New York City time) on that day by each of
the three leading brokers of Federal funds transactions in New York City
selected by Agent) and if such amounts are not paid within three (3) days of
Agent's demand, at the highest Interest Rate provided for in Section 3.1 hereof
applicable to Prime Rate Loans.
(b) Lenders hereby irrevocably authorize Agent, at its option and in
its discretion to release any security interest in, mortgage or lien upon, any
of the Collateral (i) upon termination of the Commitments and payment and
satisfaction of all of the Obligations and delivery of cash collateral to the
extent required under Section 13.1 below, or (ii) constituting property being
sold or disposed of if Administrative Borrower or any Borrower or Guarantor
certifies to Agent that the sale or disposition is made in compliance with
Section 9.7 hereof (and Agent may rely conclusively on any such certificate,
without further inquiry), or (iii) constituting property in which any Borrower
or Guarantor did not own an interest at the time the security interest, mortgage
or lien was granted or at any time thereafter, or (iv) having a value in the
aggregate in any twelve (12) month period of less than $1,000,000, and to the
extent Agent may release its security interest in and lien upon any such
Collateral pursuant to the sale or other disposition thereof, such sale or other
disposition shall be deemed consented to by Lenders, or (v) if required or
permitted under the terms of any of the other Financing Agreements, including
any intercreditor agreement, or (vi) approved, authorized or ratified in writing
by all of Lenders.
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Except as provided above, Agent will not release any security interest in,
mortgage or lien upon, any of the Collateral without the prior written
authorization of all of Lenders. Upon request by Agent at any time, Lenders will
promptly confirm in writing Agent's authority to release particular types or
items of Collateral pursuant to this Section. In no event shall the consent or
approval of Issuing Bank to any release of Collateral be required.
(c) Without in any manner limiting Agent's authority to act without
any specific or further authorization or consent by the Required Lenders, each
Lender agrees to confirm in writing, upon request by Agent, the authority to
release Collateral conferred upon Agent under this Section. Agent shall (and is
hereby irrevocably authorized by Lenders to) execute such documents as may be
necessary to evidence the release of the security interest, mortgage or liens
granted to Agent upon any Collateral to the extent set forth above; provided,
that, (i) Agent shall not be required to execute any such document on terms
which, in Agent's opinion, would expose Agent to liability or create any
obligations or entail any consequence other than the release of such security
interest, mortgage or liens without recourse or warranty and (ii) such release
shall not in any manner discharge, affect or impair the Obligations or any
security interest, mortgage or lien upon (or obligations of any Borrower or
Guarantor in respect of) the Collateral retained by such Borrower or Guarantor.
(d) Agent shall have no obligation whatsoever to any Lender, Issuing
Bank or any other Person to investigate, confirm or assure that the Collateral
exists or is owned by any Borrower or Guarantor or is cared for, protected or
insured or has been encumbered, or that any particular items of Collateral meet
the eligibility criteria applicable in respect of the Loans or Letters of Credit
hereunder, or whether any particular reserves are appropriate, or that the liens
and security interests granted to Agent pursuant hereto or any of the Financing
Agreements or otherwise have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent in this Agreement or in any
of the other Financing Agreements, it being understood and agreed that in
respect of the Collateral, or any act, omission or event related thereto,
subject to the other terms and conditions contained herein, Agent may act in any
manner it may deem appropriate, in its discretion, given Agent's own interest in
the Collateral as a Lender and that Agent shall have no duty or liability
whatsoever to any other Lender or Issuing Bank.
(e) Without limiting the generality of the foregoing, each Lender
and Issuing Bank authorizes Agent to enter into the Intercreditor Agreement on
behalf of such Lender and agrees that it will be bound by the terms of the
Intercreditor Agreement, whether or not such Lender or Issuing Bank executes the
Intercreditor Agreement.
12.12 Agency for Perfection. Each Lender and Issuing Bank hereby appoints
Agent and each other Lender and Issuing Bank as agent and bailee for the purpose
of perfecting the security interests in and liens upon the Collateral of Agent
in assets which, in accordance with Article 9 of the UCC can be perfected only
by possession (or where the security interest of a secured party with possession
has priority over the security interest of another secured party) and Agent and
each Lender and Issuing Bank hereby acknowledges that it holds possession of any
such Collateral for the benefit of Agent as secured party. Should any Lender or
Issuing Bank obtain possession of any such Collateral, such Lender shall notify
Agent thereof, and, promptly upon
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Agent's request therefor shall deliver such Collateral to Agent or in accordance
with Agent's instructions.
12.13 Successor Agent. Agent may resign as Agent upon thirty (30) days'
notice to Lenders and Parent. If Agent resigns under this Agreement, the
Required Lenders shall appoint from among the Lenders a successor agent for
Lenders. If no successor agent is appointed prior to the effective date of the
resignation of Agent, Agent may appoint, after consulting with Lenders and
Parent, a successor agent from among Lenders. Upon the acceptance by the Lender
so selected of its appointment as successor agent hereunder, such successor
agent shall succeed to all of the rights, powers and duties of the retiring
Agent and the term "Agent" as used herein and in the other Financing Agreements
shall mean such successor agent and the retiring Agent's appointment, powers and
duties as Agent shall be terminated. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 12 shall inure to its benefit
as to any actions taken or omitted by it while it was Agent under this
Agreement. If no successor agent has accepted appointment as Agent by the date
which is thirty (30) days after the date of a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nonetheless thereupon become
effective and Lenders shall perform all of the duties of Agent hereunder until
such time, if any, as the Required Lenders appoint a successor agent as provided
for above.
12.14 Other Agent Designations. Agent may at any time and from time to
time determine that a Lender may, in addition, be a "Co-Agent", "Syndication
Agent", "Documentation Agent" or similar designation hereunder and enter into an
agreement with such Lender to have it so identified for purposes of this
Agreement. Any such designation shall be effective upon written notice by Agent
to Administrative Borrower of any such designation. Any Lender that is so
designated as a Co-Agent, Syndication Agent, Documentation Agent or such similar
designation by Agent shall have no right, power, obligation, liability,
responsibility or duty under this Agreement or any of the other Financing
Agreements other than those applicable to all Lenders as such. Without limiting
the foregoing, the Lenders so identified shall not have or be deemed to have any
fiduciary relationship with any Lender and no Lender shall be deemed to have
relied, nor shall any Lender rely, on a Lender so identified as a Co-Agent,
Syndication Agent, Documentation Agent or such similar designation in deciding
to enter into this Agreement or in taking or not taking action hereunder.
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS
13.1 Term.
(a) This Agreement and the other Financing Agreements shall become
effective as of the date set forth on the first page hereof and shall continue
in full force and effect for a term ending on the date five (5) years from the
date hereof (the "Renewal Date"), and from year to year thereafter, unless
sooner terminated pursuant to the terms hereof. Agent may, at its option (or
shall at the direction of any Lender in writing received by Agent at least
ninety (90) days prior to the Renewal Date or the anniversary of any Renewal
Date, as the case may be), terminate this Agreement and the other Financing
Agreements, or Administrative Borrower or any Borrower may terminate this
Agreement and the other Financing Agreements, in each case, effective on the
Renewal Date or on the anniversary of the Renewal Date in any year by giving to
the other party at least sixty (60) days prior written notice; provided, that,
this Agreement and all other Financing Agreements must be terminated
simultaneously. In addition, Borrowers may
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terminate this Agreement at any time upon ten (10) days prior written notice to
Agent (which notice shall be irrevocable) and Agent may, at its option, and
shall at the direction of Required Lenders, terminate this Agreement at any time
on or after an Event of Default. Upon the Renewal Date or any other effective
date of termination of the Financing Agreements, Borrowers shall pay to Agent
all outstanding and unpaid Obligations and shall furnish cash collateral to
Agent (or at Agent's option, a letter of credit issued for the account of
Borrowers and at Borrowers' expense, in form and substance satisfactory to
Agent, by an issuer acceptable to Agent and payable to Agent as beneficiary) in
such amounts as Agent determines are reasonably necessary to secure Agent,
Lenders and Issuing Bank from loss, cost, damage or expense, including
attorneys' fees and expenses, in connection with any contingent Obligations,
including issued and outstanding Letter of Credit Obligations and checks or
other payments provisionally credited to the Obligations and/or as to which
Agent or any Lender has not yet received final and indefeasible payment (and
including any contingent liability of Agent to any bank at which deposit
accounts of Borrowers and Guarantors are maintained under any Deposit Account
Control Agreement) and for any of the Obligations arising under or in connection
with any Bank Products in such amounts as the party providing such Bank Products
may require (unless such Obligations arising under or in connection with any
Bank Products are paid in full in cash and terminated in a manner satisfactory
to such other party). The amount of such cash collateral (or letter of credit,
as Agent may determine) as to any Letter of Credit Obligations shall be in the
amount equal to one hundred ten (110%) percent of the amount of the Letter of
Credit Obligations plus the amount of any fees and expenses payable in
connection therewith through the end of the latest expiration date of the then
outstanding Letters of Credit. Such payments in respect of the Obligations and
cash collateral shall be remitted by wire transfer in Federal funds to the Agent
Payment Account or such other bank account of Agent, as Agent may, in its
discretion, designate in writing to Administrative Borrower for such purpose.
Interest shall be due until and including the next Business Day, if the amounts
so paid by Borrowers to the Agent Payment Account or other bank account
designated by Agent are received in such bank account later than 12:00 noon, New
York City time.
(b) No termination of the Commitments, this Agreement or any of the
other Financing Agreements shall relieve or discharge any Borrower or Guarantor
of its respective duties, obligations and covenants under this Agreement or any
of the other Financing Agreements until all Obligations have been fully and
finally discharged and paid, and Agent's continuing security interest in the
Collateral and the rights and remedies of Agent and Lenders hereunder, under the
other Financing Agreements and applicable law, shall remain in effect until all
such Obligations have been fully and finally discharged and paid. Accordingly,
each Borrower and Guarantor waives any rights it may have under the UCC to
demand the filing of termination statements with respect to the Collateral and
Agent shall not be required to send such termination statements to Borrowers or
Guarantors, or to file them with any filing office, unless and until this
Agreement shall have been terminated in accordance with its terms and all
Obligations paid and satisfied in full in immediately available funds.
13.2 Interpretative Provisions.
(a) All terms used herein which are defined in Article 1, Article 8
or Article 9 of the UCC shall have the meanings given therein unless otherwise
defined in this Agreement.
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(b) All references to the plural herein shall also mean the singular
and to the singular shall also mean the plural unless the context otherwise
requires.
(c) All references to any Borrower, Guarantor, Agent and Lenders
pursuant to the definitions set forth in the recitals hereto, or to any other
person herein, shall include their respective successors and assigns.
(d) The words "hereof", "herein", "hereunder", "this Agreement" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not any particular provision of this Agreement and as
this Agreement now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
(e) The word "including" when used in this Agreement shall mean
"including, without limitation" and the word "will" when used in this Agreement
shall be construed to have the same meaning and effect as the word "shall".
(f) An Event of Default shall exist or continue or be continuing
until such Event of Default is waived in accordance with Section 11.3 or is
cured in a manner satisfactory to Agent, if such Event of Default is capable of
being cured as determined by Agent.
(g) All references to the term "good faith" used herein when
applicable to Agent or any Lender shall mean, notwithstanding anything to the
contrary contained herein or in the UCC, honesty in fact in the conduct or
transaction concerned. Borrowers and Guarantors shall have the burden of proving
any lack of good faith on the part of Agent or any Lender alleged by any
Borrower or Guarantor at any time.
(h) Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations hereunder shall be computed
unless otherwise specifically provided herein, in accordance with GAAP as
consistently applied and using the same method for inventory valuation as used
in the preparation of the financial statements of Parent most recently received
by Agent prior to the date hereof. Notwithstanding anything to the contrary
contained in GAAP or any interpretations or other pronouncements by the
Financial Accounting Standards Board or otherwise, the term "unqualified
opinion" as used herein to refer to opinions or reports provided by accountants
shall mean an opinion or report that is unqualified and also does not include
any explanation, supplemental comment or other comment concerning the ability of
the applicable person to continue as a going concern or the scope of the audit.
(i) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including", the words "to"
and "until" each mean "to but excluding" and the word "through" means "to and
including".
(j) Unless otherwise expressly provided herein, (i) references
herein to any agreement, document or instrument shall be deemed to include all
subsequent amendments, modifications, supplements, extensions, renewals,
restatements or replacements with respect thereto, but only to the extent the
same are not prohibited by the terms hereof or of any other Financing Agreement,
and (ii) references to any statute or regulation are to be construed as
117
including all statutory and regulatory provisions consolidating, amending,
replacing, recodifying, supplementing or interpreting the statute or regulation.
(k) The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.
(l) This Agreement and other Financing Agreements may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(m) This Agreement and the other Financing Agreements are the result
of negotiations among and have been reviewed by counsel to Agent and the other
parties, and are the products of all parties. Accordingly, this Agreement and
the other Financing Agreements shall not be construed against Agent or Lenders
merely because of Agent's or any Lender's involvement in their preparation.
13.3 Notices.
(a) All notices, requests and demands hereunder shall be in writing
and deemed to have been given or made: if delivered in person, immediately upon
delivery; if by telex, telegram or facsimile transmission, immediately upon
sending and upon confirmation of receipt; if by nationally recognized overnight
courier service with instructions to deliver the next Business Day, one (1)
Business Day after sending; and if by certified mail, return receipt requested,
five (5) days after mailing. Notices delivered through electronic communications
shall be effective to the extent set forth in Section 13.3(b) below. All
notices, requests and demands upon the parties are to be given to the following
addresses (or to such other address as any party may designate by notice in
accordance with this Section):
If to any Borrower or Guarantor: C&D Technologies, Inc.
0000 Xxxxx Xxxxxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy to: Xxxxx Xxxxxx LLP
00 Xxxxx 00xx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx Xxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
If to Agent or Issuing Bank: Wachovia Bank, National Association
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Portfolio Manager
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
118
(b) Notices and other communications to Lenders and Issuing Bank
hereunder may be delivered or furnished by electronic communication (including
e-mail and Internet or intranet websites) pursuant to procedures approved by
Agent or as otherwise determined by Agent, provided, that, the foregoing shall
not apply to notices to any Lender or Issuing Bank pursuant to Section 2 hereof
if such Lender or Issuing Bank, as applicable, has notified Agent that it is
incapable of receiving notices under such Section by electronic communication.
Unless Agent otherwise requires, (i) notices and other communications sent to an
e-mail address shall be deemed received upon the sender's receipt of an
acknowledgement from the intended recipient (such as by the "return receipt
requested" function, as available, return e-mail or other written
acknowledgement), provided, that, if such notice or other communication is not
given during the normal business hours of the recipient, such notice shall be
deemed to have been sent at the opening of business on the next Business Day for
the recipient, and (ii) notices or communications posted to an Internet or
intranet website shall be deemed received upon the deemed receipt by the
intended recipient at its e-mail address as described in the foregoing clause
(i) of notification that such notice or communications is available and
identifying the website address therefor.
13.4 Partial Invalidity. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
13.5 Confidentiality.
(a) Agent, each Lender and Issuing Bank shall use all reasonable
efforts to keep confidential, in accordance with its customary procedures for
handling confidential information and safe and sound lending practices, any
non-public written information supplied to it by any Borrower pursuant to this
Agreement; provided, that, nothing contained herein shall limit the disclosure
of any such information: (i) to the extent required by statute, rule,
regulation, subpoena or court order, (ii) to bank examiners and other
regulators, auditors and/or accountants, in connection with any litigation to
which Agent, such Lender or Issuing Bank is a party, (iii) to any Lender or
Participant (or prospective Lender or Participant) or Issuing Bank or to any
Affiliate of any Lender so long as such Lender, Participant (or prospective
Lender or Participant), Issuing Bank or Affiliate shall have been instructed to
treat such information as confidential in accordance with this Section 13.5, or
(iv) to counsel for Agent, any Lender, Participant (or prospective Lender or
Participant) or Issuing Bank.
(b) In the event that Agent, any Lender or Issuing Bank receives a
request or demand to disclose any confidential information pursuant to any
subpoena or court order, Agent or such Lender or Issuing Bank, as the case may
be, agrees (i) to the extent permitted by applicable law or if permitted by
applicable law, to the extent Agent or such Lender or Issuing Bank determines in
good faith that it will not create any risk of liability to Agent or such Lender
or Issuing Bank, Agent or such Lender or Issuing Bank will promptly notify
Administrative Borrower of such request so that Administrative Borrower may seek
a protective order or other appropriate relief or remedy and (ii) if disclosure
of such information is required, disclose such information and,
119
subject to reimbursement by Borrowers of Agent's or such Lender's or Issuing
Bank's expenses, cooperate with Administrative Borrower in the reasonable
efforts to obtain an order or other reliable assurance that confidential
treatment will be accorded to such portion of the disclosed information which
Administrative Borrower so designates, to the extent permitted by applicable law
or if permitted by applicable law, to the extent Agent or such Lender or Issuing
Bank determines in good faith that it will not create any risk of liability to
Agent or such Lender or Issuing Bank.
(c) In no event shall this Section 13.5 or any other provision of
this Agreement, any of the other Financing Agreements or applicable law be
deemed: (i) to apply to or restrict disclosure of information that has been or
is made public by any Borrower, Guarantor or any third party or otherwise
becomes generally available to the public other than as a result of a disclosure
in violation hereof, (ii) to apply to or restrict disclosure of information that
was or becomes available to Agent, any Lender (or any Affiliate of any Lender)
or Issuing Bank on a non-confidential basis from a person other than a Borrower
or Guarantor, (iii) to require Agent, any Lender or Issuing Bank to return any
materials furnished by a Borrower or Guarantor to Agent, a Lender or Issuing
Bank or prevent Agent, a Lender or Issuing Bank from responding to routine
informational requests in accordance with the Code of Ethics for the Exchange of
Credit Information promulgated by The Xxxxxx Xxxxxx Associates or other
applicable industry standards relating to the exchange of credit information.
The obligations of Agent, Lenders and Issuing Bank under this Section 13.5 shall
supersede and replace the obligations of Agent, Lenders and Issuing Bank under
any confidentiality letter signed prior to the date hereof or any other
arrangements concerning the confidentiality of information provided by any
Borrower or Guarantor to Agent or any Lender. In addition, Agent and Lenders may
disclose information relating to the Credit Facility to Gold Sheets and other
similar bank trade publications, with such information to consist of deal terms
and other information customarily found in such publications.
13.6 Successors. This Agreement and the other Financing Agreements and any
other document referred to herein or therein shall be binding upon and inure to
the benefit of and be enforceable by Agent, Secured Parties, Borrowers,
Guarantors and their respective successors and assigns, except that Borrower may
not assign its rights under this Agreement, the other Financing Agreements and
any other document referred to herein or therein without the prior written
consent of Agent and Lenders. Any such purported assignment without such express
prior written consent shall be void. No Secured Party may assign its rights and
obligations under this Agreement without the prior written consent of Agent,
except as provided in Section 13.7 below. The terms and provisions of this
Agreement and the other Financing Agreements are for the purpose of defining the
relative rights and obligations of Borrowers, Guarantors, Agent and Secured
Parties with respect to the transactions contemplated hereby and there shall be
no third party beneficiaries of any of the terms and provisions of this
Agreement or any of the other Financing Agreements.
13.7 Assignments; Participations.
(a) Each Lender may, with the prior written consent of Agent, assign
all or, if less than all, a portion equal to at least $5,000,000 in the
aggregate for the assigning Lender, of such rights and obligations under this
Agreement to one or more Eligible Transferees (but not including for this
purpose any assignments in the form of a participation), each of which
120
assignees shall become a party to this Agreement as a Lender by execution of an
Assignment and Acceptance; provided, that, (i) such transfer or assignment will
not be effective until recorded by Agent on the Register and (ii) Agent shall
have received for its sole account payment of a processing fee from the
assigning Lender or the assignee in the amount of $5,000.
(b) Agent shall maintain a register of the names and addresses of
Lenders, their Commitments and the principal amount of their Loans (the
"Register"). Agent shall also maintain a copy of each Assignment and Acceptance
delivered to and accepted by it and shall modify the Register to give effect to
each Assignment and Acceptance. The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and any Borrowers,
Guarantors, Agent and Lenders may treat each Person whose name is recorded in
the Register as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by Administrative Borrower and any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
(c) Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in each Assignment and Acceptance, the
assignee thereunder shall be a party hereto and to the other Financing
Agreements and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations (including, without limitation, the obligation to participate in
Letter of Credit Obligations) of a Lender hereunder and thereunder and the
assigning Lender shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under this Agreement.
(d) By execution and delivery of an Assignment and Acceptance, the
assignor and assignee thereunder confirm to and agree with each other and the
other parties hereto as follows: (i) other than as provided in such Assignment
and Acceptance, the assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any of the other
Financing Agreements or the execution, legality, enforceability, genuineness,
sufficiency or value of this Agreement or any of the other Financing Agreements
furnished pursuant hereto, (ii) the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of any Borrower, Guarantor or any of their Subsidiaries or the performance or
observance by any Borrower or Guarantor of any of the Obligations; (iii) such
assignee confirms that it has received a copy of this Agreement and the other
Financing Agreements, together with such other documents and information it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance, (iv) such assignee will, independently and
without reliance upon the assigning Lender, Agent and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement and the
other Financing Agreements, (v) such assignee appoints and authorizes Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement and the other Financing Agreements as are delegated to Agent by the
terms hereof and thereof, together with such powers as are reasonably incidental
thereto, and (vi) such assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this Agreement and the
other Financing Agreements are required to be performed by it as a Lender. Agent
and Lenders
121
may furnish any information concerning any Borrower or Guarantor in the
possession of Agent or any Lender from time to time to assignees and
Participants.
(e) Each Lender may sell participations to one or more banks or
other entities in or to all or a portion of its rights and obligations under
this Agreement and the other Financing Agreements (including, without
limitation, all or a portion of its Commitments and the Loans owing to it and
its participation in the Letter of Credit Obligations, without the consent of
Agent or the other Lenders); provided, that, (i) such Lender's obligations under
this Agreement (including, without limitation, its Commitment hereunder) and the
other Financing Agreements shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, and Borrowers, Guarantors, the other Lenders and Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and the other Financing
Agreements, and (iii) the Participant shall not have any rights under this
Agreement or any of the other Financing Agreements (the Participant's rights
against such Lender in respect of such participation to be those set forth in
the agreement executed by such Lender in favor of the Participant relating
thereto) and all amounts payable by any Borrower or Guarantor hereunder shall be
determined as if such Lender had not sold such participation.
(f) Nothing in this Agreement shall prevent or prohibit any Lender
from pledging its Loans hereunder to a Federal Reserve Bank in support of
borrowings made by such Lenders from such Federal Reserve Bank; provided, that,
no such pledge shall release such Lender from any of its obligations hereunder
or substitute any such pledgee for such Lender as a party hereto.
(g) Borrowers and Guarantors shall assist Agent or any Lender
permitted to sell assignments or participations under this Section 13.7 in
whatever manner reasonably necessary in order to enable or effect any such
assignment or participation, including (but not limited to) the execution and
delivery of any and all agreements, notes and other documents and instruments as
shall be requested and the delivery of informational materials, appraisals or
other documents for, and the participation of relevant management in meetings
and conference calls with, potential Lenders or Participants. Borrowers shall
certify the correctness, completeness and accuracy, in all material respects, of
all descriptions of Borrowers and Guarantors and their affairs provided,
prepared or reviewed by any Borrower or Guarantor that are contained in any
selling materials and all other information provided by it and included in such
materials.
(h) Any Lender that is an Issuing Bank may at any time assign all of
its Commitments pursuant to this Section 13.7. If such Issuing Bank ceases to be
Lender, it may, at its option, resign as Issuing Bank and such Issuing Bank's
obligations to issue Letters of Credit shall terminate but it shall retain all
of the rights and obligations of Issuing Bank hereunder with respect to Letters
of Credit outstanding as of the effective date of its resignation and all Letter
of Credit Obligations with respect thereto (including the right to require
Lenders to make Loans or fund risk participations in outstanding Letter of
Credit Obligations), shall continue.
13.8 Entire Agreement. This Agreement, the other Financing Agreements, any
supplements hereto or thereto, and any instruments or documents delivered or to
be delivered in connection herewith or therewith represents the entire agreement
and understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties,
122
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written. In the event of any inconsistency between the
terms of this Agreement and any schedule or exhibit hereto, the terms of this
Agreement shall govern.
13.9 USA Patriot Act. Each Lender subject to the USA PATRIOT Act (Title
III of Pub. L. 107-56 (signed into law October 26, 2001) (the "Act") hereby
notifies Borrowers and Guarantors that pursuant to the requirements of the Act,
it is required to obtain, verify and record information that identifies each
person or corporation who opens an account and/or enters into a business
relationship with it, which information includes the name and address of
Borrowers and Guarantors and other information that will allow such Lender to
identify such person in accordance with the Act and any other applicable law.
Borrowers and Guarantors are hereby advised that any Loans or Letters of Credit
hereunder are subject to satisfactory results of such verification.
13.10 Counterparts, Etc. This Agreement and the other Financing Agreements
may be executed in any number of counterparts, each of which shall be an
original, but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of this Agreement or any of the
other Financing Agreements by telefacsimile or other electronic method of
transmission shall have the same force and effect as the delivery of an original
executed counterpart of this Agreement or any of such other Financing
Agreements. Any party delivering an executed counterpart of any such agreement
by telefacsimile or other electronic method of transmission shall also deliver
an original executed counterpart, but the failure to do so shall not affect the
validity, enforceability or binding effect of such agreement.
123
IN WITNESS WHEREOF, Agent, Lenders, Borrowers and Guarantors have caused
these presents to be duly executed as of the day and year first above written.
AGENT BORROWERS
WACHOVIA BANK, NATIONAL ASSOCIATION, C&D TECHNOLOGIES, INC.
as Agent and Issuing Bank
By:/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------------------- ---------------------------------
Title: Vice President Title: Vice President, Treasurer
--------------------------------- -----------------------------
LENDERS C&D TECHNOLOGIES (DATEL), INC.
WACHOVIA BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
By:/s/ Xxxxxx X. Xxxxxxxx
------------------------------------ Title: Vice President, Treasurer
-------------------------------
Title: Vice President
--------------------------------
Commitment: $35,000,000
LASALLE BANK C&D TECHNOLOGIES (CPS) LLC
NATIONAL ASSOCIATION
By:/s/ Xxxxx Xxxxxxxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------------------- --------------------------------
Title: Vice President Title: Treasurer
--------------------------------- -----------------------------
Commitment: $20,000,000
LENDERS GUARANTORS
CITIZENS BANK C&D CHARTER HOLDINGS, INC.
OF PENNSYLVANIA
By: /s/ Xxxxxx Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------------------- ---------------------------------
Title: Senior Vice President Title: Vice President
--------------------------------- -----------------------------
Commitment: $20,000,000
C&D DYNAMO CORP.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Title: Vice President, Treasurer
-----------------------------
DYNAMO ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Title: Treasurer
-----------------------------
C&D INTERNATIONAL INVESTMENT
HOLDINGS INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Title: Vice President, Treasurer
-----------------------------
DATEL HOLDING CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Title: Treasurer
-----------------------------
EXHIBIT A
to
LOAN AND SECURITY AGREEMENT
ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and
Acceptance") dated as of _____________, 200_ is made between
________________________ (the "Assignor") and ____________________ (the
"Assignee").
W I T N E S S E T H:
WHEREAS, Wachovia Bank, National Association, in its capacity as agent
pursuant to the Loan Agreement (as hereinafter defined) acting for and on behalf
of the financial institutions which are parties thereto as lenders (in such
capacity, "Agent"), and the financial institutions which are parties to the Loan
Agreement as lenders (individually, each a "Lender" and collectively, "Lenders")
have entered or are about to enter into financing arrangements pursuant to which
Agent and Lenders may make loans and advances and provide other financial
accommodations to C&D Technologies, Inc., a Delaware corporation, C&D
Technologies (Datel), Inc., a Delaware corporation ("Datel") and C&D
Technologies (CPS) LLC, a Delaware limited liability company (collectively,
"Borrowers") as set forth in the Loan and Security Agreement, dated December 7,
2005, by and among Borrowers, certain of their affiliates, Agent and Lenders (as
the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced, the "Loan Agreement"), and the other
agreements, documents and instruments referred to therein or at any time
executed and/or delivered in connection therewith or related thereto (all of the
foregoing, together with the Loan Agreement, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, being collectively referred to herein as the "Financing Agreements");
WHEREAS, as provided under the Loan Agreement, Assignor committed to
making Loans (the "Committed Loans") to Borrowers in an aggregate amount not to
exceed $___________ (the "Commitment");
WHEREAS, Assignor wishes to assign to Assignee [part of the] [all] rights
and obligations of Assignor under the Loan Agreement in respect of its
Commitment in an amount equal to $______________ (the "Assigned Commitment
Amount") on the terms and subject to the conditions set forth herein and
Assignee wishes to accept assignment of such rights and to assume such
obligations from Assignor on such terms and subject to such conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
A-1
1. Assignment and Acceptance.
(a) Subject to the terms and conditions of this Assignment and
Acceptance, Assignor hereby sells, transfers and assigns to Assignee, and
Assignee hereby purchases, assumes and undertakes from Assignor, without
recourse and without representation or warranty (except as provided in this
Assignment and Acceptance) an interest in (i) the Commitment and each of the
Committed Loans of Assignor and (ii) all related rights, benefits, obligations,
liabilities and indemnities of the Assignor under and in connection with the
Loan Agreement and the other Financing Agreements, so that after giving effect
thereto, the Commitment of Assignee shall be as set forth below and the Pro Rata
Share of Assignee shall be _______ (__%) percent.
(b) With effect on and after the Effective Date (as defined in
Section 5 hereof), Assignee shall be a party to the Loan Agreement and succeed
to all of the rights and be obligated to perform all of the obligations of a
Lender under the Loan Agreement, including the requirements concerning
confidentiality and the payment of indemnification, with a Commitment in an
amount equal to the Assigned Commitment Amount. Assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of the Loan Agreement are required to be performed by it as a Lender. It is the
intent of the parties hereto that the Commitment of Assignor shall, as of the
Effective Date, be reduced by an amount equal to the Assigned Commitment Amount
and Assignor shall relinquish its rights and be released from its obligations
under the Loan Agreement to the extent such obligations have been assumed by
Assignee; provided, that, Assignor shall not relinquish its rights under
Sections 2.2, 6.4, 6.9, 11.5 and 12.5 of the Loan Agreement to the extent such
rights relate to the time prior to the Effective Date.
(c) After giving effect to the assignment and assumption set forth
herein, on the Effective Date Assignee's Commitment will be $_____________.
(d) After giving effect to the assignment and assumption set forth
herein, on the Effective Date Assignor's Commitment will be $______________ (as
such amount may be further reduced by any other assignments by Assignor on or
after the date hereof).
2. Payments.
(a) As consideration for the sale, assignment and transfer
contemplated in Section 1 hereof, Assignee shall pay to Assignor on the
Effective Date in immediately available funds an amount equal to $____________,
representing Assignee's Pro Rata Share of the principal amount of all Committed
Loans.
(b) Assignee shall pay to Agent the processing fee in the amount
specified in Section 13.7(a) of the Loan Agreement.
3. Reallocation of Payments. Any interest, fees and other payments accrued
to the Effective Date with respect to the Commitment, Committed Loans and
outstanding Letters of Credit shall be for the account of Assignor. Any
interest, fees and other payments accrued on and after the Effective Date with
respect to the Assigned Commitment Amount shall be for the account of Assignee.
Each of Assignor and Assignee agrees that it will hold in trust for the other
party any interest, fees and other amounts which it may receive to which the
other party is
A-2
entitled pursuant to the preceding sentence and pay to the other party any such
amounts which it may receive promptly upon receipt.
4. Independent Credit Decision. Assignee acknowledges that it has received
a copy of the Loan Agreement and the Schedules and Exhibits thereto, together
with copies of the most recent financial statements of _____________ and its
Subsidiaries, and such other documents and information as it has deemed
appropriate to make its own credit and legal analysis and decision to enter into
this Assignment and Acceptance and agrees that it will, independently and
without reliance upon Assignor, Agent or any Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit and legal decisions in taking or not taking action under the Loan
Agreement.
5. Effective Date; Notices.
(c) As between Assignor and Assignee, the effective date for this
Assignment and Acceptance shall be _______________, 200_ (the "Effective Date");
provided, that, the following conditions precedent have been satisfied on or
before the Effective Date:
(i) this Assignment and Acceptance shall be executed and
delivered by Assignor and Assignee;
(ii) the consent of Agent as required for an effective
assignment of the Assigned Commitment Amount by Assignor to Assignee shall have
been duly obtained and shall be in full force and effect as of the Effective
Date;
(iii) written notice of such assignment, together with payment
instructions, addresses and related information with respect to Assignee, shall
have been given to Administrative Borrower and Agent;
(iv) Assignee shall pay to Assignor all amounts due to
Assignor under this Assignment and Acceptance; and
(v) the processing fee referred to in Section 2(b) hereof
shall have been paid to Agent.
(d) Promptly following the execution of this Assignment and
Acceptance, Assignor shall deliver to Administrative Borrower and Agent for
acknowledgment by Agent, a Notice of Assignment in the form attached hereto as
Schedule 1.
6. Agent. [INCLUDE ONLY IF ASSIGNOR IS AN AGENT]
(e) Assignee hereby appoints and authorizes Assignor in its capacity
as Agent to take such action as agent on its behalf to exercise such powers
under the Loan Agreement as are delegated to Agent by Lenders pursuant to the
terms of the Loan Agreement.
(f) Assignee shall assume no duties or obligations held by Assignor
in its capacity as Agent under the Loan Agreement.]
A-3
7. Withholding Tax. Assignee (a) represents and warrants to Assignor,
Agent and Borrowers that under applicable law and treaties no tax will be
required to be withheld by Assignee, Agent or Borrowers with respect to any
payments to be made to Assignee hereunder or under any of the Financing
Agreements, (b) agrees to furnish (if it is organized under the laws of any
jurisdiction other than the United States or any State thereof) to Agent and
Borrowers prior to the time that Agent or Borrowers are required to make any
payment of principal, interest or fees hereunder, duplicate executed originals
of either U.S. Internal Revenue Service Form W-8BEN or W-8ECI, as applicable
(wherein Assignee claims entitlement to the benefits of a tax treaty that
provides for a complete exemption from U.S. federal income withholding tax on
all payments hereunder) and agrees to provide new such forms upon the expiration
of any previously delivered form or comparable statements in accordance with
applicable U.S. law and regulations and amendments thereto, duly executed and
completed by Assignee, and (c) agrees to comply with all applicable U.S. laws
and regulations with regard to such withholding tax exemption.
8. Representations and Warranties.
(g) Assignor represents and warrants that (i) it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any security interest, lien, encumbrance or other
adverse claim, (ii) it is duly organized and existing and it has the full power
and authority to take, and has taken, all action necessary to execute and
deliver this Assignment and Acceptance and any other documents required or
permitted to be executed or delivered by it in connection with this Assignment
and Acceptance and to fulfill its obligations hereunder, (iii) no notices to, or
consents, authorizations or approvals of, any Person are required (other than
any already given or obtained) for its due execution, delivery and performance
of this Assignment and Acceptance, and apart from any agreements or undertakings
or filings required by the Loan Agreement, no further action by, or notice to,
or filing with, any Person is required of it for such execution, delivery or
performance, and (iv) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of
Assignor, enforceable against Assignor in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles.
(h) Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Loan Agreement or any of the other Financing
Agreements or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Agreement or any other instrument or document
furnished pursuant thereto. Assignor makes no representation or warranty in
connection with, and assumes no responsibility with respect to, the solvency,
financial condition or statements of Borrowers, Guarantors or any of their
respective Affiliates, or the performance or observance by Borrowers, Guarantors
or any other Person, of any of its respective obligations under the Loan
Agreement or any other instrument or document furnished in connection therewith.
(i) Assignee represents and warrants that (i) it is duly organized
and existing and it has full power and authority to take, and has taken, all
action necessary to execute and
A-4
deliver this Assignment and Acceptance and any other documents required or
permitted to be executed or delivered by it in connection with this Assignment
and Acceptance, and to fulfill its obligations hereunder, (ii) no notices to, or
consents, authorizations or approvals of, any Person are required (other than
any already given or obtained) for its due execution, delivery and performance
of this Assignment and Acceptance, and apart from any agreements or undertakings
or filings required by the Loan Agreement, no further action by, or notice to,
or filing with, any Person is required of it for such execution, delivery or
performance; and (iii) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of
Assignee, enforceable against Assignee in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights to general equitable principles.
9. Further Assurances. Assignor and Assignee each hereby agree to execute
and deliver such other instruments, and take such other action, as either party
may reasonably request in connection with the transactions contemplated by this
Assignment and Acceptance, including the delivery of any notices or other
documents or instruments to Borrowers or Agent, which may be required in
connection with the assignment and assumption contemplated hereby.
10. Miscellaneous.
(j) Any amendment or waiver of any provision of this Assignment and
Acceptance shall be in writing and signed by the parties hereto. No failure or
delay by either party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof and any waiver of any breach of the
provisions of this Assignment and Acceptance shall be without prejudice to any
rights with respect to any other for further breach thereof.
(k) All payments made hereunder shall be made without any set-off or
counterclaim.
(l) Assignor and Assignee shall each pay its own costs and expenses
incurred in connection with the negotiation, preparation, execution and
performance of this Assignment and Acceptance.
(m) This Assignment and Acceptance may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
(n) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Assignor and
Assignee each irrevocably submits to the non-exclusive jurisdiction of any State
or Federal court sitting in New York County, New York over any suit, action or
proceeding arising out of or relating to this Assignment and Acceptance and
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such New York State or Federal court. Each party to
this Assignment and Acceptance hereby irrevocably waives, to the fullest extent
it may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding.
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(o) ASSIGNOR AND ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH
THIS ASSIGNMENT AND ACCEPTANCE, THE LOAN AGREEMENT, ANY OF THE OTHER FINANCING
AGREEMENTS OR ANY RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, OR STATEMENTS (WHETHER ORAL OR WRITTEN).
IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment and
Acceptance to be executed and delivered by their duly authorized officers as of
the date first above written.
[ASSIGNOR]
By:____________________________
Title:_________________________
[ASSIGNEE]
By:____________________________
Title:_________________________
A-6
SCHEDULE 1
NOTICE OF ASSIGNMENT AND ACCEPTANCE
___, 20__
____________________________
____________________________
____________________________
Attn.:____________________
Re:_______________________
Ladies and Gentlemen:
Wachovia Bank, National Association, in its capacity as agent pursuant to
the Loan Agreement (as hereinafter defined) acting for and on behalf of the
financial institutions which are parties thereto as lenders (in such capacity,
"Agent"), and the financial institutions which are parties to the Loan Agreement
as lenders (individually, each a "Lender" and collectively, "Lenders") have
entered or are about to enter into financing arrangements pursuant to which
Agent and Lenders may make loans and advances and provide other financial
accommodations to C&D Technologies, Inc., a Delaware corporation, C&D
Technologies (Datel), Inc., a Delaware corporation ("Datel") and C&D
Technologies (CPS) LLC, a Delaware limited liability company (collectively,
"Borrowers") as set forth in the Loan and Security Agreement, dated December
___, 2005, by and among Borrowers, certain of their affiliates, Agent and
Lenders (as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, the "Loan Agreement"),
and the other agreements, documents and instruments referred to therein or at
any time executed and/or delivered in connection therewith or related thereto
(all of the foregoing, together with the Loan Agreement, as the same now exist
or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced, being collectively referred to herein as the "Financing
Agreements"). Capitalized terms not otherwise defined herein shall have the
respective meanings ascribed thereto in the Loan Agreement.
1. We hereby give you notice of, and request your consent to, the
assignment by __________________________ (the "Assignor") to
___________________________ (the "Assignee") such that after giving effect to
the assignment Assignee shall have an interest equal to ________ (__%) percent
of the total Commitments pursuant to the Assignment and Acceptance Agreement
attached hereto (the "Assignment and Acceptance"). We understand that the
Assignor's Commitment shall be reduced by $_____________, as the same may be
further reduced by other assignments on or after the date hereof.
A-7
2. Assignee agrees that, upon receiving the consent of Agent to such
assignment, Assignee will be bound by the terms of the Loan Agreement as fully
and to the same extent as if the Assignee were the Lender originally holding
such interest under the Loan Agreement.
3. The following administrative details apply to Assignee:
(A) Notice address:
Assignee name: _________________________
Address: _________________________
Attention: _________________________
Telephone: _________________________
Telecopier: _________________________
(B) Payment instructions:
Account No.: _________________________
At: _________________________
Reference: _________________________
Attention: _________________________
4. You are entitled to rely upon the representations, warranties and
covenants of each of Assignor and Assignee contained in the Assignment and
Acceptance.
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IN WITNESS WHEREOF, Assignor and Assignee have caused this Notice of
Assignment and Acceptance to be executed by their respective duly authorized
officials, officers or agents as of the date first above mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
By:____________________________
Title: ________________________
[NAME OF ASSIGNEE]
By:____________________________
Title: ________________________
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
WACHOVIA BANK, NATIONAL ASSOCIATION, as Agent
By:____________________________
Title: ________________________
A-9
EXHIBIT B
TO
LOAN AND SECURITY AGREEMENT
Information Certificate
See Attached.
B-1
EXHIBIT C
TO
LOAN AND SECURITY AGREEMENT
Compliance Certificate
To: Wachovia Bank, National Association, as Agent
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
I hereby certify to you pursuant to Section 9.6 of the Loan Agreement (as
defined below) as follows:
1. I am the duly elected [Chief Financial Officer][Treasurer] of C&D
Technologies, Inc., a Delaware corporation, C&D Technologies (Datel), Inc., a
Delaware corporation ("Datel") and C&D Technologies (CPS) LLC, a Delaware
limited liability company (collectively, "Borrowers"). Capitalized terms used
herein without definition shall have the meanings given to such terms in the
Loan and Security Agreement, dated December 7, 2005, by and among Wachovia Bank,
National Association, as agent for the parties thereto as lenders (in such
capacity, "Agent") and the parties thereto as lenders (collectively, "Lenders"),
Borrowers and certain of their affiliates (as such Loan and Security Agreement
is amended, modified or supplemented, from time to time, the "Loan Agreement").
2. I have reviewed the terms of the Loan Agreement, and have made, or have
caused to be made under my supervision, a review in reasonable detail of the
transactions and the financial condition of Borrowers and Guarantors, during the
immediately preceding fiscal [month/quarter].
3. The review described in Section 2 above did not disclose the existence
during or at the end of such fiscal [month/quarter], and I have no knowledge of
the existence and continuance on the date hereof, of any condition or event
which constitutes a Default or an Event of Default, except as set forth on
Schedule I attached hereto. Described on Schedule I attached hereto are the
exceptions, if any, to this Section 3 listing, in detail, the nature of the
condition or event, the period during which it has existed and the action which
any Borrower or Guarantor has taken, is taking, or proposes to take with respect
to such condition or event.
4. I further certify that, based on the review described in Section 2
above, no Borrower or Guarantor has at any time during or at the end of such
fiscal [month/quarter], except as specifically described on Schedule II attached
hereto or as permitted by the Loan Agreement, done any of the following:
(a) Changed its respective corporate or limited liability company
name, or transacted business under any trade name, style, or fictitious name,
other than those previously described to you and set forth in the Financing
Agreements.
C-1
(b) Changed the location of its chief executive office, changed its
jurisdiction of incorporation or organization, changed its type of organization
or changed the location of or disposed of any of its properties or assets (other
than pursuant to the sale of Inventory in the ordinary course of its business or
as otherwise permitted by Section 9.7 of the Loan Agreement), or established any
new asset locations.
(c) Materially changed the terms upon which it sells goods
(including sales on consignment) or provides services, nor has any vendor or
trade supplier to any Borrower or Guarantor during or at the end of such period
materially adversely changed the terms upon which it supplies goods to any
Borrower or Guarantor.
(d) Permitted or suffered to exist any security interest in or liens
on any of its properties, whether real or personal, other than as specifically
permitted in the Financing Agreements.
(e) Received any notice of, or obtained knowledge of any of the
following not previously disclosed to Agent: (i) the occurrence of any event
involving the release, spill or discharge of any Hazardous Material in violation
of applicable Environmental Law in a material respect or (ii) any investigation,
proceeding, complaint, order, directive, claims, citation or notice with respect
to: (A) any non-compliance with or violation of any applicable Environmental Law
by any Borrower or Guarantor in any material respect or (B) the release, spill
or discharge of any Hazardous Material in violation of applicable Environmental
Law in a material respect or (C) the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Materials in violation of applicable Environmental Laws in a material respect or
(D) any other environmental, health or safety matter, which has a material
adverse effect on any Borrower or Guarantor or its business, operations or
assets or any properties at which such Borrower or Guarantor transported, stored
or disposed of any Hazardous Materials.
(f) Become aware of, obtained knowledge of, or received notification
of, any breach or violation of any material covenant contained in any instrument
or agreement in respect of Indebtedness for money borrowed by any Borrower or
Guarantor.
(g) Except as set forth on Schedule III attached hereto, filed any
application for the registration of a Trademark or Patent with the United States
Patent and Trademark Office or any similar office or agency in the United States
of America, any State thereof, any political subdivision thereof or in any other
country.
5. Attached hereto as Schedule IV are the calculations used in
determining, as of the end of such fiscal [month/quarter] whether Borrowers and
Guarantors are in compliance with the covenants set forth in Section 9.17 of the
Loan Agreement for such fiscal [month/quarter].
C-2
The foregoing certifications are made and delivered this day of
___________, 20__.
Very truly yours,
_____________________________
By:__________________________
Title:_______________________
Schedule 1.41
EBITDA Adjustments
Cash Expense directly related to any announced closure of a
plant or business classified as a discontinued operation for
restructuring charges incurred prior to March 31, 2007 $8,750,000
Severance Costs in fiscal 2006 not to exceed $2.5M: $2,500,000
Inventory write down in PED related to RoHS which
occurred in the quarter ended October 31, 2005 $2,400,000
Schedule 1.57
Existing Lenders
Bank of America, N.A.
LaSalle Bank National Association
Wachovia Bank, National Association
The Bank Of New York
Allfirst Bank
PNC Bank, National Association
Citizens Bank
Comerica Bank
Calyon New York Branch
Sovereign Bank
Schedule 1.58
Existing Letters of Credit
------------------------------------------------------------------------------------------------------------------
L/C No. Beneficiary Undrawn Amount Expiration Date
------- ----------- -------------- ---------------
------------------------------------------------------------------------------------------------------------------
099511 National Union Fire Insurance Company of Pittsburgh, PA $289,009.00 January 28, 2006
------------------------------------------------------------------------------------------------------------------
3036187 The Travelers Indemnity Company $2,100,000.00 March 1, 2007
------------------------------------------------------------------------------------------------------------------
01419 National Union Fire Insurance Company of Pittsburgh, PA $823,000.00 January 28, 2006
------------------------------------------------------------------------------------------------------------------
Schedule 1.139
Term Loan Documents
1. Loan and Security Agreement, dated of even date herewith, by and among Term
Loan Agent, Term Loan Lenders, Borrowers and Guarantors;
2. Fee Letter, dated of even date herewith, by Borrowers and Guarantors in favor
of Term Loan Agent;
3. Trademark Collateral Assignment and Security Agreement, dated of even date
herewith, by and between Parent and Term Loan Agent;
4. Trademark Collateral Assignment and Security Agreement, dated of even date
herewith, by and between Datel and Term Loan Agent;
5. Pledge and Security Agreement, dated of even date herewith, by Parent, Datel,
Datel Holding, Dynamo and International in favor of Term Loan Agent with respect
to the Capital Stock of their respective subsidiaries;
6. Pledge and Security Agreement, dated of even date herewith, by Parent in
favor of Term Loan Agent with respect to the membership interests in CPS;
7. Guarantee, dated of even date herewith, by the Borrowers and Guarantors in
favor of Term Loan Agent;
8. Trademark Collateral Assignment and Security Agreement, dated of even date
herewith, by and between Charter and Term Loan Agent;
9. Patent Collateral Assignment and Security Agreement, dated of even date
herewith, by and between Charter and Term Loan Agent;
10. Collateral Assignment of Note, dated of even date herewith, by International
in favor of Term Loan Agent;
11. Collateral Agency and Intercreditor Agreement, dated of even date herewith,
by and between Agent and Term Loan Agent, as acknowledged and agreed to by
Borrowers and Guarantors;
12. Subordination Agreement, dated of even date herewith, by and between C&D
Technologies (Datel) GmbH and Term Loan Agent, as acknowledged and agreed to by
Datel; and
13. Subordination Agreement, dated as of the date hereof, by and between C&D
Technologies KK and Term Loan Agent, as acknowledged and agreed to by Datel.
