EXHIBIT 4.1
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CREDIT AGREEMENT
Dated as of July 9, 2002
among
XXXXX XXXXXXXXXXX COMPANY
XXXXXX BROS. DRILLING COMPANY
XXXXXXXXXXX XXXXXX CORPORATION
LAYNE WATER DEVELOPMENT AND STORAGE, LLC
LAYNE TEXAS, INCORPORATED
MID-CONTINENT DRILLING COMPANY
SHAWNEE OIL & GAS, L.L.C.
XXXXX-XXXXXXX INCORPORATED
TOLEDO OIL & GAS SERVICES, INC.
VIBRATION TECHNOLOGY, INC.
as Borrowers,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
and
LASALLE BANK NATIONAL ASSOCIATION
as Revolving Credit Agent and Lender
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TABLE OF CONTENTS
PAGE
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1. AMOUNT AND TERMS OF CREDIT____________________________________________________________________________________2
1.1 CREDIT FACILITIES._________________________________________________________________________________________2
1.2 LETTERS OF CREDIT._________________________________________________________________________________________4
1.3 PREPAYMENTS._______________________________________________________________________________________________5
1.4 USE OF PROCEEDS.___________________________________________________________________________________________7
1.5 INTEREST AND APPLICABLE MARGINS.___________________________________________________________________________7
1.6 ELIGIBLE ACCOUNTS.________________________________________________________________________________________10
1.7 ELIGIBLE INVENTORY._______________________________________________________________________________________12
1.8 INTENTIONALLY OMITTED.____________________________________________________________________________________13
1.9 FEES._____________________________________________________________________________________________________13
1.10 RECEIPT OF PAYMENTS.______________________________________________________________________________________14
1.11 APPLICATION AND ALLOCATION OF PAYMENTS.___________________________________________________________________14
1.12 LOAN ACCOUNT AND ACCOUNTING.______________________________________________________________________________15
1.13 INDEMNITY.________________________________________________________________________________________________16
1.14 ACCESS.___________________________________________________________________________________________________17
1.15 TAXES.____________________________________________________________________________________________________17
1.16 CAPITAL ADEQUACY; INCREASED COSTS; ILLEGALITY.____________________________________________________________18
1.17 SINGLE LOAN.______________________________________________________________________________________________20
1.18 JOINDER OF ADDITIONAL BORROWERS.__________________________________________________________________________20
2. CONDITIONS PRECEDENT_________________________________________________________________________________________21
2.1 CONDITIONS TO THE INITIAL LOANS.__________________________________________________________________________21
2.2 FURTHER CONDITIONS TO EACH LOAN.__________________________________________________________________________22
3. REPRESENTATIONS AND WARRANTIES_______________________________________________________________________________23
3.1 CORPORATE EXISTENCE; COMPLIANCE WITH LAW._________________________________________________________________23
3.2 EXECUTIVE OFFICES, COLLATERAL LOCATIONS, FEIN.____________________________________________________________23
3.3 CORPORATE POWER, AUTHORIZATION, ENFORCEABLE OBLIGATIONS.__________________________________________________24
3.4 FINANCIAL STATEMENTS AND PROJECTIONS._____________________________________________________________________24
3.5 MATERIAL ADVERSE EFFECT.__________________________________________________________________________________25
3.6 OWNERSHIP OF PROPERTY; LIENS._____________________________________________________________________________25
3.7 LABOR MATTERS.____________________________________________________________________________________________26
3.8 VENTURES, SUBSIDIARIES AND AFFILIATES; OUTSTANDING STOCK AND INDEBTEDNESS.________________________________26
3.9 GOVERNMENT REGULATION.____________________________________________________________________________________26
3.10 MARGIN REGULATIONS._______________________________________________________________________________________27
3.11 TAXES.____________________________________________________________________________________________________27
3.12 ERISA.____________________________________________________________________________________________________28
3.13 NO LITIGATION.____________________________________________________________________________________________28
3.14 BROKERS.__________________________________________________________________________________________________29
3.15 INTELLECTUAL PROPERTY.____________________________________________________________________________________29
3.16 FULL DISCLOSURE.__________________________________________________________________________________________29
3.17 ENVIRONMENTAL MATTERS.____________________________________________________________________________________29
3.18 INSURANCE.________________________________________________________________________________________________30
3.19 DEPOSIT AND DISBURSEMENT ACCOUNTS.________________________________________________________________________30
3.20 GOVERNMENT CONTRACTS._____________________________________________________________________________________30
3.21 CUSTOMER AND TRADE RELATIONS._____________________________________________________________________________31
3.22 AGREEMENTS AND OTHER DOCUMENTS.___________________________________________________________________________31
3.23 SOLVENCY._________________________________________________________________________________________________31
4. FINANCIAL STATEMENTS AND INFORMATION_________________________________________________________________________31
4.1 REPORTS AND NOTICES.______________________________________________________________________________________31
4.2 COMMUNICATION WITH ACCOUNTANTS.___________________________________________________________________________32
5. AFFIRMATIVE COVENANTS________________________________________________________________________________________32
5.1 MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS._________________________________________________________32
5.2 PAYMENT OF CHARGES._______________________________________________________________________________________32
5.3 BOOKS AND RECORDS.________________________________________________________________________________________33
5.4 INSURANCE; DAMAGE TO OR DESTRUCTION OF COLLATERAL.________________________________________________________33
5.5 COMPLIANCE WITH LAWS._____________________________________________________________________________________34
5.6 SUPPLEMENTAL DISCLOSURE.__________________________________________________________________________________35
5.7 INTELLECTUAL PROPERTY.____________________________________________________________________________________35
5.8 ENVIRONMENTAL MATTERS.____________________________________________________________________________________35
5.9 LANDLORDS' AGREEMENTS, MORTGAGEE AGREEMENTS, BAILEE LETTERS AND REAL ESTATE PURCHASES.____________________36
5.10 INTEREST RATE/CURRENCY FLUCTUATIONS PROTECTION.___________________________________________________________37
5.11 FURTHER ASSURANCES._______________________________________________________________________________________37
5.11 ADDITIONAL PLEDGES._______________________________________________________________________________________37
6. NEGATIVE COVENANTS___________________________________________________________________________________________37
6.1 MERGERS, SUBSIDIARIES, ETC._______________________________________________________________________________37
6.2 INVESTMENTS; LOANS AND ADVANCES.__________________________________________________________________________40
6.3 INDEBTEDNESS._____________________________________________________________________________________________40
6.4 EMPLOYEE LOANS AND AFFILIATE TRANSACTIONS.________________________________________________________________41
6.5 CAPITAL STRUCTURE AND BUSINESS.___________________________________________________________________________42
6.6 GUARANTEED INDEBTEDNESS.__________________________________________________________________________________42
6.7 LIENS.____________________________________________________________________________________________________42
6.8 SALE OF STOCK AND ASSETS._________________________________________________________________________________43
6.9 ERISA.____________________________________________________________________________________________________43
6.10 FINANCIAL COVENANTS.______________________________________________________________________________________43
6.11 HAZARDOUS MATERIALS.______________________________________________________________________________________44
6.12 SALE-LEASEBACKS.__________________________________________________________________________________________44
6.13 CANCELLATION OF INDEBTEDNESS._____________________________________________________________________________44
6.14 RESTRICTED PAYMENTS.______________________________________________________________________________________44
6.15 CHANGE OF CORPORATE NAME OR LOCATION; CHANGE OF FISCAL YEAR; CHANGE OF STATE OF FORMATION OF
INCORPORATION.____________________________________________________________________________________________45
6.16 NO IMPAIRMENT OF INTERCOMPANY TRANSFERS.__________________________________________________________________45
6.17 NO SPECULATIVE TRANSACTIONS.______________________________________________________________________________45
6.18 LEASES; REAL ESTATE PURCHASES.____________________________________________________________________________45
6.19 CHANGES RELATING TO SUBORDINATED DEBT; MATERIAL CONTRACTS.________________________________________________46
6.20 WORLDCOVER, INC.__________________________________________________________________________________________46
7. TERM_________________________________________________________________________________________________________46
7.1 TERMINATION.______________________________________________________________________________________________46
7.2 SURVIVAL OF OBLIGATIONS UPON TERMINATION OF FINANCING ARRANGEMENTS._______________________________________46
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES_______________________________________________________________________47
8.1 EVENTS OF DEFAULT.________________________________________________________________________________________47
8.2 REMEDIES._________________________________________________________________________________________________48
8.3 WAIVERS BY CREDIT PARTIES.________________________________________________________________________________49
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT__________________________________________________________49
9.1 ASSIGNMENT AND PARTICIPATIONS.____________________________________________________________________________49
9.2 APPOINTMENT OF AGENT AND REVOLVING CREDIT AGENT.__________________________________________________________51
9.3 AGENT'S RELIANCE, ETC.____________________________________________________________________________________53
9.4 GE CAPITAL AND AFFILIATES.________________________________________________________________________________54
9.5 LENDER CREDIT DECISION.___________________________________________________________________________________54
9.6 INDEMNIFICATION.__________________________________________________________________________________________54
9.7 SUCCESSOR AGENT.__________________________________________________________________________________________55
9.8 SETOFF AND SHARING OF PAYMENTS.___________________________________________________________________________56
9.9 ADVANCES; PAYMENTS; NON-FUNDING LENDERS; INFORMATION; ACTIONS IN CONCERT._________________________________56
10. SUCCESSORS AND ASSIGNS_______________________________________________________________________________________59
10.1 SUCCESSORS AND ASSIGNS.___________________________________________________________________________________59
11. MISCELLANEOUS________________________________________________________________________________________________59
11.1 COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT.____________________________________________________________59
11.2 AMENDMENTS AND WAIVERS.___________________________________________________________________________________60
11.3 FEES AND EXPENSES.________________________________________________________________________________________62
11.4 NO WAIVER.________________________________________________________________________________________________63
11.5 REMEDIES._________________________________________________________________________________________________63
11.6 SEVERABILITY._____________________________________________________________________________________________64
11.7 CONFLICT OF TERMS.________________________________________________________________________________________64
11.8 CONFIDENTIALITY.__________________________________________________________________________________________64
11.9 GOVERNING LAW.____________________________________________________________________________________________64
11.10 NOTICES.__________________________________________________________________________________________________65
11.11 SECTION TITLES.___________________________________________________________________________________________66
11.12 COUNTERPARTS._____________________________________________________________________________________________66
11.13 WAIVER OF JURY TRIAL._____________________________________________________________________________________66
11.14 PRESS RELEASES AND RELATED MATTERS._______________________________________________________________________66
11.15 REINSTATEMENT.____________________________________________________________________________________________67
11.16 ADVICE OF COUNSEL.________________________________________________________________________________________67
11.17 NO STRICT CONSTRUCTION.___________________________________________________________________________________67
12. CROSS-GUARANTY_______________________________________________________________________________________________67
12.1 CROSS-GUARANTY.___________________________________________________________________________________________67
12.2 WAIVERS BY BORROWER.______________________________________________________________________________________68
12.3 BENEFIT OF GUARANTY.______________________________________________________________________________________71
12.4 SUBORDINATION OF SUBROGATION, ETC.________________________________________________________________________71
12.5 ELECTION OF REMEDIES._____________________________________________________________________________________71
12.6 LIMITATION._______________________________________________________________________________________________72
12.7 CONTRIBUTION WITH RESPECT TO GUARANTY OBLIGATIONS.________________________________________________________72
12.8 LIABILITY CUMULATIVE._____________________________________________________________________________________73
INDEX OF APPENDICES
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Annex A (Recitals) - Definitions
Annex B (Section 1.2) - Letters of Credit
Annex C - Intentionally Omitted
Annex D (Section 2.1(a)) - Closing Checklist
Annex E (Section 4.1(a)) - Financial Statements and Projections -- Reporting
Annex F (Section 4.1(b)) - Collateral Reports
Annex G (Section 6.10) - Financial Covenants
Annex H (Section 9.9(a)) - Lenders' Wire Transfer Information
Annex I (Section 11.10) - Notice Addresses
Annex J (from Annex A -
Commitments definition) Commitments as of Closing Date
Exhibit 1.1(a)(i) Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii) Form of Revolving Note
Exhibit 1.1(b) Form of Term Note
Exhibit 1.1(c)(ii) Intentionally Omitted
Exhibit 1.5(e) Form of Notice of Conversion/Continuation
Exhibit 1.18 Form of Joinder Agreement
Exhibit 4.1(b) Form of Borrowing Base Certificate
Exhibit 9.1(a) Form of Assignment Agreement
Exhibit E Form of Compliance Certificate
Schedule 1.1 - Revolving Credit Agent's Representatives
Disclosure Schedule 1.4 Sources and Uses; Funds Flow Memorandum
Disclosure Schedule 3.1 - Type of Entity; State of Organization
Disclosure Schedule 3.2 Executive Offices, Collateral Locations, FEIN
Disclosure Schedule 3.4(A) Financial Statements
Disclosure Schedule 3.4(C) Projections
Disclosure Schedule 3.6 Real Estate and Leases
Disclosure Schedule 3.7 Labor Matters
Disclosure Schedule 3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock
Disclosure Schedule 3.11 Tax Matters
Disclosure Schedule 3.12 ERISA Plans
Disclosure Schedule 3.13 Litigation
Disclosure Schedule 3.15 Intellectual Property
Disclosure Schedule 3.17 Hazardous Materials
Disclosure Schedule 3.18 Insurance
Disclosure Schedule 3.19 Deposit and Disbursement Accounts
Disclosure Schedule 3.20 Government Contracts
Disclosure Schedule 3.22 Material Agreements
Disclosure Schedule 5.1 Trade Names
Disclosure Schedule 6.3 Indebtedness
Disclosure Schedule 6.4(a) Transactions with Affiliates
Disclosure Schedule 6.7 Existing Liens
This CREDIT AGREEMENT (this "AGREEMENT"), dated as of July 9, 2002
among XXXXX XXXXXXXXXXX COMPANY, a Delaware corporation ("LAYNE"), XXXXXX BROS.
DRILLING COMPANY, a Utah corporation, XXXXXXXXXXX XXXXXX CORPORATION, a Delaware
corporation, LAYNE WATER DEVELOPMENT AND STORAGE, LLC, a Delaware limited
liability company, ("LWDS") LAYNE TEXAS, INCORPORATED, a Delaware corporation,
MID-CONTINENT DRILLING COMPANY, a Delaware corporation, SHAWNEE OIL & GAS,
L.L.C., a Delaware limited liability company, XXXXX-XXXXXXX INCORPORATED, a
Louisiana corporation, TOLEDO OIL & GAS SERVICES, INC., a Louisiana corporation,
and VIBRATION TECHNOLOGY, INC., a Delaware corporation, (collectively, including
Layne and LWDS, the "BORROWERS" or individually a "BORROWER"); the other Credit
Parties signatory hereto; GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware
corporation (in its individual capacity, "GE CAPITAL"), for itself, as Lender,
and as Agent for Lenders, and the other Lenders signatory hereto from time to
time; and LASALLE BANK NATIONAL ASSOCIATION ("LASALLE"), for itself, as Lender,
and as Revolving Credit Agent for the Revolving Lenders.
RECITALS
WHEREAS, Borrowers have requested that Lenders extend a
revolving credit facility to Borrowers of up to Thirty Five Million Dollars
($35,000,000) in the aggregate and a term credit facility to Borrowers of up to
Thirty Five Million Dollars ($35,000,000) for the purpose of refinancing certain
indebtedness of Borrowers and to provide (a) working capital financing for
Borrowers, (b) funds for other general corporate purposes of Borrowers
(including Capital Expenditures) and (c) funds for other purposes permitted
hereunder; and for these purposes, Lenders are willing to make certain loans and
other extensions of credit to Borrowers of up to such amount upon the terms and
conditions set forth herein; and
WHEREAS, Borrowers have agreed to secure all of their
obligations under the Loan Documents by granting to Agent, for the benefit of
Agent and Lenders, a security interest in and lien upon substantially all of
their existing and after-acquired personal and real property; and
WHEREAS, capitalized terms used in this Agreement shall have
the meanings ascribed to them in ANNEX A and, for purposes of this Agreement and
the other Loan Documents, the rules of construction set forth in ANNEX A shall
govern. All Annexes, Disclosure Schedules, Exhibits and other attachments
(collectively, "APPENDICES") hereto, or expressly identified to this Agreement,
are incorporated herein by reference, and taken together with this Agreement,
shall constitute but a single agreement. These Recitals shall be construed as
part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, and for other good and valuable
consideration, the parties hereto agree as follows:
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1. AMOUNT AND TERMS OF CREDIT
1.1 CREDIT FACILITIES.
(a) REVOLVING CREDIT FACILITY.
(i) Subject to the terms and conditions hereof, each Revolving
Lender agrees to make available to Borrowers from time to time until the
Commitment Termination Date its Pro Rata Share of advances (each, a "REVOLVING
CREDIT ADVANCE"). The Pro Rata Share of the Revolving Loan of any Revolving
Lender shall not at any time exceed its separate Revolving Loan Commitment. The
obligations of each Revolving Lender hereunder shall be several and not joint.
Until the Commitment Termination Date, Borrowers may borrow, repay and reborrow
under this SECTION 1.1(a); provided that the aggregate amount of Revolving
Credit Advances outstanding shall not exceed at any time the lesser of (A) the
Maximum Amount and (B) the Borrowing Base, in each case less the sum of the
Letter of Credit Obligations outstanding at such time ("BORROWING
AVAILABILITY"). Borrowing Availability may be reduced by Reserves imposed by
Agent and Revolving Credit Agent in their reasonable credit judgment. Each
Revolving Credit Advance shall be made on notice by Borrower Representative to
the representative of Revolving Credit Agent identified in SCHEDULE 1.1 at the
address specified therein. Any such notice must be given no later than (1) 12:00
p.m.(noon) (New York time) on the Business Day of the proposed Revolving Credit
Advance, in the case of an Index Rate Loan, or (2) 12:00 p.m.(noon) (New York
time) on the date which is 3 Business Days prior to the proposed Revolving
Credit Advance, in the case of a LIBOR Loan. Each such notice (A "NOTICE OF
REVOLVING CREDIT ADVANCE") must be given in writing (by telecopy or overnight
courier) substantially in the form of EXHIBIT 1.1(a)(i), and shall include the
information required in such Exhibit and such other information as may be
reasonably required by Agent or Revolving Credit Agent. If Borrowers desire to
have the Revolving Credit Advances bear interest by reference to a LIBOR Rate,
Borrowers must comply with SECTION 1.5(e).
(ii) Except as provided in SECTION 1.12, Borrowers shall
execute and deliver to each Revolving Lender a note to evidence the Revolving
Loan Commitment of that Revolving Lender. Each note shall be in the principal
amount of the Revolving Loan Commitment of the applicable Revolving Lender,
dated the Closing Date and substantially in the form of EXHIBIT 1.1(a)(ii) (each
a "REVOLVING NOTE" and, collectively, the "REVOLVING NOTES"). Each Revolving
Note shall represent the obligation of Borrowers to pay the amount of the
applicable Revolving Lender's Revolving Loan Commitment or, if less, such
Revolving Lender's Pro Rata Share of the aggregate unpaid principal amount of
all Revolving Credit Advances to Borrowers together with interest thereon as
prescribed in SECTION 1.5. The entire unpaid balance of the aggregate Revolving
Loan and all other non-contingent Obligations shall be immediately due and
payable in full in immediately available funds on the Commitment Termination
Date.
(b) TERM LOAN.
(i) Subject to the terms and conditions hereof, each Term
Lender agrees to make a term loan (collectively, the "TERM LOAN") on the Closing
Date to Borrowers in the amount of the applicable Term Lender's Term Loan
Commitment. The obligations of each
2
Term Lender hereunder shall be several and not joint. Each such Term Loan shall
be evidenced by a promissory note substantially in the form of EXHIBIT 1.1(b)
(each a "TERM NOTE" and collectively the "TERM NOTES"), and, except as provided
in SECTION 1.12, all of the Borrowers shall jointly execute and deliver a Term
Note to the applicable Term Lender. Each Term Note shall represent the
obligation of Borrowers to pay the applicable Term Lender's Term Loan
Commitment, together with interest thereon as prescribed in SECTION 1.5.
(ii) Borrowers shall repay the principal amount of the Term
Loan in twenty (20) consecutive quarterly installments on the first day of
January, April, July and October of each year commencing October 1, 2002, as
follows:
----------------------------------------- ------------------------------------
Payment Date Installment Amount
------------ ------------------
----------------------------------------- ------------------------------------
October 1, 2002 $875,000
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January 1, 2003 $875,000
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April 1, 2003 $875,000
----------------------------------------- ------------------------------------
July 1, 2003 $875,000
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October 1, 2003 $1,093,750
----------------------------------------- ------------------------------------
January 1, 2004 $1,093,750
----------------------------------------- ------------------------------------
April 1, 2004 $1,093,750
----------------------------------------- ------------------------------------
July 1, 2004 $1,093,750
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October 1, 2004 $1,312,500
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January 1, 2005 $1,312,500
----------------------------------------- ------------------------------------
April 1, 2005 $1,312,500
----------------------------------------- ------------------------------------
July 1, 2005 $1,312,500
----------------------------------------- ------------------------------------
October 1, 2005 $1,750,000
----------------------------------------- ------------------------------------
January 1, 2006 $1,750,000
----------------------------------------- ------------------------------------
April 1, 2006 $1,750,000
----------------------------------------- ------------------------------------
July 1, 2006 $1,750,000
----------------------------------------- ------------------------------------
October 1, 2006 $1,968,750
----------------------------------------- ------------------------------------
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Payment Date Installment Amount
------------ ------------------
----------------------------------------- ------------------------------------
January 1, 2007 $1,968,750
----------------------------------------- ------------------------------------
April 1, 2007 $1,968,750
----------------------------------------- ------------------------------------
July 8, 2007 $8,968,750
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(iii) Notwithstanding the foregoing, the aggregate outstanding
principal balance of the Term Loan shall be due and payable in full in
immediately available funds on the Commitment Termination Date, if not sooner
paid in full. No payment with respect to the Term Loan may be reborrowed.
(iv) Each payment of principal with respect to the Term Loan
shall be paid to Agent for the ratable benefit of each Term Lender making a Term
Loan, ratably in proportion to each such Term Lender's respective Term Loan
Commitment.
(c) RELIANCE ON NOTICES; APPOINTMENT OF BORROWER REPRESENTATIVE.
Agent and Revolving Credit Agent shall be entitled to rely upon, and shall be
fully protected in relying upon, any Notice of Revolving Credit Advance, Notice
of Conversion/Continuation or similar notice believed by Agent or Revolving
Credit Agent to be genuine. Agent and Revolving Credit Agent may assume that
each Person executing and delivering such a notice was duly authorized, unless
the responsible individual acting thereon for Agent or Revolving Credit Agent
has actual knowledge to the contrary. Each Borrower hereby irrevocably grants to
Xxxxx its irrevocable power of attorney and designates Xxxxx as the Borrower
Representative and its representative and agent on its behalf for the purposes
of issuing Notices of Revolving Credit Advance, Notices of
Conversion/Continuation, and giving instructions with respect to the
disbursement of the proceeds of the Loans, requesting Letters of Credit, giving
and receiving all other notices and consents hereunder or under any of the other
Loan Documents and taking all other actions (including in respect of compliance
with covenants) on behalf of any Borrower or Borrowers under the Loan Documents.
Borrower Representative hereby accepts such appointment. Agent, Revolving Credit
Agent and each Lender may regard any notice or other communication pursuant to
any Loan Document from Borrower Representative as a notice or communication from
all Borrowers, and may give any notice or communication required or permitted to
be given to any Borrower or Borrowers hereunder to Borrower Representative on
behalf of such Borrower or Borrowers. Each Borrower agrees that each notice,
election, representation and warranty, covenant, agreement and undertaking made
on its behalf by Borrower Representative shall be deemed for all purposes to
have been made by such Borrower and shall be binding upon and enforceable
against such Borrower to the same extent as if the same had been made directly
by such Borrower.
1.2 LETTERS OF CREDIT. Subject to and in accordance with the terms
and conditions contained herein and in ANNEX B, Borrower Representative, on
behalf of Borrowers, shall have the right to request, and Revolving Lenders
agree to incur, or purchase participations in, Letter of Credit Obligations in
respect of Borrowers.
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1.3 PREPAYMENTS.
(a) VOLUNTARY PREPAYMENTS; TERMINATION OF REVOLVING LOAN
COMMITMENTS. Borrowers may at any time on at least thirty (30) days' prior
written notice by Borrower Representative to Agent and to Revolving Credit Agent
(i) voluntarily prepay all or part of the Term Loan and/or (ii) terminate the
Revolving Loan Commitment; PROVIDED that (A) any such prepayments shall be in a
minimum amount of $2,000,000 and integral multiples of $250,000 in excess of
such amount, (B) upon any such termination of the Revolving Loan Commitment, all
Loans and other Obligations shall be immediately due and payable in full and all
Letter of Credit Obligations shall be cash collateralized or otherwise satisfied
in accordance with ANNEX B hereto, and (C) after giving effect to such
prepayments or termination, Borrowers shall comply with SECTION 1.3(b)(i). Any
voluntary prepayment and any termination of the Revolving Loan Commitment must
be accompanied by payment of the Fee required by SECTION 1.9(c), if any, plus
the payment of any LIBOR funding breakage costs in accordance with SECTION
1.13(b). Upon delivering of any notice of termination, Borrowers' right to
request that Letter of Credit Obligations be incurred on their behalf shall be
permanently terminated. Upon any such termination of the Revolving Loan
Commitment, Borrowers' right to request Revolving Credit Advances shall be
permanently terminated. So long as no Default or Event of Default has occurred
or is continuing, any partial prepayments of the Term Loan made by or on behalf
of Borrowers shall be applied to prepay the scheduled installments of Borrowers'
Term Loan in order of maturity.
(b) MANDATORY PREPAYMENTS.
(i) If at any time the outstanding balance of the Revolving
Loan exceeds the lesser of (A) the Maximum Amount and (B) the Borrowing Base,
Borrowers shall immediately repay the outstanding Revolving Credit Advances to
the extent required to eliminate such excess. If any such excess remains after
repayment in full of the outstanding Revolving Credit Advances, Borrowers shall
provide cash collateral for the Letter of Credit Obligations in the manner set
forth in ANNEX B to the extent required to eliminate such excess.
(ii) Immediately upon receipt by any Borrower of proceeds of
any asset disposition (excluding proceeds of asset dispositions permitted by
SECTION 6.8 (a) THROUGH (D)) or any sale of Stock of any Subsidiary of any
Borrower, Borrowers shall prepay the Loans in an amount equal to all such
proceeds, net of (A) commissions and other reasonable and customary transaction
costs, fees and expenses properly attributable to such transaction and payable
by Borrowers in connection therewith (in each case, paid to non-Affiliates), (B)
transfer taxes, (C) amounts payable to holders of senior Liens (to the extent
such Liens constitute Permitted Encumbrances hereunder), if any, and (D) an
appropriate reserve for income taxes in accordance with GAAP in connection
therewith. Any such prepayment shall be applied in accordance with SECTION
1.3(c).
(iii) If any Borrower issues Stock or Debt Securities (other
than pursuant to an employee or director Stock option program, benefit plan or
compensation program) no later than the Business Day following the date of
receipt of the proceeds thereof, Borrowers shall prepay the Loans in an amount
equal to all such proceeds, net of underwriting
5
discounts and commissions and other reasonable costs paid to non-Affiliates in
connection therewith. Any such prepayment shall be applied in accordance with
SECTION 1.3(c).
(iv) Until the Termination Date, Borrowers shall prepay the
Obligations on the date that is 10 days after the earlier of (A) the date on
which Borrowers' annual audited Financial Statements for the immediately
preceding Fiscal Year are delivered pursuant to ANNEX E or (B) the date on which
such annual audited Financial Statements were required to be delivered pursuant
to ANNEX E, in an amount equal to fifty percent (50%) of Excess Cash Flow for
the immediately preceding Fiscal Year. Any prepayments from Excess Cash Flow
paid pursuant to this CLAUSE (iv) shall be applied in accordance with SECTION
1.3(c). Each such prepayment shall be accompanied by a certificate signed by
Borrower Representative's chief financial officer certifying the manner in which
Excess Cash Flow and the resulting prepayment, were calculated, which
certificate shall be in form and substance reasonably satisfactory to Agent.
(c) APPLICATION OF CERTAIN MANDATORY PREPAYMENTS. Any prepayments
made by Borrowers pursuant to SECTION 1.3(b)(ii) arising from the sale of assets
permitted under SECTION 6.8(e) THROUGH (h) shall be applied first to interest
then due and payable on Revolving Credit Advances and then to the principal
balance of the Revolving Credit Advances, PROVIDED, with respect to a sale of
assets permitted under SECTION 6.8(e) THROUGH (h), such sales are completed
within twelve (12) calendar months after the Closing Date. All other prepayments
made by Borrowers pursuant to SECTIONS 1.3(b)(ii), (b)(iii), or (b)(iv) above
shall be applied as follows: FIRST, to Fees and reimbursable expenses of Agent
and Revolving Credit Agent (equally) then due and payable pursuant to any of the
Loan Documents; SECOND, to interest then due and payable on the Term Loan;
THIRD, to prepay the scheduled principal installments of the Term Loan in
inverse order of maturity, until the Term Loan has been prepaid in full; FOURTH,
to interest then due and payable on Revolving Credit Advances; and FIFTH, to the
principal balance of Revolving Credit Advances outstanding until the same has
been paid in full. The Revolving Loan Commitment shall not be permanently
reduced by the amount of any such prepayments.
(d) APPLICATION OF PREPAYMENTS FROM INSURANCE AND CONDEMNATION
PROCEEDS. Prepayments from insurance or condemnation proceeds in accordance with
SECTION 5.4(c) and the Mortgage(s), respectively, shall be applied as follows:
insurance proceeds from casualties or losses to cash or Inventory shall be
applied, first, to the Revolving Credit Advances; insurance or condemnation
proceeds from casualties or losses to Equipment, Fixtures and Real Estate shall
be applied to scheduled installments of the Term Loan in the inverse order of
maturity. The Revolving Loan Commitment shall not be permanently reduced by the
amount of any such prepayments. If insurance or condemnation proceeds received
by Borrowers exceed the outstanding principal balances of the Loans or if the
precise amount of insurance or condemnation proceeds allocable to Inventory as
compared to Equipment, Fixtures and Real Estate are not otherwise determined,
the allocation and application of those proceeds shall be determined by Agent,
subject to the prior approval of Requisite Lenders.
(e) NO IMPLIED CONSENT. Nothing in this SECTION 1.3 shall be
construed to constitute Agent's, Revolving Credit Agent's or any Lender's
consent to any transaction that is not permitted by other provisions of this
Agreement or the other Loan Documents.
6
1.4 USE OF PROCEEDS. Borrowers shall utilize the proceeds of the
Loans solely for the Refinancing (and to pay any related transaction expenses),
and for the financing of Borrowers' ordinary working capital and general
corporate needs. DISCLOSURE SCHEDULE (1.4) contains a description of Borrowers'
sources and uses of funds as of the Closing Date, including Loans and Letter of
Credit Obligations to be made or incurred on that date, and a funds flow
memorandum detailing how funds from each source are to be transferred to
particular uses.
1.5 INTEREST AND APPLICABLE MARGINS.
(a) Borrowers shall pay interest to Agent or Revolving Credit
Agent, as appropriate, for the ratable benefit of Lenders in accordance with the
various Loans being made by each Lender, in arrears on each applicable Interest
Payment Date, at the following rates: (i) with respect to the Revolving Credit
Advances, the Index Rate plus the Applicable Revolver Index Margin per annum or,
at the election of Borrower Representative, the applicable LIBOR Rate plus the
Applicable Revolver LIBOR Margin per annum, based on the Revolving Credit
Advances outstanding from time to time; and (ii) with respect to the Term Loan,
the Index Rate plus the Applicable Term Loan Index Margin per annum or, at the
election of Borrower Representative, the applicable LIBOR Rate plus the
Applicable Term Loan LIBOR Margin per annum.
As of the Closing Date, the Applicable Margins are as follows:
Applicable Revolver Index Margin 1.25%
Applicable Revolver LIBOR Margin 2.75%
Applicable Term Loan Index Margin 1.25%
Applicable Term Loan LIBOR Margin 2.75%
Applicable L/C Margin 2.75%
The Applicable Margins shall be adjusted (up or down)
prospectively on a quarterly basis as determined by Agent and Revolving Credit
Agent based upon Borrowers' consolidated financial performance as set forth in
the Financial Statements, commencing with the first day of the first calendar
month that occurs more than 5 days after delivery of Borrowers' quarterly
Financial Statements to Lenders for the Fiscal Quarter ending July 31, 2002, and
likewise each Fiscal Quarter thereafter. Adjustments in Applicable Margins shall
be determined by reference to the following grids:
--------------------------------------- -------------------------------------
IF LEVERAGE RATIO IS: LEVEL OF
APPLICABLE MARGINS:
--------------------------------------- -------------------------------------
less than 2.00 Level I
--------------------------------------- -------------------------------------
less than 2.50, but greater
than or equal to 2.00 Level II
--------------------------------------- -------------------------------------
greater
than or equal to 2.50 Level III
------------------------------------------------------------------------------
7
APPLICABLE MARGINS
------------------------------------------------------------------------------
LEVEL I LEVEL II LEVEL III
-------------------------------------- ------------ --------------- ----------
Applicable Revolver 1.25% 1.50% 1.75%
Index Margin
-------------------------------------- ------------ --------------- ----------
Applicable Revolver LIBOR Margin 2.75% 3.00% 3.25%
-------------------------------------- ------------ --------------- ----------
Applicable Term Loan Index Margin 1.25% 1.50% 1.75%
-------------------------------------- ------------ --------------- ----------
Applicable Term Loan LIBOR Margin 2.75% 3.00% 3.25%
-------------------------------------- ------------ --------------- ----------
Applicable L/C Margin 2.75% 3.00% 3.25%
-------------------------------------- ------------ --------------- ----------
Concurrently with the delivery of such Financial Statements,
Borrower Representative shall deliver to Agent, Revolving Credit Agent and
Lenders a certificate, signed by its chief financial officer, setting forth in
reasonable detail the basis for the continuance of, or any change in, the
Applicable Margins. Failure to timely deliver such Financial Statements shall,
in addition to any other remedy provided for in this Agreement, result in an
increase in the Applicable Margins to the highest level set forth in the
foregoing grid, until the first day of the first calendar month following the
delivery of those Financial Statements demonstrating that such an increase is
not required. If a Default or Event of Default has occurred and is continuing at
the time any reduction in the Applicable Margins is to be implemented, that
reduction shall be deferred until the first day of the first calendar month
following the date on which such Default or Event of Default is waived or cured.
(b) If any payment on any Loan becomes due and payable on a day
other than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR Period)
and, with respect to payments of principal, interest thereon shall be payable at
the then applicable rate during such extension.
(c) All computations of Fees calculated on a per annum basis and
interest shall be made by Agent on the basis of a 360-day year, in each case for
the actual number of days occurring in the period for which such interest and
Fees are payable. The Index Rate is a floating rate determined for each day.
Each determination by Agent and Revolving Credit Agent of an interest rate and
Fees hereunder shall be final, binding and conclusive on Borrowers, absent
manifest error.
(d) So long as an Event of Default has occurred and is continuing
under SECTION 8.1(a), (h) or (I) or so long as any other Default or Event of
Default has occurred and is continuing and at the election of Agent and
Revolving Credit Agent (or upon the written request of Requisite Lenders)
confirmed by written notice from Agent to Borrower Representative, the interest
rates applicable to the Loans and the Letter of Credit Fees shall be increased
by two percentage points (2%) per annum above the rates of interest or the rate
of such Fees otherwise applicable hereunder ("DEFAULT RATE"), and all
outstanding Obligations shall bear interest at the Default Rate applicable to
such Obligations. Interest and Letter of Credit Fees at the Default Rate shall
accrue from the initial date of such Default or Event of Default until that
Default or Event of Default is cured or waived and shall be payable upon demand.
8
(e) Subject to the conditions precedent set forth in SECTION 2.2,
Borrower Representative shall have the option to (i) request that any Revolving
Credit Advance be made as a LIBOR Loan, (ii) convert at any time all or any part
of outstanding Loans from Index Rate Loans to LIBOR Loans, (iii) convert any
LIBOR Loan to an Index Rate Loan, subject to payment of LIBOR breakage costs in
accordance with SECTION 1.13(b) if such conversion is made prior to the
expiration of the LIBOR Period applicable thereto, or (iv) continue all or any
portion of any Loan as a LIBOR Loan upon the expiration of the applicable LIBOR
Period and the succeeding LIBOR Period of that continued Loan shall commence on
the first day after the last day of the LIBOR Period of the Loan to be
continued. Any Loan or group of Loans having the same proposed LIBOR Period to
be made or continued as, or converted into, a LIBOR Loan must be in a minimum
amount of $1,000,000 and integral multiples of $500,000 in excess of such
amount. Any such election must be made by 12:00 p.m. (noon) (New York time) on
the 3rd Business Day prior to (1) the date of any proposed Advance which is to
bear interest at the LIBOR Rate, (2) the end of each LIBOR Period with respect
to any LIBOR Loans to be continued as such, or (3) the date on which Borrower
Representative wishes to convert any Index Rate Loan to a LIBOR Loan for a LIBOR
Period designated by Borrower Representative in such election. If no election is
received with respect to a LIBOR Loan by 12:00 p.m. (noon) (New York time) on
the 3rd Business Day prior to the end of the LIBOR Period with respect thereto
(or if a Default or an Event of Default has occurred and is continuing or if the
additional conditions precedent set forth in SECTION 2.2 shall not have been
satisfied), that LIBOR Loan shall be converted to an Index Rate Loan at the end
of its LIBOR Period. Borrower Representative must make such election by notice
to both Agent and Revolving Credit Agent in writing, by telecopy or overnight
courier. In the case of any conversion or continuation, such election must be
made pursuant to a written notice (a "NOTICE OF CONVERSION/CONTINUATION") in the
form of EXHIBIT 1.5(e).
(f) Notwithstanding anything to the contrary set forth in this
SECTION 1.5, if a court of competent jurisdiction determines in a final order
that the rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "MAXIMUM LAWFUL RATE"), then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate; PROVIDED, however, that if at any time
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrowers shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Agent and
Revolving Credit Agent, on behalf of Lenders, is equal to the total interest
that would have been received had the interest rate payable hereunder been (but
for the operation of this paragraph) the interest rate payable since the Closing
Date as otherwise provided in this Agreement. Thereafter, interest hereunder
shall be paid at the rate(s) of interest and in the manner provided in SECTIONS
1.5(a) through (e), unless and until the rate of interest again exceeds the
Maximum Lawful Rate, and at that time this paragraph shall again apply. In no
event shall the total interest received by any Lender pursuant to the terms
hereof exceed the amount that such Lender could lawfully have received had the
interest due hereunder been calculated for the full term hereof at the Maximum
Lawful Rate. If the Maximum Lawful Rate is calculated pursuant to this
paragraph, such interest shall be calculated at a daily rate equal to the
Maximum Lawful Rate divided by the number of days in the year in which such
calculation is made. If, notwithstanding the provisions of this SECTION 1.5(f),
a court of competent jurisdiction shall finally determine that a Lender has
received interest hereunder in excess of the Maximum Lawful Rate, Agent shall,
to the extent permitted by applicable law,
9
promptly apply such excess in the order specified in SECTION 1.11 and thereafter
shall refund any excess to Borrowers or as a court of competent jurisdiction may
otherwise order.
1.6 ELIGIBLE ACCOUNTS.
All of the Accounts owned by Borrowers and reflected in the most
recent Borrowing Base Certificate delivered by Borrowers to Agent and Revolving
Credit Agent shall be "ELIGIBLE ACCOUNTS" for purposes of this Agreement, except
any Account to which any of the exclusionary criteria set forth below applies.
Agent and Revolving Credit Agent shall have the right to establish or modify
Reserves against Eligible Accounts from time to time in its reasonable credit
judgment. In addition, Agent and Revolving Credit Agent reserve the right, at
any time and from time to time after the Closing Date, to adjust any of the
criteria set forth below, to establish new criteria and to adjust advance rates
with respect to Eligible Accounts, in its reasonable credit judgment, subject to
the approval of Supermajority Revolving Lenders in the case of adjustments or
new criteria or changes in advance rates which have the effect of making more
credit available. Eligible Accounts shall not include any Account of any
Borrower:
(a) that does not arise from the sale of goods or the performance
of services by such Borrower in the ordinary course of its business;
(b) (i) upon which such Borrower's right to receive payment is not
absolute or is contingent upon the fulfillment of any material condition
whatsoever or (ii) as to which such Borrower is not able to bring suit or
otherwise enforce its remedies against the Account Debtor through judicial
process or (iii) if the Account is subject to the asserted lien of a surety bond
issuer;
(c) in the event that any defense, counterclaim, setoff or dispute
is asserted in writing as to such Account;
(d) that is not a true and correct statement of bona fide
indebtedness incurred in the amount of the Account for merchandise sold to or
services rendered by the applicable Account Debtor;
(e) with respect to which an invoice, reasonably acceptable to
Agent in form and substance, has not been sent to the applicable Account Debtor;
(f) that (i) is not owned by such Borrower or (ii) is subject to
any right, claim, security interest or other interest of any other Person, other
than (A) Liens in favor of Agent, on behalf of itself and Lenders, or (B)
equitable liens of surety bond issuers which have not been asserted by such
issuers;
(g) that arises from a sale to any director, officer, other
employee or Affiliate of any Credit Party;
(h) that is the obligation of an Account Debtor that is the United
States federal government or a political subdivision, department, agency or
instrumentality thereof unless Agent, in its sole discretion, has agreed to the
contrary in writing and such Borrower, if
10
necessary or desirable, has complied with respect to such obligation with the
Federal Assignment of Claims Act of 1940, county or municipal law restricting
assignment thereof;
(i) that is the obligation of an Account Debtor located in a
foreign country other than Canada (excluding the Province of Newfoundland, the
Northwest Territories and the Territory of Nunavit) unless payment thereof is
assured by a letter of credit assigned and delivered to Agent, reasonably
satisfactory to Agent as to form, amount and issuer;
(j) to the extent such Borrower or any Subsidiary thereof is liable
for goods sold or services rendered by the applicable Account Debtor to such
Borrower or any Subsidiary thereof but only to the extent of the potential
offset;
(k) that arises with respect to goods that are delivered on a
xxxx-and-hold, cash-on-delivery basis or placed on consignment, guaranteed sale
or other terms by reason of which the payment by the Account Debtor is or may be
conditional;
(l) that is in default; PROVIDED, that, without limiting the
generality of the foregoing, an Account shall be deemed in default upon the
occurrence of any of the following:
(i) the Account is not paid within 120 days following its
original invoice date;
(ii) the Account Debtor obligated upon such Account suspends
business, makes a general assignment for the benefit of creditors
or fails to pay its debts generally as they come due; or
(iii) a petition is filed by or against any Account Debtor
obligated upon such Account under any bankruptcy law or any other
federal, state or foreign (including any provincial) receivership,
insolvency relief or other law or laws for the relief of debtors;
(m) that is the obligation of an Account Debtor if 50% or more of
the Dollar amount of all Accounts owing by that Account Debtor are ineligible
under the other criteria set forth in this SECTION 1.6;
(n) as to which Agent's Lien thereon, on behalf of itself and
Lenders, is not a first priority (except with respect to equitable liens of
surety bond issuers which have not been asserted by such issuers) perfected
Lien;
(o) as to which any of the representations or warranties in the
Loan Documents are untrue;
(p) to the extent such Account is evidenced by a judgment,
Instrument or Chattel Paper;
(q) to the extent such Account exceeds any credit limit established
by Agent and Revolving Credit Agent, in their reasonable credit judgment;
11
(r) that is payable in any currency other than Dollars; or
(s) that is otherwise unacceptable to Agent and Revolving Credit
Agent in their reasonable credit judgment.
1.7 ELIGIBLE INVENTORY.
All of the Inventory owned by the Borrowers and reflected in the
most recent Borrowing Base Certificate delivered by Borrowers to Agent and
Revolving Credit Agent shall be "ELIGIBLE Inventory" for purposes of this
Agreement, except any Inventory to which any of the exclusionary criteria set
forth below applies. Agent and Revolving Credit Agent shall have the right to
establish or modify Reserves against Eligible Inventory from time to time in its
reasonable credit judgment. In addition, Agent and Revolving Credit Agent
reserve the right, at any time and from time to time after the Closing Date, to
adjust the criteria set forth below, to establish new criteria and to adjust
advance rates with respect to Eligible Inventory, in their reasonable credit
judgment, subject to the approval of Supermajority Revolving Lenders in the case
of adjustments or new criteria or changes in advance rates which have the effect
of making more credit available. Eligible Inventory shall not include any
Inventory of any Borrower that:
(a) is not owned by such Borrower free and clear of all Liens and
rights of any other Person, except the Liens in favor of Agent, on behalf of
itself and Lenders, and Permitted Encumbrances in favor of landlords and bailees
to the extent permitted in SECTION 5.9 hereof (subject to Reserves established
by Agent in accordance with SECTION 5.9 hereof);
(b) (i) is not located on premises owned, leased or rented by such
Borrower and set forth in DISCLOSURE SCHEDULE (3.2), or (ii) has a value in
excess of $100,000 and which is stored at a leased location, unless either (x)
Agent, in Agent's sole and absolute discretion, has given its prior consent
thereto, (y) a reasonably satisfactory landlord waiver has been delivered to
Agent, or (z) Reserves reasonably satisfactory to Agent have been established
with respect thereto or (iii) is stored with a bailee or warehouseman unless a
reasonably satisfactory, acknowledged bailee letter has been received by Agent
and Reserves reasonably satisfactory to Agent have been established with respect
thereto, or (iv) is located at an owned location subject to a mortgage in favor
of a lender other than Agent unless a reasonably satisfactory mortgagee waiver
has been delivered to Agent;
(c) is placed on consignment or is in transit, except for Inventory
in transit between domestic locations of Credit Parties as to which Agent's
Liens have been perfected at origin and destination;
(d) is covered by a negotiable document of title, unless such
document has been delivered to Agent with all necessary endorsements, free and
clear of all Liens except those in favor of Agent and Lenders;
(e) is excess, obsolete, unsalable, shopworn, seconds, damaged or
unfit for sale;
12
(f) consists of display items or packing or shipping materials or
manufacturing supplies;
(h) is not of a type held for sale in the ordinary course of such
Borrower's business;
(i) is not subject to a first priority lien in favor of Agent on
behalf of itself and Lenders, subject to Permitted Encumbrances;
(j) breaches any of the representations or warranties pertaining to
Inventory set forth in the Loan Documents;
(k) consists of Hazardous Materials or goods that can be
transported or sold only with licenses that are not readily available;
(l) is not covered by casualty insurance reasonably acceptable to
Agent; or
(m) is otherwise unacceptable to Agent in its reasonable credit
judgment.
1.8 INTENTIONALLY OMITTED.
1.9 FEES.
(a) Borrowers shall pay to GE Capital and to LaSalle, each
individually, the Fees specified in that certain fee letter dated as of the
Closing Date among Borrowers and GE Capital (the "GE CAPITAL FEE LETTER"), and
that certain fee letter dated as of Closing Date among Borrowers and LaSalle (
the "RCA FEE LETTER") at the times specified for payment therein.
(b) As additional compensation for the Revolving Lenders, Borrowers
shall pay to Revolving Credit Agent, for the ratable benefit of such Lenders, in
arrears, on the first Business Day of each month prior to the Commitment
Termination Date and on the Commitment Termination Date, a Fee for Borrowers'
non-use of available funds in an amount equal to the one-half of one-percent
(0.50%) per annum (calculated on the basis of a 360 day year for actual days
elapsed) calculated on the difference between (x) the Maximum Amount and (y) the
average for the period of the daily closing balances of the Revolving Loan
outstanding during the period for which such Fee is due.
(c) If Borrowers pay after acceleration or prepay all or any
portion of the Term Loan or prepay the Revolving Loan and terminate the
Revolving Loan Commitment, whether voluntarily or involuntarily and whether
before or after acceleration of the Obligations, or if any of the Commitments
are otherwise terminated, Borrowers shall pay to Agent (with respect to a
prepayment or termination of the Term Loan) or Revolving Credit Agent (with
respect to a prepayment, or termination of the Revolving Loan), for the benefit
of Lenders as liquidated damages and compensation for the costs of being
prepared to make funds available hereunder an amount equal to the Applicable
Percentage (as defined below) multiplied by the sum of (i) the principal amount
of the Term Loan paid after acceleration or prepaid, and (ii) the Revolving Loan
Commitment. As used herein, the term "APPLICABLE PERCENTAGE" shall mean (x) two
percent (2.0%), in the case of a prepayment on or prior to the first anniversary
of the
13
Closing Date, (y) one percent (1.0%), in the case of a prepayment after the
first anniversary of the Closing Date but on or prior to the second anniversary
thereof, and (z) zero percent (0.0%), in the case of a prepayment after the
second anniversary of the Closing Date. The Credit Parties agree that the
Applicable Percentages are a reasonable calculation of Lenders' lost profits in
view of the difficulties and impracticality of determining actual damages
resulting from an early termination of the Commitments. Notwithstanding the
foregoing, no prepayment fee shall be payable by Borrowers upon a mandatory
prepayment made pursuant to SECTIONS 1.3(b)(i), (ii), OR (iv) or 1.16(c);
PROVIDED that in the case of prepayments made pursuant to SECTIONS 1.3(b)(ii),
the transaction giving rise to the applicable prepayment is expressly permitted
under SECTION 6.
(d) Borrowers shall pay to Revolving Credit Agent, for the ratable
benefit of Revolving Lenders, the Letter of Credit Fee as provided in ANNEX B.
1.10 RECEIPT OF PAYMENTS.
Borrowers shall make each payment under this Agreement not later
than 2:00 p.m. (New York time) on the day when due in immediately available
funds in Dollars to the Collection Account. For purposes of computing interest
and Fees and determining Borrowing Availability as of any date, all payments
shall be deemed received on the Business Day on which immediately available
funds therefor are received in the applicable Collection Account prior to 2:00
p.m. (New York time). Payments received after 2:00 p.m. (New York time) on any
Business Day or on a day that is not a Business Day shall be deemed to have been
received on the following Business Day.
1.11 APPLICATION AND ALLOCATION OF PAYMENTS.
(a) So long as no Default or Event of Default has occurred and is
continuing, (i) payments matching specific scheduled payments then due shall be
applied to those scheduled payments; (ii) voluntary prepayments shall be applied
as determined by Borrowers, subject to the provisions of SECTION 1.3(a); and
(iii) mandatory prepayments shall be applied as set forth in SECTIONS 1.3(c) and
1.3(d). All payments and prepayments applied to a particular Loan shall be
applied ratably to the portion thereof held by each Lender as determined by its
Pro Rata Share. As to any other payment, and as to all payments made when a
Default or Event of Default has occurred and is continuing or following the
Commitment Termination Date, Borrowers hereby irrevocably waive the right to
direct the application of any and all payments received from or on behalf of
Borrowers, and Borrowers hereby irrevocably agree that Agent shall have the
continuing exclusive right to apply any and all such payments against the
Obligations of Borrowers as Agent may deem advisable notwithstanding any
previous entry by Agent or Revolving Credit Agent in the Loan Account or any
other books and records. In the absence of a specific determination by Agent
with respect thereto, payments shall be applied to amounts then due and payable
in the following order: (1) to Fees and reimbursable expenses of Agent and
Revolving Credit Agent due and payable pursuant to any of the Loan Documents;
(2) to interest on the other Loans and for payment of the Letter of Credit Fees,
ratably in proportion to the interest accrued as to each Loan and the Letter of
Credit Fees accrued on outstanding Letters of Credit; (3) to principal payments
on the other Loans and to provide cash collateral for Letter of Credit
Obligations in the manner described in ANNEX B, and to any liquidated
liabilities of Borrowers with respect to any interest rate swap, cap or collar
agreement or other agreements or
14
arrangements designed to provide protection against fluctuations in interest
rates (but only to the extent the same constitute Obligations) ratably to the
aggregate, combined principal balance of the other Loans, the outstanding Letter
of Credit Obligations and such liquidated liabilities under interest rate
protection agreements; and (4) to all other Obligations, including expenses of
Lenders to the extent reimbursable under SECTION 11.3.
(b) Upon direction of Agent, the Requisite Lenders or the Revolving
Credit Agent, Revolving Credit Agent shall, notwithstanding anything herein to
the contrary, charge to the Revolving Loan balance on behalf of Borrowers and
cause to be paid all Fees, expenses, Charges, costs (including insurance
premiums in accordance with SECTION 5.4(a)) and interest and principal, other
than principal of the Revolving Loan, owing by Borrowers under this Agreement or
any of the other Loan Documents if and to the extent Borrowers fail to pay
promptly any such amounts as and when due, even if the amount of such charges
would exceed Borrowing Availability at such time or would cause the balance of
the Revolving Loan to exceed Borrowers' Borrowing Base after giving effect to
such charges. At Agent's option and to the extent permitted by law, any charges
so made shall constitute part of the Revolving Loan hereunder. Notwithstanding
anything herein to the contrary, no advance may be made under the Revolving Loan
or other charge made to the Revolving Loan to fund installments of principal or
interest under the Term Loan following the occurrence and during the existence
of an Event of Default, unless otherwise approved by the Requisite Revolving
Lenders.
1.12 LOAN ACCOUNT AND ACCOUNTING.
Agent shall maintain a loan account (the "TERM LOAN ACCOUNT") on
its books to record the Term Loan, all payments made by Borrowers, and all other
debits and credits as provided in this Agreement with respect to the Term Loan.
Revolving Credit Agent shall maintain a loan account (the "REVOLVING LOAN
ACCOUNT"; the Term Loan Account and the Revolving Loan Account collectively the
"LOAN ACCOUNT") on its books to record all Advances, all payments made to
Borrowers, and all other debits to credits as provided in this Agreement with
respect to the Revolving Loan. All entries in the Loan Account shall be made in
accordance with Agent's or Revolving Credit Agent's (as applicable) customary
accounting, practices as in effect from time to time. The balance in the Loan
Account, as recorded on Agent's or Revolving Credit Agent's (as applicable) most
recent printout or other written statement, shall, absent manifest error, be
presumptive evidence of the amounts due and owing to Agent, Revolving Credit
Agent and Lenders by Borrowers; PROVIDED that any failure to so record or any
error in so recording shall not limit or otherwise affect Borrowers' duty to pay
the Obligations. Upon written request by Borrower Representative to Agent or
Revolving Credit Agent (as applicable), Agent or Revolving Credit Agent shall
render to Borrower Representative a monthly accounting of transactions with
respect to the Loans setting forth the balance of the Loan Account as to
Borrowers for the immediately preceding month. Unless Borrower Representative
notifies Agent or Revolving Credit Agent (as applicable) in writing of any
objection to any such accounting (specifically describing the basis for such
objection), within 30 days after the date thereof, each and every such
accounting shall (absent manifest error) be deemed final, binding and conclusive
on Borrowers in all respects as to all matters reflected therein. Only those
items expressly objected to in such notice shall be deemed to be disputed by
Borrowers. Notwithstanding any provision
15
herein contained to the contrary, any Lender may elect (which election may be
revoked) to dispense with the issuance of Notes to that Lender and may rely on
the Loan Account as evidence of the amount of Obligations from time to time
owing to it.
1.13 INDEMNITY.
(a) Borrowers shall indemnify and hold harmless each of Agent,
Revolving Credit Agent, L/C Issuer, Lenders and their respective Affiliates, and
each such Person's respective officers, directors, employees, attorneys, agents
and representatives (each, an "INDEMNIFIED PERSON"), from and against any and
all suits, actions, proceedings, claims, damages, losses, liabilities and
expenses (including reasonable attorneys' fees and disbursements and other costs
of investigation or defense, including those incurred upon any appeal) that may
be instituted or asserted against or incurred by any such Indemnified Person as
the result of credit having been extended, suspended or terminated under this
Agreement and the other Loan Documents and the administration of such credit,
and in connection with or arising out of the transactions contemplated hereunder
and thereunder and any actions or failures to act in connection therewith,
including any and all Environmental Liabilities and legal costs and expenses
arising out of or incurred in connection with disputes between or among any
parties to any of the Loan Documents (collectively, "INDEMNIFIED LIABILITIES");
PROVIDED, that no such Credit Party shall be liable for any indemnification to
an Indemnified Person to the extent that any such suit, action, proceeding,
claim, damage, loss, liability or expense (i) results from that Indemnified
Person's gross negligence or willful misconduct or (ii) results from disputes
between or among Agent and Revolving Credit Agent or Agent and a Lender or
Revolving Credit Agent and a Lender or between or among the Lenders, PROVIDED,
with respect to this CLAUSE (ii), such dispute does not directly or indirectly
arise out of, or in connection with any action or inaction taken by any
Indemnified Person under or pursuant to this Agreement or at the direction or
request of any Credit Party. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR
LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD
PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS
DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY
OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on the terms
provided herein, if (i) any LIBOR Loans are repaid in whole or in part prior to
the last day of any applicable LIBOR Period (whether that repayment is made
pursuant to any provision of this Agreement or any other Loan Document or occurs
as a result of acceleration, by operation of law or otherwise); (ii) Borrowers
shall default in payment when due of the principal amount of or interest on any
LIBOR Loan; (iii) Borrowers shall refuse to accept any borrowing of, or shall
request a termination of, any borrowing of, conversion into or continuation of,
LIBOR Loans after Borrowers have given notice requesting the same in accordance
herewith; or (iv) Borrowers shall fail to make any prepayment of a LIBOR Loan
after Borrowers have given a notice thereof in accordance herewith, then
Borrowers shall indemnify and hold harmless each Lender from and against all
losses, costs and expenses resulting from or arising from any of the foregoing.
Such indemnification shall include any loss (including loss of margin) or
expense arising from
16
the reemployment of funds obtained by it or from fees payable to terminate
deposits from which such funds were obtained. For the purpose of calculating
amounts payable to a Lender under this subsection, each Lender shall be deemed
to have actually funded its relevant LIBOR Loan through the purchase of a
deposit bearing interest at the LIBOR Rate in an amount equal to the amount of
that LIBOR Loan and having a maturity comparable to the relevant LIBOR Period;
PROVIDED, that each Lender may fund each of its LIBOR Loans in any manner it
sees fit, and the foregoing assumption shall be utilized only for the
calculation of amounts payable under this subsection. This covenant shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder. As promptly as practicable under the
circumstances, each Lender shall provide Borrowers with its written calculation
of all amounts payable pursuant to this SECTION 1.13(b), and such calculation
shall be binding on the parties hereto unless Borrowers shall object in writing
within 10 Business Days of receipt thereof, specifying the basis for such
objection in detail.
1.14 ACCESS.
Each Credit Party that is a party hereto shall, during normal
business hours, from time to time upon five (5) Business Day's prior notice as
frequently as Agent determines to be appropriate: (a) provide Agent, Revolving
Credit Agent and any of their officers, employees and agents access to its
properties, facilities, advisors and employees (including officers) of each
Credit Party and to the Collateral, (b) permit Agent, Revolving Credit Agent and
any of their officers, employees and agents, to inspect, audit and make extracts
from any Credit Party's books and records, and (c) permit Agent, Revolving
Credit Agent and their officers, employees and agents, to inspect, review,
evaluate and make test verifications and counts of the Accounts, Inventory and
other Collateral of any Credit Party. If a Default or Event of Default has
occurred and is continuing or if access is necessary to preserve or protect the
Collateral as determined by Agent, each such Credit Party shall provide such
access to Agent, Revolving Credit Agent and to each Lender at all times and
without advance notice. Furthermore, so long as any Event of Default has
occurred and is continuing, Borrowers shall provide Agent, Revolving Credit
Agent and each Lender with access to their suppliers and customers. Each Credit
Party shall make available to Agent, Revolving Credit Agent and their counsel,
as quickly as is possible under the circumstances, originals or copies of all
books and records that Agent may reasonably request. Each Credit Party shall
deliver any document or instrument necessary for Agent and Revolving Credit
Agent, as they may from time to time reasonably request, to obtain records from
any service bureau or other Person that maintains records for such Credit Party,
and shall maintain duplicate records or supporting documentation on media,
including computer tapes and discs owned by such Credit Party. Agent will give
Lenders at least 5 Business Days' prior written notice of regularly scheduled
audits. Representatives of other Lenders may accompany Agent's or Revolving
Credit Agent's representatives on regularly scheduled audits at no charge to
Borrower.
1.15 TAXES.
(a) Any and all payments by Borrowers hereunder (including any
payments made pursuant to SECTION 12) or under the Notes shall be made, in
accordance with this SECTION 1.15, free and clear of and without deduction for
any and all present or future Taxes. If Borrowers shall be required by law to
deduct any Taxes from or in respect of any sum payable
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hereunder (including any sum payable pursuant to SECTION 12) or under the Notes,
(i) the sum payable shall be increased as much as shall be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this SECTION 1.15) Agent, Revolving Credit Agent
or Lenders, as applicable, receive an amount equal to the sum they would have
received had no such deductions been made, (ii) Borrowers shall make such
deductions, and (iii) Borrowers shall pay the full amount deducted to the
relevant taxing or other authority in accordance with applicable law. Within 30
days after the date of any payment of Taxes, Borrowers shall furnish to Agent
the original or a certified copy of a receipt evidencing payment thereof. Agent,
Revolving Credit Agent and Lenders shall not be obligated to return or refund
any amounts received pursuant to this SECTION 1.15(a).
(b) Borrowers shall indemnify and, within 10 days of demand
therefor, pay Agent, Revolving Credit Agent and each Lender for the full amount
of Taxes (including any Taxes imposed by any jurisdiction on amounts payable
under this SECTION 1.15) paid by Agent, Revolving Credit Agent or such Lender,
as appropriate, and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes were
correctly or legally asserted.
(c) Each Lender organized under the laws of a jurisdiction outside
the United States (a "FOREIGN LENDER") as to which payments to be made under
this Agreement or under the Notes are exempt from United States withholding tax
under an applicable statute or tax treaty shall provide to Borrowers, Revolving
Credit Agent and Agent a properly completed and executed IRS Form W-8ECI or Form
W-8BEN or other applicable form, certificate or document prescribed by the IRS
or the United States certifying as to such Foreign Lender's entitlement to such
exemption (a "CERTIFICATE OF EXEMPTION"). Any foreign Person that seeks to
become a Lender under this Agreement shall provide a Certificate of Exemption to
Borrowers, Revolving Credit Agent and Agent prior to becoming a Lender
hereunder. No foreign Person may become a Lender hereunder if such Person fails
to deliver a Certificate of Exemption in advance of becoming a Lender.
1.16 CAPITAL ADEQUACY; INCREASED COSTS; ILLEGALITY.
(a) If any Lender shall have determined that any law, treaty,
governmental (or quasi-governmental) rule, regulation, guideline or order
regarding capital adequacy, reserve requirements or similar requirements or
compliance by any Lender with any request or directive regarding capital
adequacy, reserve requirements or similar requirements (whether or not having
the force of law), in each case, adopted after the Closing Date (or, with
respect to any Lender who becomes a Lender after the Closing date, the date such
Lender becomes a Lender), from any central bank or other Governmental Authority
increases or would have the effect of increasing the amount of capital, reserves
or other funds required to be maintained by such Lender and thereby reducing the
rate of return on such Lender's capital as a consequence of its obligations
hereunder, then Borrowers shall from time to time upon demand by such Lender
(with a copy of such demand to Agent) pay to Agent, for the account of such
Lender, additional amounts sufficient to compensate such Lender for such
reduction. A certificate as to the amount of that reduction and showing the
basis of the computation thereof submitted by such Lender to Borrowers and to
Agent shall, absent manifest error, be final, conclusive and binding for all
purposes.
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(b) If, due to either (i) the introduction of or any change in any
law or regulation (or any change in the interpretation thereof) or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), in each case
adopted after the Closing Date (or, with respect to any Lender who becomes a
Lender after the Closing date, the date such Lender becomes a Lender), there
shall be any increase in the cost to any Lender of agreeing to make or making,
funding or maintaining any Loan, then Borrowers shall from time to time, upon
demand by such Lender (with a copy of such demand to Agent), pay to Agent for
the account of such Lender additional amounts sufficient to compensate such
Lender for such increased cost. A certificate as to the amount of such increased
cost, submitted to Borrowers and to Agent by such Lender, shall be conclusive
and binding on Borrowers for all purposes, absent manifest error. Each Lender
agrees that, as promptly as practicable after it becomes aware of any
circumstances referred to above which would result in any such increased cost,
the affected Lender shall, to the extent not inconsistent with such Lender's
internal policies of general application, use reasonable commercial efforts to
minimize costs and expenses incurred by it and payable to it by Borrowers
pursuant to this SECTION 1.16(b).
(c) Notwithstanding anything to the contrary contained herein, if
any change in any law or regulation (or any change in the interpretation
thereof) after the Closing Date (or, with respect to any Lender who becomes a
Lender after the Closing date, the date such Lender becomes a Lender) shall make
it unlawful, or any central bank or other Governmental Authority shall assert
that it is unlawful, for any Lender to agree to make or to make or to continue
to fund or maintain any LIBOR Loan, then, unless that Lender is able to make or
to continue to fund or to maintain such LIBOR Loan at another branch or office
of that Lender without, in that Lender's opinion, adversely affecting it or its
Loans or the income obtained therefrom, on notice thereof and demand therefor by
such Lender to Borrowers through Agent, (i) the obligation of such Lender to
agree to make or to make or to continue to fund or maintain LIBOR Loans shall
terminate and (ii) Borrowers shall forthwith prepay in full all outstanding
LIBOR Loans owing by Borrowers to such Lender, together with interest accrued
thereon, unless Borrower Representative on behalf of Borrowers, within five (5)
Business Days after the delivery of such notice and demand, converts all LIBOR
Loans into Index Rate Loans.
(d) Within 15 days after receipt by Borrower Representative of
written notice and demand from any Lender (an "AFFECTED LENDER") for payment of
additional amounts or increased costs as provided in SECTIONS 1.15(a), 1.16(a)
or 1.16(b), Borrowers may, at their option, notify Agent, Revolving Credit Agent
and such Affected Lender of their intention to replace the Affected Lender. So
long as no Default or Event of Default has occurred and is continuing,
Borrowers, with the consent of Agent and Revolving Credit Agent, may obtain, at
Borrowers' expense, a replacement Lender ("REPLACEMENT LENDER") for the Affected
Lender, which Replacement Lender must be reasonably satisfactory to Agent. If
Borrowers obtain a Replacement Lender within 90 days following notice of their
intention to do so, the Affected Lender must sell and assign its Loans and
Commitments to such Replacement Lender for an amount equal to the principal
balance of all Loans held by the Affected Lender and all accrued interest and
Fees with respect thereto through the date of such sale; PROVIDED, Borrowers
shall have reimbursed such Affected Lender for the additional amounts or
increased costs that it is entitled to receive under this Agreement through the
date of such sale and assignment. Notwithstanding the foregoing, Borrowers shall
not have the right to obtain a Replacement
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Lender if the Affected Lender rescinds its demand for increased costs or
additional amounts within 15 days following its receipt of Borrowers' notice of
intention to replace such Affected Lender. Furthermore, if Borrowers give a
notice of intention to replace and do not so replace such Affected Lender within
90 days thereafter, Borrowers' rights under this SECTION 1.16(d) shall terminate
and Borrowers shall promptly pay all increased costs or additional amounts
demanded by such Affected Lender pursuant to SECTIONS 1.15(a), 1.16(a) and
1.16(b).
1.17 SINGLE LOAN.
All Loans to Borrowers and all of the other Obligations of
Borrowers arising under this Agreement and the other Loan Documents shall
constitute one general obligation of Borrowers secured, until the Termination
Date, by all of the Collateral.
1.18 JOINDER OF ADDITIONAL BORROWERS.
Any Person who is not a Borrower hereunder at the Closing Date, and is
required to become a Borrower hereunder, must (i) become a party to this
Agreement, (ii) assume all of the Obligations hereunder and under the other Loan
Documents and (iii) be bound by all the terms, conditions, representations and
warranties hereunder and under the other Loan Documents. Without limiting the
foregoing, such additional Borrower promises to be jointly and severally liable
along with the other Borrowers for the repayment of the Obligations including
the entire principal amount of the Revolving Loan and the Term Loan when due
under this Agreement. Further, such additional Borrower shall, provide the
following to Agent, each in form and substance satisfactory to Agent in its sole
discretion:
(a) A Joinder Agreement in the form set forth on EXHIBIT 1.18;
(b) Updated Schedules to this Agreement and the Security Agreement;
(c) A Pledge Agreement pursuant to which such Borrower pledges 100%
of the outstanding Stock of its US Subsidiaries and 65% of the
Stock of its Subsidiaries which are Foreign Subsidiaries to Agent
to secure the Obligations, in form and content acceptable to
Agent, accompanied by share certificates representing all of the
outstanding Stock being pledged pursuant to such Pledge Agreement
and stock powers for such share certificates executed in blank;
(d) Copies of the articles of incorporations, or otherwise applicable
organizational documents, of such additional Borrower;
(e) Good Standing certificates, domestic and foreign (if applicable)
of such additional Borrower;
(f) Certificates of the Secretary of such additional Borrower setting
forth (1) the names and true signatures of the authorized
officers of such additional Borrower, (2) the by-laws or
otherwise applicable governing documents of such additional
Borrower, (3) resolutions of such additional Borrower approving
the transaction and the assumption of the Obligations, and (4)
that the representations and
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warranties set forth in SECTION 3 hereof and the other Loan
Documents are true and correct; and
(g) Such other certificates, documents, opinions, agreements and
information as Agent or any Lender may reasonably request.
2. CONDITIONS PRECEDENT
2.1 CONDITIONS TO THE INITIAL LOANS.
No Lender shall be obligated to make any Loan or incur any Letter
of Credit Obligations on the Closing Date, or to take, fulfill, or perform any
other action hereunder, until the following conditions have been satisfied or
provided for in a manner satisfactory to Agent, or waived or postponed in
writing by Agent:
(a) CREDIT AGREEMENT; LOAN DOCUMENTS. This Agreement or
counterparts hereof shall have been duly executed by, and delivered to,
Borrowers, each other Credit Party, Agent, Revolving Credit Agent and Lenders;
and Agent shall have received such documents, instruments, agreements and legal
opinions as Agent shall reasonably request in connection with the transactions
contemplated by this Agreement and the other Loan Documents, including all those
listed in the Closing Checklist attached hereto as ANNEX D, each in form and
substance reasonably satisfactory to Agent.
(b) REPAYMENT OF PRIOR LENDER OBLIGATIONS; SATISFACTION OF
OUTSTANDING L/CS. (i) Agent shall have received a fully executed original of a
pay-off letter reasonably satisfactory to Agent confirming that all of the Prior
Lender Obligations will be repaid in full from the proceeds of the Term Loan and
the initial Revolving Credit Advance and all Liens upon any of the property of
Borrowers or any of their Subsidiaries in favor of Prior Lender shall be
terminated by Prior Lender immediately upon such payment; and (ii) all letters
of credit issued or guaranteed by Prior Lender shall have been cash
collateralized, supported by a guaranty of Agent or supported by a Letter of
Credit issued pursuant to ANNEX B, as mutually agreed upon by Agent, L/C Issuer,
Borrowers and Prior Lender.
(c) APPROVALS. Agent shall have received (i) satisfactory
evidence that the Credit Parties have obtained all required consents and
approvals of all Persons including all requisite Governmental Authorities, to
the execution, delivery and performance of this Agreement and the other Loan
Documents and the consummation of the Related Transactions or (ii) an officer's
certificate in form and substance reasonably satisfactory to Agent affirming
that no such consents or approvals are required.
(d) OPENING AVAILABILITY. The Eligible Accounts and Eligible
Inventory supporting the initial Revolving Credit Advance and the initial Letter
of Credit Obligations incurred and the amount of the Reserves to be established
on the Closing Date shall be sufficient in value, as determined by Agent and
Revolving Credit Agent, to provide Borrowers, with Borrowing Availability, after
giving effect to the initial Revolving Credit Advance made to Borrowers, and the
incurrence of any initial Letter of Credit Obligations (on a pro forma basis,
with trade payables being paid currently, and expenses and liabilities being
paid in the ordinary course of business and without acceleration of sales) of at
least $5,000,000.
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(e) PAYMENT OF FEES. Borrowers shall have paid the Fees required
to be paid on the Closing Date in the respective amounts specified in SECTION
1.9 (including the Fees specified in the GE Capital Fee Letter), and shall have
reimbursed Agent, Revolving Credit Agent and L/C Issuer for all fees, costs and
expenses of closing presented as of the Closing Date.
(f) CAPITAL STRUCTURE: OTHER INDEBTEDNESS. The capital structure
of each Credit Party and the terms and conditions of all Indebtedness of each
Credit Party shall be acceptable to Agent in its sole discretion.
(g) CASH MANAGEMENT SYSTEM. Borrowers shall have established cash
management systems in form and substance acceptable to Agent in its sole
discretion.
(h) DUE DILIGENCE. Agent shall have completed its business and
legal due diligence, with results reasonably satisfactory to Agent.
(i) MAXIMUM LEVERAGE RATIO. The Leverage Ratio, as of May 31,
2002 shall not exceed 2.5 to 1.0.
(j) MINIMUM EBITDA. Borrowers and their Subsidiaries on a
consolidated basis shall have for the twelve month period ending May 31, 2002,
EBITDA of not less than $23,000,000.
2.2 FURTHER CONDITIONS TO EACH LOAN.
Except as otherwise expressly provided herein, no Lender shall be
obligated to fund any Advance, convert or continue any Loan as a LIBOR Loan or
incur any Letter of Credit Obligation, if, as of the date thereof:
(a) any representation or warranty by any Credit Party contained
herein or in any other Loan Document is untrue or incorrect as of such date, in
any material respect, except to the extent that such representation or warranty
expressly relates to an earlier date and except for changes therein expressly
permitted or expressly contemplated by this Agreement and Agent, Revolving
Credit Agent (or L/C Issuer with respect to Letters of Credit) or Requisite
Revolving Lenders have determined not to make such Advance, convert or continue
any Loan as LIBOR Loan or incur such Letter of Credit Obligation as a result of
the fact that such warranty or representation is untrue or incorrect in any
material respect;
(b) any event or circumstance having a Material Adverse Effect
has occurred since the date hereof as determined by the Requisite Revolving
Lenders and Requisite Revolving Lenders have determined not to make such
Advance, convert or continue any Loan as a LIBOR Loan or incur such Letter of
Credit Obligation as a result of the fact that such event or circumstance has
occurred;
(c) any Default or Event of Default has occurred and is
continuing or would result after giving effect to any Advance (or the incurrence
of any Letter of Credit Obligation), and Requisite Revolving Lenders shall have
determined not to make any Advance, convert or continue any Loan as a LIBOR Loan
or incur any Letter of Credit Obligation as a result of that Default or Event of
Default; or
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(d) after giving effect to any Advance (or the incurrence of any
Letter of Credit Obligations), the outstanding principal amount of the aggregate
Revolving Loan would exceed the Maximum Amount.
The request and acceptance by Borrowers of the proceeds of any Advance,
the incurrence of any Letter of Credit Obligations or the conversion or
continuation of any Loan into, or as, a LIBOR Loan, shall be deemed to
constitute, as of the date thereof, (i) a representation and warranty by
Borrowers that the conditions in this SECTION 2.2 have been satisfied and (ii) a
reaffirmation by Borrowers of the cross-guaranty provisions set forth in SECTION
12 and of the granting and continuance of Agent's Liens, on behalf of itself,
Revolving Credit Agent and Lenders, pursuant to the Collateral Documents.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans and to incur Letter of Credit
Obligations and the L/C Issuer to issue the Letters of Credit, the Credit
Parties executing this Agreement, jointly and severally, make the following
representations and warranties to Agent, Revolving Credit Agent and each Lender
with respect to all Credit Parties and each of their Subsidiaries, each and all
of which shall survive the execution and delivery of this Agreement.
3.1 CORPORATE EXISTENCE; COMPLIANCE WITH LAW.
Each Credit Party and each of their Subsidiaries (a) is a
corporation, limited liability company or limited partnership duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation or organization set forth in Disclosure SCHEDULE
(3.1); (b) is duly qualified to conduct business and is in good standing in each
other jurisdiction where its ownership or lease of property or the conduct of
its business requires such qualification, except where the failure to be so
qualified would not result in exposure to losses, damages or liabilities in
excess of $250,000; (c) has the requisite power and authority and the legal
right to own, pledge, mortgage or otherwise encumber and operate its properties,
to lease the property it operates under lease and to conduct its business as
now, heretofore and proposed to be conducted; (d) subject to specific
representations regarding Environmental Laws, has all material licenses,
permits, consents or approvals from or by, and has made all material filings
with, and has given all material notices to, all Governmental Authorities having
jurisdiction, to the extent required for such ownership, operation and conduct;
(e) is in compliance with its charter and bylaws or partnership or operating
agreement, as applicable; and (f) subject to specific representations set forth
herein regarding ERISA, Environmental Laws, tax and other laws, is in compliance
with all applicable provisions of law, except where the failure to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
3.2 EXECUTIVE OFFICES, COLLATERAL LOCATIONS, FEIN.
As of the Closing Date, the current location of each Borrower's
chief executive office and the warehouses and leased and owned premises at which
any Collateral is located are set forth in DISCLOSURE SCHEDULE (3.2). In
addition, DISCLOSURE SCHEDULE (3.2) lists the federal employer identification
number of each Borrower.
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3.3 CORPORATE POWER, AUTHORIZATION, ENFORCEABLE OBLIGATIONS.
The execution, delivery and performance by each Credit Party of
the Loan Documents to which it is a party and the creation of all Liens provided
for therein: (a) are within such Person's power; (b) have been duly authorized
by all necessary corporate, limited liability company or limited partnership
action; (c) do not contravene any provision of such Person's charter, bylaws or
partnership or operating agreement as applicable; (d) do not violate any law or
regulation, or any order or decree of any court or Governmental Authority; (e)
do not conflict with or result in the breach or termination of, constitute a
default under or accelerate or permit the acceleration of any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which such Person is a party or by which such Person or any of its
property is bound; (f) do not result in the creation or imposition of any Lien
upon any of the property of such Person other than those in favor of Agent, on
behalf of itself and Lenders, pursuant to the Loan Documents; and (g) do not
require the consent or approval of any Governmental Authority or any other
Person, except those referred to in SECTION 2.1(c), all of which will have been
duly obtained, made or complied with prior to the Closing Date. Each of the Loan
Documents shall be duly executed and delivered by each Credit Party that is a
party thereto and each such Loan Document shall constitute a legal, valid and
binding obligation of such Credit Party enforceable against it in accordance
with its terms.
3.4 FINANCIAL STATEMENTS AND PROJECTIONS.
Except for the Projections, all Financial Statements concerning
Borrowers and their respective Subsidiaries that are referred to below have been
prepared in accordance with GAAP consistently applied throughout the periods
covered (except as disclosed therein and except, with respect to unaudited
Financial Statements, for the absence of footnotes and normal year-end audit
adjustments) and present fairly in all material respects the financial position
of the Persons covered thereby as at the dates thereof and the results of their
operations and cash flows for the periods then ended.
(a) FINANCIAL STATEMENTS. The following Financial Statements
attached hereto as DISCLOSURE SCHEDULE (3.4(a)) have been delivered on the date
hereof:
(i) The audited consolidated balance sheet at January 31,
2001 and 2002 and the related statements of income and cash flows of Borrowers
and their Subsidiaries for the Fiscal Years then ended, certified by Deloitte &
Touche, LLP.
(ii) The unaudited balance sheet(s) at May 31, 2002 and the
related statement(s) of income and cash flows of Borrowers and their
Subsidiaries for the period then ended.
(b) PROJECTIONS. The Projections delivered on or prior to the
date hereof and attached hereto as DISCLOSURE SCHEDULE (3.4(b)) have been
prepared by Borrowers in light of the past operations of their businesses, but
including future payments of known contingent liabilities, and reflect
projections for the six (6) year period beginning on February 1, 2002 on a
quarterly basis. The Projections are based upon estimates and assumptions stated
therein, all of which Borrowers believe to be reasonable and fair in light of
current conditions and current facts
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known to Borrowers and, as of the Closing Date, reflect Borrowers' good faith
and reasonable estimates of the future financial performance of Borrowers and
their respective Subsidiaries and of the other information projected therein for
the period set forth therein.
3.5 MATERIAL ADVERSE EFFECT.
Between January 31, 2002 and the Closing Date: (a) no Credit
Party or Subsidiary of any Credit Party has incurred any obligations, contingent
or noncontingent liabilities, liabilities for Charges, long-term leases or
unusual forward or long-term commitments that, alone or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, (b) no contract, lease
or other agreement or instrument has been entered into by any Credit Party or
any of their Subsidiaries or has become binding upon any Credit Party's or any
Credit Party's Subsidiary's assets and no law or regulation applicable to any
Credit Party or any of their Subsidiaries has been adopted that has had or could
reasonably be expected to have a Material Adverse Effect, and (c) no Credit
Party or Subsidiary of any Credit Party is in default and to the best of
Borrowers' knowledge no third party is in default under any material contract,
lease or other agreement or instrument, that alone or in the aggregate could
reasonably be expected to have a Material Adverse Effect. Between January 31,
2002 and the Closing Date no event has occurred, that alone or together with
other events, could reasonably be expected to have a Material Adverse Effect.
3.6 OWNERSHIP OF PROPERTY; LIENS.
As of the Closing Date, the real estate ("REAL ESTATE") listed in
DISCLOSURE SCHEDULE (3.6) constitutes all of the real property owned, leased,
subleased, or used by any Borrower. Each Borrower owns good and marketable fee
simple title to all of its owned Real Estate, and valid leasehold interests in
all of its leased Real Estate, all as described on DISCLOSURE SCHEDULE (3.6),
and copies of all such leases or a summary of terms thereof reasonably
satisfactory to Agent have been delivered to Agent. DISCLOSURE SCHEDULE (3.6)
further describes any Real Estate with respect to which any Borrower is a
lessor, sublessor or assignor as of the Closing Date. Each Borrower also has
good and marketable title to, or valid leasehold interests in, all of its
personal property and assets. As of the Closing Date, none of the properties and
assets of any Credit Party are subject to any Liens other than Permitted
Encumbrances, and there are no facts, circumstances or conditions known to any
Credit Party that may result in any Liens (including Liens arising under
Environmental Laws) other than Permitted Encumbrances. Each Borrower has
received all deeds, assignments, waivers, consents, bills of sale and other
documents, and has duly effected all recordings, filings and other actions
necessary to establish, protect and perfect such Borrower's right, title and
interest in and to all such Real Estate and other properties and assets.
DISCLOSURE SCHEDULE (3.6) also describes any purchase options, rights of first
refusal or other similar contractual rights pertaining to any Real Estate. As of
the Closing Date, no portion of any Borrower's Real Estate has suffered any
material damage by fire or other casualty loss that has not heretofore been
repaired and restored in all material respects to its original condition or
otherwise remedied. As of the Closing Date, all material permits required to
have been issued or appropriate to enable the Real Estate to be lawfully
occupied and used for all of the purposes for which it is currently occupied and
used have been lawfully issued and are in full force and effect.
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3.7 LABOR MATTERS.
As of the Closing Date (a) no strikes or other material labor
disputes against any Credit Party or their Subsidiaries are pending or, to any
Credit Party's knowledge, threatened; (b) hours worked by and payment made to
employees of each Credit Party and their Subsidiaries comply, in all material
respects, with the Fair Labor Standards Act and each other federal, state, local
or foreign law applicable to such matters; (c) all payments due from any Credit
Party or their Subsidiaries for employee health and welfare insurance have been
paid or accrued as a liability on the books of such Credit Party or Subsidiary;
(d) except as set forth in DISCLOSURE SCHEDULE (3.7), no Credit Party or US
Subsidiary of any Credit Party is a party to or bound by any material collective
bargaining agreement, management agreement, consulting agreement, employment
agreement, bonus, restricted stock, stock option, or stock appreciation plan or
agreement or any similar plan, agreement or arrangement (and true and complete
copies of any agreements described on DISCLOSURE SCHEDULE (3.7) or satisfactory
summaries thereof have been delivered to Agent); (e) there is no organizing
activity involving any Credit Party or Subsidiary of any Credit Party pending
or, to any Credit Party's knowledge, threatened by any labor union or group of
employees; (f) there are no representation proceedings pending or, to any Credit
Party's knowledge, threatened with the National Labor Relations Board, and no
labor organization or group of employees of any Credit Party or their
Subsidiaries has made a pending demand for recognition; and (g) except as set
forth in DISCLOSURE SCHEDULE (3.7), there are no material complaints or charges
against any Credit Party or their Subsidiaries pending or, to the knowledge of
any Credit Party, threatened to be filed with any Governmental Authority or
arbitrator based on, arising out of, in connection with, or otherwise relating
to the employment or termination of employment by any Credit Party or their
Subsidiaries of any individual.
3.8 VENTURES, SUBSIDIARIES AND AFFILIATES; OUTSTANDING STOCK AND
INDEBTEDNESS.
Except as set forth in DISCLOSURE SCHEDULE (3.8), as of the
Closing Date, no Credit Party or Subsidiary of any Credit Party has any
Subsidiaries, is engaged in any joint venture or partnership with any other
Person, or is an Affiliate of any other Person. All of the issued and
outstanding Stock of each Credit Party (other than Xxxxx) and their Subsidiaries
is owned by each of the Stockholders and in the amounts set forth in DISCLOSURE
SCHEDULE (3.8). Except as set forth in DISCLOSURE SCHEDULE (3.8), there are no
outstanding rights to purchase, options, warrants or similar rights or
agreements pursuant to which any Credit Party may be required to issue, sell,
repurchase or redeem any of its Stock or other equity securities or any Stock or
other equity securities of its Subsidiaries (other than employee or directory
Stock option programs, benefit plans or compensation programs). All outstanding
Indebtedness and Guaranteed Indebtedness of each Credit Party as of the Closing
Date (except for the Obligations) is described in SECTION 6.3 (including
DISCLOSURE SCHEDULE (6.3)).
3.9 GOVERNMENT REGULATION.
No Credit Party or any of their Subsidiaries is an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940. No Credit Party or any of their Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935, the
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Federal Power Act, or any other federal or state statute that restricts or
limits its ability to incur Indebtedness or to perform its obligations
hereunder. The making of the Loans by Lenders to Borrowers, the incurrence of
the Letter of Credit Obligations on behalf of Borrowers, the application of the
proceeds thereof and repayment thereof and the consummation of the Related
Transactions will not violate any provision of any such statute or any rule,
regulation or order issued by the Securities and Exchange Commission.
3.10 MARGIN REGULATIONS.
No Credit Party or any of their Subsidiaries is engaged, nor will
it engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" as such terms are defined in Regulation U of the Federal Reserve Board as
now and from time to time hereafter in effect (such securities being referred to
herein as "MARGIN STOCK"). No Credit Party or any of their Subsidiaries owns any
Margin Stock, and none of the proceeds of the Loans or other extensions of
credit under this Agreement will be used, directly or indirectly, for the
purpose of purchasing or carrying any Margin Stock, for the purpose of reducing
or retiring any Indebtedness that was originally incurred to purchase or carry
any Margin Stock or for any other purpose that might cause any of the Loans or
other extensions of credit under this Agreement to be considered a "purpose
credit" within the meaning of Regulations T, U or X of the Federal Reserve
Board. No Credit Party or any of their Subsidiaries will take or permit to be
taken any action that might cause any Loan Document to violate any regulation of
the Federal Reserve Board.
3.11 TAXES.
All tax returns, reports and statements, including information
returns, required by any Governmental Authority to be filed by any Credit Party
or any of their US Subsidiaries have been filed with the appropriate
Governmental Authority and all Charges have been paid prior to the date on which
any fine, penalty, interest or late charge may be added thereto for nonpayment
thereof (or any such fine, penalty, interest, late charge or loss has been
paid), excluding Charges or other amounts being contested in accordance with
SECTION 5.2(b). Proper and accurate amounts have been withheld by each Credit
Party and each of their US Subsidiaries from their respective employees for all
periods in full and complete compliance with all applicable federal, state,
local and foreign laws and such withholdings have been timely paid to the
respective Governmental Authorities. DISCLOSURE SCHEDULE (3.11) sets forth as of
the Closing Date those taxable years for which any Credit Party's tax returns
are currently being audited by the IRS or any other applicable Governmental
Authority, and any assessments or threatened assessments in connection with such
audit, or otherwise currently outstanding. Except as described in DISCLOSURE
SCHEDULE (3.11), no Credit Party or any of their US Subsidiaries have executed
or filed with the IRS or any other Governmental Authority any agreement or other
document extending, or having the effect of extending, the period for assessment
or collection of any Charges. None of the Credit Parties or any of their US
Subsidiaries and their respective predecessors are liable for any Charges: (a)
under any agreement (including any tax sharing agreements) or (b) to each Credit
Party's knowledge, as a transferee. As of the Closing Date, no Credit Party or
any of their US Subsidiaries have agreed or been requested to make any
adjustment under IRC Section 481(a), by reason of a change in accounting method
or otherwise, which would have a Material Adverse Effect.
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3.12 ERISA.
(a) DISCLOSURE SCHEDULE (3.12) lists (i) all ERISA Affiliates and
(ii) all Plans and separately identifies all Pension Plans, including Title IV
Plans, Multiemployer Plans, ESOPs and Welfare Plans, including all Retiree
Welfare Plans. Copies of all such listed Plans, together with a copy of the
latest IRS/DOL 5500-series form for each such Plan, have been delivered to
Agent. Except with respect to Multiemployer Plans, each Qualified Plan has been
determined by the IRS to qualify under Section 401 of the IRC, the trusts
created thereunder have been determined to be exempt from tax under the
provisions of Section 501 of the IRC, and nothing has occurred that would cause
the loss of such qualification or tax-exempt status, however, such plans have
been submitted to the IRS for updated determination letters. Each Plan is in
compliance, in all material respects, with the applicable provisions of ERISA
and the IRC, including the timely filing of all reports required under the IRC
or ERISA, including the statement required by 29 CFR Section 2520.104-23.
Neither any Credit Party, nor any of their Subsidiaries nor ERISA Affiliate has
failed to make any contribution or pay any amount due as required by either
Section 412 of the IRC or Section 302 of ERISA or the terms of any such Plan.
Neither any Credit Party nor any of their Subsidiaries nor ERISA Affiliate has
engaged in a "prohibited transaction," as defined in Section 406 of ERISA and
Section 4975 of the IRC, in connection with any Plan, that would subject any
Credit Party or their Subsidiaries to a material tax on prohibited transactions
imposed by Section 502(i) of ERISA or Section 4975 of the IRC.
(b) Except as set forth in DISCLOSURE SCHEDULE (3.12): (i) no
Title IV Plan has any Unfunded Pension Liability; (ii) no ERISA Event or event
described in Section 4062(e) of ERISA with respect to any Title IV Plan has
occurred or is reasonably expected to occur; (iii) there are no pending, or to
the knowledge of any Credit Party, threatened claims (other than claims for
benefits in the normal course), sanctions, actions or lawsuits, asserted or
instituted against any Plan or any Person as fiduciary or sponsor of any Plan;
(iv) no Credit Party, no Subsidiary of any Credit Party or ERISA Affiliate has
incurred or reasonably expects to incur any liability as a result of a complete
or partial withdrawal from a Multiemployer Plan; (v) within the last five years
no Title IV Plan of any Credit Party, no Subsidiary of any Credit Party or ERISA
Affiliate has been terminated, whether or not in a "standard termination" as
that term is used in Section 4041(b)(1) of ERISA, nor has any Title IV Plan of
any Credit Party, any Subsidiary of any Credit Party or any ERISA Affiliate
(determined at any time within the last five years) with Unfunded Pension
Liabilities been transferred outside of the "controlled group" (within the
meaning of Section 4001(a)(14) of ERISA) of any Credit Party, any Subsidiary of
any Credit Party or ERISA Affiliate (determined at such time); (vi) except in
the case of any ESOP, Stock of all Credit Parties, their Subsidiaries and their
ERISA Affiliates makes up, in the aggregate, no more than 10% of fair market
value of the assets of any Plan measured on the basis of fair market value as of
the latest valuation date of any Plan; and (vii) no liability under any Title IV
Plan has been satisfied with the purchase of a contract from an insurance
company that is not rated AAA by the Standard & Poor's Corporation or an
equivalent rating by another nationally recognized rating agency.
3.13 NO LITIGATION.
No action, claim, lawsuit, demand, investigation or proceeding is
now pending or, to the knowledge of any Credit Party, threatened against any
Credit Party or their Subsidiaries,
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before any Governmental Authority or before any arbitrator or panel of
arbitrators (collectively, "LITIGATION"), (a) that challenges any Credit Party's
or their Subsidiaries' right or power to enter into or perform any of its
obligations under the Loan Documents to which it is a party, or the validity or
enforceability of any Loan Document or any action taken thereunder, or (b) that
has a reasonable risk of being determined adversely to any Credit Party or their
Subsidiaries and that , if so determined, could be reasonably be expected to
have a Material Adverse Effect. Except as set forth on DISCLOSURE SCHEDULE
(3.13), as of the Closing Date there is no Litigation pending or, to any Credit
Party's knowledge, threatened, that seeks damages in excess of $1,000,000 or
injunctive relief against, or alleges criminal misconduct of, any Credit Party
or their Subsidiaries.
3.14 BROKERS.
No broker or finder brought about the obtaining, making or
closing of the Loans or the Related Transactions, and no Credit Party,
Subsidiary or Affiliate thereof has any obligation to any Person in respect of
any finder's or brokerage fees in connection therewith.
3.15 INTELLECTUAL PROPERTY.
As of the Closing Date, each Credit Party owns or has rights to
use all Intellectual Property necessary to continue to conduct its business as
now or heretofore conducted by it or proposed to be conducted by it, and each
material Patent, Trademark, Copyright and License is listed, together with
application or registration numbers, as applicable, in DISCLOSURE SCHEDULE
(3.15). Each Credit Party and each of their Subsidiaries conducts its business
and affairs without infringement of or interference with any Intellectual
Property of any other Person in any material respect. Except as set forth in
DISCLOSURE SCHEDULE (3.15), no Credit Party is aware of any infringement claim
by any other Person with respect to any Intellectual Property.
3.16 FULL DISCLOSURE.
No information contained in this Agreement, any of the other Loan
Documents, any Projections, Financial Statements or Collateral Reports or other
written reports from time to time delivered hereunder or any written statement
furnished by or on behalf of any Credit Party to Agent or any Lender pursuant to
the terms of this Agreement contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
the statements contained herein or therein not misleading in light of the
circumstances under which they were made. The Liens granted to Agent, on behalf
of itself and Lenders, pursuant to the Collateral Documents will at all times be
fully perfected first priority Liens in and to the Collateral described therein,
subject, as to priority, only to Permitted Encumbrances.
3.17 ENVIRONMENTAL MATTERS.
(a) Except as set forth in DISCLOSURE SCHEDULE (3.17), as of the
Closing Date: (i) the Real Estate is free of contamination from any Hazardous
Material except for such contamination that would not adversely impact the value
or marketability of such Real Estate and that would not result in Environmental
Liabilities that could reasonably be expected to exceed $100,000; (ii) no Credit
Party has caused or suffered to occur any Release of Hazardous Materials on, at,
in, under, above, to, from or about any of its Real Estate; (iii) the Credit
Parties are and have been in compliance with all Environmental Laws, except for
such noncompliance
29
that would not result in Environmental Liabilities which could reasonably be
expected to exceed $100,000; (iv) the Credit Parties have obtained, and are in
compliance with, all Environmental Permits required by Environmental Laws for
the operations of their respective businesses as presently conducted or as
proposed to be conducted, except where the failure to so obtain or comply with
such Environmental Permits would not result in Environmental Liabilities that
could reasonably be expected to exceed $100,000, and all such Environmental
Permits are valid, uncontested and in good standing; (v) no Credit Party is
involved in operations or knows of any facts, circumstances or conditions,
including any Releases of Hazardous Materials, that are likely to result in any
Environmental Liabilities of such Credit Party which could reasonably be
expected to exceed $100,000, and no Credit Party has permitted any current or
former tenant or occupant of the Real Estate to engage in any such operations;
(vi) there is no Litigation arising under or related to any Environmental Laws,
Environmental Permits or Hazardous Material that seeks damages, penalties,
fines, costs or expenses in excess of $100,000 or injunctive relief against, or
that alleges criminal misconduct by, any Credit Party; and (vii) no notice has
been received by any Credit Party identifying it as a "potentially responsible
party" or requesting information under CERCLA or analogous state statutes, and
to the knowledge of the Credit Parties, there are no facts, circumstances or
conditions that may result in any Credit Party being identified as a
"potentially responsible party" under CERCLA or analogous state statutes.
(b) Each Credit Party hereby acknowledges and agrees that neither
Agent, Revolving Credit Agent, any Lender nor the L/C Issuer (i) is, nor has
ever been, in control of any of the Real Estate or any Credit Party's affairs,
and (ii) has the capacity through the provisions of the Loan Documents or
otherwise to influence any Credit Party's conduct with respect to the ownership,
operation or management of any of its Real Estate or compliance with
Environmental Laws or Environmental Permits.
3.18 INSURANCE.
DISCLOSURE SCHEDULE (3.18) lists all insurance policies of any
nature maintained, as of the Closing Date, for current occurrences by each
Borrower, as well as a summary of the terms of each such policy.
3.19 DEPOSIT AND DISBURSEMENT ACCOUNTS.
DISCLOSURE SCHEDULE (3.19) lists all banks and other financial
institutions at which any Borrower maintains deposit or other accounts as of the
Closing Date, including any Disbursement Accounts, and such Schedule correctly
identifies the name, address and telephone number of each depository, the name
in which the account is held, a description of the purpose of the account, and
the complete account number therefor.
3.20 GOVERNMENT CONTRACTS.
Except as set forth in DISCLOSURE SCHEDULE (3.20), as of the
Closing Date, no Borrower is a party to any contract or agreement with any
Governmental Authority (other than municipalities) and no Borrower's Accounts
are subject to the Federal Assignment of Claims Act (31 U.S.C. Section 3727).
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3.21 CUSTOMER AND TRADE RELATIONS.
As of the Closing Date, there exists no actual or, to the
knowledge of any Credit Party, threatened termination or cancellation of, or any
material adverse modification or change in: the business relationship of any
Credit Party or any of their Subsidiaries with any customer or group of
customers whose purchases during the preceding 12 months caused them to be
ranked among the ten largest customers of such Credit Party or Subsidiary; or
the business relationship of any Credit Party or their Subsidiaries with any
supplier material to its operations.
3.22 AGREEMENTS AND OTHER DOCUMENTS.
As of the Closing Date, each Credit Party has provided to Agent
or its counsel, on behalf of Lenders, accurate and complete copies (or
summaries) of all of the following agreements or documents to which it is
subject and each of which is listed in DISCLOSURE SCHEDULE (3.22): supply
agreements and purchase agreements not terminable by such Credit Party within 60
days following written notice issued by such Credit Party and involving
transactions in excess of $1,000,000 per annum; leases of Equipment having a
remaining term of one year or longer and requiring aggregate rental and other
payments in excess of $1,000,000 per annum; licenses and permits held by the
Credit Parties, the absence of which could be reasonably likely to have a
Material Adverse Effect; instruments and documents evidencing any Indebtedness
or Guaranteed Indebtedness of such Credit Party and any Lien granted by such
Credit Party with respect thereto; and instruments and agreements evidencing the
issuance of any equity securities, warrants, rights or options to purchase
equity securities of such Credit Party (other than employee or director Stock
option programs, benefit plans or compensation programs).
3.23 SOLVENCY.
Both before and after giving effect to (a) the Loans and Letter
of Credit Obligations to be made or incurred on the Closing Date or such other
date as Loans and Letter of Credit Obligations requested hereunder are made or
incurred, (b) the disbursement of the proceeds of such Loans pursuant to the
instructions of Borrower; (c) the Refinancing; and (d) the payment and accrual
of all transaction costs in connection with the foregoing, each Credit Party and
each of their Subsidiaries is and will be Solvent.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 REPORTS AND NOTICES.
(a) Each Credit Party executing this Agreement hereby agrees that
from and after the Closing Date and until the Termination Date, it shall deliver
to Agent or to Agent and Lenders, as required, the Financial Statements,
notices, Projections and other information at the times, to the Persons and in
the manner set forth in ANNEX E.
(b) Each Credit Party executing this Agreement hereby agrees
that, from and after the Closing Date and until the Termination Date, it shall
deliver to Agent or to Agent and Lenders, as required, the various Collateral
Reports (including Borrowing Base Certificates in the form of EXHIBIT 4.1(b)) at
the times, to the Persons and in the manner set forth in ANNEX F.
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4.2 COMMUNICATION WITH ACCOUNTANTS.
Each Credit Party executing this Agreement authorizes (a) Agent
and, (b) so long as an Event of Default has occurred and is continuing, each
Lender, to communicate directly with its independent certified public
accountants, including Deloitte & Touche, LLP, and authorizes and, at Agent's
request, shall inform those accountants and advisors of Agent's authority
granted hereunder and request those accountants and advisors to disclose and
make available to Agent, Revolving Credit Agent and each Lender any and all
Financial Statements and other supporting financial documents, schedules and
information relating to any Credit Party (including copies of any issued
management letters) with respect to the business, financial condition and other
affairs of any Credit Party.
5. AFFIRMATIVE COVENANTS
Each Credit Party executing this Credit Agreement jointly and
severally agrees on its behalf and on behalf of each of their Subsidiaries that
from and after the date hereof and until the Termination Date:
5.1 MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS.
Each Credit Party shall and shall cause each of their
Subsidiaries to: do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence and its rights and
franchises; continue to conduct its business substantially as now conducted or
as otherwise permitted hereunder; at all times maintain, preserve and protect
all of its assets and properties used or useful in the conduct of its business,
and keep the same in good repair, working order and condition in all material
respects (taking into consideration ordinary wear and tear) and from time to
time make, or cause to be made, all necessary or appropriate repairs,
replacements and improvements thereto consistent with industry practices; and
transact business only in such corporate and trade names as are set forth in
DISCLOSURE SCHEDULE (5.1).
5.2 PAYMENT OF CHARGES.
(a) Subject to SECTION 5.2(b), each Credit Party shall and
shall cause each of their Subsidiaries to pay and discharge or cause to be paid
and discharged promptly all Charges payable by it, including (i) Charges imposed
upon it, its income and profits, or any of its property (real, personal or
mixed) and all Charges with respect to tax, social security and unemployment
withholding with respect to its employees, (ii) lawful claims for labor,
materials, supplies and services or otherwise, and (iii) all storage or rental
charges payable to warehousemen or bailees, in each case, in the ordinary course
of Business for such Credit Party or Subsidiary.
(b) Each Credit Party and their Subsidiaries may in good faith
contest, by appropriate proceedings, the validity or amount of any Charges,
Taxes or claims described in SECTION 5.2(a); PROVIDED, that (i) adequate
reserves with respect to such contest are maintained on the books of such Credit
Party or Subsidiary, in accordance with GAAP; (ii) no Lien shall be imposed to
secure payment of such Charges (other than payments to warehousemen and/or
bailees) that is superior to any of the Liens securing the Obligations and such
contest is maintained and prosecuted continuously and with diligence and
operates to suspend collection or enforcement of such Charges; (iii) none of the
Collateral becomes subject to forfeiture or loss as
32
a result of such contest; (iv) such Credit Party or Subsidiary shall promptly
pay or discharge such contested Charges, Taxes or claims and all additional
charges, interest, penalties and expenses, if any, and shall deliver to Agent
evidence reasonably acceptable to Agent of such compliance, payment or
discharge, if such contest is terminated or discontinued adversely to such
Credit Party or Subsidiary or the conditions set forth in this SECTION 5.2(b)
are no longer met; and (v) Agent has not advised Borrower Representative in
writing that Agent reasonably believes that nonpayment or nondischarge thereof
could have or result in a Material Adverse Effect.
5.3 BOOKS AND RECORDS.
Each Credit Party shall keep adequate books and records with
respect to its business activities in which proper entries, reflecting all
financial transactions, are made in accordance with GAAP and on a basis
consistent with the Financial Statements attached as DISCLOSURE SCHEDULE
(3.4(a)).
5.4 INSURANCE; DAMAGE TO OR DESTRUCTION OF COLLATERAL.
(a) Each Credit Party shall and shall cause each of their
Subsidiaries to, at its sole cost and expense, maintain the policies of
insurance described on DISCLOSURE SCHEDULE (3.18) as in effect on the date
hereof or otherwise in form and amounts and with insurers reasonably acceptable
to Agent. Such policies of insurance (or the loss payable and additional insured
endorsements delivered to Agent) shall contain provisions pursuant to which the
insurer agrees to provide 30 days prior written notice to Agent in the event of
any non-renewal, cancellation or amendment of any such insurance policy. If any
Credit Party at any time or times hereafter shall fail to and shall fail to
cause each of their Subsidiaries to obtain or maintain any of the policies of
insurance required above, or to pay all premiums relating thereto, Agent may at
any time or times thereafter obtain and maintain such policies of insurance and
pay such premiums and take any other action with respect thereto that Agent
deems reasonably advisable and consistent with what is customary in the case of
entities of established reputations engaged in the same or a similar business
and similarly situated as such Borrower. Agent shall have no obligation to
obtain insurance for any Credit Party or any of their Subsidiaries or pay any
premiums therefor. By doing so, Agent shall not be deemed to have waived any
Default or Event of Default arising from any Credit Party's or their
Subsidiaries' failure to maintain such insurance or pay any premiums therefor.
All reasonable sums so disbursed, including reasonable attorneys' fees, court
costs and other charges related thereto, shall be payable on demand by Borrowers
to Agent and shall be additional Obligations hereunder secured by the
Collateral.
(b) Agent reserves the right at any time upon any change in
any Credit Party's or their Subsidiaries' risk profile (including any change in
the product mix maintained by any Credit Party or their Subsidiaries or any laws
affecting the potential liability of such Credit Party or Subsidiary) to require
additional forms and limits of insurance to, in Agent's opinion, adequately
protect both Agent's and Lender's interests in all or any portion of the
Collateral and to ensure that each Credit Party and each of their Subsidiaries
is protected by insurance in amounts and with coverage customary for its
industry. If reasonably requested by Agent, each Credit Party shall deliver and
shall cause each of their Subsidiaries to deliver to Agent from time to time a
report of a reputable insurance broker, reasonably satisfactory to Agent, with
respect to its insurance policies.
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(c) Each Borrower shall deliver to Agent, in form and substance
reasonably satisfactory to Agent, endorsements to (i) all "All Risk" and
business interruption insurance naming Agent, on behalf of itself and Lenders,
as lender loss payee, and (ii) all general liability and other liability
policies naming Agent, on behalf of itself, Revolving Credit Agent, L/C Issuer
and Lenders, as additional insureds. Each Borrower irrevocably makes,
constitutes and appoints Agent (and all officers, employees or agents designated
by Agent), so long as any Default or Event of Default has occurred and is
continuing or the anticipated insurance proceeds exceed $2,500,000, as such
Borrower's true and lawful agent and attorney-in-fact for the purpose of making,
settling and adjusting claims under such "All Risk" policies of insurance,
endorsing the name of such Borrower on any check or other item of payment for
the proceeds of such "All Risk" policies of insurance and for making all
determinations and decisions with respect to such "All Risk" policies of
insurance. Agent shall have no duty to exercise any rights or powers granted to
it pursuant to the foregoing power-of-attorney. Borrowers shall promptly notify
Agent of any loss, damage, or destruction to the Collateral in the amount of
$250,000 or more, whether or not covered by insurance. After deducting from such
proceeds the reasonable expenses, if any, incurred by Agent in the collection or
handling thereof, Agent may, at its option, apply such proceeds to the reduction
of the Obligations in accordance with SECTION 1.3(d). Notwithstanding the
foregoing, if the casualty giving rise to such insurance proceeds could not
reasonably be expected to have a Material Adverse Effect, no Default or Event of
Default has occurred and is continuing, and such insurance proceeds do not
exceed $2,500,000 in the aggregate, Agent shall permit the applicable Borrower
to replace, restore, repair or rebuild the property; PROVIDED that if such
Borrower shall not have completed or entered into binding agreements to complete
such replacement, restoration, repair or rebuilding within 180 days of such
casualty, Agent may require Borrowers to pay such insurance proceeds over to
Agent and Agent will apply such insurance proceeds to the Obligations in
accordance with SECTION 1.3(d). All insurance proceeds for individual casualties
resulting in loss, damage or destruction of Collateral in an amount equal to or
in excess of $2,500,000 and that Requisite Lenders, in their discretion, make
available to Borrowers to replace, repair, restore or rebuild the Collateral, in
accordance with this SECTION 5.4(c) shall be applied by Agent and Revolving
Credit Agent to reduce the outstanding principal balance of the Revolving Loan
of Borrowers (which application shall not result in a permanent reduction of the
Revolving Loan Commitment) and upon such application, Agent shall establish a
Reserve against the Borrowing Base in an amount equal to the amount of such
proceeds so applied. Thereafter, such funds shall be made available to Borrowers
to provide funds to replace, repair, restore or rebuild the Collateral as
follows: (i) Borrowers shall request a Revolving Credit Advance or a release
from the cash collateral account be made to Borrowers in the amount requested to
be released; (ii) so long as the conditions set forth in SECTION 2.2 have been
met, Revolving Lenders shall make such Revolving Credit Advance or Agent shall
release funds from the cash collateral account; and (iii) in the case of
insurance proceeds applied against the Revolving Loan, the Reserve established
with respect to such insurance proceeds shall be reduced by the amount of such
Revolving Credit Advance. To the extent not used to replace, repair, restore or
rebuild the Collateral, such insurance proceeds shall be applied in accordance
with SECTION 1.3(d).
5.5 COMPLIANCE WITH LAWS.
Each Credit Party shall comply with all federal, state, local and
foreign laws and regulations applicable to it, including those relating to ERISA
and labor matters and
34
Environmental Laws and Environmental Permits, except to the extent that the
failure to comply, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
5.6 SUPPLEMENTAL DISCLOSURE.
From time to time as may be reasonably requested by Agent (which
request will not be made more frequently than once each year absent the
occurrence and continuance of a Default or an Event of Default), the Credit
Parties shall supplement each Disclosure Schedule hereto, or any representation
herein or in any other Loan Document, with respect to any matter hereafter
arising that, if existing or occurring at the date of this Agreement, would have
been required to be set forth or described in such Disclosure Schedule or as an
exception to such representation or that is necessary to correct any information
in such Disclosure Schedule or representation which has been rendered inaccurate
thereby (and, in the case of any supplements to any Disclosure Schedule, such
Disclosure Schedule shall be appropriately marked to show the changes made
therein); PROVIDED that (a) no such supplement to any such Disclosure Schedule
or representation shall amend, supplement or otherwise modify any Disclosure
Schedule or representation, or be or be deemed a waiver of any Default or Event
of Default resulting from the matters disclosed therein, except as consented to
by Requisite Lenders in writing, and (b) no supplement shall be required or
permitted as to representations and warranties that relate solely to the Closing
Date.
5.7 INTELLECTUAL PROPERTY.
Each Credit Party will conduct and shall cause each of their
Subsidiaries to conduct its business and affairs without infringement of or
interference with any Intellectual Property of any other Person in any material
respect.
5.8 ENVIRONMENTAL MATTERS.
Each Credit Party shall and shall cause each Person within its
control to: (a) conduct its operations and keep and maintain its Real Estate in
compliance with all Environmental Laws and Environmental Permits other than
noncompliance that could not reasonably be expected to have a Material Adverse
Effect; (b) implement any and all investigation, remediation, removal and
response actions that are appropriate or necessary to maintain the value and
marketability of the Real Estate or to otherwise comply with Environmental Laws
and Environmental Permits pertaining to the presence, generation, treatment,
storage, use, disposal, transportation or Release of any Hazardous Material on,
at, in, under, above, to, from or about any of its Real Estate; (c) notify Agent
promptly after such Credit Party becomes aware of any violation of Environmental
Laws or Environmental Permits or any Release on, at, in, under, above, to, from
or about any Real Estate that is reasonably likely to result in Environmental
Liabilities in excess of $100,000; and (d) promptly forward to Agent a copy of
any order, notice, request for information or any communication or report
received by such Credit Party in connection with any such violation or Release
or any other matter relating to any Environmental Laws or Environmental Permits
that could reasonably be expected to result in Environmental Liabilities in
excess of $100,000, in each case whether or not the Environmental Protection
Agency or any Governmental Authority has taken or threatened any action in
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connection with any such violation, Release or other matter. If Agent at any
time has a reasonable basis to believe that there may be a violation of any
Environmental Laws or Environmental Permits by any Credit Party or any
Environmental Liability arising thereunder, or a Release of Hazardous Materials
on, at, in, under, above, to, from or about any of its Real Estate, that, in
each case, could reasonably be expected to have a Material Adverse Effect, then
each Credit Party shall, upon Agent's written request (i) cause the performance
of such environmental audits including subsurface sampling of soil and
groundwater, and preparation of such environmental reports, at Borrowers'
expense, as Agent may from time to time reasonably request, which shall be
conducted by reputable environmental consulting firms reasonably acceptable to
Agent and shall be in form and substance reasonably acceptable to Agent, and
(ii) permit Agent or its representatives to have access to all Real Estate for
the purpose of conducting such environmental audits and testing as Agent deems
appropriate, including subsurface sampling of soil and groundwater. Borrowers
shall reimburse Agent for the costs of such audits and tests and the same will
constitute a part of the Obligations secured hereunder.
5.9 LANDLORDS' AGREEMENTS, MORTGAGEE AGREEMENTS, BAILEE LETTERS
AND REAL ESTATE PURCHASES.
Upon the request of Agent or the Requisite Lenders, each Credit
Party will use its best efforts to obtain a landlord's agreement, mortgagee
agreement or bailee letter, as applicable, from the lessor of each leased
property, mortgagee of owned property or bailee with respect to any warehouse,
processor or converter facility or other location where Collateral is stored or
located, which agreement or letter shall contain a waiver or subordination of
all Liens or claims that the landlord, mortgagee or bailee may assert against
the Collateral at that location, and shall otherwise be reasonably satisfactory
in form and substance to Agent. With respect to such locations or warehouse
space leased or owned as of the Closing Date and thereafter, if Agent has not
received a landlord or mortgagee agreement or bailee letter as of the Closing
Date (or, if later, as of the date such location is acquired or leased),
Borrowers' Eligible Inventory at that location shall, in Agent's discretion, be
excluded from the Borrowing Base or be subject to such Reserves as may be
established by Agent and Revolving Credit Agent in their reasonable credit
judgment. After the Closing Date, no real property or warehouse space shall be
leased by any Credit Party and no Inventory shall be shipped to a processor or
converter under arrangements established after the Closing Date without the
prior written consent of Agent (which consent, in Agent's discretion, may be
conditioned upon the exclusion from the Borrowing Base of Eligible Inventory at
that location or the establishment of Reserves acceptable to Agent and Revolving
Credit Agent) or, unless and until a reasonably satisfactory landlord agreement
or bailee letter, as appropriate, shall first have been obtained with respect to
such location. Each Credit Party shall timely and fully pay and perform its
obligations under all leases and other agreements with respect to each leased
location or public warehouse where any Collateral is or may be located. To the
extent otherwise permitted hereunder, if any Credit Party proposes to acquire a
fee ownership interest in Real Estate with a fair market value exceeding
$500,000 after the Closing Date, it shall first provide to Agent, for the
benefit of the Lenders, a mortgage or deed of trust granting Agent a first
priority Lien on such Real Estate subject to Permitted Encumbrances, together
with environmental audits, mortgagee title insurance commitment, real property
survey, local counsel opinion(s), and, if required by Agent, supplemental
casualty insurance and flood insurance, and such other documents, instruments or
agreements reasonably requested by Agent, in each case, in form and substance
reasonably satisfactory to Agent.
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5.10 INTEREST RATE/CURRENCY FLUCTUATIONS PROTECTION.
Within sixty (60) days after the Closing Date, Borrowers shall
enter into and maintain, for a period of two (2) years from the Closing Date,
interest rate cap, swap or collar agreements, or other agreements or
arrangements designed to provide protection against fluctuations in interest
rates, fluctuations in foreign currencies or commodity prices, which shall be on
terms, for periods and with counterparties reasonably acceptable to Agent and
Revolving Credit Agent, and pursuant to which Borrowers are protected against
increases in interest rates from and after the date of such contracts as to a
notional amount of not less than $17,500,000.
5.11 FURTHER ASSURANCES.
Each Credit Party executing this Agreement agrees that it shall
and shall cause each other Credit Party to, at such Credit Party's expense and
upon request of Agent, duly execute and deliver, or cause to be duly executed
and delivered, to Agent such further instruments and do and cause to be done
such further acts as may be necessary or proper in the reasonable opinion of
Agent to carry out more effectively the provisions and purposes of this
Agreement or any other Loan Document.
5.12 ADDITIONAL PLEDGES.
Except as required by Section 6.1, to the extent any Borrower
acquires investments or interests following the Closing Date, including any
investment or interests in Subsidiaries, joint ventures, partnerships or other
entities, such Borrower shall, except to the extent that Agent and Revolving
Credit Agent otherwise agrees, pledge and grant a first priority perfected
security interest in all such investments or interests, including any Stock, to
Agent, for the benefit of the Lenders, and execute pledge agreements, security
agreements and other documents or instruments, and deliver such certificates and
stock powers, as Agent shall, in its sole discretion require.
6. NEGATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally
agrees as to all Credit Parties and their Subsidiaries that from and after the
date hereof until the Termination Date:
6.1 MERGERS, SUBSIDIARIES, ETC.
No Credit Party shall or shall allow any of their Subsidiaries to
directly or indirectly, by operation of law or otherwise, (a) form or acquire
any Subsidiary (other than the formation of Subsidiaries in the ordinary course
of Borrowers' business and consistent with past practice; PROVIDED any such new
Subsidiary, to the extent the same is a US Subsidiary, becomes a Borrower
hereunder pursuant to the terms of SECTION 1.18, and 100% of the outstanding
Stock of any US Subsidiary and 65% of the Stock of any such Subsidiary which is
a Foreign Subsidiary of a Borrower is pledged to Agent, in form and content
acceptable to Agent), or (b) merge with, consolidate with, acquire all or
substantially all of the assets or Stock of, or otherwise combine with or
acquire, any Person, except any Subsidiary of any Borrower may merge with such
Borrower or any wholly owned Subsidiary of such Borrower, PROVIDED such
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Borrower or wholly owned Subsidiary shall be the survivor of any such merger to
which it is a party. Notwithstanding the foregoing, any Borrower may acquire all
or substantially all of the assets or Stock of any Person (the "TARGET") (in
each case, a "PERMITTED ACQUISITION") if the sum of all amounts payable in
connection with all Permitted Acquisitions (including all transaction costs and
all Indebtedness, liabilities and contingent obligations incurred or assumed in
connection therewith or otherwise reflected in a consolidated balance sheet of
Borrowers and Target) during the term hereof does not exceed $5,000,000 and the
portion thereof allocable to goodwill and intangible assets for all such
Permitted Acquisitions does not exceed $2,000,000; AND EITHER:
(a) the sum of the amounts payable in connection with any one
such Permitted Acquisition (including all transaction costs and all
Indebtedness, liabilities and contingent obligations incurred or assumed in
connection therewith or otherwise reflected in a consolidated balance sheet of
Borrowers and Target) does not exceed $1,000,000, and at or prior to the closing
of any such Permitted Acquisition, the Target will become a Borrower hereunder
pursuant to the terms of SECTION 1.18, Agent will be granted a first priority
perfected Lien (subject to Permitted Encumbrances) in all assets acquired
pursuant thereto or in the assets and Stock of the Target, and Borrowers and the
Target shall have executed such documents and taken such actions as may be
required by Agent in connection therewith; OR
(b) the Permitted Acquisition is subject to the satisfaction of
each of the following conditions:
(i) Agent shall receive at least thirty (30) Business Days'
prior written notice of such proposed Permitted Acquisition, which notice shall
include a reasonably detailed description of such proposed Permitted
Acquisition;
(ii) such Permitted Acquisition shall only involve assets
comprising a business, or those assets of a business, of the type engaged in by
Borrowers as of the Closing Date, and which business would not subject Agent or
any Lender to regulatory or third party approvals in connection with the
exercise of its rights and remedies under this Agreement or any other Loan
Documents other than approvals applicable to the exercise of such rights and
remedies with respect to Borrowers prior to such Permitted Acquisition;
(iii) such Permitted Acquisition shall be consensual and
shall have been approved by the Target's board of directors;
(iv) no additional Indebtedness, Guaranteed Indebtedness,
contingent obligations or other liabilities shall be incurred, assumed or
otherwise be reflected on a consolidated balance sheet of Borrowers and Target
after giving effect to such Permitted Acquisition, except (A) Loans made
hereunder, (B) ordinary course trade payables, accrued expenses and unsecured
Indebtedness of the Target to the extent no Default or Event of Default has
occurred and is continuing or would result after giving effect to such Permitted
Acquisition, and (C) Subordinated Debt specifically permitted under SECTION
6.3(a)(vii) below;
(v) the Target shall not have incurred an operating loss for
the trailing twelve-month period preceding the date of the Permitted
Acquisition, as determined based upon
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the Target's financial statements for its most recently completed fiscal year
and its most recent interim financial period completed within 60 days prior to
the date of consummation of such Permitted Acquisition;
(vi) the business and assets acquired in such Permitted
Acquisition shall be free and clear of all Liens (other than Permitted
Encumbrances);
(vii) at or prior to the closing of any Permitted
Acquisition, the Target will become a Borrower hereunder pursuant to the terms
of SECTION 1.18, Agent will be granted a first priority perfected Lien (subject
to Permitted Encumbrances) in all assets acquired pursuant thereto or in the
assets and Stock of the Target, and Borrowers and the Target shall have executed
such documents and taken such actions as may be required by Agent in connection
therewith;
(viii) concurrently with delivery of the notice referred to
in CLAUSE (i) above, Borrowers shall have delivered to Agent, in form and
substance reasonably satisfactory to Agent:
(A) updated versions of the most recently delivered
Projections covering the 1-year period commencing on the date of
such Permitted Acquisition and otherwise prepared in accordance
with the Projections (the "ACQUISITION PROJECTIONS") and based upon
historical financial data of a recent date reasonably satisfactory
to Agent, taking into account such Permitted Acquisition; and
(B) a certificate of the chief financial officer of
Borrowers to the effect that: (w) Borrowers will be Solvent upon
the consummation of the Permitted Acquisition; (x) the Acquisition
Projections fairly presents the financial condition of Borrowers
(on a consolidated basis) as of the date thereof after giving
effect to the Permitted Acquisition; (y) the Acquisition
Projections are reasonable estimates of the future financial
performance of Borrowers subsequent to the date thereof based upon
the historical performance of Borrowers and the Target and show
that Borrowers shall continue to be in compliance with the
financial covenants set forth in ANNEX G for the 3-year period
thereafter; and (z) Borrowers have completed their due diligence
investigation with respect to the Target and such Permitted
Acquisition, which investigation was conducted in a manner similar
to that which would have been conducted by a prudent purchaser of a
comparable business and the results of which investigation were
delivered to Agent and Lenders;
(ix) on or prior to the date of such Permitted Acquisition,
Agent shall have received, in form and substance reasonably satisfactory to
Agent, copies of the acquisition agreement and related agreements and
instruments, and all opinions, certificates, lien search results and other
documents reasonably requested by Agent or the Requisite Lenders including those
specified in the last sentence of SECTION 5.9; and
(x) at the time of such Permitted Acquisition and after giving
effect thereto, no Default or Event of Default has occurred and is continuing.
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6.2 INVESTMENTS; LOANS AND ADVANCES.
Except as otherwise expressly permitted by this SECTION 6, no
Credit Party shall or shall allow any of their Subsidiaries to make or permit to
exist any investment in, or make, accrue or permit to exist loans or advances of
money to, any Person, including, without limitation, any other Credit Party,
Subsidiary, Foreign Subsidiary or Affiliate, through the direct or indirect
lending of money, holding of securities, entering into joint ventures or
partnerships, or otherwise, except that: (a) Borrowers may hold investments
comprised of notes payable, or stock or other securities issued by Account
Debtors to Borrowers pursuant to negotiated agreements with respect to
settlement of such Account Debtor's Accounts in the ordinary course of business,
so long as the aggregate amount of such Accounts so settled by Borrowers does
not exceed $1,000,000 and are properly and adequately disclosed in Financial
Statements delivered to Agent; (b) each Credit Party may maintain its existing
investments in its Subsidiaries and Affiliates as of the Closing Date and, so
long as no Default or Event of Default has occurred and is continuing, may make
additional investments in Subsidiaries (in the form of loans or intercompany
Indebtedness) PROVIDED such investments do not exceed $2,500,000 (excluding
interest on intercompany indebtedness and royalties) at any point in time; (c)
Borrowers may make investments not to exceed $1,000,000 in the aggregate
outstanding at any one time, in non-consolidated joint ventures partnerships or
other business associations and non-consolidated Affiliates; (d) Intercompany
Indebtedness of a Borrower and payable to another Borrower as permitted in
SECTION 6.3 below; (e) so long as no Default or Event of Default has occurred
and is continuing and there is no outstanding Revolving Loan balance, Borrowers
may make investments, subject to Control Letters in favor of Agent for the
benefit of Lenders or otherwise subject to a perfected security interest in
favor of Agent for the benefit of Lenders, in (i) marketable direct obligations
issued or unconditionally guaranteed by the United States of America or any
agency thereof maturing within one year from the date of acquisition thereof,
(ii) commercial paper maturing no more than one year from the date of creation
thereof and currently having the highest rating obtainable from either Standard
& Poor's Ratings Group or Xxxxx'x Investors Service, Inc., (iii) certificates of
deposit maturing no more than one year from the date of creation thereof, issued
by commercial banks incorporated under the laws of the United States of America,
each having combined capital, surplus and undivided profits of not less than
$300,000,000 and having a senior unsecured rating of "A" or better by a
nationally recognized rating agency (an "A RATED BANK"), (iv) time deposits
maturing no more than 30 days from the date of creation thereof with A Rated
Banks and (v) mutual funds that invest solely in one or more of the investments
described in clauses (i) through (iv) above, and (f) Borrowers may make
investments characterized as Adjusted Capital Expenditures pursuant to the
definition thereof.
6.3 INDEBTEDNESS.
(a) No Credit Party shall or shall allow any of their
Subsidiaries to create, incur, assume or permit to exist any Indebtedness,
except (without duplication) (i) Indebtedness secured by purchase money security
interests and Capital Leases permitted in SECTION 6.7(c), (ii) the Loans and the
other Obligations, (iii) unfunded pension fund and other employee benefit plan
obligations and liabilities to the extent they are permitted to remain unfunded
under applicable law, (iv) existing Indebtedness described in DISCLOSURE
SCHEDULE (6.3) and refinancings thereof or amendments or modifications thereto
that do not have the effect of increasing the principal
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amount thereof or changing the amortization thereof (other than to extend the
same) and that are otherwise on terms and conditions no less favorable to any
Credit Party, as determined by Requisite Lenders, than the terms of the
Indebtedness being refinanced, amended or modified, (v) Indebtedness
specifically permitted under SECTION 6.1; (vi) Indebtedness consisting of
intercompany loans and advances made by any Borrower to any other Borrower;
PROVIDED, that: (A) Borrowers shall record all intercompany transactions on its
books and records in a manner reasonably satisfactory to Agent; (B) the
obligations of Borrowers under any such intercompany loans and advances shall be
subordinated to the Obligations of Borrowers hereunder in a manner reasonably
satisfactory to Agent; (C) at the time any such intercompany loan or advance is
made by any Borrower to any other Borrower and after giving effect thereto, each
such Borrower shall be Solvent; and (D) no Default or Event of Default would
occur and be continuing after giving effect to any such proposed intercompany
loan;(vii) Subordinated Debt under non-compete agreements entered into in
connection with Permitted Acquisitions and not exceeding in the aggregate at any
time $1,000,000, (viii) Indebtedness evidenced by non-interest bearing
promissory notes representing obligations under various casualty insurance
policies to reimburse the issuing insurance companies for claims against
Borrowers paid by such insurance companies; (ix) other unsecured Indebtedness at
any time outstanding, in addition to Indebtedness permitted by CLAUSES (i)
THROUGH (viii) which shall not exceed $2,000,000.
(b) No Credit Party shall or shall allow any of their
Subsidiaries to, directly or indirectly, voluntarily purchase, redeem, defease
or prepay any principal of, premium, if any, interest or other amount payable in
respect of any Indebtedness, other than (i) the Obligations; (ii) Indebtedness
secured by a Permitted Encumbrance if the asset securing such Indebtedness has
been sold or otherwise disposed of in accordance with SECTIONS 6.8(b) OR (c);
and (iii) Indebtedness permitted by SECTION 6.3(a)(iv) upon any refinancing
thereof in accordance with SECTION 6.3(a)(iv).
6.4 EMPLOYEE LOANS AND AFFILIATE TRANSACTIONS.
(a) Except as otherwise expressly permitted by this ARTICLE 6, no
Credit Party shall or shall allow any of their Subsidiaries to enter into or be
a party to any transaction with any other Credit Party, Subsidiary or any
Affiliate thereof except in the ordinary course of and pursuant to the
reasonable requirements of such Credit Party's or such Credit Party's
Subsidiaries' business and upon fair and reasonable terms that are no less
favorable to such Credit Party or Subsidiary than would be obtained in a
comparable arm's length transaction with a Person not an Affiliate of such
Credit Party or Subsidiary. In addition, if any such transaction or series of
related transactions outside the ordinary course of business, involves payments
in excess of $100,000 in the aggregate, the terms of these transactions must be
disclosed in advance to Agent, Revolving Credit Agent and Lenders. All such
transactions existing as of the date hereof are described in DISCLOSURE SCHEDULE
(6.4(a)).
(b) No Credit Party shall or shall allow any of their
Subsidiaries to enter into any lending or borrowing transaction with any
employees of any Credit Party or their Subsidiaries, except loans to its
respective employees in the ordinary course of business consistent with past
practices for travel and entertainment expenses, relocation costs and similar
purposes.
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6.5 CAPITAL STRUCTURE AND BUSINESS.
No Credit Party shall or shall allow any of their Subsidiaries to
(a) make any changes in any of its business objectives, purposes or operations
that could in any way adversely affect the repayment of the Loans or any of the
other Obligations or could reasonably be expected to have or result in a
Material Adverse Effect, (b) make any change in its capital structure as
described in DISCLOSURE SCHEDULE (3.8), including the issuance or sale of any
shares of Stock, warrants or other securities convertible into Stock or any
revision of the terms of its outstanding Stock other than issuance and sale of
Stock by Xxxxx, (i) the net proceeds of which are subject to SECTION 1.3(b)(iii)
or (ii) in consideration for the purchase of Tecniwell S.R.L. (Piacenza, Italy)
under and pursuant to documentation evidencing or relating to such purchase and
in existence on the Closing Date; or (c) amend its charter or bylaws in a manner
that would adversely affect Agent or Lenders or such Credit Party's or
Subsidiary's duty or ability to repay the Obligations. No Credit Party shall or
shall allow any of their Subsidiaries to engage in any business other than the
businesses currently engaged in by it.
6.6 GUARANTEED INDEBTEDNESS.
Except as otherwise expressly permitted by this ARTICLE 6, no
Credit Party shall or shall allow any of their Subsidiaries to create, incur,
assume or permit to exist any Guaranteed Indebtedness except (a) by endorsement
of instruments or items of payment for deposit to the general account of any
Credit Party or any of their Subsidiaries, and (b) for Guaranteed Indebtedness
incurred for the benefit of any other Borrower if the primary obligation is
expressly permitted by this Agreement other than Indebtedness, if any, of a
Target existing at the time such Target is acquired.
6.7 LIENS.
No Credit Party shall or shall allow any of their Subsidiaries to
create, incur, assume or permit to exist any Lien on or with respect to its
Accounts or any of its other properties or assets (whether now owned or
hereafter acquired) except for (a) Permitted Encumbrances; (b) Liens in
existence on the date hereof and summarized on DISCLOSURE SCHEDULE (6.7)
securing the Indebtedness described on DISCLOSURE SCHEDULE (6.3) and permitted
refinancings, extensions and renewals thereof, including extensions or renewals
of any such Liens; provided that the principal amount of the Indebtedness so
secured is not increased and the Lien does not attach to any other property; (c)
Liens created after the date hereof by conditional sale or other title retention
agreements (including Capital Leases) or in connection with purchase money
Indebtedness with respect to Equipment and Fixtures acquired by any Credit Party
or their Subsidiaries in the ordinary course of business, involving the
incurrence of an aggregate amount of purchase money Indebtedness and Capital
Lease Obligations of not more than $2,000,000 outstanding at any one time for
all such Liens (PROVIDED that such Liens attach only to the assets subject to
such purchase money debt and such Indebtedness is incurred within 20 days
following such purchase and does not exceed 100% of the purchase price of the
subject assets); (d) Liens in favor of Agent arising under the Collateral
Documents; and (e) Liens securing obligations of a Subsidiary of a Borrower
securing Indebtedness to such Borrower, PROVIDED such Liens are assigned to
Agent on behalf of itself and the Lenders, in form and content acceptable to
Agent. In addition, no Credit Party shall or shall allow any of their
42
Subsidiaries to become a party to any agreement, note, indenture or instrument,
or take any other action, that would prohibit the creation of a Lien on any of
its properties or other assets in favor of Agent, on behalf of itself and
Lenders, as additional collateral for the Obligations, except operating leases,
Capital Leases or Licenses which prohibit Liens upon the assets that are subject
thereto.
6.8 SALE OF STOCK AND ASSETS.
No Credit Party shall sell, transfer, convey, assign or otherwise
dispose of any of its properties or other assets, including the Stock of any of
its Subsidiaries (whether in a public or a private offering or otherwise) or any
of its Accounts, other than (a) the sale of Inventory in the ordinary course of
business; (b) the sale, transfer, conveyance or other disposition by a Credit
Party of Equipment, Fixtures or Real Estate pursuant to which the entire amount
of net proceeds of such sale, transfer, conveyance or disposition are used
(within 45 days of receipt thereof) to purchase replacements of such Equipment,
Fixtures and Real Estate having a net book value not exceeding $2,000,000 in any
single transaction or $5,000,000 in the aggregate in any Fiscal Year; (c) the
sale, transfer, conveyance or other disposition by a Credit Party of Equipment,
Fixtures or Real Estate that are obsolete or no longer used or useful in such
Credit Party's business and having a net book value not exceeding $250,000 in
any single transaction or $1,000,000 in the aggregate in any Fiscal Year; (d)
other Equipment and Fixtures having a value not exceeding $100,000 in any single
transaction or $1,000,000 in the aggregate in any Fiscal Year; (e) the sale of
Xxxxx'x interest in Drilling Equipment Supply, Inc. for fair market value to a
third-party purchaser in an arms length transaction; (f) the sale of Xxxxx'x
interest in Worldcover, Inc. for fair market value to an unrelated third-party
purchaser in an arms length transaction; (g) the sale of Xxxxx'x interest in
Stanmines NL's (Malaga, Western Australia) for fair market value to an unrelated
third-party purchaser in an arms length transaction; and (h) the sale, transfer,
conveyance or other disposition of the Real Estate located in Sunbury, Ohio
and/or Salt Lake City, Utah, for their fair market value to an unrelated
third-party purchaser in an arm's length transaction. With respect to any
disposition of assets or other properties permitted pursuant to CLAUSES (b)
THROUGH (h) above, subject to SECTION 1.3(b), Agent agrees on reasonable prior
written notice to release its Lien on such assets or other properties in order
to permit the applicable Credit Party to effect such disposition and shall
authorize Borrowers, at Borrowers' expense, to file appropriate UCC-3
termination statements and other releases as reasonably requested by Borrowers.
6.9 ERISA.
No Credit Party shall, or shall cause or permit any Subsidiary or
ERISA Affiliate to, cause or permit to occur an event that could result in the
imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of
ERISA or cause or permit to occur an ERISA Event to the extent such ERISA Event
could reasonably be expected to have a Material Adverse Effect.
6.10 FINANCIAL COVENANTS.
No Borrower shall breach or fail to comply with any of the
Financial Covenants.
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6.11 HAZARDOUS MATERIALS.
No Credit Party shall or shall allow any of their Subsidiaries to
cause or permit a Release of any Hazardous Material on, at, in, under, above,
to, from or about any of the Real Estate where such Release would (a) violate in
any respect, or form the basis for any Environmental Liabilities under, any
Environmental Laws or Environmental Permits or (b) otherwise adversely impact
the value or marketability of any of the Real Estate or any of the Collateral,
other than, in each such case, such violations or Environmental Liabilities that
could not reasonably be expected to have a Material Adverse Effect.
6.12 SALE-LEASEBACKS.
No Credit Party shall or shall allow any of their Subsidiaries to
engage in any sale-leaseback, synthetic lease or similar transaction involving
any of its assets, other than the sale-leaseback of assets consisting of new
Equipment provided that such sale-leaseback arrangement (a) is documented and
closed within 180 days of any such Equipment acquisition, and (b) does not
otherwise violate the terms of this Agreement or could not reasonably be
expected to give rise to a Default or Event of Default.
6.13 CANCELLATION OF INDEBTEDNESS.
No Credit Party shall or shall allow any of their Subsidiaries to
cancel any claim or debt owing to it, except for reasonable consideration
negotiated on an arm's-length basis and in the ordinary course of its business
consistent with past practices.
6.14 RESTRICTED PAYMENTS.
No Credit Party shall or shall allow any of their Subsidiaries to
make any Restricted Payment, except (a) intercompany loans and advances between
Borrowers to the extent permitted by SECTIONS 6.2 AND 6.3, (b) dividends and
distributions by Subsidiaries of Borrowers paid to Borrowers, (c) employee loans
permitted under SECTION 6.4(b), (d) payments of principal and interest of
intercompany loans or advances issued in accordance with SECTION 6.3; (e)
scheduled payments of interest with respect to the Subordinated Debt, (f)
dividends and distributions by any Subsidiary to owners of such Subsidiary
(other than Borrowers) so long as such dividends and distributions are paid
ratably solely with respect to net income of such Subsidiary, and (g) Xxxxx may
purchase its own Stock on the open market and re-issue such Stock to officers
and employees of Xxxxx in connection with incentive compensation plans or other
agreements with officers, directors or employees of Xxxxx approved by its Board
of Directors or any committee thereof so long as Xxxxx does not purchase more
than $1,000,000 of such Stock in any Fiscal Year; PROVIDED, that (i) no Default
or Event of Default has occurred and is continuing or would result after giving
effect to any Restricted Payment pursuant to CLAUSES (d), (e) OR (f) above, and
(ii) the timing of the Restricted Payments referred to in CLAUSES (d, (e) or (f)
above shall be set at dates that permit the delivery of Financial Statements
necessary to determine current compliance with the Financial Covenants prior to
each such payment.
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6.15 CHANGE OF CORPORATE NAME OR LOCATION; CHANGE OF FISCAL YEAR;
CHANGE OF STATE OF FORMATION OR INCORPORATION.
No Credit Party shall or shall allow any of their Subsidiaries to
(a) change its corporate name or trade name or (b) change its state of formation
or incorporation, chief executive office, principal place of business, corporate
offices or warehouses or locations at which Collateral with an aggregate value
exceeding $1,000,000 is held or stored, or the location of its records
concerning the Collateral, in each case without at least 30 days prior written
notice to Agent and after Agent's written acknowledgment that any reasonable
action requested by Agent in connection therewith, including to continue the
perfection of any Liens in favor of Agent, on behalf of Lenders, in any
Collateral, has been completed or taken, and PROVIDED that any such new location
shall be in the continental United States. Without limiting the foregoing, no
Credit Party shall or shall allow any of their Subsidiaries to change its name,
identity or corporate structure in any manner that might make any financing or
continuation statement filed in connection herewith seriously misleading within
the meaning of Section 9-506 of the Code or any other then applicable provision
of the Code except upon prior written notice to Agent and Lenders and after
Agent's written acknowledgment that any reasonable action requested by Agent in
connection therewith, including to continue the perfection of any Liens in favor
of Agent, on behalf of Lenders, in any Collateral, has been completed or taken.
No Credit Party shall or shall allow any of their Subsidiaries to change its
Fiscal Year.
6.16 NO IMPAIRMENT OF INTERCOMPANY TRANSFERS.
No Credit Party shall or shall allow any of their Subsidiaries to
directly or indirectly enter into or become bound by any agreement, instrument,
indenture or other obligation (other than this Agreement and the other Loan
Documents) that could directly or indirectly restrict, prohibit or require the
consent of any Person with respect to the payment of dividends or distributions
or the making or repayment of intercompany loans by a Subsidiary of Borrowers to
Borrowers or between Borrowers.
6.17 NO SPECULATIVE TRANSACTIONS.
No Credit Party shall or shall allow any of their Subsidiaries to
engage in any transaction involving commodity options, futures contracts or
similar transactions, except solely to hedge against fluctuations in the prices
of commodities owned or purchased by it and the values of foreign currencies
receivable or payable by it and interest swaps, caps or collars.
6.18 LEASES; REAL ESTATE PURCHASES.
No Credit Party shall or shall allow any of their Subsidiaries to
enter into any operating lease for Equipment or Real Estate, if the aggregate of
all operating lease payments payable in any year for all Credit Parties and
their Subsidiaries on a consolidated basis would exceed $10,000,000. Except as
permitted under SECTION 6.1 in connection with a Permitted Acquisition, no
Credit Party shall or shall allow any of their Subsidiaries to purchase a fee
simple ownership interest in Real Estate with an aggregate purchase price in
excess of $1,000,000.
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6.19 CHANGES RELATING TO SUBORDINATED DEBT; MATERIAL CONTRACTS.
No Credit Party shall or shall allow any of their Subsidiaries to
change or amend the terms of any Subordinated Debt (or any indenture or
agreement in connection therewith) if the effect of such amendment is to: (a)
increase the interest rate on such Subordinated Debt; (b) change the dates upon
which payments of principal or interest are due on such Subordinated Debt other
than to extend such dates; (c) change any default or event of default other than
to delete or make less restrictive any default provision therein, or add any
covenant with respect to such Subordinated Debt; (d) change the redemption or
prepayment provisions of such Subordinated Debt other than to extend the dates
therefor or to reduce the premiums payable in connection therewith; (e) grant
any security or collateral to secure payment of such Subordinated Debt; or (f)
change or amend any other term if such change or amendment would materially
increase the obligations of the Credit Party or their Subsidiaries thereunder or
confer additional material rights on the holder of such Subordinated Debt in a
manner adverse to any Credit Party, Subsidiary, Agent or any Lender.
6.20 WORLDCOVER, INC..
Xxxxx intends to market and sell its interest in, or
alternatively to liquidate and dissolve Worldcover, Inc., which is a
wholly-owned Subsidiary of Xxxxx. In the event such wholly-owned Subsidiary is
either not sold or dissolved prior to December 31, 2002, Xxxxx agrees that such
Subsidiary shall, at Agent's option, execute documents necessary for such
Subsidiary to become a Borrower hereunder pursuant to the terms of SECTION 1.18.
7. TERM
7.1 TERMINATION.
The financing arrangements contemplated hereby shall be in effect
until the Commitment Termination Date, and the Loans and all other Obligations
shall be automatically due and payable in full on such date.
7.2 SURVIVAL OF OBLIGATIONS UPON TERMINATION OF FINANCING
ARRANGEMENTS.
Except as otherwise expressly provided for in the Loan Documents,
no termination or cancellation (regardless of cause or procedure) of any
financing arrangement under this Agreement shall in any way affect or impair the
obligations, duties and liabilities of the Credit Parties or the rights of
Agent, Revolving Credit Agent and Lenders relating to any unpaid portion of the
Loans or any other Obligations, due or not due, liquidated, contingent or
unliquidated, or any transaction or event occurring prior to such termination,
or any transaction or event, the performance of which is required after the
Commitment Termination Date. Except as otherwise expressly provided herein or in
any other Loan Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon the Credit Parties, and all rights of Agent,
Revolving Credit Agent and each Lender, all as contained in the Loan Documents,
shall not terminate or expire, but rather shall survive any such termination or
cancellation and shall continue in full force and effect until the Termination
Date; PROVIDED, that
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the provisions of SECTION 11, the payment obligations under SECTIONS 1.15 and
1.16, and the indemnities contained in the Loan Documents shall survive the
Termination Date.
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.1 EVENTS OF DEFAULT.
The occurrence of any one or more of the following events
(regardless of the reason therefor) shall constitute an "EVENT OF DEFAULT"
hereunder:
(a) Any Borrower (i) fails to make any payment of principal of,
or interest on, or Fees owing in respect of, the Loans or any of the other
Obligations when due and payable, or (ii) fails to pay or reimburse Agent or
Lenders for any expense reimbursable hereunder or under any other Loan Document
within ten (10) Business Days following Agent's demand for such reimbursement or
payment of expenses.
(b) Any Credit Party fails or neglects to perform, keep or
observe any of the provisions of SECTIONS 1.4, 5.4(a) OR 6, or any of the
provisions set forth in ANNEX G.
(c) Any Borrower fails or neglects to perform, keep or observe
any of the provisions of SECTION 4 or any provisions set forth in ANNEXES E OR
F, respectively, and the same shall remain unremedied for seven (7) days or
more.
(d) Any Credit Party fails or neglects to perform, keep or
observe any other provision of this Agreement or of any of the other Loan
Documents (other than any provision embodied in or covered by any other clause
of this SECTION 8.1) and the same shall remain unremedied for twenty (20) days
or more.
(e) A default or breach occurs under any other agreement,
document, instrument or lease to which any Credit Party is a party that is not
cured within any applicable grace period therefor, and such default or breach
(i) involves the failure to make any payment when due in respect of any
Indebtedness or Guaranteed Indebtedness (other than the Obligations) of any
Credit Party in excess of $1,000,000 in the aggregate (including (x) undrawn
committed or available amounts and (y) amounts owing to all creditors under any
combined or syndicated credit arrangements), or (ii) causes, or permits any
holder of such Indebtedness or Guaranteed Indebtedness or a trustee to cause,
Indebtedness or Guaranteed Indebtedness or a portion thereof in excess of
$1,000,000 in the aggregate to become due prior to its stated maturity or prior
to its regularly scheduled dates of payment, or cash collateral in respect
thereof to be demanded, in each case, regardless of whether such default is
waived, or such right is exercised, by such holder or trustee, or (iii) involves
a lease or leases of property by any Credit Party and such lease or leases, in
the aggregate, require lease payments in excess of $1,000,000 for the calendar
year in which such default or breach occurs.
(f) Any information contained in any Borrowing Base Certificate
is untrue or incorrect in any respect, or any representation or warranty herein
or in any Loan Document or in any written statement, report, financial statement
or certificate (other than a Borrowing Base Certificate) made or delivered to
Agent or any Lender by any Credit Party is untrue or incorrect in any material
respect as of the date when made or deemed made.
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(g) Assets of any Credit Party with a fair market value of
$50,000 or more are attached, seized, levied upon or subjected to a writ or
distress warrant, or come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors of any Credit Party and such
condition continues for 30 days or more.
(h) A case or proceeding is commenced against any Credit Party
seeking a decree or order in respect of such Credit Party (i) under the
Bankruptcy Code, or any other applicable federal, state or foreign bankruptcy or
other similar law, (ii) appointing a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) for such Credit Party or for any
substantial part of any such Credit Party's assets, or (iii) ordering the
winding-up or liquidation of the affairs of such Credit Party, and such case or
proceeding shall remain undismissed or unstayed for 60 days or more or a decree
or order granting the relief sought in such case or proceeding shall be entered
by a court of competent jurisdiction.
(i) Any Credit Party (i) files a petition seeking relief under
the Bankruptcy Code, or any other applicable federal, state or foreign
bankruptcy or other similar law, (ii) consents to or fails to contest in a
timely and appropriate manner the institution of proceedings thereunder or the
filing of any such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
official) for such Credit Party or for any substantial part of any such Credit
Party's assets, (iii) makes an assignment for the benefit of creditors, (iv)
takes any action in furtherance of any of the foregoing; or (v) admits in
writing its inability to, or is generally unable to, pay its debts as such debts
become due.
(j) A final judgment or judgments for the payment of money in
excess of $250,000 in the aggregate at any time are outstanding against one or
more of the Credit Parties and the same are not, within 30 days after the entry
thereof, discharged or execution thereof stayed or bonded pending appeal, or
such judgments are not discharged prior to the expiration of any such stay.
(k) Any material provision of any Loan Document for any reason
ceases to be valid, binding and enforceable in accordance with its terms (or any
Credit Party shall challenge the enforceability of any Loan Document or shall
assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has ceased to be or
otherwise is not valid, binding and enforceable in accordance with its terms),
or any Lien created under any Loan Document ceases to be a valid and perfected
first priority Lien (except as otherwise permitted herein or therein) in any of
the Collateral purported to be covered thereby.
(l) Any Change of Control occurs.
8.2 REMEDIES.
(a) If any Default or Event of Default has occurred and is
continuing, Agent and Revolving Credit Agent may (and at the written request of
the Requisite Revolving Lenders shall), without notice, suspend the Revolving
Loan facility with respect to additional
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Advances and/or the incurrence of additional Letter of Credit Obligations,
whereupon any additional Advances and additional Letter of Credit Obligations
shall be made or incurred in the sole discretion of Agent and Revolving Credit
Agent (or in the sole discretion of the Requisite Revolving Lenders, if such
suspension occurred at their direction) so long as such Default or Event of
Default is continuing. If any Default or Event of Default has occurred and is
continuing, Agent and Revolving Credit Agent may (and at the written request of
Requisite Lenders shall), without notice except as otherwise expressly provided
herein, increase the rate of interest applicable to the Loans and the Letter of
Credit Fees to the Default Rate.
(b) If any Event of Default has occurred and is continuing, Agent
and Revolving Credit Agent may (and at the written request of the Requisite
Lenders shall), without notice: (i) terminate the Revolving Loan facility with
respect to further Advances or the incurrence of further Letter of Credit
Obligations; (ii) declare all or any portion of the Obligations, including all
or any portion of any Loan to be forthwith due and payable, and require that the
Letter of Credit Obligations be cash collateralized as provided in ANNEX B, all
without presentment, demand, protest or further notice of any kind, all of which
are expressly waived by Borrowers and each other Credit Party; or (iii) exercise
any rights and remedies provided to Agent under the Loan Documents or at law or
equity, including all remedies provided under the Code; PROVIDED, that upon the
occurrence of an Event of Default specified in SECTIONS 8.1(h) OR (i), the
Revolving Loan facility shall be immediately terminated and all of the
Obligations, including the aggregate Revolving Loan, shall become immediately
due and payable without declaration, notice or demand by any Person.
8.3 WAIVERS BY CREDIT PARTIES.
Except as otherwise provided for in this Agreement or by
applicable law, each Credit Party waives (including for purposes of SECTION 12):
(a) presentment, demand and protest and notice of presentment, dishonor, notice
of intent to accelerate, notice of acceleration, protest, default, nonpayment,
maturity, release, compromise, settlement, extension or renewal of any or all
commercial paper, accounts, contract rights, documents, instruments, chattel
paper and guaranties at any time held by Agent on which any Credit Party may in
any way be liable, and hereby ratifies and confirms whatever Agent may do in
this regard, (b) all rights to notice and a hearing prior to Agent's taking
possession or control of, or to Agent's replevy, attachment or levy upon, the
Collateral or any bond or security that might be required by any court prior to
allowing Agent to exercise any of its remedies, and (c) the benefit of all
valuation, appraisal, marshaling and exemption laws.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1 ASSIGNMENT AND PARTICIPATIONS.
(a) Subject to the terms of this SECTION 9.1, any Lender may make
an assignment to a Qualified Assignee of, or sell participations in, at any time
or times, the Loan Documents, Loans, Letter of Credit Obligations and any
Commitment or of any portion thereof or interest therein, including any Lender's
rights, title, interests, remedies, powers or duties thereunder. Any assignment
by a Lender shall: (i) require the consent of Agent (which consent shall not be
unreasonably withheld or delayed with respect to a Qualified Assignee) and the
execution of an assignment agreement (an "ASSIGNMENT AGREEMENT") substantially
in the form
49
attached hereto as EXHIBIT 9.1(a) and otherwise in form and substance reasonably
satisfactory to, and acknowledged by, Agent; (ii) be conditioned on such
assignee Lender representing to the assigning Lender and Agent that it is
purchasing the applicable Loans to be assigned to it for its own account, for
investment purposes and not with a view to the distribution thereof; (iii) after
giving effect to any such partial assignment, the assignee Lender shall have
Commitments in an amount at least equal to $5,000,000 and the assigning Lender
shall have retained Commitments in an amount at least equal to $5,000,000; and
(iv) include a payment to Agent of an assignment fee of $3,500. In the case of
an assignment by a Lender under this SECTION 9.1, the assignee shall have, to
the extent of such assignment, the same rights, benefits and obligations as all
other Lenders hereunder. The assigning Lender shall be relieved of its
obligations hereunder with respect to its Commitments or assigned portion
thereof from and after the date of such assignment. Borrowers hereby acknowledge
and agree that any assignment shall give rise to a direct obligation of
Borrowers to the assignee and that the assignee shall be considered to be a
"Lender". In all instances, each Lender's liability to make Loans hereunder
shall be several and not joint and shall be limited to such Lender's Pro Rata
Share of the applicable Commitment. In the event Agent or any Lender assigns or
otherwise transfers all or any part of the Obligations, Agent or any such Lender
shall so notify Borrowers and Borrowers shall, upon the request of Agent or such
Lender, execute new Notes in exchange for the Notes, if any, being assigned.
Notwithstanding the foregoing provisions of this SECTION 9.1(a), any Lender may
at any time pledge the Obligations held by it and such Lender's rights under
this Agreement and the other Loan Documents to a Federal Reserve Bank, and any
Lender that is an investment fund may assign the Obligations held by it and such
Lender's rights under this Agreement and the other Loan Documents to another
investment fund managed by the same investment advisor; PROVIDED, that no such
pledge to a Federal Reserve Bank shall release such Lender from such Lender's
obligations hereunder or under any other Loan Document.
(b) Any participation by a Lender of all or any part of its
Commitments shall be made with the understanding that all amounts payable by
Borrowers hereunder shall be determined as if that Lender had not sold such
participation, and that the holder of any such participation shall not be
entitled to require such Lender to take or omit to take any action hereunder
except actions directly affecting (i) any reduction in the principal amount of,
or interest rate or Fees payable with respect to, any Loan in which such holder
participates, (ii) any extension of the scheduled amortization of the principal
amount of any Loan in which such holder participates or the final maturity date
thereof, and (iii) any release of all or substantially all of the Collateral
(other than in accordance with the terms of this Agreement, the Collateral
Documents or the other Loan Documents). Solely for purposes of SECTIONS 1.13,
1.15, 1.16 AND 9.8, Borrowers acknowledge and agree that a participation shall
give rise to a direct obligation of Borrowers to the participant and the
participant shall be considered to be a "Lender". Except as set forth in the
preceding sentence no Borrower or Credit Party shall have any obligation or duty
to any participant. Neither Agent, Revolving Credit Agent nor any Lender (other
than the Lender selling a participation) shall have any duty to any participant
and may continue to deal solely with the Lender selling a participation as if no
such sale had occurred.
(c) Except as expressly provided in this SECTION 9.1, no Lender
shall, as between Borrowers and that Lender, or Agent and Revolving Credit Agent
and that Lender, be relieved of any of its obligations hereunder as a result of
any sale, assignment, transfer or
50
negotiation of, or granting of participation in, all or any part of the Loans,
the Notes or other Obligations owed to such Lender.
(d) Each Credit Party executing this Agreement shall assist any
Lender permitted to sell assignments or participations under this SECTION 9.1 as
reasonably required to enable the assigning or selling Lender to effect any such
assignment or participation, including the execution and delivery of any and all
agreements, notes and other documents and instruments as shall be requested and,
if requested by Agent, the preparation of informational materials for, and the
participation of management in meetings with, potential assignees or
participants. Each Credit Party executing this Agreement shall certify the
correctness, completeness and accuracy of all descriptions of the Credit Parties
and their respective affairs contained in any selling materials provided by them
and all other information provided by them and included in such materials,
except that any Projections delivered by Borrowers shall only be certified by
Borrowers as having been prepared by Borrowers in compliance with the
representations contained in SECTION 3.4(c).
(e) Any Lender may furnish any information concerning Credit
Parties in the possession of such Lender from time to time to assignees and
participants (including prospective assignees and participants); provided that
such Lender shall obtain from assignees or participants confidentiality
covenants substantially equivalent to those contained in SECTION 11.8.
(f) So long as no Event of Default has occurred and is
continuing, no Lender shall assign or sell participations in any portion of its
Loans or Commitments to a potential Lender or participant, if, as of the date of
the proposed assignment or sale, the assignee Lender or participant would be
subject to capital adequacy or similar requirements under SECTION 1.16(a),
increased costs under SECTION 1.16(b), an inability to fund LIBOR Loans under
SECTION 1.16(c), or withholding taxes in accordance with SECTION 1.15(a).
9.2 APPOINTMENT OF AGENT AND REVOLVING CREDIT AGENT.
(a) GE Capital is hereby appointed to act on behalf of all
Lenders as Agent under this Agreement and the other Loan Documents. The
provisions of this SECTION 9.2 are solely for the benefit of Agent, Revolving
Credit Agent and Lenders and no Credit Party nor any other Person shall have any
rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement and the other Loan
Documents, Agent shall act solely as an agent of Lenders and does not assume and
shall not be deemed to have assumed any obligation toward or relationship of
agency or trust with or for any Credit Party or any other Person. Agent shall
have no duties or responsibilities except for those expressly set forth in this
Agreement and the other Loan Documents. The duties of Agent shall be mechanical
and administrative in nature and Agent shall not have, or be deemed to have, by
reason of this Agreement, any other Loan Document or otherwise a fiduciary
relationship in respect of any Lender. Except as expressly set forth in this
Agreement and the other Loan Documents, Agent shall not have any duty to
disclose, and shall not be liable for failure to disclose, any information
relating to any Credit Party or any of their respective Subsidiaries or any
Account Debtor that is communicated to or obtained by GE Capital or any of its
Affiliates in any capacity. Neither Agent nor any of its Affiliates nor any of
their respective officers, directors, employees, agents or representatives shall
be liable to any Lender, the Revolving Credit Agent or the L/C Issuer, for
51
any action taken or omitted to be taken by it hereunder or under any other Loan
Document, or in connection herewith or therewith, except for damages caused by
its or their own gross negligence or willful misconduct.
(b) If Agent shall request instructions from Requisite Lenders,
Requisite Revolving Lenders, Supermajority Revolving Lenders or all affected
Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any other Loan Document, then Agent shall be
entitled to refrain from such act or taking such action unless and until Agent
shall have received instructions from Requisite Lenders, Requisite Revolving
Lenders, Supermajority Revolving Lenders or all affected Lenders, as the case
may be, and Agent shall not incur liability to any Person by reason of so
refraining. Agent shall be fully justified in failing or refusing to take any
action hereunder or under any other Loan Document (i) if such action would, in
the opinion of Agent, be contrary to law or the terms of this Agreement or any
other Loan Document, (ii) if such action would, in the opinion of Agent, expose
Agent to Environmental Liabilities or (iii) if Agent shall not first be
indemnified to its satisfaction against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from acting
hereunder or under any other Loan Document in accordance with the instructions
of Requisite Lenders, Requisite Revolving Lenders, Supermajority Revolving
Lenders or all affected Lenders, as applicable.
(c) LaSalle is hereby appointed to act on behalf of the Revolving
Lenders as Revolving Credit Agent under this Agreement and the other Loan
Documents. Revolving Credit Agent shall have the powers and rights specifically
set forth herein with respect to the Revolving Loan only (subject to the
qualifications hereinafter listed), and Agent shall have no responsibility or
liability, of any type or nature, with respect to the performance of such agency
by Revolving Credit Agent. . In performing its functions and duties under this
Agreement and the other Loan Documents, Revolving Credit Agent shall act solely
as an agent of Revolving Lenders and does not assume and shall not be deemed to
have assumed any obligation toward or relationship of agency or trust with or
for any Credit Party or any other Person. Revolving Credit Agent shall have no
duties or responsibilities except for those expressly set forth in this
Agreement and the other Loan Documents. The duties of Revolving Credit Agent
shall be mechanical and administrative in nature and Revolving Credit Agent
shall not have, or be deemed to have, by reason of this Agreement, any other
Loan Document or otherwise a fiduciary relationship in respect of any Lender.
Except as expressly set forth in this Agreement and the other Loan Documents,
Revolving Credit Agent shall not have any duty to disclose, and shall not be
liable for failure to disclose, any information relating to any Credit Party or
any of their respective Subsidiaries or any Account Debtor that is communicated
to or obtained by LaSalle or any of its Affiliates in any capacity. Neither
Revolving Credit Agent nor any of its Affiliates nor any of their respective
officers, directors, employees, agents or representatives shall be liable to any
Lender, Agent or L/C Issuer, for any action taken or omitted to be taken by it
hereunder or under any other Loan Document, or in connection herewith or
therewith, except for damages caused by its or their own gross negligence or
willful misconduct. Notwithstanding anything herein to the contrary, Revolving
Credit Agent shall have no right to act in any capacity, except as a Lender (i)
with respect to the Term Loan (if Revolving Credit Agent is a Term Lender), or
(ii) which
52
involves any action in connection with any Collateral (other than set-off rights
for the benefit of the Lenders).
(d) If Revolving Credit Agent shall request instructions from
Requisite Lenders, Requisite Revolving Lenders, Supermajority Revolving Lenders
or all affected Lenders with respect to any act or action (including failure to
act) in connection with this Agreement or any other Loan Document, then
Revolving Credit Agent shall be entitled to refrain from such act or taking such
action unless and until Revolving Credit Agent shall have received instructions
from Requisite Lenders, Requisite Revolving Lenders, Supermajority Revolving
Lenders or all affected Lenders, as the case may be, and Revolving Credit Agent
shall not incur liability to any Person by reason of so refraining. Revolving
Credit Agent shall be fully justified in failing or refusing to take any action
hereunder or under any other Loan Document (i) if such action would, in the
opinion of Revolving Credit Agent, be contrary to law or the terms of this
Agreement or any other Loan Document, (ii) if such action would, in the opinion
of Revolving Credit Agent, expose Revolving Credit Agent to Environmental
Liabilities or (iii) if Revolving Credit Agent shall not first be indemnified to
its satisfaction against any and all liability and expense which may be incurred
by it by reason of taking or continuing to take any such action. Without
limiting the foregoing, no Lender shall have any right of action whatsoever
against Revolving Credit Agent as a result of Agent acting or refraining from
acting hereunder or under any other Loan Document in accordance with the
instructions of Requisite Lenders, Requisite Revolving Lenders, Supermajority
Revolving Lenders or all affected Lenders, as applicable.
9.3 AGENT'S RELIANCE, ETC.
Neither Agent nor any of its Affiliates nor Revolving Credit
Agent nor any of its Affiliates nor any of their respective directors, officers,
agents or employees shall be liable for any action taken or omitted to be taken
by it or them under or in connection with this Agreement or the other Loan
Documents, except for damages caused by its or their own gross negligence or
willful misconduct. Without limiting the generality of the foregoing, Agent and
Revolving Credit Agent: (a) may treat the payee of any Note as the holder
thereof until Agent or Revolving Credit Agent receives written notice of the
assignment or transfer thereof signed by such payee and in form reasonably
satisfactory to Agent; (b) may consult with legal counsel, independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Lender (including each other) and shall not be responsible
to any Lender for any statements, warranties or representations made in or in
connection with this Agreement or the other Loan Documents; (d) shall not have
any duty to ascertain or to inquire as to the performance or observance of any
of the terms, covenants or conditions of this Agreement or the other Loan
Documents on the part of any Credit Party or to inspect the Collateral
(including the books and records) of any Credit Party; (e) shall not be
responsible to any Lender (including each other) for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto; and (f) shall incur no liability under or
in respect of this Agreement or the other Loan Documents by acting upon any
notice, consent, certificate or other instrument or writing (which may be by
telecopy, telegram, cable or telex) believed by it to be genuine and signed or
sent by the proper party or parties.
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9.4 GE CAPITAL, LASALLE AND AFFILIATES.
With respect to their Commitments hereunder, GE Capital and
LaSalle shall have the same rights and powers under this Agreement and the other
Loan Documents as any other Lender and may exercise the same as though they were
not Agent and the Revolving Credit Agent, respectively; and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include GE Capital and
LaSalle in their individual capacity. GE Capital and LaSalle and their
Affiliates may lend money to, invest in, and generally engage in any kind of
business with, Borrowers, any of their Affiliates and any Person who may do
business with or own securities of Borrowers or any such Affiliate, all as if GE
Capital and LaSalle were not Agent and Revolving Credit Agent, respectively, and
without any duty to account therefor to Lenders. GE Capital and LaSalle and
their Affiliates may accept fees and other consideration from any Credit Party
for services in connection with this Agreement or otherwise without having to
account for the same to Lenders. Each Lender acknowledges the potential conflict
of interest between GE Capital and LaSalle as Lenders holding disproportionate
interests in the Loans, and GE Capital as Agent and LaSalle as Revolving Credit
Agent.
9.5 LENDER CREDIT DECISION.
Each Lender (including both Agent and Revolving Credit Agent,
with respect to each other) acknowledges that Agent and Revolving Credit Agent
have not made any representation or warranty to it, and that no act by Agent or
Revolving Credit Agent hereafter taken, including any review of the affairs of
Borrowers and their Affiliates, shall be deemed to constitute any representation
or warranty by Agent or Revolving Credit Agent to any Lender. Each Lender
(including both Agent and Revolving Credit Agent, with respect to each other)
acknowledges that it has, independently and without reliance upon Agent,
Revolving Credit Agent or any other Lender and based on the Financial Statements
referred to in SECTION 3.4(a) and such other documents and information as it has
deemed appropriate, made its own credit and financial analysis of the Credit
Parties and its own decision to enter into this Agreement. Each Lender
(including both Agent and Revolving Credit Agent, with respect to each other)
also acknowledges that it will, independently and without reliance upon Agent,
Revolving Credit 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
credit decisions in taking or not taking action under this Agreement. Each
Lender (including both Agent and Revolving Credit Agent, with respect to each
other) acknowledges the potential conflict of interest of each other Lender as a
result of Lenders holding disproportionate interests in the Loans, and expressly
consents to, and waives any claim based upon, such conflict of interest.
9.6 INDEMNIFICATION.
Lenders agree to indemnify Agent and Revolving Credit Agent (to
the extent not reimbursed by Borrowers and without limiting the obligations of
Borrowers hereunder), ratably according to their respective Pro Rata Shares,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by, or asserted
against Agent or Revolving
54
Credit Agent in any way relating to or arising out of this Agreement or any
other Loan Document or any action taken or omitted to be taken by Agent or
Revolving Credit Agent in connection therewith; PROVIDED, that no Lender shall
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from Agent's or Revolving Credit Agent's gross negligence or willful misconduct.
Without limiting the foregoing, each Lender agrees to reimburse Agent or
Revolving Credit Agent (as applicable) promptly upon demand for its ratable
share of any out-of-pocket expenses (including counsel fees) incurred by Agent
or Revolving Credit Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement and each other Loan
Document, to the extent that Agent is not reimbursed for such expenses by Credit
Parties. The agreements contained in this Section shall survive payment in full
of the Loans and all other amounts payable under this Agreement.
9.7 SUCCESSOR AGENT.
Agent or Revolving Credit Agent may resign at any time by giving
not less than thirty (30) days' prior written notice thereof to Lenders and
Borrower. Upon any such resignation of Agent, the Requisite Lenders shall have
the right to appoint a successor Agent. Upon any such resignation of Revolving
Credit Agent, the Requisite Revolving Lenders shall have the right to appoint a
successor Revolving Credit Agent. If no successor Agent or Revolving Credit
Agent shall have been so appointed by the Requisite Lenders or the Requisite
Revolving Lenders and shall have accepted such appointment within 30 days after
the resigning Agent's or Revolving Credit Agent's giving notice of resignation,
then the resigning Agent or Revolving Credit Agent may, on behalf of Lenders or
the Revolving Lenders, appoint a successor Agent or Revolving Credit Agent,
which shall be a Lender or a Revolving Lender as the case may be, if a Lender is
willing to accept such appointment, or otherwise shall be a commercial bank or
financial institution or a subsidiary of a commercial bank or financial
institution if such commercial bank or financial institution is organized under
the laws of the United States of America or of any State thereof and has a
combined capital and surplus of at least $300,000,000. If no successor Agent or
Revolving Credit Agent has been appointed pursuant to the foregoing, by the 30th
day after the date such notice of resignation was given by the resigning Agent
or Revolving Credit Agent, such resignation shall become effective and the
Requisite Lenders shall thereafter perform all the duties of Agent or the
Revolving Lender with the largest Revolving Loan Commitment shall perform the
duties of the Revolving Credit Agent hereunder until such time, if any, as the
Requisite Lenders or the Requisite Revolving Lenders appoint a successor Agent
or Revolving Credit Agent as provided above. Any successor Agent or Revolving
Credit Agent appointed by Requisite Lenders hereunder shall be subject to the
approval of Borrowers, such approval not to be unreasonably withheld or delayed;
provided that such approval shall not be required if a Default or an Event of
Default shall have occurred and be continuing. Upon the acceptance of any
appointment as Agent or Revolving Credit Agent hereunder by a successor Agent or
Revolving Credit Agent, such successor Agent or Revolving Credit Agent shall
succeed to and become vested with all the rights, powers, privileges and duties
of the resigning Agent or Revolving Credit Agent. Upon the earlier of the
acceptance of any appointment as Agent or Revolving Credit Agent hereunder by a
successor Agent or Revolving Credit Agent or the effective date of the resigning
Agent's or Revolving Credit Agent's resignation, the resigning Agent or
Revolving Credit Agent shall be discharged from its duties and obligations under
this Agreement and the other Loan Documents, except that any
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indemnity rights or other rights in favor of such resigning Agent or Revolving
Credit Agent shall continue. After any resigning Agent's or Revolving Credit
Agent's resignation hereunder, the provisions of this SECTION 9 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent or Revolving Credit Agent under this Agreement and the other Loan
Documents.
9.8 SETOFF AND SHARING OF PAYMENTS.
In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence and during the continuance of any Event of Default and subject to
SECTION 9.9(f), each Lender is hereby authorized at any time or from time to
time, without notice to any Credit Party or to any other Person, any such notice
being hereby expressly waived, to offset and to appropriate and to apply any and
all balances held by it at any of its offices for the account of Borrowers or
Guarantor (regardless of whether such balances are then due to Borrowers or
Guarantor) and any other properties or assets at any time held or owing by that
Lender or that holder to or for the credit or for the account of Borrowers or
Guarantor against and on account of any of the Obligations that are not paid
when due. Any Lender exercising a right of setoff or otherwise receiving any
payment on account of the Obligations in excess of its Pro Rata Share thereof
shall purchase for cash (and the other Lenders or holders shall sell) such
participations in each such other Lender's or holder's Pro Rata Share of the
Obligations as would be necessary to cause such Lender to share the amount so
offset or otherwise received with each other Lender or holder in accordance with
their respective Pro Rata Shares (other than offset rights exercised by any
Lender with respect to SECTIONS 1.13, 1.15 or 1.16). Each Credit Party that is a
Borrower or Guarantor agrees, to the fullest extent permitted by law, that (a)
any Lender may exercise its right to offset with respect to amounts in excess of
its Pro Rata Share of the Obligations and may sell participations in such
amounts so offset to other Lenders and holders and (b) any Lender so purchasing
a participation in the Loans made or other Obligations held by other Lenders or
holders may exercise all rights of offset, bankers' lien, counterclaim or
similar rights with respect to such participation as fully as if such Lender or
holder were a direct holder of the Loans and the other Obligations in the amount
of such participation. Notwithstanding the foregoing, if all or any portion of
the offset amount or payment otherwise received is thereafter recovered from the
Lender that has exercised the right of offset, the purchase of participations by
that Lender shall be rescinded and the purchase price restored without interest.
9.9 ADVANCES; PAYMENTS; NON-FUNDING LENDERS; INFORMATION; ACTIONS
IN CONCERT.
(a) ADVANCES; PAYMENTS.
(i) Each Revolving Lender shall make the amount of such Lender's
Pro Rata Share of such Revolving Credit Advance available to Revolving Credit
Agent in same day funds by wire transfer to Revolving Credit Agent's account as
set forth in ANNEX H not later than 3:00 p.m. (New York time) on the requested
funding date, in the case of an Index Rate Loan, and not later than 11:00 a.m.
(New York time) on the requested funding date, in the case of a LIBOR Loan.
After receipt of such wire transfers (or, in the Revolving Credit Agent's sole
discretion, before receipt of such wire transfers), subject to the terms hereof,
Revolving Credit
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Agent shall make the requested Revolving Credit Advance to the Borrowers
designated by Borrowers in the Notice of Revolving Credit Advance. All payments
by each Revolving Lender shall be made without setoff, counterclaim or deduction
of any kind.
(ii) Each Business Day (each, a "SETTLEMENT DATE"), Revolving
Credit Agent (or Agent) shall advise each Lender by telephone, or telecopy of
the amount of such Lender's Pro Rata Share of principal, interest and Fees paid
for the benefit of Lenders with respect to each applicable Loan. Provided that
each Lender has funded all payments or Advances required to be made by it and
has purchased all participations required to be purchased by it under this
Agreement and the other Loan Documents as of such Settlement Date, Revolving
Credit Agent (or Agent) shall pay to each Lender such Lender's Pro Rata Share of
principal, interest and Fees paid by Borrowers since the previous Settlement
Date for the benefit of such Lender on the Loans held by it. To the extent that
any Lender (a "NON-FUNDING LENDER") has failed to fund all such payments and
Advances or failed to fund the purchase of all such participations, Revolving
Credit Agent (or Agent) shall be entitled to set off the funding short-fall
against that Non-Funding Lender's Pro Rata Share of all payments received from
Borrower. Such payments shall be made by wire transfer to such Lender's account
(as specified by such Lender in ANNEX H or the applicable Assignment Agreement)
not later than 2:00 p.m. (New York time) on the next Business Day following each
Settlement Date.
(b) AVAILABILITY OF LENDER'S PRO RATA SHARE. Unless Revolving
Credit Agent has been given written notice by a Revolving Lender prior to the
requested funding date that such Revolving Lender does not intend to make
immediately available to Revolving Credit Agent such Revolving Credit Lender's
pro-rata share of the Advance which Revolving Credit Agent will be obligated to
make on the requested funding date, Revolving Credit Agent may assume that such
Revolving Lender has made the required amount available to Revolving Credit
Agent on such requested funding date and Revolving Credit Agent may, in reliance
upon such assumption, make available to Borrower a corresponding amount. If such
corresponding amount is not in fact made immediately available to Revolving
Credit Agent by such Lender on the requested funding date, Revolving Credit
Agent shall be entitled to recover such corresponding amount on demand from such
Revolving Lender. If such Revolving Lender does not pay such corresponding
amount immediately upon Revolving Credit Agent's demand therefor, then Revolving
Credit Agent shall promptly notify Borrower Representative and the other
Revolving Lenders and Borrowers shall immediately pay such corresponding amount
to Revolving Credit Agent. Revolving Credit Agent shall also be entitled to
recover, either from such Non-Funding Lender or Borrowers, interest on such
corresponding amount for each day from the date such corresponding amount was
made available by Revolving Credit Agent to Borrowers to the date such
corresponding amount is recovered by Revolving Credit Agent, at a rate per annum
equal to (i) if paid by such Non-Funding Lender, the cost to Revolving Credit
Agent of funding such amount at the Federal Funds Rate, or (ii) if paid by
Borrowers, the applicable rate for the Advance in question determined from the
request therefor.
(c) RETURN OF PAYMENTS.
(i) Unless Agent or Revolving Credit Agent has been given
written notice by Borrowers, prior to the date any payment to be made by them is
due, that they do not intend to remit such payment, Agent or Revolving Credit
may assume that the Borrowers have
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timely remitted such payment and Agent or Revolving Credit Agent may, in
reliance upon such assumption, make available a corresponding amount or pro-rata
portion thereof to the Persons entitled thereto. If such payment was not in fact
remitted to the Agent or Revolving Credit Agent in immediately available funds,
then, each Lender shall immediately on demand repay to Agent or Revolving Credit
Agent (as applicable) the corresponding amount or pro-rata portion thereof made
available to such Lender, together with interest thereon in respect of each day
from the date such amount was made available by Agent or Revolving Credit Agent
to such Lender to the date such amount is repaid to Agent or Revolving Credit
Agent, at the Federal Funds Rate.
(ii) If Agent or Revolving Credit Agent determines at any
time that any amount received by Agent or Revolving Credit Agent under this
Agreement must be returned to Borrowers or paid to any other Person pursuant to
any insolvency law or otherwise, then, notwithstanding any other term or
condition of this Agreement or any other Loan Document, Agent or Revolving
Credit Agent will not be required to distribute any portion thereof to any
Lender. In addition, each Lender will repay to Agent or Revolving Credit Agent
on demand any portion of such amount that Agent has distributed to such Lender,
together with interest at such rate, if any, as Agent or Revolving Credit Agent
is required to pay to Borrowers or such other Person, without setoff,
counterclaim or deduction of any kind.
(d) NON-FUNDING LENDERS. Each Revolving Lender shall be obligated
only to fund its pro-rata share of an Advance subject to the terms and
conditions hereof, regardless of the failure of another Revolving Lender to fund
its pro-rata share thereof. Such Non-Funding Lender shall, until such amount is
paid to Revolving Credit Agent (with interest at the Federal Funds Rate), (a)
permit Revolving Credit Agent the unconditional and irrevocable right of setoff
against any amounts (including, without limitation, payments of principal,
interest, and fees, as well as indemnity payments) received by Revolving Credit
Agent hereunder for the benefit of any such Defaulting Lender, and (b) if such
failure to pay shall continue for a period of two Business Days, result in any
such Defaulting Lender forfeiting any right to vote on any matter that the
Requisite Lenders, Requisite Revolving Lenders, Supermajority Revolving Lenders
or all Lenders are permitted to vote for hereunder (and the calculation of
Requisite Lenders, Requisite Revolving Lenders and Supermajority Revolving
Lenders shall exclude such Defaulting Lender's interest in the Revolving Loan
Commitment); provided, however, once such a failure is cured, then such Lender
shall, subsequent thereto, have all rights hereunder; provided, further,
however, if any Lender shall fail to make such a payment within the two Business
Day period specified in clause (b) above (other than by reason of events beyond
the reasonable control of such Lender) two or more times during the term hereof,
such Lender shall permanently forfeit its right to vote hereunder (and the
calculation of Requisite Lenders, Requisite Revolving Lenders and Supermajority
Revolving Lenders shall exclude such Defaulting Lender's interest in the
Revolving Loan Commitment).
(e) DISSEMINATION OF INFORMATION. Each Lender agrees to use its
good faith efforts, upon becoming aware of anything which has or is reasonably
likely to have a Material Adverse Effect on any Credit Party, to promptly notify
Agent thereof. Agent shall use reasonable efforts to provide Lenders with any
notice of Default or Event of Default received by Agent from, or delivered by
Agent to, any Credit Party, with notice of any Event of Default of which Agent
has actually become aware and with notice of any action taken by Agent following
any Event of Default; PROVIDED, that Agent shall not be liable to any Lender for
any failure to do
58
so, except to the extent that such failure is attributable to Agent's gross
negligence or willful misconduct. Lenders acknowledge Borrowers are required to
provide Financial Statements and Collateral Reports to Lenders in accordance
with ANNEXES E AND F hereto and agree that Agent shall have no duty to provide
the same to Lenders. Unless otherwise specifically set forth herein, Agent and
Revolving Credit Agent shall use their best efforts to provide each other with
any and all information received which is required by the other to properly and
timely perform their duties under this Agreement; PROVIDED, that neither Agent
nor Revolving Credit Agent shall be liable to the other or any other Lender for
any failure to provide such information, except to the extent that such failure
is attributable to Agent's or Revolving Credit Agent's gross negligence or
willful misconduct.
(f) ACTIONS IN CONCERT. Anything in this Agreement to the
contrary notwithstanding, each Lender hereby agrees with each other Lender that
no Lender shall take any action to protect or enforce its rights against
Borrowers or the Collateral arising out of this Agreement or the Notes
(including exercising any rights of setoff) without first obtaining the prior
written consent of Agent and Requisite Lenders, it being the intent of Lenders
that any such action to protect or enforce rights under this Agreement and the
Notes shall be taken in concert and at the direction or with the consent of
Agent or Requisite Lenders. It is not the intent of this paragraph and Borrowers
hereby acknowledge that this paragraph shall not be read to provide Borrowers
with any additional rights or defenses which are not otherwise provided for in
this Agreement and Borrowers may not enforce the obligations of Lenders under
this paragraph.
10. SUCCESSORS AND ASSIGNS
10.1 SUCCESSORS AND ASSIGNS.
This Agreement and the other Loan Documents shall be binding on
and shall inure to the benefit of Borrowers, Agent, Revolving Credit Agent,
Lenders and their respective successors and assigns (including, in the case of
Borrowers, a debtor-in-possession on behalf of Borrower), except as otherwise
provided herein or therein. Borrowers may not assign, transfer, hypothecate or
otherwise convey its rights, benefits, obligations or duties hereunder or under
any of the other Loan Documents without the prior express written consent of
Agent, Revolving Credit Agent and Lenders. Any such purported assignment,
transfer, hypothecation or other conveyance by Borrowers without the prior
express written consent of Agent, Revolving Credit Agent and Requisite Lenders
shall be void. The terms and provisions of this Agreement are for the purpose of
defining the relative rights and obligations of Borrowers, Agent, Revolving
Credit Agent, Agent and Lenders with respect to the transactions contemplated
hereby and no Person shall be a third party beneficiary of any of the terms and
provisions of this Agreement or any of the other Loan Documents.
11. MISCELLANEOUS
11.1 COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT.
The Loan Documents constitute the complete agreement between the
parties with respect to the subject matter thereof and may not be modified,
altered or amended except as set
59
forth in SECTION 11.2. Any letter of interest, proposal letter or fee letter
(other than the GE Capital Fee Letter) between any Credit Party and Agent or any
Lender or any of their respective Affiliates, predating this Agreement and
relating to a financing of substantially similar form, purpose or effect shall
be superseded by this Agreement.
11.2 AMENDMENTS AND WAIVERS.
(a) Except for actions expressly permitted to be taken by Agent
or Revolving Credit Agent, no amendment, modification, termination or waiver of
any provision of this Agreement or any other Loan Document, or any consent to
any departure by any Credit Party therefrom, shall in any event be effective
unless the same shall be in writing and signed by Agent and Borrowers, and by
Requisite Lenders, Requisite Revolving Lenders, Supermajority Revolving Lenders
or all affected Lenders, as applicable. Except as set forth in CLAUSES (b) and
(C) below, all such amendments, modifications, terminations or waivers requiring
the consent of any Lenders shall require the written consent of Requisite
Lenders.
(b) No amendment, modification, termination or waiver of or
consent with respect to any provision of this Agreement that increases the
percentage advance rates set forth in the definition of the Borrowing Base or
that makes less restrictive the nondiscretionary criteria for exclusion from
Eligible Accounts and Eligible Inventory set forth in SECTIONS 1.6 AND 1.7,
shall be effective unless the same shall be in writing and signed by Agent,
Supermajority Revolving Lenders and Borrower. No amendment, modification,
termination or waiver of or consent with respect to any provision of this
Agreement that waives compliance with the conditions precedent set forth in
SECTION 2.2 to the making of any Loan or the incurrence of any Letter of Credit
Obligations shall be effective unless the same shall be in writing and signed by
Agent, Revolving Credit Agent, Requisite Revolving Lenders and Borrower.
Notwithstanding anything contained in this Agreement to the contrary, no waiver
or consent with respect to any Default or any Event of Default shall be
effective for purposes of the conditions precedent to the making of Loans or the
incurrence of Letter of Credit Obligations set forth in SECTION 2.2 unless the
same shall be in writing and signed by Agent, Revolving Credit Agent, Requisite
Revolving Lenders and Borrower.
(c) No amendment, modification, termination or waiver shall,
unless in writing and signed by Agent, Revolving Credit Agent and each Lender
directly affected thereby: (i) increase the principal amount of any Lender's
Commitment (which action shall be deemed only to affect those Lenders whose
Commitments are increased and must be approved by Requisite Lenders, including
those Lenders whose Commitments are increased); (ii) reduce the principal of,
rate of interest on or Fees payable with respect to any Loan or Letter of Credit
Obligations of any affected Lender; (iii) extend any scheduled payment date
(other than payment dates of mandatory prepayments under SECTION
1.3(b)(ii)-(iv)) or final maturity date of the principal amount of any Loan of
any affected Lender; (iv) waive, forgive, defer, extend or postpone any payment
of interest or Fees as to any affected Lender; (v) except as otherwise permitted
herein or in the other Loan Documents, release, or permit any Credit Party to
sell or otherwise dispose of, any Collateral with a value exceeding $2,000,000
in the aggregate (which action shall be deemed to directly affect all Lenders);
(vi) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Loans that shall be required for Lenders or any of them
to take any action hereunder; (vii) release any Borrower or any guarantor
60
of any of the Obligations (if any) from liability under this Agreement or any of
the Loan Documents; and (viii) amend or waive this SECTION 11.2 or the
definitions of the terms "REQUISITE LENDERS", "REQUISITE REVOLVING LENDERS" or
"SUPERMAJORITY REVOLVING LENDERS" insofar as such definitions affect the
substance of this SECTION 11.2. Furthermore, no amendment, modification,
termination or waiver affecting the rights or duties of Agent or Revolving
Credit Agent or L/C Issuer under this Agreement or any other Loan Document shall
be effective unless in writing and signed by Agent or Revolving Credit Agent or
L/C Issuer, as the case may be, in addition to Lenders required hereinabove to
take such action. Each amendment, modification, termination or waiver shall be
effective only in the specific instance and for the specific purpose for which
it was given. No amendment, modification, termination or waiver shall be
required for Agent to take additional Collateral pursuant to any Loan Document.
No amendment, modification, termination or waiver of any provision of any Note
shall be effective without the written concurrence of the holder of that Note.
No notice to or demand on any Credit Party in any case shall entitle such Credit
Party or any other Credit Party to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, termination, waiver
or consent effected in accordance with this SECTION 11.2 shall be binding upon
each holder of the Notes at the time outstanding and each future holder of the
Notes.
(d) If, in connection with any proposed amendment, modification,
waiver or termination (a "PROPOSED CHANGE"):
(i) requiring the consent of all affected Lenders, the
consent of Requisite Lenders is obtained, but the consent of other Lenders whose
consent is required is not obtained (any such Lender whose consent is not
obtained as described in this CLAUSE (i) and in CLAUSES (ii), (iii) and (iv)
below being referred to as a "NON-CONSENTING LENDER"),
(ii) requiring the consent of Supermajority Revolving
Lenders, the consent of Requisite Revolving Lenders is obtained, but the consent
of Supermajority Revolving Lenders is not obtained,
(iii) requiring the consent of Requisite Revolving Lenders,
the consent of Revolving Lenders holding 51% or more of the aggregate Revolving
Loan Commitments is obtained, but the consent of Requisite Revolving Lenders is
not obtained, or
(iv) requiring the consent of Requisite Lenders, the consent
of Lenders holding 51% or more of the aggregate Commitments is obtained, but the
consent of Requisite Lenders is not obtained,
then, so long as Agent is not a Non-Consenting Lender, at Borrowers' request,
Agent or a Person reasonably acceptable to Agent shall have the right with
Agent's consent and in Agent's sole discretion (but shall have no obligation) to
purchase from such Non-Consenting Lenders, and such Non-Consenting Lenders agree
that they shall, upon Agent's request, sell and assign to Agent or such Person,
all of the Commitments of such Non-Consenting Lenders for an amount equal to the
principal balance of all Loans held by the Non-Consenting Lenders and all
accrued interest and Fees with respect thereto through the date of sale, such
purchase and sale to be consummated pursuant to an executed Assignment
Agreement.
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(e) Upon payment in full in cash and performance of all of the
Obligations (other than indemnification Obligations), termination of the
Commitments and a release of all claims against Agent and Lenders, and so long
as no suits, actions, proceedings or claims are pending or threatened against
any Indemnified Person asserting any damages, losses or liabilities that are
Indemnified Liabilities, Agent shall deliver to Borrowers termination
statements, mortgage releases and other documents necessary or appropriate to
evidence the termination of the Liens securing payment of the Obligations.
11.3 FEES AND EXPENSES.
Borrowers shall reimburse (i) Agent and Revolving Credit Agent
for all fees, costs and expenses (including the reasonable fees and expenses of
all of its counsel, advisors, consultants and auditors) and (ii) Agent and
Revolving Credit Agent (and, with respect to CLAUSES (c), (d) and (e) below, all
Lenders) for all fees, costs and expenses, including the reasonable fees, costs
and expenses of counsel or other advisors (including environmental and
management consultants and appraisers), incurred in connection with the
negotiation and preparation of the Loan Documents and incurred in connection
with:
(a) the forwarding to Borrowers or any other Person on behalf of
Borrowers by Agent of the proceeds of any Loan (including a wire transfer fee of
$25 per wire transfer);
(b) any amendment, modification or waiver of, consent with
respect to, or termination of, any of the Loan Documents or Related Transactions
Documents or advice in connection with the syndication and administration of the
Loans made pursuant hereto or its rights hereunder or thereunder;
(c) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Agent, any Lender, Borrowers or any other Person and
whether as a party, witness or otherwise) in any way relating to the Collateral,
any of the Loan Documents or any other agreement to be executed or delivered in
connection herewith or therewith, including any litigation, contest, dispute,
suit, case, proceeding or action, and any appeal or review thereof, in
connection with a case commenced by or against any or all of the Borrowers or
any other Person that may be obligated to Agent by virtue of the Loan Documents;
including any such litigation, contest, dispute, suit, proceeding or action
arising in connection with any work-out or restructuring of the Loans during the
pendency of one or more Events of Default; PROVIDED that in the case of
reimbursement of counsel for Lenders other than Agent and Revolving Credit
Agent, such reimbursement shall be limited to one counsel for all such Lenders;
provided, further, that no Person shall be entitled to reimbursement under this
clause (c) in respect of any litigation, contest, dispute, suit, proceeding or
action to the extent any of the foregoing results from such Person's gross
negligence or willful misconduct;
(d) any attempt to enforce any remedies of Agent against any or
all of the Credit Parties or any other Person that may be obligated to Agent or
any Lender by virtue of any of the Loan Documents, including any such attempt to
enforce any such remedies in the course of any work-out or restructuring of the
Loans during the pendency of one or more Events of Default; PROVIDED, that in
the case of reimbursement of counsel for Lenders other than Agent and
62
Revolving Credit Agent, such reimbursement shall be limited to one counsel for
all such Lenders;
(e) any workout or restructuring of the Loans during the pendency
of one or more Events of Default; PROVIDED, that in the case of reimbursement of
counsel for Lenders other than Agent and Revolving Credit Agent, such
reimbursement shall be limited to one counsel for all such Lenders; and
(f) efforts to (i) monitor the Loans or any of the other
Obligations, (ii) evaluate, observe or assess any of the Credit Parties or their
respective affairs, and (iii) verify, protect, evaluate, assess, appraise,
collect, sell, liquidate or otherwise dispose of any of the Collateral;
including, as to each of clauses (a) through (f) above, all reasonable
attorneys' and other professional and service providers' fees arising from such
services and other advice, assistance or other representation, including those
in connection with any appellate proceedings, and all expenses, costs, charges
and other fees incurred by such counsel and others in connection with or
relating to any of the events or actions described in this SECTION 11.3, all of
which shall be payable, on demand, by Borrowers to Agent. Without limiting the
generality of the foregoing, such expenses, costs, charges and fees may include:
fees, costs and expenses of accountants, environmental advisors, appraisers,
investment bankers, management and other consultants and paralegals; court costs
and expenses; photocopying and duplication expenses; court reporter fees, costs
and expenses; long distance telephone charges; air express charges; telegram or
telecopy charges; secretarial overtime charges; and expenses for travel, lodging
and food paid or incurred in connection with the performance of such legal or
other advisory services.
11.4 NO WAIVER.
Agent's, Revolving Credit Agent's or any Lender's failure, at any
time or times, to require strict performance by the Credit Parties of any
provision of this Agreement or any other Loan Document shall not waive, affect
or diminish any right of Agent or such Lender thereafter to demand strict
compliance and performance herewith or therewith. Any suspension or waiver of an
Event of Default shall not suspend, waive or affect any other Event of Default
whether the same is prior or subsequent thereto and whether the same or of a
different type. Subject to the provisions of SECTION 11.2, none of the
undertakings, agreements, warranties, covenants and representations of any
Credit Party contained in this Agreement or any of the other Loan Documents and
no Default or Event of Default by any Credit Party shall be deemed to have been
suspended or waived by Agent, Revolving Credit Agent or any Lender, unless such
waiver or suspension is by an instrument in writing signed by an officer of or
other authorized employee of Agent, Revolving Credit Agent and the applicable
required Lenders, and directed to Borrowers specifying such suspension or
waiver.
11.5 REMEDIES.
Agent's, Revolving Credit Agent's and Lenders' rights and
remedies under this Agreement shall be cumulative and nonexclusive of any other
rights and remedies that Agent or
63
any Lender may have under any other agreement, including the other Loan
Documents, by operation of law or otherwise. Recourse to the Collateral shall
not be required.
11.6 SEVERABILITY.
Wherever possible, each provision of this Agreement and the other
Loan Documents shall be interpreted in such a manner as to be effective and
valid under applicable law, but if any provision of this Agreement or any other
Loan Document shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement or such other Loan Document.
11.7 CONFLICT OF TERMS.
Except as otherwise provided in this Agreement or any of the
other Loan Documents by specific reference to the applicable provisions of this
Agreement, if any provision contained in this Agreement conflicts with any
provision in any of the other Loan Documents, the provision contained in this
Agreement shall govern and control.
11.8 CONFIDENTIALITY.
Agent, Revolving Credit Agent and each Lender agree to use
commercially reasonable efforts (equivalent to the efforts Agent, Revolving
Credit Agent or such Lender applies to maintaining the confidentiality of its
own confidential information) to maintain as confidential all confidential
information provided to them by the Credit Parties and designated as
confidential for a period of 2 years following receipt thereof, except that
Agent and any Lender may disclose such information (a) to Persons employed or
engaged by Agent or such Lender in evaluating, approving, structuring or
administering the Loans and the Commitments; (b) to any bona fide assignee or
participant or potential assignee or participant that has agreed to comply with
the covenant contained in this SECTION 11.8 (and any such bona fide assignee or
participant or potential assignee or participant may disclose such information
to Persons employed or engaged by them as described in CLAUSE (a) above); (c) as
required or requested by any Governmental Authority or reasonably believed by
Agent or such Lender to be compelled by any court decree, subpoena or legal or
administrative order or process; (d) as, on the advice of Agent's or such
Lender's counsel, is or may be required by law; (e) in connection with the
exercise of any right or remedy under the Loan Documents or in connection with
any Litigation to which Agent or such Lender is a party; (f) that ceases to be
confidential through no fault of Agent or any Lender; or (g) is in the public
domain.
11.9 GOVERNING LAW.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN
DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY HEREBY
64
CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN XXX XXXX XXXXXX,
XXXX XX XXX XXXX, XXX XXXX SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, AGENT, REVOLVING
CREDIT AGENT AND LENDERS PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS; PROVIDED, THAT AGENT, REVOLVING CREDIT AGENT,
LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS
MAY HAVE TO BE HEARD BY X XXXXX XXXXXXX XXXXXXX XX XXX XXXX XXXXXX; PROVIDED,
FURTHER, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE
AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION
TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH CREDIT PARTY
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
SUIT COMMENCED IN ANY SUCH COURT, AND EACH CREDIT PARTY HEREBY WAIVES ANY
OBJECTION THAT SUCH CREDIT PARTY MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT. EACH CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS,
COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT
SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED
OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET FORTH IN
ANNEX I OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED
UPON THE EARLIER OF SUCH CREDIT PARTY'S ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER
DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.
11.10 NOTICES.
Except as otherwise provided herein, whenever it is provided
herein that any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon any of the parties by any
other parties, or whenever any of the parties desires to give or serve upon any
other parties any communication with respect to this Agreement, each such
notice, demand, request, consent, approval, declaration or other communication
shall be in writing and shall be deemed to have been validly served, given or
delivered: (a) upon the earlier of actual receipt and 3 Business Days after
deposit in the United States Mail, registered or certified mail, return receipt
requested, with proper postage prepaid; (b) upon transmission, when sent by
telecopy or other similar facsimile transmission (with such telecopy or
facsimile promptly confirmed by delivery of a copy by personal delivery or
United States Mail as otherwise provided in this SECTION 11.10); (c) 1 Business
Day after deposit with a reputable overnight courier with all charges prepaid or
(d) when delivered, if hand-delivered by messenger, all of which shall be
addressed to the party to be notified and sent to the address or facsimile
number indicated in ANNEX I or to such other address (or facsimile number) as
may be substituted by notice given as herein provided. The giving of any notice
required hereunder may
65
be waived in writing by the party entitled to receive such notice. Failure or
delay in delivering copies of any notice, demand, request, consent, approval,
declaration or other communication to any Person (other than Borrowers or Agent)
designated in ANNEX I to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration or
other communication.
11.11 SECTION TITLES.
The Section titles and Table of Contents contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.
11.12 COUNTERPARTS.
This Agreement may be executed in any number of separate
counterparts, each of which shall collectively and separately constitute one
agreement.
11.13 WAIVER OF JURY TRIAL.
BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE, AMONG AGENT, LENDERS AND ANY CREDIT PARTY ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS RELATED THERETO.
11.14 PRESS RELEASES AND RELATED MATTERS.
Each Credit Party executing this Agreement agrees that neither it
nor its Affiliates will in the future issue any press releases or other public
disclosure using the name of GE Capital or its affiliates or referring to this
Agreement, the other Loan Documents or the Related Transactions Documents
without at least 2 Business Days' prior notice to GE Capital and without the
prior written consent of GE Capital unless (and only to the extent that) such
Credit Party or Affiliate is required to do so under law and then, in any event,
such Credit Party or Affiliate will consult with GE Capital before issuing such
press release or other public disclosure. Each Credit Party consents to the
publication by Agent, Revolving Credit Agent or any Lender of a tombstone or
similar advertising material relating to the financing transactions contemplated
by this Agreement. Agent and Revolving Credit reserves the right to provide to
industry trade organizations information necessary and customary for inclusion
in league table measurements.
66
11.15 REINSTATEMENT.
This Agreement shall remain in full force and effect and continue
to be effective should any petition be filed by or against Borrowers for
liquidation or reorganization, should Borrowers become insolvent or make an
assignment for the benefit of any creditor or creditors or should a receiver or
trustee be appointed for all or any significant part of Borrowers' assets, and
shall continue to be effective or to be reinstated, as the case may be, if at
any time payment and performance of the Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Obligations, whether as a "voidable
preference," "fraudulent conveyance," or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Obligations shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
11.16 ADVICE OF COUNSEL.
Each of the parties represents to each other party hereto that it
has discussed this Agreement and, specifically, the provisions of SECTIONS 11.9
and 11.13, with its counsel.
11.17 NO STRICT CONSTRUCTION.
The parties hereto have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties hereto and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provisions
of this Agreement.
12. CROSS-GUARANTY
12.1 CROSS-GUARANTY.
Borrowers hereby agree that Borrowers are jointly and severally
liable for, and hereby absolutely and unconditionally guarantee to Agent,
Revolving Credit Agent, L/C Issuer and Lenders and their respective successors
and assigns, the full and prompt payment (whether at stated maturity, by
acceleration or otherwise) and performance of, all Obligations owed or hereafter
owing to Agent and Lenders by each other Borrower. Borrowers agree that their
guaranty obligations hereunder are continuing guaranties of payment and
performance and not of collection, that its obligations under this SECTION 12
shall not be discharged until payment and performance, in full, of the
Obligations has occurred, and that its obligations under this SECTION 12 shall
be absolute and unconditional, irrespective of, and unaffected by,
(a) the genuineness, validity, regularity, enforceability or any
future amendment of, or change in, this Agreement, any other Loan Document or
any other agreement, document or instrument to which Borrowers are or may become
a party;
(b) the absence of any action to enforce this Agreement
(including this SECTION 12) or any other Loan Document or the waiver or consent
by Agent and Lenders with respect to any of the provisions thereof;
67
(c) the existence, value or condition of, or failure to perfect
its Lien against, any security for the Obligations or any action, or the absence
of any action, by Agent and Lenders in respect thereof (including the release of
any such security);
(d) the insolvency of any Credit Party; or
(e) any other action or circumstances that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor.
Each Borrower shall be regarded, and shall be in the same position, as principal
debtor with respect to the Obligations guaranteed hereunder.
12.2 WAIVERS BY BORROWER.
(a) Each Borrower expressly waives all rights it may have now or
in the future under any statute, or at common law, or at law or in equity, or
otherwise, to compel Agent or Lenders to xxxxxxxx assets or to proceed in
respect of the Obligations guaranteed hereunder against any other Credit Party,
any other party or against any security for the payment and performance of the
Obligations before proceeding against, or as a condition to proceeding against,
Borrower. It is agreed among Borrowers, Agent, Revolving Credit Agent and
Lenders that the foregoing waivers are of the essence of the transaction
contemplated by this Agreement and the other Loan Documents and that, but for
the provisions of this SECTION 12 and such waivers, Agent, Revolving Credit
Agent and Lenders would decline to enter into this Agreement.
(b) Each Borrower acknowledges and agrees that they are providing
a cross-guaranty of the obligations of each other Borrower under this SECTION 12
and as such, each Borrower will be sometimes referred to in this SECTION 12.2 as
a "CROSS-GUARANTOR" and collectively, as the "CROSS-GUARANTORS." Without
limiting the generality of the foregoing, each Cross-Guarantor waives any and
all benefits and defenses under California Civil Code ("CC") Sections 2847, 2848
and 2849 and agrees that such Cross-Guarantor shall have (i) no right of
subrogation against any other Borrower, any other Cross-Guarantor or any other
Guarantor, (ii) no right of subrogation against any Collateral or security
provided for in the Loan Documents and (iii) no right of contribution against
any other Borrower, Cross-Guarantor or other Guarantor unless and until all
Obligations have been paid and satisfied in full, and Lender has released,
transferred or disposed of all of its rights, title and interest in any
collateral or security. To the extent the waiver of such Cross-Guarantor's
rights of subrogation, reimbursement and contribution as set forth herein is
found by a court of competent jurisdiction to be void or voidable for any
reason, such Cross-Guarantor's rights of subrogation and reimbursement against
any other Borrower and such Cross-Guarantor's rights of subrogation against any
Collateral or security, shall be junior and subordinate to any rights Lender may
have against any other Borrower, other Cross-Guarantor or any other Guarantor
and to all rights, title and interest Lender may have in such Collateral or
security, and such Cross-Guarantor's rights of contribution against the other
Borrowers, Cross-Guarantors and any other Guarantors shall be junior and
subordinate to any rights Lender may have against the other Borrowers,
Cross-Guarantors or other Guarantors.
68
(c) Agent may use, sell or dispose of any item of Collateral or
security as it sees fit without regard to such Cross-Guarantor's subrogation and
contribution rights, and upon disposition or sale, of any item, any and all
rights of such Cross-Guarantors relating to such item shall terminate. Each
Cross-Guarantor understands that they may record a Request for Notice of Default
pursuant to CC Section 2924(b) and thereby receive notice of any proposed
foreclosure of any Mortgaged Property then securing the Obligations. With
respect to the foreclosure of any security interest in any personal property
Collateral then securing the Obligations, Agent agrees to give Cross-Guarantors
five days' prior written notice, in the manner set forth in SECTION 11.10
hereof, of any sale or disposition of any such personal property collateral,
other than Collateral which is perishable, threatens to decline speedily in
value, is of a type customarily sold on a recognized market, or is cash, cash
equivalents, certificates of deposit or the like.
(d) Further, in accordance with CC Section 2856,
(i) Each Cross-Guarantor waives all rights and defenses
available to such Cross-Guarantor by reason of CC Sections 2787 to
2855, inclusive, 2899 and 3433 including, without limitation, any and
all rights or defenses such Cross-Guarantor may have by reason of
protection afforded to the principal with respect to any of the
Obligations or to any other Borrower, any other Cross-Guarantor or any
other Guarantor of any of the Obligations with respect to such
Cross-Guarantor's obligations under the cross-guaranty contained in
this SECTION 12, in either case, pursuant to the anti-deficiency or
other laws of California limiting or discharging the principal's
indebtedness or any other Borrower's, any other Cross-Guarantor's or
other Guarantor's obligations, including, without limitation,
California Code of Civil Procedure ("CCP") Section 580a, 580b, 580d or
726; and
(ii) Each Cross-Guarantor waives all rights and defenses that
such Cross-Guarantor may have because another Borrower's, another
Cross-Guarantor's or another Guarantor's debt is secured by Real
Estate. This means, among other things:
(1) Agent may collect from each Cross-Guarantor
without first foreclosing on any real or personal property
collateral pledged by any other Borrower, Cross-Guarantor or
other Guarantor.
(2) If Agent forecloses on any Mortgaged Property
pledged by any Borrower, any Cross-Guarantor or any other
Guarantor: (1) the amount of the debt may be reduced only by the
price for which that Collateral is sold at the foreclosure sale,
even if the Collateral is worth m ore than the sale price, and
(2) Agent may collect from each Cross-Guarantor even if Agent, by
foreclosing on the Mortgaged Property, has destroyed any right
such Cross-Guarantor may have to collect from the other Borrower.
This is an unconditional and irrevocable waiver of any rights and
defenses Cross-Guarantors may have because another Borrower's, another
Cross-Guarantor's or another Guarantor's debt is secured by Real Estate. These
rights and defenses include, but are not limited to, any rights or defenses
based upon CCP Section 580a, 580b, 580d or 726; and
69
(iii) Each Cross-Guarantor waives all rights and defenses
arising out of an election of remedies by Agent or Lenders, even though
that election of remedies, such as a nonjudicial foreclosure with
respect to security for the Obligations, has destroyed such
Cross-Guarantor's rights of subrogation and reimbursement against
another Borrower, another Cross-Guarantor or another Guarantor by the
operation of CCP Section 580d or otherwise.
(e) Each Cross-Guarantor waives any and all benefits and defenses
under CC Section 2819, and agrees that by doing so such Cross-Guarantor's
liability shall continue even if Agent alters any obligations under the Loan
Documents in any respect or Agent's remedies or rights against another Borrower
are in any way impaired or suspended without such Cross-Guarantor's consent.
(f) Each Cross-Guarantor waives any and all benefits and defenses
under CC Section 2809, 2810, 2815 and 2839 and agrees that by doing so such
Cross-Guarantor's liability may be larger in amount and more burdensome than
that of any other Borrower, any other Cross-Guarantor or any other Guarantor. No
Cross-Guarantor's liability hereunder shall be limited or affected in any way by
any impairment or any diminution or loss of value of any security or collateral
for the Loan (whether caused by Hazardous Substances or otherwise), Agent's
failure to perfect a security interest in such security or collateral or any
disability or other defense of any other Borrower, any other Cross-Guarantor or
any other Guarantor.
(g) Each Cross-Guarantor agrees that Agent may enforce this
Guaranty without the necessity of resorting to or exhausting any security or
Collateral (including, without limitation, pursuant to a judicial or nonjudicial
foreclosure) and without the necessity of proceeding against any other Borrower,
any other Cross-Guarantor or any other Guarantor. Each Cross-Guarantor hereby
waives any and all benefits and defenses under CC Sections 2845 through 2847,
2849 and 2850, including, without limitation, the right to require Agent (i) to
proceed against any other Borrower, any other Cross-Guarantor, any other
Guarantor, (ii) to foreclose any lien on any real or personal property,(iii) to
exercise any right or remedy under the Loan Documents, (iv) to draw upon any
letter of credit issued in connection herewith, or (v) to pursue any other
remedy or to enforce any other right.
(h) Each Cross-Guarantor agrees that nothing contained herein
shall prevent Agent or any Lender from suing on any Note or from exercising any
rights available to them thereunder or under any of the Loan Documents and that
the exercise of any of the aforesaid rights shall not constitute a legal or
equitable discharge of such Cross-Guarantor. Each Cross-Guarantor understands
that the exercise by Agent of certain rights and remedies contained in the Loan
Documents (such as a nonjudicial foreclosure) may affect or eliminate such
Cross-Guarantor's right of subrogation against another Borrower, another
Cross-Guarantor or another Guarantor and that such Cross-Guarantor may therefore
incur a partially or totally nonreimbursable liability hereunder. Nevertheless,
each Cross-Guarantor authorizes and empowers Agent to exercise, in its sole
discretion, any rights and remedies, or any combination thereof, which may then
be available to Agent, since it is the intent and purpose of each
Cross-Guarantor that the obligations hereunder shall be absolute, independent
and unconditional under any and all circumstances. Each Cross-Guarantor
expressly waives any defense (which defense, if such Cross-Guarantor had not
given this waiver, it might otherwise have) to a judgment
70
against such Cross-Guarantor by reason of a nonjudicial foreclosure sale.
Without limiting the generality of the foregoing, such Cross-Guarantor waives
any and all benefits and defenses under (i) CCP Section 580a (which section, if
such Cross-Guarantor had not given this waiver, would otherwise limit such
Cross-Guarantor's liability after a nonjudicial foreclosure sale to the
difference between the obligations guaranteed herein and the fair market value
of the property or interests sold at such nonjudicial foreclosure sale), (ii)
CCP Sections 580b and 580d (which sections, if such Cross-Guarantor had not
given this waiver, would otherwise limit Agent's rights to recover a deficiency
judgment with respect to purchase money obligations and after a nonjudicial
foreclosure sale, respectively), and (iii) CCP Section 726 (which section, if
such Cross-Guarantor had not given this waiver, among other things, would
otherwise require Agent to exhaust all of its security before a personal
judgment may be obtained for a deficiency). Notwithstanding any foreclosure of
the lien of any deed of trust or security agreement with respect to any or all
of the real or personal property secured thereby, whether by the exercise of the
power of sale contained therein, by an action for judicial foreclosure or by an
acceptance of a deed in lieu of foreclosure, each Cross-Guarantor shall remain
bound under the cross-guaranty contained in this SECTION 12.
(i) No provision of this Agreement shall be construed as limiting
the generality for any of the covenants and waivers set forth in this SECTION
12.
12.3 BENEFIT OF GUARANTY.
Each Borrower agrees that the provisions of this SECTION 12 are
for the benefit of Agent and Lenders and their respective successors,
transferees, endorsees and assigns, and nothing herein contained shall impair,
as between any other Borrowers and Agent or Lenders, the obligations of such
other Borrowers under the Loan Documents.
12.4 SUBORDINATION OF SUBROGATION, ETC.
Notwithstanding anything to the contrary in this Agreement or in
any other Loan Document, and except as set forth in SECTION 12.7, each Borrower
hereby expressly and irrevocably subordinates to payment of the Obligations any
and all rights at law or in equity to subrogation, reimbursement, exoneration,
contribution, indemnification or set off and any and all defenses available to a
surety, guarantor or accommodation co-obligor until the Obligations are
indefeasibly paid in full in cash. Each Borrower acknowledges and agrees that
this subordination is intended to benefit Agent, Revolving Credit Agent and
Lenders and shall not limit or otherwise affect Borrowers' liability hereunder
or the enforceability of this SECTION 12, and that Agent, Revolving Credit
Agent, Lenders and their respective successors and assigns are intended third
party beneficiaries of the waivers and agreements set forth in this SECTION
12.4.
12.5 ELECTION OF REMEDIES.
If Agent, Revolving Credit Agent or any Lender may, under
applicable law, proceed to realize its benefits under any of the Loan Documents
giving Agent, Revolving Credit Agent or such Lender a Lien upon any Collateral,
whether owned by Borrowers or by any other Person, either by judicial
foreclosure or by non-judicial sale or enforcement, Agent, Revolving Credit
Agent or any Lender may, at its sole option, determine which of its remedies or
rights it
71
may pursue without affecting any of its rights and remedies under this SECTION
12. If, in the exercise of any of its rights and remedies, Agent or any Lender
shall forfeit any of its rights or remedies, including its right to enter a
deficiency judgment against Borrowers or any other Person, whether because of
any applicable laws pertaining to "election of remedies" or the like, Borrowers
hereby consent to such action by Agent or such Lender and waive any claim based
upon such action, even if such action by Agent or such Lender shall result in a
full or partial loss of any rights of subrogation that Borrowers might otherwise
have had but for such action by Agent or such Lender. Any election of remedies
that results in the denial or impairment of the right of Agent or any Lender to
seek a deficiency judgment against any Borrower shall not impair any other
Borrower's obligation to pay the full amount of the Obligations. In the event
Agent or any Lender shall bid at any foreclosure or trustee's sale or at any
private sale permitted by law or the Loan Documents, Agent or such Lender may
bid all or less than the amount of the Obligations and the amount of such bid
need not be paid by Agent or such Lender but shall be credited against the
Obligations. The amount of the successful bid at any such sale, whether Agent,
Lender or any other party is the successful bidder, shall be conclusively deemed
to be the fair market value of the Collateral and the difference between such
bid amount and the remaining balance of the Obligations shall be conclusively
deemed to be the amount of the Obligations guaranteed under this SECTION 12,
notwithstanding that any present or future law or court decision or ruling may
have the effect of reducing the amount of any deficiency claim to which Agent or
any Lender might otherwise be entitled but for such bidding at any such sale.
12.6 LIMITATION.
Notwithstanding any provision herein contained to the contrary,
each Borrower's liability under this SECTION 12 shall be limited to an amount
not to exceed as of any date of determination, the amount that could be claimed
by Agent and Lenders from such Borrower under this SECTION 12 without rendering
such claim voidable or avoidable under Section 548 of Chapter 11 of the
Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act,
Uniform Fraudulent Conveyance Act or similar statute or common law after taking
into account, among other things, such Borrower's right of contribution and
indemnification from each other Borrower under SECTION 12.7.
12.7 CONTRIBUTION WITH RESPECT TO GUARANTY OBLIGATIONS.
(a) To the extent any Borrower shall make a payment under this
SECTION 12 of all or any of the Obligations (a "GUARANTOR PAYMENT") that, taking
into account all other Guarantor Payments then previously or concurrently made
by any other Borrower, exceeds the amount that such Borrower would otherwise
have paid if such Borrower had paid the aggregate Obligations satisfied by such
Guarantor Payment in the same proportion that Borrower's "Allocable Amount" (as
defined below) (as determined immediately prior to such Guarantor Payment) bore
to the aggregate Allocable Amounts of each of the Borrowers as determined
immediately prior to the making of such Guarantor Payment, then, following
indefeasible payment in full in cash of the Obligations and termination of the
Commitments, such Borrower shall be entitled to receive contribution and
indemnification payments from, and be reimbursed by, each other Borrower for the
amount of such excess, pro rata based upon their respective Allocable Amounts in
effect immediately prior to such Guarantor Payment.
72
(b) As of any date of determination, the "Allocable Amount" of
any Borrower shall be equal to the maximum amount of the claim that could then
be recovered from such Borrower under this SECTION 12 without rendering such
claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy
Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform
Fraudulent Conveyance Act or similar statute or common law.
(c) This SECTION 12.7 is intended only to define the relative
rights of Borrowers and nothing set forth in this SECTION 12.7 is intended to or
shall impair the obligations of Borrowers, jointly and severally, to pay any
amounts as and when the same shall become due and payable in accordance with the
terms of this Agreement, including SECTION 12.1. Nothing contained in this
SECTION 12.7 shall limit the liability of Borrowers to pay the Loans made
directly or indirectly to Borrowers and accrued interest, Fees and expenses with
respect thereto for which Borrowers shall be primarily liable.
(d) The parties hereto acknowledge that the rights of
contribution and indemnification hereunder shall constitute assets of the
Borrowers to which such contribution and indemnification is owing.
(e) The rights of the indemnifying Borrowers against other Credit
Parties under this SECTION 12.7 shall be exercisable upon the full and
indefeasible payment of the Obligations and the termination of the Commitments.
12.8 LIABILITY CUMULATIVE.
The liability of Borrowers under this SECTION 12 is in addition
to and shall be cumulative with all liabilities of Borrowers to Agent and
Lenders under this Agreement and the other Loan Documents to which Borrowers is
a party or in respect of any Obligations or obligation of the other Borrowers,
without any limitation as to amount, unless the instrument or agreement
evidencing or creating such other liability specifically provides to the
contrary.
[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first written above.
XXXXX XXXXXXXXXXX COMPANY, a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------------
Name: Xxxxx X. Xxxxxx
---------------------------------------------
Title: VP Finance
--------------------------------------------
XXXXXX BROS. DRILLING COMPANY, a Utah corporation
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------------
Name: Xxxxx X. Xxxxxx
---------------------------------------------
Title: VP Finance
--------------------------------------------
XXXXXXXXXXX XXXXXX CORPORATION, a Delaware
corporation
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------------
Name: Xxxxx X. Xxxxxx
---------------------------------------------
Title: VP Finance
--------------------------------------------
LAYNE WATER DEVELOPMENT AND STORAGE, LLC, a Delaware
limited liability company
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------------
Name: Xxxxx X. Xxxxxx
---------------------------------------------
Title: VP Finance
--------------------------------------------
LAYNE TEXAS, INCORPORATED, a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------------
Name: Xxxxx X. Xxxxxx
---------------------------------------------
Title: VP Finance
--------------------------------------------
74
MID-CONTINENT DRILLING COMPANY, a Delaware
corporation
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------------
Name: Xxxxx X. Xxxxxx
---------------------------------------------
Title: VP Finance
--------------------------------------------
SHAWNEE OIL & GAS, L.L.C., a limited liability
company
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------------
Name: Xxxxx X. Xxxxxx
---------------------------------------------
Title: VP Finance
--------------------------------------------
XXXXX-XXXXXXX INCORPORATED, a Louisiana corporation
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------------
Name: Xxxxx X. Xxxxxx
---------------------------------------------
Title: VP Finance
--------------------------------------------
TOLEDO OIL & GAS SERVICES, INC., a Louisiana
corporation
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------------
Name: Xxxxx X. Xxxxxx
---------------------------------------------
Title: VP Finance
--------------------------------------------
VIBRATION TECHNOLOGY, INC., a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------------
Name: Xxxxx X. Xxxxxx
---------------------------------------------
Title: VP Finance
--------------------------------------------
75
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
By: /s/ Xxxxx Xxxxxxx
-----------------------------------------------
DULY AUTHORIZED SIGNATORY
Xxxxx XxXxxxx, Vice President
Capital Funding, Inc.
76
LASALLE BANK NATIONAL ASSOCIATION,
as Revolving Credit Agent and Lender
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------------
Xxxxx X. Xxxxxx
Vice President
77
U.S. BANK NATIONAL ASSOCIATION,
as Lender
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------------------------
Xxxxx X. Xxxxxxxx
Vice President
78
XXXXXX TRUST AND SAVINGS BANK
as Lender
By: /s/ Xxxx X. Xxxxxxxxxx
-----------------------------------------------
Xxxx X. Xxxxxxxxxx
Vice President
79
FIRST NATIONAL BANK OF KANSAS,
as Lender
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------------
Xxxx X. Xxxxxx
Senior Vice President
80
The following Persons are signatories to this Agreement in
their capacity as Credit Parties and not as Borrower:
None as of Closing.
81
ANNEX A (RECITALS)
TO
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have
(unless otherwise provided elsewhere in the Loan Documents) the following
respective meanings, and all references to Sections, Exhibits, Schedules or
Annexes in the following definitions shall refer to Sections, Exhibits,
Schedules or Annexes of or to the Agreement:
"ACCOUNT DEBTOR" means any Person who may become obligated to
any Person under, with respect to, or on account of, an Account.
"ACCOUNTING CHANGES" has the meaning ascribed thereto in ANNEX
G.
"ACCOUNTS" means all "accounts," as such term is defined in
the Code, now owned or hereafter acquired by any Person, including (a) all
accounts receivable, other receivables, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper,
Documents or Instruments), whether arising out of goods sold or services
rendered by it or from any other transaction (including any such obligations
that may be characterized as an account or contract right under the Code), (b)
all of each Person's rights in, to and under all purchase orders or receipts for
goods or services, (c) all of each Person's rights to any goods represented by
any of the foregoing (including unpaid sellers' rights of rescission, replevin,
reclamation and stoppage in transit and rights to returned, reclaimed or
repossessed goods), (d) all monies due or to become due to any Person, under all
purchase orders and contracts for the sale of goods or the performance of
services or both by such Person or in connection with any other transaction
(whether or not yet earned by performance on the part of such Person), including
the right to receive the proceeds of said purchase orders and contracts, (e) all
health care insurance receivables and (f) all collateral security and guaranties
of any kind, given by any Account Debtor or any other Person with respect to any
of the foregoing.
"ACQUISITION PROJECTIONS" shall have the meaning assigned to
it in SECTION 6.1(ix)(A).
"ADJUSTED CAPITAL EXPENDITURES" shall mean, with respect to
Borrowers, Capital Expenditures plus, direct and indirect investments by Xxxxx,
Xxxxxxx Oil & Gas, L.L.C. or LWDS in joint ventures, partnerships or other
business associations and Affiliates, related in each case to coal bed methane
projects and water resource management projects.
"ADVANCE" means any Revolving Credit Advance as the context
may require.
"AFFECTED LENDER" shall have the meaning assigned to it in
SECTION 1.16(d).
"AFFILIATE" means, with respect to any Person, (a) each Person
that, directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary,
A-1
five percent (5%) or more of the Stock having ordinary voting power in the
election of directors of such Person, (b) each Person that controls, is
controlled by or is under common control with such Person, (c) each of such
Person's officers, directors, joint venturers and partners and (d) in the case
of Borrowers, the immediate family members, spouses and lineal descendants of
individuals who are Affiliates of Borrower. For the purposes of this definition,
"CONTROL" of a Person shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of its management or policies, whether
through the ownership of voting securities, by contract or otherwise; PROVIDED,
HOWEVER, that the term "AFFILIATE" shall specifically exclude Agent and each
Lender.
"AGENT" means GE Capital in its capacity as Agent for Lenders
or its successor appointed pursuant to SECTION 9.7.
"AGREEMENT" means the Credit Agreement by and among Borrowers,
the other Credit Parties party thereto, GE Capital, as Agent and Lender, LaSalle
as Revolving Credit Agent and Lender, and the other Lenders from time to time
party thereto, as the same may be amended, supplemented, restated or otherwise
modified from time to time.
"APPENDICES" has the meaning ascribed to it in the recitals to
the Agreement.
"APPLICABLE L/C MARGIN" means the per annum fee, from time to
time in effect, payable with respect to outstanding Letter of Credit Obligations
as determined by reference to SECTION 1.5(a).
"APPLICABLE MARGINS" means collectively the Applicable L/C
Margin, the Applicable Revolver Index Margin, the Applicable Term Loan Index
Margin, the Applicable Revolver LIBOR Margin and the Applicable Term Loan LIBOR
Margin.
"APPLICABLE REVOLVER INDEX MARGIN" means the per annum
interest rate margin from time to time in effect and payable in addition to the
Index Rate applicable to the Revolving Loan, as determined by reference to
SECTION 1.5(a).
"APPLICABLE REVOLVER LIBOR MARGIN" means the per annum
interest rate from time to time in effect and payable in addition to the LIBOR
Rate applicable to the Revolving Loan, as determined by reference to SECTION
1.5(a).
"APPLICABLE TERM LOAN INDEX MARGIN" means the per annum
interest rate from time to time in effect and payable in addition to the Index
Rate applicable to the Term Loan, as determined by reference to SECTION 1.5(a).
"APPLICABLE TERM LOAN LIBOR MARGIN" means the per annum
interest rate from time to time in effect and payable in addition to the LIBOR
Rate applicable to the Term Loan, as determined by reference to SECTION 1.5(a).
"A RATED BANK" shall have the meaning assigned to it in
SECTION 6.2.
"ASSIGNMENT AGREEMENT" has the meaning ascribed to it in
SECTION 9.1(a).
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"BANKRUPTCY CODE" means the provisions of Title 11 of the
United States Code, 11 U.S.C. Section 101 et seq. or any statute replacing the
foregoing.
"BORROWER" and "BORROWERS" have the respective meanings
ascribed thereto in the preamble to the Agreement.
"BORROWER REPRESENTATIVE" means Xxxxx in its capacity as
Borrower Representative pursuant to the provisions of SECTION 1.1(c).
"BORROWING AVAILABILITY" has the meaning ascribed to it in
SECTION 1.1(a)(i).
"BORROWING BASE" means, as of any date of determination by
Agent and Revolving Credit Agent, from time to time, an amount equal to the sum
at such time of:
(a) up to 85% of the book value of Borrowers' Eligible
Accounts;
(b) up to the lesser of (i) 50% of the book value of Eligible
Foreign Accounts or (ii) $2,000,000; and
(c) up to 60% of the book value of Borrowers' Eligible
Inventory valued at the lower of cost (determined on a first-in,
first-out basis) or market;
in each case, less any Reserves established by Agent and Revolving Credit Agent
at such time.
"BORROWING BASE CERTIFICATE" means a certificate to be
executed and delivered from time to time by Borrowers in the form attached to
the Agreement as EXHIBIT 4.1(b).
"BUSINESS DAY" means any day that is not a Saturday, a Sunday
or a day on which banks are required or permitted to be closed in the State of
New York and in reference to LIBOR Loans shall mean any such day that is also a
Business Day.
"CAPITAL EXPENDITURES" means, with respect to any Person, all
expenditures (by the expenditure of cash or the incurrence of Indebtedness) by
such Person during any measuring period for any fixed assets or improvements or
for replacements, substitutions or additions thereto, that have a useful life of
more than one year and that are required to be capitalized under GAAP.
"CAPITAL LEASE" means, with respect to any Person, any lease
of any property (whether real, personal or mixed) by such Person as lessee that,
in accordance with GAAP, would be required to be classified and accounted for as
a capital lease on a balance sheet of such Person.
"CAPITAL LEASE OBLIGATION" means, with respect to any Capital
Lease of any Person, the amount of the obligation of the lessee thereunder that,
in accordance with GAAP, would appear on a balance sheet of such lessee in
respect of such Capital Lease.
"CASH COLLATERAL ACCOUNT" has the meaning ascribed to it in
ANNEX B.
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"CASH EQUIVALENTS" has the meaning ascribed to it in ANNEX B.
"CERTIFICATE OF EXEMPTION" shall have the meaning assigned to
it in SECTION 1.15(c).
"CHANGE OF CONTROL" means any of the following: (a) any person
or group of persons (within the meaning of the Securities Exchange Act of 1934)
shall have acquired beneficial ownership (within the meaning of Rule 13d-3
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 20% or more of the issued and outstanding shares of
capital Stock of Xxxxx having the right to vote for the election of directors of
Xxxxx under ordinary circumstances; or (b) during any period of twelve
consecutive calendar months, individuals who at the beginning of such period
constituted the board of directors of Xxxxx (together with any new directors
whose election by the board of directors of Xxxxx or whose nomination for
election by the Stockholders of Xxxxx was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason other than death or disability to
constitute a majority of the directors then in office.
"CHARGES" means all federal, state, county, city, municipal,
local, foreign or other governmental taxes (including taxes owed to the PBGC at
the time due and payable), levies, assessments, charges, liens, claims or
encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c)
the employees, payroll, income or gross receipts of any Credit Party, (d) any
Credit Party's ownership or use of any properties or other assets, or (e) any
other aspect of any Credit Party's business.
"CHATTEL PAPER" means any "chattel paper," as such term is
defined in the Code, including electronic chattel paper, now owned or hereafter
acquired by any Credit Party, wherever located.
"CLOSING DATE" means July 9, 2002.
"CLOSING CHECKLIST" means the schedule, including all
appendices, exhibits or schedules thereto, listing certain documents and
information to be delivered in connection with the Agreement, the other Loan
Documents and the transactions contemplated thereunder, substantially in the
form attached hereto as ANNEX D.
"CODE" means the Uniform Commercial Code as the same may, from
time to time, be enacted and in effect in the State of New York; PROVIDED, that
in the event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of, or remedies with respect to, Agent's or
any Lender's Lien on any Collateral is governed by the Uniform Commercial Code
as enacted and in effect in a jurisdiction other than the State of New York, the
term "CODE" shall mean the Uniform Commercial Code as enacted and in effect in
such other jurisdiction solely for purposes of the provisions thereof relating
to such attachment, perfection, priority or remedies and for purposes of
definitions related to such provisions.
"COLLATERAL" means the property covered by the Security
Agreement, the Mortgages and the other Collateral Documents and any other
property, real or personal, tangible
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or intangible, now existing or hereafter acquired, that may at any time be or
become subject to a security interest or Lien in favor of Agent, on behalf of
itself and Lenders, to secure the Obligations.
"COLLATERAL DOCUMENTS" means the Security Agreement, the
Pledge Agreements, the Mortgages, the Patent Security Agreement, the Trademark
Security Agreement and all similar agreements entered into guaranteeing payment
of, or granting a Lien upon property as security for payment of, the
Obligations.
"COLLATERAL REPORTS" means the reports with respect to the
Collateral referred to in ANNEX F.
"COLLECTION ACCOUNTS" shall mean those certain accounts as
follows:
With respect to all payments of every type made with respect
to the Revolving Loan, including all Fees and expenses payable to, or
for the account of the Revolving Credit Agent:
LaSalle Bank National Association
Chicago, Illinois
ABA: 000000000
A/C No.: 1378018-7300
Account Name: Commercial Loan Syndication Unit
Attn: Xxxxx Xxxxxxxx
Phone: 000.000.0000
Fax: 000.000.0000
Ref: Xxxxx Xxxxxxxxxxx Company, et. al.
With respect to all payments of every type made with respect
to the Term Loan including all Fees and expenses payable to or for the
account of Agent:
General Electric Capital Corporation
Bankers Trust
Xxx Xxxxxxx Xxxxx Xxxxx
Xxx Xxxx, XX 00000
Account# 00-000-000
ABA# 000-000-000
Reference : Capital Funding, Inc./Xxxxx Xxxxxxxxxxx Company
"COMMITMENT TERMINATION DATE" means the earliest of (a) July
8, 2007, (b) the date of termination of Lenders' obligations to make Advances
and to incur Letter of Credit Obligations or permit existing Loans to remain
outstanding pursuant to SECTION 8.2(b), and (c) the date of indefeasible
prepayment in full by Borrowers of the Loans and the cancellation and return (or
stand-by guarantee) of all Letters of Credit or the cash collateralization of
all Letter of Credit Obligations pursuant to ANNEX B, and the permanent
reduction of all Commitments to zero dollars ($0).
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"COMMITMENTS" means (a) as to any Lender, the aggregate of
such Lender's Revolving Loan Commitment and Term Loan Commitment as set forth on
ANNEX J to the Agreement or in the most recent Assignment Agreement executed by
such Lender and (b) as to all Lenders, the aggregate of all Lenders' Revolving
Loan Commitments and Term Loan Commitments, which aggregate commitment shall be
Seventy Million and no/100 Dollars ($70,000,000) on the Closing Date, as to each
of clauses (a) and (b), as such Commitments may be reduced, amortized or
adjusted from time to time in accordance with the Agreement.
"COMPLIANCE CERTIFICATE" has the meaning ascribed to it in
ANNEX E.
"CONTRACTS" means all "contracts," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, in any event,
including all contracts, undertakings, or agreements (other than rights
evidenced by Chattel Paper, Documents or Instruments) in or under which any
Credit Party may now or hereafter have any right, title or interest, including
any agreement relating to the terms of payment or the terms of performance of
any Account.
"CONTROL AGREEMENT" shall mean any agreement in which
Borrowers purport to grant Agent, on behalf of Lenders, a security interest in
any of their Deposit Accounts.
"CONTROL LETTER" means a letter agreement between Agent and
(i) the issuer of uncertificated securities with respect to uncertificated
securities in the name of any Credit Party, (ii) a securities intermediary with
respect to securities, whether certificated or uncertificated, securities
entitlements and other financial assets held in a securities account in the name
of any Credit Party, or (iii) a futures commission merchant or clearing house,
as applicable, with respect to commodity accounts and commodity contracts held
by any Credit Party, whereby, among other things, the issuer, securities
intermediary or futures commission merchant disclaims any security interest in
the applicable financial assets, acknowledges the Lien of Agent, on behalf of
itself and Lenders, on such financial assets, and agrees to follow the
instructions or entitlement orders of Agent without further consent by the
affected Credit Party.
"COPYRIGHTS" means all of the following now owned or hereafter
adopted or acquired by any Credit Party: (a) all copyrights and General
Intangibles of like nature (whether registered or unregistered), all
registrations and recordings thereof, and all applications in connection
therewith, including all registrations, recordings and applications in the
United States Copyright Office or in any similar office or agency of the United
States, any state or territory thereof, or any other country or any political
subdivision thereof, and (b) all reissues, extensions or renewals thereof.
"CREDIT PARTIES" means Borrowers and any other Person
signatory hereto from time to time other than Lenders, Agent, Revolving Credit
Agent and L/C Issuer.
"CROSS-GUARANTOR" and "CROSS GUARANTORS" shall have the
meaning assigned to them in SECTION 12.2(b).
"DEBT SECURITIES" shall mean, any securities, instruments and
agreements evidencing or documenting a debt obligation including, without
limitation, notes, debentures, bonds, credit agreements and loan agreements.
A-6
"DEFAULT" means any event that, with the passage of time or
notice or both, would, unless cured or waived, become an Event of Default.
"DEFAULT RATE" has the meaning ascribed to it in SECTION
1.5(d).
"DEPOSIT ACCOUNTS" means all "deposit accounts" as such term
is defined in the Code.
"DISCLOSURE SCHEDULES" means the Schedules prepared by
Borrowers and denominated as Disclosure SCHEDULES (1.4) through (6.7) in the
Index to the Agreement.
"DOCUMENTS" means all "documents," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located.
"DOLLARS" or "$"means lawful currency of the United States of
America.
"EBITDA" means, with respect to any Person for any fiscal
period, without duplication, an amount equal to (a) consolidated net income of
such Person for such period determined in accordance with GAAP, MINUS (b) the
sum of (i) income tax benefits, (ii) interest income, (iii) gain from
extraordinary items for such period, (iv) any aggregate net gain (but not any
aggregate net loss) during such period arising from the sale, exchange or other
disposition of capital assets by such Person (including any fixed assets,
whether tangible or intangible, all inventory sold in conjunction with the
disposition of fixed assets and all securities), and (v) any other non-cash
gains that have been added in determining consolidated net income, in each case
to the extent included in the calculation of consolidated net income of such
Person for such period in accordance with GAAP, but without duplication, PLUS
(c) the sum of (i) any provision for income taxes, (ii) Interest Expense, (iii)
loss from extraordinary items for such period, (iv) the amount of non-cash
charges (including depreciation and amortization) for such period, (v) amortized
debt discount for such period, (vi) any aggregate net loss (but not any
aggregate net gains) during such period arising from the sale, exchange or other
disposition of capital assets by such Person, and (vii) the amount of any
deduction to consolidated net income as the result of any grant to any members
of the management of such Person of any Stock, in each case to the extent
included in the calculation of consolidated net income of such Person for such
period in accordance with GAAP, but without duplication. For purposes of this
definition, the following items shall be excluded in determining consolidated
net income of a Person: (1) the income (or deficit) of any other Person accrued
prior to the date it became a Subsidiary of, or was merged or consolidated into,
such Person or any of such Person's Subsidiaries; (2) equity earnings of other
Persons accounted for on an equity basis, except to the extent received, on a
consolidated basis, as cash dividends or distributions; (3) equity losses of
other Persons accounted for on an equity basis, except to the extent such losses
represent, on a consolidated basis, cash losses; (4) the undistributed earnings
of any Subsidiary of such Person to the extent that the declaration or payment
of dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any contractual obligation or requirement of law
applicable to such Subsidiary; (5) any restoration to income of any contingency
reserve, except to the extent that provision for such reserve was made out of
income accrued during such period; (6) any write-up of any asset; (7) any net
gain from the collection of the proceeds of life insurance policies; (8) any net
gain arising from the acquisition of any securities, or the extinguishment,
under GAAP, of any
A-7
Indebtedness, of such Person, (9) in the case of a successor to such Person by
consolidation or merger or as a transferee of its assets, any earnings of such
successor prior to such consolidation, merger or transfer of assets, and (10)
any deferred credit representing the excess of equity in any Subsidiary of such
Person at the date of acquisition of such Subsidiary over the cost to such
Person of the investment in such Subsidiary.
"ELIGIBLE ACCOUNTS" has the meaning ascribed to it in SECTION
1.6.
"ELIGIBLE FOREIGN ACCOUNTS" means those Accounts which would
otherwise be Eligible Accounts under SECTION 1.6 without regard to SECTIONS
1.6(i) OR (n) and which are owed to any Foreign Subsidiary by an Account Debtor
who currently has, or is the Subsidiary of an entity who currently has a rating
from Standard & Poor's Ratings Group equal to or higher than BBB- or a rating
from Xxxxx'x Investors Service, Inc equal to or higher than Baa3.
"ELIGIBLE INVENTORY" has the meaning ascribed to it in SECTION
1.7.
"ENVIRONMENTAL INDEMNITIES" means those certain Environmental
Indemnity Agreements dated as of the date hereof in favor of Agent and made by
each Borrower who owns Mortgaged Property.
"ENVIRONMENTAL LAWS" means all applicable federal, state,
local and foreign laws, statutes, ordinances, codes, rules, standards and
regulations, now or hereafter in effect, and any applicable judicial or
administrative interpretation thereof, including any applicable judicial or
administrative order, consent decree, order or judgment, imposing liability or
standards of conduct for or relating to the regulation and protection of human
health, safety, the environment and natural resources (including ambient air,
surface water, groundwater, wetlands, land surface or subsurface strata,
wildlife, aquatic species and vegetation). Environmental Laws include the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
(42 U.S.C. Section Section 9601 ET SEQ.) ("CERCLA"); the Hazardous Materials
Transportation Authorization Act of 1994 (49 U.S.C. Section Section 5101 et
seq.); the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Section
Section 136 et seq.); the Solid Waste Disposal Act (42 U.S.C. Section Section
6901 et seq.); the Toxic Substance Control Act (15 U.S.C. Section Section 2601
et seq.); the Clean Air Act (42 U.S.C. Section Section 7401 et seq.); the
Federal Water Pollution Control Act (33 U.S.C. Section Section 1251 et seq.);
the Occupational Safety and Health Act (29 U.S.C. Section Section 651 et seq.);
and the Safe Drinking Water Act (42 U.S.C. Section Section 300(f) et seq.), and
any and all regulations promulgated thereunder, and all analogous state, local
and foreign counterparts or equivalents and any transfer of ownership
notification or approval statutes.
"ENVIRONMENTAL LIABILITIES" means, with respect to any Person,
all liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts
and consultants), fines, penalties, sanctions and interest incurred as a result
of or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, including any arising under
or related to any Environmental Laws, Environmental Permits, or in
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connection with any Release or threatened Release or presence of a Hazardous
Material whether on, at, in, under, from or about or in the vicinity of any real
or personal property.
"ENVIRONMENTAL PERMITS" means all permits, licenses,
authorizations, certificates, approvals or registrations required by any
Governmental Authority under any Environmental Laws.
"EQUIPMENT" means all "equipment," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located
and, in any event, including all such Credit Party's machinery and equipment,
including processing equipment, conveyors, machine tools, data processing and
computer equipment, including embedded software and peripheral equipment and all
engineering, processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, attachments, accessories,
automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor
vehicles, rolling stock and other equipment of every kind and nature, trade
fixtures and fixtures not forming a part of real property, together with all
additions and accessions thereto, replacements therefor, all parts therefor, all
substitutes for any of the foregoing, fuel therefor, and all manuals, drawings,
instructions, warranties and rights with respect thereto, and all products and
proceeds thereof and condemnation awards and insurance proceeds with respect
thereto.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any regulations promulgated thereunder.
"ERISA AFFILIATE" means, with respect to any Credit Party, any
trade or business (whether or not incorporated) that, together with such Credit
Party, are treated as a single employer within the meaning of Sections 414(b),
(c), (m) or (o) of the IRC.
"ERISA EVENT" means, with respect to any Credit Party,
Subsidiary of any Credit Party or any ERISA Affiliate, (a) any event described
in Section 4043(c) of ERISA with respect to a Title IV Plan; (b) the withdrawal
of any Credit Party or ERISA Affiliate from a Title IV Plan subject to Section
4063 of ERISA during a plan year in which it was a substantial employer, as
defined in Section 4001(a)(2) of ERISA; (c) the complete or partial withdrawal
of any Credit Party or any ERISA Affiliate from any Multiemployer Plan; (d) the
filing of a notice of intent to terminate a Title IV Plan or the treatment of a
plan amendment as a termination under Section 4041 of ERISA; (e) the institution
of proceedings to terminate a Title IV Plan or Multiemployer Plan by the PBGC;
(f) the failure by any Credit Party or ERISA Affiliate to make when due required
contributions to a Multiemployer Plan or Title IV Plan unless such failure is
cured within 30 days; (g) any other event or condition that 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 Title IV Plan or
Multiemployer Plan or for the imposition of liability under Section 4069 or
4212(c) of ERISA; (h) the termination of a Multiemployer Plan under Section
4041A of ERISA or the reorganization or insolvency of a Multiemployer Plan under
Section 4241 or 4245 of ERISA; or (i) the loss of a Qualified Plan's
qualification or tax exempt status; or (j) the termination of a Plan described
in Section 4064 of ERISA.
"ESOP" means a Plan that is intended to satisfy the
requirements of Section 4975(e)(7) of the IRC.
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"EVENT OF DEFAULT" has the meaning ascribed to it in SECTION
8.1.
"EXCESS CASH FLOW" means, without duplication, with respect to
any Fiscal Year of Borrowers and their Subsidiaries commencing with the Fiscal
Year ending January 31, 2004, consolidated net income PLUS (a) depreciation,
amortization and Interest Expense to the extent deducted in determining
consolidated net income, MINUS (b) Adjusted Capital Expenditures during such
Fiscal Year (excluding the financed portion thereof and excluding any Adjusted
Capital Expenditures in such Fiscal Year to the extent in excess of the amount
permitted to be made in such Fiscal Year pursuant to CLAUSE (a) of ANNEX G),
MINUS (c) Interest Expense paid or accrued (excluding any original issue
discount, interest paid in kind or amortized debt discount, to the extent
included in determining Interest Expense) and scheduled principal payments paid
or payable in respect of Funded Debt, PLUS or MINUS (as the case may be), (d)
extraordinary gains or losses which are cash items not included in the
calculation of net income, MINUS (e) mandatory prepayments paid in cash pursuant
to SECTION 1.3 other than mandatory prepayments made pursuant to SECTIONS
1.3(b)(i), 1.3(b)(ii), 1.3(b)(iv) OR 1.3(d), PLUS (f) Taxes deducted in
determining consolidated net income to the extent not paid for in cash.
"FAIR LABOR STANDARDS ACT" means the Fair Labor Standards Act,
29 U.S.C. Section 201 et seq.
"FEDERAL FUNDS RATE" means, for any day, a floating rate equal
to the weighted average of the rates on overnight Federal funds transactions
among members of the Federal Reserve System, as determined by Agent in its sole
discretion, which determination shall be final, binding and conclusive (absent
manifest error).
"FEDERAL RESERVE BOARD" means the Board of Governors of the
Federal Reserve System.
"FEES" means any and all fees payable to Agent or any Lender
pursuant to the Agreement or any of the other Loan Documents.
"FINANCIAL COVENANTS" means the financial covenants set forth
in ANNEX G.
"FINANCIAL STATEMENTS" means the consolidated and
consolidating income statements, statements of cash flows and balance sheets of
Borrowers delivered in accordance with SECTION 3.4 and ANNEX E.
"FISCAL MONTH" means any of the monthly accounting periods of
Borrower.
"FISCAL QUARTER" means any of the quarterly accounting periods
of Borrowers, ending on April 30, July 31, October 31 and January 31 of each
year.
"FISCAL YEAR" means any of the annual accounting periods of
Borrowers ending on January 31 of each year.
"FIXED CHARGES" means, with respect to any Person for any
fiscal period, (a) the aggregate of all Interest Expense during such period,
PLUS (b) scheduled payments of principal with respect to Indebtedness during
such period, PLUS (c) Taxes paid during such period;
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PROVIDED, that the scheduled payments of principal on the Term Loan and the
Prior Lender Obligations for the Fiscal Quarters ending July 31, 2002, October
31, 2002, January 31, 2003 and April 30, 2003 shall be deemed to be $3,500,000
for the trailing 12 calendar month period.
"FIXED CHARGE COVERAGE RATIO" means, with respect to any
Person for any fiscal period, the ratio of EBITDA for such period LESS
Maintenance Capital Expenditures incurred during such period to Fixed Charges
incurred during such period.
"FIXTURES" means all "fixtures" as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party.
"FOREIGN LENDER" shall have the meaning assigned to it in
SECTION 1.15(c).
"FOREIGN SUBSIDIARY" shall mean any Subsidiary which is
organized under any jurisdiction other than the United States of America or any
state in the United States of America.
"FUNDED DEBT" means, with respect to any Person, without
duplication, all Indebtedness for borrowed money evidenced by notes, bonds,
debentures, or similar evidences of Indebtedness that by its terms matures more
than one year from, or is directly or indirectly renewable or extendible at such
Person's option under a revolving credit or similar agreement obligating the
lender or lenders to extend credit over a period of more than one year from the
date of creation thereof, and specifically including Capital Lease Obligations,
current maturities of long-term debt, revolving credit and short-term debt
extendible beyond one year at the option of the debtor, and also including, in
the case of Borrowers, the Obligations and, without duplication, Guaranteed
Indebtedness consisting of guaranties of Funded Debt of other Persons.
Notwithstanding the foregoing, the term "Funded Debt" shall not include
obligations of a Person with respect to undrawn stand-by letters of credit.
"GAAP" means generally accepted accounting principles in the
United States of America consistently applied, as such term is further defined
in ANNEX G to the Agreement.
"GE CAPITAL" means General Electric Capital Corporation, a
Delaware corporation, its legal successors and assigns.
"GE CAPITAL FEE LETTER" means that certain letter, dated as of
April 3, 2002, between GE Capital and Borrowers with respect to certain Fees to
be paid from time to time by Borrowers to GE Capital.
"GENERAL INTANGIBLES" means all "general intangibles," as such
term is defined in the Code, now owned or hereafter acquired by any Credit
Party, including all right, title and interest that such Credit Party may now or
hereafter have in or under any Contract, all payment intangibles, customer
lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefor
and reissues, extensions or renewals thereof, rights in Intellectual Property,
interests in partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any Trademark or
Trademark License), all
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rights and claims in or under insurance policies (including insurance for fire,
damage, loss and casualty, whether covering personal property, real property,
tangible rights or intangible rights, all liability, life, key man and business
interruption insurance, and all unearned premiums), uncertificated securities,
choses in action, deposit, checking and other bank accounts, rights to receive
tax refunds and other payments, rights to receive dividends, distributions,
cash, Instruments and other property in respect of or in exchange for pledged
Stock and Investment Property, rights of indemnification, all books and records,
correspondence, credit files, invoices and other papers, including without
limitation all tapes, cards, computer runs and other papers and documents in the
possession or under the control of such Credit Party or any computer bureau or
service company from time to time acting for such Credit Party.
"GOODS" means all "goods" as defined in the Code, now owned or
hereafter acquired by any Credit Party, including embedded software.
"GOVERNMENTAL AUTHORITY" means any nation or government, any
state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"GUARANTEED INDEBTEDNESS" means as to any Person, any
obligation of such Person guaranteeing, providing comfort or otherwise
supporting any Indebtedness, lease, dividend, or other obligation ("PRIMARY
OBLIGATION") of any other Person (the "PRIMARY OBLIGOR") in any manner,
including any obligation or arrangement of such Person to (a) purchase or
repurchase any such primary obligation, (b) advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency or any balance sheet condition of the primary obligor, (c)
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, (d) protect the beneficiary of such
arrangement from loss (other than product warranties given in the ordinary
course of business) or (e) indemnify the owner of such primary obligation
against loss in respect thereof. The amount of any Guaranteed Indebtedness at
any time shall be deemed to be an amount equal to the lesser at such time of (x)
the stated or determinable amount of the primary obligation in respect of which
such Guaranteed Indebtedness is incurred and (y) the maximum amount for which
such Person may be liable pursuant to the terms of the instrument embodying such
Guaranteed Indebtedness, or, if not stated or determinable, the maximum
reasonably anticipated liability (assuming full performance) in respect thereof.
"GUARANTOR PAYMENT" shall have the meaning assigned to it in
SECTION 12.7(a).
"HAZARDOUS MATERIAL" means any substance, material or waste
that is regulated by, or forms the basis of liability now or hereafter under,
any Environmental Laws, including any material or substance that is (a) defined
as a "solid waste," "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste," "restricted hazardous waste,"
"pollutant," "contaminant," "hazardous constituent," "special waste," "toxic
substance" or other similar term or phrase under any Environmental Laws, or (b)
petroleum or any fraction or by-product thereof, asbestos, polychlorinated
biphenyls (PCB's), or any radioactive substance.
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"INDEBTEDNESS" means, with respect to any Person, without
duplication, (a) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property payment for which is deferred twelve (12)
months or more, but excluding obligations to trade creditors incurred in the
ordinary course of business that are unsecured and not overdue by more than 6
months unless being contested in good faith, (b) all reimbursement and other
obligations with respect to letters of credit, bankers' acceptances and surety
bonds, whether or not matured, (c) all obligations evidenced by notes, bonds,
debentures or similar instruments, (d) all indebtedness created or arising under
any conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all Capital Lease Obligations and the present
value (discounted at the Index Rate as in effect on the Closing Date) of future
rental payments under all synthetic leases, (f) all obligations of such Person
under commodity purchase or option agreements or other commodity price hedging
arrangements, in each case whether contingent or matured, (g) all obligations of
such Person under any foreign exchange contract, currency swap agreement,
interest rate swap, cap or collar agreement or other similar agreement or
arrangement designed to alter the risks of that Person arising from fluctuations
in currency values or interest rates, in each case whether contingent or
matured, (h) all Indebtedness referred to above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien upon or in property or other assets (including accounts
and contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness, and (i) the
Obligations.
"INDEMNIFIED LIABILITIES" has the meaning ascribed to it in
SECTION 1.13.
"INDEMNIFIED PERSON" has the meaning ascribed to in Section
1.13.
"INDEX RATE" means, for any day, a floating rate equal to the
higher of (i) the rate publicly quoted from time to time by THE WALL STREET
JOURNAL as the "base rate on corporate loans posted by at least 75% of the
nation's 30 largest banks" (or, if THE WALL STREET JOURNAL ceases quoting a base
rate of the type described, the highest per annum rate of interest published by
the Federal Reserve Board in Federal Reserve statistical release H.15 (519)
entitled "Selected Interest Rates" as the Bank prime loan rate or its
equivalent), and (ii) the Federal Funds Rate plus 50 basis points per annum.
Each change in any interest rate provided for in the Agreement based upon the
Index Rate shall take effect at the time of such change in the Index Rate.
"INDEX RATE LOAN" means a Loan or portion thereof bearing
interest by reference to the Index Rate.
"INSTRUMENTS" means all "instruments," as such term is defined
in the Code, now owned or hereafter acquired by any Credit Party, wherever
located, and, in any event, including all certificated securities, all
certificates of deposit, and all notes and other, without limitation, evidences
of indebtedness, other than instruments that constitute, or are a part of a
group of writings that constitute, Chattel Paper.
"INTELLECTUAL PROPERTY" means any and all Licenses, Patents,
Copyrights, Trademarks, and the goodwill associated with such Trademarks.
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"INTEREST COVERAGE RATIO" means, with respect to any Person
for any period, the ratio of EBITDA to Interest Expense.
"INTEREST EXPENSE" means, with respect to any Person for any
fiscal period, interest expense (whether cash or non-cash), interest
income, of such Person determined in accordance with GAAP for the relevant
period ended on such date, including, interest expense with respect to any
Funded Debt of such Person and interest expense for the relevant period that has
been capitalized on the balance sheet of such Person.
"INTEREST PAYMENT DATE" means (a) as to any Index Rate Loan,
the first Business Day of each month to occur while such Loan is outstanding,
and (b) as to any LIBOR Loan, the last day of the applicable LIBOR Period;
PROVIDED, that, in addition to the foregoing, each of (x) the date upon which
all of the Commitments have been terminated and the Loans have been paid in full
and (y) the Commitment Termination Date shall be deemed to be an "Interest
Payment Date" with respect to any interest that has then accrued under the
Agreement.
"INVENTORY" means all "inventory," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located,
and in any event including inventory, merchandise, goods and other personal
property that are held by or on behalf of any Credit Party for sale or lease or
are furnished or are to be furnished under a contract of service, or that
constitute raw materials, work in process, finished goods, returned goods, or
materials or supplies of any kind, nature or description used or consumed or to
be used or consumed in such Credit Party's business or in the processing,
production, packaging, promotion, delivery or shipping of the same, including
other supplies and embedded software.
"INVESTMENT PROPERTY" means all "investment property" as such
term is defined in the Code now owned or hereafter acquired by any Credit Party,
wherever located, including (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Credit Party,
including the rights of any Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities intermediary
with respect to that account; (iii) all securities accounts of any Credit Party;
(iv) all commodity contracts of any Credit Party; and (v) all commodity accounts
held by any Credit Party.
"IRC" means the Internal Revenue Code of 1986 and all
regulations promulgated thereunder.
"IRS" means the Internal Revenue Service.
"XXXXX" means Xxxxx Xxxxxxxxxxx Company, a Delaware
corporation.
"LASALLE" means LaSalle Bank National Association, its legal
successors and assigns.
"XXXXX PLEDGE AGREEMENT" means the Pledge Agreement of even
date herewith executed by Xxxxx in favor of Agent, on behalf of itself and
Lenders, pledging all Stock of its
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Subsidiaries (other than Foreign Subsidiaries and International Directional
Services, L.L.C.), and sixty-five percent (65%) of all Stock in all of its
Foreign Subsidiaries, and one hundred percent (100%) of all Intercompany
Indebtedness owing to or held by it.
"L/C ISSUER" has the meaning ascribed to it in ANNEX B.
"L/C SUBLIMIT" has the meaning ascribed to it in ANNEX B.
"LEASE EXPENSES" means, with respect to any Person for any
fiscal period, the aggregate rental obligations of such Person determined in
accordance with GAAP which are payable in respect of such period under leases of
real or personal property (net of income from subleases thereof, but including
taxes, insurance, maintenance and similar expenses that the lessee is obligated
to pay under the terms of such leases), whether or not such obligations are
reflected as liabilities or commitments on a consolidated balance sheet of such
Person or in the notes thereto, excluding, however, any such obligations under
Capital Leases.
"LENDERS" means GE Capital, LaSalle, the other Lenders named
on the signature pages of the Agreement, and, if any such Lender shall decide to
assign all or any portion of the Obligations, such term shall include any
assignee of such Lender.
"LETTER OF CREDIT FEE" has the meaning ascribed to it in ANNEX
B.
"LETTER OF CREDIT OBLIGATIONS" means all outstanding
obligations incurred by Agent and Lenders at the request of Borrowers, whether
direct or indirect, contingent or otherwise, due or not due, in connection with
the issuance of Letters of Credit by Revolving Credit Agent or another L/C
Issuer or the purchase of a participation as set forth in ANNEX B with respect
to any Letter of Credit. The amount of such Letter of Credit Obligations shall
equal the maximum amount that may be payable at such time or at any time
thereafter by Agent or Lenders thereupon or pursuant thereto.
"LETTERS OF CREDIT" means documentary or standby letters of
credit issued for the account of Borrowers by any L/C Issuer, and bankers'
acceptances issued by Borrowers, for which Agent and Lenders have incurred
Letter of Credit Obligations.
"LEVERAGE RATIO" means, with respect to Borrowers, on a
consolidated basis, the ratio of (a) Funded Debt as of any date of determination
LESS cash or Cash Equivalents, to (b) EBITDA for the twelve months ending on
that date of determination.
"LIBOR LOAN" means a Loan or any portion thereof bearing
interest by reference to the LIBOR Rate.
"LIBOR PERIOD" means, with respect to any LIBOR Loan, each
period commencing on a Business Day selected by Borrowers pursuant to the
Agreement and ending one, two or three months thereafter, as selected by
Borrowers' irrevocable notice to Agent as set forth in SECTION 1.5(e); provided,
that the foregoing provision relating to LIBOR Periods is subject to the
following:
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(a) if any LIBOR Period would otherwise end on a day that is
not a Business Day, such LIBOR Period shall be extended to the next
succeeding Business Day unless the result of such extension would be to
carry such LIBOR Period into another calendar month in which event such
LIBOR Period shall end on the immediately preceding Business Day;
(b) any LIBOR Period that would otherwise extend beyond the
Commitment Termination Date shall end two (2) Business Days prior to
such date;
(c) any LIBOR Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such LIBOR
Period) shall end on the last Business Day of a calendar month;
(d) Borrowers shall select LIBOR Periods so as not to require
a payment or prepayment of any LIBOR Loan during a LIBOR Period for
such Loan; and
(e) Borrowers shall select LIBOR Periods so that there shall
be no more than five (5) separate LIBOR Loans in existence at any one
time.
"LIBOR RATE" means for each LIBOR Period, a rate of interest
determined by Agent and Revolving Credit Agent equal to:
(a) the offered rate for deposits in United States Dollars for
the applicable LIBOR Period that appears on Telerate Page 3750 as of
11:00 a.m. (London time), on the second full Business Day next
preceding the first day of such LIBOR Period (unless such date is not a
Business Day, in which event the next succeeding Business Day will be
used); divided by
(b) a number equal to 1.0 MINUS the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day that is 2 Business Days prior to the beginning
of such LIBOR Period (including basic, supplemental, marginal and emergency
reserves under any regulations of the Federal Reserve Board or other
Governmental Authority having jurisdiction with respect thereto, as now and from
time to time in effect) for Eurocurrency funding (currently referred to as
"EUROCURRENCY LIABILITIES" in Regulation D of the Federal Reserve Board that are
required to be maintained by a member bank of the Federal Reserve System.
If such interest rates shall cease to be available from
Telerate News Service, the LIBOR Rate shall be determined from such financial
reporting service or other information as shall be mutually acceptable to Agent
and Borrower.
"LICENSE" means any Copyright License, Patent License,
Trademark License or other license of rights or interests now held or hereafter
acquired by any Credit Party.
"LIEN" means any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature
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whatsoever (including any lease or title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing, and
the filing of, or agreement to give, any financing statement perfecting a
security interest under the Code or comparable law of any jurisdiction).
"LITIGATION" has the meaning ascribed to it in SECTION 3.13.
"LOAN ACCOUNT" has the meaning ascribed to it in SECTION 1.12.
"LOAN DOCUMENTS" means the Agreement, the Notes, the
Collateral Documents, and all other agreements, instruments, documents and
certificates identified in the Closing Checklist (other than Environmental
Indemnities, the obligations of which are not secured by the Collateral)
executed and delivered to, or in favor of, Agent or any Lenders and including
all other pledges, powers of attorney, consents, assignments, contracts,
notices, and all other written matter whether heretofore, now or hereafter
executed by or on behalf of any Credit Party, or any employee of any Credit
Party, and delivered to Agent or any Lender in connection with the Agreement or
the transactions contemplated thereby. Any reference in the Agreement or any
other Loan Document to a Loan Document shall include all appendices, exhibits or
schedules thereto, and all amendments, restatements, supplements or other
modifications thereto, and shall refer to the Agreement or such Loan Document as
the same may be in effect at any and all times such reference becomes operative.
"LOANS" means the Revolving Loan and the Term Loan.
"LWDS" means Xxxxx Water Development and Storage, LLC, a
Delaware limited liability company and its legal successors and assigns.
"MARGIN STOCK" has the meaning ascribed to in SECTION 3.10.
"MAINTENANCE CAPITAL EXPENDITURES" shall mean, for any fiscal
period, Capital Expenditures incurred or made solely for maintenance or
operating purposes, as determined by Agent. Maintenance Capital Expenditures
shall not include any Capital Expenditures made for the purpose of expanding or
increasing the business, operations or prospects of the Person incurring such
Capital Expenditures.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
(a) the business, assets, operations, prospects or financial or other condition
of Borrowers as a whole, (b) Borrowers' ability to pay any of the Loans or any
of the other Obligations in accordance with the terms of the Agreement, (c) the
Collateral or Agent's Liens, on behalf of itself and Lenders, on the Collateral
or the priority of such Liens, or (d) Agent's, Revolving Credit Agent's or any
Lender's rights and remedies under the Agreement and the other Loan Documents.
"MAXIMUM AMOUNT" means, as of any date of determination, an
amount equal to the Revolving Loan Commitment of all Lenders as of that date.
"MAXIMUM LAWFUL RATE" has the meaning ascribed to it in
SECTION 1.5(f).
"MORTGAGED PROPERTIES" has the meaning assigned to it in ANNEX
D.
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"MORTGAGES" means each of the mortgages, deeds of trust,
leasehold mortgages, leasehold deeds of trust, collateral assignments of leases
or other real estate security documents delivered by any Credit Party to Agent
on behalf of itself and Lenders with respect to the Mortgaged Properties, all in
form and substance reasonably satisfactory to Agent.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate
is making, is obligated to make or has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of them.
"NON-CONSENTING LENDER" shall have the meaning assigned to it
in SECTION 11.2(d)(i).
"NON-FUNDING LENDER" has the meaning ascribed to it in SECTION
9.9(a)(ii).
"NOTES" means, collectively, the Revolving Notes and the Term
Notes.
"NOTICE OF CONVERSION/CONTINUATION" has the meaning ascribed
to it in SECTION 1.5(e).
"NOTICE OF REVOLVING CREDIT ADVANCE" has the meaning ascribed
to it in SECTION 1.1(a).
"OBLIGATIONS" means all loans (including the Loans), Letter or
Credit Obligations, advances, debts, reimbursable obligations, swaps, xxxxxx,
liabilities, reimbursement obligations and obligations for the performance of
covenants, tasks or duties or for payment of monetary amounts (whether or not
such performance is then required or contingent, or such amounts are liquidated
or determinable) owing by any Credit Party to Agent, Revolving Credit Agent, L/C
Issuer or any Lender or its Affiliates, and all covenants and duties regarding
such amounts, of any kind or nature, present or future, whether or not evidenced
by any note, agreement or other instrument, arising under the Agreement or any
of the other Loan Documents. This term includes all principal, interest
(including all interest that accrues after the commencement of any case or
proceeding by or against any Credit Party in bankruptcy, whether or not allowed
in such case or proceeding), Fees, Charges, expenses, attorneys' fees and any
other sum chargeable to any Credit Party under the Agreement or any of the other
Loan Documents.
"OTHER LENDER" shall have the meaning assigned to it in
SECTION 9.9(d).
"OVERADVANCE" has the meaning ascribed to it in SECTION
1.1(a)(iii).
"PATENT LICENSE" means rights under any written agreement now
owned or hereafter acquired by any Credit Party granting any right with respect
to any invention on which a Patent is in existence.
"PATENT SECURITY AGREEMENTS" means the Patent Security
Agreements made in favor of Agent, on behalf of itself and Lenders, by each
applicable Credit Party.
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"PATENTS" means all of the following in which any Credit Party
now holds or hereafter acquires any interest: (a) all letters patent of the
United States or of any other country, all registrations and recordings thereof,
and all applications for letters patent of the United States or of any other
country, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State, or any other country, and (b) all reissues,
continuations, continuations-in-part or extensions thereof.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PENSION PLAN" means a Plan described in Section 3(2) of
ERISA.
"PERMITTED ACQUISITION" shall have the meaning assigned to it
in SECTION 6.1.
"PERMITTED ENCUMBRANCES" means the following encumbrances: (a)
Liens for taxes or assessments or other governmental Charges not yet due and
payable or which are being contested in accordance with SECTION 5.2(b); (b)
pledges or deposits of money securing statutory obligations under workmen's
compensation, unemployment insurance, social security or public liability laws
or similar legislation (excluding Liens under ERISA); (c) pledges or deposits of
money securing bids, tenders, contracts (other than contracts for the payment of
money) or leases to which any Credit Party is a party as lessee made in the
ordinary course of business; (d) inchoate and unperfected workers', mechanics'
or similar liens arising in the ordinary course of business, so long as such
Liens attach only to Equipment, Fixtures and/or Real Estate; (e) carriers',
warehousemen's, suppliers' or other similar possessory liens arising in the
ordinary course of business and securing liabilities in an outstanding aggregate
amount not in excess of $250,000 at any time, so long as such Liens attach only
to Inventory; (f) deposits securing, or in lieu of, surety, appeal or customs
bonds in proceedings to which any Credit Party is a party; (g) any attachment or
judgment lien not constituting an Event of Default under SECTION 8.1(j); (h)
zoning restrictions, easements, licenses, or other restrictions on the use of
any Real Estate or other minor irregularities in title (including leasehold
title) thereto, so long as the same do not materially impair the use, value, or
marketability of such Real Estate; (i) presently existing or hereafter created
Liens in favor of Agent, on behalf of Lenders; (j) Liens expressly permitted
under CLAUSES (b) and (c) of SECTION 6.7 of the Agreement, and (k) equitable
liens of surety bond issuers which have not been asserted by such issuers.
"PERSON" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, public benefit corporation,
other entity or government (whether federal, state, county, city, municipal,
local, foreign, or otherwise, including any instrumentality, division, agency,
body or department thereof).
"PLAN" means, at any time, an "employee benefit plan", as
defined in Section 3(3) of ERISA, that any Credit Party or ERISA Affiliate
maintains, contributes to or has an obligation to contribute to or has
maintained, contributed to or had an obligation to contribute to at any time
within the past 7 years on behalf of participants who are or were employed by
any Credit Party or ERISA Affiliate.
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"PLEDGE AGREEMENTS" means, collectively, the Xxxxx Pledge
Agreement and the US Subsidiaries Pledge Agreements and any pledge agreements
entered into after the Closing Date by any Credit Party (as required by the
Agreement or any other Loan Document).
"PRIOR LENDER" means, collectively or individually, as
appropriate, (i) Massachusetts Mutual Life Insurance Company, and (ii) Bank of
America National Trust and Savings Association, for itself, as lender, and as
agent for certain other lenders.
"PRIOR LENDER OBLIGATIONS" shall mean Borrowers' obligations
under (i) that certain Note Agreement dated March 15, 1996 between Xxxxx, Inc.
and Massachusetts Mutual Life Insurance Company, as the same has been modified,
amended and otherwise extended or restated from time to time, and (ii) that
certain Amended and Restated Credit Agreement, dated as of July 25, 1997, among
Layne, Xxxxx Xxxxxxxxxxx Australia Pty Limited, National Trust and Savings
Association, various financial institutions, Bank of America, as letter of
credit issuer, and Bank of America National Trust and Savings Association, as
Agent, as the same has been modified, amended and otherwise extended or restated
from time-to-time.
"PROCEEDS" means "proceeds," as such term is defined in the
Code, including (a) any and all proceeds of any insurance, indemnity, warranty
or guaranty payable to any Credit Party from time to time with respect to any of
the Collateral, (b) any and all payments (in any form whatsoever) made or due
and payable to any Credit Party from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any Governmental Authority (or any Person acting under
color of governmental authority), (c) any claim of any Credit Party against
third parties (i) for past, present or future infringement of any Patent or
Patent License, or (ii) for past, present or future infringement or dilution of
any Copyright, Copyright License, Trademark or Trademark License, or for injury
to the goodwill associated with any Trademark or Trademark License, (d) any
recoveries by any Credit Party against third parties with respect to any
litigation or dispute concerning any of the Collateral, (e) dividends, interest,
distributions and Instruments with respect to Investment Property and pledged
Stock, and (f) any and all other amounts from time to time paid or payable under
or in connection with any of the Collateral, upon disposition or otherwise.
"PROJECTIONS" means Borrowers' forecasted consolidated: (a)
balance sheets; (b) profit and loss statements; (c) cash flow statements; and
(d) capitalization statements, all prepared consistent with the historical
Financial Statements of the Borrowers, together with appropriate supporting
details and a statement of underlying assumptions.
"PROPOSED CHANGE" shall have the meaning assigned to it in
SECTION 11.2(d).
"PRO RATA SHARE" means with respect to all matters relating to
any Lender, (a) with respect to the Revolving Loan, the percentage obtained by
dividing (i) the Revolving Loan Commitment of that Lender by (ii) the aggregate
Revolving Loan Commitments of all Lenders, (b) with respect to the Term Loan(s),
the percentage obtained by dividing (i) the Term Loan Commitment of that Lender
by (ii) the aggregate Term Loan Commitments of all Lenders, as any such
percentages may be adjusted by assignments permitted pursuant to SECTION 9.1,
(c) with respect to all Loans, the percentage obtained by dividing (i) the
aggregate Commitments of that Lender by (ii) the aggregate Commitments of all
Lenders, and (d) with respect to all Loans on
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and after the Commitment Termination Date, the percentage obtained by dividing
(i) the aggregate outstanding principal balance of the Loans held by that
Lender, by (ii) the outstanding principal balance of the Loans held by all
Lenders.
"QUALIFIED PLAN" means a Pension Plan that is intended to be
tax-qualified under Section 401(a) of the IRC.
"QUALIFIED ASSIGNEE" means (a) any Lender, any Affiliate of
any Lender and, with respect to any Lender that is an investment fund that
invests in commercial loans, any other investment fund that invests in
commercial loans and that is managed or advised by the same investment advisor
as such Lender or by an Affiliate of such investment advisor, and (b) any
commercial bank, savings and loan association or savings bank or any other
entity which is an "accredited investor" (as defined in Regulation D under the
Securities Act of 1933) which extends credit or buys loans as one of its
businesses, including insurance companies, mutual funds, lease financing
companies and commercial finance companies, in each case, which has a rating of
BBB or higher from S&P and a rating of Baa2 or higher from Xxxxx'x at the date
that it becomes a Lender and which, through its applicable lending office, is
capable of lending to Borrowers without the imposition of any withholding or
similar taxes; provided that no Person determined by Agent to be acting in the
capacity of a vulture fund or distressed debt purchaser shall be a Qualified
Assignee, and no Person or Affiliate of such Person (other than a Person that is
already a Lender) holding Subordinated Debt or Stock issued by any Credit Party
shall be a Qualified Assignee.
"RATABLE SHARE" has the meaning ascribed to it in SECTION
1.1(b).
"RCA FEE LETTER" shall have the meaning ascribed to it in
SECTION 1.9(a).
"REAL ESTATE" has the meaning ascribed to it in SECTION 3.6.
"REFINANCING" means the repayment in full by Borrowers of the
Prior Lender Obligations on the Closing Date.
"RELATED TRANSACTIONS" means the initial borrowing under the
Revolving Loan and the Term Loan on the Closing Date, the Refinancing, the
payment of all fees, costs and expenses associated with all of the foregoing and
the execution and delivery of all of the Loan Documents.
"RELEASE" means any release, threatened release, spill,
emission, leaking, pumping, pouring, emitting, emptying, escape, injection,
deposit, disposal, discharge, dispersal, dumping, leaching or migration of
Hazardous Material in the indoor or outdoor environment, including the movement
of Hazardous Material through or in the air, soil, surface water, ground water
or property.
"REPLACEMENT LENDER" shall have the meaning assigned to it in
SECTION 1.16(d).
"REQUISITE LENDERS" means Lenders having (a) more than 66 2/3%
of the Commitments of all Lenders, or (b) if the Commitments have been
terminated, more than 66 2/3% of the aggregate outstanding amount of all Loans.
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"REQUISITE REVOLVING LENDERS" means Lenders having (a) more
than 66 2/3% of the Revolving Loan Commitments of all Lenders, or (b) if the
Revolving Loan Commitments have been terminated, more than 66 2/3% of the
aggregate outstanding amount of the Revolving Loan.
"RESERVES" means (a) reserves established by Agent or
Revolving Credit Agent from time to time against Eligible Inventory pursuant to
SECTION 5.9, (b) reserves established pursuant to SECTION 5.4(c), and (c) such
other reserves against Eligible Accounts, Eligible Inventory or Borrowing
Availability of Borrowers that Agent may, in its reasonable credit judgment,
establish from time to time. Without limiting the generality of the foregoing,
Reserves established to ensure the payment of accrued Interest Expenses or
Indebtedness shall be deemed to be a reasonable exercise of Agent's, Revolving
Credit Agents' or the Requisite Lenders' credit judgment.
"RESTRICTED PAYMENT" means, with respect to any Credit Party
(a) the declaration or payment of any dividend or the incurrence of any
liability to make any other payment or distribution of cash or other property or
assets in respect of Stock; (b) any payment on account of the purchase,
redemption, defeasance, sinking fund or other retirement of such Credit Party's
Stock or any other payment or distribution made in respect thereof, either
directly or indirectly; (c) any payment or prepayment of principal of, premium,
if any, or interest, fees or other charges on or with respect to, and any
redemption, purchase, retirement, defeasance, sinking fund or similar payment
and any claim for rescission with respect to, any Subordinated Debt; (d) any
payment made to redeem, purchase, repurchase or retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire Stock
of such Credit Party now or hereafter outstanding; (e) any payment of a claim
for the rescission of the purchase or sale of, or for material damages arising
from the purchase or sale of, any shares of such Credit Party's Stock or of a
claim for reimbursement, indemnification or contribution arising out of or
related to any such claim for damages or rescission; (f) any payment, loan,
contribution, or other transfer of funds or other property to any Stockholder of
such Credit Party other than payment of compensation in the ordinary course of
business to Stockholders who are employees of such Person; and (g) any payment
of management fees (or other fees of a similar nature) by such Credit Party to
any Stockholder of such Credit Party or its Affiliates.
"RETIREE WELFARE PLAN" means, at any time, a Welfare Plan that
provides for continuing coverage or benefits for any participant or any
beneficiary of a participant after such participant's termination of employment,
other than continuation coverage provided pursuant to Section 4980B of the IRC
and at the sole expense of the participant or the beneficiary of the
participant.
"REVOLVING CREDIT ADVANCE" has the meaning ascribed to it in
SECTION 1.1(a)(i).
"REVOLVING CREDIT AGENT" means LaSalle.
"REVOLVING LENDERS" means, as of any date of determination,
Lenders having a Revolving Loan Commitment.
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"REVOLVING LOAN" means, at any time, the sum of (i) the
aggregate amount of Revolving Credit Advances outstanding to Borrowers PLUS (ii)
the aggregate Letter of Credit Obligations incurred on behalf of Borrowers.
Unless the context otherwise requires, references to the outstanding principal
balance of the Revolving Loan shall include the outstanding balance of Letter of
Credit Obligations.
"REVOLVING LOAN COMMITMENT" means (a) as to any Lender, the
aggregate commitment of such Lender to make Revolving Credit Advances or incur
Letter of Credit Obligations as set forth on ANNEX J to the Agreement or in the
most recent Assignment Agreement executed by such Lender and (b) as to all
Lenders, the aggregate commitment of all Lenders to make Revolving Credit
Advances or incur Letter of Credit Obligations, which aggregate commitment shall
be Thirty Five Million and no/100 Dollars ($35,000,000) on the Closing Date, as
such amount may be adjusted, if at all, from time to time in accordance with the
Agreement.
"REVOLVING NOTE" has the meaning ascribed to it in SECTION
1.1(a)(ii).
"SECURITY AGREEMENT" means the Security Agreement of even date
herewith entered into by and among Agent, on behalf of itself and Lenders, and
each Credit Party that is a signatory thereto.
"SENIOR LEVERAGE RATIO" means, with respect to Borrowers, on a
consolidated basis, the ratio of (a) Funded Debt LESS Subordinated Debt and cash
and Cash Equivalents as of the date of determination, to (b) EBITDA for the
twelve months ending on that date of determination.
"SETTLEMENT DATE" shall have the meaning assigned to it in
SECTION 9.9(a)(ii).
"SOLVENT" means, with respect to any Person on a particular
date, that on such date (a) the fair value of the property of such Person is
greater than the total amount of liabilities, including contingent liabilities,
of such Person; (b) the present fair salable value of the assets of such Person
is not less than the amount that will be required to pay the probable liability
of such Person on its debts as they become absolute and matured; (c) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (d) such Person is not engaged in a business or transaction, and is
not about to engage in a business or transaction, for which such Person's
property would constitute an unreasonably small capital. The amount of
contingent liabilities (such as litigation, guaranties and pension plan
liabilities) at any time shall be computed as the amount that, in light of all
the facts and circumstances existing at the time, represents the amount that can
be reasonably be expected to become an actual or matured liability.
"STOCK" means all shares, options, warrants, general or
limited partnership interests, membership interests or other equivalents
(regardless of how designated) of or in a corporation, partnership, limited
liability company or equivalent entity whether voting or nonvoting, including
common stock, preferred stock or any other "equity security" (as such term is
defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934).
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"STOCKHOLDER" means, with respect to any Person, each holder
of Stock of such Person.
"SUBORDINATED DEBT" means any Indebtedness of any Credit Party
subordinated to the Obligations in a manner and form satisfactory to Agent and
Lenders in their sole discretion, as to right and time of payment and as to any
other rights and remedies thereunder.
"SUBSIDIARY" means, with respect to any Person, (a) any
corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, 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) is at the time, directly or indirectly,
owned legally or beneficially by such Person or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of more than 50% of such Stock whether by proxy, agreement,
operation of law or otherwise, and (b) any partnership or limited liability
company in which such Person and/or one or more Subsidiaries of such Person
shall have an interest (whether in the form of voting or participation in
profits or capital contribution) of more than 50% or of which any such Person is
a general partner or may exercise the powers of a general partner. Unless the
context otherwise requires, each reference to a Subsidiary shall be a reference
to a Subsidiary of a Borrower, and shall include, without limitation, all US
Subsidiaries and all Foreign Subsidiaries.
"SUPERMAJORITY REVOLVING LENDERS" means Lenders having (a) 80%
or more of the Revolving Loan Commitments of all Lenders, or (b) if the
Revolving Loan Commitments have been terminated, 80% or more of the aggregate
outstanding amount of the Revolving Loan and Letter of Credit Obligations.
"SUPPORTING OBLIGATIONS" has the meaning ascribed thereto in
the Code.
"TARGET" shall have the meaning assigned to it in SECTION 6.1.
"TAXES" means taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income of Agent or a Lender by the jurisdictions under
the laws of which Agent and Lenders are organized or conduct business or any
political subdivision thereof.
"TERMINATION DATE" means the date on which (a) the Loans have
been indefeasibly repaid in full, (b) all other Obligations under the Agreement
and the other Loan Documents have been completely discharged (c) all Letter of
Credit Obligations have been cash collateralized, canceled or backed by standby
letters of credit in accordance with Annex B, and (d) none of Borrowers shall
have any further right to borrow any monies under the Agreement.
"TERM LENDERS" means those Lenders having Term Loan
Commitments.
"TERM LOAN" has the meaning assigned to it in SECTION
1.1(b)(i).
"TERM LOAN COMMITMENT" means (a) as to any Lender with a Term
Loan Commitment, the commitment of such Lender to make its Pro Rata Share of the
Term Loan as
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set forth on Annex J to the Agreement or in the most recent Assignment Agreement
executed by such Lender, and (b) as to all Lenders with a Term Loan Commitment ,
the aggregate commitment of all Lenders to make the Term Loan, which aggregate
commitment shall be Thirty Five Million and no/100 Dollars ($35,000,000) on the
Closing Date. After advancing the Term Loan, each reference to a Lender's Term
Loan Commitment shall refer to that Lender's Pro Rata Share of the outstanding
Term Loan.
"TERM NOTE" has the meaning assigned to it in SECTION
1.1(b)(i).
"TITLE IV PLAN" means a Pension Plan (other than a
Multiemployer Plan), that is covered by Title IV of ERISA, and that any Credit
Party or ERISA Affiliate maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were employed by any of them.
"TRADEMARK SECURITY AGREEMENTS" means the Trademark Security
Agreements made in favor of Agent, on behalf of Lenders, by each applicable
Credit Party.
"TRADEMARK LICENSE" means rights under any written agreement
now owned or hereafter acquired by any Credit Party granting any right to use
any Trademark.
"TRADEMARKS" means all of the following now owned or hereafter
existing or adopted or acquired by any Credit Party: (a) all trademarks, trade
names, corporate names, business names, trade styles, service marks, logos,
other source or business identifiers, prints and labels on which any of the
foregoing have appeared or appear, designs and general intangibles of like
nature (whether registered or unregistered), all registrations and recordings
thereof, and all applications in connection therewith, including registrations,
recordings and applications in the United States Patent and Trademark Office or
in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof; (b) all
reissues, extensions or renewals thereof; and (c) all goodwill associated with
or symbolized by any of the foregoing.
"UNFUNDED PENSION LIABILITY" means, at any time, the aggregate
amount, if any, of the sum of (a) the amount by which the present value of all
accrued benefits under each Title IV Plan exceeds the fair market value of all
assets of such Title IV Plan allocable to such benefits in accordance with Title
IV of ERISA, all determined as of the most recent valuation date for each such
Title IV Plan using the actuarial assumptions for funding purposes in effect
under such Title IV Plan, and (b) for a period of 5 years following a
transaction which might reasonably be expected to be covered by Section 4069 of
ERISA, the liabilities (whether or not accrued) that could be avoided by any
Credit Party or any ERISA Affiliate as a result of such transaction.
"WELFARE PLAN" means a Plan described in Section 3(i) of
ERISA.
"US SUBSIDIARIES" shall mean, collectively, Xxxxx-Texas, Inc.
a Delaware corporation, Mid-Continent Drilling Company, a Delaware corporation;
Worldcover, Inc., a Delaware corporation, Vibration Technology, Inc., a Delaware
corporation, Shawnee Oil & Gas, L.L.C., a Delaware limited liability company,
Toledo Oil & Gas Services, Inc., a Louisiana corporation, LWDS, International
Directional Services, L.L.C., a Delaware limited liability company, Xxxxx Ohio
Company, a West Virginia corporation, Xxxxxxxxxxx Xxxxxx Corporation,
A-25
a Delaware corporation, and Xxxxxx Bros. Drilling Company, a Utah corporation,
and any other Subsidiary of any Borrower, from time to time, which is formed and
existing in, or under the laws of any state in the United States of America.
"US SUBSIDIARIES PLEDGE AGREEMENTS" means those Pledge
Agreements of even date herewith executed by the US Subsidiaries (other than
International Directional Services, L.L.C.) in favor of Agent, on behalf of
itself and Lenders, pledging all of their Stock of any Subsidiaries (other than
Foreign Subsidiaries), and sixty-five percent (65%) of all their Stock in their
Foreign Subsidiaries, if any, and all Intercompany Indebtedness owing to or held
by it.
Rules of construction with respect to accounting terms used in
the Agreement or the other Loan Documents shall be as set forth in ANNEX G. All
other undefined terms contained in any of the Loan Documents shall, unless the
context indicates otherwise, have the meanings provided for by the Code as in
effect in the State of New York to the extent the same are used or defined
therein. Unless otherwise specified, references in the Agreement or any of the
Appendices to a Section, subsection or clause refer to such Section, subsection
or clause as contained in the Agreement. The words "herein," "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole,
including all Annexes, Exhibits and Schedules, as the same may from time to time
be amended, restated, modified or supplemented, and not to any particular
section, subsection or clause contained in the Agreement or any such Annex,
Exhibit or Schedule.
Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and neuter genders. The words "including",
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; the word "or" is not exclusive; references to Persons include their
respective successors and assigns (to the extent and only to the extent
permitted by the Loan Documents) or, in the case of governmental Persons,
Persons succeeding to the relevant functions of such Persons; and all references
to statutes and related regulations shall include any amendments of the same and
any successor statutes and regulations. Whenever any provision in any Loan
Document refers to the knowledge (or an analogous phrase) of any Credit Party,
such words are intended to signify that such Credit Party has actual knowledge
or awareness of a particular fact or circumstance or that such Credit Party, if
it had exercised reasonable diligence, would have known or been aware of such
fact or circumstance.
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XXXXX X (SECTION 6.10)
TO
CREDIT AGREEMENT
FINANCIAL COVENANTS
Borrowers shall not breach or fail to comply with any of the
following financial covenants, each of which shall be calculated in accordance
with GAAP consistently applied:
(a) MAXIMUM ADJUSTED CAPITAL EXPENDITURES. Borrowers and their
Subsidiaries on a consolidated basis shall not make Adjusted Capital
Expenditures during the Fiscal Year ending January 31, 2003 that exceed in the
aggregate $15,000,000 and in any Fiscal Year thereafter for the term hereof that
exceed in the aggregate $16,000,000, in either case, PLUS an amount equal to the
value of the net proceeds from the sale of capital assets during any such Fiscal
year which are reinvested in capital assets during such Fiscal Year.
(b) MINIMUM FIXED CHARGE COVERAGE RATIO. Borrowers and their
Subsidiaries shall have on a consolidated basis at the end of each Fiscal
Quarter, a Fixed Charge Coverage Ratio for the 12-month period then ended of not
less than 1.2 to 1.0.
(c) MAXIMUM LEVERAGE RATIO. Borrowers and their Subsidiaries
on a consolidated basis shall have, at the end of each Fiscal Quarter set forth
below, a Leverage Ratio as of the last day of such Fiscal Quarter and for the
12-month period then ended of not more than the following:
3.00 to 1.00 for each Fiscal Quarter ending April 30,
2002 through and including January 31, 2003;
2.75 to 1.00 for each Fiscal Quarter ending April 30,
2003 through and including January 31, 2004;
2.50 to 1.00 for each Fiscal Quarter ending April 30,
2004 through and including January 31, 2005;
2.25 to 1.00 for each Fiscal Quarter ending thereafter.
(d) SENIOR LEVERAGE RATIO. Borrowers and their Subsidiaries on
a consolidated basis shall have, at the end of each Fiscal Quarter set forth
below, a Senior Leverage Ratio as of the last day of such Fiscal Quarter and for
the 12-month period then ended of not more than the following:
2.75 to 1.00 for each Fiscal Quarter ending April 30,
2002 through and including January 31, 2003;
2.50 to 1.00 for each Fiscal Quarter ending April 30,
2003 through and including January 31, 2004;
2.25 to 1.00 for each Fiscal Quarter ending April 30,
2004 through and including January 31, 2005;
2.00 to 1.00 for each Fiscal Quarter ending thereafter.
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(e) MINIMUM INTEREST COVERAGE RATIO. Borrowers and their
Subsidiaries on a consolidated basis shall have at the end of each Fiscal
Quarter during the term hereof, an Interest Coverage Ratio for the 12-month
period then ended of not less than 4.0 to 1.0.
(f) MINIMUM EBITDA. Borrowers and their Subsidiaries on a
consolidated basis shall have for the twelve month period ending at the end of
the Fiscal Quarter set forth below, EBITDA of not less than:
Fiscal Quarter ended July 31, 2002: $20,000,000
Fiscal Quarter ended October 31, 2002: $20,000,000
Fiscal Quarter ended January 31, 2003: $20,000,000
Fiscal Quarter ended April 30, 2003: $21,000,000
Fiscal Quarter ended July 31, 2003: $21,000,000
Fiscal Quarter ended October 31, 2003: $21,000,000
Fiscal Quarter ended January 31, 2004: $21,000,000
Fiscal Quarter ended April 30, 2004: $22,000,000
Fiscal Quarter ended July 31, 2004: $22,000,000
Fiscal Quarter ended October 31, 2004: $22,000,000
Fiscal Quarter ended January 31, 2005: $22,000,000
Fiscal Quarter ended April 30, 2005: $24,000,000
Fiscal Quarter ended July 31, 2005: $24,000,000
Fiscal Quarter ended October 31, 2005: $24,000,000
Fiscal Quarter ended January 31, 2006: $24,000,000
Fiscal Quarter ended April 30, 2006: $26,000,000
Fiscal Quarter ended July 31, 2006: $26,000,000
Fiscal Quarter ended October 31, 2006: $26,000,000
Fiscal Quarter ended January 31, 2007: $26,000,000
Each Fiscal Quarter thereafter: $26,000,000
Unless otherwise specifically provided herein, any accounting
term used in the Agreement shall have the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be computed
in accordance with GAAP consistently applied. That certain items or computations
are explicitly modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the foregoing. If any "Accounting Changes" (as defined
below) occur and such changes result in a change in the calculation of the
financial covenants, standards or terms used in the Agreement or any other Loan
Document, then Borrowers, Agent and Lenders agree to enter into negotiations in
order to amend such provisions of the Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating
Borrowers' and their Subsidiaries' financial condition shall be the same after
such Accounting Changes as if such Accounting Changes had not been made;
PROVIDED, HOWEVER, that the agreement of Requisite Lenders to any required
amendments of such provisions shall be sufficient to bind all Lenders.
"ACCOUNTING CHANGES" means (i) changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions), (ii)
changes in accounting principles concurred in by Borrowers' certified public
accountants; (iii) purchase accounting adjustments, including the establishment
of reserves pursuant thereto and any
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subsequent reversal (in whole or in part) of such reserves. All such adjustments
resulting from expenditures made subsequent to the Closing Date (including
capitalization of costs and expenses or payment of pre-Closing Date liabilities)
shall be treated as expenses in the period the expenditures are made and
deducted as part of the calculation of EBITDA in such period. If Agent,
Borrowers and Requisite Lenders agree upon the required amendments, then after
appropriate amendments have been executed and the underlying Accounting Change
with respect thereto has been implemented, any reference to GAAP contained in
the Agreement or in any other Loan Document shall, only to the extent of such
Accounting Change, refer to GAAP, consistently applied after giving effect to
the implementation of such Accounting Change. If Agent, Borrowers and Requisite
Lenders cannot agree upon the required amendments within 30 days following the
date of implementation of any Accounting Change, then all Financial Statements
delivered and all calculations of financial covenants and other standards and
terms in accordance with the Agreement and the other Loan Documents shall be
prepared, delivered and made without regard to the underlying Accounting Change.
For purposes of SECTION 8.1, a breach of a Financial Covenant contained in this
ANNEX G shall be deemed to have occurred as of the earlier of any date of
determination by Agent or as of the last day of any specified measurement
period, regardless of when the Financial Statements reflecting such breach are
delivered to Agent.
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