Exhibit 10(y)
REVOLVING CREDIT, TERM LOAN
AND
SECURITY AGREEMENT
PNC BANK, NATIONAL ASSOCIATION
(AS LENDER, ADMINISTRATIVE AGENT AND LEAD ARRANGER)
WITH
LESCO, INC.;
LESCO SERVICES, INC.;
LESCO TECHNOLOGIES, LLC;
AND
AIM LAWN & GARDEN PRODUCTS, INC.;
(BORROWERS)
January 14, 2002
TABLE OF CONTENTS
Page
I. DEFINITIONS............................................................................................1
1.1. ACCOUNTING TERMS.........................................................................1
1.2. GENERAL TERMS............................................................................1
1.3. UNIFORM COMMERCIAL CODE TERMS...........................................................19
1.4. CERTAIN MATTERS OF CONSTRUCTION.........................................................19
II. ADVANCES, PAYMENTS....................................................................................19
2.1. (a) REVOLVING ADVANCES..................................................................19
(b) [INTENTIONALLY OMITTED]......................................................21
(c) DISCRETIONARY RIGHTS.........................................................21
2.2. PROCEDURE FOR BORROWING ADVANCES........................................................21
2.3. DISBURSEMENT OF ADVANCE PROCEEDS........................................................23
2.4. TERM LOAN...............................................................................23
2.5. MAXIMUM ADVANCES........................................................................23
2.6. REPAYMENT OF ADVANCES...................................................................23
2.7. REPAYMENT OF EXCESS ADVANCES............................................................24
2.8. STATEMENT OF ACCOUNT....................................................................24
2.10. ISSUANCE OF LETTERS OF CREDIT...........................................................25
2.11. REQUIREMENTS FOR ISSUANCE OF LETTERS OF CREDIT..........................................25
2.12. ADDITIONAL PAYMENTS.....................................................................27
2.13. MANNER OF BORROWING AND PAYMENT.........................................................27
2.14. MANDATORY PREPAYMENTS...................................................................29
2.15. USE OF PROCEEDS.........................................................................29
2.16. DEFAULTING LENDER.......................................................................29
III. INTEREST AND FEES.....................................................................................30
3.1. INTEREST................................................................................30
3.2. LETTER OF CREDIT FEES..................................................................31
FACILITY FEE............................................................................32
3.4. (a) INTENTIONALLY OMITTED...............................................................32
3.5. COMPUTATION OF INTEREST AND FEES........................................................32
3.6. MAXIMUM CHARGES.........................................................................32
3.7. INCREASED COSTS.........................................................................32
3.8. BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR................................33
3.9. CAPITAL ADEQUACY........................................................................34
3.10. GROSS UP FOR TAXES......................................................................34
3.11. WITHHOLDING TAX EXEMPTION...............................................................35
IV. COLLATERAL: GENERAL TERMS............................................................................35
4.1. SECURITY INTEREST IN THE COLLATERAL.....................................................35
4.2. PERFECTION OF SECURITY INTEREST.........................................................36
4.3. DISPOSITION OF COLLATERAL...............................................................36
4.4. PRESERVATION OF COLLATERAL..............................................................36
4.5. OWNERSHIP OF COLLATERAL.................................................................37
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4.6. DEFENSE OF AGENT'S AND LENDERS' INTERESTS...............................................37
4.7. BOOKS AND RECORDS.......................................................................38
4.8. FINANCIAL DISCLOSURE....................................................................38
4.9. COMPLIANCE WITH LAWS....................................................................38
4.10. INSPECTION OF PREMISES..................................................................38
4.11. INSURANCE...............................................................................39
4.12. FAILURE TO PAY INSURANCE................................................................40
4.13. PAYMENT OF TAXES........................................................................40
4.14. PAYMENT OF LEASEHOLD OBLIGATIONS........................................................41
4.15. RECEIVABLES.............................................................................41
(a) NATURE OF RECEIVABLES........................................................41
(b) SOLVENCY OF CUSTOMERS........................................................41
(c) LOCATIONS OF BORROWER........................................................41
(d) COLLECTION OF RECEIVABLES....................................................41
(e) NOTIFICATION OF ASSIGNMENT OF RECEIVABLES....................................42
(f) POWER OF AGENT TO ACT ON BORROWERS' BEHALF...................................42
(g) NO LIABILITY.................................................................42
(h) ESTABLISHMENT OF A LOCKBOX ACCOUNT, DOMINION ACCOUNT.........................43
(i) ADJUSTMENTS..................................................................43
4.16. INVENTORY...............................................................................43
4.17. MAINTENANCE OF EQUIPMENT................................................................43
4.18. EXCULPATION OF LIABILITY................................................................44
4.19. ENVIRONMENTAL MATTERS...................................................................44
4.20. FINANCING STATEMENTS....................................................................46
V. REPRESENTATIONS AND WARRANTIES........................................................................46
5.1. AUTHORITY...............................................................................46
5.2. FORMATION AND QUALIFICATION.............................................................47
5.3. SURVIVAL OF REPRESENTATIONS AND WARRANTIES..............................................47
5.4. TAX RETURNS.............................................................................47
5.5. FINANCIAL STATEMENTS....................................................................47
5.6. CORPORATE NAME..........................................................................48
5.7. O.S.H.A. AND ENVIRONMENTAL COMPLIANCE...................................................48
5.8. SOLVENCY; NO LITIGATION, VIOLATION, INDEBTEDNESS OR DEFAULT.............................49
5.9. PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES............................................50
5.10. LICENSES AND PERMITS....................................................................51
5.11. DEFAULT OF INDEBTEDNESS.................................................................51
5.12. NO DEFAULT..............................................................................51
5.13. NO BURDENSOME RESTRICTIONS..............................................................51
5.14. NO LABOR DISPUTES.......................................................................51
5.15. MARGIN REGULATIONS......................................................................51
5.16. INVESTMENT COMPANY ACT..................................................................52
5.17. DISCLOSURE..............................................................................52
5.19. SWAPS...................................................................................52
5.20. CONFLICTING AGREEMENTS..................................................................52
5.21. APPLICATION OF CERTAIN LAWS AND REGULATIONS.............................................52
5.22. BUSINESS AND PROPERTY OF BORROWERS......................................................52
5.24 SECTION 20 SUBSIDIARIES.................................................................52
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VI. AFFIRMATIVE COVENANTS.................................................................................53
6.1. PAYMENT OF FEES.........................................................................53
6.2. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE AND ASSETS.............................53
6.3. VIOLATIONS..............................................................................53
6.4. GOVERNMENT RECEIVABLES..................................................................53
6.5. NET WORTH...............................................................................53
6.6. EBITDA and FIXED CHARGE COVERAGE RATIO..................................................54
6.6. DISTRIBUTIONS BY LFI............................................................................54
6.8. LANDLORD'S WAIVERS......................................................................54
6.9. EXECUTION OF SUPPLEMENTAL INSTRUMENTS...................................................54
6.10. PAYMENT OF INDEBTEDNESS, INCLUDING TAXES, ETC...........................................55
6.11. STANDARDS OF FINANCIAL STATEMENTS.......................................................55
6.11. INVENTORY APPRAISALS....................................................................55
VII. NEGATIVE COVENANTS....................................................................................55
7.1. MERGER, CONSOLIDATION, ACQUISITION AND SALE OF ASSETS...................................55
7.2. CREATION OF LIENS.......................................................................55
7.3. GUARANTEES..............................................................................56
7.4. INVESTMENTS.............................................................................56
7.5. LOANS...................................................................................56
7.6. CAPITAL EXPENDITURES....................................................................56
7.7. DIVIDENDS...............................................................................56
7.8. INDEBTEDNESS............................................................................57
7.9. NATURE OF BUSINESS......................................................................57
7.10. TRANSACTIONS WITH AFFILIATES............................................................57
7.11. LEASES..................................................................................57
7.12. SUBSIDIARIES............................................................................57
7.13. FISCAL YEAR AND ACCOUNTING CHANGES......................................................57
7.14. PLEDGE OF CREDIT........................................................................57
7.15. AMENDMENT OF ARTICLES OF INCORPORATION, BY-LAWS.........................................57
7.16. COMPLIANCE WITH ERISA...................................................................57
7.17. PREPAYMENT OF INDEBTEDNESS..............................................................58
VIII. CONDITIONS PRECEDENT..................................................................................58
8.1. CONDITIONS TO INITIAL ADVANCES..........................................................58
(a) NOTE.........................................................................58
(b) FILINGS, REGISTRATIONS AND RECORDINGS........................................58
(c) CORPORATE PROCEEDINGS OF BORROWERS...........................................59
(d) INCUMBENCY CERTIFICATES OF BORROWERS.........................................59
(g) CERTIFICATES.................................................................59
(h) GOOD STANDING CERTIFICATES...................................................59
(i) LEGAL OPINION................................................................60
(j) NO LITIGATION................................................................60
(k) FINANCIAL CONDITION CERTIFICATES.............................................60
(l) COLLATERAL EXAMINATION.......................................................60
(m) FEES.........................................................................60
(n) PRO FORMA FINANCIAL STATEMENTS...............................................60
(o) PAYMENT OF EXISTING INDEBTEDNESS.............................................60
(p)TRANSFER OF ACCOUNTS; LFI DISTRIBUTIONS..............................................60
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(q) INSURANCE....................................................................61
(r) TITLE INSURANCE..............................................................61
(s) ENVIRONMENTAL REPORTS........................................................61
(t) PAYMENT INSTRUCTIONS.........................................................61
(u) BLOCKED ACCOUNTS.............................................................61
(v) CONSENTS.....................................................................61
(w) NO ADVERSE MATERIAL CHANGE...................................................61
(x) LEASEHOLD AGREEMENTS.........................................................62
(y) MORTGAGE.....................................................................62
(bb) INTENTIONALLY OMITTED........................................................62
(cc) CONTRACT REVIEW..............................................................62
(dd) CLOSING CERTIFICATE..........................................................62
(ee) BORROWING BASE...............................................................62
(ff) UNDRAWN AVAILABILITY.........................................................62
(gg) OTHER........................................................................62
8.2. CONDITIONS TO EACH ADVANCE..............................................................63
(a) REPRESENTATIONS AND WARRANTIES...............................................63
(b) NO DEFAULT...................................................................63
(c) MAXIMUM ADVANCES.............................................................63
IX. INFORMATION AS TO BORROWER............................................................................63
9.1. DISCLOSURE OF MATERIAL MATTERS..........................................................63
9.2. SCHEDULES...............................................................................63
9.3. ENVIRONMENTAL REPORTS...................................................................64
9.4. LITIGATION..............................................................................64
9.5. MATERIAL OCCURRENCES....................................................................64
9.6. GOVERNMENT RECEIVABLES..................................................................64
9.7. ANNUAL FINANCIAL STATEMENTS.............................................................64
9.8. QUARTERLY FINANCIAL STATEMENTS..........................................................65
9.9. MONTHLY FINANCIAL STATEMENTS............................................................65
9.10. OTHER REPORTS...........................................................................66
9.11. ADDITIONAL INFORMATION..................................................................66
9.12. PROJECTED OPERATING BUDGET..............................................................66
9.13. VARIANCES FROM OPERATING BUDGET.........................................................66
9.14. NOTICE OF SUITS, ADVERSE EVENTS.........................................................66
9.15. ERISA NOTICES AND REQUESTS..............................................................67
9.16. ADDITIONAL DOCUMENTS....................................................................67
X. EVENTS OF DEFAULT.....................................................................................67
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT............................................................70
11.1. RIGHTS AND REMEDIES.....................................................................70
11.2. AGENT'S DISCRETION......................................................................71
11.3. SETOFF..................................................................................71
11.4. RIGHTS AND REMEDIES NOT EXCLUSIVE.......................................................71
11.5. ALLOCATION OF PAYMENTS AFTER EVENT OF DEFAULT...........................................71
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XII. WAIVERS AND JUDICIAL PROCEEDINGS......................................................................72
12.1. WAIVER OF NOTICE........................................................................72
12.2. DELAY...................................................................................72
12.3. JURY WAIVER.............................................................................72
XIII. EFFECTIVE DATE AND TERMINATION........................................................................73
13.1. TERM....................................................................................73
13.2. TERMINATION.............................................................................73
XIV. REGARDING AGENT.......................................................................................73
14.1. APPOINTMENT.............................................................................73
14.2. NATURE OF DUTIES........................................................................74
14.3. LACK OF RELIANCE ON AGENT AND RESIGNATION...............................................74
14.4. CERTAIN RIGHTS OF AGENT.................................................................75
14.5. RELIANCE................................................................................75
14.6. NOTICE OF DEFAULT.......................................................................75
14.7. INDEMNIFICATION.........................................................................75
14.8. AGENT IN ITS INDIVIDUAL CAPACITY........................................................76
14.9. DELIVERY OF DOCUMENTS...................................................................76
14.10. BORROWERS' UNDERTAKING TO AGENT.........................................................76
XV. BORROWING AGENCY......................................................................................76
15.1. BORROWING AGENCY PROVISIONS.............................................................76
15.2. WAIVER OF SUBROGATION...................................................................77
XVI. MISCELLANEOUS.........................................................................................77
16.1. GOVERNING LAW...........................................................................77
16.2. ENTIRE UNDERSTANDING....................................................................78
16.3. SUCCESSORS AND ASSIGNS; PARTICIPATIONS; NEW LENDERS.....................................80
16.4. APPLICATION OF PAYMENTS.................................................................81
16.5. INDEMNITY...............................................................................82
16.6. NOTICE..................................................................................82
16.7. SURVIVAL................................................................................84
16.8. SEVERABILITY............................................................................84
16.9. EXPENSES................................................................................84
1610. INJUNCTIVE RELIEF.......................................................................84
16.11. CONSEQUENTIAL DAMAGES...................................................................85
16.12. CAPTIONS................................................................................85
16.13. COUNTERPARTS; TELECOPIED SIGNATURES.....................................................85
16.14. CONSTRUCTION............................................................................85
16.15. CONFIDENTIALITY; SHARING INFORMATION....................................................85
16.16. PNC CONSENT.............................................................................86
16.17. PUBLICITY...............................................................................86
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REVOLVING CREDIT, TERM LOAN
AND
SECURITY AGREEMENT
Revolving Credit, Term Loan and Security Agreement dated January 14,
2002 among LESCO, INC., a corporation organized under the laws of the State of
Ohio ("LESCO"), LESCO SERVICES, INC., a corporation organized under the laws of
the State of Ohio ("LSI"), LESCO TECHNOLOGIES, LLC, a limited liability company
organized under the laws of the State of Nevada ("Technologies"), and AIM LAWN &
GARDEN PRODUCTS, INC., a corporation organized under the laws of the State of
Ohio ("AIM"), each a "Borrower" and collectively "Borrowers"), the financial
institutions which are now or which hereafter become a party hereto
(collectively, the "Lenders" and individually a "Lender") and PNC BANK, NATIONAL
ASSOCIATION ("PNC"), as agent for Lenders (PNC, in such capacity, the "Agent").
IN CONSIDERATION of the mutual covenants and undertakings herein
contained, Borrowers, Lenders and Agent hereby agree as follows:
I. DEFINITIONS.
1.1. ACCOUNTING TERMS. As used in this Agreement, the Note, or any
certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 or elsewhere in this
Agreement and accounting terms partly defined in Section 1.2 to the extent not
defined, shall have the respective meanings given to them under GAAP; PROVIDED,
HOWEVER, whenever such accounting terms are used for the purposes of determining
compliance with financial covenants in this Agreement, such accounting terms
shall be defined in accordance with GAAP as applied in preparation of the
audited financial statements of Borrowers for the fiscal year ended December 31,
2000.
1.2. GENERAL TERMS. For purposes of this Agreement the following terms
shall have the following meanings:
"ACCOUNTANTS" shall have the meaning set forth in Section 9.7
hereof.
"ACH TRANSACTIONS" shall mean any cash management or related
services including the automated clearing house transfer of funds by the Agent
for the account of any Borrower pursuant to agreement or overdrafts.
"ADVANCES" shall mean and include the Revolving Advances, and
Letters of Credit, as well as the Term Loan.
"ADVANCE RATES" shall have the meaning set forth in Section 2.1(a)
hereof.
"AFFILIATE" of any Person shall mean (a) any Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with such Person, or (b) any Person who is a director or officer (i) of
such Person, (ii) of any Subsidiary of such Person or (iii) of any Person
described in clause (a) above. For purposes of this definition, control of a
Person shall mean the power, direct or indirect, (x) to vote 5% or more of the
securities having ordinary voting power for the election of directors of such
Person, or (y) to direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.
"AGENT" shall have the meaning set forth in the preamble to this
Agreement and shall include its successors and assigns.
"ALTERNATE BASE RATE" shall mean, for any day, a rate per annum
equal to the higher of (i) the Base Rate in effect on such day and (ii) the
Federal Funds Rate in effect on such day plus 1/2 of 1%.
"APPLICABLE LAW" shall mean all laws, rules and regulations
applicable to the person, conduct, transaction, covenant, Other Document or
contract in question, including all applicable common law and equitable
principles; all provisions of all applicable state, federal and foreign
constitutions, statutes, rules, regulations and orders of any Governmental Body,
and all orders, judgments and decrees of all courts and arbitrators.
"AUTHORITY" shall have the meaning set forth in Section 4.19(d).
"BANK PRODUCTS" shall mean any one or more of the following types
of services or facilities extended to any Borrower by the Agent, or any
Affiliate of the Agent in reliance on the Agent's agreement to indemnify such
Affiliate: (a) credit cards, (b) ACH Transactions, (c) Interest Rate Protection
Agreements, and (d) foreign exchange contracts. "Bank Products Reserves" shall
mean all reserves which the Agent from time to time establishes in its sole
discretion for the Bank Products then provided or outstanding.
"BASE RATE" shall mean the base commercial lending rate of PNC as
publicly announced to be in effect from time to time, such rate to be adjusted
automatically, without notice, on the effective date of any change in such rate.
This rate of interest is determined from time to time by PNC as a means of
pricing some loans to its customers and is neither tied to any external rate of
interest or index nor does it necessarily reflect the lowest rate of interest
actually charged by PNC to any particular class or category of customers of PNC.
"BLOCKED ACCOUNTS" shall have the meaning set forth in Section
4.15(h).
"BORROWER" or "BORROWERS" shall have the meaning set forth in the
preamble to this Agreement and shall extend to all permitted successors and
assigns of such Persons.
"BORROWING BASE CERTIFICATE" shall mean a certificate duly
executed by an officer of Borrowing Agent appropriately completed and in
substantially the form of EXHIBIT A hereto.
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"BORROWERS ON A CONSOLIDATED BASIS" shall mean LESCO, LSI,
Technologies, and AIM.
"BORROWERS' ACCOUNT" shall have the meaning set forth in Section
2.8.
"BORROWING AGENT" shall mean LESCO.
"BUSINESS DAY" shall mean any day other than Saturday or Sunday or
a legal holiday on which commercial banks are authorized or required by law to
be closed for business in East Brunswick, New Jersey and, if the applicable
Business Day relates to any Eurodollar Rate Loans, such day must also be a day
on which dealings are carried on in the London interbank market.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. ss.ss.9601 ET SEQ.
"CERTIFICATES OF DEPOSIT" shall mean the following certificates of
deposit issued by PNC to LESCO, and any extensions, renewals or replacements
thereof: (a) Certificate No. 31700218617 purchased September 14, 2001, in the
amount of $472,500, and (b) Certificate No. 31300222218 purchased December 10,
2001, in the amount of $472,500.
"CHANGE OF CONTROL" shall mean (a) the occurrence of any event
(whether in one or more transactions) which results in a transfer of control of
any Borrower to a Person who is not an Original Owner or (b) any merger or
consolidation of or with any Borrower or sale of all or substantially all of the
property or assets of any Borrower. For purposes of this definition, "control of
Borrower" shall mean the power, direct or indirect (x) to vote 50% or more of
the securities having ordinary voting power for the election of directors of any
Borrower or (y) to direct or cause the direction of the management and policies
of any Borrower by contract or otherwise.
"CHANGE OF OWNERSHIP" shall mean (a) 50% or more of the common
stock or other ownership interests of any Borrower is no longer owned or
controlled by (including for the purposes of the calculation of percentage
ownership, any shares of common stock or other ownership interests into which
any capital stock or other ownership interests of any Borrower held by any of
the Original Owners is convertible or for which any such shares of the capital
stock or other ownership interests of any Borrower or of any other Person may be
exchanged and any shares of common stock or other ownership interests issuable
to such Original Owners upon exercise of any warrants, options or similar rights
which may at the time of calculation be held by such Original Owners) a Person
who is an Original Owner or (b) any merger, consolidation or sale of
substantially all of the property or assets of any Borrower.
"CHARGES" shall mean all taxes, charges, fees, imposts, levies or
other assessments, including, without limitation, all net income, gross income,
gross receipts, sales, use, ad valorem, value added, transfer, franchise,
profits, inventory, capital stock, license, withholding, payroll, employment,
social security, unemployment, excise, severance, stamp,
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occupation and property taxes, custom duties, fees, assessments, liens, claims
and charges of any kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts, imposed by any taxing or
other authority, domestic or foreign (including, without limitation, the Pension
Benefit Guaran ty Corporation or any environmental agency or superfund), upon
the Collateral, or any of the Borrowers.
"CLOSING DATE" shall mean January 14, 2002 or such other date as
may be agreed to by the parties hereto.
"CODE" shall mean the Internal Revenue Code of 1986, as amended
from time to time and the regulations promulgated thereunder.
"COLLATERAL" shall mean and include:
(a) all Receivables;
(b) all Equipment;
(c) all General Intangibles;
(d) all Inventory;
(e) all Investment Property;
(f) all Real Property subject to the Mortgages;
(g) the Leasehold Interests;
(h) all of each Borrower's right, title and interest in and
to (i) its respective goods and other property including, but not limited to,
all merchandise returned or rejected by Customers, relating to or securing any
of the Receivables; (ii) all of each Borrower's rights as a consignor, a
consignee, an unpaid vendor, mechanic, artisan, or other lienor, including
stoppage in transit, setoff, detinue, replevin, reclamation and repurchase;
(iii) all additional amounts due to any Borrower from any Customer relating to
the Receivables; (iv) other property, including warranty claims, relating to any
goods securing this Agreement; (v) all of each Borrower's contract rights,
rights of payment which have been earned under a contract right, instruments
(including promissory notes), documents, chattel paper (including electronic
chattel paper), warehouse receipts, deposit accounts, letters of credit, the
Certificates of Deposit and money; (vi) all commercial tort claims (whether now
existing or hereafter arising); (vii) if and when obtained by any Borrower, all
real and personal property of third parties in which such Borrower has been
granted a lien or security interest as security for the payment or enforcement
of Receivables; and (viii) any other goods, personal property or real property
now owned or hereafter acquired in which any Borrower has expressly granted a
security interest or may in the future grant a security interest to Agent
hereunder, or in any amendment or supplement hereto or thereto, or under any
other agreement between Agent and any Borrower;
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(i) all of each Borrower's ledger sheets, ledger cards,
files, correspondence, records, books of account, business papers, computers,
computer software (owned by any Borrower or in which it has an interest),
computer programs, tapes, disks and documents relating to (a), (b), (c), (d),
(e), (f), (g) or (h) of this Paragraph; and
(j) all proceeds and products of (a), (b), (c), (d), (e),
(f), (g), (h) and (i) in whatever form, including, but not limited to: cash,
deposit accounts (whether or not comprised solely of proceeds), certificates of
deposit, insurance proceeds (including hazard, flood and credit insurance),
negotiable instruments and other instruments for the payment of money, chattel
paper, security agreements, documents, eminent domain proceeds, condemnation
proceeds and tort claim proceeds.
"COMMITMENT PERCENTAGE" of any Lender shall mean the percentage
set forth below such Lender's name on the signature page hereof as same may be
adjusted upon any assignment by a Lender pursuant to Section 16.3(b) hereof.
"COMMITMENT TRANSFER SUPPLEMENT" shall mean a document in the form
of EXHIBIT 16.3 hereto, properly completed and otherwise in form and substance
satisfactory to Agent by which the Purchasing Lender purchases and assumes a
portion of the obligation of Lenders to make Advances under this Agreement.
"CONSENTS" shall mean all filings and all licenses, permits,
consents, approvals, authorizations, qualifications and orders of governmental
authorities and other third parties, domestic or foreign, necessary to carry on
any Borrower's business, including, without limitation, any Consents required
under all applicable federal, state or other applicable law.
"CONTRACT RATE" shall mean, as applicable, the Revolving Interest
Rate or the Term Loan Rate.
"CONTROLLED GROUP" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with any Borrower, are treated as a single
employer under Section 414 of the Code.
"CUSTOMER" shall mean and include the account debtor with respect
to any Receivable and/or the prospective purchaser of goods, services or both
with respect to any contract or contract right, and/or any party who enters into
or proposes to enter into any contract or other arrangement with any Borrower,
pursuant to which such Borrower is to deliver any personal property or perform
any services.
"CUSTOMS" shall have the meaning set forth in Section 2.11(c)
hereof.
"DATED RECEIVABLES" shall mean Eligible Receivables which have a
due date which is more than ninety (90) days past their original invoice date.
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"DEFAULT" shall mean an event which, with the giving of notice or
passage of time or both, would constitute an Event of Default.
"DEFAULT RATE" shall have the meaning set forth in Section 3.1
hereof.
"DEFAULTING LENDER" shall have the meaning set forth in Section
2.16(a) hereof.
"DEPOSITORY ACCOUNTS" shall have the meaning set forth in Section
4.15(h) hereof.
"DOCUMENTS" shall have the meaning set forth in Section 8.1(c)
hereof.
"DOLLAR" and the sign "$" shall mean lawful money of the United
States of America.
"DOMESTIC RATE LOAN" shall mean any Advance that bears interest
based upon the Alternate Base Rate.
"EARLY TERMINATION DATE" shall have the meaning set forth in
Section 13.1 hereof.
"EARNINGS BEFORE INTEREST AND TAXES" shall mean for any period the
sum of (i) net income (or loss) of Borrowers on a consolidated basis for such
period (excluding extraordinary gains and losses), PLUS (ii) all interest
expense of Borrowers on a consolidated basis for such period, PLUS (iii) all
charges against income of Borrowers on a consolidated basis for such period for
federal, state and local taxes.
"EBITDA" shall mean for any period the sum of (i) Earnings
Before Interest and Taxes for such period PLUS (ii) depreciation expenses for
such period, PLUS (iii) amortization expenses for such period.
"ELIGIBLE INVENTORY" shall mean and include Inventory excluding
work in process, with respect to each Borrower valued at the lower of cost
(average cost method) or market value, which is not, in Agent's reasonable
opinion, obsolete, slow moving or unmerchantable and which Agent, in its sole
reasonable discretion, shall not deem ineligible Inventory, based on such
considerations as Agent may from time to time deem appropriate including,
without limitation, whether the Inventory is subject to a perfected, first
priority security interest in favor of Agent and whether the Inventory conforms
to all standards imposed by any governmental agency, division or department
thereof which has regulatory authority over such goods or the use or sale
thereof. Any Inventory located on a leased premises for which the Agent has not
received a satisfactory landlord's or warehouseman's agreement within ninety
(90) days after the Closing Date shall be excluded from Eligible Inventory
unless such Inventory is subject to a reserve in an amount established by the
Agent in it sole reasonable discretion (but in the case of leased premises, in
no event more than three months of rental payments for such premises) . Eligible
Inventory shall exclude all Inventory in-transit; provided however, (i)
Stores-on-Wheels Inventory which meets the other criteria set forth above and
for which title has passed to a Borrower and which is insured to the full value
thereof shall be included in Eligible Inventory,
-6-
and (ii) Inventory in transit by common carrier from one of the Borrowers'
locations set forth on Schedule 4.5 to another of the Borrower's locations set
forth on Schedule 4.5 and which is insured to the full value thereof shall be
included in Eligible Inventory, subject to applicable reserves established by
the Agent with respect to unpaid freight charges related to such in-transit
Inventory.
"ELIGIBLE RECEIVABLES" shall mean and include with respect to each
Borrower, each Receivable of such Borrower arising in the ordinary course of
such Borrower's business and which Agent, in its sole credit judgment, shall
deem to be an Eligible Receivable, including Dated Receivables, based on such
considerations as Agent may from time to time deem appropriate. A Receivable
shall not be deemed eligible unless such Receivable is subject to Agent's first
priority perfected security interest and no other Lien (other than Permitted
Encumbrances), and is evidenced by an invoice or other documentary evidence
satisfactory to Agent. In addition, no Receivable shall be an Eligible
Receivable if:
(a) it arises out of a sale made by any Borrower to an
Affiliate of any Borrower or to a Person controlled by an Affiliate of any
Borrower;
(b) it is unpaid more than one hundred twenty (120) days
after the original invoice date or in the case of Dated Receivables, is unpaid
more than one hundred eighty (180) days after the original invoice date or more
than thirty (30) days after the payment due date;
(c) fifty percent (50%) or more of the Receivables from such
Customer are not deemed Eligible Receivables hereunder. Such percentage may, in
Agent's sole discretion, be increased or decreased from time to time;
(d) any covenant, representation or warranty contained in
this Agreement with respect to such Receivable is then in breach;
(e) the Customer shall (i) apply for, suffer, or consent to
the appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its property
or call a meeting of its creditors, (ii) admit in writing its inability, or be
generally unable, to pay its debts as they become due or cease operations of its
present business, (iii) make a general assignment for the benefit of creditors,
(iv) commence a voluntary case under any state or federal bankruptcy laws (as
now or hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi)
file a petition seeking to take advantage of any other law providing for the
relief of debtors, (vii) acquiesce to, or fail to have dismissed, any petition
which is filed against it in any involuntary case under such bankruptcy laws, or
(viii) take any action for the purpose of effecting any of the foregoing;
(f) the sale is to a Customer outside the continental United
States of America and Canada, unless the sale is on letter of credit, guaranty
or acceptance terms, in each case acceptable to Agent in its sole discretion;
-7-
(g) the sale to the Customer is on a xxxx-and-hold,
guaranteed sale, sale-and-return, sale on approval, consignment or any other
repurchase or return basis or is evidenced by chattel paper; provided however,
that a Permitted Xxxx-and-Hold Receivable shall not be excluded as an Eligible
Receivable so long as it would not otherwise be excluded as an Eligible
Receivable except for the requirement in item (j) below that it has been shipped
to the Customer;
(h) Agent believes, in its sole judgment, that collection of
such Receivable is insecure or that such Receivable may not be paid by reason of
the Customer's financial inability to pay;
(i) the Customer is the United States of America or any
department, agency or instrumentality thereof, unless the applicable Borrower
assigns its right to payment of such Receivable to Agent pursuant to the
Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 ET SEQ.
and 41 U.S.C. Sub-Section 15 ET SEQ.) or has otherwise complied with other
applicable statutes or ordinances;
(j) the goods giving rise to such Receivable have not been
shipped to the Customer or the services giving rise to such Receivable have not
been performed by the applicable Borrower or the Receivable otherwise does not
represent a final sale;
(k) the Receivables of the Customer exceed a credit limit
reasonably determined by Agent, in its sole reasonable discretion, to the extent
such Receivable exceeds such limit;
(l) the Receivable is subject to any offset, deduction,
defense, dispute, or counterclaim, the Customer is also a creditor or supplier
of a Borrower or the Receivable is contingent in any respect or for any reason;
(m) the applicable Borrower has made any agreement with any
Customer for any deduction therefrom, except for discounts or allowances made in
the ordinary course of business for prompt payment or discounts relating to the
Customer meeting volume purchases, all of which discounts or allowances are
reflected in the calculation of the face value of each respective invoice or
Customer contract related thereto;
(n) any return, rejection or repossession of the merchandise
has occurred or the rendition of services has been disputed;
(o) such Receivable is not payable to a Borrower; or
(p) such Receivable is not otherwise satisfactory to Agent
as determined in good faith by Agent in the exercise of its discretion in a
reasonable manner.
"ENVIRONMENTAL COMPLAINT" shall have the meaning set forth in
Section 4.19(d) hereof.
-8-
"ENVIRONMENTAL LAWS" shall mean all federal, state and local
environmental, land use, zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances and codes relating to the protection of the
environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of Hazardous
Substances and the rules, regulations, policies, published guidelines, written
interpretations, decisions, orders and directives of federal, state and local
governmental agencies and authorities with respect thereto.
"EQUIPMENT" shall mean and include as to each Borrower all of such
Borrower's goods (other than Inventory) whether now owned or hereafter acquired
and wherever located including, without limitation, all equipment, machinery,
apparatus, motor vehicles, fittings, furniture, furnishings, fixtures, parts,
accessories and all replacements and substitutions therefor or accessions
thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time and the rules and regulations promulgated
thereunder.
"EURODOLLAR RATE" shall mean for any Eurodollar Rate Loan for the
then current Interest Period relating thereto the interest rate per annum
reasonably determined by PNC by dividing (the resulting quotient rounded
upwards, if necessary, to the nearest 1/100th of 1% per annum) (i) the rate of
interest determined by PNC in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) to be the average of
the London interbank offered rates for U.S. Dollars quoted by the British
Bankers' Association as set forth on Dow Xxxxx Markets Service (formerly known
as Telerate) (or appropriate successor or, if British Banker's Association or
its successor ceases to provide such quotes, a comparable replacement determined
by PNC) display page 3750 (or such other display page on the Dow Xxxxx Markets
Service system as may replace display page 3750) two (2) Business Days prior to
the first day of such Interest Period for an amount comparable to such
Eurodollar Rate Loan and having a borrowing date and a maturity comparable to
such Interest Period by (ii) a number equal to 1.00 minus the Reserve
Percentage. The Eurodollar Rate may also be expressed by the following formula:
Average of London interbank offered rates quoted by BBA as shown on
Eurodollar Rate=Dow Xxxxx Markets Service Display Page 3750 or appropriate successor
--------------------------------------------------------------------
1.00 - Reserve Percentage
"EURODOLLAR RATE LOAN" shall mean an Advance at any time that
bears interest based on the Eurodollar Rate.
"EVENT OF DEFAULT" shall mean the occurrence of any of the events
set forth in Article X hereof.
"EXISTING INDEBTEDNESS" shall mean indebtedness of one or more
Borrowers under the following: (i) that certain Credit Agreement dated as of
April 24, 2001, as amended, among LESCO, as the borrower, National City Bank as
administrative agent and bank, and the other
-9-
bank party thereto, (ii) that certain Note Purchase Agreement dated as of June
15, 1998, as amended, among LESCO, Canada Life Insurance Company of America, and
each of the noteholders of LESCO's 6.64% Senior Notes, Series B, due June 15,
2004, LESCO's 6.71% Senior Notes, Series C, due June 15, 2008 and LESCO's 7.00%
Senior Notes, Series D, due June 15, 2008. and (iii) that Receivables Purchase
Agreement dated as of April 24, 2001, by and among LESCO, LFI, Market Street
Funding Corporation and PNC.
"FEDERAL FUNDS RATE" shall mean, for any day, the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or if such rate is not so published for any
day which is a Business Day, the average of quotations for such day on such
transactions received by PNC from three Federal funds brokers of recognized
standing selected by PNC.
"FEE LETTER" shall mean the fee letter dated January 14, 2002
among Borrowers and PNC.
"FINANCE CHARGES" shall mean interest, late fees and all other
financing charges paid by Customers to the Borrowers.
"FIXED CHARGE COVERAGE RATIO" shall mean and include, with respect
to any fiscal period, the ratio of (a) EBITDA minus Non-Financed Capital
Expenditures, minus income taxes expensed on a consolidated basis, minus Finance
Charges in excess of $4,000,000 in any 12 month period, all the foregoing during
such period to (b) Fixed Charges during such period.
"FIXED CHARGES" shall mean the sum of consolidated interest
expense of the Borrowers on a consolidated basis, Senior Debt Payments,
principal on other Indebtedness for borrowed money, and payments under
capitalized leases, the foregoing all as determined in conformity with GAAP.
"FORMULA AMOUNT" shall have the meaning set forth in Section
2.1(a).
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time.
"GENERAL INTANGIBLES" shall mean and include as to each Borrower
all of such Borrower's general intangibles, whether now owned or hereafter
acquired including, without limitation, all payment intangibles, choses in
action, causes of action, corporate or other business records, inventions,
designs, patents, patent applications, equipment formulations, manufacturing
procedures, quality control procedures, trademarks, service marks, trade
secrets, goodwill, copyrights, design rights, software, computer information,
source codes, codes, records and dates, registrations, licenses, franchises,
customer lists, tax refunds, tax refund claims, computer programs, all claims
under guaranties, security interests or other security held by or granted to
such Borrower to secure payment of any of the Receivables by a Customer (other
than to the
-10-
extent covered by Receivables) all rights of indemnification and all other
intangible property of every kind and nature (other than Receivables).
"GOVERNMENTAL BODY" shall mean any nation or government, any state
or other political subdivision thereof or any entity exercising the legislative,
judicial, regulatory or administrative functions of or pertaining to a
government.
"HAZARDOUS DISCHARGE" shall have the meaning set forth in Section
4.19(d) hereof.
"HAZARDOUS SUBSTANCE" shall mean, without limitation, any
flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde
foam insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or
related materials as defined in CERCLA, the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801, ET SEQ.), RCRA, or any other
applicable Environmental Law and in the regulations adopted pursuant thereto.
"HAZARDOUS WASTES" shall mean all wastes subject to regulation
under CERCLA, RCRA or applicable state law, and any other applicable Federal and
state laws now in force or hereafter enacted relating to hazardous waste
disposal.
"INDEBTEDNESS" of a Person at a particular date shall mean all
obligations of such Person which in accordance with GAAP would be classified
upon a balance sheet as liabilities (except capital stock and surplus earned or
otherwise) and in any event, without limitation by reason of enumeration, shall
include all indebtedness, debt and other similar monetary obligations of such
Person whether direct or guaranteed, and all premiums, if any, due at the
required prepayment dates of such indebtedness, and all indebtedness secured by
a Lien on assets owned by such Person, whether or not such indebtedness actually
shall have been created, assumed or incurred by such Person. Any indebtedness of
such Person resulting from the acquisition by such Person of any assets subject
to any Lien shall be deemed, for the purposes hereof, to be the equivalent of
the creation, assumption and incurring of the indebtedness secured thereby,
whether or not actually so created, assumed or incurred.
"INDUSTRIAL REVENUE BONDS" shall mean the Industrial Revenue Bonds
(LESCO, Inc. Project) issued by the County of Belmont, Ohio in a principal
amount of $5,875,000 and supported by, inter alia, the IRB Letter of Credit.
"IRB LETTER OF CREDIT" shall mean that certain Letter of Credit
No. A-304726 dated March 1, 1993, issued by PNC Bank, National Association in
favor of The Bank of New York, successor to Irving Trust Company, in its
capacity as Trustee under the Indenture of Trust dated as of January 1, 1988,
between the Trustee and the County of Belmont Ohio, for the account of LESCO,
Inc. in the face amount of $6,230,720.
"INELIGIBLE SECURITY" shall mean any security which may not be
underwritten or dealt in by member banks of the Federal Reserve System under
Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as
amended.
-11-
"INTEREST PERIOD" shall mean the period provided for any
Eurodollar Rate Loan pursuant to Section 2.2(b).
"INTEREST RATE PROTECTION AGREEMENTS" shall have the meaning
assigned to that term in Section 8.1(e).
"INVENTORY" shall mean and include as to each Borrower all of such
Borrower's now owned or hereafter acquired goods, merchandise and other personal
property, wherever located, to be furnished under any consignment arrangement,
contract of service or held for sale or lease, all raw materials, work in
process, finished goods and materials and supplies of any kind, nature or
description which are or might be used or consumed in such Borrower's business
or used in selling or furnishing such goods, merchandise and other personal
property, and all documents of title or other documents representing them.
"INVENTORY ADVANCE RATE" shall have the meaning set forth in
Section 2.1(a)(y)(iv) hereof.
"INVESTMENT PROPERTY" shall mean and include as to each Borrower,
all of such Borrower's now owned or hereafter acquired securities (whether
certificated or uncertificated), securities entitlements, securities accounts,
commodities contracts and commodities accounts.
"ISSUER" shall mean any Person who issues a Letter of Credit
and/or accepts a draft pursuant to the terms hereof.
"LEASEHOLD INTERESTS" shall mean all of each Borrower's right,
title and interest in and to the leasehold interests under ground leases
identified on Schedule 4.19 hereto.
"LENDER" and "LENDERS" shall have the meaning ascribed to such
term in the preamble to this Agreement and shall include each Person which
becomes a transferee, successor or assign of any Lender.
"LETTER OF CREDIT FEES" shall have the meaning set forth in
Section 3.2.
"LETTERS OF CREDIT" shall have the meaning set forth in Section
2.9.
"LFI" shall mean LESCO Funding, Inc., a Delaware corporation and a
wholly-owned subsidiary of LESCO.
"LIEN" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, security interest, lien (whether statutory or
otherwise), Charge, claim or encumbrance, or preference, priority or other
security agreement or preferential arrangement held or asserted in respect of
any asset of any kind or nature whatsoever including, without limitation, any
conditional sale or other title retention agreement, any lease having
substantially
-12-
the same economic effect as any of the foregoing, and the filing of, or
agreement to give, any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on
(a) the condition, operations, assets, business or prospects of the Borrowers,
taken as a whole, (b) the Borrowers' ability to pay the Obligations in
accordance with the terms thereof, (c) the value of the Collateral, or Agent's
Liens on the Collateral or the priority of any such Lien or (d) the practical
realization of the benefits of Agent's and each Lender's rights and remedies
under this Agreement and the Other Documents.
"MAXIMUM LOAN AMOUNT" shall mean $122,290,000 less repayments of
the Term Loan.
"MAXIMUM REVOLVING ADVANCE AMOUNT" shall mean $115,000,000.
"MONTHLY ADVANCES" shall have the meaning set forth in Section 3.1
hereof.
"MORTGAGE" shall mean with respect to each Real Property owned by
any Borrower or leased by a Borrower pursuant to a ground lease other than the
real property owned by LESCO and located in Martins Ferry, Ohio, Wellington,
Ohio and Windsor, New Jersey, a mortgage on such Real Property or the Borrower's
Leasehold Interests in such ground lease securing the original principal amount
of up to $125,000,000 together with all extensions, renewals, amendments,
supplements, modifications, substitutions and replacements thereto and thereof.
"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" as defined
in Sections 3(37) and 4001(a)(3) of ERISA.
"NET WORTH" at a particular date, shall mean all amounts which
would be included under shareholders' equity on a balance sheet of LESCO on a
consolidated basis determined in accordance with GAAP as at such date.
"NON-FINANCED CAPITAL EXPENDITURES" shall mean capital
expenditures of the Borrowers which are not financed by any third party lender
but shall include capital expenditures which are financed with Revolving
Advances.
"NOTE" shall mean collectively, the Term Note and the Revolving
Credit Note.
"OBLIGATIONS" shall mean and include any and all loans, advances,
debts, liabilities, obligations, covenants and duties owing by Borrowers to
Lenders or Agent or any Affiliate of Agent of any kind or nature, present or
future (including, without limitation, any interest accruing thereon after
maturity, or after the filing of any petition in bankruptcy, or the commencement
of any insolvency, reorganization or like proceeding relating to any Borrower,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding), whether or not evidenced by any note, guaranty or other
instrument, whether arising under any
-13-
agreement, instrument or document, (including, without limitation, this
Agreement and the Other Documents) whether or not for the payment of money,
whether arising by reason of an extension of credit, opening of a letter of
credit, loan, equipment lease or guarantee, under any interest or currency swap,
future, option or other similar agreement (including the Interest Rate
Protection Agreement) entered into with the Agent or any Affiliate, or in any
other manner, whether arising out of overdrafts or deposit or other accounts or
electronic funds transfers (whether through automated clearing houses or
otherwise) or out of the Agent's or any Lenders non-receipt of or inability to
collect funds or otherwise not being made whole in connection with depository
transfer check or other similar arrangements, whether direct or indirect
(including those acquired by assignment or participation), absolute or
contingent, joint or several, due or to become due, now existing or hereafter
arising, contractual or tortious, liquidated or unliquidated, regardless of how
such indebtedness or liabilities arise or by what agreement or instrument they
may be evidenced or whether evidenced by any agreement or instrument, including,
but not limited to, any and all of any Borrower's Indebtedness and/or
liabilities under this Agreement, the Other Documents or under any other
agreement between Agent or Lenders and any Borrower and any amendments,
extensions, renewals or increases and all costs and expenses of Agent and any
Lender incurred in the documentation, negotiation, modification, enforcement,
collection or otherwise in connection with any of the foregoing, including but
not limited to reasonable attorneys' fees and expenses and all obligations of
any Borrower to Agent or Lenders to perform acts or refrain from taking any
action.
"ORDERLY LIQUIDATION VALUE" shall mean the amount of net proceeds
that could be realized by the Lenders based upon the appraisal of the Borrowers'
assets conducted by Hilco Appraisal Services in November and December, 2001, or
such other appraisals acceptable to the Agent which may be conducted from time
to time.
"ORIGINAL OWNERS" shall mean the shareholders of LESCO as of the
Closing Date.
"OTHER DOCUMENTS" shall mean the Mortgage, the Note, the
Questionnaire, the Patent, Trademark and Copyright Security Agreement and any
and all other agreements, instruments and documents, including, without
limitation, guaranties, pledges, powers of attorney, consents, and all other
writings heretofore, now or hereafter executed by any Borrower and/or delivered
to Agent or any Lender in respect of the transactions contemplated by this
Agreement.
"PARENT" of any Person shall mean a corporation or other entity
owning, directly or indirectly at least 50% of the shares of stock or other
ownership interests having ordinary voting power to elect a majority of the
directors of the Person, or other Persons performing similar functions for any
such Person.
"PARTICIPANT" shall mean each Person who shall be granted the
right by any Lender to participate in any of the Advances and who shall have
entered into a participation agreement in form and substance satisfactory to
such Lender.
-14-
"PATENT, TRADEMARK AND COPYRIGHT SECURITY AGREEMENT" shall mean
the Patent, Trademark and Copyright Security Agreement executed and delivered by
each of the Borrowers to the Agent for the benefit of the Lenders.
"PAYMENT OFFICE" shall mean initially Xxx Xxxxx Xxxxxx Xxxxxxxxx,
Xxxxxx Xxxxx, Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000; thereafter, such other office of
Agent, if any, which it may designate by notice to Borrowing Agent and to each
Lender to be the Payment Office.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"PERMITTED XXXX-AND-HOLD RECEIVABLE" mean a Receivable which the
Agent determines, in its sole credit judgment, meets all of the following
criteria: (a) the risk of ownership has passed to the Customer, and the Customer
has the risk of loss and title to the goods, (b) the Customer has executed a
written agreement to purchase the goods, (c) the Customer has requested the sale
occur on a xxxx-and-hold basis and has a substantial business purpose for
ordering the goods on such basis, (d) there is a fixed schedule for the delivery
of the goods to the Customer, (e) the Borrowers have not retained any specific
performance obligations with respect to the goods, (f) the goods must be
segregated from the Borrowers' Inventory and are not available to fulfill of
orders of other Customers, and (g) the goods must be complete and ready for
shipment.
"PERMITTED ENCUMBRANCES" shall mean (a) Liens in favor of Agent
for the benefit of Agent and Lenders; (b) Liens for taxes, assessments or other
governmental charges not delinquent or being contested in good faith and by
appropriate proceedings and with respect to which proper reserves have been
taken by Borrowers; PROVIDED, THAT, the Lien shall have no effect on the
priority of the Liens in favor of Agent or the value of the assets in which
Agent has such a Lien and a stay of enforcement of any such Lien shall be in
effect; (c) matters of record disclosed on the title insurance commitments
obtained pursuant to Section 8.1(r) other than any Lien which secures Existing
Indebtedness, (d) Liens disclosed in the financial statements or notes thereto
referred to in Section 5.5, the existence of which Agent has consented to in
writing; (e) deposits or pledges to secure obligations under worker's
compensation, social security or similar laws, or under unemployment insurance;
(f) deposits or pledges to secure bids, tenders, contracts (other than contracts
for the payment of money), leases, statutory obligations, surety and appeal
bonds and other obligations of like nature arising in the ordinary course of any
Borrower's business; (g) judgment Liens that have been stayed or bonded and
mechanics', workers', materialmen's or other like Liens arising in the ordinary
course of any Borrower's business with respect to obligations which are not due
or which are being contested in good faith by the applicable Borrower; (h) Liens
placed upon fixed assets hereafter acquired to secure a portion of the purchase
price thereof, provided that (x) any such lien shall not encumber any other
property of the Borrowers and (y) the aggregate amount of Indebtedness secured
by such Liens incurred as a result of such purchases during any fiscal year
shall not exceed the amount provided for in Section 7.6; (i) growers' and other
statutory Liens on grass seed, (j) Liens which individually or in the aggregate
do no encumber Collateral having a value in excess of $500,000; and (k) Liens
disclosed on SCHEDULE 1.2.
-15-
"PERSON" shall mean any individual, sole proprietorship,
partnership, corporation, business trust, joint stock company, trust,
unincorporated organization, association, limited liability company,
institution, public benefit corporation, joint venture, entity or government
(whether Federal, state, county, city, municipal or otherwise, including any
instrumentality, division, agency, body or department thereof).
"PLAN" shall mean any employee benefit plan within the meaning of
Section 3(3) of ERISA, maintained for employees of Borrowers or any member of
the Controlled Group or any such Plan to which any Borrower or any member of the
Controlled Group is required to contribute on behalf of any of its employees.
"PRO FORMA BALANCE SHEET" shall have the meaning set forth in
Section 5.5(a) hereof.
"PRO FORMA FINANCIAL STATEMENTS" shall have the meaning set forth
in Section 5.5(b) hereof.
"PROJECTIONS" shall have the meaning set forth in Section 5.5(b)
hereof.
"PURCHASING LENDER" shall have the meaning set forth in Section
16.3 hereof.
"QUESTIONNAIRE" shall mean the Documentation Information
Questionnaire and the responses thereto provided by Borrowers and delivered to
Agent.
"RCRA" shall mean the Resource Conservation and Recovery Act, 42
U.S.C.ss.ss.6901 ET SEQ., as amended.
"REAL PROPERTY" shall mean all of each Borrower's right, title and
interest in and to owned premises and premises leased pursuant to a ground
lease, all the foregoing as identified on SCHEDULE 4.19 hereto.
"RECEIVABLES" shall mean and include, as to each Borrower, all of
such Borrower's accounts, contract rights, instruments (including those
evidencing indebtedness owed to Borrowers by their Affiliates), documents,
chattel paper (including electronic chattel paper), general intangibles relating
to accounts, drafts and acceptances, credit card receivables, and all other
forms of obligations owing to such Borrower arising out of or in connection with
the sale or lease of Inventory or the rendition of services, all supporting
obligations, guarantees and other security therefor, whether secured or
unsecured, now existing or hereafter created, and whether or not specifically
sold or assigned to Agent hereunder.
"RECEIVABLES ADVANCE RATE" shall have the meaning set forth in
Section 2.1(a)(y)(i) hereof.
-16-
"REIMBURSEMENT AGREEMENT" shall mean that certain Reimbursement
Agreement dated as of March 1, 1993, as amended, between LESCO and PNC (formerly
known as Pittsburgh National Bank) relating to the IRB Letter of Credit.
"RELEASE" shall have the meaning set forth in Section 5.7(c)(i)
hereof.
"REPORTABLE EVENT" shall mean a reportable event described in
Section 4043(b) of ERISA or the regulations promulgated thereunder.
"REQUIRED LENDERS" shall mean Lenders holding at least fifty-one
percent (51%) of the Advances and, if no Advances are outstanding, shall mean
Lenders holding at least fifty-one percent (51%) of the Commitment Percentages.
"RESERVE PERCENTAGE" shall mean the maximum effective percentage
in effect on any day as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the reserve requirements
(including, without limitation, supplemental, marginal and emergency reserve
requirements) with respect to eurocurrency funding.
"REVOLVING ADVANCES" shall mean Advances made other than Letters
of Credit and the Term Loan.
"REVOLVING CREDIT NOTE" shall mean, collectively, the promissory
notes referred to in Section 2.1(a) hereof.
"REVOLVING INTEREST RATE" shall mean an interest rate per annum
equal to: (i) during the Seasonal Overadvance Period, (a) the sum of the
Alternate Base Rate plus one-half percent (.50%) with respect to Domestic Rate
Loans, or (b) the sum of the Eurodollar Rate plus three percent (3.00%) with
respect to Eurodollar Rate Loans, or (ii) at all other times (a) the sum of the
Alternate Base Rate plus one-fourth percent (.25%) with respect to Domestic Rate
Loans, or (b) the sum of the Eurodollar Rate plus two and three-fourths percent
(2.75%) with respect to Eurodollar Rate Loans.
"SEASONAL OVERADVANCE PERIOD" shall mean the period commencing on
December 1 and ending on March 31 during which the Formula Amount is increased
by an amount of up to $7,000,000 in accordance with the provisions of Section
2.1(a).
"SECTION 20 SUBSIDIARY" shall mean the Subsidiary of the bank
holding company controlling PNC, which Subsidiary has been granted authority by
t he Federal Reserve Board to underwrite and deal in certain Ineligible
Securities.
"SENIOR DEBT PAYMENTS" shall mean and include all cash actually
expended by Borrowers to make (a) interest payments on any Advances hereunder,
PLUS, (b) scheduled principal payments on the Term Loan, PLUS (c) payments for
all fees, commissions and charges set forth herein and with respect to any
Advances, PLUS (d) capitalized lease payments, PLUS (e) payments with respect to
any other Indebtedness for borrowed money.
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"SETTLEMENT DATE" shall mean the Closing Date and thereafter
Wednesday of each week unless such day is not a Business Day in which case it
shall be the next succeeding Business Day.
"STORES-ON-WHEELS INVENTORY" shall mean Inventory which is located
on motor vehicles owned or leased by a Borrower and from which such Borrower
sells such Inventory to its Customers in the ordinary course of business.
"SUBSIDIARY" shall mean a corporation or other entity of whose
shares of stock or other ownership interests having ordinary voting power (other
than stock or other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.
"TERM" shall have the meaning set forth in Section 13.1 hereof.
"TERM LOAN" shall mean the Advances made pursuant to Section 2.4
hereof.
"TERM LOAN RATE" shall mean an interest rate per annum equal to
(a) the sum of the Alternate Base Rate plus three-fourths percent (.75%) with
respect to Domestic Rate Loans, or (b) the sum of the Eurodollar Rate plus three
and one-fourth percent (3.25%) with respect to Eurodollar Rate Loans.
"TERM NOTE" shall mean, collectively, the promissory notes
described in Section 2.4 hereof.
"TERMINATION EVENT" shall mean (i) a Reportable Event with respect
to any Plan or Multiemployer Plan; (ii) the withdrawal of any Borrower or any
member of the Controlled Group from a Plan or Multiemployer Plan during a plan
year in which such entity was a "substantial employer" as defined in Section
4001(a)(2) of ERISA; (iii) the providing of notice of intent to terminate a Plan
in a distress termination described in Section 4041(c) of ERISA; (iv) the
institution by the PBGC of proceedings to terminate a Plan or Multiemployer
Plan; (v) any event or condition (a) which might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan or Multiemployer Plan, or (b) that may result in
termination of a Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi)
the partial or complete withdrawal within the meaning of Sections 4203 and 4205
of ERISA, of any Borrower or any member of the Controlled Group from a
Multiemployer Plan.
"TOXIC SUBSTANCE" shall mean and include any material present on
the Real Property or the Leasehold Interests which has been shown to have
significant adverse effect on human health or which is subject to regulation
under the Toxic Substances Control Act (TSCA), 15 U.S.C. xx.xx. 2601 ET SEQ.,
applicable state law, or any other applicable Federal or state laws now in force
or hereafter enacted relating to toxic substances. "Toxic Substance" includes
but is not limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based
paints.
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"TRANSACTIONS" shall have the meaning set forth in Section 5.5
hereof.
"TRANSFEREE" shall have the meaning set forth in Section 16.3(b)
hereof.
"UNDRAWN AVAILABILITY" at a particular date shall mean an amount
equal to (a) the lesser of (i) the Formula Amount or (ii) the Maximum Revolving
Advance Amount, MINUS (b) the sum of (i) the outstanding amount of Advances
(other than the Term Loan) PLUS (ii) all amounts due and owing to Borrowers'
trade creditors which are outstanding beyond sixty (60) days from the due date,
plus (iii) fees and expenses for which Borrowers are liable but which have not
been paid or charged to Borrowers' Account.
"WEEK" shall mean the time period commencing with the opening of
business on a Wednesday and ending on the end of business the following Tuesday.
1.3. UNIFORM COMMERCIAL CODE TERMS. All terms used herein and defined
in the Uniform Commercial Code as adopted in the State of Ohio from time to time
shall have the meaning given therein unless otherwise defined herein. To the
extent the definition of any category or type of Collateral is expanded by any
amendment, modification or revision to the Uniform Commercial Code, such
expanded definition will apply automatically as of the date of such amendment,
modification or revision.
1.4. CERTAIN MATTERS OF CONSTRUCTION. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. Wherever appropriate in the context, terms
used herein in the singular also include the plural and VICE VERSA. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. Unless otherwise provided, all
references to any instruments or agreements to which Agent is a party,
including, without limitation, references to any of the Other Documents, shall
include any and all modifications or amendments thereto and any and all
extensions or renewals thereof.
II. ADVANCES, PAYMENTS.
2.1. (a) REVOLVING ADVANCES. Subject to the terms and conditions set
forth in this Agreement including, without limitation, Section 2.1(b), each
Lender, severally and not jointly, will make Revolving Advances to Borrowers in
aggregate amounts outstanding at any time equal to such Lender's Commitment
Percentage of the lesser of (x) the Maximum Revolving Advance Amount less the
aggregate amount of outstanding Letters of Credit or (y) an amount equal to the
sum of:
(i) up to 85%, subject to the provisions of Section 2.1(c)
hereof ("Receivables Advance Rate"), of the Eligible Receivables,
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excluding Dated Receivables, which are unpaid not more than
ninety (90) days after the original invoice date, PLUS
(ii) the lesser of (A) up to 85%, subject to the provisions
of Section 2.1(c) hereof, of the Eligible Receivables, excluding
Dated Receivables, which are unpaid more than ninety (90) days
but not more than one hundred twenty (120) days after the
original invoice date, or (B) $5,000,000, PLUS
(iii) the lesser of (A) up to 85%, subject to the provisions
of Section 2.1(c) hereof, of Eligible Receivables which are Dated
Receivables, or (B) $30,000,000 during the period from November 1
through May 31 of any calendar year and $10,000,000 during the
period from June 1 through October 31 of any calendar year minus
the amount determined under item (ii) above, PLUS
(iv) up to the lesser of (A) 53.7%, subject to the
provisions of Section 2.1(c) hereof, during the period from
October 1 through February 29 of any calendar year and 60%,
subject to the provisions of Section 2.1(c) hereof, during the
period from March 1 through September 30 of any calendar year
("Inventory Advance Rate"), of the value of Eligible Inventory
(the Receivables Advance Rate and the Inventory Advance Rate
shall be referred to collectively, as the "Advance Rates"), (B)
during the period from January 1 through June 30, $70,000,000,
and during the period from July 1 through December 31,
$60,000,000, PLUS
(v) during the Seasonal Advance Period, the lesser of (A)
10% of the value of Eligible Inventory, or (B) $7,000,000, MINUS
(vi) the amount by which the availability for Revolving
Advances based upon Stores-on-Wheels Inventory under item (iii)
above exceeds $4,000,000; MINUS
(vii) the aggregate amount of outstanding Letters of Credit,
MINUS
(viii) the Bank Products Reserves and such other reserves as
Agent may reasonably deem proper and necessary from time to time.
The amount derived from the sum of (x) Sections 2.1(a)(y)(i), (ii),
(iii), (iv) and (v) MINUS the sum of (y) Sections 2.1 (a)(y)(vi), (vii) and
(viii) at any time and from time to time shall be referred to as the "Formula
Amount". The Revolving Advances shall be evidenced by one or more secured
promissory notes (collectively, the "Revolving Credit Note") substantially in
the form attached hereto as EXHIBIT 2.1(A).
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(b) [Intentionally Omitted].
(c) DISCRETIONARY RIGHTS. Subject to Section 16.2, the Advance
Rates may be increased or decreased by Agent at any time and from time to time
in the exercise of its reasonable discretion. Each Borrower consents to any such
increases or decreases and acknowledges that decreasing the Advance Rates or
increasing the reserves may limit or restrict Advances requested by Borrowing
Agent.
2.2. PROCEDURE FOR BORROWING ADVANCES.
(a) Borrowing Agent on behalf of any Borrower may notify Agent
prior to 11:00 a.m. on a Business Day of a Borrower's request to incur, on that
day, a Revolving Advance hereunder. Should any amount required to be paid as
interest hereunder, or as fees or other charges under this Agreement or any
Other Document, or with respect to any other Obligation, become due, same shall
be deemed a request for a Revolving Advance as of the date such payment is due,
in the amount required to pay in full such interest, fee, charge or Obligation
under this Agreement or any other agreement with Agent or Lenders, and such
request shall be irrevocable.
(b) Notwithstanding the provisions of (a) above, in the event
any Borrower desires to obtain a Eurodollar Rate Loan, Borrowing Agent shall
give Agent at least three (3) Business Days' prior written notice, specifying
(i) the date of the proposed borrowing (which shall be a Business Day), (ii) the
type of borrowing and the amount on the date of such Advance to be borrowed,
which amount shall be in a minimum amount of $1,000,000 and in integral
multiples of $500,000 thereafter, and (iii) the duration of the first Interest
Period therefor. Interest Periods for Eurodollar Rate Loans shall be for one,
two or three months; PROVIDED, if an Interest Period would end on a day that is
not a Business Day, it shall end on the next succeeding Business Day unless such
day falls in the next succeeding calendar month in which case the Interest
Period shall end on the next preceding Business Day. No Eurodollar Rate Loan
shall be made available to Borrower during the continuance of a Default or an
Event of Default.
(c) Each Interest Period of a Eurodollar Rate Loan shall
commence on the date such Eurodollar Rate Loan is made and shall end on such
date as Borrowing Agent may elect as set forth in subsection (b)(iii) above
provided that the exact length of each Interest Period shall be determined in
accordance with the practice of the interbank market for offshore Dollar
deposits and no Interest Period shall end after the last day of the Term.
Borrowing Agent shall elect the initial Interest Period
applicable to a Eurodollar Rate Loan by its notice of borrowing given to Agent
pursuant to Section 2.2(b) or by its notice of conversion given to Agent
pursuant to Section 2.2(d), as the case may be. Borrowing Agent shall elect the
duration of each succeeding Interest Period by giving irrevocable written notice
to Agent of such duration not less than three (3) Business Days prior to the
last day of the then current Interest Period applicable to such Eurodollar Rate
Loan. If Agent does not receive timely notice of the Interest Period elected by
Borrowing Agent, Borrowers
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shall be deemed to have elected to convert to a Domestic Rate Loan subject to
Section 2.2(d) hereinbelow.
(d) Provided that no Event of Default shall have occurred and be
continuing, any Borrower may, on the last Business Day of the then current
Interest Period applicable to any outstanding Eurodollar Rate Loan, or on any
Business Day with respect to Domestic Rate Loans, convert any such loan into a
loan of another type in the same aggregate principal amount provided that any
conversion of a Eurodollar Rate Loan shall be made only on the last Business Day
of the then current Interest Period applicable to such Eurodollar Rate Loan. If
a Borrower desires to convert a loan, Borrowing Agent shall give Agent not less
than three (3) Business Days' prior written notice to convert from a Domestic
Rate Loan to a Eurodollar Rate Loan or one (1) Business Day's prior written
notice to convert from a Eurodollar Rate Loan to a Domestic Rate Loan,
specifying the date of such conversion, the loans to be converted and if the
conversion is from a Domestic Rate Loan to any other type of loan, the duration
of the first Interest Period therefor. After giving effect to each such
conversion, there shall not be outstanding more than eight (8) Eurodollar Rate
Loans, in the aggregate.
(e) [Intentionally Omitted].
(f) Each Borrower shall indemnify Agent and Lenders and hold
Agent and Lenders harmless from and against any and all losses or expenses that
Agent and Lenders may sustain or incur as a consequence of any prepayment,
conversion of or any default by any Borrower in the payment of the principal of
or interest on any Eurodollar Rate Loan or failure by any Borrower to complete a
borrowing of, a prepayment of or conversion of or to a Eurodollar Rate Loan
after notice thereof has been given, including, but not limited to, any interest
payable by Agent or Lenders to lenders of funds obtained by it in order to make
or maintain its Eurodollar Rate Loans hereunder. A certificate as to any
additional amounts payable pursuant to the foregoing sentence submitted by Agent
or any Lender to Borrowing Agent shall be conclusive absent manifest error.
(g) Notwithstanding any other provision hereof, if any
applicable law, treaty, regulation or directive, or any change therein or in the
interpretation or application thereof, shall make it unlawful for any Lender
(for purposes of this subsection (g), the term "Lender" shall include any Lender
and the office or branch where any Lender or any corporation or bank controlling
such Lender makes or maintains any Eurodollar Rate Loans) to make or maintain
its Eurodollar Rate Loans, the obligation of Lenders to make Eurodollar Rate
Loans hereunder shall forthwith be cancelled and Borrowers shall, if any
affected Eurodollar Rate Loans are then outstanding, promptly upon request from
Agent, either pay all such affected Eurodollar Rate Loans or convert such
affected Eurodollar Rate Loans into loans of another type. If any such payment
or conversion of any Eurodollar Rate Loan is made on a day that is not the last
day of the Interest Period applicable to such Eurodollar Rate Loan, Borrowers
shall pay Agent, upon Agent's request, such amount or amounts as may be
necessary to compensate Lenders for any loss or expense sustained or incurred by
Lenders in respect of such Eurodollar Rate Loan as a result of such payment or
conversion, including (but not limited to) any interest or other amounts payable
by Lenders to lenders of funds obtained by Lenders in order to make or
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maintain such Eurodollar Rate Loan. A certificate as to any additional amounts
payable pursuant to the foregoing sentence submitted by Lenders to Borrowing
Agent shall be conclusive absent manifest error.
2.3. DISBURSEMENT OF ADVANCE PROCEEDS. All Advances shall be disbursed
from whichever office or other place Agent may designate from time to time and,
together with any and all other Obligations of Borrowers to Agent or Lenders,
shall be charged to Borrowers' Account on Agent's books. During the Term,
Borrowers may use the Revolving Advances by borrowing, prepaying and
reborrowing, all in accordance with the terms and conditions hereof. The
proceeds of each Revolving Advance requested by Borrowers or deemed to have been
requested by Borrowers under Section 2.2(a) hereof shall, with respect to
requested Revolving Advances to the extent Lenders make such Revolving Advances,
be made available to the applicable Borrower on the day so requested by way of
credit to such Borrower's operating account at PNC, or such other bank as
Borrowing Agent may designate following notification to Agent, in immediately
available federal funds or other immediately available funds or, with respect to
Revolving Advances deemed to have been requested by any Borrower, be disbursed
to Agent to be applied to the outstanding Obligations giving rise to such deemed
request.
2.4. TERM LOAN. Subject to the terms and conditions of this Agreement,
each Lender, severally and not jointly, will make a Term Loan to Borrowers in
the sum equal to such Lender's Commitment Percentage of $7,290,000 (which is an
amount equal to 80% of the net Orderly Liquidation Value of eligible equipment
plus 70% of the appraised fair market value of Eligible Real Property). The Term
Loan shall be advanced on the Closing Date and shall be, with respect to
principal, payable as follows, subject to acceleration upon the occurrence of an
Event of Default under this Agreement or termination of this Agreement: monthly
payments in arrears on the first day of each month in thirty-five (35) equal
installments of $86,786 commencing on March 1, 2002, with the balance payable
upon the expiration of the Term and shall be evidenced by one or more secured
promissory notes (collectively, the "Term Note") in substantially the form
attached hereto as EXHIBIT 2.4.
2.5. MAXIMUM ADVANCES. The aggregate balance of Revolving Advances
outstanding at any time shall not exceed the lesser of (a) Maximum Revolving
Advance Amount less outstanding Letters of Credit, or (b) the Formula Amount.
2.6. REPAYMENT OF ADVANCES.
(a) The Revolving Advances shall be due and payable in full on
the last day of the Term subject to earlier prepayment as herein provided. The
Term Loan shall be due and payable as provided in Section 2.4 hereof and in the
Term Note, subject to mandatory prepayments as herein provided.
(b) Each Borrower recognizes that the amounts evidenced by checks,
notes, drafts or any other items of payment relating to and/or proceeds of
Collateral may not be collectible by Agent on the date received. In
consideration of Agent's agreement to conditionally credit Borrowers' Account as
of the Business Day on which Agent receives those
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items of payment, each Borrower agrees that, in computing the charges under this
Agreement, all items of payment shall be deemed applied by Agent on account of
the Obligations one (1) Business Day after the Business Day Agent receives such
payments via wire transfer or electronic depository check. Agent is not,
however, required to credit Borrowers' Account for the amount of any item of
payment which is unsatisfactory to Agent in the Agent's reasonable discretion,
and Agent may charge Borrowers' Account for the amount of any item of payment
which is returned to Agent unpaid.
(c) All payments of principal, interest and other amounts payable
hereunder, or under any of the Other Documents shall be made to Agent at the
Payment Office not later than 1:00 P.M. (New York Time) on the due date therefor
in lawful money of the United States of America in federal funds or other funds
immediately available to Agent. Agent shall have the right to effectuate payment
on any and all Obligations due and owing hereunder by charging Borrowers'
Account or by making Advances as provided in Section 2.2 hereof.
(d) Borrowers shall pay principal, interest, and all other amounts
payable hereunder, or under any related agreement, without any deduction
whatsoever, including, but not limited to, any deduction for any setoff or
counterclaim.
2.7. REPAYMENT OF EXCESS ADVANCES. The aggregate balance of Advances
outstanding at any time in excess of the maximum amount of Advances permitted
hereunder shall be immediately due and payable without the necessity of any
demand, at the Payment Office, whether or not a Default or Event of Default has
occurred.
2.8. STATEMENT OF ACCOUNT. Agent shall maintain, in accordance with its
customary procedures, a loan account ("Borrowers' Account") in the name of
Borrowers in which shall be recorded the date and amount of each Advance made by
Agent and the date and amount of each payment in respect thereof; PROVIDED,
HOWEVER, the failure by Agent to record the date and amount of any Advance shall
not adversely affect Agent or any Lender. Each month, Agent shall send to
Borrowing Agent a statement showing the accounting for the Advances made,
payments made or credited in respect thereof, and other transactions between
Agent and Borrowers, during such month. The monthly statements shall be deemed
correct and binding upon Borrowers in the absence of manifest error and shall
constitute an account stated between Lenders and Borrowers unless Agent receives
a written statement of Borrowers' specific exceptions thereto within thirty (30)
days after such statement is received by Borrowing Agent. The records of Agent
with respect to the loan account shall be conclusive evidence absent manifest
error of the amounts of Advances and other charges thereto and of payments
applicable thereto.
2.9. LETTERS OF CREDIT. Subject to the terms and conditions hereof and
upon prior request by Borrowing Agent to Agent by 10:00 a.m. on the date which
is five (5) Business Days prior to the proposed issuance thereof, Agent shall
issue or cause the issuance of Letters of Credit ("Letters of Credit") on behalf
of any Borrower; PROVIDED, HOWEVER, that Agent will not be required to issue or
cause to be issued any Letters of Credit to the extent that the face amount of
such Letters of Credit would then cause the sum of (i) the outstanding Revolving
Advances
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PLUS (ii) outstanding Letters of Credit to exceed the lesser of (x) the Maximum
Revolving Advance Amount or (y) the Formula Amount. The maximum amount of
outstanding Letters of Credit shall not exceed $10,000,000 in the aggregate at
any time. All disbursements or payments related to Letters of Credit shall be
deemed to be Domestic Rate Loans consisting of Revolving Advances and shall bear
interest at the Revolving Interest Rate for Domestic Rate Loans; Letters of
Credit that have not been drawn upon shall not bear interest. The term "Letters
of Credit" does not include the IRB Letter of Credit..
2.10. ISSUANCE OF LETTERS OF CREDIT .
(a) Borrowing Agent, on behalf of Borrowers, may request Agent to
issue or cause the issuance of a Letter of Credit by delivering to Agent at the
Payment Office, Agent's form of Letter of Credit Application (the "Letter of
Credit Application") completed to the satisfaction of Agent; and, such other
certificates, documents and other papers and information as Agent may reasonably
request. Borrowing Agent, on behalf of Borrowers, also has the right to give
instructions and make agreements with respect to any application, any applicable
letter of credit and security agreement, any applicable letter of credit
reimbursement agreement and/or any other applicable agreement, any letter of
credit and the disposition of documents, disposition of any unutilized funds,
and to agree with Agent upon any amendment, extension or renewal of any Letter
of Credit.
(b) Each Letter of Credit shall, among other things, (i) provide
for the payment of sight drafts or acceptances of usance drafts when presented
for honor thereunder in accordance with the terms thereof and when accompanied
by the documents described therein and (ii) have an expiry date not later than
twelve (12) months after such Letter of Credit's date of issuance and in no
event later than the last day of the Term. Each Letter of Credit shall be
subject to the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500, and any
amendments or revision thereof adhered to by the Issuer and, to the extent not
inconsistent therewith, the laws of the State of New York.
(c) Agent shall use its reasonable efforts to notify Lenders of
the request by Borrowing Agent for a Letter of Credit hereunder.
2.11. REQUIREMENTS FOR ISSUANCE OF LETTERS OF CREDIT .
(a) In connection with the issuance of any Letter of Credit,
Borrowers shall indemnify, save and hold Agent, each Lender and each Issuer
harmless from any loss, cost, expense or liability, including, without
limitation, payments made by Agent, any Lender or any Issuer and expenses and
reasonable attorneys' fees incurred by Agent, any Lender or Issuer arising out
of, or in connection with, any Letter of Credit to be issued or created for any
Borrower other than due to Agent's, Lender's or Issuer's gross negligence or
willful misconduct. Borrowers shall be bound by Agent's or any Issuer's
regulations and good faith interpretations of any Letter of Credit issued or
created for Borrowers' Account, although this interpretation may be different
from its own; and, neither Agent, nor any Lender, nor any Issuer nor any of
their
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correspondents shall be liable for any error, negligence, or mistakes, whether
of omission or commission, in following Borrowing Agent's or any Borrower's
instructions or those contained in any Letter of Credit or of any modifications,
amendments or supplements thereto or in issuing or paying any Letter of Credit,
except for Agent's, any Lender's, any Issuer's or any of such correspondent's
gross negligence or willful misconduct.
(b) Borrowing Agent shall authorize and direct any Issuer to name
the applicable Borrower as the "Applicant" or "Account Party" of each Letter of
Credit. If Agent is not the Issuer of any Letter of Credit, Borrowing Agent
shall authorize and direct the Issuer to deliver to Agent all instruments,
documents, and other writings and property received by the Issuer pursuant to
the Letter of Credit and to accept and rely upon Agent's instructions and
agreements with respect to all matters arising in connection with the Letter of
Credit, the application therefor.
(c) In connection with all Letters of Credit issued or caused to
be issued by Agent under this Agreement, each Borrower hereby appoints Agent, or
its designee, as its attorney, with full power and authority (i) to sign and/or
endorse such Borrower's name upon any warehouse or other receipts, letter of
credit applications and acceptances; (ii) to sign such Borrower's name on bills
of lading; (iii) to clear Inventory through the United States of America Customs
Department ("Customs") in the name of such Borrower or Agent or Agent's
designee, and to sign and deliver to Customs officials powers of attorney in the
name of such Borrower for such purpose; and (iv) to complete in such Borrower's
name or Agent's, or in the name of Agent's designee, any order, sale or
transaction, obtain the necessary documents in connection therewith, and collect
the proceeds thereof. Neither Agent nor its attorneys will be liable for any
acts or omissions nor for any error of judgment or mistakes of fact or law,
except for Agent's or its attorney's gross negligence or willful misconduct.
This power, being coupled with an interest, is irrevocable as long as any
Letters of Credit remain outstanding.
(d) Each Lender shall to the extent of the percentage amount
equal to the product of such Lender's Commitment Percentage times the aggregate
amount of all unreimbursed reimbursement obligations arising from disbursements
made or obligations incurred with respect to the Letters of Credit be deemed to
have irrevocably purchased an undivided participation in each such unreimbursed
reimbursement obligation. In the event that at the time a disbursement is made
the unpaid balance of Revolving Advances exceeds or would exceed, with the
making of such disbursement, the lesser of the Maximum Revolving Advance Amount
or the Formula Amount, and such disbursement is not reimbursed by Borrowers
within two (2) Business Days, Agent shall promptly notify each Lender and upon
Agent's demand each Lender shall pay to Agent such Lender's proportionate share
of such unreimbursed disbursement together with such Lender's proportionate
share of Agent's unreimbursed costs and expenses relating to such unreimbursed
disbursement. Upon receipt by Agent of a repayment from any Borrower of any
amount disbursed by Agent for which Agent had already been reimbursed by
Lenders, Agent shall deliver to each Lender that Lender's pro rata share of such
repayment. Each Lender's participation commitment shall continue until the last
to occur of any of the following events: (A) Agent ceases to be obligated to
issue or cause to be issued Letters of Credit hereunder; (B) no Letter of Credit
issued hereunder remains outstanding and uncancelled or (C)
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all Persons (other than the applicable Borrower) have been fully reimbursed for
all payments made under or relating to Letters of Credit.
(e) Each Borrower, the Agent and each Lender hereby acknowledge
and agree that from and after the Closing Date, that certain standby Letter of
Credit No. S241795PGH dated September 17, 2001 and issued by PNC Bank in the
amount of $900,000 in favor of American Home Assurance shall be deemed to be a
Letter of Credit subject to the terms and conditions of this Agreement,
including, without limitation, Sections 2.9 through 2.11 and Section 3.2;
provided however, that (i) the fees payable by the Borrowers with respect to
such standby Letter of Credit are hereby amended to be equal to the Letter of
Credit Fees, which fees shall be payable to the Lenders ratably based upon the
respective Commitment Percentage of each Lender and at the times provided for in
Section 3.2(a) hereof, (ii) the reimbursement agreement and pledge agreement in
favor of PNC Bank with respect to such standby Letter of Credit shall be deemed
to be in favor of the Agent for the benefit of the Lenders, and (iii) each of
the Borrowers other than LESCO acknowledges and agrees that it is receiving
valuable consideration and a direct benefit from the continuation of such
standby Letter of Credit and waive any defense to payment of the reimbursement
obligation with respect to such Letter of Credit. The rights and remedies of the
Agent and the Lenders under this Agreement and under the reimbursement agreement
and pledge agreement related to such standby Letter of Credit shall be
cumulative and may be exercised successively or concurrently.
2.12. ADDITIONAL PAYMENTS. Any sums expended by Agent or any Lender due
to any Borrower's failure to perform or comply with its obligations under this
Agreement or any Other Document including, without limitation, any Borrower's
obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be
charged to Borrowers' Account as a Revolving Advance and added to the
Obligations.
2.13. MANNER OF BORROWING AND PAYMENT.
(a) Each borrowing of Revolving Advances shall be advanced
according to the applicable Commitment Percentages of Lenders. The Term Loan
shall be advanced according to the Commitment Percentages of Lenders.
(b) Each payment (including each prepayment) by Borrowers on
account of the principal of and interest on the Revolving Advances, shall be
applied to the Revolving Advances pro rata according to the applicable
Commitment Percentages of Lenders. Each payment (including each prepayment) by
Borrowers on account of the principal of and interest on the Term Note, shall be
made from or to, or applied to that portion of the Term Loan evidenced by the
Term Note pro rata according to the Commitment Percentages of Lenders. Except as
expressly provided herein, all payments (including prepayments) to be made by
any Borrower on account of principal, interest and fees shall be made without
set off or counterclaim and shall be made to Agent on behalf of the Lenders to
the Payment Office, in each case on or prior to 1:00 P.M., New York time, in
Dollars and in immediately available funds.
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(c) (i) Notwithstanding anything to the contrary contained
in Sections 2.13(a) and (b) hereof, commencing with the first Business Day
following the Closing Date, each borrowing of Revolving Advances shall be
advanced by Agent and each payment by any Borrower on account of Revolving
Advances shall be applied first to those Revolving Advances advanced by Agent.
On or before 1:00 P.M., New York time, on each Settlement Date commencing with
the first Settlement Date following the Closing Date, Agent and Lenders shall
make certain payments as follows: (I) if the aggregate amount of new Revolving
Advances made by Agent during the preceding Week (if any) exceeds the aggregate
amount of repayments applied to outstanding Revolving Advances during such
preceding Week, then each Lender shall provide Agent with funds in an amount
equal to its applicable Commitment Percentage of the difference between (w) such
Revolving Advances and (x) such repayments and (II) if the aggregate amount of
repayments applied to outstanding Revolving Advances during such Week exceeds
the aggregate amount of new Revolving Advances made during such Week, then Agent
shall provide each Lender with funds in an amount equal to its applicable
Commitment Percentage of the difference between (y) such repayments and (z) such
Revolving Advances.
(ii) Each Lender shall be entitled to earn interest at the
applicable Contract Rate on outstanding Advances which it has funded.
(iii) Promptly following each Settlement Date, Agent shall
submit to each Lender a certificate with respect to payments received
and Advances made during the Week immediately preceding such Settlement
Date. Such certificate of Agent shall be conclusive in the absence of
manifest error.
(d) If any Lender or Participant (a "benefitted Lender") shall at
any time receive any payment of all or part of its Advances, or interest
thereon, or receive any Collateral in respect thereof (whether voluntarily or
involuntarily or by set-off) in a greater proportion than any such payment to
and Collateral received by any other Lender, if any, in respect of such other
Lender's Advances, or interest thereon, and such greater proportionate payment
or receipt of Collateral is not expressly permitted hereunder, such benefitted
Lender shall purchase for cash from the other Lenders a participation in such
portion of each such other Lender's Advances, or shall provide such other Lender
with the benefits of any such Collateral, or the proceeds thereof, as shall be
necessary to cause such benefitted Lender to share the excess payment or
benefits of such Collateral or proceeds ratably with each of the other Lenders;
PROVIDED, HOWEVER, that if all or any portion of such excess payment or benefits
is thereafter recovered from such benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. Each Lender so purchasing a portion of another
Lender's Advances may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.
(e) Unless Agent shall have been notified by telephone, confirmed
in writing, by any Lender that such Lender will not make the amount which would
constitute its applicable Commitment Percentage of the Advances available to
Agent, Agent may (but shall not be obligated to) assume that such Lender shall
make such amount available to Agent on the next
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Settlement Date and, in reliance upon such assumption, make available to
Borrowers a corresponding amount. Agent will promptly notify Borrowers of its
receipt of any such notice from a Lender. If such amount is made available to
Agent on a date after such next Settlement Date, such Lender shall pay to Agent
on demand an amount equal to the product of (i) the daily average Federal Funds
Rate (computed on the basis of a year of 360 days) during such period as quoted
by Agent, times (ii) such amount, times (iii) the number of days from and
including such Settlement Date to the date on which such amount becomes
immediately available to Agent. A certificate of Agent submitted to any Lender
with respect to any amounts owing under this paragraph (e) shall be conclusive,
in the absence of manifest error. If such amount is not in fact made available
to Agent by such Lender within three (3) Business Days after such Settlement
Date, Agent shall be entitled to recover such an amount, with interest thereon
at the rate per annum then applicable to such Revolving Advances hereunder, on
demand from Borrowers; PROVIDED, HOWEVER, that Agent's right to such recovery
shall not prejudice or otherwise adversely affect Borrowers' rights (if any)
against such Lender.
2.14. MANDATORY PREPAYMENTS.
In the event that the appraised value of the Real Property
located in Rocky River, Ohio, to be appraised in accordance with Section 8.1(l),
is less than $1,250,000, then within three (3) Business Days of the Agent's
receipt of such appraisal, the Borrowers shall make a mandatory prepayment in an
amount equal to seventy percent (70%) of the difference between $1,250,000 and
the amount of such appraisal. Subject to Section 4.3 hereof, when any Borrower
sells or otherwise disposes of any Collateral other than Inventory in the
ordinary course of business, Borrowers shall repay the Advances in an amount
equal to the net proceeds of such sale (i.e., gross proceeds after taxes less
the reasonable costs and expenses of such sales or other dispositions), such
repayments to be made promptly but in no event more than one (1) Business Day
following receipt of such net proceeds, and until the date of payment, such
proceeds shall be held in trust for Agent. In the event that the Collateral
which is sold is either the Real Property located in Rocky River, Ohio or the
Real Property located in Avon Lake, Ohio, the mandatory prepayment required to
be made by LESCO to the Agent shall be the greater of the net proceeds described
in the preceding sentence or (a) $875,000, minus any mandatory prepayment made
in accordance with the first sentence of this Section 2.14, in the case of the
Real Property located in Rocky River, Ohio, and (b) $2,268,000 in the case of
the Real Property located in Avon Lake, Ohio. The foregoing shall not be deemed
to be implied consent to any such sale otherwise prohibited by the terms and
conditions hereof. All of the foregoing repayments shall be applied to the
outstanding principal installments of the Term Loan in the inverse order of the
maturities thereof and (z) second, to the remaining Advances in such order as
Agent may determine, subject to Borrower's ability to reborrow Revolving
Advances in accordance with the terms hereof.
2.15. USE OF PROCEEDS. Borrowers shall apply the proceeds of Advances
to (i) repay Existing Indebtedness. (ii) pay fees and expenses relating to this
transaction, and (iii) to provide for their working capital needs.
2.16. DEFAULTING LENDER.
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(a) Notwithstanding anything to the contrary contained herein, in
the event any Lender (x) has refused (which refusal constitutes a breach by such
Lender of its obligations under this Agreement) to make available its portion of
any Advance or (y) notifies either Agent or Borrowing Agent that it does not
intend to make available its portion of any Advance (if the actual refusal would
constitute a breach by such Lender of its obligations under this Agreement)
(each, a "Lender Default"), all rights and obligations hereunder of such Lender
(a "Defaulting Lender") as to which a Lender Default is in effect and of the
other parties hereto shall be modified to the extent of the express provisions
of this Section 2.16 while such Lender Default remains in effect.
(b) Advances shall be incurred pro rata from Lenders (the
"Non-Defaulting Lenders") which are not Defaulting Lenders based on their
respective Commitment Percentages, and no Commitment Percentage of any Lender or
any pro rata share of any Advances required to be advanced by any Lender shall
be increased as a result of such Lender Default. Amounts received in respect of
principal of any type of Advances shall be applied to reduce the applicable
Advances of each Lender pro rata based on the aggregate of the outstanding
Advances of that type of all Lenders at the time of such application; provided,
that, such amount shall not be applied to any Advances of a Defaulting Lender at
any time when, and to the extent that, the aggregate amount of Advances of any
Non-Defaulting Lender exceeds such Non-Defaulting Lender's Commitment Percentage
of all Advances then outstanding.
(c) A Defaulting Lender shall not be entitled to give
instructions to Agent or to approve, disapprove, consent to or vote on any
matters relating to this Agreement and the Other Documents. All amendments,
waivers and other modifications of this Agreement and the Other Documents may be
made without regard to a Defaulting Lender and, for purposes of the definition
of "Required Lenders", a Defaulting Lender shall be deemed not to be a Lender
and not to have Advances outstanding.
(d) Other than as expressly set forth in this Section 2.16, the
rights and obligations of a Defaulting Lender (including the obligation to
indemnify Agent) and the other parties hereto shall remain unchanged. Nothing in
this Section 2.16 shall be deemed to release any Defaulting Lender from its
obligations under this Agreement and the Other Documents, shall alter such
obligations, shall operate as a waiver of any default by such Defaulting Lender
hereunder, or shall prejudice any rights which any Borrower, Agent or any Lender
may have against any Defaulting Lender as a result of any default by such
Defaulting Lender hereunder.
(e) In the event a Defaulting Lender retroactively cures to the
satisfaction of Agent the breach which caused a Lender to become a Defaulting
Lender, such Defaulting Lender shall no longer be a Defaulting Lender and shall
be treated as a Lender under this Agreement.
III. INTEREST AND FEES.
3.1. INTEREST. Interest on Revolving Advances and with respect to the
Term Loan shall be payable in arrears on the first day of each month with
respect to Domestic Rate Loans and,
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with respect to Eurodollar Rate Loans, at the end of each Interest Period or,
for Eurodollar Rate Loans with an Interest Period in excess of three months, at
the earlier of (a) each three months on the anniversary date of the commencement
of such Eurodollar Rate Loan or (b) the end of the Interest Period. Interest
charges shall be computed on the actual principal amount of Advances outstanding
during the month (the "Monthly Advances") at a rate per annum equal to (i) with
respect to Revolving Advances, the applicable Revolving Interest Rate and (ii)
with respect to the Term Loan, the applicable Term Loan Rate (as applicable, the
"Contract Rate"). Whenever, subsequent to the date of this Agreement, the
Alternate Base Rate is increased or decreased, the applicable Contract Rate for
Domestic Rate Loans shall be similarly changed without notice or demand of any
kind by an amount equal to the amount of such change in the Alternate Base Rate
during the time such change or changes remain in effect. The Eurodollar Rate
shall be adjusted with respect to Eurodollar Rate Loans without notice or demand
of any kind on the effective date of any change in the Reserve Percentage as of
such effective date. Upon and after the occurrence of an Event of Default, and
during the continuation thereof, the Obligations shall bear interest at the
applicable Contract Rate plus two percent (2%) per annum (the "Default Rate").
3.2. LETTER OF CREDIT FEES.
(a) Borrowers shall pay (x) to Agent, for the benefit of Lenders,
fees for each Letter of Credit for the period from and excluding the date of
issuance of same to and including the date of expiration or termination, equal
to the average daily face amount of each outstanding Letter of Credit multiplied
by two and three-fourths percent (2.75%) per annum, such fees to be calculated
on the basis of a 360-day year for the actual number of days elapsed and to be
payable monthly in arrears on the first day of each month and on the last day of
the Term and (y) to the Issuer, for its own account, fees for each Letter of
Credit for the period from and excluding the date of issuance of same to and
including the date of expiration or termination, equal to the average daily face
amount of each outstanding Letter of Credit multiplied by one fourth percent
(0.25%) per annum, such fees to be calculated on the basis of a 360-day year for
the actual number of days elapsed and to be payable monthly in arrears on the
first day of each month and on the last day of the Term, and (z) to the Issuer,
for its own account any and all fees and expenses as agreed upon by the Issuer
and the Borrowing Agent in connection with any Letter of Credit, including,
without limitation, in connection with the opening, amendment or renewal of any
such Letter of Credit and any acceptances created thereunder and shall reimburse
Agent for any and all fees and expenses, if any, paid by Agent to the Issuer
(all of the foregoing fees, the "Letter of Credit Fees"). All such charges shall
be deemed earned in full on the date when the same are due and payable hereunder
and shall not be subject to rebate or proration upon the termination of this
Agreement for any reason. Any such charge in effect at the time of a particular
transaction shall be the charge for that transaction, notwithstanding any
subsequent change in the Issuer's prevailing charges for that type of
transaction. All Letter of Credit Fees payable hereunder shall be deemed earned
in full on the date when the same are due and payable hereunder and shall not be
subject to rebate or proration upon the termination of this Agreement for any
reason.
Upon request of the Agent following the occurrence of an Event of
Default, Borrowers will cause cash to be deposited and maintained in an account
with Agent, as cash
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collateral, in an amount equal to one hundred and five percent (105%) of the
outstanding Letters of Credit, and each Borrower hereby irrevocably authorizes
Agent, in its discretion, on such Borrower's behalf and in such Borrower's name,
to open such an account and to make and maintain deposits therein, or in an
account opened by such Borrower, in the amounts required to be made by such
Borrower, out of the proceeds of Receivables or other Collateral or out of any
other funds of such Borrower coming into any Lender's possession at any time.
Agent will invest such cash collateral (less applicable reserves) in such
short-term money-market items as to which Agent and such Borrower mutually agree
and the net return on such investments shall be credited to such account and
constitute additional cash collateral. No Borrower may withdraw amounts credited
to any such account except upon payment and performance in full of all
Obligations and termination of this Agreement.
3.3. FACILITY FEE. If, for any month during the Term, the average daily
unpaid balance of the Revolving Advances for each day of such month does not
equal the Maximum Revolving Advance Amount, then Borrowers shall pay to Agent
for the ratable benefit of Lenders a fee at a rate equal to three-eighths of one
percent (.375%) per annum on the amount by which the Maximum Revolving Advance
Amount exceeds such average daily unpaid balance. Such fee shall be payable to
Agent in arrears on the first day of each fiscal quarter.
3.4. [Intentionally Omitted].
3.5. COMPUTATION OF INTEREST AND FEES. Interest and fees hereunder
shall be computed on the basis of a year of 360 days and for the actual number
of days elapsed. If any payment to be made hereunder becomes due and payable on
a day other than a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and interest thereon shall be payable at the
applicable Contract Rate during such extension.
3.6. MAXIMUM CHARGES. In no event whatsoever shall interest and other
charges charged hereunder exceed the highest rate permissible under law. In the
event interest and other charges as computed hereunder would otherwise exceed
the highest rate permitted under law, such excess amount shall be first applied
to any unpaid principal balance owed by Borrowers, and if the then remaining
excess amount is greater than the previously unpaid principal balance, Lenders
shall promptly refund such excess amount to Borrowers and the provisions hereof
shall be deemed amended to provide for such permissible rate.
3.7. INCREASED COSTS. In the event that any applicable law, treaty or
governmental regulation, or any change therein or in the interpretation or
application thereof, or compliance by any Lender (for purposes of this Section
3.7, the term "Lender" shall include Agent or any Lender and any corporation or
bank controlling Agent or any Lender) and the office or branch where Agent or
any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any
request or directive (whether or not having the force of law) from any central
bank or other financial, monetary or other authority, shall:
(a) subject Agent or any Lender to any tax of any kind whatsoever
with respect to this Agreement or any Other Document or change the basis of
taxation of payments to
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Agent or any Lender of principal, fees, interest or any other amount payable
hereunder or under any Other Documents (except for changes in the rate of tax on
the overall net income of Agent or any Lender by the jurisdiction in which it
maintains its principal office);
(b) impose, modify or hold applicable any reserve, special
deposit, assessment or similar requirement against assets held by, or deposits
in or for the account of, advances or loans by, or other credit extended by, any
office of Agent or any Lender, including (without limitation) pursuant to
Regulation D of the Board of Governors of the Federal Reserve System; or
(c) impose on Agent or any Lender or the London interbank
Eurodollar market any other condition with respect to this Agreement or any
Other Document;
and the result of any of the foregoing is to increase the cost to Agent or any
Lender of making, renewing or maintaining its Advances hereunder by an amount
that Agent or such Lender deems to be material or to reduce the amount of any
payment (whether of principal, interest or otherwise) in respect of any of the
Advances by an amount that Agent or such Lender reasonably deems to be material,
then, in any case Borrowers shall promptly pay Agent or such Lender, upon its
demand, such additional amount as will compensate Agent or such Lender for such
additional cost or such reduction, as the case may be, provided that the
foregoing shall not apply to increased costs which are reflected in the
Eurodollar Rate. Agent or such Lender shall certify the amount of such
additional cost or reduced amount to Borrowers, and such certification shall be
conclusive absent manifest error.
3.8. BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR. In the
event that Agent or any Lender shall have reasonably determined that:
(a) reasonable means do not exist for ascertaining the Eurodollar
Rate for any Interest Period;
(b) Dollar deposits in the relevant amount and for the relevant
maturity are not available in the London interbank Eurodollar market, with
respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate Loan,
or a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate Loan,
then Agent shall give Borrowing Agent prompt written, telephonic or telegraphic
notice of such determination. If such notice is given, (i) any such requested
Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless Borrowing
Agent shall notify Agent no later than 10:00 a.m. (New York City time) two (2)
Business Days prior to the date of such proposed borrowing, that its request for
such borrowing shall be cancelled or made as an unaffected type of Eurodollar
Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have
been converted to an affected type of Eurodollar Rate Loan shall be continued as
or converted into a Domestic Rate Loan, or, if Borrowing Agent shall notify
Agent, no later than 10:00 a.m. (New York City time) two (2) Business Days prior
to the proposed conversion, shall be maintained as an unaffected type of
Eurodollar Rate Loan, and (iii) any outstanding affected Eurodollar Rate
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Loans shall be converted into a Domestic Rate Loan, or, if Borrowing Agent shall
notify Agent, no later than 10:00 a.m. (New York City time) two (2) Business
Days prior to the last Business Day of the then current Interest Period
applicable to such affected Eurodollar Rate Loan, shall be converted into an
unaffected type of Eurodollar Rate Loan, on the last Business Day of the then
current Interest Period for such affected Eurodollar Rate Loans. Until such
notice has been withdrawn, Lenders shall have no obligation to make an affected
type of Eurodollar Rate Loan or maintain outstanding affected Eurodollar Rate
Loans and no Borrower shall have the right to convert a Domestic Rate Loan or an
unaffected type of Eurodollar Rate Loan into an affected type of Eurodollar Rate
Loan.
3.9. CAPITAL ADEQUACY.
(a) In the event that Agent or any Lender shall have determined
that any applicable law, rule, regulation or guideline regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by Agent or any Lender (for purposes of this Section 3.9, the term "Lender"
shall include Agent or any Lender and any corporation or bank controlling Agent
or any Lender) and the office or branch where Agent or any Lender (as so
defined) makes or maintains any Eurodollar Rate Loans with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on Agent or any Lender's capital as a
consequence of its obligations hereunder to a level below that which Agent or
such Lender could have achieved but for such adoption, change or compliance
(taking into consideration Agent's and each Lender's policies with respect to
capital adequacy) by an amount deemed by Agent or any Lender to be material,
then, from time to time, Borrowers shall pay upon demand to Agent or such Lender
such additional amount or amounts as will compensate Agent or such Lender for
such reduction. In determining such amount or amounts, Agent or such Lender may
use any reasonable averaging or attribution methods. The protection of this
Section 3.9 shall be available to Agent and each Lender regardless of any
possible contention of invalidity or inapplicability with respect to the
applicable law, regulation or condition.
(b) A certificate of Agent or such Lender setting forth such
amount or amounts as shall be necessary to compensate Agent or such Lender with
respect to Section 3.9(a) hereof when delivered to Borrowers shall be conclusive
absent manifest error.
3.10. GROSS UP FOR TAXES. If any Borrower shall be required by
Applicable Law to withhold or deduct any taxes from or in respect of any sum
payable under this Agreement or any of the Other Documents, (a) the sum payable
to Agent or such Lender shall be increased as may be necessary so that, after
making all required withholding or deductions, Agent or such Lender (as the case
may be) receives an amount equal to the sum it would have received had no such
withholding or deductions been made, (b) such Borrower shall make such
withholding or deductions, and (c) such Borrower shall pay the full amount
withheld or deducted to the relevant taxation authority or other authority in
accordance with Applicable Law.
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3.11. WITHHOLDING TAX EXEMPTION. Each Lender or assignee or participant
of a Lender that is not incorporated under the Laws of the United States of
America or a state thereof (and, upon the written request of Agent, each other
Lender or assignee or participant of a Lender) agrees that it will deliver to
each Borrower and Agent two (2) duly completed appropriate valid Withholding
Certificates (as defined under ss. 1.1441-1(c)(16) of the Income Tax Regulations
(the "Regulations")) certifying its status (i.e. U.S. or foreign person) and, if
appropriate, making a claim of reduced, or exemption from, U.S. withholding tax
on the basis of an income tax treaty or an exemption provided by the Code. The
term "Withholding Certificate" means a Form W-9; a Form W-8BEN; a Form W-8ECI; a
Form W-8IMY and the related statements and certifications as required under ss.
1.1441-1(e)(2) and/or (3) of the Regulations; a statement described in ss.
1.871-14(c)(2)(v) of the Regulations; or any other certificates under the Code
or Regulations that certify or establish the status of a payee or beneficial
owner as a U.S. or foreign person. Each Lender, assignee or participant required
to deliver to each Borrower and Agent a Withholding Certificate pursuant to the
preceding sentence shall deliver such valid Withholding Certificate as follows:
(A) each Lender which is a party hereto on the Closing Date shall deliver such
valid Withholding Certificate at least five (5) Business Days prior to the first
date on which any interest or fees are payable by any Borrower hereunder for the
account of such Lender; (B) each assignee or participant shall deliver such
valid Withholding Certificate at least five (5) Business Days before the
effective date of such assignment or participation (unless Agent in its sole
reasonable discretion shall permit such assignee or participant to deliver such
valid Withholding Certificate less than five (5) Business Days before such date
in which case it shall be due on the date specified by Agent). Each Lender,
assignee or participant which so delivers a valid Withholding Certificate
further undertakes to deliver to each Borrower and Agent two (2) additional
copies of such Withholding Certificate (or a successor form) on or before the
date that such Withholding Certificate expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent Withholding
Certificate so delivered by it, and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by any Borrower or Agent.
Notwithstanding the submission of a Withholding Certificate claiming a reduced
rate of or exemption from U.S. withholding tax, Agent shall be entitled to
withhold United States federal income taxes at the full 30% withholding rate if
in its reasonable judgment it is required to do so under the due diligence
requirements imposed upon a withholding agent under ss. 1.1441-7(b) of the
Regulations. Further, Agent is indemnified under ss. 1.1461-1(e) of the
Regulations against any claims and demands of any Lender or assignee or
participant of a Lender for the amount of any tax it deducts and withholds in
accordance with regulations under ss. 1441 of the Code.
IV. COLLATERAL: GENERAL TERMS
4.1. SECURITY INTEREST IN THE COLLATERAL. To secure the prompt payment
and performance to Agent and each Lender of the Obligations, each Borrower
hereby assigns, pledges and grants to Agent for its benefit and for the ratable
benefit of each Lender a continuing security interest in and to all of its
Collateral, whether now owned or existing or hereafter acquired or arising and
wheresoever located. Each Borrower shall xxxx its books and records as may be
necessary or appropriate to evidence, protect and perfect Agent's security
interest and shall cause its financial statements to reflect such security
interest. Each Borrower shall
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promptly provide Agent with written notice of all commercial tort claims, such
notice to contain the case title together with the applicable court and a brief
description of the claim(s). Upon delivery of each such notice, such Borrower
shall be deemed to hereby grant to Agent a security interest and lien in and to
such commercial tort claims and all proceeds thereof.
4.2. PERFECTION OF SECURITY INTEREST. Each Borrower shall take all
action that may be necessary or desirable, or that Agent may request, so as at
all times to maintain the validity, perfection, enforceability and priority of
Agent's security interest in the Collateral or to enable Agent to protect,
exercise or enforce its rights hereunder and in the Collateral, including, but
not limited to, (i) immediately discharging all Liens other than Permitted
Encumbrances, (ii) obtaining landlords' or mortgagees' lien waivers, (iii)
delivering to Agent, endorsed or accompanied by such instruments of assignment
as Agent may specify, and stamping or marking, in such manner as Agent may
specify, any and all chattel paper, instruments, letters of credits and advices
thereof and documents evidencing or forming a part of the Collateral, (iv)
entering into warehousing, lockbox and other custodial arrangements satisfactory
to Agent, and (v) executing and delivering financing statements, control
agreements, instruments of pledge, mortgages, notices and assignments, in each
case in form and substance satisfactory to Agent, relating to the creation,
validity, perfection, maintenance or continuation of Agent's security interest
under the Uniform Commercial Code or other applicable law. Agent is hereby
authorized to file financing statements without the signature of any Borrower in
accordance with the Uniform Commercial Code as adopted in the State of Ohio from
time to time. By its signature hereto, each Borrower hereby authorizes Agent to
file against such Borrower, one or more financing, continuation, or amendment
statements pursuant to the Uniform Commercial Code in form and substance
satisfactory to Agent (which statements may have a description of collateral
which is broader than that set forth herein). All charges, expenses and fees
Agent may incur in doing any of the foregoing, and any local taxes relating
thereto, shall be charged to Borrowers' Account as a Revolving Advance of a
Domestic Rate Loan and added to the Obligations, or, at Agent's option, shall be
paid to Agent for the ratable benefit of Lenders immediately upon demand.
4.3. DISPOSITION OF COLLATERAL. Each Borrower will safeguard and
protect all Collateral for Agent's general account and make no disposition
thereof whether by sale, lease or otherwise except (a) the sale of Inventory in
the ordinary course of business, (b) the disposition or transfer for cash or
cash equivalents of obsolete and worn-out Equipment in the ordinary course of
business during any fiscal year having an aggregate fair market value of not
more than $5,000,000 and only to the extent that (i) the proceeds of any such
disposition are used to acquire replacement Equipment which is subject to
Agent's first priority security interest or (ii) the proceeds of which are
remitted to Agent to be applied pursuant to Section 2.14, and (c) the
disposition or transfer for cash or cash equivalents of the Real Property
located in Rocky River, Ohio and the Real Property located in Avon Lake, Ohio,
and only to the extent that greater of the net proceeds of such disposition or
transfer or the amounts required under Section 2.14 with respect to such
Collateral are remitted to Agent to be applied pursuant to Section 2.14.
4.4. PRESERVATION OF COLLATERAL. In addition to the rights and remedies
set forth in Section 11.1 hereof, Agent: (a) may at any time take such steps as
Agent deems necessary to
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protect Agent's interest in and to preserve the Collateral, including the hiring
of such security guards or the placing of other security protection measures as
Agent may deem appropriate; (b) may employ and maintain at any of any Borrower's
premises a custodian who shall have full authority to do all acts necessary to
protect Agent's interests in the Collateral; (c) may lease warehouse facilities
to which Agent may move all or part of the Collateral; (d) may use any
Borrower's owned or leased lifts, hoists, trucks and other facilities or
equipment for handling or removing the Collateral; and (e) shall have, and is
hereby granted, a right of ingress and egress to the places where the Collateral
is located, and may proceed over and through any of Borrower's owned or leased
property. Each Borrower shall cooperate fully with all of Agent's efforts to
preserve the Collateral and will take such actions to preserve the Collateral as
Agent may direct. All of Agent's expenses of preserving the Collateral,
including any expenses relating to the bonding of a custodian, shall be charged
to Borrowers' Account as a Revolving Advance of a Domestic Rate Loan and added
to the Obligations.
4.5. OWNERSHIP OF COLLATERAL. With respect to the Collateral, at the
time the Collateral becomes subject to Agent's security interest: (a) each
Borrower shall be the sole owner of and fully authorized and able to sell,
transfer, pledge and/or grant a first priority security interest in each and
every item of the its respective Collateral to Agent; and, except for Permitted
Encumbrances the Collateral shall be free and clear of all Liens and
encumbrances whatsoever; (b) each document and agreement executed by each
Borrower or delivered to Agent or any Lender in connection with this Agreement
shall be true and correct in all respects; (c) all signatures and endorsements
of each Borrower that appear on such documents and agreements shall be genuine
and each Borrower shall have full capacity to execute same; and (d) each
Borrower's Equipment and Inventory shall be located at or in transit to the
locations set forth on SCHEDULE 4.5 and shall not be removed from such
location(s) without the prior written consent of Agent except with respect to
(i) the sale of Inventory in the ordinary course of business, (ii) transfers of
Equipment and Inventory between such locations, and (iii) disposition of
Equipment to the extent permitted in Section 4.3 hereof.
4.6. DEFENSE OF AGENT'S AND LENDERS' INTERESTS. Until (a) payment and
performance in full of all of the Obligations and (b) termination of this
Agreement, Agent's interests in the Collateral shall continue in full force and
effect. During such period no Borrower shall, without Agent's prior written
consent, pledge, sell (except Inventory in the ordinary course of business and
Equipment to the extent permitted in Section 4.3 hereof), assign, transfer,
create or suffer to exist a Lien upon or encumber or allow or suffer to be
encumbered in any way except for Permitted Encumbrances, any part of the
Collateral. Each Borrower shall defend Agent's interests in the Collateral
against any and all Persons whatsoever. At any time following demand by Agent
for payment of all Obligations pursuant to Section 11.1, Agent shall have the
right to take possession of the indicia of the Collateral and the Collateral in
whatever physical form contained, including without limitation: labels,
stationery, documents, instruments and advertising materials. If Agent exercises
this right to take possession of the Collateral, Borrowers shall, upon demand,
assemble it in the best manner possible and make it available to Agent at a
place reasonably convenient to Agent. In addition, with respect to all
Collateral, Agent and Lenders shall be entitled to all of the rights and
remedies set forth herein and further provided by the Uniform Commercial Code or
other applicable law. Each Borrower shall, and
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Agent may, at its option, instruct all suppliers, carriers, forwarders,
warehousers or others receiving or holding cash, checks, Inventory, documents or
instruments in which Agent holds a security interest to deliver same to Agent
and/or subject to Agent's order and if they shall come into any Borrower's
possession, they, and each of them, shall be held by such Borrower in trust as
Agent's trustee, and such Borrower will immediately deliver them to Agent in
their original form together with any necessary endorsement.
4.7. BOOKS AND RECORDS. Each Borrower shall (a) keep proper books of
record and account in which full, true and correct entries will be made of all
dealings or transactions of or in relation to its business and affairs; (b) set
up on its books accruals with respect to all taxes, assessments, charges, levies
and claims; and (c) on a reasonably current basis set up on its books, from its
earnings, allowances against doubtful Receivables, advances and investments and
all other proper accruals (including without limitation by reason of
enumeration, accruals for premiums, if any, due on required payments and
accruals for depreciation, obsolescence, or amortization of properties), which
should be set aside from such earnings in connection with its business. All
determinations pursuant to this subsection shall be made in accordance with, or
as required by, GAAP consistently applied in the opinion of such independent
public accountant as shall then be regularly engaged by Borrowers.
4.8. FINANCIAL DISCLOSURE. Each Borrower hereby irrevocably authorizes
and directs all accountants and auditors employed by such Borrower at any time
during the Term to exhibit and deliver to Agent and each Lender copies of any of
any Borrower's financial statements, trial balances or other accounting records
of any sort in the accountant's or auditor's possession, and to disclose to
Agent and each Lender any information such accountants may have concerning such
Borrower's financial status and business operations. Each Borrower hereby
authorizes all federal, state and municipal authorities to furnish to Agent and
each Lender copies of reports or examinations relating to such Borrower, whether
made by such Borrower or otherwise; however, Agent and each Lender will attempt
to obtain such information or materials directly from such Borrower prior to
obtaining such information or materials from such accountants or such
authorities.
4.9. COMPLIANCE WITH LAWS. Each Borrower shall comply in all material
respects with all acts, rules, regulations and orders of any legislative,
administrative or judicial body or official applicable to its respective
Collateral or any part thereof or to the operation of such Borrower's business
the non-compliance with which could reasonably be expected to have a Material
Adverse Effect. Each Borrower may, however, contest or dispute any acts, rules,
regulations, orders and directions of those bodies or officials in any
reasonable manner, provided that any related Lien is inchoate or stayed and
sufficient reserves are established to the reasonable satisfaction of Agent to
protect Agent's Lien on or security interest in the Collateral. The Collateral
at all times shall be maintained in accordance with the requirements of all
insurance carriers which provide insurance with respect to the Collateral so
that such insurance shall remain in full force and effect.
4.10. INSPECTION OF PREMISES. At all reasonable times Agent and each
Lender shall have full access to and the right to audit, check, inspect and make
abstracts and copies from each
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Borrower's books, records, audits, correspondence and all other papers relating
to the Collateral and the operation of each Borrower's business. Agent, any
Lender and their agents may enter upon any of each Borrower's premises at any
time during business hours and at any other reasonable time, and from time to
time, for the purpose of inspecting the Collateral and any and all records
pertaining thereto and the operation of such Borrower's business.
4.11. INSURANCE. Each Borrower shall bear the full risk of any loss of
any nature whatsoever with respect to the Collateral. At each Borrower's own
cost and expense in amounts and with carriers acceptable to Agent, each Borrower
shall (a) keep all its insurable properties and properties in which each
Borrower has an interest insured against the hazards of fire, flood, sprinkler
leakage, those hazards covered by extended coverage insurance and such other
hazards, and for such amounts, as is customary in the case of companies engaged
in businesses similar to such Borrower's including, without limitation, business
interruption insurance; (b) maintain a bond in such amounts as is customary in
the case of companies engaged in businesses similar to such Borrower insuring
against larceny, embezzlement or other criminal misappropriation of insured's
officers and employees who may either singly or jointly with others at any time
have access to the assets or funds of such Borrower either directly or through
authority to draw upon such funds or to direct generally the disposition of such
assets; (c) maintain public and product liability insurance against claims for
personal injury, death or property damage suffered by others; (d) maintain all
such worker's compensation or similar insurance as may be required under the
laws of any state or jurisdiction in which such Borrower is engaged in business;
(e) furnish Agent with (i) copies of all policies and evidence of the
maintenance of such policies by the renewal thereof at least thirty (30) days
before any expiration date, and (ii) appropriate loss payable endorsements in
form and substance satisfactory to Agent, naming Agent as a co-insured and loss
payee as its interests may appear with respect to all insurance coverage
referred to in clauses (a), and (c) above, and providing (A) that all proceeds
thereunder shall be payable to Agent, (B) no such insurance shall be affected by
any act or neglect of the insured or owner of the property described in such
policy, and (C) that such policy and loss payable clauses may not be cancelled,
amended or terminated unless at least thirty (30) days' prior written notice is
given to Agent. In the event of any loss thereunder, the carriers named therein
hereby are directed by Agent and the applicable Borrower to make payment for
such loss to Agent and not to such Borrower and Agent jointly. If any insurance
losses are paid by check, draft or other instrument payable to any Borrower and
Agent jointly, Agent may endorse such Borrower's name thereon and do such other
things as Agent may deem advisable to reduce the same to cash. Agent is hereby
authorized to adjust and compromise claims under insurance coverage referred to
in clauses (a) and (b) above. All loss recoveries received by Agent upon any
such insurance may be applied to the Obligations, in such order as Agent in its
sole discretion shall determine. Any surplus shall be paid by Agent to Borrowers
or applied as may be otherwise required by law. Any deficiency thereon shall be
paid by Borrowers to Agent, on demand. Anything hereinabove to the contrary
notwithstanding, and subject to the fulfillment of the conditions set forth
below, Agent shall remit to Borrowers insurance proceeds received by Agent
during any calendar year under insurance policies procured and maintained by
Borrowers which insure Borrowers' insurable properties to the extent such
insurance proceeds do not exceed $1,000,000 in the aggregate during such
calendar year or $500,000 per occurrence. In the event the amount of insurance
proceeds received by Agent for any occurrence exceeds $500,000, then Agent shall
not
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be obligated to remit the insurance proceeds to Borrowers unless Borrowers shall
provide Agent with evidence reasonably satisfactory to Agent that the insurance
proceeds will be used by Borrowers to repair, replace or restore the insured
property which was the subject of the insurable loss. In the event Borrowers
have previously received (or, after giving effect to any proposed remittance by
Agent to Borrowers would receive) insurance proceeds which equal or exceed
$1,000,000 in the aggregate during any calendar year, then Agent may, in its
sole discretion, either remit the insurance proceeds to Borrowers upon Borrowers
providing Agent with evidence reasonably satisfactory to Agent that the
insurance proceeds will be used by Borrowers to repair, replace or restore the
insured property which was the subject of the insurable loss, or apply the
proceeds to the Obligations, as aforesaid. The agreement of Agent to remit
insurance proceeds in the manner above provided shall be subject in each
instance to satisfaction of each of the following conditions: (x) No Event of
Default or Default shall then have occurred, and (y) Borrowers shall use such
insurance proceeds to repair, replace or restore the insurable property which
was the subject of the insurable loss and for no other purpose.
4.12. FAILURE TO PAY INSURANCE. If any Borrower fails to obtain
insurance as hereinabove provided, or to keep the same in force, Agent, if Agent
so elects, may obtain such insurance and pay the premium therefor on behalf of
such Borrower, and charge Borrowers' Account therefor as a Revolving Advance of
a Domestic Rate Loan and such expenses so paid shall be part of the Obligations.
4.13. PAYMENT OF TAXES. Each Borrower will pay, when due, all taxes,
assessments and other Charges lawfully levied or assessed upon such Borrower or
any of the Collateral including, without limitation, real and personal property
taxes, assessments and charges and all franchise, income, employment, social
security benefits, withholding, and sales taxes, except to the extent that such
Borrower is contesting or disputing such taxes, assessments or Charges in good
faith, by protest, administrative or judicial appeal or similar proceedings all
conducted in an expeditious manner, provided that any related tax lien is stayed
and sufficient reserves are established to the reasonable satisfaction of the
Agent to protect the security interest and Liens on the Collateral in favor of
the Agent for the benefit of the Lenders. If any tax by any governmental
authority is or may be imposed on or as a result of any transaction between any
Borrower and Agent or any Lender which Agent or any Lender may be required to
withhold or pay or if any taxes, assessments, or other Charges remain unpaid
after the date fixed for their payment, or if any claim shall be made which, in
Agent's or any Lender's reasonable opinion, may possibly create a valid Lien on
the Collateral, Agent may without notice to Borrowers pay the taxes, assessments
or other Charges and each Borrower hereby indemnifies and holds Agent and each
Lender harmless in respect thereof. Agent will not pay any taxes, assessments or
Charges to the extent that any Borrower has contested or disputed those taxes,
assessments or Charges in good faith, by expeditious protest, administrative or
judicial appeal or similar proceeding provided that any related tax lien is
stayed and sufficient reserves are established to the reasonable satisfaction of
Agent to protect Agent's security interest in or Lien on the Collateral. The
amount of any payment by Agent under this Section 4.13 shall be charged to
Borrowers' Account as a Revolving Advance of a Domestic Rate Loan and added to
the Obligations and, until Borrowers shall furnish Agent with an indemnity
therefor (or supply Agent with evidence satisfactory to Agent that due provision
for the payment thereof has been
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made), Agent may hold without interest any balance standing to Borrowers' credit
and Agent shall retain its security interest in any and all Collateral held by
Agent.
4.14. PAYMENT OF LEASEHOLD OBLIGATIONS. Each Borrower shall at all
times pay, when and as due, its rental obligations under all leases under which
it is a tenant, and shall otherwise comply, in all material respects, with all
other terms of such leases and keep them in full force and effect and, at
Agent's request will provide evidence of having done so, except to the extent
that such Borrower is contesting or disputing a rental obligation or other lease
term in good faith in an expeditious manner, provided that sufficient reserves
are established to the reasonable satisfaction of the Agent to protect the
security interest and Liens on the Collateral in favor of the Agent for the
benefit of the Lenders.
4.15. RECEIVABLES.
(a) NATURE OF RECEIVABLES. Each of the Receivables shall be a
bona fide and valid account representing a bona fide indebtedness incurred by
the Customer therein named, for a fixed sum as set forth in the invoice relating
thereto (provided immaterial or unintentional invoice errors shall not be deemed
to be a breach hereof) with respect to an absolute sale or lease and delivery of
goods upon stated terms of a Borrower, or work, labor or services theretofore
rendered by a Borrower as of the date each Receivable is created. Same shall be
due and owing in accordance with the applicable Borrower's standard terms of
sale without dispute, setoff or counterclaim except as may be stated on the
accounts receivable schedules delivered by Borrowers to Agent.
(b) SOLVENCY OF CUSTOMERS. Each Customer, to the best of each
Borrower's knowledge, as of the date each Receivable is created, is and will be
solvent and able to pay all Receivables on which the Customer is obligated in
full when due or with respect to such Customers of any Borrower who are not
solvent such Borrower has set up on its books and in its financial records bad
debt reserves adequate to cover such Receivables.
(c) LOCATIONS OF BORROWER. Each Borrower's chief executive office
is located at the addresses set forth on SCHEDULE 4.15(C) hereto. Until written
notice is given to Agent by Borrowing Agent of any other office at which any
Borrower keeps its records pertaining to Receivables, all such records shall be
kept at such executive office.
(d) COLLECTION OF RECEIVABLES. Until any Borrower's authority to
do so is terminated by Agent (which notice Agent may give at any time following
the occurrence of an Event of Default or a Default or when Agent in its sole
discretion deems it to be in Lenders' best interest to do so), each Borrower
will, at such Borrower's sole cost and expense, but on Agent's behalf and for
Agent's account, collect as Agent's property and in trust for Agent all amounts
received on Receivables, and shall not commingle such collections with any
Borrower's funds or use the same except to pay Obligations. Subject to Section
4.15(h) hereof, each Borrower shall, upon request, deliver to Agent, or deposit
in the Blocked Account, in original form and on the date of receipt thereof, all
checks, drafts, notes, money orders, acceptances, cash and other evidences of
Indebtedness.
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(e) NOTIFICATION OF ASSIGNMENT OF RECEIVABLES. At any time
following the occurrence of an Event of Default or a Default, Agent shall have
the right to send notice of the assignment of, and Agent's security interest in,
the Receivables to any and all Customers or any third party holding or otherwise
concerned with any of the Collateral. Thereafter, Agent shall have the sole
right to collect the Receivables, take possession of the Collateral, or both.
Agent's actual collection expenses, including, but not limited to, stationery
and postage, telephone and telegraph, secretarial and clerical expenses and the
salaries of any collection personnel used for collection, may be charged to
Borrowers' Account and added to the Obligations.
(f) POWER OF AGENT TO ACT ON BORROWERS' BEHALF. Agent shall have
the right to receive, endorse, assign and/or deliver in the name of Agent or any
Borrower any and all checks, drafts and other instruments for the payment of
money relating to the Receivables, and each Borrower hereby waives notice of
presentment, protest and non-payment of any instrument so endorsed. Each
Borrower hereby constitutes Agent or Agent's designee as such Borrower's
attorney with power (i) to endorse such Borrower's name upon any notes,
acceptances, checks, drafts, money orders or other evidences of payment or
Collateral; (ii) to sign such Borrower's name on any invoice or xxxx of lading
relating to any of the Receivables, drafts against Customers, assignments and
verifications of Receivables; (iii) to send verifications of Receivables to any
Customer; (iv) to sign such Borrower's name on all financing statements or any
other documents or instruments deemed necessary or appropriate by Agent to
preserve, protect, or perfect Agent's interest in the Collateral and to file
same; (v) to demand payment of the Receivables; (vi) to enforce payment of the
Receivables by legal proceedings or otherwise; (vii) to exercise all of
Borrowers' rights and remedies with respect to the collection of the Receivables
and any other Collateral; (viii) to settle, adjust, compromise, extend or renew
the Receivables; (ix) to settle, adjust or compromise any legal proceedings
brought to collect Receivables; (x) to prepare, file and sign such Borrower's
name on a proof of claim in bankruptcy or similar document against any Customer;
(xi) to prepare, file and sign such Borrower's name on any notice of Lien,
assignment or satisfaction of Lien or similar document in connection with the
Receivables; and (xii) to do all other acts and things necessary to carry out
this Agreement. All acts of said attorney or designee are hereby ratified and
approved, and said attorney or designee shall not be liable for any acts of
omission or commission nor for any error of judgment or mistake of fact or of
law, unless done maliciously or with gross (not mere) negligence; this power
being coupled with an interest is irrevocable while any of the Obligations
remain unpaid. Agent shall have the right at any time following the occurrence
of an Event of Default or Default, to change the address for delivery of mail
addressed to any Borrower to such address as Agent may designate and to receive,
open and dispose of all mail addressed to any Borrower.
(g) NO LIABILITY. Neither Agent nor any Lender shall, under any
circumstances or in any event whatsoever, have any liability for any error or
omission or delay of any kind occurring in the settlement, collection or payment
of any of the Receivables or any instrument received in payment thereof, or for
any damage resulting therefrom. Following the occurrence of an Event of Default
or Default Agent may, without notice or consent from any Borrower, xxx upon or
otherwise collect, extend the time of payment of, compromise or settle for
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cash, credit or upon any terms any of the Receivables or any other securities,
instruments or insurance applicable thereto and/or release any obligor thereof.
Agent is authorized and empowered to accept following the occurrence of an Event
of Default or Default the return of the goods represented by any of the
Receivables, without notice to or consent by any Borrower, all without
discharging or in any way affecting any Borrower's liability hereunder.
(h) ESTABLISHMENT OF A LOCKBOX ACCOUNT, DOMINION ACCOUNT. All
proceeds of Collateral shall, at the direction of Agent, be deposited by
Borrowers into a lockbox account, dominion account or such other "blocked
account" ("Blocked Accounts") as Agent may require pursuant to an arrangement
with such bank as may be selected by Borrowers and be acceptable to Agent. Prior
to the occurrence of an Event of Default, proceeds of sales of inventory which
are collected at the service center locations of the Borrowers shall not be
required to be deposited into the Blocked Accounts until each such service has
collected $5,000 since the time of its last deposit to the Blocked Accounts;
provided however, in the event that the aggregate collected funds at all service
center locations exceed $500,000 at any one time, Borrowers shall upon the
request of the Agent cause such funds in excess of $500,000 to be transferred to
the Blocked Accounts. Borrowers shall issue to any such bank, an irrevocable
letter of instruction directing said bank to transfer such funds so deposited to
Agent, either to any account maintained by Agent at said bank or by wire
transfer to appropriate account(s) of Agent. All funds deposited in such Blocked
Account shall immediately become the property of Agent and Borrowers shall
obtain the agreement by such bank to waive any offset rights against the funds
so deposited. Neither Agent nor any Lender assumes any responsibility for such
blocked account arrangement, including without limitation, any claim of accord
and satisfaction or release with respect to deposits accepted by any bank
thereunder. Alternatively, Agent may establish depository accounts ("Depository
Accounts") in the name of Agent at a bank or banks for the deposit of such funds
and Borrowers shall deposit all proceeds of Collateral or cause same to be
deposited, in kind, in such Depository Accounts of Agent in lieu of depositing
same to the Blocked Accounts.
(i) ADJUSTMENTS. No Borrower will, without Agent's consent,
compromise or adjust any Receivables (or extend the time for payment thereof) or
accept any returns of merchandise or grant any additional discounts, allowances
or credits thereon except for those compromises, adjustments, returns,
discounts, credits and allowances as have been heretofore customary in the
business of such Borrower.
4.16. INVENTORY. To the extent Inventory held for sale or lease has
been produced by any Borrower, it has been and will be produced by such Borrower
in accordance with the Federal Fair Labor Standards Act of 1938, as amended, and
all rules, regulations and orders thereunder.
4.17. MAINTENANCE OF EQUIPMENT. The Equipment shall be maintained in
good operating condition and repair (reasonable wear and tear excepted) and all
necessary replacements of and repairs thereto shall be made so that the value
and operating efficiency of the Equipment shall be maintained and preserved.
Borrower shall use and operate the Equipment in material compliance with all
Applicable Law.. Each Borrower shall have the right to sell Equipment to the
extent set forth in Section 4.3 hereof.
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4.18. EXCULPATION OF LIABILITY. Nothing herein contained shall be
construed to constitute Agent or any Lender as any Borrower's agent for any
purpose whatsoever, nor shall Agent or any Lender be responsible or liable for
any shortage, discrepancy, damage, loss or destruction of any part of the
Collateral wherever the same may be located and regardless of the cause thereof.
Neither Agent nor any Lender, whether by anything herein or in any assignment or
otherwise, assume any of any Borrower's obligations under any contract or
agreement assigned to Agent or such Lender, and neither Agent nor any Lender
shall be responsible in any way for the performance by any Borrower of any of
the terms and conditions thereof.
4.19. ENVIRONMENTAL MATTERS. (a) Borrowers shall ensure that the Real
Property and Leasehold Interests are in material compliance with all
Environmental Laws and they shall not place or permit to be placed any Hazardous
Substances on any Real Property or Leasehold Interests except as permitted by
applicable law or appropriate governmental authorities.
(b) Lesco has established and shall maintain its "Environmental
Safety Compliance Policy" to assure and monitor continued compliance with all
applicable Environmental Laws.
(c) Borrowers shall (i) employ in connection with the use of the
Real Property and Leasehold Interests appropriate technology necessary to
maintain material compliance with any applicable Environmental Laws and (ii)
dispose of any and all Hazardous Waste generated at the Real Property and
Leasehold Interests only at facilities, and transport with carriers, that
maintain valid permits under RCRA and any other applicable Environmental Laws.
Borrowers shall use their best efforts to obtain certificates of disposal, such
as hazardous waste manifest receipts, from all treatment, transport, storage or
disposal facilities or operators employed by Borrowers in connection with the
transport or disposal of any Hazardous Waste generated at the Real Property or
Leasehold Interests.
(d) In the event any Borrower obtains, gives or receives notice
of any Release or threat of Release of reportable quantities of any Hazardous
Substances at the Real Property or Leasehold Interests (any such event being
hereinafter referred to as a "Hazardous Discharge") or receives any notice of
violation, request for information or notification that it is potentially
responsible for investigation or cleanup of environmental conditions at the Real
Property or Leasehold Interests, demand letter or complaint, order, citation, or
other written notice with regard to any Hazardous Discharge or violation of
Environmental Laws affecting the Real Property, Leasehold Interests or any
Borrower's interest therein (any of the foregoing is referred to herein as an
"Environmental Complaint") from any Person, including any state agency
responsible in whole or in part for environmental matters in the state in which
the Real Property or Leasehold Interests are located or the United States
Environmental Protection Agency (any such person or entity hereinafter the
"Authority"), then Borrowing Agent shall, within five (5) Business Days, give
written notice of same to Agent detailing facts and circumstances of which any
Borrower is aware giving rise to the Hazardous Discharge or Environmental
Complaint. Notwithstanding the foregoing, notice shall not be required to be
given with respect to demands, complaints or notices of private
(non-governmental) parties which are not material. Such
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information is to be provided to allow Agent to protect its security interest in
the Real Property and Leasehold Interests and the Collateral and is not intended
to create nor shall it create any obligation upon Agent or any Lender with
respect thereto.
Borrowers shall promptly forward to Agent copies of all documents
and reports concerning a Hazardous Discharge at the Real Property or Leasehold
Interests subject to the Mortgages that any Borrower is required to file under
any Environmental Laws. Such information is to be provided solely to allow Agent
to protect Agent's security interest in the Real Property subject to the
Mortgages and the Collateral.
(e) Borrowers shall promptly forward to Agent copies of any
written request for information, notification of potential liability, demand
letter relating to potential responsibility with respect to the investigation or
cleanup of Hazardous Substances at any other site owned, operated or used by any
Borrower to dispose of Hazardous Substances and shall continue to forward copies
of correspondence between any Borrower and the Authority regarding such claims
to Agent until the claim is settled.
(f) Borrowers shall timely respond to any Hazardous Discharge or
Environmental Complaint and take all necessary action in order to safeguard the
health of any Person and to avoid subjecting the Collateral or Real Property and
Leasehold Interests subject to the Mortgages to any Lien. If any Borrower shall
fail to respond promptly to any Hazardous Discharge or Environmental Complaint
or any Borrower shall fail to comply with any of the requirements of any
applicable Environmental Laws in any material respect, Agent on behalf of
Lenders may, but without the obligation to do so, for the sole purpose of
protecting Agent's interest in Collateral: (A) give such notices or (B) enter
onto the Real Property or Leasehold Interests subject to the Mortgages (or
authorize third parties to enter onto such Real Property or Leasehold Interests)
and take such actions as Agent (or such third parties as directed by Agent)
reasonably deem necessary to clean up, remove, mitigate or otherwise deal with
any such Hazardous Discharge or Environmental Complaint. All reasonable costs
and expenses incurred by Agent and Lenders (or such third parties) in the
exercise of any such rights, including any sums paid in connection with any
judicial or administrative investigation or proceedings, fines and penalties,
together with interest thereon from the date expended at the Default Rate for
Domestic Rate Loans constituting Revolving Advances shall be paid upon demand by
Borrowers, and until paid shall be added to and become a part of the Obligations
secured by the Liens created by the terms of this Agreement or any other
agreement between Agent, any Lender and any Borrower.
(g) Upon the written request of Agent in Agent's reasonable
discretion, Borrowers shall provide Agent, at Borrowers' expense, with an
environmental site assessment or environmental audit report prepared by an
environmental consultant acceptable to the Agent in its reasonable discretion,
to assess the existence of a Hazardous Discharge and the potential costs in
connection with abatement, cleanup and removal of any Hazardous Substances found
on, under, at or within the Real Property or Leasehold Interests subject to the
Mortgages. Any report or investigation of such Hazardous Discharge proposed and
in a form acceptable to an appropriate Authority that is charged to oversee the
clean-up of such Hazardous Discharge shall
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be acceptable to Agent. If such estimates, individually or in the aggregate,
exceed $450,000, Agent shall have the right to require Borrowers to post a bond,
letter of credit or other security reasonably satisfactory to Agent to secure
payment of these costs and expenses.
(h) Borrowers shall defend and indemnify Agent and Lenders and
hold Agent, Lenders and their respective employees, agents, directors and
officers harmless from and against all loss, liability, damage and expense,
claims, costs, fines and penalties, including reasonable attorney's fees,
suffered or incurred by Agent or Lenders under or on account of any
Environmental Laws, including, without limitation, the assertion of any Lien
thereunder, with respect to any Hazardous Discharge, the presence of any
Hazardous Substances affecting the Real Property, whether or not the same
originates or emerges from the Real Property or any contiguous real estate,
including any loss of value of the Real Property subject to the Mortgages as a
result of the foregoing except to the extent such loss, liability, damage and
expense is attributable to any Hazardous Discharge resulting from actions on the
part of Agent or any Lender. Borrowers' obligations under this Section 4.19
shall arise upon the discovery of the presence of any Hazardous Substances at
the Real Property, whether or not any federal, state, or local environmental
agency has taken or threatened any action in connection with the presence of any
Hazardous Substances. Borrowers' obligation and the indemnifications hereunder
shall survive the termination of this Agreement.
(i) For purposes of Section 4.19 and 5.7, all references to Real
Property shall be deemed to include all of Borrowers' right, title and interest
in and to its owned and leased premises.
4.20 FINANCING STATEMENTS. Except as respects the financing statements
filed by Agent and the financing statements described on SCHEDULE 1.2, no
financing statement covering any of the Collateral or any proceeds thereof is on
file in any public office.
V. REPRESENTATIONS AND WARRANTIES.
Each Borrower represents and warrants as follows:
5.1 AUTHORITY. Each Borrower has full power, authority and legal right
to enter into this Agreement and the Other Documents and to perform all its
respective Obligations hereunder and thereunder. This Agreement and the Other
Documents constitute the legal, valid and binding obligation of such Borrower
enforceable against such Borrower in accordance with their terms, except as such
enforceability may be limited by any applicable bankruptcy, insolvency,
moratorium or similar laws affecting creditors' rights generally. The execution,
delivery and performance of this Agreement and of the Other Documents (a) are
within such Borrower's corporate or limited liability company powers, have been
duly authorized, are not in contravention of law or the terms of such Borrower's
by-laws, certificate of incorporation or other applicable documents relating to
such Borrower's formation or to the conduct of such Borrower's business or of
any material agreement or undertaking to which such Borrower is a party or by
which such Borrower is bound, and (b) will not conflict with nor result in any
breach
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in any of the provisions of or constitute a default under or result in the
creation of any Lien except Permitted Encumbrances upon any asset of such
Borrower under the provisions of any agreement, charter document, instrument,
by-law, or other instrument to which such Borrower is a party or by which it or
its property may be bound.
5.2. FORMATION AND QUALIFICATION. (a) Each Borrower is duly
incorporated or organized and in good standing or full force and effect under
the laws of the state listed on SCHEDULE 5.2(A) and is qualified to do business
and is in good standing or in full force and effect in the states listed on
SCHEDULE 5.2(A) which constitute all states in which qualification and good
standing or full force and effect are necessary for such Borrower to conduct its
business and own its property and where the failure to so qualify could
reasonably be expected to have a Material Adverse Effect. Each Borrower has
delivered to Agent true and complete copies of its articles of incorporation and
by-laws or operating agreement and will promptly notify Agent of any amendment
or changes thereto.
(b) The only Subsidiaries of each Borrower are listed on SCHEDULE
5.2(B).
5.3. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of such Borrower contained in this Agreement and the Other
Documents shall be true at the time of such Borrower's execution of this
Agreement and the Other Documents, and shall survive the execution, delivery and
acceptance thereof by the parties thereto and the closing of the transactions
described therein or related thereto.
5.4. TAX RETURNS. Each Borrower's federal tax identification number is
set forth on SCHEDULE 5.4. Each Borrower has filed all federal, state and local
tax returns and other reports each is required by law to file and has paid all
taxes, assessments, fees and other governmental charges that are due and
payable, except to the extent that such Borrower is contesting or disputing such
taxes, assessments or Charges in good faith, by protest, administrative or
judicial appeal or similar proceedings all conducted in an expeditious manner,
provided that any related tax lien is stayed and sufficient reserves are
established to the reasonable satisfaction of the Agent to protect the security
interest and Liens on the Collateral in favor of the Agent for the benefit of
the Lenders. Federal, state and local income tax returns of each Borrower have
been examined and reported upon by the appropriate taxing authority or closed by
applicable statute and satisfied for all fiscal years prior to and including the
fiscal year ending December 31, 2000. The provision for taxes on the books of
each Borrower are adequate for all years not closed by applicable statutes, and
for its current fiscal year, and no Borrower has any knowledge of any deficiency
or additional assessment in connection therewith not provided for on its books.
5.5. FINANCIAL STATEMENTS.
(a) The pro forma balance sheet of Borrowers on a consolidated
basis (the "Pro Forma Balance Sheet") furnished to Agent on the Closing Date
reflects the consummation of the transactions contemplated under this Agreement
(the "Transactions") and is accurate, complete and correct and fairly reflects
the financial condition of Borrowers on a consolidated basis as of the Closing
Date after giving effect to the Transactions, and has been prepared in
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accordance with GAAP, consistently applied. The Pro Forma Balance Sheet has been
certified as accurate, complete and correct in all material respects by the Vice
President and Chief Financial Officer of LESCO. All financial statements
referred to in this subsection 5.5(a), including the related schedules and notes
thereto, have been prepared, in accordance with GAAP, except as may be disclosed
in such financial statements.
(b) The twelve-month cash flow projections of the Borrowers on a
consolidated basis and their projected balance sheets as of the Closing Date,
copies of which are annexed hereto as EXHIBIT 5.5(B) (the "Projections") were
prepared under the supervision of the Chief Financial Officer of LESCO, are
based on underlying assumptions which provide a reasonable basis for the
projections contained therein and reflect Borrowers' judgment based on present
circumstances of the most likely set of conditions and course of action for the
projected period, all the foregoing subject to the forward looking cautionary
language and risk factors set forth in LESCO's periodic statements filed from
time to time with the Securities and Exchange Commission. The cash flow
Projections together with the Pro Forma Balance Sheet, are referred to as the
"Pro Forma Financial Statements".
(c) The consolidated and consolidating balance sheets of the
Borrowers, their Subsidiaries and such other Persons described therein
(including the accounts of all Subsidiaries for the respective periods during
which a subsidiary relationship existed) as of December 31, 2000, and the
related statements of income, changes in stockholder's equity, and changes in
cash flow for the period ended on such date, all accompanied by reports thereon
containing opinions without qualification by independent certified public
accountants, copies of which have been delivered to Agent, have been prepared in
accordance with GAAP, consistently applied (except for changes in application in
which such accountants concur and present fairly the financial position of the
Borrowers at such date and the results of their operations for such period.
Except as set forth in the Projections, since September 30, 2001, there has been
no change in the condition, financial or otherwise, of Borrowers as shown on the
consolidated balance sheet as of such date and no change in the aggregate value
of machinery, equipment and Real Property owned by Borrowers, except changes in
the ordinary course of business, none of which individually or in the aggregate
has been materially adverse.
5.6. CORPORATE NAME. Except as set forth on Schedule 5.6, no Borrower
(a) has been known by any other corporate name in the past five years, (b) sells
Inventory under any other name, and (c) has been the surviving corporation of a
merger or consolidation or acquired all or substantially all of the assets of
any Person during the preceding five (5) years.
5.7. O.S.H.A. AND ENVIRONMENTAL COMPLIANCE.
(a) Each Borrower has duly complied with, and its facilities,
business, assets, property, Leasehold Interests and Equipment are in compliance
in all material respects with, the provisions of the Federal Occupational Safety
and Health Act (29 U.S.C. Section 651, ET SEQ.) and all applicable Environmental
Laws; except as set forth on Schedule 5.7, there are no material outstanding
citations, notices or orders of non-compliance issued to any Borrower or
relating to
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its business, assets, property, Leasehold Interests or Equipment under any such
laws, rules or regulations.
(b) Each Borrower has been issued all material required federal,
state and local licenses, certificates or permits relating to all applicable
Environmental Laws.
(c) (i) There are no visible signs of material releases, spills,
discharges, leaks or disposal (collectively referred to as "Releases") of
Hazardous Substances at, upon, under or within any Real Property or Leasehold
Interests; (ii) during its ownership or lease of the Real Property and Leasehold
Interests, no underground storage tanks or polychlorinated biphenyls were placed
on the Real Property and Leasehold Interests, and to the Borrowers' knowledge
there are no underground storage tanks or polychlorinated biphenyls on the Real
Property or Leasehold Interests which were placed on the Real Property of
Leasehold Improvements prior to the Borrower's purchase or lease of Real
Property or Leasehold Interests; (iii) during its ownership or lease of the Real
Property and Leasehold Interests, neither the Real Property nor any Leasehold
Interests has ever been used as a treatment, storage or disposal facility of
Hazardous Waste, and to the Borrowers knowledge, neither the Real Property nor
any Leasehold Interests has ever been used as a treatment, storage or disposal
facility of Hazardous Waste prior to the Borrower's purchase or lease of the
Real Property or Leasehold Interests; and (iv) no Hazardous Substances are
present on the Real Property or Leasehold Interests, excepting (i) such
quantities as are handled in accordance with all applicable manufacturer's
instructions and governmental regulations and in proper storage containers and
as are necessary for the operation of the commercial business of any Borrower,
and (ii) Hazardous Substances placed on the Real Property and Leasehold
Interests prior to the Borrowers' purchase or lease of the Real Property and
Leasehold Interests, of which the Borrower has no knowledge of the presence of
such Hazardous Substances.
5.8. SOLVENCY; NO LITIGATION, VIOLATION, INDEBTEDNESS OR DEFAULT.
(a) Borrowers are solvent, able to pay their debts as they mature,
have capital sufficient to carry on their business and all businesses in which
they are about to engage, and (i) as of the Closing Date, the fair present
saleable value of their assets, calculated on a going concern basis, is in
excess of the amount of their liabilities and (ii) subsequent to the Closing
Date, the fair saleable value of their assets (calculated on a going concern
basis) will be in excess of the amount of their liabilities.
(b) Except as disclosed in SCHEDULE 5.8(B), no Borrower has (i)
any pending or threatened litigation, arbitration, actions or proceedings which
involve the possibility of having a Material Adverse Effect, and (ii) any
liabilities nor indebtedness for borrowed money other than the Obligations.
(c) No Borrower is in violation of any applicable statute,
regulation or ordinance in any respect which could reasonably be expected to
have a Material Adverse Effect, nor is any Borrower in material violation of any
order of any court, governmental authority or arbitration board or tribunal.
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(d) No Borrower nor any member of the Controlled Group maintains
or contributes to any Plan other than those listed on SCHEDULE 5.8(D) hereto.
Except as set forth in SCHEDULE 5.8(D), (i) no Plan has incurred any
"accumulated funding deficiency," as defined in Section 302(a)(2) of ERISA and
Section 412(a) of the Code, whether or not waived, and each Borrower and each
member of the Controlled Group has met all applicable minimum funding
requirements under Section 302 of ERISA in respect of each Plan, (ii) each Plan
which is intended to be a qualified plan under Section 401(a) of the Code as
currently in effect has been determined by the Internal Revenue Service to be
qualified under Section 401(a) of the Code and the trust related thereto is
exempt from federal income tax under Section 501(a) of the Code, (iii) no
Borrower nor any member of the Controlled Group has incurred any liability to
the PBGC other than for the payment of premiums, and there are no premium
payments which have become due which are unpaid, (iv) no Plan has been
terminated by the plan administrator thereof nor by the PBGC, and there is no
occurrence which would cause the PBGC to institute proceedings under Title IV of
ERISA to terminate any Plan, (v) at this time, the current value of the assets
of each Plan exceeds the present value of the accrued benefits and other
liabilities of such Plan and no Borrower nor any member of the Controlled Group
knows of any facts or circumstances which would materially change the value of
such assets and accrued benefits and other liabilities, (vi) no Borrower nor any
member of the Controlled Group has materially breached any of the
responsibilities, obligations or duties imposed on it by ERISA with respect to
any Plan, (vii) no Borrower nor any member of a Controlled Group has incurred
any liability for any excise tax arising under Section 4972 or 4980B of the
Code, and no fact exists which could give rise to any such liability, (viii) no
Borrower nor any member of the Controlled Group nor any fiduciary of, nor any
trustee to, any Plan, has engaged in a "prohibited transaction" described in
Section 406 of the ERISA or Section 4975 of the Code for which an exemption is
not available nor taken any action which would constitute or result in a
Termination Event with respect to any such Plan which is subject to ERISA, (ix)
each Borrower and each member of the Controlled Group has made all contributions
due and payable with respect to each Plan, (x) there exists no event described
in Section 4043(b) of ERISA, for which the thirty (30) day notice period
contained in 29 CFR ss.2615.3 has not been waived, (xi) no Borrower nor any
member of the Controlled Group has any fiduciary responsibility for investments
with respect to any plan existing for the benefit of persons other than
employees or former employees of any Borrower and any member of the Controlled
Group, and (xii) no Borrower nor any member of the Controlled Group has
withdrawn, completely or partially, from any Multiemployer Plan so as to incur
liability under the Multiemployer Pension Plan Amendments Act of 1980.
5.9. PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. All registered
patents, patent applications, trademarks, trademark applications, service marks,
service xxxx applications, copyrights, copyright and copyright applications, and
all material design rights, tradenames, assumed names, trade secrets and
licenses owned or utilized by any Borrower are set forth on SCHEDULE 5.9, are
valid and have been duly registered or filed with all appropriate governmental
authorities or are valid by reason of common law rights and constitute all of
the material intellectual property rights which are necessary for the operation
of its business; there is no material objection to or pending challenge to the
validity of any such patent, trademark, copyright, design right, tradename,
trade secret or license and no Borrower is aware of any
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grounds for any challenge, except as set forth in SCHEDULE 5.9 hereto. Each
patent, patent application, patent license, trademark, trademark application,
trademark license, service xxxx, service xxxx application, service xxxx license,
design right, copyright, copyright application and copyright license owned or
held by any Borrower and all trade secrets used by any Borrower consist of
original material or property developed by such Borrower or was lawfully
acquired by such Borrower from the proper and lawful owner thereof. Each of such
items has been maintained so as to preserve the value thereof from the date of
creation or acquisition thereof. With respect to all material software used by
any Borrower, such Borrower possesses a license to use or is in possession of
all source and object codes related to each such piece of software or is the
beneficiary of a source code escrow agreement, each such source code escrow
agreement being listed on SCHEDULE 5.9 hereto.
5.10. LICENSES AND PERMITS. Except as set forth in SCHEDULE 5.10, each
Borrower (a) is in material compliance with and (b) has procured and is now in
possession of, all material licenses or permits required by any applicable
federal, state or local law or regulation for the operation of its business in
each jurisdiction wherein it is now conducting or proposes to conduct business
and where the failure to procure such licenses or permits could have a Material
Adverse Effect.
5.11. DEFAULT OF INDEBTEDNESS. No Borrower is in default in the payment
of the principal of or interest on any Indebtedness or under any instrument or
agreement under or subject to which any Indebtedness has been issued and no
event has occurred under the provisions of any such instrument or agreement
which with or without the lapse of time or the giving of notice, or both,
constitutes or would constitute an event of default thereunder.
5.12. NO DEFAULT. No Borrower is in default in the payment or
performance of any of its contractual obligations and no Default has occurred.
5.13. NO BURDENSOME RESTRICTIONS. No Borrower is party to any contract
or agreement the performance of which could have a Material Adverse Effect. No
Borrower has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property, whether now owned
or hereafter acquired, to be subject to a Lien which is not a Permitted
Encumbrance.
5.14. NO LABOR DISPUTES. No Borrower is involved in any labor dispute;
there are no strikes or walkouts or union organization of any Borrower's
employees threatened or in existence and no labor contract is scheduled to
expire during the Term other than as set forth on SCHEDULE 5.14 hereto.
5.15. MARGIN REGULATIONS. No Borrower 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" within
the respective meanings of each of the quoted terms under Regulation U of the
Board of Governors of the Federal Reserve System as now and from time to time
hereafter in effect. No part of the proceeds of any Advance will be
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used for "purchasing" or "carrying" "margin stock" as defined in Regulation U of
such Board of Governors.
5.16. INVESTMENT COMPANY ACT. No Borrower is an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, nor is it controlled by such a company.
5.17. DISCLOSURE. No representation or warranty made by any Borrower in
this Agreement or in any financial statement, report, certificate or any other
document furnished in connection herewith or therewith contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the statements herein or therein not misleading. There is no fact known to
Borrowers or which reasonably should be known to Borrowers which Borrowers have
not disclosed to Agent in writing with respect to the transactions contemplated
by this Agreement which could reasonably be expected to have a Material Adverse
Effect.
5.18. INTENTIONALLY OMITTED.
5.19. SWAPS. Except for LESCO's existing Master Agreement dated June
14, 1995, with Bank One, Michigan, as successor to NBD Bank, and except for the
Interest Rate Protection Agreements described in Section 8.1(e), no Borrower is
a party to, nor will it be a party to, any swap agreement whereby such Borrower
has agreed or will agree to swap interest rates or currencies unless same
provides that damages upon termination following an event of default thereunder
are payable on an unlimited "two-way basis" without regard to fault on the part
of either party.
5.20. CONFLICTING AGREEMENTS. No provision of any mortgage, indenture,
contract, agreement, judgment, decree or order binding on any Borrower or
affecting the Collateral conflicts with, or requires any Consent which has not
already been obtained to, or would in any way prevent the execution, delivery or
performance of, the terms of this Agreement or the Other Documents.
5.21. APPLICATION OF CERTAIN LAWS AND REGULATIONS. No Borrower is
subject to any statute, rule or regulation which regulates the incurrence of any
Indebtedness, including without limitation, statutes or regulations relative to
common or interstate carriers or to the sale of electricity, gas, steam, water,
telephone, telegraph or other public utility services.
5.22. BUSINESS AND PROPERTY OF BORROWERS. Upon and after the Closing
Date, Borrowers do not propose to engage in any business other than the
manufacture, sale and distribution of consumable goods and hard goods used on
golf courses and lawns and activities necessary to conduct the foregoing. On the
Closing Date, each Borrower will own all the property and possess all of the
material rights and Consents necessary for the conduct of the business of such
Borrower.
5.23. SECTION 20 SUBSIDIARIES. Borrowers do not intend to use and shall
not use any portion of the proceeds of the Advances, directly or indirectly, to
purchase during the
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underwriting period, or for 30 days thereafter, Ineligible Securities being
underwritten by a Section 20 Subsidiary.
VI. AFFIRMATIVE COVENANTS.
Each Borrower (unless the context otherwise indicates that the
provision applies only to LESCO) shall, until payment in full of the Obligations
and termination of this Agreement:
6.1. PAYMENT OF FEES. Pay to Agent on demand all usual and customary
fees and expenses which Agent incurs in connection with (a) the forwarding of
Advance proceeds and (b) the establishment and maintenance of any Blocked
Accounts or Depository Accounts as provided for in Section 4.15(h). Agent may,
without making demand, charge Borrowers' Account for all such fees and expenses.
6.2. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE AND ASSETS. (a)
Conduct continuously and operate actively in all material respects its business
according to good business practices and maintain all of its properties useful
or necessary in its business in good working order and condition (reasonable
wear and tear excepted and except as may be disposed of in accordance with the
terms of this Agreement), including, without limitation, all licenses, patents,
copyrights, design rights, tradenames, trade secrets and trademarks and take all
actions necessary to enforce and protect the validity of any intellectual
property right or other right included in the Collateral; (b) keep in full force
and effect its existence and comply in all material respects with the laws and
regulations governing the conduct of its business where the failure to do so
could reasonably be expected to have a Material Adverse Effect; and (c) in all
material respects make all such reports and pay all such franchise and other
taxes and license fees and do all such other acts and things as may be lawfully
required to maintain its rights, licenses, leases, powers and franchises under
the laws of the United States or any political subdivision thereof.
6.3. VIOLATIONS. Promptly notify Agent in writing of any violation of
any law, statute, regulation or ordinance of any Governmental Body, or of any
agency thereof, applicable to any Borrower which could reasonably be expected to
have a Material Adverse Effect.
6.4. GOVERNMENT RECEIVABLES. Take all steps necessary to protect
Agent's interest in the Collateral under the Federal Assignment of Claims Act or
other applicable state or local statutes or ordinances and deliver to Agent
appropriately endorsed, any instrument or chattel paper connected with any
Receivable arising out of contracts between any Borrower and the United States,
any state or any department, agency or instrumentality of any of them.
6.5. NET WORTH. Commencing on the Closing Date and at all times
thereafter, Borrowers on a consolidated basis shall maintain a Net Worth in an
amount not less than $82,500,000, subject to an adjustment made by the Borrowers
in accordance with GAAP during the fiscal year ended December 31, 2002, to take
into account the effect of Financial Accounting Standards Board Rule 142 on the
Net Worth of the Borrowers on a consolidated basis.
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Commencing on December 31, 2002, and on the last day of each fiscal year
thereafter, the minimum Net Worth requirement set forth above shall be increased
by an amount equal to fifty percent (50%) of consolidated net income of
Borrowers on a consolidated basis for each such fiscal year in which net income
was earned (as opposed to a net loss).
6.6. EBITDA AND FIXED CHARGE COVERAGE RATIO. Commencing with the month
ending January 31, 2002, and each month thereafter until such time as the
quarterly financial statements delivered by the Borrowers pursuant to Section
9.8 evidence that the Fixed Charge Coverage Ratio, as calculated for the
Borrowers on a consolidated basis at the end of such fiscal quarter for the four
fiscal quarters then ended, is equal to or greater than 1.05 to 1.00, the
Borrowers on a consolidated basis shall maintain EBITDA for the twelve months
then ended of not less 85% of the EBITDA projected by the Borrowers as set forth
on Exhibit 6.6.
Commencing with the fiscal quarter for which the Borrowers report that
the Fixed Charge Coverage Ratio, as calculated at the end of a fiscal quarter
for the four fiscal quarters then ended, is equal to or greater than 1.05 to
1.00, but in any event no later than June 30, 2002, , and at the end of each
fiscal quarter thereafter, Borrowers on a consolidated basis shall maintain a
Fixed Charge Coverage Ratio, as calculated at the end of each fiscal quarter for
the four fiscal quarters then ended, of not less than 1.05 to 1.00.
6.7. DISTRIBUTIONS BY LFI. Within 45 days following the Closing Date,
LESCO shall cause LFI to distribute any and all remaining assets of LFI (in
addition to those previously distributed pursuant to Section 8.1(p)) to LESCO,
and as soon as is reasonably practicable following such distribution, LESCO
shall dissolve LFI and terminate its separate corporate existence.
6.8. LANDLORD'S WAIVERS. Provide to the Agent executed landlord and
warehouseman agreements satisfactory to Agent with respect to all premises
leased by Borrowers at which Inventory is located (and for which Agent has not
received such agreements prior to the Closing Date) within ninety (90) days
after the Closing Date. In the event that any Inventory is located on a premises
for which an acceptable landlord or warehouseman agreement has not been obtained
during such period, the Borrowers hereby acknowledge and agree that the Agent
shall reduce the Formula Amount calculated under Section 2.1(a)(iv) by an amount
established by the Agent in its sole reasonable discretion (but in the case of
leased premises, in no event more than three months of rental payments related
to such premises) for which an acceptable landlord or warehouseman agreement has
not been obtained.
6.9. EXECUTION OF SUPPLEMENTAL INSTRUMENTS. Execute and deliver to
Agent from time to time, upon demand, such supplemental agreements, statements,
assignments and transfers, or instructions or documents relating to the
Collateral, and such other instruments as Agent may request, in order that the
full intent of this Agreement may be carried into effect. Within 30 days after
the Closing Date, LESCO shall use its best efforts to obtain the written consent
of and execution of a memorandum of lease by the landlord for LESCO's Leasehold
Interests for its premises in Stockton, California in order to effect the
recording of the Mortgage with respect to such Leasehold Premises. Within 120
days after the Closing Date, LESCO shall use its
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commercially reasonable best efforts to obtain the execution of a consent and
estoppel by the landlord for LESCO's Leasehold Interests for its premises in
Sebring, Florida in form and content satisfactory to the Agent, with respect to
such Leasehold Premises.
6.10. PAYMENT OF INDEBTEDNESS, INCLUDING TAXES, ETC.. Pay, discharge or
otherwise satisfy at or before maturity (subject, where applicable, to specified
grace periods and, in the case of the trade payables, to normal payment
practices) all its obligations and liabilities of whatever nature, including all
taxes, assessments, and governmental charges upon it or any of its properties,
assets, income or profits, except when the failure to do so could not reasonably
be expected to have a Material Adverse Effect or when the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and each Borrower shall have provided for such reserves as Agent may reasonably
deem proper and necessary, subject at all times to any applicable subordination
arrangement in favor of Lenders.
6.11. STANDARDS OF FINANCIAL STATEMENTS. Cause all financial statements
referred to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, 9.13 and 9.14 as to
which GAAP is applicable to be complete and correct in all material respects
(subject, in the case of interim financial statements, to normal year-end audit
adjustments) and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein (except as
concurred in by such reporting accountants or officer, as the case may be, and
disclosed therein).
6.12. INVENTORY APPRAISALS. Cause appraisals of the Inventory of
Borrowers to be performed by an appraisal firm satisfactory to the Agent at
least once annually. Prior to the occurrence and continuation of an Event of
Default, the Borrowers shall pay the expenses of such appraisals one time per
year. After the occurrence and during the continuation of an Event of Default,
all such appraisals shall be at the expense of the Borrowers.
VII. NEGATIVE COVENANTS.
No Borrower shall, until satisfaction in full of the Obligations and
termination of this Agreement:
7.1. MERGER, CONSOLIDATION, ACQUISITION AND SALE OF ASSETS.
(a) Enter into any merger, consolidation or other reorganization
with or into any other Person or acquire all or a substantial portion of the
assets or stock of any Person or permit any other Person to consolidate with or
merge with it.
(b) Sell, lease, transfer or otherwise dispose of any of its
properties or assets, except in the ordinary course of its business and except
as provided in Section 4.3.
7.2. CREATION OF LIENS. Create or suffer to exist any Lien or transfer
upon or against any of its property or assets now owned or hereafter acquired,
except Permitted Encumbrances.
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7.3. GUARANTEES. Become liable upon the obligations of any Person by
assumption, endorsement or guaranty thereof or otherwise (other than to Lenders)
except the endorsement of checks in the ordinary course of business.
7.4. INVESTMENTS. Purchase or acquire obligations or stock of, or any
other interest in, any Person, except (a) obligations issued or guaranteed by
the United States of America or any agency thereof, (b) commercial paper with
maturities of not more than 180 days and a published rating of not less than A-1
or P-1 (or the equivalent rating), (c) certificates of time deposit and bankers'
acceptances having maturities of not more than 180 days and repurchase
agreements backed by United States government securities of a commercial bank if
(i) such bank has a combined capital and surplus of at least $500,000,000, or
(ii) its debt obligations, or those of a holding company of which it is a
Subsidiary, are rated not less than A (or the equivalent rating) by a nationally
recognized investment rating agency, and (d) U.S. money market funds that invest
solely in obligations issued or guaranteed by the United States of America or an
agency thereof.
7.5. LOANS. Make advances, loans or extensions of credit to any Person,
including without limitation, any Parent, Subsidiary or Affiliate except with
respect to the extension of commercial trade credit in connection with the sale
of Inventory in the ordinary course of its business.
7.6. CAPITAL EXPENDITURES. Contract for, purchase or make any
expenditure or commitments for fixed or capital assets (including capitalized
leases) which in an aggregate amount for all Borrowers would exceed the
following amounts in any of the following fiscal years of the Borrowers:
Fiscal year ended December 31 Maximum capital expenditures
----------------------------- ----------------------------
2002 $7,000,000
2003 $9,000,000
2004 $11,000,000
7.7. DIVIDENDS. Except for non-cash dividends made in accordance with
the terms of any Borrower's incentive compensation plans, declare, pay or make
any dividend or distribution on any shares of the common stock or preferred
stock of any Borrower (other than dividends or distributions payable in its
stock, or split-ups or reclassifications of its stock) or apply any of its
funds, property or assets to the purchase, redemption or other retirement of any
common or preferred stock, or of any options to purchase or acquire any such
shares of common or preferred stock of any Borrower except that so long as (a) a
notice of termination with regard to this Agreement shall not be outstanding,
(b) no Event of Default or Default shall have occurred, and (c) the purpose for
such purchase, redemption or dividend shall be as set forth in writing to Agent
at least ten (10) days prior to such purchase, redemption or dividend and such
purchase, redemption or dividend shall in fact be used for such purpose,
Borrowers shall be permitted to pay dividends in accordance with the provisions
of each Borrower's Certificate of Incorporation
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as in effect on the Closing Date, to any Borrower, PROVIDED, HOWEVER, that after
giving effect to the payment of such dividends there shall not exist any Event
of Default or Default.
7.8. INDEBTEDNESS. Create, incur, assume or suffer to exist any
Indebtedness (exclusive of trade debt) except in respect of (i) Indebtedness to
Lenders; (ii) Indebtedness incurred for capital expenditures permitted under
Section 7.6 hereof; (iii) Indebtedness set forth on SCHEDULE 7.8; and (iv) other
unsecured Indebtedness not in excess of $5,000,000 at any one time outstanding.
7.9. NATURE OF BUSINESS. Substantially change the nature of the
business in which it is presently engaged, nor except as specifically permitted
hereby purchase or invest, directly or indirectly, in any assets or property
other than in the ordinary course of business for assets or property which are
useful in, necessary for and are to be used in its business as presently
conducted.
7.10. TRANSACTIONS WITH AFFILIATES. Directly or indirectly, purchase,
acquire or lease any property from, or sell, transfer or lease any property to,
or otherwise deal with, any Affiliate, except transactions in the ordinary
course of business, on an arm's-length basis on terms no less favorable than
terms which would have been obtainable from a Person other than an Affiliate.
7.11. LEASES. Enter as lessee into any lease arrangement for real or
personal property (unless capitalized and permitted under Section 7.6 hereof) if
after giving effect thereto, aggregate annual rental payments for all leased
property would exceed $16,000,000 in any one fiscal year in the aggregate for
all Borrowers.
7.12. SUBSIDIARIES.
(a) Form any Subsidiary.
(b) Enter into any partnership, joint venture or similar
arrangement.
7.13. FISCAL YEAR AND ACCOUNTING CHANGES. Change its fiscal year from
January 1 to December 31 or make any change (i) in accounting treatment and
reporting practices except as required by GAAP or (ii) in tax reporting
treatment except as required by law.
7.14. PLEDGE OF CREDIT. Now or hereafter pledge Agent's or any Lender's
credit on any purchases or for any purpose whatsoever or use any portion of any
Advance in or for any business other than such Borrower's business as conducted
on the date of this Agreement.
7.15. AMENDMENT OF ARTICLES OF INCORPORATION, BY-LAWS. Amend, modify or
waive any term or material provision of its Articles of Incorporation or By-Laws
unless required by law.
7.16. COMPLIANCE WITH ERISA. (i) (x) Maintain, or permit any member of
the Controlled Group to maintain, or (y) become obligated to contribute, or
permit any member of the Controlled Group to become obligated to contribute, to
any Plan, other than those Plans
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disclosed on SCHEDULE 5.8(D), (ii) engage, or permit any member of the
Controlled Group to engage, in any non-exempt "prohibited transaction", as that
term is defined in section 406 of ERISA and Section 4975 of the Code, (iii)
incur, or permit any member of the Controlled Group to incur, any "accumulated
funding deficiency", as that term is defined in Section 302 of ERISA or Section
412 of the Code, (iv) terminate, or permit any member of the Controlled Group to
terminate, any defined benefit pension plan where such event could result in any
material liability for underfunding of any Borrower or any member of the
Controlled Group or the imposition of a lien on the property of any Borrower or
any member of the Controlled Group pursuant to Section 4068 of ERISA, (v)
assume, or permit any member of the Controlled Group to assume, any obligation
to contribute to any Multiemployer Plan not disclosed on SCHEDULE 5.8(D), (vi)
incur, or permit any member of the Controlled Group to incur, any withdrawal
liability to any Multiemployer Plan; (vii) fail promptly to notify Agent of the
occurrence of any Termination Event, (viii) fail to comply, or permit a member
of the Controlled Group to fail to comply in all material respects, with the
requirements of ERISA or the Code or other applicable laws in respect of any
Plan, (ix) fail to meet, or permit any member of the Controlled Group to fail to
meet, all minimum funding requirements under ERISA or the Code or postpone or
delay or allow any member of the Controlled Group to postpone or delay any
funding requirement with respect of any Plan.
7.17. PREPAYMENT OF INDEBTEDNESS. At any time, directly or indirectly,
prepay any Indebtedness (other than to Lenders), or repurchase, redeem, retire
or otherwise acquire any Indebtedness of any Borrower.
VIII. CONDITIONS PRECEDENT.
8.1. CONDITIONS TO INITIAL ADVANCES. The agreement of Lenders to make
the initial Advances requested to be made on the Closing Date is subject to the
satisfaction, or waiver by Lenders, immediately prior to or concurrently with
the making of such Advances, of the following conditions precedent:
(a) NOTE. Agent shall have received the Notes duly executed and
delivered by an authorized officer of each Borrower;
(b) FILINGS, REGISTRATIONS AND RECORDINGS. Each document
(including, without limitation, any Uniform Commercial Code financing statement)
required by this Agreement, any related agreement or under law or reasonably
requested by the Agent to be filed, registered or recorded in order to create,
in favor of Agent, a perfected security interest in or lien upon the Collateral
shall have been properly filed, registered or recorded in each jurisdiction in
which the filing, registration or recordation thereof is so required or
requested, and Agent shall have received an acknowledgment copy, or other
evidence satisfactory to it, of each such filing, registration or recordation
and satisfactory evidence of the payment of any necessary fee, tax or expense
relating thereto;
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(c) CORPORATE PROCEEDINGS OF BORROWERS. Agent shall have received
a copy of the resolutions in form and substance reasonably satisfactory to
Agent, of the Board of Directors or Board of Managers of each Borrower
authorizing (i) the execution, delivery and performance of this Agreement, the
Notes, the Mortgage, any related agreements, (collectively the "Documents") and
(ii) the granting by each Borrower of the security interests in and liens upon
the Collateral in each case certified by the Secretary or an Assistant Secretary
of each Borrower as of the Closing Date; and, such certificate shall state that
the resolutions thereby certified have not been amended, modified, revoked or
rescinded as of the date of such certificate;
(d) INCUMBENCY CERTIFICATES OF BORROWERS. Agent shall have
received a certificate of the Secretary or an Assistant Secretary of each
Borrower, dated the Closing Date, as to the incumbency and signature of the
officers of each Borrower executing this Agreement, any certificate or other
documents to be delivered by it pursuant hereto, together with evidence of the
incumbency of such Secretary or Assistant Secretary;
(e) INTEREST RATE PROTECTION. The Borrower shall have entered into
interest rate protection agreements (the "INTEREST RATE PROTECTION AGREEMENTS")
with financial institutions acceptable to the Agent on such terms and under such
conditions as shall be acceptable to the Agent. Such Interest Rate Protection
Agreements shall provide for interest rate protection for at least 50% of the
amount of Indebtedness for Term Loans plus Revolving Credit Advances outstanding
on the Closing Date for a minimum of three (3) years. Documentation for the
Interest Rate Protection Agreements shall be in a standard International Swap
Dealer Association Agreement or such other form as is acceptable to the Agent
and shall provide for the method of calculating the reimbursable amount of the
provider's credit exposure in a reasonable and customary basis. In the event
that any Lender or an Affiliate of any Lender provides an Interest Rate
Protection Agreement to Borrower hereunder, the Borrower's obligations under
such Interest Rate Protection Agreement shall be PARI PASSU with the Borrower's
obligations under this Credit Agreement and shall be secured by the Liens
granted to the Agent for the benefit of the Lenders.
(f) INTENTIONALLY OMITTED.
(g) CERTIFICATES. Agent shall have received a copy of the Articles
or Certificate of Incorporation or Articles of Organization of each Borrower,
and all amendments thereto, certified by the Secretary of State or other
appropriate official of its jurisdiction of incorporation together with copies
of the By-Laws or Operating Agreement of each Borrower and all agreements of
each Borrower's shareholders certified as accurate and complete by the Secretary
of each Borrower;
(h) GOOD STANDING CERTIFICATES. Agent shall have received good
standing certificates for each Borrower dated not more than forty-five (45) days
prior to the Closing Date, issued by the Secretary of State or other appropriate
official of each Borrower's jurisdiction of incorporation and each jurisdiction
where the conduct of each Borrower's business activities or the ownership of its
properties necessitates qualification;
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(i) LEGAL OPINION. Agent shall have received the executed legal
opinions of Xxxxx & Xxxxxxxxx and Xxxx X. Xxxxxxxxxx & Associates, P.C. in form
and substance satisfactory to Agent which shall cover such matters incident to
the transactions contemplated by this Agreement, the Notes, the Mortgages and
related agreements as Agent may reasonably require and each Borrower hereby
authorizes and directs such counsel to deliver such opinions to Agent and
Lenders;
(j) NO LITIGATION. (i) No litigation, investigation or proceeding
before or by any arbitrator or Governmental Body shall be continuing or
threatened against any Borrower or against the officers or directors of any
Borrower (A) in connection with the Other Documents or any of the transactions
contemplated thereby and which, in the reasonable opinion of Agent, is deemed
material or (B) which could, in the reasonable opinion of Agent, have a Material
Adverse Effect; and (ii) no injunction, writ, restraining order or other order
of any nature materially adverse to any Borrower or the conduct of its business
or inconsistent with the due consummation of the Transactions shall have been
issued by any Governmental Body;
(k) FINANCIAL CONDITION CERTIFICATES. Agent shall have received an
executed Financial Condition Certificate in the form of EXHIBIT 8.1(K).
(l) COLLATERAL EXAMINATION. Agent shall have completed Collateral
examinations and received appraisals, the results of which shall be satisfactory
in form and substance to Lenders, of the Receivables, Inventory, General
Intangibles, Real Property subject to the Mortgages, Leasehold Interests and
Equipment of each Borrower and all books and records in connection therewith;
provided however, that the appraisal with respect to the Real Property located
in Rocky River, Ohio subject to a Mortgage shall be provided within 15 days of
the Closing Date;
(m) FEES. Agent shall have received all fees payable to Agent and
Lenders on or prior to the Closing Date pursuant to Article III hereof and the
Fee Letter;
(n) PRO FORMA FINANCIAL STATEMENTS. Agent shall have received a
copy of the Pro Forma Financial Statements which shall be satisfactory in all
respects to Lenders;
(o) PAYMENT OF EXISTING INDEBTEDNESS. The Existing Indebtedness
shall be indefeasibly paid in full and the Agent shall have received payoff
letters, termination statements and mortgage satisfactions, if applicable, from
the holders of such Existing Indebtedness and any collateral agents for such
holders in form substance satisfactory to Agent.
(p) TRANSFER OF ACCOUNTS; LFI DISTRIBUTIONS. In connection with
the payment of certain of the Existing Indebtedness, Market Street Funding
Corporation, PNC, LFI and LESCO shall have executed and delivered an agreement
in form and substance satisfactory to the Agent pursuant to which (i) the
accounts receivable previously transferred by LESCO to LFI and Market Street
Funding Corporation which have not yet been paid by the applicable account
debtors shall be re-conveyed to LESCO in order to become Receivables, and (ii)
the proceeds of the pay-off amount made by LESCO to LFI as consideration for the
re-conveyance of the
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accounts receivable shall be paid by LFI to LESCO in satisfaction of any
promissory note obligations of LFI to LESCO, and (iii) any funds remaining with
LFI thereafter or other funds and assets of LFI in excess of $25,000 in the
aggregate shall be paid by LFI to LESCO as a distribution on the capital stock
of LFI owned by LESCO in accordance with the resolutions of LFI contained in the
Action of the Board of Directors of LFI dated December 21, 2001.
(q) INSURANCE. Agent shall have received in form and substance
satisfactory to Agent, certified copies of Borrowers' casualty insurance
policies, together with loss payable endorsements on Agent's standard form of
loss payee endorsement naming Agent as loss payee, and certified copies of
Borrowers' liability insurance policies, together with endorsements naming Agent
as a co-insured;
(r) TITLE INSURANCE. Agent shall have received fully paid
mortgagee title insurance policies (or binding commitments to issue title
insurance policies, marked to Agent's satisfaction to evidence the form of such
policies to be delivered with respect to the Mortgage), in standard ALTA form,
issued by a title insurance company satisfactory to Agent, each in an amount
equal to not less than the fair market value of the Real Property and Leasehold
Interests subject to the Mortgage (other than the Mortgage on LESCO's Leasehold
Interest in Stockton, California), insuring the Mortgage to create a valid Lien
on the Real Property or Leasehold Interests with no exceptions which Agent shall
not have approved in writing;
(s) ENVIRONMENTAL REPORTS. Agent shall have received environmental
survey assessments prepared by independent environmental engineering firms with
respect to the Real Property located in Rocky River, Ohio, Avon Lake, Ohio and
Hatfield, Massachusetts, and certificates of LESCO which relate to environmental
matters at the Real Property located at Avon Lake, Ohio and Hatfield,
Massachusetts during the period from the date of the respective environmental
survey assessment to the Closing Date. On or before January 31, 2002, Agent
shall have received updated Phase I environmental survey assessments for the
Real Property and Leasehold Interests located at Avon Lake, Ohio, Hatfield,
Massachusetts, and Sebring, Florida;
(t) PAYMENT INSTRUCTIONS. Agent shall have received written
instructions from Borrowers directing the application of proceeds of the initial
Advances made pursuant to this Agreement;
(u) BLOCKED ACCOUNTS. Agent shall have received duly executed
agreements establishing the Blocked Accounts or Depository Accounts with
financial institutions acceptable to Agent for the collection or servicing of
the Receivables and proceeds of the Collateral;
(v) CONSENTS. Agent shall have received any and all Consents
necessary to permit the effectuation of the transactions contemplated by this
Agreement and the Other Documents; and, Agent shall have received such Consents
and waivers of such third parties as might assert claims with respect to the
Collateral, as Agent and its counsel shall deem necessary;
(w) NO ADVERSE MATERIAL CHANGE. (i) since September 30, 2001,
there shall not have occurred any event, condition or state of facts which could
reasonably be expected to
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have a Material Adverse Effect and (ii) no representations made or information
supplied to Agent shall have been proven to be inaccurate or misleading in any
material respect;
(x) LEASEHOLD AGREEMENTS. Subject to Section 6.8, Agent shall have
received landlord and warehouseman agreements satisfactory to Agent with respect
to all premises leased by Borrowers at which Inventory is located;
(y) MORTGAGE. Agent shall have received in form and substance
satisfactory to Lenders (i) an executed Mortgage for each owned Real Property
and Leasehold Interest other than the Real Property located at Martins Ferry,
Belmont County, Ohio, Wellington, Ohio and Windsor, New Jersey; provided
however, the Mortgage on the Leasehold Interest in Stockton, California shall be
delivered in accordance with Section 6.9. Within 30 days of the Closing Date,
Agent shall have received surveys for the Real Property and Leasehold Interests
subject to the Mortgages (excluding the Stockton, California Leasehold Interest)
in form and content satisfactory to the Agent; and
(z) INTENTIONALLY OMITTED.
[(aa) INTENTIONALLY OMITTED.
(bb) INTENTIONALLY OMITTED.
(cc) CONTRACT REVIEW. Agent shall have reviewed all material
contracts of Borrowers including, without limitation, leases, union contracts,
labor contracts, vendor supply contracts, license agreements and distributorship
agreements and such contracts and agreements shall be satisfactory in all
respects to Agent;
(dd) CLOSING CERTIFICATE. Agent shall have received a closing
certificate signed by the Chief Financial Officer of each Borrower dated as of
the date hereof, stating that (i) all representations and warranties set forth
in this Agreement and the Other Documents are true and correct on and as of such
date, (ii) Borrowers are on such date in compliance with all the terms and
provisions set forth in this Agreement and the Other Documents and (iii) on such
date no Default or Event of Default has occurred or is continuing;
(ee) BORROWING BASE. Agent shall have received evidence from
Borrowers that the aggregate amount of Eligible Receivables and Eligible
Inventory is sufficient in value and amount to support Advances in the amount
requested by Borrowers on the Closing Date;
(ff) UNDRAWN AVAILABILITY. After giving effect to the initial
Advances hereunder, Borrowers shall have Undrawn Availability of at least
$11,500,000; and
(gg) OTHER. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
Transactions shall be satisfactory in form and substance to Agent and its
counsel.
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8.2. CONDITIONS TO EACH ADVANCE. The agreement of Lenders to make any
Advance requested to be made on any date (including, without limitation, the
initial Advance), is subject to the satisfaction of the following conditions
precedent as of the date such Advance is made:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties made by any Borrower in or pursuant to this Agreement and any
related agreements to which it is a party, and each of the representations and
warranties contained in any certificate, document or financial or other
statement furnished at any time under or in connection with this Agreement or
any related agreement shall be true and correct in all material respects on and
as of such date as if made on and as of such date;
(b) NO DEFAULT. No Event of Default or Default shall have occurred
and be continuing on such date, or would exist after giving effect to the
Advances requested to be made, on such date; PROVIDED, HOWEVER that Agent, in
its sole discretion, may continue to make Advances notwithstanding the existence
of an Event of Default or Default and that any Advances so made shall not be
deemed a waiver of any such Event of Default or Default; and
(c) MAXIMUM ADVANCES. In the case of any Advances requested to be
made, after giving effect thereto, the aggregate Advances shall not exceed the
maximum amount of Advances permitted under Section 2.1 hereof.
Each request for an Advance by any Borrower hereunder shall constitute a
representation and warranty by each Borrower as of the date of such Advance that
the conditions contained in this subsection shall have been satisfied.
IX. INFORMATION AS TO BORROWERS.
Each Borrower shall, until satisfaction in full of the Obligations and
the termination of this Agreement:
9.1. DISCLOSURE OF MATERIAL MATTERS. Immediately upon learning thereof,
report to Agent all matters materially affecting the value, enforceability or
collectibility of any portion of the Collateral including, without limitation,
any Borrower's reclamation or repossession of, or the return to any Borrower of,
a material amount of goods or claims or disputes asserted by any Customer or
other obligor.
9.2. SCHEDULES. Deliver to Agent on or before the fifteenth (15th) day
of each month as and for the prior month (a) accounts receivable ageings, (b)
accounts payable schedules, (c) Inventory reports, (d) reconciliation of
accounts receivable ageings, and accounts payable to the general ledger, and (e)
a Borrowing Base Certificate (which shall be calculated as of the last day of
the prior month and which shall not be binding upon Agent or restrictive of
Agent's rights under this Agreement). In addition, each Borrower will deliver to
Agent at such intervals as Agent may require: (i) confirmatory assignment
schedules, (ii) copies of Customer's invoices, (iii) evidence of shipment or
delivery, and (iv) such further schedules, documents and/or
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information regarding the Collateral as Agent may require including, without
limitation, trial balances and test verifications. Agent shall have the right to
confirm and verify all Receivables by any manner and through any medium it
considers advisable and do whatever it may deem reasonably necessary to protect
its interests hereunder. The items to be provided under this Section are to be
in form satisfactory to Agent and executed by each Borrower and delivered to
Agent from time to time solely for Agent's convenience in maintaining records of
the Collateral, and any Borrower's failure to deliver any of such items to Agent
shall not affect, terminate, modify or otherwise limit Agent's Lien with respect
to the Collateral.
9.3. ENVIRONMENTAL REPORTS. Furnish Agent, concurrently with the
delivery of the financial statements referred to in Sections 9.7 and 9.8, with a
certificate signed by the President of each Borrower stating, to the best of his
knowledge, each such Borrower is in compliance in all material respects with all
applicable Environmental Laws and OSHA. To the extent any Borrower is not in
material compliance with the foregoing laws, the certificate shall set forth
with specificity all areas of such non-compliance and the proposed action such
Borrower will implement in order to achieve material compliance.
9.4. LITIGATION. Promptly notify Agent in writing of any litigation,
suit or administrative proceeding affecting any Borrower, whether or not the
claim is covered by insurance, and of any suit or administrative proceeding,
which in any such case could reasonably be expected to have a Material Adverse
Effect.
9.5. MATERIAL OCCURRENCES. Promptly notify Agent in writing upon the
occurrence of (a) any Event of Default or Default; (b) any event, development or
circumstance whereby any financial statements or other reports furnished to
Agent fail in any material respect to present fairly, in accordance with GAAP
consistently applied, the financial condition or operating results of any
Borrower as of the date of such statements; (c) any accumulated retirement plan
funding deficiency which, if such deficiency continued for two plan years and
was not corrected as provided in Section 4971 of the Code, could subject any
Borrower to a tax imposed by Section 4971 of the Code; (d) each and every
default by any Borrower which might result in the acceleration of the maturity
of any Indebtedness, including the names and addresses of the holders of such
Indebtedness with respect to which there is a default existing or with respect
to which the maturity has been or could be accelerated, and the amount of such
Indebtedness; and (e) any other development in the business or affairs of any
Borrower which could reasonably be expected to have a Material Adverse Effect;
in each case describing the nature thereof and the action Borrowers propose to
take with respect thereto.
9.6. GOVERNMENT RECEIVABLES. Notify Agent promptly if any of its
Receivables arise out of contracts between any Borrower and the United States or
any department, agency or instrumentality thereof.
9.7. ANNUAL FINANCIAL STATEMENTS. Furnish Agent within ninety (90) days
after the end of each fiscal year of Borrowers, financial statements of
Borrowers on a consolidating and consolidated basis including, but not limited
to, statements of income and stockholders' equity and cash flow from the
beginning of the current fiscal year to the end of such fiscal year and the
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balance sheet as at the end of such fiscal year, all prepared in accordance with
GAAP applied on a basis consistent with prior practices, and in reasonable
detail and reported upon without qualification by an independent certified
public accounting firm selected by Borrowers and reasonably satisfactory to
Agent (the "Accountants"). The report of the Accountants shall be accompanied by
a statement of the Accountants certifying that (i) they have caused the Loan
Agreement to be reviewed, (ii) in making the examination upon which such report
was based either no information came to their attention which to their knowledge
constituted an Event of Default or a Default under this Agreement or any related
agreement or, if such information came to their attention, specifying any such
Default or Event of Default, its nature, when it occurred and whether it is
continuing, and such report shall contain or have appended thereto calculations
which set forth Borrowers' compliance with the requirements or restrictions
imposed by Sections 6.5, 6.6, 6.7, 7.6 and 7.11 hereof. In addition, the reports
shall be accompanied by a certificate of each Borrower's Chief Financial Officer
which shall state that, based on an examination sufficient to permit him to make
an informed statement, no Default or Event of Default exists, or, if such is not
the case, specifying such Default or Event of Default, its nature, when it
occurred, whether it is continuing and the steps being taken by such Borrower
with respect to such event, and such certificate shall have appended thereto
calculations which set forth Borrowers' compliance with the requirements or
restrictions imposed by Sections 6.5, 6.6, 6.7, 7.6 and 7.11 hereof.
9.8. QUARTERLY FINANCIAL STATEMENTS. Furnish Agent within 45 days after
the end of each fiscal quarter, an unaudited balance sheet of Borrowers on a
consolidated and consolidating basis and unaudited statements of income and
stockholders' equity and cash flow of Borrowers on a consolidated and
consolidating basis reflecting results of operations from the beginning of the
fiscal year to the end of such quarter and for such quarter, prepared on a basis
consistent with prior practices and complete and correct in all material
respects, subject to normal and recurring year end adjustments that individually
and in the aggregate are not material to the business of Borrowers. The reports
shall be accompanied by a certificate signed by the Chief Financial Officer of
each Borrower, which shall state that, based on an examination sufficient to
permit him to make an informed statement, no Default or Event of Default exists,
or, if such is not the case, specifying such Default or Event of Default, its
nature, when it occurred, whether it is continuing and the steps being taken by
Borrowers with respect to such default and, such certificate shall have appended
thereto calculations which set forth Borrowers' compliance with the requirements
or restrictions imposed by Sections 6.5, 6.6, 6.7, 7.6 and 7.11 hereof.
9.9. MONTHLY FINANCIAL STATEMENTS. Furnish Agent within thirty (30)
days after the end of each month (except for the month of December, for which
such statements shall be provided within sixty (60) days of each December 31),
an unaudited consolidated balance sheet of Borrowers and unaudited consolidated
statements of income and stockholders' equity and cash flow of Borrowers
reflecting results of operations from the beginning of the fiscal year to the
end of such month and for such month, prepared on a basis consistent with prior
practices and complete and correct in all material respects, subject to normal
and recurring year end adjustments that individually and in the aggregate are
not material to the business of Borrowers. The reports shall be accompanied by a
certificate of each Borrower's Chief Financial Officer, which shall state that,
based on an examination sufficient to permit him to make an informed
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statement, no Default or Event of Default exists, or, if such is not the case,
specifying such Default or Event of Default, its nature, when it occurred,
whether it is continuing and the steps being taken by Borrowers with respect to
such event and, such certificate shall have appended thereto calculations which
set forth Borrowers' compliance with the requirements or restrictions imposed by
Sections 6.5, 6.6, 6.7, 7.6 and 7.11 hereof.
9.10. OTHER REPORTS. Furnish Agent as soon as available, but in any
event within ten (10) days after the issuance thereof, with copies of such
financial statements, reports and returns as each Borrower shall send to its
stockholders.
9.11. ADDITIONAL INFORMATION. Furnish Agent with such additional
information as Agent shall reasonably request in order to enable Agent to
determine whether the terms, covenants, provisions and conditions of this
Agreement and the Notes have been complied with by Borrowers including, without
limitation (a) copies of all environmental audits and reviews, (b) without the
necessity of any request by the Agent, at least thirty (30) days prior thereto,
notice of any Borrower's opening of any new office or place of business or any
Borrower's closing of any existing office or place of business, and (c) promptly
upon any Borrower's learning thereof, notice of any labor dispute to which any
Borrower may become a party, any strikes or walkouts relating to any of its
plants or other facilities, and the expiration of any labor contract to which
any Borrower is a party or by which any Borrower is bound.
9.12. PROJECTED OPERATING BUDGET. Furnish Agent, no later than thirty
(30) days prior to the beginning of each Borrower's fiscal years commencing with
fiscal year 2003, a month by month projected operating budget and cash flow of
Borrowers on a consolidated basis for such fiscal year (including an income
statement for each month and a balance sheet as at the end of the last month in
each fiscal quarter), such projections to be accompanied by a certificate signed
by the President or Chief Financial Officer of each Borrower to the effect that
such projections have been prepared on the basis of sound financial planning
practice consistent with past budgets and financial statements and that such
officer has no reason to question the reasonableness of any material assumptions
on which such projections were prepared..
9.13. VARIANCES FROM OPERATING BUDGET. Furnish Agent, concurrently with
the delivery of the financial statements referred to in Section 9.7 and each
quarterly report, a written report summarizing all material variances from
budgets submitted by Borrowers pursuant to Section 9.12 and a discussion and
analysis by management with respect to such variances.
9.14. NOTICE OF SUITS, ADVERSE EVENTS. Furnish Agent with prompt notice
of (i) any lapse or other termination of any Consent issued to any Borrower by
any Governmental Body or any other Person that is material to the operation of
any Borrower's business, (ii) any refusal by any Governmental Body or any other
Person to renew or extend any such Consent; and (iii) copies of any periodic or
special reports filed by any Borrower with any Governmental Body or Person, if
such reports indicate any material change in the business, operations, affairs
or condition of any Borrower, or if copies thereof are reasonably requested by
Lender, and (iv) copies of any material notices and other communications from
any Governmental Body or Person which specifically relate to any Borrower.
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9.15. ERISA NOTICES AND REQUESTS. Furnish Agent with immediate written
notice in the event that (i) any Borrower or any member of the Controlled Group
knows or has reason to know that a Termination Event has occurred, together with
a written statement describing such Termination Event and the action, if any,
which such Borrower or any member of the Controlled Group has taken, is taking,
or proposes to take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, Department of Labor or PBGC with
respect thereto, (ii) any Borrower or any member of the Controlled Group knows
or has reason to know that a prohibited transaction (as defined in Sections 406
of ERISA and 4975 of the Code for which an exemption is not available) has
occurred together with a written statement describing such transaction and the
action which such Borrower or any member of the Controlled Group has taken, is
taking or proposes to take with respect thereto, (iii) a funding waiver request
has been filed with respect to any Plan together with all communications
received by any Borrower or any member of the Controlled Group with respect to
such request, (iv) any increase in the benefits of any existing defined benefit
pension plan or the establishment of any new defined benefit pension plan or the
commencement of contributions to any defined benefit pension plan to which any
Borrower or any member of the Controlled Group was not previously contributing
shall occur, (v) any Borrower or any member of the Controlled Group shall
receive from the PBGC a notice of intention to terminate a Plan or to have a
trustee appointed to administer a Plan, together with copies of each such
notice, (vi) any Borrower or any member of the Controlled Group shall receive
any unfavorable determination letter from the Internal Revenue Service regarding
the qualification of a Plan under Section 401(a) of the Code, together with
copies of each such letter; (vii) any Borrower or any member of the Controlled
Group shall receive a notice regarding the imposition of withdrawal liability,
together with copies of each such notice; (viii) any Borrower or any member of
the Controlled Group shall fail to make a required installment or any other
required payment under Section 412 of the Code on or before the due date for
such installment or payment; (ix) any Borrower or any member of the Controlled
Group knows that (a) a Multiemployer Plan has been terminated, (b) the
administrator or plan sponsor of a Multiemployer Plan intends to terminate a
Multiemployer Plan, or (c) the PBGC has instituted or will institute proceedings
under Section 4042 of ERISA to terminate a Multiemployer Plan.
9.16. ADDITIONAL DOCUMENTS. Execute and deliver to Agent, upon
reasonable request, such documents and agreements as Agent may, from time to
time, reasonably request to carry out the purposes, terms or conditions of this
Agreement.
X. EVENTS OF DEFAULT.
The occurrence of any one or more of the following events shall
constitute an "Event of Default":
10.1. failure by any Borrower to pay any principal or interest on the
Obligations when due, whether at maturity or by reason of acceleration pursuant
to the terms of this Agreement or by notice of intention to prepay, or by
required prepayment or failure to pay any other liabilities
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or make any other payment, fee or charge provided for herein when due or in any
Other Document;
10.2. any representation or warranty made or deemed made by any
Borrower in this Agreement or any related agreement or in any certificate,
document or financial or other statement furnished at any time in connection
herewith or therewith shall prove to have been misleading in any material
respect on the date when made or deemed to have been made;
10.3. failure by any Borrower to (i) furnish financial information when
due or when reasonably requested, or (ii) permit the inspection of its books or
records;
10.4. issuance of a notice of Lien, levy, assessment, injunction or
attachment against a material portion of any Borrower's property, except for
Permitted Encumbrances;
10.5. except as otherwise provided for in Sections 10.1 and 10.3,
failure or neglect of any Borrower to perform, keep or observe any term,
provision, condition, covenant herein contained, or contained in any other
agreement or arrangement, now or hereafter entered into between any Borrower and
Agent or any Lender except for a failure or neglect of any Borrower to perform,
keep or observe any term, provision, condition or covenant, contained in
Sections 4.6, 4.7, 4.9, 6.4 or 9.6 hereof which is cured within five (5) days
from the occurrence of such failure or neglect;
10.6. any judgment or judgments are rendered or judgment liens filed
against any Borrower for an aggregate amount in excess of $450,000 which within
thirty (30) days of such rendering or filing is not either satisfied, stayed or
discharged of record;
10.7. any Borrower shall (i) apply for, consent to or suffer the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar fiduciary of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of creditors, (iii)
commence a voluntary case under any state or federal bankruptcy laws (as now or
hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a
petition seeking to take advantage of any other law providing for the relief of
debtors, (vi) acquiesce to, or fail to have dismissed, within thirty (30) days,
any petition filed against it in any involuntary case under such bankruptcy
laws, or (vii) take any action for the purpose of effecting any of the
foregoing;
10.8. any Borrower shall admit in writing its inability, or be
generally unable, to pay its debts as they become due or cease operations of its
present business;
10.9. any Affiliate or any Subsidiary of any Borrower shall (i) apply
for, consent to or suffer the appointment of, or the taking of possession by, a
receiver, custodian, trustee, liquidator or similar fiduciary of itself or of
all or a substantial part of its property, (ii) admit in writing its inability,
or be generally unable, to pay its debts as they become due or cease operations
of its present business, (iii) make a general assignment for the benefit of
creditors, (iv) commence a voluntary case under any state or federal bankruptcy
laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or
insolvent, (vi) file a petition seeking to take advantage of any other law
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providing for the relief of debtors, (vii) acquiesce to, or fail to have
dismissed, within thirty (30) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (viii) take any action for the
purpose of effecting any of the foregoing;
10.10. any change in any Borrower's condition or affairs (financial or
otherwise) which in Agent's opinion has a Material Adverse Effect;
10.11. any Lien created hereunder or provided for hereby or under any
related agreement which relates to Collateral having a value in excess of
$500,000 individually or in the aggregate for any reason ceases to be or is not
a valid and perfected Lien having a first priority interest;
10.12. INTENTIONALLY OMITTED.
10.13. a default of the obligations of any Borrower under any other
agreement to which it is a party shall occur which adversely affects its
condition, affairs or prospects (financial or otherwise) which default is not
cured within any applicable grace period;
10.14. INTENTIONALLY OMITTED ;
10.15. any Change of Ownership or Change of Control shall occur;
10.16. any material provision of this Agreement shall, for any reason,
cease to be valid and binding on any Borrower, or any Borrower shall so claim in
writing to Agent;
10.17. (i) any Governmental Body shall (A) revoke, terminate, suspend
or adversely modify any material license, permit, patent trademark or tradename
of any Borrower, the continuation of which is material to the continuation of
any Borrower's business, or (B) commence proceedings to suspend, revoke,
terminate or adversely modify any such license, permit, trademark, tradename or
patent and such proceedings shall not be dismissed or discharged within sixty
(60) days, or (c) schedule or conduct a hearing on the renewal of any license,
permit, trademark, tradename or patent necessary for the continuation of any
Borrower's business and the staff of such Governmental Body issues a report
recommending the termination, revocation, suspension or material, adverse
modification of such license, permit, trademark, tradename or patent; (ii) any
agreement which is necessary or material to the operation of any Borrower's
business shall be revoked or terminated and not replaced by a substitute
acceptable to Agent within thirty (30) days after the date of such revocation or
termination, and such revocation or termination and non-replacement would
reasonably be expected to have a Material Adverse Effect;
10.18. any portion of the Collateral shall be seized or taken by a
Governmental Body, or any Borrower or the title and rights of any Borrower or
any Original Owner which is the owner of any material portion of the Collateral
shall have become the subject matter of litigation which might, in the opinion
of Agent, upon final determination, result in impairment or loss of the security
provided by this Agreement or the Other Documents;
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10.19. an event or condition specified in Sections 7.16 or 9.15 hereof
shall occur or exist with respect to any Plan and, as a result of such event or
condition, together with all other such events or conditions, any Borrower or
any member of the Controlled Group shall incur, or in the opinion of Agent be
reasonably likely to incur, a liability to a Plan or the PBGC (or both) which,
in the reasonable judgment of Agent, would have a Material Adverse Effect.
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.
11.1. RIGHTS AND REMEDIES. Upon the occurrence of (i) an Event of
Default pursuant to Section 10.7 all Obligations shall be immediately due and
payable and this Agreement and the obligation of Lenders to make Advances shall
be deemed terminated; and, (ii) any of the other Events of Default and at any
time thereafter (such default not having previously been cured), at the option
of Required Lenders all Obligations shall be immediately due and payable and
Lenders shall have the right to terminate this Agreement and to terminate the
obligation of Lenders to make Advances and (iii) a filing of a petition against
Borrower in any involuntary case under any state or federal bankruptcy laws, the
obligation of Lenders to make Advances hereunder shall be terminated other than
as may be required by an appropriate order of the bankruptcy court having
jurisdiction over any Borrower. Upon the occurrence of any Event of Default,
Agent shall have the right to exercise any and all other rights and remedies
provided for herein, under the Uniform Commercial Code and at law or equity
generally, including, without limitation, the right to foreclose the security
interests granted herein and to realize upon any Collateral by any available
judicial procedure and/or to take possession of and sell any or all of the
Collateral with or without judicial process. Agent may enter any of any
Borrower's premises or other premises without legal process and without
incurring liability to any Borrower therefor, and Agent may thereupon, or at any
time thereafter, in its discretion without notice or demand, take the Collateral
and remove the same to such place as Agent may deem advisable and Agent may
require Borrowers to make the Collateral available to Agent at a convenient
place. With or without having the Collateral at the time or place of sale, Agent
may sell the Collateral, or any part thereof, at public or private sale, at any
time or place, in one or more sales, at such price or prices, and upon such
terms, either for cash, credit or future delivery, as Agent may elect. Except as
to that part of the Collateral which is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market, Agent
shall give Borrowers reasonable notification of such sale or sales, it being
agreed that in all events written notice mailed to Borrowers at least five (5)
days prior to such sale or sales is reasonable notification. At any public sale
Agent or any Lender may bid for and become the purchaser, and Agent, any Lender
or any other purchaser at any such sale thereafter shall hold the Collateral
sold absolutely free from any claim or right of whatsoever kind, including any
equity of redemption and such right and equity are hereby expressly waived and
released by each Borrower. In connection with the exercise of the foregoing
remedies, Agent is granted permission to use all of each Borrower's trademarks,
trade styles, trade names, patents, patent applications, licenses, franchises
and other proprietary rights which are used in connection with (a) Inventory for
the purpose of disposing of such Inventory and (b) Equipment for the purpose of
completing the manufacture of unfinished goods. The proceeds realized from the
sale of any Collateral shall be applied as follows: first, to the reasonable
costs, expenses and attorneys' fees and expenses incurred by Agent for
collection
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and for acquisition, completion, protection, removal, storage, sale and delivery
of the Collateral; second, to interest due upon any of the Obligations and any
fees payable under this Agreement; and, third, to the principal of the
Obligations. If any deficiency shall arise, Borrowers shall remain liable to
Agent and Lenders therefor.
11.2. AGENT'S DISCRETION. Agent shall have the right in its sole
discretion to determine which rights, Liens, security interests or remedies
Agent may at any time pursue, relinquish, subordinate, or modify or to take any
other action with respect thereto and such determination will not in any way
modify or affect any of Agent's or Lenders' rights hereunder.
11.3. SETOFF. In addition to any other rights which Agent or any Lender
may have under applicable law, upon the occurrence of an Event of Default
hereunder, Agent and such Lender shall have a right to apply any Borrower's
property held by Agent and such Lender to reduce the Obligations.
11.4. RIGHTS AND REMEDIES NOT EXCLUSIVE. The enumeration of the
foregoing rights and remedies is not intended to be exhaustive and the exercise
of any right or remedy shall not preclude the exercise of any other right or
remedies provided for herein or otherwise provided by law, all of which shall be
cumulative and not alternative.
11.5. ALLOCATION OF PAYMENTS AFTER EVENT OF DEFAULT. Notwithstanding
any other provisions of this Agreement to the contrary, after the occurrence and
during the continuance of an Event of Default, all amounts collected or received
by the Agent on account of the Obligations or any other amounts outstanding
under any of the Other Documents or in respect of the Collateral may, at Agent's
discretion, be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation, reasonable attorneys' fees) of the Agent
in connection with enforcing the rights of the Lenders under this Agreement and
the Other Documents and any protective advances made by the Agent with respect
to the Collateral under or pursuant to the terms of this Document;
SECOND, to payment of any fees owed to the Agent;
THIRD, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation, reasonable attorneys' fees) of each of
the Lenders in connection with enforcing its rights under this Agreement and the
Other Documents or otherwise with respect to the Obligations owing to such
Lender;
FOURTH, to the payment of all of the Obligations consisting of accrued
fees and interest;
FIFTH, to the payment of the outstanding principal amount of the
Obligations (including the payment or cash collateralization of the outstanding
Letters of Credit);
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SIXTH, to all other Obligations and other obligations which shall have
become due and payable under the Other Documents or otherwise and not repaid
pursuant to clauses "FIRST" through "FIFTH" above;
SEVENTH, to the payment of the surplus, if any, to whoever may be
lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (ii) each of the Lenders shall receive (so long as it is
not a Defaulting Lender) an amount equal to its pro rata share (based on the
proportion that the then outstanding Advances held by such Lender bears to the
aggregate then outstanding Advances) of amounts available to be applied pursuant
to clauses "THIRD", "FOURTH", "FIFTH" and "SIXTH" above; and (iii) to the extent
that any amounts available for distribution pursuant to clause "FIFTH" above are
attributable to the issued but undrawn amount of outstanding Letters of Credit,
such amounts shall be held by the Agent in a cash collateral account and applied
(A) first, to reimburse the Issuer from time to time for any drawings under such
Letters of Credit and (B) then, following the expiration of all Letters of
Credit, to all other obligations of the types described in clauses "FIFTH" and
"SIXTH" above in the manner provided in this Section 11.5.
XII. WAIVERS AND JUDICIAL PROCEEDINGS.
12.1. WAIVER OF NOTICE. Each Borrower hereby waives notice of
non-payment of any of the Receivables, demand, presentment, protest and notice
thereof with respect to any and all instruments, notice of acceptance hereof,
notice of loans or advances made, credit extended, Collateral received or
delivered, or any other action taken in reliance hereon, and all other demands
and notices of any description, except such as are expressly provided for
herein.
12.2. DELAY. No delay or omission on Agent's or any Lender's part in
exercising any right, remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any default.
12.3. JURY WAIVER. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO
OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
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TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
XIII. EFFECTIVE DATE AND TERMINATION.
13.1. TERM. This Agreement, which shall inure to the benefit of and
shall be binding upon the respective successors and permitted assigns of each
Borrower, Agent and each Lender, shall become effective on the date hereof and
shall continue in full force and effect until January 14, 2005 (the "Term")
unless sooner terminated as herein provided. Borrowers may terminate this
Agreement at any time upon thirty (30) days' prior written notice upon payment
in full of the Obligations.
13.2. TERMINATION. The termination of the Agreement shall not affect
any Borrower's, Agent's or any Lender's rights, or any of the Obligations having
their inception prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights or interests created or Obligations have been fully
disposed of, concluded or liquidated. The security interests, Liens and rights
granted to Agent and Lenders hereunder and the financing statements filed
hereunder shall continue in full force and effect, notwithstanding the
termination of this Agreement or the fact that Borrowers' Account may from time
to time be temporarily in a zero or credit position, until all of the
Obligations of each Borrower have been paid or performed in full after the
termination of this Agreement or each Borrower has furnished Agent and Lenders
with an indemnification reasonably satisfactory to Agent and Lenders with
respect thereto. Accordingly, each Borrower waives any rights which it may have
under the Uniform Commercial Code to demand the filing of termination statements
with respect to the Collateral, and Agent shall not be required to send such
termination statements to each Borrower, or to file them with any filing office,
unless and until this Agreement shall have been terminated in accordance with
its terms and all Obligations paid in full in immediately available funds. All
representations, warranties, covenants, waivers and agreements contained herein
shall survive termination hereof until all Obligations are paid or performed in
full.
XIV. REGARDING AGENT.
14.1. APPOINTMENT. Each Lender hereby designates PNC to act as Agent
for such Lender under this Agreement and the Other Documents. Each Lender hereby
irrevocably authorizes Agent to take such action on its behalf under the
provisions of this Agreement and the Other Documents and to exercise such powers
and to perform such duties hereunder and thereunder as are specifically
delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto and Agent shall hold all Collateral,
payments of principal and interest, fees (except the fees set forth in the Fee
Letter and Section 3.4), charges and collections (without giving effect to any
collection days) received pursuant to
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this Agreement, for the ratable benefit of Lenders. Agent may perform any of its
duties hereunder by or through its agents or employees. As to any matters not
expressly provided for by this Agreement (including without limitation,
collection of the Note) Agent shall not be required to exercise any discretion
or take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Required Lenders, and such instructions shall be binding;
PROVIDED, HOWEVER, that Agent shall not be required to take any action which
exposes Agent to liability or which is contrary to this Agreement or the Other
Documents or applicable law unless Agent is furnished with an indemnification
reasonably satisfactory to Agent with respect thereto.
14.2. NATURE OF DUTIES. Agent shall have no duties or responsibilities
except those expressly set forth in this Agreement and the Other Documents.
Neither Agent nor any of its officers, directors, employees or agents shall be
(i) liable for any action taken or omitted by them as such hereunder or in
connection herewith, unless caused by their gross (not mere) negligence or
willful misconduct, or (ii) responsible in any manner for any recitals,
statements, representations or warranties made by any Borrower or any officer
thereof contained in this Agreement, or in any of the Other Documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any of the
Other Documents or for the value, validity, effectiveness, genuineness, due
execution, enforceability or sufficiency of this Agreement, or any of the Other
Documents or for any failure of any Borrower to perform its obligations
hereunder. Agent shall not be under any obligation to any Lender to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any of the Other Documents, or
to inspect the properties, books or records of any Borrower. The duties of Agent
as respects the Advances to Borrowers shall be mechanical and administrative in
nature; Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Lender; and nothing in this Agreement, expressed
or implied, is intended to or shall be so construed as to impose upon Agent any
obligations in respect of this Agreement except as expressly set forth herein.
14.3. LACK OF RELIANCE ON AGENT AND RESIGNATION. Independently and
without reliance upon Agent or any other Lender, each Lender has made and shall
continue to make (i) its own independent investigation of the financial
condition and affairs of each Borrower in connection with the making and the
continuance of the Advances hereunder and the taking or not taking of any action
in connection herewith, and (ii) its own appraisal of the creditworthiness of
each Borrower. Agent shall have no duty or responsibility, either initially or
on a continuing basis, to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession before
making of the Advances or at any time or times thereafter except as shall be
provided by any Borrower pursuant to the terms hereof. Agent shall not be
responsible to any Lender for any recitals, statements, information,
representations or warranties herein or in any agreement, document, certificate
or a statement delivered in connection with or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of this
Agreement or any Other Document, or of the financial condition of any Borrower,
or be required to make any inquiry concerning either the performance or
observance of any of the terms,
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provisions or conditions of this Agreement, the Note, the Other Documents or the
financial condition of any Borrower, or the existence of any Event of Default or
any Default.
Agent may resign on sixty (60) days' written notice to each of Lenders
and Borrowing Agent and upon such resignation, the Required Lenders will
promptly designate a successor Agent reasonably satisfactory to Borrowers.
Any such successor Agent shall succeed to the rights, powers and duties
of Agent, and the term "Agent" shall mean such successor agent effective upon
its appointment, and the former Agent's rights, powers and duties as Agent shall
be terminated, without any other or further act or deed on the part of such
former Agent. After any Agent's resignation as Agent, the provisions of this
Article XIV shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
14.4. CERTAIN RIGHTS OF AGENT. If Agent shall request instructions from
Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any Other Document, Agent shall be entitled to
refrain from such act or taking such action unless and until Agent shall have
received instructions from the Required Lenders; and Agent shall not incur
liability to any Person by reason of so refraining. Without limiting the
foregoing, Lenders shall not have any right of action whatsoever against Agent
as a result of its acting or refraining from acting hereunder in accordance with
the instructions of the Required Lenders.
14.5. RELIANCE. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, order or other
document or telephone message believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or entity, and, with respect
to all legal matters pertaining to this Agreement and the Other Documents and
its duties hereunder, upon advice of counsel selected by it. Agent may employ
agents and attorneys-in-fact and shall not be liable for the default or
misconduct of any such agents or attorneys-in-fact selected by Agent with
reasonable care other than for Agent's gross negligence or willful misconduct.
14.6. NOTICE OF DEFAULT. Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder or under
the Other Documents, unless Agent has received notice from a Lender or a
Borrower referring to this Agreement or the Other Documents, describing such
Default or Event of Default and stating that such notice is a "notice of
default". In the event that Agent receives such a notice, Agent shall give
notice thereof to Lenders. Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Required
Lenders; PROVIDED, THAT, unless and until Agent shall have received such
directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of Lenders.
14.7. INDEMNIFICATION. To the extent Agent is not reimbursed and
indemnified by Borrowers, each Lender will reimburse and indemnify Agent in
proportion to its respective
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portion of the Advances (or, if no Advances are outstanding, according to its
Commitment Percentage), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against Agent in performing its duties hereunder, or in any way
relating to or arising out of this Agreement or any Other Document; PROVIDED
THAT, Lenders shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from Agent's gross (not mere) negligence or
willful misconduct.
14.8. AGENT IN ITS INDIVIDUAL CAPACITY. With respect to the obligation
of Agent to lend under this Agreement, the Advances made by it shall have the
same rights and powers hereunder as any other Lender and as if it were not
performing the duties as Agent specified herein; and the term "Lender" or any
similar term shall, unless the context clearly otherwise indicates, include
Agent in its individual capacity as a Lender. Agent may engage in business with
any Borrower as if it were not performing the duties specified herein, and may
accept fees and other consideration from any Borrower for services in connection
with this Agreement or otherwise without having to account for the same to
Lenders.
14.9. DELIVERY OF DOCUMENTS. To the extent Agent receives financial
statements required under Sections 9.7, 9.8, 9.9, 9.12, 9.13 and the Borrowing
Base Certificate from any Borrower pursuant to the terms of this Agreement,
Agent will promptly furnish such documents and information to Lenders.
14.10. BORROWERS' UNDERTAKING TO AGENT. Without prejudice to their
respective obligations to Lenders under the other provisions of this Agreement,
each Borrower hereby undertakes with Agent to pay to Agent from time to time on
demand all amounts from time to time due and payable by it for the account of
Agent or Lenders or any of them pursuant to this Agreement to the extent not
already paid. Any payment made pursuant to any such demand shall PRO TANTO
satisfy the relevant Borrower's obligations to make payments for the account of
Lenders or the relevant one or more of them pursuant to this Agreement.
XV. BORROWING AGENCY.
15.1. BORROWING AGENCY PROVISIONS.
(a) Each Borrower hereby irrevocably designates Borrowing Agent
to be its attorney and agent and in such capacity to borrow, sign and endorse
notes, and execute and deliver all instruments, documents, writings and further
assurances now or hereafter required hereunder, on behalf of such Borrower or
Borrowers, and hereby authorizes Agent to pay over or credit all loan proceeds
hereunder in accordance with the request of Borrowing Agent.
(b) The handling of this credit facility as a co-borrowing
facility with a borrowing agent in the manner set forth in this Agreement is
solely as an accommodation to Borrowers and at their request. Neither Agent nor
any Lender shall incur liability to Borrowers
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as a result thereof. To induce Agent and Lenders to do so and in consideration
thereof, each Borrower hereby indemnifies Agent and each Lender and holds Agent
and each Lender harmless from and against any and all liabilities, expenses,
losses, damages and claims of damage or injury asserted against Agent or any
Lender by any Person arising from or incurred by reason of the handling of the
financing arrangements of Borrowers as provided herein, reliance by Agent or any
Lender on any request or instruction from Borrowing Agent or any other action
taken by Agent or any Lender with respect to this Section 15.1 except due to
willful misconduct or gross (not mere) negligence by the indemnified party.
(c) All Obligations shall be joint and several, and each Borrower
shall make payment upon the maturity of the Obligations by acceleration or
otherwise, and such obligation and liability on the part of each Borrower shall
in no way be affected by any extensions, renewals and forbearance granted to
Agent or any Lender to any Borrower, failure of Agent or any Lender to give any
Borrower notice of borrowing or any other notice, any failure of Agent or any
Lender to pursue or preserve its rights against any Borrower, the release by
Agent or any Lender of any Collateral now or thereafter acquired from any
Borrower, and such agreement by each Borrower to pay upon any notice issued
pursuant thereto is unconditional and unaffected by prior recourse by Agent or
any Lender to the other Borrowers or any Collateral for such Borrower's
Obligations or the lack thereof. Each Borrower waives all suretyship defenses.
15.2. WAIVER OF SUBROGATION. Each Borrower expressly waives any and all
rights of subrogation, reimbursement, indemnity, exoneration, contribution of
any other claim which such Borrower may now or hereafter have against the other
Borrowers or other Person directly or contingently liable for the Obligations
hereunder, or against or with respect to the other Borrowers' property
(including, without limitation, any property which is Collateral for the
Obligations), arising from the existence or performance of this Agreement, until
termination of this Agreement and repayment in full of the Obligations.
XVI. MISCELLANEOUS.
16.1. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Ohio. Any judicial proceeding
brought by or against any Borrower with respect to any of the Obligations, this
Agreement or any related agreement may be brought in any court of competent
jurisdiction in the State of Ohio, United States of America, and, by execution
and delivery of this Agreement, each Borrower accepts for itself and in
connection with its properties, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by any
judgment rendered thereby in connection with this Agreement. Each Borrower
hereby waives personal service of any and all process upon it and consents that
all such service of process may be made by registered mail (return receipt
requested) directed to Borrowing Agent at its address set forth in Section 16.6
and service so made shall be deemed completed five (5) days after the same shall
have been so deposited in the mails of the United States of America, or, at the
Agent's and/or any Lender's option, by personal service upon Borrowing Agent
which each Borrower irrevocably appoints as such Borrower's Agent for the
purpose of accepting service within the State of Ohio. Nothing
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herein shall affect the right to serve process in any manner permitted by law or
shall limit the right of Agent or any Lender to bring proceedings against any
Borrower in the courts of any other jurisdiction. Each Borrower waives any
objection to jurisdiction and venue of any action instituted hereunder and shall
not assert any defense based on lack of jurisdiction or venue or based upon
FORUM NON CONVENIENS. Any judicial proceeding by any Borrower against Agent or
any Lender involving, directly or indirectly, any matter or claim in any way
arising out of, related to or connected with this Agreement or any related
agreement, shall be brought only in a federal or state court located in the
County of Cuyahoga, State of Ohio.
16.2. ENTIRE UNDERSTANDING. (a)This Agreement and the documents
executed concurrently herewith contain the entire understanding between each
Borrower, Agent and each Lender and supersedes all prior agreements and
understandings, if any, relating to the subject matter hereof. Any promises,
representations, warranties or guarantees not herein contained and hereinafter
made shall have no force and effect unless in writing, signed by each
Borrower's, Agent's and each Lender's respective officers. Neither this
Agreement nor any portion or provisions hereof may be changed, modified,
amended, waived, supplemented, discharged, cancelled or terminated orally or by
any course of dealing, or in any manner other than by an agreement in writing,
signed by the party to be charged. Each Borrower acknowledges that it has been
advised by counsel in connection with the execution of this Agreement and Other
Documents and is not relying upon oral representations or statements
inconsistent with the terms and provisions of this Agreement.
(b) The Required Lenders, Agent with the consent in writing of
the Required Lenders, and Borrowers may, subject to the provisions of this
Section 16.2 (b), from time to time enter into written supplemental agreements
to this Agreement or the Other Documents executed by Borrowers, for the purpose
of adding or deleting any provisions or otherwise changing, varying or waiving
in any manner the rights of Lenders, Agent or Borrowers thereunder or the
conditions, provisions or terms thereof of waiving any Event of Default
thereunder, but only to the extent specified in such written agreements;
PROVIDED, HOWEVER, that no such supplemental agreement shall, without the
consent of all Lenders:
(i) increase the Maximum Loan Amount or the Commitment
Percentage or maximum dollar commitment of any Lender.
(ii) extend the maturity of any Note or the due date for any
amount payable hereunder, or decrease the rate of interest or reduce any
fee payable by Borrowers to Lenders pursuant to this Agreement.
(iii) alter the definition of the term Required Lenders or
alter, amend or modify this Section 16.2(b).
(iv) release any Collateral during any calendar year (other
than in accordance with the provisions of this Agreement) having an
aggregate value in excess of $1,000,000.
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(v) change the rights and duties of Agent.
(vi) permit any Revolving Advance to be made if after giving
effect thereto the total of Revolving Advances outstanding hereunder would
exceed the Formula Amount for more than thirty (30) consecutive Business
Days or exceed one hundred and five percent (105%) of the Formula Amount.
(vii) increase the Advance Rates above the Advance Rates in
effect on the Closing Date.
Any such supplemental agreement shall apply equally to each Lender and shall be
binding upon Borrowers, Lenders and Agent and all future holders of the
Obligations. In the case of any waiver, Borrowers, Agent and Lenders shall be
restored to their former positions and rights, and any Event of Default waived
shall be deemed to be cured and not continuing, but no waiver of a specific
Event of Default shall extend to any subsequent Event of Default (whether or not
the subsequent Event of Default is the same as the Event of Default which was
waived), or impair any right consequent thereon.
In the event that Agent requests the consent of a Lender pursuant to
this Section 16.2 and such Lender shall not respond or reply to Agent in writing
within ten (10) days of delivery of such request, such Lender shall be deemed to
have consented to matter that was the subject of the request. In the event that
Agent requests the consent of a Lender pursuant to this Section 16.2 and such
consent is denied, then PNC may, at its option, require such Lender to assign
its interest in the Advances to PNC or to another Lender or to any other Person
designated by the Agent (the "Designated Lender"), for a price equal to the then
outstanding principal amount thereof plus accrued and unpaid interest and fees
due such Lender, which interest and fees shall be paid when collected from
Borrowers. In the event PNC elects to require any Lender to assign its interest
to PNC or to the Designated Lender, PNC will so notify such Lender in writing
within forty five (45) days following such Lender's denial, and such Lender will
assign its interest to PNC or the Designated Lender no later than five (5) days
following receipt of such notice pursuant to a Commitment Transfer Supplement
executed by such Lender, PNC or the Designated Lender, as appropriate, and
Agent.
Notwithstanding (a) the existence of a Default or an Event of Default,
(b) that any of the other applicable conditions precedent set forth in Section
8.2 hereof have not been satisfied or (c) any other provision of this Loan
Agreement, Agent may at its discretion and without the consent of the Required
Lenders, voluntarily permit the outstanding Revolving Advances at any time to
exceed an amount equal to the sum of (i) the Formula Amount minus (ii) the
amount of minimum Undrawn Availability required by Section 6.12 hereof at such
time (such sum, the "Overadvance Threshold Amount") by up to one hundred and
five percent (105%) of the Overadvance Threshold Amount for up to thirty (30)
consecutive Business Days. For purposes of the preceding sentence, the
discretion granted to Agent hereunder shall not preclude involuntary
overadvances that may result from time to time due to the fact that the
Overadvance Threshold Amount was unintentionally exceeded for any reason,
including, but not limited to, Collateral previously deemed to be either
"Eligible Receivables" or "Eligible Inventory", as
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applicable, becomes ineligible, collections of Receivables applied to reduce
outstanding Revolving Advances are thereafter returned for insufficient funds or
overadvances are made to protect or preserve the Collateral. In the event Agent
involuntarily permits the outstanding Revolving Advances to exceed the
Overadvance Threshold Amount by more than five percent (5%), Agent shall use its
efforts to have Borrowers decrease such excess in as expeditious a manner as is
practicable under the circumstances and not inconsistent with the reason for
such excess. Revolving Advances made after Agent has determined the existence of
involuntary overadvances shall be deemed to be involuntary overadvances and
shall be decreased in accordance with the preceding sentence.
In addition to (and not in substitution of) the discretionary Revolving
Advances permitted above in this Section 16.2, the Agent is hereby authorized by
the Borrowers and the Lenders, from time to time in the Agent's sole discretion,
(A) after the occurrence and during the continuation of a Default or an Event of
Default, or (b) at any time that any of the other applicable conditions
precedent set forth in Section 8.2 hereof have not been satisfied, to make
Revolving Advances to the Borrowers on behalf of the Lenders which the Agent, in
its reasonable business judgment, deems necessary or desirable (a) to preserve
or protect the Collateral, or any portion thereof, (b) to enhance the likelihood
of, or maximize the amount of, repayment of the Advances and other Obligations,
or (iii) to pay any other amount chargeable to the Borrowers pursuant to the
terms of this Agreement; PROVIDED, THAT at any time after giving effect to any
such Revolving Advances the outstanding Revolving Advances do not exceed one
hundred and five percent (105%) of the Formula Amount.
16.3. SUCCESSORS AND ASSIGNS; PARTICIPATIONS; NEW LENDERS.
(a) This Agreement shall be binding upon and inure to the benefit
of Borrowers, Agent, each Lender, all future holders of the Obligations and
their respective successors and assigns, except that no Borrower may assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of Agent and each Lender.
(b) Each Borrower acknowledges that in the regular course of
commercial banking business one or more Lenders may at any time and from time to
time sell participating interests in the Advances to other financial
institutions (each such transferee or purchaser of a participating interest, a
"Transferee"). Each Transferee may exercise all rights of payment (including
without limitation rights of set-off) with respect to the portion of such
Advances held by it or other Obligations payable hereunder as fully as if such
Transferee were the direct holder thereof provided that Borrowers shall not be
required to pay to any Transferee more than the amount which it would have been
required to pay to Lender which granted an interest in its Advances or other
Obligations payable hereunder to such Transferee had such Lender retained such
interest in the Advances hereunder or other Obligations payable hereunder and in
no event shall Borrowers be required to pay any such amount arising from the
same circumstances and with respect to the same Advances or other Obligations
payable hereunder to both such Lender and such Transferee. Each Borrower hereby
grants to any Transferee a continuing security interest in any deposits, moneys
or other property actually or constructively held by such Transferee as security
for the Transferee's interest in the Advances.
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(c) Any Lender may with the consent of Agent which shall not be
unreasonably withheld or delayed sell, assign or transfer all or any part of its
rights under this Agreement and the Other Documents to one or more additional
banks or financial institutions and one or more additional banks or financial
institutions may commit to make Advances hereunder (each a "Purchasing Lender"),
in minimum amounts of not less than $5,000,000, pursuant to a Commitment
Transfer Supplement, executed by a Purchasing Lender, the transferor Lender, and
Agent and delivered to Agent for recording. Upon such execution, delivery,
acceptance and recording, from and after the transfer effective date determined
pursuant to such Commitment Transfer Supplement, (i) Purchasing Lender
thereunder shall be a party hereto and, to the extent provided in such
Commitment Transfer Supplement, have the rights and obligations of a Lender
thereunder with a Commitment Percentage as set forth therein, and (ii) the
transferor Lender thereunder shall, to the extent provided in such Commitment
Transfer Supplement, be released from its obligations under this Agreement, the
Commitment Transfer Supplement creating a novation for that purpose. Such
Commitment Transfer Supplement shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the addition of such
Purchasing Lender and the resulting adjustment of the Commitment Percentages
arising from the purchase by such Purchasing Lender of all or a portion of the
rights and obligations of such transferor Lender under this Agreement and the
Other Documents. Borrowers hereby consent to the addition of such Purchasing
Lender and the resulting adjustment of the Commitment Percentages arising from
the purchase by such Purchasing Lender of all or a portion of the rights and
obligations of such transferor Lender under this Agreement and the Other
Documents. Borrowers shall execute and deliver such further documents and do
such further acts and things in order to effectuate the foregoing.
(d) Agent shall maintain at its address a copy of each Commitment
Transfer Supplement delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Advances owing to each Lender from
time to time. The entries in the Register shall be conclusive, in the absence of
manifest error, and Borrowers, Agent and Lenders may treat each Person whose
name is recorded in the Register as the owner of the Advance recorded therein
for the purposes of this Agreement. The Register shall be available for
inspection by Borrowers or any Lender at any reasonable time and from time to
time upon reasonable prior notice. Agent shall receive a fee in the amount of
$3,500 payable by the applicable Purchasing Lender upon the effective date of
each transfer or assignment to such Purchasing Lender.
(e) Each Borrower authorizes each Lender to disclose to any
Transferee or Purchasing Lender and any prospective Transferee or Purchasing
Lender any and all financial information in such Lender's possession concerning
such Borrower which has been delivered to such Lender by or on behalf of such
Borrower pursuant to this Agreement or in connection with such Lender's credit
evaluation of such Borrower.
16.4. APPLICATION OF PAYMENTS. Agent shall have the continuing and
exclusive right to apply or reverse and re-apply any payment and any and all
proceeds of Collateral to any portion of the Obligations. To the extent that any
Borrower makes a payment or Agent or any Lender receives any payment or proceeds
of the Collateral for any Borrower's benefit, which are
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subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, debtor in possession, receiver, custodian
or any other party under any bankruptcy law, common law or equitable cause,
then, to such extent, the Obligations or part thereof intended to be satisfied
shall be revived and continue as if such payment or proceeds had not been
received by Agent or such Lender.
16.5. INDEMNITY. Each Borrower shall indemnify Agent, each Lender and
each of their respective officers, directors, Affiliates, employees and agents
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind or nature whatsoever (including, without limitation, fees and disbursements
of counsel) which may be imposed on, incurred by, or asserted against Agent or
any Lender in any litigation, proceeding or investigation instituted or
conducted by any governmental agency or instrumentality or any other Person with
respect to any aspect of, or any transaction contemplated by, or referred to in,
or any matter related to, this Agreement or the Other Documents, whether or not
Agent or any Lender is a party thereto, except to the extent that any of the
foregoing arises out of the gross negligence or willful misconduct of the party
being indemnified.
16.6. NOTICE. Except as otherwise provided in Section 16.1, any notice
or request hereunder may be given to Borrowing Agent or any Borrower or to Agent
or any Lender at their respective addresses set forth below or at such other
address as may hereafter be specified in a notice designated as a notice of
change of address under this Section. Any notice, request, demand, direction or
other communication (for purposes of this Section 16.6 only, a "Notice") to be
given to or made upon any party hereto under any provision of this Loan
Agreement shall be given or made by telephone or in writing (which includes by
means of electronic transmission (i.e., "e-mail") or facsimile transmission or
by setting forth such Notice on a site on the World Wide Web (a "Website
Posting") if Notice of such Website Posting (including the information necessary
to access such site) has previously been delivered to the applicable parties
hereto by another means set forth in this Section 16.6) in accordance with this
Section 16.6. Any such Notice must be delivered to the applicable parties hereto
at the addresses and numbers set forth under their respective names on Section
16.6 hereof or in accordance with any subsequent unrevoked Notice from any such
party that is given in accordance with this Section 16.6. Any Notice shall be
effective:
(a) In the case of hand-delivery, when delivered;
(b) If given by mail, four days after such Notice is deposited
with the United States Postal Service, with first-class postage prepaid, return
receipt requested;
(c) In the case of a telephonic Notice, when a party is contacted
by telephone, if delivery of such telephonic Notice is confirmed no later than
the next Business Day by hand delivery, a facsimile or electronic transmission,
a Website Posting or an overnight courier delivery of a confirmatory Notice
(received at or before noon on such next Business Day);
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(d) In the case of a facsimile transmission, when sent to the
applicable party's facsimile machine's telephone number, if the party sending
such Notice receives confirmation of the delivery thereof from its own facsimile
machine;
(e) In the case of electronic transmission, when actually
received;
(f) In the case of a Website Posting, upon delivery of a Notice
of such posting (including the information necessary to access such site) by
another means set forth in this Section 16.6; and
(g) If given by any other means (including by overnight courier),
when actually received.
Any Lender giving a Notice to Borrowing Agent or any Borrower shall
concurrently send a copy thereof to the Agent, and the Agent shall promptly
notify the other Lenders of its receipt of such Notice.
(A) If to Agent or PNC at: PNC Bank, National Association
One PNC Plaza, 6th Floor
000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to: PNC Bank, National Association
Agency Services
Xxx XXX Xxxxx, 00xx Xxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxx Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
and a copy to:
Xxxxxxxx Xxxxxxxxx Professional
Corporation
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(B) If to a Lender other than Agent, as specified on the signature
pages hereof.
(C) If to Borrowing Agent
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or any Borrower, at: LESCO, Inc.
00000 Xxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxxxx,
General Counsel
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to: Xxxxx & Xxxxxxxxx LLP
3200 National City Center
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: M.H. (Bart) Xxxxx III
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
16.7. SURVIVAL. The obligations of Borrowers under Sections 2.2(f),
3.7, 3.8, 3.9, 4.19(h), and 16.5 shall survive termination of this Agreement and
the Other Documents and payment in full of the Obligations. The obligations of
the Lenders to the Agent under Section 14.7 shall survive termination of this
Agreement and the Other Documents and payment in full of the Obligations.
16.8. SEVERABILITY. If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible.
16.9. EXPENSES. All costs and expenses including, without limitation,
reasonable attorneys' fees (including the allocated costs of in house counsel)
and disbursements incurred by Agent on its behalf or on behalf of Lenders (a) in
all efforts made to enforce payment of any Obligation or effect collection of
any Collateral, or (b) in connection with the entering into, modification,
amendment, administration and enforcement of this Agreement or any consents or
waivers hereunder and all related agreements, documents and instruments, or (c)
in instituting, maintaining, preserving, enforcing and foreclosing on Agent's
security interest in or Lien on any of the Collateral, whether through judicial
proceedings or otherwise, or (d) in defending or prosecuting any actions or
proceedings arising out of or relating to Agent's or any Lender's transactions
with any Borrower, or (e) in connection with any advice given to Agent or any
Lender with respect to its rights and obligations under this Agreement and all
related agreements, may be charged to Borrowers' Account and shall be part of
the Obligations.
16.10. INJUNCTIVE RELIEF. Each Borrower recognizes that, in the event
any Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to Lenders; therefore, Agent, if Agent so requests, shall be entitled to
temporary and permanent injunctive relief in any such case without the necessity
of proving that actual damages are not an adequate remedy.
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16.11. CONSEQUENTIAL DAMAGES. Neither Agent nor any Lender, nor any
agent or attorney for any of them, shall be liable to any Borrower for
consequential damages arising from any breach of contract, tort or other wrong
relating to the establishment, administration or collection of the Obligations.
16.12. CAPTIONS. The captions at various places in this Agreement are
intended for convenience only and do not constitute and shall not be interpreted
as part of this Agreement.
16.13. COUNTERPARTS; TELECOPIED SIGNATURES. This Agreement may be
executed in any number of and by different parties hereto on separate
counterparts, all of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission shall be deemed to be an original
signature hereto.
16.14. CONSTRUCTION. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
16.15. CONFIDENTIALITY; SHARING INFORMATION. (a) Agent, each Lender and
each Transferee shall hold all non-public information obtained by Agent, such
Lender or such Transferee pursuant to the requirements of this Agreement in
accordance with Agent's, such Lender's and such Transferee's customary
procedures for handling confidential information of this nature; PROVIDED,
HOWEVER, Agent, each Lender and each Transferee may disclose such confidential
information (a) to its examiners, affiliates, outside auditors, counsel and
other professional advisors, (b) to Agent, any Lender or to any prospective
Transferees and Purchasing Lenders, and (c) as required or requested by any
Governmental Body or representative thereof or pursuant to legal process;
PROVIDED, FURTHER that (i) unless specifically prohibited by applicable law or
court order, Agent, each Lender and each Transferee shall use its best efforts
prior to disclosure thereof, to notify the applicable Borrower of the applicable
request for disclosure of such non-public information (A) by a Governmental Body
or representative thereof (other than any such request in connection with an
examination of the financial condition of a Lender or a Transferee by such
Governmental Body) or (B) pursuant to legal process and (ii) in no event shall
Agent, any Lender or any Transferee be obligated to return any materials
furnished by any Borrower other than those documents and instruments in
possession of Agent or any Lender in order to perfect its Lien on the Collateral
once the Obligations have been paid in full and this Agreement has been
terminated.
(b) Each Borrower acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
such Borrower or one or more of its Affiliates (in connection with this
Agreement or otherwise) by any Lender or by one or more Subsidiaries or
Affiliates of such Lender and each Borrower hereby authorizes each Lender to
share any information delivered to such Lender by such Borrower and its
Subsidiaries pursuant to this Agreement, or in connection with the decision of
such Lender to enter into this Agreement, to any such Subsidiary or Affiliate of
such Lender, it being understood that any such
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Subsidiary or Affiliate of any Lender receiving such information shall be bound
by the provision of Section 16.15 as if it were a Lender hereunder. Such
authorization shall survive the repayment of the other Obligations and the
termination of the Loan Agreement.
16.16. PNC CONSENT. Any provision of the Reimbursement Agreement to the
contrary notwithstanding, PNC's execution and delivery of this Agreement
constitutes its consent to the consummation of the transactions contemplated
herein, and any default or event of default under the Reimbursement Agreement
caused solely by the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereunder are hereby waived. Other
than the foregoing waiver, PNC expressly retains all rights and remedies under
the Reimbursement Agreement.
In addition to the foregoing, PNC Bank hereby consents to the
termination of the Liens on the Borrowers' assets in favor of Xxxxx Fargo Bank
Northwest, National Association (as collateral agent for, INTER ALIA, PNC,
hereafter referred to as Well Fargo) pursuant to Section 8.1(o) upon the payment
in good funds of the Existing Indebtedness. In connection therewith, PNC Bank
hereby consents to the termination of the following documents on the Closing
Date: (i) the Intercreditor Agreement dated as of August 7, 2001, among Xxxxx
Fargo, National City Bank, PNC Bank, and the holders of the notes described in
the definition of Existing Indebtedness, (ii) the separate security agreements
dated as of August 7, 2001, by each of the Borrowers in favor of Xxxxx Fargo,
and (iii) the separate guaranty agreements dated as of August 7, 2001, of each
of the Borrowers (other than LESCO).
16.17. PUBLICITY. Each Borrower and each Lender hereby authorizes Agent
to make appropriate announcements of the financial arrangement entered into
among Borrowers, Agent and Lenders, including, without limitation, announcements
which are commonly known as tombstones, in such publications and to such
selected parties as Agent shall in its sole and absolute discretion deem
appropriate.
[SIGNATURE PAGES FOLLOW]
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Each of the parties has signed this Agreement as of the day and year first above
written.
LESCO, INC.
By: (SEAL)
----------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Address:
------------------------------------
------------------------------------
LESCO SERVICES, INC.
By: (SEAL)
----------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Address:
------------------------------------
------------------------------------
LESCO TECHNOLOGIES, LLC
By: (SEAL)
----------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Address:
------------------------------------
------------------------------------
AIM LAWN & GARDEN PRODUCTS, INC.
By: (SEAL)
----------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Address:
------------------------------------
------------------------------------
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PNC BANK, NATIONAL ASSOCIATION, as
Lender and as Agent
By: (SEAL)
----------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Address:
------------------------------------
------------------------------------
Commitment Percentage: _____%
[LENDER]
By: (SEAL)
----------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Address:
------------------------------------
------------------------------------
Commitment Percentage: _____%
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STATE OF OHIO )
) ss.
COUNTY OF CUYAHOGA )
On this _____ day of ______________, 2001, before me personally came
______________________________, to me known, who, being by me duly sworn, did
depose and say that he is the __________________ of _______________________, the
corporation described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the board of directors
of said corporation, and that he signed his name thereto by like order.
-------------------------------------
Notary Public
MY COMMISSION EXPIRES:
STATE OF OHIO )
) ss.
COUNTY OF CUYAHOGA )
On this _____ day of ______________, 2001, before me personally came
______________________________, to me known, who, being by me duly sworn, did
depose and say that he is the __________________ of _______________________, the
corporation described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the board of directors
of said corporation, and that he signed his name thereto by like order.
-------------------------------------
Notary Public
MY COMMISSION EXPIRES:
-89-
STATE OF OHIO )
) ss.
COUNTY OF CUYAHOGA )
On this _____ day of ______________, 2001, before me personally came
______________________________, to me known, who, being by me duly sworn, did
depose and say that he is the __________________ of PNC BANK, NATIONAL
ASSOCIATION, the ______________ described in and which executed the foregoing
instrument and that he signed his name thereto by on behalf of said
_____________.
-------------------------------------
Notary Public
MY COMMISSION EXPIRES:
STATE OF OHIO )
) ss.
COUNTY OF CUYAHOGA )
On this _____ day of ______________, 2001, before me personally came
______________________________, to me known, who, being by me duly sworn, did
depose and say that he is the __________________ of _______________________, the
corporation described in and which executed the foregoing instrument and that he
signed his name thereto by order of the board of directors of said corporation.
-------------------------------------
Notary Public
MY COMMISSION EXPIRES:
-90-
LIST OF EXHIBITS AND SCHEDULES
Exhibits
Exhibit 2.1(a) Revolving Credit Note
Exhibit 2.4(a) Term Note
Exhibit 5.5(b) Financial Projections
Exhibit 6.6 Projected EBITDA
Exhibit 8.1(k) Financial Condition Certificate
Exhibit 16.3 Commitment Transfer Supplement
Exhibit A Borrowing Base Certificate
Schedules
Schedule 1.2 Permitted Encumbrances
Schedule 4.5 Equipment and Inventory Locations
Schedule 4.15(c) Location of Executive Offices
Schedule 4.19 Real Property
Schedule 5.2(a) States of Qualification and Good Standing
Schedule 5.2(b) Subsidiaries
Schedule 5.4 Federal Tax Identification Number
Schedule 5.6 Prior Names
Schedule 5.7 Environmental
Schedule 5.8(b) Litigation
Schedule 5.8(d) Plans
Schedule 5.9 Intellectual Property, Source Code Escrow
Agreements
Schedule 5.10 Licenses and Permits
Schedule 5.14 Labor Disputes
Schedule 7.8 Indebtedness
