XXXXXXX XXXXX MEZZANINE CAPITAL FUND II, L.P.
SENIOR SUBORDINATED LOAN AGREEMENT
$13,500,000 SENIOR SUBORDINATED TERM NOTE
DUE JUNE 30, 2004
[R-B CAPITAL CORPORATION]
TABLE OF CONTENTS
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Page
ARTICLE 1 DEFINITIONS...................................................... 1
1.1 Certain Definitions.............................................. 1
1.2 Accounting Principles............................................ 8
ARTICLE 2 CREDIT TERMS..................................................... 8
2.1 Purchase and Sale of the Notes................................... 8
2.2 Repayment of Principal........................................... 9
2.3 Interest......................................................... 9
2.4 Prepayments...................................................... 9
2.5 Payments.........................................................10
2.6 Pro Rata Payment.................................................10
ARTICLE 3 CLOSING DELIVERIES...............................................11
ARTICLE 4 REPRESENTATIONS AND WARRANTIES...................................12
4.1 Organization and Qualification...................................12
4.2 Authorization, Validity and Enforceability.......................12
4.3 Capitalization...................................................13
4.4 No Event of Default; Compliance with Instruments.................13
4.5 Compliance with Laws.............................................13
4.6 Litigation.......................................................14
4.7 Regulations G and X..............................................14
4.8 ERISA............................................................14
4.9 Subsidiaries.....................................................14
4.10 Financial Condition..............................................14
4.11 Absence of Undisclosed Liabilities...............................14
4.12 Assets...........................................................15
4.13 Tax Matters......................................................15
4.14 Contracts........................................................15
[4.15 Armaments; Northern Ireland; South Africa].......................15
ARTICLE 5 AFFIRMATIVE COVENANTS............................................16
5.1 Payment of Obligations...........................................16
5.2 Preservation of Corporate Existence..............................16
5.3 Payment of Taxes and Claims......................................16
5.4 Reporting Requirements...........................................16
5.5 Notices to Lender................................................18
5.6 Maintenance of Insurance.........................................19
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5.7 Maintenance of Properties........................................19
5.8 Keeping of Records and Books of Account..........................19
5.9 Visitation Rights................................................19
5.10 Compliance with Laws.............................................19
5.11 Performance of Agreements........................................19
5.12 Environmental and Safety Matters.................................19
5.13 Use of Proceeds..................................................20
5.14 Assertion of Rights Under Certain Agreements.....................20
ARTICLE 6 NEGATIVE COVENANTS...............................................20
6.1 Indebtedness.....................................................20
6.2 Liens............................................................21
6.3 Contingent Obligations...........................................21
6.4 Operating Lease Obligations......................................21
6.5 Merger or Sale...................................................21
6.6 Purchase or Acquisition. Except as contemplated by the
Related Transactions Documents...................................21
6.7 Investments......................................................22
6.8 Distributions....................................................22
6.9 Amendments or Changes in Agreements..............................22
6.10 Transactions with Affiliates.....................................22
6.11 Business Conducted...............................................22
6.12 Fiscal Year......................................................22
6.13 Sale and Leaseback Transactions..................................23
6.14 Investment Banking, Broker's and Finder's Fees...................23
6.15 Subsidiaries.....................................................23
6.16 Capital Expenditures.............................................23
6.17 Allocation of Consideration......................................23
6.18 Additional Financial Covenants...................................23
6.19 Waiver of Rights Under Certain Agreements........................23
ARTICLE 7 DEFAULT..........................................................23
7.1 Events of Default................................................23
7.2 Consequences of Event of Default.................................25
7.3 Other Rights.....................................................25
ARTICLE 8 REPRESENTATIONS AND WARRANTIES OF LENDER.........................25
8.1 Capacity.........................................................25
8.2 Accredited Investor..............................................25
8.3 Investment Purpose...............................................26
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ARTICLE 9 TRANSFER OF THE NOTE..............................................26
9.1 Successors and Assigns in General.................................26
9.2 Transfer..........................................................26
ARTICLE 10 MISCELLANEOUS.....................................................27
10.1 Modifications, Amendments or Waivers..............................27
10.2 No Implied Waivers; Cumulative Remedies; Writing Required.........27
10.3 Reimbursement of Expenses; Taxes..................................27
10.4 Notices...........................................................28
10.5 Survival..........................................................28
10.6 Governing Law; Consent to Jurisdiction and Service of Process;
Waiver of Jury Trial..............................................29
10.7 Severability......................................................30
10.8 Headings..........................................................30
10.9 Counterparts......................................................30
10.10 Indemnification...................................................30
10.11 Payment Set Aside.................................................32
10.12 Interpretation....................................................32
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SENIOR SUBORDINATED LOAN AGREEMENT
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This SENIOR SUBORDINATED LOAN AGREEMENT is made and entered into as of
_____________, 1997 between [R-B CAPITAL CORPORATION], a [Minnesota]
corporation, as the borrower ("[R-B CAPITAL]"); and XXXXXXX XXXXX MEZZANINE
CAPITAL FUND II, L.P., a Delaware limited partnership ("Xxxxx"), as the lender.
In consideration of the mutual covenants and agreements contained herein,
the parties agree as follows:
ARTICLE 1
DEFINITIONS
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1.1 Certain Definitions. In addition to other terms defined elsewhere in
this Agreement, the following terms shall have the meanings set forth below:
"Acquisition" shall mean the acquisition of all of the common stock of
Peerless Parent through the Offer and the Merger.
"Affiliate" of any Person shall mean any other Person which directly
or indirectly controls, is controlled by or is under common control with such
Person. For purposes hereof, "control" shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of management or
policies of a Person whether through ownership of securities, by contract or
otherwise; provided, however, that any director, executive officer or other
Person which owns directly or indirectly 5% or more of the securities of any
other Person having ordinary voting power for the election of directors shall be
deemed to control such other Person. Under no circumstances shall Lender be
deemed to be an Affiliate of Borrower or any of its Affiliates.
"Agreement" shall mean this Senior Subordinated Loan Agreement, as it
may be amended, modified or supplemented from time to time.
"Bankruptcy Code" shall mean the Federal Bankruptcy Reform Act of 1978
(11 U.S.C. (S)101, et seq.), as amended and in effect from time to time and the
regulations issued from time to time thereunder.
"Borrower" shall mean [R-B CAPITAL] and, where applicable hereunder,
its successors by merger.
"Business Day" shall mean any day other than a Saturday, Sunday or
public holiday under the laws of the State of Illinois or other day on which
banking institutions are authorized or obligated to close in the State of
Illinois.
"Capital Expenditures" shall mean, for any period and with respect to
any Person, the aggregate of all expenditures by such Person and its
Subsidiaries for such period for the acquisition or leasing under Capital Leases
of fixed or capital assets or additions to fixed or capital assets (including
replacements, capitalized repairs and improvements during such period) which
should be capitalized under GAAP on a consolidated balance sheet of such Person
and its Subsidiaries.
"Capital Lease" shall mean a lease under which the obligations of the
lessee would, in accordance with GAAP, be included in determining total
liabilities as shown on the liability side of a balance sheet of the lessee.
"Capital Lease Obligations" shall mean the amount of the liability
reflecting the aggregate discounted amount of future payments under all Capital
Leases calculated in accordance with GAAP and Statement of Financial Accounting
Standards No. 13.
"Cash Flow" shall mean, for any period, EBITDA for such period minus
Capital Expenditures paid in cash for such period and otherwise permitted by
this Agreement, all as determined for Borrower and its Subsidiaries on a
consolidated basis in accordance with GAAP.
"Change of Control" shall mean the acquisition whether through a
single or series of transactions, by any Person or group of Persons other than
Lender, their respective Affiliates or their Permitted Transferees (as defined
in the Shareholders Agreement) of the voting power of 50% or more of Borrower's
common stock (as computed on a fully diluted basis).
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute, together with the rules and regulations
thereunder, in each case as in effect from time to time.
"Contingent Obligations", with respect to any Person, shall mean,
without duplication, any direct or indirect liability, contingent or otherwise
of such Person with respect to any Indebtedness of another or other obligation
or liability of another, including, without limitation, any such Indebtedness,
obligation or liability of another directly or indirectly guaranteed, endorsed
(other than for collection or deposit in the ordinary course of business), co-
made or discounted or sold with recourse by such Person, or in respect of which
such Person is otherwise directly or indirectly liable, including obligations or
liabilities, contingent or otherwise, arising through any agreement to purchase,
repurchase or otherwise acquire such Indebtedness obligation or liability or any
security therefor, or to provide funds for the payment or discharge thereof
(whether in the form of loans, advances, stock purchases, capital contributions
or otherwise), or to maintain solvency, assets, level of income or other
financial condition, or to make payment other than for value received. The
amount of any Contingent Obligation shall be the amount of the obligation to the
extent so guaranteed or otherwise supported, or any other contingent obligation
or liability of such Person, whether or not reflected in such Person's financial
statements.
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"Distribution", with respect to any Person, shall mean: (a) any
dividend or other distribution, direct or indirect, by such Person on account of
any shares of any class of stock of such Person; (b) any redemption, conversion,
exchange, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, by such Person of any shares of any
class of stock of such Person; and (c) any payment made by such Person to
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire shares of any class of stock of such Person other than
(x) dividend payments or other distributions payable solely in Securities and
(y) amounts fully funded by keyman insurance policies or the like and amounts of
up to _______ per annum to repurchase Securities of employees of Borrower or any
of its Subsidiaries.
"EBITDA" shall mean, for any period, for Borrower and its Subsidiaries
on a consolidated basis, determined in accordance with GAAP, the sum of (a) Net
Income (Loss) for such period, plus (b) all amounts deducted from net income (or
net loss) for such period for depreciation or amortization, plus (c) interest
expense deducted from net income (or net loss) for such period, plus (d) all
accrued taxes on or measured by income to the extent included in the
determination of such net income (or loss), plus (e) all other non-cash charges
which reduced Net Income (Loss) for such period.
"Environmental and Safety Requirements" shall mean all present and
future federal, state, local and foreign laws, statutes, rules, regulations,
ordinances and other requirements, including, without limitation, permits issued
thereunder, judicial and administrative orders and determinations, contractual
obligations and common law concerning public health and safety, nuisance, worker
health and safety, protection of the environment, pollution or contamination of
any type whatsoever, including, without limitation, all standards of conduct and
bases of obligations relating to the presence, use, production, generation,
handling, transport, treatment, storage, disposal, sale, distribution, labeling,
testing, processing, discharge, release, threatened release, control or cleanup
of any hazardous, toxic or otherwise dangerous chemical, material, substance or
waste, or mixture, pesticide, petroleum product or byproduct, asbestos,
polychlorinated biphenyls, noise or radiation.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute, together with the
rules and regulations thereunder, in each case as in effect from time to time.
"ERISA Affiliate" as applied to any Person, shall mean any trade or
business, (whether or not incorporated) which is a member of a group of which
that Person is a member and which is under common control or otherwise
affiliated within the meaning of Section 414 of the Code or Section 4001 of
ERISA and the regulations promulgated and rulings issued thereunder.
Notwithstanding the foregoing, neither Lender nor any of its Affiliates shall be
deemed an ERISA Affiliate.
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"Event of Default" shall mean any of the Events of Default described
in Section 7.1 hereof.
"Excess Cash Flow" shall mean, for any period, Cash Flow for such
period minus, to the extent paid in cash for such period, taxes, interest and
payments of principal on any Indebtedness.
"GAAP" shall mean United States generally accepted accounting
principles, as in effect from time to time, consistently applied.
"Indebtedness" of any Person shall mean, without duplication: (a) all
indebtedness for borrowed money, including, without limitation, indebtedness
constituting all or any part of the deferred purchase price of property or
services; (b) Capital Lease Obligations; (c) notes payable and drafts accepted
representing extensions of credit whether or not representing obligations for
borrowed money; (d) obligations under interest rate swap agreements, interest
rate cap agreements, interest rate collar agreements or other similar agreements
or arrangements designed to protect against fluctuations in interest rates; and
(e) all indebtedness secured by any Lien on any property or asset owned or held
by such Person regardless of whether the indebtedness secured thereby shall have
been assumed by such Person or is nonrecourse to the credit of such Person.
"Intercreditor Agreement" shall mean the Subordination Agreement of
even date herewith between Lender, Borrower and Senior Lender, in the form
attached hereto as Exhibit A, as the same may be amended or supplemented from
time to time.
"Investment" shall mean, with respect to any Person, (a) any direct or
indirect purchase or other acquisition by such Person of any beneficial interest
in, including stock, partnership interest, notes or other securities of, any
other Person and (b) any direct or indirect loan, advance or capital
contribution by such Person to any other Person, including all Indebtedness to
such Person arising from a sale of property by such Person other than in the
ordinary course of business.
"Lender" shall mean Xxxxx and its participants, transferees,
successors and assigns.
"Lien" shall mean any lien, mortgage, pledge, security interest,
charge or encumbrance of any kind, whether voluntary or involuntary, including
any conditional sale or other title retention agreement, any lease in the nature
thereof and any agreement to give any security interest.
"Material Adverse Effect" shall mean a material adverse change in, or
a material adverse effect upon, the business, operations, properties or
condition (financial or otherwise) of Borrower and its Subsidiaries taken as a
whole.
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"Merger" shall mean the merger of Borrower's subsidiary with and into
Peerless Parent contemplated by the Merger Agreement.
"Merger Agreement" shall mean the Agreement and Plan of Merger dated
as of April __, 1997 between Peerless Parent, Borrower's subsidiary and
Borrower.
"Multiemployer Plan" shall mean any Plan which is a "multiemployer
plan" as defined in Section 3(37) of ERISA.
"Multiple Employer Plan" shall mean a single employer plan as defined
in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of
Borrower or any of its ERISA Affiliates and at least one Person other than
Borrower or its ERISA Affiliates, or (b) was so maintained and with respect to
which Borrower or any of its ERISA Affiliates could have liability under Section
4064 or 4069 of ERISA in the event such plan has been or were to be terminated.
"Net Income (Loss)" shall mean, for any period, the net income (or
loss) of Borrower and its Subsidiaries on a consolidated basis for such period,
determined in accordance with GAAP; provided that in determining Net Income
(Loss) there shall be excluded:
(a) the income (or loss) of any Person which is not a Subsidiary
of Borrower, except to the extent of the amount of dividends or other
distributions actually paid to Borrower or any of its Subsidiaries in cash
by such Person during such period and the payment of dividends or similar
distributions by that Subsidiary is not at the time prohibited by operation
of the terms of its charter or of any agreement, instrument, judgment,
decree, statute, rule or governmental regulation applicable to that
Subsidiary;
(b) the income (or loss) of any Person accrued prior to the date
it becomes a Subsidiary of Borrower or is merged into or consolidated with
Borrower or any of its Subsidiaries or that Person's assets are acquired by
Borrower or any of its Subsidiaries;
(c) the proceeds of any life insurance policy; and
(d) any other extraordinary or non-recurring gains or losses of
Borrower or its Subsidiaries, and related tax effects in accordance with
GAAP.
"Obligations" shall mean all obligations of every nature of Borrower
from time to time owed to Lender under any of the Senior Subordinated Loan
Documents.
"Offer" shall mean the offer to purchase shares of common stock of
Peerless Parent contemplated by the Merger Agreement.
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"Peerless Chain" shall mean Peerless Chain Company, a Minnesota
corporation.
"Peerless Parent" shall mean Peerless Industrial Group, Inc., a
Minnesota corporation.
"Pension Plan" shall mean any employee pension benefit plan as defined
in Section 3(2) of ERISA, subject to Title IV of ERISA or Section 412 of the
Code or a money purchase pension plan.
"Person" shall mean any individual, corporation, partnership, company,
joint venture, association, bank, trust company or trust, whether or not legal
entities, or any governmental entity or agency or political subdivision thereof.
"Plan" shall mean any employee benefit plan as defined in Section 3(3)
of ERISA, whether or not terminated, to which Borrower or any of its ERISA
Affiliates maintains, contributes or has any actual or potential liability and
any other employee benefit or compensatory plan, program, policy or arrangement
with respect to which Borrower or any of its ERISA Affiliates has an actual or
potential liability.
"Potential Event of Default" shall mean any occurrence, condition, act
or omission which, with the passage of time or the giving of notice or both,
would result in an Event of Default hereunder.
"Principal" shall mean the unpaid principal amount of the senior
subordinated loans made pursuant to Section 2.1.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, and whether tangible or intangible.
"Qualified Plan" shall mean any employee pension benefit plan as
defined in Section 3(2) of ERISA other than a Pension Plan that is intended to
qualify under Section 401(a) of the Code.
"Quarterly Payment Date" shall mean the last day of March, June,
September and December of each year.
"Related Transactions" shall mean the Merger, the Offer, the Share
Purchase, the execution and delivery of the Related Transactions Documents, the
funding of the term loan pursuant to the Senior Subordinated Loan Documents, and
the payment of all fees, costs and expenses associated with all of the
foregoing.
"Related Transactions Documents" shall mean the Senior Subordinated
Loan Documents, the Senior Loan Documents, the Intercreditor Agreement, the
Shareholders
6
Agreement, the Merger Agreement, the Tender and Stock Option Agreement, the W.P.
Xxxxx Agreement and any other documents or instruments executed and delivered in
connection with the Merger of the Offer, if any.
"Sale" shall have the meaning set forth in Section 2.4(b).
"Securities" shall mean securities of the Company, including, without
limitation, shares of any class of the Company's common stock and securities
exercisable, convertible or exchangeable into shares thereof.
"Senior Indebtedness" shall mean any and all amounts constituting
Senior Indebtedness (as defined in the Intercreditor Agreement (as in effect on
the date hereof)).
"Senior Lender" shall mean The CIT Group/Business Credit, Inc.
"Senior Loan Agreement" shall mean that certain [Credit Agreement]
dated as of _______________, as amended to date, by and among Peerless Chain,
Peerless Chain of Iowa, Inc. and Senior Lender, as the same may be supplemented,
amended, modified or replaced from time to time in accordance with the
provisions of this Agreement.
"Senior Loan Documents" shall mean the Senior Loan Agreement and all
other documents, agreements, certificates and instruments attached thereto,
referred to therein or delivered in connection therewith, as any or all of the
foregoing may be supplemented, amended, modified or replaced from time to time
in accordance with the provisions of this Agreement.
"Senior Subordinated Loan Documents" shall mean this Agreement, the
Note (as herein defined), the Shareholders Agreement and any and all other
documents, agreements, certificates and instruments executed or delivered in
connection herewith or therewith, as any or all of the foregoing may be
supplemented, amended or modified from time to time.
"Share Purchase" shall mean the issuance and sale by Borrower and
purchase by Lender, upon the making of the Senior Subordinated Loan, of
Securities for an aggregate purchase price of $____________, all subject to and
upon the terms and conditions of the Shareholders Agreement, which such shares
shall, upon their issuance, be validly issued, fully paid and nonassessable and
free and clear of any and all Liens (except for those Liens arising by the terms
of the Shareholders Agreement).
"Shareholders Agreement" shall mean the Shareholders Agreement among
Borrower, Lender, [Ridge Advisors, Inc.] and the other shareholders named
therein, in the form attached hereto as Exhibit B, as the same may be amended or
supplemented from time to time.
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"Subsidiary" shall mean (i) any Person of which or in which a Person
owns directly or indirectly 100% of the combined voting power of all classes of
stock having general voting power under ordinary circumstances to elect a
majority of the board of directors of such Person, if it is a corporation, (ii)
the capital interest or profits interest of such Person, if it is a partnership,
joint venture or similar entity or (iii) the beneficial interest of such Person,
if it is a trust, association or other unincorporated entity.
"Tender and Stock Option Agreement" shall mean that certain Tender and
Stock Option Agreement dated as of April __, 1997 by and among Borrower,
Borrower's subsidiary and certain shareholders of Peerless Parent.
"W.P. Xxxxx Agreement" shall mean that certain Subordination, Consent
and Estoppel Agreement dated as of April __, 1997 by and between Lender,
Peerless Chain and CPA Peerless Limited Partnership.
Other terms are defined elsewhere in this Agreement.
1.2 Accounting Principles. Any accounting term used in this Agreement
shall have, unless otherwise specifically provided herein, the meaning
customarily given in accordance with GAAP and all financial computations
hereunder shall be computed, unless otherwise specifically provided herein, in
accordance with GAAP as consistently applied as to Borrower. If any changes in
GAAP are hereafter required or permitted and are adopted by Borrower with the
agreement of their certified public accountants and such changes result in a
change in the method of calculation of any of the financial covenants,
restrictions or standards herein or in the related definitions or terms used
therein, the parties hereto agree to enter into negotiations to amend such
provisions so as to reflect equitably such changes with the desired result that
the criteria for evaluating the financial condition of Borrower shall be the
same after such changes as if such changes had not been made; provided, however,
that no change in GAAP that would affect the method of calculation of any of the
financial covenants, restrictions or standards or definitions of terms used
therein shall be given effect in such calculations until such provisions are
amended in a manner reasonably satisfactory to Lender.
ARTICLE 2
CREDIT TERMS
2.1 Purchase and Sale of the Notes. Subject to the terms hereof, on the
date hereof, Lender shall purchase from Borrower, and Borrower shall issue and
sell to Lender, a senior subordinated note (the "Note") evidencing a term loan
(the "Loan") in the principal amount of $13,500,000 and for the purchase price
of $__________ . The Note shall be (a) dated as of the date hereof, (b) subject
to the terms of this Agreement and (c) in the form attached hereto as Exhibit C.
8
2.2 Repayment of Principal. Unless otherwise required or permitted to be
sooner paid pursuant to the provisions hereof and of the Note, Borrower shall,
repay the Principal on the Loan in full on June 30, 2004.
2.3 Interest.
(a) Interest. So long as no Event of Default has occurred and is
continuing, the Principal on the Loan shall bear interest from the date hereof
until paid, computed on the basis of a 360-day year for the actual number of
days elapsed, at a fixed annual rate of 13%.
(b) Periodic Interest Payments. Accrued interest on the Loan shall be
due and payable quarterly in arrears on each Quarterly Payment Date commencing
on the earlier of (i) the first Quarterly Payment Date following the
consummation of the Merger and (ii) the Quarterly Payment Date on September 30,
1997. In addition, all accrued and unpaid interest on the Loans shall be paid
upon the payment in full of the Principal and, if payment in full is not paid
when due, thereafter on demand.
(c) Default Interest Rate. After the occurrence and during the
continuance of any Event of Default, any interest not paid when due to Lender
hereunder shall bear interest, payable on demand, at the rate of 16% per annum.
(d) Savings Clause. In no contingency or event shall the interest
rate charged pursuant to the terms of this Agreement exceed the highest rate
permissible under any law which a court of competent jurisdiction shall, in a
final determination, deem applicable hereto. In the event that such a court
determines that Lender has received interest hereunder in excess of the highest
applicable rate, the amount of such excess interest shall be applied against the
Principal then outstanding, and any excess interest remaining after such
application shall be refunded to Borrower.
2.4 Prepayments.
(a) Optional Prepayments. Borrower may, at its option and without
penalty or premium, prepay Principal on the Loan, together with accrued interest
thereon:
(i) at any time on or after the third anniversary hereof,
provided that such prepayment of Principal shall be (A) in increments of
$500,000 and (B) made out of Excess Cash Flow; and
(ii) upon the consummation of (A) a Change of Control, (B) the
sale, transfer or disposition of all or substantially all of the assets of
Borrower (a "Sale") or (C) an initial public offering of Securities,
provided that the Principal on the Loan is repaid in full.
9
Borrower shall give notice (a "Prepayment Notice") to Lender of any optional
prepayment under this Section 2.4 not later than 12:00 p.m., Chicago, Illinois
time, on the tenth Business Day preceding the date of prepayment, specifying the
prepayment date and Principal to be prepaid (the "Prepayment Principal Amount").
Once a Prepayment Notice has been given, the Prepayment Principal Amount
specified therein, together with all accrued interest to the date of payment and
the applicable Prepayment Premium, shall become due and payable on the date
specified in the Prepayment Notice.
(b) Mandatory Prepayment on a Sale or a Change of Control. Borrower
shall give written notice (a "Change Notice") to Lender upon the earlier of (i)
30 days prior to the consummation of and (ii) the date of execution of a
definitive agreement providing for, a Sale or a Change of Control. Upon receipt
of a Change Notice, Lender shall have the right, exercisable at any time within
30 days after receipt of a Change Notice, to require that the Principal on the
Loan be repaid in full, without penalty or premium but together with all accrued
interest thereon, on or before the date of consummation of the Sale or the
Change of Control.
2.5 Payments. All payments hereunder and under the Note shall:
(a) be made to the Lender and shall be made prior to 12:00 p.m.,
Chicago, Illinois time, on the date due, to the Lender's account set forth on
Schedule 2.5 hereto, in lawful money of the United States of America, by wire
transfer in immediately available funds; and
(b) except as required by applicable law, be made without set off,
deduction or counterclaim, free and clear of all taxes (other than taxes imposed
on the net income of Lender or franchise taxes), levies, imports, duties, fees
and charges, and without any withholding, restriction or conditions imposed by
any governmental authority. If Borrower is required by law to deduct any such
amounts from or in respect of any sum payable hereunder to Lender, then the sum
payable hereunder shall be increased as may be necessary so that, after making
all required deductions, Lender receives an amount equal to the sum it would
have received had no such deductions been made.
Whenever any payment to be made hereunder or under the Note shall be stated to
be due on a date other than a Business Day, such payment shall be made on the
immediately preceding Business Day.
2.6 Pro Rata Payment. All payments hereunder and under the Note shall, at
all times, if ever, during which there is more than a single holder of the Note
(or notes issued in replacement thereof), be made pro rata among such holders
based upon the aggregate unpaid principal amount of the notes respectively held
by each such holder, as reflected in the register maintained by Borrower
pursuant to Section 9.1.
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ARTICLE 3
CLOSING DELIVERIES
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The obligation of Lender to purchase the Note and Securities on the date
hereof is subject to, among other things, Borrower delivering or causing to be
delivered to Lender on the date hereof the following (the form and substance of
each of which is satisfactory to Lender and its counsel):
(a) this Agreement, duly executed by Borrower;
(b) the Note, duly executed by Borrower;
(c) the Intercreditor Agreement, duly executed by Borrower and Senior
Lender;
(d) the W.P. Xxxxx Agreement, duly executed by the parties thereto;
(e) the Shareholders Agreement, duly executed by Borrower and all
other parties thereto;
(f) a transaction fee of $350,000 to Xxxxxxx Xxxxx Mezzanine Capital
Partners II, L.L.C.;
(g) certificates and, as applicable, instruments representing the
Securities issued to Lender pursuant to the Share Purchase;
(h) a written opinion of Xxxxx, Xxxxx & Xxxxx, counsel to Borrower,
dated as of the date hereof, in the form attached hereto as Exhibit D;
(i) certified copies of all documents evidencing corporate action
taken by Borrower with respect to the Senior Subordinated Loan Documents and the
other Related Transactions Documents;
(j) a certificate of Borrower, signed by its chairman or president, to
the effect that: (i) all of the representations and warranties of Borrower
contained in this Agreement are true and correct as of the date hereof; (ii)
Borrower has complied with and performed all of the terms, covenants and
agreements contained in the Senior Subordinated Loan Documents which are to be
complied with or performed by Borrower on or before the date hereof; and (iii)
no Event of Default or Potential Event of Default has occurred and is
continuing;
11
(k) a certificate of Borrower, signed by its secretary or an assistant
secretary, certifying the names of the officers authorized to sign the Senior
Subordinated Loan Documents, together with specimens of the true signatures of
such officers;
(l) a copy of Borrower's Articles of Incorporation, certified by the
[Minnesota] Secretary of State, and a copy of Borrower's By-Laws, certified by
its Secretary to be true and correct and in full force and effect as of the date
hereof;
(m) a good standing certificate with respect to Borrower from the
[Minnesota] Secretary of State, and from the Secretary of State of each other
jurisdiction where each such entity is qualified to do business;
(n) copies of the Related Transactions Documents, including any
amendments thereto, certified by Borrower's Secretary to be true and correct and
in full force and effect; and
(o) such other documents, agreements, certificates and instruments as
Lender may reasonably request.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
------------------------------
Borrower represents and warrants to Lender that the following statements
are true, correct and complete and such representations and warranties shall
survive the execution and delivery of this Agreement and the issuance of the
Note and Securities, notwithstanding any investigation made by Lender.
4.1 Organization and Qualification. Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the State of
[Minnesota], and is in good standing and is duly qualified to do business as a
foreign corporation in each jurisdiction where failure to be in good standing or
qualified would have a Material Adverse Effect.
4.2 Authorization, Validity and Enforceability. Borrower has the
corporate power and authority to execute, deliver and perform each of the Senior
Subordinated Loan Documents to which it is a party and to incur the borrowings
or other obligations contemplated by the provisions thereof. Borrower has taken
all necessary corporate action (including, without limitation, obtaining
approval of its shareholders) to authorize the execution, delivery and
performance of each of the Senior Subordinated Loan Documents to which it is a
party. No consent, approval or authorization of, or declaration or filing with,
any governmental authority, and no consent of any other Person, is required in
connection with the execution, delivery and performance by Borrower of the
Senior Subordinated Loan Documents to which it is a party. Each Senior
Subordinated Loan Document to which Borrower is a party has been duly executed
12
and delivered by Borrower and constitutes the legal, valid and binding
obligation of Borrower, enforceable against it in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency or other
similar laws of general application affecting the enforcement of creditors'
rights or by general principles of equity limiting the availability of equitable
remedies. Borrower's execution, delivery and performance of each Senior
Subordinated Loan Document to which it is a party do not and will not conflict
with, or constitute a violation or breach of, or constitute a default under, or
result in the creation or imposition of any Lien upon its property by reason of
the terms of (a) any contract, mortgage, lease, agreement, indenture or
instrument to which it is a party or which is binding upon it, (b) any judgment,
law, statute, rule or governmental regulation applicable to it or (c) its
Articles of Incorporation or By-laws.
4.3 Capitalization.
(a) The authorized and outstanding capital stock of Borrower, after
giving effect to the Share Purchase, is as set forth on Schedule 4.3 hereto.
Except as contemplated by Shareholders Agreement, all of the outstanding shares
of capital stock of Borrower are validly issued, fully paid and nonassessable
and free and clear of any and all Liens.
(b) There are not outstanding any shares of stock, securities, rights
or options convertible or exchangeable into or exercisable for any shares of
Borrower's capital stock, stock appreciation rights or phantom stock. Except
pursuant to the Shareholders Agreement, Borrower is not under any obligation,
contingent or otherwise, to redeem or otherwise acquire any shares of its
capital stock or any securities, rights or options to acquire such capital
stock, stock appreciation rights or phantom stock. Schedule 4.3 sets forth a
complete and accurate list of the names of, and indicates the respective
ownership of, the holders of all capital stock, securities or other rights of
Borrower.
(c) Except as otherwise contemplated by the Shareholders Agreement,
there are no statutory or contractual shareholders' preemptive rights with
respect to the issuance of Securities in connection with the Share Purchase or
otherwise related to any Securities. Except for the Shareholders Agreement,
there are no agreements between Borrower's direct or indirect shareholders with
respect to the voting or transfer of Borrower's capital stock or with respect to
any other aspect of Borrower's affairs.
4.4 No Event of Default; Compliance with Instruments. No event has
occurred and no condition exists which would constitute an Event of Default or
Potential Event of Default. Borrower is not in violation of any term of (a) its
Articles of Incorporation or By-laws, or (b) any agreement, instrument, contract
or commitment to which it is a party or by which it may be bound.
13
4.5 Compliance with Laws. Borrower is in compliance in all material
respects with all applicable laws and regulations of foreign, federal, state and
local governments and all agencies thereof. No claims have been filed against
Borrower alleging a violation of, or liability or responsibility under, any such
law or regulation which have not been heretofore settled.
4.6 Litigation. There are no actions, suits or proceedings pending or, to
Borrower's knowledge, threatened against or affecting Borrower before any court
or governmental department, agency or instrumentality, domestic or foreign,
which purport to affect or pertain to this Agreement or any other of the Related
Transactions Documents or any of the Related Transactions. No injunction, writ,
temporary restraining order or any order of any nature has been issued by any
court or governmental department, agency or instrumentality, domestic or foreign
purporting to enjoin or restrain the execution, delivery or performance of this
Agreement or any other Related Transactions Documents, or directing that any of
the Related Transactions not be consummated as provided herein or therein.
4.7 Regulations G and X. Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying "margin stock", as
defined in Regulation G of the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board"), and no part of the proceeds of the Obligations
shall be used to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any margin stock in violation
of Regulations G and X of the Federal Reserve Board.
4.8 ERISA. Neither Borrower nor any of its ERISA Affiliates maintains,
contributes to, or has any obligation to contribute to or has maintained or
contributed to at any time prior to the date hereof any Multiemployer Plan,
Multiple Employer Plan or Pension Plan.
4.9 Subsidiaries. Borrower has no Subsidiaries other than its wholly-
owned Subsidiary, [R-B MERGER SUB, INC.].
4.10 Financial Condition. Borrower has delivered to Lender the audited
consolidated balance sheets and related consolidated statements of operations,
shareholders' equity and cash flows and partnership capital of Peerless Parent
for the years ended as of December 31, 1995 and December 31, 1996. To the best
knowledge of Borrower, such financial statements were prepared in accordance
with GAAP and present fairly the consolidated financial position of Peerless
Parent as at the dates thereof and the consolidated results of its operations
for the periods then ended. To the best knowledge of Borrower, since December
31, 1996, there has not occurred, and no event, occurrence or condition exists,
which has or is reasonably likely to have a material adverse effect upon the
business, operations, properties or condition (financial or otherwise) of
Peerless Parent and its subsidiaries, taken as a whole.
4.11 Absence of Undisclosed Liabilities. To the best of Borrower's
knowledge, Borrower has no obligation or liability (whether accrued, known to
it, whether due or to become due and regardless of when asserted) arising out of
transactions entered into, on or prior to the
14
date hereof, or any action or inaction on or prior to the date hereof, or any
state of facts existing on or prior to the date hereof.
4.12 Assets. Borrower will, upon consummation of the Acquisition, have
good and indefeasible title to, or a valid leasehold interest in, or a valid
license to use, the properties and assets used in the conduct of its business as
presently conducted and as presently proposed to be conducted by it, located on
its premises, free and clear of all Liens, except for Liens permitted under
Section 6.2.
4.13 Tax Matters. Borrower and its Subsidiaries have filed all federal
and other material tax returns and reports required to be filed, and have paid
all federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their Properties, income or assets
otherwise due and payable.
4.14 Contracts. (a) Borrower has performed all the obligations required
to be performed by it to the date of this Agreement and is not in receipt of any
written claim of default under any contract, commitment or other agreement to
which it is a party; (b) to the best knowledge of Borrower, no event has
occurred which, with the passage of time or the giving of notice or both, would
result in a breach or default under any contract, instrument or other agreement
to which Borrower is a party or is bound; and (c) to the best knowledge of
Borrower, no contract or commitment to Borrower has been breached in any
material respect or canceled by the other party.
[4.15 Armaments; Northern Ireland; South Africa.
(a) No material portion of the businesses of Borrower or Peerless
Chain consists of the production or sale of armaments.
(b) Neither Borrower nor Peerless Chain engages in the manufacture,
distribution or sale of firearms, munitions (including rubber or plastic
bullets), tear gas, armored vehicles or military aircraft for use or deployment
in any activity in Northern Ireland.
(c) Neither Borrower nor Peerless Chain is an agency or
instrumentality of the government of The Republic of South Africa nor a
corporation (i) incorporated under the laws of The Republic of South Africa,
(ii) doing business directly or through any Subsidiary, in or with The Republic
of South Africa, (iii) receiving in excess of 50% of its revenues from The
Republic of South Africa or (iv) otherwise having any interests in or
relationships with The Republic of South Africa.]
15
ARTICLE 5
AFFIRMATIVE COVENANTS
---------------------
Borrower covenants that, except with the prior written consent of Lender,
so long as any of the Obligations remain outstanding:
5.1 Payment of Obligations. Borrower shall pay all of the Obligations,
as the same become due and payable.
5.2 Preservation of Corporate Existence. Borrower shall, except as
contemplated by the Related Transactions, preserve and maintain its corporate
existence, rights, franchises and privileges in the jurisdiction of its
incorporation, and qualify and remain qualified as a foreign corporation in such
jurisdictions where failure to so qualify would have a Material Adverse Effect.
5.3 Payment of Taxes and Claims. Borrower shall pay and discharge all
taxes, assessments and other governmental charges imposed upon it or upon its
income or properties, prior to the date on which penalties attach thereto, and
shall pay all claims which, if unpaid, would become a Lien upon any of its
properties, except for any such tax, assessment, charge, levy or claim which is
being contested by or on behalf of such entity in good faith and by proper
proceedings and for which such reserves or other provisions as may be required
by GAAP shall have been made and recorded.
5.4 Reporting Requirements. Borrower shall promptly furnish to Lender
all such financial information respecting it as Lender shall reasonably request
and shall notify its auditors and accountants that Lender is authorized to
obtain such information directly from them if such entity fails to furnish such
information to Lender. Without limiting the foregoing, Borrower shall furnish to
Lender, in such detail as Lender shall reasonably request, the following:
(a) Monthly Financial Statements. As soon as available and in any
event within thirty (30) days after the end of each month (commencing after the
month in which the Merger is consummated), an unaudited consolidated and
consolidating balance sheet, statement of income and expense and statement of
cash flow for Borrower and its subsidiaries for such monthly period and for the
then current fiscal year to date, all in reasonable detail, and setting forth in
comparative form, figures for the corresponding period of the previous fiscal
year and the corresponding period of Borrower's budget. Such statements shall
be certified by the president or senior financial officer of Borrower as fairly
presenting the consolidated and consolidating financial position of Borrower and
its Subsidiaries as of the dates indicated and the results of operations and
cash flow for the calendar month indicated in accordance with GAAP, subject to
normal year-end adjustments and the absence of footnote.
16
(b) Annual Financial Statements. As soon as available and in any
event within ninety (90) days after the end of each fiscal year, an audited
annual report of Borrower containing a (i) balance sheet, (ii) statement of
income and expense, (iii) statement of shareholders' equity and (iv) statement
of cash flow for such year, and setting forth in each case, in comparative form,
figures for the previous fiscal year, all in reasonable detail, fairly
presenting the consolidated and consolidating financial position and the results
of operations of Borrower and its subsidiaries as of the close of such previous
year and for the year then ended and prepared in accordance with GAAP. Such
statements shall be accompanied by an unqualified opinion of an independent
certified public accountant satisfactory to Lender.
(c) Certificates.
(i) With each of the audited financial statements delivered
pursuant to Section 5.4(b), a certificate of the independent certified
public accountants addressed to Lender to the effect that they have
reviewed and are familiar with this Agreement and that, in examining such
financial statements, they did not become aware of any fact or condition
which then constituted an Event of Default or Potential Event of Default,
except for those, if any, described in reasonable detail in such
certificate.
(ii) With each of the annual audited financial statements
delivered pursuant to Section 5.4(b) and with each monthly unaudited
financial statement delivered pursuant to Section 5.4(a), a certificate of
Borrower's president or senior financial officer (A) setting forth in
reasonable detail the calculations required to establish that Borrower was
in compliance with the covenants set forth in Sections 6.4, 6.16 and 6.18
during the period covered in such financial statements and as at the end
thereof, and (B) stating that, except as explained in reasonable detail in
such certificate, (x) Borrower is, at the date of such certificate, in
compliance with all of the covenants and agreements in this Agreement, and
(y) no Event of Default or Potential Event of Default then exists. If such
certificate discloses that a covenant has not been complied with or that an
Event of Default or Potential Event of Default exist, such certificate
shall set forth what action Borrower has taken or proposes to take with
respect thereto.
(d) Accountants' Reports. Promptly upon receipt thereof, Borrower
shall deliver copies of all significant reports submitted to Borrower by
independent public accountants in connection with each annual, interim or
special audit of its financial statements made by such accountants, including
the management letter submitted by such accountants to management in connection
with its annual audit.
(e) Annual Budget. As soon as available but in any event prior to the
end of each fiscal year, Borrower's annual budgets prepared on a monthly and
annual basis for the succeeding fiscal year (displaying anticipated statements
of income and cash flows and balance sheet) and promptly upon preparation
thereof any other significant budgets which they prepare (including any
revisions of such annual or other budgets).
17
(f) Reports to Senior Lender. Together with any compliance
certificate furnished to Senior Lender pursuant to the Senior Loan Agreement,
Borrower shall also deliver to Lender a copy of the same setting forth in
reasonable detail all calculations for all amounts contained therein and,
together with all other notices or certificates furnished to Senior Lender
pursuant to the Senior Loan Agreement, Borrower shall also deliver to Lender a
copy of the same.
5.5 Notices to Lender. Borrower shall notify Lender in writing of the
following matters at the following times:
(a) Promptly after becoming aware thereof, any Event of Default or
Potential Event of Default.
(b) Promptly after becoming aware thereof, the assertion by the holder
of any Indebtedness in excess of $250,000, including Senior Lender, that a
default exists with respect thereto or that Borrower is not in compliance with
the terms thereof, or the threat or commencement by such holder of any
enforcement action because of such asserted default or non-compliance.
(c) Promptly after becoming aware thereof, any event, occurrence or
condition that is reasonably likely to have a Material Adverse Effect.
(d) Promptly after becoming aware thereof, any pending or threatened
action, suit, proceeding or counterclaim by any Person, or any pending or
threatened investigation by any governmental authorities, which could result in
a Material Adverse Effect.
(e) Promptly after becoming aware thereof, any pending or threatened
strike, work stoppage, material unfair labor practice claim or other material
labor dispute affecting Borrower that could reasonably be expected to have a
Material Adverse Effect.
(f) Promptly after becoming aware thereof, any violation of any law,
statute, regulation or ordinance of any governmental authority (including,
without limitation, any Environmental and Safety Requirement) which could
reasonably be expected to have a Material Adverse Effect.
(g) (A) Promptly and in any event within 5 days after receipt thereof
by Borrower or any of its ERISA Affiliates, copies of each notice from the IRS
relating to the disqualification of any Plan that is intended to be qualified
under Section 401(a) of the Code; (B) promptly and in any event within 5
Business Days of the occurrence of the event, written notice of any event with
respect to any Plan which could result in the incurrence by Borrower or any of
its ERISA Affiliates of any material liabilities, fine or penalty; (C) together
with each copy of such notice received by Borrower or any of its ERISA
Affiliates, a written statement of Borrower's senior financial officer setting
forth details as to all events referred to therein and the
18
action with respect thereto taken, or proposed to be taken, by Borrower or its
ERISA Affiliates, as applicable, and a copy of any notice, filing or
correspondence to or required by the IRS, the Department of Labor, or any
government agency or adverse party as may be applicable.
Each notice given under this Section 5.5 shall describe the subject matter
thereof in reasonable detail and shall set forth the action that Borrower has
taken or propose to take with respect thereto.
5.6 Maintenance of Insurance. Borrower shall maintain insurance on its
properties and businesses with reputable insurance companies in such amounts, of
such types and covering such casualties, risks and contingencies as is
ordinarily carried by companies engaged in similar businesses and owning similar
properties in the same general areas in which they operate.
5.7 Maintenance of Properties. Borrower shall maintain and preserve all
of its properties which are necessary for the proper conduct of its businesses
in good working order and condition, ordinary wear and tear excepted.
5.8 Keeping of Records and Books of Account. Borrower shall keep complete
and accurate records and books of account, in which full and correct entries in
accordance with GAAP shall be made of all of its financial transactions.
5.9 Visitation Rights. Borrower shall, at any time and from time to time
during normal business hours, permit Lender or any agent or representative of
Lender to examine and make copies of and abstracts from the records and books of
account of, and to visit its properties and to discuss its affairs, finances and
accounts with any of its officers or directors and, subject to the first
sentence of Section 5.4, its independent accountants.
5.10 Compliance with Laws. Borrower shall comply in all material respects
with the applicable requirements of all laws, rules, regulations and orders of
any governmental authority.
5.11 Performance of Agreements. Borrower shall use reasonable efforts to
preserve its business organization and the goodwill and business of all Persons
with whom it has business relations and, in that context, perform in all
material respects all of the obligations to be performed by it under each lease,
indenture, agreement, contract and other instrument to which it is a party or by
which it and its properties may be bound, including, without limitation, the
Related Transactions Documents, except where its failure to so perform would not
have a Material Adverse Effect.
5.12 Environmental and Safety Matters.
(a) Borrower shall comply in all material respects with all
Environmental and Safety Requirements.
19
(b) Borrower shall respond immediately to any release or threatened
release of any hazardous, toxic or otherwise dangerous material, substance or
waste in a manner which complies with and meets all standards imposed by any and
all Environmental and Safety Requirements.
(c) If Lender at any time has reason to believe, in its sole and
reasonable judgment, that any activities, events or conditions on any property
or facility owned, operated or otherwise used by Borrower has been or may be
operated in violation of any Environmental and Safety Requirements, or
contaminated with any hazardous, toxic or otherwise dangerous material,
substance or waste, or subject to any governmentally imposed obligation to
conduct any corrective, investigatory, response or remedial action, then
Borrower shall, at Borrower's own cost and expense, if Lender so elects,
conduct, as appropriate, such investigation or study, through retention of a
consulting firm reasonably satisfactory to Lender, as is necessary to
demonstrate that such activities, operations, property or facility have not had
or are not reasonably likely to have a Material Adverse Effect.
5.13 Use of Proceeds. Borrower shall use the proceeds hereunder solely
to consummate the Acquisition and the fees and expenses arising in connection
with the Related Transactions or the Related Transactions Documents.
5.14 Assertion of Rights Under Certain Agreements. Borrower shall (a)
promptly notify Lender of each and every dispute with, and claims against, any
Person for which Borrower has or may have a claim under the Merger Agreement or
any documents, agreements, certificates or instruments executed or delivered in
connection therewith, (b) diligently enforce such claim and (c) promptly provide
Lender with copies of all notices, demands, requests and other communications
sent or received by Borrower pursuant to the Merger Agreement, together with
prior written notice of Borrower's intention to exercise any power, right or
remedy pursuant to the Merger Agreement.
ARTICLE 6
NEGATIVE COVENANTS
------------------
Borrower covenants that, except with the prior written consent of Lender,
so long as any of the Obligations remain outstanding:
6.1 Indebtedness. Borrower shall not create, incur, assume, guarantee or
be or remain liable for, contingently or otherwise, or suffer to exist, any
Indebtedness, except for the following:
(a) the Obligations; and
20
(b) the Senior Indebtedness.
6.2 Liens. Borrower shall not create, assume, incur or suffer to be
created, assumed, incurred or to exist, any Lien on any of its now owned or
hereafter acquired property except for (i) Liens granted to Senior Lender
pursuant to the terms of the Senior Loan Documents; (ii) Liens for taxes not yet
due or for taxes being contested in good faith by appropriate proceedings, (iii)
Liens of landlords, carriers, warehousemen, mechanics and materialmen incurred
in the ordinary course of business for sums not yet due or which are being
contested in good faith and by appropriate proceedings, (iv) Liens incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security or to
secure the performance of bids, tenders, sales, contracts (other than for the
repayment of borrowed money), surety, appeal and performance bonds, (v) zoning
restrictions, easements, licenses, reservations, covenants, rights of way,
utility easements, building restrictions and other similar charges or
encumbrances on the use of real property which do not interfere with the
ordinary conduct of the business of Borrower, (vi) rights of lessors with
respect to leases of machinery, equipment or real property of Borrower; (vii)
any judgment lien the existence or continuance of which does not constitute an
Event of Default under Section 7.1(h); and (viii) any other Liens existing on
the date hereof which constitute Permitted Liens [(as defined in the Senior Loan
Agreement)].
6.3 Contingent Obligations. Borrower shall not become liable for any
Contingent Obligations.
6.4 Operating Lease Obligations. Borrower shall not enter into any lease
of real or personal property if, after giving effect thereto, the aggregate
amount of all rental and other payments under such lease and all other leases of
Borrower then in effect would exceed for any fiscal year an amount equal to
________.
6.5 Merger or Sale. Borrower shall not (a) be a party to any merger,
liquidation or consolidation (other than those associated with the Acquisition),
(b) sell, transfer, convey, lease or otherwise dispose of any of its assets,
except for (i) the sale of inventory by Borrower in the ordinary course of
business, (ii) sales by Borrower of worn-out, excess or obsolete equipment or
other equipment, in each case, consistent with the terms of [Section ___ of the
Senior Loan Agreement (as in effect on the date hereof)], or (c) sell with
recourse, or discount or otherwise sell for less than the face thereof, any of
its accounts or notes receivable.
6.6 Purchase or Acquisition. Except as contemplated by the Related
Transactions Documents, Borrower shall not purchase or otherwise acquire, or
enter into any agreement to purchase or acquire (a) all or substantially all of
the assets or the capital stock or other ownership interests of any Person or of
the business conducted by any Person or (b) any property or assets outside of
the ordinary course of business.
21
6.7 Investments. Except as contemplated by the Related Transactions
Documents, Borrower shall not make or permit to exist any Investment in any
Person, except for: (a) advances to employees of Borrower for travel or other
ordinary business expenses in the ordinary course of, and pursuant to the
reasonable requirements of Borrower's business; (b) extensions of credit by
Borrower in the nature of accounts or notes receivable arising from the sale of
goods and services in the ordinary course of business; (c) shares of stock,
obligations or other securities received by Borrower in settlement of claims
arising in the ordinary course of business; (d) securities issued or fully
guaranteed or insured by the United States of America or any agency thereof and
maturing within one year; (e) time deposits and certificates of deposits of a
commercial bank organized under the laws of the United States of America having
capital and surplus in excess of $100,000,000 and maturing within one year; (f)
commercial paper of any United States corporation rated at least A-1 by Standard
& Poor's Corporation or at least P-1 by Xxxxx'x Investors Service, Inc. and
maturing within one year; and (g) investments in money market funds
substantially all of whose assets are comprised of securities of the type
described in (f) and (g) above.
6.8 Distributions. Borrower shall not directly or indirectly, declare or
make, or incur any liability to make, any Distributions.
6.9 Amendments or Changes in Agreements. Borrower shall not amend its
Articles of Incorporation or By-Laws. Borrower shall not modify, alter,
supplement, extend, amend or waive any rights under any of the Related
Transactions Documents without the prior written consent of Lender; [provided,
however, that Borrower may, without the prior written consent of Lender, modify
or otherwise amend the terms of the Senior Loan Documents in a manner permitted
by Section __ of the Intercreditor Agreement (as in effect on the date hereof)].
Borrower shall not enter into, modify, alter, supplement, extend, amend or waive
any right under any agreement or understanding of any kind with any key
employee, member of Borrower's senior management or consultant without the prior
written consent of Lender.
6.10 Transactions with Affiliates. [Except as permitted by the terms of
the Senior Loan Agreement (as in effect on the date hereof)], Borrower shall not
enter into or be a party to any transaction or arrangement, including, without
limitation, the purchase, sale, lease or exchange of property or the rendering
of any service, with any of its Affiliates.
6.11 Business Conducted. Borrower shall not enter into any new business
unrelated to its business as conducted on the date hereof or make any change
which is material, either individually or in the aggregate, in any of its
business objectives, purposes and operations as disclosed to Lender on the date
hereof.
6.12 Fiscal Year. Borrower shall not change its fiscal year.
22
6.13 Sale and Leaseback Transactions. Borrower shall not, directly or
indirectly, enter into any arrangement with any Person providing for Borrower
to lease or rent property that Borrower has or will sell or otherwise transfer
to such Person.
6.14 Investment Banking, Broker's and Finder's Fees. Except (a) as set
forth in paragraph (f) of Article III, (b) for amounts payable to [Ridge Capital
Corporation] pursuant to its management agreement with Borrower or (c) for any
amounts payable to Senior Lender pursuant to the Senior Loan Documents, Borrower
shall not pay or agree to pay, or reimburse any other Person with respect to,
any investment banking or similar or related fee, underwriter's fee, finder's
fee or broker's fee to any Person in connection with the consummation of the
Related Transactions. Borrower shall defend and indemnify Lender against and
hold Lender harmless from all claims of any Person for any such fees and all
costs and expenses, including, without limitation, attorneys' fees, incurred by
Lender in connection therewith.
6.15 Subsidiaries. Except as contemplated by the Related Transactions,
Borrower shall not, directly or indirectly, organize or acquire any Subsidiary.
6.16 Capital Expenditures. Borrower shall not make or incur any Capital
Expenditures if, after giving effect thereto, the aggregate amount of all
Capital Expenditures made by Borrower would exceed ________ during any fiscal
year.
6.17 Allocation of Consideration. Borrower shall take no action in
preparation of tax returns or financial statements that is inconsistent with the
allocation of the consideration paid by Lender for the Note and the Securities
purchased by it in connection with the Share Purchase.
6.18 Additional Financial Covenants. [TO BE INSERTED]
6.19 Waiver of Rights Under Certain Agreements. Borrower shall not,
without the prior written consent of Lender, waive, release or discharge any
Person with respect to any of the rights, representations, warranties,
covenants, indemnification agreements or other agreements in favor of Borrower
in connection with the Acquisition or other Related Transactions, or compromise
or settle any claim or dispute with respect thereto (it being understood that no
such waiver, release, discharge, compromise or settlement shall be effective
without the prior written consent of Lender).
ARTICLE 7
DEFAULT
-------
7.1 Events of Default. The occurrence of any of the following events
shall constitute an Event of Default hereunder:
23
(a) Borrower shall fail to pay when due (i) any interest owing on the
Obligations or (ii) any Principal; or
(b) Borrower shall default (i) in the payment when due, subject to any
applicable grace period, of any Indebtedness or Contingent Obligation in excess
of [$250,000] (other than (A) any Indebtedness constituting Obligations, and (B)
the Senior Indebtedness), or (ii) in the performance of any other covenant,
agreement, term or condition contained in any agreement under which any such
Indebtedness or Contingent Obligation is created if the effect of such default
is to cause, whether automatically or by declaration of acceleration, or permit
the holder of such obligation to cause such obligation to become due prior to
its stated maturity; or
(c) an Event of Default shall occur under the Senior Loan Documents
which shall result in the [acceleration] of the Senior Indebtedness; or
(d) any representation or warranty made herein by Borrower, or in any
certificate or financial statement furnished by Borrower pursuant to the
provisions hereof, shall prove to have been false or misleading in any material
respect as of the time made or furnished; or
(e) Borrower shall default in the performance of or compliance with
any of the covenants set forth in Section 5.1, 5.4 or 5.13 or Article 6 hereof;
or
(f) Borrower shall default in the performance of or compliance with
any other covenant, condition or provision of this Agreement or other Senior
Subordinated Loan Documents to which it is a party (and not constituting an
Event of Default under any of the other subsections of this Section 7.1) and
such default shall not be remedied for a period of 30 days after notice thereof;
or
(g) a final judgment not fully covered by insurance or otherwise
indemnified to Lender's satisfaction which, with all other such undischarged
final judgments against Borrower, exceeds an aggregate of [$250,000] shall have
been entered against Borrower if, within 30 days after the entry thereof, such
judgment shall not have been discharged or execution thereof stayed pending
appeal, or if, within 30 days after the expiration of any such stay, such
judgment shall not have been discharged, or if, enforcement proceedings shall
have been commenced by any creditor upon such judgment; or
(h) a proceeding shall have been instituted in a court having
jurisdiction seeking a decree or order for relief in respect of Borrower in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or for the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar official) of
Borrower or for any substantial part of its property, or for the winding-up or
liquidation of its affairs, and such proceeding shall remain undismissed or
unstayed and in effect
24
for a period of 60 consecutive days or such court shall enter a decree or order
granting the relief sought in such proceeding; or
(i) Borrower shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, shall
consent to the entry of an order for relief in an involuntary case under any
such law, or shall consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of Borrower or for any substantial part of its property, or
shall make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action in furtherance of any of the foregoing.
7.2 Consequences of Event of Default.
(a) Bankruptcy. If an Event of Default specified in Section 7.1(h) or
(i) hereof shall occur, the unpaid balance of the Note and interest accrued
thereon and all other liabilities of Borrower hereunder and thereunder shall be
immediately due and payable, without presentment, demand notice, protest or any
other demand or notice in connection with the delivery, acceptance, performance,
default or enforcement of the Note, all of which are hereby expressly waived.
(b) Other Defaults. If any other Event of Default shall occur, Lender
may, at its option declare the unpaid balance of the Note and interest accrued
thereon and all other liabilities of Borrower hereunder and thereunder to Lender
shall be immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived.
7.3 Other Rights. The rights and remedies of Lender upon the occurrence
of an Event of Default set forth in Section 7.2 hereof are in addition to and
not in limitation of any other rights it may have under applicable law and other
agreements.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF LENDER
----------------------------------------
Lender represents and warrants to Borrower as follows:
8.1 Capacity. Lender has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of and to
protect its own interest in connection with the acquisition of the Note and
Securities.
8.2 Accredited Investor. Lender is an "accredited investor" as defined in
Regulation D promulgated under the Securities Act of 1933, as amended.
25
8.3 Investment Purpose. Lender is making this investment for its own
account and not for the account of others and not with a view to the
distribution thereof and has no present intention of reselling the Note or
Securities.
ARTICLE 9
TRANSFER OF THE NOTE
--------------------
9.1 Successors and Assigns in General. This Agreement shall be binding
upon and, subject to Section 9.2, inure to the benefit of the parties hereto and
their respective successors and assigns, except that Borrower may not, except as
contemplated by the Acquisition and other Related Transactions, assign or
transfer its rights hereunder or any interest herein or delegate its duties
hereunder without the prior written consent of Lender. Lender shall give
Borrower prompt written notice of any assignment of or participation in the
Obligations. Borrower shall maintain a register, which shall include, without
limitation, a record of ownership that identifies each owner of any interest in
the Obligations, for registration as to the rights to principal and interest on
the Note and shall promptly register any such assignment or participation in the
Obligations upon receipt of such notice.
9.2 Transfer. Lender or any assignee of Lender may assign all or any
portion of its interest in and rights under this Agreement and the Note to any
other Person (an "Assignee"), or grant a participating or beneficial interest in
this Agreement and the Obligations to any lending institution (a "Participant")
subject to the following conditions:
(a) Securities Laws. Such assignment or participation shall not be
made under circumstances as may constitute a violation of federal
securities laws or any applicable state securities laws or regulations.
(b) Payments; Set Off. Any payments to or recoveries by Lender or any
Assignee or Participant under this Agreement or under any instrument or
agreement delivered in connection herewith shall be for the account of
Lender, and all Assignees and Participants, in proportion to the amount of
each such Person's interest in the Obligations. Rights of set off and
banker's lien, if any, may be exercised by each such Person, and amounts
and property so set off or covered by such Lien may be applied to all or
any of the obligations incurred by Borrower under this Agreement, and all
other amounts payable by Borrower under this Agreement which may be due or
unpaid as determined by Lender, Assignees or Participants to the end that
the property and credit balances of Borrower with each such Person shall be
security for, and may be applied to the payment of, all or any of the
obligations incurred by Borrower under this Agreement, and such other
amounts as though such rights were exercised, and such amounts were
recovered, by Lender.
26
(c) Further Assurance. Borrower shall, from time to time at the
request of Lender, execute and deliver to Lender or to such party or
parties as Lender may designate, any and all further instruments as may in
the reasonable opinion of Lender be necessary or advisable to give full
force and effect to any transfer contemplated by this Article 9.
ARTICLE 10
MISCELLANEOUS
-------------
10.1 Modifications, Amendments or Waivers. The provisions of this
Agreement may be modified, amended or waived, but only by a written instrument
signed by Lender and Borrower.
10.2 No Implied Waivers; Cumulative Remedies; Writing Required. No delay
or failure of Lender in exercising any right, power or remedy hereunder shall
affect or operate as a waiver thereof, nor shall any single or partial exercise
thereof or any abandonment or discontinuance of steps to enforce such a right,
power or remedy preclude any further exercise thereof or of any other right,
power or remedy. The rights and remedies hereunder of Lender are cumulative and
not exclusive of any rights or remedies which they would otherwise have. Any
waiver, permit, consent or approval of any kind or character on the part of
Lender of any breach or default under this Agreement or any such waiver of any
provision or condition of this Agreement must be in writing and shall be
effective only to the extent in such writing specifically set forth.
10.3 Reimbursement of Expenses; Taxes. Borrower agrees upon demand to pay
or reimburse Lender for all of its reasonable out-of-pocket expenses, including,
without limitation, all travel expenses and all legal, consulting, accounting
and independent analyst fees and expenses, from time to time (a) arising in
connection with the Related Transactions or the Related Transactions Documents,
(b) relating to any amendments, waivers or consents pursuant to the provisions
hereof or thereof, (c) incurred by Lender or its designees in the performance of
their duties as directors of Borrower; (d) arising in connection with the
assertion of any claims or demands, or the enforcement of any rights or
remedies; and (e) arising in connection with the enforcement of the Senior
Subordinated Loan Documents, collection of the Obligations or actions for
declaratory relief in any way related thereto or the protection or preservation
of any rights of Lender hereunder. Borrower also agrees to pay and save Lender
harmless from all liability for any stamp or other similar taxes which may be
payable in connection with this Agreement and the other Senior Subordinated Loan
Documents or the performance of any transactions contemplated hereby or thereby.
27
10.4 Notices. All notices and other communications given to or made upon
any party hereto in connection with this Agreement shall, except as otherwise
expressly herein provided, be in writing (including telexed or telecopied
communication) and mailed, telexed, telecopied or delivered by hand or by
reputable overnight courier service to the respective parties, as follows:
Borrower: [R-B CAPITAL CORPORATION]
_____________________________
_____________________________
Attn: President
Telecopy: _____________________
With a copy to: Xxxxx, Xxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
Lender: Xxxxxxx Xxxxx Mezzanine Capital Fund II, L.P.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxx
Telecopy: (000) 000-0000
With a copy to: Altheimer & Xxxx
00 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxxxx, Esq.
and Xxxxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
or in accordance with any subsequent written direction from the recipient party
to the sending party. All such notices and other communications shall, except
as otherwise expressly herein provided, be effective upon delivery if delivered
by hand; when deposited with a reputable courier service, delivery charges
prepaid; when deposited in the mail, postage prepaid; or in the case of telex or
telecopy, when received.
10.5 Survival. All representations, warranties, covenants,
indemnifications, consents and agreements of Borrower contained herein or made
in writing in connection herewith shall survive the execution and delivery of
this Agreement, the making of the term loan hereunder and the issuance of the
Note and, notwithstanding any implication to the contrary, shall remain in
effect through, but not beyond, the date that all amounts due hereunder are paid
to Lender.
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10.6 Governing Law; Consent to Jurisdiction and Service of Process;
Waiver of Jury Trial.
(a) Governing Law. THIS AGREEMENT, THE NOTE AND THE OTHER SENIOR
SUBORDINATED LOAN DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND THEREUNDER SHALL BE DEEMED TO BE CONTRACTS UNDER THE LAWS OF THE
STATE OF ILLINOIS AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE
STATE OF ILLINOIS OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF ILLINOIS.
(b) Consent to Jurisdiction and Service of Process. BORROWER HEREBY
CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE
COUNTY OF XXXX, STATE OF ILLINOIS AND AGREE THAT ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTE OR ANY OF THE OTHER
SENIOR SUBORDINATED LOAN DOCUMENTS MAY BE LITIGATED IN SUCH COURTS. BORROWER
ACCEPTS THE NONEXCLUSIVE JURISDICTION OF SUCH COURTS AND WAIVE ANY DEFENSE OF
FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY. BORROWER DESIGNATES AND APPOINTS THE XXXXXXXX-XXXX CORPORATION SYSTEM,
INC. AND SUCH OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY BORROWER WHICH
IRREVOCABLY AGREES IN WRITING PURSUANT TO AN APPOINTMENT OF AGENT AGREEMENT TO
SO SERVE AS THEIR AGENT TO RECEIVE ON THEIR BEHALF SERVICE OF ALL PROCESS IN ANY
SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY
BORROWER TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. A COPY OF ANY
SUCH PROCESS SO SERVED SHALL BE MAILED BY REGISTERED MAIL TO BORROWER AT THE
ADDRESS STATED IN SECTION 10.4; PROVIDED, HOWEVER, THAT, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY
OF SERVICE OF PROCESS. IF ANY AGENT APPOINTED BY BORROWER REFUSES TO ACCEPT
SERVICE, BORROWER AGREES THAT SERVICE UPON THEM BY MAIL SHALL CONSTITUTE
SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF LENDER TO BRING
PROCEEDINGS AGAINST BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
29
(c) Waiver of Jury Trial. EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER IN
CONTRACT, TORT OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER SENIOR SUBORDINATED LOAN DOCUMENT. EACH OF THE PARTIES
HERETO AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO
MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF TRIAL BY
JURY.
10.7 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law in any jurisdiction, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating any other provision of this Agreement.
10.8 Headings. Section and subsection headings in this Agreement are
included for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.
10.9 Counterparts. This Agreement may be executed in any number of
counterparts and by any of the parties hereto on separate counterparts, each of
which, when so executed and delivered, shall be an original, but all such
counterparts shall together constitute one and the same instrument.
10.10 Indemnification.
(a) General. (i) In addition to all of Borrower's other obligations
under this Agreement and the other Senior Subordinated Loan Documents, Borrower
agrees to defend, protect, indemnify and hold harmless each of Lender, its
Assignees and Participants, and all of their respective officers, directors,
shareholders, partners, employees, attorneys, consultants and agents (including,
without limitation, those retained in connection with the satisfaction or
attempted satisfaction of any of the conditions set forth in this Agreement)
(collectively, the "Indemnitees") from and against any and all losses, damages,
liabilities, obligations, penalties, fees, costs and expenses (including,
without limitation, reasonable attorneys' and paralegals' fees, costs and
expenses) incurred by such Indemnitees, whether prior to or from and after the
date of this Agreement, whether direct, indirect or consequential, as a result
of or arising from or relating to any suit, investigation, action or proceeding
by any Person, either threatened or initiated, asserting a claim for any legal
or equitable remedy against any Person under any law or regulation (other than
suits or other actions by Borrower against an Indemnitee where Borrower
30
is successful on the merits), regardless of whether the Indemnitee seeking
indemnification is a party to the action or proceeding for which indemnification
is sought, including, without limitation, any federal or state securities or
labor laws, or under any Environmental and Safety Requirements or common law
principles arising from or in connection with any of the following: (A)
Borrower's negotiation, preparation, execution or performance of the Senior
Subordinated Loan Documents or any other documents, agreements, certificates or
instruments executed or delivered in connection with the Related Transactions,
including, without limitation the Related Transactions Documents, (B) Lender's
furnishing of funds to Borrower under this Agreement or under the Note or (C)
any matter relating to the financing transactions contemplated by this
Agreement, the other Senior Subordinated Loan Documents or by any document,
agreement, certificate or instrument executed or delivered in connection with
the transactions contemplated hereby or thereby (including, without limitation,
any transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the Obligations) (collectively, "Indemnified
Matters"). Notwithstanding the foregoing, Indemnified Matters shall not include
losses, damages, liabilities, obligations, penalties, fees, costs and expenses
incurred by any Indemnitee in connection with (1) any violations of law or
governmental regulations by such Indemnitee, (2) any acts of willful misconduct
or gross negligence by such Indemnitee, (3) any actions against such Indemnitee
by partners, shareholders or creditors of such Indemnitee or partners,
shareholders or creditors of such Indemnitee's ultimate parent company or (4)
any action against such Indemnitee to the extent based on such Indemnitee's
status as a shareholder of Borrower. To the extent that this undertaking to
indemnify, pay and hold harmless set forth in this Section 10.10 may be
unenforceable for any reason, Borrower shall contribute the maximum portion
which it is permitted to pay and satisfy under applicable law, to the payment
and satisfaction of all Indemnified Matters incurred by the Indemnitees.
(b) Environmental Liabilities. Without limiting the generality of the
indemnity set forth in Section 10.10(a) hereof, Borrower hereby further agrees
to indemnify and to hold harmless Lender and all Indemnitees from and against
any and all losses, liabilities, damages, obligations, penalties, injuries,
costs, fees (including, without limitation, reasonable attorneys', paralegals'
and expert witnesses' fees, costs and expenses), expenses and claims of any and
every kind whatsoever paid, incurred or suffered by, or asserted against, each
of Lender or any Indemnitee for, with respect to, or as a direct or indirect
result of, the past, present or future events, activities or operations on, or
the past, present or future condition of, any property owned, operated or
otherwise used by Borrower, any Environmental Affiliate, or its or their
predecessors or successors, or any off-site hazardous, toxic or otherwise
dangerous material, substance or waste treatment, storage or disposal facility
associated therewith (the "Properties"), including, without limitation, the
presence on or under, or the escape, seepage, leakage, spillage, discharge,
emission, release, or threatened release into, onto or from the Properties of
any toxic, hazardous or otherwise dangerous substance, material or waste,
including, without limitation, any losses, liabilities, damages, injuries,
costs, expenses or claims asserted or arising under any Environmental and Safety
Requirement regardless of whether caused by, or within the control of, Borrower.
31
10.11 Payment Set Aside. To the extent that Borrower makes a payment or
payments to Lender, or Lender exercises its rights of set off, and such payment
or payments or the proceeds of such set off or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to Borrower, a trustee, receiver or any other Person under any law (including,
without limitation, any bankruptcy law, state or federal law, common law or
equitable cause), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or set off had not occurred.
10.12 Interpretation. In this Agreement and each other Senior
Subordinated Loan Document, unless a clear, contrary intention appears, (a) the
singular number includes the plural number and vice versa, and (b) reference to
any gender includes each other gender (including the neuter gender).
32
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed this Agreement as of the day and year first above
written.
LENDER:
------
XXXXXXX XXXXX MEZZANINE CAPITAL FUND II, L.P.
By: Xxxxxxx Xxxxx Mezzanine Capital
Partners II, L.L.C., its general partner
By:______________________________________
A Managing Director
BORROWER:
--------
[R-B CAPITAL CORPORATION]
By:___________________________________________
Its:__________________________________________
33
