Exh. 10.5
[EXECUTION COPY]
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TERM LOAN AGREEMENT
dated as of August 12, 1996
between
RCL PTY,
as Borrower
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Lender
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TABLE OF CONTENTS
Section Page
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ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . 1
1.02. Computation of Time Periods . . . . . . . . . . . . . . . . . . . 19
1.03. Accounting Terms. . . . . . . . . . . . . . . . . . . . . . . . . 20
1.04. References to this Agreement. . . . . . . . . . . . . . . . . . . 20
1.05. Miscellaneous Terms . . . . . . . . . . . . . . . . . . . . . . . 20
1.06. Other Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE II
AMOUNTS AND TERMS OF TERM LOAN
2.01. Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.02. Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.03. Authorized Officers and Agents. . . . . . . . . . . . . . . . . . 22
ARTICLE III
PAYMENTS AND PREPAYMENTS
3.01. Prepayments; Reductions in Term Loan Commitment . . . . . . . . . 23
3.02. Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.03. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.04. Promise to Repay; Evidence of Indebtedness. . . . . . . . . . . . 27
ARTICLE IV
CONDITIONS TO TERM LOAN
4.01. Conditions Precedent to Effective Date. . . . . . . . . . . . . . 27
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01. Representations and Warranties. . . . . . . . . . . . . . . . . . 31
ARTICLE VI
REPORTING COVENANTS
6.01. Financial Statements. . . . . . . . . . . . . . . . . . . . . . . 39
6.02. Operations Reports. . . . . . . . . . . . . . . . . . . . . . . . 42
6.03. Collateral Reporting. . . . . . . . . . . . . . . . . . . . . . . 43
6.04. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . 43
6.05. Lawsuits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.06. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.07. Employee Benefit Plan Notices . . . . . . . . . . . . . . . . . . 45
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6.08. Environmental Notices . . . . . . . . . . . . . . . . . . . . . . 45
6.09. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.10. Government Contract Notices . . . . . . . . . . . . . . . . . . . 45
6.11. Other Information . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE VII
AFFIRMATIVE COVENANTS
7.01. Organizational Existence, Etc.. . . . . . . . . . . . . . . . . . 47
7.02. Organizational Powers; Conduct of Business. . . . . . . . . . . . 47
7.03. Compliance with Laws, Etc.. . . . . . . . . . . . . . . . . . . . 47
7.04. Payment of Taxes and Claims; Tax Consolidation. . . . . . . . . . 47
7.05. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.06. Inspection of Property; Books and Records; Discussions . . . . . 48
7.07. Insurance and Condemnation Proceeds . . . . . . . . . . . . . . . 49
7.08. [Intentionally omitted] . . . . . . . . . . . . . . . . . . . . . 49
7.09. Employee Benefit Plan Compliance. . . . . . . . . . . . . . . . . 49
7.10. Government Contract Compliance. . . . . . . . . . . . . . . . . . 49
7.11. Maintenance of Property . . . . . . . . . . . . . . . . . . . . . 49
7.12. Condemnation. . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.13. Business Contracts. . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE VIII
NEGATIVE COVENANTS
8.01. Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.02. Sales of Assets . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.03. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.04. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.05. Accommodation Obligations . . . . . . . . . . . . . . . . . . . . 52
8.06. Restricted Junior Payments. . . . . . . . . . . . . . . . . . . . 53
8.07. Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . 53
8.08. Transactions with Shareholders and Affiliates . . . . . . . . . . 53
8.09. Restriction on Fundamental Changes. . . . . . . . . . . . . . . . 53
8.10. Sales and Leasebacks. . . . . . . . . . . . . . . . . . . . . . . 54
8.11. Employee Benefit Plan Matters . . . . . . . . . . . . . . . . . . 54
8.12. Issuance of Capital Stock . . . . . . . . . . . . . . . . . . . . 54
8.13. Organizational Documents. . . . . . . . . . . . . . . . . . . . . 54
8.14. Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.15. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.16. Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . 55
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Section Page
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ARTICLE IX
FINANCIAL COVENANTS
9.01. Net Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE X
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
10.01. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . 55
10.02. Rights and Remedies. . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE XI
MISCELLANEOUS
11.01. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
11.02. Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
11.03. Change in Accounting Principles. . . . . . . . . . . . . . . . . 61
11.04. Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.05. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . 61
11.06. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
11.07. Survival of Warranties and Agreements. . . . . . . . . . . . . . 63
11.08. Failure or Indulgence Not Waiver; Remedies Cumulative. . . . . . 63
11.09. Marshalling; Payments Set Aside. . . . . . . . . . . . . . . . . 63
11.10. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 63
11.11. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
11.12. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . 64
11.13. Limitation of Liability. . . . . . . . . . . . . . . . . . . . . 64
11.14. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 64
11.15. Certain Consents and Waivers of the Borrower . . . . . . . . . . 64
11.16. Counterparts; Effectiveness; Inconsistencies . . . . . . . . . . 66
11.17. Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . 66
11.18. Supervening Legislation. . . . . . . . . . . . . . . . . . . . . 66
11.19. Time is of the Essence . . . . . . . . . . . . . . . . . . . . . 66
11.20 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 67
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EXHIBITS
Exhibit A -- Form of Collection Account Agreement
Exhibit B -- Form of Fixed and Floating Charge
Exhibit C -- Form of Notice of Borrowing
Exhibit D -- Form of Parent Pledge Agreement
Exhibit E -- Form of Parent Guaranty
Exhibit F -- Form of Officer's Certificate to Accompany Reports
SCHEDULES
Schedule 1.01.1 -- Collection Accounts and Collection Account Banks
Schedule 1.01.2 -- Permitted Existing Accommodation Obligations
Schedule 1.01.3 -- Permitted Existing Indebtedness
Schedule 1.01.4 -- Permitted Existing Liens
Schedule 5.01-C -- Consents
Schedule 5.01-D -- Subsidiaries; Authorized, Issued and Outstanding
Capital Stock
Schedule 5.01-N -- Pending Actions
Schedule 5.01-S -- Employee Benefit Plan Matters
Schedule 5.01-T -- Labor Contracts
Schedule 5.01-V -- Government Contract Matters
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TERM LOAN AGREEMENT
This Term Loan Agreement dated as of August 12, 1996 (as further
amended, restated, supplemented or modified from time to time, the
"Agreement") is entered into by and between RCL Pty (ACN 073 075 428), an
unlimited liability company organized under the laws of the State of
Victoria, Australia (the "Borrower"), and General Electric Capital
Corporation, a New York corporation (the "Lender").
ARTICLE I
DEFINITIONS
1.01. CERTAIN DEFINED TERMS. The following terms used in this
Agreement shall have the following meanings, applicable both to the singular and
the plural forms of the terms defined:
"ACCOMMODATION OBLIGATION" means any Contractual Obligation,
contingent or otherwise, of one Person with respect to any Indebtedness,
obligation or liability of another, if the primary purpose or intent thereof
by the Person incurring the Accommodation Obligation is to provide assurance
to the obligee of such Indebtedness, obligation or liability of another that
such Indebtedness, obligation or liability will be paid or discharged, or
that any agreements relating thereto will be complied with, or that the
holders thereof will be protected (in whole or in part) against loss in
respect thereof including, without limitation, direct and indirect
guarantees, endorsements (except for collection or deposit in the ordinary
course of business), notes co-made or discounted, recourse agreements,
take-or-pay agreements, keep-well agreements, agreements to purchase or
repurchase such Indebtedness, obligation or liability or any security
therefor or to provide funds for the payment or discharge thereof, agreements
to maintain solvency, assets, level of income, or other financial condition,
and agreements to make payment other than for value received. The amount of
any Accommodation Obligation shall be equal to the amount of the obligation
so guaranteed or otherwise supported; PROVIDED, that (i) if the liability of
the Person extending such guaranty or support is limited with respect thereto
to an amount less than the obligation guaranteed or supported, or is limited
to recourse against a particular asset or assets of such Person, the amount
of the corresponding Accommodation Obligation shall be limited (in the case
of a guaranty or other support limited by amount) to such lesser amount or
(in the case of a guaranty or other support limited by recourse to a
particular asset or assets) to the higher of the Fair Market Value of such
asset or assets at the date for determination of the amount of the
Accommodation Obligation or the value at which such asset or assets would, in
conformity with GAAP, be reflected on or valued for the purposes of preparing
a consolidated balance sheet of such Person as at such determination date;
and (ii) if any obligation is guaranteed or otherwise supported jointly and
severally by a Person and others, then the amount of the liability of such
Person with respect to
such guaranty or other support to be included in the amount of such Person's
Accommodation Obligation shall be the whole principal amount so guaranteed or
otherwise supported.
"ACCOUNT" means all of the Borrower's and each Parent's respective
present and future (i) book debts and accounts receivable, (ii) contract
rights, chattel paper, instruments, documents, deposit accounts (including,
without limitation, the Collection Accounts), and other rights to payment of
any kind, whether or not arising out of or in connection with the sale or
lease of goods or the rendering of services, and whether or not earned by
performance, (iii) any of the foregoing which are not evidenced by
instruments or chattel paper, (iv) intercompany receivables, and any security
documents executed in connection therewith, (v) proceeds of any letters of
credit or insurance policies on which the Borrower or any Parent is named as
beneficiary, (vi) claims against third parties for advances and other
financial accommodations and any other obligations whatsoever owing to the
Borrower or any Parent, (vii) rights in and to all security agreements,
leases, guarantees, instruments, securities, documents of title and other
contracts securing, evidencing, supporting or otherwise relating to any of
the foregoing, together with all rights in any goods, merchandise or
Inventory which any of the foregoing may represent, and (viii) rights in
returned and repossessed goods, merchandise and Inventory which any of the
same may represent, including, without limitation, any right of stoppage in
transit.
"ACCOUNT DEBTOR" means any person who is or who may become obligated
to the Borrower under, with respect to, or on account of an Account or a
General Intangible.
"AFFILIATE" means any Person (other than Lender) which directly or
indirectly owns or controls, on an aggregate basis, including all beneficial
ownership and ownership or control as a trustee, guardian or other fiduciary,
at least ten percent (10%) of the outstanding capital stock (or other
ownership interests) having ordinary voting power to elect a majority of the
board of directors or otherwise to direct or cause the direction of the
management and policies (irrespective of whether, at the time, stock (or
other ownership interest) of any other class or classes of such Person shall
have or might have voting power by reason of the happening of any
contingency) of the Borrower or any Parent which is controlled by or is under
common control with the Borrower, any Parent or any stockholders (or other
owners) of the Borrower or any Parent. For the purpose of this definition,
"control" means the possession, directly or indirectly, of the power to
direct or to cause the direction of management and policies, whether through
the ownership of voting securities, by contract or otherwise.
"AGREEMENT" is defined in the preamble hereto.
"BORROWER" is defined in the preamble hereto.
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"BORROWING" means the borrowing of the Term Loan hereunder.
"BUSINESS DAY" means a day, in the applicable local time, which is
not a Saturday or Sunday or a legal holiday and on which banks are not
required or permitted by law or other governmental action to close in Los
Angeles, California, Chicago, Illinois, New York, New York or Melbourne,
Victoria, Australia.
"CAPITAL EXPENDITURES" means, for any period, the aggregate of all
expenditures (whether payable in cash or other Property or accrued as a
liability (but without duplication)) during such period that, in conformity
with GAAP, are required to be included in or reflected by KHI's or any of its
Subsidiaries' fixed asset accounts as reflected in any of their respective
balance sheets; PROVIDED, HOWEVER, that Capital Expenditures shall include,
whether or not such a designation would be in conformity with GAAP, (i) that
portion of Capital Leases which is capitalized on the consolidated balance
sheet of KHI and its Subsidiaries and (ii) expenditures for Equipment which
is purchased simultaneously with the trade-in of existing Equipment owned by
KHI or any of its Subsidiaries, to the extent the gross purchase price of the
purchased Equipment exceeds the book value of the Equipment being traded in
at such time.
"CAPITAL LEASE", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease or a financing
lease on the balance sheet of that Person.
"CAPITAL STOCK", with respect to any Person, means any shares, capital
stock, stock units or units in the capital of such Person, regardless of class
or designation, and all warrants, options, purchase rights, conversion or
exchange rights, voting rights, calls or claims of any character with respect
thereto.
"CASH EQUIVALENTS" means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States or Australian government and
backed by the full faith and credit of the United States or Australian
government; and (ii) domestic and eurodollar certificates of deposit and time
deposits, bankers' acceptances and floating rate certificates of deposit
issued by any commercial bank organized under the laws of the United States,
any state thereof, the District of Columbia, Australia or any state thereof,
any foreign bank, or its branches or agencies (fully protected against
currency fluctuations), which, at the time of acquisition, are rated A-1 (or
better) by Standard & Poor's Corporation or Prime-1 (or better) by Xxxxx'x
Investors Services, Inc.; PROVIDED, that the maturities of such Cash
Equivalents shall not exceed one year.
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"CASH FLOW" means, for any Person for any period, the amounts for such
period (taken as a single accounting period determined in conformity with GAAP)
of such Person's (i) net income or loss determined on a first-in-first-out
method of inventory accounting basis, PLUS (ii) depreciation and amortization
expense, PLUS (iii) interest expense, PLUS (iv) foreign, federal and state
income taxes, PLUS (v) state sales taxes arising in connection with the
Purchase, to the extent included in the calculation of net income (or loss),
PLUS (vi) extraordinary losses, PLUS (vii) Liabilities and Costs incurred in
connection with any Remedial Action, to the extent included in the calculation
of net income (or loss), PLUS (viii) Transaction Costs, MINUS (ix) extraordinary
gains.
"CLAIM" means any claim or demand, by any Person, of whatsoever kind
or nature for any alleged Liabilities and Costs, whether based in contract,
tort, implied or express warranty, strict liability, criminal or civil statute,
Permit, ordinance or regulation, common law or otherwise.
"COLLATERAL" means all Property and interests in Property now owned
or hereafter acquired by the Borrower or either Parent upon which a Lien is
granted under any of the Loan Documents.
"COLLECTION ACCOUNT" means (i) each deposit account of the Borrower
identified on SCHEDULE 1.01.1 and (ii) each deposit account of the Lender
into which collections in respect of Accounts and other proceeds of
Collateral are deposited.
"COLLECTION ACCOUNT AGREEMENT" means, with respect to each
Collection Account of the Borrower or any Parent, an agreement in
substantially the form of EXHIBIT A attached hereto and made a part hereof
(or such other form as may be agreed to by the Borrower and the Lender),
pursuant to which, among other things (i) the Collection Account Bank party
thereto agrees to remit to the Lender or its designee in accordance with
instructions contained therein, on a daily basis and by wire transfer or
through an automated clearing house, all collected funds on deposit in the
Collection Account(s) maintained by such Collection Account Bank (which
agreement may not be revoked, and shall remain in effect, until sixty (60)
days after such Collection Account Bank mails to the Lender and the Borrower
or the applicable Parent a notice of termination), and (ii) the Borrower or
the applicable Parent and the Collection Account Bank confirm the Lender's
perfected first priority liens in the Collection Accounts subject thereto.
"COLLECTION ACCOUNT BANK" means each bank, trust company or other
financial institution (i) identified on SCHEDULE 1.01.1 at which the Borrower
or any Parent maintains one or more Collection Accounts or (ii) at which the
Lender maintains one or more Collection Accounts.
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"COMPLIANCE CERTIFICATE" is defined in SECTION 6.01(d).
"CONTRACTUAL OBLIGATION", as applied to any Person, means any
provision of any Securities issued by that Person or any indenture, mortgage,
deed of trust, security agreement, pledge agreement, guaranty, contract,
undertaking, agreement or instrument to which that Person is a party or by which
it or any of its properties is bound, or to which it or any of its properties is
subject.
"CORPORATIONS LAW" means the Corporations Law of Australia.
"CUSTOMARY PERMITTED LIENS" means
(i) Liens (other than Environmental Encumbrances and Liens in favor of
the Insurance and Superannuation Commission of Australia) with respect to
the payment of taxes, assessments or governmental charges in all cases which
are not yet due or which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with GAAP;
(ii) statutory Liens of landlords and Liens of suppliers,
mechanics, carriers, materialmen, warehousemen or workmen and other
Liens imposed by law created in the ordinary course of business for
amounts not yet due or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with
GAAP;
(iii) Liens (other than Environmental Encumbrances and Liens in favor
of the Insurance and Superannuation Commission of Australia) incurred or
deposits made in the ordinary course of business in connection with worker's
compensation, unemployment insurance or other types of social security
benefits or to secure the performance of bids, tenders, sales, contracts
(other than for the repayment of borrowed money), surety and performance
bonds; PROVIDED, that (A) all such Liens do not in the aggregate materially
detract from the value of the Borrower's or any of its Parents assets or
Property or materially impair the use thereof in the operation of their
respective businesses, and (B) all such Liens in connection with worker's
compensation, unemployment insurance or other types of social security
benefits deposits shall secure obligations in an aggregate principal amount
not exceeding $50,000 at any time outstanding; and
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(iv) Liens arising with respect to zoning restrictions,
easements, licenses, reservations, covenants, rights-of-way, utility
easements, building restrictions and other similar charges or
encumbrances on the use of Real Property which do not interfere with
the ordinary conduct of the business of the Borrower or any of its
Subsidiaries.
"DESIGNATED PREPAYMENT" is defined in SECTION 3.01(b)(iii).
"DOLLARS" and "$" mean the lawful money of the United States.
"EFFECTIVE DATE" is defined in SECTION 11.16.
"EMPLOYEE BENEFIT PLAN" means any superannuation fund within the
meaning of the Superannuation Industry (Supervision) Xxx 0000 (Cwlth) which
is maintained or contributed to for the benefit of the employees of the
Borrower.
"ENVIRONMENTAL ENCUMBRANCE" is defined in the Fixed and Floating
charge.
"ENVIRONMENTAL HAZARD" is defined in the Fixed and Floating charge.
"ENVIRONMENTAL LAW" is defined in the Fixed and Floating charge.
"EQUIPMENT" means all of the Borrower's and each Parent's respective
present and future (i) equipment, including, without limitation, machinery,
manufacturing, distribution, selling, data processing and office equipment,
assembly systems, tools, molds, dies, fixtures, appliances, furniture,
furnishings, vehicles, vessels, aircraft, aircraft engines, and trade
fixtures, (ii) other tangible personal Property (other than the Borrower's
and each Parents' respective Inventory), and (iii) any and all accessions,
parts and appurtenances attached to any of the foregoing or used in
connection therewith, and any substitutions therefor and replacements,
products and proceeds thereof.
"EVENT OF DEFAULT" means any of the occurrences set forth in
SECTION 10.01 after the expiration of any applicable grace period and the
giving of any applicable notice, in each case as expressly provided in
SECTION 10.01.
"EXCESS CASH FLOW" means, for any Fiscal Year, an amount equal to
(i) Cash Flow for such Fiscal Year, MINUS (ii) income taxes paid in cash during
such Fiscal Year, MINUS (iii) state sales taxes arising in connection with the
Purchase which are paid in cash during such Fiscal Year, MINUS (iv) Capital
Expenditures paid in cash during such Fiscal Year, MINUS (v)
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Transaction Costs paid in cash during such Fiscal Year, MINUS (vi) interest
on permitted Indebtedness of KHI and its Subsidiaries paid in cash during
such Fiscal Year, including, without limitation, the interest component of
all Capital Leases, MINUS (vii) for Fiscal Year 1994, $2,000,000, MINUS
(viii) for Fiscal Year 1995 and each Fiscal Year thereafter, scheduled
amortization of the principal portion of the "Term Loan" under (and as
defined in) the KTI Credit Agreement during such Fiscal Year, MINUS (ix)
extraordinary cash losses incurred during such Fiscal Year, MINUS (x)
Liabilities and Costs paid in cash during such Fiscal Year and incurred in
connection with any Remedial Action, PLUS (xi) extraordinary cash gains for
such Fiscal Year, PLUS (xii) any cash gain for such Fiscal Year with respect
to any inventory or accounts purchased from Microdot Aerospace Limited in
connection with the Purchase, to the extent included in the calculation of
net income (or loss), PLUS (or MINUS) (xiii) any decrease (or increase) in
Net Working Capital since the last day of the then immediately preceding
Fiscal Year, the amount for such Fiscal Year in each case determined in
conformity with GAAP for KHI, KTI, the Borrower and their respective
Subsidiaries on a consolidated basis.
"EXCESS PROCEEDS OF ISSUANCE OF STOCK OR INDEBTEDNESS" means net
cash proceeds received by the Borrower or any Parent at any time after the
Effective Date on account of the issuance of (i) Capital Stock of the
Borrower (other than Capital Stock of the Borrower issued to the Parent) (ii)
Capital Stock of either Parent (other than Capital Stock of either Parent
issued to KTI) or (iii) Indebtedness (other than Indebtedness permitted under
SECTION 8.01) of the Borrower or either Parent, in each case net of all
transaction costs and underwriters' discounts with respect thereto.
"EXPORT LICENSE" means any and all licenses, authorizations,
approvals or applications therefor relating to exports, reexports, temporary
exports, temporary imports and imports, as the case may be, granted by or
pending before any Governmental Authority.
"FAIR MARKET VALUE" means, with respect to any asset, the value of the
consideration obtainable in a sale of such asset in the open market, assuming a
sale by a willing seller to a willing purchaser dealing at arm's length and
arranged in an orderly manner over a reasonable period of time, each having
reasonable knowledge of the nature and characteristics of such asset, neither
being under any compulsion to act, determined (a) in good faith by the board of
directors of the Borrower or (b) in an appraisal of such asset, PROVIDED, that
such appraisal was performed relatively contemporaneously with such sale by an
independent third party appraiser and the basic assumptions underlying such
appraisal have not materially changed since the date thereof.
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"FISCAL YEAR" means the fiscal year of the Borrower, which shall be
the 12-month period ending on December 31 of each calendar year.
"FIXED AND FLOATING CHARGE" means the Fixed and Floating Charge
dated August 2, 1996, in substantially the form of EXHIBIT B attached hereto
and made a part hereof, executed by the Borrower in favor of the Lender,
pursuant to which the Borrower grants a security interest to the Lender in
substantially all of its Property, as the same may be amended, restated,
supplemented or modified from time to time.
"GAAP" means (i) with respect to the Borrower, (A) the applicable
accounting standards and practices required by the Corporations Law and (B)
if not inconsistent with the accounting standards described in CLAUSE (i),
generally accepted accounting principles set forth in the opinions and
pronouncements of the Institute of Chartered Accountants in Australia or
Australian Society of Certified Practising Accounts or any successor to
either of them or in such other statements by such other entity as may be in
general use by significant segments of the accounting profession in Australia
as in effect on the date hereof (unless otherwise specified herein as in
effect on another date or dates); and (ii) with respect to the Parents,
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute
of Certified Public Accounting Standards Board or in such other statements by
such other entity as may be in general use by significant segments of the
accounting profession as in effect on the date hereof (unless otherwise
specified herein as in effect on another date or dates).
"GENERAL INTANGIBLES" means all of the Borrower's and each Parent's
respective present and future (i) general intangibles, (ii) rights,
interests, choses in action, causes of action, claims and other intangible
Property of every kind and nature (other than Accounts), (iii) corporate and
other business records, (iv) loans, royalties, and other obligations
receivable, (v) trademarks, registered trademarks, trademark applications,
service marks, registered service marks, service xxxx applications, patents,
patent applications, trade names, rights of use of any name, labels,
fictitious names, inventions, designs, trade secrets, computer programs,
software, printouts and other computer materials, goodwill, registrations,
copyrights, copyright applications, permits, licenses, franchises, customer
lists, credit files, correspondence, and advertising materials, (vi) customer
and supplier contracts, firm sale orders, rights under license and franchise
agreements, rights under tax sharing agreements, and other contracts and
contract rights, (vii) interests in partnerships and joint ventures, (viii)
tax refunds and tax refund claims, (ix) right, title and interest under
leases, subleases, licenses and concessions and other agreements relating to
Property, (x) deposit accounts (general or special) with any bank or other
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financial institution (including, without limitation, the Collection
Accounts) (xi) credits with and other claims against third
parties (including carriers and shippers), (xii) rights to indemnification and
with respect to support and keep-well agreements, (xiii) reversionary interests
in pension and profit sharing plans and reversionary, beneficial and residual
interests in trusts, (xiv) proceeds of insurance of which the Borrower or any
Parent is beneficiary, (xv) letters of credit, guarantees, Liens, security
interests and other security held by or granted to the Borrower or any Parent,
(xvi) uncertificated securities, and (xvii) governmental
certificates and certifications, including, without limitation, certificates and
certifications relating to Government Contracts and Export Licenses,
authorizations and approvals, issued to the Borrower or any parent.
"GOVERNMENTAL AUTHORITY" means any nation or government, any federal,
state, territorial, local or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"GOVERNMENT CONTRACT" means any bid, quotation, proposal, contract,
agreement, work authorization, lease, commitment or sale or purchase order of
the Borrower which is entered into with or submitted to any Governmental
Authority, including, among other things, all contracts and work
authorizations to supply goods and services to such Governmental Authority.
"INCOME TAX ASSESSMENT ACT" means the Income Tax Assessment Act 1936
(Cwlth).
"INDEBTEDNESS", as applied to any Person, means, at any time, (i) all
indebtedness, obligations or other liabilities of such Person (A) for borrowed
money or evidenced by debt securities, debentures, acceptances, notes or other
similar instruments, and any accrued interest, fees and charges relating
thereto, (B) under profit payment agreements or in respect of obligations to
redeem, repurchase or exchange any Securities of such Person or to pay dividends
in respect of any stock, (C) with respect to letters of credit issued for such
Person's account, (D) to pay the deferred purchase price of property or
services, except accounts payable and accrued expenses arising in the ordinary
course of business, (E) in respect of Capital Leases, (F) which are
Accommodation Obligations or (G) under warranties and indemnities; (ii) all
indebtedness, obligations or other liabilities of such Person or others secured
by a Lien on any property of such Person, whether or not such indebtedness,
obligations or liabilities are assumed by such Person, all as of such time;
(iii) all preferred stock subject (upon the occurrence of any contingency or
otherwise) to mandatory redemption; and (iv) all contingent Contractual
Obligations with respect to any of the foregoing.
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"INDEX RATE" means the higher of:
(i) the highest prime or base rate of interest published in New York
City by any of Xxxxxx Guaranty Trust Company of New York, Citibank, N.A.
and Chemical Bank (whether or not such rate is actually charged by any such
bank); and
(ii) the latest published rate for 90-day directly placed commercial
paper (or the mid-point in the range of such rates, if more than one rate
is published) as quoted either in the Federal Reserve Rate Report which
customarily appears in the Friday issue of THE WALL STREET JOURNAL under
"Money Rates" or in such other publication as the Lender may, from time to
time hereafter, designate in writing.
"INSOLVENCY EVENT" is defined in the Fixed and Floating Charge.
"INVENTORY" means all of the Borrower's and each Parent's
respective present and future (i) inventory, (ii) goods, merchandise and other
personal Property furnished or to be furnished under any contract of service or
intended for sale or lease, and all consigned goods and all other items which
have previously constituted Equipment but are then currently being held for sale
or lease in the ordinary course of the Borrower's or any Parent's business,
(iii) raw materials, work-in-process and finished goods, (iv) materials and
supplies of any kind, nature or description used or consumed in the Borrower's
or any Parent's business or in connection with the manufacture, production,
packing, shipping, advertising, finishing or sale of any of the Property
described in CLAUSES (i) through (iii) above, (v) goods in which the Borrower or
any Parent has a joint or other interest or right of any kind (including,
without limitation, goods in which the Borrower or any Parent has an
interest or right as consignee), and (vi) goods which are returned to or
repossessed by the Borrower or any Parent; in each case whether in the
possession of the Borrower, any Parent, a bailee, a consignee, or any other
Person for sale, storage, transit, processing, use or otherwise, and any and all
documents for or relating to any of the foregoing.
"INVESTMENT" means, with respect to any Person, (i) any purchase or
other acquisition by that Person of Securities, or of a beneficial interest in
Securities, issued by any other Person, (ii) any purchase by that Person of all
or substantially all of the assets of a business conducted by another Person,
and (iii) any loan, advance (other than deposits with financial institutions
available for withdrawal on demand, prepaid expenses, accounts receivable,
advances to employees and similar items made or incurred in the ordinary course
of business) or capital contribution by that 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 its business.
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The amount of any Investment shall be the original cost of such Investment,
plus the cost of all additions thereto less the amount of any return of
capital or principal to the extent such return is in cash with respect to
such Investment without any adjustments for increases or decreases in value
or write-ups, write-downs or write-offs with respect to such Investment.
"KHI" means Kaynar Holdings Inc., a Delaware corporation.
"KHI AGREEMENTS" means (i) the KHI Loan Agreement and the agreements,
documents and instruments executed in connection therewith and (ii) the PIK
Dividend Note Agreement and the PIK Dividend Notes.
"KHI LOAN AGREEMENT" means that certain Term Loan Agreement dated as
of January 3, 1994 by and between KHI and the Lender, as amended and as
amended and restated by that certain Amended and Restated Term Loan Agreement
of even date herewith by and between KHI and the Lender, as the same may be
further amended, restated, supplemented or modified from time to time.
"KTI" means Kaynar Technologies Inc., a Delaware corporation.
"KTI CREDIT AGREEMENT" means that certain Credit Agreement dated as
of January 3, 1994 by and between KTI and the Lender, as amended and as
amended and restated by that certain Amended and Restated Credit Agreement
of even date herewith by and between KHI and the Lender, as the same may be
further amended, restated, supplemented or modified from time to time.
"KTI LOAN DOCUMENTS" means the "Loan Documents" as defined in the
KTI Credit Agreement.
"LENDER" is defined in the preamble hereto.
"LIABILITIES AND COSTS" means all liabilities, obligations,
responsibilities, losses, damages, personal injury, death, punitive damages,
economic damages, consequential damages, treble damages, intentional, willful or
wanton injury, damage or threat to the environment, natural resources or public
health or welfare, costs and expenses (including, without limitation, attorney,
expert and consulting fees and costs of investigation, feasibility or Remedial
Action studies), fines, penalties and monetary sanctions, interest, direct or
indirect, known or unknown, absolute or contingent, past, present or future.
"LIEN" means any mortgage, deed of trust, pledge, charge,
hypothecation, assignment, conditional sale agreement, deposit arrangement,
security interest, encumbrance, title retention arrangement, xxxx of sale (as
defined in any statute), profit a prendre, easement, restrictive covenant,
equity interest, garnishee order, writ of execution, right of set-off,
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license to use or occupy, lien (statutory or other), notice under section 218
or 255 of the Income Tax Assessment Act or under section 74 of the Sales Tax
Assessment Act or under any other similar Requirement of Law, preference,
priority or other security agreement or preferential arrangement of any kind
or nature whatsoever in respect of any property of a Person, whether granted
voluntarily or imposed by law, and any agreement to create any of them or
allow any of them to exist, and includes the interest of a lessor under a
Capital Lease or under any financing lease having substantially the same
economic effect as any of the foregoing and the filing of any financing
statement or similar notice, naming the owner of such property as debtor,
under the Uniform Commercial Code or other comparable law of any jurisdiction.
"LOAN ACCOUNT" is defined in SECTION 3.04(b).
"LOAN DOCUMENTS" means this Agreement, the Fixed and Floating
Charge, the Parent Guaranty, the Parent Pledge Agreements and all other
instruments, agreements and written Contractual Obligations between the
Borrower or any Parent and the Lender delivered to the Lender pursuant to or
in connection with the transactions contemplated hereby.
"MANAGEMENT DISCUSSION AND ANALYSIS" is defined in SECTION 6.02.
"MATERIAL ADVERSE EFFECT" means a material adverse effect upon (i) the
financial condition, operations, assets or prospects of KHI, KTI, the Borrower
or any of their respective Subsidiaries, (ii) the ability of KHI, KTI, the
Borrower or any of their respective Subsidiaries to perform their respective
obligations under the Transaction Documents, or (iii) the ability of the
Lender to enforce the Loan Documents.
"NET CASH PROCEEDS OF SALE" means (i) proceeds received by the
Borrower or Parent in cash from the sale, assignment or other
disposition of (but not the lease or license of) any Property, other than sales
permitted under CLAUSES (ii) through (iv) of SECTION 8.02, net of (A) the costs
of sale, assignment or other disposition, (B) any income, franchise, transfer or
other tax liability arising from such transaction and (C) amounts required to be
applied to the repayment of Indebtedness secured by a Lien permitted by
SECTION 8.03 on the asset disposed of, if such net proceeds arise from any
individual sale, assignment or other disposition or from any group of related
sales, assignments or other dispositions; and (ii) proceeds of insurance on
account of the loss of, damage to, or the occurrence of any other insured risk
with respect to, any such Property or Properties, and payments of compensation
for any such Property or Properties taken by condemnation or eminent domain, as
provided in SECTION 7.07.
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"NET WORKING CAPITAL" means, as of any date of determination, the
excess, if any, of (i) consolidated current assets, except cash and Cash
Equivalents, over (ii) consolidated current liabilities, except current
maturities of long-term debt as of such date, in each case for the KHI, KTI,
the Borrower and their respective Subsidiaries on a consolidated basis.
"NOTICE OF BORROWING" means a notice substantially in the form of
EXHIBIT C attached hereto and made a part hereof.
"OBLIGATIONS" means all loans, advances, debts, liabilities,
obligations, covenants and duties owing by the Borrower to the Lender, or any
Person entitled to indemnification pursuant to SECTION 11.02 of this
Agreement, of any kind or nature, present or future, whether or not evidenced
by any note, guaranty or other instrument, arising under this Agreement or
any other Loan Document, whether or not for the payment of money, whether
arising by reason of an extension of credit, loan, guaranty, indemnification
or in any other manner, whether direct or indirect (including those acquired
by assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired. The term includes, without
limitation, all interest (including, without limitation, interest, whether or
not allowed after the occurence of an event or occurrence described in
SECTION 10.01(f), at the then applicable rate (including the rate in effect
from time to time under SECTION 2.02(c)) specified herein that accrues after
the commencement of any proceeding under the bankruptcy, reorganization,
insolvency, dissolution, liquidation or other debtor relief Requirement of
Law), charges, expenses, fees, attorneys' fees and disbursements and any
other sum chargeable to the Borrower under this Agreement or any other Loan
Document.
"OFFICER'S CERTIFICATE" means a certificate executed on behalf of a
corporation by (i) the chairman or vice-chairman of its board of directors
(if an officer of such corporation) or (ii) its president, any of its
vice-presidents, its chief financial officer, or its treasurer; PROVIDED,
HOWEVER, that any such certificate executed on behalf of the Borrower shall
be executed by a director or secretary of the Borrower.
"OPERATING LEASE" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee which is not
a Capital Lease.
"ORGANIZATIONAL DOCUMENTS" means, with respect to any corporation,
limited liability company, unlimited liability company or partnership (i) the
articles/certificate of incorporation (or the equivalent organizational
documents) of such corporation or limited liability company, (ii) the
partnership agreement executed by the partners in the partnership, (iii) the
certificate of registration and memorandum and articles of association of such
unlimited liability company, (iv) the by-laws (or the equivalent governing
documents) of the
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corporation, limited liability company, unlimited liability company or
partnership, and (iv) any document setting forth the designation, amount
and/or relative rights, limitations and preferences of any class or series of
such corporation's Capital Stock or such limited liability company's,
unlimited liability company's or partnership's equity or ownership interests.
"PARENT GUARANTY" means a guaranty and contribution agreement of
even date herewith, substantially in the form of EXHIBIT E attached hereto
and made a part hereof, executed by each Parent in favor of Lender, pursuant
to which each Parent unconditionally guarantees the payment and performance
of the Obligations.
"PARENT PLEDGE AGREEMENT" means the Pledge Agreements dated as of
August 2, 1996, each in substantially the form of EXHIBIT D attached hereto
and made a part hereof, executed by Recoil Holdings and Recoil Australia
Holdings, respectively, in favor of the Lender, pursuant to which such Parent
pledges and grants a security interest to the Lender in 100% of the issued
and outstanding Capital Stock of any Affiliated Person and related Property,
as the same may be amended, restated, supplemented or modified from time to
time.
"PARENTS" means Recoil Australia Holdings and Recoil Holdings, and
"PARENT" means either of them.
"PENSION PLAN" means any Employee Benefit Plan which (i) is
maintained or contributed to for the benefit of employees of the Borrower,
and (ii) under applicable local law, is required to be funded through a trust
or other funding vehicle.
"PERMITS" means any license, permit, variance, interim permit, permit
application, approval, consent, certification, qualification or other
authorization under any Requirement of Law applicable to the Borrower or any
Parent or otherwise required by any Governmental Authority in
connection with the business or operations of the Borrower or any Parent,
including, without limitation, any license, permit, consent,
certification, approval, authorization or qualification relating to any
Government Contract.
"PERMITTED EXISTING ACCOMMODATION OBLIGATIONS" means the Accommodation
Obligations of the Borrower and each Parent identified as such on SCHEDULE
1.01.2.
"PERMITTED EXISTING INDEBTEDNESS" means the Indebtedness of the
Borrower and its Subsidiaries identified as such on SCHEDULE 1.01.3.
"PERMITTED EXISTING LIENS" means the Liens on the Property of the
Borrower and its Subsidiaries identified as such on SCHEDULE 1.01.4.
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"PERSON" means any natural person, corporation, limited liability
company, unlimited liability company, limited partnership, general partnership,
joint stock company, joint venture, association, company, trust, bank, trust
company, land trust, business trust or other organization, whether or not a
legal entity, and any Governmental Authority.
"PIK DIVIDEND NOTE AGREEMENT" means that certain PIK Dividend Note
Agreement dated as of January 3, 1994 by and between the KHI and the
Lender, as the initial holder of the preferred stock of KHI, and the
other Persons from time to time party thereto as "Holders" (as defined therein),
as the same may be amended, restated, supplemented or modified from time to
time.
"PIK DIVIDEND NOTES" means the outstanding promissory notes issued by
KHI pursuant to the PIK Dividend Note Agreement.
"POTENTIAL EVENT OF DEFAULT" means an event which, with the giving of
notice or the lapse of time, or both, would constitute an Event of Default.
"PROCESS AGENT" is defined in SECTION 11.15.
"PROPERTY" means any Real Property or personal property, plant,
building, facility, structure, underground storage tank or unit, Equipment,
Inventory, General Intangible, Account, or other asset owned, leased or operated
by the Borrower or any Parent, as applicable, (including any surface water
thereon or adjacent thereto, and soil and groundwater thereunder).
"PURCHASE" means the "Purchase" as defined in the KTI Credit
Agreement.
"REAL PROPERTY" means all of the Borrower's and any Parent's
respective present and future right, title and interest (including, without
limitation, any leasehold estate) in (i) any plots, pieces or parcels of
land, (ii) any improvements, buildings, structures and fixtures now or
hereafter located or erected thereon or attached thereto of every nature
whatsoever (the rights and interests described in CLAUSE (i) or (ii) above
being the "Premises"), (iii) all easements, rights of way, gores of land or
any lands occupied by streets, ways, alleys, passages, sewer rights, water
courses, water rights and powers, and public places adjoining such land, and
any other interests in property constituting appurtenances to the Premises,
or which hereafter shall in any way belong, relate or be appurtenant thereto,
(iv) all hereditaments, gas, oil, minerals (with the right to extract, sever
and remove such gas, oil and minerals), and easements, of every nature
whatsoever, located in or on the Premises and (v) all other rights and
privileges thereunto belonging or appertaining and all extensions, additions,
improvements, betterments, renewals, substitutions and replacements to or of
any of the rights and interests described in CLAUSE (iii) or (iv) above.
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"RECOIL ACQUISITION" means, collectively, (i) the purchase by KTI of
substantially all of the assets of Recoil U.S. pursuant to the Recoil U.S.
Acquisition Agreement and (ii) the purchase by KTI, the Borrower and, if
designated by the Borrower to acquire the shares of Recoil U.K., Kaynar U.K.
of substantially all of the assets of Recoil Australia pursuant to the Recoil
Australia Acquisition Agreement.
"RECOIL ACQUISITION AGREEMENTS" means the Recoil U.S. Acquisition
Agreement and the Recoil Australia Acquisition Agreement, and "RECOIL
ACQUISITION AGREEMENT" means either of them.
"RECOIL ACQUISITION DOCUMENTS" means the Recoil Acquisition Agreements
and all of the agreements, documents and instruments executed in connection with
either of them.
"RECOIL AUSTRALIA" means Recoil Pty Ltd, a company organized under the
laws of the State of Victoria, Australia.
"RECOIL AUSTRALIA ACQUISITION AGREEMENT" means that certain
Australian Asset Sale Agreement dated August , 1996 among KTI, the Borrower,
Recoil Australia and the other Vendors, pursuant to which the Vendors agree
to sell, and the Borrower and KTI agree to purchase, substantially all of the
assets of Recoil Australia.
"RECOIL AUSTRALIA HOLDINGS" means Recoil Australia Holdings, Inc., a
Delaware corporation.
"RECOIL BELGIUM" means Recoil Marketing BVBA, a company organized
under the laws of Belgium.
"RECOIL HOLDINGS" means Recoil Holdings, Inc., a Delaware corporation.
"RECOIL U.K." means Recoil (Europe) Limited., a company organized under
the laws of England and Wales.
"RECOIL U.S." means Recoil Inc., an Oregon corporation.
"RECOIL U.S. ACQUISITION AGREEMENT" means that certain US Asset Sale
Agreement dated August , 1996 among KTI, Recoil U.S., Recoil Australia and the
other Vendors, pursuant to which Recoil U.S. agrees to sell, and KTI agrees to
purchase, substantially all of the assets of Recoil U.S.
"RELEASE" means release, presence, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment or into or out of any
Property or Third Party Property, including the movement of Environmental
Hazards through or in the air, soil, surface water, groundwater, Property or
Third Party Property.
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"REMEDIAL ACTION" means actions required to (i) clean up, remove,
treat or in any other way address Environmental Hazards in the indoor or
outdoor environment; (ii) prevent the Release or threat of Release or
minimize the further release of any Environmental Hazard; or (iii)
investigate and determine if a remedial response is needed and to design such
a response and post-remedial investigation, monitoring, operation and
maintenance and care.
"REQUIREMENTS OF LAW" means, as to any Person, the Organizational
Documents of such Person, and any law, rule or regulation, or determination
of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject including, without limitation,
any certificate of occupancy, zoning ordinance, building, environmental or
land use requirement or Permit or environmental, labor, employment,
occupational safety or health law, ordinance, rule, regulation or common law.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
Capital Stock of the Borrower or any Parent now or hereafter outstanding,
except a dividend payable solely in shares of that class of stock or in any
junior class of stock to the holders of that class, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition
for value, direct or indirect, of any shares of any class of Capital Stock of
the Borrower or any Parent now or hereafter outstanding, and (iii) any
payment made to redeem, purchase, repurchase or retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of Capital Stock of the Borrower or any Parent now or
hereafter outstanding.
"SALES TAX ASSESSMENT ACT" means the Sales Tax Assessment Act of
1992 (Cwlth).
"SCHEDULED MATURITY DATE" means January 3, 1999.
"SECURITIES" means any stock, shares, voting trust certificates,
bonds, debentures, notes or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or any certificates of
interest, shares, or participations in temporary or interim certificates for
the purchase or acquisition of, or any right to subscribe to, purchase or
acquire any of the foregoing, but shall not include any evidence of the
Obligations.
"SOLVENT", when used with respect to any Person, means that at the
time of determination:
(i) the assets of such Person, at a fair valuation, are in
excess of the total amount of its
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debts (including, without limitation, contingent liabilities); and
(ii) the present fair saleable value of its assets is greater
than its probable liability on its existing debts as such debts become
absolute and matured; and
(iii) it is then able and expects to be able to pay its debts
(including, without limitation, contingent debts and other commitments) as
they mature; and
(iv) it has capital sufficient to carry on its business as conducted
and as proposed to be conducted.
"SUBSIDIARY" of a Person means any corporation, limited liability
company, unlimited liability company, general or limited partnership, or
other entity which is a subsidiary of such Person within the meaning of part
1.2 of the Corporations Law or of which securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other Persons performing similar functions with respect to such
entity are at the time directly or indirectly owned or controlled by such
Person, one or more of the other subsidiaries of such Person or any
combination thereof.
"TAXES" is defined in SECTION 3.03(a).
"TERM LOAN" is defined in SECTION 2.01(a).
"TERM LOAN COMMITMENT" means the obligation of the Lender to make its
Term Loan pursuant to the terms and conditions of this Agreement, which shall
be in an aggregate principal amount of $6,000,000, as permanently reduced
from time to time by payments or prepayments on the Term Loan made pursuant
to SECTION 2.01(d) or SECTION 3.01.
"TERMINATION EVENT" means (i) the institution by the any
Governmental Authority of proceedings to terminate any Employee Benefit Plan;
(ii) any Governmental Authority shall appoint or institute proceedings to
appoint a trustee to administer any Employee Benefit Plan; or (iii) the
partial of complete withdrawal of the Borrower from an Employee Benefit Plan.
"THIRD PARTY PROPERTY" means any real or personal property, plant,
building, facility, structure, underground storage tank or unit or equipment
owned, leased or operated by any Person other than the Borrower or any Parent
(including, without limitation, any surface water thereon or
adjacent thereto and soil and ground water thereunder).
"TRANSACTION COSTS" means the fees, costs and expenses payable by
KHI, KTI, the Borrower and their respective
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Subsidiaries in connection with the execution, delivery and performance of
the Transaction Documents.
"TRANSACTION DOCUMENTS" means (i) the Loan Documents, (ii) the KHI
Agreements, (iii) the KTI Loan Documents and (iv) the Recoil
Acquisition Documents.
"UNIFORM COMMERCIAL CODE" means the Uniform Commercial Code as enacted
in the State of California, as it may be amended from time to time.
"VENDORS" means Recoil Australia, Advent Limited, Australian Pacific
Technology Limited, Western Pacific Investment Company Limited, Mr. Xxxxx Xxxxx,
X. Xxxxx Holdings Pty Limited and Lenarde Pty Ltd.
1.02. COMPUTATION OF TIME PERIODS. In this Agreement, in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding". Periods of days referred to in this Agreement shall be
counted in calendar days unless Business Days are expressly prescribed. Any
period determined hereunder by reference to a month or months or year or years
shall end on the day in the relevant calendar month in the relevant year, if
applicable, immediately preceding the date numerically corresponding to the
first day of such period, PROVIDED, that if such period commences on the last
day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month during which such period is to end),
such period shall, unless otherwise expressly required by the other provisions
of this Agreement, end on the last day of the calendar month.
1.03. ACCOUNTING TERMS. Subject to SECTION 11.03, for purposes of
this Agreement, all accounting terms not otherwise defined herein shall have the
meanings assigned to them in conformity with GAAP.
1.04. REFERENCES TO THIS AGREEMENT. The words "hereof", "herein",
"hereunder" and similar terms when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
article, section, subsection, clause, schedule and exhibit references herein are
references to articles, sections, subsections, clauses, schedules and exhibits
to this Agreement unless otherwise specified.
1.05. MISCELLANEOUS TERMS. All terms defined in this Agreement in
the singular shall have comparable meanings when used in the plural, and VICE
VERSA, unless otherwise specified. The term "including" is by way of example
and not limitation. A reference to a statute, ordinance, code or other
Requirement of Law includes regulations and other instruments under it and
consolidations, amendments, re-enactments or replacements of any
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of them. A reference to a Person includes a reference to the Person's
executors, administrators, successors, substitutes (including Persons taking
by novation) and assigns.
1.06. OTHER TERMS. All other terms contained in this Agreement
shall, unless the context indicates otherwise, have the meanings assigned to
such terms by the Uniform Commercial Code to the extent the same are defined
therein.
ARTICLE II
AMOUNTS AND TERMS OF TERM LOAN
2.01. TERM LOANS. (a) AMOUNT OF TERM LOAN. The Lender, subject
to the terms and conditions set forth in this Agreement, hereby agrees to
make a term loan, in Dollars, to the Borrower on the Effective Date, in an
aggregate amount equal to $6,000,000 (the "Term Loan").
(b) NOTICE OF BORROWING. When the Borrower desires to borrow the
Term Loan under this SECTION 2.01, it shall deliver to the Lender a Notice of
Borrowing, signed by it, on the Effective Date. Such Notice of Borrowing
shall specify (i) the amount of the proposed Borrowing, and (ii) instructions
for the disbursement of the proceeds of the proposed Borrowing. In lieu of
delivering such a Notice of Borrowing, the Borrower may give the Lender
telephonic notice of the Borrowing of the Term Loan on the Effective Date, if
it confirms such notice by delivery of the Notice of Borrowing to the Lender
promptly, but in no event later than 5:00 p.m. (Chicago time) on the same
day. Any Notice of Borrowing (or telephonic notice in lieu thereof) given
pursuant to this SECTION 2.01(b) shall be irrevocable.
(c) MAKING OF TERM LOAN. Promptly after receipt of a
Notice of Borrowing under SECTION 2.01(b) (or telephonic notice in lieu
thereof), the Lender shall deposit an amount equal to the amount requested by
the Borrower to be made in respect of the Term Loan under this SECTION
2.01(c), in immediately available funds, not later than 1:00 p.m. (Chicago
time) on the Effective Date. Subject to the fulfillment of the conditions
precedent set forth in SECTION 4.01, the Lender shall make the proceeds of
such amounts available to the Borrower by disbursing such proceeds on the
Effective Date to an account specified in a written notice from the Lender to
the Borrower or in accordance with the Borrower's disbursement instructions
set forth in such Notice of Borrowing.
(d) REPAYMENT OF THE TERM LOAN. (i) The outstanding
principal balance of the Term Loan shall be payable in full on the earlier of
(x) the Scheduled Maturity Date (or, if not a Business Day, the immediately
preceding Business Day), and (y) the date of acceleration of the Obligations
pursuant hereto.
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(ii) In addition to the scheduled payments on the Term Loan, the
Borrower may make the voluntary prepayments described in SECTION 3.01(a)(i)
and shall make the mandatory prepayments prescribed in SECTION 3.01(b), for
credit against such scheduled payments on the Term Loans pursuant to SECTION
3.01(a)(i) or SECTION 3.01(b), as applicable.
(e) USE OF PROCEEDS OF TERM LOAN. The proceeds of the
Term Loan shall be used (i) to pay that portion of the "Purchase Price" under
(and as defined in) the Recoil Australia Acquisition Agreement attributable
to the assets of Recoil Australia (other than the Capital Stock of Recoil
Belgium and Recoil U.K.) and (iii) for working capital in the ordinary course
of the Borrower's business and for other lawful general corporate purposes.
2.02. INTEREST. (a) RATE OF INTEREST. The Term Loan and the
outstanding principal balance of all other Obligations shall bear interest on
the unpaid principal amount thereof from the date the Term Loan is made and
such other Obligations are due and payable until paid in full, except as
otherwise provided in SECTION 2.02 (c), at a rate per annum equal to the sum
of (i) the Index Rate, as in effect from time to time as interest accrues,
PLUS (ii) one and one-half percent (1.50%).
(b) INTEREST PAYMENTS. (i) Interest accrued on the Term Loan shall
be payable in arrears (A) with respect to interest accrued and unpaid as of
the end of any calendar month, on the first day of the immediately succeeding
calendar month, commencing on the first such day following the making of the
Term Loan, (B) upon the payment or prepayment of the Term Loan in full, and
(C) if not theretofore paid in full, at maturity (whether by acceleration or
otherwise) of the Term Loan.
(ii) Interest accrued on the principal balance of all other
Obligations shall be payable in arrears (A) on the last day of each calendar
month, commencing on the first such day following the incurrence of such
Obligation, (B) upon repayment thereof in full or in part, and (C) if not
theretofore paid in full, at the time such other Obligation becomes due and
payable (whether by acceleration or otherwise).
(c) DEFAULT INTEREST. Notwithstanding the rates of interest
specified in SECTION 2.02(a) or elsewhere in this Agreement, effective
immediately upon (i) the occurrence of an Event of Default described in
SECTION 10.01(a) or (ii) the occurrence of any other Event of Default and
notice from the Lender of the effectiveness of this SECTION 2.02(c), and for
as long thereafter as such Event of Default shall be continuing, the
principal balance of the Term Loan, and the principal balance of all other
Obligations, shall bear interest at a rate which is three and one-half
percent (3.50%) per annum in excess of the Index Rate.
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(d) COMPUTATION OF INTEREST. Interest on all Obligations shall be
computed on the basis of the actual number of days elapsed in the period during
which interest accrues and a year of 360 days. In computing interest on the
Term Loan, the date of the making of the Loan shall be included and the
date of payment shall be excluded; PROVIDED, HOWEVER, that if a Loan is
repaid in accordance with the terms hereof on the same day prior to 1:00 p.m.
(Chicago time) on which it is made, no interest shall be paid on the Term
Loan.
(e) INTEREST FOLLOWING JUDGMENT OR ORDER. If any of the
Obligations becomes merged in a judgment or order, then the Borrower agrees
to pay interest to the Lender on the amount of that Obligation as an
independent Obligation. This interest accrues from the date the Obligation
becomes due for payment both before and after the judgement or order until it
is paid in full, at a rate which is the higher of (i) the rate payable under
the judgment or order and (ii) the rate referred to in SECTION 2.02(c).
2.03. AUTHORIZED OFFICERS AND AGENTS. On the Effective Date and
from time to time thereafter when necessary, the Borrower shall deliver to
the Lender an Officer's Certificate setting forth the names of the officers,
employees and agents authorized to request the Term Loan and containing a
specimen signature of each such officer, employee or agent. The officers,
employees and agents so authorized shall also be authorized to act for the
Borrower in respect of all other matters relating to the Loan Documents. The
Lender shall be entitled to rely conclusively on such officer's or employee's
authority to request the Term Loan until the Lender receives written notice
to the contrary. The Lender shall have no duty to verify the authenticity of
the signature appearing on any written Notice of Borrowing or any other
document, and, with respect to an oral request for such a Loan the
Lender shall have no duty to verify the identity of any person representing
himself or herself as one of the officers, employees or agents authorized to
make such request or otherwise to act on behalf of the Borrower. The Lender
shall incur no liability to the Borrower or any other Person in acting upon
any telephonic notice referred to above which the Lender believes in good
faith to have been given by a duly authorized officer or other person
authorized to borrow on behalf of the Borrower.
ARTICLE III
PAYMENTS AND PREPAYMENTS
3.01. PREPAYMENTS; REDUCTIONS IN TERM LOAN COMMITMENT.
(a) VOLUNTARY PREPAYMENTS/REDUCTIONS. (i) The Borrower may, upon
at least one (1) Business Day's prior written notice to the Lender, at any
time and from time to time, prepay the Term Loan, in whole or in part.
Unless the aggregate
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outstanding principal balance of the Term Loan is to be prepaid in full,
voluntary prepayments of the Term Loan shall be in an aggregate minimum
amount of $100,000 and integral multiples of $100,000 in excess of that
amount. Each voluntary prepayment shall be applied to the unpaid
installments of the Term Loan in the forward order of maturity and shall
premanently reduce the Term Loan Commitment of the Lender. Any notice of
prepayment given to the Lender under this SECTION 3.01(a)(i) shall specify
the date (which shall be a Business Day) of prepayment and the aggregate
principal amount of the prepayment. When notice of prepayment is delivered
as provided herein, the principal amount of the Term Loan specified in the
notice shall become due and payable on the prepayment date specified in such
notice.
(ii) The repayments and prepayments in respect of reductions and
terminations described in this SECTION 3.01(a) may be made without premium or
penalty.
(b) MANDATORY PREPAYMENTS/REDUCTIONS.
(i) Within two (2) Business Days after the Borrower's or any
Parent's receipt of any Net Cash Proceeds of Sale, the Borrower shall
make or cause to be made a mandatory prepayment of the Obligations in an
amount equal to one hundred percent (100%) of such Net Cash Proceeds of Sale.
(ii) After the payment in full of the "Obligations" under (and as
defined in) the KTI Credit Agreement, within ninety (90) days after the end
of each Fiscal Year, the Borrower shall calculate Excess Cash Flow for such
Fiscal Year and shall make a mandatory prepayment in an amount equal to
seventy-five percent (75%) of such Excess Cash Flow. The Borrower shall make
an additional mandatory prepayment on the date on which annual reports are
required to be delivered by SECTION 6.01(c) to the extent 75% of Excess Cash
Flow determined in accordance with the annual reports exceeds 75% of the
Borrower's preliminary calculation of Excess Cash Flow.
(iii) Within two (2) Business Days after the Borrower's or any
Parent's receipt of any Excess Proceeds of Issuance of Stock or
Indebtedness, the Borrower shall make or cause to be made a mandatory
prepayment in an amount equal to one hundred percent (100%) of such Excess
Proceeds of Issuance of Stock or Indebtedness.
(iv) Nothing in this SECTION 3.01(b) shall be construed to
constitute the Lender's consent to any transaction referred to in CLAUSES (i)
or (iii) above which is not expressly permitted by ARTICLE VIII.
(v) Each mandatory prepayment required by CLAUSES (i), (ii) and
(iii) of this SECTION 3.01(b) shall be referred to herein as a "Designated
Prepayment". The Borrower shall give the Lender not less than one (1)
Business Day's prior written notice
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or telephonic notice promptly confirmed in writing, of the date on which each
such Designated Prepayment will be made (which date of prepayment shall be no
later than the date on which such Designated Payment becomes due and payable
pursuant to this SECTION 3.01(b)).
(iv) Designated Prepayments shall be allocated and applied to the
unpaid principal balance of the Term Loan.
3.02. PAYMENTS. (a) MANNER AND TIME OF PAYMENT. All payments and
prepayments of principal of and interest on the Term Loan and other
Obligations (including, without limitation, fees and expenses) which are
payable to the Lender shall be made without condition or reservation of
right, in immediately available funds, delivered to the Lender not later than
1:00 p.m. (Chicago time) on the date and at the place due, to such account of
the Lender as it may designate; and funds received by the Lender not later
than 1:00 p.m. (Chicago time) on any given Business Day shall be credited
against payment to be made that day and funds received by the Lender after
that time shall be deemed to have been paid on the immediately following
Business Day. All payments and prepayments of Obligations shall be made in
Dollars, and the Borrower waives any right which it has under any Requirement
of Law to repay the Obligations in a currency other than Dollars. If the
Lender receives payment in a currency other than Dollars, the Lender may
convert the amount received into Dollars at the spot rate at which the Lender
is able to purchase Dollars with the amount received at the time of receipt
of the other currency. The Borrower satisfies its obligation to make payments
in Dollars only to the extent of the amount of the Dollars purchased after
deducting any costs of conversion. The Borrower acknowledges that it may be
necessary for the Lender to convert amounts received through a currency other
than Dollars to ascertain the Dollar equivalent of the amount received.
(b) APPLICATION OF PAYMENTS. (i) Subject to the provisions of
SECTIONS 3.01 AND 3.02(b)(ii), all payments of principal and interest in respect
of the Term Loan, all payments of fees and all other payments in respect of any
other Obligations, shall be applied FIRST, to pay all Obligations then due and
payable and SECOND, as the Borrower so designates.
(ii) After the occurrence of an Event of Default and while the same is
continuing, the Lender shall apply all payments in respect of any Obligations
and all proceeds of Collateral in the following order:
(A) FIRST, to pay Obligations in respect of any fees, expense
reimbursements or indemnities then due to the Lender;
(B) SECOND, to pay interest due in respect of the Supplemental
Term Loan;
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(C) THIRD, to the payment or prepayment of principal
outstanding on the Term Loan; and
(D) FOURTH, to the payment of all other Obligations.
(c) PAYMENTS ON NON-BUSINESS DAYS. Whenever any payment to be made
by the Borrower hereunder is stated to be due on a day which is not a
Business Day, the payment shall instead be due on the immediately following
Business Day, and any such extension of time shall be included in the
computation of the payment of interest and fees hereunder.
3.03. TAXES. (a) PAYMENT OF TAXES. Any and all payments by the
Borrower hereunder or other document evidencing any Obligations shall be
made, in accordance with SECTION 3.02, free and clear of and without
reduction for any and all present or future taxes, levies, imposts,
deductions, charges, withholdings, duties, and all stamp, transaction or
documentary taxes, excise taxes, ad valorem taxes and other taxes imposed on
the value of the Property, charges or levies which arise from the execution,
delivery or registration, or from payment or performance under, or otherwise
with respect to, any of the Loan Documents or the Term Loan Commitment and
all other liabilities with respect thereto (including any related interest,
penalties, fines and expenses in connection with any of them), excluding
taxes imposed on or measured by net income or overall gross receipts and
capital and franchise taxes imposed on the Lender by (i) the United States,
(ii) the Governmental Authority of any jurisdiction in which the Lender has
an office or any political subdivision thereof or (iii) the Governmental
Authority in which the Lender is organized, managed and controlled or any
political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and duties being hereinafter referred to as
"Taxes"). If the Borrower shall be required by law to withhold or deduct any
Taxes from or in respect of any sum payable hereunder or any such document to
the Lender (x) the sum payable to the Lender shall be increased as may be
necessary so that after making all required withholding or deductions
(including withholding or deductions applicable to additional sums payable
under this SECTION 3.03) the Lender receives an amount equal to the sum it
would have received had no such withholding or deductions been made, (y) the
Borrower shall make such withholding or deductions, and (z) the Borrower
shall pay the full amount withheld or deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) INDEMNIFICATION. The Borrower will indemnify the Lender
against, and reimburse the Lender on demand for, the full amount of all Taxes
(including, without limitation, any Taxes imposed by any Governmental Authority
on amounts payable under this SECTION 3.03 and any additional income or
franchise taxes resulting therefrom) incurred or paid by the Lender or any of
its Affiliates and any liability (including penalties, additions to
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tax, interest, and out-of-pocket expenses paid to third parties) arising
therefrom or with respect thereto, whether or not such Taxes were lawfully
payable. A certificate as to any additional amount payable to any Person
under this SECTION 3.03 submitted by it to the Borrower shall, absent
manifest error, be final, conclusive and binding upon all parties hereto.
The Lender agrees, within a reasonable time after receiving a written request
from the Borrower, to provide the Borrower with such certificates as are
reasonably required, and take such other actions as are reasonably necessary
to claim such exemptions as the Lender may be entitled to claim in respect of
all or a portion of any Taxes which are otherwise required to be paid or
deducted or withheld pursuant to this SECTION 3.03 in respect of any payments
under this Agreement.
(c) RECEIPTS. Within thirty (30) days after the date of any
payment of Taxes by the Borrower, it will furnish to the Lender, at its
address referred to in SECTION 11.06, the original or a certified copy of a
receipt evidencing payment thereof.
(d) INCOME TAX ASSESSMENT ACT MATTERS.
(i) The Borrower acknowledges that section 261 of the Income Tax
Assessment Act may render void its Obligation to make payment under this
SECTION 3.03. However, the Borrower convenants that even if this is the case,
and the Borrower would not otherwise be obliged to make the payment as a
result thereof, it will make the payments contemplated by this SECTION 3.03
and that the making of such payment is in the best interest of Borrower. The
Borrower acknowledges that the Lender has materially relied on the covenant
in this SECTION 3.03(d)(i) in entering into this Agreement and breach of such
covenant would materially harm the Lender.
(ii) The Borrower waives any right it may have to any reimbursement
of money paid under this SECTION 3.03 or in accordance with the Borrower's
covenant contained in SECTION 3.03(d)(i). The Borrower also releases the
Lender from any Claim the Borrower may have against the Lender or any of its
affiliates to refund or repay amounts so paid whether the Claim arises by
reason of the Obligation under this SECTION 3.03 being void under section 261
of the Income Tax Assessment Act or by reason of money paid under mistake of
any nature or for any other reason.
3.04. PROMISE TO REPAY; EVIDENCE OF INDEBTEDNESS.
(a) PROMISE TO REPAY. The Borrower hereby agrees to pay when due
the principal amount of the Term Loan which is made to it, and further agrees
to pay all unpaid interest accrued thereon, in accordance with the terms of
this Agreement.
(b) LOAN ACCOUNT. The Lender shall maintain in accordance with its
usual practice an account or accounts (a "Loan Account") evidencing the
Indebtedness of the Borrower to
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the Lender resulting from the Term Loan owing to the Lender from time to
time, including the amount of principal and interest payable and paid to the
Lender from time to time hereunder.
(c) ENTRIES BINDING. The entries made in the Loan Account shall be
conclusive and binding for all purposes, absent manifest error.
ARTICLE IV
CONDITIONS TO TERM LOAN
4.01. CONDITIONS PRECEDENT TO EFFECTIVE DATE. The obligation of
the Lender to make the Term Loan on the Effective Date shall be subject to
the satisfaction of all of the following conditions precedent:
(a) DOCUMENTS. The Lender shall have received on or before the
Effective Date all of the following, each duly executed, acknowledged,
stamped and registered where appropriate and in form and substance
satisfactory to the Lender:
(i) this Agreement, together with all Schedules hereto which shall
be in each case true, complete and correct in all material respects as
of the Effective Date;
(ii) a Notice of Borrowing completed in accordance with the provisions
of SECTION 2.01(b);
(iii) the Fixed and Floating Charge, together with all schedules
thereto which shall be in each case true, complete and correct in all
material respects as of the Effective Date:
(iv) a certified copy of the extract of the meeting of the board of
directors of each of the Borrower and each Parent evidencing the
resolutions authorizing the execution, delivery and performance of the
Loan Documents to which such Person is a party;
(v) the Parent Pledge Agreements and the Parent Guaranty and Uniform
Commercial Code financing statements for filing in jurisdictions
with respect to the Property subject to the Charge Over Shares;
(vi) favorable legal opinions, each dated the Effective Date, addressed
to the Lender (or with respect to which the Lender has been issued a
reliance letter) from the following counsel:
(A) O'Melveny & Xxxxx LLP, United States counsel to the
Borrower, Recoil Australia Holdings
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and Recoil Holdings, with respect to the Loan Documents and
related matters;
(B) Corrs Xxxxxxxx Westgarth, Australian counsel to the
Borrower, Recoil Australia Holdings and Recoil Holdings, with
respect to the Loan Documents, the Recoil Australia Acquisition
Agreement and related matters; and
(C) Norton Xxxxx Xxxxxxxx, Australian counsel to Recoil
Australia and certain of the Vendors, with respect to the
Recoil Australia Acquisition Agreement and related matters;
and
(D) Xxxxx-Xxxxx Lanyon, Australian counsel to certain of the
Vendors, with respect to the Recoil Acquisition Documents and
related matters;
(vii) evidence that the Borrower and each Parent have directed its
counsel to prepare and deliver to the Lender the respective opinions
described in SUBCLAUSES (A) and (B) of CLAUSE (vii) above and that
Recoil Australia and the Vendors have directed their respective counsel
to prepare and deliver to the Lender the respective opinions described
in SUBCLAUSES (C) and (D) of CLAUSE (ix) above;
(viii) a certificate signed by a director of the Borrower certifying
that all conditions precedent under this SECTION 4.01 have been met and
no Potential Event of Default or Event of Default has occurred or is
continuing;
(ix) a solvency certificate for the Borrower and each Parent,
duly executed by a director of such Person, dated the Effective Date
and giving effect to the Recoil Australia and the financing transactions
contemplated under this Agreement, supported by such analyses, valuations,
appraisals, reviews, projections and other documentation as the Lender
deems appropriate;
(x) the PRO FORMA financials referred to in SECTION 5.01(g);
(xi) originals of all powers of attorney under which any of the
Loan Documents are executed;
(xii) such additional documentation as the Lender may reasonably
request.
(b) PERFECTION OF LIENS. Evidence that the Fixed and Floating
Charge and the Parent Pledge Agreements have been filed, stamped and/or
registered where necessary to record or perfect the Lender's security
interest in the respective Collateral subject thereto, certificates
representing Capital Stock included
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in the Collateral (including the Capital Stock of RCL) have been delivered to
the Lender (with duly executed stock powers) and all recording fees and stamp
and filing taxes have been paid.
(c) NO LEGAL IMPEDIMENTS. No law, regulation, order, judgment or
decree of any Governmental Authority shall, and the Lender shall not have
received any notice that litigation is pending or threatened which is likely
to (i) enjoin, prohibit or restrain (A) the making of the Term Loan on the
Effective Date, (B) the Parents' entering into the Parent Guaranty on the
Effective Date or (C) the consummation of the Recoil Acquisition or (ii)
impose or result in the imposition of a Material Adverse Effect.
(d) NO DEFAULT. No Event of Default or Potential Event of Default
shall have occurred and be continuing or would result from the making of the
Term Loan on the Effective Date or the Parents' entering into the Parent
Guaranty on the Effective Date.
(e) REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties contained in SECTION 5.01 and in any of the other Loan Documents
shall be true and correct in all material respects on and as of the Effective
Date.
(f) THE RECOIL ACQUISITION. (i) The Lender shall be satisfied in
all material respects (A) with the terms, form and substance of the Recoil
Acquisition and the Recoil Acquisition Documents, including, without
limitation, the resolutions with respect to the Recoil Acquisition adopted by
the respective boards of directors of the Borrower, KTI, Recoil Australia,
Recoil U.S. and the other parties to the respective Recoil Acquisition
Agreements, (B) that the parties to the Recoil Acquisition Agreements have
complied with all applicable Requirements of Law in connection with the
Recoil Acquisition, (C) that all conditions precedent to, and all consents
necessary to permit, the Recoil Acquisition pursuant to the Recoil
Acquisition Documents shall have been satisfied or delivered, or waived with
the prior written consent of the Lender, (D) that all Liens
encumbering the assets being purchased in the Recoil Acquisition have been
terminated (other than Liens permitted by SECTION 8.03) and (E) that the
Recoil Acquisition Documents have not been amended or modified without the
prior written consent of the Lender and are in full force and effect.
(ii) Substantially simultaneously with the consummation of the
transactions contemplated by this Agreement, the KHI Loan Agreement and the
KTI Credit Agreement, the Borrower, KTI and, if designated by KTI to acquire
the shares of Recoil U.K., Kaynar U.K. shall have acquired substantially all
of the assets of Recoil Australia pursuant to the Recoil Australia
Acquisition Agreement and related documents in compliance with all applicable
Requirements of Law.
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(g) ORGANIZATIONAL DOCUMENTS. The Lender shall have received
copies, certified to its satisfaction, of the Organizational Documents of the
Borrower and each Parent as in effect as of the Effective Date and determined
them to be satisfactory in form and substance.
(h) NO MATERIAL ADVERSE EFFECT. No event has occurred since
December 31, 1995 which has had or is reasonably likely to have a Material
Adverse Effect.
(i) FEES AND EXPENSES PAID. There shall have been paid to the
Lender all fees and expenses due and payable on or before the Effective Date.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01. REPRESENTATIONS AND WARRANTIES. In order to induce the
Lender to enter into this Agreement and to make the Term Loan and the other
financial accommodations to the Borrower, the Borrower hereby represents and
warrants to the Lender that the following statements are true, correct and
complete:
(a) ORGANIZATION; ORGANIZATIONAL POWERS. The Borrower and each
Parent (i) is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, (ii) is duly qualified to do
business as a foreign corporation (or other entity) and is in good standing
under the laws of each jurisdiction in which failure to be so qualified and
in good standing will have or is reasonably likely to have a Material Adverse
Effect, and (iii) has all requisite corporate power and authority to own,
operate and encumber its Property and to conduct its business as proposed to
be conducted in connection with and following the consummation of the
transactions contemplated by the Transaction Documents.
(b) AUTHORITY. (i) The Borrower and each Parent have the
requisite corporate power and authority (A) to execute, deliver and perform
each of the Transaction Documents which are to be executed by it in
connection with the Recoil Acquisition or which have been executed by it as
required by this Agreement on or prior to the Effective Date and (B) to file
the Transaction Documents which must be filed by it in connection with the
Recoil Acquisition or which have been filed by it as required by this
Agreement on or prior to the Effective Date, with any Governmental Authority.
(ii) The execution, delivery, performance and filing, as the case
may be, of each of the Transaction Documents which must be executed or filed
by the Borrower or any Parent in connection with the Recoil Acquisition or
which have been executed or filed as required by this Agreement on or prior
to the Effective Date and to which the Borrower or any Parent is
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party and the consummation of the transactions contemplated thereby, have
been duly approved by the respective boards of directors and, if necessary,
the shareholders of the Borrower and each Parent and such approvals have not
been rescinded. No other organizational action or proceedings on the part of
the Borrower or any Parent are necessary to consummate such transactions.
(iii) Each of the Transaction Documents to which the Borrower or
any Parent is a party has been duly executed, delivered or filed, as the case
may be, by it and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, is in full force and
effect and no material term or condition thereof has been amended, modified
or waived from the terms and conditions contained in the Transaction
Documents delivered to the Lender pursuant to SECTION 4.01(a) without the
prior written consent of the Lender, and all parties thereto have performed
and complied with all the terms, provisions, agreements and conditions set
forth therein and required to be performed or complied with by such parties
on or before the Effective Date, and no Potential Event of Default, Event of
Default or breach of any covenant by any such party exists thereunder.
(iv) Neither the Borrower nor any Parent have entered into any
Transaction Document in the capacity of a trustee of any trust or settlement.
(v) All of the obligations of the Borrower and each Parent under
any Loan Document to which such Person is a party rank at least equally with
all other senior, secured Indebtedness of such Person, except Indebtedness
mandatorily preferred by law or as otherwise permitted hereunder or under the
Loan Documents, including Indebtedness permitted by SECTION 8.01 and Liens
permitted by SECTION 8.03.
(c) CONSENTS. Except as set forth in SCHEDULE 5.01-C no consents
or approvals of, or filings or registrations (other than filings or
registrations contemplated by SECTION 4.01(b) or 5.01(f)(i) with respect to
Government Contracts) by the Borrower or any Parent with any Governmental
Authority or any other Person not a party to this Agreement are necessary in
connection with the execution and delivery of the Transaction Documents by
the Borrower and the Parents and the consummation by the Borrower and the
Parents of the transactions contemplated by the Transaction Documents, except
where the failure to obtain such consents or approvals would not result in a
Material Adverse Effect.
(d) SUBSIDIARIES; OWNERSHIP OF CAPITAL STOCK. SCHEDULE 5.01-D
accurately sets forth (i) the correct legal name, the jurisdiction of
incorporation and the jurisdictions in which qualified to transact business
as a foreign corporation of each of the direct and indirect Subsidiaries of
the Borrower and the Parents, (ii) the authorized, issued and outstanding
shares of each class of Capital Stock of the Parents, the Borrower and each
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of their respective Subsidiaries and the owners of such shares, and (iii) a
summary of the direct and indirect partnership, joint venture, or other
equity interests, if any, of the Borrower and any each Parent in any Person
that is not a corporation. None of such issued and outstanding Capital Stock
is subject to any vesting, redemption, or repurchase agreement, and there are
no warrants or options outstanding with respect to such Capital Stock. The
outstanding Capital Stock of the Borrower and each Parent is duly authorized,
validly issued, fully paid and nonassessable.
(e) NO CONFLICT. The execution, delivery and performance of each
of the Transaction Documents to which the Borrower or any Parent is a party
do not and will not (i) conflict with the Organizational Documents of the
Borrower or any Parent, (ii) constitute a tortious interference with any
Contractual Obligation of any Person or conflict with, result in a breach of
or constitute (with or without notice or lapse of time or both) a default
under any Requirement of Law or Contractual Obligation of the Borrower or any
Parent, or require termination of any Contractual Obligation, the
consequences of which violation, breach, default or termination, singly or in
the aggregate, will have or is reasonably likely to have a Material Adverse
Effect or is reasonably likely to subject the Lender to any liability, or
(iii) result in or require the creation or imposition of any Lien whatsoever
upon any of the Property or assets of the Borrower or any Parent, other than
Liens contemplated by the Loan Documents.
(f) PATENTS, TRADEMARKS, PERMITS, ETC.; GOVERNMENT APPROVALS. (i)
After giving effect to the Recoil Acquisition, the Borrower and each Parent
own, are licensed or otherwise have the lawful right to use, or have all
permits and other governmental approvals (except with respect to Government
Contracts), patents, trademarks, trade names, copyrights, technology,
know-how and processes used in or necessary for the conduct of their
businesses as proposed to be conducted which are material to their condition
(financial or otherwise), operations, performance and prospects, taken as a
whole, including, without limitation, the name "Recoil". With respect to
each Government Contract acquired by the Borrower in connection with the
Recoil Acquisition, such Government Contract has been transferred to the
Borrower (and all necessary approvals therefor have been obtained) or the
Borrower is operating under a subcontract which is in full force and
effect.
(ii) The consummation of the Recoil Acquisition and the
transactions contemplated by the Transaction Documents will not impair the
ownership of or rights under (or the license or other right to use, as the
case may be) any permits and governmental approvals, patents, trademarks,
trade names, copyrights, technology, know-how or processes by the Borrower or
any Parent in any manner which has or is reasonably likely to have a Material
Adverse Effect.
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(g) PRO FORMA FINANCIALS. The PRO FORMA consolidated and
consolidating balance sheets of KHI and its Subsidiaries prepared as of March
31, 1996 (and giving effect to the Recoil Acquisition) and in accordance with
GAAP consistently applied, copies of which have been furnished to the Lender
on or before the Effective Date, fairly present on a PRO FORMA basis the
financial condition of KHI and it's Subsidiaries as of March 31, 1996, and
reflect on a PRO FORMA basis those liabilities reflected in the notes thereto
and resulting from consummation of the transactions contemplated by the
Transaction Documents, and the payment or accrual of all Transaction Costs
payable on the Effective Date with respect to any of the foregoing. The
projections and assumptions expressed in the PRO FORMA financials furnished
pursuant to this SECTION 5.01(g) are reasonable based on the information
available to the Borrower as of the date hereof.
(h) SOLVENCY. After giving effect to the Term Loan to be made on
the Effective Date, and the disbursement of the proceeds of the Term Loan
pursuant to the Borrower's instructions (if any), the Borrower and each
Parent are Solvent.
(i) THE RECOIL ACQUISITION. (i) All conditions precedent to, and
all consents necessary to permit, the Recoil Acquisition pursuant to the
Recoil Acquisition Documents have been satisfied or delivered, or waived with
the prior written consent of the Lender, and no material breach of any term
or provision of any Recoil Acquisition Document has occurred and no action
has been taken by any competent authority which restrains, prevents or
imposes material adverse conditions upon, or seeks to restrain, prevent or
impose material adverse conditions upon, the Recoil Acquisition or the making
of the Term Loan hereunder.
(ii) After giving effect to the Recoil Acquisition, and the
Borrower, KTI and, if designated by KTI to acquire the shares of Recoil U.K.,
Kaynar U.K. have acquired substantially all of the assets of Recoil Australia
pursuant to the Recoil Australia Acquisition Agreement and related documents
in compliance with all applicable Requirements of Law.
(j) PLEDGE OF COLLATERAL. The grant and perfection of the security
interest in the Capital Stock of the Borrower constituting a portion of the
Collateral for the benefit of the Lender, as contemplated by the terms of the
Parent Pledge Agreements, is not made in violation of the registration
provisions of the Securities Act of 1933, any applicable provisions of other
federal securities laws, state securities or "Blue Sky" law, foreign
securities law, or applicable general corporation, limited liability company,
unlimited liability company or partnership law or in violation of any other
Requirement of Law.
(k) GOVERNMENTAL REGULATION. Neither the Borrower, nor any Parent
is subject to regulation under the Public Utility
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Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce
Act, or the Investment Company Act of 1940, or any other foreign, federal or
state statute or regulation which limits its ability to incur indebtedness or
its ability to consummate the transactions contemplated hereby or by the
Recoil Acquisition Agreements.
(l) RESTRICTED JUNIOR PAYMENTS. Since the respective dates of
incorporation of the Borrower and the Parents, neither the Borrower nor any
Parent has directly or indirectly declared, ordered, paid or made or set
apart any sum or Property for any Restricted Junior Payment or agreed to do
so, except as permitted pursuant to SECTION 8.06.
(m) BANK ACCOUNTS. Each bank, trust company or other financial
institution at which the Borrower or any Parent maintains any deposit account
has executed and delivered to the Lender a Collection Account Agreement with
respect to such deposit account(s).
(n) LITIGATION; ADVERSE EFFECTS. Except as set forth in SCHEDULE
5.01-N, there is no action, suit proceeding, investigation or arbitration
before or by any Governmental Authority or private arbitrator pending or, to
the best of Borrower's knowledge, threatened against the Borrower or any
Parent or any Property of any of them (i) challenging the validity or the
enforceability of any of the Transaction Documents or (ii) which will or is
reasonably likely to result in any Material Adverse Effect. There is no
material loss contingency within the meaning of GAAP which has not been
reflected in the consolidated financial statements of the Borrower. Neither
the Borrower nor any of its Subsidiaries is (x) in violation of any
applicable Requirements of Law which violation will have or is reasonably
likely to have a Material Adverse Effect, or (y) subject to or in default
with respect to any final judgment, writ, injunction, restraining order or
order of any nature, decree, rule or regulation of any court or Governmental
Authority which will have or is reasonably likely to have a Material Adverse
Effect.
(o) NO MATERIAL ADVERSE CHANGE. Since the Effective Date, there has
occurred no event which has had or is reasonably likely to have a Material
Adverse Effect.
(p) PERFORMANCE. Neither the Borrower nor any Parent has received
notice or has actual knowledge that (i) it is in default in the performance,
observance or fulfillment of any of the material obligations, covenants or
conditions contained in any Contractual Obligation applicable to it, or (ii)
any condition exists which, with the giving of notice or the lapse of time or
both, would constitute a default with respect to any such Contractual
Obligation.
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(q) DISCLOSURE. The representations and warranties of the Borrower
and the Parents contained in the Transaction Documents, and all certificates
and other documents delivered to the Lender pursuant to the terms thereof, do
not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading. The Borrower has not intentionally withheld any fact from the
Lender in regard to any matter which will have or is reasonably likely to
have a Material Adverse Effect.
(r) REQUIREMENTS OF LAW. The Borrower and the Parents are in
compliance with all Requirements of Law applicable to them and their
respective businesses, in each case where the failure to so comply
individually or in the aggregate will have or is reasonably likely to have a
Material Adverse Effect.
(s) EMPLOYEE BENEFIT MATTERS. The Borrower does not maintain or
contribute to any Employee Benefit Plan other than those listed on SCHEDULE
5.01-S hereto. Each Employee Benefit Plan is in compliance in all material
respects with all laws, regulations and rules applicable thereto and the
respective requirements of the governing documents for such Employee Benefit
Plan. The aggregate of the liabilities to provide all of the accrued benefits
under any Pension Plan does not exceed the current Fair Market Value of the
assets held in the trust or other funding vehicle for such Pension Plan. With
respect to any Employee Benefit Plan maintained or contributed to by the
Borrower (other than a Pension Plan), reasonable reserves have been
established to the extent required by prudent business practice or where
required by ordinary accounting practices in the jurisdiction in which such
Employee Benefit Plan is maintained. The aggregate unfunded liabilities,
after giving effect to any reserves for such liabilities, with respect to
such Employee Benefit Plans does not exceed the current Fair Market Value of
the assets held in the trust or other funding vehicle (or reserves) for such
Employee Benefit Plan. There are no actions, suits or claims (other than
routine claims for benefits) pending or threatened against the Borrower with
respect to any Employee Benefit Plan.
(t) LABOR MATTERS. SCHEDULE 5.01-T accurately sets forth all labor
contracts to which the Borrower or any Parent is a party on the date hereof
and the expiration date of each such contract. There are no strikes, lockouts
or other disputes relating to any collective bargaining or similar agreement
to which the Borrower or any Parent is a party.
(u) INSURANCE. SCHEDULE 5.01-X of the KTI Credit Agreement
accurately sets forth as of the date delivered to the Lender all insurance
policies and programs currently in effect with respect to the respective
Property and assets and business of the Borrower and the Parents, specifying
for each such policy
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and program, (i) the amount thereof, (ii) the risks insured against thereby,
(iii) the name of the insurer and each insured party thereunder, (iv) the
policy or other identification number thereof, (v) the expiration date
thereof and (vi) the annual premium with respect thereto. Such insurance
policies and programs are in amounts sufficient to cover the replacement
value of the respective Property and assets of the Borrower and the Parents.
(v) GOVERNMENT CONTRACT MATTERS. Except as set forth in SCHEDULE
5.01-V:
(i) The Borrower is in compliance with all material terms and
conditions of all Government Contracts, including all clauses, provisions
and requirements incorporated expressly, by reference or by operation of
law therein;
(ii) The Borrower is in compliance with all material terms and
conditions of all Requirements of Law and all Contractual Obligations
pertaining to any Government Contract;
(iii) All representations and certifications executed or
acknowledged or set forth in or pertaining to each Government Contract were
complete, accurate, correct and truthful as of the date such representations
or certifications were made, and the Borrower has complied in all material
respects with all such representations and certifications since such date;
(iv) No Governmental Authority, any prime contractor,
subcontractor or other Person has notified the Borrower that the Borrower
has breached or violated any Requirement of Law, certification,
representation, clause, provision or requirement pertaining to any
Government Contract;
(v) No termination for default, termination for convenience,
cure notice or show cause notice is currently in effect with respect to
any Government Contract;
(vi) To the best of the Borrower's knowledge, no cost incurred
pertaining to any Government Contract has been questioned or challenged, is
the subject of any investigation or has been disallowed by any Governmental
Authority;
(vii) To the best of the Borrower's knowledge, no money due to the
Borrower pertaining to any Government Contract has been withheld, or has
been the subject of an attempt to withhold, or reduced through exercise
of a right of set-off or otherwise;
(viii) there is no action, suit, investigation or proceeding
relating to any Government Contract, or relating
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to any proposed suspension or debarment of the Borrower or any of its
employees or agents, pending against (or, to the best of the Borrower's
knowledge, threatened against) the Borrower, such other Person or any
Property;
(ix) Neither the Borrower nor any of its directors, officers or
employees is (or during the last five (5) years has been) suspended or
debarred from doing business with any Governmental Authority or is (or
during such period was) the subject of a finding of nonresponsibility or
ineligibility for government contracting;
(x) (A) To the best of the Borrower's knowledge, none of the
Borrower's directors, officers, employees, consultants or agents is (or
during the last five (5) years has been) under administrative, civil or
criminal investigation, indictment or information by any Governmental
Authority with respect to any alleged irregularity, misstatement or omission
arising under or relating to any Government Contract, (B) during the last
five (5) years, the Borrower has not conducted or initiated any internal
investigation or audit or made a voluntary disclosure to any Governmental
Authority, with respect to any alleged irregularity, misstatement or
omission arising under or related to any Government Contract; and (C) the
Borrower has no knowledge or reason to know of any irregularity,
misstatement or omission arising under or relating to any Government
Contract that has led or could reasonably lead, either before or after
the Effective Date, to any of the consequences set forth in CLAUSE (A) or
(B) above or any other material damage, penalty assessment, recoupment of
payment or disallowance of cost;
(xi) There exist (A) no outstanding material Claims against the
Borrower or any Property, either by a Governmental Authority or by any prime
contractor, subcontractor, vendor or other third party, arising under or
relating to any Government Contract; and (B) no material disputes between
the Borrower or any Parent, on the one hand, and any Governmental Authority,
any prime contractor, subcontractor, vendor or other third party, on the
other hand, arising under or relating to any Government Contract;
(xii) The Borrower's cost accounting and procurement systems with
respect to Government Contracts are in compliance in all material respects
with all applicable Requirements of Law; and
(xiii) All Government Contracts and bids (A) are being performed or
were submitted, as the case may be, in the ordinary course of business and
(B) are or would be, as the case may be, capable of performance in
accordance with their
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terms without loss (determined in accordance with the Borrower's
accounting principles, consistently applied).
(w) PAYMENT OF TAXES. All tax returns and reports of each of the
Borrower and the Parents required to be filed have been timely filed, and all
taxes, assessments, fees and other governmental charges thereupon and upon
their respective Property, assets, income and franchises which are shown in
such returns or reports to be due and payable have been paid, other than
those which are being contested in good faith by appropriate proceedings. The
Borrower has no knowledge of any proposed tax assessment (or similar claim)
against the Borrower or any Parent that will have or is reasonably likely to
have a Material Adverse Effect.
(x) BENEFIT OF TRANSACTION DOCUMENTS. The Company and each Parent
benefits by executing and delivering the Transaction Documents to which such
Person is a party and the interest charged by the Lender under the Loan
Documents is fair and reasonable.
(y) RELATED PARTY TRANSACTIONS. None of the parties to the Recoil
Acquisition Documents has contravened or will contravene section 243H or
section 243ZE of the Corporations Law by entering into or participating in
any Transaction Document or any transaction contemplated by any Transaction
Document, to the extent that such Requirements of Law are applicable to such
Persons and the Transaction Documents.
(z) TITLE TO PROPERTY. Each of the Borrower and each Parent is the
beneficial owner of, and has good and marketable title to, all Property held
by it or on its behalf and all undertakings carried on by such Person, free
from any Lien other than those permitted by this Agreement.
ARTICLE VI
REPORTING COVENANTS
The Borrower covenants and agrees that so long as any Obligations are
outstanding (other than indemnities not yet due), unless the Lender shall
otherwise give prior written consent thereto:
6.01. FINANCIAL STATEMENTS. The Borrower shall maintain a system of
accounting established and administered in accordance with sound business
practices to permit preparation of consolidated and consolidating financial
statements in conformity with GAAP, and each of the financial statements
described below shall be prepared from such system and records. The Borrower
shall deliver or cause to be delivered to the Lender:
(a) MONTHLY REPORTS. As soon as practicable, and in any event within
thirty (30) days after the end of each calendar
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month in each Fiscal Year, the consolidated and consolidating balance sheets of
the Borrower and the Parents as at the end of such period and the related
consolidated and consolidating statements of income, stockholders' equity and
cash flow of the Borrower and the Parents for such calendar month and for the
period from the beginning of the then current Fiscal Year to the end of such
calendar month, setting forth in each case in comparative form the corresponding
figures for the corresponding calendar periods in the previous Fiscal Year and
the corresponding figures from the consolidated financial forecast for the
current Fiscal Year delivered pursuant to SECTION 6.01(f), certified by a
director of the Borrower as fairly presenting the consolidated and consolidating
financial position of the Borrower and the Parents as at the dates indicated and
the results of their operations and cash flow for the calendar months indicated
in accordance with GAAP, subject to normal year end adjustments.
(b) QUARTERLY REPORTS. As soon as practicable, and in any event
within forty-five (45) days after the end of each fiscal quarter in each Fiscal
Year, the consolidated and consolidating balance sheets of the Borrower and
the Parents as at the end of such period and the related consolidated and
consolidating statements of income, stockholders' equity and cash flow of the
Borrower and the Parents for such fiscal quarter and for the period from the
beginning of the then current Fiscal Year to the end of such fiscal quarter,
setting forth in each case in comparative form the corresponding figures for the
corresponding periods of the previous Fiscal Year and the corresponding figures
from the consolidated financial forecast for the current Fiscal Year delivered
pursuant to SECTION 6.01(f), certified by a director of the Borrower as fairly
presenting the consolidated and consolidating financial position of the Borrower
and the Parents as at the dates indicated and the results of their operations
and cash flow for the periods indicated in accordance with GAAP, subject to
normal year end adjustments.
(c) ANNUAL REPORTS. As soon as practicable, and in any event
within one hundred twenty (120) days after the end of each Fiscal Year, (i)
the consolidated and consolidating balance sheets of the Borrower and the
Parents as at the end of such Fiscal Year and the related consolidated and
consolidating statements of income, stockholders' equity and cash flow of the
Borrower and the Parents for such Fiscal Year, setting forth in each case in
comparative form the corresponding figures for the previous Fiscal Year and
the corresponding figures from the consolidated financial forecast for the
current Fiscal Year delivered pursuant to SECTION 6.01(f), and (ii) a report
thereon of Xxxxxx Xxxxxxxx & Co. or other independent certified public
accountants of recognized standing and otherwise acceptable to the Lender,
which report shall be unqualified and shall state that such financial
statements fairly present the consolidated and consolidating financial
position of each of the Borrower and the Parents as at the dates indicated
and the results of their
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operations and cash flow for the periods indicated in conformity with GAAP
applied on a basis consistent with prior years (except for changes with which
Xxxxxx Xxxxxxxx & Co. or any such other independent certified public
accountants, if applicable, shall concur and which shall have been disclosed in
the notes to the financial statements) and that the examination by such
accountants in connection with such consolidated and consolidating financial
statements has been made in accordance with generally accepted auditing
standards.
(d) OFFICER'S CERTIFICATE. Together with each delivery of any
financial statement pursuant to PARAGRAPHS (b) and (c) of this SECTION 6.01,
(i) an Officer's Certificate of the Borrower substantially in the form of
EXHIBIT F attached hereto and made a part hereof, stating that the officer or
director signatory thereto has reviewed the terms of the Loan Documents, and
has made, or caused to be made under his supervision, a review in reasonable
detail of the transactions and consolidated and consolidating financial
condition of the Borrower and the Parents during the accounting period
covered by such financial statements, that such review has not disclosed the
existence during or at the end of such accounting period, and that such
officer or director does not have knowledge of the existence as at the date
of such Officer's Certificate, of any condition or event which constitutes an
Event of Default or Potential Event of Default, or, if any such condition or
event existed or exists, specifying the nature and period of existence
thereof and what action the Borrower or any Parent has taken, is taking and
proposes to take with respect thereto; and (ii) a certificate (the
"Compliance Certificate"), signed by a director of Borrower, setting forth
calculations and the methods of determination thereof (with such specificity
as the Lender may reasonably request) for the period then ended which
demonstrate compliance, when applicable, with the provisions of ARTICLE IX.
(e) ACCOUNTANT'S STATEMENT AND PRIVITY LETTER. Together with each
delivery of the financial statements referred to in SECTION 6.01(c), a written
statement of the firm of independent certified public accountants giving the
report thereon (i) stating that their audit examination has included a review of
the terms of this Agreement as it relates to accounting matters, (ii) stating
whether, in connection with their audit examination, any condition or event
which constitutes an Event of Default or Potential Event of Default has come to
their attention, and if such condition or event has come to their attention,
specifying the nature and period of existence thereof; PROVIDED, that such
accountants shall not be liable by reason of any failure to obtain knowledge of
any such condition or event that would not be disclosed in the course of their
audit examination, and (iii) stating that based on their audit examination
nothing has come to their attention which causes them to believe that the
information contained in either or both of the certificates delivered therewith
pursuant to SECTION 6.01(d) is not correct or that the matters set forth in the
Compliance
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Certificate delivered therewith pursuant to SECTION 6.01(d)(ii) for the
applicable Fiscal Year are not stated in accordance with the terms of this
Agreement. The statement referred to above shall be accompanied by (x) a
copy of the management letter or any similar report delivered to the Borrower
or to any officer, director or employee thereof by such accountants in
connection with such financial statements and (y) a letter from the Borrower
to such accountants informing such accountants that the Lender is relying
upon the financial statements audited by such accountants and delivered to
the Lender pursuant to SECTION 6.01(c) and that a primary intent of the
Borrower in having such financial statements audited is to induce the Lender
to continue to make financial accommodations to the Borrower under this
Agreement. The Lender may, with the consent of the Borrower (which consent
shall not be unreasonably withheld), communicate directly with such
accountants.
(f) BUDGETS; BUSINESS PLANS; FINANCIAL PROJECTIONS. As soon as
practicable and in any event not later than thirty (30) days prior to the
commencement of each Fiscal Year of the Borrower, (i) a monthly budget for such
Fiscal Year; (ii) an annual business plan for such Fiscal Year, in form and
substance acceptable to the Lender, accompanied by a report reconciling all
changes and departures from the business plan delivered to the Lender for the
preceding Fiscal Year; and (iii) a consolidated plan and financial forecast,
prepared in accordance with the Borrower's normal accounting procedures applied
on a consistent basis, for such Fiscal Year and the two (2) immediately
succeeding Fiscal Years, including, without limitation, (A) a forecasted
consolidated balance sheet and a consolidated statement of changes in financial
position of the Borrower for such Fiscal Years, (B) forecasted consolidated
balance sheets, statements of earnings and retained earnings, and changes in
financial position of the Borrower for and as of the end of each fiscal quarter
of such Fiscal Years, (C) the amount of forecasted Capital Expenditures and
Excess Cash Flow for such Fiscal Years, and (D) forecasted compliance with the
provisions of ARTICLE IX for such Fiscal Years.
6.02. OPERATIONS REPORTS. Accompanying the reports to be delivered
by the Borrower each fiscal quarter in each Fiscal Year pursuant to SECTION
6.01(b) and, in addition to the foregoing, within seven (7) days after the
Lender's request therefor, the Borrower shall deliver to the Lender a report
detailing the operations of the Borrower which report shall include a
management discussion and analysis with respect to the Borrower's financial
performance during such period, including a comparison of actual sales versus
budgeted sales for such fiscal quarter, a discussion of bookings, a listing
of significant new customers and new products developed for sale, an
explanation of any cost saving measures implemented, together with a
discussion of the general business environment and results of operations,
including an explanation of any material changes in consolidated and
consolidating statements of income, stockholders' equity and
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cash flow of the Borrower and the Parents for such period from such
statements for the corresponding period of the previous Fiscal Year and the
corresponding figures from the consolidated financial forecast for the
current Fiscal Year pursuant to SECTION 6.01(f) (the "Management Discussion
and Analysis").
6.03. COLLATERAL REPORTING. (a) Upon the request of the Lender,
the Borrower shall deliver to the Lender, in form and substance acceptable to
the Lender, a summary aged trial balance of all then existing Accounts
specifying the names, addresses, face amount and dates of invoices for each
Account the Borrower obligated on an Account so listed ("Schedule of
Accounts"), and upon demand, the original or copies, as request, of all
documents, including, without limitation, proofs of delivery, repayment
histories and present status reports, relating to the Accounts so scheduled
and such other matters and information relating to the status of Accounts as
the Lender shall reasonably request.
(b) Promptly upon, but in no event later than ten (10) Business
Days after, the Borrower's learning thereof, inform the Lender, in writing,
of (i) any material delay in the Borrower's performance of any of its
obligations to any material Account Debtor and of any assertion of any
material claims, offsets or counterclaims by any Account Debtor and of any
material allowances, credits or other monies granted by the Borrower to any
Account Debtor, and (ii) all material adverse information relating to the
financial condition of any material Account Debtor.
(c) Upon the request of the Lender, the Borrower shall deliver to
Lender, in form and substance acceptable to the Lender, a report summarizing,
on a LIFO and FIFO basis, the kind, type, quality and quantity of Inventory
as of the end of such month, the Borrower's cost therefor, and summaries of
Inventory by categories or classifications and by location.
(d) The Borrower shall provide the Lender with copies of all
agreements between the Borrower and any warehouse at which Inventory may from
time to time be kept and all leases or similar agreements between the
Borrower of any of its Affiliates and any other Person, whether the Borrower
or its Affiliate is lessor or lessee thereunder.
6.04. EVENTS OF DEFAULT. Promptly upon any of the chief executive
officer, chief operating officer, chief financial officer, treasurer or
controller of the Borrower obtaining knowledge (a) of any condition or event
which constitutes an Event of Default or Potential Event of Default, or
becoming aware that the Lender has given any notice with respect to a claimed
Event of Default or Potential Event of Default under this Agreement, (b) that
any Person has given any notice to the Borrower or any Parent or taken any
other action with respect to a claimed default or event or condition of the
type referred to
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in SECTION 10.01(e), or (c) of any condition or event which has or is
reasonably likely to have a Material Adverse Effect or affect the value of,
or the Lender's interest in, Collateral with a value in excess of $500,000 in
any material respect, the Borrower shall deliver to the Lender an Officer's
Certificate specifying (A) the nature and period of existence of any such
claimed default, Event of Default, Potential Event of Default, condition or
event, (B) the notice given or action taken by such Person in connection
therewith, and (C) what action the Borrower has taken, is taking and proposes
to take with respect thereto.
6.05. LAWSUITS. (a) Promptly upon the Borrower obtaining
knowledge of the institution of, or written threat of, any action, suit,
proceeding, governmental investigation or arbitration against or affecting
the Borrower or any Parent or any Property of the Borrower or any Parent not
previously disclosed pursuant to SECTION 5.01(n), which action, suit,
proceeding, governmental investigation or arbitration exposes, or in the case
of multiple actions, suits, proceedings, governmental investigations or
arbitrations arising out of the same general allegations or circumstances
which expose, in the Borrower's reasonable judgment, the Borrower or any
Parent to liability in an amount aggregating $100,000 or more
(exclusive of claims covered by insurance policies of the Borrower or any
Parent unless the insurers of such claims have disclaimed coverage
or reserved the right to disclaim coverage on such claims), the Borrower
shall give written notice thereof to the Lender and provide such other
information as may be reasonably available to enable the Lender and its
counsel to evaluate such matters; (b) as soon as practicable and in any event
within forty-five (45) days after the end of each fiscal quarter of the
Borrower, the Borrower shall provide a written quarterly report to the Lender
covering the institution of, or written threat of, any action, suit,
proceeding, governmental investigation or arbitration (not previously
reported) against or affecting the Borrower or any Parent or any
Property of the Borrower or any Parent not previously disclosed
by the Borrower to the Lender, and shall provide such other information at
such time as may be reasonably available to enable the Lender and its counsel
to evaluate such matters (but excluding such information at to which the
Borrower in good faith has asserted or will assert a legal privilege in
objection to disclosure of the information by the Borrower in the action,
suit, proceeding, investigation or arbitration); and (c) in addition to the
requirements set forth in CLAUSES (a) and (b) of this SECTION 6.05, the
Borrower upon request of the Lender shall promptly give written notice of the
status of any action, suit, proceeding, governmental investigation or
arbitration covered by a report delivered pursuant to CLAUSE (a) or (b) above
and provide such other information as may be reasonably available to it to
enable the Lender and its counsel to evaluate such matters.
6.06. INSURANCE. As soon as practicable and in any event by the last
day of April in each Fiscal Year, the Borrower
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shall deliver to the Lender (a) a report in form and substance reasonably
satisfactory to the Lender outlining all material insurance coverage
maintained as of the date of such report by the Borrower and the duration of
such coverage and (b) evidence that all premiums with respect to such
coverage have been paid when due.
6.07. EMPLOYEE BENEFIT PLAN NOTICES. The Borrower shall deliver or
cause to be delivered to the Lender, at the Borrower's expense, the following
information and notices as soon as reasonably possible, and in any event:
(a) within ten (10) Business Days after the Borrower knows or has
reason to know that a Termination Event has occurred, a written
statement of the chief financial officer or a director of the Borrower
describing such Termination Event and the action, if any, which the
Borrower has taken, is taking or proposes to take with respect thereto,
and when known, any action taken or threatened by any Governmental
Authority with respect thereto; and
(b) within ten (10) Business Days after the Borrower receives
written notice from the Lender requesting the same, copies of any
Employee Benefit Plan and related documents, reports and correspondence
specified in such notice.
For purposes of this SECTION 6.07, the Borrower shall be deemed to know all
facts known by the Administrator of any Employee Benefit Plan of which the
Borrower is the plan sponsor.
6.08. ENVIRONMENTAL NOTICES. The Borrower shall deliver all
notices pertaining to Environmental Laws, Environmental Hazards, Remedial
Actions and Environmental Encumbrances as are required to be delivered under
the terms of the Fixed and Floating Charge.
6.09. LABOR MATTERS. The Borrower shall notify the Lender in
writing, promptly upon the Borrower's learning thereof, of (a) any material
labor dispute to which the Borrower or any Parent may become a party,
including, without limitation, any strikes, lockouts or other disputes
relating to such Persons' plants and other facilities and (b) any liability
incurred with respect to the closing of any plant or other facility of the
Borrower or any Parent.
6.10. GOVERNMENT CONTRACT NOTICES. The Borrower shall notify the
Lender in writing, within three (3) Business Days after the Borrower's learning
thereof, of any of the following:
(a) Any Governmental Authority, any prime contractor, subcontractor
or other Person has notified the Borrower that the Borrower has breached
or violated in any material
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respect any Requirement of Law, certification, representation, clause,
provision or requirement pertaining to any Government Contract;
(b) A termination for default, termination for convenience, cure
notice or show cause notice is in effect with respect to any Government
Contract;
(c) Any cost incurred pertaining to any Government Contract has been
questioned or challenged, is the subject of any investigation or has been
disallowed by any Governmental Authority;
(d) Any money due to the Borrower or any Parent pertaining to
any Government Contact is withheld, or is the subject of an attempt to
withhold, or is reduced through exercise of a right of set-off or
otherwise;
(e) The commencement or threat of any action, suit, investigation or
proceeding relating to any Government Contact, or relating to any proposed
suspension or debarment of the Borrower, or any of its employees or agents,
against the Borrower, such other Person or any Property;
(f) The discovery of any irregularity, misstatement or omission
arising under or relating to any Government Contract that could reasonably
be expected to lead to (i) an administrative, civil or criminal
investigation, indictment or information with respect to the Borrower or
any of its directors, officers, employees, consultants or agents,
(ii) disclosure of such irregularity, misstatement or omission to
any Governmental Authority or (iii) material damage, penalty assessment,
recoupment of payment or disallowance of cost; or
(g) The existence of (i) any outstanding material Claims against the
Borrower or any Property, either by a Governmental Authority or by any prime
contractor, subcontractor, vendor or other third party, arising under or
relating to any Government Contract, or (ii) any material dispute between
the Borrower or any Parent, on the one hand, and any Governmental Authority,
any prime contractor, subcontractor, vendor or other third party, on the
other hand, arising under or relating to any Government Contract.
6.10. OTHER INFORMATION. Promptly upon receiving a request therefor
from the Lender, the Borrower shall prepare and deliver to the Lender such other
information with respect to the Borrower, any Parent, or the Collateral,
including, without limitation, schedules identifying and describing
the Collateral and any dispositions thereof, as from time to time may be
reasonably requested by the Lender.
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ARTICLE VII
AFFIRMATIVE COVENANTS
The Borrower covenants or represents and agrees that so long as any
Obligations are outstanding (other than indemnities not yet due), unless the
Lender shall otherwise give prior written consent:
7.01. ORGANIZATIONAL EXISTENCE, ETC. Except as permitted by
SECTION 8.09, the Borrower shall and each Parent shall at all times maintain
its organizational existence and preserve and keep, or cause to be preserved
and kept, in full force and effect its rights and franchises material to its
businesses, except where the loss or termination of such rights and
franchises is not likely to have a Material Adverse Effect.
7.02. ORGANIZATIONAL POWERS; CONDUCT OF BUSINESS. The Borrower and
each Parent shall to qualify and remain qualified to do business in each
jurisdiction in which the nature of its business requires it to be so
qualified.
7.03. COMPLIANCE WITH LAWS, ETC. The Borrower and each Parent
shall (a) comply with all Requirements of Law and all restrictive covenants
affecting such Person or the business, Property, assets or operations of such
Person, and (b) obtain as needed all Permits necessary for its operations and
maintain such Permits in good standing, except in the case where
noncompliance with either CLAUSE (a) or (b) above is not reasonably likely to
have a Material Adverse Effect.
7.04. PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION. The Borrower
and each Parent shall pay (a) all taxes, assessments and other governmental
charges imposed upon it or on any of its Property or assets or in respect of
any of its franchises, business, income or Property before any penalty,
addition to tax or interest accrues thereon, and (b) all claims (including,
without limitation, claims for labor, services, materials and supplies) for
sums which have become due and payable and which by law have or may become a
Lien (other than a Lien permitted by SECTION 8.03) upon any of the Borrower's
or any Parent's Property or assets, prior to the time when any penalty or
fine shall be incurred with respect thereto; PROVIDED, HOWEVER, that no such
taxes, assessments and governmental charges referred to in CLAUSE (a) above
or claims referred to in CLAUSE (b) above need be paid if being contested in
good faith by appropriate proceedings diligently instituted and conducted and
if such reserve or other appropriate provision, if any, as shall be required
in conformity with GAAP shall have been made therefor. Neither Borrower nor
Parent will file or consent to the filing of any consolidated income tax
return with any Person (other than with KHI, KTI, the Parents, the Borrower
or any of their respective Subsidiaries).
7.05. INSURANCE. The Borrower shall maintain in full force and
effect the insurance policies and programs applicable
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to Borrower listed on SCHEDULE 5.01-X of the KTI Credit Agreement or
substantially similar policies and programs or other policies and programs as
are acceptable to the Lender and, upon the request of the Lender, such other
insurance which, in the sole and reasonable judgment of the Lender, is
necessary or desirable to increase the likelihood of the repayment of the
Obligations. All such policies and programs shall be maintained with
insurers acceptable to the Lender. Each certificate and policy relating to
Property damage, boiler and machinery and/or business interruption coverage
shall contain an endorsement, in form and substance acceptable to the Lender,
showing loss payable to the Lender, and, if required by the Lender, naming the
Lender as an additional insured under such policy. Each certificate and
policy relating to coverages other than the foregoing shall, if required by
the Lender, contain an endorsement naming the Lender as an additional insured
under such policy. Such endorsement or an independent instrument furnished
to the Lender shall provide that the insurance companies will give the Lender
at least thirty (30) days' written notice before any such policy or policies
of insurance shall be altered adversely to the interests of the Lender or
cancelled and that no act, whether willful or negligent, or default of the
Borrower or any other Person shall affect the right of the Lender to recover
under such policy or policies of insurance in case of loss or damage. In the
event the Borrower or any Parent, at any time or times hereafter shall fail
to obtain or maintain any of the policies or insurance required herein or to
pay any premium in whole or in part relating thereto, then the Lender,
without waiving or releasing any obligations or resulting Event of Default
hereunder, may at any time or times thereafter (but shall be under no
obligation to do so) obtain and maintain such policies of insurance and pay
such premiums and take any other action with respect thereto which the Lender
deems advisable. All sums so disbursed by the Lender shall be part of the
Obligations, payable as provided in this Agreement.
7.06. INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. The
Borrower and each Parent shall permit any authorized representative(s)
designated by the Lender to visit and inspect any of the Properties of the
Borrower or any Parent, to examine, audit, check and make copies of their
respective financial and accounting records, books, journals, orders, receipts
and any correspondence and other data relating to their respective businesses
or the transactions contemplated hereby or by the Recoil Acquisition Documents
(including, without limitation, in connection with environmental compliance,
hazard or liability or any Government Contract), and to discuss their
affairs, finances and accounts with their officers and independent certified
public accountants, all upon reasonable notice and at such reasonable times
during normal business hours, as often as may be reasonably requested. At
the request of the Lender and upon delivery to the Borrower of invoices
therefor, each such visitation and inspection shall be at the Borrower's
expense. The Borrower and each Parent shall keep and maintain in
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all material respects proper books of record and account in which entries in
conformity with GAAP shall be made of all dealings and transactions in
relation to their respective businesses and activities, including, without
limitation, transactions and other dealings with respect to the Collateral.
If an Event of Default has occurred and is continuing, the Borrower and each
Parent, upon the Lender's request, shall turn over copies of any such records
to the Lender or its representatives.
7.07. INSURANCE AND CONDEMNATION PROCEEDS. The Borrower hereby
directs all insurers under policies of Property damage, boiler and machinery
and business interruption insurance and payors of any condemnation claim or
award relating to the Property to pay all proceeds payable under such
policies or with respect to such claim or award directly to the Lender, and
in no case to the Borrower and the Lender. Such proceeds shall constitute
Net Cash Proceeds of Sale and shall be applied to the Obligations in
accordance with SECTION 3.01(b)(vi).
7.08. [Intentionally omitted].
7.09. EMPLOYEE BENEFIT PLAN COMPLIANCE. The Borrower shall
establish, maintain and operate all Employee Benefit Plans to comply in all
material respects with all laws and regulations applicable thereto and the
respective requirements of the governing documents for such Employee Benefit
Plans.
7.10. GOVERNMENT CONTRACT COMPLIANCE. The Borrower shall (a)
maintain all Permits pertaining to Government Contracts required to operate
the Borrower's business as it is currently conducted, including, without
limitation, all Export Licenses and other similar Permits; and (b) comply in
all material respects with all Requirements of Law and Contractual Obligations
pertaining to each Government Contract.
7.11. MAINTENANCE OF PROPERTY. The Borrower and each Parent shall
maintain in all material respects all of their respective owned and leased
Property in good, safe and insurable condition and repair, and not permit,
commit or suffer any waste or abandonment of any such Property and from time
to time shall make or cause to be made all material repairs, renewal and
replacements thereof, including, without limitation, any capital improvements
which may be required; PROVIDED, HOWEVER, that such Property may be altered or
renovated in the ordinary course of business.
7.12. CONDEMNATION. Immediately upon learning of the institution
of any proceeding for the condemnation or other taking of any of the owned or
leased Real Property of the Borrower or any Parent, the Borrower shall notify
the Lender of the pendency of such proceeding, and permit the Lender to
participate in any such proceeding, and from time to time will deliver to the
Lender all instruments reasonably requested by the Lender to permit such
participation.
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7.13. BUSINESS CONTRACTS. Within 120 days after the Effective Date,
the Borrower shall deliver to Lender evidence that (i) all parties to any
"Business Contract" (under and as defined in the Recoil Australia Acquisition
Agreement) transferred to and/or assumed by the Borrower in connection with
the Recoil Acquisition have consented to such transfer and/or assumption,
(ii) that such consent was not required under such Business Contract or
applicable Requirements of Law, (iii) that such Business Contract has been
replaced by a new Business Contract with such party or (iv) that such
Business Contract is not material to Borrower's business.
ARTICLE VIII
NEGATIVE COVENANTS
The Borrower covenants or represents and agrees that so long as any
Obligations are outstanding (other than indemnities not yet due), unless the
Lender shall otherwise give prior written consent:
8.01. INDEBTEDNESS. Neither the Borrower nor any Parent shall
directly or indirectly create, incur, assume or otherwise become or remain
directly or indirectly liable with respect to any Indebtedness, except:
(i) the Obligations and other obligations and liabilities under the
Loan Documents;
(ii) trade payables, wages and other accrued expenses incurred
in the ordinary course of business;
(iii) the Transaction Costs;
(iv) to the extent permitted by ARTICLE IX and the KTI Credit
Agreement and in any event in an aggregate amount not to exceed
$3,000,000 at any time, Capital Leases and purchase money
Indebtedness incurred to finance the acquisition of fixed assets,
and Indebtedness incurred to refinance such Capital Leases and
purchase money Indebtedness;
(v) Indebtedness in respect of taxes, assessments, governmental
charges and claims for labor, materials or supplies, to the extent
that payment thereof is not required pursuant to SECTION 7.04;
(vi) Indebtedness constituting Accommodation Obligations
permitted by SECTION 8.05;
(vii) Indebtedness with respect to reasonable warranties and
indemnities made under any agreements for asset sales permitted under
SECTION 8.02;
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(viii) Indebtedness with respect to warranties and indemnities in
favor of Recoil Australia and the Vendors under the Recoil Australia
Acquisition Agreement; and
(ix) Permitted Existing Indebtedness
8.02. SALES OF ASSETS. Neither the Borrower nor any Parent shall
sell, assign, transfer, lease, convey or otherwise dispose of any Property,
whether now owned or hereafter acquired, or any income or profits therefrom,
or enter into any agreement to do so, except:
(i) the sale of Property having an aggregate Fair Market Value
of not more than $1,000,000 in any Fiscal Year for cash consideration
not less than the Fair Market Value thereof, PROVIDED that the
Borrower complies with the mandatory prepayment provisions set forth
in SECTION 3.01(b);
(ii) the transfer of Property from the Borrower or any Parent to
KTI;
(iii) the sale of Inventory in the ordinary course of business;
(iv) the disposition of Equipment if (A) such Equipment is obsolete
or no longer useful in the ordinary course of the Borrower's or such
Parent's business, PROVIDED, that the aggregate Fair Market Value of all
such Equipment disposed of in any Fiscal Year shall not exceed $500,000,
or (B) within six (6) months after such disposition, the proceeds
therefrom are either (I) used to finance the purchase of replacement
Equipment and the Borrower delivers to the Lender evidence of such use
and that the replacement Equipment is free and clear of all Liens except
those created under the Loan Documents or (II) delivered to the Lender
for application to the repayment of the Obligations;
(v) the licensing of General Intangibles as permitted by the Loan
Documents; and
(vi) any Investment permitted under SECTION 8.04.
8.03. LIENS. Neither the Borrower nor any Parent shall directly or
indirectly create, incur, assume or permit to exist any Lien on or with
respect to any of their respective Property or assets except:
(i) Liens created by the Loan Documents;
(ii) Customary Permitted Liens;
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(iii) purchase money Liens (including the interest of a lessor
under a Capital Lease or an Operating Lease having substantially the
same economic effect and Liens to which any Property is subject at the
time of the Borrower's or any Parent's purchase thereof) securing
an amount not to exceed $3,000,000 in the aggregate at any time or
from time to time, PROVIDED, that such Liens shall not apply to any
Property of the Borrower or any Parent other than that purchased
or subject to such Capital Lease; and
(iv) Permitted Existing Liens.
8.04. INVESTMENTS. Neither the Borrower nor any Parent
shall directly or indirectly make or own any Investment except:
(i) Investments in Cash Equivalents;
(ii) Investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and
suppliers arising in the ordinary course of business;
(iii) contributions to and payments of benefits under any Employee
Benefit Plan (in accordance with the terms of the Employee Benefit Plan)
permitted by this Agreement; and
(iv) Investments arising from intercompany loans from the Borrower
or any Parent to KTI, PROVIDED, that all such Indebtedness shall be
evidenced by promissory notes delivered to the Lender in accordance with
the Fixed and Floating Charge or the Parent Pledge Agreements and shall be
subordinated in right of payment ot the "Obligations" under (and as
defined in) the KTI Credit Agreement;
8.05. ACCOMMODATION OBLIGATIONS. Neither the Borrower nor any
Parent shall directly or indirectly create or become or be liable with
respect to any Accommodation Obligation, except:
(i) recourse obligations resulting from endorsement of
negotiable instruments for collection in the ordinary course of
business;
(ii) Permitted Existing Accommodation Obligations; and
(iii) Accommodation Obligations arising under the Loan Documents.
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8.06. RESTRICTED JUNIOR PAYMENTS. Neither the Borrower nor any
Parent shall declare or make any Restricted Junior Payment, except that each
Parent may make dividends or distributions to KTI on the Capital Stock of
such Parent.
8.07. CONDUCT OF BUSINESS. The Borrower shall not engage in any
business other than (i) the businesses engaged in by Recoil Australia on the
Effective Date and (ii) any business or activities which are substantially
similar, related or incidental thereto, all of which shall be conducted
outside the United States of America. The Parents shall not engage in any
business other than the holding of the Capital Stock of RCL.
8.08. TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES. Neither the
Borrower nor any Parent shall directly or indirectly enter into or permit to
exist any transaction (including, without limitation, the purchase, sale,
lease or exchange of any property or the rendering of any service) with any
holder or holders of more than five percent (5%) of any class of equity
Securities of KTI or KHI, or with any Affiliate of the Borrower, on terms
that are less favorable to the Borrower than those that might be obtained in
an arm's length transaction at the time from Persons who are not such a
holder or Affiliate. Nothing contained in this SECTION 8.08 shall prohibit
(i) any transaction expressly permitted by SECTIONS 8.01 or 8.05; (ii)
increases in compensation and benefits for officers and employees of the
Borrower which are customary in the industry or consistent with the past
business practice of the Borrower or any Parent, PROVIDED, that no Event of
Default or Potential Event of Default has occurred and is continuing; (iii)
payment of customary directors' fees and indemnities; (iv) performance of any
obligations arising under the Transaction Documents; or (v) transactions
between the Borrower or any Parent and KTI, PROVIDED that no Event of
Default or Potential Event of Default results therefrom.
8.09. RESTRICTION ON FUNDAMENTAL CHANGES. Neither the Borrower nor
any Parent shall enter into any merger or consolidation, or liquidate,
wind-up or dissolve (or suffer any liquidation or dissolution), or convey,
lease, sell, transfer or otherwise dispose of, in one transaction or series
of transactions, all or substantially all of the Borrower's or any such
Parent's business or Property, whether now or hereafter acquired, except
for (i) transactions permitted under SECTION 8.02 and (ii) a merger
of Recoil Holdings and Recoil Australia Holdings, PROVIDED that such merger
will not result in any adverse tax consequences to Recoil Holdings, Recoil
Australia Holdings, the Borrower or the Lender.
8.10. SALES AND LEASEBACKS. Neither the Borrower nor any Parent
shall become liable, directly, by assumption or by Accommodation Obligation,
with respect to any lease, whether an Operating Lease or a Capital Lease, of
any Property (whether real or personal or mixed) (i) which it sold or
transferred or is to sell or transfer to any other Person, or (ii) which it
intends to
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use for substantially the same purposes as any other Property which has been
or is to be sold or transferred by it to any other Person in connection with
such lease.
8.11. EMPLOYEE BENEFIT PLAN MATTERS. The Borrower shall not:
(i) permit any unfunded liabilities with respect to any Pension
Plan; or
(ii) fail to pay any required contributions or payments to a Pension
Plan on or before the due date for such required installment or payment.
8.12. ISSUANCE OF CAPITAL STOCK. The Borrower shall not issue any
Capital Stock to any Person except for the Capital Stock isued by the
Borrower to Recoil Holdings and Recoil Australia Holdings as of the Effective
Date. Each Parent shall not issue any Capital Stock to any Person except for
the Capital Stock issued by such Parent to KTI as of the Effective Date.
8.13. ORGANIZATIONAL DOCUMENTS. Neither the Borrower nor any
Parent shall amend, modify or otherwise change any of the terms or provisions
in any of their respective Organizational Documents as in effect on the date
hereof, PROVIDED, that the Borrower shall be permitted to change its name to
Recoil Pty Ltd after the Effective Date.
8.14. BANK ACCOUNTS. Neither the Borrower nor any Parent shall
open or maintain any deposit account with any Person unless (i) such Person
is a bank or financial institution reasonably acceptable to the Lender, (ii)
such Person has executed a Collection Account Agreement with respect to such
deposit account, and (iii) SCHEDULE 1.01.1 reflects (or shall have been
amended to reflect) such Person as a Collection Account Bank and such deposit
account as a Collection Account under this Agreement.
8.15. FISCAL YEAR. Neither the Borrower nor any Parent shall
change its Fiscal Year for accounting or tax purposes from a period
consisting of the 12-month period ending on December 31 of each calendar year.
8.16. SUBSIDIARIES. The Borrower shall not acquire or create any
Subsidiaries. Neither Parent shall acquire or create any Subsidiaries other
than the Borrower.
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ARTICLE IX
FINANCIAL COVENANTS
The Borrower covenants and agrees that so long as any Obligations
are outstanding (other than indemnities not yet due), unless the Lender shall
otherwise give prior written consent thereto:
9.01 NET INCOME. The Borrower shall have positive net income,
determined in conformity with GAAP on a first-in-first-out method of
inventory accounting basis, for each 12-month period ending on each March 31,
June 30, September 30 and December 31 during the term of this Agreement;
PROVIDED, HOWEVER, that for the periods ending on September 30, 1996,
December 31, 1996, March 31, 1997 and June 30, 1997, such periods shall
commence on the Effective Date.
ARTICLE X
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
10.01. EVENTS OF DEFAULT. Each of the following occurrences shall
constitute an Event of Default under this Agreement:
(a) FAILURE TO MAKE PAYMENTS WHEN DUE. The Borrower shall fail to
pay when due any of the Obligations (other than the failure to make a
payment under SECTION 3.03 with respect to Taxes payable to a federal
Australian Governmental Authority).
(b) BREACH OF CERTAIN COVENANTS. The Borrower or any Parent shall
fail duly and punctually to perform or observe any agreement, covenant or
obligation binding on such Person under SECTIONS 6.08, 7.01, and 7.06,
ARTICLE VIII or ARTICLE IX.
(c) BREACH OF REPRESENTATION OR WARRANTY. Any representation or
warranty made or deemed made by the Borrower or any Parent to the Lender
herein or by the Borrower or any Parent in any of the other Loan Documents or
in any statement or certificate at any time given by any such Person pursuant
to any of the Loan Documents shall be false or misleading in any material
respect on the date as of which made (or deemed made).
(d) OTHER DEFAULTS. The Borrower or any Parent shall default in
the performance of or compliance with any term contained in this Agreement
(other than as covered by PARAGRAPHS (a), (b) or (c) of this SECTION 10.01)
or any default or event of default shall occur under any of the other Loan
Documents, and such default or event of default shall continue for fifteen
(15) days after the Borrower has knowledge of the default or, if earlier,
receipt by the Borrower of a notice of the default from the Lender (other
than the failure to make a payment under SECTION 3.03 with respect to Taxes
payable to a federal Australian Governmental Authority).
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(e) DEFAULT AS TO OTHER INDEBTEDNESS; OPERATING LEASES; KHI
AGREEMENTS. The Borrower or any Parent shall fail to make any payment when
due (whether by scheduled maturity, required prepayment, acceleration, demand
or otherwise) with respect to any Indebtedness (other than an Obligation)
having a principal amount in excess of $100,000; or any breach, default or
event of default shall occur, or any other condition shall exist under any
instrument, agreement or indenture pertaining to any such Indebtedness; or
any such Indebtedness shall be otherwise declared to be due and payable (by
acceleration or otherwise) or required to be prepaid, redeemed or otherwise
repurchased by the Borrower or any Parent (other than by a regularly
scheduled required prepayment) prior to the stated maturity thereof; or any
"Event of Default" under (and as defined in) either of the KHI Agreements or
the KTI Credit Agreement has occurred and is continuing.
(f) INSOLVENCY EVENTS.
(i) An involuntary case shall be commenced against the Borrower or
any Parent and the petition shall not be dismissed, stayed, bonded or
discharged within sixty (60) days after commencement of the case; or a court
having jurisdiction in the premises shall enter a decree or order for relief
in respect of the Borrower or any Parent in an involuntary case, under any
applicable bankruptcy, insolvency or other similar law now or hereinafter in
effect; or any other similar relief shall be granted under any applicable
federal, state, local or foreign law; or the board of directors of the
Borrower or any Parent Subsidiaries (or any committee thereof) adopts any
resolution or otherwise authorizes any action to approve any of the foregoing.
(ii) A decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator,
trustee, custodian, controller (as defined in the Corporations Law) or other
officer having similar powers over the Borrower or any of its Subsidiaries or
over all or a substantial part of the Property of the Borrower or any Parent
shall be entered; or a Person is appointed under legislation to investiate or
manage any part of the affairs of the Borrower or any Parent; or an interim
receiver, trustee or other custodian of the Borrower or any Parent or of all
or a substnatial part of the Property of the Borrower or any Parent shall be
appointed or a warrant of attachment, execution or similar process against
any substantial part of the Property of the Borrower or any Parent shall be
issued an any such event shall not be stayed, dismissed, bonded or discharged
within sixty (60) days after entry, appointment or issuance; or the board of
directors of the Borrower or any Parent (or any committee thereof) adopts any
resolution or otherwise authorizes any action to approve any of the foregoing.
(iii) The Borrower or any Parent shall commence a voluntary case
under any applicable bankruptcy, insolvency or
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other similar law now or hereafter in effect, or shall consent to the entry
of an order for relief in an involuntary case, or to the conversion of an
involuntary case to a voluntary case, under any such law, or shall consent to
the appointment of or taking possession by a receiver, trustee, controller or
other custodian for all or a substantial part of its Property, or shall
consent to the appointment under legislation of a Person to investigate or
manage any part of the affairs of the Borrower or any Parent; or the Borrower
or any of its Subsidiaries of the Borrower shall make any assignment for the
benefit of creditors or shall be unable or fail, or admit in writing its
inability, to pay its debts as such debts become due.
(iv) Any Insolvency Event shall have occurred.
(g) JUDGMENTS AND ATTACHMENTS. Any money judgment (other than a
money judgment covered by insurance as to which the insurance company has
acknowledged coverage), distress, writ, warrant of attachment or order of
encumbrance, or similar process against the Borrower or any Parent of the
Borrower or any of their respective assets involving in any case an amount in
excess of $500,000 is entered or levied and shall remain undischarged,
unvacated, unbonded or unstayed for a period of sixty (60) days or in any
event later than five (5) days prior to the date of any proposed sale
thereunder.
(h) DISSOLUTION. Any order, judgment or decree shall be entered
against the Borrower or any Parent decreeing its involuntary dissolution or
split up and such order shall remain undischarged and unstayed for a period
in excess of sixty (60) days; or the Borrower or any Parent shall otherwise
dissolve or cease to exist except as specifically permitted by this Agreement.
(i) LOAN DOCUMENTS; FAILURE OF SECURITY. At any time, for any
reason, (i) any Loan Document ceases to be in full force and effect or the
Borrower or any Parent party thereto seeks to repudiate its obligations
thereunder and the Liens intended to be created thereby are, or the Borrower
or any Parent seeks to render such Liens, invalid and unperfected, or (ii)
Liens in favor of the Lender contemplated by the Loan Documents shall, at any
time, for any reason, be invalidated or otherwise cease to be in full force
and effect, or such Liens shall be subordinated or shall not have the
priority contemplated by this Agreement or the Loan Documents.
(j) TERMINATION EVENT. Any Termination Event occurs which the
Lender believes could reasonably be expected to subject the Borrower to
liability in excess of $250,000.
(k) SUSPENSIONS, DEBARMENT. Any suspension or debarment with
respect to Government Contracts is imposed on the Borrower or any of its
directors, officers, employees, consultants or agents.
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(l) MATERIAL ADVERSE CHANGE. An event shall exist which has a
Material Adverse Effect.
(m) REDUCTION IN CAPITAL. The Borrower or any Parent takes action
to reduce its capital.
(n) CESSATION OF BUSINESS. The Borrower or any Parent ceases to
carry on its business or a material part of it, or threatens to do either of
those things except to reconstruct or amalgamate while solvent on terms
approved by the Lender.
(o) CHANGE OF CONTROL. All of the Capital Stock of the Borrower
ceases to be held by Recoil Holdings and/or Recoil Australia Holdings.
(p) TAX PAYMENTS. The Company or any Parent does not pay when due
(i) any money payable by such Person under SECTION 3.03 or under Section 5 of
the Guaranty, as applicable or (ii) any money such Person has warranted it
will pay under SECTION 3.03 or under Section 5 of the Guaranty.
An event of Default shall be deemed "continuing" until cured or
waived in writing in accordance with SECTION 11.05.
10.02. RIGHTS AND REMEDIES.
(a) ACCELERATION AND TERMINATION. Upon the occurrence of any Event
of Default described in SECTIONS 10.01(f), the Term Loan Commitment shall
automatically and immediately terminate and the unpaid principal amount of,
and any and all accrued interest on, the Obligations and all accrued fees
shall automatically become immediately due and payable, without presentment,
demand, or protest or other requirements of any kind (including, without
limitation, valuation and appraisement, diligence, presentment, notice of
intent to demand or accelerate and of acceleration), all of which are hereby
expressly waived by the Borrower; and upon the occurrence and during the
continuance of any other Event of Default, the Lender may, by written notice
to the Borrower, declare the unpaid principal amount of and any and all
accrued and unpaid interest on the Obligations to be, and the same shall
thereupon be, immediately due and payable, without presentment, demand, or
protest or other requirements of any kind (including, without limitation,
valuation and appraisement, diligence, presentment, notice of intent to
demand or accelerate and of acceleration), all of which are hereby expressly
waived by the Borrower.
(b) DEFAULT RATE OF INTEREST. In addition to any other remedies
available to the Lender after the occurrence of an Event of Default, the
Lender shall be entitled to receive interest on the Obligations at the
default rate in accordance with SECTION 2.02(c).
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(c) ENFORCEMENT. The Borrower acknowledges that in the event the
Borrower or any of its Subsidiaries fails to perform, observe or discharge
any of their respective obligations or liabilities under this Agreement or
any other Loan Document, any remedy of law may prove to be inadequate relief
to the Lender; therefore, the Borrower agrees that the Lender shall be
entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.
ARTICLE XI
MISCELLANEOUS
11.01. EXPENSES. The Borrower agrees upon demand to pay, or
reimburse the Lender for, all of the Lender's reasonable internal and
external audit, legal, appraisal, valuation, filing, document duplication and
reproduction and investigation expenses and for all other out-of-pocket costs
and expenses of every type and nature (including, without limitation, the
reasonable fees, expenses and disbursements of Sidley & Austin, local and
foreign legal counsel, auditors, accountants, appraisers, printers, insurance
and environmental advisers, and other consultants and agents) incurred by the
Lender in connection with (a) the preparation, negotiation, execution,
stamping, registration and completion of this Agreement and the Loan
Documents and any amendments, consents, waivers, assignments, restatements,
or supplements to any of the same; (b) the Lender's periodic audits of the
Borrower and the parents after the Effective Date; (c) the protection of the
Liens under the Loan Documents after the Effective Date (including, without
limitation, any reasonable fees and expenses for local counsel in various
jurisdictions); (d) the ongoing administration of this Agreement and the Term
Loan, including consultation with attorneys in connection therewith and with
respect to the Lender's rights and responsibilities under this Agreement and
the other Loan Documents; (e) the protection, collection or enforcement of
any of the Obligations or Loan Documents or any security therefor or
exercising or enforcing any other right or remedy available to the Lender
under the Loan Documents; (f) the commencement, defense or intervention in
any court proceeding relating in any way to the Obligations, the Property,
the Borrower, any Parent, this Agreement or any of the other Transaction
Documents; (g) the response to, and preparation for, any subpoena or request
for document production with which the Lender is served or deposition or
other proceeding in which the Lender is called to testify, in each case,
relating in any way to the Obligations, the Property, the Borrower, Parent,
this Agreement or any of the other Transaction Documents; (h) in connection
with any refinancing or restructuring of the credit arrangements provided
under this Agreement in the nature of a "work-out" or in any insolvency or
bankruptcy proceeding; (i) in taking any other action in or with respect to
any suit or proceeding (bankruptcy or otherwise) described in CLAUSES (e)
through (h) above.
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11.02. INDEMNITY. The Borrower further agrees to defend, protect,
indemnify, and hold harmless the Lender and each of its officers, directors,
employees, attorneys and agents (including, without limitation, those
retained in connection with the satisfaction or attempted satisfaction of any
of the conditions set forth in ARTICLE IV) (collectively, the "Indemnitees")
from and against any and all liabilities, obligations, losses (other than
loss of profits), damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (excluding
any taxes and including, without limitation, the fees and disbursements of
counsel or consulting firms for such Indemnitees in connection with any
investigative, administrative or judicial proceeding, whether or not such
Indemnitees shall be designated a party thereto), imposed on, incurred by, or
asserted against such Indemnitees in any manner relating to or arising out of
(a) this Agreement or the other Loan Documents, or any act, event or
transaction related or attendant thereto or to the Recoil Acquisition, the
making of the Term Loan, the management of the Term Loan, the use or intended
use of the proceeds of the Term Loan hereunder, or any of the other
transactions contemplated by the Transaction Documents, or (b) any
Liabilities and Costs under Environmental Laws arising from or in connection
with the past, present or future operations of the Borrower, any Parent or
any of their respective predecessors in interest, or, the past, present or
future environmental condition of any Property, the presence of
asbestos-containing materials at any Property or the Release or threatened
Release of any Contaminant (collectively, the "Indemnified Matters");
PROVIDED, HOWEVER, that the Borrower shall have no obligation to an
Indemnitee hereunder with respect to Indemnified Matters to the extent caused
by or resulting from the willful misconduct or gross negligence of the
Indemnitee (or any other Indemnitee whose willful misconduct or grossly
negligent acts were authorized by the Indemnitee claiming indemnification
hereunder), as determined by a court of competent jurisdiction. To the
extent that the undertaking to indemnify, pay and hold harmless set forth in
the preceding sentence may be unenforceable because it is violative of any
law or public policy, the 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.
11.03. CHANGE IN ACCOUNTING PRINCIPLES. If any change in the
accounting principles used in the preparation of the most recent financial
statements referred to in SECTION 6.01 are hereafter required or permitted by
the rules, regulations, pronouncements and opinions of the Financial Accounting
Standards Board or the American Institute of Certified Public Accountants (or
successors thereto or agencies with similar functions) and are adopted by the
Borrower with the agreement of its independent certified public accountants and
such changes result in a change in the method of calculation of any of the
covenants, standards or terms found in ARTICLE VIII and ARTICLE IX, the parties
hereto
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agree to enter into negotiations in order to amend such provisions so as to
equitably reflect such changes with the desired result that the criteria for
evaluating compliance with such covenants, standards and terms by the
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 covenants, standards or terms shall be given
effect in such calculations until such provisions are amended, in a manner
satisfactory to the Lender and the Borrower, to so reflect such change in
accounting principles.
11.04. SETOFF. In addition to any Liens granted under the Loan
Documents and any rights now or hereafter granted under applicable law, upon
the occurrence and during the continuance of any Event of Default, the Lender
is hereby authorized by the Borrower at any time or from time to time,
without notice to any Person (any such notice being hereby expressly waived)
to set off and to appropriate and to apply any and all deposits (general or
special, including, but not limited to, indebtedness evidenced by
certificates of deposit, whether matured or unmatured (but not including
trust accounts)) and any other Indebtedness at any time held or owing by the
Lender to or for the credit or the account of the Borrower against and on
account of the Obligations of the Borrower to the Lender, including, but not
limited to, the Term Loan and all claims of any nature or description
arising out of or in connection with this Agreement, irrespective of whether
or not (a) the Lender shall have made any demand hereunder or (b) the Lender
shall have declared the principal of and interest on the Term Loan and other
amounts due hereunder to be due and payable as permitted by ARTICLE X and
even though such Obligations may be contingent or unmatured.
11.05. AMENDMENTS AND WAIVERS. Unless otherwise provided in this
Agreement, no amendment or modification of any provision of this Agreement
shall be effective without the written agreement of the Lender and the
Borrower, and no termination or waiver of any provision of this Agreement, or
consent to any departure by the Borrower therefrom, shall be effective
without the written concurrence of the Lender, which the Lender shall have
the right to grant or withhold in its sole discretion. Any waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which it was given. No notice to or demand on the Borrower in any case
shall entitle the Borrower to any other or further notice or demand in
similar or other circumstances.
11.06. NOTICES. Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to be given shall
be in writing and may be personally served, telecopied, telexed or sent by
courier service or United States certified mail and shall be deemed to have
been given when delivered in person or by courier service, upon receipt of a
telecopy or telex or three (3) days (seven (7), if posted to Australia from a
place outside of Australia or from
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Australia to place outside of Australia) Business Days after deposit in the
ordinary post in the applicable jurisdiction with postage prepaid and properly
addressed. For the purposes hereof, the addresses of the parties hereto
(until notice of a change thereof is delivered as provided in this SECTION
11.06) shall be as follows:
(a) If to the Lender, at:
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxxx
Telecopier No. (000) 000-0000
with copies to:
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Corporate Finance Group
Department Counsel
Telecopier No. (000) 000-0000
and
Sidley & Austin
000 Xxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxx, III, Esq.
Telecopier No. (000) 000-0000
(b) If to the Borrower, at:
RCL Pty
c/o Kaynar Technologies Inc.
000 Xxxxx Xxxxx Xxxxxxx Xxxx.
Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx
Telecopier No. (000) 000-0000
with a copy to:
O'Melveny & Xxxxx LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: C. Xxxxx Xxxxx, Esq.
Telecopier No. (000) 000-0000
PROVIDED, that the Lender or the Borrower shall have the right to change any
of the above-listed addresses by properly addressed and delivered notice to
the other party.
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11.07. SURVIVAL OF WARRANTIES AND AGREEMENTS. All representations
and warranties made herein and all obligations of the Borrower in respect of
taxes, indemnification and expense reimbursement shall survive the execution
and delivery of this Agreement and the other Loan Documents, the making and
repayment of the Term Loan, and the termination of this Agreement and shall
not be limited in any way by the passage of time or occurrence of any event
and shall expressly cover time periods when the Lender may have come into
possession or control of any of the Borrower's or any Parent's Property.
11.08. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of the Lender in the exercise of any power,
right or privilege under any of the Loan Documents shall impair such power,
right or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege. All rights and remedies existing under
the Loan Documents are cumulative to and not exclusive of any rights or
remedies otherwise available.
11.09. MARSHALLING; PAYMENTS SET ASIDE. The Lender shall be under
no obligation to xxxxxxxx any assets in favor of the Borrower or any other
party or against or in payment of any or all of the Obligations. To the
extent that the Borrower makes a payment or payments to the Lender or the
Lender receives payment from the proceeds of the Collateral or exercises its
rights of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid
to a trustee, receiver or any other party, then to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied,
and all Liens, right and remedies therefor, shall be revived and continued in
full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
11.10. SEVERABILITY. In case any provision in or obligation under
this Agreement or the other Loan Documents shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability
of the remaining provisions or obligations, or of such provision or
obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.
11.11. HEADINGS. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of
this Agreement or be given any substantive effect.
11.12. GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED, AND THE
RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
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11.13. LIMITATION OF LIABILITY. No claim may be made by the
Borrower or the Lender or any other Person against the Borrower, the Lender
or the Affiliates, directors, officers, employees, attorneys or agents of any
of them for any special, consequential or punitive damages in respect of any
claim for breach of contract or any other theory of liability arising out of
or related to the transactions contemplated by this Agreement, or any act,
omission or event occurring in connection therewith; and the Borrower and the
Lender hereby waive, release and agree not to xxx upon any such claim for any
such damages, whether or not accrued and whether or not known or suspected to
exist in its favor.
11.14. SUCCESSORS AND ASSIGNS. This Agreement and the other Loan
Documents shall be binding upon the parties hereto and their respective
successors and assigns and shall inure to the benefit of the parties hereto
and the successors and permitted assigns of the Lender. The Lender may
assign all or any part of its rights and obligations under this Agreement and
the other Loan Documents to any Person upon thirty (30) days' prior written
notice to (but without the consent of) the Borrower, it being agreed and
understood that the Lender's right to assign its interests under this
Agreement and the other Loan Documents shall be independent of any right of
assignment in favor of the Lender with respect to any other agreement,
document or instrument to which it is a party. The rights hereunder of the
Borrower, or any interest therein, may not be assigned without the written
consent of the Lender.
11.15. CERTAIN CONSENTS AND WAIVERS OF THE BORROWER.
(a) PERSONAL JURISDICTION. (i) THE LENDER AND THE BORROWER
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF ANY CALIFORNIA STATE COURT OR FEDERAL COURT
SITTING IN LOS ANGELES, CALIFORNIA, AND ANY COURT HAVING JURISDICTION OVER
APPEALS OF MATTERS HEARD IN SUCH COURTS, IN ANY ACTION OR PROCEEDING ARISING
OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT, WHETHER ARISING IN
CONTRACT, TORT, EQUITY OR OTHERWISE, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN SUCH STATE COURT OR, TO THE EXTENT PERMITTED BY LAW,
IN SUCH FEDERAL COURT. THE BORROWER IRREVOCABLY DESIGNATES AND APPOINTS CT
CORPORATION AS ITS AGENT (THE "PROCESS AGENT") FOR SERVICE OF ALL PROCESS IN
ANY SUCH PROCEEDING IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED
TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. THE LENDER AND THE
BORROWER AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL
BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. THE BORROWER WAIVES IN ALL
DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT
CONSIDERING THE DISPUTE.
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(ii) THE BORROWER AGREES THAT THE LENDER SHALL HAVE THE RIGHT TO
PROCEED AGAINST THE BORROWER OR ITS PROPERTY IN A COURT IN ANY LOCATION WHICH
IS NECESSARY OR DESIRABLE TO ENABLE THE LENDER TO REALIZE ON THE COLLATERAL
OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER ENTERED IN FAVOR OF THE LENDER. THE BORROWER AGREES THAT IT WILL
NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY THE
LENDER TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE
LENDER. THE BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION
OF THE COURT IN WHICH THE LENDER MAY COMMENCE A PROCEEDING DESCRIBED IN THIS
SECTION.
(b) SERVICE OF PROCESS. THE BORROWER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE PROCESS AGENT OR THE BORROWER'S NOTICE ADDRESS
SPECIFIED BELOW, SUCH SERVICE TO BECOME EFFECTIVE FIVE (5) DAYS AFTER SUCH
MAILING. THE BORROWER IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF
ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL
AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
SHALL LIMIT THE RIGHT OF THE LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER
IN THE COURTS OF ANY OTHER JURISDICTION.
(c) WAIVER OF JURY TRIAL. THE LENDER AND THE BORROWER IRREVOCABLY
WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT.
(D) IMMUNITY. NEITHER THE COMPANY NOR ANY PARENT HAVE IMMUNITY FROM
THE JURISDICTION OF ANY COURT OR FROM LEGAL PROCESS (WHETHER THROUGH SERVICE
OF PROCESS, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION,
EXECUTION OR OTHERWISE).
11.16. COUNTERPARTS; EFFECTIVENESS; INCONSISTENCIES. This
Agreement and any amendments, waivers, consents, or supplements hereto may be
executed in counterparts, each of which when so executed and delivered shall
be deemed an original, but all such counterparts together shall constitute
but one and the same instrument. This Agreement shall become effective
against the Borrower and the Lender as of the date when all of the conditions
set forth in SECTION 4.01 have been satisfied or duly waived in accordance
with SECTION 11.05 (the "Effective Date"). Subject to the provisions of this
Agreement (including, without limitation, the preliminary statements hereto),
this Agreement and each of the other Loan Documents shall be construed to the
extent reasonable to be consistent one with the other, but to the extent that
the terms and conditions of this Agreement are actually
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inconsistent with the terms and conditions of any other Loan Document, this
Agreement shall govern.
11.17. CONFIDENTIALITY. The Lender shall hold all nonpublic
information obtained pursuant to the requirements of this Agreement and
identified as such by the Borrower in accordance with the Lender's customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices and in any event may make
disclosure reasonably required by a bona fide offeree, transferee or
participant in connection with the contemplated transfer or participation or
as required or requested by any Governmental Authority or representative
thereof or pursuant to legal process and shall require any such offeree,
transferee or participant to agree (and require any of its offerees,
transferees or participants to agree) to comply with this SECTION 11.17. In
no event shall the Lender be obligated or required to return any materials
furnished by the Borrower; PROVIDED, HOWEVER, that each offeree shall be
required to agree that if it does not become a transferee or participant it
shall return all materials furnished to it by the Borrower in connection with
this Agreement. Any and all confidentiality agreements entered into between
the Lender and the Borrower shall survive the execution of this Agreement.
11.18 SUPERVENING LEGISLATION. Any present or future legislation
which operates to vary the obligations of the Borrower or any Parent in
connection with the Agreement or the other Loan Documents with the result
that the Lender's rights, powers or remedies are adversely affected
(including by way of delay or postponement) is excluded except to the extent
that its exclusion is prohibited or rendered ineffective by applicable
Requirements of Law.
11.19 TIME IS OF THE ESSENCE. Time is of the essence of this
Agreement in respect of any Obligation of the Borrower to pay money.
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11.20. ENTIRE AGREEMENT. This Agreement, taken together with all of
the other Loan Documents, embodies the entire agreement and understanding among
the parties hereto and all prior agreements and understandings, written and
oral, relating to the subject matter hereof.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first above written.
SIGNED by /s/ X.X. Xxxxxx
-------------------)
as authorized representative )
of RCL Pty in the presence of:)
) --------------------------
) By executing this Agreement
) the signatory warrants that
/s/ Xxxxxx X. Law ) the signatory is duly
------------------------- ) authorized to execute this
Signature of Witness ) Agreement on behalf of RCL
Pty
SIGNED by /s/ Xxxxx X. Xxxxxx
-------------------)
as authorized representative )
of General Electric Capital ) /s/ P.C. Xxxxxx
Corporation in the ) --------------------------
presence of: ) By executing this Agreement
) the signatory warrants that
/s/ illegible ) the signatory is duly
------------------------- ) authorized to execute this
Signature of Witness ) Agreement on behalf of
General Electric Capital
Corporation
