EXHIBIT 10.12
CONFORMED COPY
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LOAN AND SECURITY AGREEMENT
BY AND AMONG
AMTROL HOLDINGS, INC.
AS GUARANTOR,
AMTROL INC.
AND
WATER SOFT INC.
AS BORROWERS,
THE LENDERS THAT ARE SIGNATORIES HERETO
AS THE LENDERS,
AND
FOOTHILL CAPITAL CORPORATION
AS THE ARRANGER AND ADMINISTRATIVE AGENT
DATED AS OF DECEMBER 26, 2001
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TABLE OF CONTENTS
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1. DEFINITIONS AND CONSTRUCTION........................................................................1
1.1 Definitions....................................................................................1
1.2 Accounting Terms..............................................................................28
1.3 Code..........................................................................................28
1.4 Construction..................................................................................29
1.5 Schedules and Exhibits........................................................................29
2. LOAN AND TERMS OF PAYMENT..........................................................................29
2.1 Revolver Advances.............................................................................29
2.2 Term Loans....................................................................................31
2.3 Borrowing Procedures and Settlements..........................................................32
2.4 Payments......................................................................................37
2.5 Overadvances..................................................................................41
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations...................41
2.7 Cash Management...............................................................................43
2.8 Crediting Payments; Float Charge..............................................................44
2.9 Designated Account............................................................................44
2.10 Maintenance of Loan Account; Statements of Obligations........................................44
2.11 Fees..........................................................................................45
2.12 Letters of Credit.............................................................................45
2.13 LIBOR Option..................................................................................48
2.14 Capital Requirements..........................................................................52
2.15 Change of Lending Office......................................................................52
2.16 Replacement of Lenders........................................................................53
2.17 Joint and Several Liability of Borrowers......................................................53
3. CONDITIONS; TERM OF AGREEMENT......................................................................55
3.1 Conditions Precedent to the Initial Extension of Credit.......................................55
3.2 Conditions Subsequent to the Initial Extension of Credit......................................59
3.3 Conditions Precedent to all Extensions of Credit..............................................60
3.4 Term..........................................................................................60
3.5 Effect of Termination.........................................................................61
3.6 Early Termination by Borrowers................................................................61
4. CREATION OF SECURITY INTEREST......................................................................62
4.1 Grant of Security Interest....................................................................62
4.2 Negotiable Collateral.........................................................................62
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral........................62
4.4 Filing of Financing Statements; Commercial Tort Claims; Delivery of
Additional Documentation Required.............................................................62
4.5 Power of Attorney.............................................................................63
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4.6 Right to Inspect..............................................................................64
4.7 Control Agreements............................................................................64
5. REPRESENTATIONS AND WARRANTIES.........................................................................64
5.1 No Encumbrances...............................................................................64
5.2 Eligible Accounts.............................................................................65
5.3 Eligible Inventory............................................................................65
5.4 Equipment.....................................................................................65
5.5 Location of Inventory and Equipment...........................................................65
5.6 Inventory Records.............................................................................65
5.7 State of Incorporation; Location of Chief Executive Office; Organizational
ID Number; FEIN; Commercial Tort Claims.......................................................65
5.8 Due Organization and Qualification; Subsidiaries..............................................65
5.9 Due Authorization; No Conflict................................................................66
5.10 Litigation....................................................................................67
5.11 No Material Adverse Change....................................................................67
5.12 Fraudulent Transfer...........................................................................68
5.13 Employee Benefits.............................................................................68
5.14 Environmental Condition.......................................................................68
5.15 Brokerage Fees................................................................................68
5.16 Intellectual Property.........................................................................68
5.17 Leases........................................................................................69
5.18 DDAs..........................................................................................69
5.19 Complete Disclosure...........................................................................69
5.20 Indebtedness..................................................................................69
5.21 Special Purpose Corporation...................................................................69
5.22 Senior Subordinated Notes.....................................................................69
6. AFFIRMATIVE COVENANTS..................................................................................70
6.1 Accounting System.............................................................................70
6.2 Collateral Reporting..........................................................................70
6.3 Financial Statements, Reports, Certificates...................................................71
6.4 Guarantor Reports.............................................................................73
6.5 Return........................................................................................73
6.6 Maintenance of Properties.....................................................................74
6.7 Taxes.........................................................................................74
6.8 Insurance.....................................................................................74
6.9 Location of Inventory and Equipment...........................................................75
6.10 Compliance with Laws..........................................................................75
6.11 Leases........................................................................................75
6.12 Existence.....................................................................................75
6.13 Environmental.................................................................................75
6.14 Commercial Tort Claims; Organizational ID Number..............................................76
6.15 Disclosure Updates............................................................................76
6.16 AMTROL Germany................................................................................76
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7. NEGATIVE COVENANTS.....................................................................................76
7.1 Indebtedness..................................................................................76
7.2 Liens.........................................................................................77
7.3 Restrictions on Fundamental Changes...........................................................78
7.4 Disposal of Assets............................................................................78
7.5 Change Name...................................................................................78
7.6 Guarantee.....................................................................................78
7.7 Nature of Business............................................................................79
7.8 Prepayments and Amendments....................................................................79
7.9 Change of Control.............................................................................79
7.10 Consignments..................................................................................79
7.11 Distributions.................................................................................79
7.12 Accounting Methods............................................................................80
7.13 Investments...................................................................................80
7.14 Transactions with Affiliates..................................................................80
7.15 Suspension....................................................................................80
7.16 Intentionally Omitted.........................................................................80
7.17 Use of Proceeds...............................................................................81
7.18 Change in Location of Chief Executive Office; Inventory and Equipment with
Bailees.......................................................................................81
7.19 Securities Accounts...........................................................................81
7.20 Financial Covenants...........................................................................81
8. EVENTS OF DEFAULT......................................................................................84
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.................................................................86
9.1 Rights and Remedies...........................................................................86
9.2 Remedies Cumulative...........................................................................88
10. TAXES AND EXPENSES.....................................................................................88
11. WAIVERS; INDEMNIFICATION...............................................................................89
11.1 Demand; Protest; etc..........................................................................89
11.2 The Lender Group's Liability for Collateral...................................................89
11.3 Indemnification...............................................................................89
12. NOTICES................................................................................................90
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.............................................................91
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.............................................................91
14.1 Assignments and Participations................................................................91
14.2 Successors....................................................................................95
15. AMENDMENTS; WAIVERS....................................................................................95
15.1 Amendments and Waivers........................................................................95
15.2 Replacement of Holdout Lender.................................................................96
15.3 No Waivers; Cumulative Remedies...............................................................96
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16. AGENT; THE LENDER GROUP................................................................................97
16.1 Appointment and Authorization of Agent........................................................97
16.2 Delegation of Duties..........................................................................97
16.3 Liability of Agent............................................................................98
16.4 Reliance by Agent.............................................................................98
16.5 Notice of Default or Event of Default.........................................................98
16.6 Credit Decision...............................................................................99
16.7 Costs and Expenses; Indemnification...........................................................99
16.8 Agent in Individual Capacity.................................................................100
16.9 Successor Agent..............................................................................100
16.10 Lender in Individual Capacity................................................................101
16.11 Withholding Taxes............................................................................101
16.12 Collateral Matters...........................................................................103
16.13 Restrictions on Actions by Lenders; Sharing of Payments......................................104
16.14 Agency for Perfection........................................................................104
16.15 Payments by Agent to the Lenders.............................................................104
16.16 Concerning the Collateral and Related Loan Documents.........................................105
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by
Lenders; Other Reports and Information.......................................................105
16.18 Several Obligations; No Liability............................................................106
17. GENERAL PROVISIONS....................................................................................106
17.1 Effectiveness................................................................................106
17.2 Section Headings.............................................................................107
17.3 Interpretation...............................................................................107
17.4 Severability of Provisions...................................................................107
17.5 Amendments in Writing........................................................................107
17.6 Counterparts; Telefacsimile Execution........................................................107
17.7 Revival and Reinstatement of Obligations.....................................................107
17.8 Integration..................................................................................107
17.9 AMTROL as Agent for Borrowers................................................................108
18. GUARANTY..............................................................................................108
18.1 Guaranty; Limitation of Liability............................................................108
18.2 Guaranty Absolute............................................................................109
18.3 Waiver.......................................................................................109
18.4 Continuing Guaranty; Assignments.............................................................110
18.5 Subrogation..................................................................................110
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "AGREEMENT"), is entered into
as of December 26, 2001, by and among, on the one hand, the lenders identified
on the signature pages hereof (such lenders, together with their respective
successors and assigns, are referred to hereinafter each individually as a
"LENDER" and collectively as "Lenders"), FOOTHILL CAPITAL CORPORATION, a
California corporation, as the arranger and administrative agent for the Lenders
("AGENT"), and, on the other hand, AMTROL HOLDINGS, INC., a Delaware corporation
("HOLDINGS"), AMTROL INC., a Rhode Island corporation ("AMTROL"), and WATER SOFT
INC., a Rhode Island corporation (together with AMTROL, each individually a
"BORROWER", and individually and collectively, jointly and severally,
"BORROWERS").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the following terms shall
have the following definitions:
"ACCOUNT DEBTOR" means any Person who is or who may become obligated
under, with respect to, or on account of, an Account, chattel paper, or a
General Intangible.
"ACCOUNTS" means all of Borrowers' now owned or hereafter acquired
right, title, and interest with respect to "accounts" (as that term is defined
in the Code), and any and all supporting obligations in respect thereof.
"ACH TRANSACTIONS" means any cash management or related services
(including the Automated Clearing House processing of electronic funds transfers
through the direct Federal Reserve Fedline system) provided by Xxxxx Fargo or
its Affiliates for the account of any of the Loan Parties or their Subsidiaries.
"ADDITIONAL DOCUMENTS" has the meaning set forth in SECTION 4.4(c).
"ADMINISTRATIVE BORROWER" has the meaning set forth in SECTION 17.9.
"ADVANCES" has the meaning set forth in SECTION 2.1(a).
"AFFECTED LOANS" has the meaning set forth in SECTION 2.13(b)(iv).
"AFFILIATE" means, as applied to any Person, any other Person who,
directly or indirectly, controls, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of Stock, by contract, or
otherwise; PROVIDED, HOWEVER, that, for purposes of the definition of Eligible
Accounts and SECTION 7.14 hereof: (a) any Person which owns directly or
indirectly 10% or more of the securities having ordinary voting power for the
election of directors or other
members of the governing body of a Person or 10% or more of the partnership or
other ownership interests of a Person (other than as a limited partner of such
Person) shall be deemed to control such Person; (b) each director (or comparable
manager) of a Person shall be deemed to be an Affiliate of such Person; and (c)
each partnership or joint venture in which a Person is a partner or joint
venturer shall be deemed to be an Affiliate of such Person.
"AGENT" means Foothill, solely in its capacity as agent for the
Lenders hereunder, and any successor thereto.
"AGENT ADVANCES" has the meaning set forth in SECTION 2.3(e)(i).
"AGENT'S ACCOUNT" means the account identified on Schedule A-1.
"AGENT'S LIENS" means the Liens granted by Borrowers to Agent for the
benefit of the Lender Group under this Agreement or the other Loan Documents.
"AGENT-RELATED PERSONS" means Agent together with its Affiliates,
officers, directors, employees, and agents.
"AGREEMENT" has the meaning set forth in the preamble hereto.
"AMTROL" has the meaning set forth in the preamble hereto.
"AMTROL CANADA" means AMTROL Canada Ltd., a Canadian company.
"AMTROL GERMANY" means AMTROL Holding GmbH, a German company.
"AMTROL NETHERLANDS" means AMTROL Holding Netherlands B.V., a Dutch
company.
"AMTROL PORTUGAL" means AMTROL - Alfa Metalomecanica S.A., a
Portuguese company.
"APPLICABLE PREPAYMENT PREMIUM" means, as of any date of
determination, an amount equal to (a) during the period of time from and after
the date of the execution and delivery of this Agreement up to the date that is
the first anniversary of the Closing Date, 5.0% times the Revolver Commitment on
the date immediately prior to the date of determination, (b) during the period
of time from and including the date that is the first anniversary of the Closing
Date up to the date that is the second anniversary of the Closing Date, 4.0%
times the Revolver Commitment on the date immediately prior to the date of
determination, (c) during the period of time from and including the date that is
the second anniversary of the Closing Date up to the date that is the third
anniversary of the Closing Date, 3.0% times the Revolver Commitment on the date
immediately prior to the date of determination, (d) during the period of time
from and including the date that is the third anniversary of the Closing Date up
to the date that is the fourth anniversary of the Closing Date, 2.0% times the
Revolver Commitment on the date immediately prior to the date of determination,
and (e) during the period of time from and including the date that is the fourth
anniversary of the
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Closing Date up to the date that is the fifth anniversary of the Closing Date,
1.0% times the Revolver Commitment on the date immediately prior to the date of
determination.
"APPLICABLE PROCEEDS" has the meaning set forth in SECTION
2.13(b)(iv).
"ASSIGNEE" has the meaning set forth in SECTION 14.1.
"ASSIGNMENT AND ACCEPTANCE" means an Assignment and Acceptance in the
form of Exhibit A-1.
"AUTHORIZED PERSON" means any officer or other employee of
Administrative Borrower.
"AVAILABILITY" means, as of any date of determination, if such date is
a Business Day, and determined at the close of business on the immediately
preceding Business Day, if such date of determination is not a Business Day, the
amount that Borrowers are entitled to borrow as Advances under SECTION 2.1
(after giving effect to all then outstanding Obligations (other than Bank
Product Obligations) and all sublimits and reserves applicable hereunder).
"BANK PRODUCT AGREEMENTS" means those certain cash management service
agreements entered into from time to time by any Loan Party or its Subsidiaries
in connection with any of the Bank Products.
"BANK PRODUCT OBLIGATIONS" means all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing by any Loan Party
or its Subsidiaries to Xxxxx Fargo or its Affiliates pursuant to or evidenced by
the Bank Product Agreements and irrespective of whether for the payment of
money, whether direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, and including all such amounts that a
Borrower is obligated to reimburse to Agent or any member of the Lender Group as
a result of Agent or such member of the Lender Group purchasing participations
or executing indemnities or reimbursement obligations with respect to the Bank
Products provided to a Loan Party or its Subsidiaries pursuant to the Bank
Product Agreements.
"BANK PRODUCT RESERVES" means, as of any date of determination, the
amount of reserves that Agent has established (based upon Xxxxx Fargo's or its
Affiliate's reasonable determination of the credit exposure in respect of then
extant Bank Products) for Bank Products then provided or outstanding.
"BANK PRODUCTS" means any service or facility extended to any Loan
Party or its Subsidiaries by Xxxxx Fargo or any Affiliate of Xxxxx Fargo
including: (a) credit cards, (b) credit card processing services, (c) debit
cards, (d) purchase cards, (e) ACH Transactions, (f) cash management, including
controlled disbursement, accounts or services, or (g) Hedge Agreements.
"BANKRUPTCY CODE" means the United States Bankruptcy Code, as in
effect from time to time.
"BASE LIBOR RATE" means, with respect to any Interest Period, the rate
per annum, determined by Agent in accordance with its customary procedures, and
utilizing such
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electronic or other quotation sources as it considers appropriate (rounded
upwards, if necessary, to the next 1/16%), on the basis of the rates at which
Dollar deposits are offered to major banks in the London interbank market on or
about 11:00 a.m. (California time) 2 Business Days prior to the commencement of
the applicable Interest Period, for a term and in amounts comparable to the
Interest Period and amount of the LIBOR Rate Loan requested by Administrative
Borrower in accordance with this Agreement, which determination shall be
conclusive in the absence of manifest error.
"BASE RATE" means, the rate of interest announced within Xxxxx Fargo
at its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate" is one of Xxxxx Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as Xxxxx Fargo may designate.
"BASE RATE LOAN" means each portion of an Advance or Term Loan that
bears interest at a rate determined by reference to the Base Rate.
"BASE RATE MARGIN" means 0.5 percentage points.
"BASE RATE TERM LOAN MARGIN" means, (a) with respect to Term Loan A,
0.75 percentage points and (b) with respect to Term Loan B, 3.25 percentage
points.
"BENEFIT PLAN" means a "defined benefit plan" (as defined in SECTION
3(35) of ERISA) for which any Borrower or any Subsidiary or ERISA Affiliate of
any Borrower has been an "employer" (as defined in SECTION 3(5) of ERISA) within
the past six years.
"BOARD OF DIRECTORS" means the board of directors (or comparable
managers) of AMTROL or any committee thereof duly authorized to act on behalf
thereof.
"BOOKS" means all of each Borrower's now owned or hereafter acquired
books and records (including all of its Records indicating, summarizing, or
evidencing its assets (including the Collateral) or liabilities, all of each
Borrower's or its Subsidiaries' Records relating to its or their business
operations or financial condition, and all of its or their goods or General
Intangibles related to such information).
"BORROWER" and "BORROWERS" have the respective meanings set forth in
the preamble to this Agreement.
"BORROWING" means a borrowing hereunder consisting of Advances (or
term loans, in the case of the Term Loans) made on the same day by the Lenders
(or Agent on behalf thereof), or by Swing Lender in the case of a Swing Loan, or
by Agent in the case of an Agent Advance, in each case, to Administrative
Borrower.
"BORROWING BASE" has the meaning set forth in SECTION 2.1.
"BUSINESS DAY" means any day that is not a Saturday, Sunday, or other
day on which national banks are authorized or required to close, except that, if
a determination of a
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Business Day shall relate to a LIBOR Rate Loan, the term "Business Day" also
shall exclude any day on which banks are closed for dealings in Dollar deposits
in the London interbank market.
"CANADIAN PERFECTION DATE" has the meaning set forth in
SECTION 3.2(b).
"CAPITAL EXPENDITURES" means, for any period, with respect to any
Person, the aggregate of all expenditures by such Person and its Subsidiaries
for the acquisition or leasing (pursuant to a capital lease) of fixed or capital
assets or additions to equipment (including replacements, capitalized repairs
and improvements during such period) that should be capitalized under GAAP on a
consolidated balance sheet of such Person and its Subsidiaries.
"CAPITAL LEASE" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"CAPITALIZED LEASE OBLIGATION" means any Indebtedness represented by
obligations under a Capital Lease.
"CASH EQUIVALENTS" means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 270 days from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either S&P or Xxxxx'x,
(c) commercial paper maturing no more than 1 year from the date of acquisition
thereof and, at the time of acquisition, having a rating of A-1 or P-1, or
better, from S&P or Xxxxx'x, (d) certificates of deposit or bankers' acceptances
maturing within 1 year from the date of acquisition thereof either (i) issued by
any bank organized under the laws of the United States or any state thereof
which bank has a rating of A or A2, or better, from S&P or Xxxxx'x, or (ii)
certificates of deposit less than or equal to $100,000 in the aggregate issued
by any other bank insured by the Federal Deposit Insurance Corporation, or (e)
shares of money market mutual or similar funds which invest exclusively in
assets satisfying the requirements of clauses (a) through (d) above.
"CASH MANAGEMENT BANK" has the meaning set forth in SECTION 2.7(a).
"CASH MANAGEMENT ACCOUNT" has the meaning set forth in SECTION 2.7(a).
"CASH MANAGEMENT AGREEMENTS" means those certain cash management
service agreements, in form and substance satisfactory to Agent, each of which
is among one of the Borrowers, Agent, and one of the Cash Management Banks.
"CHANGE OF CONTROL" means (a) any "person" or "group" (within the
meaning of Sections 13(d) and 14(d) of the Exchange Act), other than Permitted
Holders, becomes the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of 30%, or more, of the Stock of Holdings
having the right to vote for the election of members of the Board of Directors,
or (b) a majority of the members of the Board of Directors do not constitute
Continuing Directors, or (c) Holdings ceases to own and control (i) directly,
100% of the outstanding capital stock of AMTROL, (ii) indirectly through AMTROL,
100% of the
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outstanding capital Stock of each of its Subsidiaries that is not a Foreign
Subsidiary, other than AMTROL, extant as of the Closing Date and (iii)
indirectly through AMTROL, the percentage of the outstanding capital Stock of
each of its Foreign Subsidiaries extant as of the Closing Date that Holdings
owns on the Closing Date.
"CLOSING DATE" means the date of the making of the initial Advance (or
other extension of credit) hereunder or the date on which Agent sends Borrower a
written notice that each of the conditions precedent set forth in SECTION 3.1
either have been satisfied or have been waived.
"CLOSING DATE BUSINESS PLAN" means the set of Projections of Borrowers
for the 3 year period following the Closing Date (on a year by year basis, and
for the 1 year period following the Closing Date, on a month by month basis or
as otherwise required), in form and substance (including as to scope and
underlying assumptions) reasonably satisfactory to Agent.
"CODE" means the New York Uniform Commercial Code, as in effect from
time to time.
"COLLATERAL" means all of each Borrower's now owned or hereafter
acquired right, title, and interest in and to each of the following:
(a) Accounts,
(b) Books,
(c) Equipment,
(d) General Intangibles,
(e) Inventory,
(f) Investment Property,
(g) Negotiable Collateral,
(h) Real Property Collateral,
(i) money or other assets of each such Borrower that now or
hereafter come into the possession, custody, or control of any member of the
Lender Group, and
(j) the proceeds and products, whether tangible or intangible,
of any of the foregoing, including proceeds of insurance covering any or all of
the foregoing, and any and all Accounts, Books, Equipment, General Intangibles,
Inventory, Investment Property, Negotiable Collateral, Real Property, money,
deposit accounts, or other tangible or intangible property resulting from the
sale, exchange, collection, or other disposition of any of the foregoing, or any
portion thereof or interest therein, and the proceeds thereof.
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"COLLATERAL ACCESS AGREEMENT" means a landlord waiver, bailee letter,
or acknowledgement agreement of any lessor, warehouseman, processor, consignee,
or other Person in possession of, having a Lien upon, or having rights or
interests in the Equipment or Inventory, in each case, in form and substance
reasonably satisfactory to Agent.
"COLLECTIONS" means all cash, checks, notes, instruments, and other
items of payment (including insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds) of Borrowers.
"COMMERCIAL TORT CLAIM ASSIGNMENT" has the meaning set forth in
SECTION 4.4(b).
"COMMITMENT" means, with respect to each Lender, its Revolver
Commitment, its Term Loan A Commitment, its Term Loan B Commitment or its Total
Commitment, as the context requires, and, with respect to all Lenders, their
Revolver Commitments, their Term Loan A Commitments, their Term Loan B
Commitments, or their Total Commitments, as the context requires, in each case
as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on Schedule C-1 or on the signature page of the Assignment
and Acceptance pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of SECTION 14.1.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
of Exhibit C-1 delivered by the chief financial officer of AMTROL to Agent.
"CONSOLIDATED EBIT" means, for any period (A) the sum of the amounts
for such period of (i) Consolidated Net Income, (ii) provisions for taxes based
on income, (iii) Consolidated Interest Expense, (iv) non-cash amortization or
write-off of deferred financing costs to the extent deducted in determining
Consolidated Net Income, (v) non-cash losses on sales of assets (excluding sales
in the ordinary course of business) and other extraordinary losses, (vi) any
other non-cash charges which have been subtracted in calculating Consolidated
Net Income for such period, (vii) any non-recurring non-cash charge or
restructuring charge to the extent deducted in determining Consolidated Net
Income and (viii) the cumulative effect of any change in accounting principles
LESS (B) the amount for such period of gains on sales of assets (excluding sales
in the ordinary course of business) and other extraordinary gains, in each case,
for AMTROL and its Subsidiaries, as determined on a consolidated basis in
accordance with GAAP.
"CONSOLIDATED EBITDA" means, for any period, the sum of the amounts
for such period of (i) Consolidated EBIT, (ii) depreciation expense for AMTROL
and its Subsidiaries and (iii) amortization expense for AMTROL and its
Subsidiaries.
"CONSOLIDATED FIXED CHARGES" means, for any period, (a) all principal
of Indebtedness for borrowed money of AMTROL and its Subsidiaries scheduled to
be paid during such period (not including prepayments of the Advances unless
such prepayments are accompanied by a reduction of the Revolver Commitments)
plus (b) Consolidated Interest Expense excluding any interest that is payable
and paid other than in cash plus (c) Capital Expenditures.
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"CONSOLIDATED INTEREST EXPENSE" means, for any period, total interest
expense (including the portion that is attributable to Capital Leases in
accordance with GAAP) of AMTROL and its Subsidiaries on a consolidated basis
with respect to all outstanding Indebtedness of AMTROL and its Subsidiaries
(including, without limitation, all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance financing
and net costs under Hedge Agreements).
"CONSOLIDATED NET INCOME" means, for any period, the net income (or loss)
of AMTROL and its Subsidiaries on a consolidated basis for such period taken as
a single accounting period determined in conformity with GAAP, PROVIDED that
there shall be excluded from the calculation thereof (without duplication)
compensation expense resulting from the issuance of capital Stock, stock options
or stock appreciation rights issued to employees, including officers, of AMTROL
or any of its Subsidiaries, or the exercise of such options or rights, in each
case to the extent the obligation (if any) associated therewith and compensation
expense resulting from the repurchase of any such capital Stock, options and
rights is not expected to be settled by the payment of cash by AMTROL or any
Affiliate of AMTROL and up to $800,000 of bonuses actually paid by AMTROL and
its Subsidiaries to their employees on or before June 30, 2002.
"CONTINUING DIRECTOR" means (a) any member of the Board of Directors who
was a director (or comparable manager) of AMTROL on the Closing Date, and (b)
any individual who becomes a member of the Board of Directors after the Closing
Date if such individual was appointed or nominated for election to the Board of
Directors by a majority of the Continuing Directors, but excluding any such
individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or threatened election
contest relating to the election of the directors (or comparable managers) of
AMTROL (as such terms are used in Rule 14a-11 under the Exchange Act) and whose
initial assumption of office resulted from such contest or the settlement
thereof.
"CONTRIBUTION AGREEMENT" means the Contribution Agreement, duly executed by
the Loan Parties, in form and substance reasonably satisfactory to Agent.
"CONTROL AGREEMENT" means a control agreement, in form and substance
reasonably satisfactory to Agent, executed and delivered by the applicable
Borrower, Agent, and the applicable securities intermediary with respect to a
Securities Account or a bank with respect to a deposit account.
"CYPRESS" means The Cypress Group L.L.C., a Delaware limited liability
company, or any Person controlled by or under common control with The Cypress
Group L.L.C.
"D-24 PRODUCTION LINE TRANSACTION" means the sale by AMTROL to AMTROL
Portugal of the Equipment identified in Schedule T-1.
"DAILY BALANCE" means, with respect to each day during the term of this
Agreement, the amount of an Obligation owed at the end of such day.
"DDA" means any checking or other demand deposit account maintained by any
Borrower.
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"DEFAULT" means an event, condition, or default that, with the giving of
notice, the passage of time, or both, would be an Event of Default.
"DEFAULTING LENDER" means any Lender that fails to make any Advance (or
other extension of credit) that it is required to make hereunder on the date
that it is required to do so hereunder.
"DEFAULTING LENDER RATE" means (a) the Base Rate for the first 3 days from
and after the date the relevant payment is due, and (b) thereafter, at the
interest rate then applicable to Advances that are Base Rate Loans (inclusive of
the Base Rate Margin applicable thereto).
"DESIGNATED ACCOUNT" means that certain DDA of Administrative Borrower
identified on Schedule D-1.
"DILUTION" means, as of any date of determination, a percentage, based upon
the experience of the immediately prior 90 days, that is the result of dividing
the Dollar amount of (a) bad debt write-downs, discounts, advertising
allowances, credits, or other dilutive items with respect to the Accounts during
such period; PROVIDED, HOWEVER that rebates shall not be included in the
calculation of this clause (a) to the extent Agent determines in its Permitted
Discretion that Borrowers shall have made adequate reserves on their books with
respect to such rebates, by (b) Borrowers' Collections with respect to Accounts
during such period (excluding extraordinary items) plus the Dollar amount of
clause (a).
"DILUTION RESERVE" means, as of any date of determination, an amount
sufficient to reduce the advance rate against Eligible Accounts by one
percentage point for each percentage point by which Dilution is in excess of
5.0%.
"DISBURSEMENT LETTER" means an instructional letter executed and delivered
by Administrative Borrower to Agent regarding the extensions of credit to be
made on the Closing Date, the form and substance of which is reasonably
satisfactory to Agent.
"DOLLARS" or "$" means United States dollars.
"DUE DILIGENCE LETTER" means the due diligence letter sent by Agent's
counsel to Administrative Borrower, together with Administrative Borrower's
completed responses to the inquiries set forth therein, the form and substance
of such responses to be satisfactory to Agent.
"ELIGIBLE ACCOUNTS" means those Accounts created by one of Borrowers in the
ordinary course of its business, that arise out of its sale of goods or
rendition of services, that comply with each of the representations and
warranties with respect to Eligible Accounts made by Borrowers under the Loan
Documents, and that are not excluded as ineligible by virtue of one or more of
the criteria set forth below; PROVIDED, HOWEVER, that such criteria may be fixed
and revised from time to time by Agent in Agent's Permitted Discretion to
address the results of any audit performed by Agent from time to time after the
Closing Date. In determining the amount to be included, Eligible Accounts shall
be calculated net of customer deposits and unapplied cash remitted to Borrowers.
Eligible Accounts shall not include the following:
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(a) Accounts that the Account Debtor has failed to pay within 120
days of original invoice date or Accounts with selling terms of more than
90 days,
(b) Accounts owed by an Account Debtor (or its Affiliates) where
50% or more of all Accounts owed by that Account Debtor (or its Affiliates)
are deemed ineligible under clause (a) above,
(c) Accounts with respect to which the Account Debtor is an
employee, Affiliate, or agent of any Borrower,
(d) Accounts arising in a transaction wherein goods are placed on
consignment or are sold pursuant to a guaranteed sale, a sale or return, a
sale on approval, a xxxx and hold, or any other terms by reason of which
the payment by the Account Debtor may be conditional,
(e) Accounts that are not payable in Dollars or, after the
Canadian Perfection Date, Canadian Dollars,
(f) Accounts with respect to which the Account Debtor either (i)
does not maintain its chief executive office in the United States or, after
the Canadian Perfection Date, Canada, or (ii) is not organized under the
laws of the United States or any state thereof or, after the Canadian
Perfection Date, Canada, or (iii) is the government of any foreign country
or sovereign state, or of any state, province, municipality, or other
political subdivision thereof, or of any department, agency, public
corporation, or other instrumentality thereof, unless (y) the Account is
supported by an irrevocable letter of credit satisfactory to Agent (as to
form, substance, and issuer or domestic confirming bank) that has been
delivered to Agent and is directly drawable by Agent, or (z) the Account is
covered by credit insurance in form, substance, and amount, and by an
insurer, satisfactory to Agent,
(g) Accounts with respect to which the Account Debtor is either
(i) the United States or any department, agency, or instrumentality of the
United States (exclusive, however, of Accounts with respect to which the
applicable Borrower has complied, to the reasonable satisfaction of Agent,
with the Assignment of Claims Act, 31 U.S.C. ss. 3727), or (ii) any state
of the United States (exclusive, however, of (y) Accounts owed by any state
that does not have a statutory counterpart to the Assignment of Claims Act
or (z) Accounts owed by any state that does have a statutory counterpart to
the Assignment of Claims Act as to which the applicable Borrower has
complied to Agent's satisfaction),
(h) Accounts with respect to which the Account Debtor is a
creditor of any Borrower and has or has asserted a right of setoff, has
disputed its liability, or has made any claim with respect to its
obligation to pay the Account, to the extent of such claim, right of
setoff, or dispute,
(i) Accounts with respect to an Account Debtor whose total
obligations owing to Borrowers exceed 10% (such percentage as applied to a
particular Account Debtor being subject to reduction by Agent in its
Permitted Discretion if the
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credit worthiness of such Account Debtor deteriorates) of all Eligible
Accounts, to the extent of the obligations owing by such Account Debtor in
excess of such percentage,
(j) Accounts with respect to which the Account Debtor is subject
to an Insolvency Proceeding, is not Solvent, has gone out of business, or
as to which a Borrower has received notice of an imminent Insolvency
Proceeding or a material impairment of the financial condition of such
Account Debtor,
(k) Accounts with respect to which the Account Debtor is located
in the states of New Jersey, Minnesota, or West Virginia (or any other
state that requires a creditor to file a business activity report or
similar document in order to bring suit or otherwise enforce its remedies
against such Account Debtor in the courts or through any judicial process
of such state), unless the applicable Borrower has qualified to do business
in New Jersey, Minnesota, West Virginia, or such other states, or has filed
a business activities report with the applicable division of taxation, the
department of revenue, or with such other state offices, as appropriate,
for the then-current year, or is exempt from such filing requirement,
(l) Accounts, the collection of which, Agent, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's
financial condition,
(m) Accounts that are not subject to a valid and perfected first
priority Agent's Lien,
(n) Accounts with respect to which (i) the goods giving rise to
such Account have not been shipped and billed to the Account Debtor, or
(ii) the services giving rise to such Account have not been performed and
billed to the Account Debtor, or
(o) Accounts that represent the right to receive progress
payments or other advance xxxxxxxx that are due prior to the completion of
performance by the applicable Borrower of the subject contract for goods or
services.
"ELIGIBLE EQUIPMENT" means Equipment in good working order, condition
and repair (ordinary wear and tear excepted) used in the ordinary course of
Borrowers' business located at one of the business locations of Borrowers set
forth on Schedule E-1, that complies with each of the representations and
warranties with respect to Eligible Equipment made by Borrowers in the Loan
Documents, that is not excluded as ineligible by virtue of the one or more of
the criteria set forth below; PROVIDED, HOWEVER, that such criteria may be fixed
and revised from time to time by Agent in Agent's Permitted Discretion after the
Closing Date. An item of Equipment shall not be included in Eligible Equipment
if:
(a) a Borrower does not have good, valid, and marketable title
thereto,
(b) it is not located at one of the locations in the United
States (or, after the Canadian Perfection Date, Canada) set forth on
Schedule E-1 or in transit from one such location to another such location,
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(c) it is located on real property leased by a Borrower or in a
contract warehouse, in each case, unless it is subject to a Collateral
Access Agreement executed by the lessor, warehouseman, or other third
party, as the case may be, or Agent has established rent reserves
acceptable to Agent and unless it is segregated or otherwise separately
identifiable from goods of others, if any, stored on the premises, or
(d) it is not subject to a valid and perfected first priority
security Agent's Lien.
"ELIGIBLE INVENTORY" means Inventory of Borrowers consisting of raw
materials, subassemblies and first quality finished goods held for sale in the
ordinary course of Borrowers' business located at one of the business locations
of Borrowers set forth on Schedule E-1 (or in-transit between any such
locations), that complies with each of the representations and warranties
respecting Eligible Inventory made by Borrowers in the Loan Documents, and that
is not excluded as ineligible by virtue of the one or more of the criteria set
forth below; PROVIDED, HOWEVER, that such criteria may be fixed and revised from
time to time by Agent in Agent's Permitted Discretion to address the results of
any audit or appraisal performed by Agent from time to time after the Closing
Date. An item of Inventory shall not be included in Eligible Inventory if:
(a) a Borrower does not have good, valid, and marketable title
thereto,
(b) it is not located at one of the locations in the United
States (or, after the Canadian Perfection Date, Canada) set forth on Schedule
E-1 or in transit from one such location to another such location,
(c) it is located on real property leased by a Borrower or in a
contract warehouse, in each case, unless it is subject to a Collateral Access
Agreement executed by the lessor, warehouseman, or other third party, as the
case may be, or Agent has established rent reserves acceptable to Agent and
unless it is segregated or otherwise separately identifiable from goods of
others, if any, stored on the premises,
(d) it is not subject to a valid and perfected first priority
security Agent's Lien,
(e) it consists of goods returned or rejected by a Borrower's
customers,
(f) it consists of work-in-process other than subassemblies, or
(g) it consists of goods that are obsolete or slow moving,
restrictive or custom items or goods that constitute spare parts, packaging and
shipping materials, finishing materials, supplies used or consumed in a
Borrower's business, xxxx and hold goods, defective goods, "seconds," or
Inventory acquired on consignment.
"ELIGIBLE TRANSFEREE" means (a) a commercial bank organized under the
laws of the United States, or any state thereof, and having total assets in
excess of $250,000,000, (b) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such
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country and which has total assets in excess of $250,000,000, provided that such
bank is acting through a branch or agency located in the United States, (c) a
finance company, insurance company, or other financial institution or fund that
is engaged in making, purchasing, or otherwise investing in commercial loans in
the ordinary course of its business and having (together with its Affiliates)
total assets in excess of $250,000,000, (d) any Affiliate (other than
individuals) of a Lender that was party hereto as of the Closing Date or any
fund, money market account, investment account or other account controlled by a
Lender or an Affiliate of such Lender, (e) so long as no Event of Default has
occurred and is continuing, any other Person approved by Agent and
Administrative Borrower, and (f) during the continuation of an Event of Default,
any other Person approved by Agent.
"ENVIRONMENTAL ACTIONS" means any written complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other written communication from
any Governmental Authority, or any third party involving violations of
Environmental Laws or releases of Hazardous Materials from (a) any assets,
properties, or businesses of any Borrower or any predecessor in interest, (b)
from adjoining properties or businesses, or (c) from or onto any facilities
which received Hazardous Materials generated by any Borrower or any predecessor
in interest.
"ENVIRONMENTAL LAW" means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy or rule of common
law now or hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, to the extent binding on Borrowers, relating
to the environment, employee health and safety, or Hazardous Materials,
including CERCLA; RCRA; the Federal Water Pollution Control Act, 33
U.S.C.ss.1251 ET SEQ.; the Toxic Substances Control Act, 15 X.X.X.xx. 2601 ET
SEQ.; the Clean Air Act, 42 X.X.X.xx. 7401 ET SEQ.; the Safe Drinking Water Act,
42 X.X.X.xx. 3803 ET SEQ.; the Oil Pollution Act of 1990, 33 X.X.X.xx. 2701 ET
SEQ.; the Emergency Planning and the Community Right-to-Know Act of 1986, 42
U.S.C.ss.11001 ET SEQ.; the Hazardous Material Transportation Act, 49 X.X.X.xx.
1801 ET SEQ.; the Occupational Safety and Health Act, 29 X.X.X.xx. 651 ET SEQ.
(to the extent it regulates occupational exposure to Hazardous Materials); and
any state and local or foreign counterparts or equivalents, in each case as
amended from time to time.
"ENVIRONMENTAL LIABILITIES AND COSTS" means all liabilities, monetary
obligations, Remedial Actions, losses, damages, punitive damages, consequential
damages, treble damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts, or consultants, and costs of
investigation and feasibility studies), fines, penalties, sanctions, and
interest incurred as a result of any claim or demand by any Governmental
Authority or any third party, and which relate to any Environmental Action.
"ENVIRONMENTAL LIEN" means any Lien in favor of any Governmental Authority
for Environmental Liabilities and Costs.
"EQUIPMENT" means all of Borrowers' now owned or hereafter acquired right,
title, and interest with respect to equipment, machinery, machine tools, motors,
furniture, furnishings, fixtures, vehicles (including motor vehicles), tools,
parts, goods (other than consumer goods,
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farm products, or Inventory), wherever located, including all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto.
"ERISA AFFILIATE" means (a) any Person subject to ERISA whose employees are
treated as employed by the same employer as the employees of a Borrower under
IRC Section 414(b), (b) any trade or business subject to ERISA whose employees
are treated as employed by the same employer as the employees of a Borrower
under IRC Section 414(c), (c) solely for purposes of Section 302 of ERISA and
Section 412 of the IRC, any organization subject to ERISA that is a member of an
affiliated service group of which a Borrower is a member under IRC Section
414(m), or (d) solely for purposes of Section 302 of ERISA and Section 412 of
the IRC, any Person subject to ERISA that is a party to an arrangement with a
Borrower and whose employees are aggregated with the employees of a Borrower
under IRC Section 414(o).
"EVENT OF DEFAULT" has the meaning set forth in SECTION 8.
"EXCESS AVAILABILITY" means the amount, as of the date any determination
thereof is to be made, equal to Availability minus the aggregate amount, if any,
of all trade payables of Borrowers aged in excess of their historical levels
with respect thereto and all book overdrafts in excess of their historical
practices with respect thereto, in each case as determined by Agent in its
Permitted Discretion.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as in effect from
time to time.
"EXISTING CREDIT AGREEMENT" means the Credit Agreement, dated as of
November 13, 1996, as amended, by and among Holdings, AMTROL (f/k/a AMTROL
Acquisition, Inc.), the Existing Lenders, Xxxxxx Xxxxxxx Senior Funding, Inc.,
as Documentation Agent, and Bankers Trust Company, as Administrative Agent.
"EXISTING LENDERS" means the lenders and agents party to the Existing
Credit Agreement.
"FAIR MARKET VALUE" means, with respect to any Real Property Collateral,
the appraised market value of such Real Property Collateral as determined from
time to time by a qualified appraisal company selected by Agent.
"FAMILY MEMBER" means, with respect to any individual, any other individual
having a relationship by blood (to the second degree of consanguinity),
marriage, or adoption to such individual.
"FAMILY TRUSTS" means, with respect to any individual, trusts or other
estate planning vehicles established for the benefit of Family Members of such
individual and in respect of which such individual serves as trustee or in a
similar capacity.
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"FEE LETTER" means that certain fee letter, dated as of even date herewith,
between Borrowers and Agent, in form and substance satisfactory to Agent.
"FEIN" means Federal Employer Identification Number.
"FOOTHILL" means Foothill Capital Corporation, a California corporation.
"FOREIGN SUBSIDIARY" means a Subsidiary of Holdings that is organized,
incorporated or otherwise formed under the laws of any jurisdiction other than
any state of the United States or, after the Canadian Perfection Date, Canada.
"FUNDING DATE" means the date on which a Borrowing occurs.
"FUNDING LOSSES" has the meaning set forth in SECTION 2.13(b)(ii).
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States, consistently applied.
"GENERAL INTANGIBLES" means all of Borrowers' now owned or hereafter
acquired right, title, and interest with respect to general intangibles
(including payment intangibles, contract rights, rights to payment, judgments,
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill, patents, designs, inventions, trade secrets, trade names,
d/b/a's, Internet domain names, logos, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature, reports,
catalogs, money, deposit accounts, insurance premium rebates, tax refunds, and
tax refund claims), and any and all supporting obligations in respect thereof,
and any other personal property other than goods, Accounts, Investment Property,
and Negotiable Collateral.
"GOVERNING DOCUMENTS" means, with respect to any Person, the certificate or
articles of incorporation, by-laws, or other organizational documents of such
Person.
"GOVERNMENTAL AUTHORITY" means any federal, state, local, or other
governmental or administrative body, instrumentality, department, or agency or
any court, tribunal, administrative hearing body, arbitration panel, commission,
or other similar dispute-resolving panel or body.
"GUARANTEED OBLIGATIONS" has the meaning set forth in SECTION 18.1.
"GUARANTOR" means (a) Holdings, (b) each Subsidiary of Holdings other than
a Foreign Subsidiary or the Borrowers, and (c) each other Person that guarantees
all or any part of the Obligations.
"GUARANTY" means that certain general continuing guaranty executed and
delivered by each Guarantor in favor of Agent, for the benefit of the Lender
Group, in form and substance reasonably satisfactory to Agent or, in the case of
Holdings, the provisions set forth in SECTION 18.
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"HAZARDOUS MATERIALS" means (a) substances that are defined or listed in,
or otherwise classified pursuant to, any applicable Environmental Laws as
"hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum products, natural gas, natural gas
liquids, synthetic gas, drilling fluids, produced waters, and other wastes
associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"HEDGE AGREEMENT" means any and all transactions, agreements and other
documents now existing or hereafter entered into between any of the Loan Parties
and their Subsidiaries and any of Xxxxx Fargo and its Affiliates, that provide
for an interest rate, credit, commodity or equity swap, cap, floor, collar,
forward foreign exchange transaction, currency swap, cross currency rate swap,
currency option, or any combination of, or option with respect to, these or
similar transactions, for the purpose of hedging such Loan Party's or
Subsidiary's exposure to fluctuations in interest or exchange rates, loan,
credit exchange, security or currency valuations or commodity prices.
"HOLDINGS" has the meaning set forth in the preamble to this Agreement.
"INDEBTEDNESS" means (a) all obligations for borrowed money, (b) all
obligations evidenced by bonds, debentures, notes, or other similar instruments
and all reimbursement or other obligations in respect of letters of credit,
bankers acceptances, and all net obligations under interest rate swaps or other
financial products, (c) all obligations under Capital Leases, (d) all
obligations or liabilities of others secured by a Lien on any asset,
irrespective of whether such obligation or liability is assumed, (e) all
obligations for the deferred purchase price of assets (other than trade debt
incurred in the ordinary course of business and repayable in accordance with
customary trade practices), and (f) any obligation guaranteeing or intended to
guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
discounted, or sold with recourse) any obligation of any other Person.
"INDEMNIFIED LIABILITIES" has the meaning set forth in SECTION 11.3.
"INDEMNIFIED PERSON" has the meaning set forth in SECTION 11.3.
"INDENTURE" means the Indenture, dated as of November 1, 1996, as
supplemented, between AMTROL (f/k/a AMTROL Acquisition, Inc.), as Issuer, and
The Bank of New York, as trustee, governing the Senior Subordinated Notes.
"INSOLVENCY PROCEEDING" means any proceeding commenced by or against any
Person under any provision of the Bankruptcy Code or under any other state or
federal bankruptcy or insolvency law, assignments for the benefit of creditors,
formal or informal moratoria, compositions, extensions generally with creditors,
or proceedings seeking reorganization, arrangement, or other similar relief.
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"INTANGIBLE ASSETS" means, with respect to any Person, that portion of the
book value of all of such Person's assets that would be treated as intangibles
under GAAP.
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement, dated as of
the Closing Date, by and among the Other Senior Lenders, Agent and Lenders, and
acknowledged by each Borrower and each Guarantor, the form and substance of
which is reasonably satisfactory to Agent.
"INTEREST PERIOD" means, with respect to each LIBOR Rate Loan, a period
commencing on the date of the making of such LIBOR Rate Loan and ending 1, 2, 3,
or 6 months thereafter; PROVIDED, HOWEVER, that (a) if any Interest Period would
end on a day that is not a Business Day, such Interest Period shall be extended
(subject to clauses (c)-(e) below) to the next succeeding Business Day, (b)
interest shall accrue at the applicable rate based upon the LIBOR Rate from and
including the first day of each Interest Period to, but excluding, the day on
which any Interest Period expires, (c) any Interest Period that would end on a
day that is not a Business Day shall be extended to the next succeeding Business
Day unless such Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Business Day, (d) with respect
to an Interest Period that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period), the Interest Period shall end on the
last Business Day of the calendar month that is 1, 2, 3, or 6 months after the
date on which the Interest Period began, as applicable, and (e) Borrowers (or
Administrative Borrower on behalf thereof) may not elect an Interest Period
which will end after the Maturity Date.
"INVENTORY" means all Borrowers' now owned or hereafter acquired right,
title, and interest with respect to inventory, including goods held for sale or
lease or to be furnished under a contract of service, goods that are leased by a
Borrower as lessor, goods that are furnished by a Borrower under a contract of
service, and raw materials, work in process, or materials used or consumed in a
Borrower's business.
"INVESTMENT" means, with respect to any Person, any investment by such
Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practices), purchases or other
acquisitions for consideration of Indebtedness or Stock, and any other items
that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP.
"INVESTMENT PROPERTY" means all of Borrowers' now owned or hereafter
acquired right, title, and interest with respect to "investment property" as
that term is defined in the Code, and any and all supporting obligations in
respect thereof.
"IRC" means the Internal Revenue Code of 1986, as in effect from time to
time.
"ISSUING LENDER" means Foothill or any other Lender that, at the request of
Administrative Borrower and with the consent of Agent agrees, in such Lender's
sole discretion,
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to become an Issuing Lender for the purpose of issuing L/Cs or L/C Undertakings
pursuant to SECTION 2.12.
"L/C" has the meaning set forth in SECTION 2.12(a).
"L/C DISBURSEMENT" means a payment made by the Issuing Lender pursuant to a
Letter of Credit.
"L/C UNDERTAKING" has the meaning set forth in SECTION 2.12(a).
"LENDER" and "LENDERS" have the respective meanings set forth in the
preamble to this Agreement, and shall include any other Person made a party to
this Agreement in accordance with the provisions of SECTION 14.1.
"LENDER GROUP" means, individually and collectively, each of the Lenders
(including the Issuing Lender) and Agent.
"LENDER GROUP EXPENSES" means all (a) costs or expenses (including taxes,
and insurance premiums) required to be paid by a Borrower under any of the Loan
Documents that are paid or incurred by any one or more members of the Lender
Group, (b) fees or charges paid or incurred by any one or more members of the
Lender Group in connection with the Lender Group's transactions with Borrowers,
including, fees or charges for photocopying, notarization, couriers and
messengers, telecommunication, public record searches (including tax lien,
judgment, and UCC searches and including searches with the patent and trademark
office, the copyright office, or the department of motor vehicles), filing,
recording, publication, appraisal (including periodic Collateral appraisals,
field examinations or business valuations to the extent of the fees and charges
(and up to the amount of any limitation) contained in this Agreement), real
estate surveys, real estate title policies and endorsements, and environmental
audits, (c) costs and expenses incurred by any one or more members of the Lender
Group in the disbursement of funds to or for the account of Borrowers (by wire
transfer or otherwise), (d) charges paid or incurred by any one or more members
of the Lender Group resulting from the dishonor of checks, (e) reasonable costs
and expenses paid or incurred by any one or more members of the Lender Group to
correct any default or enforce any provision of the Loan Documents, or in
gaining possession of, maintaining, handling, preserving, storing, shipping,
selling, preparing for sale, or advertising to sell the Collateral, or any
portion thereof, irrespective of whether a sale is consummated, (f) audit fees
and expenses of Agent related to audit examinations of the Books to the extent
of the fees and charges (and up to the amount of any limitation) contained in
this Agreement, (g) reasonable costs and expenses of third party claims or any
other suit paid or incurred by any one or more members of the Lender Group in
enforcing or defending the Loan Documents or in connection with the transactions
contemplated by the Loan Documents or any one or more members of the Lender
Group's relationship with any Borrower or any guarantor of the Obligations, (h)
Agent's and each Lender's reasonable fees and expenses (including attorneys
fees) incurred in advising, structuring, drafting, reviewing, administering, or
amending the Loan Documents, and (i) Agent's and each Lender's reasonable fees
and expenses (including attorneys fees) incurred in terminating, enforcing
(including attorneys fees and expenses incurred in connection with a "workout,"
a "restructuring," or an Insolvency Proceeding concerning any Borrower or in
exercising rights or remedies under the Loan Documents), or defending the Loan
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Documents, irrespective of whether suit is brought, or in taking any Remedial
Action concerning the Collateral.
"LENDER-RELATED PERSON" means, with respect to any Lender, such Lender,
together with such Lender's Affiliates, and the officers, directors, employees,
and agents of such Lender.
"LETTER OF CREDIT" means an L/C or an L/C Undertaking, as the context
requires.
"LETTER OF CREDIT USAGE" means, as of any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit plus 100% of the
amount of outstanding time drafts accepted by an Underlying Issuer as a result
of drawings under Underlying Letters of Credit.
"LIBOR DEADLINE" has the meaning set forth in SECTION 2.13(b)(i).
"LIBOR NOTICE" means a written notice in the form of EXHIBIT L-1.
"LIBOR OPTION" has the meaning set forth in SECTION 2.13(a).
"LIBOR RATE" means, for each Interest Period for each LIBOR Rate Loan, the
rate per annum determined by Agent (rounded upwards, if necessary, to the next
1/16%) by dividing (a) the Base LIBOR Rate for such Interest Period, by (b) 100%
minus the Reserve Percentage. The LIBOR Rate shall be adjusted on and as of the
effective day of any change in the Reserve Percentage.
"LIBOR RATE LOAN" means each portion of an Advance or the Term Loan A that
bears interest at a rate determined by reference to the LIBOR Rate.
"LIBOR RATE MARGIN" means 2.50 percentage points.
"LIBOR RATE TERM LOAN A MARGIN" means 3.50 percentage points.
"LIEN" means any interest in an asset securing an obligation owed to, or a
claim by, any Person other than the owner of the asset, whether such interest
shall be based on the common law, statute, or contract, whether such interest
shall be recorded or perfected, and whether such interest shall be contingent
upon the occurrence of some future event or events or the existence of some
future circumstance or circumstances, including the lien or security interest
arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation,
assignment, deposit arrangement, security agreement, conditional sale or trust
receipt, or from a lease, consignment, or bailment for security purposes and
also including reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.
"LOAN ACCOUNT" has the meaning set forth in SECTION 2.10.
"LOAN DOCUMENTS" means this Agreement, the Bank Product Agreements, the
Cash Management Agreements, the
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Contribution Agreement, the Control Agreements, the Disbursement Letter, the Due
Diligence Letter, the Fee Letter, the Guaranty, the Intercreditor Agreement, the
Mortgages, the Officers' Certificate, the Stock Pledge Agreement, any note or
notes executed by a Borrower in connection with this Agreement and payable to a
member of the Lender Group, and any other agreement entered into, now or in the
future, by any Borrower and the Lender Group in connection with this Agreement;
PROVIDED that any representation or warranty made with respect to the Due
Diligence Letter or the Officers' Certificate herein or in any other Loan
Document shall only be made as to statements therein or materials furnished
thereunder as of the date of such letter, certificate or the delivery of
materials thereunder, as the case may be.
"LOAN PARTIES" means Borrowers and Guarantors.
"MARYLAND REAL PROPERTY" has the meaning set forth in SECTION 3.2(d).
"MATERIAL ADVERSE CHANGE" means (a) a material adverse change in the
business, operations, results of operations, assets, liabilities or condition
(financial or otherwise) of Holdings and its Subsidiaries taken as a whole, (b)
a material impairment of any Loan Party's ability to perform its obligations
under the Loan Documents to which it is a party or of the Lender Group's ability
to enforce the Obligations or realize upon the Collateral, or (c) a material
impairment of the enforceability or priority of the Agent's Liens with respect
to the Collateral as a result of an action or failure to act on the part of a
Loan Party.
"MATURITY DATE" has the meaning set forth in SECTION 3.4.
"MAXIMUM REVOLVER AMOUNT" means, as of any date of determination, the
difference between (a) $35,000,000 and (b) the aggregate outstanding principal
amount of Term Loan A.
"MORTGAGES" means, individually and collectively, one or more mortgages,
deeds of trust, or deeds to secure debt, executed and delivered by a Borrower in
favor of Agent, for the benefit of the Lender Group, in form and substance
reasonably satisfactory to Agent, that encumber the Real Property Collateral and
the related improvements thereto.
"NEGOTIABLE COLLATERAL" means all of Borrowers' now owned and hereafter
acquired right, title, and interest with respect to letters of credit, letter of
credit rights, instruments, promissory notes, drafts, documents, and chattel
paper (including electronic chattel paper and tangible chattel paper), and any
and all supporting obligations in respect thereof.
"NET LIQUIDATION PERCENTAGE" means the percentage of the book value of
Borrowers' Inventory or Equipment, as the case may be, that is estimated to be
recoverable in an orderly liquidation of such Inventory or Equipment,
respectively, such percentage to be as determined from time to time by a
qualified appraisal company selected by Agent.
"NORTH AMERICAN EBITDA" means, for any period, Consolidated EBITDA,
adjusted to Agent's satisfaction to include solely the North American Operations
and to exclude the operations of the Foreign Subsidiaries (other than AMTROL
Canada).
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"NORTH AMERICAN OPERATIONS" means the operations of Borrowers and AMTROL
Canada.
"OBLIGATIONS" means (a) all loans (including the Term Loans), Advances,
debts, principal, interest (including any interest that, but for the provisions
of the Bankruptcy Code, would have accrued), contingent reimbursement
obligations with respect to outstanding Letters of Credit, premiums, liabilities
(including all amounts charged to Borrowers' Loan Account pursuant hereto),
obligations, fees (including the fees provided for in the Fee Letter), charges,
costs, Lender Group Expenses (including any fees or expenses that, but for the
provisions of the Bankruptcy Code, would have accrued), covenants, and duties of
any kind and description owing by Borrowers to the Lender Group pursuant to or
evidenced by the Loan Documents and irrespective of whether for the payment of
money, whether direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, and (b) all Bank Product Obligations. Any
reference in this Agreement or in the Loan Documents to the Obligations shall
include all amendments, changes, extensions, modifications, renewals
replacements, substitutions, and supplements, thereto and thereof, as
applicable, both prior and subsequent to any Insolvency Proceeding.
"OFFICERS' CERTIFICATE" means the representations and warranties of
officers form submitted by Agent to Administrative Borrower, together with
Borrowers' completed responses to the inquiries set forth therein dated as of
the delivery date, the form and substance of such responses to be reasonably
satisfactory to Agent.
"ORIGINATING LENDER" has the meaning set forth in SECTION 14.1(e).
"OTHER SENIOR DEBT" means the Indebtedness of the Loan Parties incurred
pursuant to the Other Senior Debt Loan Agreement.
"OTHER SENIOR DEBT LOAN AGREEMENT" means the Loan Agreement, dated as of
December 26, 2001, among Holdings, as guarantor, AMTROL and Water Soft Inc., as
borrowers and the Other Senior Lenders, as lenders.
"OTHER SENIOR DEBT LOAN DOCUMENTS" means the Other Senior Debt Loan
Agreement and each other agreement, guaranty, note, mortgage or other document
delivered pursuant thereto.
"OTHER SENIOR LENDERS" means Cypress Merchant Banking Partners L.P. and
Cypress Offshore Partners L.P. and their successors and assigns as lenders under
the Other Senior Debt Loan Agreement.
"OVERADVANCE" has the meaning set forth in SECTION 2.5.
"PARTICIPANT" has the meaning set forth in SECTION 14.1(e).
"PARTICIPANT REGISTER" has the meaning set forth in SECTION 14.1(h).
"PAY-OFF LETTER" means a letter, in form and substance reasonably
satisfactory to Agent, from Existing Lenders to Agent respecting the amount
necessary to repay in full all of the
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obligations of Borrowers owing to Existing Lenders and obtain a release of all
of the Liens existing in favor of Existing Lenders in and to the assets of
Borrowers.
"PERMITTED DISCRETION" means a determination made in good faith and in the
exercise of reasonable (from the perspective of a secured asset-based lender)
business judgment.
"PERMITTED DISPOSITIONS" means (a) sales or other dispositions by Borrowers
of Equipment that is substantially worn, damaged, or obsolete in the ordinary
course of the applicable Borrower's business, (b) sales by Borrowers of
Inventory to buyers in the ordinary course of business, (c) the use or transfer
of money or Cash Equivalents by Borrowers in a manner that is not prohibited by
the terms of this Agreement or the other Loan Documents, (d) the licensing by
Borrowers, on a non-exclusive basis, of patents, trademarks, copyrights, and
other intellectual property rights in the ordinary course of the applicable
Borrower's business, (e) the merger or consolidation of any wholly-owned
Subsidiary with or into, the liquidation of any wholly-owned Subsidiary into, or
the disposition of any or all of the assets of any wholly-owned Subsidiary to,
any Borrower or any Guarantor (other than Holdings) so long as (i) no other
provision of this Agreement would be violated thereby, (ii) Administrative
Borrower gives Agent at least 30 days' prior written notice of such merger,
consolidation, liquidation or disposition, (iii) Agent's rights in any of the
Collateral, including, without limitation, the existence, perfection and
priority of the Agent's Liens therein, are not adversely affected by such
merger, consolidation, liquidation or disposition, (iv) Agent determines in its
Permitted Discretion that such merger, consolidation, liquidation or disposition
is not materially disadvantageous to the Lenders and (v) such Borrower or
Guarantor is the surviving corporation, (f) the D-24 Production Line
Transaction, PROVIDED, that (i) immediately before and after giving effect to
such transaction no Default or Event of Default shall exist, (ii) no other
provision of this Agreement would be violated thereby, (iii) the consideration
received by AMTROL shall be in an amount at least equal to the appraised value
of such equipment determined by Agent prior to the Closing Date and the proceeds
shall consist solely of cash and (iv) the net cash proceeds of such sale or
other disposition are applied pursuant to SECTION 2.4(C)(II), (g) the sale or
other disposition of the stock or assets of AMTROL Germany so long as (i)
immediately before and after giving effect to such transaction no Default or
Event of Default shall exist, (ii) no other provisions of this Agreement would
be violated thereby, (iii) Administrative Borrower gives Agent at least 30 days'
prior written notice of such sale or other disposition, (iv) Agent determines in
its Permitted Discretion that such sale or other disposition is not materially
disadvantageous to the Lenders, (v) the net cash proceeds of such sale or other
disposition are applied pursuant to SECTION 2.4(C)(IV) and (vi) the
consideration received by AMTROL shall be in an amount at least equal to
$1,000,000 and shall consist solely of cash and (h) other sales or dispositions
by Borrowers of any other assets (other than capital Stock of any Subsidiary of
Holdings or Real Property necessary or useful in the business or operations of
AMTROL or any of its Subsidiaries) to the extent the net cash proceeds received
from all such sales and dispositions permitted under this clause (h) shall not
exceed $250,000 in any fiscal year of Borrowers; PROVIDED THAT each such sale or
disposition shall be in an amount not less than the fair market value of such
asset and the consideration received shall consist solely of cash.
"PERMITTED HOLDER" means (a) Cypress and (b) any executive officer of
Holdings or AMTROL on the Closing Date or any individual who becomes an
executive officer of
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Holdings or AMTROL at a time when Cypress beneficially owns more than a majority
of the capital Stock of Holdings, their Family Members and their Family Trusts.
"PERMITTED INVESTMENTS" means (a) investments in Cash Equivalents, (b)
investments in negotiable instruments for collection, (c) advances made in
connection with purchases of goods or services in the ordinary course of
business, (d) investments by either Borrower in the other Borrower, (e)
investments (including debt obligations) 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, (f) guarantee obligations permitted
pursuant to SECTION 7.1, (g) loans, advances and equity contributions
outstanding on the Closing Date described in Schedule P-2 hereto and (h)
additional loans and advances to, and equity contributions in, any Foreign
Subsidiary, PROVIDED that at no time shall the aggregate outstanding amount of
all loans, advances and contributions made pursuant to this clause (h) exceed
$500,000.
"PERMITTED LIENS" means (a) Liens held by Agent for the benefit of Agent
and the Lenders, (b) Liens for unpaid taxes that either (i) are not yet
delinquent, or (ii) do not constitute an Event of Default hereunder and are the
subject of Permitted Protests, (c) Liens set forth on Schedule P-1, (d) the
interests of lessors under operating leases, (e) purchase money Liens or the
interests of lessors under Capital Leases to the extent that such Liens or
interests secure Permitted Purchase Money Indebtedness or payables arising from
the purchase by any Borrower or any Guarantor of any equipment or goods in the
ordinary course of business, PROVIDED that such payables shall not constitute
Indebtedness, and so long as such Lien attaches only to the asset purchased or
acquired and the proceeds thereof, (f) Liens arising by operation of law in
favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or
suppliers, incurred in the ordinary course of business and not in connection
with the borrowing of money, and which Liens either (i) are for sums not yet
delinquent, or (ii) are the subject of Permitted Protests, (g) Liens arising
from deposits made in connection with obtaining worker's compensation,
unemployment insurance or other types of social security, (h) Liens or deposits
to secure performance of bids, tenders, or leases incurred in the ordinary
course of business and not in connection with the borrowing of money, (i) Liens
granted as security for surety or appeal bonds in connection with obtaining such
bonds in the ordinary course of business, (j) Liens resulting from any judgment
or award that is not an Event of Default hereunder, (k) Liens with respect to
the Real Property Collateral that are exceptions to the commitments for title
insurance issued in connection with the Mortgages, as accepted by Agent, (l)
with respect to any Real Property that is not part of the Real Property
Collateral, easements, rights of way, zoning restrictions, minor defects or
irregularities in title that do not materially interfere with or impair the use
or operation thereof, (k) Liens created pursuant to the Other Senior Debt Loan
Documents and securing the Other Senior Debt, to the extent such Liens are
subordinate to the Agent's Liens and subject to the Intercreditor Agreement, (l)
leases or subleases granted to others not interfering in any material respect
with the business of Borrowers or its Subsidiaries and (m) other Liens securing
Indebtedness in an aggregate amount outstanding at any one time not in excess of
$50,000.
"PERMITTED PROTEST" means the right of the applicable Borrower to protest
any Lien (other than any such Lien that secures the Obligations), taxes (other
than payroll taxes or taxes that are the subject of a United States federal tax
lien), or rental payment, provided that (a) a
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reserve with respect to such obligation is established on the Books in such
amount as is required under GAAP, (b) any such protest is instituted promptly
and prosecuted diligently by the applicable Borrower in good faith, and (c)
Agent is satisfied that, while any such protest is pending, there will be no
material impairment of the enforceability, validity, or priority of any of the
Agent's Liens.
"PERMITTED PURCHASE MONEY INDEBTEDNESS" means, as of any date of
determination, Purchase Money Indebtedness incurred after the Closing Date in an
aggregate amount outstanding at any one time not in excess of $250,000.
"PERSON" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.
"PERSONAL PROPERTY COLLATERAL" means all Collateral other than Real
Property.
"POST-CLOSING BANK ACCOUNTS" has the meaning set forth in
SECTION 3.2(c).
"PROJECTIONS" means AMTROL's forecasted (a) balance sheets, (b) profit
and loss statements, (c) cash flow statements, all prepared on a consistent
basis with AMTROL's historical financial statements, except to the extent
necessary to take into account changes in GAAP, together with appropriate
supporting details and a statement of underlying assumptions.
"PRO RATA SHARE" means:
(a) with respect to a Lender's obligation to make Advances and
receive payments of principal, interest, fees, costs, and expenses with
respect thereto, (i) prior to the Revolver Commitment being reduced to
zero, the percentage obtained by dividing (x) such Lender's Revolver
Commitment, by (y) the aggregate Revolver Commitments of all Lenders, and
(ii) from and after the time that the Revolver Commitment has been
terminated or reduced to zero, the percentage obtained by dividing (x) the
aggregate principal amount of such Lender's Advances by (y) the aggregate
principal amount of all Advances,
(b) with respect to a Lender's obligation to participate in
Letters of Credit, to reimburse the Issuing Lender, and to receive payments
of fees with respect thereto, (i) prior to the Revolver Commitment being
reduced to zero, the percentage obtained by dividing (x) such Lender's
Revolver Commitment, by (y) the aggregate Revolver Commitments of all
Lenders and (ii) from and after the time that the Revolver Commitment has
been terminated or reduced to zero, the Percentage obtained by dividing (x)
the aggregate principal amount of such Lender's Advances by (y) the
aggregate principal amount of all Advances,
(c) with respect to a Lender's obligation to make the Term Loan A
and receive payments of interest, fees, and principal with respect thereto,
(i) prior to the making of the Term Loan A, the percentage obtained by
dividing (x) such Lender's Term Loan A Commitment, by (y) the aggregate
amount of all Lenders' Term Loan
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A Commitments, and (ii) from and after the making of the Term Loan A, the
percentage obtained by dividing (x) the principal amount of such Lender's
portion of the Term Loan A Amount by (y) the Term Loan A Amount, and
(d) with respect to a Lender's obligation to make the Term Loan B
and receive payments of interest, fees, and principal with respect thereto,
(i) prior to the making of the Term Loan B, the percentage obtained by
dividing (x) such Lender's Term Loan B Commitment, by (y) the aggregate
amount of all Lenders' Term Loan B Commitments, and (ii) from and after the
making of the Term Loan B, the percentage obtained by dividing (x) the
principal amount of such Lender's portion of the Term Loan B Amount by (y)
the Term Loan B Amount, and
(e) with respect to all other matters as to a particular Lender
(including the indemnification obligations arising under SECTION 16.7), the
percentage obtained by dividing (i) such Lender's Revolver Commitment plus
the unpaid amount of such Lender's portion of the outstanding Term Loan A
plus the unpaid principal amount of such Lender's portion of the
outstanding Term Loan B, by (ii) the aggregate amount of Revolver
Commitments of all Lenders plus the unpaid principal amount of the
outstanding Term Loan A plus the unpaid principal amount of the Term Loan
B; PROVIDED, HOWEVER, that in the event the Revolver Commitments have been
terminated or reduced to zero, Pro Rata Share shall be the percentage
obtained by dividing (A) the principal amount of such Lender's Advances
plus the unpaid principal amount of such Lender's portion of the
outstanding Term Loan A plus the unpaid principal amount of such Lender's
portion of the outstanding Term Loan B, by (B) the principal amount of all
outstanding Advances plus the unpaid principal amount of the outstanding
Term Loan A plus the unpaid principal amount of the outstanding Term
Loan B.
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within 90 days after, the acquisition of any fixed assets for the purpose
of financing all or any part of the acquisition cost thereof.
"RATING AGENCIES" has the meaning set forth in SECTION 2.18.
"REAL PROPERTY" means any estates or interests in real property now
owned or hereafter acquired by any Borrower and the improvements thereto.
"REAL PROPERTY COLLATERAL" means the parcel or parcels of Real
Property identified on Schedule R-1 and any Real Property hereafter acquired by
a Borrower.
"RECORD" means information that is inscribed on a tangible medium or
which is stored in an electronic or other medium and is retrievable in
perceivable form.
"REGISTER" has the meaning set forth in SECTION 14.1(h).
"REMEDIAL ACTION" means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate, or in any way address
Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous
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Materials so they do not migrate or endanger or threaten to endanger public
health or welfare or the indoor or outdoor environment, (c) perform any
pre-remedial studies, investigations, or post-remedial operation and maintenance
activities, or (d) conduct any other actions authorized by 42 U.S.C. ss. 9601.
"REPORT" has the meaning set forth in SECTION 16.17.
"REQUIRED AVAILABILITY" means Excess Availability and unrestricted
cash and Cash Equivalents in an amount of not less than $7,000,000.
"REQUIRED LENDERS" means, at any time, Lenders whose Pro Rata Shares
aggregate 50.1% or more as determined pursuant to clause (e) of the definition
of "Pro Rata Share".
"RESERVE PERCENTAGE" means, on any day, for any Lender, the maximum
percentage prescribed by the Board of Governors of the Federal Reserve System
(or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of that Lender, but so
long as such Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.
"REVOLVER COMMITMENT" means, with respect to each Lender, its Revolver
Commitment, and, with respect to all Lenders, their Revolver Commitments, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on Schedule C-1 or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of SECTION 14.1.
"REVOLVER USAGE" means, as of any date of determination, the sum of
(a) the then extant amount of outstanding Advances, plus (b) the then extant
amount of the Letter of Credit Usage.
"RISK PARTICIPATION LIABILITY" means, as to each Letter of Credit, all
reimbursement obligations of Borrowers to the Issuing Lender with respect to an
L/C Undertaking, consisting of (a) the amount available to be drawn or which may
become available to be drawn, (b) all amounts that have been paid by the Issuing
Lender to the Underlying Issuer to the extent not reimbursed by Borrowers,
whether by the making of an Advance or otherwise, and (c) all accrued and unpaid
interest, fees, and expenses payable with respect thereto.
"SEC" means the United States Securities and Exchange Commission and
any successor thereto.
"SECURITIES ACCOUNT" means a "securities account" as that term is
defined in the Code.
"SENIOR SUBORDINATED NOTES" means the 105/8% Senior Subordinated Notes
due 2006 issued by AMTROL under the Indenture.
"SETTLEMENT" has the meaning set forth in SECTION 2.3(F)(I).
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"SETTLEMENT DATE" has the meaning set forth in SECTION 2.3(f)(i).
"SOLVENT" means, with respect to any Person on a particular date, that such
Person is not insolvent (as such term is defined in the Uniform Fraudulent
Transfer Act).
"STOCK" means all shares, options, warrants, interests, participations, or
other equivalents (regardless of how designated) of or in a Person, whether
voting or nonvoting, including common stock, preferred stock, or any other
"equity security" (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the SEC under the Exchange Act).
"STOCK PLEDGE AGREEMENT" means a stock pledge agreement, in form and
substance reasonably satisfactory to Agent, executed and delivered by Holdings
and each of its Subsidiaries that are not Foreign Subsidiaries that owns Stock
of a Subsidiary of Holdings.
"STOCKHOLDERS' AGREEMENTS" means the existing stockholders' agreements
entered into by Holdings and any holders of its Stock governing the terms and
relative rights of such Stock.
"SUBSIDIARY" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.
"SWING LENDER" means Foothill or any other Lender that, at the request of
Administrative Borrower and with the consent of Agent agrees, in such Lender's
sole discretion, to become the Swing Lender hereunder.
"SWING LOAN" has the meaning set forth in SECTION 2.3(d)(i).
"TAXES" has the meaning set forth in SECTION 16.11(e).
"TERM LOAN" means either Term Loan A or Term Loan B and "TERM LOANS" means,
collectively, Term Loan A and Term Loan B.
"TERM LOAN A" has the meaning set forth in SECTION 2.2.
"TERM LOAN A AMOUNT" means, as of any date of determination, the lower of
(a) $10,500,000 and (b) the sum of (i) 80% of the Net Liquidation Percentage of
Eligible Equipment and (ii) 60% of the Fair Market Value of Borrowers' Real
Property Collateral; PROVIDED, HOWEVER, that if Borrowers fail to satisfy the
conditions set forth in SECTION 3.2(d) on or prior to the date set forth
therein, the value attributable to the Maryland Real Property shall not be
included for purposes of this clause (b) until such time as the conditions set
forth therein are satisfied in full.
"TERM LOAN A COMMITMENT" means, with respect to each Lender, its Term Loan
A Commitment, and, with respect to all Lenders, their Term Loan A Commitments,
in each case
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as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on SCHEDULE C-1 or on the signature page of the Assignment
and Acceptance pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of SECTION 14.1.
"TERM LOAN B" has the meaning set forth in SECTION 2.2.
"TERM LOAN B AMOUNT" means the lower of (a) $7,500,000 and (b) 50% of the
North American Consolidated EBITDA for the 4 fiscal quarter period ended on
October 31, 2001.
"TERM LOAN B COMMITMENT" means, with respect to each Lender, its Term Loan
B Commitment, and, with respect to all Lenders, their Term Loan B Commitments,
in each case as such Dollar amounts are set forth beside such Lender's name
under the applicable heading on SCHEDULE C-1 or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of SECTION 14.1.
"TOTAL COMMITMENT" means, with respect to each Lender, its Total
Commitment, and, with respect to all Lenders, their Total Commitments, in each
case as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on Schedule C-1 attached hereto or on the signature page of
the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of SECTION 14.1.
"UNDERLYING ISSUER" means a third Person which is the beneficiary of an L/C
Undertaking and which has issued a letter of credit at the request of the
Issuing Lender for the benefit of Borrowers.
"UNDERLYING LETTER OF CREDIT" means a letter of credit that has been issued
by an Underlying Issuer.
"VOIDABLE TRANSFER" has the meaning set forth in SECTION 17.7.
"XXXXX FARGO" means Xxxxx Fargo Bank, National Association, a national
banking association.
"XXXXXX WAREHOUSE" means the portion of the warehouse leased by AMTROL from
Xxxxxx Warehouse Co., Inc. located at 000 Xxxxxxxx Xxxxxx, Xxxxx Xxxxx,
Xxxxxxxxx.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrowers" or the term "AMTROL" is used in respect of a financial
covenant or a related definition, it shall be understood to mean AMTROL and its
Subsidiaries on a consolidated basis unless the context clearly requires
otherwise.
1.3 CODE. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein.
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1.4 CONSTRUCTION. Unless the context of this Agreement or any other
Loan Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein). Any reference herein to any Person shall be construed to
include such Person's successors and assigns. Any requirement of a writing
contained herein or in the other Loan Documents shall be satisfied by the
transmission of a Record and any Record transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein. If such Record is transmitted via electronic
mail, such Record shall be followed promptly by a written copy of such Record,
PROVIDED that the failure or delay by Agent or any Lender to so provide such
copy to any Loan Party shall not render such Record invalid or otherwise
prejudice the rights of Agent or any Lender.
1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits
attached to this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 REVOLVER ADVANCES.
(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, each Lender with a Revolver Commitment agrees
(severally, not jointly or jointly and severally) to make advances ("ADVANCES")
to Borrowers in an amount at any one time outstanding not to exceed such
Lender's Pro Rata Share of an amount equal to the lesser of (i) the Maximum
Revolver Amount less the Letter of Credit Usage, and (ii) the Borrowing Base
less the Letter of Credit Usage. For purposes of this Agreement, "BORROWING
BASE," as of any date of determination, shall mean the result of:
(x) the lesser of
(i) 85% of the amount of Eligible Accounts, less the amount,
if any, of the Dilution Reserve, and
(ii) an amount equal to Borrowers' Collections with respect
to Accounts for the immediately preceding 75 day period, plus
(y) the lowest of
(i) $9,000,000,
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(ii) 80% of the product of (A) the then extant Net
Liquidation Percentage and (B) the book value of Eligible Inventory;
(iii) the sum of (A) 70% of the book value of Eligible
Inventory consisting of finished goods and (B) the lesser of (1) 25% of the
book value of Eligible Inventory consisting of raw materials, and (2) 120%
of the amount of credit availability created by clause (iii)(A) above,
and
(iv) 85% of the amount of credit availability created by
clause (x) above, minus
(z) the sum of (i) the Bank Product Reserve, (ii) the aggregate
amount of reserves, if any, established by Agent under SECTION 2.1(B)
and (iii) to the extent any Collateral is located at the Xxxxxx
Warehouse and the landlord of such location has not executed a
Collateral Access Agreement, the greater of (A) $50,000 and (B) the
amount equal to four months rent on the Xxxxxx Warehouse.
(b) Anything to the contrary in this SECTION 2.1 notwithstanding,
Agent shall have the right to establish reserves in such amounts, and with
respect to such matters, as Agent in its Permitted Discretion shall deem
necessary or appropriate, against the Borrowing Base, including reserves with
respect to (i) sums that Borrowers are required to pay (such as taxes,
assessments, insurance premiums, or, in the case of leased assets, rents or
other amounts payable under such leases) and has failed to pay under any Section
of this Agreement or any other Loan Document, (ii) amounts owing by Borrowers to
any Person to the extent secured by a Lien on, or trust over, any of the
Collateral (other than any existing Permitted Lien set forth on Schedule P-1
which is specifically identified thereon as entitled to have priority over the
Agent's Liens), which Lien or trust, in the Permitted Discretion of Agent likely
would have a priority superior to the Agent's Liens (such as Liens or trusts in
favor of landlords, warehousemen, carriers, mechanics, materialmen, laborers, or
suppliers, or Liens or trusts for ad valorem, excise, sales, or other taxes
where given priority under applicable law) in and to such item of the
Collateral, and (iii) warranties and rebates. Promptly after the establishment
of reserves or any changes to amounts attributable to, or in the calculation of,
Eligible Accounts, Eligible Equipment or Eligible Inventory or a redetermination
of the Term Loan A Amount pursuant to SECTION 2.2(A)(III), Agent shall notify
Administrative Borrower of such changes, PROVIDED that the failure or delay in
notifying Administrative Borrower shall not make such establishment or change
invalid or otherwise prejudice the rights of Agent or any Lender. In addition to
the foregoing, Agent shall have the right to have the Inventory reappraised by a
qualified appraisal company selected by Agent from time to time for the purpose
of redetermining the Net Liquidation Percentage of the Eligible Inventory
portion of the Collateral and, as a result, redetermining the Borrowing Base;
PROVIDED that so long as no Event of Default shall have occurred and be
continuing, no more than three such appraisals shall be conducted by Agent
during any 12-month period.
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(c) The Lenders with Revolver Commitments shall have no
obligation to make additional Advances hereunder to the extent such additional
Advances would cause the Revolver Usage to exceed the Maximum Revolver Amount.
(d) Amounts borrowed pursuant to this Section may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time
during the term of this Agreement.
2.2 TERM LOANS.
(a) TERM LOAN A.
(i) Subject to the terms and conditions of this Agreement,
on the Closing Date each Lender with a Term Loan A Commitment agrees
(severally, not jointly or jointly and severally) to make term loans
(collectively, the "TERM LOAN A") to Borrowers in an amount equal to such
Lender's Pro Rata Share of the Term Loan A Amount. The Term Loan A shall be
repaid on the first day of each calendar quarter commencing April 1, 2002
in an amount equal to $426,756.83.
(ii) The outstanding unpaid principal balance and all
accrued and unpaid interest under the Term Loan A shall be due and payable
on the date of termination of this Agreement, whether by its terms, by
prepayment, or by acceleration. All amounts outstanding under the Term Loan
A shall constitute Obligations.
(iii) Agent may (x) reappraise the Eligible Equipment by a
qualified appraisal company selected by Agent for the purpose of
determining the Net Liquidation Percentage of the Eligible Equipment
portion of the Collateral and (y) have reappraised the Real Property
Collateral by a qualified appraisal company selected by Agent for the
purpose of determining the Fair Market Value of the Real Estate Collateral
and, as a result of such reappraisals, redetermining the Term Loan A
Amount; PROVIDED, HOWEVER, that between the Closing Date and the first
anniversary of the Closing Date, Agent may not reappraise the Equipment or
the Real Property Collateral more than once during such period, and, after
the first anniversary of the Closing Date, Agent shall not reappraise the
Equipment or the Real Property Collateral more than once during any
18-month period.
(b) TERM LOAN B. Subject to the terms and conditions of this
Agreement, on the Closing Date each Lender with a Term Loan B Commitment agrees
(severally, not jointly or jointly and severally) to make certain term loans
(collectively, the "TERM LOAN B") to Borrowers in an amount equal to such
Lender's Pro Rata Share of the Term Loan B Amount. The Term Loan B shall be
repaid on the first day of each calendar quarter commencing April 1, 2002 in an
amount equal to $312,500.00.
The outstanding unpaid principal balance and all accrued and unpaid
interest under the Term Loan B shall be due and payable on the earlier of (i)
the date that is the third anniversary of the Closing Date and (ii) the date of
termination of this Agreement, whether by its terms, by prepayment, or by
acceleration. All amounts outstanding under the Term Loan B shall constitute
Obligations.
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2.3 BORROWING PROCEDURES AND SETTLEMENTS.
(a) PROCEDURE FOR BORROWING BASE RATE LOANS. Each Borrowing of
Base Rate Loans shall be made by an irrevocable written request by an Authorized
Person delivered to Agent (which notice must be received by Agent no later than
10:00 a.m. (California time) on the Business Day prior to the date that is the
requested Funding Date in the case of a request for an Advance or a Term Loan
specifying (i) the amount of such Borrowing, and (ii) the requested Funding
Date, which shall be a Business Day; PROVIDED, HOWEVER, that in the case of a
request for Swing Loan in an amount of $4,000,000, or less, such notice will be
timely received if it is received by Agent no later than 10:00 a.m. (California
time) on the Business Day that is the requested Funding Date) specifying (i) the
amount of such Borrowing, and (ii) the requested Funding Date, which shall be a
Business Day. At Agent's election, in lieu of delivering the above-described
written request, any Authorized Person may give Agent telephonic notice of such
request by the required time, with such telephonic notice to be confirmed in
writing within 24 hours of the giving of such notice.
(b) AGENT'S ELECTION. Promptly after receipt of a request for a
Borrowing pursuant to SECTION 2.3(A), Agent shall elect, in its discretion, (i)
to have the terms of SECTION 2.3(C) apply to such requested Borrowing, or (ii)
if the Borrowing is for an Advance, to request Swing Lender to make a Swing Loan
pursuant to the terms of SECTION 2.3(D) in the amount of the requested
Borrowing; PROVIDED, HOWEVER, that if Swing Lender declines in its sole
discretion to make a Swing Loan pursuant to SECTION 2.3(D), Agent shall elect to
have the terms of SECTION 2.3(C) apply to such requested Borrowing.
(c) MAKING OF ADVANCES.
(i) In the event that Agent shall elect to have the terms of
this SECTION 2.3(c) apply to a requested Borrowing as described in SECTION
2.3(b), then promptly after receipt of a request for a Borrowing pursuant
to SECTION 2.3(a), Agent shall notify the Lenders, not later than 1:00 p.m.
(California time) on the Business Day immediately preceding the Funding
Date applicable thereto, by telecopy, telephone, or other similar form of
transmission, of the requested Borrowing. Each Lender shall make the amount
of such Lender's Pro Rata Share of the requested Borrowing available to
Agent in immediately available funds, to Agent's Account, not later than
10:00 a.m. (California time) on the Funding Date applicable thereto. After
Agent's receipt of the proceeds of such Advances (or such Term Loan, as
applicable), upon satisfaction of the applicable conditions precedent set
forth in SECTION 3 hereof, Agent shall make the proceeds thereof available
to Administrative Borrower on the applicable Funding Date by transferring
immediately available funds equal to such proceeds received by Agent to
Administrative Borrower's Designated Account; PROVIDED, HOWEVER, that,
subject to the provisions of SECTION 2.3(i), Agent shall not request any
Lender to make, and no Lender shall make, any Advance (or its portion of
any Term Loan) if Agent shall have actual knowledge that (1) one or more of
the applicable conditions precedent set forth in SECTION 3 will not be
satisfied on the requested Funding Date for the applicable Borrowing
unless such condition has been waived, or (2) the requested Borrowing
would exceed the Availability on such Funding Date.
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(ii) Unless Agent receives notice from a Lender on or prior
to the Closing Date or, with respect to any Borrowing after the Closing
Date, at least 1 Business Day prior to the date of such Borrowing, that
such Lender will not make available as and when required hereunder to Agent
for the account of Borrowers the amount of that Lender's Pro Rata Share of
the Borrowing, Agent may assume that each Lender has made or will make such
amount available to Agent in immediately available funds on the Funding
Date and Agent may (but shall not be so required), in reliance upon such
assumption, make available to Borrowers on such date a corresponding
amount. If and to the extent any Lender shall not have made its full amount
available to Agent in immediately available funds and Agent in such
circumstances has made available to Borrowers such amount, that Lender
shall on the Business Day following such Funding Date make such amount
available to Agent, together with interest at the Defaulting Lender Rate
for each day during such period. A notice submitted by Agent to any Lender
with respect to amounts owing under this subsection shall be conclusive,
absent manifest error. If such amount is so made available, such payment to
Agent shall constitute such Lender's Advance on the date of Borrowing for
all purposes of this Agreement. If such amount is not made available to
Agent on the Business Day following the Funding Date, Agent will notify
Administrative Borrower of such failure to fund and, upon demand by Agent,
Borrowers shall pay such amount to Agent for Agent's account, together with
interest thereon for each day elapsed since the date of such Borrowing, at
a rate per annum equal to the interest rate applicable at the time to the
Advances composing such Borrowing. The failure of any Lender to make any
Advance on any Funding Date shall not relieve any other Lender of any
obligation hereunder to make an Advance on such Funding Date, but no Lender
shall be responsible for the failure of any other Lender to make the
Advance to be made by such other Lender on any Funding Date.
(iii) Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by Borrowers to Agent for the
Defaulting Lender's benefit, and, in the absence of such transfer to the
Defaulting Lender, Agent shall transfer any such payments to each other
non-Defaulting Lender member of the Lender Group ratably in accordance with
their Commitments (but only to the extent that such Defaulting Lender's
Advance was funded by the other members of the Lender Group) or, if so
directed by Administrative Borrower and if no Default or Event of Default
had occurred and is continuing (and to the extent such Defaulting Lender's
Advance was not funded by the Lender Group), retain same to be re-advanced
to Borrowers as if such Defaulting Lender had made Advances to Borrowers.
Subject to the foregoing, Agent may hold and, in its Permitted Discretion,
re-lend to Borrowers for the account of such Defaulting Lender the amount
of all such payments received and retained by it for the account of such
Defaulting Lender. Solely for the purposes of voting or consenting to
matters with respect to the Loan Documents, such Defaulting Lender shall be
deemed not to be a "Lender" and such Lender's Commitment shall be deemed to
be zero. This Section shall remain effective with respect to such Lender
until (x) the Obligations under this Agreement shall have been declared or
shall have become immediately due and payable, (y) the non-Defaulting
Lenders, Agent, and Administrative Borrower shall have waived such
Defaulting Lender's default in writing, or (z) the Defaulting Lender makes
its Pro Rata Share of the applicable Advance and pays to Agent all amounts
owing by Defaulting Lender in respect thereof. The operation of this
Section shall not be construed to increase
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or otherwise affect the Commitment of any Lender, to relieve or excuse the
performance by such Defaulting Lender or any other Lender of its duties and
obligations hereunder, or to relieve or excuse the performance by Borrowers
of their duties and obligations hereunder to Agent or to the Lenders other
than such Defaulting Lender. Any such failure to fund by any Defaulting
Lender shall constitute a material breach by such Defaulting Lender of this
Agreement and shall entitle Administrative Borrower at its option, upon
written notice to Agent, to arrange for a substitute Lender to assume the
Commitment of such Defaulting Lender, such substitute Lender to be
acceptable to Agent. In connection with the arrangement of such a
substitute Lender, the Defaulting Lender shall have no right to refuse to
be replaced hereunder, and agrees to execute and deliver a completed form
of Assignment and Acceptance in favor of the substitute Lender (and agrees
that it shall be deemed to have executed and delivered such document if it
fails to do so) subject only to being repaid its share of the outstanding
Obligations (other than Bank Product Obligations) (including an assumption
of its Pro Rata Share of the Risk Participation Liability) without any
premium or penalty of any kind whatsoever; provided further, however, that
any such assumption of the Commitment of such Defaulting Lender shall not
be deemed to constitute a waiver of any of the Lender Groups' or Borrowers'
rights or remedies against any such Defaulting Lender arising out of or in
relation to such failure to fund.
(d) MAKING OF SWING LOANS.
(i) In the event Agent shall elect, with the consent of
Swing Lender, as a Lender, to have the terms of this SECTION 2.3(d) apply
to a requested Borrowing as described in SECTION 2.3(b), Swing Lender as a
Lender shall make such Advance in the amount of such Borrowing (any such
Advance made solely by Swing Lender as a Lender pursuant to this SECTION
2.3(d) being referred to as a "SWING LOAN" and such Advances being referred
to collectively as "SWING LOANS") available to Borrowers on the Funding
Date applicable thereto by transferring immediately available funds to
Administrative Borrower's Designated Account. Each Swing Loan is an Advance
hereunder and shall be subject to all the terms and conditions applicable
to other Advances, except that no such Swing Loan shall be eligible for the
LIBOR Option and all payments on any Swing Loan shall be payable to Swing
Lender as a Lender solely for its own account (and for the account of the
holder of any participation interest with respect to such Swing Loan).
Subject to the provisions of SECTION 2.3(i), Agent shall not request Swing
Lender as a Lender to make, and Swing Lender as a Lender shall not make,
any Swing Loan if Agent has actual knowledge that (i) one or more of the
applicable conditions precedent set forth in SECTION 3 will not be
satisfied on the requested Funding Date for the applicable Borrowing unless
such condition has been waived, or (ii) the requested Borrowing would
exceed the Availability on such Funding Date. Swing Lender as a Lender
shall not otherwise be required to determine whether the applicable
conditions precedent set forth in SECTION 3 have been satisfied on the
Funding Date applicable thereto prior to making, in its sole discretion,
any Swing Loan.
(ii) The Swing Loans shall be secured by the Agent's Liens,
shall constitute Advances and Obligations hereunder, and shall bear
interest at the rate applicable from time to time to Advances that are Base
Rate Loans.
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(e) AGENT ADVANCES.
(i) Agent hereby is authorized by Borrowers and the Lenders,
from time to time in Agent's sole discretion, (1) after the occurrence and
during the continuance of a Default or an Event of Default, or (2) at any
time that any of the other applicable conditions precedent set forth in
SECTION 3 have not been satisfied, to make Advances to Borrowers on behalf
of the Lenders that Agent, in its Permitted Discretion deems necessary or
desirable (A) to preserve or protect the Collateral, or any portion
thereof, (B) to enhance the likelihood of repayment of the Obligations
(other than Bank Product Obligations), or (C) to pay any other amount
chargeable to Borrowers pursuant to the terms of this Agreement, including
Lender Group Expenses and the costs, fees, and expenses described in
SECTION 10 (any of the Advances described in this SECTION 2.3(e) shall be
referred to as "AGENT ADVANCES"). Each Agent Advance is an Advance
hereunder and shall be subject to all the terms and conditions applicable
to other Advances, except that no such Agent Advance shall be eligible for
the LIBOR Option and all payments thereon shall be payable to Agent solely
for its own account (and for the account of the holder of any participation
interest with respect to such Agent Advance).
(ii) The Agent Advances shall be repayable by Borrowers on
demand and secured by the Agent's Liens granted to Agent under the Loan
Documents, shall constitute Advances and Obligations hereunder, and shall
bear interest at the rate applicable from time to time to Advances that are
Base Rate Loans.
(f) SETTLEMENT. It is agreed that each Lender's funded portion
of the Advances is intended by the Lenders to equal, at all times, such Lender's
Pro Rata Share of the outstanding Advances. Such agreement notwithstanding,
Agent, Swing Lender, and the other Lenders agree (which agreement shall not be
for the benefit of or enforceable by Borrowers) that in order to facilitate the
administration of this Agreement and the other Loan Documents, settlement among
them as to the Advances, the Swing Loans, and the Agent Advances shall take
place on a periodic basis in accordance with the following provisions:
(i) Agent shall request settlement ("SETTLEMENT") with the
Lenders on a weekly basis, or on a more frequent basis if so determined by
Agent, (1) on behalf of Swing Lender, with respect to each outstanding
Swing Loan, (2) for itself, with respect to each Agent Advance, and (3)
with respect to Collections received, as to each by notifying the Lenders
by telecopy, telephone, or other similar form of transmission, of such
requested Settlement, no later than 2:00 p.m. (California time) on the
Business Day immediately prior to the date of such requested Settlement
(the date of such requested Settlement being the "SETTLEMENT DATE"). Such
notice of a Settlement Date shall include a summary statement of the amount
of outstanding Advances, Swing Loans, and Agent Advances for the period
since the prior Settlement Date. Subject to the terms and conditions
contained herein (including SECTION 2.3(c)(iii)): (y) if a Lender's balance
of the Advances, Swing Loans, and Agent Advances exceeds such Lender's Pro
Rata Share of the Advances, Swing Loans, and Agent Advances as of a
Settlement Date, then Agent shall, by no later than 12:00 p.m. (California
time) on the Settlement Date, transfer in immediately available funds to
the account of such Lender as such Lender may designate, an amount such
that each such Lender shall, upon receipt of such amount, have as of the
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Settlement Date, its Pro Rata Share of the Advances, Swing Loans, and Agent
Advances, and (z) if a Lender's balance of the Advances, Swing Loans, and
Agent Advances is less than such Lender's Pro Rata Share of the Advances,
Swing Loans, and Agent Advances as of a Settlement Date, such Lender shall
no later than 12:00 p.m. (California time) on the Settlement Date transfer
in immediately available funds to the Agent's Account, an amount such that
each such Lender shall, upon transfer of such amount, have as of the
Settlement Date, its Pro Rata Share of the Advances, Swing Loans, and Agent
Advances. Such amounts made available to Agent under clause (z) of the
immediately preceding sentence shall be applied against the amounts of the
applicable Swing Loan or Agent Advance and, together with the portion of
such Swing Loan or Agent Advance representing Swing Lender's Pro Rata Share
thereof, shall constitute Advances of such Lenders. If any such amount is
not made available to Agent by any Lender on the Settlement Date applicable
thereto to the extent required by the terms hereof, Agent shall be entitled
to recover for its account such amount on demand from such Lender together
with interest thereon at the Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of the
Advances, Swing Loans, and Agent Advances is less than, equal to, or
greater than such Lender's Pro Rata Share of the Advances, Swing Loans, and
Agent Advances as of a Settlement Date, Agent shall, as part of the
relevant Settlement, apply to such balance the portion of payments actually
received in good funds by Agent with respect to principal, interest, and
fees payable by Borrowers and allocable to the Lenders hereunder, and
proceeds of Collateral. To the extent that a net amount is owed to any such
Lender after such application, such net amount shall be distributed by
Agent to that Lender as part of such next Settlement.
(iii) Between Settlement Dates, Agent, to the extent no
Agent Advances or Swing Loans are outstanding, may pay over to Swing Lender
any payments received by Agent, that in accordance with the terms of this
Agreement would be applied to the reduction of the Advances, for
application to Swing Lender's Pro Rata Share of the Advances. If, as of any
Settlement Date, Collections received since the then immediately preceding
Settlement Date have been applied to Swing Lender's Pro Rata Share of the
Advances other than to Swing Loans, as provided for in the previous
sentence, Swing Lender shall pay to Agent for the accounts of the Lenders,
and Agent shall pay to the Lenders, to be applied to the outstanding
Advances of such Lenders, an amount such that each Lender shall, upon
receipt of such amount, have, as of such Settlement Date, its Pro Rata
Share of the Advances. During the period between Settlement Dates, Swing
Lender with respect to Swing Loans, Agent with respect to Agent Advances,
and each Lender (subject to the effect of letter agreements between Agent
and individual Lenders) with respect to the Advances other than Swing Loans
and Agent Advances, shall be entitled to interest at the applicable rate or
rates payable under this Agreement on the daily amount of funds employed by
Swing Lender, Agent, or the Lenders, as applicable.
(g) NOTATION. Agent shall record on its books the principal
amount of the Advances owing to each Lender, including the Swing Loans owing to
Swing Lender, and Agent Advances owing to Agent, and the interests therein of
each
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Lender, from time to time. In addition, each Lender is authorized, at such
Lender's option, to note the date and amount of each payment or prepayment of
principal of such Lender's Advances in its books and records, including computer
records, such books and records constituting conclusive evidence, absent
manifest error, of the accuracy of the information contained therein.
(h) LENDERS' FAILURE TO PERFORM. All Advances (other than Swing
Loans and Agent Advances) shall be made by the Lenders contemporaneously and in
accordance with their Pro Rata Shares. It is understood that (i) no Lender shall
be responsible for any failure by any other Lender to perform its obligation to
make any Advance (or other extension of credit) hereunder, nor shall any
Commitment of any Lender be increased or decreased as a result of any failure by
any other Lender to perform its obligations hereunder, and (ii) no failure by
any Lender to perform its obligations hereunder shall excuse any other Lender
from its obligations hereunder.
(i) WATER SOFT INC. LIMITATIONS. Notwithstanding any provisions
hereunder, Water Soft Inc. may only borrow under this Agreement if such
borrowing is permitted by the Indenture.
2.4 PAYMENTS.
(a) PAYMENTS BY BORROWERS.
(i) Except as otherwise expressly provided herein, all
payments by Borrowers shall be made to Agent's Account for the account of
the Lender Group and shall be made in immediately available funds, no later
than 11:00 a.m. (California time) on the date specified herein. Any payment
received by Agent later than 11:00 a.m. (California time), shall be deemed
to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue until such following Business Day.
(ii) Unless Agent receives notice from Administrative
Borrower prior to the date on which any payment is due to the Lenders that
Borrowers will not make such payment in full as and when required, Agent
may assume that Borrowers have made (or will make) such payment in full to
Agent on such date in immediately available funds and Agent may (but shall
not be so required), in reliance upon such assumption, distribute to each
Lender on such due date an amount equal to the amount then due such Lender.
If and to the extent Borrowers do not make such payment in full to Agent on
the date when due, each Lender severally shall repay to Agent on demand
such amount distributed to such Lender, together with interest thereon at
the Defaulting Lender Rate for each day from the date such amount is
distributed to such Lender until the date repaid.
(b) APPORTIONMENT AND APPLICATION.
(i) Except as otherwise provided with respect to Defaulting
Lenders and except as otherwise provided in the Loan Documents (including
letter agreements between Agent and individual Lenders), aggregate
principal and interest payments shall be apportioned ratably among the
Lenders (according to the unpaid principal balance of the Obligations to
which such payments relate held by each Lender)
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and payments of fees and expenses (other than fees or expenses that are for
Agent's separate account, after giving effect to any letter agreements
between Agent and individual Lenders) shall be apportioned ratably among
the Lenders. All payments shall be remitted to Agent and all such payments
(other than payments that relate to principal or interest of specific
Obligations pursuant to SECTIONS 2.2, 2.4, and 2.5 or payments constituting
the payment of specific fees), and all proceeds of Accounts or other
Collateral received by Agent, shall be applied as follows:
A. FIRST, to pay any Lender Group Expenses then due to Agent
under the Loan Documents, until paid in full,
B. SECOND, to pay any Lender Group Expenses then due to the
Lenders under the Loan Documents, on a ratable basis, until paid in
full,
C. THIRD, to pay any fees then due to Agent (for its
separate accounts, after giving effect to any letter agreements
between Agent and the individual Lenders) under the Loan Documents
until paid in full,
D. FOURTH, to pay any fees then due to any or all of the
Lenders (after giving effect to any letter agreements between Agent
and individual Lenders) under the Loan Documents, on a ratable basis,
until paid in full,
E. FIFTH, to pay interest due in respect of all Agent
Advances, until paid in full,
F. SIXTH, ratably to pay interest due in respect of the
Advances (other than Agent Advances) and the Swing Loans until paid
in full,
G. SEVENTH, so long as no Event of Default has occurred and
is continuing or, if an Event of Default has occurred and is
continuing and Agent agrees in its sole discretion, to pay interest
due and payable in respect of the Term Loans until paid in full (if
any Event of Default has occurred and is continuing, the priority of
the payment of interest of the Term Loans is deferred to items
"sixteenth" and "seventeenth" below),
H. EIGHTH, to pay the principal of all Agent Advances until
paid in full,
I. NINTH, so long as no Event of Default has occurred and is
continuing or, if any Event of Default has occurred and is continuing
and Agent agrees in its sole discretion, to pay principal payments due
and payable in respect of Term Loan A until paid in full (if any Event
of Default has occurred and is continuing, the priority of payment of
scheduled principal payments is deferred to item "sixteenth" below),
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J. TENTH, so long as no Event of Default has occurred and is
continuing or, if an Event of Default has occurred and is continuing
and Agent agrees in its sole discretion, to pay principal payments due
and payable in respect of Term Loan B until paid in full (if an Event
of Default has occurred and is continuing, the priority of payment of
scheduled principal payments is deferred to item "seventeenth" below),
K. ELEVENTH, to pay the principal of all Swing Loans until
paid in full,
L. TWELFTH, so long as no Event of Default has occurred and
is continuing, and at Agent's election (which election will not be
made if an Overadvance would be created thereby), to pay amounts then
due and owing by the Loan Parties or their Subsidiaries in respect of
all Bank Products, until paid in full,
M. THIRTEENTH, so long as no Event of Default has occurred
and is continuing, to pay the principal of all Advances until paid in
full,
N. FOURTEENTH, if an Event of Default has occurred and is
continuing, ratably (i) to pay the principal of all Advances until
paid in full, and (ii) to Agent, to be held by Agent, for the benefit
Xxxxx Fargo or its Affiliates, as applicable, as cash collateral in an
amount up to the amount of the Bank Product Reserve established prior
to the occurrence of, and not in contemplation of, the subject Event
of Default until the Loan Parties and their Subsidiaries' obligations
in respect of the then extant Bank Products have been paid in full or
the cash collateral amount has been exhausted,
O. FIFTEENTH, if an Event of Default has occurred and is
continuing, to Agent, to be held by Agent, for the ratable benefit of
Issuing Lender and those Lenders having a Revolver Commitment, as cash
collateral in an amount up to 105% of the then extant Letter of Credit
Usage until paid in full,
P. SIXTEENTH, if an Event of Default has occurred and is
continuing, to pay interest due and payable and the outstanding
principal balance of Term Loan A until Term Loan A is paid in full,
Q. SEVENTEENTH, if an Event of Default has occurred and is
continuing, to pay interest due and payable and the outstanding
principal balance of Term Loan B until Term Loan B is paid in full,
R. EIGHTEENTH, to pay any other Obligations (including Bank
Product Obligations) until paid in full, and
S. NINETEENTH, to Borrowers (to be wired to the Designated
Account) or such other Person entitled thereto under applicable law.
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(ii) Agent promptly shall distribute to each Lender, pursuant to
the applicable wire instructions received from each Lender in writing, such
funds as it may be entitled to receive, subject to a Settlement delay as
provided in SECTION 2.3(H).
(iii) In each instance, so long as no Event of Default has
occurred and is continuing, SECTION 2.4(B) shall not be deemed to apply to any
payment by Borrowers specified by Borrowers to be for the payment of specific
Obligations then due and payable (or prepayable) under any provision of this
Agreement.
(iv) For purposes of the foregoing, "paid in full" means
payment of all amounts owing under the Loan Documents according to the terms
thereof, including loan fees, service fees, professional fees, interest (and
specifically including interest accrued after the commencement of any Insolvency
Proceeding), default interest, interest on interest, and expense reimbursements,
whether or not the same would be or is allowed or disallowed in whole or in part
in any Insolvency Proceeding.
(v) Notwithstanding anything to the contrary, the Applicable
Prepayment Premium shall not be paid to any Lender until all other Obligations
have been paid in full.
(vi) In the event of a direct conflict between the priority
provisions of this SECTION 2.4 and other provisions contained in any other Loan
Document, it is the intention of the parties hereto that such priority
provisions in such documents shall be read together and construed, to the
fullest extent possible, to be in concert with each other. In the event of any
actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms
and provisions of this SECTION 2.4 shall control and govern.
(c) MANDATORY PREPAYMENTS
(i) If at any time, the Term Loan A Amount is redetermined in
accordance with SECTION 2.2(a)(iii) and, as a result thereof, the outstanding
principal amount of the Term Loan A is in excess of the Term Loan A Amount,
Borrowers shall within 5 Business Days of such redetermination pay to Agent an
amount equal to such excess, to be applied pro rata to the remaining principal
installments of the Term Loan A.
(ii) Upon the occurrence of any Permitted Disposition described
in clause (f) or (h) of the definition of Permitted Disposition, Borrowers shall
repay the outstanding amount of the Term Loan A (or if such Term Loan A is
repaid in full, the outstanding amount of the Term Loan B and if such Term Loan
B is repaid in full, the Obligations in accordance with SECTION 2.4(b)) in an
amount equal to 100% of the net cash proceeds received (after deducting
therefrom reasonable expenses related thereto) by any Loan Party in connection
therewith, the amount of such repayment to be applied pro rata to the remaining
principal installments of the Term Loan A.
(iii) Upon the issuance or incurrence by AMTROL Portugal of any
Indebtedness in excess of (pound sign)12,000,000, Borrowers shall repay the
outstanding amount of the Term Loan B (or if such Term Loan B is repaid in full,
the outstanding
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amount of the Term Loan A and if such Term Loan A is repaid in full, the
Obligations in accordance with SECTION 2.4(b)) in an amount of 100% of such
excess incurred (after deducting therefrom reasonable expenses related to
the incurrence of such Indebtedness) by any Loan Party in connection
therewith. The provisions of this subsection (iii) shall not be deemed to
be implied consent to any such issuance, incurrence or sale otherwise
prohibited by the terms and conditions of this Agreement.
(iv) Upon the consummation of the transaction described in clause
(g) of the definition of Permitted Disposition, Borrowers shall repay the
outstanding amount of the Term Loan B (or if such Term Loan B is repaid in
full, the outstanding amount of the Term Loan A and if such Term Loan A is
repaid in full, the Obligations in accordance with SECTION 2.4(B)) in an
amount equal to 100% of the net cash proceeds of such transaction (after
deducting therefrom reasonable expenses related thereto) in connection
therewith, the amount of such repayment to be applied pro rata to the
remaining principal installments of the Term Loan B.
(v) Upon the receipt by any Loan Party of any payment for any
loss under any insurance policy or any award or compensation for
condemnation or taking by eminent domain in respect of any Equipment or
Real Property Collateral, which payment the Required Lenders elect,
pursuant to SECTION 6.8, to apply to the prepayment of the Obligations,
Borrowers shall repay the outstanding principal of the Term Loan A (or if
such Term Loan A is repaid in full, the outstanding amount of the Term Loan
B and if such Term Loan B amount is repaid in full, the Obligations in
accordance with SECTION 2.4(b)) in an amount equal to 100% of the net cash
proceeds received (after deducting therefrom reasonable expenses related
thereto) by any Loan Party in connection therewith, the amount of such
repayment to be applied pro rata to the remaining principal installments of
the Term Loan A.
2.5 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations (other than Bank Product Obligations) owed by Borrowers to the
Lender Group pursuant to SECTIONS 2.1 and 2.12 is greater than either the Dollar
or percentage limitations set forth in SECTIONS 2.1 or 2.12, (an "OVERADVANCE"),
Borrowers immediately shall pay to Agent, in cash, the amount of such excess,
which amount shall be used by Agent to reduce the related Obligations that
caused such Overadvance. In addition, Borrowers hereby promise to pay the
Obligations (including principal, interest, fees, costs, and expenses) in
Dollars in full to the Lender Group as and when due and payable under the terms
of this Agreement and the other Loan Documents.
2.6 INTEREST RATES AND LETTER OF CREDIT FEE: RATES, PAYMENTS, AND
CALCULATIONS.
(a) INTEREST RATES. Except as provided in clause (c) below, all
Obligations (except for undrawn Letters of Credit and except for Bank Product
Obligations) that have been charged to the Loan Account pursuant to the terms
hereof shall bear interest on the Daily Balance thereof as follows (i) if the
relevant Obligation is an Advance that is a LIBOR Rate Loan, at a per annum rate
equal to the LIBOR Rate plus the LIBOR Rate Margin, (ii) if the relevant
Obligation is a portion of the Term Loan A that is a LIBOR Rate Loan, at a per
annum
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rate equal to the LIBOR Rate plus the LIBOR Rate Term Loan A Margin, (iii) if
the relevant Obligation is a portion of Term Loan A that is a Base Rate Loan, at
a per annum rate equal to the Base Rate plus the applicable Base Rate Term Loan
Margin, (iv) if the relevant Obligation is Term Loan B, at a per annum rate
equal to the greater of (A) the Base Rate plus the applicable Base Rate Term
Loan Margin and (B) 9.25%, and (v) otherwise, at a per annum rate equal to the
Base Rate plus the Base Rate Margin.
(b) LETTER OF CREDIT FEE. Borrowers shall pay Agent (for the
ratable benefit of the Lenders with a Revolver Commitment, subject to any letter
agreement between Agent and individual Lenders), a Letter of Credit fee (in
addition to the charges, commissions, fees, and costs set forth in SECTION
2.12(e)) which shall accrue at a rate equal to 2.0% per annum times the Daily
Balance of the undrawn amount of all outstanding Letters of Credit.
(c) DEFAULT RATE. Upon the occurrence and during the
continuation of an Event of Default (and at the election of Agent or the
Required Lenders),
(i) all Obligations (except for undrawn Letters of Credit
and except for Bank Product Obligations) that have been charged to the Loan
Account pursuant to the terms hereof shall bear interest on the Daily
Balance thereof at a per annum rate equal to 3 percentage points above the
per annum rate otherwise applicable hereunder, and
(ii) the Letter of Credit fee provided for above shall be
increased to 3 percentage points above the per annum rate otherwise
applicable hereunder.
(d) PAYMENT. Interest on Base Rate Loans, Letter of Credit fees,
and all other fees payable hereunder shall be due and payable, in arrears, on
the first day of each month at any time that Obligations or Commitments are
outstanding. Borrowers hereby authorize Agent, from time to time, without prior
notice to Borrowers, to, and Agent agrees that it will, charge such interest and
fees, all Lender Group Expenses (as and when incurred), the charges,
commissions, fees, and costs provided for in SECTION 2.12(E) (as and when
accrued or incurred), the fees and costs provided for in SECTION 2.11 (as and
when accrued or incurred), and all other payments as and when due and payable
under any Loan Document (including the installments due and payable with respect
to the Term Loans and including any amounts due and payable to Xxxxx Fargo or
its Affiliates in respect of Bank Products up to the amount of the then extant
Bank Product Reserve) to Borrowers' Loan Account, which amounts thereafter shall
constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances hereunder. Any interest not paid when due shall be
compounded by being charged to Borrowers' Loan Account and shall thereafter,
until paid, constitute Advances hereunder and shall accrue interest at the rate
then applicable to Advances that are Base Rate Loans hereunder.
(e) COMPUTATION. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
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(f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. In no event
shall the interest rate or rates payable under this Agreement, plus any other
amounts paid in connection herewith, exceed the highest rate permissible under
any law that a court of competent jurisdiction shall, in a final determination,
deem applicable. Borrowers and the Lender Group, in executing and delivering
this Agreement, intend legally to agree upon the rate or rates of interest and
manner of payment stated within it; PROVIDED, HOWEVER, that, anything contained
herein to the contrary notwithstanding, if said rate or rates of interest or
manner of payment exceeds the maximum allowable under applicable law, then, ipso
facto, as of the date of this Agreement, Borrowers are and shall be liable only
for the payment of such maximum as allowed by law, and payment received from
Borrowers in excess of such legal maximum, whenever received, shall be applied
to reduce the principal balance of the Obligations to the extent of such excess.
2.7 CASH MANAGEMENT.
(a) Borrowers shall (i) establish and maintain cash management
services of a type and on terms satisfactory to Agent at one or more of the
banks set forth on Schedule 2.7(a) (each a "CASH MANAGEMENT BANK"), and shall
request in writing and otherwise take such reasonable steps to ensure that all
of its Account Debtors forward payment of the amounts owed by them directly to
such Cash Management Bank, and (ii) deposit or cause to be deposited promptly,
and in any event no later than the first Business Day after the date of receipt
thereof, all Collections (including those sent directly by Account Debtors to a
Cash Management Bank and those sent to each Post-Closing Bank Account unless
such account is subject to a Cash Management Agreement) into a bank account in
Agent's name (a "CASH MANAGEMENT ACCOUNT") at one of the Cash Management Banks.
(b) Each Cash Management Bank shall establish and maintain Cash
Management Agreements with Agent and Borrowers, in form and substance reasonably
acceptable to Agent. Each such Cash Management Agreement shall provide, among
other things, that (i) all items of payment deposited in such Cash Management
Account and proceeds thereof are held by such Cash Management Bank as agent or
bailee-in-possession for Agent, (ii) the Cash Management Bank has no rights of
setoff or recoupment or any other claim against the applicable Cash Management
Account, other than for payment of its service fees and other charges directly
related to the administration of such Cash Management Account and for returned
checks or other items of payment, and (iii) it immediately will forward by daily
sweep all amounts in the applicable Cash Management Account to the Agent's
Account.
(c) So long as no Default or Event of Default has occurred and
is continuing, Administrative Borrower may amend Schedule 2.7(a) to add or
replace a Cash Management Account Bank or Cash Management Account; PROVIDED,
HOWEVER, that (i) such prospective Cash Management Bank shall be reasonably
satisfactory to Agent and Agent shall have consented in writing in advance to
the opening of such Cash Management Account with the prospective Cash Management
Bank, and (ii) prior to the time of the opening of such Cash Management Account,
Borrowers and such prospective Cash Management Bank shall have executed and
delivered to Agent a Cash Management Agreement. Borrowers shall close any of
their Cash Management Accounts (and establish replacement cash management
accounts in accordance with the foregoing sentence) promptly and in any event
within 30 days of notice from Agent that the creditworthiness of any Cash
Management Bank is no longer acceptable in
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Agent's reasonable judgment, or as promptly as practicable and in any event
within 60 days of notice from Agent that the operating performance, funds
transfer, or availability procedures or performance of the Cash Management Bank
with respect to Cash Management Accounts or Agent's liability under any Cash
Management Agreement with such Cash Management Bank is no longer acceptable in
Agent's reasonable judgment.
(d) The Cash Management Accounts shall be cash collateral
accounts, with all cash, checks and similar items of payment in such accounts
securing payment of the Obligations, and in which Borrowers are hereby deemed to
have granted a Lien to Agent.
2.8 CREDITING PAYMENTS; FLOAT CHARGE. The receipt of any payment item
by Agent (whether from transfers to Agent by the Cash Management Banks pursuant
to the Cash Management Agreements or otherwise) shall not be considered a
payment on account unless such payment item is a wire transfer of immediately
available federal funds made to the Agent's Account or unless and until such
payment item is honored when presented for payment. Should any payment item not
be honored when presented for payment, then Borrowers shall be deemed not to
have made such payment and interest shall be calculated accordingly. Anything to
the contrary contained herein notwithstanding, any payment item shall be deemed
received by Agent only if it is received into the Agent's Account on a Business
Day on or before 11:00 a.m. (California time). If any payment item is received
into the Agent's Account on a non-Business Day or after 11:00 a.m. (California
time) on a Business Day, it shall be deemed to have been received by Agent as of
the opening of business on the immediately following Business Day. From and
after the Closing Date, Agent shall be entitled to charge Borrowers for one (1)
Business Day of 'clearance' or 'float' at the Base Rate under SECTION 2.6 on all
Collections that are received by Borrowers (regardless of whether forwarded by
the Cash Management Banks to Agent). This across-the-board one (1) Business Day
clearance or float charge on all Collections is acknowledged by the parties to
constitute an integral aspect of the pricing of the financing of Borrowers and
shall apply irrespective of whether or not there are any outstanding monetary
Obligations; the effect of such clearance or float charge being the equivalent
of charging one (1) day of interest on such Collections.
2.9 DESIGNATED ACCOUNT. Agent is authorized to make the Advances and
the Term Loans, and Issuing Lender is authorized to issue the Letters of Credit,
under this Agreement based upon telephonic or other instructions received from
anyone purporting to be an Authorized Person, or without instructions if
pursuant to SECTION 2.6(d). Administrative Borrower agrees to establish and
maintain the Designated Account for the purpose of receiving the proceeds of the
Advances requested by Borrowers and made by Agent or the Lenders hereunder.
Unless otherwise agreed by Agent and Administrative Borrower, any Advance, Agent
Advance, or Swing Loan requested by Borrowers and made by Agent or the Lenders
hereunder shall be made to the Designated Account.
2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Agent
shall maintain an account on its books in the name of Borrowers (the "LOAN
ACCOUNT") on which Borrowers will be charged with the Term Loans, all Advances
(including Agent Advances and Swing Loans) made by Agent, Swing Lender, or the
Lenders to Borrowers or for Borrowers' account, the Letters of Credit issued by
Issuing Lender for Borrowers' account, and with all other payment Obligations
hereunder or under the other Loan Documents (except for Bank Product
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Obligations), including, accrued interest, fees and expenses, and Lender Group
Expenses. In accordance with SECTION 2.8, the Loan Account will be credited with
all payments received by Agent from Borrowers or for Borrowers' account,
including all amounts received in the Agent's Account from any Cash Management
Bank. Agent shall render statements regarding the Loan Account to Administrative
Borrower, including principal, interest, fees, and including an itemization of
all charges and expenses constituting Lender Group Expenses owing, and such
statements shall be conclusively presumed to be correct and accurate and
constitute an account stated between Borrowers and the Lender Group unless,
within 30 days after receipt thereof by Administrative Borrower, Administrative
Borrower shall deliver to Agent written objection thereto describing the error
or errors contained in any such statements.
2.11 FEES. Borrowers shall pay to Agent the following fees and
charges, which fees and charges shall be non-refundable when paid (irrespective
of whether this Agreement is terminated thereafter) and shall be apportioned
among the Lenders in accordance with the terms of letter agreements between
Agent and individual Lenders:
(a) UNUSED LINE FEE. On the first day of each month during the
term of this Agreement, an unused line fee in the amount equal to 0.375% per
annum times the result of (a) the Maximum Revolver Amount, less (b) the sum of
(i) the average Daily Balance of Advances that were outstanding during the
immediately preceding month, plus (ii) the average Daily Balance of the Letter
of Credit Usage during the immediately preceding month,
(b) FEE LETTER FEES. As and when due and payable under the terms
of the Fee Letter, Borrowers shall pay to Agent the fees set forth in the Fee
Letter, and
(c) AUDIT, APPRAISAL, AND VALUATION CHARGES. For the separate
account of Agent, audit, appraisal, and valuation fees and charges as follows,
(i) a fee of $850 pay day, per auditor, plus out-of-pocket expenses for each
financial audit of a Borrower performed by personnel employed by Agent, (ii) if
implemented, a one time charge of $3,000 plus out-of-pocket expenses for
expenses for the establishment of electronic collateral reporting systems, (iii)
a fee of $1,500 per day per appraiser, plus out-of-pocket expenses, for each
appraisal of the Collateral performed by personnel employed by Agent, and (iv)
the actual charges paid or incurred by Agent if it elects to employ the services
of one or more third Persons to perform financial audits of Borrowers, to
appraise the Collateral, or any portion thereof, including, without limitation,
the appraisals and reappraisals described in SECTIONS 2.1(B) and 2.2(A)(III),
but subject to the limitations set forth therein, or to assess a Borrower's
business valuation.
2.12 LETTERS OF CREDIT.
(a) Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue letters of credit for the account of Borrowers
(each, an "L/C") or to purchase participations or execute indemnities or
reimbursement obligations (each such undertaking, an "L/C UNDERTAKING") with
respect to letters of credit issued by an Underlying Issuer (as of the Closing
Date, the prospective Underlying Issuer is to be Xxxxx Fargo) for the account of
Borrowers. To request the issuance of an L/C or an L/C Undertaking (or the
amendment, renewal, or extension of an outstanding L/C or L/C Undertaking),
Administrative
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Borrower shall hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing
Lender) to the Issuing Lender and Agent (reasonably in advance of the requested
date of issuance, amendment, renewal, or extension) a notice requesting the
issuance of an L/C or L/C Undertaking, or identifying the L/C or L/C Undertaking
to be amended, renewed, or extended, the date of issuance, amendment, renewal,
or extension, the date on which such L/C or L/C Undertaking is to expire, the
amount of such L/C or L/C Undertaking, the name and address of the beneficiary
thereof (or of the Underlying Letter of Credit, as applicable), and such other
information as shall be necessary to prepare, amend, renew, or extend such L/C
or L/C Undertaking. If requested by the Issuing Lender, Borrowers also shall be
an applicant under the application with respect to any Underlying Letter of
Credit that is to be the subject of an L/C Undertaking. The Issuing Lender shall
have no obligation to issue a Letter of Credit if any of the following would
result after giving effect to the requested Letter of Credit:
(i) the Letter of Credit Usage would exceed the Borrowing
Base less the amount of outstanding Advances, or
(ii) the Letter of Credit Usage would exceed $3,000,000, or
(iii) the Letter of Credit Usage would exceed the Maximum
Revolver Amount less the then extant amount of outstanding Advances.
Borrowers and the Lender Group acknowledge and agree that certain
Underlying Letters of Credit may be issued to support letters of credit that
already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall have an expiry date no later
than 30 days prior to the Maturity Date and all such Letters of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrowers immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 11:00 a.m., California time, on the date that such L/C Disbursement is
made, if Administrative Borrower shall have received written or telephonic
notice of such L/C Disbursement prior to 10:00 a.m., California time, on such
date, or, if such notice has not been received by Administrative Borrower prior
to such time on such date, then not later than 11:00 a.m., California time, on
(i) the Business Day that Administrative Borrower receives such notice, if such
notice is received prior to 10:00 a.m., California time, on the date of receipt,
and, in the absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be an Advance hereunder and, thereafter, shall
bear interest at the rate then applicable to Advances that are Base Rate Loans
under SECTION 2.6. To the extent an L/C Disbursement is deemed to be an Advance
hereunder, Borrowers' obligation to reimburse such L/C Disbursement shall be
discharged and replaced by the resulting Advance. Promptly following receipt by
Agent of any payment from Borrowers pursuant to this paragraph, Agent shall
distribute such payment to the Issuing Lender or, to the extent that Lenders
have made payments pursuant to SECTION 2.12(c) to reimburse the Issuing Lender,
then to such Lenders and the Issuing Lender as their interest may appear.
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(b) Promptly following receipt of a notice of L/C Disbursement
pursuant to SECTION 2.12(a), each Lender with a Revolver Commitment agrees to
fund its Pro Rata Share of any Advance deemed made pursuant to the foregoing
subsection on the same terms and conditions as if Borrowers had requested such
Advance and Agent shall promptly pay to Issuing Lender the amounts so received
by it from the Lenders. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the Issuing Lender or the Lenders with Revolver
Commitment, the Issuing Lender shall be deemed to have granted to each Lender
with a Revolver Commitment, and each Lender with a Revolver Commitment shall be
deemed to have purchased, a participation in each Letter of Credit, in an amount
equal to its Pro Rata Share of the Risk Participation Liability of such Letter
of Credit, and each such Lender agrees to pay to Agent, for the account of the
Issuing Lender, such Lender's Pro Rata Share of any payments made by the Issuing
Lender under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender with a Revolver Commitment hereby absolutely and
unconditionally agrees to pay to Agent, for the account of the Issuing Lender,
such Lender's Pro Rata Share of each L/C Disbursement made by the Issuing Lender
and not reimbursed by Borrowers on the date due as provided in clause (a) of
this Section, or of any reimbursement payment required to be refunded to
Borrowers for any reason. Each Lender with a Revolver Commitment acknowledges
and agrees that its obligation to deliver to Agent, for the account of the
Issuing Lender, an amount equal to its respective Pro Rata Share pursuant to
this SECTION 2.12(B) shall be absolute and unconditional and such remittance
shall be made notwithstanding the occurrence or continuation of an Event of
Default or Default or the failure to satisfy any condition set forth in SECTION
3 hereof. If any such Lender fails to make available to Agent the amount of such
Lender's Pro Rata Share of any payments made by the Issuing Lender in respect of
such Letter of Credit as provided in this Section, Agent (for the account of the
Issuing Lender) shall be entitled to recover such amount on demand from such
Lender together with interest thereon at the Defaulting Lender Rate until paid
in full.
(c) Each Borrower hereby agrees to indemnify, save, defend, and hold
the Lender Group harmless from any loss, cost, expense, or liability, and
reasonable attorneys fees incurred by the Lender Group arising out of or in
connection with any Letter of Credit; PROVIDED, HOWEVER, that no Borrower shall
be obligated hereunder to indemnify for any loss, cost, expense, or liability
that is caused by the gross negligence or willful misconduct of the Issuing
Lender or any other member of the Lender Group. Each Borrower agrees to be bound
by the Underlying Issuer's regulations and interpretations of any Underlying
Letter of Credit or by Issuing Lender's interpretations of any L/C issued by
Issuing Lender to or for such Borrower's account, even though this
interpretation may be different from such Borrower's own, and each Borrower
understands and agrees that in the absence of gross negligence or willful
misconduct the Lender Group shall not be liable for any error, negligence, or
mistake, whether of omission or commission, in following Borrowers' instructions
or those contained in the Letter of Credit or any modifications, amendments, or
supplements thereto. Each Borrower understands that the L/C Undertakings may
require Issuing Lender to indemnify the Underlying Issuer for certain costs or
liabilities arising out of claims by Borrowers against such Underlying Issuer.
Each Borrower hereby agrees to indemnify, save, defend, and hold the Lender
Group harmless with respect to any loss, cost, expense (including reasonable
attorneys fees), or liability incurred by the Lender Group under any L/C
Undertaking as a result of the Lender Group's indemnification of any Underlying
Issuer; PROVIDED, HOWEVER, that no Borrower shall be obligated hereunder to
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indemnify for any loss, cost, expense, or liability that is caused by the gross
negligence or willful misconduct of the Issuing Lender or any other member of
the Lender Group.
(d) Each Borrower hereby authorizes and directs any Underlying Issuer
to deliver to the Issuing Lender all instruments, documents, and other writings
and property received by such Underlying Issuer pursuant to such Underlying
Letter of Credit and to accept and rely upon the Issuing Lender's instructions
with respect to all matters arising in connection with such Underlying Letter of
Credit and the related application.
(e) Any and all charges, commissions, fees, and costs incurred by the
Issuing Lender relating to Underlying Letters of Credit shall be Lender Group
Expenses for purposes of this Agreement and immediately shall be reimbursable by
Borrowers to Agent for the account of the Issuing Lender; it being acknowledged
and agreed by each Borrower that, as of the Closing Date, the issuance charge
imposed by the prospective Underlying Issuer is .825% per annum times the face
amount of each Underlying Letter of Credit, that such issuance charge may be
changed from time to time, and that the Underlying Issuer also imposes a
schedule of charges for amendments, extensions, drawings, and renewals.
(f) If by reason of (i) any change in any applicable law, treaty,
rule, or regulation or any change in the interpretation or application thereof
by any Governmental Authority, or (ii) compliance by the Underlying Issuer or
the Lender Group with any direction, request, or requirement (irrespective of
whether having the force of law) of any Governmental Authority or monetary
authority including, Regulation D of the Federal Reserve Board as from time to
time in effect (and any successor thereto):
(x) any reserve, deposit, or similar requirement is or shall be
imposed or modified in respect of any Letter of Credit issued hereunder, or
(y) there shall be imposed on the Underlying Issuer or the
Lender Group any other condition regarding any Underlying Letter of Credit or
any Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Administrative Borrower, and Borrowers shall pay on demand such amounts
as Agent may specify to be necessary to compensate the Lender Group for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Base Rate Loans hereunder. The determination by Agent of any
amount due pursuant to this Section, as set forth in a certificate setting forth
the calculation thereof in reasonable detail, shall, in the absence of manifest
or demonstrable error, be final and conclusive and binding on all of the parties
hereto.
2.13 LIBOR OPTION.
(a) INTEREST AND INTEREST PAYMENT DATES. In lieu of having interest
charged at the rate based upon the Base Rate, Borrowers shall have the option
(the "LIBOR
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OPTION") to have interest on all or a portion of the Advances or the Term Loan A
be charged at a rate of interest based upon the LIBOR Rate. Interest on LIBOR
Rate Loans shall be payable on the earliest of (i) the last day of the Interest
Period applicable thereto, (ii) the occurrence of an Event of Default in
consequence of which the Required Lenders or Agent on behalf thereof elect to
accelerate the maturity of all or any portion of the Obligations, or (iii)
termination of this Agreement pursuant to the terms hereof. On the last day of
each applicable Interest Period, unless Administrative Borrower properly has
exercised the LIBOR Option with respect thereto, the interest rate applicable to
such LIBOR Rate Loan automatically shall convert to the rate of interest then
applicable to Base Rate Loans of the same type hereunder. At any time that an
Event of Default has occurred and is continuing, Borrowers no longer shall have
the option to request that Advances or the Term Loan A bear interest at the
LIBOR Rate and Agent shall have the right to convert the interest rate on all
outstanding LIBOR Rate Loans to the rate then applicable to Base Rate Loans
hereunder.
(b) LIBOR ELECTION.
(i) Administrative Borrower may, at any time and from time to
time, so long as no Event of Default has occurred and is continuing, elect
to exercise the LIBOR Option by notifying Agent prior to 11:00 a.m.
(California time) at least 3 Business Days prior to the commencement of the
proposed Interest Period (the "LIBOR DEADLINE"). Notice of Administrative
Borrower's election of the LIBOR Option for a permitted portion of the
Advances or the Term Loan A and an Interest Period pursuant to this Section
shall be made by delivery to Agent of a LIBOR Notice received by Agent
before the LIBOR Deadline, or by telephonic notice received by Agent before
the LIBOR Deadline (to be confirmed by delivery to Agent of a LIBOR Notice
received by Agent prior to 5:00 p.m. (California time) on the same day.
Promptly upon its receipt of each such LIBOR Notice, Agent shall provide a
copy thereof to each of the Lenders having a Revolver Commitment.
(ii) Each LIBOR Notice shall be irrevocable and binding on
Borrowers. In connection with each LIBOR Rate Loan, each Borrower shall
indemnify, defend, and hold Agent and the Lenders harmless against any
loss, cost, or expense incurred by Agent or any Lender as a result of (a)
the payment of any principal of any LIBOR Rate Loan other than on the last
day of an Interest Period applicable thereto (including as a result of an
Event of Default), (b) the conversion of any LIBOR Rate Loan other than on
the last day of the Interest Period applicable thereto, or (c) the failure
to borrow, convert, continue or prepay any LIBOR Rate Loan on the date
specified in any LIBOR Notice delivered pursuant hereto (such losses,
costs, and expenses, collectively, "FUNDING LOSSES"). Funding Losses shall,
with respect to Agent or any Lender, be deemed to equal the amount
determined by Agent or such Lender to be the excess, if any, of (i) the
amount of interest that would have accrued on the principal amount of such
LIBOR Rate Loan had such event not occurred, at the LIBOR Rate that would
have been applicable thereto, for the period from the date of such event to
the last day of the then current Interest Period therefor (or, in the case
of a failure to borrow, convert or continue, for the period that would have
been the Interest Period therefor), minus (ii) the amount of interest that
would accrue on such principal amount for such period at the interest rate
which Agent or such Lender would be offered were it to be offered, at the
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commencement of such period, Dollar deposits of a comparable amount and
period in the London interbank market. A certificate of Agent or a Lender
delivered to Administrative Borrower setting forth any amount or amounts
that Agent or such Lender is entitled to receive pursuant to this Section
shall be conclusive absent manifest error.
(iii) Borrowers shall have not more than 5 LIBOR Rate Loans in
effect at any given time. Borrowers only may exercise the LIBOR Option for
LIBOR Rate Loans of at least $500,000 and integral multiples of $100,000 in
excess thereof.
(iv) Notwithstanding any provisions contained in this Agreement,
so long as no Event of Default shall have occurred and be continuing, if on
any day an application of proceeds (the "APPLICABLE PROCEEDS") to prepay
the Obligations of Borrowers pursuant to SECTION 2.4(B) or SECTION 2.4(C)
would result in a Funding Loss as a result of a LIBOR Rate Loan being
repaid other than on the last day of an Interest Period applicable thereto
(such affected LIBOR Rate Loans (the "AFFECTED LOANS"),
A. the Applicable Proceeds shall be applied first to prepay
all Base Rate Loans until all such Base Rate Loans shall be paid in
full, and
B. if the prepayment occurs on the same day that an Advance
is made, the amount applied from the Applicable Proceeds on such date
shall be deemed to be equal to the amount of the Applicable Proceeds
less the Advances to be made on such date.
(v) If, after giving effect to clauses (iv)(A) and (iv)(B)
above, the application of the Applicable Proceeds would still result in a
Funding Loss, the remaining Applicable Proceeds shall be applied as
follows:
A. If the remaining Applicable Proceeds are as a result a
mandatory prepayment pursuant to SECTION 2.4(c), Agent may in its
Permitted Discretion elect either to prepay the Affected Loans and not
charge Borrowers a Funding Loss or to deposit the remaining Applicable
Proceeds of any such mandatory prepayment in an interest-bearing cash
collateral account established and controlled by Agent, to be applied
as hereinafter provided in this SECTION 2.13(b)(v)(a). Agent shall
apply the cash deposited in such cash collateral account, to the
extent available, to repay the Affected Loans on the last day of the
Interest Periods of such Affected Loans or to any other Base Rate
Loans made to Borrowers thereafter until all of the cash on deposit in
such cash collateral account has been applied. Pending such
application, the Affected Loans shall continue to bear interest at the
applicable rate and such interest shall be payable on the last day of
the Interest Period with respect to such Affected Loans. The cash
deposited with Agent shall accrue interest, for the account of
Borrowers, at a rate to be determined by Agent. Interest shall be
payable to Borrowers in arrears or credited against interest
obligations of Borrowers under this Agreement promptly after the cash
on deposit has been fully applied to prepay such Affected Loans or any
other Base Rate Loans; and
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B. If the remaining Applicable Proceeds are as a result of
the payment of the Obligations of Borrowers pursuant to SECTION
2.4(B), Agent may in its Permitted Discretion elect either to prepay
the Affected Loans and not charge Borrowers a Funding Loss or to
deposit the remaining Applicable Proceeds into Borrowers' Designated
Account for use by Borrowers and such proceeds deposited into
Borrowers' Designated Account shall not be deemed to be an Advance.
(c) PREPAYMENTS. Borrowers may prepay LIBOR Rate Loans at any
time; PROVIDED, HOWEVER, that in the event that LIBOR Rate Loans are prepaid on
any date that is not the last day of the Interest Period applicable thereto,
including as a result of any automatic prepayment through the required
application by Agent of proceeds of Collections in accordance with SECTION
2.4(B) or for any other reason, including early termination of the term of this
Agreement or acceleration of all or any portion of the Obligations pursuant to
the terms hereof, each Borrower shall indemnify, defend, and hold Agent and the
Lenders and their Participants harmless against any and all Funding Losses in
accordance with clause (b) above.
(d) SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE.
(i) The LIBOR Rate may be adjusted by Agent with respect to
any Lender on a prospective basis to take into account any additional or
increased costs to such Lender of maintaining or obtaining any eurodollar
deposits or increased costs due to changes in applicable law occurring
subsequent to the commencement of the then applicable Interest Period,
including changes in tax laws (except changes of general applicability in
corporate income tax laws) and changes in the reserve requirements imposed
by the Board of Governors of the Federal Reserve System (or any successor),
excluding the Reserve Percentage, which additional or increased costs would
increase the cost of funding loans bearing interest at the LIBOR Rate. In
any such event, the affected Lender shall give Administrative Borrower and
Agent notice of such a determination and adjustment and Agent promptly
shall transmit the notice to each other Lender together with a statement
from such affected Lender setting forth the basis for adjusting such LIBOR
Rate and the method for determining the amount of such adjustment, or (y)
repay the LIBOR Rate Loans with respect to which such adjustment is made
(together with any amounts due under clause (b)(ii) above).
(ii) In the event that (x) any change in any law,
regulation, treaty, or directive, or in the interpretation of application
thereof, shall at any time after the date hereof, in the reasonable opinion
of any Lender, make it unlawful, or (y) any change in market conditions
shall at any time after the date hereof, in the reasonable opinion of any
Lender, make it impractical, for such Lender to fund or maintain LIBOR
Advances or to continue such funding or maintaining, or to determine or
charge interest rates at the LIBOR Rate, such Lender shall give notice in
reasonable detail of such changed circumstances to Agent and Administrative
Borrower and Agent promptly shall transmit the notice to each other Lender
and (y) in the case of any LIBOR Rate Loans of such Lender that are
outstanding, the date specified in such Lender's notice shall be deemed to
be the last day of the Interest Period of such LIBOR Rate Loans, and
interest upon the LIBOR Rate Loans of such Lender thereafter shall accrue
interest at the rate
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then applicable to Base Rate Loans, and (z) Borrowers shall not be entitled
to elect the LIBOR Option until such Lender determines that it would no
longer be unlawful or impractical to do so.
(e) NO REQUIREMENT OF MATCHED FUNDING. Anything to the
contrary contained herein notwithstanding, neither Agent, nor any Lender, nor
any of their Participants, is required actually to acquire eurodollar deposits
to fund or otherwise match fund any Obligation as to which interest accrues at
the LIBOR Rate. The provisions of this Section shall apply as if each Lender or
its Participants had match funded any Obligation as to which interest is
accruing at the LIBOR Rate by acquiring eurodollar deposits for each Interest
Period in the amount of the LIBOR Rate Loans.
2.14 CAPITAL REQUIREMENTS. If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), the effect of reducing the return on such Lender's or such
holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Administrative Borrower and Agent thereof. Following receipt
of such notice, Borrowers agree to pay such Lender on demand the amount of such
reduction of return of capital as and when such reduction is determined, payable
within 90 days after presentation by such Lender of a statement in the amount
and setting forth in reasonable detail such Lender's calculation thereof and the
assumptions upon which such calculation was based (which statement shall be
deemed true and correct absent manifest error); PROVIDED that Borrower shall not
be required to compensate any Lender pursuant to this SECTION 2.14 for any
amounts incurred more than 90 days prior to the date that such Lender notifies
Administrative Borrower of such Lender's intent to claim compensation therefor.
In determining such amount, such Lender may use any reasonable averaging and
attribution methods.
2.15 CHANGE OF LENDING OFFICE. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of SECTION 2.12(f),
2.13(d), 2.14 or 16.11(E) with respect to such Lender, it will, if requested by
Borrowers, use reasonable efforts (subject to overall policy considerations of
such Lender) to designate another lending office for any Advances or Term Loans
affected by such event with the object of avoiding the consequences of such
event, PROVIDED that such designation is made on terms that, in the Permitted
Discretion of such Lender, cause such Lender and its lending office(s) to suffer
no economic, legal or regulatory disadvantage, and provided, FURTHER, that
nothing in this Section shall affect or postpone any of the obligations of
Borrowers or the rights of any Lender pursuant to SECTION 2.12(f), 2.13(d), 2.14
or 16.11(e).
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2.16 REPLACEMENT OF LENDERS. Borrowers shall be permitted to replace
any Lender that requests reimbursement for amounts owing pursuant to SECTION
2.12(f), 2.13(d), 2.14 or 16.11(e) with a replacement Eligible Transferee,
PROVIDED that (i) such replacement does not conflict with any law, (ii) no Event
of Default shall have occurred and be continuing at the time of such
replacement, (iii) prior to any such replacement, such Lender shall have taken
no action so as to eliminate the continued need for payment of amounts owing
pursuant to SECTION 2.12(f), 2.13(d), 2.14 or 16.11(e), (iv) the replacement
Eligible Transferee shall purchase, at par, all Advances and Term Loans and
other amounts owing to such replaced Lender on the date of replacement, (v)
Borrowers shall be liable to such replaced Lender under SECTION 2.13(b)(ii) if
any LIBOR Loan owing to such replaced Lender shall be purchased other than on
the last day of the Interest Period relating thereto, (vi) the Eligible
Transferee, if not already a Lender, shall be reasonably satisfactory to the
Agent, (vii) the replaced Lender shall be obligated to make such replacement in
accordance with the provisions of SECTION 14.1 (provided that Borrowers shall be
obligated to pay the registration and processing fee referred to therein),
(viii) until such time as such replacement shall be consummated, Borrowers shall
pay all additional amounts (if any) required pursuant to SECTION 2.12(f),
2.13(d), 2.14 or 16.11(e), as the case may be, and (ix) any such replacement
shall not be deemed to be a waiver of any rights that Borrowers, Agent or any
other Lender shall have against the replaced Lender.
2.17 JOINT AND SEVERAL LIABILITY OF BORROWERS.
(a) Each of Borrowers is accepting joint and several liability
hereunder and under the other Loan Documents in consideration of the financial
accommodations to be provided by the Agent and the Lenders under this Agreement,
for the mutual benefit, directly and indirectly, of each of Borrowers and in
consideration of the undertakings of the other Borrowers to accept joint and
several liability for the Obligations.
(b) Each of Borrowers, jointly and severally, hereby irrevocably
and unconditionally accepts, not merely as a surety but also as a co-debtor,
joint and several liability with the other Borrowers, with respect to the
payment and performance of all of the Obligations (including, without
limitation, any Obligations arising under this SECTION 2.17), it being the
intention of the parties hereto that all the Obligations shall be the joint and
several obligations of each Borrower without preferences or distinction among
them.
(c) If and to the extent that any Borrower shall fail to make any
payment with respect to any of the Obligations as and when due or to perform any
of the Obligations in accordance with the terms thereof, then in each such event
the other Borrowers will make such payment with respect to, or perform, such
Obligation.
(d) The Obligations of each Borrower under the provisions of this
SECTION 2.17 constitute the absolute and unconditional, full recourse
Obligations of each Borrower enforceable against each such Borrower to the full
extent of its properties and assets, irrespective of the validity, regularity or
enforceability of this Agreement or any other circumstances whatsoever.
(e) Except as otherwise expressly provided in this Agreement,
each Borrower hereby waives notice of acceptance of its joint and several
liability, notice of any
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Advances, Term Loans or L/C's issued under or pursuant to this Agreement, notice
of the occurrence of any Default, Event of Default, or of any demand for any
payment under this Agreement, notice of any action at any time taken or omitted
by Agent or Lenders under or in respect of any of the Obligations, any
requirement of diligence or to mitigate damages and, generally, to the extent
permitted by applicable law, all demands, notices and other formalities of every
kind in connection with this Agreement (except as otherwise provided in this
Agreement). Each Borrower hereby assents to, and waives notice of, any extension
or postponement of the time for the payment of any of the Obligations, the
acceptance of any payment of any of the Obligations, the acceptance of any
partial payment thereon, any waiver, consent or other action or acquiescence by
Agent or Lenders at any time or times in respect of any default by any Borrower
in the performance or satisfaction of any term, covenant, condition or provision
of this Agreement, any and all other indulgences whatsoever by Agent or Lenders
in respect of any of the Obligations, and the taking, addition, substitution or
release, in whole or in part, at any time or times, of any security for any of
the Obligations or the addition, substitution or release, in whole or in part,
of any Borrower. Without limiting the generality of the foregoing, each Borrower
assents to any other action or delay in acting or failure to act on the part of
any Agent or Lender with respect to the failure by any Borrower to comply with
any of its respective Obligations, including, without limitation, any failure
strictly or diligently to assert any right or to pursue any remedy or to comply
fully with applicable laws or regulations thereunder, which might, but for the
provisions of this SECTION 2.17 afford grounds for terminating, discharging or
relieving any Borrower, in whole or in part, from any of its Obligations under
this SECTION 2.17, it being the intention of each Borrower that, so long as any
of the Obligations hereunder remain unsatisfied, the Obligations of such
Borrower under this SECTION 2.17 shall not be discharged except by performance
and then only to the extent of such performance. The Obligations of each
Borrower under this SECTION 2.17 shall not be diminished or rendered
unenforceable by any winding up, reorganization, arrangement, liquidation,
reconstruction or similar proceeding with respect to any Borrower or any Agent
or Lender. The joint and several liability of the Borrower hereunder shall
continue in full force and effect notwithstanding any absorption, merger,
amalgamation or any other change whatsoever in the name, constitution or place
of formation of any of the Borrower or any Agent or Lender.
(f) Each Borrower represents and warrants to Agent and Lenders
that such Borrower is currently informed of the financial condition of Borrowers
and of all other circumstances which a diligent inquiry would reveal and which
bear upon the risk of nonpayment of the Obligations. Each Borrower further
represents and warrants to Agent and Lenders that such Borrower has read and
understands the terms and conditions of the Loan Documents. Each Borrower hereby
covenants that such Borrower will continue to keep informed of Borrowers'
financial condition, the financial condition of other guarantors, if any, and of
all other circumstances which bear upon the risk of nonpayment or nonperformance
of the Obligations.
(g) The provisions of this SECTION 2.17 are made for the benefit
of the Agent, the Lenders and their respective successors and assigns, and may
be enforced by it or them from time to time against any or all Borrowers as
often as occasion therefor may arise and without requirement on the part of any
such Agent, Lender, successor or assign first to marshal any of its or their
claims or to exercise any of its or their rights against any Borrower or to
exhaust any remedies available to it or them against any Borrower or to resort
to any other
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source or means of obtaining payment of any of the Obligations hereunder or to
elect any other remedy. The provisions of this SECTION 2.17 shall remain in
effect until all of the Obligations shall have been paid in full or otherwise
fully satisfied. If at any time, any payment, or any part thereof, made in
respect of any of the Obligations, is rescinded or must otherwise be restored or
returned by Agent or any Lender upon the insolvency, bankruptcy or
reorganization of any Borrower, or otherwise, the provisions of this SECTION
2.17 will forthwith be reinstated in effect, as though such payment had not been
made.
(h) Each Borrower hereby agrees that it will not enforce any of
its rights of contribution or subrogation against any other Borrower with
respect to any liability incurred by it hereunder or under any of the other Loan
Documents, any payments made by it to Agent or Lenders with respect to any of
the Obligations or any collateral security therefor until such time as all of
the Obligations have been paid in full in cash. Any claim which any Borrower may
have against any other Borrower with respect to any payments to Agent or any
Lender hereunder or under any other Loan Documents are hereby expressly made
subordinate and junior in right of payment, including without limitation, as to
any increases in the Obligations arising hereunder or thereunder, to the prior
payment in full in cash of the Obligations and, in the event of any insolvency,
bankruptcy, receivership, liquidation, reorganization or other similar
proceeding under the laws of any jurisdiction relating to any Borrower, its
debts or its assets, whether voluntary or involuntary, all such Obligations
shall be paid in full in cash before any payment or distribution of any
character, whether in cash, securities or other property, shall be made to any
other Borrower therefor.
(i) Each Borrower hereby agrees that, after the occurrence and
during the continuance of any Default or Event of Default, the payment of any
amounts due with respect to the indebtedness owing by any Borrower to any other
Borrower is hereby subordinated to the prior payment in full in cash of the
Obligations. Each Borrower hereby agrees that after the occurrence and during
the continuance of any Default or Event of Default, such Borrower will not
demand, xxx for or otherwise attempt to collect any indebtedness of any other
Borrower owing to such Borrower until the Obligations shall have been paid in
full in cash. If, notwithstanding the foregoing sentence, such Borrower shall
collect, enforce or receive any amounts in respect of such indebtedness, such
amounts shall be collected, enforced and received by such Borrower as trustee
for Agent, and such Borrower shall deliver any such amounts to the Agent for
application to the Obligations in accordance with SECTION 2.4(B).
3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to make the initial
Advance (or otherwise to extend any credit provided for hereunder), is subject
to the fulfillment, to the satisfaction of Agent, of each of the conditions
precedent set forth below:
(a) the Closing Date shall occur on or before December 31, 2001;
(b) Agent shall have received all financing statements required
by Agent, duly executed by the applicable Borrowers (if necessary);
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(c) Agent shall have received each of the following documents,
in form and substance reasonably satisfactory to Agent, duly executed, and each
such document shall be in full force and effect:
(i) the Control Agreements,
(ii) the Disbursement Letter,
(iii) the Due Diligence Letter,
(iv) the Fee Letter,
(v) the Guaranty,
(vi) the Cash Management Agreements,
(vii) the Mortgages,
(viii) the Officers' Certificate,
(ix) the Stock Pledge Agreement, together with all
certificates representing the shares of Stock pledged thereunder, as well
as Stock powers with respect thereto endorsed in blank,
(x) the Pay-Off Letter, together with UCC termination
statements and other documentation evidencing the termination by Existing
Lenders of their Liens in and to the properties and assets of the Loan
Parties,
(xi) the Intercreditor Agreement, and
(xii) the Contribution Agreement.
(d) Agent shall have received a certificate from the Secretary
of each Borrower (i) attesting to the resolutions of such Borrower's Board of
Directors authorizing its execution, delivery, and performance of this Agreement
and the other Loan Documents to which such Borrower is a party and authorizing
specific officers of such Borrower to execute the same and (ii) certifying the
names and true signatures of the officers of such Borrower authorized to sign
each Loan Document to which such Borrower is a party;
(e) Agent shall have received copies of each Borrower's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of such Borrower;
(f) Agent shall have received a certificate of status with
respect to each Borrower, dated within 15 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Borrower, which certificate shall indicate that such
Borrower is in good standing in such jurisdiction;
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(g) Agent shall have received certificates of status with
respect to each Borrower, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such Borrower) in which its failure to
be duly qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Borrower is in good standing in such
jurisdictions;
(h) Agent shall have received a certificate from the Secretary
of each Guarantor attesting to the resolutions of such Guarantor's Board of
Directors authorizing its execution, delivery, and performance of the Loan
Documents to which such Guarantor is a party and authorizing specific officers
of such Guarantor to execute the same;
(i) Agent shall have received copies of each Guarantor's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of such Guarantor;
(j) Agent shall have received a certificate of status with
respect to each Guarantor, dated within 15 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Guarantor, which certificate shall indicate that such
Guarantor is in good standing in such jurisdiction;
(k) Agent shall have received certificates of status with
respect to each Guarantor, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such Guarantor) in which its failure to
be duly qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Guarantor is in good standing in such
jurisdictions;
(l) Agent shall have received a certificate of insurance,
together with the endorsements thereto, as are required by SECTION 6.8, the form
and substance of which shall be reasonably satisfactory to Agent;
(m) Agent shall have received Collateral Access Agreements with
respect to the locations listed on Schedule E-1 (other than the Xxxxxx
Warehouse);
(n) Agent shall have received opinions of Borrowers' counsel in
form and substance satisfactory to Agent;
(o) Agent shall have received a certificate of the chief
financial officer of AMTROL that all tax returns required to be filed by
Borrowers have been timely filed and all taxes upon Borrowers or their
properties, assets, income, and franchises (including Real Property taxes and
payroll taxes) have been paid prior to delinquency, except such taxes that are
the subject of a Permitted Protest;
(p) Borrowers shall have the Required Availability after giving
effect to the initial extensions of credit hereunder;
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(q) Agent shall have completed its business, legal, and
collateral due diligence, including (i) a collateral audit and review of
Borrowers' books and records and verification of Borrowers' representations and
warranties to the Lender Group, the results of which shall be reasonably
satisfactory to Agent, and (ii) an inspection of each of the locations where
Inventory is located, the results of which shall be satisfactory to Agent;
(r) Agent shall have received completed reference checks with
respect to Borrowers' senior management, the results of which are reasonably
satisfactory to Agent in its sole discretion;
(s) Agent shall have received an appraisal of the Net
Liquidation Percentage applicable to Borrowers' Inventory and Equipment, the
results of which shall be reasonably satisfactory to Agent;
(t) Agent shall have received AMTROL's Closing Date Business
Plan;
(u) the Other Senior Lenders shall have made loans to AMTROL in
an aggregate principal amount of not less than $25,000,000 pursuant to the terms
and conditions set forth in the Other Senior Debt Loan Documents and Agent shall
have received a certificate from the President or Secretary of AMTROL certifying
the consummation of such transaction;
(v) Borrowers shall pay all Lender Group Expenses that have been
incurred in connection with the transactions evidenced by this Agreement and
that are then due and payable;
(w) Agent shall have received (i) appraisals of the Real
Property Collateral reasonably satisfactory to Agent, and (ii) mortgagee title
insurance policies (or marked commitments to issue the same) for the Real
Property Collateral issued by a title insurance company satisfactory to Agent
(each a "MORTGAGE POLICY" and, collectively, the "MORTGAGE POLICIES") in amounts
satisfactory to Agent assuring Agent for the benefit of the Lenders that the
Mortgages on such Real Property Collateral are valid and enforceable first
priority mortgage Liens on such Real Property Collateral free and clear of all
defects and encumbrances except Permitted Liens, and the Mortgage Policies
otherwise shall be in form and substance reasonably satisfactory to Agent;
(x) Agent shall have received a phase-I environmental report and
a real estate survey with respect to each parcel composing the Real Property
Collateral located at 0000 Xxxxxxxx Xxxx, Xxxx Xxxxxxx, Xxxxx Xxxxxx; the
environmental consultants and surveyors retained for such reports or surveys,
the scope of the reports or surveys, and the results thereof shall be reasonably
acceptable to Agent;
(y) Agent shall have received copies of each of the following
documents, together with a certificate of the Secretary of the applicable
Borrower certifying each such document as being a true, correct, and complete
copy thereof:
(i) the Indenture (including any supplements, amendments or
other modifications thereto), and
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(ii) the Other Senior Debt Loan Documents;
(z) Borrowers shall have received all licenses, approvals or
evidence of other actions required by any Governmental Authority in connection
with the execution and delivery by Borrowers of this Agreement or any other Loan
Document or with the consummation of the transactions contemplated hereby and
thereby;
(aa) Agent shall have received a certificate from the Chief
Financial Officer of AMTROL certifying that Availability will not be less than
$1,500,000 after giving effect to the payment of regularly scheduled interest on
the Senior Subordinated Notes on December 31, 2001; and
(bb) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance reasonably satisfactory to Agent.
3.2 CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to continue to make
Advances (or otherwise extend credit hereunder) is subject to the fulfillment,
on or before the date applicable thereto, of each of the conditions subsequent
set forth below (the failure by Borrowers to so perform or cause to be performed
constituting an Event of Default):
(a) within 30 days of the Closing Date, deliver to Agent
certified copies of the policies of insurance, together with the endorsements
thereto, as are required by SECTION 6.8, the form and substance of which shall
be satisfactory to Agent and its counsel;
(b) with respect to (i) any Advance the proceeds of which are to
be used to acquire property from AMTROL Canada or to finance the operations of
AMTROL Canada or (ii) any Advance made in reliance on a Borrowing Base that
includes any Accounts, Equipment or Inventory owned by AMTROL Canada, evidence
satisfactory to Agent that Agent shall have a valid, perfected, first priority
security interest in substantially all of the personal property of AMTROL
Canada, that AMTROL Canada shall have become a Loan Party and that this
Agreement and the other Loan Documents shall have been amended (if necessary) in
a manner reasonably satisfactory to Borrowers and Agent, all pursuant to such
documentation (including legal opinions) as Agent may require in its Permitted
Discretion (the date upon which all of the foregoing shall have been
consummated, the "CANADIAN PERFECTION DATE");
(c) within 30 days after the Closing Date, enter into a Cash
Management Agreement with respect to AMTROL's account with JPMorgan Chase,
account no. 000000000 and Bank of Nova Scotia, account no. 000000000000 (the
"POST-CLOSING BANK ACCOUNTS"), or establish replacement accounts with one or
more other banking institutions each of whom shall have entered into a Cash
Management Agreement reasonably satisfactory to Agent in its Permitted
Discretion;
(d) on or before January 20, 2002, cause to be delivered to
Agent and the issuer of the title insurance policy for the Real Property located
at Xxxx'x Yard Area, Sparrows Point, Maryland (the "MARYLAND REAL PROPERTY") a
certified survey of the Maryland Real Property in form and substance
satisfactory to Agent and immediately thereafter cause to be
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delivered to Agent amendments to the title insurance policy with respect to the
Maryland Real Property in accordance with Agent's escrow agreement with the
title insurance company;
(e) on or before January 4, 2002, cause to be delivered to Agent
for the Real Property located at 0000 Xxxxxxxx Xxxxxx, Xxxx Xxxxxxx, Xxxxx
Xxxxxx a revised certified survey of such Real Property (the "RHODE ISLAND
SURVEY") indicating (i) a legal description matching the title insurance
commitment for such Real Property, (ii) a revised certification in form and
substance satisfactory to Agent, and (iii) removal of Notes number 4 and 7 of
the Rhode Island Survey, which said Rhode Island Survey shall be in form and
substance satisfactory to Agent, in Agent's sole discretion; and
(f) on or before January 11, 2002, deliver to Agent documents
satisfactory to Agent relating to the creation, perfection and establishment of
the first priority of Agent's Lien on approximately 66% of the Stock of AMTROL
Netherlands in accordance with the laws of The Netherlands.
3.3 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The obligation
of the Lender Group (or any member thereof) to make all Advances (or to extend
any other credit hereunder) shall be subject to the following conditions
precedent:
(a) the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct in all material
respects on and as of the date of such extension of credit, as though made on
and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date);
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof;
(c) no injunction, writ, restraining order, or other order of
any nature prohibiting, directly or indirectly, the extending of such credit
shall have been issued and remain in force by any Governmental Authority against
any Borrower, Agent, any Lender, or any of their Affiliates;
(d) the amount of the Revolver Usage, after giving effect to the
requested Advances or L/C's shall not exceed the Availability; and
(e) no Material Adverse Change shall have occurred since the
Closing Date.
3.4 TERM. This Agreement shall become effective upon the execution
and delivery hereof by Borrowers, Agent, and the Lenders and shall continue in
full force and effect for a term ending on December 21, 2006 (the "MATURITY
DATE"). The foregoing notwithstanding, the Lender Group, upon the election of
the Required Lenders, shall have the right to terminate its obligations under
this Agreement immediately and without notice upon the occurrence and during the
continuation of an Event of Default.
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3.5 EFFECT OF TERMINATION. On the date of termination of this
Agreement, all Obligations (including contingent reimbursement obligations of
Borrowers with respect to any outstanding Letters of Credit and including all
Bank Product Obligations) immediately shall become due and payable without
notice or demand (including (a) either (i) providing cash collateral to be held
by Agent for the benefit of those Lenders with a Revolver Commitment in an
amount equal to 105% of the then extant Letter of Credit Usage, or (ii) causing
the original Letters of Credit to be returned to the Issuing Lender, and (b)
providing cash collateral to be held by Agent for the benefit of Xxxxx Fargo or
its Affiliates with respect to the then extant Bank Product Obligations). No
termination of this Agreement, however, shall relieve or discharge Borrowers of
their duties, Obligations, or covenants hereunder and the Agent's Liens in the
Collateral shall remain in effect until all Obligations have been fully and
finally discharged and the Lender Group's obligations to provide additional
credit hereunder have been terminated. When this Agreement has been terminated
and all of the Obligations have been fully and finally discharged and the Lender
Group's obligations to provide additional credit under the Loan Documents have
been terminated irrevocably, Agent will, at Borrowers' sole expense, execute and
deliver any UCC termination statements, lien releases, mortgage releases,
re-assignments of trademarks, discharges of security interests, and other
similar discharge or release documents (and, if applicable, in recordable form)
as are reasonably necessary to release, as of record, the Agent's Liens and all
notices of security interests and liens previously filed by Agent with respect
to the Obligations.
3.6 EARLY TERMINATION BY BORROWERS. Borrowers have the option,
at any time upon 45 days prior written notice by Administrative Borrower to
Agent, to terminate this Agreement by paying to Agent, for the benefit of the
Lender Group, in cash, the Obligations (including (a) either (i) providing cash
collateral to be held by Agent for the benefit of those Lenders with a Revolver
Commitment in an amount equal to 105% of the then extant Letter of Credit Usage,
or (ii) causing the original Letters of Credit to be returned to the Issuing
Lender, and (b) providing cash collateral to be held by Agent for the benefit of
Xxxxx Fargo or its Affiliates with respect to the then extant Bank Product
Obligations), in full, together with the Applicable Prepayment Premium (to be
allocated based upon letter agreements between Agent and individual Lenders). If
Administrative Borrower has sent a notice of termination pursuant to the
provisions of this Section, then the Commitments shall terminate and Borrowers
shall be obligated to repay the Obligations (including (a) either (i) providing
cash collateral to be held by Agent for the benefit of those Lenders with a
Revolver Commitment in an amount equal to 105% of the then extant Letter of
Credit Usage, or (ii) causing the original Letters of Credit to be returned to
the Issuing Lender, and (b) providing cash collateral to be held by Agent for
the benefit of Xxxxx Fargo or its Affiliates with respect to the then extant
Bank Product Obligations), in full, together with the Applicable Prepayment
Premium, on the date set forth as the date of termination of this Agreement in
such notice. In the event of the termination of this Agreement and repayment of
the Obligations at any time prior to the Maturity Date, for any other reason,
including (a) termination upon the election of the Required Lenders to terminate
after the occurrence of an Event of Default, (b) foreclosure and sale of
Collateral, (c) sale of the Collateral in any Insolvency Proceeding, or (d)
restructure, reorganization or compromise of the Obligations by the confirmation
of a plan of reorganization, or any other plan of compromise, restructure, or
arrangement in any Insolvency Proceeding, then, in view of the impracticability
and extreme difficulty of ascertaining the actual amount of damages to the
Lender Group or profits lost by the Lender Group as a result of such early
termination, and by mutual agreement
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of the parties as to a reasonable estimation and calculation of the lost profits
or damages of the Lender Group, Borrowers shall pay the Applicable Prepayment
Premium to Agent (to be allocated based upon letter agreements between Agent and
individual Lenders), measured as of the date of such termination.
4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST. Each Borrower hereby grants to Agent,
for the benefit of the Lender Group, a continuing security interest in all of
its right, title, and interest in all currently existing and hereafter acquired
or arising Personal Property Collateral in order to secure prompt repayment of
any and all of the Obligations in accordance with the terms and conditions of
the Loan Documents and in order to secure prompt performance by Borrowers of
each of their covenants and duties under the Loan Documents. The Agent's Liens
in and to the Personal Property Collateral shall attach to all Personal Property
Collateral without further act on the part of Agent or Borrowers. Anything
contained in this Agreement or any other Loan Document to the contrary
notwithstanding, except for Permitted Dispositions, Borrowers have no authority,
express or implied, to dispose of any item or portion of the Collateral.
4.2 NEGOTIABLE COLLATERAL. In the event that any Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral, and if
and to the extent that perfection or priority of Agent's security interest is
dependent on or enhanced by possession, the applicable Borrower, immediately
upon the request of Agent, shall endorse and deliver physical possession of such
Negotiable Collateral to Agent.
4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE
COLLATERAL. At any time after the occurrence and during the continuation of an
Event of Default, Agent or Agent's designee may (a) notify Account Debtors of
Borrowers that the Accounts, chattel paper, or General Intangibles have been
assigned to Agent or that Agent has a security interest therein, or (b) collect
the Accounts, chattel paper, or General Intangibles directly and charge the
collection costs and expenses to the Loan Account. Each Borrower agrees that it
will hold in trust for the Lender Group, as the Lender Group's trustee, any
Collections that it receives and immediately will deliver said Collections to
Agent or a Cash Management Bank in their original form as received by the
applicable Borrower.
4.4 FILING OF FINANCING STATEMENTS; COMMERCIAL TORT CLAIMS; DELIVERY
OF ADDITIONAL DOCUMENTATION REQUIRED.
(a) Each Borrower authorizes Agent to file any financing
statement required hereunder, and any continuation statement or amendment with
respect thereto, in any appropriate filing office without the signature of such
Borrower where permitted by applicable law. Each Borrower hereby ratifies the
filing of any financing statement, and any continuation statement or amendment
with respect thereto, filed without the signature of such Borrower prior to the
date hereof, a copy of which will be delivered promptly to Administrative
Borrower.
(b) If any Borrower acquires any commercial tort claim after the
date hereof that could reasonably be expected to result in a payment in excess
of $100,000, such Borrower shall immediately deliver to Agent a written
description of such commercial tort claim
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and shall deliver a written agreement, in form and substance satisfactory to
Agent, pursuant to which such Borrower shall pledge and collaterally assign all
of its right, title and interest in and to such commercial tort claim to Agent,
for the benefit of the Lenders, as security for the Obligations (a "COMMERCIAL
TORT CLAIM ASSIGNMENT").
(c) At any time upon the request of Agent, Borrowers shall
execute and deliver to Agent, any and all financing statements, original
financing statements in lieu of continuation statements, amendments to financing
statements, fixture filings, security agreements, pledges, assignments,
Commercial Tort Claim Assignments, endorsements of certificates of title, and
all other documents (collectively, the "ADDITIONAL DOCUMENTS") that Agent may
request in its Permitted Discretion, in form and substance satisfactory to
Agent, to create and perfect and continue perfected or better perfect the
Agent's Liens in the Collateral (whether now owned or hereafter arising or
acquired, tangible or intangible, real or personal), and in order to fully
consummate all of the transactions contemplated hereby and under the other Loan
Documents, including any Mortgages.
(d) To the maximum extent permitted by applicable law, each
Borrower authorizes Agent to execute any such Additional Documents in such
Borrower's name and authorizes Agent to file such executed Additional Documents
in any appropriate filing office. To the maximum extent permitted by applicable
law, each Borrower authorizes Agent the filing of any such Additional Documents
without the signature of the applicable Borrower in any appropriate filing
office. In addition, on such periodic basis as Agent shall require, Borrowers
shall (x) cause all patents, copyrights, and trademarks acquired or generated by
Borrowers necessary or useful to the conduct of Borrowers' business that are not
already the subject of a registration with the appropriate filing office (or an
application therefor diligently prosecuted) to be registered with such
appropriate filing office in a manner sufficient to impart constructive notice
of Borrowers' ownership thereof, and (y) cause to be prepared, executed, and
delivered to Agent supplemental schedules to the applicable Loan Documents to
identify such patents, copyrights, and trademarks as being subject to the
security interests created thereunder.
4.5 POWER OF ATTORNEY. Each Borrower hereby irrevocably makes,
constitutes, and appoints Agent (and any of Agent's officers, employees, or
agents designated by Agent) as such Borrower's true and lawful attorney, with
power to (a) if such Borrower refuses to, or fails timely to execute and deliver
any of the documents described in SECTION 4.4, sign the name of such Borrower on
any of the documents described in SECTION 4.4, copies of which will be delivered
to Administrative Borrower thereafter, (b) at any time that an Event of Default
has occurred and is continuing, sign such Borrower's name on any invoice or xxxx
of lading relating to the Collateral, drafts against Account Debtors, or notices
to Account Debtors, (c) send requests for verification of Accounts (and prior to
the occurrence and continuance of an Event of Default, use reasonable efforts to
notify Administrative Borrower promptly after such Accounts have been verified,
PROVIDED that the failure or delay in notifying Administrative Borrower shall
not prejudice the rights of Agent or any Lender), (d) endorse such Borrower's
name on any Collection item that may come into the Lender Group's possession,
(e) at any time that an Event of Default has occurred and is continuing, make,
settle, and adjust all claims under such Borrower's policies of insurance and
make all determinations and decisions with respect to such policies of
insurance, and (f) at any time that an Event of Default has occurred and is
continuing, settle and adjust disputes and claims respecting the Accounts,
chattel paper, or General
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Intangibles directly with Account Debtors, for amounts and upon terms that Agent
determines to be reasonable, and Agent may cause to be executed and delivered
any documents and releases that Agent determines to be necessary. The
appointment of Agent as each Borrower's attorney, and each and every one of its
rights and powers, being coupled with an interest, is irrevocable until all of
the Obligations have been fully and finally repaid and performed and the Lender
Group's obligations to extend credit hereunder are terminated.
4.6 RIGHT TO INSPECT. Agent and each Lender (through any of their
respective officers, employees, or agents) shall have the right, from time to
time during normal business hours hereafter (or, after the occurrence and
continuance of Event of Default, at any time) to inspect the Books and to check,
test, and appraise the Collateral in order to verify Borrowers' financial
condition or the amount, quality, value, condition of, or any other matter
relating to, the Collateral or conduct a field examination or business
valuation; PROVIDED, that the number of appraisals with respect to the
Inventory, Equipment and Real Property for any given period that may be
conducted by Agent shall be subject to SECTIONS 2.1(B) and 2.2(A).
4.7 CONTROL AGREEMENTS. Each Borrower agrees that it will not
transfer assets out of any Securities Accounts or DDA's other than as permitted
under SECTION 7.19 and, if to another securities intermediary or depository,
unless each of the applicable Borrower, Agent, and the substitute securities
intermediary have entered into a Control Agreement. Each Borrower hereby agrees
to take any or all action that Agent requests in order for Agent to obtain
control in accordance with Sections 9-104, 9-105, 9-106 and 9-107 of the Code
with respect to any Collateral constituting Securities Accounts, DDA's,
electronic chattel paper, Investment Property and letter-of-credit rights. No
arrangement contemplated hereby or by any Control Agreement in respect of any
Securities Accounts or other Investment Property or any DDA, electronic chattel
paper or letter-of-credit rights shall be modified by Borrowers without the
prior written consent of Agent. Upon the occurrence and during the continuance
of a Default or Event of Default, Agent may notify any securities intermediary
or depository to liquidate the applicable Securities Account or DDA or any
related Investment Property maintained or held thereby and remit the proceeds
thereof to the Agent's Account.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement, the
following representations and warranties are made to the Lender Group which
representations and warranties shall be true, correct, and complete, in all
material respects, as of the date hereof, and shall be true, correct, and
complete, in all material respects, as of the Closing Date, and at and as of the
date of the making of each Advance and Term Loan (or other extension of credit)
made thereafter, as though made on and as of the date of such Advance and Term
Loans (or other extension of credit) (except to the extent that such
representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:
5.1 NO ENCUMBRANCES. Each Borrower has good and indefeasible title to
its Collateral and the Real Property, free and clear of Liens except for
Permitted Liens.
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5.2 ELIGIBLE ACCOUNTS. The Eligible Accounts are bona fide existing
payment obligations of Account Debtors created by the sale and delivery of
Inventory or the rendition of services to such Account Debtors in the ordinary
course of Borrowers' business, owed to Borrowers without defenses, disputes,
offsets, counterclaims, or rights of return or cancellation. As to each Account
that is identified by Administrative Borrower as an Eligible Account in a
borrowing base report submitted to Agent, such Account is not excluded as
ineligible by virtue of one or more of the excluding criteria set forth in the
definition of Eligible Accounts.
5.3 ELIGIBLE INVENTORY. All Eligible Inventory is of good and
merchantable quality, free from defects. As to each item of Inventory that is
identified by Administrative Borrower as Eligible Inventory in a borrowing base
report submitted by Agent, such Inventory is not excluded as ineligible by
virtue of one or more of the excluding criteria set forth in the definition of
Eligible Inventory.
5.4 EQUIPMENT. All of the Equipment is used or held for use in
Borrowers' business and is fit for such purposes. As to each item of Equipment
that is identified by Administrative Borrower as Eligible Equipment in any
report submitted to Agent, such Equipment is not excluded as ineligible by
virtue of one or more of the excluding criteria set forth in the definition of
Eligible Equipment.
5.5 LOCATION OF INVENTORY AND EQUIPMENT. All of the Inventory and
Equipment of Borrowers is located at the locations (which locations are in a
state of the United States) identified on Schedule 5.5. All of the Inventory and
Equipment of AMTROL Canada is located at the locations (which locations are in a
province of Canada, identified on Schedule 5.5. Except as set forth on Schedule
5.5, no Equipment or Inventory is stored with a bailee, warehouseman, or similar
party.
5.6 INVENTORY RECORDS. Each Borrower keeps correct and accurate
records itemizing and describing the type, quality, and quantity of its
Inventory and the book value thereof.
5.7 STATE OF INCORPORATION; LOCATION OF CHIEF EXECUTIVE OFFICE;
ORGANIZATIONAL ID NUMBER; FEIN; COMMERCIAL TORT CLAIMS.
(a) The state of incorporation, the chief executive office and
the organizational identification number and FEIN of each Loan Party is set
forth in Schedule 5.7.
(b) No Borrower holds any commercial tort claims as of the date
hereof, except as set forth in Schedule 5.7.
5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each Loan Party is duly organized and existing and in good
standing under the laws of the jurisdiction of its organization and qualified to
do business in any state where the failure to be so qualified reasonably could
be expected to have a Material Adverse Change.
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(b) Set forth on Schedule 5.8(b), is a complete and accurate
description of the authorized capital Stock of each Loan Party, by class, and,
as of the Closing Date, a description of the number of shares of each such class
that are issued and outstanding. Other than as described on Schedule 5.8(b),
there are no subscriptions, options, warrants, or calls relating to any shares
of each Loan Party's capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. No Loan Party is
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of its capital Stock or any security convertible
into or exchangeable for any of its capital Stock.
(c) Set forth on Schedule 5.8(c), is a complete and accurate
list of each Loan Party's direct and indirect Subsidiaries (who are not Loan
Parties), showing: (i) the jurisdiction of their organization; (ii) the number
of shares of each class of common and preferred Stock authorized for each of
such Subsidiaries; and (iii) the number and the percentage of the outstanding
shares of each such class owned directly or indirectly by the applicable Loan
Party. All of the outstanding capital Stock of each such Subsidiary has been
validly issued and is fully paid and non-assessable.
(d) Except as set forth on Schedule 5.8(c), there are no
subscriptions, options, warrants, or calls relating to any shares of any Loan
Party's Subsidiaries' capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. No Loan Party or
any of its respective Subsidiaries is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of any Loan
Party's Subsidiaries' capital Stock or any security convertible into or
exchangeable for any such capital Stock.
5.9 DUE AUTHORIZATION; NO CONFLICT.
(a) As to each Borrower, the execution, delivery, and
performance by such Borrower of this Agreement and the Loan Documents to which
it is a party have been duly authorized by all necessary action on the part of
such Borrower.
(b) As to each Borrower, the execution, delivery, and
performance by such Borrower of this Agreement and the Loan Documents to which
it is a party do not and will not (i) violate any provision of federal, state,
or local law or regulation applicable to any Borrower, the Governing Documents
of any Borrower, or any order, judgment, or decree of any court or other
Governmental Authority binding on any Borrower, (ii) conflict with, result in a
breach of, or constitute (with due notice or lapse of time or both) a default
under any material contractual obligation of any Borrower, (iii) result in or
require the creation or imposition of any Lien of any nature whatsoever upon any
properties or assets of Borrower, other than Permitted Liens, or (iv) require
any approval of any Borrower's interestholders or any approval or consent of any
Person under any material contractual obligation of any Borrower.
(c) Other than the filing of financing statements, fixture
filings, and Mortgages, the execution, delivery, and performance by each
Borrower of this Agreement and the Loan Documents to which such Borrower is a
party do not and will not require any registration with, consent, or approval
of, or notice to, or other action with or by, any Governmental Authority or
other Person.
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(d) As to each Borrower, this Agreement and the other Loan
Documents to which such Borrower is a party, and all other documents
contemplated hereby and thereby, when executed and delivered by such Borrower
will be the legally valid and binding obligations of such Borrower, enforceable
against such Borrower in accordance with their respective terms, except as
enforcement may be limited by the effects of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally.
(e) The Agent's Liens are validly created, perfected, and first
priority Liens, subject only to Permitted Liens.
(f) The execution, delivery, and performance by each Guarantor
of the Loan Documents to which it is a party have been duly authorized by all
necessary action on the part of such Guarantor.
(g) The execution, delivery, and performance by each Guarantor
of the Loan Documents to which it is a party do not and will not (i) violate any
provision of federal, state, or local law or regulation applicable to Guarantor,
the Governing Documents of such Guarantor, or any order, judgment, or decree of
any court or other Governmental Authority binding on such Guarantor, (ii)
conflict with, result in a breach of, or constitute (with due notice or lapse of
time or both) a default under any material contractual obligation of such
Guarantor, (iii) result in or require the creation or imposition of any Lien of
any nature whatsoever upon any properties or assets of such Guarantor, other
than Permitted Liens, or (iv) require any approval of such Guarantor's
interestholders or any approval or consent of any Person under any material
contractual obligation of such Guarantor.
(h) The execution, delivery, and performance by each Guarantor
of the Loan Documents to which such Guarantor is a party do not and will not
require any registration with, consent, or approval of, or notice to, or other
action with or by, any Governmental Authority or other Person.
(i) The Loan Documents to which each Guarantor is a party, and
all other documents contemplated hereby and thereby, when executed and delivered
by such Guarantor will be legally valid and binding obligations of such
Guarantor, enforceable against such Guarantor in accordance with their
respective terms, except as enforcement may be limited by the effects of
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally.
5.10 LITIGATION. Other than those matters disclosed on Schedule 5.10,
there are no actions, suits, or proceedings pending or, to the knowledge of
Borrowers, threatened against Borrowers, or any of their Subsidiaries, as
applicable, except for (a) matters that are fully covered by insurance (subject
to customary deductibles), and (b) after the Closing Date matters arising that
reasonably could not be expected to result in a Material Adverse Change.
5.11 NO MATERIAL ADVERSE CHANGE. All financial statements relating to
Borrowers or Guarantors that have been delivered by Borrowers or Guarantors to
the Lender Group have been prepared in accordance with GAAP (except, in the case
of unaudited financial
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statements, for the lack of footnotes and being subject to year-end audit
adjustments) and present fairly in all material respects, Borrowers' (or
Guarantors', as applicable) financial condition as of the date thereof and
results of operations for the period then ended. There has not been a Material
Adverse Change with respect to Borrowers (or Guarantors, as applicable) since
the date of the latest financial statements submitted to the Lender Group on or
before the Closing Date.
5.12 FRAUDULENT TRANSFER.
(a) Each Borrower is Solvent.
(b) No transfer of property is being made by any Borrower and no
obligation is being incurred by any Borrower in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of Borrowers.
5.13 EMPLOYEE BENEFITS. No "accumulated funding deficiency" (within
the meaning of Section 412 of the IRC or Section 302 of ERISA) has occurred
during the five-year period prior to the Closing Date with respect to any
Benefit Plan of Holdings or any of its Subsidiaries. Each Benefit Plan of
Holdings or any of its Subsidiaries has complied in all respects with the
applicable provisions of ERISA, except for where in any respect liabilities,
"accumulated funding deficiencies", or compliance failures, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Change.
5.14 ENVIRONMENTAL CONDITION. Except as would not result in or could
not be expected to result in a material liability under Environmental Laws, (a)
to Borrowers' knowledge, none of Borrowers' properties or assets has ever been
used by Borrowers or by previous owners or operators in the disposal of, or to
produce, store, handle, treat, release, or transport, any Hazardous Materials,
where such production, storage, handling, treatment, release or transport is or
was in violation, in any material respect, of applicable Environmental Law, (b)
to Borrowers' knowledge, none of Borrowers' properties or assets has ever been
designated or identified in any manner pursuant to any Environmental Law as a
Hazardous Materials disposal site, (c) none of Borrowers have received written
notice that a Lien arising under any Environmental Law has attached to any
revenues or to any Real Property owned or operated by Borrowers, and (d) except
for matters resolved or remediated to the written satisfaction of the relevant
Governmental Authority, none of Borrowers have received a summons, citation,
notice, or directive from the Environmental Protection Agency or any other
federal or state governmental agency concerning any action or omission by any
Borrower resulting in the releasing or disposing of Hazardous Materials into the
environment in violation of any applicable Environmental Laws.
5.15 BROKERAGE FEES. Borrowers have not utilized the services of any
broker or finder in connection with Borrowers' obtaining financing from the
Lender Group under this Agreement and no brokerage commission or finders', fee
is payable by Borrowers in connection herewith.
5.16 INTELLECTUAL PROPERTY. Each Borrower owns, or holds licenses in,
all trademarks, trade names, copyrights, patents, patent rights, and licenses
that are necessary to the
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conduct of its business as currently conducted. Attached hereto as Schedule 5.16
is a true, correct, and complete listing of all material patents, patent
applications, trademarks, trademark applications, copyrights, and copyright
registrations as to which each Borrower is the owner or is an exclusive
licensee.
5.17 LEASES. Borrowers enjoy peaceful and undisturbed possession under
all leases material to the business of Borrowers and to which Borrowers are a
party or under which Borrowers are operating. All of such leases are valid and
subsisting and no material default by Borrowers exists under any of them.
5.18 DDAs. Set forth on Schedule 5.18 are all of the DDAs of each
Borrower, including, with respect to each depository (i) the name and address of
that depository, and (ii) the account numbers of the accounts maintained with
such depository.
5.19 COMPLETE DISCLOSURE. All factual information (taken as a whole)
furnished by or on behalf of Borrowers in writing to Agent or any Lender
(including all information contained in the Schedules hereto or in the other
Loan Documents) for purposes of or in connection with this Agreement, the other
Loan Documents or any transaction contemplated herein or therein is, and all
other such factual information (taken as a whole) hereafter furnished by or on
behalf of Borrowers in writing to the Agent or any Lender will be, true and
accurate in all material respects on the date as of which such information is
dated or certified and not incomplete by omitting to state any fact necessary to
make such information (taken as a whole) not misleading in any material respect
at such time in light of the circumstances under which such information was
provided. On the Closing Date, the Closing Date Projections are based on, and as
of the date on which any other Projections are delivered to Agent, such
additional Projections will be based on Borrowers' good faith reasonable
estimate of its future performance for the periods covered thereby.
5.20 INDEBTEDNESS. Set forth on Schedule 5.20 is a true and complete
list of all Indebtedness of each Borrower outstanding immediately prior to the
Closing Date that is to remain outstanding after the Closing Date and such
Schedule accurately reflects the aggregate principal amount of such Indebtedness
and the principal terms thereof.
5.21 SPECIAL PURPOSE CORPORATION. Neither Holdings nor AMTROL
International Investments Inc. is engaged in any business other than related to
the entering into and performing its obligations under the Loan Documents and
the Other Senior Debt Documents to which it is a party and the ownership of the
capital Stock of AMTROL (in the case of Holdings) and the capital Stock of
AMTROL Canada, AMTROL Germany, AMTROL Europe Ltd. and AMTROL Netherlands B.V.
(in the case of AMTROL International Investments Inc.).
5.22 SENIOR SUBORDINATED NOTES. The subordination provisions contained
in the Senior Subordinated Notes are enforceable by the Lender Group against
Borrowers and the holders of such Senior Subordinated Notes, subject to the
effects of bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable
principles (regardless of whether enforcement is sought in equity or at law) and
an implied covenant of good faith and fair dealing, and all Obligations of
Borrowers
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are within the definition of "Designated Senior Indebtedness" included in such
provisions of the Indenture and Senior Subordinated Notes.
6. AFFIRMATIVE COVENANTS.
So long as any credit hereunder shall be available and until full and
final payment of the Obligations and the termination of this Agreement:
6.1 ACCOUNTING SYSTEM. Borrowers shall, and shall cause each of their
respective Subsidiaries to, maintain a system of accounting that enables
Borrowers to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Agent. Borrowers also shall keep an
inventory reporting system that shows all additions, sales, claims, returns, and
allowances with respect to the Inventory.
6.2 COLLATERAL REPORTING. Borrowers shall, and shall cause each of
their respective Subsidiaries (other than the Foreign Subsidiaries) to, provide
Agent (with copies for each Lender) with the following documents at the
following times in form satisfactory to Lenders:
--------------------------------------------------------------------------------
Daily (a) a sales journal, collection journal, and credit register
since the last such schedule and a calculation of the
Borrowing Base as of such date, and
(b) notice of all returns, disputes, or claims.
--------------------------------------------------------------------------------
Weekly (c) Inventory reports specifying each Borrower's cost and the
wholesale market value of its Inventory, by category, with
additional detail showing additions to and deletions from
the Inventory.
--------------------------------------------------------------------------------
Monthly (not (d) a detailed calculation of the Borrowing Base (including
later than detail regarding those Accounts that are not Eligible
the 10th day Accounts),
of each
month) (e) a detailed aging, by total, of the Accounts, together with a
reconciliation to the detailed calculation of the Borrowing
Base previously provided to Agent,
(f) a summary aging, by vendor, of Borrowers' accounts payable
and any book overdraft,
(g) a calculation of Dilution for the prior month, and
(h) so long as any Collateral is located at the Xxxxxx
Warehouse, satisfactory evidence of payment of the monthly
rent with respect to the Xxxxxx Warehouse.
--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
Quarterly (i) a detailed list of each Borrower's customers, and
(j) a report regarding each Borrower's accrued, but unpaid, ad
valorem taxes.
--------------------------------------------------------------------------------
Upon request (k) copies of invoices in connection with the Accounts, credit
by Agent memos, remittance advices, deposit slips, shipping and
delivery documents in connection with the Accounts and, for
Inventory and Equipment acquired by Borrowers, purchase
orders and invoices.
--------------------------------------------------------------------------------
Upon reasonable (l) such other reports as to the Collateral, or the financial
request condition of Borrowers.
by Agent
--------------------------------------------------------------------------------
In addition, each Borrower agrees to cooperate fully with Agent to
facilitate and implement a system of electronic collateral reporting in order to
provide electronic reporting of each of the items set forth above.
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Holdings or AMTROL
(as the case may be) shall deliver to Agent, with copies to each Lender:
(a) as soon as available, but in any event within 30 days (45
days in the case of a month that is the end of one of the first 3 fiscal
quarters in a fiscal year) after the end of each month (other than the last
month of each fiscal year) during each of AMTROL's fiscal years,
(i) balance sheets, income statements, and statements of
cash flow prepared on a consolidated basis for AMTROL's and its
Subsidiaries' operations and separately for the North American Operations
during such period,
(ii) a certificate signed by the chief financial officer of
AMTROL to the effect that:
A. the financial statements delivered hereunder have
been prepared in accordance with GAAP (except for the lack of
footnotes and being subject to year-end audit adjustments) and fairly
present in all material respects the financial condition of AMTROL and
its Subsidiaries and the North American Operations (as applicable),
and
B. there does not exist any condition or event that
constitutes a Default or Event of Default (or, to the extent of any
non-compliance, describing such non-compliance as to which he or she
may have knowledge and what action Borrowers have taken, are taking,
or propose to take with respect thereto), and
(iii) for each month that is the date on which a financial
covenant in SECTION 7.20 is to be tested, a Compliance Certificate
demonstrating, in
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reasonable detail, compliance at the end of such period with the applicable
financial covenants contained in SECTION 7.20, and
(b) as soon as available, but in any event within 90 days after
the end of each of AMTROL's fiscal years,
(i) consolidated financial statements of AMTROL and its
Subsidiaries for each such fiscal year, audited by independent certified
public accountants reasonably acceptable to Agent and certified, without
any qualifications, by such accountants to have been prepared in accordance
with GAAP (such audited financial statements to include a balance sheet,
income statement, and statement of cash flow and, if prepared, such
accountants' letter to management),
(ii) a certificate of such accountants addressed to Agent
and the Lenders stating that such accountants do not have knowledge of the
existence of any Default or Event of Default under SECTION 7.20,
(c) as soon as available, but in any event within 30 days after
the start of each of AMTROL's fiscal years, copies of the Projections, in form
and substance (including as to scope and underlying assumptions) satisfactory to
Agent, in its sole discretion, for the forthcoming 3 years, year by year, and
for the forthcoming fiscal year, month by month, certified by the chief
financial officer of AMTROL as being such officer's good faith best estimate of
the financial performance of AMTROL and its Subsidiaries during the period
covered thereby,
(d) if and when filed by Holdings or any Borrower,
(i) 10-Q quarterly reports, Form 10-K annual reports, and
Form 8-K current reports, and
(ii) any other filings made by Holdings or any Borrower with
the SEC,
(e) if and when reasonably requested by Agent, copies of
Holdings' or Borrowers' federal income tax returns, and any amendments thereto,
filed with the Internal Revenue Service,
(f) if and when filed by any Borrower and as reasonably
requested by Agent, satisfactory evidence of payment of applicable excise taxes
in each jurisdictions in which (i) any Borrower conducts business or is required
to pay any such excise tax, (ii) where any Borrower's failure to pay any such
applicable excise tax would result in a Lien on the properties or assets of any
Borrower, or (iii) where any Borrower's failure to pay any such applicable
excise tax reasonably could be expected to result in a Material Adverse Change,
(g) as soon as Holdings or a Borrower has knowledge of any event
or condition that constitutes a Default or an Event of Default, notice thereof
and a statement of the curative action that Holdings or Borrowers propose to
take with respect thereto,
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(h) as soon as available, (i) copies of any amendment or other
modification of any Other Senior Debt Loan Document or the Indenture, (ii)
copies of material notices and other correspondence that Holdings or any
Borrower executes, receives or sends in connection with (A) any Other Senior
Debt Loan Document to an Other Senior Lender in its capacity as a lender
thereunder or (B) the Indenture, and (iii) written notice of any potential or
actual default under any Other Senior Debt Loan Document or the Indenture,
(i) promptly after the commencement thereof, but in any event
within 5 days after the service of process with respect thereto on any Loan
Party, notice of all actions, suits or proceedings brought by or against any
Loan Party before any Governmental Authority which could reasonably be expected
to result in a Material Adverse Change,
(j) after December 31, 2001, not less than 10 Business Days'
prior to the making of any regularly scheduled semi-annual payment of interest
on the Senior Subordinated Notes, Borrowers shall deliver a certificate stating
that after giving effect to such interest payment Availability will not be less
than $1,500,000, and
(k) upon the request of Agent, any other report reasonably
requested relating to the financial condition of Borrowers.
In addition to the financial statements referred to above, AMTROL
agrees that no Borrower, or any Subsidiary of a Borrower, will have a fiscal
year different from that of AMTROL. Borrowers agree that their independent
certified public accountants are authorized to communicate with Agent and to
release to Agent whatever financial information relating to the affairs,
finances or accounts of Borrowers that Agent reasonably may request; PROVIDED,
that Agent shall provide notice to Administrative Borrower promptly after Agent
communicates with such accountants. Each Borrower waives the right to assert a
confidential relationship, if any, it may have with any accounting firm or
service bureau in connection with any information requested by Agent pursuant to
or in accordance with this Agreement (other than with respect to information
protected by the attorney-client privilege), and agree that Agent may contact
directly any such accounting firm or service bureau in order to obtain such
information.
6.4 GUARANTOR REPORTS. To the extent available, Holdings shall, and
shall cause each Guarantor to, deliver its annual financial statements at the
time when AMTROL provides its audited financial statements to Agent and, to the
extent available and requested by Agent, copies of all federal income tax
returns.
6.5 RETURN. Borrowers shall cause returns and allowances as between
Borrowers and their Account Debtors, to be on the same basis and in accordance
with the usual customary practices of the applicable Borrower, as they exist at
the time of the execution and delivery of this Agreement or changes or other
modifications to such practices as such applicable Borrower deems commercially
reasonable and necessary to the conduct of its business so long as such changes
or other modifications could not reasonably be expected to materially adversely
affect Agent or the Lenders. If, at a time when no Event of Default has occurred
and is continuing, any Account Debtor returns any Inventory to any Borrower, the
applicable Borrower promptly shall determine the reason for such return and, if
the applicable Borrower accepts such return, issue a credit memorandum (with a
copy to be sent to Agent upon request) in the
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appropriate amount to such Account Debtor. If, at a time when an Event of
Default has occurred and is continuing, any Account Debtor returns any Inventory
to any Borrower, the applicable Borrower promptly shall determine the reason for
such return and, if Agent consents (which consent shall not be unreasonably
withheld), issue a credit memorandum (with a copy to be sent to Agent) in the
appropriate amount to such Account Debtor.
6.6 MAINTENANCE OF PROPERTIES. Borrowers shall, and shall cause their
respective Subsidiaries to, maintain and preserve all of its material properties
which are necessary or useful in the proper conduct to its business in good
working order and condition, ordinary wear and tear excepted, and comply at all
times with the provisions of all material leases to which it is a party as
lessee, so as to prevent any loss or forfeiture thereof or thereunder.
6.7 TAXES. Holdings and Borrowers shall, and shall cause their
respective Subsidiaries to, cause all material assessments and taxes, whether
real, personal, or otherwise, due or payable by, or imposed, levied, or assessed
against them or any of their assets to be paid in full, before delinquency or
before the expiration of any extension period, except to the extent that the
validity of such assessment or tax shall be the subject of a Permitted Protest.
Holdings and Borrowers shall, and shall cause their respective Subsidiaries to,
make timely payment or deposit of all material tax payments and withholding
taxes required of it by applicable laws, including those laws concerning
F.I.C.A., F.U.T.A., state disability, and local, state, and federal income
taxes, and will, upon request, furnish Agent with proof satisfactory to Agent
indicating that the applicable Person has made such payments or deposits. Upon
reasonable request of Agent, Holdings and Borrowers shall, and shall cause their
respective Subsidiaries to, deliver satisfactory evidence of payment of
applicable excise taxes in each jurisdiction in which any of them is required to
pay any such excise tax.
6.8 INSURANCE.
(a) At Borrowers' expense, Borrowers shall, and shall cause
their respective Subsidiaries to, maintain insurance respecting its property and
assets wherever located, covering loss or damage by fire, theft, explosion, and
all other hazards and risks as ordinarily are insured against by other Persons
engaged in the same or similar businesses. Additionally, Borrowers shall, and
shall cause their respective Subsidiaries to, maintain business interruption,
public liability, and product liability insurance, as well as insurance against
larceny, embezzlement, and criminal misappropriation. All such policies of
insurance shall be in such amounts and with such insurance companies as are
reasonably satisfactory to Agent. Borrowers shall deliver copies of all such
policies to Agent with a satisfactory lender's loss payable endorsement naming
Agent as sole loss payee or additional insured, as appropriate. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than 30 days prior written notice to Agent in the event of cancellation
of the policy for any reason whatsoever.
(b) Administrative Borrower shall give Agent prompt notice of
any loss covered by such insurance. Agent shall have the exclusive right to
adjust any losses payable under any such insurance policies in excess of
$200,000, without any liability to Borrowers whatsoever in respect of such
adjustments. Any monies received as payment for any loss under any insurance
policy described in SECTION 6.8(a) (other than liability insurance policies) or
as
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payment of any award or compensation for condemnation or taking by eminent
domain, shall be paid over to Agent to be applied at the option of the Required
Lenders either to the prepayment of the Obligations or shall be disbursed to
Administrative Borrower under staged payment terms reasonably satisfactory to
the Required Lenders for application to the cost of repairs, replacements, or
restorations. Any such repairs, replacements, or restorations shall be effected
with reasonable promptness and shall be of a value at least equal to the value
of the items or property destroyed prior to such damage or destruction.
(c) Borrowers shall not, and shall not permit their respective
Subsidiaries to, take out separate insurance concurrent in form or contributing
in the event of loss with that required to be maintained under this SECTION 6.8,
unless Agent is included thereon as named insured with the loss payable to Agent
under a lender's loss payable endorsement or its equivalent. Administrative
Borrower immediately shall notify Agent whenever such separate insurance is
taken out, specifying the insurer thereunder and full particulars as to the
policies evidencing the same, and copies of such policies promptly shall be
provided to Agent.
6.9 LOCATION OF INVENTORY AND EQUIPMENT. Borrowers shall keep the
Inventory and Equipment only at the locations in the continental United States
identified on Schedule 5.5 and AMTROL Canada shall keep the Inventory and
Equipment only at the locations in Canada identified on Schedule 5.5; PROVIDED,
HOWEVER, that Administrative Borrower may amend Schedule 5.5 so long as such
amendment occurs by written notice to Agent not less than 30 days prior to the
date on which the Inventory or Equipment is moved to such new location, so long
as such new location is within the continental United States, or, after the
Canadian Perfection Date, Canada and so long as, at the time of such written
notification, the applicable Borrower provides or has authorized any financing
statements, fixture filings or other similar instruments necessary to perfect
and continue perfected the Agent's Liens on such assets and also provides to
Agent a Collateral Access Agreement.
6.10 COMPLIANCE WITH LAWS. Borrowers shall, and shall cause their
respective Subsidiaries to, comply with the requirements of all applicable laws,
rules, regulations, and orders of any Governmental Authority, including the Fair
Labor Standards Act and the Americans With Disabilities Act, other than laws,
rules, regulations, and orders the non-compliance with which, individually or in
the aggregate, would not result in and reasonably could not be expected to
result in a Material Adverse Change.
6.11 LEASES. Borrowers shall pay when due all rents and other amounts
payable under any material leases to which any Borrower is a party or by which
any Borrower's properties and assets are bound, unless such payments are the
subject of a Permitted Protest.
6.12 EXISTENCE. Holdings and Borrowers shall, and shall cause their
respective Subsidiaries to, at all times preserve and keep in full force and
effect each Person's valid existence and good standing and any rights and
franchises material to their businesses.
6.13 ENVIRONMENTAL. Borrowers shall (a) keep any property either owned
or operated by any Borrower free of any Environmental Liens or post bonds or
other financial assurances sufficient to satisfy the obligations or liability
evidenced by such Environmental Liens, (b) comply, in all material respects,
with Environmental Laws and provide to Agent
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documentation of such compliance which Agent reasonably requests, (c) promptly
notify Agent of any release of a Hazardous Material of any reportable quantity
from or onto property owned or operated by any Borrower and take any Remedial
Actions required under applicable Environmental Laws to xxxxx said release or
otherwise to come into material compliance with applicable Environmental Law,
and (d) promptly provide Agent with written notice within 10 days of the receipt
of any of the following: (i) notice that an Environmental Lien has been filed
against any of the real or personal property of any Borrower, (ii) notice of the
commencement of any Environmental Action or notice that an Environmental Action
will be filed against any Borrower, and (iii) notice of a violation, citation,
or other administrative order which reasonably could be expected to result in a
Material Adverse Change.
6.14 COMMERCIAL TORT CLAIMS; ORGANIZATIONAL ID NUMBER. Administrative
Borrower shall, immediately upon obtaining any commercial tort claim which could
reasonably be expected to result in a payment in excess of $100,000, deliver to
Agent an updated Schedule 5.7(d) and the other documents required under SECTION
4.4. Administrative Borrower shall, immediately upon obtaining an organizational
identification number (to the extent any Loan Party has not been issued such
number on or prior to the Closing Date), notify Agent in writing and deliver to
Agent an updated Schedule 5.7(c).
6.15 DISCLOSURE UPDATES. Administrative Borrower shall promptly and in
no event later than 10 Business Days after obtaining knowledge thereof, (a)
notify Agent if any written information, exhibit, or report furnished to the
Lender Group hereunder contained any untrue statement of a material fact or
omitted to state any material fact necessary to make the statements contained
therein not misleading in light of the circumstances in which made, and (b)
correct any material defect or error that may be discovered therein or in any
Loan Document (other than such information contained in or attached to the Due
Diligence Letter or the Officers' Certificate) or in the execution,
acknowledgement, filing, or recordation thereof.
6.16 AMTROL GERMANY. On or prior to the date occurring ninety (90)
days following the Closing Date, Borrowers shall deliver to Agent documents
satisfactory to Agent relating to creation, perfection and establishment of the
first priority of Agent's Lien on approximately 66% of the Stock of AMTROL
Germany in accordance with the laws of the Federal Republic of Germany.
7. NEGATIVE COVENANTS.
So long as any credit hereunder shall be available and until full and
final payment of the Obligations and the termination of this Agreement:
7.1 INDEBTEDNESS. Holdings will not, and will not permit any of its
Subsidiaries that is not a Foreign Subsidiary to, create, incur, assume, permit,
guarantee, or otherwise become or remain, directly or indirectly, liable with
respect to any Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other Loan
Documents (including, without limitation, guarantees hereunder and thereunder),
together with Indebtedness owed to Underlying Issuers with respect to Underlying
Letters of Credit;
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(b) Indebtedness set forth on Schedule 5.20;
(c) Permitted Purchase Money Indebtedness;
(d) Other Senior Debt governed by the Other Senior Debt Loan
Documents (including, without limitation, guarantees thereunder) so long as all
such indebtedness and such documents are subject to the Intercreditor Agreement,
to the extent provided therein;
(e) Indebtedness evidenced by the Senior Subordinated Notes;
(f) refinancings, renewals, or extensions of Indebtedness
permitted under clauses (b), (c), (d) and (e) of this SECTION 7.1 (and
continuance or renewal of any Permitted Liens associated therewith) so long as:
(i) the terms and conditions of such refinancings, renewals, or extensions do
not, in Agent's judgment, materially impair the prospects of repayment of the
Obligations by Borrowers or materially impair Borrowers' creditworthiness, (ii)
such refinancings, renewals, or extensions do not result in an increase in the
principal amount of, or interest rate with respect to, the Indebtedness so
refinanced, renewed, or extended, (iii) such refinancings, renewals, or
extensions do not result in a shortening of the average weighted maturity of the
Indebtedness so refinanced, renewed, or extended, nor are they on terms or
conditions, that, taken as a whole, are materially more burdensome or
restrictive to the applicable Borrower, (iv) if the Indebtedness that is
refinanced, renewed, or extended was subordinated in right of payment to the
Obligations, then the terms and conditions of the refinancing, renewal, or
extension Indebtedness must be include subordination terms and conditions that
are at least as favorable to the Lender Group as those that were applicable to
the refinanced, renewed, or extended Indebtedness, and (v) in the case of Other
Senior Debt permitted under clause (d) of this SECTION 7.1, such Indebtedness
remains subject to the Intercreditor Agreement or a replacement intercreditor
agreement that is in form and substance satisfactory to Agent;
(g) Hedge Agreements in respect of Indebtedness otherwise
permitted hereby that bears interest at a floating rate, so long as such
agreements are not entered into for speculative purposes;
(h) Indebtedness owing by one Borrower to another Borrower or by
any Guarantor that is a Subsidiary of AMTROL to another Guarantor that is a
Subsidiary of AMTROL or to any Borrower; and
(i) additional unsecured Indebtedness of Borrowers or any of
their Guarantors (other than Holdings) in an aggregate principal amount (for
Borrowers and all such Guarantors) not to exceed $500,000 at any one time
outstanding.
7.2 LIENS. Holdings will not, and will not permit any of its
Subsidiaries that is not a Foreign Subsidiary to, create, incur, assume, or
permit to exist, directly or indirectly, any Lien on or with respect to any of
its assets, of any kind, whether now owned or hereafter acquired, or any income
or profits therefrom, except for Permitted Liens (including Liens that are
replacements of Permitted Liens to the extent that the original Indebtedness is
refinanced,
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renewed, or extended under SECTION 7.1(F) and so long as the replacement Liens
only encumber those assets that secured the refinanced, renewed, or extended
Indebtedness).
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Except as otherwise permitted under SECTION 7.4, Holdings
will not, and will not permit any of its Subsidiaries that is not a Foreign
Subsidiary to:
(i) enter into any merger, consolidation, reorganization,
or recapitalization, or reclassify its Stock,
(ii) liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution) other than the dissolution of AGI Holdings,
Inc., AMTROL Management International Inc., AMTROL Export Sales Inc.,
AMTROL Ltd. and The Perma Tank Co.; or
(iii) convey, sell, lease, license, assign, transfer, or
otherwise dispose of, in one transaction or a series of transactions, all
or any substantial part of its assets.
(b) Holdings will not permit (i) AMTROL Germany to liquidate,
wind up, or dissolve itself (or suffer any liquidation or dissolution) or (ii)
the Stock or assets of AMTROL Germany to be conveyed, sold, leased, licensed,
assigned, transferred or otherwise disposed of, in one transaction or a series
of related transactions, except as permitted by clause (g) of the definition of
the term "Permitted Dispositions".
(c) Holdings will not permit (i) AMTROL Portugal to liquidate,
wind up or dissolve itself (or suffer any liquidation or dissolution) or (ii)
the stock or assets of AMTROL Portugal to be conveyed, sold, leased, licensed,
assigned, transferred, or otherwise disposed of, in one transaction or a series
of related transactions, all or substantially all of its assets or property.
7.4 DISPOSAL OF ASSETS. Other than Permitted Dispositions, Holdings
will not, and will not permit any of its Subsidiaries that is not a Foreign
Subsidiary to, convey, sell, lease, license, assign, transfer, or otherwise
dispose of any of its properties or assets.
7.5 CHANGE NAME. Holdings will not, and will not permit any of its
Subsidiaries that is not a Foreign Subsidiary to, change its name,
organizational identification number, state of incorporation, FEIN, corporate
structure or identity, or add any new fictitious name; PROVIDED, HOWEVER, that
any such Person may change its name upon at least 30 days prior written notice
by Administrative Borrower to Agent of such change and so long as, at the time
of such written notification, such Person provides any financing statements or
fixture filings necessary to perfect and continue perfected Agent's Liens.
7.6 GUARANTEE. Except as otherwise permitted under SECTIONS 7.1(A),
(D) and (I), Holdings will not, and will not permit any of its Subsidiaries that
is not a Foreign Subsidiary to, guarantee or otherwise become in any way liable
with respect to the obligations of any third
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Person except by endorsement of instruments or items of payment for deposit to
the account of Borrowers or which are transmitted or turned over to Agent.
7.7 NATURE OF BUSINESS. Holdings will not, and will not permit any of
its Subsidiaries to, make any change in the principal nature of its business.
7.8 PREPAYMENTS AND AMENDMENTS. Holdings will not, and will not
permit any of its Subsidiaries that is not a Foreign Subsidiary to:
(a) except in connection with a refinancing permitted by SECTION
7.1(f), prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness
other than the Obligations in accordance with this Agreement and the
Indebtedness described in SECTION 7.1(c) AND (h);
(b) directly or indirectly, by deposit of monies or otherwise,
make any payment on account of any principal of, premium or interest payable in
connection with the Other Senior Debt; PROVIDED, HOWEVER, that, Borrowers may
make in-kind payments (which in-kind payments may consist of Holdings' capital
Stock) of scheduled interest with respect to such Other Senior Debt, and
(c) except in connection with a refinancing permitted by SECTION
7.1(f), directly or indirectly, amend, modify, alter, increase, or change any of
the terms or conditions of any agreement, instrument, document, indenture, or
other writing evidencing or concerning Indebtedness in any manner adverse to
Lenders in any respect permitted under SECTION 7.1(b), (c), (d) or (e).
7.9 CHANGE OF CONTROL. Except as otherwise permitted under SECTION
7.3(b) or SECTION 7.4 by reason of a Permitted Disposition described in clause
(g) of the definition of such term Holdings will not, and will not permit any of
its Subsidiaries to, cause, permit, or suffer, directly or indirectly, any
Change of Control.
7.10 CONSIGNMENTS. Borrowers will not consign any Inventory or sell
any Inventory on xxxx and hold, sale or return, sale on approval, or other
conditional terms of sale; PROVIDED, HOWEVER, that upon prior written notice to
Agent of the identity of the customers or other Persons with respect to which
such arrangements are made, Borrowers may make such arrangements described in
this SECTION 7.10 with respect to Inventory that has an aggregate book value of
less than $1,000,000 at any time and Schedule 7.10 identifies customers and
other Persons who, as of the Closing Date, have entered into such arrangements
with Borrowers.
7.11 DISTRIBUTIONS. Neither Holdings nor any Borrower will make any
distribution or declare or pay any dividends (in cash or other property, other
than common Stock) on, or purchase, acquire, redeem, or retire any of any of its
Stock, of any class, whether now or hereafter outstanding other than
distributions or declaration and payment of dividends by (a) Water Soft Inc. to
AMTROL, (b) by another Subsidiary of AMTROL to such Subsidiary's direct parent,
or (c) by AMTROL to Holdings (i) in amounts necessary to pay customary operating
expenses incurred in the ordinary course of business (including, without
limitation, professional fees and expenses and other similar corporate overhead
costs and expenses) but in an aggregate amount not to exceed $75,000 in any
fiscal year, or (ii) to redeem or repurchase
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Holdings' common stock (or options to purchase such common stock) from (A)
officers, employees and directors (or their estates) upon the death, permanent
disability, retirement or termination of employment of any such Person or
otherwise in accordance with (x) the Stockholders' Agreement and (y) any stock
option plan or any employee stock ownership plan, or (B) other stockholders of
Holdings, so long as the purpose of such purpose is to acquire the common stock
of Holdings for reissuance to new officers, employees and directors (or their
estates) of Holdings to the extent so reissued within 12 months of such
purchase, provided that in each such case (I) no Default or Event of Default is
then in existence or would arise therefrom, (II) the aggregate amount of all
cash paid in respect of such shares so redeemed or repurchased in any 12-month
period does not exceed $75,000 and (III) after giving effect to each such
redemption or repurchase, Availability shall not be less than $5,000,000.
7.12 ACCOUNTING METHODS. Holdings will not, and will not permit any of
its Subsidiaries to, modify or change its method of accounting (other than as
may be required to conform to GAAP) or enter into, modify, or terminate any
agreement currently existing, or at any time hereafter entered into with any
third party accounting firm or service bureau for the preparation or storage of
any such Person's accounting records if such firm or bureau would not permit
Agent the communication or access to such firm or bureau as described in SECTION
6.3(d).
7.13 INVESTMENTS. Except for Permitted Investments, Holdings will not,
and will not permit any of its Subsidiaries that is not a Foreign Subsidiary to,
directly or indirectly, make or acquire any Investment, or incur any liabilities
(including contingent obligations) for or in connection with any Investment;
PROVIDED, HOWEVER, that Borrowers shall not have Permitted Investments (other
than in the Cash Management Accounts) in deposit accounts or Securities Accounts
in excess of $250,000 outstanding at any one time unless Borrowers, as
applicable, and the applicable securities intermediary or bank have entered into
Control Agreements or similar arrangements governing such Permitted Investments,
as Agent shall determine in its Permitted Discretion, to perfect (and further
establish) the Agent's Liens in such Permitted Investments.
7.14 TRANSACTIONS WITH AFFILIATES. Holdings will not, and will not
permit any of its Subsidiaries to, directly or indirectly, enter into or permit
to exist any transaction with any of its Affiliates except for (a) transactions
that are in the ordinary course of business, upon fair and reasonable terms,
that are fully disclosed to Agent, and that are no less favorable to it than
would be obtained in an arm's length transaction with a non-Affiliate, (b) the
transactions contemplated by the Other Senior Debt Loan Documents, (c) the D-24
Production Line Transaction and (d) so long as an Event of Default shall not
have occurred and be continuing, payments by AMTROL to Cypress and its
Affiliates made pursuant to any financial advisory, financing, underwriting or
placement agreement, or in respect of other investment banking activities, in
each case as determined by the Board of Directors of such Person in good faith
and approved by Agent in its Permitted Discretion.
7.15 SUSPENSION. Holdings will not, and will not permit any of its
Subsidiaries to, suspend or go out of a substantial portion of its business
except as permitted by SECTION 7.3(b).
7.16 INTENTIONALLY OMITTED.
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7.17 USE OF PROCEEDS. Borrowers will not use the proceeds of the
Advances and the Term Loans for any purpose other than (a) on the Closing Date,
(i) to repay in full the outstanding principal, accrued interest, and accrued
fees and expenses owing to Existing Lenders under the Existing Credit Agreement,
and (ii) to pay transactional fees, costs, and expenses incurred in connection
with this Agreement, the other Loan Documents, and the transactions contemplated
hereby and thereby, and (b) thereafter, consistent with the terms and conditions
hereof, for its lawful and permitted purposes to fund working capital, capital
expenditures of Borrowers and other general corporate purposes of Borrowers,
excluding, however, any Investment in any Subsidiary of any Borrower except as
other permitted pursuant to SECTION 7.13.
7.18 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY AND
EQUIPMENT WITH BAILEES. Holdings will not, and will not permit any of its
Subsidiaries that is not a Foreign Subsidiary to, relocate its chief executive
office to a new location without Administrative Borrower providing 30 days prior
written notification thereof to Agent and so long as, at the time of such
written notification, the applicable Person provides any financing statements or
fixture filings necessary to perfect and continue perfected the Agent's Liens
and also provides to Agent a Collateral Access Agreement with respect to such
new location. The Inventory and Equipment shall not at any time now or hereafter
be stored with a bailee, warehouseman, or similar party without Agent's prior
written consent unless otherwise set forth in Schedule 5.5.
7.19 SECURITIES ACCOUNTS. Borrowers will not establish or maintain any
Securities Account unless Agent shall have received a Control Agreement in
respect of such Securities Account. Borrowers agree to not transfer assets out
of any Securities Account; PROVIDED, HOWEVER, that, so long as no Event of
Default has occurred and is continuing or would result therefrom, Borrowers may
use such assets (and the proceeds thereof) to the extent not prohibited by this
Agreement.
7.20 FINANCIAL COVENANTS.
(a) Borrowers will maintain:
(i) MINIMUM EBITDA.
A. North American EBITDA, measured on a fiscal
month-end or quarterly basis (as the case may be), of not less than
the required amount set forth in the following table for the
applicable period set forth opposite thereto:
--------------------------------------------------------------------------------
APPLICABLE AMOUNT APPLICABLE PERIOD
--------------------------------------------------------------------------------
$2,500,000 Four months ended on or near January 31, 2002
--------------------------------------------------------------------------------
$3,360,000 Five months ended on or near February 28, 2002
--------------------------------------------------------------------------------
$5,110,000 Six months ended on or near March 31, 2002
--------------------------------------------------------------------------------
$5,740,000 Seven months ended on or near April 30, 2002
--------------------------------------------------------------------------------
$7,540,000 Eight months ended on or near May 31, 2002
--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
APPLICABLE AMOUNT APPLICABLE PERIOD
--------------------------------------------------------------------------------
$ 9,780,000 Nine months ended on or near June 30, 2002
--------------------------------------------------------------------------------
$10,590,000 Ten months ended on or near July 31, 2002
--------------------------------------------------------------------------------
$11,550,000 Eleven months ended on or near August 31, 2002
--------------------------------------------------------------------------------
$13,990,000 Twelve months ended on or near September 30, 2002
--------------------------------------------------------------------------------
$14,480,000 Twelve months ended on or near October 31, 2002
--------------------------------------------------------------------------------
$14,700,000 Twelve months ended on or near November 30, 2002
--------------------------------------------------------------------------------
$14,900,000 Twelve months ended on or near December 31, 2002
--------------------------------------------------------------------------------
$14,900,000 Twelve months ended on the last day of each calendar
month on or near December 31, 2002; PROVIDED,
HOWEVER, that if there does not occur or exist a
Default or Event of Default from the Closing Date
until December 31, 2002, Borrowers shall be required
to maintain minimum North American EBITDA in an
amount equal to the amount set forth opposite hereto
for each twelve month period ended on or near
March 31, June 30, September 30 and December 31
of each year
--------------------------------------------------------------------------------
B. Consolidated EBITDA, measured on a fiscal month-end
or quarterly basis (as the case may be), of not less than the required
amount set forth in the following table for the applicable period set forth
opposite thereto:
--------------------------------------------------------------------------------
APPLICABLE AMOUNT APPLICABLE PERIOD
--------------------------------------------------------------------------------
$ 4,020,000 Four months ended on or near January 31, 2002
--------------------------------------------------------------------------------
$ 5,440,000 Five months ended on or near February 28, 2002
--------------------------------------------------------------------------------
$ 7,840,000 Six months ended on or near March 31, 2002
--------------------------------------------------------------------------------
$ 9,040,000 Seven months ended on or near April 30, 2002
--------------------------------------------------------------------------------
$11,600,000 Eight months ended on or near May 31, 2002
--------------------------------------------------------------------------------
$14,630,000 Nine months ended on or near June 30, 2002
--------------------------------------------------------------------------------
$16,150,000 Ten months ended on or near July 31, 2002
--------------------------------------------------------------------------------
$17,370,000 Eleven months ended on or near August 31, 2002
--------------------------------------------------------------------------------
$20,630,000 Twelve months ended on or near September 30, 2002
--------------------------------------------------------------------------------
$21,340,000 Twelve months ended on or near October 31, 2002
--------------------------------------------------------------------------------
$21,750,000 Twelve months ended on or near November 30, 2002
--------------------------------------------------------------------------------
$22,180,000 Twelve months ended on or near December 31, 2002
--------------------------------------------------------------------------------
$22,180,000 Twelve months ended on the last day of each
calendar month on or near December 31, 2002;
PROVIDED, HOWEVER, that if there does not occur or
exist a Default or Event of Default from the
Closing Date until December 31, 2002, Borrowers
shall be required to maintain minimum Consolidated
EBITDA in an amount equal to the amount set forth
opposite hereto for each twelve month period ended
on or near March 31, June 30, September 30 and
December 31 of each year
--------------------------------------------------------------------------------
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(ii) FIXED CHARGE COVERAGE RATIO. Permit the ratio of (x)
Consolidated Fixed Charges for any period commencing and ending on or near
the dates set forth below for such period to (y) Consolidated EBITDA for
such period to be less than the amount set forth in the following table for
such period set forth opposite thereto:
--------------------------------------------------------------------------------
Applicable Ratio Applicable Period
--------------------------------------------------------------------------------
1.0 to .73 January 1, 2002 to March 31, 2002
--------------------------------------------------------------------------------
1.0 to .88 January 1, 2002 to June 30, 2002
--------------------------------------------------------------------------------
1.0 to .93 January 1, 2002 to September 30, 2002
--------------------------------------------------------------------------------
1.0 to .92 January 1, 2002 to December 31, 2002
--------------------------------------------------------------------------------
1.0 to .92 4 fiscal quarters ended March 31, 2003
--------------------------------------------------------------------------------
1.0 to .94 4 fiscal quarters ended June 30, 2003
--------------------------------------------------------------------------------
1.0 to .91 4 fiscal quarters ended September 30, 2003
--------------------------------------------------------------------------------
1.0 to .88 4 fiscal quarters ended December 31, 2003
--------------------------------------------------------------------------------
1.0 to .88 4 fiscal quarters ended March 31, 2004
--------------------------------------------------------------------------------
1.0 to .89 4 fiscal quarters ended June 30, 2004
--------------------------------------------------------------------------------
1.0 to .89 4 fiscal quarters ended September 30, 2004
--------------------------------------------------------------------------------
1.0 to .78 4 fiscal quarters ended December 31, 2004
--------------------------------------------------------------------------------
1.0 to .79 4 fiscal quarters ended March 31, 2005
--------------------------------------------------------------------------------
1.0 to .80 4 fiscal quarters ended June 30, 2005
--------------------------------------------------------------------------------
1.0 to .81 4 fiscal quarters ended September 30, 2005
--------------------------------------------------------------------------------
1.0 to .96 4 fiscal quarters ended December 31, 2005
--------------------------------------------------------------------------------
1.0 to .96 4 fiscal quarters ended March 31, 2006
--------------------------------------------------------------------------------
1.0 to .96 4 fiscal quarters ended June 30, 2006
--------------------------------------------------------------------------------
1.0 to .97 4 fiscal quarters ended September 30, 2006
--------------------------------------------------------------------------------
(b) CAPITAL EXPENDITURES. Holdings will not, and will not permit any
of its Subsidiaries that is not a Foreign Subsidiary to, make or incur Capital
Expenditures in any fiscal year set forth below in excess of the amount set
forth in the following table for the applicable fiscal year:
--------------------------------------------------------------------------------
FISCAL YEAR AMOUNT
--------------------------------------------------------------------------------
Fiscal Year 2002 $4,200,000
--------------------------------------------------------------------------------
Fiscal Year 2003 $5,400,000
--------------------------------------------------------------------------------
Fiscal Year 2004 $5,400,000
--------------------------------------------------------------------------------
Fiscal Year 2005 $5,400,000
--------------------------------------------------------------------------------
Fiscal Year 2006 $5,400,000
--------------------------------------------------------------------------------
In addition to the foregoing, in the event that the amount of
Capital Expenditures permitted to be made hereby in any fiscal year of
Borrowers (before giving effect to any increase in permitted Capital
Expenditures amount pursuant to this paragraph) is greater than the amount
of such Capital Expenditures actually made by
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Borrowers during such fiscal year, the lesser of (x) such excess and (y)
$750,000 of the applicable Capital Expenditure amount set forth above may
be carried forward and utilized to make additional Capital Expenditures in
the immediately succeeding fiscal year; PROVIDED, that (A) Capital
Expenditures made in any fiscal year shall be deemed made first in respect
of amounts permitted for such fiscal year as provided above and second in
respect of amounts carried forward from the prior fiscal year pursuant to
this paragraph and (B) no amounts carried forward pursuant to this
paragraph may be carried forward to any fiscal year thereafter.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "EVENT OF DEFAULT") under this Agreement:
8.1 If Borrowers fail to pay when due and payable or when declared
due and payable, all or any portion of the Obligations (whether of principal,
interest (including any interest which, but for the provisions of the Bankruptcy
Code, would have accrued on such amounts), fees and charges due the Lender
Group, reimbursement of Lender Group Expenses, or other amounts constituting
Obligations);
8.2 If Holdings or any Borrower fails to perform, keep, or observe
any term, provision, condition, covenant, or agreement contained in SECTIONS
6.1, 6.2, 6.3, 6.4, 6.6, 6.10, and 6.11 of this Agreement, or comparable
provisions of the other Loan Documents, within 10 Business Days of the date when
required (or within 5 days of the date when required in the case of SECTION 6.2
or SECTION 6.3), or if a Loan Party otherwise fails to perform, keep, or observe
any other term, provision, condition, covenant, or agreement contained in this
Agreement or in any of the other Loan Documents to which such Loan Party is a
party;
8.3 If any material portion of the assets of Borrowers or of Holdings
and its Subsidiaries other than the Foreign Subsidiaries (taken as a whole) is
attached, seized, subjected to a writ or distress warrant, levied upon, or comes
into the possession of any third Person;
8.4 If an Insolvency Proceeding is commenced by Holdings or any
Borrower or any of their Subsidiaries (other than AMTROL Germany);
8.5 If an Insolvency Proceeding is commenced against Holdings or any
Borrower, or any of their Subsidiaries (other than AMTROL Germany), and any of
the following events occur: (a) Holdings or the applicable Borrower or the
applicable Subsidiary consents to the institution of the Insolvency Proceeding
against it, (b) the petition commencing the Insolvency Proceeding is not timely
controverted, (c) the petition commencing the Insolvency Proceeding is not
dismissed within 45 calendar days of the date of the filing thereof; PROVIDED,
HOWEVER, that, during the pendency of such period, Agent (including any
successor agent) and each other member of the Lender Group shall be relieved of
their obligation to extend credit hereunder, (d) an interim trustee is appointed
to take possession of all or any substantial portion of the properties or assets
of, or to operate all or any substantial portion of the business of, Holdings or
any Borrower or any of their Subsidiaries, or (e) an order for relief shall have
been entered therein;
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8.6 If the conduct of all or any material part of the business
affairs of Borrowers or of Holdings and its Subsidiaries other than the Foreign
Subsidiaries (taken as a whole) is enjoined, restrained, or in any way prevented
by court order;
8.7 If there exists on all or any material portion of the assets of
Borrowers or of Holdings and its Subsidiaries other than the Foreign
Subsidiaries (taken as a whole) a notice of Lien, levy, or assessment is filed
of record by the United States, or any department, agency, or instrumentality
thereof, or by any state, county, municipal, or governmental agency, or if any
taxes or debts owing at any time hereafter becomes a Lien, whether xxxxxx or
otherwise, upon all or a material portion of the assets of Borrowers or of
Holdings and its Subsidiaries other than the Foreign Subsidiaries (taken as a
whole) and the same is not paid on the payment date thereof;
8.8 If a judgment or other claim becomes a Lien or encumbrance upon
all or any material portion of the properties or assets of Borrowers or of
Holdings and its Subsidiaries other than the Foreign Subsidiaries (taken as a
whole), and such judgment or other claim is not fully covered by insurance
issued by a reputable and solvent insurance company and either shall be final
and non-appealable or shall not be vacated, discharged or stayed or bonded
pending appeal for any period of 45 consecutive days;
8.9 If there is a default in any material agreement (including,
without limitation, any Other Senior Debt Loan Document or the Indenture) to
which Holdings or any Borrower or any of their Subsidiaries is a party and such
default (a) occurs at the final maturity of the obligations thereunder, or (b)
results in a right by the other party thereto, irrespective of whether
exercised, to accelerate the maturity of Holdings' or the applicable Borrower's
or their Subsidiaries' obligations thereunder, to terminate such agreement, or
to refuse to renew such agreement pursuant to an automatic renewal right therein
and the obligations of such applicable Person under such agreement exceed
$500,000;
8.10 If Holdings or any Borrower or any of their Subsidiaries makes
any payment on account of Indebtedness that has been contractually subordinated
in right of payment to the payment of the Obligations (including, without
limitation, the Indebtedness evidenced by the Senior Subordinated Notes), except
to the extent such payment is permitted by the terms of the subordination
provisions applicable to such Indebtedness;
8.11 If any warranty, representation, statement, or Record made to the
Lender Group by Holdings or any Borrower, its Subsidiaries, or any officer,
employee, agent, or director of any Borrower or any of its Subsidiaries under or
in connection with any Loan Document shall prove to have been inaccurate in any
material respect on or as of the date made or deemed made;
8.12 If the obligation of any Guarantor under its Guaranty is limited
or terminated by operation of law or by such Guarantor thereunder;
8.13 If this Agreement or any other Loan Document that purports to
create a Lien, shall, for any reason, fail or cease to create a valid and
perfected and, except to the extent permitted by the terms hereof or thereof,
first priority Lien on or security interest in the Collateral covered hereby or
thereby;
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8.14 Any provision of any Loan Document shall at any time for any
reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by Holdings or any Borrower, or a proceeding shall be
commenced by Holdings or any Borrower, or by any Governmental Authority having
jurisdiction over Holdings or any Borrower, seeking to establish the invalidity
or unenforceability thereof, or Holdings or any Borrower shall deny that
Holdings or any Borrower has any liability or obligation purported to be created
under any Loan Document; or
8.15 On the date that any regularly scheduled semi-annual payment of
interest on the Senior Subordinated Notes is made, Availability is less than
$1,500,000 after giving effect to such payment.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the
continuation, of an Event of Default, the Required Lenders (at their election
but without notice of their election and without demand) may authorize and
instruct Agent to do any one or more of the following on behalf of the Lender
Group (and Agent, acting upon the instructions of the Required Lenders, shall do
the same on behalf of the Lender Group), all of which are authorized by
Borrowers:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable;
(b) Cease advancing money or extending credit to or for the
benefit of Borrowers under this Agreement, under any of the Loan Documents, or
under any other agreement between Borrowers and the Lender Group;
(c) Terminate this Agreement and any of the other Loan Documents
as to any future liability or obligation of the Lender Group, but without
affecting any of the Agent's Liens in the Collateral and without affecting the
Obligations;
(d) Settle or adjust disputes and claims directly with Account
Debtors for amounts and upon terms which Agent considers advisable, and in such
cases, Agent will credit the Loan Account with only the net amounts received by
Agent in payment of such disputed Accounts after deducting all Lender Group
Expenses incurred or expended in connection therewith;
(e) Cause Borrowers to hold all returned Inventory in trust for
the Lender Group, segregate all returned Inventory from all other assets of
Borrowers or in Borrowers' possession and conspicuously label said returned
Inventory as the property of the Lender Group;
(f) Without notice to or demand upon any Borrower or any
Guarantor, make such payments and do such acts as Agent considers necessary or
reasonable to protect its security interests in the Collateral. Each Borrower
agrees to assemble the Personal Property Collateral if Agent so requires, and to
make the Personal Property Collateral available to Agent at a place that Agent
may designate which is reasonably convenient to both parties. Each Borrower
authorizes Agent to enter the premises where the Personal Property Collateral is
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located, to take and maintain possession of the Personal Property Collateral, or
any part of it, and to pay, purchase, contest, or compromise any Lien that in
Agent's determination appears to conflict with the Agent's Liens and to pay all
expenses incurred in connection therewith and to charge Borrowers' Loan Account
therefor. With respect to any of Borrowers' owned or leased premises, each
Borrower hereby grants Agent a license to enter into possession of such premises
and to occupy the same, without charge, in order to exercise any of the Lender
Group's rights or remedies provided herein, at law, in equity, or otherwise;
(g) Without notice to any Borrower (such notice being expressly
waived), and without constituting a retention of any collateral in satisfaction
of an obligation (within the meaning of the Code), set off and apply to the
Obligations any and all (i) balances and deposits of any Borrower held by the
Lender Group (including any amounts received in the Cash Management Accounts),
or (ii) Indebtedness at any time owing to or for the credit or the account of
any Borrower held by the Lender Group;
(h) Hold, as cash collateral, any and all balances and deposits
of any Borrower held by the Lender Group, and any amounts received in the Cash
Management Accounts, to secure the full and final repayment of all of the
Obligations;
(i) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Personal Property Collateral. Agent is hereby granted a license or
other right to use, without charge, for the benefit of the Lender Group such
Borrower's labels, patents, copyrights, trade secrets, trade names, trademarks,
service marks, and advertising matter, or any property of a similar nature, as
it pertains to the Personal Property Collateral, in completing production of,
advertising for sale, and selling any Personal Property Collateral and such
Borrower's rights under all licenses and all franchise agreements shall inure to
the Lender Group's benefit;
(j) Sell the Personal Property Collateral at either a public or
private sale, or both, by way of one or more contracts or transactions, for cash
or on terms, in such manner and at such places (including Borrowers' premises)
as Agent determines is commercially reasonable. It is not necessary that the
Personal Property Collateral be present at any such sale;
(k) Agent shall give notice of the disposition of the Personal
Property Collateral as follows:
(i) Agent shall give Administrative Borrower (for the
benefit of the applicable Borrower) a notice in writing of the time and
place of public sale, or, if the sale is a private sale or some other
disposition other than a public sale is to be made of the Personal Property
Collateral, the time on or after which the private sale or other
disposition is to be made; and
(ii) The notice shall be personally delivered or mailed,
postage prepaid, to Administrative Borrower as provided in SECTION 12, at
least 10 days before the earliest time of disposition set forth in the
notice; no notice needs to be given prior to the disposition of any portion
of the Personal Property Collateral that is perishable or
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threatens to decline speedily in value or that is of a type customarily
sold on a recognized market;
(l) Agent, on behalf of the Lender Group may credit bid and
purchase at any public sale;
(m) Agent may seek the appointment of a receiver or keeper to
take possession of all or any portion of the Collateral or to operate same and,
to the maximum extent permitted by law, may seek the appointment of such a
receiver without the requirement of prior notice or a hearing;
(n) The Lender Group shall have all other rights and remedies
available to it at law or in equity pursuant to any other Loan Documents; and
(o) Any deficiency that exists after disposition of the Personal
Property Collateral as provided above will be paid immediately by Borrowers. Any
excess will be returned, without interest and subject to the rights of third
Persons, by Agent to Administrative Borrower (for the benefit of the applicable
Borrower).
9.2 REMEDIES CUMULATIVE. The rights and remedies of the Lender Group
under this Agreement, the other Loan Documents, and all other agreements shall
be cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
10. TAXES AND EXPENSES.
If any Borrower fails to pay any monies (whether taxes,
assessments, insurance premiums, or, in the case of leased properties or assets,
rents or other amounts payable under such leases) due to third Persons, or fails
to make any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Agent, in its Permitted
Discretion and without prior notice to any Borrower, may do any or all of the
following: (a) make payment of the same or any part thereof, (b) set up such
reserves in Borrowers' Loan Account as Agent deems necessary to protect the
Lender Group from the exposure created by such failure, or (c) in the case of
the failure to comply with SECTION 6.8 hereof, obtain and maintain insurance
policies of the type described in SECTION 6.8 and take any action with respect
to such policies as Agent deems prudent. Any such amounts paid by Agent shall
constitute Lender Group Expenses and any such payments shall not constitute an
agreement by the Lender Group to make similar payments in the future or a waiver
by the Lender Group of any Event of Default under this Agreement. Agent need not
inquire as to, or contest the validity of, any such expense, tax, or Lien and
the receipt of the usual official notice for the payment thereof shall be
conclusive evidence that the same was validly due and owing.
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11. WAIVERS; INDEMNIFICATION.
11.1 DEMAND; PROTEST; ETC. Each Borrower waives demand, protest,
notice of protest, notice of default or dishonor, notice of payment and
nonpayment, nonpayment at maturity, release, compromise, settlement, extension,
or renewal of documents, instruments, chattel paper, and guarantees at any time
held by the Lender Group on which any such Borrower may in any way be liable.
11.2 THE LENDER GROUP'S LIABILITY FOR COLLATERAL. Each Borrower
hereby agrees that: (a) so long as the Lender Group complies with its
obligations, if any, under the Code, Agent shall not in any way or manner be
liable or responsible for: (i) the safekeeping of the Collateral, (ii) any loss
or damage thereto occurring or arising in any manner or fashion from any cause,
(iii) any diminution in the value thereof, or (iv) any act or default of any
carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all
risk of loss, damage, or destruction of the Collateral shall be borne by
Borrowers.
11.3 INDEMNIFICATION. Each Borrower shall pay, indemnify, defend,
and hold the Agent-Related Persons, the Lender-Related Persons with respect to
each Lender, each Participant, and each of their respective officers, directors,
employees, agents, and attorneys-in-fact (each, an "INDEMNIFIED PERSON")
harmless (to the fullest extent permitted by law) from and against any and all
claims, demands, suits, actions, investigations, proceedings, and damages, and
all reasonable attorneys fees and disbursements and other costs and expenses
actually incurred in connection therewith (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against, imposed
upon, or incurred by any of them (a) in connection with or as a result of or
related to the execution, delivery, enforcement, performance, or administration
of this Agreement, any of the other Loan Documents, or the transactions
contemplated hereby or thereby, and (b) with respect to any investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or
the use of the proceeds of the credit provided hereunder (irrespective of
whether any Indemnified Person is a party thereto), or any act, omission, event,
or circumstance in any manner related thereto (all the foregoing, collectively,
the "INDEMNIFIED LIABILITIES"). The foregoing to the contrary notwithstanding,
Borrowers shall have no obligation to any Indemnified Person under this SECTION
11.3 with respect to any Indemnified Liability that a court of competent
jurisdiction finally determines to have resulted from the gross negligence or
willful misconduct of such Indemnified Person. This provision shall survive the
termination of this Agreement and the repayment of the Obligations. If any
Indemnified Person makes any payment to any other Indemnified Person with
respect to an Indemnified Liability as to which Borrowers were required to
indemnify the Indemnified Person receiving such payment, the Indemnified Person
making such payment is entitled to be indemnified and reimbursed by Borrowers
with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO
EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE
OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON OTHER THAN ACTS OR OMISSIONS
CONSTITUTING GROSS NEGLIGENCE OF SUCH INDEMNIFIED PERSON.
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12. NOTICES.
Unless otherwise provided in this Agreement, all notices or
demands by Borrowers or Agent to the other relating to this Agreement or any
other Loan Document shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by registered or certified mail
(postage prepaid, return receipt requested), overnight courier, electronic mail
(at such email addresses as Administrative Borrower or Agent, as applicable, may
designate to each other in accordance herewith and followed promptly by a hard
copy sent by any other means permitted herein), or telefacsimile to Borrowers in
care of Administrative Borrower or to Agent, as the case may be, at its address
set forth below:
If to Administrative
Borrower: AMTROL INC.
0000 Xxxxxxxx Xxxx
Xxxx Xxxxxxx, Xxxxx Xxxxxx 00000
Attn: Xxxxx X. Xxxxxxxxxxx
Chief Financial Officer
Fax No. 000-000-0000
with copies to: CYPRESS GROUP L.L.C.
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxxxx
Fax No. 000-000-0000
If to Agent: FOOTHILL CAPITAL CORPORATION
Xxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Business Finance Division Manager
Fax No. 000-000-0000
with copies to: Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx X. Xxxxxxx, Esq.
Fax No. 000-000-0000
Agent and Borrowers may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other party. All notices or demands sent in accordance with this SECTION 12,
other than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Each Borrower acknowledges and agrees that notices sent by
the Lender Group in connection with the exercise of enforcement rights against
Collateral under the provisions of the
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Code shall be deemed sent when deposited in the mail or personally delivered,
or, where permitted by law, transmitted by telefacsimile or any other method set
forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND THE ENFORCEMENT HEREOF OR THEREOF OR
RELATED HERETO OR THERETO, SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH THE, LAWS OF THE STATE OF NEW YORK.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW
YORK, STATE OF NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN
THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE
SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWERS, HOLDINGS AND THE
LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH
MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO
THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(B).
BORROWERS, HOLDINGS AND THE LENDER GROUP HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWERS, HOLDINGS AND THE LENDER GROUP
REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE
EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT
TO A TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 ASSIGNMENTS AND PARTICIPATIONS.
(a) Any Lender may, with the written consent of Agent
(provided that no written consent of Agent shall be required in connection with
any assignment and delegation
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by a Lender to an Eligible Transferee and no notice to Agent shall be required
in connection with any assignment and delegation by a Lender to an Affiliate of
a Lender or a fund or account managed by a Lender), assign and delegate to one
or more assignees (each an "Assignee") all, or any ratable part of all, of the
Obligations, the Commitments and the other rights and obligations of such Lender
hereunder and under the other Loan Documents, in a minimum amount of $5,000,000
(except such minimum amount shall not apply to any Affiliate of a Lender or to a
fund or account managed by a Lender); PROVIDED, HOWEVER, that Borrowers and
Agent may continue to deal solely and directly with such Lender in connection
with the interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses, and related
information with respect to the Assignee, have been given to Administrative
Borrower and Agent by such Lender and the Assignee, (ii) such Lender and its
Assignee have delivered to Administrative Borrower and Agent a fully executed
Assignment and Acceptance in form and substance satisfactory to Agent, and (iii)
the assignor Lender or Assignee has paid to Agent for Agent's separate account a
processing fee in the amount of $5,000. Anything contained herein to the
contrary notwithstanding, the consent of Agent shall not be required (and
payment of any fees shall not be required) if such assignment is in connection
with any merger, consolidation, sale, transfer, or other disposition of all or
any substantial portion of the business or loan portfolio of such Lender or the
assignee is an Affiliate (other than individuals) of, or a fund, money market
account, investment account or other account managed by Lender or an Affiliate
of a Lender).
(b) From and after the date that Agent notifies the
assignor Lender (with a copy to Administrative Borrower, if applicable) that it
has received fully executed Assignment and Acceptance and payment (if
applicable) of the above-referenced processing fee, (i) the Assignee thereunder
shall be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment and Acceptance, shall have
the rights and obligations of a Lender under the Loan Documents, and (ii) the
assignor Lender shall, to the extent that rights and obligations hereunder and
under the other Loan Documents have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights (except with respect to SECTION
11.3 hereof) and be released from its obligations under this Agreement (and in
the case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's rights and obligations under this Agreement and the
other Loan Documents, such Lender shall cease to be a party hereto and thereto),
and such assignment shall affect a novation between Borrowers and the Assignee.
(c) By executing and delivering an Assignment and
Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm
to and agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Acceptance, such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrowers or the performance or observance by Borrowers of any of their
obligations under this Agreement or any other Loan Document furnished pursuant
hereto, (iii) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to
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make its own credit analysis and decision to enter into such Assignment and
Acceptance, (iv) such Assignee will, independently and without reliance upon
Agent, such assigning Lender or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement, (v)
such Assignee appoints and authorizes Agent to take such actions and to exercise
such powers under this Agreement as are delegated to Agent, by the terms hereof,
together with such powers as are reasonably incidental thereto, and (vi) such
Assignee agrees that it will perform all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.
(d) Immediately upon each Assignee's making its processing
fee payment under the Assignment and Acceptance and receipt and acknowledgment
by Agent of such fully executed Assignment and Acceptance, this Agreement shall
be deemed to be amended to the extent, but only to the extent, necessary to
reflect the addition of the Assignee and the resulting adjustment of the
Commitments arising therefrom. The Commitment allocated to each Assignee shall
reduce such Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time, with the written consent of
Agent, sell to one or more commercial banks, financial institutions, or other
Persons not Affiliates of such Lender (a "PARTICIPANT") participating interests
in its Obligations owing to such Lender, the Commitment of such Lender, and the
other rights and interests of that Lender (the "ORIGINATING LENDER") hereunder
and under the other Loan Documents (provided that no written consent of Agent
shall be required in connection with any sale of any such participating
interests by a Lender to an Eligible Transferee); PROVIDED, HOWEVER, that (i)
the Originating Lender shall remain a "Lender" for all purposes of this
Agreement and the other Loan Documents and the Participant receiving the
participating interest in the Obligations, the Commitments, and the other rights
and interests of the Originating Lender hereunder shall not constitute a
"Lender" hereunder or under the other Loan Documents and the Originating
Lender's obligations under this Agreement shall remain unchanged, (ii) the
Originating Lender shall remain solely responsible for the performance of such
obligations, (iii) Borrowers, Agent, and the Lenders shall continue to deal
solely and directly with the Originating Lender in connection with the
Originating Lender's rights and obligations under this Agreement and the other
Loan Documents, (iv) no Originating Lender shall transfer or grant any
participating interest under which the Participant has the right to approve any
amendment to, or any consent or waiver with respect to, this Agreement or any
other Loan Document, except to the extent such amendment to, or consent or
waiver with respect to this Agreement or of any other Loan Document would (A)
extend the final maturity date of the Obligations hereunder in which such
Participant is participating, (B) reduce the interest rate applicable to the
Obligations hereunder in which such Participant is participating, (C) release
all or a material portion of the Collateral or guaranties (except to the extent
expressly provided herein or in any of the Loan Documents) supporting the
Obligations hereunder in which such Participant is participating, (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant, (E) change the amount or due dates of scheduled principal
repayments or prepayments or premiums in respect of the Obligations hereunder in
which such Participant is participating, or (F) subordinate the Agent's Liens
for the benefit of the Lender Group to the Liens of any other creditor of
Borrowers; and (v) all amounts payable by Borrowers hereunder shall be
determined as if such Lender had not sold such participation; except that, if
amounts outstanding under this Agreement are due and unpaid, or
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shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set-off in respect of its participating interest in amounts owing under
this Agreement to the same extent as if the amount of its participating interest
were owing directly to it as a Lender under this Agreement. The rights of any
Participant only shall be derivative through the Originating Lender with whom
such Participant participates and no Participant shall have any rights under
this Agreement or the other Loan Documents or any direct rights as to the other
Lenders, Agent, Borrowers, the Collections, the Collateral, or otherwise in
respect of the Obligations; PROVIDED that, in the case of SECTION 16.11, such
Participant shall have complied with the requirements of such Section. No
Participant shall have the right to participate directly in the making of
decisions by the Lenders among themselves. The provisions of this SECTION
14.1(E) are solely for the benefit of the Lender Group, and no Borrower shall
have any right as a third party beneficiary of any such provisions.
(f) In connection with any such assignment or participation
or proposed assignment or participation, a Lender may disclose all documents and
information which it now or hereafter may have relating to Borrowers or
Borrowers' business subject to the agreement that such prospective assignee or
participant holds such materials on the same confidential basis as the Lenders.
(g) Any other provision in this Agreement notwithstanding,
any Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR ss.203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
(h) The Agent, acting for this purpose as an agent of
Borrowers, shall maintain at the address set forth in SECTION 12 a copy of each
Assignment and Acceptance delivered to it and a register for the recordation of
the names and addresses of Lenders, and the commitment of, and certain of the
Obligations owing to, each Lender pursuant to the terms hereof from time to time
(the "REGISTER"). The entries in the Register shall be conclusive, and
Borrowers, Agent and Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice of the contrary In the event that any
Lender sells participations in any Obligations, such Lender shall maintain a
register on which it enters the name of all participants in such Obligations
held by it (the "PARTICIPANT Register"). Any Obligation (and the registered
note, if any, evidencing the same) may be participated in whole or in part only
by registration of such participation on the Participant Register (and each
registered note shall expressly so provide). Any participation of such
Obligations (and the registered note, if any, evidencing the same) may be
effected only by the registration of such participation on the Participant
Register.
(i) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, payment of the
processing and recordation fee and any required written consent to such
assignment, Agent shall accept such Assignment and Acceptance and record the
information contained therein in the Register. No assignment shall be effective
for purposes of this Agreement unless it has been recorded in the Register as
provided in this paragraph.
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14.2 SUCCESSORS. This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the parties; PROVIDED, HOWEVER,
that Borrowers may not assign this Agreement or any rights or duties hereunder
without the Lenders' prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release any Borrower from its Obligations. A Lender may assign this Agreement
and the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to SECTION 14.1 hereof and, except as expressly required pursuant to
SECTION 14.1 hereof, no consent or approval by any Borrower is required in
connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision
of this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrowers therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by Agent at the written request
of the Required Lenders) and Administrative Borrower (on behalf of all
Borrowers) and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; PROVIDED,
HOWEVER, that no such waiver, amendment, or consent shall, unless in writing and
signed by all of the Lenders affected thereby and Administrative Borrower (on
behalf of all Borrowers), and acknowledged by Agent do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees, or other
amounts due hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on, any
loan or other extension of credit hereunder, or reduce any fees or other amounts
payable hereunder or under any other Loan Document,
(d) change the percentage of the Commitments that is required to
take any action hereunder,
(e) amend this Section or any provision of the Agreement
providing for consent or other action by all Lenders,
(f) release Collateral other than as permitted by SECTION 16.12,
(g) change the definition of "Required Lenders" or "Pro Rata
Share",
(h) contractually subordinate any of the Agent's Liens,
(i) release any Borrower or Guarantor from any obligation for
the payment of money, or
(j) amend, modify or waive any of the provisions of SECTION 16.
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and, PROVIDED FURTHER, HOWEVER, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, affect
the rights or duties of Agent, Issuing Lender, or Swing Lender, as applicable,
under this Agreement or any other Loan Document. The foregoing notwithstanding,
any amendment, modification, waiver, consent, termination, or release of, or
with respect to, any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Lender Group among themselves, and that
does not affect the rights or obligations of Borrowers, shall not require
consent by or the agreement of Borrowers.
15.2 REPLACEMENT OF HOLDOUT LENDER. If any action to be taken by the
Lender Group or Agent hereunder requires the unanimous consent, authorization,
or agreement of all Lenders, and a Lender ("HOLDOUT LENDER") fails to give its
consent, authorization, or agreement, then Agent, upon at least 5 Business Days
prior irrevocable notice to the Holdout Lender, may permanently replace the
Holdout Lender with one or more substitute Lenders (each, a "REPLACEMENT
LENDER"), and the Holdout Lender shall have not right to refuse to be replaced
hereunder. Such notice to replace the Holdout Lender shall specify an effective
date for such replacement, which date shall not be later than 15 Business Days
after the date such notice is given.
Prior to the effective date of such replacement, the Holdout Lender
and each Replacement Lender shall execute and deliver an Assignment and
Acceptance, subject only to the Holdout Lender being repaid its share of the
outstanding Obligations (including an assumption of its Pro Rata Share of the
Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance. The replacement of any Holdout Lender shall be
made in accordance with the terms of SECTION 14.1. Until such time as the
Replacement Lenders shall have acquired all of the Obligations, the Commitments,
and the other rights and obligations of the Holdout Lender hereunder and under
the other Loan Documents, the Holdout Lender shall remain obligated to make the
Holdout Lender's Pro Rata Share of Advances and to purchase a participation in
each Letter of Credit, in an amount equal to its Pro Rata Share of the Risk
Participation Liability of such Letter of Credit.
15.3 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent or any
Lender to exercise any right, remedy, or option under this Agreement or, any
other Loan Document, or delay by Agent or any Lender in exercising the same,
will operate as a waiver thereof. No waiver by Agent or any Lender will be
effective unless it is in writing, and then only to the extent specifically
stated. No waiver by Agent or any Lender on any occasion shall affect or
diminish Agent's and each Lender's rights thereafter to require strict
performance by Borrowers of any provision of this Agreement. Agent's and each
Lender's rights under this Agreement and the other Loan Documents will be
cumulative and not exclusive of any other right or remedy that Agent or any
Lender may have.
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16. AGENT; THE LENDER GROUP.
16.1 APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby
designates and appoints Foothill as its representative under this Agreement and
the other Loan Documents and each Lender hereby irrevocably authorizes Agent to
take such action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to Agent by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. Agent
agrees to act as such on the express conditions contained in this SECTION 16.
The provisions of this SECTION 16 are solely for the benefit of Agent, and the
Lenders, and Borrowers shall have no rights as a third party beneficiary of any
of the provisions contained herein. Any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that Foothill
is merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert under or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that Agent shall have the
right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Obligations, the Collateral,
the Collections, and related matters, (b) execute or file any and all financing
or similar statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders as
provided in the Loan Documents, (d) exclusively receive, apply, and distribute
the Collections as provided in the Loan Documents, (e) open and maintain such
bank accounts and cash management accounts as Agent deems necessary and
appropriate in accordance with the Loan Documents for the foregoing purposes
with respect to the Collateral and the Collections, (f) perform, exercise, and
enforce any and all other rights and remedies of the Lender Group with respect
to Borrowers, the Obligations, the Collateral, the Collections, or otherwise
related to any of same as provided in the Loan Documents, and (g) incur and pay
such Lender Group Expenses as Agent may deem necessary or appropriate for the
performance and fulfillment of its functions and powers pursuant to the Loan
Documents.
16.2 DELEGATION OF DUTIES. Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
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16.3 LIABILITY OF AGENT. None of the Agent-Related Persons shall (i)
be liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Borrower or any Subsidiary or
Affiliate of any Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the Books or properties of Borrowers or the books or
records or properties of any of Borrowers' Subsidiaries or Affiliates.
16.4 RELIANCE BY AGENT. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrowers
or counsel to any Lender), independent accountants and other experts selected by
Agent. Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless Agent shall first receive
such advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by Lenders against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any such action. Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a request or
consent of the Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.
16.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT. Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest,
fees, and expenses required to be paid to Agent for the account of the Lenders,
except in the case of Agent with respect to actual knowledge of the existence of
an Overadvance and except with respect to Defaults and Events of Default of
which Agent has actual knowledge, unless Agent shall have received written
notice from a Lender or Administrative Borrower referring to this Agreement,
describing such Default or Event of Default, and stating that such notice is a
"notice of default." Agent promptly will notify the Lenders of its receipt of
any such notice or of any Event of Default of which Agent has actual knowledge.
If any Lender obtains actual knowledge of any Event of Default, such Lender
promptly shall notify the other Lenders and Agent of such Event of Default. Each
Lender shall be solely responsible for giving any notices to its Participants,
if any. Subject to SECTION 16.4, Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Required Lenders in
accordance with SECTION 9; PROVIDED, HOWEVER, that unless
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and until Agent has received any such request, Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable.
16.6 CREDIT DECISION. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Borrowers
and their Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to Borrowers. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document. Except for notices, reports, and other documents
expressly herein required to be furnished to the Lenders by Agent, Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of Borrowers and any other
Person party to a Loan Document that may come into the possession of any of the
Agent-Related Persons.
16.7 COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur and pay
Lender Group Expenses to the extent Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including court costs, reasonable
attorneys fees and expenses, costs of collection by outside collection agencies
and auctioneer fees and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not Borrowers are obligated to reimburse
Agent or Lenders for such expenses pursuant to the Loan Agreement or otherwise.
Agent is authorized and directed to deduct and retain sufficient amounts from
Collections received by Agent to reimburse Agent for such out-of-pocket costs
and expenses prior to the distribution of any amounts to Lenders. In the event
Agent is not reimbursed for such costs and expenses from Collections received by
Agent, each Lender hereby agrees that it is and shall be obligated to pay to or
reimburse Agent for the amount of such Lender's Pro Rata Share thereof. Whether
or not the transactions contemplated hereby are consummated, the Lenders shall
indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by
or on behalf of Borrowers and without limiting the obligation of Borrowers to do
so), according to their Pro Rata Shares, from and against any and all
Indemnified Liabilities; PROVIDED, HOWEVER, that no Lender shall be liable for
the payment to any Agent-Related Person of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence or willful
misconduct nor shall any Lender be liable for the obligations of any Defaulting
Lender in failing to make an Advance
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or other extension of credit hereunder. Without limitation of the foregoing,
each Lender shall reimburse Agent upon demand for such Lender's ratable share of
any costs or out-of-pocket expenses (including attorneys fees and expenses)
incurred by Agent in connection with the preparation, execution, delivery,
administration, modification, amendment, or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that Agent is
not reimbursed for such expenses by or on behalf of Borrowers. The undertaking
in this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of Agent.
16.8 AGENT IN INDIVIDUAL CAPACITY. Foothill and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking,
lending, trust, financial advisory, underwriting, or other business with
Borrowers and their Subsidiaries and Affiliates and any other Person party to
any Loan Documents as though Foothill were not Agent hereunder, and, in each
case, without notice to or consent of the other members of the Lender Group. The
other members of the Lender Group acknowledge that, pursuant to such activities,
Agent or its Affiliates may receive information regarding Borrowers or their
Affiliates and any other Person (other than the Lender Group) party to any Loan
Documents that is subject to confidentiality obligations in favor of Borrowers
or such other Person and that prohibit the disclosure of such information to the
Lenders, and the Lenders acknowledge that, in such circumstances (and in the
absence of a waiver of such confidentiality obligations, which waiver Agent will
use its reasonable best efforts to obtain), Agent shall not be under any
obligation to provide such information to them. The terms "Lender" and "Lenders"
include Foothill in its individual capacity.
16.9 SUCCESSOR AGENT. Agent may resign as Agent upon 45 days notice to
the Lenders. If Agent resigns under this Agreement, the Required Lenders shall,
with the consent of AMTROL (such consent not to be unreasonably withheld),
appoint a successor Agent for the Lenders provided that (i) if a Default shall
have occurred and be continuing, such consent of AMTROL shall not be required
and (ii) any Lender that is not a Defaulting Lender shall be deemed to be
acceptable to AMTROL. If no successor Agent is so appointed prior to the
effective date of the resignation of Agent, Agent may appoint, after consulting
with the Lenders, a successor Agent. If Agent has materially breached or failed
to perform any material provision of this Agreement or of applicable law, the
Required Lenders may agree in writing to remove and replace Agent with a
successor Agent from among the Lenders. In any such event, upon the acceptance
of its appointment as successor Agent hereunder, such successor Agent shall
succeed to all the rights, powers, and duties of the retiring Agent and the term
"Agent" shall mean such successor Agent and the retiring Agent's appointment,
powers, and duties as Agent shall be terminated. After any retiring Agent's
resignation hereunder as Agent, the provisions of this SECTION 16 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement. If no successor Agent has accepted appointment as
Agent by the date which is 45 days following a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nevertheless thereupon
become effective and the Lenders shall perform all of the duties of Agent
hereunder until such time, if any, as the Lenders appoint a successor Agent as
provided for above.
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16.10 LENDER IN INDIVIDUAL CAPACITY. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with
Borrowers and their Subsidiaries and Affiliates and any other Person (other than
the Lender Group) party to any Loan Documents as though such Lender were not a
Lender hereunder without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, such Lender and its respective Affiliates may receive information
regarding Borrowers or their Affiliates and any other Person (other than the
Lender Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrowers or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender not shall be under any obligation to provide such
information to them. With respect to the Swing Loans and Agent Advances, Swing
Lender shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the sub-agent of the
Agent.
16.11 WITHHOLDING TAXES.
(a) If any Lender is a "foreign corporation, partnership or
trust" within the meaning of the IRC and such Lender claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the IRC, such
Lender agrees with and in favor of Agent and Borrowers, to deliver to Agent and
Administrative Borrower:
(i) if such Lender claims an exemption from withholding tax
pursuant to its portfolio interest exception, (a) a statement of the
Lender, signed under penalty of perjury, that it is not a (I) a "bank" as
described in Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder
(within the meaning of Section 881(c)(3)(B) of the IRC), or (III) a
controlled foreign corporation described in Section 881(c)(3)(C) of the
IRC, and (B) a properly completed IRS Form W-8BEN, before the first payment
of any interest under this Agreement and at any other time reasonably
requested by Agent or Administrative Borrower;
(ii) if such Lender claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, properly completed
IRS Form W-8BEN before the first payment of any interest under this
Agreement and at any other time reasonably requested by Agent or
Administrative Borrower;
(iii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Lender, two properly completed and executed copies of IRS Form W-8ECI
before the first payment of any interest is due under this Agreement and at
any other time reasonably requested by Agent or Administrative Borrower;
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(iv) such other form or forms as may be required under the
IRC or other laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Such Lender agrees promptly to notify Agent and Administrative Borrower of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form W-8BEN
and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of Borrowers to such Lender, such
Lender agrees to notify Agent of the percentage amount in which it is no longer
the beneficial owner of Obligations of Borrowers to such Lender. To the extent
of such percentage amount, Agent will treat such Lender's IRS Form W-8BEN as no
longer valid.
(c) If any Lender is entitled to a reduction in the applicable
U.S. withholding tax, Agent may withhold from any interest payment to such
Lender an amount equivalent to the applicable withholding tax after taking into
account such reduction. Notwithstanding anything to the contrary herein, if the
forms or other documentation required by subsection (a) of this Section are not
delivered to Agent, then Agent may withhold from any interest payment to such
Lender not providing such forms or other documentation an amount equivalent to
the applicable withholding tax.
(d) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify and hold Agent harmless for all amounts
paid, directly or indirectly, by Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to Agent under this Section, together with all costs and expenses
(including attorneys fees and expenses). The obligation of the Lenders under
this subsection shall survive the payment of all Obligations and the resignation
or replacement of Agent.
(e) All payments made by Borrowers hereunder or under any note
or other Loan Document will be made without setoff, counterclaim, or other
defense, except as required by applicable law other than for Taxes (as defined
below). All such payments will be made free and clear of, and without deduction
or withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction (other than the United States) or by any political subdivision or
taxing authority thereof or therein (other than of the United States) with
respect to such payments (but excluding, any tax imposed by any jurisdiction or
by any political subdivision or taxing authority thereof or therein measured by
or based on the net income or net profits of a Lender, or any franchise tax or
to the extent that any tax results from a change in the circumstances of the
Lender, including a change in the residence, place of organization, or principal
place of business of the Lender, or a change in the branch or lending office of
the Lender participating in the
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transactions set forth herein) and all interest, penalties or similar
liabilities with respect thereto (all such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges being referred to collectively as
"TAXES"). If any Taxes are so levied or imposed, each Borrower agrees to pay the
full amount of such Taxes, and such additional amounts as may be necessary so
that every payment of all amounts due under this Agreement or under any note,
including any amount paid pursuant to this SECTION 16.11(E) after withholding or
deduction for or on account of any Taxes, will not be less than the amount
provided for herein; PROVIDED, HOWEVER, that Borrowers shall not be required to
increase any such amounts payable to Agent or any Lender (i) that is not
organized under the laws of the United States, if such Person fails to comply
with the other requirements of this SECTION 16.11, or (ii) if the increase in
such amount payable results from Agent's or such Lender's own willful misconduct
or gross negligence. Borrowers will furnish to Agent as promptly as possible
after the date the payment of any Taxes is due pursuant to applicable law
certified copies of tax receipts evidencing such payment by Borrowers.
16.12 COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize Agent, at its
option and in its sole discretion, to release any Lien on any Collateral (i)
upon the termination of the Commitments and payment and satisfaction in full by
Borrowers of all Obligations, (ii) constituting property being sold or disposed
of if a release is required or desirable in connection therewith and if
Administrative Borrower certifies to Agent that the sale or disposition is
permitted under SECTION 7.4 of this Agreement or the other Loan Documents (and
Agent may rely conclusively on any such certificate, without further inquiry),
(iii) constituting property in which no Borrower owned any interest at the time
the security interest was granted or at any time thereafter, or (iv)
constituting property leased to a Borrower under a lease that has expired or is
terminated in a transaction permitted under this Agreement. Except as provided
above, Agent will not execute and deliver a release of any Lien on any
Collateral without the prior written authorization of (y) if the release is of
all or any substantial portion of the Collateral, all of the Lenders, or (z)
otherwise, the Required Lenders. Upon request by Agent or Administrative
Borrower at any time, the Lenders will confirm in writing Agent's authority to
release any such Liens on particular types or items of Collateral pursuant to
this SECTION 16.12; PROVIDED, HOWEVER, that (1) Agent shall not be required to
execute any document necessary to evidence such release on terms that, in
Agent's opinion, would expose Agent to liability or create any obligation or
entail any consequence other than the release of such Lien without recourse,
representation, or warranty, and (2) such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of Borrowers in respect of) all
interests retained by Borrowers, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by Borrowers or is
cared for, protected, or insured or has been encumbered, or that the Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission, or event related thereto, subject to the terms and conditions
contained herein,
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Agent may act in any manner it may deem appropriate, absent Agent's gross
negligence or willful misconduct, in its sole discretion given Agent's own
interest in the Collateral in its capacity as one of the Lenders and that Agent
shall have no other duty or liability whatsoever to any Lender as to any of the
foregoing, except as otherwise provided herein.
16.13 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.
(a) Each of the Lenders agrees that it shall not, without the
express consent of Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of Agent, set off against the Obligations,
any amounts owing by such Lender to Borrowers or any deposit accounts of
Borrowers now or hereafter maintained with such Lender. Each of the Lenders
further agrees that it shall not, unless specifically requested to do so by
Agent, take or cause to be taken any action, including, the commencement of any
legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce
any security interest in, any of the Collateral the purpose of which is, or
could be, to give such Lender any preference or priority against the other
Lenders with respect to the Collateral.
(b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations arising under, or relating to, this
Agreement or the other Loan Documents, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender's Pro Rata Share of all such
distributions by Agent, such Lender promptly shall (1) turn the same over to
Agent, in kind, and with such endorsements as may be required to negotiate the
same to Agent, or in immediately available funds, as applicable, for the account
of all of the Lenders and for application to the Obligations in accordance with
the applicable provisions of this Agreement, or (2) purchase, without recourse
or warranty, an undivided interest and participation in the Obligations owed to
the other Lenders so that such excess payment received shall be applied ratably
as among the Lenders in accordance with their Pro Rata Shares; PROVIDED,
HOWEVER, that if all or part of such excess payment received by the purchasing
party is thereafter recovered from it, those purchases of participations shall
be rescinded in whole or in part, as applicable, and the applicable portion of
the purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.
16.14 AGENCY FOR PERFECTION. Agent hereby appoints each other Lender
as its agent (and each Lender hereby accepts such appointment) for the purpose
of perfecting the Agent's Liens in assets which, in accordance with Article 9 of
the Code can be perfected only by possession. Should any Lender obtain
possession of any such Collateral, such Lender shall notify Agent thereof, and,
promptly upon Agent's request therefor shall deliver such Collateral to Agent or
in accordance with Agent's instructions.
16.15 PAYMENTS BY AGENT TO THE LENDERS. All payments to be made by
Agent to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice to Agent. Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium, or interest of the Obligations.
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16.16 CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS. Each
member of the Lender Group authorizes and directs Agent to enter into this
Agreement and the other Loan Documents relating to the Collateral, for the
benefit of the Lender Group. Each member of the Lender Group agrees that any
action taken by Agent in accordance with the terms of this Agreement or the
other Loan Documents relating to the Collateral and the exercise by Agent of its
powers set forth therein or herein, together with such other powers that are
reasonably incidental thereto, shall be binding upon all of the Lenders.
16.17 FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY;
DISCLAIMERS BY LENDERS; OTHER REPORTS AND INFORMATION. By becoming a party to
this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report (each a "REPORT" and collectively, "REPORTS") prepared by or at the
request of Agent, and Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i)
make any representation or warranty as to the accuracy of any Report, and (ii)
shall not be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding Borrowers
and will rely significantly upon the Books, as well as on representations of
Borrowers' personnel,
(d) agrees to keep all Reports and other material, non-public
information regarding Borrowers and their Subsidiaries and their operations,
assets, and existing and contemplated business plans in a confidential manner;
it being understood and agreed by Borrowers that in any event such Lender may
make disclosures (a) to counsel for and other advisors, accountants, and
auditors to such Lender, (b) reasonably required by any bona fide potential or
actual Assignee or Participant in connection with any contemplated or actual
assignment or transfer by such Lender of an interest herein or any participation
interest in such Lender's rights hereunder so long as such Person agrees to hold
such materials on a confidential basis, (c) of information that has become
public by disclosures made by Persons other than such Lender, its Affiliates,
assignees, transferees, or Participants, or (d) as required or requested by any
court, governmental or administrative agency, pursuant to any subpoena or other
legal process, or by any law, statute, regulation, or court order; PROVIDED,
HOWEVER, that, unless prohibited by applicable law, statute, regulation, or
court order, such Lender shall notify Administrative Borrower of any request by
any court, governmental or administrative agency, or pursuant to any subpoena or
other legal process for disclosure of any such non-public material information
concurrent with, or where practicable, prior to the disclosure thereof, and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent and any such
other Lender preparing a Report harmless from any action the indemnifying Lender
may take or conclusion the indemnifying Lender may reach or draw from any Report
in connection with any loans or
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other credit accommodations that the indemnifying Lender has made or may make to
Borrowers, or the indemnifying Lender's participation in, or the indemnifying
Lender's purchase of, a loan or loans of Borrowers; and (ii) to pay and protect,
and indemnify, defend and hold Agent, and any such other Lender preparing a
Report harmless from and against, the claims, actions, proceedings, damages,
costs, expenses, and other amounts (including, attorneys fees and costs)
incurred by Agent and any such other Lender preparing a Report as the direct or
indirect result of any third parties who might obtain all or part of any Report
through the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrowers to Agent that has not been contemporaneously
provided by Borrowers to such Lender, and, upon receipt of such request, Agent
shall provide a copy of same to such Lender, (y) to the extent that Agent is
entitled, under any provision of the Loan Documents, to request additional
reports or information from Borrowers, any Lender may, from time to time,
reasonably request Agent to exercise such right as specified in such Lender's
notice to Agent, whereupon Agent promptly shall request of Administrative
Borrower the additional reports or information reasonably specified by such
Lender, and, upon receipt thereof from Administrative Borrower, Agent promptly
shall provide a copy of same to such Lender, and (z) any time that Agent renders
to Administrative Borrower a statement regarding the Loan Account, Agent shall
send a copy of such statement to each Lender.
16.18 SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding that
certain of the Loan Documents now or hereafter may have been or will be executed
only by or in favor of Agent in its capacity as such, and not by or in favor of
the Lenders, any and all obligations on the part of Lenders to make any credit
available hereunder shall constitute the several (and not joint) obligations of
the respective Lenders on a ratable basis, according to their respective
Commitments, to make an amount of such credit not to exceed, in principal
amount, at any one time outstanding, the amount of their respective Commitments.
Nothing contained herein shall confer upon any Lender any interest in, or
subject any Lender to any liability for, or in respect of, the business, assets,
profits, losses, or liabilities of any other Lender. Each Lender shall be solely
responsible for notifying its Participants of any matters relating to the Loan
Documents to the extent any such notice may be required, and no Lender shall
have any obligation, duty, or liability to any Participant of any other Lender.
Except as provided in SECTION 16.7, no member of the Lender Group shall have any
liability for the acts or any other member of the Lender Group. No Lender shall
be responsible to any Borrower or any other Person for any failure by any other
Lender to fulfill its obligations to make credit available hereunder, nor to
advance for it or on its behalf in connection with its Commitment, nor to take
any other action on its behalf hereunder or in connection with the financing
contemplated herein.
17. GENERAL PROVISIONS.
17.1 EFFECTIVENESS. This Agreement shall be binding and deemed
effective when executed by Borrowers, Agent, and each Lender whose signature is
provided for on the signature pages hereof.
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17.2 SECTION HEADINGS. Headings and numbers have been set forth
herein for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.
17.3 INTERPRETATION. Neither this Agreement nor any uncertainty
or ambiguity herein shall be construed or resolved against the Lender Group or
Borrowers, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
17.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
17.5 AMENDMENTS IN WRITING. This Agreement only can be amended by
a writing in accordance with SECTION 15.1.
17.6 COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
17.7 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence
or payment of the Obligations by any Borrower or Guarantor or the transfer to
the Lender Group of any property should for any reason subsequently be declared
to be void or voidable under any state or federal law relating to creditors'
rights, including provisions of the Bankruptcy Code relating to fraudulent
conveyances, preferences, or other voidable or recoverable payments of money or
transfers of property (collectively, a "VOIDABLE TRANSFER"), and if the Lender
Group is required to repay or restore, in whole or in part, any such Voidable
Transfer, or elects to do so upon the reasonable advice of its counsel, then, as
to any such Voidable Transfer, or the amount thereof that the Lender Group is
required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender Group related thereto, the liability
of Borrowers or Guarantors automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.
17.8 INTEGRATION. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
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17.9 AMTROL AS AGENT FOR BORROWERS. Each Borrower hereby
irrevocably appoints AMTROL as the borrowing agent and attorney-in-fact for all
Borrowers (the "ADMINISTRATIVE BORROWER") which appointment shall remain in full
force and effect unless and until Agent shall have received prior written notice
signed by each Borrower that such appointment has been revoked and that another
Borrower has been appointed Administrative Borrower. Each Borrower hereby
irrevocably appoints and authorizes the Administrative Borrower (i) to provide
Agent with all notices with respect to Advances, the Term Loans and Letters of
Credit obtained for the benefit of any Borrower and all other notices and
instructions under this Agreement and (ii) to take such action as the
Administrative Borrower deems appropriate on its behalf to obtain Advances, the
Term Loans and Letters of Credit and to exercise such other powers as are
reasonably incidental thereto to carry out the purposes of this Agreement. It is
understood that the handling of the Loan Account and Collateral of Borrowers in
a combined fashion, as more fully set forth herein, is done solely as an
accommodation to Borrowers in order to utilize the collective borrowing powers
of Borrowers in the most efficient and economical manner and at their request,
and that Lender Group shall not incur liability to any Borrower as a result
hereof. Each Borrower expects to derive benefit, directly or indirectly, from
the handling of the Loan Account and the Collateral in a combined fashion since
the successful operation of each Borrower is dependent on the continued
successful performance of the integrated group. To induce the Lender Group to do
so, and in consideration thereof, each Borrower hereby jointly and severally
agrees to indemnify each member of the Lender Group and hold each member of the
Lender Group harmless against any and all liability, expense, loss or claim of
damage or injury, made against the Lender Group by any Borrower or by any third
party whosoever, arising from or incurred by reason of (a) the handling of the
Loan Account and Collateral of Borrowers as herein provided, (b) the Lender
Group's relying on any instructions of the Administrative Borrower, or (c) any
other action taken by the Lender Group hereunder or under the other Loan
Documents, except that Borrowers will have no liability to the relevant
Agent-Related Person or Lender-Related Person under this SECTION 17.9 with
respect to any liability that has been finally determined by a court of
competent jurisdiction to have resulted solely from the gross negligence or
willful misconduct of such Agent-Related Person or Lender-Related Person, as the
case may be.
18. GUARANTY.
18.1 GUARANTY; LIMITATION OF LIABILITY. Holdings hereby,
unconditionally and irrevocably, guarantees the punctual payment when due,
whether at stated maturity, by acceleration or otherwise, of all Obligations of
Borrowers now or hereafter existing under any Loan Document, whether for
principal, interest (including, without limitation, all interest that accrues
after the commencement of any case, proceeding or other action relating to
bankruptcy, insolvency or reorganization of any Borrower), fees, expenses or
otherwise (such obligations, to the extent not paid by Borrowers, being the
"GUARANTEED OBLIGATIONS"), and agrees to pay any and all expenses (including
reasonable counsel fees and expenses) incurred by Agent and Lenders in enforcing
any rights under the guaranty set forth in this SECTION 18. Without limiting the
generality of the foregoing, the Holdings' liability shall extend to all amounts
that constitute part of the Guaranteed Obligations and would be owed by
Borrowers to Agent and Lenders under any Loan Document but for the fact that
they are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving any Borrower.
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18.2 GUARANTY ABSOLUTE. Holdings guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Loan
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of Agent or
Lenders with respect thereto. The obligations of Holdings under this SECTION 18
are independent of the Guaranteed Obligations, and a separate action or actions
may be brought and prosecuted against Holdings to enforce such obligations,
irrespective of whether any action is brought against Borrowers or whether
Borrowers are joined in any such action or actions. The liability of Holdings
under this SECTION 18 shall be irrevocable, absolute and unconditional
irrespective of, and Holdings hereby irrevocably waives any defenses it may now
or hereafter have in any way relating to, any or all of the following:
(a) any lack of validity or enforceability of any Loan
Document or any agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of,
or in any other term of, all or any of the Guaranteed Obligations, or any other
amendment or waiver of or any consent to departure from any Loan Document,
including, without limitation, any increase in the Guaranteed Obligations
resulting from the extension of additional credit to Borrowers or otherwise;
(c) any taking, exchange, release or non-perfection of any
Collateral, or any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Guaranteed Obligations;
(d) any change, restructuring or termination of the
corporate, limited liability company or partnership structure or existence of
any Borrower; or
(e) any other circumstance (including, without limitation,
any statute of limitations) or any existence of or reliance on any
representation by Agent or the Lenders that might otherwise constitute a defense
available to, or a discharge of, Holdings, any Borrower or any other guarantor
or surety.
This SECTION 18 shall continue to be effective or be reinstated,
as the case may be, if at any time any payment of any of the Guaranteed
Obligations is rescinded or must otherwise be returned by a Lender or any other
Person upon the insolvency, bankruptcy or reorganization of any Borrower or
otherwise, all as though such payment had not been made.
18.3 WAIVER. Holdings hereby waives promptness, diligence, notice
of acceptance and any other notice with respect to any of the Guaranteed
Obligations and this SECTION 18 and any requirement that Agent or the Lenders
exhaust any right or take any action against Borrowers or any other Person or
any Collateral. Holdings acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated herein and that the waiver
set forth in this SECTION 18.3 is knowingly made in contemplation of such
benefits. Holdings hereby waives any right to revoke this SECTION 18, and
acknowledges that this SECTION 18 is continuing in nature and applies to all
Guaranteed Obligations, whether existing now or in the future.
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18.4 CONTINUING GUARANTY; ASSIGNMENTS. This SECTION 18 is a
continuing guaranty and shall (a) remain in full force and effect until the
later of (i) the cash payment in full of the Guaranteed Obligations (other than
indemnification obligations as to which no claim has been made) and all other
amounts payable under this SECTION 18 and (ii) the Maturity Date or earlier
termination of this Agreement, (b) be binding upon Holdings, its successors and
assigns and (c) inure to the benefit of and be enforceable by Agent and the
Lenders and their successors, pledgees, transferees and assigns. Without
limiting the generality of the foregoing clause (c), any Lender may pledge,
assign or otherwise transfer all or any portion of its rights and obligations
under this Agreement (including, without limitation, all or any portion of its
Commitments owing to it) to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted such
Lender herein or otherwise, in each case as provided in SECTION 14.1.
18.5 SUBROGATION. Holdings will not exercise any rights that it
may now or hereafter acquire against any Borrower or any other Guarantor that
arise from the existence, payment, performance or enforcement of Holdings'
obligations under this SECTION 18, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or indemnification and any
right to participate in any claim or remedy of Agent and Lenders against any
Borrower or any other Guarantor or any collateral, whether or not such claim,
remedy or right arises in equity or under contract, statute or common law,
including, without limitation, the right to take or receive from any Borrower or
any other Guarantor, directly or indirectly, in cash or other property or by
set-off or in any other manner, payment or security solely on account of such
claim, remedy or right, unless and until all of the Guaranteed Obligations and
all other amounts payable under this SECTION 18 shall have been paid in full in
cash and the Maturity Date or earlier termination of this Agreement shall have
occurred. If any amount shall be paid to Holdings in violation of the
immediately preceding sentence at any time prior to the later of the payment in
full in cash of the Guaranteed Obligations and all other amounts payable under
this SECTION 18 and the earlier of the Maturity Date and the early termination
of this Agreement, such amount shall be held in trust for the benefit of Agent
and Lenders and shall forthwith be paid to Agent and the Lenders to be credited
and applied to the Guaranteed Obligations and all other amounts payable under
this SECTION 18, whether matured or unmatured, in accordance with the terms of
this Agreement, or to be held as collateral for any Guaranteed Obligations or
other amounts payable under this SECTION 18 thereafter arising. If (i) Holdings
shall make payment to Agent and the Lenders of all or any part of the Guaranteed
Obligations, (ii) all of the Guaranteed Obligations and all other amounts
payable under this SECTION 18 shall be paid in full in cash and (iii) the
Maturity Date or earlier termination of this Agreement shall have occurred,
Agent and Lenders will, at Holdings' request and expense, execute and deliver to
Holdings appropriate documents, without recourse and without representation or
warranty, necessary to evidence the transfer by subrogation to Holdings of an
interest in the Guaranteed Obligations resulting from such payment by Holdings.
[Signature page to follow.]
-110-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
AMTROL HOLDINGS, INC.,
a Delaware corporation
By: /s/ Xxxxx Xxxxxxxxxxx
------------------------------------
Title: Assistant Treasurer
AMTROL INC.,
a Rhode Island corporation
By: /s/ Xxxxx Xxxxxxxxxxx
------------------------------------
Title: Executive Vice President and C.F.O.
WATER SOFT INC.,
a Rhode Island corporation
By: /s/ Xxxxx Xxxxxxxxxxx
------------------------------------
Title: President
FOOTHILL CAPITAL CORPORATION,
a California corporation, as Agent and as a
Lender
By: /s/ Xxxxx X. Xxxx
------------------------------------
Title: Vice President
ABLECO FINANCE LLC,
a Delaware limited liability company, as a
Lender
By: /s/ Xxxxx Xxxxx
------------------------------------
Title: Senior Vice President
EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit C-1 Form of Compliance Certificate
Exhibit L-1 Form of LIBOR Notice
Schedule A-1 Agent's Account
Schedule C-1 Commitments
Schedule D-1 Designated Account
Schedule E-1 Eligible Inventory Locations
Schedule G-1 Guarantors
Schedule P-1 Permitted Liens
Schedule P-2 Permitted Investments
Schedule R-1 Real Property Collateral
Schedule T-1 D-24 Production Line Transaction
Schedule 2.7(a) Cash Management Banks
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7 Organizational Matters; Commercial Tort Claims
Schedule 5.8(b) Capitalization of Loan Parties
Schedule 5.8(c) Capitalization of Borrowers' Subsidiaries
Schedule 5.10 Litigation
Schedule 5.16 Intellectual Property
Schedule 5.18 Demand Deposit Accounts
Schedule 5.20 Indebtedness
Schedule 7.10 Consignments
SCHEDULE A-1
AGENT'S ACCOUNT
An account at a bank designated by Agent from time to time as the account
into which Borrowers shall make all payments to Agent for the benefit of the
Lender Group and into which the Lender Group shall make all payments to Agent
under this Agreement and the other Loan Documents; unless and until Agent
notifies Administrative Borrower and the Lender Group to the contrary, Agent's
Account shall be that certain deposit account bearing account number 323-266193
and maintained by Agent with JPMorgan Chase Bank, 0 Xxx Xxxx Xxxxx, 00xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, ABA #000000000.
SCHEDULE C-1
COMMITMENTS
-----------------------------------------------------------------------------------------------------
REVOLVER TERM LOAN A TERM LOAN B TOTAL
LENDER COMMITMENT* COMMITMENT COMMITMENT COMMITMENT
-----------------------------------------------------------------------------------------------------
Foothill Capital Corporation $30,000,000 $10,500,000 -0- $30,000,000
-----------------------------------------------------------------------------------------------------
Ableco Finance LLC 5,000,000 -0- $7,500,000 $12,500,000
-----------------------------------------------------------------------------------------------------
All Lenders $35,000,000 $10,500,000 $7,500,000 $42,500,000
-----------------------------------------------------------------------------------------------------
----------------
* The Revolver Commitment is reduced by the amount of the outstanding
principal of Term Loan A.
SCHEDULE D-1
DESIGNATED ACCOUNT
Account number 9392244020 of Administrative Borrower maintained with
Administrative Borrower's Designated Account Bank, or such other deposit account
of Administrative Borrower (located within the United States) that has been
designated as such, in writing, by Administrative Borrower to Agent.
"DESIGNATED ACCOUNT BANK" means Fleet Bank, whose office is located at
_________, and whose ABA number is _____________. [Borrowers to provide
information.]
