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CREDIT AGREEMENT
dated as of January 16, 1998,
by and among
XXXXXXXX INDUSTRIES,
(and subject to and in accordance with Addendum A attached
hereto, STERLING ELECTRONICS CORPORATION)
as Borrower,
the Lenders referred to herein,
and
FIRST UNION NATIONAL BANK,
as Administrative Agent
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.........................................................1
SECTION 1.1 DEFINITIONS..................................................1
SECTION 1.2 GENERAL.....................................................16
SECTION 1.3 OTHER DEFINITIONS AND PROVISIONS............................16
ARTICLE II REVOLVING CREDIT FACILITY.........................................16
SECTION 2.1. REVOLVING CREDIT LOANS......................................16
SECTION 2.2. PROCEDURE FOR ADVANCES OF REVOLVING CREDIT LOANS............17
SECTION 2.3. REPAYMENT OF REVOLVING CREDIT LOANS.........................17
SECTION 2.4. REVOLVING CREDIT NOTES......................................18
SECTION 2.5. PERMANENT REDUCTION OF THE REVOLVING CREDIT COMMITMENT......18
SECTION 2.6. TERMINATION OF THE REVOLVING CREDIT FACILITY................19
SECTION 2.7. USE OF PROCEEDS.............................................19
SECTION 2.8. SECURITY....................................................19
ARTICLE III LETTER OF CREDIT FACILITY........................................19
SECTION 3.1. L/C COMMITMENT..............................................19
SECTION 3.2. PROCEDURE FOR ISSUANCE OF LETTERS OF CREDIT.................20
SECTION 3.3. LETTER OF CREDIT FEES AND OTHER CHARGES.....................20
SECTION 3.4. L/C PARTICIPATIONS..........................................21
SECTION 3.5. REIMBURSEMENT OBLIGATION OF THE BORROWER....................22
SECTION 3.6. OBLIGATIONS ABSOLUTE........................................22
SECTION 3.7. EFFECT OF APPLICATION.......................................23
ARTICLE IV TERM LOAN FACILITIES..............................................23
SECTION 4.1. TERM LOANS..................................................23
SECTION 4.2. PROCEDURE FOR ADVANCE OF TERM LOANS.........................23
SECTION 4.3. REPAYMENT OF TERM LOANS.....................................24
SECTION 4.4. OPTIONAL PREPAYMENTS OF TERM LOANS..........................25
SECTION 4.5. MANDATORY PREPAYMENTS OF TERM LOANS.........................25
SECTION 4.6. TERM NOTES..................................................26
SECTION 4.7. USE OF PROCEEDS.............................................26
SECTION 4.8. SECURITY....................................................26
ARTICLE V GENERAL LOAN PROVISIONS............................................26
SECTION 5.1. INTEREST....................................................26
SECTION 5.2. NOTICE AND MANNER OF CONVERSION OR CONTINUATION OF LOANS....29
SECTION 5.3. COMMITMENT FEE..............................................30
SECTION 5.4. MANNER OF PAYMENT...........................................30
SECTION 5.5. CREDITING OF PAYMENTS AND PROCEEDS..........................31
SECTION 5.6. ADJUSTMENTS.................................................31
SECTION 5.7. NATURE OF OBLIGATIONS OF LENDERS REGARDING EXTENSIONS OF
CREDIT; ASSUMPTION BY THE ADMINISTRATIVE AGENT............32
SECTION 5.8. CHANGED CIRCUMSTANCES.......................................33
SECTION 5.10. CAPITAL REQUIREMENTS........................................35
SECTION 5.11. TAXES.......................................................35
SECTION 5.12 REPLACEMENT LENDER..........................................37
ARTICLE VI CLOSING; CONDITIONS OF CLOSING AND BORROWING......................37
SECTION 6.1. CLOSING.....................................................37
SECTION 6.2. CONDITIONS TO CLOSING AND EXTENSIONS OF CREDIT..............37
SECTION 6.3. CONDITIONS TO ALL EXTENSIONS OF CREDIT......................42
SECTION 6.4 CONDITIONS AND COVENANTS TO JOINDER OF STERLING AS A
BORROWER..................................................43
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE BORROWER...................43
SECTION 7.1. REPRESENTATIONS AND WARRANTIES..............................43
SECTION 7.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC.............52
ARTICLE VIII FINANCIAL INFORMATION AND NOTICES...............................52
SECTION 8.1. FINANCIAL STATEMENTS AND PROJECTIONS........................52
SECTION 8.2. OFFICER'S COMPLIANCE CERTIFICATES...........................53
SECTION 8.3. ACCOUNTANTS' CERTIFICATE....................................53
SECTION 8.4. OTHER REPORTS...............................................53
SECTION 8.5. NOTICE OF LITIGATION AND OTHER MATTERS......................54
SECTION 8.6. ACCURACY OF INFORMATION.....................................55
ARTICLE IX AFFIRMATIVE COVENANTS.............................................55
SECTION 9.1. PRESERVATION OF CORPORATE EXISTENCE AND RELATED MATTERS.....55
SECTION 9.2. MAINTENANCE OF PROPERTY.....................................55
SECTION 9.3. INSURANCE...................................................55
SECTION 9.4. ACCOUNTING METHODS AND FINANCIAL RECORDS....................56
SECTION 9.5. PAYMENT AND PERFORMANCE OF OBLIGATIONS......................56
SECTION 9.6. COMPLIANCE WITH LAWS AND APPROVALS..........................56
SECTION 9.7. ENVIRONMENTAL LAWS..........................................56
SECTION 9.8. COMPLIANCE WITH ERISA.......................................57
SECTION 9.9. COMPLIANCE WITH AGREEMENTS..................................57
SECTION 9.10. CONDUCT OF BUSINESS.........................................57
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SECTION 9.11. VISITS AND INSPECTIONS......................................57
SECTION 9.12. INTEREST RATE PROTECTION....................................57
SECTION 9.13. ADDITIONAL COLLATERAL.......................................58
SECTION 9.14. YEAR 2000 COMPATIBILITY.....................................58
SECTION 9.15. FURTHER ASSURANCES..........................................58
ARTICLE X FINANCIAL COVENANTS................................................58
SECTION 10.1. LEVERAGE RATIO..............................................59
SECTION 10.2. INTEREST COVERAGE RATIO.....................................59
SECTION 10.3. MINIMUM TANGIBLE NET WORTH..................................60
ARTICLE XI NEGATIVE COVENANTS................................................61
SECTION 11.1. LIMITATIONS ON DEBT.........................................61
SECTION 11.2. LIMITATIONS ON GUARANTY OBLIGATIONS.........................61
SECTION 11.3. LIMITATIONS ON LIENS........................................62
SECTION 11.4. LIMITATIONS ON LOANS, ADVANCES, INVESTMENTS AND
ACQUISITIONS..............................................63
SECTION 11.5. LIMITATIONS ON MERGERS AND LIQUIDATION......................65
SECTION 11.6. LIMITATIONS ON SALE OF ASSETS...............................65
SECTION 11.7. LIMITATIONS ON DIVIDENDS AND DISTRIBUTIONS..................65
SECTION 11.8. LIMITATIONS ON EXCHANGE AND ISSUANCE OF CAPITAL STOCK.......66
SECTION 11.9. TRANSACTIONS WITH AFFILIATES................................66
SECTION 11.10. CERTAIN ACCOUNTING CHANGES..................................66
SECTION 11.11. CHARTER DOCUMENTS: CAPITALIZATION...........................66
SECTION 11.12. RESTRICTIVE AGREEMENTS......................................66
ARTICLE XII DEFAULT AND REMEDIES.............................................67
SECTION 12.1. EVENTS OF DEFAULT...........................................67
SECTION 12.2. REMEDIES....................................................69
SECTION 12.3. RIGHTS AND REMEDIES CUMULATIVE; NON-WAIVER; ETC.............70
ARTICLE XIII THE ADMINISTRATIVE AGENT........................................71
SECTION 13.1. APPOINTMENT.................................................71
SECTION 13.2. DELEGATION OF DUTIES........................................71
SECTION 13.3. EXCULPATORY PROVISIONS......................................71
SECTION 13.4. RELIANCE BY THE ADMINISTRATIVE AGENT........................71
SECTION 13.5. NOTICE OF DEFAULT...........................................72
SECTION 13.6. NON-RELIANCE ON THE ADMINISTRATIVE AGENT AND OTHER LENDERS..72
SECTION 13.7. INDEMNIFICATION.............................................73
SECTION 13.8. THE ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY.........73
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SECTION 13.9. RESIGNATION OF THE ADMINISTRATIVE AGENT; SUCCESSOR
ADMINISTRATIVE AGENT......................................73
ARTICLE XIV MISCELLANEOUS.....................................................74
SECTION 14.1. NOTICES.....................................................74
SECTION 14.2. EXPENSES; INDEMNITY.........................................75
SECTION 14.4. GOVERNING LAW...............................................76
SECTION 14.5. CONSENT TO JURISDICTION.....................................76
SECTION 14.6. BINDING ARBITRATION; WAIVER OF JURY TRIAL...................77
SECTION 14.7. REVERSAL OF PAYMENTS........................................78
SECTION 14.8. INJUNCTIVE RELIEF...........................................78
SECTION 14.9. ACCOUNTING MATTERS..........................................78
SECTION 14.10. SUCCESSORS AND ASSIGNS; PARTICIPATIONS......................79
SECTION 14.11. AMENDMENTS, WAIVERS AND CONSENTS............................82
SECTION 14.12. PERFORMANCE OF DUTIES.......................................83
SECTION 14.13. ALL POWERS COUPLED WITH INTEREST............................83
SECTION 14.14. SURVIVAL OF INDEMNITIES.....................................83
SECTION 14.15. TITLES AND CAPTIONS.........................................83
SECTION 14.16. SEVERABILITY OF PROVISIONS..................................83
SECTION 14.17. COUNTERPARTS................................................83
SECTION 14.18. TERM OF AGREEMENT...........................................83
iv
CREDIT AGREEMENT, dated as of the 16th day of January, 1998, by and
among XXXXXXXX INDUSTRIES, a corporation organized under the laws of
California ("Xxxxxxxx"), subject to and in accordance with Addendum A
attached hereto, STERLING ELECTRONICS CORPORATION, a corporation organized
under the laws of Nevada ("Sterling", and together with Xxxxxxxx, the
"Borrower"), the Lenders who are or may become a party to this Agreement (the
"Lenders"), and FIRST UNION NATIONAL BANK, as Administrative Agent for the
Lenders.
STATEMENT OF PURPOSE
Subject to the terms and conditions of Addendum A attached hereto,
Sterling, which will be a Wholly-Owned Subsidiary of Xxxxxxxx upon the
consummation of the Acquisition, shall be a Borrower hereunder. Addendum A
shall form a part of this Agreement and shall be read in conjunction with
this Agreement.
The Borrower has requested, and the Lenders have agreed, to extend
certain credit facilities to the Borrower on the terms and conditions of this
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, such
parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. The following terms when used in this
Agreement shall have the meanings assigned to them below:
"ACQUISITION" means the merger of MI Holdings Nevada, Inc. with and into
Sterling and the acquisition by Xxxxxxxx of all of the outstanding stock of
Sterling, the final consummation of such acquisition to take place
contemporaneously with or immediately following the satisfaction of the
closing conditions set forth in Section 6.2 and 6.3.
"ACQUISITION DOCUMENTS" means the Agreement and Plan of Merger dated as
of September 18, 1997 by and among Xxxxxxxx, MI Holdings Nevada, Inc., and
Sterling, the Articles of Merger related thereto, and all other documents
executed in connection with the Acquisition, all as may be amended, restated,
supplemented or otherwise modified from time to time.
"ACQUISITION FILING" means the filing of the Articles of Merger with the
Secretary of State of Nevada which evidences the final consummation of the
Acquisition.
"ADMINISTRATIVE AGENT" means First Union in its capacity as
Administrative Agent hereunder, and any successor thereto appointed pursuant
to Section 13.9.
"ADMINISTRATIVE AGENT'S OFFICE" means the office of the Administrative
Agent specified in or determined in accordance with the provisions of
Section 14.1.
"AFFILIATE" means, with respect to any Person, any other Person (other
than a Subsidiary) which directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with, such first Person or any of its Subsidiaries. The term "control" means
(a) the power to vote ten percent (10%) or more of the securities or other
equity interests of a Person having ordinary voting power, or (b) the
possession, directly or indirectly, of any other power to direct or cause the
direction of the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise.
"AGGREGATE COMMITMENT" means the aggregate amount of the Lenders'
Commitments hereunder, as such amount may be reduced or modified at any time
or from time to time pursuant to the terms hereof. On the Closing Date, the
Aggregate Commitment shall be Three Hundred Twenty-Five Million Dollars
($325,000,000).
"AGREEMENT" means this Credit Agreement, as amended, restated,
supplemented or otherwise modified from time to time.
"APPLICABLE LAW" means all applicable provisions of constitutions, laws,
statutes, ordinances, rules, treaties, regulations, permits, licenses,
approvals, interpretations and orders of all Governmental Authorities and all
orders and decrees of all courts and arbitrators.
"APPLICABLE MARGIN" shall have the meaning assigned thereto in
Section 5.1(c).
"APPLICATION" means an application, in the form of EXHIBIT C-4,
requesting the Issuing Lender to issue a Letter of Credit; PROVIDED, that if
First Union is ever replaced as Issuing Lender, such new Issuing Lender shall
distribute its form of Application to the Borrower which, if reasonably
acceptable to the Borrower, shall be substituted in lieu of the application
form attached as EXHIBIT C-4.
"ARTICLES OF MERGER" means the articles of merger to be filed with the
Secretary of State in the State of Nevada in connection with the Acquisition.
"ASIAN JOINT VENTURE" means the investments of up to a twenty-five
percent (25%) interest in an Asian electronic component distribution company
by the Borrower.
"ASSIGNMENT AND ACCEPTANCE" shall have the meaning assigned thereto in
Section 14.10(b).
"BASE RATE" means, at any time, the higher of (a) the Prime Rate or
(b) the Federal Funds Rate PLUS 1/2 of 1%; each change in the Base Rate shall
take effect simultaneously with the corresponding change or changes in the
Prime Rate or the Federal Funds Rate.
"BASE RATE LOAN" means any Loan bearing interest at a rate based upon
the Base Rate as provided in Section 5.1(a).
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"BORROWER" means Xxxxxxxx, in its capacity as borrower hereunder, and
subject to the terms and conditions of Addendum A attached hereto, Sterling,
in its capacity as borrower hereunder.
"BUSINESS DAY" means (a) for all purposes other than as set forth in
clause (b) below, any day other than a Saturday, Sunday or legal holiday, on
which banks in Charlotte, North Carolina and New York, New York are open for
the conduct of their commercial banking business, and (b) with respect to all
notices and determinations in connection with, and payments of principal of
and interest on, any LIBOR Rate Loan, any day that is a Business Day
described in clause (a) and that is also a day for trading by and between
banks in Dollar deposits in the London interbank market.
"CAPITAL ASSET" means, with respect to the Borrower and its
Subsidiaries, any asset that should, in accordance with GAAP, be classified
and accounted for as a capital asset on a Consolidated balance sheet of the
Borrower and its Subsidiaries.
"CAPITAL LEASE" means, with respect to the Borrower and its
Subsidiaries, any lease by the Borrower or any of its Subsidiaries as lessee
of any property that should, in accordance with GAAP, be classified and
accounted for as a capital lease on a Consolidated balance sheet of the
Borrower and its Subsidiaries.
"CASH EQUIVALENTS" shall have the meaning assigned thereto in
Section 11.4(b).
"CHANGE IN CONTROL" shall have the meaning assigned thereto in
Section 12.1(i).
"CLOSING DATE" means the date of this Agreement.
"CODE" means the Internal Revenue Code of 1986, and the rules and
regulations thereunder, each as amended or supplemented from time to time.
"COLLATERAL" means any collateral pledged by the Borrower, its
shareholders, or any of their Subsidiaries to the Administrative Agent, for
the ratable benefit of itself and the Lenders, in order to secure the
Obligations or any portion thereof.
"COMMITMENT" means, as to any Lender, the sum of such Lender's
(a) Revolving Credit Commitment and (b) Term Loan Commitment.
"CONSOLIDATED" means, when used with reference to financial statements
or financial statement items of the Borrower and its Subsidiaries, such
statements or items on a consolidated basis in accordance with applicable
principles of consolidation under GAAP.
"CREDIT FACILITIES" means the collective reference to the Revolving
Credit Facility, the L/C Facility and the Term Loan Facility.
"CURRENT ASSETS" means, as of any date of determination, all assets
that, in accordance with GAAP, would be classified as current assets on a
Consolidated balance sheet of the Borrower and
3
its Subsidiaries as at such date of determination; PROVIDED, that cash and
Cash Equivalents shall be excluded from any calculation of Current Assets.
"CURRENT LIABILITIES" means, as of any date of determination, all
liabilities that, in accordance with GAAP, would be classified as current
liabilities on a Consolidated balance sheet of the Borrower and its
Subsidiaries as at such date of determination; PROVIDED, that the current
portion of all Consolidated Funded Debt (including the Extensions of Credit)
shall be excluded from any calculation of Current Liabilities.
"DEBT" means, with respect to the Borrower and its Subsidiaries at any
date and without duplication, the sum of the following calculated in
accordance with GAAP: (a) all liabilities, obligations and indebtedness for
borrowed money, including but not limited to obligations evidenced by bonds,
debentures, notes or other similar instruments of any such Person, (b) all
obligations to pay the deferred purchase price of property or services of any
such Person, except trade payables arising in the ordinary course of business
not more than ninety (90) days past due, (c) all obligations of any such
Person as lessee under Capital Leases, (d) all Debt of any other Person
secured by a Lien on any asset of any such Person, (e) all Guaranty
Obligations of any such Person, (f) all obligations, contingent or otherwise,
of any such Person relative to the face amount of letters of credit, whether
or not drawn, including without limitation any Reimbursement Obligation, and
banker's acceptances issued for the account of any such Person and (g) all
net obligations incurred by any such Person pursuant to Hedging Agreements.
"DEFAULT" means any of the events specified in Section 12.1 which with
the passage of time, the giving of notice or any other condition, would
constitute an Event of Default.
"DOLLARS" OR "$" means, unless otherwise qualified, dollars in lawful
currency of the United States.
"EBIT" means, with respect to the Borrower and its Subsidiaries for any
period, the following calculated without duplication for such period on a
Consolidated basis in accordance with GAAP: (a) Net Income LESS (i) to the
extent included in calculating Net Income, any after-tax extraordinary gains,
PLUS (ii) to the extent included in calculating Net Income, any after-tax
extraordinary losses (but excluding all such losses relating to the
Acquisition as set forth in clause (iii) below and excluding any non-cash
loss to the extent it represents an accrual of or reserve for cash losses in
any future period) PLUS (iii) any extraordinary losses, whether cash or
non-cash, relating to the Acquisition in an aggregate amount not to exceed
$15,000,000 (provided that all such excluded extraordinary losses relating to
the Acquisition must be taken no later than August 31, 1998) PLUS (b) to the
extent deducted in calculating Net Income, (i) income and franchise taxes and
(ii) Interest Expense. For purposes of calculating compliance with Article X,
EBIT shall be adjusted in a manner reasonably satisfactory to the
Administrative Agent to include on a pro forma basis as of the first day of
any calculation period any acquisition (including the Acquisition) permitted
by Section 11.4 consummated during such period in accordance with this
Agreement and exclude on a pro forma basis as of the first day of any
calculation period any Subsidiary or assets (other than assets sold in the
ordinary course of business) sold during such period in accordance with this
Agreement.
4
"ELIGIBLE ASSIGNEE" means, with respect to any assignment of the rights,
interest and obligations of a Lender hereunder, a Person that is at the time
of such assignment (a) a commercial bank organized or licensed under the laws
of the United States or any state thereof, having combined capital and
surplus in excess of $500,000,000, (b) a commercial bank organized under the
laws of any other country that is a member of the Organization of Economic
Cooperation and Development, or a political subdivision of such country,
having combined capital and surplus in excess of $500,000,000, (c) a finance
company, insurance company or other financial institution which in the
ordinary course of business extends credit of the type extended hereunder and
that has total assets in excess of $500,000,000, (d) already a Lender
hereunder (whether as an original party to this Agreement or as the assignee
of another Lender) or an Affiliate of a Lender hereunder, (e) the successor
(whether by transfer of assets, merger or otherwise) to all or substantially
all of the commercial lending business of the assigning Lender, or (f) any
other Person that has been approved in writing as an Eligible Assignee by the
Borrower and the Administrative Agent.
"EMPLOYEE BENEFIT PLAN" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained for employees of the
Borrower or any ERISA Affiliate or (b) has at any time within the preceding
six years been maintained for the employees of the Borrower or any current or
former ERISA Affiliate.
"ENVIRONMENTAL LAWS" means any and all federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations and orders of courts or Governmental Authorities, relating to
the protection of human health or the environment, including, but not limited
to, requirements pertaining to the manufacture, processing, distribution,
use, treatment, storage, disposal, transportation, handling, reporting,
licensing, permitting, investigation or remediation of Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
the rules and regulations thereunder, each as amended or modified from time
to time.
"ERISA AFFILIATE" means any Person who together with the Borrower is
treated as a single employer within the meaning of Section 414(b), (c), (m)
or (o) of the Code or Section 4001(b) of ERISA.
"EURODOLLAR RESERVE PERCENTAGE" means, for any day, the percentage
(expressed as a decimal and rounded upwards, if necessary, to the next higher
1/100th of 1%) which is in effect for such day as prescribed by the Federal
Reserve Board (or any successor) for determining the maximum reserve
requirement (including without limitation any basic, supplemental or
emergency reserves) in respect of Eurocurrency liabilities or any similar
category of liabilities for a member bank of the Federal Reserve System in
New York City.
"EVENT OF DEFAULT" means any of the events specified in Section 12.1,
provided that any requirement for passage of time, giving of notice, or any
other condition, has been satisfied.
"EXCESS PROCEEDS" shall have the meaning assigned thereto in
Section 2.5(b).
5
"EXISTING FACILITIES" means the Funded Debt (other than Debt permitted
under Section 11.1) of the Borrower and its Subsidiaries described on
SCHEDULE 1.1(b) which is to be repaid in full and terminated prior to or
contemporaneous with the Closing.
"EXTENSIONS OF CREDIT" means (a) with respect to all Lenders, the
aggregate principal amount of all outstanding Loans and L/C Obligations and
(b) with respect to each Lender, the sum of (i) such Lender's Revolving
Credit Commitment Percentage of the outstanding Revolving Credit Loans and
L/C Obligations and (ii) such Lender's Term Loan Percentage of the Term
Loans.
"FDIC" means the Federal Deposit Insurance Corporation, or any successor
thereto.
"FEDERAL FUNDS RATE" means, the rate per annum (rounded upwards, if
necessary, to the next higher 1/100th of 1%) representing the daily effective
federal funds rate as quoted by the Administrative Agent and confirmed in
Federal Reserve Board Statistical Release H.15 (519) or any successor or
substitute publication selected by the Administrative Agent. If, for any
reason, such rate is not available, then "Federal Funds Rate" shall mean a
daily rate which is determined, in the reasonable, good faith opinion of the
Administrative Agent, to be the rate at which federal funds are being offered
for sale in the national federal funds market at 9:00 a.m. (Charlotte time)
on such day. Rates for weekends or holidays shall be the same as the rate
for the most immediate preceding Business Day.
"FEE LETTER" means the separate fee letter agreement dated October 28,
1997 among the Borrower, FUCMC and the Administrative Agent, as confirmed by
that certain letter dated November 20, 1997 among the Borrower, FUCMC and the
Administrative Agent.
"FIRST UNION" means First Union National Bank, a national banking
association, and its successors.
"FISCAL QUARTER" means, with respect to the Borrower and its
Subsidiaries, any three-month period ending on the last day of February, May,
August or November; PROVIDED, that in the case of Sterling prior to the
Acquisition, any three-month period ending on or about the last day of March,
June, September or December.
"FISCAL YEAR" means the fiscal year of the Borrower and its Subsidiaries
ending on May 31.
"FOREIGN SUBSIDIARY" means any Subsidiary of the Borrower organized
under the laws of any nation other than the United States.
"FUCMC" means First Union Capital Markets Corp. and its successors.
"FUNDED DEBT" means, with respect to the Borrower and its Subsidiaries,
as of any date of determination and without duplication, the sum of the
following calculated in accordance with GAAP: (a) all liabilities,
obligations and indebtedness for borrowed money including but not limited to
obligations evidenced by bonds, debentures, notes or other similar
instruments of any
6
such Person, (b) all obligations of any such Person as lessee under Capital
Leases and (c) all Debt of the type described in clauses (a) or (b) above of
any other Person secured by a Lien on any asset of the Borrower and its
Subsidiaries.
"GAAP" means generally accepted accounting principles, as recognized by
the American Institute of Certified Public Accountants and the Financial
Accounting Standards Board, consistently applied and maintained on a
consistent basis for the Borrower and its Subsidiaries throughout the period
indicated and, subject to Section 14.9, consistent with the prior financial
practice of the Borrower and its Subsidiaries.
"GOVERNMENTAL APPROVALS" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to,
all Governmental Authorities.
"GOVERNMENTAL AUTHORITY" means any nation, province, state or political
subdivision thereof, and any government or any Person exercising executive,
legislative, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"GUARANTOR" means each domestic Material Subsidiary which has executed
the Guaranty Agreement or a supplement thereto.
"GUARANTY AGREEMENT" means the Unconditional Guaranty Agreement executed
by each domestic Material Subsidiary of the Borrower in favor of
Administrative Agent for the ratable benefit of itself and the Lenders and
substantially in the form of EXHIBIT I, as amended, restated, supplemented or
otherwise modified from time to time.
"GUARANTY OBLIGATION" means, with respect to the Borrower and its
Subsidiaries, without duplication, any obligation, contingent or otherwise,
of any such Person pursuant to which such Person has directly or indirectly
guaranteed any Debt or other obligation of any other Person and, without
limiting the generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of any such Person (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt or other
obligation (whether arising by virtue of partnership arrangements, by
agreement to keep well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement condition or otherwise) or
(b) entered into for the purpose of assuring in any other manner the obligee
of such Debt or other obligation of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part); PROVIDED, that
the term Guaranty Obligation shall not include endorsements for collection or
deposit in the ordinary course of business.
"HAZARDOUS MATERIALS" means any substances or materials (a) which are or
become defined as hazardous wastes, hazardous substances, pollutants,
contaminants, chemical substances or mixtures or toxic substances under any
Applicable Law, (b) which are toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise harmful to
human health or the environment and are or become regulated by any
Governmental Authority, (c) the presence of which require investigation or
remediation under any Applicable Law or common law, (d) the
7
discharge or emission or release of which requires a permit or license under
any Applicable Law or other Governmental Approval, (e) which are deemed to
constitute a nuisance, a trespass or pose a health or safety hazard to
persons or neighboring properties, (f) which consist of underground or
aboveground storage tanks, whether empty, filled or partially filled with any
substance, or (g) which contain, without limitation, asbestos,
polychlorinated biphenyls, urea formaldehyde foam insulation, petroleum
hydrocarbons, petroleum derived substances or waste, crude oil, nuclear fuel,
natural gas or synthetic gas.
"HEDGING AGREEMENT" means any agreement with respect to an interest rate
swap, collar, cap or floor or a forward rate agreement or other agreement
regarding the hedging of interest rate risk exposure executed in connection
with hedging the interest rate exposure of the Borrower or any of its
Subsidiaries, and any confirming letter executed pursuant to such hedging
agreement, all as amended, restated or otherwise modified.
"INITIAL LOANS" means the Loans made by the Lenders, and, if applicable,
the initial Letter of Credit issued by the Issuing Lender, on the Closing
Date upon the satisfaction of the closing conditions set forth in Sections 6.2
and 6.3.
"INTEREST EXPENSE" means, with respect to the Borrower and its
Subsidiaries for any period without duplication, the gross interest expense
paid or accrued during such period (including without limitation, interest
expense attributable to Capital Leases, all net obligations pursuant to
Hedging Agreements and all commitment fees payable under this Agreement but
excluding any pay-in-kind interest on securities issued in connection with
unsecured debt) of such Persons, all determined for such period on a
Consolidated basis in accordance with GAAP. For purposes of calculating
compliance with Article X, Interest Expense shall be adjusted in a manner
reasonably satisfactory to the Administrative Agent to include on a pro forma
basis as of the first day of any calculation period any acquisition
(including the Acquisition) permitted by Section 11.4 consummated during such
period in accordance with this Agreement and exclude on a pro forma basis as
of the first day of any calculation period any Subsidiary or assets (other
than assets sold in the ordinary course of business) sold during such period
in accordance with this Agreement.
"INTEREST PERIOD" shall have the meaning assigned thereto in
Section 5.1(b).
"ISSUING LENDER" means First Union, in its capacity as issuer of any
Letter of Credit, or any successor thereto.
"L/C COMMITMENT" means Twenty-Five Million Dollars ($25,000,000).
"L/C FACILITY" means the letter of credit facility established pursuant
to Article III hereof.
"L/C OBLIGATIONS" means at any time, an amount equal to the sum of (a)
the aggregate undrawn and unexpired amount of the then outstanding Letters of
Credit and (b) the aggregate amount of drawings under Letters of Credit which
have not then been reimbursed pursuant to Section 3.5.
8
"L/C PARTICIPANTS" means the collective reference to all the Lenders
(including the Issuing Lender in its capacity as a Lender) other than the
Issuing Lender.
"LENDER" means each Person executing this Agreement as a Lender set
forth on the signature pages hereto and each Person that hereafter becomes a
party to this Agreement as a Lender pursuant to Section 14.10.
"LENDING OFFICE" means, with respect to any Lender, the office of such
Lender maintaining such Lender's Extensions of Credit.
"LETTERS OF CREDIT" shall have the meaning assigned thereto in
Section 3.1(a).
"LEVERAGE RATIO" means, as of any date of determination, the ratio
determined in accordance with Section 10.1 as of the Fiscal Quarter ending on
or most recently prior to such date of determination.
"LIBOR" means the rate of interest per annum determined on the basis of
the rate for deposits in Dollars in minimum amounts of at least $3,000,000
for a period equal to the applicable Interest Period which appears on the
Telerate Page 3750 at approximately 11:00 a.m. (London Time) two (2) Business
Days prior to the first day of the applicable Interest Period (rounded
upward, if necessary, to the nearest one-sixteenth of one percent (1/16%)).
If, for any reason, such rate does not appear on Telerate Page 3750, then
"LIBOR" shall be determined by the Administrative Agent to be the arithmetic
average (rounded upward, if necessary, to the nearest one-sixteenth of one
percent (1/16%) of the rates per annum at which deposits in Dollars would be
offered by first class banks in the London interbank market to the
Administrative Agent at approximately 11:00 a.m. (London time) two (2)
Business Days prior to the first day of the applicable Interest Period for a
period equal to such Interest Period and in an amount substantially equal to
the amount of the applicable Loan.
"LIBOR RATE" means a rate per annum (rounded upwards, if necessary, to
the next higher 1/100th of 1%) determined by the Administrative Agent
pursuant to the following formula:
LIBOR Rate = LIBOR
----------------------------------
1.00-Eurodollar Reserve Percentage
"LIBOR RATE LOAN" means any Loan bearing interest at a rate based upon
the LIBOR Rate as provided in Section 5.1(a).
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or similar encumbrance of any kind in respect of
such asset. For the purposes of this Agreement, a Person shall be deemed to
own subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, Capital
Lease or other title retention agreement relating to such asset.
9
"LOAN" means any Revolving Credit Loan or any Term Loan made to the
Borrower pursuant to Articles II and IV, respectively, and all such Loans
collectively as the context requires.
"LOAN DOCUMENTS" means, collectively, this Agreement, the Notes, the
Applications, any Hedging Agreement executed by any Lender or its Affiliate,
the Security Documents and each other document, instrument and agreement
executed and delivered by the Borrower or any of its Subsidiaries in
connection with this Agreement or otherwise referred to herein or
contemplated hereby, all as may be amended, restated, supplemented or
otherwise modified from time to time.
"XXXXXXXX PLEDGE AGREEMENT" means the Pledge Agreement executed by
Xxxxxxxx in favor of the Administrative Agent for the ratable benefit of
itself and the Lenders, substantially in the form of EXHIBIT H-1, as amended,
restated, supplemented or otherwise modified from time to time.
"MATERIAL ADVERSE EFFECT" means, with respect to the Borrower or any of
its Subsidiaries, a material adverse effect on the properties, business,
operations or condition (financial or otherwise) of the Borrower and its
Subsidiaries taken as a whole or the ability of any such Person to perform
its obligations under any Loan Document.
"MATERIAL CONTRACT" means (a) any contract or other agreement, written
or oral, of the Borrower or any of its Subsidiaries involving monetary
liability of or to any such Person in an amount in excess of $15,000,000 per
annum (excluding any contract or other agreement of the Borrower or any of
its Subsidiaries entered into in the ordinary course of business for the
purchase or sale of inventory or services), (b) the Transaction Documents,
(c) the Sterling Synthetic Lease and Sterling Lease Guaranty or (d) any other
contract or agreement, written or oral, of the Borrower or any of its
Subsidiaries the failure to comply with which could reasonably be expected to
have a Material Adverse Effect.
"MATERIAL SUBSIDIARY" means, as of any date of determination, any
Subsidiary of the Borrower, which Subsidiary has (a) revenues at least equal
to five percent (5%) of the Consolidated revenues of the Borrower and its
Subsidiaries, calculated for the period of four (4) Fiscal Quarters ending on
or immediately prior to such date of determination, (b) assets with a fair
saleable value at least equal to five percent (5%) of the fair saleable value
of the consolidated assets of the Borrower and its Subsidiaries on such date
of determination or (c) EBIT at least equal to five percent (5%) of the
Consolidated EBIT of the Borrower and its Subsidiaries, calculated for the
period of four (4) Fiscal Quarters ending on or immediately prior to such
date of determination.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is
making, or is accruing an obligation to make, contributions within the
preceding six years.
"NET CASH PROCEEDS" means, as applicable, (a) with respect to any sale
or other disposition of assets, the gross cash proceeds received by the
Borrower or any of its Subsidiaries from such sale LESS the sum of (i) all
income taxes and other taxes assessed by a Governmental Authority as a result
of such sale and any other reasonable fees and expenses incurred in
connection therewith and (ii) the principal amount of, premium, if any, and
interest on any Debt secured by a Lien on the
10
asset (or a portion thereof) sold, which Debt is required to be repaid in
connection with such sale, (b) with respect to any offering of capital stock
or issuance of Debt, the gross cash proceeds received by the Borrower or any
of its Subsidiaries therefrom LESS all legal, underwriting and other
reasonable fees and expenses incurred in connection therewith and (c) with
respect to any payment under an insurance policy or in connection with a
condemnation proceeding, the amount of cash proceeds received by the Borrower
or its Subsidiaries from an insurance company or Governmental Authority net
of all reasonable expenses of collection less all income taxes and other
taxes assessed by a Governmental Authority as a result of such payment.
"NET INCOME" means, with respect to any Person for any period, the net
income (or loss) of such Person for such period determined in accordance with
GAAP; PROVIDED, that there shall be excluded from net income (or loss):
(a) the income (or loss) of any Person (other than a Subsidiary of such Person)
in which such Person has an ownership interest unless received by such Person
in a cash distribution and (b) the income (or loss) of any Person accrued
prior to the date it became a Subsidiary of such first Person or is merged
into or consolidated with such first Person.
"NOTES" means the Revolving Credit Notes, the Term Notes, or any
combination thereof, made by the Borrower payable to the order of each of the
Lenders, any amendments and modifications thereto, any substitutes therefor,
and any replacements, restatements, renewals or extensions thereof, in whole
or in part; "Note" means any of such Notes.
"NOTICE OF ACCOUNT DESIGNATION" means a notice given by the Borrower to
the Administrative Agent with respect to the distribution of Loan proceeds,
substantially in the form of EXHIBIT E.
"NOTICE OF CONVERSION/CONTINUATION" means a notice given by the Borrower
to the Administrative Agent substantially in the form of EXHIBIT C-3.
"NOTICE OF PAYMENT" means a notice given by the Borrower to the
Administrative Agent with respect to any optional repayment of Loans,
substantially in the form of EXHIBIT D.
"NOTICE OF REVOLVING CREDIT BORROWING" means a notice given by the
Borrower to the Administrative Agent substantially in the form of EXHIBIT C-1.
"NOTICE OF TERM LOAN BORROWING" means the notice given by the Borrower
to the Administrative Agent substantially in the form of EXHIBIT C-2.
"OBLIGATIONS" means, in each case, whether now in existence or hereafter
arising: (a) the principal of and interest on (including interest accruing
after the filing of any bankruptcy or similar petition) the Loans, (b) the
L/C Obligations, (c) all payment and other obligations owing by the Borrower
to any Lender (or its Affiliate) or the Administrative Agent under any
Hedging Agreement executed pursuant to Section 9.12 to which a Lender (or its
Affiliate) is a party and (d) all other fees and commissions (including
attorney's fees), charges, indebtedness, loans, liabilities, financial
accommodations, obligations, covenants and duties owing by the Borrower to
the Lenders or the Administrative Agent under or in respect of this
Agreement, any Note, any Letter of Credit
11
or any of the other Loan Documents of every kind, nature and description,
direct or indirect, absolute or contingent, due or to become due, contractual
or tortious, liquidated or unliquidated, and whether or not evidenced by any
note, and whether or not for the payment of money.
"OFFICER'S COMPLIANCE CERTIFICATE" means a certificate appropriately
completed and substantially in the form of EXHIBIT F.
"OPERATING CASH FLOW" means, with respect to the Borrower and its
Subsidiaries for any period, the following, calculated without duplication
for such period on a Consolidated basis in accordance with GAAP: (a) Net
Income, PLUS (b) to the extent deducted in determining Net Income, (i) income
and franchise taxes, (ii) Interest Expense and (iii) depreciation and
amortization (including amortization of goodwill, software development costs
and other intangibles). For purposes of calculating compliance with Article X,
Operating Cash Flow shall be adjusted in a manner reasonably satisfactory to
the Administrative Agent to include on a pro forma basis as of the first day
of any calculation period any acquisition (including the Acquisition)
permitted by Section 11.4 consummated during such period in accordance with
this Agreement and exclude on a pro forma basis as of the first day of any
calculation period any Subsidiary or assets (other than assets sold in the
ordinary course of business) sold during such period in accordance with this
Agreement.
"OTHER TAXES" shall have the meaning assigned thereto in Section 5.11(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency.
"PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Title IV of ERISA
or Section 412 of the Code and which (a) is maintained for employees of the
Borrower or any ERISA Affiliates or (b) has at any time within the preceding
six years been maintained for the employees of the Borrower or any of their
current or former ERISA Affiliates.
"PERSON" means an individual, corporation, limited liability company,
partnership, association, trust, business trust, joint venture, joint stock
company, pool, syndicate, sole proprietorship, unincorporated organization,
Governmental Authority or other form of entity or group thereof.
"PRIME RATE" means, at any time, the rate of interest per annum publicly
announced from time to time by First Union as its prime rate. Each change in
the Prime Rate shall be effective as of the opening of business on the day
such change in the Prime Rate occurs. The parties hereto acknowledge that
the rate announced publicly by First Union as its Prime Rate is an index or
base rate and shall not necessarily be its lowest or best rate charged to its
customers or other banks.
"REGISTER" shall have the meaning assigned thereto in Section 14.10(d).
"REIMBURSEMENT OBLIGATION" means the obligation of the Borrower to
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn under
Letters of Credit.
12
"REQUIRED LENDERS" means, at any date, any combination of Lenders
holding at least Sixty-Six and Two-Thirds percent (66 2/3%) of the Extensions
of Credit, or if no Extensions of Credit are outstanding, any combination of
Lenders whose Commitments aggregate at least Sixty Six and Two-Thirds percent
(66 2/3%).
"REVOLVING CREDIT COMMITMENT" means (a) as to any Lender, the obligation
of such Lender to make Revolving Credit Loans to and issue or participate in
Letters of Credit issued for the account of the Borrower hereunder in an
aggregate principal amount at any time outstanding not to exceed the amount
set forth opposite such Lender's name on SCHEDULE 1.1(a), as such amount may
be reduced or modified at any time or from time to time pursuant to
Sections 2.5 and 14.10 and (b) as to all Lenders, the aggregate commitment of
all Lenders to make Revolving Credit Loans and issue or participate in Letters
of Credit, as such amount may be reduced or modified at any time or from time
to time pursuant to such Sections. The Revolving Credit Commitment of all
Lenders on the Closing Date shall be Two Hundred Twenty-Five Million Dollars
($225,000,000).
"REVOLVING CREDIT COMMITMENT PERCENTAGE" means, as to the respective
Revolving Credit Commitment of any Lender at any time, the ratio of (a) the
amount of the Revolving Credit Commitment of such Lender to (b) all of the
Revolving Credit Commitments of all Lenders.
"REVOLVING CREDIT FACILITY" means the revolving credit facility
established pursuant to Article II.
"REVOLVING CREDIT LOANS" means the revolving credit loans to be made to
the Borrower pursuant to Article II.
"REVOLVING CREDIT NOTES" means the separate Revolving Credit Notes made
by the Borrower payable to the order of each Lender, substantially in the
form of EXHIBIT A hereto, evidencing the Revolving Credit Facility, and any
amendments and modifications thereto, any substitutes therefor, and any
replacements, restatements, renewals or extension thereof, in whole or in
part; "Revolving Credit Note" means any of such Revolving Credit Notes.
"REVOLVING CREDIT TERMINATION DATE" means the earliest of the dates
referred to in Section 2.6.
"SECURITY DOCUMENTS" means the collective reference to the Xxxxxxxx
Pledge Agreement, the Subsidiary Pledge Agreement, the Guaranty Agreement and
each other agreement or writing pursuant to which the Borrower or any
Subsidiary thereof pledges or grants a security interest in any property or
assets securing the Obligations or any such Person guaranties the payment
and/or performance of the Obligations, all as may be amended, restated,
supplemented or otherwise modified from time to time.
"SOLVENT" means, as to the Borrower and its Subsidiaries on a particular
date, that any such Person (a) has capital sufficient to carry on its
business and transactions and all business and transactions in which it is
about to engage and is able to pay its debts as they mature, (b) owns
13
property having a value, both at fair valuation and at present fair saleable
value, greater than the amount required to pay its probable liabilities
(including contingencies), and (c) does not believe that it will incur debts
or liabilities beyond its ability to pay such debts or liabilities as they
mature.
"STERLING" means Sterling Electronics Corporation, and its successors.
"STERLING LEASE GUARANTY" means that certain guaranty from Sterling to
Credit Tenant Lease Corporation 96-01 dated as of June 5, 1996 guaranteeing
the Sterling Synthetic Lease.
"STERLING SYNTHETIC LEASE" means the Lease Agreement dated as of June 5,
1996 between Credit Tenant Lease Corporation 96-01, as lessor, and Sterling
Electronics Partners, L.P., as lessee.
"STERLING SYNTHETIC LEASE DOCUMENTS" means the Sterling Synthetic Lease,
the Sterling Lease Guaranty and all other documents executed in connection
with the Sterling Synthetic Lease.
"SUBSIDIARY" means as to any Person, any corporation, partnership,
limited liability company or other entity of which more than fifty percent
(50%) of the outstanding capital stock or other ownership interests having
ordinary voting power to elect a majority of the board of directors or other
managers of such corporation, partnership, limited liability company or other
entity is at the time, directly or indirectly, owned by or the management is
otherwise controlled by such Person (irrespective of whether, at the time,
capital stock of any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency).
Unless otherwise qualified, references to "Subsidiary" or "Subsidiaries"
herein shall refer to those of the Borrower and shall include Sterling.
"SUBSIDIARY PLEDGE AGREEMENT" means any Pledge Agreement executed by a
Material Subsidiary in favor of the Administrative Agent for the ratable
benefit of itself and the Lenders, substantially in the form of EXHIBIT H-2,
as amended, restated, supplemented or otherwise modified from time to time.
"TANGIBLE NET WORTH" means, with respect to the Borrower and its
Subsidiaries as of any date of determination, Consolidated stockholders'
equity, LESS Consolidated intangible assets, including without limitation,
goodwill and unamortized software development costs and discounts, all
calculated in accordance with GAAP.
"TAXES" shall have the meaning assigned thereto in Section 5.11(a).
"TERM LOANS" means the term loans made to the Borrower by the Lenders
pursuant to Article IV.
"TERM LOAN COMMITMENT" means (a) as to any Lender, the obligation of
such Lender to make a Term Loan to the Borrower hereunder in the principal
amount not to exceed the amount set forth opposite such Lender's name on
SCHEDULE 1.1(a) and (b) as to all Lenders, the aggregate commitment of all
Lenders to make Term Loans. The Term Loan Commitment of all Lenders as of
the Closing Date shall be One Hundred Million Dollars ($100,000,000).
14
"TERM LOAN PERCENTAGE" means, as to any Lender, (a) prior to making the
Term Loans, the ratio of (i) the Term Loan Commitment of such Lender to
(ii) the Term Loan Commitments of all Lenders and (b) after the Term Loans are
made, the ratio of (i) the outstanding principal balance of the Term Loan of
such Lender to (ii) the aggregate outstanding principal balance of the Term
Loans of all Lenders.
"TERM LOAN FACILITY" means the term loan facility established pursuant
to Article IV under which the Lenders make Term Loans to the Borrower.
"TERM LOAN MATURITY DATE" means the earlier of (i) five years after the
Closing Date and (ii) November 30, 2002.
"TERM NOTES" means the Term Notes made by the Borrower payable to the
order of each of the Lenders, substantially in the form of EXHIBIT B hereto,
evidencing the Term Loan Facility, and any amendments, modifications and
supplements thereto, any substitutes therefor, and any replacements,
restatements, renewals or extensions thereof, in whole or in part; "Term
Note" means any of such Term Notes.
"TERMINATION EVENT" means: (a) a "Reportable Event" described in
Section 4043 of ERISA, or (b) the withdrawal of the Borrower or any ERISA
Affiliate from a Pension Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA, or (c) the
termination of a Pension Plan, the filing of a notice of intent to terminate
a Pension Plan or the treatment of a Pension Plan amendment as a termination
under Section 4041 of ERISA, or (d) the institution of proceedings to
terminate, or the appointment of a trustee with respect to, any Pension Plan
by the PBGC, or (e) any other event or condition which would constitute
grounds under Section 4042(a) of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan, or (f) the partial
or complete withdrawal of the Borrower or any ERISA Affiliate from a
Multiemployer Plan, or (g) the imposition of a Lien pursuant to Section 412
of the Code or Section 302 of ERISA, or (h) any event or condition which
results in the reorganization or insolvency of a Multiemployer Plan under
Sections 4241 or 4245 of ERISA, or (i) any event or condition which results
in the termination of a Multiemployer Plan under Section 4041A of ERISA or
the institution by PBGC of proceedings to terminate a Multiemployer Plan
under Section 4042 of ERISA.
"TRANSACTIONS" means the collective reference to the transactions
contemplated by the Acquisition Documents and the Extensions of Credit.
"TRANSACTION DOCUMENTS" means the Acquisition Documents and the Loan
Documents.
"UNIFORM CUSTOMS" means the Uniform Customs and Practice for Documentary
Credits (1994 Revision), International Chamber of Commerce Publication No. 500,
as amended from time to time by applicable Governmental Authorities.
"UCC" means the Uniform Commercial Code as in effect in the State of
North Carolina.
15
"UNITED STATES" means the United States of America.
"WHOLLY-OWNED" means, with respect to a Subsidiary, that all of the shares
of capital stock or other ownership interests of such Subsidiary (other than
directors' qualifying shares) are, directly or indirectly, owned or controlled
by the Borrower and/or one or more of its Wholly-Owned Subsidiaries.
SECTION 1.2 GENERAL. Unless otherwise specified, a reference in this
Agreement to a particular section, subsection, Schedule or Exhibit is a
reference to that section, subsection, Schedule or Exhibit of this Agreement.
Wherever from the context it appears appropriate, each term stated in either
the singular or plural shall include the singular and plural, and pronouns
stated in the masculine, feminine or neuter gender shall include the
masculine, the feminine and the neuter. Any reference herein to "Charlotte
time" shall refer to the applicable time of day in Charlotte, North Carolina.
SECTION 1.3 OTHER DEFINITIONS AND PROVISIONS.
(a) USE OF CAPITALIZED TERMS. Unless otherwise defined therein, all
capitalized terms defined in this Agreement shall have the defined meanings
when used in this Agreement, the Notes and the other Loan Documents or any
certificate, report or other document made or delivered pursuant to this
Agreement (other than the Acquisition Documents or any Material Contract).
(b) MISCELLANEOUS. The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
ARTICLE II
REVOLVING CREDIT FACILITY
SECTION 2.1. REVOLVING CREDIT LOANS. Subject to the terms and
conditions of this Agreement, each Lender severally agrees to make Revolving
Credit Loans to the Borrower from time to time from the Closing Date through
the Revolving Credit Termination Date as requested by the Borrower in
accordance with the terms of Section 2.2; PROVIDED, that (a) the aggregate
principal amount of all outstanding Revolving Credit Loans (after giving
effect to any amount requested) shall not exceed the Revolving Credit
Commitment LESS the L/C Obligations, (b) each Lender's Revolving Credit
Commitment Percentage of the sum of the aggregate principal amount of all
outstanding Revolving Credit Loans and L/C Obligations shall not at any time
exceed such Lender's Revolving Credit Commitment and (c) except for Revolving
Credit Loans which are made as a part of the Initial Loans, the Lenders shall
have no obligation to make additional Revolving Credit Loans until the
Acquisition Filing in accordance with Section 6.3(d). Each Revolving Credit
Loan by a Lender shall be in a principal amount equal to such Lender's
Revolving Credit Commitment Percentage of the aggregate principal amount of
Revolving Credit Loans requested on such occasion. Subject to the terms and
conditions hereof, the
16
Borrower may borrow, repay and reborrow Revolving Credit Loans hereunder
until the Revolving Credit Termination Date.
SECTION 2.2. PROCEDURE FOR ADVANCES OF REVOLVING CREDIT LOANS.
(a) REQUESTS FOR BORROWING. The Borrower shall give the Administrative
Agent a Notice of Revolving Credit Borrowing not later than 2:30 p.m.
(Charlotte time) (i) at least one (1) Business Day before each Base Rate Loan
and (ii) at least three (3) Business Days before each LIBOR Rate Loan, of its
intention to borrow, specifying (A) the date of such borrowing, which shall be
a Business Day, (B) the amount of such borrowing, which shall be (x) with
respect to Base Rate Loans, other than borrowings pursuant to Section 3.5, in
an aggregate principal amount of $1,000,000 or a whole multiple of $500,000 in
excess thereof and (y) with respect to LIBOR Rate Loans in an aggregate
principal amount of $3,000,000 or a whole multiple of $1,000,000 in excess
thereof (except, in each case, the amount of such borrowing may be in the
aggregate amount available to the Borrower), (C) whether the Revolving Credit
Loans are to be LIBOR Rate Loans or Base Rate Loans, and (D) in the case of a
LIBOR Rate Loan, the duration of the Interest Period applicable thereto.
Notices received after 2:30 p.m. (Charlotte time) shall be deemed received on
the next Business Day. The Administrative Agent shall promptly notify the
Lenders of each Notice of Revolving Credit Borrowing.
(b) DISBURSEMENT OF REVOLVING CREDIT LOANS. Not later than 2:30 p.m.
(Charlotte time) on the proposed borrowing date, each Lender will make
available to the Administrative Agent, for the account of the Borrower, at the
office of the Administrative Agent in funds immediately available to the
Administrative Agent, such Lender's Revolving Credit Commitment Percentage of
the Revolving Credit Loans to be made on such borrowing date. The Borrower
hereby irrevocably authorizes the Administrative Agent to disburse the proceeds
of each borrowing requested pursuant to this Section 2.2 in immediately
available funds by transferring such proceeds to the deposit account designated
by the Borrower in the Notice of Account Designation delivered on the Closing
Date or any date thereafter (any such subsequent notice to supersede any prior
notice). Subject to Section 5.7, to the extent that any Lender has not made
available to the Administrative Agent its Revolving Credit Commitment
Percentage of any Revolving Credit Loan requested pursuant to this Section 2.2,
the Administrative Agent shall not be obligated to disburse such portion of the
proceeds of such Revolving Credit Loan.
SECTION 2.3. REPAYMENT OF REVOLVING CREDIT LOANS.
(a) REPAYMENT ON REVOLVING CREDIT TERMINATION DATE. The Borrower shall
repay the outstanding principal amount of all Revolving Credit Loans in full,
together with all accrued but unpaid interest thereon, on the Revolving Credit
Termination Date.
(b) MANDATORY REPAYMENTS.
(i) If at any time the outstanding principal amount of all Revolving
Credit Loans exceeds the Revolving Credit Commitment LESS the L/C Obligations,
the Borrower shall repay immediately upon notice from the Administrative Agent,
by payment to the Administrative
17
Agent for the account of the Lenders, the Revolving Credit Loans in an amount
equal to such excess. Each such repayment shall be accompanied by any amount
required to be paid pursuant to Section 5.9.
(ii) The Borrower shall repay the outstanding principal balance of
the Revolving Credit Loans pursuant to Section 2.5(c) in connection with any
corresponding reduction in the Revolving Credit Commitment.
(c) OPTIONAL REPAYMENTS. The Borrower may at any time and from time to
time repay the Revolving Credit Loans, in whole or in part, upon delivery to
the Administrative Agent of a Notice of Payment at least three (3) Business
Days prior thereto, specifying the date and amount of repayment and whether the
repayment is of LIBOR Rate Loans, Base Rate Loans, or a combination thereof,
and, if a combination thereof, the amount allocable to each. Upon receipt of
such notice, the Administrative Agent shall promptly notify each Lender. If
any such notice is given, the amount specified in such notice shall be due and
payable on the date set forth in such notice. Partial repayments shall be in
an aggregate amount of $1,000,000 or a whole multiple of $500,000 in excess
thereof with respect to Base Rate Loans, and $3,000,000 or a whole multiple of
$1,000,000 in excess thereof with respect to LIBOR Rate Loans. Each such
repayment shall be accompanied by any amount required to be paid pursuant to
Section 5.9.
SECTION 2.4. REVOLVING CREDIT NOTES. Each Lender's Revolving Credit
Loans and the obligation of the Borrower to repay such Revolving Credit Loans
shall be evidenced by a separate Revolving Credit Note executed by the
Borrower payable to the order of such Lender representing the Borrower's
obligation to pay such Lender's Revolving Credit Loans in accordance with the
terms hereof. Each Revolving Credit Note shall be dated the date hereof and
shall bear interest on the unpaid principal amount thereof at the applicable
interest rate per annum specified in Section 5.1.
SECTION 2.5. PERMANENT REDUCTION OF THE REVOLVING CREDIT COMMITMENT.
(a) The Borrower shall have the right at any time and from time to time,
upon at least three (3) Business Days prior written notice to the
Administrative Agent, to permanently reduce, in whole at any time or in part
from time to time, without premium or penalty, the (i) entire Revolving Credit
Commitment at any time or (ii) portions of the Revolving Credit Commitment,
from time to time, in an aggregate amount not less than $5,000,000 or any whole
multiple of $1,000,000 in excess thereof.
(b) If at any time Net Cash Proceeds required to prepay the Term Loans
pursuant to Section 4.5 ("Excess Proceeds") remain after the prepayment of Term
Loans as required thereunder, the Revolving Credit Commitment shall be
permanently reduced by an amount equal to the amount of such Excess Proceeds.
(c) Each permanent reduction permitted or required pursuant to this
Section 2.5 shall be accompanied by a payment of principal (and furnishing of
cash collateral satisfactory to the Administrative Agent for any applicable L/C
Obligations) sufficient to reduce the aggregate
18
principal amount of Revolving Credit Loans and L/C Obligations after such
reduction to the Revolving Credit Commitment as so reduced. Any reduction of
the Revolving Credit Commitment to zero shall be accompanied by payment of
all outstanding Obligations with respect to the Revolving Credit Facility
(and furnishing of cash collateral satisfactory to the Administrative Agent
for all L/C Obligations) and termination of the Revolving Credit Commitment
and the Revolving Credit Facility. Such cash collateral shall be applied in
accordance with Section 12.2(b). If the reduction of the Revolving Credit
Commitment requires the repayment of any LIBOR Rate Loan, such repayment
shall be accompanied by any amount required to be paid pursuant to Section
5.9 hereof.
SECTION 2.6. TERMINATION OF THE REVOLVING CREDIT FACILITY. The
Revolving Credit Facility shall terminate on the earliest of (a) the date
five years after the Closing Date, (b) December 31, 2002, (c) the date of
termination by the Borrower pursuant to Section 2.5, and (d) the date of
termination by the Administrative Agent on behalf of the Lenders pursuant to
Section 12.2(a) (the "Revolving Credit Termination Date").
SECTION 2.7. USE OF PROCEEDS. The Borrower shall use the proceeds of
the Revolving Credit Loans (a) to finance the Acquisition, (b) to repay in
full and terminate the Existing Facilities and (c) for working capital and
general corporate requirements of the Borrower and its Subsidiaries,
including the payment of certain fees and expenses incurred in connection
with the Transactions.
SECTION 2.8. SECURITY. The Obligations of the Borrower under the
Revolving Credit Facility shall be secured as provided in the Security
Documents.
ARTICLE III
LETTER OF CREDIT FACILITY
SECTION 3.1. L/C COMMITMENT.
(a) Subject to the terms and conditions hereof, the Issuing Lender, in
reliance on the agreements of the other Lenders set forth in Section 3.4(a),
agrees to issue standby or commercial letters of credit ("Letters of Credit")
for the account of the Borrower on any Business Day from the Closing Date
through but not including the Revolving Credit Termination Date in such form as
may be approved from time to time by the Issuing Lender; PROVIDED, that the
Issuing Lender shall have no obligation to issue any Letter of Credit if, after
giving effect to such issuance, (i) the L/C Obligations would exceed the L/C
Commitment or (ii) the aggregate principal amount of the Revolving Credit Loans
and L/C Obligations then outstanding would exceed the Revolving Credit
Commitment of all Lenders.
(b) Each Letter of Credit shall (i) be denominated in Dollars in a
minimum amount of $1,000,000, (ii) be either a standby letter of credit issued
to support obligations of the Borrower or any of its Subsidiaries incurred in
the ordinary course of business or a commercial letter of credit to be issued
on behalf of the Borrower or any Subsidiary to purchase goods in the ordinary
19
course of its business, (iii) expire on a date one year or less from the
issuance thereof (with such automatic renewal terms as to which the Issuing
Lender may agree in its sole discretion); PROVIDED that in no case shall such
expiration be later than the Revolving Credit Termination Date and (iv) be
subject to the Uniform Customs and, to the extent not inconsistent therewith,
the laws of the State of North Carolina. The Issuing Lender shall not at any
time be obligated to issue any Letter of Credit hereunder if such issuance
would conflict with, or cause the Issuing Lender or any L/C Participant to
exceed any limits imposed by, any Applicable Law. References herein to "issue"
and derivations thereof with respect to Letters of Credit shall also include
extensions or modifications (but not automatic renewals) of any existing
Letters of Credit, unless the context otherwise requires.
SECTION 3.2. PROCEDURE FOR ISSUANCE OF LETTERS OF CREDIT. The Borrower
may from time to time request that the Issuing Lender issue a Letter of
Credit by delivering to the Issuing Lender at the Administrative Agent's
Office an Application therefor (which Application shall be delivered to the
Issuing Lender by the Administrative Agent), completed to the satisfaction of
the Issuing Lender, and such other certificates, documents and other papers
and information as the Issuing Lender may request. Upon receipt of any
Application, the Issuing Lender shall process such Application and the
certificates, documents and other papers and information delivered to it in
connection therewith in accordance with its customary procedures and shall,
subject to Section 3.1 and Article VI, promptly issue the Letter of Credit
requested thereby (but in no event shall the Issuing Lender be required to
issue any Letter of Credit earlier than three Business Days after its receipt
of the Application therefor and all such other certificates, documents and
other papers and information relating thereto) by issuing the original of
such Letter of Credit to the beneficiary thereof or as otherwise may be
agreed by the Issuing Lender and the Borrower. The Issuing Lender shall
furnish to the Borrower a copy of such Letter of Credit and furnish to each
Lender a copy of such Letter of Credit and a statement of the amount of each
Lender's participation therein, all promptly following the issuance of such
Letter of Credit.
SECTION 3.3. LETTER OF CREDIT FEES AND OTHER CHARGES.
(a) The Borrower shall pay to the Administrative Agent, for the account
of the Issuing Lender and the L/C Participants (other than the Issuing Lender),
a letter of credit fee with respect to each standby Letter of Credit in an
amount equal to the product of (i) the face amount of such letter of credit
issued MULTIPLIED BY (ii) a per annum fee equal to the Applicable Margin with
respect to LIBOR Rate Loans in effect from time to time as determined pursuant
to Section 5.1(c). The Borrower shall pay such letter of credit fee quarterly
in arrears on the last Business Day of each Fiscal Quarter during the term of
this Agreement, and on the Revolving Credit Termination Date. The
Administrative Agent shall, promptly following its receipt thereof, distribute
such fee to the Lenders pro rata in accordance with their respective Revolving
Credit Commitment Percentages.
(b) In addition to the foregoing letter of credit fee, the Borrower shall
pay to the Administrative Agent, for the account of the Issuing Lender, a
facing fee of the greater of (i) $100.00 or (ii) .15% per annum on the face
amount of each standby Letter of Credit and each commercial Letter of Credit,
payable quarterly in arrears on the last Business Day of each Fiscal Quarter
during the term of this Agreement, and on the Revolving Credit Termination
Date. The
20
Administrative Agent shall, promptly following its receipt thereof,
distribute such fee to the Issuing Lender.
(c) The Borrower shall pay to the Administrative Agent, for the
account of the Issuing Lender and the L/C Participants (other than the
Issuing Lender), an issuance fee of .75% per annum on the face amount of each
commercial Letter of Credit, such fee to be payable quarterly in arrears on
the last Business Day of each Fiscal Quarter during the term of this
Agreement and on the Revolving Credit Termination Date.
(d) The Borrower shall pay or reimburse the Issuing Lender for such
normal and customary costs and expenses as are incurred or charged by the
Issuing Lender in issuing, effecting payment under, amending or otherwise
administering any Letter of Credit.
SECTION 3.4. L/C PARTICIPATIONS.
(a) The Issuing Lender irrevocably agrees to grant and hereby grants to
each L/C Participant, and, to induce the Issuing Lender to issue Letters of
Credit hereunder, each L/C Participant irrevocably agrees to accept and
purchase and hereby accepts and purchases from the Issuing Lender, on the terms
and conditions hereinafter stated, for such L/C Participant's own account and
risk an undivided interest equal to such L/C Participant's Revolving Credit
Commitment Percentage in the Issuing Lender's obligations and rights under each
Letter of Credit issued hereunder and the amount of each draft paid by the
Issuing Lender thereunder. Each L/C Participant unconditionally and
irrevocably agrees with the Issuing Lender that, if a draft is paid under any
Letter of Credit for which the Issuing Lender is not reimbursed in full by the
Borrower in accordance with the terms of this Agreement, such L/C Participant
shall pay to the Issuing Lender upon demand at the Issuing Lender's address for
notices specified herein an amount equal to such L/C Participant's Revolving
Credit Commitment Percentage of the amount of such draft, or any part thereof,
which is not so reimbursed.
(b) Upon becoming aware of any amount required to be paid by any L/C
Participant to the Issuing Lender pursuant to Section 3.4(a) in respect of any
unreimbursed portion of any payment made by the Issuing Lender under any Letter
of Credit, the Issuing Lender shall notify the Administrative Agent and each
L/C Participant of the amount and due date of such required payment and each
such L/C Participant shall pay to the Issuing Lender the amount specified on
the applicable due date. If any such amount is paid to the Issuing Lender
after the date such payment is due, such L/C Participant shall pay to the
Issuing Lender on demand, in addition to such amount, the product of (i) such
amount, MULTIPLIED BY (ii) the daily average Federal Funds Rate as determined
by the Administrative Agent during the period from and including the date such
payment is due to the date on which such payment is immediately available to
the Issuing Lender, MULTIPLIED BY (iii) a fraction the numerator of which is
the number of days that elapse during such period and the denominator of which
is 360. A certificate of the Issuing Lender with respect to any amounts owing
under this Section shall be conclusive in the absence of manifest error. With
respect to payment to the Issuing Lender of the unreimbursed amounts described
in this Section 3.4(b), if the L/C Participants receive notice that any such
payment is due (A) prior to 1:00 p.m. (Charlotte time) on any Business Day,
such payment shall be due that Business Day, and (B) after
21
1:00 p.m. (Charlotte time) on any Business Day, such payment shall be due on
the following Business Day.
(c) Whenever, at any time after the Issuing Lender has made payment under
any Letter of Credit and has received from any L/C Participant its Revolving
Credit Commitment Percentage of such payment in accordance with this Section
3.4, the Issuing Lender receives any payment related to such Letter of Credit
(whether directly from the Borrower or otherwise) or any payment of interest on
account thereof, the Issuing Lender will distribute to such L/C Participant its
PRO RATA share thereof; PROVIDED, that in the event that any such payment
received by the Issuing Lender shall be required to be returned by the Issuing
Lender, such L/C Participant shall return to the Issuing Lender the portion
thereof previously distributed by the Issuing Lender to it.
SECTION 3.5. REIMBURSEMENT OBLIGATION OF THE BORROWER. The Borrower
agrees to reimburse the Issuing Lender on each date on which the Issuing
Lender notifies the Borrower of the date and amount of a draft paid under any
Letter of Credit for the amount of (a) such draft so paid and (b) any taxes,
fees, charges or other costs or expenses incurred by the Issuing Lender in
connection with such payment required to be paid hereunder; PROVIDED such
notice is delivered prior to 1:00 p.m. (Charlotte time). (Any notice
delivered after 1:00 p.m. (Charlotte time) shall be deemed to be delivered on
the following day). Each such payment shall be made to the Issuing Lender at
its address for notices specified herein in lawful money of the United States
and in immediately available funds. Interest shall be payable on any and all
amounts remaining unpaid by the Borrower under this Article III from the date
such amounts become payable (whether at stated maturity, by acceleration or
otherwise) until payment in full at the rate which would be payable on any
outstanding Base Rate Loans which were then overdue. If the Borrower fails
to timely reimburse the Issuing Lender on the date the Borrower receives the
notice referred to in this Section 3.5, the Borrower shall be deemed to have
timely given a Notice of Revolving Credit Borrowing to the Administrative
Agent pursuant to Section 2.2 requesting the Lenders to make a Revolving
Credit Loan as a Base Rate Loan on such date in an amount equal to the amount
described in clauses (a) and (b) above and, subject to the satisfaction or
waiver of the conditions precedent specified in Article VI, the Lenders shall
make Revolving Credit Loans in such amount, the proceeds of which shall be
applied to reimburse the Issuing Lender for the amount of the related drawing
and costs and expenses.
SECTION 3.6. OBLIGATIONS ABSOLUTE.
(a) The Borrower's obligations under this Article III (including, without
limitation, the Reimbursement Obligation) shall be absolute and unconditional
under any and all circumstances and irrespective of any set-off, counterclaim
or defense to payment which the Borrower may have or have had against the
Issuing Lender or any beneficiary of a Letter of Credit. The Borrower also
agrees with the Issuing Lender that the Issuing Lender shall not be responsible
for, and the Borrower's Reimbursement Obligation under Section 3.5 shall not be
affected by, among other things, the validity or genuineness of documents or of
any endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or any dispute between or among the Borrower and
any beneficiary of any Letter of Credit or any other party to which such Letter
of
22
Credit may be transferred or any claims whatsoever of a Borrower against any
beneficiary of such Letter of Credit or any such transferee.
(b) The responsibility of the Issuing Lender to the Borrower in
connection with any draft presented for payment under any Letter of Credit
shall, in addition to any payment obligation expressly provided for in such
Letter of Credit, be limited to determining that the documents (including each
draft) delivered under such Letter of Credit in connection with such
presentment are in conformity with such Letter of Credit.
(c) The Issuing Lender shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit, except
for errors or omissions caused by the Issuing Lender's gross negligence or
willful misconduct.
(d) Notwithstanding anything to the contrary contained in this Section
3.6, the Borrower agrees that any action taken or omitted by the Issuing Lender
under or in connection with any Letter of Credit or the related drafts or
documents, if done in the absence of gross negligence or willful misconduct and
in accordance with the standards of care specified in the Uniform Customs and,
to the extent not inconsistent therewith, the UCC shall be binding on the
Borrower and shall not result in any liability of the Issuing Lender to the
Borrower.
SECTION 3.7. EFFECT OF APPLICATION. To the extent that any provision
of any Application related to any Letter of Credit is inconsistent with the
provisions of this Article III, the provisions of this Article III shall
apply. Without limiting the generality of the foregoing, such Application
shall not be deemed to add additional Events of Default or security for the
Obligations (except for any other security for obligations under commercial
Letters of Credit in the form of commercial goods or personal property).
ARTICLE IV
TERM LOAN FACILITIES
SECTION 4.1. TERM LOANS. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make a Term Loan to the Borrower
on the Closing Date in a principal amount equal to such Lender's Term Loan
Commitment.
SECTION 4.2. PROCEDURE FOR ADVANCE OF TERM LOANS.
(a) The Borrower shall give the Administrative Agent a Notice of Term
Loan Borrowing prior to 1:00 p.m. (Charlotte time) on the Closing Date,
requesting that the Lenders make the Term Loans as Base Rate Loans on such date
in an amount equal to the aggregate Term Loan Commitment of all the Lenders.
(b) To the extent any conversion of the applicable interest rate is
effected pursuant to Section 5.3, each borrowing of a Base Rate Loan shall be
in an aggregate principal amount of at least $1,000,000 or any integral
multiple of $500,000 in excess thereof and each borrowing of a
23
LIBOR Rate Loan shall be in an aggregate principal amount of $3,000,000 or
any integral multiple of $1,000,000 in excess thereof.
(c) Not later than 2:00 p.m. (Charlotte time) on the Closing Date, each
Lender will make available to the Administrative Agent for the account of the
Borrower, at the office of the Administrative Agent in funds immediately
available to the Administrative Agent, an amount equal to such Lender's Term
Loan Percentage of the Term Loan requested. The Borrower hereby irrevocably
authorizes the Administrative Agent to disburse the proceeds of the Term Loans
in immediately available funds by wire transfer in accordance with the Notice
of Account Designation delivered pursuant to Section 6.2(h).
SECTION 4.3. REPAYMENT OF TERM LOANS. The Borrower shall repay the
outstanding principal amount of the Term Loans in consecutive quarterly
installments on the last Business Day of each Fiscal Quarter, commencing on
February 28, 1999, in accordance with the following amortization schedule:
Date Term
Loan Repayment
----------- --------------
2/28/99 $3,750,000
5/31/99 $3,750,000
8/31/99 $3,750,000
11/30/99 $3,750,000
2/29/00 $5,000,000
5/31/00 $5,000,000
8/31/00 $5,000,000
11/30/00 $5,000,000
2/28/01 $6,250,000
5/31/01 $6,250,000
8/31/01 $6,250,000
11/30/01 $6,250,000
2/28/02 $10,000,000
5/31/02 $10,000,000
8/31/02 $10,000,000
11/30/02 $10,000,000
24
If not sooner paid, the Term Loans shall be paid in full, together with accrued
interest thereon, on the Term Loan Maturity Date.
SECTION 4.4. OPTIONAL PREPAYMENTS OF TERM LOANS. The Borrower shall
have the right at any time and from time to time, upon delivery to the
Administrative Agent of a Notice of Payment at least three (3) Business Days
prior thereto, to prepay the Term Loans in whole or in part without premium
or penalty except as provided below. Upon receipt of any such notice, the
Administrative Agent promptly shall forward a copy thereof to the Lenders.
Each optional partial prepayment of the Term Loans hereunder shall be in an
aggregate principal amount of at least $1,000,000 or any whole multiple of
$500,000 in excess thereof with respect to Base Rate Loans and $3,000,000 or
a whole multiple of $1,000,000 with respect to LIBOR Rate Loans and shall be
applied to and reduce on a PRO RATA basis the remaining principal
installments of the Term Loans set forth in Section 4.3. Each such
prepayment shall be accompanied by any payment required under Section 5.9.
SECTION 4.5. MANDATORY PREPAYMENTS OF TERM LOANS.
(a) DEBT PROCEEDS. The Borrower shall make mandatory principal
prepayments of the Term Loans in amounts equal to one hundred percent (100%) of
the Net Cash Proceeds from any issuance of Debt (other than Debt permitted by
Section 11.1) by the Borrower or any of its Subsidiaries after the Closing
Date. Such prepayment shall be made within five (5) Business Days after the
date of consummation of any such transaction.
(b) EQUITY PROCEEDS. The Borrower shall make mandatory principal
prepayments of the Term Loans in amounts equal to seventy-five (75%) of the
aggregate Net Cash Proceeds from any offering of equity securities by the
Borrower or any of its Subsidiaries; provided, that, the Borrower shall not be
required to make any such prepayment if the offering of equity securities was
made as consideration (or partial consideration) in connection with an
acquisition permitted by Section 11.4 or the exercise of any employee stock
options. Such prepayment shall be made within five (5) Business Days after the
date of consummation of any such transaction.
(c) ASSET SALE PROCEEDS. The Borrower shall make mandatory principal
prepayments of the Term Loans in amounts equal to one hundred percent (100%) of
the Net Cash Proceeds in excess of $250,000 in any Fiscal Year from the sale or
other disposition of assets by the Borrower or any of its Subsidiaries not
permitted pursuant to Section 11.6 (a) through (e) that are not reinvested in
assets substantially similar to the assets sold within 180 days of receipt of
such Net Cash Proceeds. Such prepayment shall be made immediately on the
conclusion of such 180 day period.
(d) INSURANCE PROCEEDS. The Borrower shall make mandatory principal
prepayments of the Term Loans in amounts equal to one hundred percent (100%) of
the Net Cash Proceeds received by the Borrower or any of its Subsidiaries from
any payment under any hazard insurance policy of the Borrower or any of its
Subsidiaries (excluding any insurance contracts covering loss or damage to
inventory of the Borrower or any of its Subsidiaries in transit) that
25
have not been applied toward the repair or replacement with similar property
of the applicable damaged or destroyed property within 180 days of receipt of
such Net Cash Proceeds. Such prepayment shall be made immediately on the
conclusion of such 180 day period.
(e) NOTICE; MANNER OF PAYMENT. Upon the occurrence of any event
triggering the prepayment requirement under Sections 4.5(a) through and
including 4.5(d), the Borrower shall give prompt written notice of such event
and the amount of the corresponding prepayment to the Administrative Agent and
upon receipt of such notice, the Administrative Agent shall promptly so notify
the Lenders. Each mandatory prepayment under Section 4.5 shall be applied as
follows: (i) first, to reduce on a PRO RATA basis the remaining scheduled
principal installments of the Term Loans under Section 4.3 and (ii) second, to
the extent of any excess, to permanently reduce the Revolving Credit Commitment
pursuant to Section 2.5(b).
SECTION 4.6. TERM NOTES. Each Lender's Term Loans and the obligation
of the Borrower to repay such Term Loans shall be evidenced by a Term Note,
payable to the order of such Lender representing the Borrower's obligation to
pay such Lender's Term Loan Commitment in accordance with the terms hereof.
Each Term Note shall be dated the Closing Date and shall bear interest on the
unpaid principal amount thereof at the applicable interest rate per annum
specified in Section 5.1.
SECTION 4.7. USE OF PROCEEDS. The Borrower shall use the proceeds of
the Term Loans solely (a) to finance the Acquisition, (b) to repay in full
and terminate the Existing Facilities and (c) for working capital and general
corporate requirements of the Borrower and its Subsidiaries, including the
payment of certain fees and expenses incurred in connection with the
Transactions.
SECTION 4.8. SECURITY. The Obligations of the Borrower under the Term
Loan Facility shall be secured as provided in the Security Documents.
ARTICLE V
GENERAL LOAN PROVISIONS
SECTION 5.1. INTEREST.
26
(a) INTEREST RATE OPTIONS. Subject to the provisions of this Section
5.1, at the election of the Borrower, the aggregate principal amount of the
Notes or any portion thereof shall bear interest at the Base Rate or the LIBOR
Rate PLUS, in each case, the Applicable Margin as set forth below; PROVIDED,
that the LIBOR Rate shall not be available until three (3) Business Days after
the Closing Date. The Borrower shall select the rate of interest and Interest
Period, if any, applicable to any Loan at the time a Notice of Borrowing is
given pursuant to Section 2.2 and 4.2 or at the time a Notice of
Conversion/Continuation is given pursuant to Section 5.2. Each Loan or portion
thereof bearing interest based on the Base Rate shall be a "Base Rate Loan" and
each Loan or portion thereof bearing interest based on the LIBOR Rate shall be
a "LIBOR Rate Loan". Any Loan or any portion thereof as to which the Borrower
has not duly specified an interest rate as provided herein shall be deemed a
Base Rate Loan.
(b) INTEREST PERIODS. In connection with each LIBOR Rate Loan, the
Borrower, by giving notice at the times described in Section 5.1(a), shall
elect an interest period (each, an "Interest Period") to be applicable to such
LIBOR Rate Loan, which Interest Period shall be a period of one (1), two (2),
three (3), or six (6) months; PROVIDED that:
(i) the Interest Period shall commence on the date of advance of
or conversion to any LIBOR Rate Loan and, in the case of immediately
successive Interest Periods, each successive Interest Period shall commence
on the date on which the next preceding Interest Period expires;
(ii) if any Interest Period would otherwise expire on a day that
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; PROVIDED, that if any Interest Period with respect
to a LIBOR Rate Loan would otherwise expire on a day that is not a Business
Day but is a day of the month after which no further Business Day occurs in
such month, such Interest Period shall expire on the next preceding Business
Day;
(iii) any Interest Period with respect to a LIBOR Rate Loan 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) shall end on the last Business Day of the relevant
calendar month at the end of such Interest Period;
(iv) no Interest Period shall extend beyond the Revolving Credit
Termination Date or the Term Loan Maturity Date, as applicable, and no
Interest Periods shall be selected by the Borrower which would result in the
repayment of any LIBOR Rate Loan as a result of any repayment required
pursuant to Section 4.3 prior to the end of an Interest Period; and
(v) there shall be no more than eight (8) Interest Periods
outstanding at any time.
(c) APPLICABLE MARGIN. The Applicable Margin provided for in Section
5.1(a) with respect to the Loans (the "Applicable Margin") shall, for the
period commencing on the Closing
27
Date and ending on the Adjustment Date following the Fiscal Quarter ending
February 28, 1998, equal the percentage set forth as follows:
Applicable Margin Per Annum
Base Rate + LIBOR Rate +
-----------------------------
0.00% .75%
Commencing on the Adjustment Date following the Fiscal Quarter ending
February 28, 1998, the Applicable Margin provided for in Section 5.1(a) shall
be determined by reference to the Leverage Ratio as of the end of the Fiscal
Quarter immediately preceding the delivery of the applicable Officer's
Compliance Certificate as follows:
Applicable Margin Per Annum
Leverage Ratio Base Rate + LIBOR Rate +
------------------ ---------------------------
Greater than or equal to 2.75 to 1.0. 0.00% .950%
Greater than or equal to 2.50 to 1.0 0.00% .750%
but less than 2.75 to 1.0.
Greater than or equal to 2.00 to 1.0 0.00% .625%
but less than 2.50 to 1.0.
Greater than or equal to 1.50 to 1.0 0.00% .500%
but less than 2.00 to 1.0.
Less than 1.50 to 1.0. 0.00% .375%
Adjustments, if any, in the Applicable Margin shall be made by the
Administrative Agent on the fifth (5th) Business Day (each an "Adjustment
Date") after receipt by the Administrative Agent of quarterly financial
statements for the Borrower and its Subsidiaries and the accompanying
Officer's Compliance Certificate setting forth the Leverage Ratio of the
Borrower and its Subsidiaries as of the most recent Fiscal Quarter end.
Subject to Section 5.1(d), in the event the Borrower fails to deliver such
financial statements and certificate within the time required by Sections 8.1
and 8.2 hereof, the Applicable Margin shall be the highest Applicable Margin
set forth above until the Adjustment Date following delivery of such
financial statements and certificate.
(d) DEFAULT RATE. Upon the occurrence and during the continuance of an
Event of Default, (i) the Borrower shall no longer have the option to request
LIBOR Rate Loans, (ii) all outstanding LIBOR Rate Loans shall bear interest at
a rate per annum two percent (2%) in excess of the rate then applicable to
LIBOR Rate Loans until the end of the applicable Interest Period and thereafter
at a rate equal to two percent (2%) in excess of the rate then applicable to
Base Rate Loans, and (iii) all outstanding Base Rate Loans shall bear interest
at a rate per annum equal to two percent (2%) in excess of the rate then
applicable to Base Rate Loans. Interest shall continue to
28
accrue on the Notes after the filing by or against the Borrower of any
petition seeking any relief in bankruptcy or under any act or law pertaining
to insolvency or debtor relief, whether state, federal or foreign.
(e) INTEREST PAYMENT AND COMPUTATION. Interest on each Base Rate Loan
shall be payable in arrears on the last Business Day of each Fiscal Quarter,
commencing on February 28, 1998; and interest on each LIBOR Rate Loan shall be
payable on the last day of each Interest Period applicable thereto, and if such
Interest Period extends over three (3) months, at the end of each three (3)
month interval during such Interest Period. Interest on LIBOR Rate Loans and
all fees and commissions payable hereunder shall be computed on the basis of a
360-day year and assessed for the actual number of days elapsed and interest on
Base Rate Loans shall be computed on the basis of a 365/66-day year and
assessed for the actual number of days elapsed.
(f) MAXIMUM RATE. In no contingency or event whatsoever shall the
aggregate of all amounts deemed interest hereunder or under any of the Notes
charged or collected pursuant to the terms of this Agreement or pursuant to any
of the Notes exceed the highest rate permissible under any Applicable Law which
a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that such a court determines that the Lenders
have charged or received interest hereunder in excess of the highest applicable
rate, the rate in effect hereunder shall automatically be reduced to the
maximum rate permitted by Applicable Law and the Lenders shall at the
Administrative Agent's option promptly refund to the Borrower any interest
received by the Lenders in excess of the maximum lawful rate or shall apply
such excess to the principal balance of the Obligations. It is the intent
hereof that the Borrower not pay or contract to pay, and that neither the
Administrative Agent nor any Lender receive or contract to receive, directly or
indirectly in any manner whatsoever, interest in excess of that which may be
paid by the Borrower under Applicable Law.
SECTION 5.2. NOTICE AND MANNER OF CONVERSION OR CONTINUATION OF LOANS.
Provided that no Event of Default has occurred and is then continuing, the
Borrower shall have the option to (a) convert at any time all or any portion
of its outstanding Base Rate Loans in a principal amount equal to $3,000,000
or any whole multiple of $1,000,000 in excess thereof into one or more LIBOR
Rate Loans, or (b) upon the expiration of any Interest Period, (i) convert
all or any part of its outstanding LIBOR Rate Loans in a principal amount
equal to $1,000,000 or a whole multiple of $500,000 in excess thereof into
Base Rate Loans, or (ii) continue such LIBOR Rate Loans as LIBOR Rate Loans.
Whenever the Borrower desires to convert or continue Loans as provided above,
the Borrower shall give the Administrative Agent a Notice of Conversion/
Continuation not later than 11:00 a.m. (Charlotte time) three (3) Business
Days before the day on which a proposed conversion or continuation of such
Loan is to be effective specifying (A) the Loans to be converted or
continued, and, in the case of any LIBOR Rate Loan to be converted or
continued, the last day of the Interest Period therefor, (B) the effective
date of such conversion or continuation (which shall be a Business Day), (C)
the principal amount of such Loans to be converted or continued, and (D) the
Interest Period to be applicable to such converted or continued LIBOR Rate
Loan. The Administrative Agent shall promptly notify the Lenders of such
Notice of Conversion/Continuation.
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SECTION 5.3. COMMITMENT FEE. For the period commencing on the Closing
Date and ending on the Adjustment Date following the Fiscal Quarter ending
February 28, 1998, the Borrower shall pay to the Administrative Agent, for
the account of the Lenders, a non-refundable commitment fee on the average
daily unused portion of the Revolving Credit Commitment at a rate per annum
equal to 0.25%. Commencing on the Adjustment Date following the Fiscal
Quarter ending February 28, 1998, the Borrower shall pay to the
Administrative Agent, for the account of the Lenders, a non-refundable
commitment fee on the average daily unused portion of the Revolving Credit
Commitment at a rate per annum equal to the percentage set forth opposite the
corresponding Leverage Ratio below:
Leverage Ratio Commitment Fee Percentage
---------------- -------------------------
Greater than or equal to 2.75 to 1.0. 0.375%
Greater than or equal to 2.50 to 1.0
but less than 2.75 to 1.0 0.250%
Greater than or equal to 2.00 to 1.0
but less than 2.50 to 1.0 0.200%
Greater than or equal to 1.50 to 1.0 0.150%
but less than 2.00 to 1.0.
Less than 1.50 to 1.0. 0.125%
Adjustments, if any, in the commitment fee percentage shall be made by the
Administrative Agent on the fifth (5th) Business Day (each, an "Adjustment
Date") after receipt by the Administrative Agent of quarterly financial
statements for the Borrower and its Subsidiaries and the accompanying Officer's
Compliance Certificate setting forth the Leverage Ratio of the Borrower and its
Subsidiaries as of the most recent Fiscal Quarter end. In the event the
Borrower fails to deliver such financial statements and certificate within the
time required by Sections 8.1 and 8.2 hereof, the commitment fee percentage
shall be the highest commitment fee percentage set forth above until the
Adjustment Date following delivery of such financial statements and
certificate. The commitment fee shall be payable in arrears on the last
Business Day of each Fiscal Quarter during the term of this Agreement, and on
the Revolving Credit Termination Date. Such commitment fee shall be
distributed by the Administrative Agent to the Lenders PRO RATA in accordance
with the Lenders' respective Revolving Credit Commitment Percentages.
SECTION 5.4. MANNER OF PAYMENT.
(a) Each payment by the Borrower on account of the principal of or
interest on the Revolving Credit Loans or of any fee, commission or other
amounts (including the Reimbursement Obligation) payable to the Lenders under
this Agreement with respect to the Revolving Credit Loans, the Letters of
Credit or any Revolving Credit Note shall be made not later than 2:30 p.m.
(Charlotte time) on the date specified for payment under this Agreement to the
Administrative
30
Agent at the Administrative Agent's Office for the account of the Lenders
(other than as set forth below) PRO RATA in accordance with their respective
Revolving Credit Commitment Percentages, in Dollars, in immediately available
funds and shall be made without any set-off, counterclaim or deduction
whatsoever, (b) each payment by the Borrower on account of the principal of
or interest on the Term Loans or of any fee, commission or other amounts
payable to the Lenders under this Agreement with respect to the Term Loans or
any Term Note shall be made in like manner, except for the account of the
Lenders PRO RATA in accordance with their respective Term Loan Percentages
and (c) any other amounts payable to the Lenders under this Agreement shall
be made in like manner, except for the account of the Lenders PRO RATA based
on its or their respective share in the Obligation with respect to which such
payment was received. Any payment received after 2:30 p.m. (Charlotte time)
shall be deemed to have been made on the next succeeding Business Day for all
purposes. Upon receipt by the Administrative Agent of each such payment, the
Administrative Agent shall distribute to each Lender at its address for
notices set forth herein its PRO RATA share of such payment in accordance
with this Section 5.4 and shall wire advice of the amount of such credit to
each Lender. Each payment to the Administrative Agent of Administrative
Agent's or Issuing Lender's fees or expenses shall be made for the account of
the Administrative Agent or Issuing Lender, as the case may be, and any
amount payable to any Lender under Sections 5.3, 5.8, 5.9, 5.10, 5.11 or 14.2
shall be paid to the Administrative Agent for the account of the applicable
Lender.
SECTION 5.5. CREDITING OF PAYMENTS AND PROCEEDS. In the event that the
Borrower shall fail to pay any of the Obligations when due and the
Obligations have been accelerated pursuant to Section 12.2, all payments
received by the Lenders upon the Notes and the other Obligations and all net
proceeds from the enforcement of the Obligations shall be applied first to
all expenses then due and payable by the Borrower hereunder, then to all
indemnity obligations then due and payable by the Borrower hereunder, then to
all Administrative Agent's and Issuing Lender's fees then due and payable,
then to all commitment and other fees and commissions then due and payable,
then to accrued and unpaid interest on the Notes, the Reimbursement
Obligation and any termination payments due in respect of a Hedging Agreement
with any Lender (or its Affiliate) executed pursuant to Section 9.12 (PRO
RATA in accordance with all such amounts due), then to the principal amount
of the Notes and Reimbursement Obligations and then to the cash collateral
account described in Section 12.2(b) hereof to the extent of any L/C
Obligations then outstanding, in that order.
SECTION 5.6. ADJUSTMENTS. If any Lender (a "Benefited Lender") shall
at any time receive any payment of all or part of the Obligations, or
interest thereon, or if any Lender shall at any time receive any collateral
in respect to the Obligations (whether voluntarily or involuntarily, by
set-off or otherwise) in a greater proportion than any such payment to and
collateral received by any other Lender, if any, in respect of such other
Lender's Extensions of Credit, or interest thereon, such Benefited Lender
shall purchase for cash from the other Lenders such portion of each such
other Lender's Extensions of Credit, or shall provide such other Lenders with
the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such Benefited Lender to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Lenders;
PROVIDED, that if all or any portion of such excess payment or benefits is
thereafter recovered from such Benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits
31
returned to the extent of such recovery, but without interest. The Borrower
agrees that each Lender so purchasing a portion of another Lender's
Extensions of Credit may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as fully as if
such Lender were the direct holder of such portion.
SECTION 5.7. NATURE OF OBLIGATIONS OF LENDERS REGARDING EXTENSIONS OF
CREDIT; ASSUMPTION BY THE ADMINISTRATIVE AGENT. The obligations of the
Lenders under this Agreement to make the Loans and issue or participate in
Letters of Credit are several and are not joint or joint and several. Unless
the Administrative Agent shall have received notice from a Lender prior to a
proposed borrowing date that such Lender will not make available to the
Administrative Agent such Lender's ratable portion of the amount to be
borrowed on such date (which notice shall not release such Lender of its
obligations hereunder), the Administrative Agent may assume that such Lender
has made such portion available to the Administrative Agent on the proposed
borrowing date in accordance with Section 2.2 and 4.2, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower
on such date a corresponding amount. If such amount is made available to the
Administrative Agent on a date after such borrowing date, such Lender shall
pay to the Administrative Agent on demand an amount, until paid, equal to the
product of (a) the amount of such borrowing not made available by such Lender
in accordance with the terms hereof, MULTIPLIED BY (b) the daily average
Federal Funds Rate during such period as determined by the Administrative
Agent, MULTIPLIED BY (c) a fraction, the numerator of which is the number of
days that elapse from and including such borrowing date to the date on which
such amount of such borrowing not made available by such Lender in accordance
with the terms hereof shall have become immediately available to the
Administrative Agent, and the denominator of which is 360. A certificate of
the Administrative Agent with respect to any amounts owing under this Section
shall be conclusive, absent manifest error. If such amount is not made
available to the Administrative Agent by such Lender within three (3)
Business Days of such borrowing date, the Administrative Agent shall be
entitled to recover such amount made available by the Administrative Agent
with interest thereon at the rate per annum applicable to Base Rate Loans
hereunder, on demand, from the Borrower. The failure of any Lender to make
its Revolving Credit Commitment Percentage or Term Loan Percentage, as
applicable, of any Loan available shall not relieve it or any other Lender of
its obligation, if any, hereunder to make its Revolving Credit Commitment
Percentage or Term Loan Percentage, as applicable, of such Loan available on
such borrowing date, but no Lender shall be responsible for the failure of
any other Lender to make its Revolving Credit Commitment Percentage or Term
Loan Percentage, as applicable, of such Loan available on the borrowing date.
32
SECTION 5.8. CHANGED CIRCUMSTANCES.
(a) CIRCUMSTANCES AFFECTING LIBOR RATE AVAILABILITY. If with respect
to any Interest Period the Administrative Agent or the Required Lenders
(after consultation with Administrative Agent) shall determine that, by
reason of circumstances affecting the foreign exchange and interbank markets
generally, deposits in eurodollars in the applicable amounts are not being
quoted via Telerate Page 3750 or offered to the Administrative Agent or a
Lender for such Interest Period, then the Administrative Agent shall
forthwith give notice thereof to the Borrower. Thereafter, until the
Administrative Agent notifies the Borrower that such circumstances no longer
exist, the obligation of the Lenders to make LIBOR Rate Loans and the right
of the Borrower to convert any Loan to or continue any Loan as a LIBOR Rate
Loan shall be suspended, and the Borrower shall repay in full (or cause to be
repaid in full) the then outstanding principal amount of each such LIBOR Rate
Loans together with accrued interest thereon, on the last day of the then
current Interest Period applicable to such LIBOR Rate Loan or convert the
then outstanding principal amount of each such LIBOR Rate Loan to a Base Rate
Loan as of the last day of such Interest Period.
(b) LAWS AFFECTING LIBOR RATE AVAILABILITY. If, after the date hereof,
the introduction of, or any change in, any Applicable Law or any change in
the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or any of their
respective Lending Offices) with any request or directive (whether or not
having the force of law) of any such Governmental Authority, central bank or
comparable agency, shall make it unlawful or impossible for any of the
Lenders (or any of their respective Lending Offices) to honor its obligations
hereunder to make or maintain any LIBOR Rate Loan, such Lender shall promptly
give notice thereof to the Administrative Agent and the Administrative Agent
shall promptly give notice to the Borrower and the other Lenders.
Thereafter, until the Administrative Agent notifies the Borrower that such
circumstances no longer exist, (i) the obligations of the Lenders to make
LIBOR Rate Loans and the right of the Borrower to convert any Loan or
continue any Loan as a LIBOR Rate Loan shall be suspended and thereafter the
Borrower may select only Base Rate Loans hereunder, and (ii) if any of the
Lenders may not lawfully continue to maintain a LIBOR Rate Loan to the end of
the then current Interest Period applicable thereto as a LIBOR Rate Loan, the
applicable LIBOR Rate Loan shall immediately be converted to a Base Rate Loan
for the remainder of such Interest Period.
(c) INCREASED COSTS. If, after the date hereof, the introduction of, or
any change in, any Applicable Law, or in the interpretation or administration
thereof by any Governmental Authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by any
of the Lenders (or any of their respective Lending Offices) with any request or
directive (whether or not having the force of law) of such Governmental
Authority, central bank or comparable agency:
(i) shall subject any of the Lenders (or any of their respective
Lending Offices) to any tax, duty or other charge with respect to any Note,
Letter of Credit or Application or shall change the basis of taxation of
payments to any of the Lenders (or any of their respective Lending
33
Offices) of the principal of or interest on any Note, Letter of Credit or
Application or any other amounts due under this Agreement in respect thereof
(except for changes in the rate of tax on the overall net income of any of
the Lenders or any of their respective Lending Offices imposed by the
jurisdiction in which such Lender is organized or is or should be qualified
to do business or such Lending Office is located); or
(ii) shall impose, modify or deem applicable any reserve (including,
without limitation, any imposed by the Board of Governors of the Federal
Reserve System), special deposit, insurance or capital or similar requirement
against assets of, deposits with or for the account of, or credit extended by
any of the Lenders (or any of their respective Lending Offices) or shall impose
on any of the Lenders (or any of their respective Lending Offices) or the
foreign exchange and interbank markets any other condition affecting any Note;
and the result of any of the foregoing is to increase the costs to any of the
Lenders of maintaining any LIBOR Rate Loan, or issuing or participating in
Letters of Credit or to reduce the yield or amount of any sum received or
receivable by any of the Lenders under this Agreement or under the Notes in
respect of a LIBOR Rate Loan or Letter of Credit or Application, then such
Lender shall promptly notify the Administrative Agent, and the Administrative
Agent shall promptly notify the Borrower of such fact and demand compensation
therefor and, within fifteen (15) days after such notice by the Administrative
Agent, the Borrower shall pay to such Lender such additional amount or amounts
as will compensate such Lender or Lenders for such increased cost or reduction.
The Administrative Agent will promptly notify the Borrower of any event of
which it has knowledge which will entitle any Lender to compensation pursuant
to this Section 5.8(c); PROVIDED, that the Administrative Agent shall incur no
liability whatsoever to the Lenders or the Borrower in the event it fails to do
so. The amount of such compensation shall be determined, in the applicable
Lender's sole discretion, based upon the assumption that such Lender funded its
Revolving Credit Commitment Percentage or Term Loan Percentage, as applicable,
of the LIBOR Rate Loans in the London interbank market and using any reasonable
attribution or averaging methods which such Lender deems appropriate and
practical. A certificate of such Lender setting forth the basis for
determining such amount or amounts necessary to compensate such Lender shall be
forwarded to the Borrower through the Administrative Agent and shall be
conclusively presumed to be correct save for manifest error.
(d) ALTERNATE LENDING OFFICE. To the extent reasonably possible, each
Lender shall designate an alternate Lending Office with respect to its LIBOR
Rate Loans to reduce any liability of the Borrower to such Lender pursuant to
this Section 5.8 or to avoid the circumstances described in Sections 5.8(a)
and (b), so long as such designation is not, in the reasonable judgment of such
Lender, disadvantageous to such Lender.
SECTION 5.9. INDEMNITY. The Borrower hereby indemnifies each of the
Lenders against any loss or expense which may arise or be attributable to
each Lender's obtaining, liquidating or employing deposits or other funds
acquired to effect, fund or maintain any Loan (a) as a consequence of any
failure by the Borrower to make any payment when due of any amount due
hereunder in connection with a LIBOR Rate Loan, (b) due to any failure of the
Borrower to borrow on a date specified therefor in a Notice of Borrowing or
Notice of Conversion/Continuation or
34
(c) due to any payment, prepayment or conversion of any LIBOR Rate Loan on a
date other than the last day of the Interest Period therefor. The amount of
such loss or expense shall be determined, in the applicable Lender's sole
discretion, based upon the assumption that such Lender funded its Revolving
Credit Commitment Percentage or Term Loan Percentage, as applicable, of the
LIBOR Rate Loans in the London interbank market and using any reasonable
attribution or averaging methods which such Lender deems appropriate and
practical. A certificate of such Lender setting forth the basis for
determining such amount or amounts necessary to compensate such Lender shall
be forwarded to the Borrower through the Administrative Agent and shall be
conclusively presumed to be correct save for manifest error.
SECTION 5.10. CAPITAL REQUIREMENTS. If, after the date hereof, either
(a) the introduction of, or any change in, or in the interpretation of, any
Applicable Law or (b) compliance with any guideline or request from any
central bank or comparable agency or other Governmental Authority (whether or
not having the force of law), has or would have the effect of reducing the
rate of return on the capital of, or has affected or would affect the amount
of capital required to be maintained by, any Lender or any corporation
controlling such Lender as a consequence of, or with reference to the
Commitments and other commitments of this type, below the rate which the
Lender or such other corporation could have achieved but for such
introduction, change or compliance, then within five (5) Business Days after
written demand by any such Lender, the Borrower shall pay to such Lender from
time to time as specified by such Lender additional amounts sufficient to
compensate such Lender or other corporation for such reduction. A
certificate as to such amounts submitted to the Borrower and the
Administrative Agent by such Lender, shall, in the absence of manifest error,
be presumed to be correct and binding for all purposes.
SECTION 5.11. TAXES.
(a) PAYMENTS FREE AND CLEAR. Any and all payments by the Borrower
hereunder or under the Notes or the Letters of Credit shall be made free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholding, and all liabilities with respect
thereto excluding, (i) in the case of each Lender and the Administrative Agent,
income and franchise taxes imposed by the jurisdiction under the laws of which
such Lender or the Administrative Agent (as the case may be) is organized or is
or should be qualified to do business or any political subdivision thereof and
(ii) in the case of each Lender, income and franchise taxes imposed by the
jurisdiction of such Lender's Lending Office or any political subdivision
thereof (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes"). If the
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under any Note or Letter of Credit to any Lender or
the Administrative Agent, (A) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 5.11) such Lender or
the Administrative Agent (as the case may be) receives an amount equal to the
amount such party would have received had no such deductions been made, (B) the
Borrower shall make such deductions, (C) the Borrower shall pay the full amount
deducted to the relevant taxing authority or other authority in accordance with
applicable law, and (D) the Borrower shall deliver to the Administrative Agent
evidence of such
35
payment to the relevant taxing authority or other authority in the manner
provided in Section 5.11(d).
(b) STAMP AND OTHER TAXES. In addition, the Borrower shall pay any
present or future stamp, registration, recordation or documentary taxes or any
other similar fees or charges or excise or property taxes, levies of the United
States or any state or political subdivision thereof or any applicable foreign
jurisdiction which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, the
Loans, the Letters of Credit, the other Loan Documents, or the perfection of
any rights or security interest in respect thereto (hereinafter referred to as
"Other Taxes").
(c) INDEMNITY. The Borrower shall indemnify each Lender and the
Administrative Agent for the full amount of Taxes and Other Taxes (including,
without limitation, any Taxes and Other Taxes imposed by any jurisdiction on
amounts payable under this Section 5.11) paid by such Lender or the
Administrative Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
Such indemnification shall be made within thirty (30) days from the date such
Lender or the Administrative Agent (as the case may be) makes written demand
therefor.
(d) EVIDENCE OF PAYMENT. Within thirty (30) days after the date of any
payment of Taxes or Other Taxes, the Borrower shall furnish to the
Administrative Agent, at its address referred to in Section 14.1, the original
or a certified copy of a receipt evidencing payment thereof or other evidence
of payment satisfactory to the Administrative Agent.
(e) DELIVERY OF TAX FORMS. Each Lender organized under the laws of a
jurisdiction other than the United States or any state thereof shall deliver
to the Borrower, with a copy to the Administrative Agent, on the Closing Date
or concurrently with the delivery of the relevant Assignment and Acceptance,
as applicable, (i) two United States Internal Revenue Service Forms 4224 or
Forms 1001, as applicable (or successor forms) properly completed and
certifying in each case that such Lender is entitled to a complete exemption
from withholding or deduction for or on account of any United States federal
income taxes, and (ii) an Internal Revenue Service Form W-8 or W-9 or
successor applicable form, as the case may be, to establish an exemption from
United States backup withholding taxes. Each such Lender further agrees to
deliver to the Borrower, with a copy to the Administrative Agent, a Form 1001
or 4224 and Form W-8 or W-9, or successor applicable forms or manner of
certification, as the case may be, on or before the date that any such form
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the Borrower,
certifying in the case of a Form 1001 or 4224 that such Lender is entitled to
receive payments under this Agreement without deduction or withholding of any
United States federal income taxes (unless in any such case an event
(including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders such forms inapplicable or the exemption to which such
forms relate unavailable and such Lender notifies the Borrower and the
Administrative Agent that it is not entitled to receive payments without
deduction or withholding of
36
United States federal income taxes) and, in the case of a Form W-8 or W-9,
establishing an exemption from United States backup withholding tax.
(f) SURVIVAL. Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 5.11 shall survive for a period of three (3) years
after the payment in full of the Obligations and the termination of the Credit
Facilities.
SECTION 5.12 REPLACEMENT LENDER. Unless an Event of Default shall have
occurred and be continuing, at any time within one hundred eighty (180) days
after any payment by the Borrower of any amount pursuant to or by reason of
the operation of Sections 5.8(a), 5.8(b), 5.8(c), 5.10, 5.11(a) or 5.11(c),
the Borrower, by writing addressed to the Administrative Agent and each
Lender that requested the payment of such amount, may nominate or propose an
Eligible Assignee that is willing to become the assignee of the Commitment
and other obligations of such Lender (a "Replacement Lender") pursuant to
Section 14.10(b), and within fifteen (15) Business Days after receipt of such
proposal from the Borrower, each such Lender shall execute and deliver to the
Administrative Agent an Assignment and Acceptance of its entire Commitment in
favor of the proposed Replacement Lender in accordance with Section 14.10(b)
unless, prior to the expiration of such period, the Administrative Agent
shall have notified the Borrower and such Lender that the proposed
Replacement Lender is not reasonably acceptable to the Administrative Agent;
PROVIDED, that in no event will (i) any Lender be required to enter into an
Assignment and Acceptance at a price less than par plus accrued interest and
prorated fees and other costs due hereunder to the effective date thereof
(including any amounts which would be owing to such Lender pursuant to
Section 5.9 if all of its Loans were repaid on such effective date), (ii)
either of the Administrative Agent or Lenders be obligated to assist the
Borrower in identifying any Eligible Assignees that are willing to become
such a Replacement Lender or (iii) any such assignment be required if
consummation conflicts with any Applicable Law. The assignment fee payable
to the Administrative Agent in connection with any such assignment pursuant
to Section 14.10(b) shall be for the account of the Borrower.
ARTICLE VI
CLOSING; CONDITIONS OF CLOSING AND BORROWING
SECTION 6.1. CLOSING. The closing shall take place at the offices of
Xxxxxxx Xxxxxxxxx Xxxxxxx & Xxxxxxx, L.L.P. on January 16, 1998, or on such
other date or such other place as the parties hereto shall mutually agree.
SECTION 6.2. CONDITIONS TO CLOSING AND EXTENSIONS OF CREDIT. The
obligation of the Lenders to close this Agreement and to make the initial
Loans or issue the initial Letter of Credit is subject to the satisfaction of
each of the following conditions:
37
(a) EXECUTED LOAN DOCUMENTS. The following Loan Documents shall have
been duly authorized and executed by the parties thereto, shall be in full
force and effect and no default shall exist thereunder, and original
counterparts thereof shall have been duly delivered to the Administrative
Agent:
(i) this Agreement;
(ii) the Notes;
(iii) the Xxxxxxxx Pledge Agreement;
(iv) the Guaranty Agreement; and
(v) the Subsidiary Pledge Agreement, if applicable.
(b) CLOSING CERTIFICATES; ETC.
(i) OFFICER'S CERTIFICATE OF THE BORROWER. The Administrative
Agent shall have received a certificate from the chief executive officer or
chief financial officer of the Borrower, in form and substance satisfactory
to the Administrative Agent, to the effect that all representations and
warranties of the Borrower contained in this Agreement and the other Loan
Documents are true and correct, except for those made as of an earlier date,
which were true and correct as of such earlier date; that the Borrower is not
in violation of any of the covenants contained in this Agreement and the
other Loan Documents; that, after giving effect to the transactions
contemplated by this Agreement, no Default or Event of Default has occurred
and is continuing; and that the Borrower has satisfied each of the closing
conditions.
(ii) CERTIFICATE OF SECRETARY OF THE BORROWER AND EACH OF ITS
SUBSIDIARIES. Except with respect to the Subsidiaries of the Borrower set
forth on SCHEDULE 6.2 attached hereto, the Administrative Agent shall have
received a certificate of the secretary or assistant secretary of the
Borrower and each of its Subsidiaries, including, without limitation,
Sterling and each of its Subsidiaries, certifying that attached thereto is a
true and complete copy of the charter documents of the Borrower or such
Subsidiary, as applicable, and all amendments thereto, certified as of a
recent date by the appropriate Governmental Authority in its jurisdiction of
incorporation; that attached thereto is a true and complete copy of the
bylaws of the Borrower or such Subsidiary, as applicable, as in effect on the
date of such certification; that attached thereto is a true and complete copy
of resolutions duly adopted by the board of directors of the Borrower or such
Subsidiary, as applicable, authorizing the execution, delivery and
performance of the Loan Documents to which it is a party; and as to the
incumbency and genuineness of the signature of each officer of the Borrower
or such Subsidiary, as applicable, executing Loan Documents to which it is a
party.
(iii) CERTIFICATES OF GOOD STANDING. Except with respect to the
Subsidiaries of the Borrower set forth on SCHEDULE 6.2 attached hereto, the
Administrative Agent shall have received long-form certificates as of a
recent date of the good standing of the Borrower and each of its
38
its Subsidiaries, including, without limitation, Sterling and each of its
Subsidiaries, under the laws of its jurisdiction of organization and each
other jurisdiction where the Borrower or such Subsidiary is qualified to do
business and a certificate of the relevant taxing authorities of each such
jurisdictions certifying that such Person has filed required tax returns and
owes no delinquent taxes.
(iv) OPINIONS OF COUNSEL. The Administrative Agent shall have
received favorable opinions of counsel to the Borrower addressed to the
Administrative Agent and the Lenders with respect to the Borrower and the
Guarantors, the Loan Documents, the Collateral, the Acquisition and such
other matters as the Lenders shall reasonably request, which shall include,
without limitation, an opinion as to compliance by the Borrower and its
Subsidiaries with all applicable material corporate instruments and
agreements (including, without limitation, the Sterling Synthetic Lease
Documents).
(v) TAX FORMS. The Administrative Agent shall have received
copies of the United States Internal Revenue Service forms required by
Section 5.11(e) hereof.
(vi) CERTIFICATE OF COMPLIANCE WITH STERLING SYNTHETIC LEASE
DOCUMENTS. The Administrative Agent shall have received a certificate of the
chief financial officer, or other officer acceptable to the Administrative
Agent, of Sterling certifying (i) that attached thereto is a true and
complete copy of the Sterling Synthetic Lease, the Sterling Lease Guaranty
and each other Sterling Synthetic Lease Document reasonably requested by the
Administrative Agent to be attached thereto, (ii) that all representations
and warranties of Sterling and Sterling Electronics Partners, L.P. contained
in the Sterling Synthetic Lease, the Sterling Lease Guaranty and the other
Sterling Synthetic Lease Documents are true, correct and complete, except for
those made as of an earlier date, which were true and correct as of such
earlier date, (iii) that Sterling and Sterling Electronics Partners L.P., as
applicable and to the extent party thereto, are not in violation in any
material respect of any of the covenants contained in the Sterling Synthetic
Lease, the Sterling Lease Guaranty and the other Sterling Synthetic Lease
Documents and (iv) that prior to and after giving effect to the transactions
contemplated by this Agreement, no default or Event of Default has occurred
and is continuing under the Sterling Synthetic Lease, the Sterling Lease
Guaranty (including, without limitation, the provisions of Section 8 thereof)
and the other Sterling Synthetic Lease Documents.
(c) COLLATERAL.
(i) FILINGS AND RECORDINGS. All filings and recordations that
are necessary to perfect the security interests of the Lenders in the
Collateral shall have been filed or recorded in all appropriate locations and
the Administrative Agent shall have received evidence satisfactory to the
Administrative Agent that such security interests constitute valid and
perfected first priority Liens therein subject to Liens described in Section
11.3.
(ii) PLEDGED STOCK. The Agent shall have received original stock
certificates evidencing the capital stock pledged pursuant to the Pledge
Agreements, together with an undated stock power for each stock certificate
duly executed in blank by the registered owner thereof.
39
(d) CONSENTS; DEFAULTS.
(i) GOVERNMENTAL AND THIRD PARTY APPROVALS. All necessary
approvals, authorizations and consents, if any be required, of any Person and
of all Governmental Authorities and courts having jurisdiction with respect
to the Transactions shall have been obtained except where the failure to
obtain any such approval, authorization or consent could not reasonably be
expected to have a Material Adverse Effect.
(ii) NO INJUNCTION, ETC. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any Governmental Authority to enjoin, restrain, or prohibit, or to
obtain substantial damages in respect of, or which is related to or arises
out of the Transactions, or which, in the Administrative Agent's discretion,
would make it inadvisable to consummate the Transactions.
(iii) NO EVENT OF DEFAULT. No Default or Event of Default shall
have occurred and be continuing, and no default or event of default shall
have occurred and be continuing under the Acquisition Documents or any other
Material Contract that could reasonably be expected to have a Material
Adverse Effect, or in any such case would occur upon the initial Extensions
of Credit under this Agreement.
(e) FINANCIAL MATTERS.
(i) FINANCIAL STATEMENTS. The Administrative Agent shall have
received the unaudited quarterly and audited Consolidated financial
statements of the Borrower and its Subsidiaries referred to in Section
7.1(o), all in form and substance satisfactory to the Administrative Agent.
(ii) FINANCIAL CONDITION CERTIFICATE. The Borrower shall have
delivered to the Administrative Agent a certificate, in form and substance
satisfactory to the Administrative Agent, and certified as accurate by the
chief executive officer or chief financial officer of the Borrower, that (A)
the Borrower and each of its Subsidiaries are, taken as a whole, Solvent, (B)
the Borrower's material payables (excluding trade payables of the Borrower
incurred in connection with the purchase of inventory in the ordinary course
of business) are current and not past due and (C) attached thereto is the PRO
FORMA balance sheet of the Borrower and its Subsidiaries delivered in the
syndication memorandum to the Lenders by the Administrative Agent setting
forth on a PRO FORMA basis the financial condition of the Borrower and its
Subsidiaries on a Consolidated basis, reflecting on a PRO FORMA basis the
effect of the Transactions, including all fees and expenses in connection
therewith and evidencing compliance on a PRO FORMA basis with the covenants
contained in Article X.
(iii) PAYMENT AT CLOSING; FEE LETTER. There shall have been paid
by the Borrower to the Administrative Agent and the Lenders the fees set
forth or referenced in Section 5.3 and any other accrued and unpaid fees or
commissions due hereunder (including, without limitation, reasonable
out-of-pocket legal fees and expenses), and to any other Person such amount
as may be due thereto in connection with the transactions contemplated
hereby, including all taxes, fees and
40
other charges in connection with the execution, delivery, recording, filing
and registration of any of the Loan Documents. The Borrower shall have paid
to First Union the fees set forth in the Fee Letter.
(iv) PROJECTIONS. The Administrative Agent shall have received
projected financial statements of the Borrower and its Subsidiaries for the
Fiscal Years ending 1998 through and including 2002, including Consolidated
balance sheets, statements of income and cash flow statements of Borrower and
its Subsidiaries giving effect to the Transactions, together with appropriate
supporting details and such other facts as relate to the ongoing business of
the Borrower and its Subsidiaries (collectively, the "Projections"). Such
Projections shall be accompanied by a certificate of the chief executive
officer or chief financial officer of the Borrower to the effect that the
Projections are based on reasonable estimates and assumptions, all of which
are fair in light of the conditions which existed at the time the Projections
were made, have been prepared on the basis of the assumptions stated therein,
and reflect, as of the time so furnished and as of the Closing Date, the
reasonable estimate of the Borrower and its Subsidiaries of the results of
the operations and other information projected therein.
(v) EXISTING FACILITIES. The Existing Facilities shall be
repaid in full with the initial Extensions of Credit and such agreements and
all other documents referred to therein (including, without limitation, all
Liens created thereunder) shall be terminated.
(f) ACQUISITION AND ACQUISITION DOCUMENTS. The Acquisition Documents
shall be in form and substance satisfactory to the Administrative Agent and all
conditions precedent to complete the Acquisition thereunder shall have been
completed or waived (except only the Acquisition Filing, which such Acquisition
Filing is contemplated to occur contemporaneously with or immediately following
the making of the Initial Loans by the Lenders) to the satisfaction of the
Administrative Agent, including, without limitation, the satisfaction of the
Administrative Agent with the form of the Articles of Merger to be filed in
connection with the Acquisition, such that the Acquisition shall occur
contemporaneously with or immediately following the initial funding under the
Credit Facilities on the Closing Date.
(g) LIMITATION ON INITIAL LOANS. The Administrative Agent shall have
received evidence, in form and substance satisfactory to the Administrative
Agent, that the aggregate principal amount of the Initial Loans made by the
Lenders does not exceed the maximum amount necessary solely to consummate the
Acquisition, to pay all fees and expenses thereunder and hereunder and to repay
in full the Existing Facilities; PROVIDED that the Initial Loans shall not be
disbursed (except to First Union as paying agent pursuant to Section 6.3(d))
until Administrative Agent has received evidence, in form and substance
satisfactory to the Administrative Agent, of the Acquisition Filing as
contemplated under Section 6.3(d).
41
(h) MISCELLANEOUS.
(i) NOTICE OF BORROWING AND ACCOUNT DESIGNATION. The
Administrative Agent shall have received the Notice of Revolving Credit
Borrowing and the Notice of Term Loan Borrowing with respect to the Loans to
be made on the Closing Date; PROVIDED that only Base Rate Loans shall be
available on the Closing Date. The Borrower shall also have delivered to the
Administrative Agent a Notice of Account Designation with respect to the
Loans to be made on the Closing Date.
(ii) PROCEEDINGS AND DOCUMENTS. All documents, opinions,
certificates and other instruments and all proceedings in connection with the
Transactions shall be satisfactory in form and substance to the Lenders. The
Lenders shall have received copies of all other instruments and other
evidence as the Lenders may reasonably request, in form and substance
satisfactory to the Lenders, with respect to the Transactions and the taking
of all actions in connection therewith.
(iii) DUE DILIGENCE. The Administrative Agent and the Lenders
shall have completed to their satisfaction their due diligence reviews of the
Borrower and its Subsidiaries in connection with the Transactions and the
corporate and capital structure.
SECTION 6.3. CONDITIONS TO ALL EXTENSIONS OF CREDIT. The obligations
of the Lenders to make any Loan or issue any Letter of Credit is subject to
the satisfaction of the following conditions precedent on the relevant
borrowing or issue date, as applicable:
(a) CONTINUATION OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties contained in Article VII shall be true and correct on and as of
such borrowing or issuance date with the same effect as if made on and as of
such date; except for any representation and warranty made as of an earlier
date, which representation and warranty shall remain true and correct as of
such earlier date.
(b) NO EXISTING DEFAULT. No Default or Event of Default shall have
occurred and be continuing hereunder (i) on the borrowing date with respect to
such Loan or after giving effect to the Loans to be made on such date or (ii)
or the issue date with respect to such Letter of Credit or after giving effect
to such Letters of Credit on such date.
(c) CERTIFICATES; ADDITIONAL DOCUMENTS. The Administrative Agent shall
have received the current Officer's Compliance Certificate, and each additional
document, instrument or other item of information reasonably requested by the
Administrative Agent in connection with, and material to, the corresponding
Extension of Credit.
(d) DISBURSEMENT OF THE INITIAL LOANS AND CONSUMMATION OF THE
ACQUISITION.
(i) DISBURSEMENT OF THE INITIAL LOANS. The Initial Loans made
by the Lenders on the Closing Date, a portion of which Initial Loans shall
have been deposited with the Administrative Agent in escrow for the payment
of any fees and expenses in connection with the Acquisition and the Credit
Agreement and the repayment of the Existing Facilities and a portion of
42
which shall have been deposited with First Union in escrow as paying agent
under the Agreement and Plan of Merger dated September 18, 1997, shall not be
disbursed by the Administrative Agent and by First Union as paying agent
until the Administrative Agent has received evidence, in form and substance
satisfactory to the Administrative Agent, of the Acquisition Filing.
(ii) LOANS OTHER THAN THE INITIAL LOANS. Except with respect to
the Initial Loans, the Lenders shall not be obligated to make any additional
Loan or issue any additional Letter of Credit until the Administrative Agent
has received evidence, in form and substance satisfactory to the
Administrative Agent, of the Acquisition Filing.
SECTION 6.4 CONDITIONS AND COVENANTS TO JOINDER OF STERLING AS A
BORROWER.
(a) EFFECTIVENESS OF STERLING AS A BORROWER. The rights and obligations
of Sterling as a Borrower hereunder, subject to the terms and provisions of
Addendum A attached hereto, shall not be effective until the Administrative
Agent has received evidence, in form and substance acceptable to the
Administrative Agent, of the Acquisition Filing in accordance with Section
6.3(d); PROVIDED that Sterling shall execute and deliver to the Administrative
Agent the fully executed Credit Agreement signed by Sterling in conjunction
with the delivery by the other parties hereto of their respective signature
pages to the Credit Agreement and the other Loan Documents.
(b) FAILURE TO CONSUMMATE THE MERGER. If the Acquisition Filing does not
occur within one (1) Business Day of the Closing Date in accordance with
Section 6.3(d), the Initial Loans made by the Lenders on the Closing Date, a
portion of which Initial Loans shall have been deposited with the
Administrative Agent in escrow for the payment of any fees and expenses in
connection with the Acquisition and the Credit Agreement and the repayment of
the Existing Facilities and a portion of which shall have been deposited with
First Union in escrow as paying agent under the Agreement and Plan of Merger
dated September 18, 1997, shall be returned to the Lenders in accordance
herewith and with Agreement for Appointment as Depository and Exchange Agent
dated January 16, 1998 and the Credit Facilities shall be automatically
terminated and all Obligations shall automatically become due and payable.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
SECTION 7.1. REPRESENTATIONS AND WARRANTIES. To induce the
Administrative Agent and Lenders to enter into this Agreement and to induce
the Lenders to make the Loans or issue or participate in the Letters of
Credit, the Borrower hereby represents and warrants to the Administrative
Agent and Lenders that:
(a) ORGANIZATION; POWER; QUALIFICATION. Each of the Borrower and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or formation, has the power and
authority to own its properties and to carry on its business as now being and
hereafter proposed to be conducted and is duly qualified and authorized to do
business in each jurisdiction in which the character of its properties or the
nature of its
43
business requires such qualification and authorization, except
where the failure to be so qualified or authorized could not reasonably be
expected to result in a Material Adverse Effect. The jurisdictions in which
the Borrower and its Subsidiaries, including, without limitation, its Material
Subsidiaries, are organized and qualified to do business as of the Closing Date
are described on SCHEDULE 7.1(a).
(b) OWNERSHIP. Each Subsidiary of the Borrower, including, without
limitation, each Material Subsidiary of the Borrower, as of the Closing Date
is listed on SCHEDULE 7.1(b). The capitalization of the Borrower and its
Subsidiaries, including, without limitation, its Material Subsidiaries, as of
the Closing Date consists of the number of shares, authorized, issued and
outstanding, of such classes and series, with or without par value, described
on SCHEDULE 7.1(b). All outstanding shares have been duly authorized and
validly issued and are fully paid and nonassessable. The shareholders of the
Subsidiaries of the Borrower, including, without limitation the Material
Subsidiaries of the Borrower, and the number of shares owned by each as of
the Closing Date are described on SCHEDULE 7.1(b). There are no outstanding
stock purchase warrants, subscriptions, options, securities, instruments or
other rights of any type or nature whatsoever, which are convertible into,
exchangeable for or otherwise provide for or permit the issuance of capital
stock of the Borrower or any of its Subsidiaries, including, without
limitation, any of its Material Subsidiaries, as of the Closing Date, except
as described on SCHEDULE 7.1(b).
(c) AUTHORIZATION OF AGREEMENT, TRANSACTION DOCUMENTS AND BORROWING. Each
of the Borrower and its Subsidiaries has the corporate power and authority, and
has taken all necessary corporate and other action to authorize the execution,
delivery and performance of this Agreement and each of the other Transaction
Documents to which it is a party in accordance with their respective terms.
This Agreement and each of the other Transaction Documents have been duly
executed and delivered by the duly authorized officers of the Borrower and each
of its Subsidiaries party thereto, and each such document constitutes the
legal, valid and binding obligation of the Borrower or its Subsidiary party
thereto, enforceable in accordance with its terms, except as such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
state or federal debtor relief laws from time to time in effect which affect
the enforcement of creditors' rights in general and the availability of
equitable remedies.
(d) COMPLIANCE OF AGREEMENT, TRANSACTION DOCUMENTS AND BORROWING WITH
LAWS, ETC. The execution, delivery and performance by the Borrower and its
Subsidiaries of the Transaction Documents to which each such Person is a party,
in accordance with their respective terms, the borrowings hereunder and the
transactions contemplated hereby and thereby do not and will not, by the
passage of time, the giving of notice or otherwise, (i) require any material
Governmental Approval (except for such as have been obtained) or violate any
material Applicable Law relating to the Borrower or any of its Subsidiaries,
(ii) conflict with, result in a breach of or constitute a default under the
articles of incorporation, bylaws or other organizational documents of the
Borrower or any of its Subsidiaries or any material indenture, agreement or
other instrument to which such Person is a party or by which any of its
properties may be bound or any material Governmental Approval relating to such
Person, or (iii) result in or require the creation or imposition of any Lien
upon or with respect to any property now owned or hereafter acquired by such
Person other than Liens arising under the Loan Documents.
44
(e) COMPLIANCE WITH LAW; GOVERNMENTAL APPROVALS. Each of the Borrower
and its Subsidiaries (i) has all Governmental Approvals required by any
Applicable Law for it to conduct its business, each of which is in full force
and effect, is final and not subject to review on appeal and is not the subject
of any pending or, to the best of its knowledge, threatened attack by direct or
collateral proceeding, and (ii) is in compliance with each Governmental
Approval applicable to it and in compliance with all other Applicable Laws
relating to it or any of its respective properties, except in each case with
respect to subclauses (i) and (ii) where the failure to do so could not
reasonably be expected to have a Material Adverse Effect.
(f) TAX RETURNS AND PAYMENTS. Each of the Borrower and its Subsidiaries
has duly filed or caused to be filed all federal, state, local and other tax
returns required by Applicable Law to be filed, and has paid, or made adequate
provision for the payment of, all federal, state, local and other taxes,
assessments and governmental charges or levies upon it and its property,
income, profits and assets which are due and payable, except where the failure
to so file or cause to be filed such return or pay such taxes could not
reasonably be expected to have a Material Adverse Effect. No Governmental
Authority has asserted any Lien or other claim of any material amount against
the Borrower or any Subsidiary thereof with respect to unpaid taxes which has
not been discharged or resolved; PROVIDED, that the Borrower or such Subsidiary
may contest such Lien or other claim in good faith so long as adequate reserves
are maintained in accordance with GAAP. The charges, accruals and reserves on
the books of the Borrower and its Subsidiaries in respect of federal, state,
local and other taxes for all Fiscal Years and portions thereof since the
organization of the Borrower and its Subsidiaries are in the judgment of the
Borrower adequate, and the Borrower does not anticipate any additional taxes or
assessments for any of such years.
(g) INTELLECTUAL PROPERTY MATTERS. Each of the Borrower and its
Subsidiaries owns or possesses rights to use all franchises, licenses,
copyrights, copyright applications, patents, patent rights or licenses, patent
applications, trademarks, trademark rights, trade names, trade name rights,
copyrights and rights with respect to the foregoing which are required to
conduct its business, except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect. No event has occurred which
permits, or after notice or lapse of time or both would permit, the revocation
or termination of any such rights, and neither the Borrower nor any Subsidiary
thereof is liable to any Person for infringement under Applicable Law with
respect to any such rights as a result of its business operations.
(h) ENVIRONMENTAL MATTERS. Except as disclosed on SCHEDULE 7.1(h), and
after the Closing Date except with respect to violations, claims, actions,
proceedings, notices, liabilities, contaminations, incidents or events
described in clauses (i) through (vi) below ("Environmental Events") that could
not reasonably be expected to result in liability to the Borrower or any of its
Subsidiaries of (A) $1,000,000 or more per Environmental Event or
(B) $2,000,000 or more in the aggregate:
(i) The properties of the Borrower and its Subsidiaries do not
contain, and to their knowledge have not previously contained, any Hazardous
Materials in amounts or concentrations
45
concentrations which (a) constitute or constituted a violation of, or (b)
could reasonably be expected to give rise to liability under, applicable
Environmental Laws;
(ii) Such properties and all operations conducted in connection
therewith are in compliance, and have been in compliance, with all applicable
Environmental Laws, and there is no contamination at, under or about such
properties or such operations which could interfere with the continued
operation of such properties or impair the fair saleable value thereof;
(iii) Neither the Borrower nor any Subsidiary thereof has received
any notice of violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of their properties or the operations
conducted in connection therewith, nor does the Borrower or any Subsidiary
thereof have knowledge or reason to believe that any such notice will be
received or is being threatened;
(iv) Hazardous Materials have not been transported or disposed of
from the properties of the Borrower and its Subsidiaries in violation of, or
in a manner or to a location which could give rise to liability under,
Environmental Laws, nor have any Hazardous Materials been generated, treated,
stored or disposed of at, on or under any of such properties in violation of,
or in a manner that could give rise to liability under, any applicable
Environmental Laws;
(v) No judicial proceedings or governmental or administrative
action is pending, or, to the knowledge of the Borrower, threatened, under
any Environmental Law to which the Borrower or any Subsidiary thereof is or
will be named as a party with respect to such properties or operations
conducted in connection therewith, nor are there any consent decrees or other
decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental
Law with respect to such properties or such operations; and
(vi) There has been no release, or to the best of the Borrower's
knowledge, the threat of release, of Hazardous Materials at or from such
properties, in violation of or in amounts or in a manner that could give rise
to liability under Environmental Laws.
(i) ERISA.
(i) As of the Closing Date, neither the Borrower nor any ERISA
Affiliate maintains or contributes to, or has any obligation under, any
Employee Benefit Plans other than those identified on SCHEDULE 7.1(i);
(ii) Except as set forth on SCHEDULE 7.1(i), the Borrower and
each ERISA Affiliate is in compliance with all applicable provisions of ERISA
and the regulations and published interpretations thereunder with respect to
all Employee Benefit Plans except for any required amendments for which the
remedial amendment period as defined in Section 401(b) of the Code has not
yet expired. Except as set forth on SCHEDULE 7.1(i), each Employee Benefit
Plan that is intended to be qualified under Section 401(a) of the Code has
been determined by the Internal Revenue Service to be so qualified, and each
trust related to such plan has been determined to be
46
exempt under Section 501(a) of the Code. No liability has been incurred by
the Borrower or any ERISA Affiliate which remains unsatisfied for any taxes
or penalties with respect to any Employee Benefit Plan or any Multiemployer
Plan;
(iii) No Pension Plan has been terminated, nor has any accumulated
funding deficiency (as defined in Section 412 of the Code) been incurred
(without regard to any waiver granted under Section 412 of the Code), nor has
any funding waiver from the Internal Revenue Service been received or
requested with respect to any Pension Plan, nor has the Borrower or any ERISA
Affiliate failed to make any contributions or to pay any amounts due and
owing as required by Section 412 of the Code, Section 302 of ERISA or the
terms of any Pension Plan prior to the due dates of such contributions under
Section 412 of the Code or Section 302 of ERISA, nor has there been any event
requiring any disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with
respect to any Pension Plan;
(iv) Neither the Borrower nor any ERISA Affiliate has: (A)
engaged in a nonexempt prohibited transaction described in Section 406 of the
ERISA or Section 4975 of the Code, (B) incurred any liability to the PBGC
which remains outstanding other than the payment of premiums and there are no
premium payments which are due and unpaid, (C) failed to make a required
contribution or payment to a Multiemployer Plan, or (D) failed to make a
required installment or other required payment under Section 412 of the Code;
(v) No Termination Event has occurred or is reasonably expected
to occur; and
(vi) No proceeding, claim, lawsuit and/or investigation is
existing or, to the best knowledge of the Borrower after due inquiry,
threatened concerning or involving any (A) employee welfare benefit plan (as
defined in Section 3(1) of ERISA) currently maintained or contributed to by
the Borrower or any ERISA Affiliate, (B) Pension Plan or (C) Multiemployer
Plan.
Notwithstanding the foregoing provisions of this Section 7.1(i),
after the Closing Date the representations and warranties of the Borrower with
respect to the matters described in clauses (ii) through (vi) above shall be
subject to the existence of any non-compliance, non-exemption, liability,
termination, occurrence, failure, activity, claims, lawsuit, investigation or
other similar matter or event as described in clauses (ii) through (vi) above
("ERISA Events") that could not reasonably be expected to result in liability
to the Borrower or any of its Subsidiaries of (A) $1,000,000 or more per ERISA
Event or (B) $2,000,000 or more in the aggregate.
(j) MARGIN STOCK. Neither the Borrower nor any Subsidiary thereof is
engaged principally or as one of its activities in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" (as
each such term is defined or used in Regulations G and U of the Board of
Governors of the Federal Reserve System). No part of the proceeds of any of
the Loans or Letters of Credit will be used for purchasing or carrying margin
stock or for any purpose which violates, or which would be inconsistent with,
the provisions of Regulation G, T, U or X of such Board of Governors.
47
(k) GOVERNMENT REGULATION. Neither the Borrower nor any Subsidiary
thereof is an "investment company" or a company "controlled" by an "investment
company" (as each such term is defined or used in the Investment Company Act of
1940, as amended) and neither the Borrower nor any Subsidiary thereof is, or
after giving effect to any Extension of Credit will be, subject to regulation
under the Public Utility Holding Company Act of 1935 or the Interstate Commerce
Act, each as amended, or any other Applicable Law which limits its ability to
incur or consummate the transactions contemplated hereby.
(l) MATERIAL CONTRACTS. SCHEDULE 7.1(l) sets forth a complete and
accurate list of all Material Contracts of the Borrower and its Subsidiaries in
effect as of the Closing Date not listed on any other Schedule hereto other
than customer and supplier contracts entered into in the ordinary course of
business for the purchase or sale of inventory or services; other than as set
forth in SCHEDULE 7.1(l), each Material Contract is, and after giving effect to
the consummation of the Transactions will be, in full force and effect in
accordance with the terms thereof, except where the failure to be in full force
and effect could not reasonably be expected to have a Material Adverse Effect.
The Borrower and its Subsidiaries have delivered to the Administrative Agent a
true and complete copy of each Material Contract required to be listed on
SCHEDULE 7.1(l) as of the Closing Date.
(m) EMPLOYEE RELATIONS. Each of the Borrower and its Subsidiaries has a
stable work force in place and is not, as of the Closing Date, except as set
forth on SCHEDULE 7.1(m), party to any collective bargaining agreement nor has
any labor union been recognized as the representative of its employees. The
Borrower knows of no pending, threatened or contemplated strikes, work stoppage
or other collective labor disputes involving its employees or those of its
Subsidiaries, except if any such strike, work stoppage or dispute could not
reasonably be expected to have a Material Adverse Effect.
(n) BURDENSOME PROVISIONS. Neither the Borrower nor any Subsidiary
thereof is a party to any indenture, agreement, lease or other instrument, or
subject to any corporate or partnership restriction, Governmental Approval or
Applicable Law which is so unusual or burdensome as in the foreseeable future
could be reasonably expected to have a Material Adverse Effect. The Borrower
and its Subsidiaries do not presently anticipate that future expenditures
needed to meet the provisions of any statutes, orders, rules or regulations of
a Governmental Authority will be so burdensome as to have a Material Adverse
Effect.
48
(o) FINANCIAL STATEMENTS.
(i) The (A) audited Consolidated balance sheets of the Borrower
and its Subsidiaries (excluding Sterling and its Subsidiaries) as of May 31,
1997 and the related statements of income and cash flows for the Fiscal Years
then ended and (B) unaudited Consolidated balance sheet of the Borrower and
its Subsidiaries (excluding Sterling and its Subsidiaries) as of August 31,
1997 and the related unaudited interim statements of income and cash flows,
copies of which have been furnished to the Administrative Agent and each
Lender, fairly present the assets, liabilities and financial position of the
Borrower and its Subsidiaries (excluding Sterling and its Subsidiaries) as at
such dates, and the results of the operations and cash flows for the periods
then ended, subject to the absence of footnotes and normal year-end
adjustments with respect to such unaudited statements. All such financial
statements, including the related schedules and notes thereto, have been
prepared in accordance with GAAP. The Borrower and its Subsidiaries
(excluding Sterling and its Subsidiaries) have no Debt, obligation or other
unusual forward or long-term commitment which is not fairly reflected in the
foregoing financial statements or in the notes thereto in accordance with
GAAP.
(ii) To the best of the Borrower's knowledge, the (A) audited
Consolidated balance sheets of Sterling and its Subsidiaries as of March 29,
1997 and the related statements of income and cash flows for the fiscal year
then ended and (B) unaudited Consolidated balance sheet of Sterling and its
Subsidiaries as of September 27, 1997 and the related unaudited interim
statements of income and cash flows, copies of which have been furnished to
the Administrative Agent and each Lender, fairly present the assets,
liabilities and position of Sterling and its Subsidiaries as at such dates,
and the results of the operations and cash flows for the periods then ended.
All such financial statements, including the related schedules and notes
thereto, have been prepared in accordance with GAAP. To the best of the
Borrower's knowledge, other than the Sterling Synthetic Lease and the
Sterling Lease Guaranty, Sterling and its Subsidiaries have no Debt,
obligation or other unusual forward or long-term commitment which is not
fairly reflected in the foregoing financial statements or in the notes
thereto in accordance with GAAP.
(p) NO MATERIAL ADVERSE CHANGE.
(i) Since May 31, 1997, there has been no material adverse
change in the properties, business, operations, or condition (financial or
otherwise) of the Borrower and its Subsidiaries, taken as a whole, and no
event has occurred or condition arisen that could reasonably be expected to
have a Material Adverse Effect.
(ii) To the best of the Borrower's knowledge, since June 28, 1997
there has been no material adverse change in the properties, business,
operations, or condition (financial or otherwise) of Sterling and its
Subsidiaries, taken as a whole, and no event has occurred or condition arisen
that could reasonably be expected to have a Material Adverse Effect .
(q) SOLVENCY. As of the Closing Date and after giving effect to each
Extension of Credit made hereunder, the Borrower and each of its Subsidiaries,
taken as a whole, will be Solvent.
49
(r) TITLES TO PROPERTIES. Each of the Borrower and its Subsidiaries has
such title to the real property owned or leased by it as is necessary or
desirable to the conduct of its business and valid and legal title to all of
its personal property and assets, including, but not limited to, those
reflected on the balance sheets of the Borrower and its Subsidiaries delivered
pursuant to Section 7.1(o), except those which have been disposed of by the
Borrower or its Subsidiaries subsequent to such date which dispositions have
been in the ordinary course of business or as otherwise expressly permitted
hereunder, and except where the failure to obtain such titles could not
reasonably be expected to have a Material Adverse Effect. The Borrower enjoys
peaceful and undisturbed possession under all of its leases of real property
and all such leases are valid and subsisting and in full force and effect. The
Borrower has made available complete and accurate copies of all such leases as
of the Closing Date to the Administrative Agent.
(s) LIENS. None of the properties and assets of the Borrower or any
Subsidiary thereof is subject to any Lien, except Liens permitted pursuant to
Section 11.3. No financing statement under the Uniform Commercial Code of any
state which names the Borrower or any Subsidiary thereof or any of their
respective trade names or divisions as debtor and which has not been
terminated, has been filed in any state or other jurisdiction and neither the
Borrower nor any Subsidiary thereof has signed any such financing statement or
any security agreement authorizing any secured party thereunder to file any
such financing statement, except to perfect those Liens permitted by Section
11.3.
(t) DEBT AND GUARANTY OBLIGATIONS. SCHEDULE 7.1(t) is a complete and
correct listing of all Debt (excluding trade payables of the Borrower and its
Subsidiaries incurred in connection with the purchase of inventory in the
ordinary course of business) and Guaranty Obligations of the Borrower and its
Subsidiaries as of the Closing Date in excess of $2,000,000. The Borrower and
its Subsidiaries have performed and are in compliance with all of the terms of
such Debt and Guaranty Obligations and all instruments and agreements relating
thereto, and no default or event of default, or event or condition which with
notice or lapse of time or both would constitute such a default or event of
default on the part of the Borrower or its Subsidiaries exists with respect to
any such Debt or Guaranty Obligation.
(u) LITIGATION. Except as set forth on SCHEDULE 7.1(u), as of the
Closing Date there are no actions, suits or proceedings, in which the amount in
controversy is equal to or greater than $500,000 per action, suit or proceeding
or equal to or greater than $2,000,000 in the aggregate, pending nor, to the
knowledge of the Borrower, threatened against or in any other way relating
adversely to or affecting the Borrower or any Subsidiary thereof or any of
their respective properties (as a defendant or as the recipient of a
counterclaim or similar action) in any court or before any arbitrator of any
kind or before or by any Governmental Authority.
(v) ABSENCE OF DEFAULTS. No event has occurred or is continuing which
constitutes a Default or an Event of Default, or which constitutes, or which
with the passage of time or giving of notice or both would constitute, a
default or event of default by the Borrower or any Subsidiary thereof under any
Material Contract (except where such event could not reasonably be expected to
have a Material Adverse Effect) or judgment, decree or order to which the
Borrower or its Subsidiaries is a party or by which the Borrower or its
50
Subsidiaries or any of their respective properties may be bound or which would
require the Borrower or its Subsidiaries to make any payment thereunder prior
to the scheduled maturity date therefor (except where such judgment, decree or
order could not reasonably be expected to have a Material Adverse Effect).
(w) ACQUISITION DOCUMENTS. The Borrower has delivered to the
Administrative Agent true, complete and correct copies of the Acquisition
Documents, together with all amendments and modifications thereto. Such
Acquisition Documents (including the schedules and exhibits thereto) comprise a
full and complete copy of all agreements between the parties thereto with
respect to the subject matter thereof and all transactions related thereto, and
there are no agreements or understandings, oral or written, or side agreements
not contained therein that relate to or modify the substance thereof. Such
Acquisition Documents have been duly authorized by all necessary corporate
action on the part of the Borrower and each of its Subsidiaries party thereto,
and, when executed and delivered by the Borrower and each such Subsidiary,
shall be enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or similar state
or federal debtor relief laws from time to time in effect which affect the
enforcement of creditors' rights in general and the availability of equitable
remedies. The information contained in the Acquisition Documents relating to
the Borrower and its Subsidiaries as of the date thereof and as of the date
hereof, except to the extent corrected on or prior to the Closing Date, did not
and do not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading. To the best
knowledge of the Borrower after due inquiry, as of the date thereof and as of
the date hereof, the information contained in such Acquisition Documents
relating to Sterling and the other parties thereto did not and do not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(x) ACCURACY AND COMPLETENESS OF INFORMATION. All written information,
reports and other papers and data produced by or on behalf of the Borrower or
any Subsidiary thereof and furnished to the Lenders were, at the time the same
were so furnished, complete and correct in all respects to the extent necessary
to give the recipient a true and accurate knowledge of the subject matter. No
document furnished or written statement made to the Administrative Agent or the
Lenders by the Borrower or any Subsidiary thereof in connection with the
negotiation, preparation or execution of this Agreement or any of the Loan
Documents contains or will contain any untrue statement of a fact material to
the creditworthiness of the Borrower or its Subsidiaries or omits or will omit
to state a fact necessary in order to make the statements contained therein not
misleading. The projections and pro forma financial information contained in
such materials are based upon good faith estimates and assumptions believed by
the Borrower to be reasonable at the time made, it being recognized by the
Administrative Agent and the Lenders that such projections as to future events
are not to be viewed as facts and that actual results during the period or
periods covered by any such projections may differ from the projected results.
The Borrower is not aware of any facts which it has not disclosed in writing to
the Administrative Agent having a Material Adverse Effect, or insofar as the
Borrower can now foresee, could reasonably be expected to have a Material
Adverse Effect.
51
SECTION 7.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. All
representations and warranties set forth in this Article VII and all
representations and warranties contained in any certificate, or any of the
Loan Documents (including but not limited to any such representation or
warranty made in or in connection with any amendment thereto) shall
constitute representations and warranties made under this Agreement. All
representations and warranties made under this Agreement shall be made or
deemed to be made at and as of the Closing Date, shall survive the Closing
Date and shall not be waived by the execution and delivery of this Agreement,
any investigation made by or on behalf of the Lenders or any borrowing
hereunder.
ARTICLE VIII
FINANCIAL INFORMATION AND NOTICES
So long as any of the Obligations are outstanding and unpaid or any
Commitment is outstanding (whether or not the conditions to borrowing have been
or can be fulfilled), unless consent has been obtained in the manner set forth
in Section 14.11, the Borrower will furnish or cause to be furnished to the
Administrative Agent at the Administrative Agent's Office at the address set
forth in Section 14.1 and to the Lenders at their respective addresses as set
forth on SCHEDULE 1.1(a), or such other office as may be designated by the
Administrative Agent and Lenders from time to time:
SECTION 8.1. FINANCIAL STATEMENTS AND PROJECTIONS.
(a) QUARTERLY FINANCIAL STATEMENTS. As soon as practicable and in any
event within forty-five (45) days after the end of each Fiscal Quarter, an
unaudited Consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries as of the close of such Fiscal Quarter and unaudited Consolidated
and consolidating statements of income and cash flows for the Fiscal Quarter
then ended and that portion of the Fiscal Year then ended, including the notes
thereto, all in reasonable detail setting forth in comparative form the
corresponding figures for the preceding Fiscal Year and prepared by the
Borrower in accordance with GAAP and, if applicable, containing disclosure of
the effect on the financial position or results of operations of any change in
the application of accounting principles and practices during the period, and
certified by the chief financial officer of the Borrower to present fairly in
all material respects in accordance with GAAP the financial condition of the
Borrower and its Subsidiaries as of their respective dates and the results of
operations of the Borrower and its Subsidiaries for the respective periods then
ended, subject to the absence of footnotes and normal year end adjustments.
(b) ANNUAL FINANCIAL STATEMENTS. As soon as practicable and in any event
within ninety (90) days after the end of each Fiscal Year, an audited
Consolidated and unaudited consolidating balance sheet of the Borrower and its
Subsidiaries as of the close of such Fiscal Year and audited Consolidated and
unaudited consolidating statements of income and cash flows for the Fiscal Year
then ended, including the notes thereto, all in reasonable detail setting forth
in comparative form the corresponding figures for the preceding Fiscal Year
and, in the case of the audited statements, prepared by Xxxxxx Xxxxxxxx LLP or
another independent certified public accounting firm
52
acceptable to the Administrative Agent in accordance with GAAP and, if
applicable, containing disclosure of the effect on the financial position or
results of operation of any change in the application of accounting
principles and practices during the year, and accompanied by a report thereon
by such certified public accountants that is not qualified with respect to
scope limitations imposed by the Borrower or any of its Subsidiaries or with
respect to accounting principles followed by the Borrower or any of its
Subsidiaries not in accordance with GAAP.
(c) ANNUAL BUSINESS PLAN AND FINANCIAL PROJECTIONS. As soon as
practicable and in any event within thirty (30) days after the beginning of
each Fiscal Year, a business plan of the Borrower and its Subsidiaries for the
ensuing five (5) Fiscal Years, such plan to be prepared in accordance with GAAP
and to include, on a quarterly basis, the following: a quarterly operating and
capital budget, a projected income statement, statement of cash flows and
balance sheet and a report containing management's major assumptions covering
such projections. Such projections shall be accompanied by a certificate of
the chief executive officer or chief financial officer of the Borrower to the
effect that the projections are based on reasonable estimates and assumptions,
all of which are fair in light of the conditions which existed at the time the
projections were made, have been prepared on the basis of the assumptions
stated therein, and reflect, as of the time so furnished, the reasonable
estimate of the Borrower and its Subsidiaries of the results of the operations
and other information projected therein, it being recognized by the
Administrative Agent and the Lenders that such projections as to future events
are not to be viewed as facts and that actual results during the period or
periods covered by any such projections may differ from the projected results.
SECTION 8.2. OFFICER'S COMPLIANCE CERTIFICATES. At each time financial
statements are delivered pursuant to Sections 8.1 (a) or (b), an Officer's
Compliance Certificate duly executed by the chief executive officer or chief
financial officer of the Borrower.
SECTION 8.3. ACCOUNTANTS' CERTIFICATE. At each time financial
statements are delivered pursuant to Section 8.1(b), a certificate of the
independent public accountants certifying such financial statements addressed
to the Administrative Agent for the benefit of the Lenders, stating that in
making the examination necessary for the certification of such financial
statements, they obtained no knowledge of any Default or Event of Default or,
if such is not the case, specifying such Default or Event of Default and its
nature and period of existence.
SECTION 8.4. OTHER REPORTS.
(a) Promptly upon receipt thereof, copies of all reports, if any,
submitted to the Borrower or its Board of Directors by its independent public
accountants in connection with their auditing function, including, without
limitation, any management report and any management responses thereto;
(b) Such other information regarding the operations, business affairs and
financial condition of the Borrower or any of its Subsidiaries as the
Administrative Agent or any Lender may reasonably request; and
53
(c) Promptly after the same are sent, copies of all financial statements
and reports which the Borrower is required by Governmental Authorities to send
to its stockholders, and within ten (10) days after the same are filed (but in
any event within forty-five (45) days after the end of each of the first three
(3) fiscal quarters of each Fiscal Year, with respect to reports on Form 10-Q,
and within ninety (90) days after the end of each Fiscal Year, with respect to
reports on Form 10-K), copies of all financial statements and material regular,
periodical, or special reports which the Borrower may make to, or file with,
the Securities and Exchange Commission or any successor or analogous state
Governmental Authority, including, without limitation, reports filed on Forms
10-K, 10-Q and 8-K.
SECTION 8.5. NOTICE OF LITIGATION AND OTHER MATTERS. Prompt (but in no
event later than five (5) Business Days after an executive officer of the
Borrower obtains knowledge thereof) telephonic and written notice of:
(a) the commencement of all proceedings and investigations by or before
any Governmental Authority and all actions and proceedings in any court or
before any arbitrator against or involving the Borrower or any Subsidiary
thereof or any of their respective properties, assets or businesses (as a
defendant or the recipient of a counterclaim or similar action) which,
individually, involve an amount in controversy in excess of $500,000, or, in
the aggregate for similar proceedings and investigations, involve an amount in
controversy in excess of $2,000,000;
(b) any notice of any violation received by the Borrower or any
Subsidiary thereof from any Governmental Authority including, without
limitation, any notice of violation of Environmental Laws which in any such
case could reasonably be expected to have a Material Adverse Effect;
(c) any labor controversy that has resulted in, or threatens to result
in, a strike or other work action against the Borrower or any Subsidiary
thereof, except if such strike or work action could not reasonably be expected
to have a Material Adverse Effect;
(d) any attachment, judgment, lien, levy or order exceeding $5,000,000
that may be assessed against or threatened against the Borrower or any
Subsidiary thereof;
(e) any Default or Event of Default;
(f) or any event which constitutes or which with the passage of time or
giving of notice or both would constitute a default or event of default under
any Material Contract to which the Borrower or any of its Subsidiaries is a
party or by which the Borrower or any Subsidiary thereof or any of their
respective properties may be bound;
(g) (i) any unfavorable determination letter from the Internal Revenue
Service regarding the qualification of an Employee Benefit Plan under Section
401(a) of the Code (along with a copy thereof), (ii) all notices received by
the Borrower or any ERISA Affiliate of the PBGC's intent to terminate any
Pension Plan or to have a trustee appointed to administer any Pension Plan,
(iii) all notices received by the Borrower or any ERISA Affiliate from a
Multiemployer Plan sponsor
54
concerning the imposition or amount of withdrawal liability pursuant to
Section 4202 of ERISA and (iv) the Borrower obtaining knowledge or reason to
know that the Borrower or any ERISA Affiliate has filed or intends to file a
notice of intent to terminate any Pension Plan under a distress termination
within the meaning of Section 4041(c) of ERISA; and
(h) any event which makes any of the representations set forth in Section
7.1 inaccurate in any respect.
SECTION 8.6. ACCURACY OF INFORMATION. All written information,
reports, statements and other papers and data furnished by or on behalf of
the Borrower to the Administrative Agent or any Lender (other than financial
forecasts) whether pursuant to this Article VIII or any other provision of
this Agreement, or any of the Security Documents, shall be, at the time the
same is so furnished, complete and correct in all material respects to the
extent necessary to give the Administrative Agent or any Lender complete,
true and accurate knowledge of the subject matter based on the Borrower's
knowledge thereof.
ARTICLE IX
AFFIRMATIVE COVENANTS
So long as any of the Obligations are outstanding and unpaid or any
Commitment is outstanding (whether or not the conditions to borrowing have been
or can be fulfilled), unless consent has been obtained in the manner provided
for in Section 14.11, the Borrower will, and will cause each of its
Subsidiaries to:
SECTION 9.1. PRESERVATION OF CORPORATE EXISTENCE AND RELATED MATTERS.
Except as permitted by Section 11.5, preserve and maintain its separate
corporate existence and all rights, franchises, licenses and privileges
necessary to the conduct of its business, and qualify and remain qualified as
a foreign corporation and authorized to do business in each jurisdiction in
which the failure to so qualify could reasonably be expected to have a
Material Adverse Effect; PROVIDED, that any Subsidiary may liquidate,
dissolve and wind up into the Borrower or a Wholly-Owned Material Subsidiary.
SECTION 9.2. MAINTENANCE OF PROPERTY. Protect and preserve all
properties useful in and necessary to its business, including copyrights,
patents, trade names and trademarks; maintain in good working order and
condition all buildings, equipment and other tangible real and personal
property useful in and necessary to its business; and from time to time make
or cause to be made all renewals, replacements and additions to such property
necessary for the conduct of its business, so that the business carried on in
connection therewith may be properly and advantageously conducted at all
times.
SECTION 9.3. INSURANCE. Maintain insurance with financially sound and
reputable insurance companies against such risks and in such amounts as are
customarily maintained by similar businesses and as may be required by
Applicable Law and on the Closing Date and from time to time thereafter
deliver to the Administrative Agent upon its request a
55
detailed list of the insurance then in effect, stating the names of the
insurance companies, the amounts and rates of the insurance, the dates of the
expiration thereof and the properties and risks covered thereby.
SECTION 9.4. ACCOUNTING METHODS AND FINANCIAL RECORDS. Maintain a
system of accounting, and keep such books, records and accounts (which
present fairly in all material respects in accordance with GAAP the financial
condition of the Borrower and its Subsidiaries) as may be required or as may
be necessary to permit the preparation of financial statements in accordance
with GAAP and in compliance with the regulations of any Governmental
Authority having jurisdiction over it or any of its properties.
SECTION 9.5. PAYMENT AND PERFORMANCE OF OBLIGATIONS. Pay and perform
all Obligations under this Agreement and the other Loan Documents, and pay or
perform (a) all taxes, assessments and other governmental charges that may be
levied or assessed upon it or any of its property, and (b) all other
indebtedness, obligations and liabilities in accordance with customary trade
practices except, in each case, when any failure to pay or perform could not
reasonably be expected to have a Material Adverse Effect; PROVIDED, that the
Borrower or such Subsidiary may contest any item described in clauses (a) or
(b) of this Section 9.5 in good faith so long as adequate reserves are
maintained with respect thereto in accordance with GAAP.
SECTION 9.6. COMPLIANCE WITH LAWS AND APPROVALS. Observe and remain in
compliance with all Applicable Laws and maintain in full force and effect all
Governmental Approvals, in each case applicable to the conduct of its
business except where failure to comply with Applicable Laws or maintain
Government Approvals could not reasonably be expected to have a Material
Adverse Effect.
SECTION 9.7. ENVIRONMENTAL LAWS. In addition to and without limiting
the generality of Section 9.6, (a) comply with, and ensure such compliance by
all tenants and subtenants, if any, with, all applicable Environmental Laws
and obtain and comply with and maintain, and ensure that all tenants and
subtenants obtain and comply with and maintain, any and all licenses,
approvals, notifications, registrations or permits required by applicable
Environmental Laws, (b) conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions required
under Environmental Laws, and promptly comply with all lawful orders and
directives of any Governmental Authority regarding Environmental Laws, except
where failure to so comply, obtain, maintain, conduct or complete such
actions under such clauses (a) and (b) could not reasonably be expected to
have a Material Adverse Effect, and (c) defend, indemnify and hold harmless
the Administrative Agent and the Lenders, and their respective parents,
Subsidiaries, Affiliates, employees, agents, officers and directors, from and
against any claims, demands, penalties, fines, liabilities, settlements,
damages, costs and expenses of whatever kind or nature known or unknown,
contingent or otherwise, arising out of, or in any way relating to the
violation of, noncompliance with or liability under any Environmental Laws
applicable to the operations of the Borrower or such Subsidiary, or any
orders, requirements or demands of Governmental Authorities related thereto,
including, without limitation, reasonable attorney's and consultant's fees,
investigation and laboratory fees, response costs, court costs and litigation
56
expenses, except to the extent that any of the foregoing directly result from
the gross negligence or willful misconduct of the party seeking
indemnification therefor.
SECTION 9.8. COMPLIANCE WITH ERISA. In addition to and without
limiting the generality of Section 9.6, (a) comply with all applicable
provisions of ERISA and the regulations and published interpretations
thereunder with respect to all Employee Benefit Plans, (b) not take any
action or fail to take action the result of which could be a liability to the
PBGC or to a Multiemployer Plan, (c) not participate in any prohibited
transaction that could result in any civil penalty under ERISA or tax under
the Code, (d) operate each Employee Benefit Plan in such a manner that will
not incur any tax liability under Section 4980B of the Code or any liability
to any qualified beneficiary as defined in Section 4980B of the Code and (e)
furnish to the Administrative Agent upon the Administrative Agent's request
such additional information about any Employee Benefit Plan as may be
reasonably requested by the Administrative Agent, except when the failure to
so comply, not take action or take action, not participate, operate or
furnish as described in clauses (a) through (e) above could not reasonably be
expected to result in liability to the Borrower or any of its Subsidiaries of
(i) $1,000,000 or more per event or action described above or (ii) $2,000,000
or more in the aggregate.
SECTION 9.9. COMPLIANCE WITH AGREEMENTS. Except where the failure to
comply could not be reasonably expected to have a Material Adverse Effect,
comply in all respects with each term, condition and provision of all leases,
agreements and other instruments entered into in the conduct of its business
including, without limitation, any Material Contract; PROVIDED, that the
Borrower or such Subsidiary may contest any such lease, agreement or other
instrument in good faith through applicable proceedings so long as adequate
reserves are maintained in accordance with GAAP.
SECTION 9.10. CONDUCT OF BUSINESS. Engage only in businesses in
substantially the same fields as the businesses conducted on the Closing Date
and in lines of business reasonably related thereto.
SECTION 9.11. VISITS AND INSPECTIONS. Permit representatives of the
Administrative Agent (or any Lender at the same time and in coordination with
the Administrative Agent) upon reasonable advance notice and during normal
business hours, from time to time, to visit and inspect its properties;
inspect, audit and make extracts from its books, records and files,
including, but not limited to, management letters prepared by independent
accountants; and discuss with its principal officers, and its independent
accountants, its business, assets, liabilities, financial condition, results
of operations and business prospects.
SECTION 9.12. INTEREST RATE PROTECTION. Maintain (commencing thirty
(30) days after the Closing Date) during the term of the Credit Facilities, a
Hedging Agreement with minimum notional amount at any date of determination
equal to fifty percent (50%) of the outstanding principal balance on the Term
Loans at an interest rate and upon other terms and conditions reasonably
satisfactory to the Administrative Agent.
57
SECTION 9.13. ADDITIONAL COLLATERAL.
(a) Upon the creation of any Material Subsidiary or upon any Subsidiary
becoming a Material Subsidiary, cause to be executed and delivered to the
Administrative Agent within five (5) Business Days after the creation of such
Material Subsidiary, (i) a supplement to the Guaranty Agreement, with such
changes as the Administrative Agent may reasonably request, duly executed by
such Material Subsidiary and (ii) a supplement to the Xxxxxxxx Pledge
Agreement or Subsidiary Pledge Agreement, as applicable, with such changes as
the Administrative Agent may reasonably request, executed by the Borrower or
applicable Subsidiary such that 100% of the outstanding equity interests of
such Material Subsidiary owned by the Borrower or such Subsidiary (65% (or
the highest percentage that would still prevent such pledge from constituting
a deemed dividend under any applicable provision, including, without
limitation, Section 956, of the Code) of the outstanding equity interests of
such Material Subsidiary if such Subsidiary is a Foreign Subsidiary) shall
have been pledged to the Administrative Agent for the ratable benefit of the
Administrative Agent and the Lenders.
(b) Upon the delivery of any additional Security Documents and
Collateral pursuant to this Section 9.13, deliver to the Administrative Agent
favorable legal opinions addressed to the Administrative Agent and Lenders in
form and substance satisfactory thereto with respect to such Security
Document and additional Collateral and such other documents and closing
certificates as may be reasonably requested by the Administrative Agent or
Required Lenders consistent with the terms of Article VI.
SECTION 9.14. YEAR 2000 COMPATIBILITY. The Borrower shall take all
actions reasonably necessary and in its control to assure that Borrower's
computer based systems are able to operate and effectively process data which
includes dates on and after January 1, 2000. At the request of the
Administrative Agent, the Borrower shall provide reasonable assurances
satisfactory to the Administrative Agent of the Borrower's Year 2000
compatibility.
SECTION 9.15. FURTHER ASSURANCES. Make, execute and deliver all such
additional and further acts, things, deeds and instruments as the
Administrative Agent or any Lender may reasonably require to document and
consummate the transactions contemplated hereby and to vest completely in and
insure the Administrative Agent and the Lenders their respective rights under
this Agreement, the Notes, the Letters of Credit and the other Loan Documents.
ARTICLE X
FINANCIAL COVENANTS
So long as any of the Obligations are outstanding and unpaid or any
Commitment is outstanding (whether or not the conditions to borrowing have
been or can be fulfilled), unless consent has been obtained in the manner set
forth in Section 14.11, the Borrower and its Subsidiaries on a Consolidated
basis will not:
58
SECTION 10.1. LEVERAGE RATIO. As of the end of any Fiscal Quarter
during any period set forth below, permit the ratio of (a) the Consolidated
Funded Debt of the Borrower and its Subsidiaries as of such Fiscal Quarter
end to (b) the Consolidated Operating Cash Flow of the Borrower and its
Subsidiaries for the period of four (4) consecutive Fiscal Quarters ending on
such Fiscal Quarter end to exceed the corresponding ratio set forth below:
Period Ratio
------ -----
1/16/98 - 11/30/98 3.50 to 1.00
12/1/98 - 11/30/99 3.25 to 1.00
12/1/99 - 11/30/00 3.00 to 1.00
12/1/00 and thereafter 2.75 to 1.00
; PROVIDED that with respect to (i) the Fiscal Quarter ending February 28,
1998, Consolidated Operating Cash Flow of the Borrower and its Subsidiaries
shall equal the sum of (A) the Consolidated Operating Cash Flow of Xxxxxxxx
and its Subsidiaries (other than Sterling and its Subsidiaries) for the
period of four (4) consecutive Fiscal Quarters ending on such Fiscal Quarter
end PLUS (B) the Consolidated Operating Cash Flow of Sterling and its
Subsidiaries for the period from the Closing Date through February 28, 1998
TIMES eight and one/fifth (8 1/5) [Said fraction calculated to annualize
the Consolidated Operating Cash Flow by multiplying four times the quotient of
ninety days divided by forty-four days], (ii) the Fiscal Quarter ending
May 31, 1998, Consolidated Operating Cash Flow of the Borrower and its
Subsidiaries shall equal the sum of (A) the Consolidated Operating Cash Flow of
Xxxxxxxx and its Subsidiaries (other than Sterling and its Subsidiaries) for
the period of four (4) consecutive Fiscal Quarters ending on such Fiscal
Quarter end PLUS (B) the Consolidated Operating Cash Flow of Sterling and its
Subsidiaries for such Fiscal Quarter TIMES four (4), (iii) the Fiscal Quarter
ending August 31, 1998, Consolidated Operating Cash Flow of the Borrower and
its Subsidiaries shall equal the sum of (A) the Consolidated Operating Cash
Flow of Xxxxxxxx and its Subsidiaries (other than Sterling and its
Subsidiaries) for the period of four (4) consecutive Fiscal Quarters ending on
such Fiscal Quarter end PLUS (B) the Consolidated Operating Cash Flow of
Sterling and its Subsidiaries for the period of two (2) consecutive Fiscal
Quarters ending on such Fiscal Quarter end TIMES two (2), and (iv) the Fiscal
Quarter ending November 30, 1998, Consolidated Operating Cash Flow of the
Borrower and its Subsidiaries shall equal the sum of (A) the Consolidated
Operating Cash Flow of Xxxxxxxx and its Subsidiaries (other than Sterling
and its Subsidiaries) for the period of four (4) consecutive Fiscal Quarters
ending on such Fiscal Quarter end PLUS (B) the Consolidated Operating Cash Flow
of Sterling and its Subsidiaries for the period of three (3) consecutive Fiscal
Quarters ending on such Fiscal Quarter end TIMES four-thirds (4/3).
SECTION 10.2. INTEREST COVERAGE RATIO. As of the end of any Fiscal
Quarter commencing the Fiscal Quarter ending February 28, 1998, permit the
ratio of (a) Consolidated EBIT of the Borrower and its Subsidiaries for the
period of four (4) consecutive Fiscal Quarters ending on such Fiscal Quarter
end to (b) Consolidated Interest Expense of the Borrower and its Subsidiaries
for such period of four (4) consecutive Fiscal Quarters, to be less than 3.50
to 1.0; PROVIDED that with respect to (i) the Fiscal Quarter ending February
28, 1998, the Consolidated EBIT of the Borrower and its Subsidiaries shall
equal the sum of (A) the Consolidated EBIT of
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Xxxxxxxx and its Subsidiaries (other than Sterling and its Subsidiaries) for
the period of four (4) consecutive Fiscal Quarters ending on such Fiscal
Quarter end PLUS (B) the Consolidated EBIT of Sterling and its Subsidiaries
for the period from the Closing Date through February 28, 1998 TIMES eight
and one-fifth (8 1/5) [Said fraction calculated to annualize the Consolidated
EBIT by multiplying four times the quotient of ninety days divided by
forty-four days], (ii) the Fiscal Quarter ending May 31, 1998, the Consolidated
EBIT of the Borrower and its Subsidiaries shall equal the sum of (A) the
Consolidated EBIT of Xxxxxxxx and its Subsidiaries (other than Sterling and its
Subsidiaries) for the period of four (4) consecutive Fiscal Quarters ending
on such Fiscal Quarter end PLUS (B) the Consolidated EBIT of Sterling and its
Subsidiaries for such Fiscal Quarter TIMES four (4), (iii) the Fiscal Quarter
ending August 31, 1998, the Consolidated EBIT of the Borrower and its
Subsidiaries shall equal the sum of (A) the Consolidated EBIT of Xxxxxxxx and
its Subsidiaries (other than Sterling and its Subsidiaries) for the period of
four (4) consecutive Fiscal Quarters ending on such Fiscal Quarter end PLUS
(B) the Consolidated EBIT of Sterling and its Subsidiaries for the period of
two (2) consecutive Fiscal Quarters ending on such Fiscal Quarter end TIMES
two (2), (iv) the Fiscal Quarter ending November 30, 1998, the Consolidated
EBIT of the Borrower and its Subsidiaries shall equal the sum of (A) the
Consolidated EBIT of Xxxxxxxx and its Subsidiaries (other than Sterling and
its Subsidiaries) for the period of four (4) consecutive Fiscal Quarters
ending on such Fiscal Quarter end PLUS (B) the Consolidated EBIT of Sterling
and its Subsidiaries for the period of three (3) consecutive Fiscal Quarters
ending on such Fiscal Quarter end TIMES four-thirds (4/3); and PROVIDED
FURTHER that with respect to (i) the Fiscal Quarter ending February 28, 1998,
the Consolidated Interest Expense of the Borrower and its Subsidiaries shall
be equal to the Consolidated Interest Expense of the Borrower and its
Subsidiaries for such Fiscal Quarter TIMES four (4), (ii) the Fiscal Quarter
ending May 31, 1998, the Consolidated Interest Expense of the Borrower and
its Subsidiaries shall be equal to the Consolidated Interest Expense of the
Borrower and its Subsidiaries for the period of two (2) consecutive Fiscal
Quarters ending on such Fiscal Quarter end TIMES two (2), and (iii) the
Fiscal Quarter ending August 31, 1998, the Consolidated Interest Expense of
the Borrower and its Subsidiaries shall be equal to the Consolidated Interest
Expense of the Borrower and its Subsidiaries for the period of three (3)
consecutive Fiscal Quarters ending on such Fiscal Quarter end TIMES
four-thirds (4/3).
SECTION 10.3. MINIMUM TANGIBLE NET WORTH. As of the end of any Fiscal
Quarter, permit Tangible Net Worth as of such date to be less than (a)
$210,000,000, PLUS (b) 75% of cumulative quarterly Consolidated Net Income of
the Borrower and its Subsidiaries commencing on March 1, 1998 (without
deduction for any quarterly losses), PLUS (c) 75% of the Net Cash Proceeds of
any issuance of any common equity (excluding equity issued pursuant to
employee stock options) by the Borrower or any of its Subsidiaries after the
Closing Date.
SECTION 10.4. CURRENT RATIO. As of the end of any Fiscal Quarter,
permit the ratio of (a) Consolidated Current Assets of the Borrower and its
Subsidiaries as of such Fiscal Quarter end to (b) Consolidated Current
Liabilities of the Borrower and its Subsidiaries as of such Fiscal Quarter
end, to be less than 1.75 to 1.0.
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ARTICLE XI
NEGATIVE COVENANTS
So long as any of the Obligations are outstanding and unpaid or any
Commitment is outstanding (whether or not the conditions to borrowing have been
or can be fulfilled), unless consent has been obtained in the manner set forth
in Section 14.11, the Borrower will not and will not permit any of its
Subsidiaries to:
SECTION 11.1. LIMITATIONS ON DEBT. Create, incur, assume or suffer to
exist any Debt except:
(a) the Obligations;
(b) Debt incurred in connection with the Hedging Agreement required by
Section 9.12 and any other Hedging Agreement with a counterparty and upon terms
and conditions reasonably satisfactory to the Administrative Agent;
(c) Debt existing on the Closing Date and not otherwise permitted under
this Section 11.1, including, without limitation, Debt set forth on
SCHEDULE 7.1(t), and the renewal and refinancing (but not the increase) thereof;
(d) Debt of the Borrower and its Subsidiaries incurred in connection with
Capitalized Leases in an aggregate amount not to exceed $10,000,000 on any date
of determination;
(e) purchase money Debt of the Borrower and its Subsidiaries incurred in
the ordinary course of business in an aggregate amount not to exceed
$10,000,000 on any date of determination;
(f) Debt consisting of Guaranty Obligations permitted by Section 11.2;
(g) Debt consisting of trade payables of the Borrower and its
Subsidiaries incurred in connection with the purchase of inventory in the
ordinary course of business; and
(h) Debt not otherwise permitted by this Section 11.1 in an aggregate
amount not to exceed $5,000,000 on any date of determination;
PROVIDED, that none of the Debt permitted to be incurred by this Section shall
restrict, limit or otherwise encumber (by covenant or otherwise) the ability of
any Subsidiary of the Borrower to make any payment to the Borrower or any of
its Subsidiaries (in the form of dividends, intercompany advances or otherwise)
for the purpose of enabling the Borrower to pay the Obligations.
SECTION 11.2. LIMITATIONS ON GUARANTY OBLIGATIONS. Create, incur,
assume or suffer to exist any Guaranty Obligations except:
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(a) Guaranty Obligations in favor of the Administrative Agent for the
ratable benefit of the Administrative Agent and the Lenders;
(b) Guaranty Obligations in an amount not to exceed $2,000,000 to secure
payment or performance of customer service contracts incurred in the ordinary
course of business;
(c) Guaranty Obligations in an aggregate amount not to exceed $2,000,000
in connection with flooring arrangements with customers to repurchase goods
that the Borrower or its Subsidiaries sold to such customers; and
(d) the Sterling Lease Guaranty.
SECTION 11.3. LIMITATIONS ON LIENS. Create, incur, assume or suffer to
exist, any Lien on or with respect to any of its assets or properties
(including without limitation shares of capital stock or other ownership
interests), real or personal, whether now owned or hereafter acquired, except:
(a) Liens for taxes, assessments and other governmental charges or
levies (excluding any Lien imposed pursuant to any of the provisions of ERISA
or Environmental Laws) not yet due or as to which the period of grace (not to
exceed thirty (30) days except with respect to immaterial matters), if any,
related thereto has not expired or which are being contested in good faith
and by appropriate proceedings if adequate reserves are maintained to the
extent required by GAAP;
(b) the claims of materialmen, mechanics, carriers, warehousemen,
processors or landlords for labor, materials, supplies or rentals incurred in
the ordinary course of business, (i) which are not overdue for a period of
more than thirty (30) days (except with respect to immaterial matters) or
(ii) which are being contested in good faith and by appropriate proceedings;
(c) Liens consisting of deposits or pledges made in the ordinary course
of business in connection with, or to secure payment of, obligations under
workers' compensation, unemployment insurance or similar legislation;
(d) Liens constituting encumbrances in the nature of zoning
restrictions, easements and rights or restrictions of record on the use of
real property, which in the aggregate are not substantial in amount and which
do not, in any case, detract from the value of such property or impair the
use thereof in the ordinary conduct of business;
(e) Liens in favor of the Administrative Agent for the ratable benefit
of the Administrative Agent and the Lenders;
(f) Liens not otherwise permitted by this Section 11.3 and in existence
on the Closing Date and described on SCHEDULE 11.3 and the replacement or
extension thereof to the extent the related Debt is permitted pursuant to
Section 11.1(c); and
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(g) Liens securing Debt permitted under Section 11.1(d) and (e); PROVIDED
that (i) such Liens shall be created substantially simultaneously with the
acquisition or lease of the related asset, (ii) such Liens do not at any time
encumber any property other than the property financed by such Debt, (iii) the
amount of Debt secured thereby is not increased and (iv) the principal amount
of Debt secured by any such Lien shall at no time exceed one hundred percent
(100%) of the original purchase price or original lease payment amount of such
property at the time it was acquired.
SECTION 11.4. LIMITATIONS ON LOANS, ADVANCES, INVESTMENTS AND
ACQUISITIONS. Purchase, own, invest in or otherwise acquire, directly or
indirectly, any capital stock, interests in any partnership or joint venture
(including without limitation the creation or capitalization of any
Subsidiary), evidence of Debt or other obligation or security, substantially
all or a portion of the business or assets of any other Person or any other
investment or interest whatsoever in any other Person, or make or permit to
exist, directly or indirectly, any loans, advances or extensions of credit
to, or any investment in cash or by delivery of property in, any Person, or
enter into, directly or indirectly, any commitment or option in respect of
the foregoing except:
(a) investments in Subsidiaries existing on the Closing Date and the
other existing loans, advances and investments described on SCHEDULE 11.4;
(b) investments in newly formed Wholly-Owned Subsidiaries; PROVIDED, that
the Borrower shall comply and cause its Subsidiaries to comply with Section
9.13, if applicable;
(c) investments in (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency
thereof maturing within 120 days from the date of acquisition thereof,
(ii) commercial paper maturing no more than 120 days from the date of creation
thereof and currently having the highest rating obtainable from either
Standard & Poor's Rating's Group, a Division of XxXxxx-Xxxx Corporation or
Xxxxx'x Investors Service, Inc., (iii) certificates of deposit maturing no more
than 120 days from the date of creation thereof issued by commercial banks
incorporated under the laws of the United States of America, each having
combined capital, surplus and undivided profits of not less than $500,000,000
and having a rating of "A" or better by a nationally recognized rating agency
(collectively, "Cash Equivalents"); PROVIDED, that the aggregate amount
invested in such certificates of deposit shall not at any time exceed
$5,000,000 for any one such certificate of deposit and $10,000,000 for any one
such bank, or (iv) time deposits maturing no more than 30 days from the date of
creation thereof with commercial banks or savings banks or savings and loan
associations each having membership either in the FDIC or the deposits of which
are insured by the FDIC and in amounts not exceeding the maximum amounts of
insurance thereunder;
(d) advances by the Borrower or any of its Subsidiaries to their
employees for travel and other related expenses in an aggregate amount not to
exceed $1,000,000 in any Fiscal Year;
(e) extensions of credit in the ordinary course of business to account
debtors of the Borrower and its Subsidiaries with respect to trade accounts
receivable;
63
(f) investments in the form of the acquisition of capital stock or other
similar securities received in connection with the bankruptcy or reorganization
of suppliers and customers of the Borrower and its Subsidiaries and in
settlement of delinquent obligations of, and other disputes with, customers and
suppliers of the Borrower and its Subsidiaries arising in the ordinary course
of business;
(g) the Acquisition;
(h) the purchase of the property subject to the Sterling Synthetic Lease
in accordance with the terms of the Sterling Synthetic Lease Documents, as the
same may be amended in accordance with the terms of Addendum A; and
(i) investments by the Borrower or any of its Subsidiaries (i) in the
form of the acquisition of all or substantially all of the business or a line
of business (whether by the acquisition of capital stock or other equity
interest, assets or any combination thereof) of any other Person or (ii) in
the form of an investment pursuant to which the Borrower or any of its
Subsidiaries purchases fifty percent (50%) or less of a business or line of
business (including the Asian Joint Venture) (whether by the acquisition of
capital stock or other equity interest, assets or any combination thereof)
if, in either case, such acquisition or investment meets the following
requirements: (A) if the investment is in the form of an acquisition of
capital stock or other equity interest under subclause (i) above, the Person
whose equity interest is to be acquired shall be or, as a result of such
acquisition shall become, a Wholly-Owned Subsidiary of the Borrower and no
Change of Control shall have been effected thereby, (B) the Person whose
assets, capital stock or combination thereof are to be acquired or the entity
in which the Borrower or any of its Subsidiaries is to invest shall engage in
a business substantially similar to the Borrower's ordinary course of
business in existence as of the Closing Date, (C) evidence of approval of the
acquisition or investment by the board of directors or equivalent governing
body of the acquired Person authorizing the acquisition or investment and the
execution, delivery and performance of any transactions contemplated thereby,
shall have been delivered to the Administrative Agent, (D) if the total
consideration for such acquisition or investment is in excess of $5,000,000,
the Borrower shall have demonstrated pro forma compliance with each covenant
contained in Articles IX, X and XI hereof prior to consummating the
acquisition and no Default or Event of Default shall have occurred and be
continuing both before and after giving effect to the acquisition, (E) a
description of the acquisition or investment and the governing documentation
shall have been delivered to the Administrative Agent at least ten (10)
Business Days prior to the consummation of the acquisition and a copy of the
final governing documentation shall be delivered within a reasonable time
after the acquisition, (F) the Borrower shall comply and cause each of its
Subsidiaries to comply with Section 9.13 and (G) the fair market value of all
consideration paid (including, without limitation, cash consideration paid,
Debt assumed and the value of an stock transferred in any "pooling of
interests" or otherwise) in connection with all such acquisitions and
investments in the aggregate shall not exceed $30,000,000 during the term of
this Agreement; PROVIDED, that the Borrower and its Subsidiaries may make an
acquisition such that the aggregate consideration for all acquisitions and
investments made during the term of this Agreement exceeds $30,000,000 if
such acquisition has been previously approved in writing by the Required
Lenders.
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SECTION 11.5. LIMITATIONS ON MERGERS AND LIQUIDATION. Merge,
consolidate or enter into any similar combination with any other Person or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution) except:
(a) any Wholly-Owned Subsidiary of the Borrower may merge with or be
wound up into the Borrower or any other Wholly-Owned Subsidiary of the Borrower
(as long as the Borrower or any such Subsidiary which has executed a Guaranty
Agreement, as applicable, is the survivor of any such transaction involving any
such Person);
(b) any Wholly-Owned Subsidiary may merge with the Person such Wholly-
Owned Subsidiary was formed to acquire in connection with an acquisition
permitted by Section 11.4(h); and
(c) the consummation of the Acquisition.
SECTION 11.6. LIMITATIONS ON SALE OF ASSETS. Convey, sell, lease,
assign, transfer or otherwise dispose of any of its property, business or
assets (including, without limitation, the sale of any receivables and
leasehold interests and any sale-leaseback or similar transaction), whether
now owned or hereafter acquired except:
(a) the sale of Inventory in the ordinary course of business;
(b) the sale of assets no longer used or usable in the business of the
Borrower or any of its Subsidiaries;
(c) the transfer of (i) assets to the Borrower, (ii) assets to any Wholly-
Owned Subsidiary of the Borrower pursuant to Section 11.5(a), (iii) inventory
in the ordinary course of business to the Borrower or any Wholly-Owned
Subsidiary and (iv) assets having an aggregate fair market value of less than
$3,000,000 during the term of this Agreement to the Borrower or any Material
Subsidiary;
(d) sale and leaseback transactions in an aggregate amount that does not
exceed $15,000,000 over the term of this Agreement;
(e) the sale or discount without recourse of accounts receivable arising
in the ordinary course of business in connection with the compromise or
collection thereof; and
(f) any other sale or disposition of assets by the Borrower or its
Subsidiaries in the ordinary course of business, as long as Net Cash Proceeds
are applied as set forth herein.
SECTION 11.7. LIMITATIONS ON DIVIDENDS AND DISTRIBUTIONS. Declare or
pay any dividends upon any of its capital stock; purchase, redeem, retire or
otherwise acquire, directly or indirectly, any shares of its capital stock,
or make any distribution of cash, property or assets among the holders of
shares of its capital stock, or make any change in its capital structure that
could reasonably be expected to have a Material Adverse Effect; PROVIDED that:
65
(a) the Borrower or any Subsidiary may pay dividends in shares of its
own capital stock;
(b) any Subsidiary may pay cash dividends to the Borrower; and
(c) the Borrower may pay cash dividends to its shareholders in an
aggregate amount not to exceed in any Fiscal Year five percent (5%) of the
Consolidated Net Income of the Borrower and its Subsidiaries for the preceding
Fiscal Year; PROVIDED that the Borrower must remain in compliance on a pro
forma basis with each covenant contained in Articles X and XI prior to and
following the payment of any such cash dividends.
SECTION 11.8. LIMITATIONS ON EXCHANGE AND ISSUANCE OF CAPITAL STOCK.
Issue, sell or otherwise dispose of any class or series of capital stock
that, by its terms or by the terms of any security into which it is
convertible or exchangeable, is, or upon the happening of an event or passage
of time would be, (a) convertible or exchangeable into Debt or (b) required
to be redeemed or repurchased, including at the option of the holder, in
whole or in part, or has, or upon the happening of an event or passage of
time would have, a redemption or similar payment due.
SECTION 11.9. TRANSACTIONS WITH AFFILIATES. Directly or indirectly:
(a) make any loan or advance to, or purchase or assume any note or other
obligation to or from, any of its officers, directors, shareholders or other
Affiliates, or to or from any member of the immediate family of any of its
officers, directors, shareholders or other Affiliates (other than the payment
of fees to directors and advances to employees for expenses (including
relocation expenses)), or subcontract any operations to any of its
Affiliates, or (b) enter into, or be a party to, any transaction with any of
its Affiliates, except pursuant to the reasonable requirements of its
business and upon fair and reasonable terms that are fully disclosed to and
approved in writing by the Required Lenders and are no less favorable to it
than it would obtain in a comparable arm's length transaction with a Person
not its Affiliate (PROVIDED that the approval of the Required Lenders shall
not be required (i) to the extent the aggregate value of all such
transactions is not in excess of $3,000,000 or (ii) with respect to the
purchase and sale of inventory in the ordinary course of business to or from
its Affiliates).
SECTION 11.10. CERTAIN ACCOUNTING CHANGES. Change its Fiscal Year end,
or make any significant change in its accounting treatment and reporting
practices except as required by GAAP or required by Governmental Authorities.
SECTION 11.11. CHARTER DOCUMENTS; CAPITALIZATION. Amend or modify its
articles of incorporation, by-laws, corporate structure or capitalization in
any way that would reasonably be expected to have a Material Adverse Effect.
SECTION 11.12. RESTRICTIVE AGREEMENTS. Enter into any Debt which
contains any negative pledge on assets or any covenants materially more
restrictive than the provisions of Articles X and XI hereof, or which
restricts, limits or otherwise encumbers its ability to incur Liens
66
on or with respect to any of its assets or properties other than the assets
or properties securing such Debt.
ARTICLE XII
DEFAULT AND REMEDIES
SECTION 12.1. EVENTS OF DEFAULT. Each of the following shall
constitute an Event of Default, whatever the reason for such event and
whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment or order of any court or any order, rule or
regulation of any Governmental Authority or otherwise:
(a) DEFAULT IN PAYMENT OF PRINCIPAL OF LOANS AND REIMBURSEMENT
OBLIGATIONS. The Borrower shall default in any payment of principal of any
Loan, Note or Reimbursement Obligation when and as due (whether at maturity, by
reason of acceleration or otherwise).
(b) OTHER PAYMENT DEFAULT. The Borrower shall default in the payment
when and as due (whether at maturity, by reason of acceleration or otherwise)
of interest on any Loan, Note or Reimbursement Obligation or the payment of any
other Obligation, and such default shall continue unremedied for three (3)
Business Days.
(c) MISREPRESENTATION. Any representation or warranty made or deemed to
be made by the Borrower or any of its Subsidiaries under this Agreement, any
Loan Document or any amendment hereto or thereto, shall at any time prove to
have been incorrect or misleading in any material respect when made or deemed
made.
(d) DEFAULT IN PERFORMANCE OF CERTAIN COVENANTS. The Borrower shall
default in the performance or observance of any covenant or agreement contained
in Section 8.5(e) or Articles X or XI.
(e) DEFAULT IN PERFORMANCE OF OTHER COVENANTS AND CONDITIONS. The
Borrower or any Subsidiary thereof shall default in the performance or
observance of any term, covenant, condition or agreement contained in this
Agreement (other than as specifically provided for otherwise in this Section
12.1) or any other Loan Document and such default shall continue for a period
of thirty (30) days after written notice thereof has been given to the
Borrower by the Administrative Agent.
(f) HEDGING AGREEMENT. Any termination payment shall be due by the
Borrower under any Hedging Agreement and such amount is not paid within five
(5) Business Days of the due date thereof.
(g) DEBT CROSS-DEFAULT. The Borrower or any of its Subsidiaries shall
(i) default in the payment of any Debt (other than (A) the Notes or any
Reimbursement Obligation and (B) trade payables of the Borrower and its
Subsidiaries incurred in connection with the purchase of inventory in the
ordinary course of business) the aggregate outstanding amount of which Debt is
in excess of $3,000,000 beyond the period of grace if any, provided in the
instrument or agreement under which
67
such Debt was created, or (ii) default in the observance or performance of
any other agreement or condition relating to any Debt (other than (A) the
Notes or any Reimbursement Obligation and (B) trade payables of the Borrower
and its Subsidiaries incurred in connection with the purchase of inventory in
the ordinary course of business) the aggregate outstanding amount of which
Debt is in excess of $3,000,000 or contained in any instrument or agreement
evidencing, securing or relating thereto or any other event shall occur or
condition exist, the effect of which default or other event or condition is
to cause, or to permit the holder or holders of such Debt (or a trustee or
agent on behalf of such holder or holders) to cause, with the giving of
notice if required, any such Debt to become due prior to its stated maturity
(any applicable grace period having expired).
(h) OTHER CROSS-DEFAULTS. The Borrower or any of its Subsidiaries shall
default in the payment when due, or in the performance or observance, of any
obligation or condition of any Material Contract unless, but only as long as,
the existence of any such default is being contested by the Borrower or such
Subsidiary in good faith by appropriate proceedings and adequate reserves in
respect thereof have been established on the books of the Borrower or such
Subsidiary to the extent required by GAAP; PROVIDED, that this Section 12.1(h)
shall not apply if such default could not reasonably be expected to have a
Material Adverse Effect.
(i) CHANGE IN CONTROL. (i) Any person or group of persons (within the
meaning of Section 13(d) of the Securities and Exchange Act of 1934, as
amended) shall obtain ownership or control in one or more series of
transactions of more than twenty-five percent (25%) of the common stock or
twenty-five percent (25%) of the voting power of the Borrower entitled to vote
in the election of members of the board of directors of the Borrower, (ii)
there shall have occurred under any indenture or other instrument evidencing
any Debt in excess of $3,000,000 any "change in control" (as defined in such
indenture or other evidence of Debt) obligating the Borrower to repurchase,
redeem or repay all or any part of the Debt or capital stock provided for
therein, (iii) the Borrower shall fail to own or control, directly or
indirectly, more than seventy-five percent (75%) of the common stock or seventy-
five percent (75%) of the voting power of any Subsidiary entitled to vote in
the election of members of the board of directors of such Subsidiary or other
governing body of such Subsidiary, other than as a result of a merger,
consolidation or other similar combination permitted under Section 11.5 or (iv)
the Borrower shall fail to own or control, directly or indirectly, one hundred
percent (100%) of the common stock or one hundred percent (100%) of the voting
power of Sterling entitled to vote in the election of members of the board of
directors of Sterling or other governing body of Sterling, other than as a
result of a merger, consolidation or other similar combination permitted under
Section 11.5, (any such event, a "Change in Control").
(j) VOLUNTARY BANKRUPTCY PROCEEDING. The Borrower or any Subsidiary
thereof shall (i) commence a voluntary case under the federal bankruptcy laws
(as now or hereafter in effect), (ii) file a petition seeking to take advantage
of any other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or composition for adjustment of debts, (iii)
consent to or fail to contest in a timely and appropriate manner any petition
filed against it in an involuntary case under such bankruptcy laws or other
laws, (iv) apply for or consent to, or fail to contest in a timely and
appropriate manner, the appointment of, or the taking of possession by, a
receiver, custodian, trustee, or liquidator of itself or of a substantial part
of its property, domestic or foreign, (v) admit in writing its inability to pay
its debts as they become due, (vi) make a general
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assignment for the benefit of creditors, or (vii) take any corporate action
for the purpose of authorizing any of the foregoing.
(k) INVOLUNTARY BANKRUPTCY PROCEEDING. A case or other proceeding shall
be commenced against the Borrower or any Subsidiary thereof in any court of
competent jurisdiction seeking (i) relief under the federal bankruptcy laws (as
now or hereafter in effect) or under any other laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, winding up or adjustment of
debts, or (ii) the appointment of a trustee, receiver, custodian, liquidator or
the like for the Borrower or any Subsidiary thereof or for all or any
substantial part of their respective assets, domestic or foreign, and such case
or proceeding shall continue undismissed or unstayed for a period of sixty (60)
consecutive days, or an order granting the relief requested in such case or
proceeding (including, but not limited to, an order for relief under such
federal bankruptcy laws) shall be entered.
(l) FAILURE OF AGREEMENTS. Any provision of this Agreement or of any
other Loan Document shall for any reason cease to be valid and binding on the
Borrower or Subsidiary party thereto or any such Person shall so state in
writing, or this Agreement or any other Loan Document shall for any reason
(except as a result of the gross negligence or willful misconduct of the
Administrative Agent or any Lender) cease to create a valid and perfected first
priority Lien on, or security interest in, any of the collateral purported to
be covered thereby, except for Liens permitted by this Agreement, in each case
other than in accordance with the express terms hereof or thereof.
(m) TERMINATION EVENT. The occurrence of any of the following events:
(i) the Borrower or any ERISA Affiliate fails to make full payment when due of
all amounts which, under the provisions of any Pension Plan or Section 412 of
the Code, the Borrower or any ERISA Affiliate is required to pay as
contributions thereto, (ii) an accumulated funding deficiency in excess of
$3,000,000 occurs or exists, whether or not waived, with respect to any Pension
Plan, (iii) a Termination Event or (iv) the Borrower or any ERISA Affiliate as
employers under one or more Multiemployer Plan makes a complete or partial
withdrawal from any such Multiemployer Plan and the plan sponsor of such
Multiemployer Plans notifies such withdrawing employer that such employer has
incurred a withdrawal liability requiring payments in an amount exceeding
$3,000,000.
(n) JUDGMENT. A judgment or order for the payment of money which causes
the aggregate amount of all such judgments to exceed $3,000,000 in any Fiscal
Year shall be entered against the Borrower or any of its Subsidiaries by any
court and such judgment or order shall continue undischarged or unstayed for a
period of thirty (30) days.
SECTION 12.2. REMEDIES. Upon the occurrence of an Event of Default,
with the consent of the Required Lenders, the Administrative Agent may, or
upon the request of the Required Lenders, the Administrative Agent shall, by
notice to the Borrower:
(a) ACCELERATION; TERMINATION OF CREDIT FACILITIES. Declare the
principal of and interest on the Loans, the Notes and the Reimbursement
Obligations at the time outstanding, and all other amounts owed to the Lenders
and to the Administrative Agent under this Agreement or any of the
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other Loan Documents (including, without limitation, all L/C Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit
shall have presented the documents required thereunder) and all other
Obligations, to be forthwith due and payable, whereupon the same shall
immediately become due and payable without presentment, demand, protest or
other notice of any kind, all of which are expressly waived, anything in this
Agreement or the other Loan Documents to the contrary notwithstanding, and
terminate the Credit Facilities; PROVIDED, that upon the occurrence of an
Event of Default specified in Section 12.1(j) or (k), the Credit Facilities
shall be automatically terminated and all Obligations shall automatically
become due and payable.
(b) LETTERS OF CREDIT. With respect to all Letters of Credit with
respect to which presentment for honor shall not have occurred at the time of
an acceleration pursuant to the preceding paragraph, require the Borrower at
such time to deposit in a cash collateral account opened by the Administrative
Agent an amount in cash equal to the aggregate then undrawn and unexpired
amount of such Letters of Credit. Amounts held in such cash collateral account
shall be applied by the Administrative Agent to the payment of drafts drawn
under such Letters of Credit, and the unused portion thereof after all such
Letters of Credit shall have expired or been fully drawn upon, if any, shall be
applied to repay the other Obligations. After all such Letters of Credit shall
have expired or been fully drawn upon, the Reimbursement Obligation shall have
been satisfied and all other Obligations shall have been paid in full, the
balance, if any, in such cash collateral account shall be returned to the
Borrower.
(c) RIGHTS OF COLLECTION. Exercise on behalf of the Lenders all of its
other rights and remedies under this Agreement, the other Loan Documents and
Applicable Law, in order to satisfy all of the Borrower's Obligations.
SECTION 12.3. RIGHTS AND REMEDIES CUMULATIVE; NON-WAIVER; ETC. The
enumeration of the rights and remedies of the Administrative Agent and the
Lenders set forth in this Agreement is not intended to be exhaustive and the
exercise by the Administrative Agent and the Lenders of any right or remedy
shall not preclude the exercise of any other rights or remedies, all of which
shall be cumulative, and shall be in addition to any other right or remedy
given hereunder or under the Loan Documents or that may now or hereafter
exist in law or in equity or by suit or otherwise. No delay or failure to
take action on the part of the Administrative Agent or any Lender in
exercising any right, power or privilege shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right, power or
privilege preclude other or further exercise thereof or the exercise of any
other right, power or privilege or shall be construed to be a waiver of any
Event of Default. No course of dealing between the Borrower, the
Administrative Agent and the Lenders or their respective agents or employees
shall be effective to change, modify or discharge any provision of this
Agreement or any of the other Loan Documents or to constitute a waiver of any
Event of Default.
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ARTICLE XIII
THE ADMINISTRATIVE AGENT
SECTION 13.1. APPOINTMENT. Each of the Lenders hereby irrevocably
designates and appoints First Union as Administrative Agent of such Lender
under this Agreement and the other Loan Documents and each such Lender
irrevocably authorizes First Union as Administrative Agent for such Lender,
to take such action on its behalf under the provisions of this Agreement and
the other Loan Documents and to exercise such powers and perform such duties
as are expressly delegated to the Administrative Agent by the terms of this
Agreement and such other Loan Documents, together with such other powers as
are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement or such other Loan Documents, the
Administrative Agent shall not have any duties or responsibilities, except
those expressly set forth herein and therein, or any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into this Agreement or the
other Loan Documents or otherwise exist against the Administrative Agent.
SECTION 13.2. DELEGATION OF DUTIES. The Administrative Agent may
execute any of its duties under this Agreement and the other Loan Documents
by or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents
or attorneys-in-fact selected by the Administrative Agent with reasonable
care.
SECTION 13.3. EXCULPATORY PROVISIONS. Neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates shall be (a) liable for any action lawfully taken
or omitted to be taken by it or such Person under or in connection with this
Agreement or the other Loan Documents (except for actions occasioned solely
by its or such Person's own gross negligence or willful misconduct), or (b)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Borrower or any of its Subsidiaries
or any officer thereof contained in this Agreement or the other Loan
Documents or in any certificate, report, statement or other document referred
to or provided for in, or received by the Administrative Agent under or in
connection with, this Agreement or the other Loan Documents or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or the other Loan Documents or for any failure of the Borrower or
any of its Subsidiaries to perform its obligations hereunder or thereunder.
The Administrative Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement, or to inspect the
properties, books or records of the Borrower or any of its Subsidiaries.
SECTION 13.4. RELIANCE BY THE ADMINISTRATIVE AGENT. The Administrative
Agent shall be entitled to rely, and shall be fully protected in relying,
upon any note, writing, resolution, notice, consent, certificate, affidavit,
letter, cablegram, telegram, telecopy, telex or teletype message, statement,
order 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, without
limitation, counsel to the Borrower), independent accountants and other
experts selected by the Administrative Agent. The Administrative Agent
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may deem and treat the payee of any Note as the owner thereof for all
purposes unless such Note shall have been transferred in accordance with
Section 14.10. The Administrative Agent shall be fully justified in failing
or refusing to take any action under this Agreement and the other Loan
Documents unless it shall first receive such advice or concurrence of the
Required Lenders (or, when expressly required hereby or by the relevant other
Loan Document, all the Lenders) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action except for its own gross negligence or willful
misconduct. The Administrative Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement and the Notes
in accordance with a request of the Required Lenders (or, when expressly
required hereby, all the Lenders), and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Notes.
SECTION 13.5. NOTICE OF DEFAULT. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event
of Default hereunder unless it has received notice from a Lender or the
Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event
that the Administrative Agent receives such a notice, it shall promptly give
notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders; PROVIDED that unless and until
the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders,
except to the extent that other provisions of this Agreement expressly
require that any such action be taken or not be taken only with the consent
and authorization or the request of the Lenders or Required Lenders, as
applicable.
SECTION 13.6. NON-RELIANCE ON THE ADMINISTRATIVE AGENT AND OTHER LENDERS.
Each Lender expressly acknowledges that neither the Administrative Agent nor
any of the Administrative Agent's officers, directors, employees, agents,
attorneys-in-fact, Subsidiaries or Affiliates has made any representations or
warranties to it and that no act by the Administrative Agent hereinafter taken,
including any review of the affairs of the Borrower or any of its Subsidiaries,
shall be deemed to constitute any representation or warranty by the
Administrative Agent to any Lender. Each Lender represents to the
Administrative Agent that it has, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and its Subsidiaries and made
its own decision to make its Loans and issue or participate in Letters of
Credit hereunder and enter into this Agreement. Each Lender also represents
that it will, independently and without reliance upon the Administrative Agent
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement
and the other Loan Documents, and to make such investigation as it deems
necessary to inform itself as to the business, operations, property, financial
and other condition and creditworthiness of the Borrower and its Subsidiaries.
Except for notices, reports and
72
other documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder or by the other Loan Documents, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business,
operations, property, financial and other condition or creditworthiness of
the Borrower or any of its Subsidiaries which may come into the possession of
the Administrative Agent or any of its officers, directors, employees,
agents, attorneys-in-fact, Subsidiaries or Affiliates.
SECTION 13.7. INDEMNIFICATION. The Lenders agree to indemnify the
Administrative Agent in its capacity as such and (to the extent not
reimbursed by the Borrower and without limiting the obligation of the
Borrower to do so), ratably according to their respective Extensions of
Credit, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including,
without limitation, at any time following the payment of the Notes or any
Reimbursement Obligation) be imposed on, incurred by or asserted against the
Administrative Agent in any way relating to or arising out of this Agreement
or the other Loan Documents, or any documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by the Administrative Agent under or in connection
with any of the foregoing; PROVIDED that no Lender shall be liable for the
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Administrative Agent's bad faith, gross negligence or
willful misconduct. The agreements in this Section 13.7 shall survive the
payment of the Notes, any Reimbursement Obligation and all other amounts
payable hereunder and the termination of this Agreement.
SECTION 13.8. THE ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. The
Administrative Agent and its Subsidiaries and Affiliates may make loans to,
accept deposits from and generally engage in any kind of business with the
Borrower as though the Administrative Agent were not an Administrative Agent
hereunder. With respect to any Extensions of Credit made or renewed by it
and any Note issued to it, the Administrative Agent shall have the same
rights and powers under this Agreement and the other Loan Documents as any
Lender and may exercise the same as though it were not an Administrative
Agent, and the terms "Lender" and "Lenders" shall include the Administrative
Agent in its individual capacity.
SECTION 13.9. RESIGNATION OF THE ADMINISTRATIVE AGENT; SUCCESSOR
ADMINISTRATIVE AGENT. Subject to the appointment and acceptance of a
successor as provided below, the Administrative Agent may resign at any time
by giving notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Required Lenders shall have the right to appoint a successor
Administrative Agent, which successor shall have minimum capital and surplus
of at least $500,000,000 and, if no Default or Event of Default has occurred
or is continuing, be reasonably acceptable to the Borrower. If no successor
Administrative Agent shall have been so appointed by the Required Lenders
and, if applicable, accepted by the Borrower, or such appointee shall not
have accepted such appointment within thirty (30) days after the
Administrative Agent's giving of notice of resignation, then the
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which successor shall have minimum capital and surplus
of at least $500,000,000. Upon the acceptance of any appointment as
Administrative Agent
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hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. After any retiring Administrative Agent's resignation hereunder
as Administrative Agent, the provisions of this Article XIII shall continue
in effect for its benefit in respect of any actions taken or omitted to be
taken by it while it was acting as Administrative Agent.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1. NOTICES.
(a) METHOD OF COMMUNICATION. Except as otherwise provided in this
Agreement, all notices and communications hereunder shall be in writing, or by
telephone subsequently confirmed in writing. Any notice shall be effective if
delivered by hand delivery or sent via telecopy, recognized overnight courier
service or certified mail, return receipt requested, and shall be presumed to
be received by a party hereto (i) on the date of delivery if delivered by hand
or sent by telecopy prior to 3:30 p.m. on such date, (ii) on the next Business
Day if sent by recognized overnight courier service and (iii) on the third
Business Day following the date sent by certified mail, return receipt
requested. A telephonic notice to the Administrative Agent as understood by
the Administrative Agent will be deemed to be the controlling and proper notice
in the event of a discrepancy with or failure to receive a confirming written
notice.
(b) ADDRESSES FOR NOTICES. Notices to any party shall be sent to it at
the following addresses, or any other address as to which all the other parties
are notified in writing.
If to the Borrower: Xxxxxxxx Industries
0000 Xxxxxxx Xxxxxx
Xx Xxxxx, XX 00000
Attention: Xxxxx X. Xxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
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With copies to: O'Melveny & Xxxxx
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
If to First Union as First Union National Bank
Administrative Agent: Xxx Xxxxx Xxxxx Xxxxxx, XX-00
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Syndication Agency Services
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
With copies to: First Union National Bank
Xxx Xxxxx Xxxxx Xxxxxx, XX-0
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxxxx Xxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Xxxxxxx Xxxxxxxxx Xxxxxxx Xxxxxxx, L.L.P.
Suite 4200
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
If to any Lender: To the Address set forth on SCHEDULE 1.1(a)
hereto
(c) ADMINISTRATIVE AGENT'S OFFICE. The Administrative Agent hereby
designates its office located at the address set forth above, or any subsequent
office in the United States which shall have been specified for such purpose by
written notice to the Borrower and Lenders, as the Administrative Agent's
Office referred to herein, to which payments due are to be made and at which
Extensions of Credit will be disbursed.
SECTION 14.2. EXPENSES; INDEMNITY. The Borrower will (a) pay all
out-of-pocket expenses of the Administrative Agent in connection with: (i)
the preparation, execution and delivery of this Agreement and each other Loan
Document, whenever the same shall be executed and delivered, including
without limitation all out-of-pocket syndication and due diligence expenses
and reasonable fees and disbursements of counsel for the Administrative Agent
and (ii) the preparation, execution and delivery of any waiver, amendment or
consent by the Administrative
75
Agent or the Lenders relating to this Agreement or any other Loan Document,
including without limitation reasonable fees and disbursements of counsel for
the Administrative Agent, (b) at any time after a Default has occurred and is
continuing (or at any time thereafter with respect to any of the following
undertaken during the existence of a Default), pay all reasonable
out-of-pocket expenses of the Administrative Agent and, if such Default is an
Event of Default, each Lender actually incurred in connection with the
administration and enforcement of any rights and remedies of the
Administrative Agent and Lenders under the Credit Facilities, including
consulting with appraisers, accountants, engineers, attorneys and other
Persons concerning the nature, scope or value of any right or remedy of the
Administrative Agent or any Lender hereunder or under any other Loan Document
or any factual matters in connection therewith, which expenses shall include
without limitation the reasonable fees and disbursements of such Persons, and
(c) defend, indemnify and hold harmless the Administrative Agent and the
Lenders, and their respective parents, Subsidiaries, Affiliates, employees,
agents, officers and directors, from and against any losses, penalties, fines,
liabilities, settlements, damages, costs and expenses, suffered by any such
Person in connection with any claim, investigation, litigation or other
proceeding (whether or not the Administrative Agent or any Lender is a party
thereto) and the prosecution and defense thereof, arising out of or in any way
connected with the Agreement, any other Loan Document or the Loans, including
without limitation reasonable attorney's and consultant's fees, except to the
extent that any of the foregoing directly result from the gross negligence or
willful misconduct of the party seeking indemnification therefor.
SECTION 14.3. SET-OFF In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
upon and after the occurrence of any Event of Default and during the
continuance thereof, the Lenders and any assignee or participant of a Lender
in accordance with Section 14.10 are hereby authorized by the Borrower at any
time or from time to time, without notice to the Borrower or to any other
Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, time or
demand, including, but not limited to, indebtedness evidenced by certificates
of deposit, whether matured or unmatured) and any other indebtedness at any
time held or owing by the Lenders, or any such assignee or participant to or
for the credit or the account of the Borrower against and on account of the
Obligations irrespective of whether or not (a) the Lenders shall have made any
demand under this Agreement or any of the other Loan Documents or (b) the
Administrative Agent shall have declared any or all of the Obligations to be
due and payable as permitted by Section 12.2 and although such Obligations
shall be contingent or unmatured.
SECTION 14.4. GOVERNING LAW. This Agreement, the Notes and the other
Loan Documents, unless otherwise expressly set forth therein, shall be
governed by, construed and enforced in accordance with the laws of the State
of North Carolina, without reference to the conflicts or choice of law
principles thereof.
SECTION 14.5. CONSENT TO JURISDICTION. The Borrower hereby irrevocably
consents to the personal jurisdiction of the state and federal courts located
in Mecklenburg County, North Carolina, in any action, claim or other
proceeding arising out of any dispute in connection with this Agreement, the
Notes and the other Loan Documents, any rights or obligations hereunder or
thereunder, or the performance of such rights and obligations. The Borrower
hereby irrevocably
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consents to the service of a summons and complaint and other process in any
action, claim or proceeding brought by the Administrative Agent or any Lender
in connection with this Agreement, the Notes or the other Loan Documents, any
rights or obligations hereunder or thereunder, or the performance of such
rights and obligations, on behalf of itself or its property, in the manner
specified in Section 14.1. Nothing in this Section 14.5 shall affect the right
of the Administrative Agent or any Lender to serve legal process in any other
manner permitted by Applicable Law or affect the right of the Administrative
Agent or any Lender to bring any action or proceeding against the Borrower or
its properties in the courts of any other jurisdictions.
SECTION 14.6. BINDING ARBITRATION; WAIVER OF JURY TRIAL.
(a) BINDING ARBITRATION. Upon demand of any party, whether made before
or after institution of any judicial proceeding, any dispute, claim or
controversy arising out of, connected with or relating to the Notes or any
other Loan Document ("Disputes"), between or among parties to the Notes or any
other Loan Document, shall be resolved by binding arbitration as provided
herein; PROVIDED, that if demand is made after institution of judicial
proceedings, such demand must be made within 120 days after the date such
proceedings are instituted. Institution of a judicial proceeding by a party
does not waive the right of that party to demand arbitration hereunder.
Disputes may include, without limitation, tort claims, counterclaims, claims
brought as class actions, claims arising from Loan Documents executed in the
future, or claims concerning any aspect of the past, present or future
relationships arising out of or connected with the Loan Documents.
Arbitration shall be conducted under and governed by the Commercial Financial
Disputes Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association and Title 9 of the U.S. Code. All arbitration
hearings shall be conducted in Charlotte, North Carolina. The expedited
procedures set forth in Rule 51, ET SEQ. of the Arbitration Rules shall be
applicable to claims of less than $1,000,000. All applicable statutes of
limitation shall apply to any Dispute. A judgment upon the award may be
entered in any court having jurisdiction. The panel from which all
arbitrators are selected shall be comprised of licensed attorneys. The single
arbitrator selected for expedited procedure shall be a retired judge from the
highest court of general jurisdiction, state or federal, of the state where
the hearing will be conducted. Notwithstanding the foregoing, this paragraph
shall not apply to any Hedging Agreement that is a Loan Document.
(B) JURY TRIAL. TO THE EXTENT PERMITTED BY LAW, THE ADMINISTRATIVE
AGENT, EACH LENDER AND THE BORROWER HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR THE
OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR
THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
(c) PRESERVATION OF CERTAIN REMEDIES. Notwithstanding the preceding
binding arbitration provisions, the parties hereto and the other Loan
Documents preserve, without diminution, certain remedies that such Persons may
employ or exercise freely, either alone, in conjunction with or during a
Dispute. Each such Person shall have and hereby reserves the right to proceed
in any court of proper jurisdiction or by self help to exercise or prosecute
the following
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remedies: (i) all rights to foreclose against any real or personal property
or other security by exercising a power of sale granted in the Loan Documents
or under applicable law or by judicial foreclosure and sale, (ii) all rights
of self help including peaceful occupation of property and collection of
rents, set off, and peaceful possession of property, (iii) obtaining
provisional or ancillary remedies including injunctive relief, sequestration,
garnishment, attachment, appointment of receiver and in filing an involuntary
bankruptcy proceeding, and (iv) when applicable, a judgment by confession of
judgment. Preservation of these remedies does not limit the power of an
arbitrator to grant similar remedies that may be requested by a party in a
Dispute.
SECTION 14.7. REVERSAL OF PAYMENTS. To the extent the Borrower makes a
payment or payments to the Administrative Agent for the ratable benefit of the
Lenders or the Administrative Agent receives any payment or proceeds of the
collateral which payments or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds repaid, the Obligations or part thereof
intended to be satisfied shall be revived and continued in full force and
effect as if such payment or proceeds had not been received by the
Administrative Agent.
SECTION 14.8. INJUNCTIVE RELIEF.
(a) The Borrower recognizes that, in the event the Borrower fails to
perform, observe or discharge any of its obligations or liabilities under this
Agreement, any remedy of law may prove to be inadequate relief to the Lenders.
Therefore, the Borrower agrees that the Lenders, at the Lenders' option, shall
be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.
(b) The Administrative Agent, Lenders and Borrower (on behalf of itself
and its Subsidiaries) hereby agrees that no such Person shall have a remedy of
punitive or exemplary damages against any other party to a Loan Document and
each such Person hereby waives any right or claim to punitive or exemplary
damages that they may now have or may arise in the future in connection with
any Dispute, whether such Dispute is resolved through arbitration or
judicially.
SECTION 14.9. ACCOUNTING MATTERS. All financial and accounting
calculations, measurements and computations made for any purpose relating to
this Agreement, including, without limitation, all computations utilized by
the Borrower or any Subsidiary thereof to determine compliance with any
covenant contained herein, shall, except as otherwise expressly contemplated
hereby or unless there is an express written direction by the Administrative
Agent and Required Lenders to the contrary agreed to by the Borrower, be
performed in accordance with GAAP as in effect on the Closing Date. In the
event that changes in GAAP shall be mandated by the Financial Accounting
Standards Board, or any similar accounting body of comparable standing, shall
be recommended by the Borrower's certified public accountants or shall be
required by Governmental Authorities, to the extent that such changes would
modify such accounting terms or the interpretation or computation thereof,
such changes shall be followed in defining such accounting terms only from and
after the date the Borrower and the Required Lenders shall have
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amended this Agreement to the extent necessary to reflect any such changes in
the financial covenants and other terms and conditions of this Agreement.
SECTION 14.10. SUCCESSORS AND ASSIGNS; PARTICIPATIONS.
(a) BENEFIT OF AGREEMENT. This Agreement shall be binding upon and
inure to the benefit of the Borrower, the Administrative Agent and the
Lenders, all future holders of the Notes, and their respective successors and
assigns, except that the Borrower shall not assign or transfer any of its
rights or obligations under this Agreement without the prior written consent
of each Lender.
(b) ASSIGNMENT BY LENDERS. Each Lender may, with the consent of the
Administrative Agent and, so long as no Default or Event of Default shall have
occurred and be continuing, the Borrower, which consents shall not be
unreasonably withheld, assign to one or more Eligible Assignees all or a
portion of its interests, rights and obligations under this Agreement
(including, without limitation, all or a portion of the Obligations at the time
owing to it and the Notes held by it); PROVIDED that:
(i) each such assignment shall be of a constant, and not a
varying, percentage of all the assigning Lender's rights and obligations
under this Agreement;
(ii) except for assignments to a Lender, if less than all of the
assigning Lender's Commitment is to be assigned, the Commitment so
assigned shall not be less than $5,000,000;
(iii) the parties to each such assignment shall execute and
deliver to the Administrative Agent, for its acceptance and recording in
the Register, an Assignment and Acceptance in the form of EXHIBIT H
attached hereto (an "Assignment and Acceptance"), together with any Note
or Notes subject to such assignment;
(iv) such assignment shall not, without the consent of the Borrower,
require the Borrower to file a registration statement with the Securities
and Exchange Commission or apply to or qualify the Loans or the Notes
under the blue sky laws of any state; and
(v) the assigning Lender shall pay to the Administrative Agent an
assignment fee of $3,500 upon the execution by such Lender of the
Assignment and Acceptance; PROVIDED that no such fee shall be payable upon
any assignment by a Lender to an Affiliate thereof.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective
date shall be at least five (5) Business Days after the execution thereof, (A)
the assignee thereunder shall be a party hereto and, to the extent provided in
such Assignment and Acceptance, have the rights and obligations of a Lender
hereby and (B) the Lender thereunder shall, to the extent provided in such
assignment, be released from its obligations under this Agreement.
79
(c) RIGHTS AND DUTIES UPON ASSIGNMENT. 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 set forth in such Assignment and Acceptance.
(d) REGISTER. The Administrative Agent shall maintain a copy of each
Assignment and Acceptance delivered to it and a register for the recordation
of the names and addresses of the Lenders and the amount of the Obligations
with respect to each Lender from time to time (the "Register"). The entries
in the Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Administrative Agent and the Lenders may treat each person whose
name is recorded in the Register as a Lender hereunder for all purposes of
this Agreement. The Register shall be available for inspection by the
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(e) ISSUANCE OF NEW NOTES. Upon its receipt of an Assignment and
Acceptance executed by an assigning Lender and an Eligible Assignee together
with any Note or Notes subject to such assignment and the written consent to
such assignment, the Administrative Agent shall, if such Assignment and
Acceptance has been completed and is substantially in the form of EXHIBIT H:
(i) accept such Assignment and Acceptance;
(ii) record the information contained therein in the Register;
(iii) give prompt notice thereof to the Lenders and the Borrower;
and
(iv) promptly deliver a copy of such Assignment and Acceptance to
the Borrower.
Within five (5) Business Days after receipt of notice, the Borrower shall
execute and deliver to the Administrative Agent, in exchange for the
surrendered Note or Notes, a new Note or Notes to the order of such Eligible
Assignee in amounts equal to the Commitment assumed by it pursuant to such
Assignment and Acceptance and a new Note or Notes to the order of the
assigning Lender in an amount equal to the Commitment retained by it
hereunder. Such new Note or Notes shall be in an aggregate principal amount
equal to the aggregate principal amount of such surrendered Note or Notes,
shall be dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of the assigned Notes delivered to the
assigning Lender. Each surrendered Note or Notes shall be canceled and
returned to the Borrower.
(f) PARTICIPATIONS. Each Lender may sell participations to one or more
banks or other financial institutions in all or a portion of its rights and/or
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment and the Notes held by it); PROVIDED that:
(i) each such participation shall be in an amount not less than
$5,000,000;
80
(ii) such Lender's obligations under this Agreement (including,
without limitation, its Commitment) shall remain unchanged;
(iii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations;
(iv) such Lender shall remain the holder of the Notes held by it for
all purposes of this Agreement;
(v) the Borrower, the Administrative Agent and the other Lenders
shall continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Agreement;
(vi) such Lender shall not permit such participant the right to
approve any waivers, amendments or other modifications to this Agreement
or any other Loan Document other than waivers, amendments or modifications
which would reduce the principal of or the interest rate on any Loan or
Reimbursement Obligation, extend the term or increase the amount of the
Commitment, reduce the amount of any fees to which such participant is
entitled, extend any scheduled payment date for principal of any Loan or,
except as expressly contemplated hereby or thereby, release substantially
all of the Collateral; and
(vii) any such disposition shall not, without the consent of the
Borrower, require the Borrower to file a registration statement with the
Securities and Exchange Commission or to apply to qualify the Loans or the
Notes under the blue sky laws of any state.
(g) DISCLOSURE OF INFORMATION; CONFIDENTIALITY. Except as required by
law or order or demand of any Governmental Authority, the Administrative Agent
and the Lenders shall hold all non-public information with respect to the
Borrower and its Subsidiaries obtained pursuant to the Loan Documents in
accordance with their customary procedures for handling confidential
information; PROVIDED, that the Administrative Agent may disclose information
relating to this Agreement to Gold Sheets and other similar bank trade
publications, such information to consist of deal terms and other information
customarily found in such publications; and PROVIDED, FURTHER, that the
Administrative Agent and Lenders may disclose information relating to this
Agreement to their Affiliates, attorneys, accountants and other
representatives, each of whom shall be advised of, and shall be subject to,
the confidentiality provisions set forth herein, and in connection with any
litigation between the Lenders and the Borrower. In the event that the
Administrative Agent or any Lender is required by any Governmental Authority
to disclose any non-public information with respect to the Borrower, the
Administrative Agent and Lenders agree that, unless legally prohibited, they
will provide the Borrower with prompt notice of any such requirement to enable
the Borrower to seek an appropriate protective order. Any Lender may, in
connection with any assignment, proposed assignment, participation or proposed
participation pursuant to this Section 14.10, disclose to the assignee,
participant, proposed assignee or proposed participant, any information
relating to the Borrower furnished to such Lender by or on behalf of the
Borrower; PROVIDED, that prior to any such disclosure, each such assignee,
proposed assignee, participant or proposed
81
participant shall agree with the Borrower or such Lender to preserve the
confidentiality of any confidential information relating to the Borrower
received from such Lender.
(h) CERTAIN PLEDGES OR ASSIGNMENTS. Nothing herein shall prohibit any
Lender from pledging or assigning any Note to any Federal Reserve Bank in
accordance with Applicable Law.
SECTION 14.11. AMENDMENTS, WAIVERS AND CONSENTS. Except as set forth
below, any term, covenant, agreement or condition of this Agreement or any of
the other Loan Documents may be amended or waived by the Lenders, and any
consent given by the Lenders, if, but only if, such amendment, waiver or
consent is in writing signed by the Required Lenders (or by the Administrative
Agent with the consent of the Required Lenders) and delivered to the
Administrative Agent and, in the case of an amendment, signed by the Borrower;
PROVIDED, that no amendment, waiver or consent shall
(a) (i) increase the Revolving Credit Commitment of any Lender,
(ii) reduce the rate of interest or fees payable on any Revolving Credit
Loan, the Revolving Credit Commitment, any Letter of Credit or
Reimbursement Obligation, (iii) extend the originally scheduled time or
times of payment of the principal of any Revolving Credit Loan or
Reimbursement Obligation or the time or times of payment of interest on
any Revolving Credit Loan, the Revolving Credit Commitment, any Letter of
Credit or Reimbursement Obligation or any fee or commission with respect
thereto, (iv) reduce or waive the principal amount of any Revolving Credit
Loan or Reimbursement Obligation, (v) permit the subordination of the
principal of and interest on any Revolving Credit Loan or Reimbursement
Obligation or (vi) extend the time of the obligation of the Revolving
Commitment Lenders to make or issue or participate in Letters of Credit,
in any case, without the written consent of each Lender holding Revolving
Credit Loans or a Revolving Credit Commitment,
(b) (i) increase the Term Loan Commitment of any Lender, (ii)
reduce the rate of interest or fees payable on any Term Loan, (iii) reduce
or waive the principal amount of any Term Loan, (iv) permit any
subordination of the principal of or interest on any Term Loan or (v)
extend the originally scheduled time or times of payment of the principal
of any Term Loan or the time or times of payment of interest on any Term
Loan or any fee or commission with respect thereto, in any case, without
the written consent of each Lender holding a Term Loan, or
(c) release any portion of the Collateral or release any
Security Document (other than as specifically permitted in this Agreement
or the applicable Security Document), amend the provisions of this Section
14.11, or amend the definition of Required Lenders without the written
consent of each Lender.
In addition, no amendment, waiver or consent to the provisions of (a) Article
XIII shall be made without the written consent of the Administrative Agent and
(b) Article III without the written consent of the Issuing Lender.
82
SECTION 14.12. PERFORMANCE OF DUTIES. The Borrower's obligations under
this Agreement and each of the Loan Documents shall be performed by the
Borrower at its sole cost and expense.
SECTION 14.13. ALL POWERS COUPLED WITH INTEREST. All powers of attorney
and other authorizations granted to the Lenders, the Administrative Agent and
any Persons designated by the Administrative Agent or any Lender pursuant to
any provisions of this Agreement or any of the other Loan Documents shall be
deemed coupled with an interest and shall be irrevocable so long as any of the
Obligations remain unpaid or unsatisfied or the Credit Facilities have not
been terminated.
SECTION 14.14. SURVIVAL OF INDEMNITIES. Notwithstanding any termination
of this Agreement, the indemnities to which the Administrative Agent and the
Lenders are entitled under the provisions of this Article XIV and any other
provision of this Agreement and the Loan Documents shall continue in full
force and effect and shall protect the Administrative Agent and the Lenders
against events arising after such termination as well as before.
SECTION 14.15. TITLES AND CAPTIONS. Titles and captions of Articles,
Sections and subsections in this Agreement are for convenience only, and
neither limit nor amplify the provisions of this Agreement.
SECTION 14.16. SEVERABILITY OF PROVISIONS. Any provision of this
Agreement or any other Loan Document which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective only to the
extent of such prohibition or unenforceability without invalidating the
remainder of such provision or the remaining provisions hereof or thereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 14.17. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and shall be binding upon all parties, their successors and assigns, and all
of which taken together shall constitute one and the same agreement.
SECTION 14.18. TERM OF AGREEMENT. This Agreement shall remain in effect
from the Closing Date through and including the date upon which all
Obligations shall have been indefeasibly and irrevocably paid and satisfied in
full. The Administrative Agent is hereby permitted to release all Liens on
the Collateral in favor of the Administrative Agent, for the ratable benefit
of itself and the Lenders, upon repayment of the outstanding principal of and
all accrued interest on the Loan, payment of all outstanding fees and expenses
hereunder and the termination of the Lenders' Commitments. No termination of
this Agreement shall affect the rights and obligations of the parties hereto
arising prior to such termination.
83
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers, all as of the day and year first
written above.
[CORPORATE SEAL] XXXXXXXX INDUSTRIES
By: /s/ Xxxxxx Xxxxx
--------------------------------------
Xxxxxx Xxxxx
--------------------------------------
President and Chief Executive Officer
--------------------------------------
[CORPORATE SEAL] STERLING ELECTRONICS CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------------
Xxxxxx Xxxxxxx
--------------------------------------
Chairman and Chief Executive Officer
--------------------------------------
FIRST UNION NATIONAL BANK,
as Administrative Agent and Lender
By: /s/ XXXXXX X. XXXXXXX
--------------------------------------
Xxxxxx X. Xxxxxxx
--------------------------------------
Vice President
--------------------------------------
ABN AMRO BANK, N.V.
By: /s/ XXXXXXX X. XXXXXX
--------------------------------------
Xxxxxxx X. Xxxxxx
--------------------------------------
Vice President
--------------------------------------
By: /s/ XXXX X. XXXXXXX
--------------------------------------
Xxxx X. Xxxxxxx
--------------------------------------
Vice President
--------------------------------------
THE BANK OF NEW YORK
By: /s/ XXXXXXX X. XXXXXX
--------------------------------------
Xxxxxxx X. Xxxxxx
--------------------------------------
Vice President
--------------------------------------
COMERICA BANK
By: /s/ XXXXXXXX X. XXXXXXXXXX
--------------------------------------
Xxxxxxxx X. Xxxxxxxxxx
--------------------------------------
Assistant Vice President
--------------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ XXXXX X. XXXXX
--------------------------------------
Xxxxx X. Xxxxx
--------------------------------------
Vice President
--------------------------------------
NATIONSBANK OF TEXAS, N.A.
By: /s/ XXXXXX X. XXXXXXX
--------------------------------------
Xxxxxx X. Xxxxxxx
--------------------------------------
Vice President
--------------------------------------
UNION BANK OF CALIFORNIA, N.A.
By: /s/ XXXXX XXXX
--------------------------------------
Xxxxx Xxxx
--------------------------------------
Vice President
--------------------------------------
XXXXX FARGO BANK, NATIONAL
ASSOCIATION
By: /s/ XXXXXX X. XXXXXX
--------------------------------------
Xxxxxx X. Xxxxxx
--------------------------------------
Vice President
--------------------------------------
BANQUE NATIONAL DE PARIS
By: /s/ XXXXX XXXXXXX
--------------------------------------
Xxxxx Xxxxxxx
--------------------------------------
Senior Vice President
--------------------------------------
By: /s/ XXXXXXX X. XXXX
--------------------------------------
Xxxxxxx X. Xxxx
--------------------------------------
Vice President
--------------------------------------
BANK OF MONTREAL
By: /s/ XXXXXX X. PEER
--------------------------------------
Xxxxxx X. Peer
--------------------------------------
Director
--------------------------------------
ADDENDUM, EXHIBITS AND SCHEDULES
ADDENDUM
Addendum A - Terms Respecting Joinder of Sterling as a Borrower to
the Credit Agreement
EXHIBITS
--------
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Term Loan Notes
Exhibit C-1 - Form of Notice of Revolving Credit Borrowing
Exhibit C-2 - Form of Notice of Term Loan Borrowing
Exhibit C-3 - Form of Notice of Conversion/Continuation
Exhibit C-4 - Form of Letter of Credit Application
Exhibit D - Form of Notice of Payment
Exhibit E - Form of Notice of Account Designation
Exhibit F - Form of Officer's Certificate
Exhibit G - Form of Assignment and Acceptance
Exhibit H-1 - Form of Xxxxxxxx Pledge Agreement
Exhibit H-2 - Form of Subsidiary Pledge Agreement
Exhibit I - Form of Guaranty Agreement
SCHEDULES
---------
Schedule 1.1(a) - Lenders and Commitments
Schedule 1.1(b) - Existing Facilities
Schedule 6.2 - Inactive Subsidiaries
Schedule 7.1(a) - Jurisdictions of Organization and Qualification
Schedule 7.1(b) - Subsidiaries and Capitalization
Schedule 7.1(h) - Environmental Matters
Schedule 7.1(i) - ERISA Plans
Schedule 7.1(l) - Material Contracts
Schedule 7.1(m) - Labor and Collective Bargaining Agreements
Schedule 7.1(t) - Debt and Guaranty Obligations
Schedule 7.1(u) - Litigation
Schedule 11.3 - Existing Liens
Schedule 11.4 - Existing Loans, Advances and Investments
ADDENDUM A
This is the Addendum A (the "Addendum") referred to in and made part of
the Credit Agreement (the "Credit Agreement") dated as of January 16, 1998 by
and among Xxxxxxxx Industries ("Xxxxxxxx"), Sterling Electronics Corporation
("Sterling," and collectively with Xxxxxxxx, the "Borrower"), the Lenders party
thereto and First Union National Bank, as Administrative Agent. This Addendum
sets forth the terms of Sterling's status as a Borrower under the Credit
Agreement and is hereby incorporated by reference into the Credit Agreement.
A. DEFINED TERMS.
1. Undefined capitalized terms used in this Addendum shall have the
meanings assigned thereto in the Credit Agreement.
2. The Sterling Lease Guaranty and the Sterling Synthetic Lease are
attached hereto as EXHIBIT A and EXHIBIT B, respectively.
B. STATUS AS A BORROWER; JOINT AND SEVERAL LIABILITY, ETC.
1. Xxxxxxxx and Sterling agree that Sterling is a Borrower under the
Credit Agreement, and except as otherwise set forth herein Sterling shall
comply with and be subject to and have the benefit of all of the terms,
covenants (other than the financial covenants set forth in Article X of the
Credit Agreement which shall apply to Xxxxxxxx and its Subsidiaries on a
Consolidated basis), agreements and obligations set forth in the Credit
Agreement and the other Loan Documents.
2. Sterling and Xxxxxxxx shall each be jointly and severally liable for
all of the Obligations under the Credit Agreement and the Notes, subject in the
case of Sterling to Paragraph D below.
3. Sterling and Xxxxxxxx each separately shall make all representations
and warranties included in the Credit Agreement; PROVIDED that the reference to
the Borrower in Section 7.1(p)(i) shall be deemed to be a reference to
Xxxxxxxx.
4. Except as required by Paragraph E.1 of this Addendum, Sterling shall
not be obligated to execute the Guaranty Agreement.
C. CREDIT AGREEMENT REFERENCES.
In connection with the status of Sterling as a Borrower under the Credit
Agreement and the other Loan Documents, (a) except to the extent that the
context of the Credit Agreement, this Addendum or any other Loan Document
otherwise requires any reference to the term "Borrower"
in the singular to be a reference to Xxxxxxxx only, any reference to the term
"Borrower" in the singular in the Credit Agreement, this Addendum and the
other Loan Documents shall be a reference to both Xxxxxxxx and Sterling and
(b) except to the extent that the context of the Credit Agreement, this
Addendum or any other Loan Document otherwise requires any reference to the
"Borrower and its Subsidiaries" or other similar reference to be a reference
to both Xxxxxxxx and Sterling and their Subsidiaries, any reference to the
term "Borrower and its Subsidiaries" shall be deemed to refer to Xxxxxxxx and
its Subsidiaries.
D. LIMITATIONS ON STERLING'S LIABILITY FOR THE OBLIGATIONS.
At any time and from time to time, Sterling's liability under the Credit
Agreement shall equal the lesser of (1) the total amount of the Obligations
under the Credit Agreement and (2) the maximum amount of the Obligations which
would not cause Sterling to be in default under the covenants or any other
term or provision of the Sterling Lease Guaranty. It is the intention of the
parties to the Credit Agreement that Sterling be a Borrower under the Credit
Agreement, jointly and severally liable for the repayment of the Obligations,
to the maximum extent that would still permit Sterling to remain in compliance
with the terms and provisions of the Sterling Lease Guaranty. This Addendum
shall terminate and no longer have any effect upon the termination of
Sterling's obligations under the Sterling Lease Guaranty; PROVIDED that
Sterling shall have satisfied each provision set forth in Paragraph E of this
Addendum.
E. RELEASE OF STERLING AS A BORROWER.
1. Upon the termination of Sterling's obligations under the Sterling
Lease Guaranty through the payment in full of the Sterling Synthetic Lease,
the provision by Sterling or Xxxxxxxx of a letter of credit to secure the
obligations of the lessee under the Sterling Synthetic Lease or otherwise, the
form of which termination shall be in form and substance reasonably
satisfactory to the Administrative Agent, Sterling shall execute and deliver
to the Administrative Agent each document and agreement required to be
delivered under Section 9.13 of the Credit Agreement and shall satisfy each
term, covenant and condition applicable to it as a Material Subsidiary of
Xxxxxxxx set forth therein in a manner acceptable to the Administrative Agent.
Upon Sterling's execution and delivery to the Administrative Agent of each
document and agreement required to be delivered under Section 9.13 of the
Credit Agreement and Sterling's satisfaction of each term, covenant and
condition applicable to it as a Material Subsidiary of Xxxxxxxx set forth
therein in a manner acceptable to the Administrative Agent, (i) Sterling shall
be released from its obligations as a Borrower under the Credit Agreement and
this Addendum shall terminate and no longer have any effect and (ii) each
reference in the Credit Agreement to the Borrower shall be a reference to
Xxxxxxxx only and not to Sterling.
2. Upon the release of Sterling from its obligations under the Credit
Agreement and this Addendum in the manner set forth in Paragraph E.1 hereof,
the original Notes executed by Xxxxxxxx and Sterling shall be cancelled and
delivered to Xxxxxxxx, and amended and restated Notes shall be executed by
Xxxxxxxx in replacement thereof.
3. The Administrative Agent shall notify each Lender in writing upon the
satisfaction of the conditions set forth in Paragraph E.1.
F. COVENANTS.
Xxxxxxxx shall use its good faith efforts, as determined in the reasonable
discretion of the Administrative Agent, to terminate Sterling's obligations
under the Sterling Lease Guaranty through the payment in full of the Sterling
Synthetic Lease, the provision by Sterling of a letter of credit to secure the
obligations of the lessee under the Sterling Synthetic Lease or otherwise, the
form of which termination shall be in form and substance reasonably
satisfactory to the Administrative Agent.
G. CLOSING CONDITIONS.
Each of Sterling and Xxxxxxxx shall comply with all of the closing
conditions applicable to the Borrower in the Credit Agreement and each will
cause their Subsidiaries to comply with any applicable Credit Agreement closing
conditions.
H. MISCELLANEOUS.
1. This Addendum shall be read in conjunction with the Credit Agreement
and shall form a part of the Credit Agreement.
2. Subject to the final sentence of Paragraph D and the final sentence
of paragraph E.1, this Addendum shall remain in full force and effect so long
as any of the Obligations are outstanding and unpaid or any Commitment is
outstanding.
