Exhibit 10.2
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SDI OPERATING PARTNERS, L.P.
AND THE SUBSIDIARIES SET FORTH
ON SCHEDULE I HERETO
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NOTE PURCHASE AGREEMENT
Dated as of September 30, 1997
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7.66% Senior Notes due 2002
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TABLE OF CONTENTS
Page
SECTION 1. ISSUANCE OF NOTES..................................................1
1.1. Authorization..............................................1
1.2. Purchase and Sale of Notes; the Closing....................1
1.3. Representations of the Purchaser...........................2
1.4. Surcharge Rate.............................................2
SECTION 2. REPRESENTATIONS OF THE COMPANY.....................................2
2.1. Organization and Good Standing.............................3
2.2. Power and Authority; Validity of Agreement.................3
2.3. No Violation of Laws or Agreements.........................3
2.4. Material Contracts.........................................3
2.5. Compliance.................................................3
2.6. Litigation.................................................4
2.7. Title to Assets............................................4
2.8. Partnership Interests......................................4
2.9. Capital Stock..............................................4
2.10. Accuracy of Information; Full Disclosure...................4
2.11. Taxes and Assessments......................................5
2.12. Indebtedness...............................................6
2.13. Management Agreements......................................6
2.14. Subsidiaries and Investments...............................6
2.15. ERISA......................................................6
2.16. Fees and Commissions.......................................7
2.17. No Extension of Credit for Securities......................7
2.18. Hazardous Wastes, Substances and Petroleum Products........7
2.19. Solvency...................................................8
2.20. Investment Company Act.....................................8
2.21. Private Offering by the Company............................8
2.22. Solvency...................................................8
2.23. Foreign Assets Control Regulations.........................9
SECTION 3. CONDITIONS OF CLOSING..............................................9
3.1. Proceedings Satisfactory...................................9
3.2. Opinion of Special Counsel.................................9
3.3. Opinion of Counsel for the Company.........................9
3.4. Authorization Documents; Officer's Certificate.............9
3.5. Legality...................................................9
3.6. Financial Information......................................9
3.7. Private Placement Number..................................10
3.8. Prepayment of Existing Notes..............................10
Page
3.9. Credit Agreement..........................................10
3.10. The Conversion............................................10
3.11. Commitment Fee............................................10
SECTION 4. PREPAYMENT OF THE NOTES...........................................10
4.1. Mandatory Repayments of the Notes.........................10
4.2. Optional Prepayment of the Notes..........................10
4.3. Notice of Prepayment; Make-Whole Computations.............11
4.4. Allocation of Prepayments.................................11
4.5. Surrender of Notes; Notation Thereon......................11
4.6. Purchase of Notes.........................................11
4.7. Special Prepayment for Change of Control..................12
4.8. Prepayment in Connection with a Sale of Material Assets...12
SECTION 5. AFFIRMATIVE COVENANTS.............................................13
5.1. Existence and Good Standing..............................13
5.2. Quarterly Financial Statements...........................13
5.3. Annual Financial Statements..............................13
5.4. Cash Flow Projections....................................14
5.5. Public Information.......................................14
5.6. Books and Records........................................14
5.7. Properties; Insurance....................................14
5.8. Notices..................................................14
5.9. Taxes....................................................15
5.10. Compliance; Notification.................................15
5.11. ERISA....................................................16
5.12. Capitalization Ratio.....................................16
5.13. Fixed Charge Coverage Ratio..............................16
5.14. Leverage Ratio...........................................16
5.15. Management Changes.......................................16
5.16. Subsequent Credit Terms..................................17
5.17. Use of Proceeds..........................................17
5.18. Transactions Among Affiliates............................17
5.19. Other Information........................................17
SECTION 6. NEGATIVE COVENANTS. .............................................17
6.1. Indebtedness..............................................17
6.2. Guaranties................................................18
6.3. Loans.....................................................18
6.4. Liens and Encumbrances....................................18
6.5. Additional Negative Pledge................................19
Page
6.6. Restricted Payments.......................................19
6.7. Transfer of Assets........................................19
6.8. Acquisitions and Investments..............................19
6.9. Use of Proceeds...........................................20
6.10. Amendment of Documents....................................20
6.11. Payment of Loan...........................................20
SECTION 7. DEFINITIONS.......................................................20
7.1. Definitions...............................................20
7.2. Rules of Construction.....................................30
SECTION 8. EVENTS OF DEFAULT; REMEDIES.......................................30
8.1. Events of Default.........................................30
8.2. Acceleration; Suits for Enforcement.......................32
8.3. Remedies Cumulative.......................................33
8.4. Remedies Not Waived.......................................33
SECTION 9. GUARANTY..........................................................33
9.1. Guaranty..................................................33
9.2. Bankruptcy................................................33
9.3. Nature and Term of Guaranty...............................34
9.4. Rights and Remedies.......................................34
9.5. Actions by Holders of the Notes Not Affecting Guaranty....34
9.6. Payment in Accordance with Notes and this Agreement.......34
9.7. Payments Under Guaranty...................................35
9.8. Waivers and Modifications.................................35
9.9. Waiver....................................................35
9.10. Subordination of Rights of Subrogation....................35
9.11. No Setoff by Guarantors...................................36
9.12. Continuing Guaranty; Transfer of Note.....................36
9.13. Representations and Warranties; Covenants.................36
SECTION 10. REGISTRATION, TRANSFER AND EXCHANGE OF NOTES......................36
SECTION 11. LOST, ETC., NOTES.................................................37
SECTION 12. AMENDMENT AND WAIVER..............................................37
SECTION 13. HOME OFFICE PAYMENT...............................................38
SECTION 14. LIABILITIES OF THE PURCHASER......................................39
Page
SECTION 15. TAXES.............................................................39
SECTION 16. MISCELLANEOUS.....................................................39
16.1. Expenses.................................................39
16.2. Reliance on and Survival of Representations..............40
16.3. Successors and Assigns...................................40
16.4. Notices..................................................40
16.5. Reproduction of Documents................................40
16.6. Law Governing............................................41
16.7. Headings.................................................41
16.8. Counterparts.............................................41
SCHEDULE I - The Subsidiaries party to this Agreement
SCHEDULE II - Manner of Payment and Notice
EXHIBIT A - Form of Note
EXHIBIT B - Disclosures of the Company and its Subsidiaries
EXHIBIT C - Covenant Compliance Certificate
SDI OPERATING PARTNERS, L.P.
AND ITS SUBSIDIARIES SET FORTH ON
SCHEDULE I HERETO
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
NOTE PURCHASE AGREEMENT
Philadelphia, Pennsylvania
as of September 30, 1997
TEACHERS INSURANCE AND
ANNUITY ASSOCIATION OF AMERICA
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
SDI OPERATING PARTNERS, L.P., a Delaware limited partnership (the
"Company"), and its Subsidiaries set forth on Schedule I hereto (the
"Subsidiaries" and collectively with the Company, the "Obligors"), hereby agree
with you as follows:
I. ISSUANCE OF NOTES.
A. Authorization. The Company has duly authorized an issue of
$60,000,000 aggregate principal amount of its 7.66% Senior Notes due 2002 (the
"Notes"). Each Note shall be substantially in the form annexed hereto as Exhibit
A. As used herein, (i) the term "Notes" shall include all notes originally
issued pursuant to this Agreement and all notes delivered in substitution or
exchange for any of said notes pursuant to this Agreement and, where applicable,
shall include the singular number as well as the plural and (ii) the term "Note"
shall mean one of the Notes.
B. Purchase and Sale of Notes; the Closing. The Company shall sell to
you and, subject to the terms and conditions hereof, you shall purchase from the
Company, Notes in the aggregate principal amount of $60,000,000, at a price
equal to 100% of such amount. The closing of the purchases of Notes by you
hereunder shall be held at 10:00 a.m., Philadelphia time, on September 30, 1997
(the "Closing Date") at the office of Pepper, Xxxxxxxx & Xxxxxxx LLP, 3000 Two
Xxxxx Square, 00xx xxx Xxxx Xxxxxxx, Xxxxxxxxxxxx, XX 00000. On the Closing
Date, the Company will deliver to you one or more Notes, in any denominations
(multiples of $1,000), in the aggregate principal amount to be purchased by you,
all as you may specify by timely notice
to the Company (or, in the absence of such notice, one Note to be purchased by
you registered in your name), duly executed and dated the Closing Date, against
your delivery to the Company of such purchase price.
C. Representations of the Purchaser. You represent to the Company as
follows:
1. You are purchasing the Notes to be purchased by you on the
ClosingDate for investment and not with a view to the distribution or sale of
the Notes, subject, however, to any requirement of law that your property be at
all times within your control.
2. The source of your funds to pay the purchase price of the Notes
is an "insurance company general account" (as the term is defined in Prohibited
Transaction Exemption 95-60 (issued by the Department of Labor on July 12,
1995)) in respect of which the reserves and liabilities (as defined by the
annual statement for life insurance companies approved by the National
Association of Insurance Commissioners (the "NAIC Annual Statement")) for the
general account contract(s) held by or on behalf of any employee benefit plan
together with the amount of the reserves and liabilities for the general account
contract(s) held by or on behalf of any other employee benefit plans maintained
by the same employer (or affiliate thereof as defined in said Prohibited
Transaction Exemption 95-60) or by the same employee organization in the general
account do not exceed 10% of the total reserves and liabilities of the general
account (exclusive of separate account liabilities) plus surplus as set forth in
the NAIC Annual Statement filed with your state of domicile.
3. You understand that the Notes have not been registeredunder the
Securities Act of 1933, as amended, and may be resold only if registered
pursuant to the provisions of the Securities Act of 1933, as amended, or if an
exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law, and that the
Company is not required to register the Notes.
D. Surcharge Rate. Notwithstanding the interest rate set forth in
Paragraph 1.1 hereof and in the Notes , the Company shall pay interest on the
Notes at the rate of 7.91% (the "Surcharge Rate") (i) for the period from the
Closing Date to December 31, 1997 and (ii) thereafter if for the Rolling Period
ended on or immediately prior to the date of the interest payment then being
made, the Leverage Ratio is equal to or greater than 2.75 to 1.
II. REPRESENTATIONS OF THE COMPANY. Each of the Obligors and Guarantors
represents and warrants to you that:
A. Organization and Good Standing. Each of the Company and SDIPI is a
limited partnership duly formed and validly existing under the laws of the state
of Delaware, and has the power and authority to carry on its business as now
conducted. Each Subsidiary and each Guarantor (other than SDIPI) is duly
organized and existing and in good standing under the laws of the jurisdiction
of its incorporation, and has the power and authority to carry on its business
as now conducted. Each of the Company and Guarantors is qualified to do business
in all other states in which the failure to qualify would have a Material
Adverse Effect.
B. Power and Authority; Validity of Agreement. Each of the Obligors and
Guarantors has the power and authority under Delaware law and under its
organizational documents to enter into and perform this Agreement, the Notes and
all other agreements, documents and actions required hereunder, to the extent
each is a party thereto; and all actions necessary or appropriate for the
Obligors' and Guarantors' execution and performance of this Agreement, the
Notes, and all other agreements, documents and actions required hereunder, to
the extent it is a party hereto, have been taken, and, upon their execution, the
same will constitute the valid and binding obligations of the Obligors and
Guarantors to the extent each is a party thereto, enforceable in accordance with
their terms.
C. No Violation of Laws or Agreements. The making and performance of
this Agreement, the Notes, and the other documents, agreements and actions
required of the Obligors and Guarantors hereunder, to the extent each is a party
thereto, will not violate any provisions of any law or regulation, federal,
state or local, or the respective organizational documents of the Obligors or
Guarantors or result in any breach or violation of, or constitute a default
under, any agreement or instrument by which either the Obligors, Guarantors or
their respective property may be bound, including without limitation the Credit
Agreement and the Indenture.
D. Material Contracts. None of the Guarantors or the Obligors is a
party to or in any manner obligated under any contracts material to their
respective business except this Agreement, the Notes, their organizational
documents, the Promissory Notes, the Credit Agreement, the Indenture, and the
agreements identified on Exhibit B hereto and there exists no material default
under any of such contracts.
E. Compliance. Each of the Guarantors and the Obligors is in compliance
in all material respects with all applicable laws and regulations, federal,
state and local (including without limitation those administered by the Local
Authorities) material to the conduct of its business and operations; the
Guarantors and the Obligors possess all the material franchises, authorizations,
patents, copyrights, trademarks, permits and licenses necessary or required in
the conduct of their respective businesses, and, except as may be described on
Exhibit B, the same are valid, binding, enforceable and subsisting without any
material defaults thereunder; and, except as described on Exhibit B, no
authorization, consent, approval, waiver, license or exemptions from, nor any
filing, declaration or registration with, any court, governmental agency or
regulatory authority (federal, state or local) or non-governmental entity, under
the terms of contracts or otherwise, is required by reason of or in connection
with the Obligors' and the Guarantors' execution and performance of this
Agreement, the Notes and all other agreements, documents and actions required
hereunder to the extent each is a party hereto and thereto.
F. Litigation. Except as set forth on Exhibit B hereto, there are no
actions, suits, proceedings or claims which are pending or, to the best of the
Guarantors' and the Obligors' knowledge or information, threatened against any
of the Guarantors or the Obligors which, if adversely resolved, would be
reasonably likely to have a Material Adverse Effect.
G. Title to Assets. Except as set forth on Exhibit B hereto, each
Obligor and Guarantor has good and marketable title to substantially all of its
properties and assets as
reflected in the financial statements of SunSource Inc. and its Consolidated
Subsidiaries most recently delivered to you pursuant to Paragraphs 3.6, 5.2 and
5.3 hereof, free and clear of any liens and encumbrances, except the security
interests permitted pursuant to Paragraph 6.4 hereof and all such assets are in
good order and repair and fully covered by the insurance required pursuant to
Paragraph 5.7 hereof.
H. Partnership Interests. The number and percentage of partnership
interests in the Company and SDIPI and the ownership thereof, effective upon the
conversion, are accurately set forth on Exhibit B attached hereto; all such
interests are validly existing and the creation and sale thereof are in
compliance with all applicable federal and state securities and other applicable
laws; the ownership thereof is free and clear of any liens and encumbrances or
other contractual restrictions except as set forth in the Partnership
Agreements, and SDIPI is the general partner of the Company.
I. Capital Stock. The number of shares and classes of the capital stock
of each Subsidiary, SunSub A and SunSub B and the ownership thereof, effective
upon the Conversion, are accurately set forth on Exhibit B attached hereto; all
such shares are validly existing, fully paid and non-assessable, and the
issuance and sale thereof are in compliance with all applicable federal and
state securities and other applicable laws; and the shareholders' ownership
thereof is free and clear of any liens or encumbrances or other contractual
restrictions.
J. Accuracy of Information; Full Disclosure.
1. All information furnished to you concerning the financial
condition of SunSource Inc. and its Consolidated Subsidiaries, including
SunSource L.P. and its Consolidated Subsidiaries', SDIPI's, and the Guarantors'
respective annual financial statements for the period ending December 31, 1996,
and SunSource L.P. and its Consolidated Subsidiaries' consolidated interim
financial statement for the period ending June 30, 1997, copies of which have
been furnished to you, have been prepared in accordance with GAAP (except that
the annual financial statements of SDIPI were prepared on a tax basis, not a
GAAP basis) and fairly present the financial condition of SDIPI, Guarantors and
SunSource L.P. and its Consolidated Subsidiaries as of the dates and for the
periods covered and discloses liabilities of SDIPI, Guarantors and SunSource
L.P. and its Consolidated Subsidiaries required to be disclosed under GAAP and,
except on the date hereof for the effect of the Conversion, there has been no
Material Adverse Change from the date of such statements to the date hereof; and
2. All financial statements and other documents furnished by
SunSource L.P., SDIPI, Guarantors and SunSource Inc. and its subsidiaries to you
in connection with this Agreement and the Notes do not and will not contain any
untrue statement of material fact or omit to state a material fact necessary in
order to make the statements contained therein not misleading. The Company and
Guarantors have disclosed to you in writing any and all facts which materially
and adversely affect the business, properties, operations or condition,
financial or otherwise, of Guarantors and the Obligors' or the Obligors' or
Guarantors' ability to perform their respective obligations under this Agreement
and the Notes.
K. Taxes and Assessments.
1. Each of the Guarantors and the Company has duly and timely
filed all information and tax returns and reports with all federal, state, local
or foreign governmental taxing authorities, bodies or agencies; and all taxes,
including without limitation income, gross receipt, sales, use, excise and any
other taxes, and any governmental charges, penalties, interest or fines with
respect thereto, due and payable by Guarantors and the Company have been paid,
withheld or reserved for in accordance with GAAP or, to the extent they relate
to periods on or prior to the date of the financial statements delivered from
time to time pursuant to Paragraphs 3.6, 5.2 and 5.3 hereof (the "Financial
Statements"), are reflected as a liability on the Financial Statements in
accordance with GAAP.
2. Each of the Guarantors and the Obligors has properly withheld
all amounts determined by them to be required by law to be withheld for income
taxes and unemployment taxes including without limitation, all amounts required
with respect to social security and unemployment compensation, relating to its
employees, and has remitted such withheld amounts in a timely manner to the
appropriate taxing authority, agency or body.
3. As of the date of this Agreement, none of the federalincome tax
information returns of SDIPI or the Company has been audited. Except as set
forth on Exhibit B hereto, neither Guarantors nor Obligors have entered into any
agreements for the extension of time for the assessment of any tax or tax
delinquency, nor has any of them received outstanding and unresolved notices
from the Internal Revenue Service or any other state, local or foreign taxing
authority, agency or body of any proposed examination or of any proposed change
in reported information which may result in a deficiency or assessment against
Guarantors or Obligors and there are no suits, actions, claims, investigations,
inquiries or proceedings now pending against Guarantors or Obligors in respect
of taxes, governmental charges or assessments.
L. Indebtedness. Guarantors and Obligors have no presently outstanding
Indebtedness or obligations including contingent obligations and obligations
under leases of property from others, except the Loan, the Junior Subordinated
Debentures, the Indebtedness and obligations described either on Exhibit B
hereto or in Guarantors' or the Company's financial statements which have been
furnished to you and Indebtedness permitted to be incurred pursuant to Paragraph
6.1 hereof. There exists no default with respect to the payment of principal or
interest under any such outstanding Indebtedness. The Indebtedness under the
Loan ranks pari passu and equal to the Indebtedness evidenced by the Notes,
without any priority. The Junior Subordinated Debentures rank junior and are
subordinated to the Indebtedness evidenced by the Notes, and all other
Indebtedness of the Company and Guarantors ranks either pari passu or junior to
the Indebtedness evidenced by the Notes.
M. Management Agreements. The Company is a party to no other material
management or consulting agreements for the provision of services to the
Company, except as described in Exhibit B hereto.
N. Subsidiaries and Investments. Obligors have no Subsidiaries or
Affiliates, or investments in or loans to any other individuals or business
entities, except as described in Exhibit B hereto and except as are permitted to
be acquired or created pursuant to Paragraph 6.8 hereof.
O. ERISA. Each Plan maintained by Guarantors or Obligors and each ERISA
Affiliate is, as of its most recently completed annual report, in compliance in
all material respects with all applicable provisions of ERISA and the
regulations promulgated thereunder; and, except as set forth in Exhibit B
hereto:
1. Neither Guarantors, Obligors nor any ERISA Affiliatemaintains or
contributes to or has maintained or contributed to any multiemployer plan (as
defined in Section 4001 of ERISA) under which Guarantors, Obligors, or any ERISA
Affiliate could have any withdrawal liability;
2. Neither Guarantors, Obligors, nor any ERISA Affiliate, sponsors
or maintains any Plan under which there is an Accumulated Funding Deficiency,
whether or not waived;
3. The aggregate liability for accrued benefits and otherancillary
benefits under each Plan that is or will be sponsored or maintained by
Guarantors, Obligors or any ERISA Affiliate (determined on the basis of the
actuarial assumptions prescribed for valuing benefits under terminating
single-employer defined benefit plans under Title IV of ERISA) does not exceed
the aggregate fair market value of the assets under each such defined benefit
pension Plan;
4. Neither Guarantors, Obligors nor any ERISA Affiliate has
liability arising out of or relating to a failure of any Plan to comply with the
provisions of ERISA or the Code;
5. There does not exist any unfunded liability (determined on the
basis of actuarial assumptions utilized by the actuary for the Plan in preparing
the most recent Annual Report) of Guarantors, the Obligors or any ERISA
Affiliate under any plan, program or arrangement providing post-retirement life
or health benefits; and
6. The matters described on Exhibit B attached hereto referencing
clauses (a) through (e) this Paragraph 2.15, would not, either singly or in the
aggregate, have a Material Adverse Effect.
The execution, sale and delivery of the Notes hereunder will not
involve any prohibited transaction within the meaning of ERISA or Section 4975
of the Code. The representation by the Company in the preceding sentence is made
in reliance upon and subject to the accuracy of your representation in Paragraph
1.3(b) of this Agreement.
P. Fees and Commissions. The Obligors owe no fees or commissions of any
kind, and know of no claim for any fees or commissions, in connection with the
Obligors' issuing the Notes except (i) those set forth in the Credit Agreement
and (ii) those provided herein.
Q. No Extension of Credit for Securities. Guarantors and Obligors are
not now, nor at any time have they been, engaged principally, or as one of their
important activities, in the business of extending or arranging for the
extension of credit, for the purpose of purchasing or carrying any margin stock
or margin securities; nor will the proceeds of the Notes be used by the Company
directly or indirectly, for such purposes.
R. Hazardous Wastes, Substances and Petroleum Products. Except as set
forth in Exhibit B hereto:
1. Each of the Guarantors and the Obligors: (i) has received all
permits and filed all notifications necessary to carry on their respective
business(es); and (ii) is in compliance in all respects with all Environmental
Control Statutes except with respect to immaterial instances of noncompliance of
which it has no knowledge.
2. Neither Guarantors nor Obligors have given any written or oral
notice, nor has it failed to give required notice, to the Environmental
Protection Agency ("EPA") or any state or local agency with regard to any actual
or imminently threatened removal, spill, release or discharge of Hazardous
Substances on properties owned, leased or operated by Guarantors or Obligors or
used in connection with the conduct of its business and operations.
3. Neither Guarantors nor Obligors have received notice that it is
potentially responsible for the performance of or payment of costs relating to
clean-up or remediation of any actual or imminently threatened spill, release or
discharge of Hazardous Substances pursuant to any Environmental Control Statute.
S. Solvency. To the best of SunSource Inc.'s knowledge, SunSource Inc.
and its Consolidated Subsidiaries are, on a consolidated basis, upon the
Conversion and after receipt and application of the proceeds of the sale of the
Notes will be, solvent such that (i) the fair value of their assets (including
without limitation the fair salable value of the goodwill and other intangible
property of SunSource Inc. and its Consolidated Subsidiaries) is greater than
the total amount of their liabilities, including without limitation, contingent
liabilities, (ii) the present fair salable value of their assets (including
without limitation the fair salable value of the goodwill and other intangible
property of SunSource Inc. and its Consolidated Subsidiaries) is not less than
the amount that will be required to pay the probable liability on their debts as
they become absolute and matured, and (iii) they are able to realize upon their
assets and pay their debts and other liabilities, contingent obligations and
other commitments as they mature in the normal course of business. SunSource
Inc. and its Consolidated Subsidiaries (i) do not intend to, and do not believe
that they will, incur debts or liabilities beyond their ability to pay as such
debts and liabilities mature, or (ii) are not engaged in a business or
transaction, or about to engage in a business or transaction, for which their
property would constitute unreasonably small capital after giving due
consideration to the prevailing practice and industry in which they are engaged.
For purposes of this Paragraph 2.19, in computing the amount of contingent
liabilities at any time, it is intended that such liabilities will be computed
at the amount which, in light of all the facts and circumstances existing at
such time, represents the amount that reasonably can be expected to become an
actual matured liability.
T. Investment Company Act. Neither the Obligors nor Guarantors are
directly or indirectly controlled by or acting on behalf of any person which is
an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
U. Private Offering by the Company. Neither the Company, nor any
partner thereof, nor anyone acting on behalf of the Company, or any partner
thereof, has offered the Notes or any similar securities for sale to, or
solicited any offer to buy any of the same from, or otherwise approached or
negotiated in respect thereof with, any person other than you. Neither the
Company, nor any partner thereof, nor anyone acting on behalf of the Company, or
any partner thereof, has taken, or will take, any action which would subject the
issuance or sale of the Notes to Section 5 of the Securities Act of 1933, as
amended.
V. Solvency. The Company is, and upon giving effect to the issuance of
the Notes will be, a "solvent institution", as said term is used in Section
1405(c) of the New York Insurance Law, whose "obligations are not in default as
to principal or interest", as said terms are used in said Section 1405(c).
W. Foreign Assets Control Regulations. Neither the execution, sale nor
delivery by the Company of the Notes nor its use of the proceeds thereof will
violate the Foreign Assets Regulations, the Foreign Funds Control Regulations,
the Transaction Control Regulations, the Cuban Assets Control Regulations, the
Iranian Transaction Regulations, or the Iraqi Sanctions Regulations of the
United States Treasury Department (31 C.F.R. Subtitle B, Chapter V, as amended).
III. CONDITIONS OF CLOSING. Your obligation to purchase and pay for the
Notes to be purchased by you hereunder shall be subject to the conditions
hereinafter set forth:
A. Proceedings Satisfactory. All proceedings taken in connection with
the issue of the Notes and the consummation of the transactions contemplated
hereby and all documents and papers relating thereto shall be satisfactory to
you and your special counsel, and you and your special counsel shall have
received copies of such documents and papers, all in form and substance
satisfactory to you and your special counsel, as you or they may reasonably
request in connection therewith.
B. Opinion of Special Counsel. You shall have received an opinion dated
the Closing Date from Milbank, Tweed, Xxxxxx & XxXxxx, your special counsel, in
form and substance satisfactory to you.
C. Opinion of Counsel for the Company. You shall have received an
opinion dated the Closing Date from Xxxxxx, Xxxxx & Bockius LLP, counsel for the
Company and Guarantors, in form and substance satisfactory to you.
D. Authorization Documents; Officer's Certificate. The Company shall
deliver to you those documents it is required to deliver to Banks pursuant to
Paragraphs 5.1(b) and 5.1(h) of the Credit Agreement.
E. Legality. On the Closing Date, the Notes to be purchased by you
hereunder shall be a legal investment for you under the laws of each
jurisdiction to which you may be subject (without resort to any basket provision
of said laws such as New York Insurance Law Section 1405(a)(8)) (unless you have
waived such requirement), and you shall have received such certificates or other
evidence as you may reasonably request demonstrating the legality of such
purchase under such laws.
F. Financial Information. The Company shall have furnished to you: (i)
a pro forma schedule of assets and liabilities of SunSource Inc. and its
Consolidated Subsidiaries setting forth all SunSource Inc.'s and its
Consolidated Subsidiaries' Indebtedness, certified as accurate by the chief
financial officer of SunSource Inc.; (ii) cash flow projections for SunSource
Inc. and its Consolidated Subsidiaries on a consolidated basis, for the three
(3) year period immediately following the date hereof, satisfactory to you and
certified as reasonable by the chief financial officer or controller of
SunSource Inc. (such cash flow projections shall take into account the
transactions contemplated by this Agreement and shall identify the sources of
cash the Company intends to use to meet its needs during such three year
period); (iii) financial projections for SunSource Inc. and its Consolidated
Subsidiaries for the period from closing through December 31, 2001 on a
consolidated basis satisfactory to you and (iv) a certificate with respect to
the matters set forth in Paragraph 2.19 hereof.
G. Private Placement Number. The Company shall have delivered to you a
certificate or other satisfactory evidence that Standard & Poor's CUSIP Service
Bureau has assigned a private placement number with respect to the Notes.
H. Prepayment of Existing Notes. In connection with the Conversion, the
Company shall simultaneously prepay the entire aggregate principal amount of its
Senior Notes due 2002 (together with the agreed upon make whole premium) and the
holders of such Notes shall have waived, pursuant to an instrument in form and
substance satisfactory to you, the refunding restrictions applicable thereto.
I. Credit Agreement. The Company shall, simultaneously with the
execution hereof, have entered into the Credit Agreement in the form theretofore
provided to you which shall be in full force and effect.
J. The Conversion. The Company shall complete the Conversion as
outlined in SEC Form S-4 Registration Statement dated December 31, 1996, as
amended.
K. Commitment Fee. The Company shall have paid to you a commitment fee
of .25% on the entire principal amount of the Notes.
L. Insurance. The Company shall have provided you with certificates of
insurance with respect to all of the Obligors' fire, casualty, liability and
other insurance covering its respective property and business.
M. Other Documents. The Company shall provide you with the Declaration
of Trust of the Trust, the Indenture, and such additional documents as you
reasonably may request.
IV. PREPAYMENT OF THE NOTES.
A. Mandatory Repayments of the Notes. As provided therein, the entire
unpaid principal amount of the Notes shall be due and payable on September 30,
2002.
B. Optional Prepayment of the Notes.
1. Upon notice given as provided in Paragraph 4.3, the Company, at
its option, may at any time prepay the Notes as a whole or from time to time in
part (in multiples of $100,000), in each case at the principal amount so to be
prepaid, together with interest accrued thereon to the date fixed for such
prepayment, plus (subject to Paragraph 4.2(b) below) an amount equal to the
Make-Whole Amount for each such Note. Each prepayment pursuant to this Paragraph
4.2 shall be allocated as provided in Paragraph 4.4.
2. Notwithstanding anything to the contrary in Paragraph 4.2(a)
above, the Company may apply Designated Disposition Proceeds in an amount not to
exceed $15,000,000 to the prepayment of the Notes pursuant to Paragraph 4.2(a)
without payment of any Make-Whole Amount.
C. Notice of Prepayment; Make-Whole Computations.
1. The Company shall call the Notes for prepayment pursuant to
Paragraph 4.2 by giving written notice thereof to each holder of any Note, which
notice shall be given not less than 30 nor more than 60 days prior to the date
fixed for such prepayment in such notice and shall specify the amount so to be
prepaid and the date fixed for such prepayment. Upon the giving of notice of any
prepayment as provided in this Paragraph, the Company will prepay on the date
therein fixed for prepayment the principal amount of the Notes so to be prepaid
as specified in such notice, together with interest accrued thereon to such date
fixed for prepayment, plus (subject to Paragraph 4.2(b)) the applicable
Make-Whole Amount (if any).
2. Three business days prior to any prepayment pursuant to Paragraph
4.2, the Company will furnish to each holder of a Note an Officer's Certificate
setting forth in reasonable detail the calculation of the Make-Whole Amount (if
any) in connection with such prepayment and attaching a copy of the source of
the market data by reference to which the applicable Treasury Yields were
determined in connection with such computations.
D. Allocation of Prepayments. In the event of any prepayment of less
than all of the outstanding Notes pursuant to Paragraph 4.2, the Company will
allocate the principal amount so to be prepaid (but only in units of $1,000)
among all outstanding Notes pro rata according to the respective principal
amounts thereof.
E. Surrender of Notes; Notation Thereon. Subject to the provisions of
Section 13, the Company may, as a condition of payment of all or any part of the
principal of, premium, if any, and interest on, any Note, require the holder to
present such Note for notation of such payment and, if such Note be paid in
full, require the surrender thereof.
F. Purchase of Notes. The Company will not, and will not permit any of
its Subsidiaries to, acquire directly or indirectly by purchase or prepayment or
otherwise any of the outstanding Notes except by way of payment or prepayment in
accordance with the provisions of the Notes and of this Agreement.
G. Special Prepayment for Change of Control. Promptly and in any event
within five days after a Change of Control, the Company will give notice thereof
to the holders of all outstanding Notes, which notice shall (i) refer
specifically to this Paragraph 4.7, (ii) specify the Change of Control
Prepayment Date and the Response Date (each as defined below) in respect thereof
and (iii) offer to prepay all Notes at the unpaid principal amount of such
Notes, together with interest accrued thereon to the Change of Control
Prepayment Date on the date specified in such notice (the "Change of Control
Prepayment Date"), which date shall be not less than 30 nor more than 60 days
after the date of such notice. Each holder of a Note shall notify the Company of
such holder's acceptance or rejection of such offer by giving notice of such
acceptance or rejection to the Company on a date (the "Change of Control
Response Date") not more than 20 days after the date of the notice required to
be given by the Company pursuant to the first sentence of this Paragraph 4.7
(which notice given by such holder shall be binding upon such holder and the
Company). The failure by the holder of a Note to respond to such offer on or
before the Change of Control Response Date shall be deemed to be a rejection of
such offer. On the Change of Control Prepayment Date, the Company shall prepay,
and there shall become due and payable, all of the Notes held by the holders by
whom such offer has been accepted in accordance with this Paragraph 4.7 at a
price in respect of each Note held by each such holder equal to the unpaid
principal amount of such Note, together with interest accrued thereon to the
Change of Control Prepayment Date.
H. Prepayment in Connection with a Sale of Material Assets. If at any
time the Company is required to offer to apply any Net Cash Proceeds of any
asset disposition to the prepayment of the Notes as contemplated by Paragraph
6.7 (including any Designated Disposition Proceeds not applied by the Company to
the prepayment of the Notes pursuant to Paragraph 4.2), the Company will give
written notice thereof to the holders of all outstanding Notes, which notice
shall (i) refer specifically to this Paragraph 4.8, (ii) specify the Asset
Disposition Prepayment Date and the Response Date (each as defined below) in
respect thereof, (iii) set forth (x) the aggregate Net Cash Proceeds to be
applied to the retirement of the Indebtedness, (y) the Noteholders' Applicable
Share and (z) the amount of such Noteholders'
Applicable Share allocable to each Note, determined by allocating such
Noteholders' Applicable Share pro rata among all outstanding Notes according to
the respective unpaid principal amounts thereof, and (iv) offer to prepay a
principal amount of each Note equal to such Noteholders' Applicable Share so
allocable to such Note, on the date therein specified (the "Asset Disposition
Prepayment Date"), which shall be not less than 30 nor more than 60 days after
the date of the giving of such notice. Any such prepayment shall be at the
principal amount so to be prepaid, together with interest accrued thereon to the
date fixed for such prepayment. Each holder of a Note shall notify the Company
of such holder's acceptance or rejection of such offer by giving written notice
of such acceptance or rejection to the Company on a date (the "Asset Disposition
Response Date") not more than 20 days after the date of the notice required to
be given by the Company pursuant to the first sentence of this Paragraph 4.8
(which notice given by such holder shall be binding upon such holder and the
Company). The failure by the holder of a Note to respond to such offer on or
before the Asset Disposition Response Date shall be deemed to be a rejection of
such offer. On the Asset Disposition Prepayment Date, the Company shall prepay,
and there shall become due and payable, the applicable portion of the Notes held
by the holders by whom such offer has been accepted in accordance with this
Paragraph 4.8 at a price in respect of each Note held by each such holder equal
to the principal amount of such Note so to be prepaid, together with interest
accrued thereon to the Asset Disposition Prepayment Date. Any such Net Cash
Proceeds which are not applied to the prepayment of the Notes pursuant to the
foregoing provisions of this Paragraph 4.8 due to a rejection of the Company's
offer shall be applied by the Company to the prepayment of the debt outstanding
under the Credit Agreement and the permanent reduction of the commitment
thereunder as set forth in the Credit Agreement.
V. AFFIRMATIVE COVENANTS. The Obligors and Guarantors covenant and agree
that so long as any Note shall be outstanding hereunder, each of the Obligors
and Guarantors will (and with respect to Paragraph 5.11, the Obligors will cause
each ERISA Affiliate) to:
A. Existence and Good Standing. Preserve and maintain its existence as
a limited partnership or corporation, as applicable, and its good standing in
all states in which it conducts business and the validity of all its material
franchises, licenses and permits required in the conduct of its business.
B. Quarterly Financial Statements. Furnish each holder of a Note within
forty-five (45) days of the end of each quarterly fiscal period hereafter, other
than the last quarterly fiscal period in the fiscal year, with unaudited
quarterly consolidated financial statements of SunSource Inc. and its
Consolidated Subsidiaries, in form and substance as required by GAAP, including
for each such quarter (i) a consolidated balance sheet; (ii) a consolidated
statement of income; (iii) a consolidated statement of cash flows; and (iv) a
certificate in the form of Exhibit C attached hereto executed by the chief
financial officer or controller of SunSource Inc. showing the calculation of the
covenants set forth in Paragraphs 5.12 through 5.14 and Section Six hereof
prepared in accordance with GAAP consistently applied and stating that the
financial statements fairly present the financial condition of SunSource Inc.
and its Consolidated Subsidiaries as of the date and for the periods covered and
that as of the date of such certificate there exists no violation of any
provision of this Agreement or the happening of any Event of Default or Default.
C. Annual Financial Statements. Furnish each holder of a Note within
ninety (90) days after the close of each fiscal year commencing with fiscal 1997
with audited consolidated annual financial statements of SunSource Inc. and its
Consolidated Subsidiaries, including the financial statements, certificate in
the form of Exhibit C attached hereto and information required under Paragraph
5.2 hereof, which consolidated financial statements shall be prepared in
accordance with GAAP. The financial statements delivered pursuant to (i) above
shall be certified without qualification (except with respect to changes in GAAP
as to which SunSource Inc.'s independent certified public accountants have
concurred) by an independent certified public accounting firm satisfactory to
the Required Holders; and SunSource Inc. shall cause each holder of a note to be
furnished, at the time of the completion of the annual audit, with a certificate
signed by such accountants showing the calculation of the covenants set forth in
Paragraphs 5.12 through 5.14 and Section Six hereof and stating that to the best
of their knowledge there exists no violations of any provisions of this
Agreement or the happening of any Event of Default or Default hereunder.
D. Cash Flow Projections. Furnish to each holder of a Note, on or
before March 31 of each year, commencing with fiscal year 1998, cash flow
projections of SunSource Inc. and its Consolidated Subsidiaries on a
consolidated basis for the twelve (12) month period ending on December 31 of
such year.
E. Public Information. Deliver to each holder of a Note, promptly upon
transmission thereof, copies of all such financial statements, proxy statements,
notices and reports as the Company shall send to its limited partners or to the
Banks or to the holders of the Junior Subordinated Debentures, copies of all
registration statements (without exhibits), and all annual, quarterly or other
reports which the Company or the Guarantors files with the Securities and
Exchange Commission (or any governmental body or agency succeeding to the
functions of the Securities and Exchange Commission) including without
limitation, Form 10Q and Form 10K, and copies of all auditors' annual management
letters delivered to SunSource Inc., the Company or a Guarantor.
F. Books and Records. Keep and maintain satisfactory and adequate books
and records of account in accordance with GAAP and make or cause the same to be
made available to each holder of a Note or their agents or nominees at any
reasonable time during normal business hours upon reasonable notice for
inspection and to make extracts thereof and permit any holder of the Notes to
discuss contents of same with senior officers of SunSource Inc., the Obligors or
a Guarantor and also with outside auditors and accountants of SunSource Inc.,
the Obligors or a Guarantor.
G. Properties; Insurance. Keep and maintain all of its property and
assets in good order and repair and materially covered by insurance with
reputable and financially sound insurance companies against such hazards and in
such amounts as is customary in the industry, under policies requiring the
insurer to furnish reasonable notice to you and opportunity to cure any
non-payment of premiums prior to termination of coverage; and, as required
above, furnish each holder of a Note with certificates of such insurance.
H. Notices. Notify each holder of a Note in writing immediately of (i)
the institution of any litigation, the commencement of any administrative
proceedings, the happening of any event or the assertion or threat of any claim
which might reasonably be expected to have a Material Adverse Effect, (ii) the
occurrence of any Event of Default or Default hereunder or (iii) any notice
delivered to the Trustee from SunSource Inc. or the holder of any Senior
Indebtedness (as defined in the Indenture) in respect of Section 14.06 of the
Indenture.
I. Taxes. Pay and discharge all taxes, assessments or other
governmental charges or levies imposed on it or any of its property or assets
prior to the date on which any penalty for non-payment or late payment is
incurred, unless the same are (a) being contested in good faith by appropriate
proceedings and (b) are covered by appropriate reserves maintained in cash or
cash equivalents in accordance with GAAP.
J. Compliance; Notification.
1. Except to the extent that noncompliance would not have a Material
Adverse Effect, comply in all respects with all local, state and federal laws
and regulations applicable to its business, including without limitation the
Environmental Control Statutes, the Securities Act of 1933, as amended, and all
laws and regulations of the Local Authorities, and the provisions and
requirements of all franchises, permits, licenses and other like grants of
authority held by the Obligors or Guarantors; and notify each holder of a Note
immediately in detail of any actual or alleged failure to comply with, failure
to perform, breach, violation or default under any such laws or regulations or
under the terms of any of such franchises, permits, certificates, licenses or
grants of authority, or of the occurrence or existence of any facts or
circumstances which with the passage of time, the giving of notice or otherwise
could create such a failure, breach, violation or default or could occasion the
termination of any of such franchises, permits, certificates, licenses or grants
of authority, except to the extent that such matter would not have a Material
Adverse Effect.
2. With respect to the Environmental Control Statutes, promptly
notify each holder of a Note when, in connection with the conduct of the
Company's businesses or operations, any person (including, without limitation,
EPA or any state or local agency) provides oral or written notification to the
Company or Guarantors or the Company or Guarantors otherwise become aware of a
condition with regard to an actual or imminently threatened removal, spill,
release or discharge of hazardous or toxic wastes, substances or petroleum
products that requires notification to the applicable governmental authority
under an Environmental Control Statute and would have an Environmental Material
Adverse Effect; and notify each holder of a Note in detail promptly upon the
receipt by the Obligors or Guarantors of an assertion of liability under the
Environmental Control Statutes, of any actual or alleged failure to comply with
or perform, breach, violation or default under any such statutes or regulations
or of the occurrence or existence of any facts, events or circumstances which
with the passage of time, the giving of notice, or both, could create such a
breach, violation or default and would have an Environmental Material Adverse
Effect.
3. With respect to each disclosure previously made to each holder of
a Note pursuant to Exhibit B attached hereto or Paragraph 5.10(b) hereof
regarding alleged or actual liability under Environmental Control Statutes, not
later than twenty (20) days after the last day of each fiscal quarter, deliver
to each holder of a Note a report describing (i) the estimated dollar amount,
when initially determined, of any such liability (including costs of
investigation and remediation) and if any such initial estimate with respect to
a disclosed matter shall be modified thereafter by more than $1,000,000, the
modified dollar amount; and (ii) any information or change in circumstances
regarding actual or alleged liability under Environmental Control Statutes of
the Obligors or Guarantors, if the effect thereof would be to increase liability
in connection with the investigation or remediation with respect thereto by more
than $1,000,000.
K. ERISA. (a) Comply, and cause any Plan maintained for the employees
of SDIPI, Guarantors or Obligors to comply, in all material respects with the
provisions of ERISA; (b) not incur any material Accumulated Funding Deficiency
or any material liability to the PBGC (as established by ERISA); (c) permit any
event to occur (i) as described in Section 4042 of ERISA or (ii) which may
result in the imposition of a lien on its properties or assets; and (d) notify
you in writing promptly after it has come to the attention of senior management
of Guarantors or the Company of the assertion or threat of any "reportable
event" or other event described in Section 4042 of ERISA (relating to the
soundness of a Plan), except those with respect to which the PBGC has waived the
30 day notice rule, or the PBGC's ability to assert a material liability against
it) or impose a lien on Guarantors' or the Company's properties or assets.
L. Capitalization Ratio. Maintain a Capitalization Ratio not to exceed:
(i) with respect to the last day of each of the first two fiscal quarters in
each fiscal year, sixty-two percent (62%) and (ii) with respect to the last day
of each of the last two fiscal quarters of each fiscal year, sixty percent
(60%).
M. Fixed Charge Coverage Ratio. Maintain as of the last day of each
fiscal quarter set forth in the left hand column, for the Rolling Period ending
on such date, a Fixed Charge Coverage Ratio for SunSource Inc. and its
Consolidated Subsidiaries of not less than the amount set forth in the right
hand column:
Period Minimum Ratio
Date of Agreement through 3/31/98 1.00
6/30/98 through 12/31/98 1.25
3/31/99 through 9/30/99 1.40
12/31/99 and the last day of each fiscal quarter
thereafter 1.50
N. Leverage Ratio. Maintain on the last day of each fiscal quarter a
Leverage Ratio of not greater than 3.25:1.
O. Management Changes. Notify each holder of a Note in writing within
thirty (30) days after any change of its management group as described in the
"Change of Control" definition.
P. Subsequent Credit Terms.
1. Notify each holder of a Note in writing not less than five (5)
Business Days prior to its entering into any amendment or modification of any
credit arrangement, whether now in effect or hereafter incurred, pursuant to
which the Obligors or Guarantors agree to financial covenants which are more
restrictive to the Obligors or Guarantors than those contained in Sections Five
and Six hereof. Upon entering into any such amendment or modification, and with
respect to the covenants in the Credit Agreement, the corresponding covenants,
terms and conditions of this Agreement are and shall be deemed to be
automatically and immediately amended to conform with and to include the
applicable covenants, terms and/or conditions of such other agreement; provided,
however, that the foregoing shall not be applicable to or be deemed to affect
any provision of this Agreement to the extent that any amendment or modification
is less restrictive than the corresponding provisions of this Agreement.
2. The Obligors and Guarantors hereby agree promptly to execute and
deliver any and all such documents and instruments and to take all such further
actions as you may, in your sole discretion, deem necessary or appropriate to
effectuate the provisions of this Paragraph 5.16.
Q. Use of Proceeds. Use the proceeds of the Notes solely for general
corporate purposes, including working capital, acquisition financing,
transaction expenses, payments of up to $14,500,000 to the former holders of the
A interests in SunSource L.P. pursuant to the Conversion, and repayment of
certain Indebtedness, including Indebtedness under the Existing Credit Agreement
and Existing Note Purchase Agreements and make-whole payments under the Existing
Note Purchase Agreements.
R. Transactions Among Affiliates. Cause all transactions between and
among Affiliates to be on an arms-length basis and on such terms and conditions
as are customary in the applicable industry between and among unrelated
entities.
S. Other Information. Provide you with any other documents and
information, financial or otherwise, reasonably requested by you from time to
time.
VI. NEGATIVE COVENANTS. So long as any Note shall be outstanding
hereunder, eachof the Company and the Guarantors covenants and agrees that it
will not:
A. Indebtedness. Borrow any monies or create any Indebtedness except:
(i) borrowings from you hereunder; (ii) Indebtedness evidenced by the Credit
Agreement not to exceed Ninety Million Dollars ($90,000,000) aggregate principal
amount outstanding at any time, which may be increased by up to an additional
Twenty Million Dollars ($20,000,000) upon the request of the Company and
agreement of the Banks, which shall rank equally and are pari passu with the
obligations to holders of the Notes hereunder; (iii) Indebtedness under the
Junior Subordinated Debentures, not to exceed One Hundred Five Million Five
Hundred Thousand Dollars ($105,500,000) principal amount outstanding at any time
(but not including any amounts
which constitute Compounded Interest, as defined in the Indenture), which shall
be subordinate and junior to the obligations to holders of the Notes hereunder;
(iv) trade Indebtedness in the normal and ordinary course of business for value
received, of which no more than Five Million Dollars ($5,000,000) shall be
outstanding at any time under Trade Notes; (v) Indebtedness and obligations
incurred or assumed to purchase or lease fixed or capital assets, provided,
however, that the total principal amount of such Indebtedness and obligations
incurred in any calendar year shall not exceed in the aggregate Seven Million
Five Hundred Thousand Dollars ($7,500,000); (vi) borrowings from the Company by
its Subsidiaries to the extent the Company is permitted to make such loans
pursuant to Paragraph 6.3(i) hereof; (vii) Indebtedness outstanding on the date
hereof and disclosed on Exhibit B hereto, but without any increase in the
outstanding principal amount thereof; (viii) up to an additional Ten Million
Dollars ($10,000,000) aggregate principal amount outstanding at any time (which
shall include the revolving credit facility with the Bank of Nova Scotia); and
(ix) unsecured promissory notes in favor of sellers of assets or stock in
acquisitions otherwise permitted pursuant to Paragraph 6.8 hereof not to exceed
Ten Million Dollars ($10,000,000); provided, however, that Indebtedness of
Subsidiaries under clauses (v) and (viii) hereof shall in no event exceed in the
aggregate outstanding at any time Five Million Dollars ($5,000,000).
B. Guaranties. Guarantee or assume or agree to become liable in any
way, either directly or indirectly, for any additional Indebtedness or liability
of others (except hereunder and under the Notes and with respect to the
Promissory Notes and to endorse checks or drafts in the ordinary course of
business), except that (i) the Obligors may guarantee Indebtedness which in the
aggregate shall not exceed Five Million Dollars ($5,000,000) outstanding at any
time and (ii) any entity may guarantee debt of another entity otherwise
permitted hereunder.
C. Loans. Make any loans or advances to others provided that the
Company may make loans and advances to (i) the Subsidiaries not to exceed Seven
Million Five Hundred Thousand Dollars ($7,500,000) in aggregate outstanding
principal amount at any time, and (ii) to its sales personnel in the ordinary
course of business.
D. Liens and Encumbrances. Create, permit or suffer the creation of any
liens, security interests, or any other encumbrances on any of its property,
real or personal, except (i) liens arising in favor of sellers or lessors for
indebtedness and obligations incurred to purchase or lease fixed or capital
assets permitted under Paragraph 6.1(v) hereof, provided, however, that such
liens secure only the indebtedness and obligations created thereunder and are
limited to the assets purchased or leased pursuant thereto; (ii) liens for
taxes, assessments or other governmental charges, federal, state or local, which
are then being currently contested in good faith by appropriate proceedings and
are covered by appropriate reserves maintained in cash or cash equivalents and
in accordance with GAAP; (iii) pledges or deposits to secure obligations under
workmen's compensation, unemployment insurance or social security laws or
similar legislation; (iv) deposits to secure performance or payment bonds, bids,
tenders, contracts, leases, franchises or public and statutory obligations
required in the ordinary course of business; (v) deposits to secure surety,
appeal or custom bonds required in the ordinary course of business and (vi)
liens and security interests securing up to Five Million Dollars ($5,000,000) of
Indebtedness outstanding under Trade Notes.
E. Additional Negative Pledge. Agree or covenant with or promise any
person or entity other than you and the Banks that it will not pledge its assets
or properties or otherwise grant any liens, security interests or encumbrances
on its property on terms similar to those set forth in Paragraph 6.4 hereof.
F. Restricted Payments. Make any Restricted Payments; provided, however
that so long as there exists no Event of Default or Default under this Agreement
and no Event of Default or Default will result therefrom: (i) SunSource Inc. may
pay dividends on its common stock; (ii) SunSource Inc. may make regularly
scheduled interest payments on the Junior Subordinated Debentures as in effect
on the date hereof; and (iii) SunSource Inc. may make Tax Distributions;
provided further that if the Leverage Ratio immediately prior to and after
giving effect to such purchase is less than 2.25 to 1, as set forth in a
certificate of the chief financial officer or controller of SunSource Inc. and
delivered to each holder of a Note, then SunSource Inc. may purchase or redeem
its common stock or purchase Trust Preferred Securities, provided a like amount
of the Junior Subordinated Debentures are simultaneously purchased.
G. Transfer of Assets. Sell, lease, transfer or otherwise dispose of
all or any portion of its assets, real or personal, other than such transactions
made on an arm's length basis in the normal and ordinary course of business for
value received; provided, however, that in the absence of a Default or an Event
of Default, and, if a Default or Event of Default would not result therefrom,
the Company may (i) sell assets other than in transactions made on an arm's
length basis in the normal and ordinary course of business for value received in
the aggregate after the date hereof for all such transactions up to Fifteen
Million Dollars ($15,000,000) and (ii) consummate a Sale of Material Assets,
provided that the Notes shall be repaid in connection therewith pursuant to
Paragraph 4.8 hereof by an amount equal to the Noteholders' Applicable Share
received by the Company on account of such sale(s), to the extent such sale(s),
in the aggregate, exceed Fifteen Million Dollars ($15,000,000).
H. Acquisitions and Investments. (a) Purchase or otherwise acquire any
part or amount of the capital stock or assets of, or make any investments in any
other entity or corporation, except Permitted Investments; (b) create, acquire
or maintain any Subsidiary not listed on Schedule I hereto except: (i) A & H
Holding Company, Inc., (ii) if the Subsidiary is either directly or indirectly
owned by A & H Holding Company, Inc. or (iii) if the Subsidiary executes a
joinder to this Agreement to become a Guarantor hereunder and delivers such
opinions and certificates as the holders of the Notes shall reasonably request;
(c) enter into any new business activities or ventures not directly related to
its present business; or (d) merge or consolidate with or into any other entity
or corporation, except that SunSub A, SunSub B, SunSource Inc. or SDIPI may be
merged into the Company if the Company is the surviving entity; provided,
however, that in the absence of a Default or an Event of Default hereunder, and
if a Default or Event of Default would not result therefrom, the Company may
make acquisitions (by merger or purchase) of substantially all but not less than
substantially all of other entities or corporations in the same or substantially
the same business as the Company. The Company shall provide to you a cash flow
projection from the date of any proposed acquisition with a purchase
price exceeding Ten Million Dollars ($10,000,000), showing prospective
compliance with Paragraphs 5.12 through 5.14 and Section Six of this Agreement
through the Maturity Date.
I. Use of Proceeds. Use any of the proceeds of the Notes, directly or
indirectly, to purchase or carry margin securities within the meaning of
Regulation G of the Board of Governors of the Federal Reserve System; or engage
as its principal business in the extension of credit for purchasing or carrying
such securities.
J. Amendment of Documents. (a) Without the consent of the Required
Holders, which consent shall not be withheld unreasonably, amend or permit any
amendments to: the Obligors' or Guarantors' organizational documents (including
without limitation the Partnership Agreements); the Declaration of Trust of the
Trust; the Indenture; the Terms of Common Securities of the Trust; the Terms of
Preferred Securities of the Trust; the Preferred Securities Guaranty; and (b)
with respect to those provisions of the Credit Agreement relating to financial
covenants (Paragraphs 6.13 through 6.15 through), Events of Default (Section 9),
mandatory or voluntary prepayments (Paragraphs 2.8 and 2.9) and all definitions
related thereto, any amendment, waiver or consent thereto shall require the
simultaneous amendment, waiver or consent, as applicable, to the corresponding
provision in this Agreement pursuant to Section 12.
K. Payment of Loan. Make any payment of principal on the Loan except if
simultaneously with such payment a prepayment to the extent of the Noteholders'
Applicable Share of such payment is made pursuant to Section 4 hereof.
VII. DEFINITIONS.
A. Definitions. When used in this Agreement, the following terms shall
have the respective meanings set forth below.
"Accumulated Funding Deficiency" has the meaning ascribed to that
term in Section 302 of ERISA.
"Adjusted EBITDAR" means, for any fiscal period of SunSource Inc.
and its Consolidated Subsidiaries, EBITDA plus rent expense (as determined in
accordance with GAAP) minus Capital Expenditures.
"Affiliate" means: (i) any person who or entity which directly or
indirectly owns, controls or holds ten percent (10%) or more of the outstanding
common stock in SunSource Inc.; (ii) any entity of which ten percent (10%) or
more of the outstanding common stock or beneficial interest is directly or
indirectly owned, controlled, or held by SunSource Inc. or an Affiliate; (iii)
any entity which directly or indirectly is under common control with SunSource
Inc.; (iv) any officer, director or partner of SunSource Inc. or any Affiliate;
or (v) any immediate family member of any person who is an Affiliate. For
purposes of this definition, the term "control" means the possession, directly
or indirectly of the power to direct or cause the direction of the management
and policies of an entity, whether through the ownership of voting securities,
by contract, or otherwise.
"Agent" means CoreStates Bank, N.A. in its capacity as
administrative agent for the Banks pursuant to the Credit Agreement, and its
successors and assigns in such capacity.
"Agreement" means this Note Purchase Agreement and all exhibits and
schedules hereto, as each may be amended, modified or supplemented from time to
time.
"Bank" means individually and "Banks" means collectively, the banks
identified on Schedule 2 attached to the Credit Agreement as such Schedule may
be amended from time to time, their respective successors and assigns and any
additional banks which become parties to the Credit Agreement after the date
thereof in accordance with Paragraph 12.2 of the Credit Agreement, but shall not
include any such Bank which is replaced pursuant to the terms thereof after the
date thereof.
"Business Day" means any day not a Saturday, Sunday or a day on
which banks are required or permitted to be closed under the laws of the
Commonwealth of Pennsylvania.
"Capital Expenditures" means, for any period, amounts accrued or
incurred for fixed assets or improvements, replacements, substitutions or
additions thereto, which have a useful life of more than one (1) year, including
direct or indirect acquisition costs of such assets.
"Capital Leases" means capital leases and subleases, as defined in
Statement 13 of the Financial Accounting Standards Board dated November 1976, as
amended and updated from time to time.
"Capitalization Ratio" means, as of any date of determination, the
ratio of Funded Debt to Total Capital.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendment
and Reauthorization Act of 1986, as amended from time to time.
"Change of Control" means if at any time after the date of this
Agreement: (a) SunSource Inc. ceases to own, directly or indirectly, all of the
general and limited partnership interests in the Company and SDIPI; or (b)(i)
any person or group within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "1934 Act") and the rules and regulations
promulgated thereunder shall have beneficial ownership (within the meaning of
Rule 13d-3 of the 1934 Act), directly or indirectly, of securities of SunSource
Inc. (or other securities convertible into such securities) representing twenty
percent (20%) or more of the combined voting power of all securities of
SunSource Inc. entitled to vote in the election of directors other than Xxxxxx
Affiliates and the management group of Xxxxxx X. Xxxxxxx, Xxx X. Xxxxxxx, Xxxxxx
X. Xxxxxxxxx, Xxxxxx X. Xxxxxxxx, Xxxxxx X. Xxxxxxxx and Xxxx X. XxXxxxxxx
(hereinafter called a "Controlling Person"); or (ii) a majority of the Board of
Directors of SunSource Inc. shall cease for any reason to consist of (1)
individuals who on the date hereof are serving as directors of SunSource Inc. or
(2) individuals who subsequently become members of the Board if such
individuals' nomination for election or election to the board is recommended or
approved by a majority of the Board of Directors of SunSource Inc. For purposes
of clause (b)(i) above, a person or group shall not be a Controlling Person if
such person or group holds voting power in good faith and not for the purpose of
circumventing Paragraph 8.1(f) as an agent, bank, broker, nominee, trustee, or
holder of revocable proxies given in response to a solicitation pursuant to the
1934 Act, for one or more beneficial owners who do not individually, or, if they
are a group acting in concert, as a group, have the voting power specified in
clause (b)(i) above.
"Closing Date" means September 30, 1997.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time and regulations in effect from time to time.
"Conversion" means the conversion of SunSource L.P., a Delaware
limited partnership, to the corporate form of SunSource Inc., a Delaware
corporation as set forth in SunSource Inc.'s Registration Statement on Form S-4,
filed with the Securities and Exchange Commission on December 31, 1996, as
amended.
"Credit Agreement" means the Amended and Restated Credit Agreement
dated September 30, 1997 among SDI Operating Partners, L.P. and its Subsidiaries
set forth on Schedule 1 attached thereto, SDI Partners I, L.P., SunSource Inc.,
SunSub A and SunSub B and CoreStates Bank N.A., for itself and as Agent, the
Bank of Nova Scotia, for itself and as Documentation Agent, and the Banks set
forth on Schedule 2 attached thereto, as amended, modified or supplemented from
time to time pursuant to the terms thereof and hereof.
"Default" means an event or circumstance which, with the giving of
notice or the passage of time or both, would constitute an Event of Default.
"Designated Disposition Proceeds" means the aggregate proceeds of
any one or more sales, divestitures or spin-offs of or any portion of either the
Xxxxxxx Fastener or Xxxxxxx Glass divisions of the Company up to Fifteen Million
Dollars ($15,000,000).
"Distributions Paid on Trust Securities" means all amounts payable
by the Trust to the holders of the Trust Preferred Securities and Trust Common
Securities.
"EBITDA" means, for any fiscal period of SunSource Inc. and its
Consolidated Subsidiaries, Net Income plus (i) GP Management Fees, (ii) Interest
Expense (including all interest paid on the Junior Subordinated Debentures
(whether paid in cash or in kind)), (iii) all provisions for income taxes, (iv)
depreciation and amortization expense, and (v) extraordinary losses, minus
extraordinary gains, as each such item is determined in accordance with GAAP.
For purposes of this definition, extraordinary losses shall include the
restructuring charge of Four Million Nine Hundred Thousand Dollars ($4,900,000),
net of deferred income tax benefits and Conversion transaction charges of Two
Million One Hundred Fifty Thousand Dollars ($2,150,000) incurred during 1996,
and Conversion transaction charges (including make whole provisions and other
costs), not to exceed Eight Million Dollars ($8,000,000) to be incurred in 1997.
"Environmental Control Statutes" means any federal, state or local
laws governing control, storage, removal, spill, release or discharge of
Hazardous Substances including without limitation CERCLA, the Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976
and the Hazardous and Solid Waste Amendments of 1984, the Federal Water
Pollution Control Act, as amended by the Clean Water Act of 1976, the Hazardous
Materials Transportation Act, the Emergency Planning and Community Right to Know
Act of 1986, the National Environmental Policy Act of 1975, the Oil Pollution
Act of 1990, any similar or implementing state law, in each case, including all
amendments thereto and all rules and regulations promulgated thereunder and
permits issued in connection therewith.
"Environmental Material Adverse Effect" means a material adverse
effect on the business, financial condition on prospects of the Company taken as
a whole, greater than or equal to $1,000,000 per single event of $5,000,000 in
the aggregate for all such environmental events as a result of any condition,
circumstance or contingency.
"EPA" means the United States Environmental Protection Agency, or
any successor thereto.
"ERISA Affiliate" means, when used with respect to an Employee
Benefit Plan, ERISA, the PBGC or a provision of the Code pertaining to employee
benefit plans, any Person that is a member of any group of organization within
the meaning of Code Sections 414(b), (c), (m) or (o) of which any Obligor or any
Guarantor is a member.
"ERISA" means the Employee Retirement Income Security Act of 1974,
all amendments thereto and all rules and regulations in effect at any time.
"Event of Default" means an event described in Paragraph 8.1 hereof.
"Existing Credit Agreement" means that certain Credit Agreement
among SDI Operating Partners L.P., SDIPI, Agent and certain of the Banks dated
December 22, 1992, as amended.
"Existing Note Purchase Agreement(s)" means those note purchase
agreements dated December 15, 1992, as amended, issued by SDI Operating
Partners, L.P. for Ninety-Five Million Dollars ($95,000,000) in privately-placed
notes.
"Fixed Charges" means, at any date of determination for the most
recently ended Rolling Period of SunSource Inc. and its Consolidated
Subsidiaries, the sum of (i) Interest Expense (including interest paid on the
Junior Subordinated Debentures to the extent paid in cash); (ii) GP Management
Fees; (iii) rent expense; (iv) scheduled maturities paid on Funded Debt
(excluding the Loan); (v) cash dividends paid by SunSource Inc.; and (vi)
Partnership Distributions, all as determined in accordance with GAAP.
"Fixed Charge Coverage Ratio" means, at any date of determination,
the ratio of Adjusted EBITDAR to Fixed Charges for the most recently ended
Rolling Period.
"Funded Debt" means, at any date of determination of SunSource Inc.
and its Consolidated Subsidiaries, the sum of the following in such period,
without duplication: (i) Indebtedness for borrowed money; (ii) Indebtedness
evidenced by notes, debentures or similar instruments; (iii) Capital Leases;
(iv) guarantees of Indebtedness or Capital Leases; and (v) letters of credit and
letter of credit reimbursement obligations. For purposes of this definition,
Funded Debt does not include the Junior Subordinated Debentures.
"GAAP" shall mean generally accepted accounting principles, which
shall be (i) applied in accordance with the Statement on Auditing Standards No.
69 "The Meaning of Present Fairly in Conformity with Generally Accepted
Accounting Principles in the Independent Auditor's Report," (SAS 69) or
superseding pronouncements, issued by the Auditing Standards Board of the
American Institute of Certified Public Accountants and (ii) in the form and
content of any requirements for financial statements filed with the Securities
and Exchange Commission, in all cases applied on a consistent basis. The
requirement that such principles be applied on a consistent basis shall mean
that the accounting principles observed in a current period are comparable in
all material respects to those applied in a preceding period except such changes
in accounting principles approved by the Guarantor's outside auditors.
"GP Management Fees" shall mean management fees due SDIPI from SDI
Operating Partners, L.P. which arose or accrued prior to the Conversion
notwithstanding that any such amount may not be due or payable until after the
Conversion.
"Guarantors" means SDIPI, SunSub A, SunSub B, SunSource Inc. and any
future Subsidiary executing a joinder to this Agreement to become a guarantor.
"Hazardous Substance" means petroleum products and items defined in
the Environmental Control Statutes as "hazardous substances", "hazardous
wastes", "pollutants" or "contaminants" and any other toxic, reactive,
corrosive, carcinogenic, flammable or hazardous substance or other pollutants.
"Indebtedness" of any person means and includes all obligations of
such person which, in accordance with GAAP, shall be classified on a balance
sheet of such person as liabilities of such person and in any event shall
include all (i) obligations of such person for borrowed money or which have been
incurred in connection with acquisition of property or assets, (ii) obligations
secured by any lien upon property or assets owned by such person,
notwithstanding that such person has not assumed or become liable for the
payment of such obligations, (iii) obligations created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such person, notwithstanding the fact that the rights and remedies
of the seller, lender or lessor under such agreement in the event of default are
limited to repossession or sale of property, (iv) Capital Leases, (v) guarantees
and (vi) letters of credit and letter of credit reimbursement obligations.
"Interest Expense" means for any fiscal period, the interest expense
of SunSource Inc. and its Consolidated Subsidiaries, as determined in accordance
with GAAP for such period.
"Indenture" means the Indenture dated as of September 5, 1997
between SunSource Inc. and Bank of New York, as trustee, providing for the
issuance of the Junior Subordinated Debentures.
"Junior Subordinated Debentures" means the unsecured subordinated
obligations of SunSource Inc. which will be deposited in the Trust as trust
assets upon the Conversion and the terms of which are included in the Indenture.
"Xxxxxx Affiliates" means Xxxxxx Brothers Capital Partners I, L.P.,
LBI Group, Inc., Xxxxxx Ltd. I Inc., Xxxxxx/SDI, Inc. and Xxxxxx Brothers
Holdings Inc.
"Leverage Ratio" means as of any date of determination of SunSource
Inc. and its Consolidated Subsidiaries the ratio of Funded Debt as of such date
to EBITDA for the most recently ended Rolling Period.
"Loan" or "Loans" means the outstanding principal balance of
Indebtedness for advances under the Credit Agreement, plus the outstanding
principal balance of Indebtedness for advances on swing line loans under
Paragraph 2.13 of the Credit Agreement, plus the unreimbursed amount of any
draws on letters of credit under the Credit Agreement, in each case, together
with interest accrued thereon and fees and expenses incurred in connection
therewith.
"Local Authorities" means individually and collectively the state
and local governmental authorities and administrative agencies which govern the
commercial or industrial facilities or businesses owned or operated by the
Obligors.
"Make-Whole Amount" shall mean, in connection with any prepayment of
a Note pursuant to Paragraph 4.2, the amount (but not less than zero) equal to
the excess, if any, of
(1) the sum of the Present Values (as hereinafter defined) of (a)
the principal amount of such Note being prepaid (assuming the principal balance
of such Note payable upon maturity is paid when due) and (b) the amount of
interest (other than accrued interest being paid concurrently with such
prepayment) that would have been payable on each interest payment date on the
amount of such principal being prepaid (assuming the principal balance of such
Note payable upon maturity and interest payments are paid when due), over
(2) the principal amount of such Note being prepaid.
For purposes of this definition, "Present Value" shall be determined in
accordance with generally accepted financial practice on a semiannual basis at a
discount rate equal to the sum of the applicable Treasury Yield plus 1/2 of 1%;
and the applicable "Treasury Yield" for such purpose shall be the yield on
actively traded United States Treasury securities having a maturity equal to the
then-remaining weighted average life to maturity (determined in accordance with
generally accepted financial practice) of the Note being prepaid as determined
by reference to the display designated as "Page 500" on the Dow Xxxxx Markets
Service (or, if such display is no longer published, any publicly available
source of similar market data, such as Federal Reserve
Statistical Release H.15(519), that became publicly available at least four
Business Days prior to the date of such prepayment); provided that if such
weighted average life to maturity is not equal to the maturity of any actively
traded United States Treasury securities as set forth on said display (or said
substitute source of market data), such yield shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the yields
of actively traded United States Treasury securities set forth on said display
(or said substitute source of market data) having a maturity closest to such
weighted average life to maturity.
"Material Adverse Change" means a material adverse change in the
business, financial condition or prospects of the Obligors taken as a whole as a
result of any condition, circumstance or contingency, either singly or in the
aggregate.
"Material Adverse Effect" means a material adverse effect on the
business, financial condition or prospects of the Obligors taken as a whole as a
result of any condition, circumstance or contingency, either singly or in the
aggregate.
"Maturity Date" means September 30, 2002.
"Net Cash Proceeds" of (A) any sale of assets shall mean the cash
proceeds received by the seller in such a transaction less (i) the reasonable
costs of the transaction, and (ii) indebtedness secured by any lien on such
assets which is paid from such proceeds and (iii) any tax payment required to be
made as a result of the gain (if any) on such sale; and (B) any other prepayment
of the Loan and Notes shall mean the total amount of such payment to the Banks
and the holder of the Notes.
"Net Income" means, for any period, SunSource Inc. and its
Consolidated Subsidiaries' gross revenue for such period (excluding
extraordinary gains and losses) less all expenses and other proper charges
(including taxes on income) in each case as determined in accordance with GAAP.
"Net Worth" means, as of any date of determination, Total Assets
minus Total Liabilities in SunSource Inc. and its Consolidated Subsidiaries, as
stated on the financial statements most recently delivered to you pursuant to
Paragraphs 5.2 and 5.3 hereof, as applicable.
"Noteholders' Applicable Share" means, as of any date of
determination, with respect to any Net Cash Proceeds which are required or
permitted to be used by the Company to reduce the amount outstanding on the
Notes pursuant to this Agreement, the portion of such Net Cash Proceeds which
bears the same relationship to the entire amount of such Net Cash Proceeds as
the amount outstanding on the Notes on the date of determination bears to the
sum of the outstanding principal amount of the Loan plus the amount of the Notes
on the date of determination.
"Notes" means the Company's 7.66% Notes due 2002 issued in an
original aggregate principal amount of Sixty Million Dollars ($60,000,000)
pursuant to this Agreement.
"Officer's Certificate" means a certificate signed on behalf of the
Company and SunSource Inc. by the chief financial officer or controller of
SunSource Inc.
"Partnership Agreement" means individually, as noted, and
"Partnership Agreements" means collectively the Amended and Restated Agreement
of Limited Partnership of SDI Operating Partners, L.P. dated February 1, 1987,
and the Amended and Restated Agreement of Limited Partnership of SDIPI dated
February 5, 1987, as each may be amended to date and from time to time hereafter
in accordance with its terms and the provisions hereof.
"Partnership Distributions" means amounts payable by the Company to
SunSource Inc. and SDIPI pursuant to Section 5.02 of the Company's Partnership
Agreement, to fund Tax Distributions, including without limitation those which
arose or accrued prior to the Conversion notwithstanding that any such amounts
may not be due or payable until after the Conversion.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Permitted Investments" means (i) investments in commercial paper
maturing in 180 days or less from the date of issuance which is rated Al or
better by Standard & Poor's Corporation or Pl or better by Xxxxx'x Investors
Services, Inc.; (ii) investments in direct obligations of the United States of
America or obligations of any agency thereof which are guaranteed by the United
States of America, provided that such obligations mature within twelve (12)
months of the date of acquisition thereof; (iii) investments in certificates of
deposit maturing within one (1) year from the date of acquisition thereof issued
by a bank or trust company organized under the laws of the United States or any
state thereof, having capital, surplus and undivided profits aggregating at
least $1,000,000,000 and the long-term deposits of which are rated Al or better
by Xxxxx'x Investors Services, Inc. or equivalent by Standard & Poor's
Corporation; (iv) money market funds invested in vehicles of the types set forth
in subsections (i) through (iii); and (v) other investments not to exceed
$500,000 in the aggregate made from the date hereof to the Maturity Date.
"Plan" means any pension benefit or welfare benefit plan as defined
in Sections 3(1), (2) or (3) of ERISA covering employees of the Obligors or any
ERISA Affiliate.
"Promissory Notes" means collectively the Promissory Notes in the
form of Exhibit B attached to the Credit Agreement to be delivered by the
borrowers set forth in the Credit Agreement to Banks pursuant to Paragraph
5.1(a) thereof, as the same may be amended or modified or extended or restated
from time to time.
"Required Banks" means those Banks (which may include Agent) holding
sixty-six and two-thirds percent (66-2/3%) or more of the amount of the
commitment, as defined in the Credit Agreement, or, if indebtedness is
outstanding hereunder, sixty-six and two-thirds percent (66-2/3%) or more of the
Loan.
"Required Holders" means the holder or holders of at least sixty-six
and two-thirds percent (66-2/3%) of the outstanding principal amount of the
Notes.
"Restricted Payments" means (i) any dividend or distribution on, or
the purchase, redemption, prepayment or other retirement of the common
securities of SunSource Inc.; (ii) the payment of principal or interest on or
the purchase, redemption, prepayment or other retirement of the Junior
Subordinated Debentures; and (iii) Tax Distributions.
"Rolling Period" means, as of any date, the most recent four (4)
consecutive fiscal quarters of SunSource Inc. and its Consolidated Subsidiaries
completed on or before such date.
"Sale of Material Assets" means any sale, transfer or other
disposition of the Company's assets in transactions in which the total
consideration paid or payable to Company (including without limitation all cash,
liabilities assumed and the fair market value of any stock provided in such
transaction) is, in the aggregate, as to all such transactions after the date of
this Agreement, greater than Fifteen Million Dollars ($15,000,000).
"SDI Operating Partners, L.P." means SDI Operating Partners, L.P., a
Delaware limited partnership.
"SDIPI" means SDI Partners I, L.P., a Delaware limited partnership
and the general partner of SDI Operating Partners, L.P.
"Subsidiary" or "Subsidiaries" means any corporation of which the
Company, directly or indirectly, owns more than fifty percent (50%) of any class
or classes of securities. The Subsidiaries of the Company on the date hereof are
set forth on Schedule I attached hereto.
"SunSource Inc." means SunSource Inc., a Delaware corporation.
"SunSource Inc. and its Consolidated Subsidiaries" means SunSource
Inc. and its consolidated subsidiaries as defined in accordance with GAAP.
"SunSource L.P. and its Consolidated Subsidiaries" means SunSource
L.P., a Delaware limited partnership, converted to corporate form by the
Conversion, and its consolidated subsidiaries as defined in accordance with
GAAP.
"SunSub A" means SunSub A Inc., a Delaware corporation.
"SunSub B" means SunSub B Inc., a Delaware corporation.
"Tax Distributions" shall mean those distributions which are payable
to the former B interest holders in SunSource L.P. pursuant to the Company's
Partnership Agreement, including any payments which are due and payable after
the Conversion.
"Total Assets" means, as of any date of determination, all assets of
SunSource Inc. and its Consolidated Subsidiaries, as set forth on SunSource
Inc.'s financial statements most recently delivered to you pursuant to
Paragraphs 3.6, 5.2 and 5.3 hereof, as defined in accordance with GAAP.
"Total Capital" means, at any date of determination of SunSource
Inc. and its Consolidated Subsidiaries, the sum of the following: (i) Funded
Debt; (ii) the outstanding principal amount of Junior Subordinated Debentures;
and (iii) Net Worth.
"Total Liabilities" means, as of any date of determination, all
liabilities and deferred items of SunSource Inc. and its Consolidated
Subsidiaries, as set forth on SunSource Inc.'s financial statements most
recently delivered to you pursuant to Paragraphs 3.6, 5.2 and 5.3 hereof, as
defined in accordance with GAAP.
"Trade Notes" means Indebtedness of the Company secured by the
Company's inventory of glass and window products pursuant to financing plans in
the normal course of business for value received.
"Trust" shall mean SunSource Capital Trust, a Delaware statutory
business trust, which is the issuer of the Trust Preferred Securities to the
former holders of the A interests in SunSource L.P. and the Trust Common
Securities to SunSource Inc.
"Trust Common Securities" means the common securities issued by the
Trust pursuant to the Conversion.
"Trust Preferred Securities" means the preferred securities issued
by the Trust pursuant to the Conversion.
B. Rules of Construction.
(a) GAAP. Except as otherwise provided herein, financial and
accounting terms used in the foregoing definitions or elsewhere in this
Agreement shall be defined in accordance with GAAP. If the Company or you
determine that a change in GAAP from that in effect on the date hereof has
altered the treatment of certain financial data to their detriment under this
Agreement, such party may, by written notice to the other within thirty (30)
days after the effective date of such change in GAAP, request renegotiation and
the parties agree to negotiate in good faith to modify such financial covenants
affected by such change to reflect equitably such change. If the Company and the
holders of the Notes have not agreed on revised covenants within thirty (30)
days after the delivery of such notice, then, for purposes of this Agreement,
GAAP will mean generally accepted accounting principles on the date just prior
to the date on which the change occurred that gave rise to the notice.
(b) Use of Term "Consolidated". Any term defined in thi
Section 7, when modified by the word "Consolidated" shall have the meaning given
to such term herein as to SunSource Inc. on a consolidated basis with its
Subsidiaries and all other entities whose accounts, financial results or
position, for either federal income tax or financial accounting purposes, are
consolidated with those of SunSource Inc. in accordance with GAAP.
VIII. EVENTS OF DEFAULT; REMEDIES.
A. Events of Default. Each of the following events shall be an Event of
Default hereunder:
1. If any of the Obligors or Guarantors shall fail to pay when due
(i) any installment of principal or interest when due or (ii) fees, costs,
expenses or any other sum payable to you hereunder or otherwise within 5 days
after notice from you that it is due;
2. If any representation or warranty made herein or in connection
herewith or in any statement, certificate or other document furnished hereunder
is incorrect, false or misleading in any material respect when made;
3. If any of the Obligors or Guarantors shall default in the payment
or performance of any obligation or Indebtedness to another, either singly or in
the aggregate in excess of $1,000,000, whether now or hereafter incurred;
4. If there shall be a default in or failure to observe at any test
date the covenants set forth in Paragraphs 5.12 through 5.14 or Section Six
hereof;
5. If any of the Obligors or Guarantors shall default in the
performance of any other agreement or covenant contained herein (other than as
provided in subparagraphs (a), (b) or (d) above) or in any document executed or
delivered in connection herewith, and such default shall continue uncured for
twenty (20) days after the earlier of (i) any Obligor having actual knowledge of
such default, and (ii) notice thereof to the Company given by any holder of a
Note;
6. [Intentionally omitted];
7. If custody or control of any substantial part of the property of
any of the Obligors or Guarantors shall be assumed by any governmental agency or
any court of competent jurisdiction at the instance of any governmental agency;
if any material license or franchise shall be suspended, revoked or otherwise
terminated; if any governmental regulatory authority or judicial body shall make
any other final non-appealable determination the effect of which would be to
affect materially and adversely the operations of any of the Obligors or
Guarantors as now conducted;
8. If any of the Obligors or Guarantors: becomes insolvent, bankrupt
or generally fails to pay its debts as such debts become due; is adjudicated
insolvent or bankrupt; admits in writing its inability to pay its debts; or
shall suffer a custodian, receiver or trustee for it or substantially all of its
property to be appointed and if appointed without its consent, not be discharged
within thirty (30) days; makes an assignment for the benefit of creditors; or
suffers proceedings under any law related to bankruptcy, insolvency, liquidation
or the reorganization, readjustment or the release of debtors to be instituted
against it and if contested by it not dismissed or stayed within thirty (30)
days; if proceedings under any law related to bankruptcy, insolvency,
liquidation, or the reorganization, readjustment or the release of debtors is
instituted or commenced by any Obligor; if any order for relief is entered
relating to any of the foregoing proceedings; if any of the Obligors or
Guarantors shall call a meeting of its creditors with a view to arranging a
composition or adjustment of its debts; or if any of the Obligors or Guarantors
shall by any act or failure to act indicate its consent to, approval of or
acquiescence in any of the foregoing;
9. If any event or condition shall occur or exist with respect to
any activity or substance regulated under the Environmental Control Statutes and
as a result of such event or condition, any of Guarantors or the Obligors has
incurred or in the opinion of the Company are reasonably likely to incur a
liability in excess of $1,000,000 during any consecutive twelve (12) month
period;
10. If any judgment, writ, warrant or attachment or execution or
similar process which calls for payment or presents liability in excess of
$1,000,000 shall be rendered, issued or levied against any of Guarantors or
Obligors or their respective property and such process shall not be paid,
waived, stayed, vacated, discharged, settled, satisfied or fully bonded within
sixty (60) days after its issuance or levy; provided, however, that if a
judgment, writ, warrant or attachment or execution or similar process relates to
federal or state taxation, then an Event of Default shall occur if the same
shall not be paid, waived, stayed, vacated, discharged, settled, satisfied or
fully bonded within one hundred twenty (120) days after its issuance or levy; or
11. If SunSource Inc. makes a payment of principal or interest on or
purchases or redeems the Junior Subordinated Debentures and the Trust does not
immediately use such funds to make Distributions Paid on Trust Securities.
B. Acceleration; Suits for Enforcement. (i) Upon the occurrence of an
Event of Default under Paragraph 8.1(h), the unpaid principal amount of all
Notes, together with the interest accrued thereon and, to the extent permitted
by law, an amount equal to the Additional Amount specified below shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by the Company and (ii) if any other Event of Default shall have occurred
and be continuing, the holders of at least 51% in aggregate principal amount of
the Notes may elect to declare the entire unpaid principal amount of all Notes
to be, and the same shall forthwith become, due and payable, together with the
interest accrued thereon and, to the extent permitted by law, an amount equal to
the Additional Amount specified below, provided that, during the
existence of an Event of Default described in Paragraph 8.1(a) with respect to
any Note, the holder of such Note may, by written notice to the Company, declare
such Note to be, and the same shall forthwith become, due and payable, together
with the interest accrued thereon and, to the extent permitted by law, an amount
equal to the Additional Amount specified below. If any holder of any Note shall
exercise the option specified in the proviso to the preceding sentence, the
Company will forthwith give written notice thereof to the holders of all other
outstanding Notes and each such holder may (whether or not such notice is given
or received), by written notice to the Company, declare the principal of all
Notes held by it to be, and the same shall forthwith become, due and payable,
together with the interest accrued thereon and, to the extent permitted by law,
an amount equal to the Additional Amount specified below. For purposes of this
Paragraph 8.2 the term "Additional Amount" means, with respect to any Note, an
amount equal to the Make-Whole Amount that would be payable with respect to such
Note if the Company had elected to prepay the Notes pursuant to Paragraph 4.2.
In addition, the holder of any Note may proceed to protect and enforce its
rights, either by suit in equity or by action at law, or both, whether for the
specific performance of any covenant or agreement contained in this Agreement or
in aid of the exercise of any power granted in this Agreement, or the holder of
any Note may proceed to enforce the payment of all sums due upon such Note
whether by acceleration or otherwise or to enforce any other legal or equitable
right of the holder of such Note.
The Company covenants that, if it shall default in the making of any
payment due under any Note or in the performance or observance of any agreement
contained in this Agreement, it will pay to the holder thereof such further
amounts, to the extent lawful, as shall be sufficient to pay the costs and
expenses of collection or of otherwise enforcing such holder's rights, including
reasonable counsel fees.
C. Remedies Cumulative. No remedy herein conferred upon you or the
holder of any Note is intended to be exclusive of any other remedy and each and
every such remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise.
D. Remedies Not Waived. No course of dealing between the Company and
you or the holder of any Note and no delay or failure in exercising any rights
hereunder or under any Note in respect thereof shall operate as a waiver of any
of your rights or the rights of any holder of such Note.
IX. GUARANTY.
A. Guaranty. Each Guarantor hereby irrevocably, absolutely and
unconditionally guarantees and becomes surety for the full, prompt and punctual
payment to you and the other holders of the Notes, as and when due, whether at
maturity, by acceleration or otherwise, of any and all Indebtedness, liabilities
and obligations of the Company to you and the other holders of the Notes created
at any time under, or pursuant to the terms of, this Agreement and of the Notes,
whether for principal, interest, premiums, fees, expenses or otherwise (all such
indebtedness, liabilities and obligations being called in this Section Nine
collectively the "Obligations"),
together with any and all reasonable expenses, including attorneys' fees and
disbursements, which may be incurred by you or the other holders of the Notes in
enforcing any and all rights against Guarantors under this Agreement (herein the
"Expenses").
B. Bankruptcy. Without limiting Guarantors' obligations hereunder and
notwithstanding any purported termination of this Section Nine or this
Agreement, if any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation, dissolution, assignment for the benefit
of creditors, or similar event with respect to any of the Obligors or any
additional guarantor or endorser of all or any of the Obligations and Expenses
shall occur, and such occurrence shall result in the return of (or if in such
event you or another holder of the Notes shall be requested to return) any
payment or performance of any of the Obligations or Expenses, then the
obligations of each Guarantor hereunder shall be reinstated with respect to such
payment or performance returned or requested to be returned and with respect to
all further obligations arising as a result of such return or request, and each
Guarantor shall thereupon be liable therefor, without any obligation on the part
of you or another holder of the Notes to contest or resist any such return.
C. Nature and Term of Guaranty. The obligations of each Guarantor under
this Section Nine shall be independent, absolute, irrevocable and unconditional
and shall remain in full force and effect until the Obligations and all other
amounts payable hereunder shall have been paid in full (subject, however, to
reinstatement under Paragraph 9.2 hereof).
D. Rights and Remedies. You or any other holder of the Notes may
proceed to exercise any right or remedy which you or it may have under this
Section Nine against Guarantors without first pursuing or exhausting any rights
or remedies which it may have against any of the Obligors, any additional
guarantor or against any other person or entity or any collateral security, and
may proceed to exercise any right or remedy which it may have under this Section
Nine without regard to any actions or omissions of any other person or entity,
in any manner or order, without any obligation to marshal in favor of Guarantors
or other persons or entities and without releasing any of Guarantors'
obligations hereunder with respect to any unpaid Obligations and Expenses. No
remedy herein conferred upon or reserved to you and the other holders of the
Notes is intended to be exclusive of any other available remedy or remedies, but
each and every such remedy shall be cumulative and shall be in addition to every
other remedy given under this Section Nine or now or hereafter existing at law
or in equity.
E. Actions by Holders of the Notes Not Affecting Guaranty. The Required
Holders may, at any time or from time to time, in such manner and upon such
terms as they may deem proper, extend or change the time of payment or the
manner or place of payment of, or otherwise modify or waive any of the terms of,
or release, exchange, settle or compromise any or all of the Obligations and
Expenses or any collateral security therefor, or subordinate payment of the
same, or any part thereof, to the payment of any other indebtedness, liabilities
or obligations of any of the Obligors which may at any time be due or owing to
themselves or anyone, or elect not to enforce any of their rights with respect
to any or all of the Obligations and Expenses or any collateral security
therefor, all without notice to, or further assent of, Guarantors and without
releasing or affecting Guarantors' obligations under this Section Nine.
F. Payment in Accordance with Notes and this Agreement. This Section
Nine shall be construed as guaranteeing that the Obligations and Expenses shall
be paid strictly in accordance with the terms of the Notes and this Agreement,
regardless of any non-perfection of any collateral security for the Obligations;
any invalidity or unenforceability of this Agreement, the Notes or any of the
Obligations; the voluntary or involuntary liquidation, dissolution, sale or
other disposition of all, or substantially all of the assets, marshaling of
assets and liabilities, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition with creditors or
readjustment of, or other similar proceedings affecting any of the Obligors,
Guarantors or any additional guarantor or endorser of any or all of the
Obligations and Expenses or any of the assets of any of them, or any contest of
the validity of this Section Nine in any such proceeding; or any law, regulation
or decree now or hereafter in effect in any jurisdiction which might in any
manner affect any of such terms or provisions or any rights of the holder or
holders of the Notes with respect thereto or which might cause or permit any of
the Obligors or any additional guarantor or endorser of the Obligations and
Expenses to invoke any defense to, or any alteration in the time, amount or
manner of payment of any or all of the Obligations and Expenses or performance
of this Section Nine.
G. Payments Under Guaranty. All payments by Guarantors hereunder shall
be made in the manner set forth on Schedule II hereto.
H. Waivers and Modifications. No failure or delay on the part of any
holder of the Notes in exercising any power or right under this Section Nine
against Guarantors shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power preclude any other or further
exercise thereof or the exercise of any other right or power under this Section
Nine. No modification or waiver of any provision of this Section Nine, nor
consent to any departure therefrom, shall, in any event, be effective unless the
same is in writing signed by the Required Holders and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No notice to, or demand on Guarantors, in any case, shall entitle
the Guarantors to any other or further notice or demand in similar or other
circumstances.
I. Waiver. Each Guarantor hereby waives promptness, diligence,
presentment, demand, notice of acceptance and any other notice with respect to
any of the Obligations and this Section Nine, except notice of demand for
payment hereunder.
J. Subordination of Rights of Subrogation. Guarantors shall not
exercise any rights which Guarantors may acquire by way of subrogation under
this Section Nine, applicable law or otherwise, by any payment made hereunder or
otherwise, until all of the Obligations and Expenses and all other amounts
payable hereunder (including amounts which may become due following a
reinstatement hereof under Paragraph 9.2 hereof) shall have been paid in full in
cash. If any amount shall be paid to any Guarantor on account of such rights at
any time when all the Obligations and Expenses shall not have been paid in full
(including amounts which may become due following a reinstatement hereof under
Paragraph 9.2 hereof), such amount paid to such Guarantor shall be held in trust
for the benefit of the holders of the Notes and shall forthwith be credited and
applied against the Obligations and Expenses, whether matured or unmatured, in
accordance with the terms of the Notes and this Agreement; provided, however,
that to the extent not prohibited by applicable law or affecting the Banks' or
holders of the Notes right to retain such funds, the holders of the Notes shall
retain Noteholders' Applicable Share of the Net Cash Proceeds of any amount so
recovered and the remainder shall be shared with the Banks. If any Guarantor
shall make payment to the holders of the Notes of all or any part of the
Obligations and Expenses and all of the Obligations and Expenses shall be paid
in full, the holders of the Notes, shall, at such Guarantor's request, execute
and deliver to such Guarantor appropriate documents, without recourse and
without representation or warranty, necessary to evidence the transfer, by
subrogation, to Guarantor of an interest in the Obligations resulting from such
payment by Guarantor.
K. No Setoff by Guarantors. No setoff, counterclaim, reduction, or
diminution of any obligation, or any defense of any kind or nature which
Guarantors have or may have against any of the Obligors or any holder of the
Notes shall be available hereunder to Guarantors.
L. Continuing Guaranty; Transfer of Note. Except as provided in
Paragraph 9.2 hereof, this Section Nine is a continuing guaranty and shall (i)
remain in full force and effect until the Obligations and Expenses and all other
amounts payable under this Section Nine shall have been paid in full (subject,
however, to reinstatement under Paragraph 9.2 hereof), (ii) be binding upon
Guarantors and the successors and assigns of Guarantors, and (iii) inure to the
benefit of the holders of the Notes, and be enforceable by them and their
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (iii), any holder of the Notes may, to the extent permitted in
this Agreement endorse, assign or otherwise transfer its Notes to any other
person or entity, and such other person or entity shall thereupon become vested
with all the rights in respect thereof granted to any holder of the Notes herein
or otherwise.
M. Representations and Warranties; Covenants. By signing in the place
provided below, each Guarantor hereby makes the representations and warranties
set forth in this Agreement and hereby agrees to the covenants and other
agreements of the Guarantors to the extent set forth in this Agreement.
X. REGISTRATION, TRANSFER AND EXCHANGE OF NOTES. The Company will
keep at its principal executive office a note register (herein sometimes
referred to as the "Note Register"), in which, subject to such reasonable
regulations as it may prescribe, but at its expense (other than transfer taxes,
if any), it will provide for the registration and transfer of Notes.
Whenever any Note or Notes shall be surrendered either at the principal
executive office of the Company or at the place of payment named in the Notes,
for transfer or exchange, the Company will execute and deliver in exchange
therefor a new Note or Notes, as may be requested by such holder, in the same
aggregate unpaid principal amount of the Note or Notes so surrendered. Each such
new Note shall be payable to such person as such holder may request. Each Note
presented or surrendered for registration of transfer or exchange shall be duly
endorsed, or shall be accompanied by a written instrument of transfer duly
executed, by the registered holder of such Note or its attorney duly authorized
in writing. Any Note issued in exchange for any other Note or upon transfer
thereof shall carry the rights to unpaid interest and
interest to accrue which were carried by the Note so exchanged or transferred,
and neither gain nor loss of interest shall result from any such transfer or
exchange. Any transfer tax relating to such transaction shall be paid by the
holder requesting the exchange.
The Company and any agent of the Company may treat the person in whose
name any Note is registered as the owner of such Note for the purpose of
receiving payment of the principal of and premium (if any) and interest on such
Note and for all other purposes whatsoever, whether or not such Note be overdue.
XI. LOST, ETC., NOTES. Upon receipt by the Company of evidence satisfactory
to it of the loss, theft, destruction or mutilation of any Note, and (in case of
loss, theft or destruction) of indemnity satisfactory to it and upon surrender
and cancellation of such Note, if mutilated, the Company will deliver in lieu of
such Note a new Note in a like unpaid principal amount, dated as of the date to
which interest has been paid thereon.
Notwithstanding the foregoing provisions of this Section, if any Note
of which you or any other institutional holder is the owner is lost, stolen or
destroyed, then the affidavit of your or such holder's Treasurer or Assistant
Treasurer (or other responsible officials) shall be accepted as satisfactory
evidence thereof and no indemnity shall be required as a condition to the
execution and delivery by the Company of a new Note in lieu of such Note (or as
a condition to the payment thereof, if due and payable) other than your or such
holder's written agreement to indemnify the Company.
The Company will keep at its principal executive offices a true copy of
this Agreement (as at the time in effect), and cause the same to be available
for inspection at said office during normal business hours by any holder of a
Note or any prospective purchaser of a Note designated by a holder thereof.
XII. AMENDMENT AND WAIVER.
A. Any term, covenant, agreement or condition of this Agreement or of
the Notes may, with the consent of the Company, be amended, or compliance
therewith may be waived (either generally or in a particular instance and either
retroactively or prospectively) by one or more substantially concurrent written
instruments signed by the Required Holders, provided, however, that no such
amendment or waiver shall:
a. (i) change the rate or the time of payment of interest on any
of the Notes, without the consent of the holder of each Note so affected,
(ii) modify any of the provisions of this Agreement or of the
Notes with respect to the payment or prepayment thereof, or change the
percentage of holders of Notes required to approve any such amendment or
effectuate any such waiver, without the consent of the holders of all the Notes
then outstanding, or
(iii) give to any Note any preference over any other Note,
b. extend to or affect any obligation not expressly waived or
impair any right consequent thereon, and
c. amend, waive or modify the provisions of this Agreement
relating to (i) the covenants set forth in Paragraphs 5.12 through 5.14 and
Section Six hereof; (ii) any of the Events of Default set forth in Paragraph 8.1
hereof; (iii) the mandatory and voluntary prepayment provisions of Paragraphs
4.1, 4.2, 4.3, 4.4, 4.7 and 4.8 hereof; and (iv) any of the definitions relating
to the matters described in clauses (i) through (iii) above, without the
simultaneous amendment, waiver or modification of the corresponding provision of
the Credit Agreement by Banks or Required Banks, as applicable.
B. Any amendment or waiver pursuant to Subsection A of this Section
shall (except as provided in Clause A(1)(i)) apply equally to all the holders of
the Notes and shall be binding upon them, upon each future holder of any Note
and upon the Company, in each case whether or not a notation thereof shall have
been placed on any Note.
C. The Company will not solicit, request or negotiate for or with
respect to any proposed waiver or amendment of any of the provisions of this
Agreement or the Notes unless each holder of any Note (irrespective of the
amount of Notes then owned by it) shall be informed thereof by the Company and
shall be afforded the opportunity of considering the same and shall be supplied
by the Company with sufficient information to enable it to make an informed
decision with respect thereto. Executed or true and correct copies of any
amendment or waiver effected pursuant to the provisions of this Section 12 shall
be delivered by the Company to each holder of outstanding Notes forthwith
following the date on which the same shall have been executed and delivered by
the required percentage of the holders of the Notes. The Company will not,
directly or indirectly, pay or cause to be paid any remuneration, whether by way
of supplemental or additional interest, fee or otherwise, to any holder of any
Note as consideration for or as an inducement to the entering into by any holder
of any Note or any amendment or waiver of any of the terms and provisions of
this Agreement unless such remuneration is concurrently paid, on the same terms,
ratably to the holders of all of the Notes outstanding at the time such offer is
made.
XIII. HOME OFFICE PAYMENT. Notwithstanding anything to the contrary in this
Agreement or the Notes, so long as you or any nominee designated by you shall be
the holder of any Note, the Company shall punctually pay all amounts which
become due and payable on such Note to you at your address and in the manner set
forth in Schedule II hereto, or at such other place and in such other manner as
you may designate by notice to the Company, without presentation or surrender of
such Note. You agree that prior to the sale, transfer or other disposition of
any such Note, you will make notation thereon of the portion of the principal
amount paid or prepaid and the date to which interest has been paid thereon, or
surrender the same in exchange for a Note or Notes aggregating the same
principal amount as the unpaid principal amount of the Note so surrendered. The
Company shall enter into an agreement similar to that contained in this Section
with any other institutional investor (or nominee thereof) who shall hold any of
the Notes.
XIV. LIABILITIES OF THE PURCHASER. Neither this Agreement nor any
disposition of any of the Notes shall be deemed to create any liability or
obligation of you or any other holder of any Note to enforce any provision
hereof or of any of the Notes for the benefit or on behalf of any other person
who may be the holder of any Note.
XV. TAXES. The Company will pay all taxes (including interest and
penalties) which may be payable in respect of the execution and delivery of this
Agreement or of the execution and delivery (but not the transfer) of any of the
Notes or of any amendment of, or waiver or consent under or with respect to,
this Agreement or of any of the Notes and will save you and all subsequent
holders of the Notes harmless against any loss or liability resulting from
nonpayment or delay in payment of any such tax. The obligations of the Company
under this Section shall survive the payment of the Notes.
XVI. MISCELLANEOUS.
A. Expenses. The Company agrees, whether or not the transactions
contemplated by Paragraph 1.2 shall be consummated, to pay all reasonable
expenses incident to such transactions and also in connection with any future
amendment of, or waiver under or with respect to (whether or not the same shall
become effective), this Agreement or any of the Notes, including in each case,
without limitation, all document production and other expenses, the reasonable
fees and disbursements of your special and local counsel for their services in
connection with such transactions, the fees and expenses in connection with the
assignment of the private placement number referred to in Paragraph 3.7 and all
expenses in connection with the shipping to and from your office or the office
of your nominee or custodian bank of the Notes delivered to you on the Closing
Date and to reimburse you for any reasonable out-of-pocket expenses in
connection therewith. The Company also agrees to pay all reasonable expenses
following the occurrence and during the continuance of any Default or Event of
Default or incident to the negotiation of any restructuring, workout or similar
arrangement, whether or not consummated, relating to the Company. The
obligations of the Company under this Paragraph shall survive the payment of the
Notes.
In furtherance of the foregoing paragraph, on the Closing Date, the
Company will pay the fees and disbursements of Milbank, Tweed, Xxxxxx & XxXxxx
and Pepper, Xxxxxxxx & Xxxxxxx LLP which are reflected in the statement of such
special counsel delivered to the Company on or prior to the Closing Date; and
thereafter the Company will pay, promptly upon receipt of supplemental
statements therefor from time to time, additional fees, if any, and
disbursements of such special counsel in connection with the transactions
contemplated by Paragraph 1.2 (including unposted disbursements as of the
Closing Date).
B. Reliance on and Survival of Representations. All agreements,
representations and warranties of the Company or any partner of the Company
herein and in any certificates or other instruments delivered pursuant to this
Agreement shall (A) be deemed to be material and to have been relied upon by
you, notwithstanding any investigation heretofore or hereafter made by you or on
your behalf, and (B) survive the execution and delivery of this Agreement and
the delivery
of the Notes to you, and shall continue in effect so long as any Note is
outstanding and thereafter as provided in Section 15 and Paragraph 16.1.
C. Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of the respective parties hereto shall bind and inure
to the benefit of their respective successors and assigns, except that, in the
case of a successor to the Company by consolidation or merger or a transferee of
its assets, this Agreement shall inure to the benefit of such successor or
transferee only if it becomes such in accordance with Paragraph 6.8; provided,
however, that you shall not be obligated to purchase any Notes on the Closing
Date from any person other than the Company. The provisions of this Agreement
are intended to be for the benefit of all holders, from time to time, of the
Notes, and shall be enforceable by any such holder, whether or not an express
assignment to such holder of rights under this Agreement has been made by you or
your successor or assign, provided, however, that the benefit of Paragraphs 5.2,
5.3, 5.6, Section 11 (as to satisfactory indemnity) and Section 13 shall be
limited as provided therein.
D. Notices. All notices, opinions and other communications provided for
in this Agreement shall be in writing and delivered or mailed, first class
postage prepaid, addressed (A) if to the Company, at the address set forth at
the head of this Agreement (marked for the attention of Vice President-Finance),
or at such other address as the Company may hereafter designate by notice to you
and to each other holder of any Note at the time outstanding, (B) if to you, at
your address as set forth in Schedule II hereto or at such other address as you
may hereafter designate by notice to the Company, or (C) if to any other holder
of any Note, at the address of such holder as it appears on the Note Register or
the records of the Company maintained pursuant to Section 10.
E. Reproduction of Documents. This Agreement and all related documents,
including (a) consents, waivers and modifications which may subsequently be
executed, (b) documents received by you at the closing of your purchase of the
Notes (except the Notes themselves), and (c) financial statements, certificates
and other information previously or subsequently furnished to you, may be
reproduced by you by any photographic, photostatic, microfilm, micro-card,
miniature photographic or other similar process and you may destroy any original
document so reproduced. The Company agrees and stipulates that any such
reproduction shall, to the extent permitted by applicable law, be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not the reproduction
was made by you in the regular course of business) and that any enlargement,
facsimile or further reproduction of the reproduction shall likewise be
admissible in evidence.
F. Law Governing. This Agreement and the Notes shall be governed by and
construed in accordance with the laws of the State of New York.
G. Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect any of the terms hereof.
H. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
If you are in agreement with the foregoing, please sign the form of
acceptance in the space provided below whereupon this Agreement shall become a
binding agreement between you and the Company.
Very truly yours,
SDI OPERATING PARTNERS, L.P.
By: SDI PARTNERS I, L.P., its general partner
By: SUNSUB B INC., its general partner
By: ______________________________
Name:
Title:
SUNSOURCE INC., as Guarantor and for
purposes of making the representations and
warranties, and agreeing to the covenants
and other agreements as set forth in the
Agreement
By:____________________________________
Name:
Title:
SUNSUB A INC., as Guarantor and for purposes
of making the representations and
warranties, and agreeing to the covenants
and other agreements as set forth in the
Agreement
By:____________________________________
Name:
Title:
SUNSUB B INC., as Guarantor and for purposes
of making the representations and
warranties, and agreeing to the covenants
and other agreements as set forth in the
Agreement
By:____________________________________
Name:
Title:
SDI PARTNERS I, L.P., as Guarantor and for
purposes of making the representations and
warranties, and agreeing to the covenants
and other agreements as set forth in the
Agreement
By: SUNSUB B INC., its general partner
By:_______________________________
Name:
Title:
The foregoing Agreement is
hereby accepted as of the date
first above written:
TEACHERS INSURANCE AND
ANNUITY ASSOCIATION OF
AMERICA
By: ___________________________
Name:
Title:
EXHIBIT A
SDI OPERATING PARTNERS, L.P.
SENIOR NOTE DUE 2002
PPN: ____________
Note No. [Date]
$
FOR VALUE RECEIVED, the undersigned, SDI OPERATING PARTNERS, L.P., a
limited partnership organized and existing under the laws of Delaware (herein
called the "Company"), hereby promises to pay to
or registered assigns, the principal sum of
DOLLARS
(or so much thereof as shall not have been prepaid) on September 30, 2002, with
interest (computed on the basis of a 360-day year of twelve 30-day months) on
the unpaid principal hereof at the rate of 7.66% per annum (subject to increase
as provided in Paragraph 1.4 of the Note Purchase Agreement referred to below)
from the date hereof, payable quarterly in arrears on March 30, June 30,
September 30 and December 30 in each year, commencing on December 30, 1997,
until said principal shall have become due and payable, and thereafter to pay
interest (so computed) at the rate per annum equal to the greater of (i) the
prime commercial lending rate of interest announced by The Chase Manhattan Bank
(National Association) at its principal office in New York, New York, as in
effect from time to time, plus 1% or (ii) 8.66%, on any overdue principal and
premium and, to the extent permitted by applicable law, on any overdue interest,
until the same shall be paid. Payments of principal, premium, if any, and
interest are to be made at the office of Xxxxxx Guaranty Trust Company of New
York, New York, in lawful money of the United States of America.
This Note is one of the 7.66% Senior Notes issued pursuant to the Note
Purchase Agreement dated as of September 30, 1997 between the Company and
Teachers Insurance and Annuity Association of America, and is entitled to the
benefits thereof. As provided in said Note Purchase Agreement, this Note is
subject to optional prepayments in whole or in part.
This Note is transferable on the note register of the Company upon
presentment at the principal executive office of the Company or the place of
payment named herein, duly endorsed, or accompanied by a written instrument of
transfer duly executed, by the registered holder hereof or such holder's
attorney duly authorized in writing. As provided in said Note
1
Purchase Agreement, Notes may also be exchanged at such office or place of
payment for a like aggregate principal amount of Notes, as requested by the
holder presenting the same. The Company may deem and treat the person in whose
name this Note is registered as the holder and owner hereof for the purpose of
receiving payments and for all other purposes whatsoever, and the Company shall
not be affected by any notice to the contrary.
In case an Event of Default (as defined in said Note Purchase
Agreement) shall occur and be continuing, the principal of this Note may become
or be declared due and payable in the manner and with the effect provided in
said Note Purchase Agreement.
SDI OPERATING PARTNERS, L.P.
By: SDI PARTNERS I, L.P., its general partner
By: SUNSUB B INC., its general partner
By: _________________________
Name:
Title:
2
EXHIBIT C
Form of Compliance Certificate
To: Each holder of a Note under the Note Purchase Agreement dated
as of September 30, 1997, between the Company and Teachers
Insurance and Annuity Association of America (as amended, the
"Agreement")
Attached hereto are the financial statements and other items required
to be delivered to you pursuant to Paragraph 5.2 or 5.3 of the Agreement. All
capitalized terms used but not defined in this certificate shall have the
meanings set forth in the Agreement.
The undersigned hereby certify that:
1. The attached financial statements were prepared in accordance with
GAAP (except that annual financial statements of SDIPI are prepared on a tax
basis) consistently applied and fairly present the financial condition of
SunSource Inc. and its Consolidated Subsidiaries as of the date made and for the
period covered.
2. As of the date of such financial statements, there exists no
violation of any provision of the Agreement and there has not been an Event of
Default or a Default, except as described in Item 3 below.
3. The following event or circumstance, is, or with the passage of time
or giving of notice will be, an Event of Default:_______________________________
________________________________________________________________________________
_______________________________________________________________________________.
4. The following actions are being taken with respect to the matter(s)
identified in Item 3 above:_____________________________________________________
________________________________________________________________________________
________________________________________________________________________________
_______________________________________________________________________________.
3
5. Attached hereto as Schedule 1 are the calculations of the covenants
set forth in Paragraphs 5.12 through 5.14 and certain paragraphs in Section Six
of the Agreement.
IN WITNESS WHEREOF, the undersigned, being the chief financial officer
or controller of SunSource Inc., has executed and delivered this certificate
this ____ day of _________________, ____.
SUNSOURCE INC., for itself and on behalf
of the Obligors
By: __________________________________
Name:
Title:
