Exhibit 10.1
CREDIT AGREEMENT
Dated as of February 1, 2002
among
PRECISION PARTNERS, INC.,
MID STATE MACHINE PRODUCTS,
NATIONWIDE PRECISION PRODUCTS CORP.,
GALAXY INDUSTRIES CORPORATION,
GENERAL AUTOMATION, INC.,
CERTIFIED FABRICATORS, INC.,
XXXXXXXX MACHINE & TOOL CO., INC.,
and
GALAXY PRECISION PRODUCTS CORP.
as Borrowers,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
GENERAL ELECTRIC CAPITAL CORPORATION
as Lender and Agent
ABLECO FINANCE LLC
as Lender
THE OTHER LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
GECC CAPITAL MARKETS GROUP, INC.
as Lead Arranger
and
GENERAL ELECTRIC CAPITAL CORPORATION
as Revolving Credit Agent
TABLE OF CONTENTS
1. AMOUNT AND TERMS OF CREDIT...........................................
1.1. Credit Facilities..............................................
1.2. Prepayments....................................................
1.3. Use of Proceeds................................................
1.4. Interest and Applicable Margins................................
1.5. Eligible Accounts..............................................
1.6. Eligible Inventory.............................................
1.7. Cash Management Systems........................................
1.8. Fees. .........................................................
1.9. Receipt of Payments...........................................
1.10. Application and Allocation of Payments.........................
1.11. Loan Account and Accounting....................................
1.12. Indemnity......................................................
1.13. Access.........................................................
1.14. Taxes..........................................................
1.15. Capital Adequacy; Increased Costs; Illegality..................
1.16. Reliance on Notices; Appointment of Borrower Representative....
1.17. Letters of Credit..............................................
2. CONDITIONS PRECEDENT.................................................
2.1. Conditions to the Initial Loans, Master Lease and
Letter of Credit.............................................
2.2. Further Conditions to Each Advance or Letter of Credit.........
3. REPRESENTATIONS AND WARRANTIES.......................................
3.1. Corporate Existence; Compliance with Law.......................
3.2. Executive Offices; FEIN........................................
3.3. Corporate Power, Authorization, Enforceable Obligations........
3.4. Financial Statements and Projections...........................
3.5. Material Adverse Effect........................................
3.6. Ownership of Property; Liens...................................
3.7. Labor Matters..................................................
3.8. Ventures, Subsidiaries and Affiliates; Outstanding Stock
and Indebtedness.............................................
3.9. Government Regulation..........................................
3.10. Margin Regulations.............................................
3.11. Taxes .........................................................
3.12. ERISA..........................................................
3.13. No Litigation..................................................
3.14. Brokers........................................................
3.15. Intellectual Property..........................................
3.16. Full Disclosure................................................
3.17. Environmental Matters..........................................
3.18. Insurance......................................................
3.19. Deposit and Disbursement Accounts..............................
3.20. Government Contracts...........................................
3.21. Customer and Trade Relations...................................
3.22. Agreements and Other Documents.................................
3.23. Solvency.......................................................
3.24. Fiscal Year....................................................
3.25. Matters Related to Subordinated Debt...........................
3.26. Master Lease. The Master Lease is a capital lease
as determined in accordance with GAAP........................
4. FINANCIAL STATEMENTS AND INFORMATION.................................
4.1. Reports and Notices............................................
4.2. Communication with Accountants.................................
5. AFFIRMATIVE COVENANTS................................................
5.1. Maintenance of Existence and Conduct of Business...............
5.2. Payment of Obligations.........................................
5.3. Books and Records..............................................
5.4. Insurance; Damage to or Destruction of Collateral..............
5.5. Compliance with Laws...........................................
5.6. Supplemental Disclosure........................................
5.7. Intellectual Property..........................................
5.8. Environmental Matters..........................................
5.9. Landlords' Agreements, Mortgagee Agreements and Bailee Letters.
5.10. Change in Collateral...........................................
5.11. After Acquired Real Property...................................
5.12. Further Assurances.............................................
5.13. Inventory Systems Audit........................................
5.14. Subordinated Debt..............................................
5.15. Reporting......................................................
6. NEGATIVE COVENANTS...................................................
6.1. Mergers, Subsidiaries, Etc.....................................
6.2. Investments; Loans and Advances................................
6.3. Indebtedness...................................................
6.4. Employee Loans, Affiliate Transactions, Management Fees........
6.5. Capital Structure and Business.................................
6.6. Guaranteed Indebtedness........................................
6.7. Liens..........................................................
6.8. Sale of Stock and Assets.......................................
6.9. ERISA..........................................................
6.10. Financial Covenants............................................
6.11. Hazardous Materials............................................
6.12. Sale-Leasebacks................................................
6.13. Cancellation of Indebtedness...................................
6.14. Restricted Payments............................................
6.15. Change of Corporate Name or Location; Change of Fiscal Year....
6.16. No Impairment of Intercompany Transfers........................
6.17. No Speculative Transactions....................................
6.18. Leases.........................................................
6.19. Financing Statements...........................................
7. TERM.................................................................
7.1. Termination....................................................
7.2. Survival of Obligations Upon Termination of
Financing Arrangements.......................................
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES...............................
8.1. Events of Default..............................................
8.2. Remedies.......................................................
8.3. Waivers by Credit Parties......................................
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT..................
9.1. Assignment and Participations..................................
9.2. Appointment of Agents..........................................
9.3. Agent's and Revolving Credit Agent's Reliance, Etc............
9.4. GE Capital and Successor Agent or Revolving Credit Agent
and Affiliates...............................................
9.5. Lender Credit Decision.........................................
9.6. Indemnification................................................
9.7. Successor Agent and Revolving Credit Agent.....................
9.8. Setoff and Sharing of Payments.................................
9.9. Advances; Payments; Non-Funding Lenders; Information;
Actions in Concert...........................................
10. SUCCESSORS AND ASSIGNS...............................................
10.1. Successors and Assigns........................................
11. MISCELLANEOUS........................................................
11.1. Complete Agreement; Modification of Agreement.................
11.2. Amendments and Waivers........................................
11.3. Fees and Expenses.............................................
11.4. No Waiver.....................................................
11.5. Remedies......................................................
11.6. Severability..................................................
11.7. Conflict of Terms.............................................
11.8. Confidentiality...............................................
11.9. GOVERNING LAW.................................................
11.10. Notices......................................................
11.11. Section Titles...............................................
11.12. Counterparts.................................................
11.13. WAIVER OF JURY TRIAL.........................................
11.14. Press Releases...............................................
11.15. Reinstatement................................................
11.16. Advice of Counsel............................................
11.17. No Strict Construction.......................................
12. CROSS GUARANTY AND BORROWER CONTRIBUTION RIGHTS......................
12.1. Cross-Guaranty................................................
12.2. Waivers by Borrowers..........................................
12.3. Benefit of Guaranty...........................................
12.4. Subordination of Subrogation, Etc.............................
12.5. Election of Remedies..........................................
12.6. Limitation....................................................
12.7. Contribution with Respect to Obligations......................
12.8. Liability Cumulative..........................................
12.9. Joint and Several Liability, Etc..............................
CREDIT AGREEMENT
----------------
CREDIT AGREEMENT, dated as of February 1, 2002 among (a) PRECISION
PARTNERS, INC., a Delaware corporation ("Precision"), GALAXY INDUSTRIES
CORPORATION, a Michigan corporation ("Galaxy"), MID STATE MACHINE PRODUCTS, a
Maine corporation ("Mid State"), NATIONWIDE PRECISION PRODUCTS CORP., a New York
corporation ("Nationwide"), GENERAL AUTOMATION, INC., an Illinois corporation
("GA"), CERTIFIED FABRICATORS, INC., a California corporation ("Certified
Fabricators"), XXXXXXXX MACHINE & TOOL CO., INC., a New York corporation
("Xxxxxxxx"), and GALAXY PRECISION PRODUCTS CORP., a Delaware corporation
("GPPC") (Precision, Galaxy, Mid State, Nationwide, GA, Certified Fabricators,
Xxxxxxxx, and GPPC, together with their permitted successors and assigns being
sometimes hereinafter called collectively, "Borrowers"); (b) PRECISION PARTNERS
HOLDING COMPANY, a Delaware corporation ("Holdings"); (c) GENERAL ELECTRIC
CAPITAL CORPORATION, a New York corporation (in its individual capacity, "GE
Capital"), for itself, as Lender, and as Agent for Lenders; (d) GENERAL ELECTRIC
CAPITAL CORPORATION, as Revolving Credit Agent; (e) ABLECO FINANCE LLC, a
Delaware limited liability company ("Ableco") as Lender, and (f) the other
Lenders from time to time party hereto.
RECITALS
WHEREAS, Borrowers desire that Lenders (i) extend revolving and term
credit facilities to Borrowers in the amount of up to Sixty-Nine Million Fifty
Thousand Dollars ($69,050,000.00) in the aggregate, to provide (a) working
capital financing for Borrowers, and (b) funds for the refinancing of certain
senior debt, capital expenditures and other general corporate purposes of
Borrowers, and (ii) make available a capital lease for the lease of equipment
with an original capitalized lessor's cost of Five Million Nine Hundred Fifty
Thousand Dollars ($5,950,000); and for these purposes, Lenders are willing to
make such credit facilities available to Borrowers, upon the terms and
conditions set forth herein; and
WHEREAS, Borrowers desire to secure all of their obligations under the
Operative Documents by granting to Agent or the Revolving Credit Agent, for the
benefit of Lenders, a security interest in and Lien upon substantially all of
their existing and after-acquired personal (other than intercompany debt) and
real property; and
WHEREAS, Borrowers desire to further secure all of their obligations under
the Operative Documents by granting to Agent, for the benefit of Agent and
Lenders, a security interest in all of the issued and outstanding capital stock
of each subsidiary of any of the Borrowers; and
WHEREAS, Holdings is willing to guaranty all of the obligations of
Borrowers to Lenders under the Operative Documents and to pledge to Agent, for
the benefit of Agent and Lenders, all of the capital stock of Precision to
secure such guaranty; and
WHEREAS, capitalized terms used in this Agreement shall have the meanings
ascribed to them in Annex A. All Annexes, Disclosure Schedules, Exhibits and
other attachments (collectively, "Appendices") hereto, or expressly identified
to this Agreement, are incorporated herein by reference, and taken together,
shall constitute but a single agreement. These Recitals shall be construed as
part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, and for other good and valuable consideration, the
parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1. Credit Facilities.
-----------------
1.1.1 Revolving Loan.
a. Subject to the terms and conditions hereof, each Revolving
Lender agrees to make available from time to time until the Commitment
Termination Date its Pro Rata Share of advances (each, a "Revolving Credit
Advance"). The Pro Rata Share of the Revolving Loan of any Revolving Lender
shall not at any time exceed its separate Revolving Loan Commitment. The
obligations of each Revolving Lender hereunder shall be several and not joint.
The aggregate amount of Revolving Credit Advances outstanding shall not exceed
at any time the lesser of (A) the Maximum Amount and (B) the Aggregate Borrowing
Base, in each case less the sum of the Letter of Credit Obligations outstanding
at such time ("Borrowing Availability"). Until the Commitment Termination Date,
Borrowers may from time to time borrow, repay and reborrow under this Section
1.1.1(a). Each Revolving Credit Advance shall be made on notice by Borrower
Representative to the representative of the Revolving Credit Agent identified on
Disclosure Schedule 1.1 at the address specified thereon. Those notices must be
given no later than (1) 11:00 a.m. (New York time) on the Business Day of the
proposed Revolving Credit Advance, in the case of an Index Rate Loan, or (2)
11:00 a.m. (New York time) on the date which is three (3) Business Days prior to
the proposed Revolving Credit Advance, in the case of a LIBOR Loan. Each such
notice (a "Notice of Revolving Credit Advance") may be given by telephone
(promptly confirmed by a written notice substantially in the form of Exhibit
1.1.1(a), which notice shall include the information required in such Exhibit
and such other information as the Revolving Credit Agent shall have otherwise
previously reasonably requested). If the Borrowers desire to have the Revolving
Credit Advances bear interest by reference to a LIBOR Rate, Borrower
Representative must comply with Section 1.4(e).
b. Borrowers shall execute and deliver to the Revolving Credit
Agent, for the benefit of each Revolving Lender, a note to evidence Borrowers'
joint and several obligation to repay all Advances with interest. The note shall
be in the principal amount equal to the Maximum Amount, dated the Closing Date
and substantially in the form of Exhibit 1.1.1(b) (the "Revolving Note"). The
Revolving Note shall represent the obligation of Borrowers to jointly and
severally pay the amount of all Revolving Credit Advances together with interest
thereon as prescribed in Section 1.4. The entire unpaid balance of the aggregate
Revolving Credit Advances and all other non-contingent Obligations shall be
immediately due and payable in full in immediately available funds on the
Commitment Termination Date. Each payment of principal with respect to the
Revolving Credit Advances shall be paid to the Revolving Credit Agent for the
benefit of the Revolving Lenders ratably in proportion to each such Revolving
Lender's Revolving Commitment.
1.1.2 Term Loan.
a. Subject to the terms and conditions hereof, Term Lenders
agree to make a term loan (the "Term Loan") on the Closing Date to the Borrowers
in the original principal amount of the Term Loan Commitment. The obligations of
each Term Lender hereunder shall be several and not joint. The portion of the
Term Loan made by each Term Lender shall be evidenced by a promissory note
substantially in the form of Exhibit 1.1.2(a) (each a "Term Note", and
collectively, the "Term Notes"), and Borrowers shall execute and deliver the
Term Notes to the respective Term Lenders in the principal amounts hereinafter
set forth:
GE Capital $19,050,000
Ableco $25,000,000
Each Term Note shall represent the obligation of the Borrowers to jointly
and severally pay the portion of the Term Loan advanced by the Term Lender to
whom such Term Note is payable, together with interest thereon as prescribed in
Section 1.4.
b. Borrowers shall jointly and severally pay the principal
amount of the Term Loan in fourteen (14) consecutive quarterly installments on
the first day of January, April, July and October of each year, commencing
October 1, 2002, as follows (as such amounts are reduced by the application of
prepayments made pursuant to Section 1.2):
Payment Date Installment Amount
------------ ------------------
October 1, 2002 $1,101,250
January 1, 2003 $1,101,250
April 1, 2003 $1,101,250
July 1, 2003 $1,101,250
October 1, 2003 $1,101,250
January 1, 2004 $1,101,250
April 1, 2004 $1,101,250
July 1, 2004 $1,101,250
October 1, 2004 $1,101,250
January 1, 2005 $1,101,250
April 1, 2005 $2,202,500
July 1, 2005 $2,202,500
October 1, 2005 $2,202,500
January 1, 2006 $26,430,000
c. Notwithstanding the foregoing Section 1.1.2(b), the
outstanding principal balance of the Term Loan and the Master Lease shall be due
and payable in full in immediately available funds if the Revolving Loan
Commitment of all Lenders is terminated voluntarily or involuntarily at any
time.
d. Each payment of principal with respect to the Term Loan
shall be paid to Agent for the benefit of the Term Lenders ratably in proportion
to each such Term Lender's Term Loan Commitment.
1.2. Prepayments.
-----------
1.2.1 Voluntary Prepayments. Borrowers may at any time on at least
two (2) Business Days' prior written notice in the case of LIBOR Loans, or one
(1) Business Day's prior written notice in the case of Index Rate Loans by
Borrower Representative to Agent (and to Revolving Credit Agent, if applicable)
(i) voluntarily prepay all or part of the Term Loan to a principal balance not
less than the then-outstanding unamortized capitalized lessor's cost under the
Master Lease, (ii) voluntarily prepay all or part of the Revolving Credit
Advances at any time without reducing the Revolving Loan Commitment, and/or
(iii) permanently reduce the Revolving Loan Commitment to an amount not less
than $20,000,000; provided that any prepayments of the Term Loan or permanent
reductions in the Revolving Loan Commitment shall be in a minimum amount of
$1,000,000 and integral multiples of $100,000 in excess of such amount. Any such
voluntary prepayment of the Term Loan must be accompanied by the payment of the
fee required by Section 1.8(c), if any, plus the payment of any LIBOR funding
breakage costs in accordance with Section 1.12(b). Each notice of partial
prepayment shall designate the Loans or other Obligations to which such
prepayment is to be applied, provided that any partial prepayments of the Term
Loan shall be applied to prepay the scheduled installments of the Term Loan in
the inverse order of maturity.
1.2.2 Mandatory Prepayments.
a. If at any time the outstanding balance of the aggregate
Revolving Credit Advances exceeds the Borrowing Availability, Borrowers shall
immediately repay the aggregate outstanding Revolving Credit Advances to the
extent required to eliminate such excess. If any such excess remains after
repayment in full of the aggregate outstanding Revolving Credit Advances,
Borrowers shall provide cash collateral for the Letter of Credit Obligations in
the manner set forth in Annex B to the extent required to eliminate such excess.
b. Immediately upon receipt by any Credit Party of proceeds of
any asset disposition (including condemnation proceeds, but excluding proceeds
of asset dispositions permitted by Section 6.8 (a), (b), (c), and (h)) or any
sale of Stock of any Subsidiary of any Credit Party, unless a Reinvestment
Notice is delivered to the Agent prior to or simultaneously with the receipt of
such proceeds and the conditions set forth in the Section 1.18 are met,
Borrowers shall prepay the outstanding Obligations in an amount equal to all Net
Cash Proceeds. If the Borrowers shall send a Reinvestment Notice indicating that
the Borrowers intend to use less than all of the Net Cash Proceeds for
restoration or replacement, any portion of the Net Cash Proceeds which is not
deposited into the reinvestment cash collateral account described in Section
1.18 below shall be applied to prepayment of the outstanding Obligations. Any
prepayment under this Section 1.2.2(b) shall be applied in accordance with
Section 1.2.3 or Section 6.8(g) below.
c. If Holdings issues Stock, no later than the Business Day
following the date of receipt of the proceeds thereof (except equity, the
proceeds of which will be used, within 90 days for permitted capital
expenditures, the repurchasing of the Subordinated Notes, and the repurchase of
stock from employees and former employees for a maximum aggregate amount of
$1,000,000), the Borrowers shall prepay the outstanding Obligations in an amount
equal to all Net Cash Proceeds. Any such prepayment shall be applied in
accordance with Section 1.2.3 below.
d. If for any Fiscal Year of the Borrowers, commencing with
the fiscal year ending December 31, 2002, there shall be Excess Cash Flow, the
Borrowers shall, on the relevant Excess Cash Flow Application Date, apply 75% of
such Excess Cash Flow toward repayment of the outstanding Obligations as set
forth in Section 1.2.3; provided that the required percentage of Excess Cash
Flow to be applied to prepayments pursuant to this Section 1.2.2(d) shall be
reduced to 50% for so long as the Borrowers' most recent Consolidated Senior
Leverage Ratio is less than 2.0 to 1.0. Each such payment shall be made on a
date (an "Excess Cash Flow Application Date") no later than five Business Days
after the earlier of (i) the date upon which the financial statements of the
Borrowers for the Fiscal Year with respect to which such prepayment is made are
required to be delivered as hereinafter provided, or (ii) the date such
statements are actually delivered.
e. The Borrowers will immediately prepay the outstanding
principal amount of the Term Loan and the Master Lease in the event that the
entire Revolving Loan Commitment is terminated for any reason.
f. Upon the issuance or incurrence by any Credit Party or any
of its Subsidiaries of any Indebtedness (other than Indebtedness permitted by
Section 6.3(a)), the Borrowers shall prepay the outstanding Obligations in an
amount equal to 100% of the Net Cash Proceeds of such issuance or incurrence of
Indebtedness. Any such prepayment shall be applied in accordance with the
provisions of Section 1.2.3 below.
g. Upon the receipt by any Credit Party or any of its
Subsidiaries of any Extraordinary Receipts the Borrowers shall prepay the
outstanding Obligations in an amount equal to 100% of the Net Cash Proceeds of
such Extraordinary Receipts, to be applied in accordance with Section 1.2.3
below.
1.2.3 Application of Certain Mandatory Prepayments. Any prepayments
made by Borrowers pursuant to Sections 1.2.2(b), 1.2.2(c), 1.2.2(d), 1.2.2(f) or
1.2.2(g) above (other than a prepayment made in connection with the sale of the
assets described on Disclosure Schedule 6.8) shall be applied as follows:
a. Any mandatory prepayments arising from the sale or
disposition of (i) Accounts arising from the sale or lease of Inventory or the
rendition of services or (ii) Inventory, or from Recovery Events relating to
Inventory, or from the Extraordinary Receipts arising in connection with amounts
due in connection with Accounts arising from the sale or lease of Inventory or
the rendition of services or Inventory shall be applied: first, to interest then
due and payable on Revolving Credit Advances made to Borrowers; second, to the
principal balance of Revolving Credit Advances outstanding to Borrowers until
the same shall have been paid in full; third to interest then due and payable on
the Term Loan and the Master Lease ratably based upon the Pro Rata Shares held
by the respective Term Lenders and Lessors; fourth, to prepay the Term Loan
until the principal balance of the Term Loan is not greater than the unamortized
capitalized lessor's cost under the Master Lease; and fifth to the principal
balance of the Term Loan and the unamortized capitalized lessor's cost under the
Master Lease, ratably based upon the Pro Rata Shares held by the respective Term
Lenders and Lessors.
b. Any mandatory prepayments arising from the sale or
disposition of all of the stock of a Borrower shall be applied as follows: An
amount equal to the book value of the Accounts arising from the sale or lease of
Inventory or the rendition of services and Inventory of such Borrower shall be
applied first to interest then due and payable on Revolving Credit Advances made
to Borrowers; and second, to the principal balance of Revolving Credit Advances
outstanding to Borrowers until the same shall have been paid in full; third to
interest then due and payable on the Term Loan and the Master Lease ratably
based upon the Pro Rata Shares held by the respective Term Lenders and Lessors;
fourth, to prepay the Term Loan until the principal balance of the Term Loan is
not greater than the unamortized capitalized lessor's cost under the Master
Lease; and fifth to the principal balance of the Term Loan and the unamortized
capitalized lessor's cost under the Master Lease, ratably based upon the Pro
Rata Shares held by the respective Term Lenders and Lessors. The remainder of
any such mandatory prepayment shall be applied first, to interest then due and
payable on the Term Loan and the Master Lease ratably based upon the Pro Rata
Shares held by the respective Term Lenders and Lessors; second, to prepay the
Term Loan until the principal balance of the Term Loan is not greater than the
unamortized capitalized lessor's cost under the Master Lease; third, to the
principal balance of the Term Loan and the unamortized capitalized lessor's cost
under the Master Lease, ratably based upon the Pro Rata Shares held by the
respective Term Lenders and Lessors; fourth, to interest then due and payable on
Revolving Credit Advances made to Borrowers; and fifth, to the principal balance
of Revolving Credit Advances outstanding to Borrowers until the same shall have
been paid in full.
c. Any mandatory prepayments other than those covered by
Sections (a) and (b) above shall be applied: first, to interest then due and
payable on the Term Loan and the Master Lease ratably based upon the Pro Rata
Shares held by the respective Term Lenders and Lessors; second, to prepay the
Term Loan until the principal balance of the Term Loan is not greater than the
unamortized capitalized lessor's cost under the Master Lease; third, to the
principal balance of the Term Loan and the unamortized capitalized lessor's cost
under the Master Lease ratably based upon the Pro Rata Shares held by the
respective Term Lenders and Lessors; fourth, to interest then due and payable on
Revolving Credit Advances made to Borrowers; and fifth, to the principal balance
of Revolving Credit Advances outstanding to Borrowers until the same shall have
been paid in full.
1.2.4 Nothing in this Section 1.2 shall be construed to constitute
Agent's or any Lender's consent to any transaction referred to in Section 1.2.2
above that is not permitted by other provisions of this Agreement or the other
Operative Documents. The Revolving Loan Commitment shall not be permanently
reduced by the amount of any such prepayments. All prepayments applied to the
principal balance of the Term Loan or the unamortized capitalized lessor's cost
under the Master Lease shall be applied to scheduled payments in the inverse
order of maturity. Anything in the foregoing to the contrary notwithstanding, in
the event that a mandatory prepayment becomes due under this Section 1.2 on a
date other than at the end of a LIBOR Period, in lieu of making the mandatory
prepayment on such date and incurring LIBOR breakage costs, the Borrower may
(but shall not be obligated to), on the date upon which such mandatory
prepayment is due, deposit the amount of such mandatory prepayment with the
Agent, or its designee, as cash collateral, to be applied as set forth above on
the last day of the then-applicable LIBOR Period. The Borrowers hereby grant to
the Agent, for the benefit of the Lenders, a security interest in any monies so
deposited.
1.3. Use of Proceeds.
---------------
Borrowers shall utilize the proceeds of the Term Loan, the Master
Lease, and the Revolving Loan solely for the Refinancing (and to pay any related
transaction expenses), and for the financing of Borrowers' working capital,
capital expenditures and general corporate needs (but excluding in any event the
making of any Restricted Payment not specifically permitted by Section 6.14).
Disclosure Schedule 1.3 contains a description of Borrowers' sources and uses of
funds as of the Closing Date, including Loans, proceeds of the Master Lease, and
Letter of Credit Obligations to be made or incurred on that date, and a funds
flow memorandum detailing how funds from each source are to be transferred to
particular uses.
1.4. Interest and Applicable Margins.
-------------------------------
a. Borrowers shall pay (i) Revolving Credit Agent, for the
ratable benefit of Revolving Lenders, in arrears on each applicable Interest
Payment Date, interest on the aggregate Revolving Credit Advances outstanding
from time to time at the Index Rate plus the Applicable Revolver Index Margin
or, at the election of Borrower Representative as hereinafter set forth, at the
applicable LIBOR Rate plus the Applicable Revolver LIBOR Margin; and (ii) Agent,
for the benefit of the Term Lenders ratably in proportion to each such Term
Lender's Term Loan Commitment, in arrears on each applicable Interest Payment
Date, interest on the Term Loan, at the applicable LIBOR Rate plus the
Applicable Term Loan LIBOR Margin; provided, however, that in no event shall the
rate of interest payable on the Term Loan be lower than the Applicable Term Loan
Floor.
b. If any payment on any Loan becomes due and payable on a day
other than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR Period)
and, with respect to payments of principal, interest thereon shall be payable at
the then applicable rate during such extension.
c. All computations of Fees calculated on a per annum basis
and interest shall be made by Agent, or Revolving Credit Agent, as applicable,
on the basis of a three hundred and sixty (360) day year, in each case for the
actual number of days occurring in the period for which such interest and Fees
are payable (including the first day, but excluding the last day). The Index
Rate shall be determined each day based upon the Index Rate as in effect each
day. Each determination by Agent, or Revolving Credit Agent, as applicable, of
any interest rate and Fees hereunder shall be conclusive, absent demonstrable
error.
d. So long as an Event of Default shall have occurred and be
continuing, the interest rates applicable to the Loans, the Master Lease and the
Letter of Credit Fees shall be increased to the Default Rate and interest at the
Default Rate shall accrue from the initial date of such Event of Default until
that Event of Default is cured or waived in writing and shall be payable upon
demand.
e. So long as no Event of Default shall have occurred and be
continuing, and subject to the conditions precedent set forth in this Section
1.4(e), Borrower Representative shall have the option to (i) request that any
Revolving Credit Advance be made as a LIBOR Loan, (ii) convert at any time all
or any part of the outstanding balance of the Revolving Credit Advances from an
Index Rate Loan to a LIBOR Loan, (iii) convert at any time all or any part of
the outstanding balance of the Revolving Credit Advances from a LIBOR Loan to an
Index Rate Loan, subject to payment of LIBOR breakage costs in accordance with
Section 1.12(b) if such conversion is made prior to the expiration of the LIBOR
Period applicable thereto, or (iv) continue all or any portion of the Revolving
Credit Advances as a LIBOR Loan upon the expiration of any applicable LIBOR
Period and the succeeding LIBOR Period of that continued portion of such
Revolving Credit Advances shall commence on the last day of the preceding LIBOR
Period. Any Index Rate Loan to be made or continued as, or converted into, a
LIBOR Loan must be in a minimum amount of $1,000,000 or an integral multiple of
$100,000 in excess of such amount. Any such election must be made by 11:00 a.m.
(New York time) on the third (3rd) Business Day prior to (1) the date of any
proposed Advance which is to bear interest at a rate based upon LIBOR Rate, (2)
the end of each LIBOR Period with respect to any LIBOR Loan to be continued as
such, or (3) the date on which Borrower Representative wishes to convert any
Index Rate Loan to a LIBOR Loan for a LIBOR Period designated by Borrower
Representative in such election, or one (1) Business Day prior to the date on
which the Borrower Representative wishes to convert any LIBOR Loan to an Index
Rate Loan. If no election is received with respect to a LIBOR Loan by 11:00 a.m.
(New York time) on the third (3rd) Business Day prior to the end of the LIBOR
Period with respect thereto (or if an Event of Default shall have occurred and
be continuing), that LIBOR Loan shall be converted to an Index Rate Loan at the
end of its LIBOR Period. If Borrower Representative desires to make an election
as set forth above, Borrower Representative must make such election to Revolving
Credit Agent by telephonic notice promptly confirmed in writing, by telecopy or
overnight courier, and in the case of any conversion or continuation made by
election of the Borrowers, such written confirmation must be made pursuant to a
written notice (a "Notice of Conversion/Continuation") in the form of Exhibit
1.4(e).
f. Notwithstanding anything to the contrary set forth in this
Section 1.4, if a court of competent jurisdiction determines in a final order
that the rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "Maximum Lawful Rate"), then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate; provided, however, that if at any time
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrowers shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Agent, on behalf
of Term Lenders or received by Revolving Credit Agent on behalf of Revolving
Lenders, as applicable, is equal to the total interest which would have been
received had the interest rate payable hereunder been (but for the operation of
this paragraph) the interest rate payable since the Closing Date as otherwise
provided in this Agreement. Thereafter, interest hereunder shall be paid at the
rate(s) of interest and in the manner provided in Sections 1.4(a) through (d)
above, unless and until the rate of interest again exceeds the Maximum Lawful
Rate, and at that time this paragraph shall again apply. In no event shall the
total interest received by any Lender pursuant to the terms hereof exceed the
amount which such Lender could lawfully have received had the interest due
hereunder been calculated for the full term hereof at the Maximum Lawful Rate.
If the Maximum Lawful Rate is calculated pursuant to this paragraph, such
interest shall be calculated at a daily rate equal to the Maximum Lawful Rate
divided by the number of days in the year in which such calculation is made. If,
notwithstanding the provisions of this Section 1.4(f), a court of competent
jurisdiction shall finally determine that a Lender has received interest
hereunder in excess of the Maximum Lawful Rate, Agent or Revolving Credit Agent,
as applicable shall, to the extent permitted by applicable law, promptly apply
such excess in the order specified in Section 1.10 and thereafter shall refund
any excess to Borrowers or as a court of competent jurisdiction may otherwise
order.
1.5. Eligible Accounts.
-----------------
Based on the most recent Borrowing Base Certificate delivered by the
Borrowers to Revolving Credit Agent and on other information available to
Revolving Credit Agent, Revolving Credit Agent shall in its reasonable credit
judgment determine which Accounts of each Borrower shall be "Eligible Accounts"
for purposes of this Agreement. In determining whether a particular Account of
any Borrower constitutes an Eligible Account, Revolving Credit Agent shall not
include any such Account to which any of the exclusionary criteria set forth
below applies. Revolving Credit Agent reserves the right, at any time and from
time to time after the Closing Date, upon not less than two Business Days'
notice to the Borrowers, to adjust any such criteria, to establish new criteria
and to adjust advance rates with respect to Eligible Accounts, in its reasonable
credit judgment, subject to the approval of Requisite Lenders in the case of
adjustments or new criteria or changes in advance rates which have the effect of
making more credit available than would otherwise be available hereunder based
upon the criteria, advance rates and Reserves established as of the Closing
Date. Eligible Accounts shall not include any Account of any Borrower:
a. which does not arise from the sale of goods or the performance of
services by such Borrower in the ordinary course of its business;
b. (i) upon which such Borrower's right to receive payment is not
absolute or is contingent upon the fulfillment of any condition whatsoever or
(ii) as to which such Borrower is not able to bring suit or otherwise enforce
its remedies against the Account Debtor through judicial process or (iii) if the
Account represents a progress billing consisting of an invoice for goods sold or
used or services rendered pursuant to a contract under which the Account
Debtor's obligation to pay that invoice is subject to such Borrower's completion
of further performance under such contract or is subject to the equitable Lien
of a surety bond issuer, in each case to the extent of the amount that is
contingent, unenforceable or uncollectible;
c. as to which any defense, counterclaim, setoff or dispute is
asserted, to the extent such defense, counterclaim, setoff, or dispute is
asserted;
d. that is not a true and correct statement of bona fide
indebtedness incurred in the amount of the Account for merchandise sold to or
services rendered and accepted by the applicable Account Debtor;
e. with respect to which (i) the applicable invoice is a form that
is unacceptable to the Revolving Credit Agent, as previously notified to the
Borrowers in writing, or (ii) an invoice has not been sent to the applicable
Account Debtor;
f. that (i) is not owned by such Borrower or (ii) is subject to any
right, claim, security interest or other similar interest of any other Person,
other than Liens in favor of Agent or Revolving Credit Agent, on behalf of the
Lenders and inchoate Liens for monies not yet due and payable;
g. that arises from a sale to any other Credit Party or to any
director, officer, other employee or Affiliate of any Credit PARTY;
h. that is the obligation of an Account Debtor that is the United
States government or a political subdivision thereof, or any state or
municipality or department, agency or instrumentality thereof unless Revolving
Credit Agent, in its sole discretion, has agreed to the contrary in writing and
such Borrower has complied with the Federal Assignment of Claims Act of 1940,
and any amendments thereto, or any applicable state statute or municipal
ordinance of similar purpose and effect, with respect to such obligation;
i. that is the obligation of an Account Debtor located in a foreign
country other than Canada (excluding the provinces of Quebec, Newfoundland, Nova
Scotia and Xxxxxx Xxxxxx Island) unless payment thereof is assured by a letter
of credit assigned and delivered to Revolving Credit Agent, reasonably
satisfactory to Revolving Credit Agent as to form, amount and issuer;
j. to the extent such Borrower or any Subsidiary thereof is liable
for goods sold or services rendered by the applicable Account Debtor to such
Borrower or any Subsidiary thereof;
k. that arises with respect to goods which are delivered on a
xxxx-and-hold, cash-on-delivery basis or placed on consignment, guaranteed sale
or other terms by reason of which the payment by the Account Debtor is or may be
conditional;
l. that is in default; provided, that, without limiting the
generality of the foregoing, an Account shall be deemed in default upon the
occurrence of any of the following:
(1) it is not paid within the earlier of: ninety (90) days
following its due date or one hundred (100) days following its original
invoice date;
(2) if any Account Debtor obligated upon such Account suspends
business, makes a general assignment for the benefit of creditors or fails
to pay its debts generally as they come due; or
(3) if any petition is filed by or against any Account Debtor
obligated upon such Account under any bankruptcy law or any other federal,
state or foreign (including any provincial) receivership, insolvency
relief or other law or laws for the relief of debtors, unless such
petition has been dismissed or terminated;
m. which is the obligation of an Account Debtor if fifty percent
(50%) or more of the dollar amount of all Accounts owing by that Account Debtor
to the Borrowers taken as a whole are ineligible under the other criteria set
forth in this Section 1.5 (other than pursuant to Sections (j), (q), or (r) of
this Section 1.5);
n. as to which Agent's Lien or the Revolving Credit Agent's Lien
thereon, on behalf of the Lenders, is not a first priority perfected Lien
(except that an Account may be subject to inchoate Liens for monies not yet due
and payable);
o. as to which any of the representations or warranties pertaining
to Accounts set forth in this Agreement or the Security Agreement is untrue in
any material respect;
p. to the extent such Account is evidenced by a judgment, Instrument
or Chattel Paper;
q. to the extent such Account exceeds any credit limit established
by Revolving Credit Agent, in its reasonable discretion;
r. to the extent that such Account, together with all other Accounts
owing by such Account Debtor as of any date of determination, exceed twenty
percent (20%) of all Eligible Accounts of the Borrowers taken as a whole;
provided, however, that the Revolving Credit Agent, in its discretion, without
the need for Lender approval, may permit Accounts owed by any one or more of
Bosch Rexroth Corporation, New Venture Gear, Xxxxxx-Xxxxx, a subsidiary of TRW,
Inc., Xxxxxxx Kodak, General Electric Company, General Electric Company Gas
Turbine Outsourcing Operation, XXXX Corporation, or Caterpillar, Inc. to be
treated as Eligible Accounts to the extent that the Accounts owed by any of such
entities exceeds 20% of all Eligible Accounts of the Borrowers taken as a whole,
so long as the Accounts of any such entity shall not be deemed to be Eligible
Accounts to the extent that the Accounts of any such entity exceed 30% of total
Eligible Accounts of the Borrowers taken as a whole;
s. which is payable in any currency other than Dollars; or
t. which is unacceptable to Revolving Credit Agent in its reasonable
credit judgment.
1.6. Eligible Inventory.
------------------
Based on the most recent Borrowing Base Certificate delivered by the
Borrowers to Revolving Credit Agent and on other information available to
Revolving Credit Agent, Revolving Credit Agent shall in its reasonable credit
judgment determine which Inventory of each Borrower shall be "Eligible
Inventory" for purposes of this Agreement. In determining whether any particular
Inventory of any Borrower constitutes Eligible Inventory, Revolving Credit Agent
shall not include any such Inventory to which any of the exclusionary criteria
set forth below applies. Revolving Credit Agent reserves the right, at any time
and from time to time after the Closing Date, upon not less than two Business
Days' notice to the Borrowers, to adjust any such criteria, to establish new
criteria and to adjust advance rates with respect to Eligible Inventory, in its
reasonable credit judgment, subject to the approval of Requisite Lenders in the
case of adjustments or new criteria or changes in advance rates which have the
effect of making more credit available than would otherwise be available
hereunder based upon the eligibility criteria, advance rates, and Reserves
established on the Closing Date. Eligible Inventory shall not include any
Inventory of any Borrower that:
a. is not owned by such Borrower free and clear of all Liens and
rights of any other Person (including the rights of a purchaser that has made
progress payments and the rights of a surety that has issued a bond to assure
such Borrower's performance with respect to that Inventory), except the Liens in
favor of Agent, on behalf the Lenders, and Permitted Encumbrances in favor of
landlords, warehouseman, and bailees to the extent permitted in Section 5.9
hereof (subject to Reserves established by Revolving Credit Agent in accordance
with Section 5.9 hereof), and inchoate Liens for monies not yet due and payable;
b. is (i) not located on premises owned or leased by such Borrower
or (ii) is stored with a bailee, warehouseman or similar Person, unless
Revolving Credit Agent has given its prior consent thereto and unless (x) a
satisfactory bailee letter or landlord waiver has been delivered to Revolving
Credit Agent, or (y) Reserves satisfactory to Revolving Credit Agent have been
established with respect thereto, or (iii) located at any site if the aggregate
book value of Inventory at such location is less than $100,000;
c. is placed on consignment or is in transit;
d. is covered by a negotiable document of title, unless such
document has been delivered to Agent with all necessary endorsements, free and
clear of all Liens except those in favor of Agent and Lenders and inchoate Liens
for monies not yet due and payable;
e. in Revolving Credit Agent's reasonable determination, is excess,
obsolete, unsalable, shopworn, seconds, damaged or unfit for sale;
f. consists of display items or packing or shipping materials,
manufacturing supplies, or replacement parts for Equipment of any Borrower;
g. consists of goods which have been returned by the buyer;
h. is not of a type held for sale in the ordinary course of such
Borrower's business;
i. as to which Agent's Lien, on behalf the Lenders, therein is not a
first priority perfected Lien (except that Inventory may be subject to inchoate
Liens for monies not yet due and payable);
j. as to which any of the representations or warranties pertaining
to Inventory set forth in this Agreement or the Security Agreement is untrue in
any material respect;
k. consists of Hazardous Materials or goods that can be transported
or sold only with licenses that are not readily available;
l. is not covered by casualty insurance acceptable to Revolving
Credit Agent; or
m. is otherwise unacceptable to Revolving Credit Agent in its
reasonable credit judgment.
1.7. Cash Management Systems.
-----------------------
Borrowers will establish and will maintain until the Termination
Date, the cash management systems described on Annex C (the "Cash Management
Systems").
1.8. Fees.
----
a. Borrowers shall pay to GE Capital and Ableco, as applicable,
individually, the Fees specified in the Fee Letter, at the times specified for
payment therein.
b. As additional compensation for the Revolving Lenders, Borrowers
agree to pay to Revolving Credit Agent, for the ratable benefit of the Revolving
Lenders, in arrears, on the first Business Day of each month prior to the
Commitment Termination Date and on the Commitment Termination Date, a fee for
Borrowers' non-use of available funds in an amount equal to one half of one
percent (1/2%) per annum (the "Applicable Unused Line Fee Margin") (calculated
on the basis of a 360 day year for actual days elapsed in the period for which
Applicable Unused Line Fee Margin is payable, including the first day, but
excluding the last day of such period) of the difference between (x) the Maximum
Amount (as it may be reduced from time to time) and (y) the average for the
period of the daily closing balances of the aggregate Revolving Credit Advances
and Letter of Credit Obligations outstanding during the period for which such
fee is due.
c. If Borrowers prepay all or any portion of the Term Loan or the
Master Lease, whether voluntarily or involuntarily and whether before or after
acceleration of the Obligations, Borrowers shall pay to Agent, for the ratable
benefit of the Lenders, as liquidated damages and compensation for the costs of
being prepared to make funds available hereunder an amount determined by
multiplying the Applicable Percentage (as defined below) by the principal amount
of the Term Loan or Master Lease prepaid. As used herein, the term "Applicable
Percentage" shall mean (w) three percent (3%), in the case of a prepayment on or
prior to the first anniversary of the Closing Date, (x) one and one half percent
(1.5%), in the case of a prepayment after the first anniversary of the Closing
Date but on or prior to the second anniversary, and (y) one percent (1%), in the
case of a prepayment after the second anniversary of the Closing Date but on or
prior to the third anniversary and (z) one half of one percent (1/2%), in the
case of a prepayment after the third anniversary of the Closing Date but prior
to the fourth anniversary. Notwithstanding the foregoing, no prepayment fee
shall be payable by Borrowers upon a mandatory prepayment made pursuant to
Sections 1.2.2(b), 1.2.2(c), 1.2.2(d), 1.2.2(f), 1.2.2(g) or 6.8(g) or if the
Loans and Master Lease are refinanced by a credit facility in which GE Capital
acts as agent; and, in the case of prepayments made pursuant to Section 1.2.2(b)
or 1.2.2(c), the transaction giving rise to the applicable prepayment is
expressly permitted under Section 6.
1.9. Receipt of Payments.
-------------------
Borrowers shall make each payment under this Agreement not later
than 2:00 p.m. (New York time) on the day when due in immediately available
funds in Dollars. All payments due with respect to the Term Loan shall be made
directly to the Agent for the benefit of the Term Lenders in accordance with the
wiring instructions set forth on Schedule 1.9 hereto, or in accordance with such
other payment instructions as the Agent shall deliver to the Borrower
Representative, and all payments made with respect to the Revolving Loan shall
be made directly to the Collection Account. For purposes of computing interest
and Fees and determining Borrowing Availability or Net Borrowing Availability as
of any date, all payments shall be deemed received on the day of receipt of
immediately available funds therefore by the Agent or in the Collection Account,
as applicable, prior to 2:00 p.m. New York time. Payments received after 2:00
p.m. New York time on any Business Day shall be deemed to have been received on
the following Business Day.
1.10. Application and Allocation of Payments.
--------------------------------------
a. So long as no Event of Default shall have occurred and be
continuing, (i) payments consisting of proceeds of Accounts arising from the
sale or lease of Inventory or the rendition of services and Inventory received
in the ordinary course of business shall be applied to the Revolving Loan
Obligations; (ii) payments matching specific scheduled payments then due shall
be applied to those scheduled payments; (iii) voluntary prepayments shall be
applied as determined by Borrower Representative, subject to the provisions of
Section 1.2.1; and (iv) mandatory prepayments shall be applied as set forth in
Section 1.2.3 or Section 6.8(g), as applicable. All payments and prepayments
applied to the Term Loan shall be applied for the benefit of the Term Lenders
ratably in proportion to each such Term Lender's Commitment with respect to the
Term Loan. All payments and prepayments applied to the Revolving Loan shall be
applied for the benefit of the Revolving Lenders ratably in proportion to each
such Revolving Lender's Commitment with respect to the Revolving Loan. All
payments and prepayments applied to the Master Lease shall be applied for the
benefit of the Lessors ratably in proportion to each such Lessor's Commitment
with respect to the Master Lease.
b. At any time when an Event of Default shall have occurred
and be continuing, any amounts received by the Agent, the Revolving Credit Agent
or the Lenders shall be applied as follows:
(i) Any proceeds of the disposition of Accounts arising from the
sale or lease of Inventory or the rendition of services or Inventory shall be
applied: first, ratably to pay the Revolving Loan Obligations in respect of any
fees and reimbursements, indemnities and other similar amounts due to Revolving
Lenders or the Revolving Credit Agent until paid in full; second, to interest
then due and payable on Revolving Credit Advances made to Borrowers until paid
in full; third, to the principal balance of Revolving Credit Advances
outstanding to Borrowers until the same shall have been paid in full and then to
a cash collateral account to secure the Letter of Credit Obligations; fourth,
ratably to pay the Term Loan Obligations and the Master Lease Obligations in
respect of any fees and reimbursements, indemnities and other similar amounts
due to Term Lenders, Lessors, or Agent until paid in full; fifth, to interest
then due and payable on the Term Loan and the Master Lease ratably based upon
the Pro Rata Shares held by the respective Term Lenders and Lessors; sixth, to
prepay the Term Loan until the principal balance of the Term Loan is not greater
than the unamortized capitalized lessor's cost under the Master Lease; and
seventh to the principal balance of the Term Loan and the unamortized
capitalized lessor's cost under the Master Lease, ratably based upon the Pro
Rata Shares held by the respective Term Lenders and Lessors.
(ii) Any mandatory prepayments arising from the sale or disposition
of all of the stock of a Borrower shall be applied as follows: An amount equal
to the book value of the Accounts arising from the sale or lease of Inventory or
the rendition of services and Inventory of such Borrower shall be applied first
to interest then due and payable on Revolving Credit Advances made to Borrowers;
and second, to the principal balance of Revolving Credit Advances outstanding to
Borrowers until the same shall have been paid in full; third to interest then
due and payable on the Term Loan and the Master Lease ratably based upon the Pro
Rata Shares held by the respective Term Lenders and Lessors; fourth, to prepay
the Term Loan until the principal balance of the Term Loan is not greater than
the unamortized capitalized lessor's cost under the Master Lease; and fifth to
the principal balance of the Term Loan and the unamortized capitalized lessor's
cost under the Master Lease, ratably based upon the Pro Rata Shares held by the
respective Term Lenders and Lessors. The remainder of any such mandatory
prepayment shall be applied first, to interest then due and payable on the Term
Loan and the Master Lease ratably based upon the Pro Rata Shares held by the
respective Term Lenders and Lessors; second, to prepay the Term Loan until the
principal balance of the Term Loan is not greater than the unamortized
capitalized lessor's cost under the Master Lease; third, to the principal
balance of the Term Loan and the unamortized capitalized lessor's cost under the
Master Lease, ratably based upon the Pro Rata Shares held by the respective Term
Lenders and Lessors; fourth, to interest then due and payable on Revolving
Credit Advances made to Borrowers; and fifth, to the principal balance of
Revolving Credit Advances outstanding to Borrowers until the same shall have
been paid in full.
(iii) All other amounts received shall be applied: first, ratably to
pay the Term Loan Obligations and the Master Lease Obligations in respect of any
fees and reimbursements, indemnities and other similar amounts due to Term
Lenders, Lessors, or Agent until paid in full; second, to interest then due and
payable on the Term Loan and the Master Lease ratably based upon the Pro Rata
Shares held by the respective Term Lenders and Lessors; third, to prepay the
Term Loan until the principal balance of the Term Loan is not greater than the
unamortized capitalized lessor's cost under the Master Lease; fourth to the
principal balance of the Term Loan and the unamortized capitalized lessor's cost
under the Master Lease, ratably based upon the Pro Rata Shares held by the
respective Term Lenders and Lessors; fifth, ratably to pay the Revolving Loan
Obligations in respect of any fees and reimbursements, indemnities and other
similar amounts due to Revolving Lenders or the Revolving Credit Agent until
paid in full; sixth, to interest then due and payable on Revolving Credit
Advances made to Borrowers until paid in full; and seventh, to the principal
balance of Revolving Credit Advances outstanding to Borrowers until the same
shall have been paid in full and then to a cash collateral account to secure the
Letter of Credit Obligations.
As to all payments made when an Event of Default shall have occurred
and be continuing each Borrower hereby irrevocably agrees that Agent or
Revolving Credit Agent, as applicable, shall have the right to apply any and all
such payments against the Obligations as set forth above, notwithstanding any
previous entry by Agent or Revolving Credit Agent in its respective Loan Account
or any other books and records.
1.10.1 Revolving Credit Agent is authorized to, and at its sole
election may, upon notice to the Borrowers, charge to the Revolving Loan balance
on behalf of each Borrower and cause to be paid all Fees, expenses, Charges,
costs (including insurance premiums in accordance with Section 5.4(a)) and
interest and principal, other than principal of the Revolving Loan, owing by
Borrowers under this Agreement or any of the other Operative Documents if and to
the extent Borrowers fail to promptly pay any such amounts as and when due and
payable pursuant to the terms hereof, so long as such charges would not cause
the outstanding balance of the Revolving Credit Advances to exceed Borrowing
Availability and would not cause the sum of the outstanding balance of the
Revolving Credit Advances and the outstanding Letter of Credit Obligations of
the Borrowers to exceed the Aggregate Borrowing Base. At Revolving Credit
Agent's option and to the extent permitted by law, any charges so made shall
constitute part of the Revolving Loan hereunder.
1.11. Loan Account and Accounting.
---------------------------
Revolving Credit Agent and Agent shall each maintain a loan account
(each a "Loan Account") on their books to record, with respect to the Revolving
Loan, the Term Loan, and the Master Lease, respectively, all payments made by
Borrowers, and all other debits and credits as provided in this Agreement. All
entries in a Loan Account shall be made in accordance with Revolving Credit
Agent's or Agent's customary accounting practices as in effect from time to
time. The balance in the Loan Accounts, as recorded on Revolving Credit Agent's
or Agent's most recent printout or other written statement, as applicable,
shall, absent demonstrable error, be presumptive evidence of the amounts due and
owing to Revolving Credit Agent, Agent, and Lenders by each Borrower; provided
that any failure to so record or any error in so recording shall not limit or
otherwise affect any Borrower's duty to pay the Obligations. Unless Borrower
Representative notifies Agent, and the Revolving Credit Agent, if applicable in
writing of any objection to any accounting delivered to Borrower Representative
(specifically describing the basis for such objection), within ninety (90) days
after the date thereof, each and every such accounting shall (absent
demonstrable error) be deemed final, binding and conclusive upon Borrowers in
all respects as to all matters reflected therein. Only those items expressly
objected to in such notice shall be deemed to be disputed by Borrowers.
1.12. Indemnity.
---------
a. Each Credit Party that is a signatory hereto shall jointly and
severally indemnify and hold harmless each of Agent, Revolving Credit Agent,
Lenders and their respective Affiliates, and each such Person's respective
officers, directors, employees, attorneys, agents and representatives (each, an
"Indemnified Person"), from and against any and all suits, actions, proceedings,
claims, damages, losses, liabilities and expenses (including reasonable
attorneys' fees and disbursements and other costs of investigation or defense,
including those incurred upon any appeal) which may be instituted or asserted
against or incurred by any such Indemnified Person as the result of credit
having been extended, suspended or terminated under this Agreement and the other
Operative Documents and the administration of such credit, and in connection
with or arising out of the transactions contemplated hereunder and thereunder
and any actions or failures to act in connection therewith, including any and
all Environmental Liabilities and legal costs and expenses arising out of or
incurred in connection with disputes between or among any parties to any of the
Operative Documents (collectively, "Indemnified Liabilities"); provided, that no
such Credit Party shall be liable for any indemnification to an Indemnified
Person (or any legal costs and expenses arising therefrom or in connection
therewith) to the extent that any such suit, action, proceeding, claim, damage,
loss, liability or expense results from (i) any dispute between Lenders, or any
dispute between one or more Lenders and the Agent or the Revolving Credit Agent,
(ii) that Indemnified Person's gross negligence or willful misconduct as
determined by a final judgment of a court of competent jurisdiction, or (iii)
legal proceedings between the Indemnified Persons and one or more Credit Parties
in which the applicable Credit Party or Parties prevail (based upon the
standards of liability set forth herein). NO INDEMNIFIED PERSON SHALL BE
RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY OPERATIVE DOCUMENT, ANY
SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER
PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE,
EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT
HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY OPERATIVE DOCUMENT OR AS
A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
b. To induce Lenders to provide the LIBOR Rate option on the terms
provided herein, if (i) any LIBOR Loans are repaid in whole or in part prior to
the last day of any applicable LIBOR Period (whether that repayment is made
pursuant to any provision of this Agreement or any other Operative Document or
is the result of acceleration, by operation of law or otherwise); (ii) any
Borrower shall default in payment when due of the principal amount of or
interest on any LIBOR Loan; (iii) any Borrower shall default in making any
borrowing of LIBOR Loans after Borrower Representative has given notice
requesting the same in accordance herewith; or (iv) any Borrower shall fail to
make any prepayment of a LIBOR Loan after Borrower Representative has given a
notice thereof in accordance herewith, Borrowers shall jointly and severally
indemnify and hold harmless each Lender from and against all losses, costs and
expenses resulting from or arising from any of the foregoing. Such
indemnification shall include, without limitation, any loss (excluding loss of
margin or other anticipated profits) or expense arising from the reemployment of
funds obtained by it or from fees payable to terminate deposits from which such
funds were obtained. For the purpose of calculating amounts payable to a Lender
under this Section, each Lender shall be deemed to have actually funded its
relevant LIBOR Loan through the purchase of a deposit bearing interest at the
LIBOR Rate in an amount equal to the amount of that LIBOR Loan and having a
maturity comparable to the relevant LIBOR Period; provided, however, that each
Lender may fund each of its LIBOR Loans in any manner it sees fit, and the
foregoing assumption shall be utilized only for the calculation (including
reasonable detail) of amounts payable under this Section. This covenant shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder. As promptly as practicable under the
circumstances, each Lender shall provide Borrower Representative with its
written calculation of all amounts payable pursuant to this Section 1.12(b), and
such calculation shall be binding on the parties hereto unless Borrower
Representative shall object in writing within ten (10) Business Days of receipt
thereof, specifying the basis for such objection in detail.
1.13. Access.
------
Each Credit Party which is a party hereto shall, during normal
business hours, from time to time upon one (1) Business Day's prior notice as
frequently as Revolving Credit Agent or Agent determines to be appropriate: (a)
provide Revolving Credit Agent or Agent, or any of their officers, employees and
agents access to the properties, facilities, advisors and employees (including
officers) of each Credit Party and to the Collateral, (b) permit Revolving
Credit Agent or Agent and any of their officers, employees and agents, to
inspect, audit and make extracts from any Credit Party's books and records, and
(c) permit Revolving Credit Agent, Agent, and their officers, employees and
agents, to inspect, review, evaluate and make test verifications and counts of
the Accounts, Inventory and other Collateral of any Credit Party. If an Event of
Default shall have occurred and be continuing or if access is necessary to
preserve or protect the Collateral as determined by Agent, Revolving Credit
Agent, or any Lender, upon notice, each such Credit Party shall provide such
access to Revolving Credit Agent, Agent, and each Lender. Furthermore, so long
as any Event of Default shall have occurred and be continuing, upon notice,
Borrowers shall provide Revolving Credit Agent, Agent and each Lender with
access to their suppliers and customers. Each Credit Party shall make available
to Revolving Credit Agent, Agent, or any Lender and its counsel, as quickly as
is possible under the circumstances, originals or copies of all books and
records, which Revolving Credit Agent, Agent, or such Lender, as applicable, may
request. Each Credit Party shall deliver any document or instrument necessary
for Revolving Credit Agent, Agent, or any Lender as it may from time to time
request, to obtain records from any service bureau or other Person which
maintains records for such Credit Party, and shall maintain duplicate records or
supporting documentation on media, including computer tapes and discs owned by
such Credit Party. Revolving Credit Agent will give Lenders at least ten (10)
days' prior written notice of field audits. Representatives of other Lenders may
accompany Revolving Credit Agent's representatives on field audits at no charge
to Borrowers. In connection with each field audit conducted by Revolving Credit
Agent, Borrowers will pay (a) all reasonable out-of-pocket expenses, and (b) a
$750 per day examination charge per field examiner.
1.14. Taxes.
-----
a. Any and all payments by each Borrower hereunder (including any
payments made pursuant to Section 12) or under the Notes shall be made, in
accordance with this Section 1.14, free and clear of and without deduction for
any and all present or future Taxes. If any Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder (including any
sum payable pursuant to Section 12) or under the Notes, (i) the sum payable
shall be increased as much as shall be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 1.14) Agent, Revolving Credit Agent, or Lenders, as
applicable, receive an amount equal to the sum they would have received had no
such deductions been made, (ii) such Borrower shall make such deductions, and
(iii) such Borrower shall pay the full amount deducted to the relevant taxing or
other authority in accordance with applicable law. Within thirty (30) days after
the date of any payment of Taxes, Borrower Representative shall furnish to Agent
the original or a certified copy of a receipt evidencing payment thereof.
b. Each Credit Party that is a signatory hereto shall jointly and
severally indemnify and, within ten (10) Business Days of demand therefor, pay
Agent, Revolving Credit Agent, and each Lender for the full amount of Taxes
(including any Taxes imposed by any jurisdiction on amounts payable under this
Section 1.14 but excluding Taxes otherwise payable under Section 11.3(c)) paid
by Agent, Revolving Credit Agent, or such Lender, as appropriate, and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes were correctly or legally asserted.
c. Each Lender organized under the laws of a jurisdiction outside
the United States (a "Foreign Lender") as to which payments to be made under
this Agreement or under the Notes are exempt from United States withholding tax
under an applicable statute or tax treaty shall provide to Borrower
Representative, and Agent or Revolving Credit Agent, as applicable, a properly
completed and executed IRS Form W-8BEN, W-8IMY, or W-8ECI or other successor
form, certificate or document prescribed by the IRS or the United States
certifying as to such Foreign Lender's entitlement to such exemption (a
"Certificate of Exemption"). Any foreign Person that seeks to become a Lender
under this Agreement shall provide a Certificate of Exemption to Borrower
Representative and Agent or Revolving Credit Agent, as applicable prior to
becoming a Lender hereunder. No foreign Person may become a Lender hereunder if
such Person is unable to deliver a Certificate of Exemption.
1.15. Capital Adequacy; Increased Costs; Illegality.
---------------------------------------------
a. If any Lender shall have determined that any law, treaty,
governmental (or quasi-governmental) rule, regulation, guideline or order
regarding capital adequacy, reserve requirements or similar requirements or
compliance by any Lender with any request or directive regarding capital
adequacy, reserve requirements or similar requirements (whether or not having
the force of law), in each case, adopted after the Closing Date, from any
central bank or other Governmental Authority increases or would have the effect
of increasing the amount of capital, reserves or other funds required to be
maintained by such Lender and thereby reducing the rate of return on such
Lender's capital as a consequence of its obligations hereunder by an amount
which such Lender deems to be material, then Borrowers shall from time to time
within five (5) Business Days after demand by such Lender (with a copy of such
demand to Agent and to Revolving Credit Agent, if applicable) pay to Agent or
Revolving Credit Agent, as applicable, for the account of such Lender,
additional amounts sufficient to compensate such Lender for such reduction;
provided, however, that a Lender shall not be entitled to collect from the
Borrowers such additional amounts to the extent that the law, treaty, rule,
regulation, guideline or order, request or directive was adopted and became
effective as to such Lender more than 180 days prior to such Lender's demand to
the Borrowers. A certificate as to the amount of that reduction and showing the
basis of the computation thereof in reasonable detail submitted by such Lender
to Borrower Representative and to Agent or Revolving Credit Agent, as
applicable, shall, absent demonstrable error, be final, conclusive and binding
for all purposes.
b. If, due to either (i) the introduction of or any change in any
law or regulation (or any change in the interpretation thereof) or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), in each case
adopted after the Closing Date, there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining any Loan, then
Borrowers shall from time to time, upon demand by such Lender (with a copy of
such demand to Agent and to Revolving Credit Agent, if applicable), pay to Agent
or Revolving Credit Agent, as applicable, for the account of such Lender
additional amounts sufficient to compensate such Lender for such increased cost;
provided, however, that a Lender shall not be entitled to collect from the
Borrowers such increased costs to the extent that the change in law or
regulation (or change in interpretation thereof) or the applicable guideline or
request giving rise to such increased cost was adopted and became effective as
to such Lender more than 180 days prior to such Lender's demand to the
Borrowers. A certificate as to the amount of such increased cost, submitted to
Borrower Representative and to Agent, or Revolving Credit Agent, as applicable,
by such Lender, shall be conclusive and binding on Borrowers for all purposes,
absent demonstrable error. Each Lender agrees that, as promptly as practicable
after it becomes aware of any circumstances referred to above which would result
in any such increased cost, the affected Lender shall, to the extent not
inconsistent with such Lender's internal policies of general application, use
reasonable commercial efforts to minimize costs and expenses incurred by it and
payable to it by Borrowers pursuant to this Section 1.15(b).
c. Notwithstanding anything to the contrary contained herein, if the
introduction of or any change in any law or regulation (or any change in the
interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender to agree
to make or to make or to continue to fund or maintain any LIBOR Loan, then,
unless that Lender is able to make or to continue to fund or to maintain such
LIBOR Loan at another branch or office of that Lender without, in that Lender's
reasonable opinion, adversely affecting it or its Loans or the income obtained
therefrom, on notice thereof and demand therefor by such Lender to Borrower
Representative through Agent or Revolving Credit agent, as applicable, (i) the
obligation of such Lender to agree to make or to make or to continue to fund or
maintain LIBOR Loans shall terminate and (ii) each Borrower shall forthwith
prepay in full all outstanding LIBOR Loans owing by such Borrower to such
Lender, together with interest accrued thereon, unless Borrower Representative
on behalf of such Borrower, within five (5) Business Days after the delivery of
such notice and demand, converts all such Loans into a Loan bearing interest
based on the Index Rate.
d. Within fifteen (15) days after receipt by Borrower Representative
of written notice and demand from any Lender (an "Affected Lender") for payment
of additional amounts or increased costs as provided in Section 1.14(a), 1.15(a)
or 1.15(b), Borrower Representative may, at its option, notify Agent (and
Revolving Credit Agent, if applicable) and the Lenders of its intention to
replace the Affected Lender. So long as no Default or Event of Default shall
have occurred and be continuing, Borrower Representative, with the consent of
Agent (and Revolving Credit Agent, if applicable), and all Lenders other than
the Affected Lender, may obtain, at Borrowers' expense, a replacement Lender
("Replacement Lender") for the Affected Lender, which Replacement Lender must be
satisfactory to Agent (and Revolving Credit Agent, if applicable) and the other
Lenders. If Borrowers obtain a Replacement Lender within ninety (90) days
following notice of their intention to do so, the Affected Lender must sell and
assign its interest in the Loans and the Master Lease and Commitments to such
Replacement Lender for an amount equal to the principal balance of all interests
in the Loans and the Master Lease held by the Affected Lender and all accrued
interest and Fees and expenses with respect thereto through the date of such
sale, provided that Borrowers shall have reimbursed such Affected Lender for the
additional amounts or increased costs that it is entitled to receive under this
Agreement through the date of such sale and assignment.
Notwithstanding the foregoing, Borrowers shall not have the right to
obtain a Replacement Lender if the Affected Lender rescinds its demand for
increased costs or additional amounts within fifteen (15) days following its
receipt of Borrowers' notice of intention to replace such Affected Lender.
Furthermore, if Borrowers give a notice of intention to replace and do not so
replace such Affected Lender within ninety (90) days thereafter, Borrowers'
rights under this Section 1.15(d) shall terminate and Borrowers shall promptly
pay all increased costs or additional amounts demanded by such Affected Lender
pursuant to Sections 1.14(a), 1.15(a) and 1.15(b).
Each of the Lenders hereby agrees that, upon the occurrence of any
circumstance entitling such Lender to additional compensation or to cease
making, participating in, or renewing, funding, or maintaining Loans (or the
Master Lease) under any of the foregoing provisions of Section 1.15, upon the
request (and at the sole expense) of the Borrowers, such Lender shall use
reasonable efforts (consistent with its internal policy and with legal and
regulatory restrictions, and without the need for expenditure of money) to
designate a different lending office, if available, for any loans affected by
such circumstances if the making of such designation would avoid the need for or
materially reduce the amount of any such additional amounts that may thereafter
accrue, or would allow such Lender to continue to perform its obligations to
make, participate in, fund, or maintain Loans or the Master Lease and, in any
case, would not, in the sole judgment of such Lender be disadvantageous to such
Lender in any way.
1.16. Reliance on Notices; Appointment of Borrower Representative.
-----------------------------------------------------------
Agent and Revolving Credit Agent shall be entitled to rely upon, and
shall be fully protected in relying upon, any Notice of Revolving Credit
Advance, Notice of Conversion/Continuation or similar notice believed by Agent
or Revolving Credit Agent to be genuine. Agent and Revolving Credit Agent may
assume that each Person executing and delivering such notice was duly
authorized, unless the responsible individual acting thereon for Agent or
Revolving Credit Agent, as applicable, has actual knowledge to the contrary.
Each Borrower hereby designates Precision as its representative and agent on its
behalf for the purposes of issuing Notices of Revolving Credit Advances and
Notices of Conversion/Continuation, requesting Letters of Credit, giving
instructions with respect to the disbursement of the proceeds of the Loans and
the Master Lease, selecting interest rate options, giving and receiving all
other notices and consents hereunder or under any of the other Operative
Documents and taking all other actions (including in respect of compliance with
covenants) on behalf of any Borrower or Borrowers under the Operative Documents.
Borrower Representative hereby accepts such appointment. Agent, Revolving Credit
Agent, and each Lender may regard any notice or other communication pursuant to
any Operative Document from Borrower Representative as a notice or communication
from all Borrowers, and may give any notice or communication required or
permitted to be given to any Borrower or Borrowers hereunder to Borrower
Representative on behalf of such Borrower or Borrowers. Each Borrower agrees
that each notice, election, representation and warranty, covenant, agreement and
undertaking made on its behalf by Borrower Representative shall be deemed for
all purposes to have been made by such Borrower and shall be binding upon and
enforceable against such Borrower to the same extent as if the same had been
made directly by such Borrower.
1.17. Letters of Credit.
-----------------
Subject to and in accordance with the terms and conditions contained
herein and in Annex B, Borrower Representative, on behalf of the Borrowers,
shall have the right to request, and Revolving Lenders agree to incur, or
purchase participations in, Letter of Credit Obligations in respect of the
Borrowers.
1.18. Reinvestment of Net Cash Proceeds. Anything herein to the
contrary notwithstanding, upon the occurrence of any asset sale or disposition
or Recovery Event, if (i) no Event of Default has occurred and is continuing,
and (ii) the Net Cash Proceeds of the asset sale, disposition or Recovery Event
are less than $2,000,000, (iii) upon completion thereof, restoration or
replacement of the affected asset will not result in any decrease in value or
other impairment to such asset or the perfection or priority of the security
interests therein granted to the Agent for the benefit of the Lenders, (iv)
restoration or replacement will be completed within 180 days after the sale,
disposition or Recovery Event, (v) the Borrower Representative sends to the
Agent, within ten (10) days after the sale, disposition, or Recovery Event, a
Reinvestment Notice, and (vi) sufficient funds are available for any restoration
or replacement of the affected asset, then, such Net Cash Proceeds shall be
applied to the restoration of the affected asset or replacement of the affected
asset with an asset of the same or greater value used or usable in the business
of the Borrowers, if all of the following conditions are met to the reasonable
satisfaction of the Agent:
(i) The Net Cash Proceeds which may be necessary to restore or
replace the asset, shall be deposited in a reinvestment cash collateral
account to be held by the Agent;
(ii) The Borrowers will proceed diligently to restore or replace
the asset.
(iii) Of such Net Cash Proceeds in the reinvestment cash collateral
account, 100% shall be disbursed upon the Borrowers' request in
installments and amounts determined as follows:
(1) At the time of each disbursement, there shall exist no
Event of Default.
(2) With respect to each disbursement and accompanying request
therefor, there shall be delivered to the Agent, a certificate
signed by the Borrower Representative specifying in reasonable
detail the items of cost to be reimbursed from the proceeds and
certifying that no Event of Default has occurred under any of the
Operative Documents, and confirming, in the case of the restoration
of assets, that such disbursement is to pay the cost of restoration
not paid previously by any other prior disbursement, that all
restoration completed to the date of such certificate has been
completed in accordance with applicable laws, ordinances, and codes.
(3) With respect to restoration of assets for which progress
payments are made, the final advance shall be disbursed only upon
delivery to the Agent, in addition to the items required above, of
the following:
(A) If applicable, evidence satisfactory to the Agent
that all claims then existing for labor, services, and
materials enforceable by the creation of a Lien against the
asset have been paid in full or provision acceptable to the
Agent has been made therefore, and
(B) If the asset is real property, a certificate of the
Borrowers' architect or engineer engaged on such project, if
any, that the restoration or acquisition of additional
property has been completed in a good and workmanlike manner
in accordance with the plans and specifications approved by
the Agent and in accordance with all laws, rules, regulations,
orders, codes, and ordinances then applicable to such
restoration or acquisition of additional property.
(iv) If the asset to be repaired is real property, if required by
the Agent, the contractor or contractors performing the restoration work
shall have obtained payment and performances bonds naming the Agent, as
agent for the Lenders as dual obligee.
(v) All monies held in the reinvestment cash collateral account
shall constitute a part of the Collateral covered hereby, and the
Borrowers hereby grant to the Agent, for the benefit of the Lenders a
security interest therein.
(vi) Any monies held in the reinvestment cash collateral account
that are not disbursed to the Borrowers as set forth above within 180 days
shall be applied to the mandatory prepayment of the Obligations in
accordance with the provisions of Section 1.2.3 or Section 6.8(g), as
applicable.
2. CONDITIONS PRECEDENT
2.1. Conditions to the Initial Loans, Master Lease and Letter of Credit.
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No Lender shall be obligated to make any Loan, enter into the Master
Lease, or incur any Letter of Credit Obligations on the Closing Date, or to
take, fulfill, or perform any other action hereunder, until the following
conditions have been satisfied or provided for in a manner satisfactory to Agent
and Revolving Credit Agent, and Lenders or waived in writing by Agent, Revolving
Credit Agent and Lenders:
a. Credit Agreement; Operative Documents. This Agreement or
counterparts hereof shall have been duly executed by, and delivered to, Credit
Parties, Agent, Revolving Credit Agent and Lenders; and Agent shall have
received such documents, instruments, agreements and legal opinions as Agent
shall reasonably request in connection with the transactions contemplated by
this Agreement and the other Operative Documents, including all those listed in
the Closing Checklist attached hereto as Annex D, each in form and substance
satisfactory to Agent.
b. Repayment of Prior Lender Obligations. Agent shall have received
a fully executed original of a pay-off letter reasonably satisfactory to Agent
confirming that all of the Prior Lender Obligations for the payment of money
will be repaid in full from the proceeds of the Term Loan, the Master Lease, and
the initial Revolving Credit Advance and all Liens upon any of the property of
Borrowers or any of their Subsidiaries securing the Prior Lender Obligations
shall be terminated immediately upon such payment.
c. Approvals. Agent shall have received (i) satisfactory evidence
that the Credit Parties have obtained all required consents and approvals of all
Persons including all requisite Governmental Authorities, to the execution,
delivery and performance of this Agreement and the other Operative Documents and
the consummation of the Related Transactions or (ii) an officer's certificate in
form and substance satisfactory to Agent affirming that no such consents or
approvals are required.
d. Opening Availability. The Eligible Accounts and Eligible
Inventory of each Borrower supporting the initial Revolving Credit Advance and
the initial Letter of Credit Obligations and the amount of the Reserves to be
established on the Closing Date shall be sufficient in value, as determined by
Agent and Revolving Credit Agent, to provide Borrowers, collectively, with Net
Borrowing Availability, after giving effect to the initial Revolving Credit
Advance made and the initial Letter of Credit Obligations incurred (if any) and
the consummation of the Related Transactions (on a pro forma basis, with trade
payables being paid currently, and expenses and liabilities being paid in the
ordinary course of business and without acceleration of sales) of at least
$8,000,000.
e. Payment of Fees. Borrowers shall have paid the Fees required to
be paid on the Closing Date in the respective amounts specified in Section 1.8
(including the Fees specified in the Fee Letter), and shall have reimbursed
Agent, Revolving Credit Agent, and the Lenders for all fees, costs and expenses
of closing presented and invoiced in reasonable detail at least one Business Day
prior to the Closing Date.
f. Capital Structure: Other Indebtedness. The capital structure of
each Credit Party and the terms and conditions of all Indebtedness of each
Credit Party shall be acceptable to Agent in its sole discretion.
g. Cap on Initial Advance. The sum of the Revolving Credit Advance
made on the Closing Date and the face amount of the Letter of Credit, if any,
issued on account of the Borrowers on the Closing Date shall be not greater than
$8,000,000.
h. Material Adverse Change. There shall be, since the last audited
financial statements, other than as set forth in the third-quarter 10-Q filing
with the Securities and Exchange Commission with respect to the period ending
September 30, 2001 or as otherwise expressly reported in writing to the Agent
and the Lenders (including, without limitation, in this Agreement and the other
Operative Documents), (i), no material adverse change in the business, financial
or other condition of the Borrowers, taken as a whole, the industries in which
the Borrowers operate, the Collateral, or in the prospects or projections of the
Borrowers, taken as a whole, (ii) no litigation commenced which, if successful,
would have a Material Adverse Effect, and (iii) no material increase in the
liabilities, liquidated or contingent, of the Borrowers taken as a whole, or a
material decrease in the assets of the Borrowers taken as a whole.
i. Financial Covenants. (i) The Borrowers shall have a minimum
trailing twelve month Consolidated EBITDA, for the period ending November 30,
2001 of not less than $25,000,000, and (ii) the Borrowers shall have a pro forma
ratio of Consolidated Senior Debt, as of the Closing Date, to trailing
twelve-month Consolidated EBITDA for the period ending November 30, 2001 of not
more than 2.4 to 1.0.
2.2. Further Conditions to Each Advance or Letter of Credit.
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Except as otherwise expressly provided herein, no Lender shall be
obligated to fund any Advance or incur any Letter of Credit Obligations if, as
of the date thereof:
a. Any representation or warranty by any Credit Party contained
herein or in any of the other Operative Documents shall be untrue or incorrect
in any material respect as of such date, except to the extent that such
representation or warranty expressly relates to an earlier date and except for
changes therein expressly permitted or expressly contemplated by this Agreement;
or
b. Any event or circumstance having a Material Adverse Effect
(except as expressly permitted or waived in accordance with the terms hereof)
shall have occurred since the date hereof; or
c. (i) Any Event of Default shall have occurred and be continuing or
would result after giving effect to such Advance, or the incurrence of such
Letter of Credit Obligations, as the case may be, or (ii) a Default shall have
occurred and be continuing or would result after giving effect to such Advance
or the incurrence of such Letter of Credit Obligations, as the case may be; or
d. After giving effect to such Advance, or the incurrence of such
Letter of Credit Obligations, as the case may be, the outstanding principal
amount of the aggregate Revolving Credit Advances would exceed the Borrowing
Availability.
Furthermore, the Borrowers shall not request or be entitled to
receive any Advance hereunder or incur Letter of Credit Obligations hereunder
if, after giving effect to such Advance or Letter of Credit Obligations, the
Borrowers shall be in violation of the provisions of the Indenture.
The request and acceptance by any Borrower of the proceeds of any
Loan or the incurrence of any Letter of Credit Obligations, as the case may be,
shall be deemed to constitute, as of the date of such request or acceptance, (i)
a representation and warranty by Borrowers that the conditions in this Section
2.2 have been satisfied and (ii) a reaffirmation by Borrowers of the
cross-guaranty provisions set forth in Section 12 and of the granting and
continuance of Agent's and Revolving Credit Agent's Liens, on behalf of the
Lenders, pursuant to the Collateral Documents.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans, enter into the Master Lease,
and incur the Letter of Credit Obligations, the Credit Parties executing this
Agreement, jointly and severally, make the following representations and
warranties to Agent, Revolving Credit Agent and each Lender with respect to all
Credit Parties, each and all of which shall survive the execution and delivery
of this Agreement.
3.1. Corporate Existence; Compliance with Law.
-----------------------------------------
Each Credit Party (a) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation as set forth on Disclosure Schedule 3.1 and has the organizational
identification number, if available, described in Disclosure Schedule 3.1; (b)
is duly qualified to conduct business where it is incorporated and is in good
standing in each other jurisdiction where its ownership or lease of property or
the conduct of its business requires such qualification, except where the
failure to be so qualified would not result in a material adverse effect upon
the properties, business, or financial condition of such Credit Party; (c) has
the requisite corporate power and authority and the legal right to own, pledge,
mortgage or otherwise encumber and operate its properties, to lease the property
it operates under lease and to conduct its business as now and currently
proposed to be conducted; (d) subject to the specific representations regarding
Environmental Laws set forth in Section 3.17, has all licenses, permits,
consents or approvals from or by, and has made all filings with, and has given
all notices to, all Governmental Authorities having jurisdiction, to the extent
required for such ownership, operation and conduct, the lack of which would have
a material adverse effect upon the properties, business, or financial condition
of such Credit Party; (e) is in compliance with its charter and by-laws; and (f)
subject to specific representations set forth herein regarding ERISA,
Environmental Laws, tax and other laws, is in compliance with all applicable
provisions of law, except where the failure to comply, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
3.2. Executive Offices; FEIN.
-----------------------
As of the Closing Date, each Credit Party's name, as it appears in
its certificate of incorporation, is as set forth on the signature page to this
Agreement, and the current location of each Credit Party's chief executive
office and principal place of business is set forth in Disclosure Schedule 3.2,
and none of such locations have changed within the four (4) months preceding the
Closing Date. In addition, Disclosure Schedule 3.2 lists the federal employer
identification number of each Credit Party.
3.3. Corporate Power, Authorization, Enforceable Obligations.
-------------------------------------------------------
The execution, delivery and performance by each Credit Party of the
Operative Documents to which it is a party and the creation of all Liens
provided for therein: (a) are within such Person's corporate power; (b) have
been duly authorized by all necessary corporate and shareholder action; (c) do
not contravene any provision of such Person's charter or bylaws; (d) do not
violate any law or regulation, or any order or decree of any court or
Governmental Authority; (e) do not conflict with or result in the breach or
termination of, constitute a default under or accelerate or permit the
acceleration of any performance required by, any indenture, mortgage, note, deed
of trust, loan agreement or other contract regarding Indebtedness of any Credit
Party, or any material lease, agreement or other instrument to which such Person
is a party or by which such Person or any of its property is bound; (f) do not
result in the creation or imposition of any Lien upon any of the property of
such Person other than those in favor of Agent or the Revolving Credit Agent, on
behalf of the Lenders, pursuant to the Operative Documents; and (g) do not
require the consent or approval of any Governmental Authority or any other
Person, except those referred to in Section 2.1(c), all of which will have been
duly obtained, made or complied with on or prior to the Closing Date. On or
prior to the Closing Date, each of the Operative Documents shall have been duly
executed and delivered by each Credit Party thereto and each such Operative
Document shall then constitute a legal, valid and binding obligation of such
Credit Party enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the enforcement of
creditors' rights generally and general equitable principles (whether
enforcement is sought by proceeding in equity or at law).
3.4. Financial Statements and Projections.
------------------------------------
Except for the Projections, all Financial Statements concerning
Borrowers and their respective Subsidiaries which are referenced below have been
prepared in accordance with GAAP consistently applied throughout the periods
covered (except as disclosed therein and except, with respect to unaudited
Financial Statements, for the absence of footnotes and normal year-end audit
adjustments) and present fairly in all material respects the financial position
of the Persons covered thereby as at the dates thereof and the results of their
operations and cash flows for the periods then ended.
3.4.1 The following Financial Statements attached hereto as
Disclosure Schedule 3.4(A) have been delivered on or prior to the date hereof:
a. The audited consolidated and unaudited consolidating
balance sheets at December 31, 2000 and the related statements of income and
cash flows of Borrowers and their Subsidiaries for the Fiscal Years then ended,
certified by a Responsible Officer of the Borrowers.
b. The unaudited balance sheet(s) at September 30, 2001
and the related statement(s) of income and cash flows of Borrowers and their
Subsidiaries for the Fiscal Quarter then ended.
3.4.2 Projections.
-----------
The Projections delivered on the date hereof have been
prepared by Borrowers in light of the past operations of their businesses and
reflect projections for the one-year period beginning on January 1, 2002 on a
month by month basis for the first year and on a year by year basis thereafter.
The Projections are based upon estimates and assumptions stated therein, all of
which Borrowers believe to be reasonable and fair in light of current conditions
and current facts known to Borrowers and, as of the Closing Date, reflect
Borrowers' good faith and reasonable estimates of the future financial
performance of Borrowers for the period set forth therein.
3.5. Material Adverse Effect.
-----------------------
Between September 30, 2001 and the Closing Date, (a) no Credit Party
has incurred any obligations, contingent or non-contingent liabilities,
liabilities for Charges, long-term leases or unusual forward or long-term
commitments which are not reflected in the financial statements delivered
pursuant hereto and which, alone or in the aggregate, would reasonably be
expected to have a Material Adverse Effect, (b) except as disclosed on
Disclosure Schedule 3.5, no contract, lease or other agreement or instrument has
been entered into by any Credit Party or has become binding upon any Credit
Party's assets which has had or would reasonably be expected to have a Material
Adverse Effect, and (c) no Credit Party is in default and to the best of
Borrowers' knowledge no third party is in default under any material contract,
lease or other agreement or instrument, which alone or in the aggregate would
reasonably be expected to have a Material Adverse Effect. Between September 30,
2001 and the Closing Date no event has occurred, which alone or together with
other events, would reasonably be expected to have a Material Adverse Effect.
3.6. Ownership of Property; Liens.
----------------------------
As of the Closing Date, the real estate ("Real Estate") listed on
Disclosure Schedule 3.6 constitutes all of the real property owned, leased,
subleased, or used by any Credit Party. Except as set forth in Disclosure
Schedule 3.6 and except for Permitted Encumbrances under clause (a), (c), (d),
(g), (h), (j) and (n) of the definition thereof, as of the Closing Date, each
Credit Party owns good and marketable fee simple title to all of its owned real
estate, and valid and marketable leasehold interests in all of its leased Real
Estate, all as described on Disclosure Schedule 3.6, and copies of all such
leases or a summary of terms thereof satisfactory to Agent have been delivered
to Agent. Disclosure Schedule 3.6 further describes any Real Estate with respect
to which any Credit Party is a lessor, sublessor or assignor as of the Closing
Date. Each Credit Party also has good and marketable title to or ownership
interests in all of its material personal properties and assets (except for
Permitted Encumbrances under clause (a), (c), (d), (g), (h), (j) and (n) of the
definition thereof). As of the Closing Date, none of the properties and assets
of any Credit Party are subject to any Liens other than Permitted Encumbrances
and liens which will be terminated in connection with the Refinancing, and there
are no facts, circumstances or conditions known to any Credit Party that may
result in any Liens (including Liens arising under Environmental Laws) other
than Permitted Encumbrances and liens which will be terminated in connection
with the Refinancing. Each Credit Party has received all deeds, assignments,
waivers, consents, non-disturbance and recognition or similar agreements, bills
of sale and other documents, and has duly effected all recordings, filings and
other actions, which the Agent has requested, that are necessary to establish,
protect and perfect such Credit Party's right, title and interest in and to all
such Real Estate and other material properties and assets. Disclosure Schedule
3.6 also describes any purchase options, rights of first refusal or other
similar contractual rights pertaining to any Real Estate. As of the Closing
Date, no portion of any Credit Party's Real Estate has suffered any material
damage by fire or other casualty loss, which has not heretofore been repaired
and restored in all material respects to its original condition or otherwise
remedied. As of the Closing Date, all material permits required to have been
issued or appropriate to enable the Real Estate to be lawfully occupied and used
for all of the purposes for which they are currently occupied and used have been
lawfully issued and are in full force and effect.
3.7. Labor Matters.
-------------
Except as set forth on Disclosure Schedule 3.7, as of the Closing
Date (a) no strikes or other material labor disputes against any Credit Party
are pending or, to any Credit Party's knowledge, threatened; (b) hours worked by
and payment made to employees of each Credit Party comply with the Fair Labor
Standards Act and each other federal, state, local or foreign law applicable to
such matter; (c) all payments due from any Credit Party for employee health and
welfare insurance and other benefits have been paid or accrued as a liability on
the books of such Credit Party; (d) except as set forth in Disclosure Schedule
3.7, no Credit Party is a party to or bound by any collective bargaining
agreement or any management agreement, consulting agreement or any employment
agreement providing for base salary in excess of $200,000 during any one year
(and true and complete copies of any such agreements described on Disclosure
Schedule 3.7 have been delivered to Agent); (e) there is no organizing activity
involving any Credit Party pending or, to any Credit Party's knowledge,
threatened by any labor union or group of employees; (f) there are no
representation proceedings pending or, to any Credit Party's knowledge,
threatened with the National Labor Relations Board, and no labor organization or
group of employees of any Credit Party has made a pending demand for
recognition; and (g) except as set forth in Disclosure Schedule 3.7, there are
no complaints or charges against any Credit Party pending or, to the knowledge
of any Credit Party, threatened to be filed with any Governmental Authority or
arbitrator based on, arising out of, in connection with, or otherwise relating
to the employment or termination of employment by any Credit Party of any
individual that would reasonably be expected to have a Material Adverse Effect.
No Credit Party or any ERISA Affiliate has incurred any liability under the
Worker Adjustment Retraining Notification Act or any similar law, which remains
unpaid or unsatisfied.
3.8. Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness.
------------------------------------------------------------
Except as set forth in Disclosure Schedule 3.8, no Credit Party has
any Subsidiaries or is engaged in any joint venture or partnership with any
other Person. All of the issued and outstanding Stock of each Credit Party is
owned by each of the stockholders and in the amounts set forth on Disclosure
Schedule 3.8. Except as set forth in Disclosure Schedule 6.3, there are no
outstanding rights to purchase, options, warrants or similar rights or
agreements pursuant to which any Credit Party may be required to issue, sell,
repurchase or redeem any of its Stock or other equity securities or any Stock or
other equity securities of its Subsidiaries. All outstanding Indebtedness of
each Credit Party as of the Closing Date is described in Section 6.3 (including
Disclosure Schedule 6.3).
3.9. Government Regulation.
---------------------
No Credit Party is an "investment company" or an "affiliated person"
of, or "promoter" or "principal underwriter" for, an "investment company," as
such terms are defined in the Investment Company Act of 1940, as amended. No
Credit Party is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, or any other federal or state statute that
restricts or limits its ability to incur Indebtedness or to perform its
obligations hereunder. The making of the Loans by Lenders to Borrowers, the
entering into the Master Lease, and the incurrence of the Letter of Credit
Obligations, the application of the proceeds thereof and repayment thereof and
the consummation of the Related Transactions will not violate any provision of
any such statute or any rule, regulation or order issued by the Securities and
Exchange Commission.
3.10. Margin Regulations.
------------------
No Credit Party is engaged, nor will it engage, principally or as
one of its important activities, in the business of extending credit for the
purpose of "purchasing" or "carrying" any "margin security" as such terms are
defined in Regulation U of the Federal Reserve Board as now and from time to
time hereafter in effect (such securities being referred to herein as "Margin
Stock"). No Credit Party owns any Margin Stock, and none of the proceeds of the
Loans or other extensions of credit under this Agreement will be used, directly
or indirectly, for the purpose of purchasing or carrying any Margin Stock, for
the purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry any Margin Stock or for any other purpose which
might cause any of the Loans or other extensions of credit under this Agreement
to be considered a "purpose credit" within the meaning of Regulation, U or X of
the Federal Reserve Board. No Credit Party will take or permit to be taken any
action, which might cause any Operative Document to violate regulation U or X of
the Federal Reserve Board.
3.11. Taxes.
-----
All material tax returns, reports and statements, including
information returns, required by any Governmental Authority to be filed by any
Credit Party have been filed with the appropriate Governmental Authority and all
material Charges have been paid prior to the date on which any fine, penalty,
interest or late charge may be added thereto for nonpayment thereof (or any such
fine, penalty, interest, late charge or loss has been paid), excluding material
Charges or other amounts being contested in accordance with Section 5.2(b).
Proper and accurate amounts have been withheld by each Credit Party from its
respective employees for all periods in full and complete compliance with all
applicable federal, state, local and foreign law and such withholdings have been
timely paid to the respective Governmental Authorities except where failure to
do so would not result in liability in excess of $100,000. Disclosure Schedule
3.11 sets forth as of the Closing Date those taxable years for which any Credit
Party's tax returns are currently being audited by the IRS or any other
applicable Governmental Authority and any assessments or threatened assessments
in connection with such audit, or otherwise currently outstanding. Except as
described on Disclosure Schedule 3.11, no Credit Party has executed or filed
with the IRS or any other Governmental Authority any agreement or other document
extending, or having the effect of extending, the period for assessment or
collection of any Charges. As of the Closing Date, except as disclosed in
Disclosure Schedule 3.11, none of the Credit Parties and their respective
predecessors are liable to any third party for any Charges in excess of $250,000
(whether under any tax sharing agreements or otherwise) that have not been
satisfied when due. As of the Closing Date, no Credit Party has agreed or been
requested to make any adjustment under IRC Section 481(a), by reason of a change
in accounting method or otherwise, which would have a Material Adverse Effect.
3.12. ERISA.
-----
a. Disclosure Schedule 3.12 lists and separately identifies all
Title IV Plans, Multiemployer Plans, ESOPs and Retiree Welfare Plans. Copies of
all such listed Plans, together with a copy of the latest form 5500 for each
such Plan, have been delivered to Agent. Except with respect to Multiemployer
Plans, each Qualified Plan has been determined by the IRS to qualify under
Section 401 of the IRC, and the trusts created thereunder have been determined
to be exempt from tax under the provisions of Section 501 of the IRC, and
nothing has occurred which would cause the loss of such qualification or
tax-exempt status. Each Plan is in compliance with the applicable provisions of
ERISA and the IRC, including the filing of reports required under the IRC or
ERISA unless such failure to comply would not reasonably be likely to result in
liabilities in excess of $750,000. No Credit Party or ERISA Affiliate has failed
to make any contribution or pay any amount due as required by either Section 412
of the IRC or Section 302 of ERISA or the terms of any such Plan. No Credit
Party or ERISA Affiliate has engaged in a prohibited transaction, as defined in
Section 4975 of the IRC, in connection with any Plan, which would subject any
Credit Party to a material tax on prohibited transactions imposed by Section
4975 of the IRC.
b. Except as set forth in Disclosure Schedule 3.12: (i) no Title IV
Plan has any Unfunded Pension Liability; (ii) no ERISA Event or event described
in Section 4062(e) of ERISA with respect to any Title IV Plan has occurred or is
reasonably expected to occur; (iii) there are no pending, or to the knowledge of
any Credit Party, threatened claims (other than claims for benefits in the
normal course), sanctions, actions or lawsuits, asserted or instituted against
any Plan or any Person as fiduciary or sponsor of any Plan; (iv) no Credit Party
or ERISA Affiliate has incurred or reasonably expects to incur any liability as
a result of a complete or partial withdrawal from a Multiemployer Plan; (v)
within the last five years no Title IV Plan with Unfunded Pension Liabilities
has been transferred outside of the "controlled group" (within the meaning of
Section 4001(a)(14) of ERISA) of any Credit Party or ERISA Affiliate; and (vi)
no liability under any Title IV Plan has been satisfied with the purchase of a
contract from an insurance company that was not rated AAA by the Standard &
Poor's Corporation or the equivalent by another nationally recognized rating
agency as of the date of purchase of such contract.
3.13. No Litigation.
-------------
No action, claim, lawsuit, demand, investigation or proceeding is
now pending or, to the knowledge of any Credit Party, threatened against any
Credit Party, before any Governmental Authority or before any arbitrator or
panel of arbitrators (collectively, "Litigation"), (a) which challenges any
Credit Party's right or power to enter into or perform any of its obligations
under the Operative Documents to which it is a party, or the validity or
enforceability of any Operative Document or any action taken thereunder, or (b)
which has a reasonable risk of being determined adversely to any Credit Party
and which, if so determined, would reasonably be expected to have a Material
Adverse Effect. Except as set forth on Disclosure Schedule 3.13, as of the
Closing Date there is no Litigation pending or threatened, which seeks damages
in excess of $100,000 or injunctive relief or alleges criminal misconduct of any
Credit Party.
3.14. Brokers.
-------
No broker or finder acting on behalf of any Credit Party brought
about the obtaining, making or closing of the Loans, the Master Lease, or the
Related Transactions, and no Credit Party has any obligation to any Person in
respect of any finder's or brokerage fees in connection therewith.
3.15. Intellectual Property.
---------------------
As of the Closing Date, each Credit Party owns or has rights to use
all Intellectual Property necessary to continue to conduct its business as now
or currently proposed to be conducted by it, and each Patent, Trademark,
Copyright and License is listed, together with application or registration
numbers, as applicable, in Disclosure Schedule 3.15 hereto. Each Credit Party
conducts its business and affairs without infringement of or interference with
any Intellectual Property of any other Person in any way that would reasonably
be expected to have a material adverse effect on such Credit Party's properties,
business, or financial condition.
3.16. Full Disclosure.
---------------
The information contained in this Agreement (including, without
limitation, the Disclosure Schedules and the Annexes attached hereto), the other
Operative Documents, the Collateral Reports and the other reports from time to
time delivered hereunder and all written statements furnished by or on behalf of
any Credit Party to Agent, Revolving Credit Agent, or any Lender pursuant to the
terms of this Agreement, taken as a whole, do not contain any untrue statement
of material fact or omit to state a material fact necessary to make the
statements contained herein or therein not misleading in light of the
circumstances under which they were made. The Liens granted to Agent and
Revolving Credit Agent, on behalf of the Lenders, pursuant to the Collateral
Documents will at all times after the filing of the termination statements and
releases delivered in connection with the Refinancing (and, with respect to
Collateral acquired after the date hereof, after the filing of appropriate
financing statements in favor of the Agent or Revolving Credit Agent (to the
extent necessary), the possession of the certificates evidencing any stock and
the instruments evidencing any Indebtedness comprising part of the Collateral,
the filing of appropriate mortgages with respect to any real property comprising
part of the Collateral, and the entering into of control letters and blocked
account agreements, as appropriate) be fully perfected first priority Liens
(except to the extent that actions necessary to perfect such Lien are not
required to be taken under the terms of this Agreement) with respect to the
Collateral described therein, subject only to Permitted Encumbrances with
respect to the Collateral.
3.17. Environmental Matters.
---------------------
a. Except as set forth in Disclosure Schedule 3.17, as of the
Closing Date: (i) the Real Estate is free of contamination from any Hazardous
Material except for such contamination that would not adversely impact the value
or marketability of such Real Estate and which would not result in Environmental
Liabilities which would reasonably be expected to exceed $500,000; (ii) no
Credit Party has caused or suffered to occur any Release of Hazardous Materials
on, at, in, under, above, to, from or about any of its Real Estate which has not
been fully remediated, the liabilities resulting from which would reasonably be
expected to exceed $25,000; (iii) the Credit Parties are and have been in
compliance with all Environmental Laws, except for such noncompliance which
would not result in Environmental Liabilities which would reasonably be expected
to exceed $500,000; (iv) the Credit Parties have obtained, and are in compliance
with, all Environmental Permits required by Environmental Laws for the
operations of their respective businesses as presently conducted or as currently
proposed to be conducted, except where the failure to so obtain or comply with
such Environmental Permits would not result in Environmental Liabilities which
would reasonably be expected to exceed $500,000, and all such Environmental
Permits are valid, uncontested and in good standing; (v) no Credit Party is
involved in operations or knows of any facts, circumstances or conditions,
including any Releases of Hazardous Materials, that are likely to result in any
Environmental Liabilities of such Credit Party which would reasonably be
expected to exceed $500,000, and, to the knowledge of the Credit Parties, no
current or former tenant or occupant of the Real Estate has engaged in any such
operations; (vi) there is no Litigation arising under or related to any
Environmental Laws, Environmental Permits or Hazardous Material which seeks
damages, penalties, fines, costs or expenses in excess of $500,000 or injunctive
relief, or which alleges criminal misconduct by any Credit Party; (vii) no
notice has been received by any Credit Party identifying it as a "potentially
responsible party" or requesting information under CERCLA or analogous state
statutes, and to the knowledge of the Credit Parties, there are no facts,
circumstances or conditions that may result in any Credit Party being identified
as a "potentially responsible party" under CERCLA or analogous state statutes;
and (viii) the Credit Parties have provided to Agent copies of all existing
environmental reports, reviews and audits and all material written information
pertaining to actual or potential Environmental Liabilities, in each case
relating to any Credit Party.
b. Each Credit Party hereby acknowledges and agrees that Agent is not now,
and has not ever been, in control of any of the Real Estate or any Credit
Party's affairs, and (ii) does not control any Credit Party's conduct with
respect to the ownership, operation or management of any of its Real Estate or
compliance with Environmental Laws or Environmental Permits.
3.18. Insurance.
---------
Disclosure Schedule 3.18 lists all insurance policies of any nature
maintained, as of the Closing Date, for current occurrences by each Credit
Party, as well as a summary of the terms of each such policy. Each Credit Party
keeps its property adequately insured and maintains (i) insurance to such extent
and against such risks, including fire, as is reasonable and customary with
companies in the same or similar businesses, (ii) workmen's compensation
insurance in the amount required by applicable law, (iii) public liability
insurance, which shall include product liability insurance, in an amount
reasonable and customary with companies in the same or similar business against
claims for personal injury or death on properties owned, occupied or controlled
by it, and (iv) such other insurance as may be required by law or as may be
reasonably required by the Agent (including, without limitation, against
larceny, embezzlement or other criminal misappropriation).
3.19. Deposit and Disbursement Accounts.
---------------------------------
Disclosure Schedule 3.19 lists all banks and other financial
institutions at which any Credit Party maintains deposits and/or other accounts
as of the Closing Date, including any Disbursement Accounts, and such Disclosure
Schedule correctly identifies the name, address and telephone number of each
depository, the name in which the account is held, a description of the purpose
of the account, and the complete account number.
3.20. Government Contracts.
--------------------
Except as set forth in Disclosure Schedule 3.20, as of the Closing
Date, no Credit Party is a party to any contract or agreement with any
Governmental Authority and no Credit Party's Accounts are subject to the Federal
Assignment of Claims Act, as amended (31 U.S.C. Section 3727) or any similar
state or local law.
3.21. Customer and Trade Relations.
----------------------------
As of the Closing Date, except as disclosed on Disclosure Schedule
3.21, there exists no actual or, to the knowledge of any Credit Party,
threatened termination or cancellation of, or any material adverse modification
or change in: the business relationship of any Credit Party with any customer or
group of customers whose purchases during the preceding twelve (12) months
caused them to be ranked among the ten largest customers of the Credit Parties
taken as a whole; or the business relationship of any Credit Party with any
supplier material to its operations, in any of the foregoing cases, that would
reasonably be expected to have a material adverse effect on the property,
business, or financial condition of the Credit Parties, taken as a whole.
3.22. Agreements and Other Documents.
------------------------------
As of the Closing Date, each Credit Party has provided to Agent or
its counsel, on behalf of Lenders, accurate and complete copies (or summaries)
of all of the following agreements or documents to which such Credit Party is
subject and each of which are listed on Disclosure Schedule 3.22: supply
agreements and purchase agreements not terminable by such Credit Party within
sixty (60) days following written notice issued by such Credit Party and
involving transactions in excess of $1,000,000 per annum; any lease of Equipment
having a remaining term of one year or longer and requiring aggregate rental and
other payments in excess of $250,000 per annum; licenses and permits held by the
Credit Parties, the absence of which would be reasonably likely to have a
Material Adverse Effect; instruments or documents evidencing Indebtedness of
such Credit Party (excluding Indebtedness owed to a Borrower by another Credit
Party as otherwise permitted hereunder) and any security interest granted by
such Credit Party with respect thereto. All stock option plans and other
agreements regarding the issuance of any equity securities, warrants, rights or
options to purchase equity securities of such Credit Party are described in
Disclosure Schedule 3.22.
3.23. Solvency.
--------
Both before and after giving effect to (a) the Master Lease and the
Loans and the Letter of Credit Obligations to be made or extended, as the case
may be, on the Closing Date or such other date as Loans requested hereunder are
made or extended, (b) the disbursement of the proceeds of such Loans and Master
Lease pursuant to the instructions of Borrower Representative, (c) the
Refinancing and (d) the payment and accrual of all transaction costs in
connection with the foregoing, and after giving effect to all contribution
rights among the Credit Parties (whether through this Agreement or otherwise),
each Credit Party is Solvent.
3.24. Fiscal Year.
-----------
The fiscal year of each Credit Party ends on December 31 of each
year.
3.25. Matters Related to Subordinated Debt.
------------------------------------
As of the Closing Date, Borrowers have delivered to Agent a complete
and correct copy of the Indenture (including all schedules, exhibits,
amendments, supplements, modifications, assignments and all other documents
delivered pursuant thereto or in connection therewith). Borrower Representative
had the corporate power and authority to incur the Indebtedness evidenced by the
Indenture. The subordination provisions of the Indenture are enforceable against
the holders of the Subordinated Notes by Agent and Lenders. All Obligations from
time to time outstanding, including the Obligations to pay principal of and
interest on the Loans, rent under the Master Lease, and the Letter of Credit
Obligations do, or when incurred, will, constitute senior indebtedness entitled
to the benefits of the subordination provisions contained in (i) the Indenture
and the Subordinated Notes, and (ii) the documents related to any other
Subordinated Debt. Borrowers acknowledge that Agent and each Lender are entering
into this Agreement and are extending the Commitments in reliance upon the
subordination provisions of the Indenture and the Subordinated Notes and this
Section 3.25.
3.26. Master Lease. The Master Lease is a capital lease as determined in
accordance with GAAP.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1. Reports and Notices.
-------------------
a. Each Borrower hereby agrees that from and after the Closing Date
and until the Termination Date, it shall deliver to Agent, and/or Lenders, as
required, the Financial Statements, notices, Projections and other information
at the times, to the Persons and in the manner set forth in Annex E.
b. Each Borrower hereby agrees that from and after the Closing Date
and until the Termination Date, it shall deliver to Agent, Revolving Credit
Agent, and/or Lenders, as required, the various Collateral Reports (including
Borrowing Base Certificates in the form of Exhibit 4.1(b)) at the times, to the
Persons and in the manner set forth in Annex F.
4.2. Communication with Accountants.
------------------------------
Each Credit Party executing this Agreement authorizes Agent,
Revolving Credit Agent, and each Lender, to communicate directly with its
independent certified public accountants including Ernst & Young, and authorizes
and shall instruct those accountants and advisors to disclose and make available
to Agent, Revolving Credit Agent, and each Lender any and all Financial
Statements and other supporting financial documents, schedules and information
relating to any Credit Party (including copies of any final management letters)
with respect to the business, financial condition and other affairs of any
Credit Party; provided, however, that nothing in this section 4.2 shall impose
upon such accountants a duty to act in violation of such accountants' standard
policies or procedures.
5. AFFIRMATIVE COVENANTS
Each Credit Party executing this Credit Agreement jointly and severally
agrees as to all Credit Parties that from and after the date hereof and until
the Termination Date:
5.1. Maintenance of Existence and Conduct of Business.
------------------------------------------------
Each Credit Party shall: (a) do or cause to be done all things
necessary to preserve and keep in full force and effect (i) its corporate
existence and (ii) its rights and franchises necessary or desirable in the
ordinary course of business except as otherwise permitted pursuant to Section
6.1; (b) remain in good standing in its jurisdiction of incorporation, and be
qualified to do business and remain in good standing in each other jurisdiction
where its ownership or lease of property or the conduct of its business requires
such qualification, except where the failure to be so qualified would not result
in a material adverse effect upon the properties, business, or financial
condition of such Credit Party; (c) preserve and protect all of its assets and
properties necessary in the conduct of its business, and keep the same in good
repair, working order and condition in all material respects (taking into
consideration ordinary wear and tear and casualty and condemnation) and from
time to time make, or cause to be made, all necessary or appropriate repairs,
replacements and improvements thereto consistent with industry practices; (e) at
all times comply with the provisions of all leases to which it is a party as
lessee or under which it occupies property so as to prevent any loss or
forfeiture thereof and thereunder unless such loss or forfeiture would not
reasonably be expected to have a material adverse effect on such Credit Party's
properties, business, or financial condition; and (f) transact business only in
such corporate and trade names as are set forth in Disclosure Schedule 5.1, as
such Schedule may from time to time be supplemented.
5.2. Payment of Obligations.
----------------------
a. Subject to Section 5.2(b), each Credit Party shall pay and
discharge or cause to be paid and discharged promptly all material Charges
payable by it, including (A) material Charges imposed upon it, its income and
profits, or any of its property (real, personal or mixed) and all material
Charges with respect to tax, social security and unemployment withholding with
respect to its employees, and (B) subject to Section 5(b), material lawful
claims for labor, materials, supplies and services or otherwise, before any
thereof shall become past due; provided, however, that, in the case of claims
for labor, materials, supplies, and services, such claims may be paid in the
ordinary course of business in accordance with past practices, so long as such
claims are paid before such claims shall become more than 30 days past due.
b. Each Credit Party may in good faith contest, by appropriate
proceedings, the validity or amount of any material Charges described in Section
5.2(a); provided, that (i) such Credit Party shall deliver to the Lenders prompt
notice of any such contest; (ii) adequate reserves with respect to such contest
are maintained on the books of such Credit Party, in accordance with GAAP, (iii)
the good faith contest of such Charges by appropriate proceedings stays the
enforcement or collection of any penalty or fine or the imposition of any Lien
resulting from the non-payment thereof (other than inchoate Liens); (iv) such
contest is maintained and prosecuted continuously and with diligence, (v) none
of the Collateral becomes subject to forfeiture or loss as a result of such
contest, (vi) such Credit Party shall promptly pay or discharge such contested
Charges or claims and all additional charges, interest, penalties and expenses,
if any, and shall deliver to Agent evidence acceptable to Agent of such
compliance, payment or discharge, if such contest is terminated or discontinued
adversely to such Credit Party or the conditions set forth in this Section
5.2(b) are no longer met, and (vii) Agent has not advised Borrowers in writing
that Agent reasonably believes that nonpayment or nondischarge thereof would
have or result in a Material Adverse Effect.
5.3. Books and Records.
-----------------
Each Credit Party shall keep adequate books and records with respect
to its business activities in which proper entries, reflecting all financial
transactions, are made in accordance with GAAP.
5.4. Insurance; Damage to or Destruction of Collateral.
-------------------------------------------------
a. The Credit Parties shall, at their sole cost and expense,
maintain the policies of insurance described on Disclosure Schedule 3.18 as in
effect on the date hereof or otherwise in form and amounts and with insurers
reasonably acceptable to Agent. If any Credit Party at any time or times
hereafter shall fail to obtain or maintain any of the policies of insurance
required above or to pay all premiums relating thereto, Agent may at any time or
times thereafter obtain and maintain such policies of insurance and pay such
premiums and take any other action with respect thereto which Agent reasonably
deems advisable. Agent shall have no obligation to obtain insurance for any
Credit Party or pay any premiums therefor. By doing so, Agent shall not be
deemed to have waived any Event of Default arising from any Credit Party's
failure to maintain such insurance or pay any premiums therefor. All sums so
disbursed, including attorneys' fees, court costs and other charges related
thereto, shall be payable within ten Business Days after demand, on demand by
Borrowers to Agent and shall be additional Obligations hereunder secured by the
Collateral.
b. Agent reserves the right at any time upon any change in any
Credit Party's risk profile (including any change in the product mix maintained
by any Credit Party or any laws affecting the potential liability of such Credit
Party) to require additional forms and limits of insurance, if available at
commercially reasonable rates, to, in Agent's reasonable opinion, adequately
protect both Agent's and Lender's interests in all or any portion of the
Collateral and to ensure that each Credit Party is protected by insurance in
amounts and with coverage customary for its industry. If reasonably requested by
Agent, each Credit Party shall deliver to Agent from time to time a report of a
reputable insurance broker, reasonably satisfactory to Agent, with respect to
its insurance policies.
c. Each Credit Party shall deliver to Agent, in form and substance
satisfactory to Agent, endorsements to (i) all "All Risk" and business
interruption insurance naming Agent, on behalf of the Lenders, as loss payee,
and (ii) all general liability and other liability policies naming Agent, on
behalf of itself and Lenders, as additional insured. Each Credit Party
irrevocably makes, constitutes and appoints Agent (and all officers, employees
or agents designated by Agent), so long as any Event of Default shall have
occurred and be continuing or the anticipated insurance proceeds exceed
$1,000,000, as such Credit Party's true and lawful agent and attorney-in-fact
for the purpose of making, settling and adjusting claims under such "All Risk"
policies of insurance, endorsing the name of such Credit Party on any check or
other item of payment for the proceeds of such "All Risk" policies of insurance
and for making all determinations and decisions with respect to such "All Risk"
policies of insurance. Agent shall have no duty to exercise any rights or powers
granted to it pursuant to the foregoing power-of-attorney. Borrower
Representative shall promptly notify Agent of any loss, damage, or destruction
to the Collateral in the amount of $100,000 or more, whether or not covered by
insurance. After deducting from such proceeds the expenses, if any, incurred by
Agent in the collection or handling thereof, Agent may, at its option, apply
such proceeds to the reduction of the Obligations, or permit or require the
applicable Credit Party to use such money, or any part thereof, to replace,
repair, restore or rebuild the Collateral in a diligent and expeditious manner
with materials and workmanship of substantially the same quality as existed
before the loss, damage or destruction. Notwithstanding the foregoing, if the
casualty giving rise to such insurance proceeds would not reasonably be expected
to have a Material Adverse Effect and such insurance proceeds do not exceed
$2,000,000 in the aggregate, Agent shall permit the applicable Credit Party to
replace, restore, repair or rebuild the property subject to and upon the terms
and conditions set forth in Section 1.18; provided that if such Credit Party
shall not have completed or entered into binding agreements to complete such
replacement, restoration, repair or rebuilding within 180 days of such casualty,
Agent may apply such insurance proceeds to the Obligations in accordance with
Section 1.2.3.
5.5. Compliance with Laws.
--------------------
Each Credit Party shall comply with all federal, state, local and
foreign laws and regulations applicable to it, including those relating to ERISA
and labor matters and Environmental Laws and Environmental Permits, except to
the extent that the failure to comply, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect.
5.6. Supplemental Disclosure.
-----------------------
From time to time as may be requested by Agent (which request will
not be made more frequently than once each year absent the occurrence and
continuance of an Event of Default), the Credit Parties shall supplement each
Disclosure Schedule hereto, or any representation herein or in any other
Operative Document, with respect to any matter hereafter arising which, if
existing or occurring at the date of this Agreement, would have been required to
be set forth or described in such Disclosure Schedule or as an exception to such
representation or which is necessary to correct any information in such
Disclosure Schedule or representation which has been rendered inaccurate thereby
(and, in the case of any supplements to any Disclosure Schedule, such Disclosure
Schedule shall be appropriately marked to show the changes made therein);
provided that (a) no such supplement to any such Disclosure Schedule or
representation shall be or be deemed a waiver of any Default or Event of Default
resulting from the matters disclosed therein, except if, at the time, such
waiver is specifically consented to by Agent and Requisite Lenders in writing;
and (b) no supplement shall be required as to representations and warranties
that relate solely to the Closing Date.
5.7. Intellectual Property.
---------------------
Each Credit Party will conduct its business and affairs without
infringement of or interference with any Intellectual Property of any other
Person, which infringement or interference would reasonably be expected to have
a material adverse effect on such Credit Party's properties, business, or
financial condition.
5.8. Environmental Matters.
---------------------
Each Credit Party shall and shall cause each Person within its
control to: (a) conduct its operations and keep and maintain its Real Estate in
compliance with all Environmental Laws and Environmental Permits other than
noncompliance which would not reasonably be expected to have a Material Adverse
Effect; (b) implement any and all investigation, remediation, removal and
response actions which are appropriate or reasonably necessary to maintain the
value and marketability of the Real Estate or to otherwise comply with
Environmental Laws and Environmental Permits pertaining to the presence,
generation, treatment, storage, use, disposal, transportation or Release of any
Hazardous Material on, at, in, under, above, to, from or about any of its Real
Estate except where failure to do so would not reasonably be expected to result
in Environmental Liabilities in excess of $500,000; (c) unless precluded from
disclosure by order of or agreement with any Governmental Authority, notify
Agent promptly after such Credit Party becomes aware of any violation of
Environmental Laws or Environmental Permits or any Release on, at, in, under,
above, to, from or about any Real Estate which is reasonably likely to result in
Environmental Liabilities in excess of $500,000; and (d) unless precluded from
disclosure by order of or agreement with any Governmental Authority, promptly
forward to Agent a copy of any order, notice, request for information or any
communication or report received by such Credit Party in connection with any
such violation or Release or any other matter relating to any Environmental Laws
or Environmental Permits that would reasonably be expected to result in
Environmental Liabilities in excess of $500,000, in each case whether or not the
Environmental Protection Agency or any Governmental Authority has taken or
threatened any action in connection with any such violation, Release or other
matter. If Agent at any time has a reasonable basis to believe that there may be
a violation of any Environmental Laws or Environmental Permits by any Credit
Party or any Environmental Liability arising thereunder, or a Release of
Hazardous Materials on, at, in, under, above, to, from or about any of its Real
Estate, which, in each case, would reasonably be expected to have a Material
Adverse Effect, then each Credit Party shall, upon Agent's written request (i)
cause the performance of such environmental audits including subsurface sampling
of soil and groundwater, and preparation of such environmental reports, at
Borrowers' expense, as Agent may from time to time reasonably request, which
shall be conducted by reputable environmental consulting firms reasonably
acceptable to Agent and shall be in form and substance acceptable to Agent, and
(ii) permit Agent or its representatives to have reasonable access to all Real
Estate for the purpose of conducting such environmental audits and testing as
Agent deems appropriate, including subsurface sampling of soil and groundwater.
Borrowers shall reimburse Agent for the costs of such audits and tests and the
same will constitute a part of the Obligations secured hereunder.
5.9. Landlords' Agreements, Mortgagee Agreements and Bailee Letters.
--------------------------------------------------------------
Each Credit Party shall use commercially reasonable efforts to
obtain a landlord's agreement, mortgagee agreement or bailee letter, as
applicable, from the lessor of each leased property or mortgagee of owned
property or with respect to any warehouse, processor or converter facility or
other location where Collateral is located, which agreement or letter shall
contain a waiver or subordination of all Liens or claims that the landlord,
mortgagee or bailee may assert against the Inventory or Collateral at that
location, and shall otherwise be reasonably satisfactory in form and substance
to Agent. With respect to such locations or warehouse space leased or owned by
any Borrower, if Agent has not received the applicable landlord agreement,
mortgagee agreements and/or bailee letter, as applicable, any Borrower's
Eligible Inventory at that location shall, in Revolving Credit Agent's
discretion, be excluded from the Aggregate Borrowing Base or be subject to such
Reserves as may be established by Revolving Credit Agent in its discretion.
Furthermore, after the Closing Date, if any Inventory shall be shipped to any
location for which the Agent has not received the appropriate landlord
agreement, mortgagee agreement and/or bailee letter, as applicable, any
Borrower's Eligible Inventory at such location shall, in the Revolving Credit
Agent's discretion, be excluded from the Aggregate Borrowing Base or be subject
to such Reserves as may be established by the Revolving Credit Agent in its
discretion) unless and until a satisfactory landlord agreement, mortgagee
agreement an/or bailee letter, as appropriate, shall have been obtained and
delivered with respect to such location. Borrowers will not relocate any
Equipment, or maintain any equipment at any new location for which the Borrowers
have not obtained a landlord's agreement, mortgagee's agreement or bailee's
letter.
Each Credit Party shall timely and fully pay its obligations and
perform in all material respects its other obligations under all leases and
other agreements with respect to each leased location or public warehouse where
any Collateral is or may be located.
5.10. Change in Collateral.
--------------------
Each Credit Party shall give the Agent not less than 30 days' prior
written notice of any change in the location of any Collateral, other than to
locations set forth on Disclosure Schedule 5.10 with respect to which the Agent
or Revolving Credit Agent has filed fixture financing statements (if applicable)
and obtained applicable landlord's waivers, mortgagee's waivers, and/or bailee
letters, as applicable (if required) and otherwise fully perfected its Liens
thereon; provided, however, that the Borrowers may move Inventory in the
ordinary course of business to locations for which the Borrowers have not
obtained the requisite mortgagee agreements, landlord's agreement, and/or bailee
letters, without such prior notice to the Agent; so long as the total value of
Eligible Inventory maintained at such locations does not exceed the amount of
such Eligible Inventory maintained in such locations, as reflected on the most
recent Borrowing Base Certificate delivered to the Revolving Credit Agent.
5.11. After Acquired Real Property.
----------------------------
Upon the acquisition by any Credit Party or any of its Subsidiaries
after the date hereof of any interest (whether fee or leasehold) in any real
property (wherever located) (each such interest being an "After Acquired
Property") (x) with a Current Value (as defined below) in excess of $250,000 in
the case of a fee interest, or (y) requiring the payment of annual rent
exceeding in the aggregate $100,000 in the case of leasehold interest, (a) such
Person shall immediately so notify the Agent, setting forth with specificity a
description of the interest acquired, the location of the real property, any
structures or improvements thereon and either an appraisal or such Credit
Party's good-faith estimate of the current value of such real property (for
purposes of this Section, the "Current Value"), and (b) such Person shall,
within two (2) Business Days after such acquisition, furnish to the Agent any of
the following, each in form and substance reasonably satisfactory to the Agent:
(i) if such property is a fee property, a Mortgage with respect to such
After-Acquired Property and related assets located thereat, or if such property
is a leasehold property, a Collateral Assignment of the applicable lease, each
duly executed by such Person and in recordable form and a landlord's agreement
in form and substance satisfactory to the Lenders; (ii) evidence of the
recording of the Mortgage or Collateral Assignment referred to in clause (i)
above in such office or offices as may be necessary or, in the opinion of the
Agent, desirable to create and perfect a valid and enforceable first priority
Lien on the property purported to be covered thereby or to otherwise protect the
rights of the Agent and the Lenders thereunder, subject only to Permitted
Encumbrances (iii) with respect to any fee property (or any leasehold property
if required by the Agent) a Title Insurance Policy, (iv) with respect to any fee
property (or any leasehold property if required by the Agent) a survey of such
real property, certified to the Agent and to the issuer of the Title Insurance
Policy by a licensed professional surveyor reasonably satisfactory to the Agent,
(v) a Phase I Environmental Site Assessments with respect to such real property,
certified to the Agent by a company reasonably satisfactory to the Agent, (vi)
in the case of a leasehold interest, a certified copy of the lease between the
landlord and such Person with respect to such real property in which such Person
has a leasehold interest, and the certificate of occupancy with respect thereto,
(vii) in the case of a leasehold interest, an attornment and nondisturbance
agreement between the landlord (and any fee mortgagee) with respect to such real
property and the Agent, and (viii) such other documents or instruments
(including guarantees and opinions of counsel) as the Agent may reasonably
require and as are reasonably related to the requested Mortgage. The Borrowers
shall pay all fees and expenses, including reasonable attorneys' fees and
expenses, and all title insurance charges and premiums, in connection with each
Credit Party's obligations under this Section 5.11.
5.12. Further Assurances.
------------------
Each Credit Party executing this Agreement agrees that it shall and
shall cause each other Credit Party to, at such Credit Party's expense and upon
reasonable request of Agent, duly execute and deliver, or cause to be duly
executed and delivered, to Agent such further instruments and do and cause to be
done such further acts as the Agent may require from time to time (a) to carry
out more effectively the provisions and purposes of this Agreement or any other
Operative Document, or (b) to subject to valid and perfected first priority
Liens any of the Collateral or any other property of any Borrower and its
Subsidiaries (subject to Permitted Encumbrances), or (c) to establish and
maintain the validity and effectiveness of any of the Operative Documents and
the validity, perfection and priority of the Liens intended to be created
thereby. At any time after (i) the occurrence of an Event of Default, or (ii)
written notice from the Agent or the Requisite Lenders that there has been a
material impairment in the value of the Collateral, the Agent shall be entitled,
at the direction of the Requisite Lenders, to record the Mortgages not otherwise
required to be recorded in accordance with the provisions of Section W. of Annex
D , and the Credit Parties shall, at their expense, do or cause to be done such
further acts as the Agent may require from time to time to record such Mortgages
and establish the priority of the Liens intended to be created thereby.
5.13. Inventory Systems Audit.
-----------------------
The Borrowers will comply with all recommendations contained in the
systems audit performed by Price Waterhouse Coopers, as described in Schedule
5.13 hereto, within the time frames described in Schedule 5.13 hereto.
5.14. Subordinated Debt.
-----------------
(a) The Credit Parties shall not request any Advance or Letter of
Credit if, after the making of such Advance or the issuance of
such Letter of Credit, the Credit Parties will be in violation
of the provisions of the Indenture.
(b) For the purpose of determining compliance with the Indenture,
the Master Lease shall be allocated to clause (xi) of the
definition of "Permitted Indebtedness" set forth therein and,
therefore, is not required to be included in clause (ii) of such
definition of "Permitted Indebtedness".
5.15. Reporting.
---------
The Borrowers shall not take any position, in its financial
statements, tax returns or otherwise, inconsistent with the characterization of
the Master Lease as a capital lease under GAAP. -
6. NEGATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally agrees as
to all Credit Parties that, without the prior written consent of Agent and the
Requisite Lenders, from and after the date hereof until the Termination Date:
6.1. Mergers, Subsidiaries, Etc.
--------------------------
No Credit Party shall directly or indirectly, by operation of law or
otherwise, (a) form or acquire any Subsidiary, or (b) merge with, consolidate
with, acquire all or substantially all of the assets or capital stock of, or
otherwise combine with or acquire, any Person, except that (i) any of the
Borrowers may merge with or consolidate with any other Borrower, subject to the
Liens thereon created pursuant to the Operative Documents, and (ii) any of the
Borrowers may acquire all or substantially all of the assets or stock of any
other Borrower, subject to the Liens thereon created pursuant to the Operative
Documents.
6.2. Investments; Loans and Advances.
-------------------------------
Except as otherwise expressly permitted by this Section 6, no Credit
Party shall make or permit to exist any investment in, or make, accrue or permit
to exist loans or advances of money to, any Person, through the direct or
indirect lending of money, holding of securities or otherwise (collectively,
"Investments"), except that Borrowers may hold (a) Investments comprised of
notes payable, or stock or other securities issued by Account Debtors to any
Borrower pursuant to negotiated agreements with respect to settlement of such
Account Debtor's Accounts in the ordinary course of business, so long as the
aggregate amount of such Accounts so settled by Borrowers does not exceed
$100,000; (b) existing investments as of the Closing Date as shown on Disclosure
Schedule 6.2; (c) Investments in cash and Cash Equivalents; (d) Investments
resulting from or comprising part of the transactions otherwise expressly
permitted under this Agreement; (e) loans and advances to management and other
employees as expressly permitted under Section 6.4; (f) Investments by any
Credit Party in any Borrower, (g) the acceptance of promissory notes, earn-outs
and other non-cash consideration received as partial payment for the sale,
lease, transfer or other disposition of assets of any Credit Party otherwise
permitted under Section 6.8 provided that the total non-cash consideration paid
for such sales, leases, transfers or other dispositions shall not exceed
$100,000 in the aggregate, and such notes or other forms of non-cash
consideration shall be pledged or assigned to the Agent for the benefit of the
Lenders in such a manner as to give the Agent, for the benefit of the Lenders a
perfected first-priority security interest in and to such notes or other
consideration, subject only to inchoate liens for monies not yet due and
payable; and (h) other investments not to exceed $100,000 at any time
outstanding.
6.3. Indebtedness.
------------
a. No Credit Party shall create, incur, assume or permit to exist
any Indebtedness, except (without duplication) (i) Indebtedness secured by
purchase money security interests and Capital Leases expressly permitted by the
terms hereof, if any, (ii) the Loans, the Master Lease, the Letter of Credit
Obligations, and the other Obligations, (iii) unfunded pension fund and other
employee benefit plan obligations and liabilities to the extent they are
permitted to remain unfunded under applicable law, (iv) existing Indebtedness
described in Disclosure Schedule 6.3; (v) Indebtedness in respect of performance
bonds, bid bonds, appeal bonds, surety bonds, and similar obligations incurred
in the ordinary course of business; (vi) endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of
business; (vii) additional Indebtedness in an aggregate amount not to exceed
$250,000 at any one time outstanding; (viii) Indebtedness consisting of
intercompany loans and advances made by any Credit Party to any other Borrower,
provided that each Borrower shall have executed and delivered to each other
Credit Party, on the Closing Date, a demand note (collectively, the
"Intercompany Notes") to evidence any such intercompany Indebtedness owing at
any time by such Borrower to such other Credit Parties which Intercompany Notes
shall be in form and substance reasonably satisfactory to Agent and (ix)
extensions, replacements, renewals and refinancings of Indebtedness permitted by
this Section 6.3(a) or amendments or modifications thereto which do not have the
effect of increasing the principal amount thereof or changing the amortization
thereof (other than to extend the same) and which are otherwise on terms and
conditions no less favorable in any material respect to any Credit Party, Agent
or the Lenders than the terms of the Indebtedness being refinanced, amended or
modified, except that interest rates, premiums and fees may be on comparable
market terms.
b. No Credit Party shall directly or indirectly, voluntarily
purchase, redeem, defease or prepay any principal of, or premium, if any,
interest or other amount payable in respect of any Indebtedness, other than (i)
the Obligations, (ii) Indebtedness secured by a Permitted Encumbrance if the
asset securing such Indebtedness has been sold or otherwise disposed of in
accordance with Sections 6.8(b) or (c); (iii) other Indebtedness (excluding
Subordinated Debt) not in excess of $100,000; (iv) the purchase, redemption,
defeasance or other acquisition for value of the Subordinated Notes solely with
the proceeds of equity contributions; (v) the regularly scheduled payments or
required prepayment of Indebtedness that is being refinanced or replaced in
accordance with Section 6.3(a), and (vi) the purchase, redemption, defeasance or
other acquisition for value of Indebtedness of any Borrower owing to any other
Credit Party.
c. The Credit Parties shall not, without the prior written consent
of the Lenders, amend or modify the Indenture or the Subordinated Notes.
6.4. Employee Loans, Affiliate Transactions, Management Fees.
-------------------------------------------------------
a. Except as expressly permitted pursuant to Section 6.14, no
Borrower shall enter into or be a party to any transaction with any Affiliate
thereof other than another Borrower except in the ordinary course of and
pursuant to the reasonable requirements of such Credit Party's business and upon
fair and reasonable terms that are no less favorable to such Credit Party than
would be obtained in a comparable arm's length transaction with a Person not an
Affiliate of such Credit Party. In addition (i) if any such transaction or
series of related transactions involves payments in excess of $100,000 in the
aggregate, the terms of these transactions must be promptly disclosed to Agent
and Lenders, and (ii) if any such transaction or series of related transactions
involves payments in excess of $1,000,000 in the aggregate, the terms of these
transactions must be disclosed in advance to Agent and Lenders. All such
transactions existing as of the date hereof are described on Disclosure Schedule
6.4(a).
b. No Credit Party shall enter into any lending or borrowing
transaction with any employees of any Credit Party, except (i) reimbursement
arrangements with their respective employees in the ordinary course of business
consistent with past practices for travel expenses, relocation costs and similar
purposes and (ii) stock option financing in cash up to a maximum of $50,000 to
any employee and up to a maximum of $100,000 in the aggregate at any one time
outstanding, and (iii) the financing of stock options that do not require any
disbursement of cash by the Borrowers, up to a maximum of $50,000 to any
employee and up to a maximum of $100,000 in the aggregate at any one time
outstanding.
c. The Credit Parties shall not (i) pay any management fee (in cash
or otherwise) or similar amounts to any member of the SKM Group, any member of
the Carlisle Group or any other Person until the Obligations have been paid in
full, or (ii) accrue any management fees or similar amounts to any Person (other
than management fees accrued to members of the SKM Group and/or the Carlisle
Group after the date hereof in an amount not in excess of $500,000 in the
aggregate per year) until the Obligations have been paid in full; provided,
however that (i) the Borrowers may accrue and pay amounts owed to the SKM Group
or the Carlisle Group in connection with reimbursement of reasonable and
customary out-of-pocket expenses, up to $100,000 per year, and (ii) a Borrower
may make payments to another Borrower under a Management Services Agreement
entered into between Borrowers for the purpose of allocation of overhead costs.
In connection with the foregoing, the Credit Parties shall deliver to the Agent,
for the benefit of the Lenders, the undertaking of each member of the SKM Group,
the Carlisle Group, and any other non-employee equity holder (or Affiliate of an
equity holder) providing management or consulting services to any of the Credit
Parties, confirming the foregoing agreement and confirming that the obligations
owed to each such party are subordinated to the repayment in full of the
Obligations.
6.5. Capital Structure and Business.
------------------------------
No Credit Party shall (a) make any changes in any of its business or
operations which would be reasonably expected in any way to affect adversely the
repayment of the Loans or any of the other Obligations or would reasonably be
expected to have or result in a material adverse effect on such Credit Party's
properties, business, or financial condition, except to the extent that such
change in business or operations is otherwise expressly permitted by the terms
of this Agreement, (b) make any change in its capital structure as described on
Disclosure Schedule 3.8, including the issuance of any shares of Stock, warrants
or other securities convertible into Stock or any revision of the terms of its
outstanding Stock which would adversely affect Agent or Lenders or such Credit
Party's duty or ability to repay the Obligations, except that (i) Holdings may
make a Public Offering or private offering of its common Stock so long as (1)
the proceeds thereof are applied in prepayment of the Obligations as required by
Sections 1.2.2, 1.2.3 or 6.8(g), as applicable, and (2) no Change of Control
occurs after giving effect thereto, and (ii) Holdings may issue stock in
consideration for equity contributions, the proceeds of which are used as
otherwise provided in this Agreement, or (c) amend its charter or bylaws in a
manner which would adversely affect Agent or Lenders or such Credit Party's duty
or ability to repay the Obligations; provided, however, that the Borrowers shall
not be prohibited under this Section 6.5 from merging or consolidating with
other Borrowers, or otherwise engaging in inter-Borrower transactions as
otherwise expressly permitted by the terms of this Agreement. No Credit Party
shall engage in any business in any material respect other than the businesses
engaged in by it on the date of this Agreement or businesses reasonably related
thereto.
6.6. Guaranteed Indebtedness.
-----------------------
No Credit Party shall create, incur, assume or permit to exist any
Guaranteed Indebtedness except (a) by endorsement of instruments or items of
payment for deposit to the general account of any Credit Party, (b) Guaranteed
Indebtedness incurred for the benefit of any other Borrower if the primary
obligation is expressly permitted by this Agreement, (c) Guaranteed Indebtedness
created under the Operative Documents, (c) existing Indebtedness described in
Disclosure Schedule 6.6; (d) endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business; (e)
Guaranteed Indebtedness incurred in connection with any refinancing, extensions
or replacements of Indebtedness of any Borrower permitted by the terms of this
Agreement; and (f) guaranties of the Subordinated Debt issued in accordance with
the Indenture.
6.7. Liens.
-----
No Credit Party shall create, incur, assume or permit to exist any
Lien on or with respect to its Accounts or any of its other properties or assets
(whether now owned or hereafter acquired) except for Permitted Encumbrances.
6.8. Sale of Stock and Assets.
------------------------
No Credit Party shall sell, transfer, convey, assign or otherwise
dispose of any of its properties or other assets, including the capital Stock of
any of its Subsidiaries (whether in a public or a private offering or otherwise)
or any of their Accounts, other than (a) the sale of Inventory in the ordinary
course of business; (b) the sale, lease, transfer, or other disposition of
assets in a transaction otherwise expressly permitted by the provisions of this
Agreement; (c) the sale, lease, transfer or other disposition of any assets from
one Borrower to another Borrower; (d) the sale, lease, transfer, or other
disposition of fixed or capital assets that are obsolete or no longer used or
useful in such Credit Party's business and having a value not exceeding $500,000
in the aggregate in any Fiscal Year, so long as the Net Cash Proceeds therefrom
are applied in accordance with Section 1.2.3; (e) the sale, lease, transfer, or
other disposition of any asset (other than the stock of any Credit Party) that
is replaced, or the replacement of which has been commenced and completed, in
accordance with the terms of Section 1.18; (f) the sale, lease , transfer, or
other disposition of assets not otherwise permitted under this Section 6.8, in
an aggregate amount not to exceed $1,000,000, so long as the Net Cash Proceeds
therefrom are applied in accordance with Section 1.2.3; (g) the sale, lease,
transfer or other disposition of assets as set forth on Disclosure Schedule 6.8
provided that the Net Cash Proceeds of such sale, lease, transfer or other
disposition are applied as described in Disclosure Schedule 6.8, and (h) the
sublease, after the date hereof, of property leased by Certified Fabricators and
located at 6351 and 0000 Xxxxxxx Xxxxxx, Xxxxx Xxxx, Xxxxxxxxxx and the sublease
of property leased by Galaxy and located at 0000 Xxxxx, Xxxxxx, Xxxxxxxx. With
respect to any disposition of assets or other properties permitted pursuant to
this Section 6.8, Agent agrees on reasonable prior written notice to release its
Lien on such assets or other properties upon receipt of proceeds as otherwise
agreed herein, in order to permit the applicable Credit Party to effect such
disposition and shall execute and deliver to Borrowers, at Borrowers' expense,
appropriate UCC-3 termination statements and other releases as reasonably
requested by Borrowers.
6.9. ERISA.
-----
No Credit Party shall, or shall cause or permit any ERISA Affiliate
to, cause or permit to occur an event which would reasonably be expected to
result in the imposition of a Lien under Section 412 of the IRC or Section 302
or 4068 of ERISA or cause or permit to occur an ERISA Event to the extent such
ERISA Event would reasonably be expected to have a Material Adverse Effect.
6.10. Financial Covenants.
-------------------
Borrowers shall not breach or fail to comply with any of the
Financial Covenants (the "Financial Covenants") set forth in Annex G.
6.11. Hazardous Materials.
-------------------
No Credit Party shall cause or permit a Release of any Hazardous
Material on, at, in, under, above, to, from or about any of the Real Estate
where such Release would (a) violate in any respect, or form the basis for any
Environmental Liabilities under, any Environmental Laws or Environmental Permits
or (b) otherwise materially adversely impact the value or marketability of any
of the Real Estate or any of the Collateral, other than such violations,
Environmental Liabilities or impact which would not reasonably be expected to
have a Material Adverse Effect.
6.12. Sale-Leasebacks.
---------------
No Credit Party shall engage in any sale-leaseback, synthetic lease
or similar transaction involving any of its assets other than the sale and
leaseback of certain real estate owned by General Automation, Inc., upon and
subject to the terms and conditions described in Disclosure Schedule 6.12.
6.13. Cancellation of Indebtedness.
----------------------------
No Credit Party shall cancel any claim or debt owing to it, except
for (a) permitted debts owed by a Borrower and (b) reasonable consideration
negotiated on an arm's-length basis and in the ordinary course of its business
consistent with past practices.
6.14. Restricted Payments.
-------------------
No Credit Party shall make any Restricted Payment, except (a)
intercompany loans and advances between Credit Parties to the extent permitted
by Section 6.3 above, (b) dividends and distributions by Subsidiaries of any
Borrower paid to such Borrower, (c) employee loans permitted under Section
6.4(b) above, (d) the payment of dividends and other distributions payable
solely in additional Stock, (e) the issuance of stock or warrants, or rights or
options to acquire stock to management and other employees in accordance with
the Precision Partners Holding Company 1999 Stock Option Plan, effective as of
April 6, 1999, and the redemption of the stock of employees and former employees
for a price not to exceed $1,000,000, which redemption is paid for solely with a
new equity infusion, (f) payments by the Borrowers to Holdings to pay (i) taxes
of Holdings and its Subsidiaries when due and (ii) ordinary and customary
administrative expenses, in an amount not to exceed $100,000 per year, and (g)
other Restricted Payments between Borrowers.
6.15. Change of Corporate Name or Location; Change of Fiscal Year.
-----------------------------------------------------------
No Credit Party shall (a) change its corporate name, or (b) change
its jurisdiction of incorporation, in any case without at least twenty (20) days
prior written notice to Agent and Revolving Credit Agent and after Agent's and
Revolving Credit Agent's written acknowledgment that any reasonable action
requested by Agent or Revolving Credit Agent in connection therewith, including
to continue the perfection of any Liens in favor of Agent and Revolving Credit
Agent, on behalf of Lenders, in any Collateral, has been completed or taken.
Without limiting the foregoing, no Credit Party shall change its name or
corporate structure in any manner which might make any financing statement or
continuation statement materially misleading under the Code, except upon prior
written notice to Agent, Revolving Credit Agent and Lenders and after Agent's
and Revolving Credit Agent's written acknowledgment that any reasonable action
requested by Agent or Revolving Credit Agent in connection therewith to continue
the perfection of any Liens in favor of Agent and Revolving Credit Agent, on
behalf of Lenders, in any Collateral, has been completed or taken. No Credit
Party shall change its Fiscal Year.
No Borrower shall relocate any of the Collateral or maintain any
Collateral at any new location, except that Borrowers may remove an item of
Collateral from an existing location to another location in the continental
United Stated owned or leased by a Borrower, so long as (i) the Borrowers give
the Agent such prior notice as shall be required by Section 5.10 hereof; (ii) at
all times such item of Collateral shall be maintained and insured in accordance
with the terms of this Agreement, (iii) the Borrowers shall have filed such
financing statements (including fixture filings) and releases as shall be
necessary to maintain Agent's first priority lien thereon, and (iv) Borrowers
shall have obtained a landlord's agreement, mortgagee's agreement, or bailee's
letter, as applicable (unless the Borrowers shall not be required to do so under
the provisions of Section 5.9 hereof).
6.16. No Impairment of Intercompany Transfers.
---------------------------------------
No Credit Party shall directly or indirectly enter into or become
bound by any agreement, instrument, indenture or other obligation (other than
this Agreement and the other Operative Documents) which could directly or
indirectly restrict, prohibit or require the consent of any Person with respect
to the payment of dividends or distributions or the making or repayment of
intercompany loans by a Subsidiary of any Borrower to any Borrower or between
Borrowers; provided, however, that nothing in this Section 6.16 shall prohibit
or restrict (a) this Agreement or the other Operative Documents; (b) any other
agreement in existence on the date hereof and expressly permitted by the terms
of this Agreement; (c) any operative law, rule, or regulation or Governmental
Authorization; or (d) any agreement evidencing or setting forth the terms of any
refunding, refinancing, or replacement Indebtedness otherwise permitted to be
incurred under Section 6.3.
6.17. No Speculative Transactions.
---------------------------
No Credit Party shall engage in any transaction involving commodity
options, futures contracts or similar transactions, except solely to hedge
against fluctuations in the prices of commodities owned or purchased by it and
the values of foreign currencies receivable or payable by it and interest swaps,
caps or collars.
6.18. Leases.
------
No Credit Party shall enter into any new operating lease for
Equipment or Real Estate, except for (a) new leases of equipment with rental
payments not to exceed $250,000 in the aggregate per year and (b) sale
leasebacks permitted under Section 6.12; provided, however, that nothing in this
Section 6.18 shall be deemed to restrict the renewal or extension of existing
operating leases to the extent that the aggregate annual rental payments are not
increased thereunder, unless any increase is included in the calculation of the
$250,000 limit described above.
6.19. Financing Statements.
--------------------
No Credit Party may file any amendments, correction statements, or
termination statements concerning any Collateral without the prior written
consent of the Agent.
6.20 Federal Reserve Regulations.
----------------------------
No Credit Party shall permit any Loan or the proceeds of any Loan under
this Agreement to be used for any purpose that would cause such Loan to be a
margin loan under the provisions of Regulation T, U or X of the Board of
Governors of the Federal Reserve System of the United States.
6.21 Investment Company Act of 1940.
------------------------------
No Credit Party shall engage in any business, enter into any
transaction, use any securities or take any other action or permit any of its
Subsidiaries to do any of the foregoing, that would cause it or any of its
Subsidiaries to become subject to the registration requirements of the
Investment Company Act of 1940, as amended, by virtue of being an "investment
company" or a company "controlled" by an "investment company" not entitled to an
exemption within the meaning of such Act.
6.22 Certain Agreements.
------------------
No Credit Party shall agree to any amendment or other change to or
waiver of any of its rights under any Material Contract, which amendment, change
or waiver would reasonably be expected to have a Material Adverse Effect.
7. TERM
7.1. Termination.
-----------
The financing arrangements contemplated hereby shall be in effect
until the Commitment Termination Date, and the Loans and all other Obligations
shall be automatically due and payable in full on such date.
7.2. Survival of Obligations Upon Termination of Financing Arrangements.
------------------------------------------------------------------
Except as otherwise expressly provided for in the Operative
Documents, no termination or cancellation (regardless of cause or procedure) of
any financing arrangement under this Agreement shall in any way affect or impair
the obligations, duties and liabilities of the Credit Parties or the rights of
Agent and Lenders relating to any unpaid portion of the Loans or any other
Obligations, due or not due, liquidated, contingent or unliquidated or any
transaction or event occurring prior to such termination. Except as otherwise
expressly provided herein or in any other Operative Document, all undertakings,
agreements, covenants, warranties and representations of or binding upon the
Credit Parties, and all rights of Agent and each Lender, all as contained in the
Operative Documents, shall not terminate or expire, but rather shall survive any
such termination or cancellation and shall continue in full force and effect
until the Commitment Termination Date; provided however, that in all events the
provisions of Section 11, the payment obligations under Sections 1.14 and 1.15,
and the indemnities contained in the Operative Documents shall survive the
Commitment Termination Date.
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES
8.1. Events of Default.
-----------------
The occurrence of any one or more of the following events
(regardless of the reason therefor) shall constitute an "Event of Default"
hereunder:
a. Any Borrower (i) fails to make any payment of principal of the
Loans or any of the other Obligations as and when the same becomes due and
payable (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise), or (ii) fails to make any payment of interest on the
Loans or any of the other Obligations within two (2) Business Days of the date
when the same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise), or (iii) fails to make any
payment of Fees owing in respect of, the Loans or any of the other Obligations
within five (5) days of the date when the same becomes due and payable (whether
by scheduled maturity, required prepayment, acceleration, demand, or otherwise),
or (iv) fails to pay or reimburse Agent, Revolving Credit Agent, or Lenders for
any expense reimbursable hereunder or under any other Operative Document within
ten (10) days following Agent's or Revolving Credit Agent's demand for such
reimbursement or payment of expenses.
b. Any Credit Party (i) shall fail or neglect to perform, keep or
observe Sections 4.1, 5.1(a), (b), (c), and (e), 5.2, 5.4(a), the first sentence
of 5.4(c), 5.5, 5.10, 5.13, Annex C, or Annex G, or Section 6 of this Agreement,
or (ii) shall fail or neglect to perform, keep, or observe any of the other
provisions of this Agreement, or of any of the other Operative Documents (other
than any provision embodied in or covered by any other clause of this Section
8.1), and such failure is not cured (y) within ten (10) days after such failure,
or (z) if the nature of such failure is such that Borrowers cannot have
knowledge of such failure without notice from the Agent, the Revolving Credit
Agent, or the Lenders of an approval or disapproval, then within ten (10) days
after notice from the Agent, the Revolving Credit Agent or a Lender.
c. An Event of Default shall occur under the Master Lease or any of
the other Operative Documents, after giving effect to any applicable grace or
cure period.
d. A default or breach shall occur under any other agreement,
document or instrument to which any Credit Party is a party which is not cured,
waived, or otherwise satisfied within any applicable grace period, and such
default or breach (i) involves the failure to make any payment when due in
respect of any Indebtedness (other than the Obligations) of any Credit Party in
excess of $1,000,000 in the aggregate, or (ii) causes, or permits any holder of
such Indebtedness or a trustee to cause such Indebtedness or a portion thereof
in excess of $1,000,000 in the aggregate to become due prior to its stated
maturity or prior to its regularly scheduled dates of payment, regardless of
whether such default is waived, or such right is exercised, by such holder or
trustee.
e. Any information contained in any written statement, report,
financial statement or certificate (including a Borrowing Base Certificate) made
or delivered to Agent, Revolving Credit Agent or any Lender by any Credit Party
is untrue or incorrect in any material respect as of the date when made or
deemed made.
f. Assets of any Credit Party with a fair market value of $50,000 or
more shall be attached, seized, levied upon or subjected to a writ or distress
warrant, or come within the possession of any receiver, trustee, custodian or
assignee for the benefit of creditors of any Credit Party and such condition
continues for a period of thirty (30) days without dismissal or bonding pending
appeal.
g. A case or proceeding shall have been commenced against any Credit
Party seeking a decree or order in respect of any Credit Party (i) under Title
11 of the United States Code, as now constituted or hereafter amended or any
other applicable federal, state or foreign bankruptcy or other similar law, (ii)
appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator
(or similar official) for any Credit Party or of any substantial part of any
such Person's assets, or (iii) ordering the winding-up or liquidation of the
affairs of any Credit Party, and such case or proceeding shall remain
undismissed or unstayed for sixty (60) days or more or such court shall enter a
decree or order granting the relief sought in such case or proceeding.
h. Any Credit Party (i) shall file a petition seeking relief under
Title 11 of the United States Code, as now constituted or hereafter amended, or
any other applicable federal, state or foreign bankruptcy or other similar law,
(ii) shall fail to contest in a timely and appropriate manner or shall consent
to the institution of proceedings thereunder or to the filing of any such
petition or to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official) of any
Credit Party or of any substantial part of any such Person's assets, (iii) shall
make an assignment for the benefit of creditors, (iv) shall take any corporate
action in furtherance of any of the foregoing; or (v) shall admit in writing its
inability to, or shall be generally unable to, pay its debts as such debts
become due.
i. A final judgment or judgments for the payment of money in excess
of $250,000 in the aggregate at any time outstanding shall be rendered against
any Credit Party and the same shall not, within fifteen (15) days after the
entry thereof, have been discharged or execution thereof stayed or bonded
pending appeal, or shall not have been discharged prior to the expiration of any
such stay, other than any judgments which are covered in full by insurance which
is not being disputed by the insurer.
j. Any material provision of any Operative Document shall for any
reason cease to be valid, binding and enforceable in accordance with its terms
(or any Credit Party or any Governmental Authority having jurisdiction over such
Credit Party shall challenge the enforceability of any Operative Document or
shall assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Operative Documents has ceased to be
or otherwise is not valid, binding and enforceable in accordance with its
terms), or any security interest created under any Operative Document shall
cease to be a valid and perfected first priority security interest or Lien
(except as otherwise permitted herein or therein) in any of the Collateral
purported to be covered thereby.
k. Any Change of Control shall occur.
l. A default shall occur under a Material Contract, or a license or
permit now held by one of the Credit Parties shall be lost, suspended, or
revoked, or a strike, workstoppage or other similar event shall occur, as a
result of which revenue-producing activities cease or are substantially
curtailed, and such cessation or curtailment (a) is not covered by business
interruption insurance and (b) is likely to have a Material Adverse Effect.
m. The indictment of any Credit Party under any criminal statute, or
commencement of criminal or civil proceedings against any Credit Party, pursuant
to which statute or proceedings the penalties or remedies sought or available
include forfeiture to any Governmental Authority of any material portion of the
property of such Credit Party.
n. Any Credit Party or any of its ERISA Affiliates shall have made a
complete or partial withdrawal from a Multiemployer Plan, and, as a result of
such complete or partial withdrawal, any Credit Party or any of its ERISA
Affiliates incurs a withdrawal liability in excess of $750,000; or a
Multiemployer Plan enters reorganization status under Section 4241 of ERISA,
and, as a result thereof any Credit Party's or any of its ERISA Affiliates'
annual contribution requirements with respect to such Multiemployer Plan
increases in an annual amount in excess of $750,000.
o. Any ERISA Event with respect to any Plan shall have occurred,
and, 30 days after notice thereof shall have been given to any Credit Party by
the Agent, (i) such ERISA Event (if correctable) shall not have been corrected,
and (ii) the then current value of such Plan's vested benefits exceeds the then
current value of assets allocable to such benefits in such Plan by more than
$1,000,000 (or, in the case of an ERISA Event involving liability under Section
409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or
Section 4971 or 4975 of the Code, the liability is in excess of such amount).
p. Any Credit Party shall be liable for any Environmental
Liabilities the payment of which would reasonably be expected to have a Material
Adverse Effect.
8.2. Remedies.
--------
a. If any Event of Default shall have occurred and be continuing or
if a Default shall have occurred and be continuing Agent may (and at the written
request of the Requisite Lenders shall) by notice to the Revolving Credit Agent,
without notice to the Borrowers, suspend the Revolving Loan facility with
respect to further Advances or the obligation to issue further Letters of
Credit. If any Event of Default shall have occurred and be continuing, the rate
of interest applicable to the Loans and Letter of Credit Fees shall
automatically increase to the Default Rate until such Default is cured or
waived.
b. If any Event of Default shall have occurred and be continuing,
Agent may, and shall at the request of the Requisite Lenders, by notice to the
Revolving Credit Agent, upon notice to the Borrowers, (i) terminate the
Revolving Loan Commitment with respect to further Advances and Letters of
Credit; (ii) declare all or any portion of the Obligations, including all or any
portion of any Loan, to be forthwith due and payable, and require that the
Letter of Credit Obligations be cash collateralized as provided in Annex B, all
without presentment, demand, protest or further notice of any kind, all of which
are expressly waived by Borrowers and each other Credit Party; and (iii)
exercise any rights and remedies provided to Agent or Revolving Credit Agent
under the Operative Documents and/or at law or equity, including all remedies
provided under the Code; provided, however, that upon the occurrence of an Event
of Default specified in Sections 8.1(g) or (h), the Revolving Loan Commitment
shall be immediately terminated and all of the Obligations, including the
aggregate Revolving Loan, the Term Loan, and the Master Lease, shall become
immediately due and payable without declaration, notice or demand by any Person.
c. If any Event of Default shall have occurred and be continuing,
the Agent (at the request of any Term Lender) may from time to time, make such
disbursements and advances ("Protective Advances") which the Agent or the
Lender, in their sole discretion, deem necessary or desirable to preserve or
protect the Collateral or any portion thereof, to enhance the likelihood or
maximize the amount of repayment by the Borrowers of the Loans and the other
Obligations or to pay any other amount chargeable to the Borrowers pursuant to
the terms of this Agreement, including, without limitation, costs, fees and
expenses as described herein. The Protective Advances shall be repayable on
demand, be secured by the Collateral, and be treated as principal of the Term
Loan for purposes of the application of payments or proceeds of Collateral. The
Protective Advances shall not constitute Loans but shall otherwise constitute
Obligations hereunder. The Agent or the Lenders shall notify the Borrower
Representative in writing of each such Protective Advance, which notice shall
include a description of the purpose of such Protective Advance. Without
limitation to its obligations hereunder, each Lender agrees that it shall make
available to the Agent, upon the Agent's demand, in Dollars in immediately
available funds, the amount equal to such Lender's Pro Rata Share of each such
Protective Advance. If such funds are not made available to the Agent by any
such Lender, the Agent shall be entitled to recover such funds, on demand from
such Lender together with interest thereon, for each day from the date such
payment was due until the date such amount is paid to the Agent, at the Default
Rate then applicable to the Term Loan.
8.3. Waivers by Credit Parties.
-------------------------
Except as otherwise provided for in this Agreement or by applicable
law, each Credit Party waives, to the extent permitted by law (including for
purposes of Section 12): (a) presentment, demand and protest and notice of
presentment, dishonor, notice of intent to accelerate, notice of acceleration,
protest, default, nonpayment, maturity, release, compromise, settlement,
extension or renewal of any or all commercial paper, accounts, contract rights,
documents, instruments, chattel paper and guaranties at any time held by Agent
on which any Credit Party may in any way be liable, and hereby ratifies and
confirms whatever Agent may do in this regard, (b) all rights to notice and a
hearing prior to Agent's taking possession or control of, or to Agent's replevy,
attachment or levy upon, the Collateral or any bond or security which might be
required by any court prior to allowing Agent to exercise any of its remedies,
and (c) the benefit of all valuation, appraisal, marshaling and exemption laws.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1. Assignment and Participations.
-----------------------------
a. The Credit Parties signatory hereto consent to any Lender's
assignment of, and/or sale of participations in, at any time or times, the
Operative Documents, the obligations under the Master Lease, the Loans, Letter
of Credit Obligations and any Commitment or of any portion thereof or interest
therein, including any Lender's rights, title, interests, remedies, powers or
duties thereunder, whether evidenced by a writing or not. Any assignment by a
Lender shall (i) require the consent of the Requisite Lenders, which consent
shall not be unreasonably withheld, and the execution of an assignment agreement
(an "Assignment Agreement") substantially in the form attached hereto as Exhibit
9.1(a) and otherwise in form and substance satisfactory to, and acknowledged by,
Agent; (ii) be conditioned on such assignee Lender representing to the assigning
Lender, Agent, and Borrower that it is purchasing the applicable Loans or
interest in the Master Lease to be assigned to it for its own account, for
investment purposes and not with a view to the distribution thereof; (iii) if a
partial assignment, be in an amount at least equal to $5,000,000 and, after
giving effect to any such partial assignment, the assigning Lender shall have
retained Commitments in an amount at least equal to $5,000,000; and (iv) include
a payment to Agent by the assigning Lender of an assignment fee of $3,500. In
the case of an assignment by a Lender under this Section 9.1, the assignee shall
have, to the extent of such assignment, the same rights, benefits and
obligations as it would if it were a Lender hereunder. The assigning Lender
shall be relieved of its obligations hereunder with respect to its Commitments
or assigned portion thereof from and after the date of such assignment. Each
Borrower hereby acknowledges and agrees that any assignment will give rise to a
direct obligation of Borrowers to the assignee and that the assignee shall be
considered to be a "Lender". In all instances, each Lender's liability to make
Loans hereunder shall be several and not joint and shall be limited to such
Lender's ratable share of the applicable Commitment. In the event Agent or any
Lender assigns or otherwise transfers all or any part of the Obligations, Agent
or any such Lender shall so notify Borrowers and Borrowers shall, upon the
request of Agent or such Lender, execute new Notes in exchange for the Notes, if
any, being assigned.
Notwithstanding the foregoing provisions of this Section 9.1(a), any
Lender may at any time (x) make any assignment to an affiliate of a Lender or to
a fund or account managed by a Lender without satisfying any of the conditions
set forth in this Section 9.1(a) (including, without limitation, the conditions
contained in clauses (i) through (iv) above and the requirement to provide
notice to the Agent, Revolving Credit Agent or Borrowers); provided however,
that the Agent, Revolving Credit Agent and the Borrowers may continue to deal
solely and directly with such assigning Lender in connection with the interest
so assigned to the assignee of such Lender until such assigning Lender provides
written notice of such assignment to the Agent or Revolving Credit Agent, as
applicable, and such assigning Lender and its assignee have delivered to the
Agent or Revolving Credit Agent, as applicable, a fully executed Assignment
Agreement substantially in the form attached hereto as Exhibit 9.1(a) or
otherwise in form and substance reasonably satisfactory to the Agent or
Revolving Credit Agent, as applicable, and (y) pledge the Obligations held by it
and such Lender's rights under this Agreement and the other Operative Documents
to a Federal Reserve Bank; provided, however, that no such pledge to a Federal
Reserve Bank shall release such Lender from such Lender's obligations hereunder
or under any other Operative Document.
b. Any participation by a Lender of all or any part of its
Commitments shall be made with the understanding that all amounts payable by
Borrowers hereunder shall be determined as if that Lender had not sold such
participation, and that the holder of any such participation shall not be
entitled to require such Lender to take or omit to take any action hereunder
except actions directly affecting (i) any reduction in the principal amount of,
or interest rate or Fees payable with respect to, any Loan in which such holder
participates, (ii) any extension of the scheduled amortization of the principal
amount of any Loan in which such holder participates or the final maturity date
thereof, and (iii) any release of all or substantially all of the Collateral
(other than in accordance with the terms of this Agreement, the Collateral
Documents or the other Operative Documents). Solely for purposes of Sections
1.12, 1.14, 1.15 and 9.8, each Borrower acknowledges and agrees that a
participation shall give rise to a direct obligation of Borrowers to the
participant and the participant shall be considered to be a "Lender". Except as
set forth in the preceding sentence no Borrower or Credit Party shall have any
obligation or duty to any participant. Neither Agent nor any Lender (other than
the Lender selling a participation) shall have any duty to any participant and
may continue to deal solely with the Lender selling a participation as if no
such sale had occurred.
c. Except as expressly provided in this Section 9.1, no Lender
shall, as between Borrowers and that Lender, or Agent and that Lender, be
relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participation in, all or
any part of the Loans, the Notes, the Master Lease or other Obligations owed to
such Lender.
d. Each Credit Party executing this Agreement shall assist any
Lender permitted to sell assignments or participations under this Section 9.1 as
reasonably required to enable the assigning or selling Lender to effect any such
assignment or participation, including the execution and delivery of any and all
agreements, notes and other documents and instruments as shall be reasonably
requested and, if requested by Agent, the preparation of informational materials
for, and the participation of management in meetings with, potential assignees
or participants. Each Credit Party executing this Agreement shall certify the
completeness and accuracy in all material respects of all descriptions of the
Credit Parties and their affairs contained in any selling materials provided by
them and all other information provided by them and included in such materials ,
except that any Financial Statements and Projections delivered by Borrowers
shall only be certified by Borrowers as having been prepared by Borrowers in
compliance with the representations contained in Section 3.4.
e. Subject to the provisions of Section 11.8, a Lender may furnish
any information concerning Credit Parties in the possession of such Lender from
time to time to assignees and participants (including prospective assignees and
participants). Each Lender shall obtain from assignees or participants
confidentiality covenants substantially equivalent to those contained in Section
11.8.
9.2. Appointment of Agents.
---------------------
a. GE Capital is hereby appointed to act on behalf of all Lenders as
Agent under this Agreement and the other Operative Documents. General Electric
Capital Corporation is hereby appointed to act on behalf of all Revolving
Lenders as Revolving Credit Agent and by all Lenders as agent to control and
hold the cash collateral in any blocked account or Letter of Credit Cash
Collateral Account under this Agreement and the other Operative Documents. The
provisions of this Section 9.2 are solely for the benefit of Agent, Revolving
Credit Agent, and Lenders and no Credit Party nor any other Person shall have
any rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement and the other Operative
Documents, Agent and Revolving Credit Agent shall act solely as an agent of
Lenders and do not assume and shall not be deemed to have assumed any obligation
toward or relationship of agency or trust with or for any Credit Party or any
other Person. Agent and Revolving Credit Agent shall have no duties or
responsibilities except for those expressly set forth in this Agreement and the
other Operative Documents. The duties of Agent and Revolving Credit Agent shall
be mechanical and administrative in nature and Agent and Revolving Credit Agent
shall not have, or be deemed to have, by reason of this Agreement, any other
Operative Document or otherwise, a fiduciary relationship in respect of any
Lender. Neither Agent, nor Revolving Credit Agent, nor any of either's
Affiliates nor any of their respective officers, directors, employees, agents or
representatives shall be liable to any Lender for any action taken or omitted to
be taken by it hereunder or under any other Operative Document, or in connection
herewith or therewith, except for damages caused by its or their own gross
negligence or willful misconduct as determined by a final judgment of a court of
competent jurisdiction.
b. If Agent or Revolving Credit Agent shall request instructions
from Requisite Lenders or all affected Lenders with respect to any act or action
(including failure to act) in connection with this Agreement or any other
Operative Document, then Agent or Revolving Credit Agent shall be entitled to
refrain from such act or taking such action unless and until Agent or Revolving
Credit Agent shall have received instructions from Requisite Lenders or all
affected Lenders, as the case may be, and Agent or Revolving Credit Agent shall
not incur liability to any Person by reason of so refraining. Agent or Revolving
Credit Agent shall be fully justified in failing or refusing to take any action
hereunder or under any other Operative Document (a) if such action would, in the
opinion of Agent or Revolving Credit Agent , be contrary to law or the terms of
this Agreement or any other Operative Document, (b) if such action would, in the
opinion of Agent or Revolving Credit Agent, expose such Agent or Revolving
Credit Agent to Environmental Liabilities or (c) if Agent or Revolving Credit
Agent, as applicable, shall not first be indemnified to its satisfaction against
any and all liability and expense which may be incurred by it by reason of
taking or continuing to take any such action. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against Agent as a result of
Agent or Revolving Credit Agent acting or refraining from acting hereunder or
under any other Operative Document in accordance with the instructions of
Requisite Lenders or all affected Lenders, as applicable, except to the extent
that any such right of action arises out of such Agent's gross negligence or
willful misconduct as determined by a court of competent jurisdiction.
9.3. Agent's and Revolving Credit Agent's Reliance, Etc.
---------------------------------------------------
Neither Agent, nor Revolving Credit Agent, nor any of either's
Affiliates nor any of their respective directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement or the other Operative Documents, except
for damages caused by its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, Agent or Revolving Credit
Agent: (a) may treat a Lender as a Lender thereof until Agent, or Revolving
Credit Agent, as applicable, receives written notice of the assignment or
transfer from such Lender and its assignee and in form reasonably satisfactory
to Agent or Revolving Credit Agent; (b) may consult with legal counsel,
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (c) makes no
warranty or representation to any Lender and shall not be responsible to any
Lender for any statements, warranties or representations made in or in
connection with this Agreement or the other Operative Documents; (d) shall not
have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of this Agreement or the other
Operative Documents on the part of any Credit Party or to inspect the Collateral
(including the books and records) of any Credit Party; (e) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or the other
Operative Documents or any other instrument or document furnished pursuant
hereto or thereto; and (f) shall incur no liability under or in respect of this
Agreement or the other Operative Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopy, telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper
party or parties.
9.4. GE Capital and Successor Agent or Revolving Credit Agent
and Affiliates.
--------------------------------------------------------
With respect to its Commitments hereunder, GE Capital and any
successor Agent or Revolving Credit Agent which is also a Lender hereunder shall
have the same rights and powers under this Agreement and the other Operative
Documents as any other Lender and may exercise the same as though it were not
Agent or Revolving Credit Agent, as applicable; and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include GE Capital and
any such successor in their individual capacities. GE Capital and any successor
Agent or Revolving Credit Agent and their Affiliates may lend money to, invest
in, and generally engage in any kind of business with, any Credit Party, any of
their Affiliates and any Person who may do business with or own securities of
any Credit Party or any such Affiliate, all as if GE Capital (or such successor)
were not Agent or Revolving Credit Agent, as applicable, without any duty to
account therefor to Lenders. GE Capital, any such successor, and their
Affiliates may accept fees and other consideration from any Credit Party for
services in connection with such other transactions without having to account
for the same to Lenders. Each Lender acknowledges the potential conflict of
interest between GE Capital or a successor as a Lender, holding disproportionate
interests in the Loans and/or the Master Lease, and GE Capital or such successor
as Agent or Revolving Credit Agent.
9.5. Lender Credit Decision.
----------------------
Each Lender acknowledges that it has, independently and without
reliance upon Agent or any other Lender and based on the Financial Statements
referred to in Section 3.4.1 and such other documents and information as it has
deemed appropriate, made its own credit and financial analysis of the Credit
Parties and its own decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon Agent or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement. Each Lender acknowledges the potential
conflict of interest of each other Lender as a result of Lenders holding
disproportionate interests in the Loans, and expressly consents to, and waives
any claim based upon, such conflict of interest.
9.6. Indemnification.
---------------
Lenders agree to indemnify Agent (to the extent not reimbursed by
Credit Parties and without limiting the obligations of the Credit Parties
hereunder), ratably according to their respective Pro Rata Shares, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against
Agent in any way relating to or arising out of this Agreement or any other
Operative Document or any action taken or omitted by Agent in connection
therewith; provided, however, that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from Agent's gross negligence
or willful misconduct, and Revolving Lenders agree to indemnify Revolving Credit
Agent (to the extent not reimbursed by Credit Parties and without limiting the
obligations of the Credit Parties hereunder), ratably according to their
respective Pro Rata Shares in the Revolving Loan, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against Revolving Credit Agent in any way
relating to or arising out of this Agreement or any other Operative Document or
any action taken or omitted by Revolving Credit Agent in connection therewith;
provided, however, that no Revolving Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from Revolving Credit Agent's
gross negligence or willful misconduct. Without limiting the foregoing, each
Lender agrees to reimburse Agent (or each Revolving Lender agrees to reimburse
Revolving Credit Agent, as applicable) promptly upon demand for its ratable
share of any out-of-pocket expenses (including counsel fees) incurred by Agent,
or Revolving Credit Agent, as applicable, in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement and each
other Operative Document, to the extent that Agent, or Revolving Credit Agent,
as applicable, is not reimbursed for such expenses by Credit Parties.
9.7. Successor Agent and Revolving Credit Agent.
------------------------------------------
a. Agent may resign at any time by giving not less than thirty (30)
days' prior written notice thereof to Lenders and Borrower Representative. Upon
any such resignation, the Requisite Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Requisite Lenders and shall have accepted such appointment within 30 days after
the resigning Agent's giving notice of resignation, then the resigning Agent
may, on behalf of Lenders, appoint a successor Agent, which shall be a Lender,
if a Lender is willing to accept such appointment, or otherwise shall be a
commercial bank or financial institution or a subsidiary of a commercial bank or
financial institution if such commercial bank or financial institution is
organized under the laws of the United States of America or of any State thereof
and has a combined capital and surplus of at least $300,000,000. If no successor
Agent has been appointed pursuant to the foregoing, by the 30th day after the
date such notice of resignation was given by the resigning Agent, such
resignation shall become effective and the Requisite Lenders shall thereafter
perform all the duties of Agent hereunder until such time, if any, as the
Requisite Lenders appoint a successor Agent as provided above. Any successor
Agent appointed by Requisite Lenders hereunder shall be subject to the approval
of Borrower Representative, such approval not to be unreasonably withheld or
delayed; provided that such approval shall not be required if a Default or an
Event of Default shall have occurred and be continuing. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall succeed to and become vested with all the rights, powers, privileges and
duties of the resigning Agent. Upon the earlier of the acceptance of any
appointment as Agent hereunder by a successor Agent or the effective date of the
resigning Agent's resignation, the resigning Agent shall be discharged from its
duties and obligations under this Agreement and the other Operative Documents,
except that any indemnity rights or other rights in favor of such resigning
Agent shall continue. After any resigning Agent's resignation hereunder, the
provisions of this Section 9 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement and the
other Operative Documents. Agent may be removed for gross negligence or willful
misconduct at the written direction of the holders (other than Agent) of
two-thirds or more of the sum of the aggregate amount of the Term Loan
Commitments, Capital Lease Commitments, and Revolving Loan Commitments.
b. Revolving Credit Agent may resign at any time by giving not less
than thirty (30) days' prior written notice thereof to Lenders and Borrower
Representative. Upon any such resignation, the Requisite Lenders shall have the
right to appoint a successor Revolving Credit Agent. If no successor Revolving
Credit Agent shall have been so appointed by the Requisite Lenders and shall
have accepted such appointment within 30 days after the resigning Revolving
Credit Agent's giving notice of resignation, then the resigning Revolving Credit
Agent may, on behalf of Lenders, appoint a successor Revolving Credit Agent,
which shall be a Revolving Lender, if a Revolving Lender is willing to accept
such appointment, or otherwise shall be a commercial bank or financial
institution or a subsidiary of a commercial bank or financial institution if
such commercial bank or financial institution is organized under the laws of the
United States of America or of any State thereof and has a combined capital and
surplus of at least $300,000,000. If no successor Revolving Credit Agent has
been appointed pursuant to the foregoing, by the 30th day after the date such
notice of resignation was given by the resigning Revolving Credit Agent, such
resignation shall become effective and the Requisite Lenders shall thereafter
perform all the duties of Revolving Credit Agent hereunder until such time, if
any, as the Requisite Lenders appoint a successor Revolving Credit Agent as
provided above. Any successor Revolving Credit Agent appointed by Requisite
Lenders hereunder shall be subject to the approval of Borrower Representative,
such approval not to be unreasonably withheld or delayed; provided that such
approval shall not be required if a Default or an Event of Default shall have
occurred and be continuing. Upon the acceptance of any appointment as Revolving
Credit Agent hereunder by a successor Revolving Credit Agent, such successor
Revolving Credit Agent shall succeed to and become vested with all the rights,
powers, privileges and duties of the resigning Revolving Credit Agent. Upon the
earlier of the acceptance of any appointment as Revolving Credit Agent hereunder
by a successor Revolving Credit Agent or the effective date of the resigning
Revolving Credit Agent's resignation, the resigning Revolving Credit Agent shall
be discharged from its duties and obligations under this Agreement and the other
Operative Documents, except that any indemnity rights or other rights in favor
of such resigning Revolving Credit Agent shall continue. After any resigning
Revolving Credit Agent's resignation hereunder, the provisions of this Section 9
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Revolving Credit Agent under this Agreement and the other Operative
Documents. Revolving Credit Agent may be removed for gross negligence or willful
misconduct at the written direction of the holders (other than Revolving Credit
Agent) of two-thirds or more of the sum of the aggregate amount of the Term Loan
Commitments, Capital Lease Commitments, and Revolving Loan Commitments.
9.8. Setoff and Sharing of Payments.
------------------------------
In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, at any time after the Loans
or other Obligations become due and payable pursuant to Section 8.2(b) and to
the extent permitted by law, each Lender and each holder of any Note is hereby
authorized at such time or from time to time, without notice to any Credit Party
or to any other Person, any such notice being hereby expressly waived, to set
off and to appropriate and to apply any and all balances held by it at any of
its offices for the account of any Credit Party (regardless of whether such
balances are then due to such Credit Party) and any other properties or assets
any time held or owing by that Lender or that holder to or for the credit or for
the account of any Credit Party against and on account of any of the Obligations
which are not paid when due. Notwithstanding anything herein to the contrary,
after any Lender has exercised its right of setoff pursuant to this Section 9.8,
it will notify the Borrowers, the Agent, the Revolving Credit Agent and the
other Lenders of such exercise. Any Lender or holder of any Note or the Master
Lease exercising a right to set off or otherwise receiving any payment on
account of the Obligations in excess of its Pro Rata Share thereof shall
purchase for cash (and the other Lenders or holders shall sell) such
participations in each such other Lender's or holder's Pro Rata Share of the
Obligations as would be necessary to cause such Lender to share the amount so
set off or otherwise received with each other Lender or holder in accordance
with their respective Pro Rata Shares. Each Credit Party agrees, to the fullest
extent permitted by law, that (a) any Lender or holder may exercise its right to
set off with respect to amounts in excess of its Pro Rata Share of the
Obligations and may sell participations in such amount so set off to other
Lenders and holders and (b) any Lender or holders so purchasing a participation
in the Loans made or other Obligations held by other Lenders or holders may
exercise all rights of set-off, bankers' Lien, counterclaim or similar rights
with respect to such participation as fully as if such Lender or holder were a
direct holder of the Loans and the other Obligations in the amount of such
participation. Notwithstanding the foregoing, if all or any portion of the
set-off amount or payment otherwise received is thereafter recovered from the
Lender that has exercised the right of set-off, the purchase of participations
by that Lender shall be rescinded and the purchase price restored without
interest. In the event that a Term Lender or a Revolving Lender is required by
the provisions of this Section 9.8 to purchase a participation interest from a
Lender holding an interest in both Loans and the Master Lease, the purchasing
Lender shall be entitled to purchase its participation interest in the Loans
alone, so long as the participating Lender holds an interest in the Loans in a
sufficient amount.
9.9. Advances; Payments; Non-Funding Lenders; Information;
Actions in Concert.
-----------------------------------------------------
a. Advances; Payments. Each Revolving Lender shall make the amount
of such Lender's Pro Rata Share of such Revolving Credit Advance available to
Revolving Credit Agent in same day funds by wire transfer to Revolving Credit
Agent's account as set forth in Annex H not later than 3:00 p.m. (New York time)
on the requested funding date, in the case of an Index Rate Loan and not later
than 11:00 a.m. (New York time) on the requested funding date in the case of a
LIBOR Loan. After receipt of such wire transfers (or, in the Revolving Credit
Agent's sole discretion, before receipt of such wire transfers), subject to the
terms hereof, Revolving Credit Agent shall make the requested Revolving Credit
Advance to the Borrower designated by Borrower Representative in the Notice of
Revolving Credit Advance. All payments by each Revolving Lender shall be made
without setoff, counterclaim or deduction of any kind.
b. On the second (2nd) Business Day of each calendar week or more
frequently as aggregate cumulative payments in excess of $2,000,000 are received
with respect to the Revolving Loan (each, a "Settlement Date"), Revolving Credit
Agent will advise each Revolving Lender by telephone, or telecopy of the amount
of such Lender's Pro Rata Share of principal, interest and Fees paid for the
benefit of Lenders with respect to the Revolving Loan. Provided that such
Revolving Lender has funded all payments or Advances required to be made by it
and has purchased all participations required to be purchased by it under this
Agreement and the other Operative Documents as of such Settlement Date,
Revolving Credit Agent will pay to each Revolving Lender such Revolving Lender's
Pro Rata Share of principal, interest and Fees paid by Borrowers since the
previous Settlement Date for the benefit of that Revolving Lender on the Pro
Rata Share of the Revolving Loan held by it. To the extent that any Revolving
Lender has failed to fund all such payments and Advances or failed to fund the
purchase of all such participations (such Lender being herein called a
"Non-Funding Lender"), Revolving Credit Agent shall be entitled to set off the
funding short-fall against that Non-Funding Lender's Pro Rata Share of all
payments received from Borrowers. Such payments shall be made by wire transfer
to such Revolving Lender's account (as specified by such Lender in Annex H or
the applicable Assignment Agreement) not later than 2:00 p.m. (New York time) on
the next Business Day following each Settlement Date.
c. Not later than the second (2nd) Business Day after receipt of any
payment received with respect to the Term Loan, Agent will advise each Term
Lender by telephone, or telecopy of the amount of such Lender's ratable share
(based proportionately upon such Term Lender's Term Loan Commitment) of
principal, interest and Fees paid for the benefit of Term Lenders with respect
to the Term Loan. Provided that such Term Lender has made all payments required
to be made by it under this Agreement and the other Operative Documents, Agent
will pay to each Term Lender such Term Lender's ratable share, (based
proportionately upon each such Term Lender's Term Loan Commitment) of principal,
interest and Fees paid by Borrowers. To the extent that any Term Lender has
failed to fund all such payments, Agent shall be entitled to set off the funding
short-fall against that Term Lender's Pro Rata Share of all payments received
from Borrowers. Such payments shall be made by wire transfer to such Term
Lender's account (as specified by such Term Lender in Annex H or the applicable
Assignment Agreement).
d. Availability of Lender's Pro Rata Share. Revolving Credit Agent
may assume that each Revolving Lender will make its Pro Rata Share of each
Revolving Credit Advance available to Revolving Credit Agent on each funding
date. If such Pro Rata Share is not, in fact, paid to Revolving Credit Agent by
such Revolving Lender when due, Revolving Credit Agent will be entitled to
recover such amount on demand from such Revolving Lender without set-off,
counterclaim or deduction of any kind. If any Revolving Lender fails to pay the
amount of its Pro Rata Share forthwith upon Revolving Credit Agent's demand,
Revolving Credit Agent shall promptly notify Borrower Representative and
Borrowers shall immediately repay such amount to Revolving Credit Agent. Nothing
in this Section 9.9(d) or elsewhere in this Agreement or the other Operative
Documents shall be deemed to require Revolving Credit Agent to advance funds on
behalf of any Revolving Lender or to relieve any Revolving Lender from its
obligation to fulfill its Commitments hereunder or to prejudice any rights that
Borrowers may have against any Revolving Lender as a result of any default by
such Revolving Lender hereunder. To the extent that Revolving Credit Agent
advances funds to any Borrower on behalf of any Revolving Lender and is not
reimbursed therefor on the same Business Day as such Advance is made, Revolving
Credit Agent shall be entitled to retain for its account all interest accrued on
such Advance until reimbursed by the applicable Revolving Lender.
e. Return of Payments.
(1) If Agent or Revolving Credit Agent pays an amount
to a Lender under this Agreement in the belief or expectation that a
related payment has been or will be received by Agent or Revolving Credit
Agent from Borrowers and such related payment is not received by Agent or
Revolving Credit Agent, as applicable, then Agent or Revolving Credit
Agent, as applicable, will be entitled to recover such amount from such
Lender on demand without set-off, counterclaim or deduction of any kind.
(2) If Agent or Revolving Credit Agent determines at
any time that any amount received by Agent or Revolving Credit Agent under
this Agreement must be returned to any Borrower or paid to any other
Person pursuant to any insolvency law or otherwise, then, notwithstanding
any other term or condition of this Agreement or any other Operative
Document, Agent or Revolving Credit Agent will not be required to
distribute any portion thereof to any Lender. In addition, each Lender
will repay to Agent or Revolving Credit Agent, as applicable, on demand
any portion of such amount that Agent or Revolving Credit Agent has
distributed to such Lender, together with interest at such rate, if any,
as Agent or Revolving Credit Agent is required to pay to any Borrower or
such other Person, without set-off, counterclaim or deduction of any kind.
f. Non-Funding Lenders. The failure of any Non-Funding Lender to
make any Revolving Credit Advance or any payment required by it hereunder shall
not relieve any other Revolving Lender (each such other Revolving Lender, an
"Other Lender") of its obligations to make such Advance or purchase such
participation on such date, but neither any Other Lender nor Revolving Credit
Agent shall be responsible for the failure of any Non-Funding Lender to make an
Advance or to purchase a participation required hereunder. Notwithstanding
anything set forth herein to the contrary, a Non-Funding Lender shall not have
any voting or consent rights under or with respect to any Operative Document or
constitute a "Lender" or be included in the calculation of "Requisite Lenders"
hereunder for any voting or consent rights under or with respect to any
Operative Document.
g. Dissemination of Information. Agent and Revolving Credit Agent
will provide Lenders with any notice of Default or Event of Default received by
Agent or Revolving Credit Agent from, or delivered by Agent or Revolving Credit
Agent to, any Credit Party, with notice of any Event of Default of which Agent
or Revolving Credit Agent has actually become aware and with notice of any
action taken by Agent or Revolving Credit Agent following any Event of Default;
provided, however, that Agent or Revolving Credit Agent shall not be liable to
any Lender for any failure to do so, except to the extent that such failure is
attributable to Agent's or Revolving Credit Agent's gross negligence or willful
misconduct. Lenders acknowledge that Borrowers are required to provide certain
Financial Statements and Collateral Reports to Lenders in accordance with
Annexes E and F hereto and agree that, to the extent that the Borrowers are
required to do so, Agent and Revolving Credit Agent shall have no duty to
provide the same to Lenders.
h. Actions in Concert. Anything in this Agreement to the contrary
notwithstanding, Revolving Credit Agent and each Lender hereby agrees with each
other Lender that neither Revolving Credit Agent nor any Lender shall take any
action to protect or enforce its rights arising out of this Agreement or the
Notes (including exercising any rights of set-off) without first obtaining the
prior written consent of Agent and Requisite Lenders, it being the intent of
Lenders that any such action to protect or enforce rights under this Agreement
and the Notes shall be taken in concert and at the direction or with the consent
of Agent; provided, however, that upon the occurrence and during the continuance
of any Event of Default , the Agent or the Revolving Credit Agent, as
applicable, shall, within ten (10) days of receipt of a written demand by (i)
any Term Lender or Lessor holding at least 50% of the sum of the outstanding
principal balance of the Term Loan plus the outstanding capitalized Lessor's
Cost under the Master Lease, or (ii) at any time when the Net Borrowing
Availability is less than $2,500,000, any Revolving Lender holding at least 50%
of the Revolving Loan Commitment, commence and diligently pursue in good faith
the exercise of its enforcement rights or remedies against, and take action to
enforce its Liens on, the Collateral to the extent that the Agent or Revolving
Credit Agent, as applicable, is permitted to exercise such rights and remedies
by the terms of the Operative Documents and/or under applicable law (including,
without limitation, any or all of the following: solicitation of bids from third
parties to conduct the liquidation of all or a material portion of Collateral,
the engagement or retention of sales brokers, marketing agents, investment
bankers, accountants, appraisers, auctioneers or other third parties for the
purposes of valuing, marketing, promoting and selling a material portion of the
Collateral, the commencement of any action to foreclose on its Lien on all or
any material portion of the Collateral, notification of account debtors to make
payments to the Agent, the Revolving Credit Agent or their agents, any action to
take possession of all or any material portion of the Collateral or commencement
of any legal proceedings or actions against or with respect to all or any
material portion of the Collateral).
10. SUCCESSORS AND ASSIGNS
10.1. Successors and Assigns.
----------------------
This Agreement and the other Operative Documents shall be binding on
and shall inure to the benefit of each Credit Party, Agent, Revolving Credit
Agent, Lenders and their respective successors and assigns (including, in the
case of any Credit Party, a debtor-in-possession on behalf of such Credit
Party), except as otherwise provided herein or therein. No Credit Party may
assign, transfer, hypothecate or otherwise convey its rights, benefits,
obligations or duties hereunder or under any of the other Operative Documents
without the prior express written consent of Agent and Lenders. Any such
purported assignment, transfer, hypothecation or other conveyance by any Credit
Party without the prior express written consent of Agent and Lenders shall be
void. The terms and provisions of this Agreement are for the purpose of defining
the relative rights and obligations of each Credit Party, Agent and Lenders with
respect to the transactions contemplated hereby and no Person shall be a third
party beneficiary of any of the terms and provisions of this Agreement or any of
the other Operative Documents.
11. MISCELLANEOUS
11.1. Complete Agreement; Modification of Agreement.
---------------------------------------------
The Operative Documents constitute the complete agreement between
the parties with respect to the subject matter thereof and may not be modified,
altered or amended except as set forth in Section 11.2 below. Any letter of
interest, commitment letter, and/or fee letter (other than the Fee Letter)
and/or confidentiality agreement between any Credit Party and Agent, Revolving
Credit Agent, or any Lender or any of their respective affiliates, predating
this Agreement and relating to a financing of substantially similar form,
purpose or effect shall be superseded by this Agreement.
11.2. Amendments and Waivers.
----------------------
a. Except for actions expressly permitted to be taken by Agent or
Revolving Credit Agent herein or in any of the other Operative Documents, or as
set forth in (b) and (c) below, no amendment, modification, termination or
waiver of any provision of this Agreement or any of the Notes or any of the
other Operative Documents, or any consent to any departure by any Credit Party
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Requisite Lenders.
b. No amendment, modification, or waiver of or consent to departure
with respect to any provision of this Agreement which increases the percentage
advance rates set forth in the definition of Aggregate Borrowing Base on the
date of this Agreement, or which makes less restrictive the nondiscretionary
criteria for exclusion from Eligible Accounts and Eligible Inventory set forth
in Sections 1.6 and 1.7 on the date of this Agreement, shall be effective unless
the same shall be in writing and signed by all Lenders and the Borrower
Representative. No amendment, modification, termination or waiver of or consent
with respect to any provision of this Agreement which waives compliance with the
conditions precedent set forth in Section 2.2 to the making of any Loan or the
incurrence of any Letter of Credit Obligation shall be effective unless the same
shall be in writing and signed by all Lenders and the Borrower Representative.
In addition, without limiting the foregoing, notwithstanding anything contained
in this Agreement to the contrary, no waiver or consent with respect to any
Event of Default (if in connection therewith Agent or Requisite Lenders, or all
Lenders, as the case may be, have exercised its or their right to suspend the
making or further Advances or incurrence of further Letter of Credit Obligations
pursuant to Section 8.2(a)) or any Event of Default shall be effective for
purposes of the conditions precedent to the making of Loans or the incurrence of
Letter of Credit Obligations set forth in Section 2.2 unless the same shall be
in writing and signed by the Borrowers, and Requisite Lenders.
c. No amendment, modification, consent to departure, or waiver with
respect to the Operative Documents shall, unless in writing and signed by Agent
and each Lender directly affected thereby, do any of the following: (i) increase
the principal amount of any Lender's Commitment (which action shall be deemed to
directly affect all Lenders); (ii) reduce the principal of, stated rate of
interest on or Fees payable with respect to any Loan or any Letter of Credit
Obligation; (iii) extend any scheduled payment date or final maturity date of
the principal amount of any Loan; (iv) waive, forgive, defer, extend or postpone
any payment of interest or Fees as to any affected Lender; (v) release any
Guaranty or, except as otherwise permitted herein or in the other Operative
Documents, release, or permit any Credit Party to sell or otherwise dispose of,
any Collateral with a value exceeding $50,000 in the aggregate, except for
releases of Collateral specifically permitted by the terms hereof or of the
other Operative Documents (which action shall be deemed to directly affect all
Lenders); (vi) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which shall be required for Lenders or any
of them to take any action hereunder; and (vii) amend or waive this Section 11.2
or the definitions of the term "Requisite Lenders" insofar as such definitions
affect the substance of this Section 11.2. Furthermore, no amendment,
modification, termination or waiver affecting the rights or duties of Agent or
Revolving Credit Agent under this Agreement or any other Operative Document
shall be effective unless in writing and signed by Agent or Revolving Credit
Agent, as applicable, in addition to Lenders required hereinabove to take such
action. Each amendment, modification, termination or waiver shall be effective
only in the specific instance and for the specific purpose for which it was
given. No amendment, modification, termination or waiver shall be required for
Agent to take additional Collateral pursuant to any Operative Documents. No
amendment, modification, termination or waiver of any provision of any Note
shall be effective without the written concurrence of the holder of that Note.
No notice to or demand on any Credit Party in any case shall entitle such Credit
Party or any other Credit Party to any other or further notice or demand in
similar or other circumstances unless required by the terms hereof or of any
other Operative Document. Any amendment, modification, termination, waiver or
consent effected in accordance with this Section 11.2 shall be binding upon each
holder of the Notes at the time outstanding and each future holder of the Notes.
d. Upon payment in full in cash of all of the Obligations (other
than indemnification Obligations under Section 1.12), and termination of the
Commitments, and so long as no suits, actions, proceedings, or claims are
pending or threatened against any Indemnified Person asserting any damages,
losses or liabilities that are Indemnified Liabilities, Agent shall deliver to
Borrowers termination statements, mortgage releases and other documents
necessary or appropriate to evidence the termination of the Liens securing
payment of the Obligations.
11.3. Fees and Expenses.
-----------------
Borrowers shall reimburse Agent, Revolving Credit Agent and all
Lenders for all reasonable out-of-pocket expenses incurred in connection with
the preparation of the Operative Documents (including the reasonable fees and
expenses of all of its special loan counsel, advisors, consultants and auditors
retained in connection with the Operative Documents and advice in connection
therewith) and the closing of the transactions contemplated hereby. Borrowers
shall reimburse Agent, Revolving Credit Agent, and all Lenders for all
out-of-pocket fees, costs and expenses, including the reasonable fees, costs and
expenses of counsel or other advisors (including environmental and management
consultants and appraisers) for advice, assistance, or other representation in
connection with:
a. any amendment, modification or waiver of, or consent with respect
to, any of the Operative Documents or the documents related to the Related
Transactions or advice in connection with the administration of the Loans made
pursuant hereto or its rights hereunder or thereunder;
b. without duplication of any amounts owing under Section 1.12, any
litigation, contest, dispute, suit, proceeding or action (whether instituted by
Agent, any Lender, any Borrower or any other Person) in any way relating to the
Collateral, any of the Operative Documents or any other agreement to be executed
or delivered in connection therewith or herewith, whether as party, witness, or
otherwise, including any litigation, contest, dispute, suit, case, proceeding or
action, and any appeal or review thereof, in connection with a case commenced by
or against any or all of the Borrowers or any other Person that may be obligated
to Agent, Revolving Credit Agent, or Lenders by virtue of the Operative
Documents; including any such litigation, contest, dispute, suit, proceeding or
action arising in connection with any work-out or restructuring of the Loans
during the pendency of one or more Events of Default; provided, that no such
Credit Party shall be liable under this Section 11.3(b) for any fees, costs,
expenses, or other amounts arising in connection with any litigation, contest,
case, suit, action, proceeding, claim, damage, loss, liability or expense, or
appeal or review thereof, that results from (i) any dispute between Lenders, or
any dispute between one or more Lenders and the Agent or the Revolving Credit
Agent, (ii) the reimbursed party's gross negligence or willful misconduct as
determined by a final judgment of a court of competent jurisdiction, or (iii)
legal proceedings between one or more Indemnified Persons and one or more Credit
Parties in which the applicable Credit Party or Parties prevail (based upon the
standards of liability set forth herein);
c. any and all stamps and other taxes payable in connection with the
execution, delivery, filing, and recording of any of the Operative Documents;
d. during the continuance of an Event of Default, any attempt to
enforce any remedies of Agent or Revolving Credit Agent against any or all of
the Credit Parties that may be obligated to Agent or Revolving Credit Agent or
any Lender by virtue of any of the Operative Documents; including any such
attempt to enforce any such remedies in the course of any work-out or
restructuring of the Loans during the pendency of one or more Events of Default;
e. any work-out or restructuring of the Loans during the continuance
of one or more Events of Default;
f. efforts to (i) evaluate, observe or assess any of the Credit
Parties or their respective affairs, and (ii) verify, protect, evaluate, assess,
appraise any of the Collateral, or, during the continuance of an Event of
Default, to , collect, sell, liquidate or otherwise dispose of any of the
Collateral; including, as to each of clauses (a) through (e) above, all
reasonable out-of-pocket attorneys' and other professional, consultant and
service providers' fees arising from such services, including those in
connection with any appellate proceedings; and all reasonable out of pocket
expenses, costs, charges and other fees incurred by such counsel and others in
any way or respect arising in connection with or relating to any of the events
or actions described in this Section 11.3 shall be payable, within ten (10)
Business Days of demand therefor, by Borrowers to Agent or Revolving Credit
Agent, as applicable, for itself and for the benefit of the applicable Lenders.
Without limiting the generality of the foregoing, such expenses, costs, charges
and fees may include: reasonable out of pocket fees, costs and expenses of
accountants, environmental advisors, appraisers, investment bankers, management
and other consultants and paralegals; court costs and expenses; duplication
expenses; court reporter fees, costs and expenses; long distance telephone
charges; courier or air express charges; telegram or telecopy charges;
secretarial overtime charges; and reasonable expenses for travel, lodging and
food paid or incurred in connection with the performance of such legal or other
advisory services.
11.4. No Waiver.
---------
Agent's, Revolving Credit Agent's or any Lender's failure, at any
time or times, to require strict performance by the Credit Parties of any
provision of this Agreement and any of the other Operative Documents shall not
waive, affect or diminish any right of Agent, Revolving Credit Agent or such
Lender thereafter to demand strict compliance and performance therewith. Any
suspension or waiver of an Event of Default shall not suspend, waive or affect
any other Event of Default whether the same is prior or subsequent thereto and
whether the same or of a different type. Subject to the provisions of Section
11.2, none of the undertakings, agreements, warranties, covenants and
representations of any Credit Party contained in this Agreement or any of the
other Operative Documents and no Default or Event of Default by any Credit Party
shall be deemed to have been suspended or waived by Agent, Revolving Credit
Agent, or any Lender, unless such waiver or suspension is by an instrument in
writing signed by an officer of or other authorized employee of Agent and the
applicable required Lenders, and directed to Borrowers specifying such
suspension or waiver.
11.5. Remedies.
--------
Agent's, Revolving Credit Agent's and Lenders' rights and remedies
under this Agreement shall be cumulative and nonexclusive of any other rights
and remedies which Agent, Revolving Credit Agent, or any Lender may have under
any other agreement, including the other Operative Documents, by operation of
law or otherwise. Recourse to the Collateral shall not be required.
11.6. Severability.
------------
Wherever possible, each provision of this Agreement and the other
Operative Documents shall be interpreted in such a manner as to be effective and
valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
11.7. Conflict of Terms.
-----------------
If this Agreement is amended at any time, the parties hereby agree
to endeavor to make any corresponding changes to the Master Lease and the other
Operative Documents. Except as otherwise provided in this Agreement, any
intercreditor agreement entered into among the Lenders, or any of the other
Operative Documents by specific reference to the applicable provisions of this
Agreement, if any provision contained in this Agreement is in conflict with, or
inconsistent with, any provision in any of the other Operative Documents, the
provision contained in this Agreement shall govern and control.
11.8. Confidentiality.
---------------
Agent, Revolving Credit Agent and each Lender agree to use
commercially reasonable efforts (equivalent to the efforts Agent, Revolving
Credit Agent or such Lender applies to maintaining the confidentiality of its
own confidential information) to maintain as confidential all confidential
information provided to them by the Credit Parties and designated as
confidential, except that Agent, Revolving Credit Agent and any Lender may
disclose such information (a) to Persons employed or engaged by Agent, Revolving
Credit Agent or such Lender in evaluating, approving, structuring or
administering the Loans and the Commitments that has been instructed to comply
with the covenant set forth in this Section 11.8; (b) to any bona fide assignee
or participant or potential assignee or participant that has agreed to comply
with the covenant contained in this Section 11.8 (and any such bona fide
assignee or participant or potential assignee or participant may disclose such
information to Persons employed or engaged by them as described in clause (a)
above); (c) upon notice to the Borrowers unless legally prohibited, as required
by any Governmental Authority or reasonably believed by Agent, Revolving Credit
Agent or such Lender, on advice of counsel, to be compelled by any court decree,
subpoena or legal or administrative order or process; (d) as, on the advice of
Agent's, Revolving Credit Agent's or such Lender's counsel, required by law; (e)
to the extent reasonably required in connection with the exercise of any right
or remedy under the Operative Documents or in connection with any Litigation to
which Agent, Revolving Credit Agent or such Lender is a party; or (f) which
ceases to be confidential through no fault of Agent, Revolving Credit Agent or
such Lender.
11.9. GOVERNING LAW.
-------------
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE OPERATIVE
DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THE OPERATIVE DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS
OF THE UNITED STATES OF AMERICA. EACH PARTY HERETO HEREBY CONSENTS AND AGREES
THAT THE STATE OR FEDERAL COURTS LOCATED IN XXX XXXX XXXXXX, XXXX XX XXX XXXX,
XXX XXXX SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN THE CREDIT PARTIES, AGENT, REVOLVING CREDIT AGENT AND LENDERS
PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER OPERATIVE DOCUMENTS OR TO ANY
MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER
OPERATIVE DOCUMENTS, PROVIDED, THAT AGENT, REVOLVING CREDIT AGENT, LENDERS AND
THE CREDIT PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK
AND, PROVIDED, FURTHER NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO
PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT OR
REVOLVING CREDIT AGENT. EACH PARTY HERETO EXPRESSLY SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND EACH PARTY HERETO HEREBY WAIVES ANY OBJECTION WHICH SUCH PARTY MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS
AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY SUCH COURT. EACH PARTY HERETO HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR
SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY
BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PARTY AT THE ADDRESS
SET FORTH IN ANNEX I OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF SUCH PARTY'S ACTUAL RECEIPT THEREOF OR THREE (3)
DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
11.10. Notices.
-------
Except as otherwise provided herein, whenever it is provided herein
that any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon any of the parties by any
other parties, or whenever any of the parties desires to give or serve upon any
other parties any communication with respect to this Agreement, each such
notice, demand, request, consent, approval, declaration or other communication
shall be in writing and shall be deemed to have been validly served, given or
delivered (a) upon the earlier of actual receipt and three (3) Business Days
after deposit in the United States Mail, registered or certified mail, return
receipt requested, with proper postage prepaid, (b) upon transmission, when sent
by telecopy or other similar facsimile transmission (with such telecopy or
facsimile promptly confirmed by delivery of a copy by personal delivery or
United States Mail as otherwise provided in this Section 11.10), (c) one (1)
Business Day after deposit with a reputable overnight courier with all charges
prepaid or (d) when delivered, if hand-delivered by messenger, all of which
shall be addressed to the party to be notified and sent to the address or
facsimile number indicated on Annex I or to such other address (or facsimile
number) as may be substituted by notice given as herein provided. The giving of
any notice required hereunder may be waived in writing by the party entitled to
receive such notice. Failure or delay in delivering copies of any notice,
demand, request, consent, approval, declaration or other communication to any
Person (other than Borrower Representative or Agent) designated on Annex I to
receive copies shall in no way adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration or other communication.
11.11. Section Titles.
--------------
The Section titles and Table of Contents contained in this Agreement
are and shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreement between the parties hereto.
11.12. Counterparts.
------------
This Agreement may be executed in any number of separate
counterparts, each of which shall collectively and separately constitute one
agreement.
11.13. WAIVER OF JURY TRIAL.
--------------------
BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE, AMONG AGENT, REVOLVING CREDIT AGENT, LENDERS AND ANY CREDIT PARTY
ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
OPERATIVE DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
11.14. Press Releases.
--------------
Each Credit Party executing this Agreement agrees that neither it
nor its Affiliates will in the future issue any press releases or other public
disclosure using the name of any Lender or its affiliates or referring to this
Agreement, the other Operative Documents without at least two (2) Business Days'
prior notice to such Lender and without the prior written consent of such Lender
unless (and only to the extent that) such Credit Party or Affiliate is required
to do so under law and then, in any event, such Credit Party or Affiliate will
consult with such Lender before issuing such press release or other public
disclosure. Each Credit Party consents to the publication by Agent, Revolving
Credit Agent, or any Lender of a tombstone or similar advertising material
relating to the financing transactions contemplated by this Agreement. Agent,
Revolving Credit Agent or such Lender shall provide a draft of any such
tombstone or similar advertising material to each Credit Party for review and
comment prior to the publication thereof. Agent reserves the right to provide to
industry trade organizations information necessary and customary for inclusion
in league table measurements with Borrowers' consent which shall not be
unreasonably withheld or delayed.
11.15. Reinstatement.
-------------
This Agreement shall remain in full force and effect and continue to
be effective should any petition be filed by or against any Borrower for
liquidation or reorganization, should any Borrower become insolvent or make an
assignment for the benefit of any creditor or creditors or should a receiver or
trustee be appointed for all or any significant part of any Borrower's assets,
and shall continue to be effective or to be reinstated, as the case may be, if
at any time payment and performance of the Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Obligations, whether as a "voidable
preference," "fraudulent conveyance," or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Obligations shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
11.16. Advice of Counsel.
-----------------
Each of the parties represents to each other party hereto that it
has discussed this Agreement and, specifically, the provisions of Sections 11.9
and 11.13, with its counsel.
11.17. No Strict Construction.
----------------------
The parties hereto have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties hereto and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
12. CROSS GUARANTY AND BORROWER CONTRIBUTION RIGHTS.
12.1. Cross-Guaranty.
--------------
a. Each Borrower hereby agrees that such Borrower is jointly and
severally liable for, and hereby absolutely and unconditionally guarantees to
Agent, Revolving Credit Agent, and Lenders and their respective permitted
successors and assigns, the full and prompt payment (whether at stated maturity,
by acceleration or otherwise) of all Obligations owed or hereafter owing to
Agent, Revolving Credit Agent and Lenders by each other Borrower. Each Borrower
agrees that its guaranty obligation hereunder is a continuing guaranty of
payment and not of collection, that its obligations under this Section 12 shall
not be discharged until payment in full of the Obligations has occurred, and
that its obligations under this Section 12 shall be absolute and unconditional,
irrespective of, and unaffected by,
(i) the genuineness, validity, regularity, enforceability or
any future amendment of, or change in, this Agreement, any other Operative
Document or any other agreement, document or instrument to which any
Borrower is or may become a party;
(ii) the absence of any action to enforce this Agreement
(including this Section 12) or any other Operative Document or the waiver
or consent by Agent and Lenders with respect to any of the provisions
thereof;
(iii) the existence, value or condition of, or failure to
perfect its Lien against, any security for the Obligations or any action,
or the absence of any action, by Agent, Revolving Credit Agent and Lenders
in respect thereof (including the release of any such security);
(iv) the insolvency of any Credit Party; or
(v) any other action or circumstances which might otherwise
constitute a legal or equitable discharge or defense of a surety or
guarantor. Each Borrower shall be regarded, and shall be in the same
position, as principal debtor with respect to the Obligations guaranteed
hereunder.
12.2. Waivers by Borrowers.
--------------------
Each Borrower expressly waives all rights it may have now or in the
future under any statute, or at common law, or at law or in equity, or
otherwise, to compel Agent or Lenders to xxxxxxxx assets or to proceed in
respect of the Obligations guaranteed hereunder against any other Credit Party,
any other party or against any security for the payment and performance of the
Obligations before proceeding against, or as a condition to proceeding against,
such Borrower. It is agreed among each Borrower, Agent, Revolving Credit Agent
and Lenders that the foregoing waivers are of the essence of the transaction
contemplated by this Agreement and the other Operative Documents and that, but
for the provisions of this Section 12 and such waivers, Agent, Revolving Credit
Agent, and Lenders would decline to enter into this Agreement.
12.3. Benefit of Guaranty.
-------------------
Each Borrower agrees that the provisions of this Section 12 are for
the benefit of Agent, Revolving Credit Agent, and Lenders and their respective
permitted successors, transferees, endorsees and assigns, and nothing herein
contained shall impair, as between any other Borrower and Agent, Revolving
Credit Agent or Lenders, the obligations of such other Borrower under the
Operative Documents.
12.4. Subordination of Subrogation, Etc.
---------------------------------
Notwithstanding anything to the contrary in this Agreement or in any
other Operative Document, and except as set forth in Section 12.7 or in other
contribution agreements among the Credit Parties, each Borrower hereby expressly
and irrevocably subordinates to payment of the Obligations any and all rights at
law or in equity to subrogation, reimbursement, exoneration, contribution,
indemnification or set off and any and all defenses available to a surety,
guarantor or accommodation co-obligor until the Obligations are paid in full in
cash. Each Borrower acknowledges and agrees that this subordination is intended
to benefit Agent, Revolving Credit Agent, and Lenders and shall not limit or
otherwise affect such Borrower's liability hereunder or the enforceability of
this Section 12, and that Agent, Revolving Credit Agent, Lenders and their
respective permitted successors and assigns are intended third party
beneficiaries of the waivers and agreements set forth in this Section 12.4.
The Agent and the Lenders agree that if (i) the Obligations shall be
repaid in full, and (ii) the Termination Date shall have occurred, the Agent and
the Lenders will, at the Borrowers' request and expense, execute and deliver to
the Borrowers appropriate documents, without recourse and without representation
or warranty, necessary to evidence the transfer or subrogation to the Borrowers
of an interest in the Obligations resulting from the payment made by the
Borrowers hereunder.
12.5. Election of Remedies.
--------------------
If Agent, Revolving Credit Agent, or any Lender may, under
applicable law, proceed to realize its benefits under any of the Operative
Documents giving Agent, Revolving Credit Agent, or such Lender a Lien upon any
Collateral, whether owned by any Borrower or by any other Person, either by
judicial foreclosure or by non-judicial sale or enforcement, Agent or any Lender
may, at its sole option, determine which of its remedies or rights it may pursue
without affecting any of its rights and remedies under this Section 12. If, in
the exercise of any of its rights and remedies, Agent or any Lender shall
forfeit any of its rights or remedies, including its right to enter a deficiency
judgment against any Borrower or any other Person, whether because of any
applicable laws pertaining to "election of remedies" or the like, each Borrower
hereby consents to such action by Agent or such Lender and waives any claim
based upon such action, even if such action by Agent or such Lender shall result
in a full or partial loss of any rights of subrogation which each Borrower might
otherwise have had but for such action by Agent or such Lender. Any election of
remedies which results in the denial or impairment of the right of Agent or any
Lender to seek a deficiency judgment against any Borrower shall not impair any
other Borrower's obligation to pay the full amount of the Obligations. In the
event Agent or any Lender shall bid at any foreclosure or trustee's sale or at
any private sale permitted by law or the Operative Documents, Agent or such
Lender may bid all or less than the amount of the Obligations and the amount of
such bid need not be paid by Agent or such Lender but shall be credited against
the Obligations. The amount of the successful bid at any such sale, whether
Agent, Lender or any other party is the successful bidder, shall be conclusively
deemed to be the fair market value of the Collateral and the difference between
such bid amount and the remaining balance of the Obligations shall be
conclusively deemed to be the amount of the Obligations guaranteed under this
Section 12, notwithstanding that any present or future law or court decision or
ruling may have the effect of reducing the amount of any deficiency claim to
which Agent or any Lender might otherwise be entitled but for such bidding at
any such sale.
12.6. Limitation.
----------
Notwithstanding any provision herein contained to the contrary, each
Borrower's liability under this Section 12 (which liability is in any event in
addition to amounts for which such Borrower is primarily liable under Section 1)
shall be limited to an amount not to exceed as of any date of determination the
greater of:
a. the net amount of all Loans advanced to any other Borrower under
this Agreement and then re-loaned or otherwise transferred to, or for the
benefit of, such Borrower; and
b. the amount which could be claimed by Agent and Lenders from such
Borrower under this Section 12 without rendering such claim voidable or
avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any
applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance
Act or similar statute or common law after taking into account, among other
things, such Borrower's right of contribution and indemnification from each
other Borrower under Section 12.7.
12.7. Contribution with Respect to Obligations.
----------------------------------------
a. To the extent that any Borrower shall make a payment of all or
any of the Obligations (a "Payment") which, taking into account all other
Payments then previously or concurrently made by any other Borrower, exceeds the
amount which such Borrower would otherwise have paid if each Borrower had paid
the aggregate Obligations satisfied by such Payment in the same proportion that
such Borrower's "Allocable Amount" (as defined below) (as determined immediately
prior to such Payment) bore to the aggregate Allocable Amounts of each of the
Borrowers as determined immediately prior to the making of such Payment, then,
following payment in full in cash of the Obligations and termination of the
Commitments, such Borrower shall be entitled to receive contribution and
indemnification payments from, and be reimbursed by, each other Borrower for the
amount of such excess, pro rata based upon their respective Allocable Amounts in
effect immediately prior to such Payment.
b. As of any date of determination, the "Allocable Amount" of any
Borrower shall be equal to the maximum amount of the claim which could then be
recovered from such Borrower under this Section 12 without rendering such claim
voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or
under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law.
c. This Section 12.7 is intended only to define the relative rights
of Borrowers and nothing set forth in this Section 12.7 is intended to or shall
impair the obligations of Borrowers, jointly and severally, to pay any amounts
as and when the same shall become due and payable in accordance with the terms
of this Agreement, including Section 12.1. Nothing contained in this Section
12.7 shall limit the liability of any Borrower to pay the Loans made directly or
indirectly to that Borrower and accrued interest, Fees and expenses with respect
thereto for which such Borrower shall be primarily liable.
d. The parties hereto acknowledge that the rights of contribution
and indemnification hereunder shall constitute assets of the Borrower to which
such contribution and indemnification is owing.
e. The rights of the indemnifying Borrowers against other Credit
Parties under this Section 12.7 shall be exercisable upon the full payment of
the Obligations and the termination of the Commitments.
12.8. Liability Cumulative.
--------------------
The liability of Borrowers under this Section 12 is in addition to
and shall be cumulative with all liabilities of each Borrower to Agent,
Revolving Credit Agent, and Lenders under this Agreement and the other Operative
Documents to which such Borrower is a party or in respect of any Obligations or
obligation of the other Borrower, without any limitation as to amount, unless
the instrument or agreement evidencing or creating such other liability
specifically provides to the contrary.
12.9. Joint and Several Liability, Etc.
---------------------------------
Each of the Borrowers shall be jointly and severally liable for the
Obligations. Agent may, except as otherwise expressly provided in this
Agreement, without notice to or consent of any of the Borrowers and with or
without consideration, release, discharge, compromise or settle with, waive,
grant indulgences to, proceed against or otherwise deal with, any of the
Borrowers without in any way affecting, limiting, modifying, discharging or
releasing any of the obligations and liabilities under this Agreement or the
other Operative Documents of any other Borrowers. Each Borrower consents and
agrees that (a) Agent shall not be under any obligation to xxxxxxxx any assets
in favor of such Borrower or against or in payment of any or all of the
obligations and liabilities of such Borrower under this Agreement or any of the
other Operative Document, (b) any rights such Borrower may have against any
other Borrowers for contribution, exoneration from payment or otherwise, in
respect of any amounts paid by such Borrower pursuant to any of the Operative
Documents or which continue to be owing pursuant to any of the Operative
Documents, shall be postponed until the Obligations have been paid in full and
no Commitments therefor are outstanding and (c) Agent may enforce and collect
the obligations and liabilities of such Borrower hereunder or under the other
Operative Documents irrespective of any attempt, pursuit, enforcement or
exhaustion of any rights and remedies the Lender may at any time have to collect
the obligations and liabilities hereunder or under the other Operative Documents
of any other Borrower.
[SIGNATURES BEGIN NEXT PAGE]
IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first written above.
PRECISION PARTNERS, INC.
By: /s/ Xxxxx Xxxxxx
---------------------------------
Name: Xxxxx Xxxxxx
Title: Executive Vice President and Chief
Financial Officer
GALAXY INDUSTRIES CORPORATION
MID STATE MACHINE PRODUCTS
NATIONWIDE PRECISION PRODUCTS CORP.
GENERAL AUTOMATION, INC.
CERTIFIED FABRICATORS, INC.
GALAXY PRECISION PRODUCTS CORP.
XXXXXXXX MACHINE & TOOL CO., INC.
By: /s/ Xxxxx Xxxxxx
---------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
PRECISION PARTNERS HOLDING COMPANY
By: /s/ Xxxxx Xxxxxx
---------------------------------
Name: Xxxxx Xxxxxx
Title: Executive Vice President and Chief
Financial Officer
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Assistant Vice President
GENERAL ELECTRIC CAPITAL CORPORATION,
as Revolving Credit Agent and Lender
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Assistant Vice President
ABLECO FINANCE LLC, as Lender
By: /s/ Xxxxx Gender
---------------------------------
Name: Xxxxx Gender
Title: Senior Vice President
ANNEX A
TO
CREDIT AGREEMENT
----------------
DEFINITIONS
-----------
Capitalized terms used in the Operative Documents shall have (unless otherwise
provided elsewhere in the Operative Documents) the following respective meanings
and all section references in the following definitions shall refer to Sections
of the Agreement:
"Ableco" shall have the meaning given to such term in the Preamble hereto.
"Account Debtor" shall mean any Person who may become obligated to any
Credit Party under, with respect to, or on account of, an Account.
"Accounts" shall mean all "accounts," as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party and, in any event, including
(a) all accounts receivable, other receivables, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper,
Documents or Instruments) now owned or hereafter received or acquired by or
belonging or owing to any Credit Party, whether arising out of goods sold or
services rendered by it or from any other transaction (including any such
obligations which may be characterized as an account or contract right under the
Code), (b) all of each Credit Party's rights in, to and under all purchase
orders or receipts now owned or hereafter acquired by it for goods or services,
(c) all of each Credit Party's rights to any goods represented by any of the
foregoing (including unpaid sellers' rights of rescission, replevin, reclamation
and stoppage in transit and rights to returned, reclaimed or repossessed goods),
(d) all monies due or to become due to any Credit Party, under all purchase
orders and contracts for the sale of goods or the performance of services or
both by such Credit Party or in connection with any other transaction (whether
or not yet earned by performance on the part of such Credit Party) now or
hereafter in existence, including the right to receive the proceeds of said
purchase orders and contracts, and (e) all collateral security and guarantees of
any kind, now or hereafter in existence, given by any Person with respect to any
of the foregoing.
"Advance" shall mean any Revolving Credit Advance.
"Affiliate" shall mean, with respect to any Person, (a) each Person that,
directly or indirectly, owns or Controls, whether beneficially, or as a trustee,
guardian or other fiduciary, five percent (5%) or more of the Stock having
ordinary voting power in the election of directors of such Persons, (b) each
Person that Controls, is Controlled by or is under common Control with such
Person, (c) each of such Person's officers, directors, joint venturers and
partners and (d) in the case of Borrowers, the immediate family members, spouses
and lineal descendants of individuals who are Affiliates of any Borrower. For
the purposes of this definition, the term "Affiliate" shall specifically exclude
Agent, Revolving Credit Agent, and each Lender.
"Agent" shall mean GE Capital or its successor appointed pursuant to
Section 9.7.
"Aggregate Borrowing Base" shall mean, at any time the sum of (a)
eighty-five percent (85%) of the Borrowers' Eligible Accounts; plus (b) the
lowest of (i) fifty percent (50%) of the Borrowers' Eligible Inventory, valued
at the lower of cost (on a first in, first out basis) or market value, or (ii)
eighty percent (80%) of the net orderly liquidation value of the Borrowers'
Eligible Inventory, or (iii) $12,500,000; minus (c) the Dilution Reserve, minus
(d) such additional reserves as the Revolving Credit Agent may deem appropriate.
"Agreement" shall mean the Credit Agreement by and among Borrowers, the
other Credit Parties named therein, GE Capital, as Agent and Lender, Ableco
Finance LLC as Lender, GE Capital as Revolving Credit Agent, GECC Capital
Markets Group, Inc. as Lead Arranger, and the other Lenders signatory from time
to time to the Agreement.
"Allocable Amount " shall have the meaning set forth in Section 12.7(b).
"Appendices" shall have the meaning assigned to it in the recitals to the
Agreement.
"Applicable Capital Lease Index Margin" shall mean 3.50%.
"Applicable Capital Lease Interest Rate Floor" shall mean ten percent
(10%) from the date hereof until December 31, 2002, eleven percent (11%) from
January 1, 2003 until the December 31, 2004, and twelve percent (12%)
thereafter.
"Applicable Capital Lease LIBOR Margin" shall mean 5.00%.
"Applicable L/C Margin" shall mean the per annum fee, from time to time in
effect, payable with respect to outstanding Letter of Credit Obligations, in an
amount equal to 3.25%.
"Applicable Margins" means collectively the Applicable Unused Line Fee
Margin, the Applicable Revolver Index Margin, the Applicable L/C Margin, the
Applicable Revolver LIBOR Margin and the Applicable Term Loan LIBOR Margin.
"Applicable Percentage" shall have the meaning set forth in Section
1.8(c).
"Applicable Revolver Index Margin" shall mean 1.75%.
"Applicable Revolver LIBOR Margin" shall mean 3.25%.
"Applicable Term Loan Floor" shall mean ten percent (10%) from the date
hereof until December 31, 2002, eleven percent (11%) from January 1, 2003 until
the December 31, 2004, and twelve percent (12%) thereafter.
"Applicable Term Loan Index Margin" shall mean 3.50%.
"Applicable Term Loan LIBOR Margin" shall mean 5.00%.
"Applicable Unused Line Fee Margin" shall mean the per annum fee, from
time to time in effect, payable in respect to Borrowers' non-use of committed
funds pursuant to Section 1.8(b).
"Assignment Agreement" shall have the meaning assigned to it in Section
9.1(a).
"Borrower Representative" shall mean Precision in its capacity as Borrower
Representative pursuant to the provisions of Section 1.16.
"Borrowers" and "Borrower" shall have the respective meanings assigned
thereto in the Preamble to the Agreement.
"Borrowing Availability" shall have the meaning assigned to it in Section
1.1.1(a).
"Borrowing Base Certificate" shall mean a certificate to be executed and
delivered from time to time by each Borrower in the form attached to the
Agreement as Exhibit 4.1(b).
"Business Day" shall mean any day that is not a Saturday, a Sunday or a
day on which banks are required or permitted to be closed in the State of New
York and in reference to LIBOR Loans shall mean any such day that is also a
LIBOR Business Day.
"Capital Expenditures" shall mean, with respect to any Person, the
aggregate of all expenditures (by the expenditure of cash or the incurrence of
Indebtedness; excluding, however, expenditures made by the reinvestment of the
proceeds of asset dispositions made in accordance with the Agreement) by such
Person during any measuring period for the acquisition or leasing (pursuant to a
capital lease) of fixed or capital assets or improvements or for replacements,
substitutions or additions thereto, that are required to be capitalized under
GAAP; provided, however, that (a) for the purpose of calculating Capital
Expenditures for any Fiscal Year, if a Borrower orders an asset during one
Fiscal Year and such asset is delivered and paid for in the subsequent Fiscal
Year, the Borrowers shall be entitled to treat the Capital Expenditure as though
it was made in the Fiscal Year in which such asset is ordered, provided that the
Borrowers notify the Agent and the Lenders of their intention to do so
concurrently with or prior to the end of such Fiscal Year, and (b) the
capitalized lessor's cost under the Master Lease shall not be deemed to be a
Capital Expenditure.
"Capital Lease" shall mean, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, would be required to be classified and accounted for as a
capital lease on a balance sheet of such Person.
"Capital Lease Commitment" shall mean (a) as to any Lessor with a Capital
Lease Commitment, the commitment of such Lessor to make its proportionate share
of the capitalized lessor's cost under the Master Lease as set forth on Annex J
to the Agreement or in the most recent Assignment Agreement executed by such
Lessor, and (b) as to all Lessor with a Capital Lease Commitment, the aggregate
commitment of all Lessors to enter into the Capital Lease, which aggregate
commitment shall be Five Million Nine Hundred Fifty Thousand Dollars
($5,950,000) on the Closing Date, as to each of clauses (a) and (b), as such
Capital Lease Commitments may be reduced, amortized or adjusted from time to
time in accordance with the Agreement.
"Capital Lease Obligation" shall mean, with respect to any Capital Lease
of any Person, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would be capitalized on a balance sheet of such lessee in
respect of such Capital Lease.
"Carlisle Group" means Carlisle Group, L.P. and its Control Investment
Affiliates.
"Cash Equivalent" means (a) securities issued or directly and fully
guaranteed or insured by the United States or any agency or instrumentality
thereof (provided that the full faith and credit of the United States is pledged
in support thereof) having maturities of not more than twelve months from the
date of acquisition, (b) U.S. dollar denominated time deposits and certificates
of deposit of (i) any Lender, (ii) any domestic commercial bank of recognized
standing having capital and surplus in excess of $500,000,000 or (iii) any bank
whose short-term commercial paper rating from S&P is at least A-1 or the
equivalent thereof or from Xxxxx'x is at least P-1 or the equivalent thereof
(any such bank being an "Approved Bank"), in each case with maturities of not
more than 270 days from the date of acquisition, (c) commercial paper and
variable or fixed rate notes issued by any Approved Bank (or by the parent
company thereof) or any variable rate notes issued by, or guaranteed by, any
domestic corporation rated A-1 (or the equivalent thereof) or any variable rate
notes issued by, or guaranteed by, any domestic corporation rated A-1 (or the
equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or
better by Moody's and maturing within six months of the date of acquisition, (d)
repurchase agreements entered into by any Person with a bank or trust company
(including any of the Lenders) or recognized securities dealers having capital
and surplus in excess of $500,000,000 for direct obligations issued by or fully
guaranteed by the United States in which such Person shall have a perfected
first priority security interest (subject to no other Liens) and having, on the
date of purchase thereof, a fair market value of at least 100% of the amount of
the repurchase obligations, (i) investments, classified in accordance with GAAP
as current assets, in money market investment programs registered under the
Investment Company Act of 1940, as amended, which are administered by reputable
financial institutions having capital of at least $500,000,000 and the
portfolios of which are limited to Investments of the character described in the
foregoing clauses (a) through (d) and (f) securities with maturities of six
months or less from the date of acquisition backed by standby letters of credit
issued by any Lender or any commercial bank satisfying the requirements of
clause (b)(ii) or (iii).
"Cash Management Systems" shall have the meaning assigned to it in Section
1.7.
"Certified Fabricators" means Certified Fabricators, Inc., a California
corporation.
"Change of Control" means any of the following: (a) any person or group of
persons (within the meaning of the Securities Exchange Act of 1934, as amended)
other than Permitted Investors shall have acquired beneficial ownership (within
the meaning of Rule 13d-3 promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended) of 20% or more of the
issued and outstanding shares of capital Stock of Holdings having the right to
vote for the election of directors of Holdings under ordinary circumstances; (b)
during any period of twelve consecutive calendar months, individuals who at the
beginning of such period constituted the board of directors of Holdings
(together with any new directors whose election by the board of directors of
Holdings or whose nomination for election by the stockholders of Holdings was
approved by a vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of such period or whose elections or
nomination for election was previously so approved) cease for any reason other
than death or disability to constitute a majority of the directors then in
office, (c) Holdings shall cease to own and control all of the economic and
voting rights associated with all of the outstanding capital Stock of Precision,
or Precision shall cease to own and control all of the economic and voting
rights associated with all of the outstanding capital of each of its
subsidiaries (other than as a result of inter-Borrower mergers or other
inter-Borrower transactions expressly permitted by the terms of the Agreement,
or (d) a "Change of Control" as defined in the Indenture shall occur.
"Charges" shall mean all federal, state, county, city, municipal, local,
foreign or other governmental taxes (including taxes owed to the PBGC at the
time due and payable), levies, assessments, charges, Liens, claims or
encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c)
the employees, payroll, income or gross receipts of any Credit Party, (d) any
Credit Party's ownership or use of any properties or other assets, or (e) any
other aspect of any Credit Party's business.
"Chattel Paper" shall mean any "chattel paper," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located.
"Closing Date" shall mean February 1, 2002.
"Closing Checklist" shall mean the schedule, including all appendices,
exhibits or schedules thereto, listing certain documents and information to be
delivered in connection with the Agreement, the other Operative Documents and
the transactions contemplated thereunder, substantially in the form attached
hereto as Annex D.
"Code" shall mean the Uniform Commercial Code as the same may, from time
to time, be enacted and in effect in the State of New York; provided, however,
in the event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of Agent's or any Lender's security interest
in any Collateral is governed by the Uniform Commercial Code as enacted and in
effect in a jurisdiction other than the State of New York, the term "Code" shall
mean the Uniform Commercial Code as enacted and in effect in such other
jurisdiction solely for purposes of the provisions hereof relating to such
attachment, perfection or priority and for purposes of definitions related to
such provisions.
"Collateral" shall mean, at any time, the property then covered by any
Security Agreement, Mortgage or other Collateral Document or otherwise then
subject to a security interest or Lien in favor of Agent or Revolving Credit
Agent, on behalf of the Lenders, to secure the Obligations.
"Collateral Documents" shall mean the Security Agreement, the Pledge
Agreement, the Deposit Pledge Agreement, the Mortgages and all similar
agreements entered into granting a Lien upon property as security for payment
of, the Obligations.
"Collateral Reports" shall mean the reports with respect to the Collateral
referred to in Annex F.
"Collection Account" shall mean that certain account of Revolving Credit
Agent, account number 00-000-000 in the name of Revolving Credit Agent at
Bankers Trust in New York, New York or such other account as Revolving Credit
Agent shall specify.
"Commitment Termination Date" shall mean the earliest of (a) January 1,
2006, (b) the date of termination of Lenders' obligations to make Advances or
incur Letter of Credit Obligations or permit existing Loans or Letter of Credit
Obligations to remain outstanding pursuant to Section 8.2(b), and (c) the date
of prepayment in full by Borrowers of the Loans, and the cancellation and return
(or stand-by guarantee) of all Letters of Credit or the cash collateralization
of all Letter of Credit Obligations pursuant to ANNEX B and the permanent
reduction of the Revolving Loan Commitment to zero dollars ($0).
"Commitments" shall mean (a) as to any Lender, the aggregate of such
Lender's Revolving Loan Commitment and Term Loan Commitment and Capital Lease
Commitment as set forth on Annex J to the Agreement or in the most recent
Assignment Agreement executed by such Lender and (b) as to all Lenders, the
aggregate of all Lenders' Revolving Loan Commitments and Term Loan Commitments
and Capital Lease Commitments, which aggregate commitment shall be Seventy-Five
Million Dollars ($75,000,000.00) on the Closing Date, as to each of clauses (a)
and (b), as such Commitments may be reduced, amortized or adjusted from time to
time in accordance with the Agreement.
"Compliance Certificate" shall have the meaning assigned to it in Annex E.
"Concentration Accounts" shall have the meaning assigned to it in Annex C.
"Consolidated Current Assets" means, at any date, all amounts (other than
Cash and Cash Equivalents) that would, in conformity with GAAP, be set forth
opposite the caption "total current assets" (or any like caption) on a
consolidated balance sheet of any Person at such date.
"Consolidated Current Liabilities" means, at any date, all amounts that
would, in conformity with GAAP, be set forth opposite the caption "total current
liabilities" (or any like caption) on a consolidated balance sheet of any Person
at such date, but excluding (a) the current portion of any Funded Debt of such
Person and (b) without duplication of clause (a) above, all Indebtedness
consisting of the Revolving Loan to the extent otherwise included therein.
"Consolidated EBITDA" means, for any Person for any period, Consolidated
Net Income for such period plus, without duplication and to the extent reflected
as a charge in the statement of such Consolidated Net Income for such period,
the sum of (a) income tax expense, (b) interest expense, amortization or
write-off of debt discount and debt issuance costs and commissions, discounts
and other fees and charges associated with Indebtedness (including the Loans and
any Subordinated Debt), (c) depreciation and amortization expense, (d)
amortization of intangibles (including, but not limited to, goodwill) and
organization costs, (e) any extraordinary, unusual or non-recurring expenses
(including expense items related to the closing of the transactions contemplated
hereby and restructuring costs of up to $755,000 incurred during 2002 in
connection with the restructuring of CFI) or losses (including, whether or not
otherwise includable as a separate item in the statement of such Consolidated
Net Income for such period, non-cash losses on sales of assets outside of the
ordinary course of business) acceptable to the Requisite Lenders, (f) any other
non-recurring non-cash charges acceptable to the Requisite Lenders, and (g)
management fees accrued in accordance with the provisions of the Agreement;
minus, to the extent included in the statement of such Consolidated Net Income
for such period, the sum of (a) interest income, (b) any extraordinary, unusual
or nonrecurring income or gains (including, whether or not otherwise includable
as a separate item in the statement of such Consolidated Net Income for such
period, gains on the sales of assets outside the ordinary course of business)
and (c) any other noncash income, all as determined on a consolidated basis.
"Consolidated EBITDAR" means, for any Person for any period, Consolidated
EBITDA of such Person for such period, plus, without duplication and to the
extent reflected as a charge in the statement of such Person's Consolidated Net
Income for such period, Consolidated Rental Expense of such Person for such
period.
"Consolidated Fixed Charge Coverage Ratio" means, for any Person for any
period, the ratio of (a) Consolidated EBITDAR for such period to (b)
Consolidated Fixed Charges for such period.
"Consolidated Fixed Charges" means, for any Person for any period, the sum
(without duplication) of (a) Consolidated Interest Expense for such period, (b)
Consolidated Lease Expense for such period, (c) Consolidated Rental Expense of
such Person for such period (d) scheduled payments made during such period on
account of principal of Indebtedness of such Person (including scheduled
principal payments in respect of the Term Loan and Master Lease), (d) state and
federal taxes paid, and (e) Capital Expenditures less the Net Cash Proceeds from
the sale of Equipment or Real Estate.
"Consolidated Interest Expense" means, for any Person for any period,
total cash interest expense (including that attributable to Capital Lease
Obligations) of such Person on a consolidated basis for such period with respect
to all outstanding Indebtedness of such Person (including all commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing).
"Consolidated Lease Expense" means, for any Person for any period, the
aggregate amount of fixed and contingent rentals payable by such Person for such
period with respect to capital leases of real and personal property, determined
on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, for any period for any Person, the
consolidated net income (or loss) of such Person, determined on a consolidated
basis in accordance with GAAP; provided that there shall be excluded (a) except
as otherwise expressly provided herein, the income (or deficit) of any Person
accrued prior to the date it becomes a Subsidiary of such Person or is merged
into or consolidated with such Person, (b) the income (or deficit) of any Person
in which such Person has an ownership interest, except to the extent that any
such income is actually received by such Person in the form of dividends or
similar distributions, and (c) the undistributed earnings of any Subsidiary of
such Person to the extent that the distribution of such earnings to such Person
is not at the time permitted by the terms of any Contractual Obligation or
requirement of law applicable to such Subsidiary.
"Consolidated Rental Expense" means, for any Person for any period, on a
consolidated basis, the aggregate base rental payments, other than Consolidated
Lease Expenses, to lessors or their assignees by such Persons for such period
under assignments to rent or lease any real or personal property as recorded in
accordance with GAAP.
"Consolidated Senior Debt" means, at any date for any Person, the
aggregate principal amount of all Indebtedness of such Person as shown on such
Person's balance sheet, other than Subordinated Debt, all determined on a
consolidated basis in accordance with GAAP; provided, however, that for the
purposes of measuring the Senior Leverage Ratio for the period ending December
31, 2001 only, Consolidated Senior Debt shall be net of cash held by the Credit
Parties.
"Consolidated Senior Interest Coverage Ratio" means, for any Person for
any period, the ratio of (a) Consolidated EBITDA for such period to (b)
Consolidated Interest Expense on Consolidated Senior Debt for such period.
"Consolidated Senior Leverage Ratio" means, as at the last day of any
period, the ratio of (a) Consolidated Senior Debt on such day to (b)
Consolidated EBITDA for the immediately preceding four fiscal quarters.
"Consolidated Total Interest Coverage Ratio" means, for any Person for any
period, the ratio of (a) Consolidated EBITDA for such period to (b) Consolidated
Interest Expense for such period..
"Consolidated Working Capital" means, at any date for any Person, the
excess of Consolidated Current Assets on such date over Consolidated Current
Liabilities on such date.
"Contracts" shall mean all "contracts," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, in any event,
including all contracts, undertakings, or agreements (other than rights
evidenced by Chattel Paper, Documents or Instruments) in or under which any
Credit Party may now or hereafter have any right, title or interest, including
any agreement relating to the terms of payment or the terms of performance of
any Account.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or any Contract by which it or its property is
bound.
"Control" means, as to any Person, the ability of any other Person,
directly or indirectly, to exclusively direct or cause the direction of the
management of the policies of the first Person, whether by contract or
otherwise.
"Control Investment Affiliate" means, as to any Person, any other Person
that (a) directly or indirectly is in Control or, is Controlled by, or is under
common Control with, such Person and (b) is organized by such Person primarily
for the purpose of making equity or debt investments in one or more companies.
"Control Letter" means a letter agreement between Agent and (i) the issuer
of uncertificated securities with respect to uncertificated securities in the
name of any Credit Party, (ii) a securities intermediary with respect to
securities, whether certificated or uncertificated, securities entitlements and
other financial assets held in a securities account in the name of any Credit
Party, or (iii) a futures commission merchant or clearing house with respect to
commodity accounts and commodity contracts held by any Credit Party, whereby,
among other things, the issuer, securities intermediary or futures commission
merchant disclaims any security interest in the applicable financial assets,
acknowledges the Lien of Agent, on behalf of the Lenders, on such financial
assets, and agrees to follow the instructions or entitlement orders of Agent
without further consent by the affected Credit Party.
"Copyright License" shall mean any and all rights now owned or hereafter
acquired by any Credit Party under any written agreement granting any right to
use any Copyright or Copyright registration.
"Copyrights" shall mean all of the following now owned or hereafter
acquired by any Credit Party: (a) all copyrights and general intangibles of a
like nature (whether registered or unregistered), now owned or existing or
hereafter adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, including all registrations, recordings
and applications in the United States Copyright Office or in any similar office
or agency of the United States, any state or territory thereof, or any other
country or any political subdivision thereof, and (b) all reissues, extensions
or renewals thereof.
"Credit Parties" shall mean the Guarantors, each Borrower, and each of
their respective Subsidiaries other than Mid State Foundation.
"Current Value" shall have the meaning given to such term in Section 5.11.
"Default" shall mean any event, which, with the passage of time or notice
or both, would, unless cured or waived, become an Event of Default.
"Default Rate" means, as to any of the Obligations, a per annum rate of
interest equal to two percent (2%) above the rate otherwise applicable to such
Obligation, provided that, from and after the expiration of the then-current
Libor Period with respect to any Obligations bearing interest at a rate based
upon the LIBOR Rate, the Default Rate shall be equal to (a) for the Revolving
Loan, two percent (2%) plus the Applicable Revolver Index Margin plus the Index
Rate, (b) for the Term Loan, the greater of two percent (2%) plus the Applicable
Term Loan Index Margin plus the Index Rate or two percent (2%) plus the
Applicable Term Loan Floor, (c) for the Master Lease, the greater of to percent
(2%) plus the Applicable Capital Lease Index Margin plus the Index Rate, or two
percent (2%) plus the Applicable Capital Lease Interest Rate Floor, and (d) for
the Letters of Credit two percent (2%) plus the Applicable L/C Margin.
"Deposit Pledge Agreement means that certain Deposit Pledge Agreement
dated the Closing Date from the Credit Parties to the Revolving Credit Agent for
the benefit of the Lenders.
"Dilution" shall mean, as of any date of determination, a percentage based
upon the experience of the immediately prior six months, that is the result of
dividing the dollar amount of (a) bad debt write-downs, discounts, credits, or
other dilutive items with respect to Accounts during such period, by (b) the
Borrowers' collections, including cash, checks, notes, instruments, and other
items of payment, with respect to such period, plus the dollar amount described
in clause (a).
"Dilution Reserve" shall mean, as of any date of determination, an amount
sufficient to reduce the advance rate against Eligible Accounts by one
percentage point for each percentage point by which Dilution is in excess of
five percent (5%).
"Disbursement Accounts" shall have the meaning assigned to it on Annex C.
"Disclosure Schedules" shall mean the Schedules prepared by Borrowers and
denominated as Disclosure Schedules 1.3 through 6.8 in the Index to the
Agreement.
"Documents" shall mean any "documents," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located.
"Dollars" or "$" shall mean lawful currency of the United States of
America.
"Eligible Accounts" shall have the meaning assigned to it in Section 1.5
of the Agreement.
"Eligible Inventory" shall have the meaning assigned to it in Section 1.6
of the Agreement.
"Environmental Laws" shall mean all applicable federal, state, local and
foreign laws, statutes, ordinances, codes, rules, standards and regulations, now
or hereafter in effect, and in each case as amended or supplemented from time to
time, including any applicable judicial or administrative order, consent decree,
order or judgment, imposing liability or standards of conduct for or relating to
the regulation and protection of human health, safety, the environment and
natural resources (including ambient air, surface water, groundwater, wetlands,
land surface or subsurface strata, wildlife, aquatic species and vegetation).
Environmental Laws include the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (42 U.S.C.ss.ss.9601 et seq.)
("CERCLA"); the Hazardous Materials Transportation Authorization Act of 1994 (49
U.S.C.ss.ss.5101 et seq.); the Federal Insecticide, Fungicide, and Rodenticide
Act (7 U.S.C.ss.ss.136 et seq.); the Solid Waste Disposal Act (42 X.X.X.xx.xx.
6901 et seq.); the Toxic Substance Control Act (15 U.S.C.ss.ss.2601 et seq.);
the Clean Air Act (42 U.S.C.ss.ss.7401 et seq.); the Federal Water Pollution
Control Act (33 U.S.C.ss.ss.1251 et seq.); the Occupational Safety and Health
Act (29 U.S.C.ss.ss.651 et seq.); and the Safe Drinking Water Act (42
X.X.X.xx.xx. 300(f) et seq.), each as from time to time amended, and any and all
regulations promulgated thereunder, and all analogous state, local and foreign
counterparts or equivalents and any transfer of ownership notification or
approval statutes.
"Environmental Liabilities" shall mean, with respect to any Person, all
liabilities, obligations, remedial and removal costs, investigation and
feasibility study costs, capital costs, operation and maintenance costs, losses,
damages, punitive damages, property damages, natural resource damages,
consequential damages, treble damages, costs and expenses (including all fees,
disbursements and expenses of counsel, experts and consultants), fines,
penalties, sanctions and interest incurred as a result of or related to any
claim, suit, action, investigation, proceeding or demand by any Person, whether
based in contract, tort, implied or express warranty, strict liability, criminal
or civil statute or common law, arising under or related to any Environmental
Laws, Environmental Permits, or in connection with any Release or threatened
Release or presence of a Hazardous Material whether on, at, in, under, from or
about or in the vicinity of any real or personal property.
"Environmental Permits" shall mean all permits, licenses, authorizations,
certificates, approvals or registrations required by any Governmental Authority
under any Environmental Laws.
"Equipment" shall mean all "equipment," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located and,
in any event, including all such Credit Party's machinery and equipment,
including processing equipment, conveyors, machine tools, data processing and
computer equipment with software and peripheral equipment (other than software
constituting part of the Accounts), and all engineering, processing and
manufacturing equipment, office machinery, furniture, materials handling
equipment, tools, attachments, accessories, automotive equipment, trailers,
trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock and other
equipment of every kind and nature, trade fixtures and fixtures not forming a
part of real property, all whether now owned or hereafter acquired, and wherever
situated, together with all additions and accessions thereto, replacements
therefor, all parts therefor, all substitutes for any of the foregoing, fuel
therefor, and all manuals, drawings, instructions, warranties and rights with
respect thereto, and all products and proceeds thereof and condemnation awards
and insurance proceeds with respect thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974 (or
any successor legislation thereto), as amended from time to time, and any
regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any Credit Party, any trade
or business (whether or not incorporated) which, together with such Credit
Party, are treated as a single employer within the meaning of Sections 414(b),
(c), (m) or (o) of the IRC.
"ERISA Event" shall mean, with respect to any Credit Party or any ERISA
Affiliate, (a) any event described in Section 4043(c) of ERISA with respect to a
Title IV Plan (except for events with respect to which the reporting requirement
has been waived by the PBGC); (b) the withdrawal of any Credit Party or ERISA
Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer, as defined in Section 4001(a)(2) of
ERISA; (c) the complete or partial withdrawal of any Credit Party or any ERISA
Affiliate from any Multiemployer Plan; (d) the filing of a notice of intent to
terminate a Title IV Plan or the treatment of a plan amendment as a termination
under Section 4041 of ERISA; (e) the institution of proceedings to terminate a
Title IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit
Party or ERISA Affiliate to make when due required contributions to a
Multiemployer Plan or Title IV Plan unless such failure is cured within 30 days;
(g) any other event or condition which might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan
or for the imposition of liability under Section 4069 or 4212(c) of ERISA; (h)
the termination of a Multiemployer Plan under Section 4041A of ERISA or the
reorganization or insolvency of a Multiemployer Plan under Section 4241 of
ERISA; or (i) the loss of a Qualified Plan's qualification or tax exempt status;
or (j) the termination of a Plan described in Section 4064 of ERISA.
"ESOP" shall mean a Plan, which is intended to satisfy the requirements of
Section 4975(e)(7) of the IRC.
"Event of Default" shall have the meaning assigned to it in Section 8.1.
"Excess Cash Flow" means, for any fiscal year of the Borrowers, the
excess, if any, of (a) the sum, without duplication, of (i) Consolidated Net
Income for such fiscal year, (ii) an amount equal to the amount of all non-cash
charges (including depreciation and amortization) deducted in arriving at such
Consolidated Net Income, (iii) decreases in Consolidated Working Capital for
such fiscal year, and (iv) an amount equal to the aggregate net non-cash loss on
the disposition of property by the Borrowers during such fiscal year (other than
sales of Inventory in the ordinary course of business), to the extent deducted
in arriving at such Consolidated Net Income, over (b) the sum, without
duplication, of (i) an amount equal to the amount of all non-cash income
included in arriving at such Consolidated Net Income, (ii) the aggregate amount
actually paid by the Borrowers in cash during such fiscal year (or incurred for
orders made prior to the end of such fiscal year) on account of Capital
Expenditures (excluding the principal amount of Indebtedness (other than
Revolving Credit Advances) incurred in connection with such expenditures), (iii)
the aggregate amount of all prepayments of Revolving Credit Advances during such
fiscal year to the extent accompanying permanent reductions of the Revolving
Commitments and all prepayments of the Term Loan and Master Lease during such
fiscal year, (iv) the aggregate amount of all regularly scheduled principal
payments of Funded Debt (including the Term Loan and the Master Lease) of the
Borrowers made during such fiscal year (including any such payments resulting
from scheduled permanent reductions of any revolving credit facility), (v)
increases in Consolidated Working Capital for such fiscal year, (vi) an amount
equal to the aggregate net non-cash gain on the disposition of property by the
Borrowers during such fiscal year (other than sales of Inventory in the ordinary
course of business), to the extent included in arriving at such Consolidated Net
income, and (vii) an amount equal to the Net Cash Proceeds of asset sales or
dispositions which are held for reinvestment in accordance with the terms
hereof.
"Excess Cash Flow Application Date" shall have the meaning defined in
Section 1.2.2(d).
"Extraordinary Receipts" means any cash received by any Credit Party or
any of its Subsidiaries not in the ordinary course of business and not
consisting of proceeds described in Section 1.2.2 (b), (c), (d) or (f) , or
Section 6.8(g), as applicable, foreign, United States, state or local tax
refunds, insurance proceeds, pension plan reversions, judgments, proceeds of
settlements or other consideration of any kind in connection with any cause of
action, indemnity payments and any purchase price adjustment received in
connection with any purchase agreement.
"Federal Funds Rate" shall mean, for any period, a fluctuating interest
rate per annum equal for each day during such period of the weighted average of
the rates (rounded upward, if necessary to the nearest whole multiple of 1/16 of
1% per annum) on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations for such day on such transactions received by the Agent from
three Federal funds brokers of recognized standing selected by it.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System, or any successor thereto.
"Fee Letter" shall mean that certain letter, dated as of even date
herewith between GE Capital, Ableco and the Borrowers with respect to certain
Fees to be paid from time to time by Borrowers to GE Capital and Ableco.
"Fees" shall mean any and all fees payable to Agent, Revolving Credit
Agent, or any Lender pursuant to the Agreement or any of the other Operative
Documents.
"Financial Covenants " shall have the meaning set forth in Section 6.10.
"Financial Statements" shall mean the consolidated and consolidating
income statements, statements of cash flows and balance sheets of Borrowers
delivered in accordance with Section 3.4 of the Agreement and Annex E to the
Agreement.
"Fiscal Month" shall mean any of the monthly accounting periods of
Borrowers.
"Fiscal Quarter" shall mean any of the quarterly accounting periods of
Borrowers, ending on March 31, June 30, September 30 and December 31 of each
year.
"Fiscal Year" shall mean any of the annual accounting periods of Borrowers
ending on December 31 of each year.
"Fixtures" shall mean any "fixtures" as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party.
"Foreign Lender" shall have the meaning given to such term in Section
1.14(c) of the Agreement.
"Funded Debt" shall mean, as to any Person, all Indebtedness of such
Person that matures more than one year from the date of its creation or matures
within one year from such date but is renewable or extendible, at the option of
such Person, to a date more than one year from such date or arises under a
revolving credit or similar agreement that obligates the lender or lenders to
extend credit during a period of more than one year from such date, including
all current maturities and current sinking fund payments in respect of such
Indebtedness whether or not required to be paid within one year from the date of
its creation and, in the case of the Borrower, Indebtedness in respect of the
Loans.
"GA" shall mean General Automation, Inc., an Illinois corporation.
"GAAP" shall mean generally accepted accounting principles in the United
States of America consistently applied, as such term is further defined in Annex
G to the Agreement.
"Galaxy" shall mean Galaxy Industries Corporation, a Michigan corporation.
"GE Capital" shall have the meaning given to such term in the Preamble to
the Agreement.
"General Intangibles" shall mean any "general intangibles," as such term
is defined in the Code, now owned or hereafter acquired by any Credit Party,
and, in any event, including all right, title and interest which such Credit
Party may now or hereafter have in or under any Contract, all customer lists,
Licenses, Copyrights, Trademarks, Patents, and all applications therefor and
reissues, extensions or renewals thereof, rights in Intellectual Property,
interests in partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any Trademark or
Trademark License), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key man and business interruption insurance, and all unearned
premiums), uncertificated securities, choses in action, deposit, checking and
other bank accounts, rights to receive tax refunds and other payments, rights of
indemnification, all books and records, correspondence, credit files, invoices
and other papers, including without limitation all tapes, cards, computer runs
and other papers and documents in the possession or under the control of such
Credit Party or any computer bureau or service company from time to time acting
for such Credit Party.
"Xxxxxxxx" means Xxxxxxxx Machine & Tool Co., Inc., a New York
corporation.
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"GPPC" means Galaxy Precision Products Corp., a Delaware corporation.
"Guaranteed Indebtedness" shall mean, as to any Person, any obligation of
such Person guaranteeing any indebtedness, lease, dividend, or other obligation
("primary obligations") of any other Person (the "primary obligor") in any
manner, including any obligation or arrangement of such Person (a) to purchase
or repurchase any such primary obligation, (b) to advance or supply funds (i)
for the purchase or payment of any such primary obligation or (ii) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet condition of the primary
obligor, (c) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation, or (d) to
indemnify the owner of such primary obligation against loss in respect thereof.
The amount of any Guaranteed Indebtedness at any time shall be deemed to be an
amount equal to the lesser at such time of (x) the stated or determinable amount
of the primary obligation in respect of which such Guaranteed Indebtedness is
made and (y) the maximum amount for which such Person may be liable pursuant to
the terms of the instrument embodying such Guaranteed Indebtedness; or, if not
stated or determinable, the maximum reasonably anticipated liability (assuming
full performance) in respect thereof.
"Guarantors" shall mean Holdings, and each other Person, if any, which
executes a guarantee or other similar agreement in favor of Agent in connection
with the transactions contemplated by the Agreement and the other Operative
Documents.
"Guaranty" shall mean the guaranty of even date herewith executed by
Holdings in favor of Agent and Lenders and any other guarantee of the
Obligations now or hereafter executed and delivered by any other Person.
"Xxxxxx Group" means Xxxxxx & Co. and its Control Investment Affiliates.
"Hazardous Material" shall mean any substance, material or waste which is
regulated by or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance which is (a) defined as
a "solid waste," "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste," "restricted hazardous waste," "pollutant,"
"contaminant," "hazardous constituent," "special waste," "toxic substance" or
other similar term or phrase under any Environmental Laws, (b) petroleum or any
fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB's), or
any radioactive substance.
"Holdings" shall have the meaning ascribed thereto in the Preamble to the
Agreement.
"Indebtedness" of any Person shall mean without duplication (a) all
indebtedness of such Person for borrowed money (including, without limitation,
the Obligations) or for the deferred purchase price of property payment for
which is deferred six (6) months or more, but excluding obligations to trade
creditors incurred in the ordinary course of business that are not overdue by
more than six (6) months unless being contested in good faith, (b) all
reimbursement and other obligations with respect to letters of credit, bankers'
acceptances and surety bonds, whether or not matured, (c) all obligations
evidenced by notes, bonds, debentures or similar instruments, (d) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (e)
all Capital Lease Obligations and the present value of future rental payments
under all synthetic leases, (f) all obligations of such Person under commodity
purchase or option agreements or other commodity price hedging arrangements, in
each case whether contingent or matured, (g) all obligations of such Person
under any foreign exchange contract, currency swap agreement, interest rate
swap, cap or collar agreement or other similar agreement or arrangement designed
to alter the risks of that Person arising from fluctuations in currency values
or interest rates, in each case whether contingent or matured, and (h) all
Indebtedness referred to above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property or other assets (including accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness.
"Indemnified Liabilities" shall have the meaning assigned to it in Section
1.13.
"Indenture" means the Indenture dated March 19, 1999 by and among
Precision Partners, Inc., the guarantors named therein, and The Bank of New York
as Trustee, as the same may from time to time be amended, restated,
supplemented, or otherwise modified.
"Index Rate" shall mean, for any day, a floating rate equal to the higher
of (i) the rate publicly quoted from time to time by The Wall Street Journal as
the "base rate on corporate loans at large U.S. money center commercial banks"
(or, if The Wall Street Journal ceases quoting a base rate of the type
described, the highest per annum rate of interest published by the Federal
Reserve Board in Federal Reserve statistical release H.15 (519) entitled
"Selected Interest Rates" as the Bank prime loan rate or its equivalent), and
(ii) the Federal Funds Rate plus fifty (50) basis points per annum. Each change
in any interest rate provided for in the Agreement based upon the Index Rate
shall take effect at the time of such change in the Index Rate.
"Index Rate Loan" shall mean a Loan or portion thereof bearing interest by
reference to the Index Rate.
"Instruments" shall mean any "instrument," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located,
and, in any event, including all certificated securities, all certificates of
deposit, and all notes and other, without limitation, evidences of indebtedness,
other than instruments that constitute, or are a part of a group of writings
that constitute, Chattel Paper.
"Intellectual Property" shall mean any and all Licenses, Patents,
Copyrights, Trademarks, trade secrets and customer lists.
"Intercompany Notes" shall have the meaning assigned to it in Section 6.3.
"Interest Payment Date" means (a) as to any Index Rate Loan, the last day
of each month to occur while such Loan is outstanding, (b) as to any LIBOR Loan,
the last day of the applicable LIBOR Period; provided that, in addition to the
foregoing, each of (x) the date upon which all of the Commitments have been
terminated and the Loans have been paid in full and (y) the Commitment
Termination Date shall be deemed to be an "Interest Payment Date" with respect
to any interest which is then accrued under the Agreement.
"Inventory" shall mean any "inventory," as such term is defined in the
Code, now or hereafter owned or acquired by any Credit Party, wherever located,
and in any event including inventory, merchandise, goods and other personal
property which are held by or on behalf of any Credit Party for sale or lease or
are furnished or are to be furnished under a contract of service, or which
constitute raw materials, work in process or materials used or consumed or to be
used or consumed in such Credit Party's business or in the processing,
production, packaging, promotion, delivery or shipping of the same, including
other supplies.
"Investments" shall have the meaning given to such term in Section 6.2 of
the Agreement.
"Investment Property" shall have the meaning ascribed thereto in Section
9-115 of the Code in those jurisdictions in which such definition has been
adopted and shall include (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Credit Party,
including the rights of any Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities intermediary
with respect to that account; (iii) all securities accounts held by any Credit
Party; (iv) all commodity contracts held by any Credit Party; and (v) all
commodity accounts held by any Credit Party.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and any
successor thereto.
"IRS" shall mean the Internal Revenue Service, or any successor thereto.
"L/C Issuer" shall have the meaning assigned to such term in Annex B.
"Lease Documents" shall mean the Capital Lease, the schedules thereto, and
all other agreements, instruments, documents and certificates executed and
delivered to, or in favor of, Agent and/or Lenders and including all other
pledges, powers of attorney, consents, assignments, contracts, notices, and all
other written matter whether heretofore, now or hereafter executed by or on
behalf of any Credit Party, or any employee of any Credit Party, and delivered
to Agent or any Lender in connection with the Capital Lease or the transactions
contemplated hereby. Any reference in the Agreement, the Capital Lease or any
other Operative Document or Lease Document to a "Lease Document" shall include
all appendices, exhibits or schedules thereto, and all amendments, restatements,
supplements or other modifications thereto.
"Lenders" shall mean the Term Lenders, Revolving Lenders and Lessors named
on the signature page of the Agreement, and, if any such Lender shall assign all
or any portion of the Obligations, such term shall include such assignee, in
each case only for so long as such Person has a commitment hereunder.
"Lessors" shall mean those Lenders having Capital Lease Commitments.
"Letter of Credit Cash Collateral Account" shall have the meaning given to
such term in Annex B.
"Letter of Credit Fee" has the meaning ascribed thereto in Annex B.
"Letter of Credit Obligations" shall mean at any time, the sum of (a) the
aggregate undrawn stated amount of all Letters of Credit then outstanding, plus
(b) all amounts theretofore drawn under Letters of Credit and not reimbursed
prior to or at such time.
"Letters of Credit" shall mean commercial or standby letters of credit
issued for the account of any Borrower by any L/C Issuer, and bankers'
acceptances issued by any Borrower, for which Revolving Credit Agent and
Revolving Lenders have incurred Letter of Credit Obligations.
"LIBOR Business Day" shall mean a Business Day on which banks in the city
of London are generally open for interbank or foreign exchange transactions.
"LIBOR Loan" shall mean a Loan or any of the other Obligations or any
portion thereof bearing interest by reference to the LIBOR Rate.
"LIBOR Period" shall mean (a) with respect to the Term Loan (i) the period
commencing on the Closing Date and ending on April 1, 2002, (ii) the period
commencing on April 1, 2002 and ending on July 1, 2002, (iii) the period
commencing on July 1, 2002 and ending on October 2002, and (iv) each period
thereafter commencing on a principal installment date and ending on the next
succeeding principal installment date, and (b) with respect to the Revolving
Loan, each period commencing on a LIBOR Business Day selected by Borrower
Representative pursuant to the Agreement and ending one, two, or three months
thereafter with respect to the Revolving Loan, as selected by Borrower
Representative's irrevocable notice to Revolving Credit Agent as set forth in
Section 1.4(e); provided that the foregoing provision relating to LIBOR Periods
is subject to the following:
(a) if any LIBOR Period would otherwise end on a day that is not a LIBOR
Business Day, such LIBOR Period shall be extended to the next succeeding LIBOR
Business Day unless the result of such extension would be to carry such LIBOR
Period into another calendar month in which event such LIBOR Period shall end on
the immediately preceding LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend beyond the Commitment
Termination Date shall on such date;
(c) any LIBOR Period pertaining to a LIBOR Loan that begins on the last
LIBOR Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such LIBOR
Period) shall end on the last LIBOR Business Day of a calendar month;
(d) Borrower Representative shall select LIBOR Periods so as not to
require a payment or prepayment of any LIBOR Loan during a LIBOR Period for such
Loan; and
(e) Borrower Representative shall select LIBOR Periods so that there shall
be no more than three (3) separate interest rate tranches under the Revolving
Loan in existence at any one time.
"LIBOR Rate" shall mean for each LIBOR Period, a per annum rate of
interest, rounded upward to the nearest 1/16 of 1%, equal to:
(a) the offered rate for deposits in United States Dollars for the
applicable LIBOR Period which appears on Telerate Page 3750 as of 11:00 a.m.,
London time, on the second full LIBOR Business Day next preceding the first day
of each LIBOR Period (unless such date is not a Business Day, in which event the
next succeeding Business Day will be used); divided by
(b) a number equal to 1.0 minus the aggregate (but without duplication) of
the rates (expressed as a decimal fraction) of reserve requirements in effect on
the day which is two (2) LIBOR Business Days prior to the beginning of such
LIBOR Period (including basic, supplemental, marginal and emergency reserves
under any regulations of the Board of Governors of the Federal Reserve system or
other Governmental Authority having jurisdiction with respect thereto, as now
and from time to time in effect) for Eurocurrency funding (currently referred to
as "Eurocurrency liabilities" in Regulation D of such Board) which are required
to be maintained by a member bank of the Federal Reserve System.
If such interest rates shall cease to be available from Telerate News
Service, the LIBOR Rate shall be determined from such financial reporting
service or other information as shall be mutually acceptable to all Lenders and
Borrower Representative.
"License" shall mean any Copyright License, Patent License, Trademark
License or other license of rights or interests now held or hereafter acquired
by any Credit Party.
"Lien" shall mean any mortgage or deed of trust, pledge, hypothecation,
collateral assignment, deposit arrangement, lien, charge or security interest,
or easement, encumbrance, claim, or preference, priority or other security
agreement or preferential arrangement having the effect of security of any kind
or nature whatsoever (including any lease or title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement
perfecting a security interest under the Code or comparable law of any
jurisdiction).
"Litigation" shall have the meaning assigned to it in Section 3.13.
"Loan Account" shall have the meaning assigned to it in Section 1.11.
"Loan Documents" shall mean the Agreement, the Notes, the Guaranty, the
Collateral Documents and all other agreements, instruments, documents and
certificates identified in the Closing Checklist executed and delivered to, or
in favor of, Agent, Revolving Credit Agent, and/or Lenders and including all
other pledges, powers of attorney, consents, assignments, contracts, notices,
and all other written matter whether heretofore, now or hereafter executed by or
on behalf of any Credit Party, or any employee of any Credit Party, and
delivered to Agent, Revolving Credit Agent, or any Lender in connection with the
Agreement or the transactions contemplated hereby. Any reference in the
Agreement or any other Loan Document to a "Loan Document" shall include all
appendices, exhibits or schedules thereto, and all amendments, restatements,
supplements or other modifications thereto, and shall refer to such Agreement as
the same may be in effect at any and all times such reference becomes operative.
"Loans" shall mean the Revolving Loan and the Term Loan.
"Margin Stock " shall have the meaning set forth in Section 3.10.
"Master Lease" means that certain Master Lease Agreement dated February 1,
2002 by and between General Electric Capital Corporation, for itself as Lessor
and as Agent for Lessors, and the Borrowers, as Lessees.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
business, assets, operations or financial or other condition of the Credit
Parties, taken as a whole, (b) the Borrowers' ability to pay any of the Loans or
any of the other Obligations in accordance with the terms of the Agreement, (c)
the Collateral or Agent's or Revolving Credit Agent's Liens, on behalf of the
Lenders, on the Collateral or the priority of such Liens, or (d) Agent's,
Revolving Credit Agent's or any Lender's rights and remedies under the Agreement
and the other Operative Documents.
"Material Contract" means, with respect to any Person, (i) each contract
or agreement to which such Person or any of its Subsidiaries is a party
involving aggregate consideration payable to or by such Person or such
Subsidiary of $1,500,000 or more (other than purchase orders in the ordinary
course of the business of such Person or such Subsidiary and other than
contracts that by their terms may be terminated by such Person or Subsidiary in
the ordinary course of its business upon less than 60 days' notice without
penalty or premium) and (ii) all other contracts or agreements material to the
business, operations, condition (financial or otherwise), performance or
properties of the Borrowers, taken as a whole.
"Maximum Amount" shall mean, at any particular time, an amount equal to
the Revolving Loan Commitment of all Lenders.
"Maximum Lawful Rate" shall have the meaning given to such term in Section
1.4(f).
"Measurement Period" shall mean (a) as to any covenant calculation made as
of March 31, 2002, June 30, 2002, or September 30, 2002, the period from January
1, 2002 through and including such date; and (ii) as to any covenant calculation
made as of any date thereafter, the four quarters ending on such date.
"Mid State" shall mean Mid State Machine Products, a Maine corporation.
"Mortgaged Properties" shall have the meaning assigned to it in Annex D.
"Mortgages" shall mean each of the mortgages, deeds of trust, leasehold
mortgages, leasehold deeds of trust, collateral assignments of leases or other
real estate security documents delivered by any Credit Party to Agent with
respect to the Mortgaged Properties, all in form and substance reasonably
satisfactory to Agent.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate is
making, is obligated to make or has made or been obligated to make, within the
last five (5) years, contributions on behalf of participants who are or were
employed by any of them.
"Nationwide" shall mean Nationwide Precision Products Corp., a New York
corporation.
"Net Borrowing Availability" shall mean as of any date of determination as
to all Borrowers, the lesser of (i) the Maximum Amount and (ii) the Aggregate
Borrowing Base, in each case less the Revolving Credit Advances and Letter of
Credit Obligations then outstanding.
"Net Cash Proceeds" means: (a) in connection with any asset sale, equity
issuance, debt issuance or incurrence, or other disposition of any property of
assets or any Recovery Event or Extraordinary Receipts, the aggregate proceeds
thereof in the form of cash and Cash Equivalents (including any such proceeds
received by way of deferred payment of principal pursuant to a note or
installment receivable or purchase price adjustment receivable or otherwise, but
only as and when received) of such, sale, disposition or Recovery Event, after
deducting therefrom:
(a) reasonable and customary brokerage commissions,
underwriting fees, legal fees, accountants'
fees, investment banking fees, finder's fees,
and other customary fees and expenses actually
incurred in connection therewith;
(b) the amount of taxes paid or reasonably
estimated to be payable within one year in
connection with or as a result of such
transaction (after taking into account any
available tax credits or deductions and any tax
sharing arrangements);
(c) in the case of any sale, lease, transfer, or
other disposition of any property or asset or
any Recovery Event, amounts required to be
applied to the repayment of Indebtedness (other
than the Obligations) secured by a Lien
expressly permitted hereunder on any asset that
is the subject of such sale, lease, transfer,
disposition or Recovery Event (other than any
Lien pursuant to a Operative Document); and
(d) in the case of the sale, lease, transfer, or
disposition of any property and assets, the
aggregate amount of all reasonable and
customary post-closing purchase price
adjustments to the cash or Cash Equivalents
received, and such reserves as the Lenders
shall approve, in their discretion .
"Non-Funding Lender" shall have the meaning assigned to it in Section
9.9(b).
"Notes" shall mean the Revolving Note and the Term Notes, collectively.
"Notice of Conversion/Continuation" shall have the meaning assigned to it
in Section 1.4(e).
"Notice of Revolving Credit Advance" shall have the meaning assigned to it
in Section 1.1.1(a).
"Obligations" shall mean all loans, advances, debts, liabilities and
obligations for payment of monetary amounts (whether or not such amounts are
liquidated or determinable) owing by any Credit Party to Agent, Revolving Credit
Agent, any Lessor or any other Lender, and all covenants and duties regarding
the payment of such amounts, of any kind or nature, present or future, whether
or not evidenced by any note, agreement or other instrument, arising under the
Agreement or any of the other Operative Documents. This term includes all
principal, interest (including all interest which accrues after the commencement
of any case or proceeding in bankruptcy after the insolvency of, or for the
reorganization of any Credit Party, whether or not allowed in such proceeding),
rental payments, Fees, Charges, expenses, attorneys' fees and any other sum
chargeable to any Credit Party under the Agreement or any of the other Operative
Documents.
"Operative Documents" means, collectively, the Loan Documents and the
Lease Documents.
"Patent License" shall mean rights under any written agreement now owned
or hereafter acquired by any Credit Party granting any right with respect to any
invention on which a Patent is in existence.
"Patents" shall mean all of the following in which any Credit Party now
holds or hereafter acquires any interest: (a) all letters patent of the United
States or any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any state or territory thereof, or any other country, and (b) all reissues,
continuations, continuations-in-part or extensions thereof.
"Payment " shall have the meaning set forth in Section 12.7(a).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
"Permitted Encumbrances" shall mean the following encumbrances: (a) Liens
for taxes or assessments or other governmental Charges not yet due and payable
or being contested in accordance with Section 5.2(b); (b) pledges or deposits of
money securing statutory obligations under workmen's compensation, unemployment
insurance, social security or public liability laws or similar legislation
(excluding Liens under ERISA); (c) pledges or deposits of money securing bids,
tenders, contracts (other debt for borrowed money) or leases to which any Credit
Party is a party as lessee made in the ordinary course of business; (d) inchoate
and unperfected workers', storage, repairman's, mechanics' or similar Liens
arising in the ordinary course of business, so long as such Liens attach only to
Equipment, Fixtures and/or Real Estate; (e) carriers', warehousemen's,
suppliers' bailees' or other similar possessory Liens arising in the ordinary
course of business (i) that have been subordinated to the Obligations in writing
in a manner satisfactory to the Lenders or with respect to which the Borrowers,
after the exercise of commercially reasonable efforts, have not obtained waivers
and (ii) securing liabilities in an outstanding aggregate amount not in excess
of $200,000 at any time, so long, in each case under this clause (e) as such
Liens attach only to Inventory; (f) deposits securing, or in lieu of, surety,
appeal or customs bonds in proceedings to which any Credit Party is a party; (g)
any attachment or judgment Lien not constituting an Event of Default under
Section 8.1(j); (h) zoning restrictions, easements, licenses, or other
restrictions on the use of any Real Estate or other minor irregularities in
title (including leasehold title) thereto, so long as the same do not materially
impair the use, value, or marketability of such Real Estate; (i) presently
existing or hereinafter created Liens to secure the Obligations; and (j) Liens
in existence on the date hereof and summarized on Disclosure Schedule 6.7; (k)
purchase money Liens on or in fixed assets or capital assets acquired or held by
any Borrower to secure the purchase price of such asset or to secure
Indebtedness incurred solely for the purpose of financing the acquisition,
construction, or improvement of such asset (including Liens arising out of
Capital Leases entered into for such purposes and otherwise permitted
hereunder); provided that no such Lien shall cover any property or assets other
than the property or assets so acquired, constructed or obtained, and the amount
secured by all such Liens (other than the amount of the existing capital leases
disclosed in this Agreement, and any refinancing thereof) shall not exceed, in
the aggregate $50,000 at any one time outstanding; (l) deposits made, and Letter
of Credit issued, to secure the performance of operating leases of the Borrowers
in the ordinary course of business; (m) Liens arising solely from precautionary
filings of financing statements under the Uniform Commercial Code of the
applicable jurisdictions in respect of operating leases otherwise permitted
hereunder; (n) leases or subleases of assets owned by the Credit Parties; (o)
contractual rights of setoff pertaining to deposits or sweep accounts in the
ordinary course of business; (p) Liens in favor of the Trustee under the
Indenture, which Liens arise solely under the "equal and ratable" clause of the
Indenture as a result of Liens permitted hereunder; and (q) replacement,
extension, or renewal of any Lien otherwise expressly permitted to be created or
to exist under this Section 6.7; provided that any such Lien shall not extend to
or cover any property or assets not theretofore covered.
"Permitted Investors" shall mean the Carlisle Group, the Xxxxxx Group, and
the SKM Group
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, public benefit corporation, other entity
or government (whether federal, state, county, city, municipal, local, foreign,
or otherwise, including any instrumentality, division, agency, body or
department thereof).
"Plan" shall mean, at any time, an employee benefit plan, as defined in
Section 3(3) of ERISA, which any Credit Party maintains, contributes to or has
an obligation to contribute to on behalf of participants who are or were
employed by any Credit Party.
"Pledge Agreement shall mean that certain Stock Pledge Agreement dated the
Closing Date from Holdings, Precision and Nationwide.
"Precision" means Precision Partners, Inc., a Delaware corporation.
"Prior Credit Agreement" shall mean that certain Credit Agreement dated as
of March 19, 1999, as amended and otherwise modified, by and among Precision, as
borrower, the guarantors from time to time party thereto, Citicorp, U.S.A.,
Inc., as Administrative Agent, NationsBank, N.A. as Syndication Agent, SunTrust
Bank, Atlanta, as Documentation Agent, Xxxxxxx Xxxxx Xxxxxx, as Arranger, and
the Lenders from time to time party thereto.
"Prior GE Obligations" means, collectively, (a) the obligations under that
certain Loan, Security and Guaranty Agreement dated as of December 8, 2000, as
amended and otherwise modified, by and between (i) Galaxy Industries
Corporation, Mid State Machine Products, Nationwide Precision Products Corp.,
and General Automation, Inc. (ii) General Electric Capital Corporation, for
itself and as agent for certain participants, and (iii) Precision Partners,
Inc., and (b) the obligations under that certain Amended and Restated Master
Lease Agreement dated as of December 8, 2000 between (i) Galaxy Industries
Corporation, Mid State Machine Products, Nationwide Precision Products Corp.,
and General Automation, Inc. and (ii) General Electric Capital Corporation, for
itself and as agent for certain participants.
"Prior Lender" shall mean the agent for the benefit of the Lenders under
the Prior Credit Agreement.
"Prior Lender Obligations" shall mean all obligations under the Prior
Credit Agreement and the other documents executed in connection therewith and
the Prior GE Obligations.
"Proceeds" shall mean "proceeds," as such term is defined in the Code and,
in any event, shall include (a) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to any Credit Party from time to time
with respect to any of the Collateral, (b) any and all payments (in any form
whatsoever) made or due and payable to any Credit Party from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental Authority
(or any Person acting under color of governmental authority), (c) any claim of
any Credit Party against third parties (i) for past, present or future
infringement of any Patent or Patent License, or (ii) for past, present or
future infringement or dilution of any Copyright, Copyright License, Trademark
or Trademark License, or for injury to the goodwill associated with any
Trademark or Trademark License, (d) any recoveries by any Credit Party against
third parties with respect to any litigation or dispute concerning any of the
Collateral, and (e) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral, upon disposition or
otherwise.
"Projections" means Borrowers' forecasted consolidated and consolidating:
(a) balance sheets; (b) profit and loss statements; and (c) cash flow
statements, all prepared on a Subsidiary by Subsidiary basis or a division by
division basis, if applicable, and otherwise consistent with the historical
Financial Statements of the Borrowers, together with appropriate supporting
details and underlying assumptions.
"Pro Rata Share" shall mean with respect to all matters relating to any
Lender (a) with respect to the Revolving Loan, the percentage obtained by
dividing (i) the Revolving Loan Commitment of that Lender by (ii) the aggregate
Revolving Loan Commitments of all Lenders (or, if after the Commitment
Termination Date, by dividing the portion of the outstanding principal balance
of the Revolving Loan held by such Lender by the total outstanding principal
balance of the Revolving Loan), (b) with respect to the Term Loan or the Master
Lease, the percentage obtained by dividing (i) the outstanding principal balance
of the portion of the Term Loan and the total outstanding unamortized
capitalized lessor's cost under the Master Lease held by that Lender by (ii) the
total outstanding principal balance of the Term Loan and the total outstanding
unamortized capitalized lessor's cost under the Master Lease held by all
Lenders, (c) with respect to all Loans, the percentage obtained by dividing (i)
the sum of the total Revolving Loan Commitment of such Lender (if any) (or,
after the Commitment Termination Date, the outstanding principal balance of the
portion of the Revolving Loan held by such Lender, if any) plus the outstanding
principal balance of the portion of the Term Loan held by such Lender (if any)
plus the total outstanding unamortized capitalized lessor's cost under the
Master Lease held by such Lender by (ii) the sum of the aggregate outstanding
Revolving Loan Commitments (or, if after the Commitment Termination Date, the
outstanding principal balance of the Revolving Loan) plus the outstanding
principal balance of the Term Loan, plus the total outstanding unamortized
capitalized lessor's cost under the Master Lease.
"Protective Advances" shall have the meaning given to such term in Section
8.2(c).
"Public Offering" shall mean a firm underwritten public offering of common
stock registered on form X-0, X-0 or S-3 under the Securities Act of 1933, as
amended, by a nationally recognized investment banking firm and after giving
effect to which the issuer shall be qualified for listing on the NASDAQ National
Market, the American Stock Exchange or the New York Stock Exchange.
"Qualified Plan" shall mean a Plan, which is intended to be tax-qualified
under Section 401(a) of the IRC.
"Real Estate" shall have the meaning assigned to it in Section 3.6.
"Recovery Event" shall mean, with respect to any property, real or
personal, of any Person, any loss of title with respect to real property or any
loss of or damage to or destruction of, or any condemnation or other taking
(including by any Governmental Authority) of, such property (including real
property) for which such Person receives insurance proceeds or proceeds of a
condemnation award or other compensation. "Recovery Event" shall include but not
be limited to any taking of any Mortgaged Property or real property of any
Credit Party or any part thereof, in or by condemnation or other eminent domain
proceedings pursuant to any law, general or special, or by reason of the
temporary requisition of the use or occupancy of any Mortgaged Property or real
property of any Credit Party or any part thereof, by any Governmental Authority,
civil or military.
"Refinancing" shall mean the repayment in full by Borrowers of the Prior
Lender Obligations on the Closing Date.
"Reinvestment Notice" means a written notice executed by a Responsible
Officer of the Borrower Representative stating that (i) no Event of Default has
occurred and is continuing, and (ii) that the Borrowers intend and expect to use
Net Cash Proceeds (a) received in connection with an asset sale or other
disposition to acquire replacement assets of an equal or greater value, or (b)
received in connection with a condemnation or casualty occurrence, to repair,
restore, or replace the damaged or lost asset, and (iii) that the restoration,
repair, or replacement is expected to be completed within a period of 180 days.
"Related Transactions" means each borrowing under the Revolving Loan, the
Term Loan, and the Master Lease on the Closing Date, the Refinancing, and the
payment of all fees, costs and expenses associated with all of the foregoing.
"Release" shall mean any release, threatened release, spill, emission,
leaking, pumping, pouring, emitting, emptying, escape, injection, deposit,
disposal, discharge, dispersal, dumping, leaching or migration of Hazardous
Material in the indoor or outdoor environment, including the movement of
Hazardous Material through or in the air, soil, surface water, ground water or
property.
"Requisite Lenders" shall mean (a) at any time when the Net Borrowing
Availability is greater than or equal to $2,500,000, Lenders having more than
fifty percent (50.00%) of the sum of the aggregate outstanding principal amount
of the Term Loan, plus the outstanding capitalized lessor's cost under the
Master Lease, or (b) at any time when the Net Borrowing Availability is less
than $2,500,000, (i) Lenders having more than fifty percent (50.00%) of the sum
of the aggregate outstanding principal amount of the Term Loan plus the
outstanding capitalized lessor's cost under the Master Lease, and (ii) Lenders
having more than fifty percent (50%) of the outstanding Revolving Loan
Commitments.
"Reserves" shall mean, with respect to the Borrowing Base of any Borrower
(a) reserves established by Revolving Credit Agent from time to time against
Eligible Inventory pursuant to Section 5.9, and (b) such other reserves against
Eligible Accounts, Eligible Inventory or Borrowing Availability of any Borrower
which Revolving Credit Agent may, in its reasonable credit judgment, establish
from time to time; provided that the Revolving Credit Agent shall not establish
reserves for the payment of accrued interest on the Subordinated Debt.
"Responsible Officer" means the chief executive officer, the chief
operating officer, the president, the chief financial officer, the controller,
the principal accounting officer, or the treasurer (or the equivalent of any of
the foregoing) of any Credit Party, or any other officer of any Credit Party
responsible for overseeing the administration of and reviewing compliance with,
this Agreement and the other Operative Documents.
"Restricted Payment" shall mean (a) the declaration or payment of any
dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of a Person's Stock,
(b) any payment on account of the purchase, redemption, defeasance, sinking fund
or other retirement of a Person's Stock or any other payment or distribution
made in respect thereof, either directly or indirectly, (c) any payment or
prepayment of principal of, or premium, if any, on or with respect to, and any
redemption, purchase, retirement, defeasance, sinking fund or similar payment
and any claim for rescission with respect to, any Subordinated Debt except as
otherwise expressly permitted under Section 6.3(b); (d) any payment made to
redeem, purchase, repurchase or retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire Stock of such Person
now or hereafter outstanding; (e) any payment of a claim for the rescission of
the purchase or sale of, or for material damages arising from the purchase or
sale of, any shares of such Person's Stock or of a claim for reimbursement,
indemnification or contribution arising out of or related to any such claim for
damages or rescission; and (f) any payment, loan, contribution, or other
transfer of funds or other property to any Stockholder of such Person in its
capacity as a stockholder, except as otherwise expressly permitted hereunder,
other than payment of compensation in the ordinary course to stockholders who
are employees of such Person.
"Retiree Welfare Plan" shall mean, at any time, a Plan that is a "welfare
plan" as defined in Section 3(2) of ERISA, that provides for continuing coverage
or benefits for any participant or any beneficiary of a participant after such
participant's termination of employment, other than continuation coverage
provided pursuant to Section 4980B of the IRC and at the sole expense of the
participant or the beneficiary of the participant.
"Revolving Credit Advance" shall have the meaning assigned to it in
Section 1.1.1(a).
"Revolving Credit Agent" shall mean GE Capital or its successor appointed
pursuant to Section 9.7.
"Revolving Lenders" shall mean, as of any date of determination, Lenders
having a Revolving Loan Commitment.
"Revolving Loan" shall mean, at any time the sum of (i) the aggregate
amount of Revolving Credit Advances outstanding to the Borrowers plus (ii) the
aggregate Letter of Credit Obligations. Unless the context otherwise requires,
references to the outstanding principal balance of the Revolving Loan shall
include the outstanding balance of Letter of Credit Obligations.
"Revolving Loan Commitment" shall mean (a) as to any Lender, the aggregate
commitment of such Lender to make Revolving Credit Advances and/or incur Letter
of Credit Obligations as set forth on Annex J to the Agreement or in the most
recent Assignment Agreement executed by such Lender and (b) as to all Lenders,
the aggregate commitment of all Lenders to make Revolving Credit Advances and/or
incur Letter of Credit Obligations, which aggregate commitment shall be
Twenty-Five Million Dollars ($25,000,000) on the Closing Date, as such amount
may be adjusted, if at all, from time to time in accordance with the Agreement.
"Revolving Note" shall have the meaning assigned to it in Section
1.1.1(b).
"Security Agreement" shall mean the Security Agreement of even date
herewith entered into among Agent, on behalf of the Lenders, and each Credit
Party that is a signatory thereto.
"SKM Group" means Xxxxxxxx, Xxxx & Xxxxxx, LLC and its Control Investment
Affiliates.
"Solvent" shall mean, with respect to any Person on a particular date,
that on such date (a) the fair value of the property of such Person is greater
than the total amount of liabilities, including contingent liabilities, of such
Person; (b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured; (c) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person's ability to pay as such debts and liabilities mature; and
(d) such Person is not engaged in a business or transaction, and is not about to
engage in a business or transaction, for which such Person's property would
constitute an unreasonably small capital. The amount of contingent liabilities
(such as litigation, guarantees and pension plan liabilities) at any time shall
be computed as the amount which, in light of all the facts and circumstances
existing at the time, represents the amount which can be reasonably be expected
to become an actual or matured liability.
"Stock" shall mean all shares, options, warrants, general or limited
partnership interests or other equivalents (regardless of how designated) of or
in a corporation, partnership or equivalent entity whether voting or nonvoting,
including common stock, preferred stock or any other "equity security" (as such
term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated
by the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended).
"Subsidiary" shall mean, with respect to any Person, (a) any corporation
of which an aggregate of more than fifty percent (50%) of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person and/or one or more Subsidiaries of
such Person, or with respect to which any such Person has the right to vote or
designate the vote of fifty percent (50%) or more of such Stock whether by
proxy, agreement, operation of law or otherwise, and (b) any partnership or
limited liability company in which such Person and/or one or more Subsidiaries
of such Person shall have an interest (whether in the form of voting or
participation in profits or capital contribution) of more than fifty percent
(50%) or of which any such Person is a general partner or may exercise the
powers of a general partner.
"Subordinated Debt" means, collectively, the Indebtedness evidenced by the
Subordinated Notes, and any other Indebtedness fully and unconditionally
subordinated to the repayment of the Obligations.
"Subordinated Notes" means, collectively, the 12% Senior Subordinated
Notes issued pursuant to the Indenture, as the same may from time to time be
amended, restated, supplemented, or otherwise modified.
"Taxes" shall mean taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income of Agent, Revolving Credit Agent or a Lender
and franchise taxes imposed in lieu thereof by the jurisdictions under the laws
of which Agent, Revolving Credit Agent and Lenders are organized or any
political subdivision thereof or where their lending offices are located.
"Term Lenders" shall mean those Lenders having Term Loan Commitments.
"Term Loan" shall have the meaning assigned to it in Section 1.1.2(a).
"Term Loan Commitment" shall mean (a) as to any Lender with a Term Loan
Commitment, the commitment of such Lender to make its proportionate share of the
Term Loan as set forth on Annex J to the Agreement or in the most recent
Assignment Agreement executed by such Lender, and (b) as to all Lenders with a
Term Loan Commitment, the aggregate commitment of all Lenders to make the Term
Loan, which aggregate commitment shall be Forty-Four Million Fifty Thousand
Dollars ($44,050,000) on the Closing Date, as to each of clauses (a) and (b), as
such Term Loan Commitments may be reduced, amortized or adjusted from time to
time in accordance with the Agreement.
"Term Note" and "Term Notes" shall have the meaning assigned to such terms
in Section 1.1.2(a).
"Termination Date" shall mean the date on which the Loans have been repaid
in full and all other Obligations under the Agreement and the other Operative
Documents have been completely discharged and Letter of Credit Obligations have
been cash collateralized, canceled or backed by stand-by letters of credit in
accordance with Annex B, and none of Borrowers shall have any further right to
borrow any monies under the Agreement.
"Title IV Plan" shall mean an employee pension benefit plan, as defined in
Section 3 (2) of ERISA (other than a Multiemployer Plan), which is covered by
Title IV of ERISA, and which any Credit Party or ERISA Affiliate maintains,
contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any of them.
"Trademark License" shall mean rights under any written agreement now
owned or hereafter acquired by any Credit Party granting any right to use any
Trademark.
"Trademarks" shall mean all of the following now owned or hereafter
acquired by any Credit Party: (a) all trademarks, trade names, corporate names,
business names, trade styles, service marks, logos, other source or business
identifiers, prints and labels on which any of the foregoing have appeared or
appear, designs and general intangibles of like nature (whether registered or
unregistered), now owned or existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any state or territory thereof, or any other country or any
political subdivision thereof; (b) all reissues, extensions or renewals thereof;
and (c) all goodwill associated with or symbolized by any of the foregoing.
"Unfunded Pension Liability" shall mean, at any time, the aggregate
amount, if any, of the sum of (a) the amount by which the present value of all
accrued benefits under each Title IV Plan exceeds the fair market value of all
assets of such Title IV Plan allocable to such benefits in accordance with Title
IV of ERISA, all determined as of the most recent valuation date for each such
Title IV Plan using the actuarial assumptions for funding purposes in effect
under such Title IV Plan, and (b) for a period of five (5) years following a
transaction which might reasonably be expected to be covered by Section 4069 of
ERISA, the liabilities (whether or not accrued) that could be avoided by any
Credit Party or any ERISA Affiliate as a result of such transaction.
All other undefined terms contained in any of the Operative Documents
shall, unless the context indicates otherwise, have the meanings provided for by
the Code as in effect in the State of New York to the extent the same are used
or defined therein. Unless otherwise specified, references in the Agreement or
any of the Appendices to a Section, Section or clause refer to such Section,
Section or clause as contained in the Agreement. The words "herein," "hereof"
and "hereunder" and other words of similar import refer to the Agreement as a
whole, including all Annexes, Exhibits and Schedules, as the same may from time
to time be amended, restated, modified or supplemented, and not to any
particular section, Section or clause contained in the Agreement or any such
Annex, Exhibit or Schedule.
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words "including", "includes" and
"include" shall be deemed to be followed by the words "without limitation";
references to Persons include their respective successors and assigns (to the
extent and only to the extent permitted by the Operative Documents) or, in the
case of governmental Persons, Persons succeeding to the relevant functions of
such Persons; and all references to statutes and related regulations shall
include any amendments of the same and any successor statutes and regulations.
Whenever any provision in any Operative Document refers to the knowledge (or an
analogous phrase) of any Credit Party, such words are intended to signify that
such Credit Party has actual knowledge or awareness of a particular fact or
circumstance or that such Credit Party, if it had exercised reasonable
diligence, would have known or been aware of such fact or circumstance.
ANNEX B
TO
CREDIT AGREEMENT
----------------
LETTERS OF CREDIT
-----------------
(a) Issuance. Subject to the terms and conditions of the Agreement,
Revolving Credit Agent and Revolving Lenders agree to incur, from time to time
prior to the Commitment Termination Date, upon the request of Borrower
Representative on behalf of the Borrowers and for such Borrowers' account,
Letter of Credit Obligations by causing Letters of Credit to be issued (by a
bank or other legally authorized Person selected by or acceptable to Revolving
Credit Agent in its sole discretion (each, an "L/C Issuer")) for the Borrowers'
account and guaranteed by Agent; provided, however, that if the L/C Issuer is a
Revolving Lender, then such Letters of Credit shall not be guaranteed by
Revolving Credit Agent but rather each Revolving Lender shall, subject to the
terms and conditions hereinafter set forth, purchase (or be deemed to have
purchased) risk participations in all such Letters of Credit issued with the
written consent of Revolving Credit Agent, as more fully described in paragraph
(b)(ii) below. The aggregate amount of all such Letter of Credit Obligations
shall not at any time exceed the least of (i) Two Million Dollars ($2,000,000)
(the "L/C Sublimit"), and (ii) the Maximum Amount less the aggregate outstanding
principal balance of the Revolving Credit Advances, and (iii) the Aggregate
Borrowing Base less the aggregate outstanding principal balance of the Revolving
Credit Advances. No such Letter of Credit shall have an expiry date which is
more than one year following the date of issuance thereof, and neither Revolving
Credit Agent nor Revolving Lenders shall be under any obligation to incur Letter
of Credit Obligations in respect of, or purchase risk participations in, any
Letter of Credit having an expiry date more than one-year from the date of
issuance; provided, however, that Letters of Credit, if so requested by the
Borrowers, will have customary automatic one-year renewals.
(b)(i) Advances Automatic; Participations. In the event that Revolving
Credit Agent or any Revolving Lender shall make any payment on or pursuant to
any Letter of Credit Obligation, such payment shall then be deemed automatically
to constitute a Revolving Credit Advance to the Borrowers under Section 1.1(a)
of the Agreement regardless of whether a Default or Event of Default shall have
occurred and be continuing and notwithstanding the Borrowers' failure to satisfy
the conditions precedent set forth in Section 2, and each Revolving Lender shall
be obligated to pay its Pro Rata Share thereof in accordance with the Agreement.
The failure of any Revolving Lender to make available to Revolving Credit Agent
for Revolving Credit Agent's own account its Pro Rata Share of any such
Revolving Credit Advance or payment by Revolving Credit Agent under or in
respect of a Letter of Credit shall not relieve any other Revolving Lender of
its obligation hereunder to make available to Revolving Credit Agent its Pro
Rata Share thereof, but no Revolving Lender shall be responsible for the failure
of any other Revolving Lender to make available such other Revolving Lender's
Pro Rata Share of any such payment.
(ii) If it shall be illegal or unlawful for the Borrowers to incur
Revolving Credit Advances as contemplated by paragraph (b)(i) above because of
an Event of Default described in Section 8.1(h) or (i) or otherwise or if it
shall be illegal or unlawful for any Revolving Lender to be deemed to have
assumed a ratable share of the reimbursement obligations owed to an L/C Issuer,
or if the L/C Issuer is a Revolving Lender, then (i) immediately and without
further action whatsoever, each Revolving Lender shall be deemed to have
irrevocably and unconditionally purchased from Revolving Credit Agent (or such
L/C Issuer, as the case may be) an undivided interest and participation equal to
such Revolving Lender's Pro Rata Share (based on the Revolving Loan Commitments)
of the Letter of Credit Obligations in respect of all Letters of Credit then
outstanding and (ii) thereafter, immediately upon issuance of any Letter of
Credit, each Revolving Lender shall be deemed to have irrevocably and
unconditionally purchased from Revolving Credit Agent (or such L/C Issuer, as
the case may be) an undivided interest and participation in such Revolving
Lender's Pro Rata Share (based on the Revolving Loan Commitments) of the Letter
of Credit Obligations with respect to such Letter of Credit on the date of such
issuance. Each Revolving Lender shall fund its participation in all payments or
disbursements made under the Letters of Credit in the same manner as provided in
the Agreement with respect to Revolving Credit Advances.
(c) Letter of Credit Cash Collateral. If Borrowers are required to provide
cash collateral for any Letter of Credit Obligations pursuant to the Agreement
prior to the Commitment Termination Date, the Borrowers will pay to Revolving
Credit Agent for the benefit of Revolving Lenders cash or cash equivalents
reasonably acceptable to Revolving Credit Agent ("Cash Equivalents") in an
amount equal to 105% of the maximum amount then available to be drawn under each
applicable Letter of Credit outstanding for the account of the Borrowers. Such
funds or Cash Equivalents shall be held by Revolving Credit Agent in a cash
collateral account (the "Letter of Credit Cash Collateral Account") maintained
at a bank or financial institution reasonably acceptable to Revolving Credit
Agent. The Letter of Credit Cash Collateral Account shall be in the name of the
Borrowers (or the Borrower Representative) and shall be pledged to, and subject
to the control of, Revolving Credit Agent, for the benefit of Revolving Lenders,
in a manner reasonably satisfactory to Agent. Each Borrower hereby pledges and
grants to Revolving Credit Agent, on behalf of Lenders, a security interest in
all such funds and Cash Equivalents held in the Letter of Credit Cash Collateral
Account from time to time and all proceeds thereof, as security for the payment
of all amounts due in respect of the Letter of Credit Obligations and other
Obligations, whether or not then due. The Agreement, including this Annex B,
shall constitute a security agreement under applicable law.
If any Letter of Credit Obligations, whether or not then due and payable,
shall for any reason be outstanding on the Commitment Termination Date,
Borrowers shall either (i) provide cash collateral therefor in the manner
described above, or (ii) cause all such Letters of Credit and guaranties thereof
to be canceled and returned, or (iii) deliver a stand-by letter (or letters) of
credit in guaranty of such Letter of Credit Obligations, which stand-by letter
(or letters) of credit shall be of like tenor and duration (plus thirty (30)
additional days) as, and in an amount equal to 105% of, the aggregate maximum
amount then available to be drawn under, the Letters of Credit to which such
outstanding Letter of Credit Obligations relate and shall be issued by a Person,
and shall be subject to such terms and conditions, as shall be reasonably
satisfactory to Revolving Credit Agent and Agent.
From time to time after funds are deposited in the Letter of Credit Cash
Collateral Account by any Borrower, whether before or after the Commitment
Termination Date, Revolving Credit Agent may apply such funds or Cash
Equivalents then held in the Letter of Credit Cash Collateral Account to the
payment of any amounts, in such order as Revolving Credit Agent may elect, as
shall be or shall become due and payable by the Borrowers to Revolving Credit
Lenders with respect to such Letter of Credit Obligations of the Borrowers and,
upon the satisfaction in full of all Letter of Credit Obligations, and any other
Obligations of the Borrowers then due and payable, so long as no Default or
Event of Default has then occurred and is continuing, any amounts remaining in
the Letter of Credit Cash Collateral Account shall be returned to the Borrowers.
No Borrower nor any Person claiming on behalf of or through any Borrower
shall have any right to withdraw any of the funds or Cash Equivalents held in
the Letter of Credit Cash Collateral Account, except that (i) if the Letter of
Credit Cash Collateral Account was established to cure a borrowing base
deficiency, then upon the cure of such deficiency, and the payment of all other
Obligations then due and payable, so long as no Default or Event of Default has
then occurred and is continuing, any amount remaining in the Letter of Credit
Cash Collateral Account shall be returned to the Borrowers, and (ii) upon the
termination of all Letter of Credit Obligations and the payment of all amounts
payable by Borrowers to Lenders in respect thereof, and upon payment of all
other Obligations then due and owing, so long as no Default or Event of Default
has then occurred and is continuing, any remaining amount shall be paid to
Borrowers or as otherwise required by law, and (iii) if the Letter of Credit
Cash Collateral Account was established as a result of an Event of Default and
such Event of Default has been cured, so long as no other Default or Event of
Default has then occurred and is continuing, any amount remaining in the Letter
of Credit Cash Collateral Account shall be returned to the Borrowers.
(d) Fees and Expenses. Borrowers agree to pay to Revolving Credit Agent
for the ratable benefit of Revolving Lenders, as compensation to such Lenders
for Letter of Credit Obligations incurred hereunder, (x) all costs and expenses
incurred by Revolving Credit Agent or any Revolving Lender on account of such
Letter of Credit Obligations, and (y) for each month during which any Letter of
Credit Obligation shall remain outstanding, a fee (the "Letter of Credit Fee")
in an amount equal to the Applicable L/C Margin multiplied by the maximum amount
available from time to time to be drawn under the applicable Letter of Credit.
Such fee shall be paid to Revolving Credit Agent for the benefit of the
Revolving Lenders in arrears, on the first day of each month. In addition,
Borrowers shall pay to any L/C Issuer, on demand, such fees (including all per
annum fees), charges and expenses of such L/C Issuer in respect of the issuance,
negotiation, acceptance, amendment, transfer and payment of such Letter of
Credit or otherwise payable pursuant to the application and related
documentation under which such Letter of Credit is issued.
(e) Request for Incurrence of Letter of Credit Obligations. Borrower
Representative shall give Agent at least two (2) Business Days prior written
notice requesting the issuance of any Letter of Credit, specifying the date such
Letter of Credit is to be issued, identifying the beneficiary to which such
Letter of Credit Obligation relates and describing the nature of the
transactions proposed to be supported thereby. The notice shall be accompanied
by the form of the Letter of Credit (which shall be acceptable to the L/C
Issuer) to be guarantied and, to the extent not previously delivered to
Revolving Credit Agent, copies of all agreements between any Borrower and the
L/C Issuer pertaining to the issuance of Letters of Credit. Notwithstanding
anything contained herein to the contrary, Letter of Credit applications by
Borrower Representative and approvals by Revolving Agent and the L/C Issuer may
be made and transmitted pursuant to electronic codes and security measures
mutually agreed upon and established by and among Borrower Representative,
Revolving Credit Agent and the L/C Issuer.
(f) Obligation Absolute. The obligation of Borrowers to reimburse
Revolving Credit Agent and Revolving Lenders for payments made with respect to
any Letter of Credit Obligation shall be absolute, unconditional and
irrevocable, without necessity of presentment, demand, protest or other
formalities, and the obligations of each Revolving Lender to make payments to
Revolving Credit Agent with respect to Letters of Credit shall be unconditional
and irrevocable. Such obligations of Borrowers and Revolving Lenders shall be
paid strictly in accordance with the terms hereof under all circumstances
including the following circumstances:
(i) any lack of validity or enforceability of any Letter of Credit
or the Agreement or the other Operative Documents or any other agreement;
(ii) the existence of any claim, set-off, defense or other right
which any Borrower or any of their respective Affiliates or any Lender may
at any time have against a beneficiary or any transferee of any Letter of
Credit (or any Persons or entities for whom any such transferee may be
acting), Revolving Credit Agent, any Lender, or any other Person, whether
in connection with the Agreement, the Letter of Credit, the transactions
contemplated herein or therein or any unrelated transaction (including any
underlying transaction between any Borrower or any of their respective
Affiliates and the beneficiary for which the Letter of Credit was
procured);
(iii) any draft, demand, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) payment by Revolving Credit Agent (except as otherwise
expressly provided in paragraph (g)(ii)(C) below) or any L/C Issuer under
any Letter of Credit or guaranty thereof against presentation of a demand,
draft or certificate or other document which does not comply with the
terms of such Letter of Credit or such guaranty, unless such demand, draft
or certificate is substantially different from the applicable form
specified in such Letter of Credit;
(v) any other circumstance or happening whatsoever, which is similar
to any of the foregoing; or
(vi) the fact that a Default or an Event of Default shall have
occurred and be continuing.
(g) Indemnification; Nature of Lenders' Duties. (i) In addition to amounts
payable as elsewhere provided in the Agreement, Borrowers hereby agree to pay
and to protect, indemnify, and save harmless Revolving Credit Agent and each
Revolving Lender from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including attorneys' fees and
allocated costs of internal counsel) which Revolving Credit Agent or any
Revolving Lender may incur or be subject to as a consequence, direct or
indirect, of (A) the issuance of any Letter of Credit or guaranty thereof, or
(B) the failure of Revolving Credit, Agent, or any Revolving Lender seeking
indemnification or of any L/C Issuer to honor a demand for payment under any
Letter of Credit or guaranty thereof as a result of any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto government or
Governmental Authority, in each case other than to the extent solely as a result
of (i) the gross negligence or willful misconduct of L/C Issuer, Revolving
Credit Agent or such Revolving Lender (as finally determined by a court of
competent jurisdiction), (ii) any dispute between Lenders, or any dispute
between one or more Lenders and the Agent or the Revolving Credit Agent, (iii)
legal proceedings between one or more of the Indemnified Persons and one or more
of the Credit Parties in which the applicable Credit Party or Credit Parties
prevail (based upon the standards of liability set forth herein), and (iv) the
L/C Issuer's failure to make lawful payment under a Letter of Credit after the
presentation to it of a draft strictly complying with the terms and conditions
of the Letter of Credit, unless such failure to make lawful payment was
compelled by an injunction or otherwise prohibited or impossible.
(ii) As between Revolving Credit Agent and any Revolving Lender and
Borrowers, except as expressly excluded from the indemnifications set forth
above, Borrowers assume all risks of the acts and omissions of, or misuse of any
Letter of Credit by beneficiaries of any Letter of Credit. In furtherance and
not in limitation of the foregoing, to the fullest extent permitted by law
neither Revolving Credit Agent nor any Revolving Lender shall be responsible,
except as expressly excluded from the indemnifications set forth above,: (A) for
the form, validity, sufficiency, accuracy, genuineness or legal effect of any
document issued by any party in connection with the application for and issuance
of any Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (B) for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (C) for failure of the beneficiary of any
Letter of Credit to comply fully with conditions required in order to demand
payment under such Letter of Credit; provided that, in the case of any payment
by Agent under any Letter of Credit or guaranty thereof, Revolving Credit Agent
shall be liable to the extent such payment was made solely as a result of its
gross negligence or willful misconduct (as finally determined by a court of
competent jurisdiction) in determining that the demand for payment under such
Letter of Credit or guaranty thereof complies on its face with any applicable
requirements for a demand for payment under such Letter of Credit or guaranty
thereof; (D) for errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether
or not they be in cipher; (E) for errors in interpretation of technical terms;
(F) for any loss or delay in the transmission or otherwise of any document
required in order to make a payment under any Letter of Credit or guaranty
thereof or of the proceeds thereof; (G) for the credit of the proceeds of any
drawing under any Letter of Credit or guaranty thereof; and (H) for any
consequences arising from causes beyond the control of Revolving Credit Agent or
any Revolving Lender. None of the above shall affect, impair, or prevent the
vesting of any of Revolving Credit Agent's or any Revolving Lender's rights or
powers hereunder or under the Agreement.
(iii) Nothing contained herein shall be deemed to limit or to expand
any waivers, covenants or indemnities made by Borrowers in favor of any L/C
Issuer in any letter of credit application, reimbursement agreement or similar
document, instrument or agreement between or among Borrowers and such L/C
Issuer.
DRAFT
ANNEX C (SECTION 1.7)
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TO
CREDIT AGREEMENT
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CASH MANAGEMENT SYSTEMS
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Each Borrower shall establish and maintain the Cash Management Systems
described below:
(a) Borrowers shall, subject to paragraph (d) below, (i) establish one or
more Blocked Accounts (each, a "Blocked Account") at one of the banks set forth
on Disclosure Schedule 3.19, and shall request in writing and otherwise take
such reasonable steps to ensure that all Account Debtors forward payment
directly to a Blocked Account, and (ii) deposit promptly, and in any event no
later than the first Business Day after the date of receipt thereof, all cash,
checks, drafts or other similar items of payment relating to or constituting
payments made in respect of any and all Collateral (whether or not otherwise
delivered to a Blocked Account) into the Blocked Account bank (the "Blocked
Account Bank").
(b) Revolving Credit Agent shall established a concentration account in
its name, on behalf of the Borrowers (the "Concentration Account") at the bank
that shall be designated as the concentration account bank ("Concentration
Account Bank") for Revolving Credit Agent on Disclosure Schedule 3.19.
(c) The Concentration Account Bank and each Blocked Account Bank, shall
enter into a blocked account agreement with Revolving Credit Agent, for the
benefit of Lenders, and the applicable Borrowers thereof, in form and substance
reasonably acceptable to Revolving Credit Agent, which shall become operative on
or prior to the Closing Date. The blocked account agreement shall provide, among
other things, that (i) all items of payment deposited in such account and
proceeds thereof deposited in the Concentration Account are held by such bank as
agent or bailee-in-possession for Revolving Credit Agent, on behalf of Lenders,
(ii) the bank executing such agreement has no rights of setoff or recoupment or
any other claim against such account, as the case may be, other than for payment
of its service fees and other charges directly related to the administration of
such account and for returned checks or other items of payment, and (iii) from
and after the Closing Date (A) with respect to each bank at which a Blocked
Account is located, such bank agrees to forward immediately all collected
amounts in each Blocked Account maintained by such Blocked Account Bank to the
Concentration Account Bank and to commence the process of daily sweeps from the
Blocked Accounts into the Concentration Account. The Borrowers shall not
accumulate or maintain cash in any accounts other than Blocked Accounts except
for (a) amounts not in excess of $600,000 in the aggregate at any one time in
the Borrowers' payroll account(s), from which no amounts may be withdrawn except
for the ACH funding of tax and payroll obligations, and (b) amounts not in
excess of $15,000 at any one time per Borrower or $100,000 at any one time in
the aggregate for all Borrowers, held in xxxxx cash accounts to meet minimum
balance and minimal operational requirements.
(d) So long as no Event of Default has occurred and is continuing,
Borrowers may amend Disclosure Schedule 3.19 to replace any Blocked Account Bank
or replace or amend any Disbursement Account; provided, however, that prior to
the time of the opening of any Blocked Account or Disbursement Account, the
applicable Borrower and such bank shall have executed and delivered to Revolving
Credit Agent a blocked account agreement, in form and substance reasonably
satisfactory to Revolving Credit Agent. Borrowers shall close any of their
accounts (and establish replacement accounts in accordance with the foregoing
sentence) promptly and in any event within thirty (30) days of notice from
Revolving Credit Agent that the creditworthiness of any bank holding an account
is no longer acceptable in Revolving Credit Agent's reasonable judgment, or as
promptly as practicable and in any event within sixty (60) days of notice from
Revolving Credit Agent that the operating performance, funds transfer and/or
availability procedures with respect to the Blocked Accounts of the bank holding
such accounts is no longer acceptable in Revolving Credit Agent's reasonable
judgment.
(e) The Blocked Account, Disbursement Accounts and the Concentration
Account shall be cash collateral accounts, with all cash, checks and other
similar items of payment in such accounts securing payment of the Loans and all
other Obligations, and in which each Borrower shall have granted a Lien to
Revolving Credit Agent, on behalf of the Lenders, pursuant to the Deposit Pledge
Agreement.
(f) All amounts deposited in the Concentration Account shall be deemed
received by Revolving Credit Agent in accordance with Section 1.9 of the
Agreement and shall be applied (and allocated) by Revolving Credit Agent in
accordance with Section 1.10 of the Agreement. In no event shall any amount be
so applied unless and until such amount shall have been credited in immediately
available funds to the Concentration Account.
(g) Each Borrower may maintain, in its name, an account (each a
"Disbursement Account" and collectively, the "Disbursement Accounts") at a bank
reasonably acceptable to Revolving Credit Agent into which Revolving Credit
Agent shall, from time to time, deposit proceeds of Revolving Credit Advances
made to such Borrower pursuant to Section 1.1 for use by such Borrower solely in
accordance with the provisions of Section 1.3.
(h) Each Borrower shall (i) hold in trust for Revolving Credit Agent, for
the benefit of the Lenders, all checks, cash and other items of payment received
by such Borrower, and (ii) within one (1) Business Day after receipt by such
Borrower of any checks, cash or other items or payment, deposit the same into
the Borrowers' Blocked Accounts. Each Borrower acknowledges and agrees that all
cash, checks, or items of payment consisting of proceeds of collateral are
subject to a lien for the benefit of the Lenders, and all proceeds of the sale
or other disposition of any collateral shall be deposited directly into a
Blocked Account except that as provided in Section (c) above.
ANNEX D (SECTION 2.1(A))
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TO
CREDIT AGREEMENT
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SCHEDULE OF ADDITIONAL CLOSING DOCUMENTS
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In addition to, and not in limitation of, the conditions described in Section
2.1 of the Agreement, pursuant to Section 2.1(a), the following items must be
received by Agent in form and substance satisfactory to Agent on or prior to the
Closing Date (each capitalized term used but not otherwise defined herein shall
have the meaning ascribed thereto in Annex A to the Agreement):
A. Appendices. All Appendices to the Agreement, in form and substance
satisfactory to Agent.
B. Revolving Notes and Term Notes. Duly executed originals of the
Revolving Notes and Term Notes dated the Closing Date.
C. Security Agreement. Duly executed originals of the Security Agreement,
dated the Closing Date, and all instruments, documents and agreements executed
pursuant thereto.
D. Insurance. Satisfactory evidence that the insurance policies required
by Section 5.4 are in full force and effect, together with appropriate evidence
showing loss payable and/or additional insured clauses or endorsements, as
requested by Agent, in favor of Agent, on behalf of Lenders.
E. Security Interests and Code Filings.
(a) Evidence satisfactory to Agent and Revolving Credit Agent that
Agent and Revolving Credit Agent (for the benefit of the Lenders) have a valid
and perfected first priority security interest in the Collateral (subject to
Permitted Encumbrances and except to the extent that the Lenders and the Agent,
pursuant to this Agreement and the other Operative Documents have specifically
permitted the Credit Parties not to take certain specified action necessary to
perfect such security interest), including (i) such documents duly executed by
each Credit Party (including financing statements under the Code and other
applicable documents under the laws of any jurisdiction with respect to the
perfection of Liens) as Agent or Revolving Credit Agent may request in order to
perfect its security interests in the Collateral and (ii) copies of Code search
reports listing all effective financing statements that name any Credit Party as
debtor, together with copies of such financing statements, none of which shall
cover the Collateral, except for those relating to the Prior Lender Obligations
(all of which shall be terminated on the Closing Date) and Permitted
Encumbrances.
(b) Evidence satisfactory to Agent, including copies, of all UCC-1
and other financing statements filed in favor of any Credit Party with respect
to each location, if any, at which Inventory may be consigned.
(c) Control Letters from (i) all issuers of uncertificated
securities and financial assets held by each Borrower, (ii) all securities
intermediaries with respect to all securities accounts and securities
entitlements of each Borrower, and (iii) all futures commission agents and
clearing houses with respect to all commodities contracts and commodities
accounts held by any Borrower.
F. Payoff Letter; Termination Statements. Copies of a duly executed payoff
letter, in form and substance reasonably satisfactory to Agent, by and between
all parties to the Prior Lender loan documents evidencing repayment in full of
all Prior Lender Obligations, together with (a) UCC-3 or other appropriate
termination statements, in form and substance satisfactory to Agent, manually
signed by the Prior Lender releasing all Liens of Prior Lender upon any of the
personal property of each Credit Party, and (b) termination of all blocked
account agreements, bank agency agreements or other similar agreements or
arrangements or arrangements in favor of Prior Lender or relating to the Prior
Lender Obligations.
G. Intellectual Property Security Agreements. Duly executed originals of
Trademark Security Agreements, Copyright Security Agreements and Patent Security
Agreements, each dated the Closing Date and signed by each Credit Party which
owns Trademarks, Copyrights and/or Patents, as applicable, all in form and
substance satisfactory to Agent, together with all instruments, documents and
agreements executed pursuant thereto.
H. Holdings Guaranty. Duly executed originals of the Holdings Guaranty,
dated the Closing Date, and all documents, instruments and agreements executed
pursuant thereto.
I. Initial Borrowing Base Certificate. Duly executed originals of an
initial Borrowing Base Certificate from the Borrower Representative, dated the
Closing Date, reflecting information concerning Eligible Accounts and Eligible
Inventory of the Borrowers as a whole as of (i) with respect to Inventory,
December 31, 2001, and (ii) with respect to Accounts, a date not more than seven
(7) days prior to the Closing Date.
J. Initial Notice of Revolving Credit Advance. Duly executed originals of
a Notice of Revolving Credit Advance, dated the Closing Date, with respect to
the initial Revolving Credit Advance to be requested by Borrower Representative
on the Closing Date.
K. Letter of Direction. Duly executed originals of a letter of direction
from Borrower Representative addressed to Agent, on behalf of itself and
Lenders, with respect to the disbursement on the Closing Date of the proceeds of
the Term Loan, the Master Lease, and the initial Revolving Credit Advance.
L. Cash Management System; Blocked Account Agreements. Evidence
satisfactory to Agent that, as of the Closing Date, Cash Management Systems
complying with Annex C to the Agreement have been established and are currently
being maintained in the manner set forth in such Annex C, together with copies
of duly executed blocked account and lock box agreements, reasonably
satisfactory to Agent, with the banks as required by Annex C.
M. Charter and Good Standing. For each Credit Party, such Person's (a)
charter and all amendments thereto, (b) good standing certificates (including
verification of tax status if available) in its state of incorporation and (c)
good standing certificates (including verification of tax status) and
certificates of qualification to conduct business in each jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification (except where the failure to be so qualified would not result in a
material adverse effect upon the properties, business, or financial condition of
such Credit Party), each dated a recent date prior to the Closing Date and
certified by the applicable Secretary of State or other authorized Governmental
Authority.
N. Bylaws and Resolutions. For each Credit Party, (a) such Person's
bylaws, together with all amendments thereto and (b) resolutions of such
Person's Board of Directors, and stockholders, if necessary, approving and
authorizing the execution, delivery and performance of the Operative Documents
to which such Person is a party and the transactions to be consummated in
connection therewith, each certified as of the Closing Date by such Person's
corporate secretary or an assistant secretary as being in full force and effect
without any modification or amendment.
O. Incumbency Certificates. For each Credit Party, signature and
incumbency certificates of the officers of each such Person executing any of the
Operative Documents, certified as of the Closing Date by such Person's corporate
secretary or an assistant secretary as being true, accurate, correct and
complete.
P. Opinions of Counsel. Duly executed originals of opinions of counsel for
the Credit Parties, together with any local counsel opinions requested by Agent,
each in form and substance reasonably satisfactory to Agent and its counsel,
dated the Closing Date, and each accompanied by a letter addressed to such
counsel from the Credit Parties, authorizing and directing such counsel to
address its opinion to Agent, on behalf of Lenders, and to include in such
opinion an express statement to the effect that Agent and Lenders are authorized
to rely on such opinion.
Q. Pledge Agreement. Duly executed originals of the Pledge Agreement
accompanied by share certificates representing all of the outstanding Stock
being pledged pursuant to such Pledge Agreement and stock powers for such share
certificates executed in blank.
R. Accountants' Letters. A letter from the Credit Parties to their
independent auditors authorizing the independent certified public accountants of
the Credit Parties to communicate with Agent and Lenders in accordance with
Section 4.2.
S. Solvency Certificate. The Credit Parties shall deliver to Agent for the
benefit of Lenders a solvency certificate reasonably satisfactory in form and
substance to the Agent and executed by a Responsible Officer of the Credit
Parties.
T. Fee Letter. Duly executed originals of the Fee Letter.
U. Officer's Certificate. Agent shall have received duly executed
originals of a certificate of a Responsible Officer of each Borrower, dated the
Closing Date, stating that there has been, since the last audited financial
statements, other than as set forth in the third-quarter 10-Q filing with the
Securities and Exchange Commission with respect to the period ending September
30, 2001 or as otherwise expressly reported in writing to the Agent and the
Lenders (including, without limitation, in this Agreement and the other
Operative Documents, no material adverse change in the business, financial or
other condition of the Borrowers, taken as a whole, the industries in which the
Borrowers operate, the Collateral, or in the prospects or projections of the
Borrowers, taken as a whole, (ii) no litigation commenced which, if successful,
would have a Material Adverse Effect, and (iii) no material increase in the
liabilities, liquidated or contingent, of the Borrowers taken as a whole, or a
material decrease in the assets of the Borrowers taken as a whole.
V. Waivers. Agent, on behalf of Lenders, shall have received landlord
waivers and consents, bailee letters and mortgagee agreements in form and
substance satisfactory to Agent, in each case as required pursuant to Section
5.9.
W. Mortgages. Mortgages covering all of the owned Real Estate (the
"Mortgaged Properties") together with the related items described in Section
5.11, and, to the extent required by the Lenders, Mortgages covering certain
leased Real Estate; provided, however, that Mortgages received with respect to
leasehold properties located in the State of New York shall not be required to
be recorded until the Requisite Lenders request such recordation in accordance
with Section 5.12.
X. Assignment of Leases. Agent and Lenders shall have received any and all
assignments of leases, all in form and substance reasonably satisfactory to
Agent, in its sole discretion, as Agent shall have deemed necessary or
appropriate.
Y. Subordination, Non-Disturbance and Attornment Agreements. Agent and
Lenders shall have received any and all subordination, non-disturbance and
attornment agreements, all in form and substance reasonably satisfactory to
Agent, in its sole discretion, as Agent shall have deemed necessary or
appropriate.
Z. Ground Lease. Agent shall receive an executed copy of any ground leases
between landlord and tenant, as Agent shall have deemed necessary or
appropriate.
AA. Subordination and Intercreditor Agreements. Agent and Lenders shall
have received any and all subordination and/or intercreditor agreements, all in
form and substance reasonably satisfactory to Agent, in its sole discretion, as
Agent shall have deemed necessary or appropriate with respect to any
Indebtedness of any Credit Party.
BB. Environmental Reports. Agent shall have received Phase I Environmental
Site Assessment Reports on all of the Real Estate, all in form and substance
satisfactory to Agent, in its sole discretion; and Agent shall have further
received such environmental review and audit reports, including Phase II
reports, with respect to the Real Estate of any Credit Party as Agent shall have
requested, and Agent shall be satisfied, in its sole discretion, with the
contents of all such environmental reports.
CC. Appraisals. Agent shall have received appraisals as to all Equipment
and as to each parcel of Real Estate owned by each Borrower of the Mortgaged
Properties, each of which shall be in form and substance satisfactory to Agent.
DD. Financials; Financial Condition. Agent shall have received Borrowers'
final Financial Statements for their Fiscal Quarter ended September 30, 2001,
certified by a Responsible Officer of the Credit Parties. Each Borrower shall
have provided Agent with its current operating statements, a consolidated and
consolidating balance sheet and statement of cash flows, and Projections in each
case in form and substance satisfactory to Agent, and Agent shall be satisfied,
in its sole discretion, with all of the foregoing. Agent shall have further
received a certificate of a Responsible Officer of each Borrower, based on such
Projections, to the effect that the Projections are based upon estimates and
assumptions stated therein, all of which such Borrower believes to be reasonable
and fair in light of current conditions and current facts known to such Borrower
and, as of the Closing Date, reflect such Borrower's good faith and reasonable
estimates of its future financial performance.
EE. Manager's Agreements. A subordination agreement or other agreement of
undertaking satisfactory to the Agent and the Lenders, executed by each
non-employee equity holder (or Affiliate of any equity holder) providing
management or consulting services to any of the Credit Parties, confirming (i)
the restrictions set forth in Section 6.4(c) and (ii) the subordination of all
amounts owed to such managers to the repayment of the Obligations.
FF. Other Documents. Such other certificates, documents and agreements
respecting any Credit Party as Agent may, in its sole discretion, request.
ANNEX E (SECTION 4.1(A))
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TO
CREDIT AGREEMENT
----------------
FINANCIAL STATEMENTS AND PROJECTIONS -- REPORTING
-------------------------------------------------
Borrowers shall deliver or cause to be delivered to Agent and Lenders the
following:
(a) Monthly Financials. Within forty-five (45) days after the end of each
Fiscal Month, financial information regarding Borrowers and their Subsidiaries,
certified by a Responsible Officer of Borrower Representative, consisting of
consolidated and consolidating (i) unaudited balance sheets as of the close of
such Fiscal Month and the related statements of income and cash flow for that
portion of the Fiscal Year ending as of the close of such Fiscal Month; (ii)
unaudited statements of income and cash flows for such Fiscal Month, setting
forth in comparative form the figures for the corresponding period in the prior
year and the figures contained in the Projections for such Fiscal Year, all
prepared in accordance with GAAP (subject to normal year-end adjustments and the
absence of footnotes); and (iii) a summary of the outstanding balance of all
Intercompany Notes as of the last day of that Fiscal Month. Such financial
information shall be accompanied by the certificate of a Responsible Officer of
Borrower Representative that (x) such financial information presents fairly in
accordance with GAAP (subject to normal year-end adjustments and the absence of
footnotes) the financial position and results of operations of Borrowers and
their Subsidiaries, on a consolidated and consolidating basis, in each case as
at the end of such month and for the period then ended and (y) there was no
Default or Event of Default in existence as of such time or, if a Default or
Event of Default shall have occurred and be continuing, describing the nature
thereof and all efforts undertaken to cure such Default or Event of Default; In
addition, Borrowers shall deliver to Agent and Lenders, within forty-five (45)
days after the end of each month, a management discussion and analysis which
includes a comparison to budget for that month and a comparison of performance
for that month to the corresponding period in the prior year.
(b) Quarterly Financials. Within forty-five (45) days after the end of
each Fiscal Quarter, consolidated and consolidating financial information
regarding Borrowers and their Subsidiaries, certified by a Responsible Officer
of Borrower Representative, including (i) unaudited balance sheets as of the
close of such Fiscal Quarter and the related statements of income and cash flow
for that portion of the Fiscal Year ending as of the close of such Fiscal
Quarter and (ii) unaudited statements of income and cash flows for such Fiscal
Quarter, in each case setting forth in comparative form the figures for the
corresponding period in the prior year and the figures contained in the
Projections for such Fiscal Year, all prepared in accordance with GAAP (subject
to normal year-end adjustments and the absence of footnotes). Such financial
information shall be accompanied by (A) a statement in reasonable detail (each,
a "Compliance Certificate" showing the calculations used in determining
compliance with each of the financial covenants set forth on Annex G which is
tested on a quarterly basis and (B) the certification of a Responsible Officer
of Borrower Representative that (i) such financial information presents fairly
in accordance with GAAP (subject to normal year-end adjustments and the absence
of footnotes) the financial position and results of operations of Borrowers and
their Subsidiaries, on both a consolidated and consolidating basis, as at the
end of such Fiscal Quarter and for the period then ended, (ii) there was no
Default or Event of Default in existence as of such time or, if a Default or
Event of Default shall have occurred and be continuing, describing the nature
thereof and all efforts undertaken to cure such Default or Event of Default. In
addition, Borrowers shall deliver to Agent and Lenders, within forty-five (45)
days after the end of each Fiscal Quarter, a management discussion and analysis
which includes a comparison to budget for that Fiscal Quarter and a comparison
of performance for that Fiscal Quarter to the corresponding period in the prior
year;
(c) Operating Plan. As soon as available, but not later than February 15,
2002 and February 1 of each Fiscal Year thereafter, an annual operating plan for
each Borrower, approved by the Board of Directors of such Borrower, for the
following year, which will include a statement of all of the material
assumptions on which such plan is based, will include monthly balance sheets and
a monthly budget for the following year and will integrate sales, gross profits,
operating expenses, operating profit, cash flow projections and Borrowing
Availability projections all prepared on the same basis and in similar detail as
that on which operating results are reported (and in the case of cash flow
projections, representing management's good faith estimates of future financial
performance based on historical performance), and including plans for personnel,
Capital Expenditures and facilities;
(d) Annual Audited Financials. Within ninety (90) days after the end of
each Fiscal Year, audited Financial Statements for Borrowers and their
Subsidiaries on an audited consolidated and an unaudited consolidating basis,
consisting of balance sheets and statements of income and retained earnings and
cash flows, setting forth in comparative form in each case the figures for the
previous Fiscal Year, which Financial Statements shall be prepared in accordance
with GAAP, certified without qualification, by an independent certified public
accounting firm of national standing or otherwise acceptable to Agent. Such
Financial Statements shall be accompanied by (i) a statement prepared in
reasonable detail showing the calculations used in determining compliance with
each of the financial covenants set forth on Annex G, (ii) a report from such
accounting firm to the effect that, in connection with their audit examination,
nothing has come to their attention to cause them to believe that a Default or
Event of Default has occurred (or specifying those Defaults and Events of
Default that they became aware of), it being understood that such audit
examination extended only to accounting matters and that no special
investigation was made with respect to the existence of Defaults or Events of
Default, (iii) the annual letters to such accountants in connection with their
audit examination detailing contingent liabilities and material litigation
matters, and (iv) the certification of a Responsible Officer of Borrowers that
all such Financial Statements present fairly in accordance with GAAP the
financial position and results of operations of Borrowers and their Subsidiaries
on a consolidated and consolidating basis, as at the end of such year and for
the period then ended, and that there was no Default or Event of Default in
existence as of such time or, if a Default or Event of Default shall have
occurred and be continuing, describing the nature thereof and all efforts
undertaken to cure such Default or Event of Default;
(e) Management Letters. Within five (5) Business Days after receipt
thereof by any Credit Party, copies of all final management letters received by
such Credit Party from its independent certified public accountants;
(f) Default Notices. As soon as practicable, and in any event within five
(5) Business Days after an executive officer of any Borrower has actual
knowledge of the existence of any Default, Event of Default or other event which
has had a Material Adverse Effect, telephonic or telecopied notice specifying
the nature of such Default or Event of Default or other event, including the
anticipated effect thereof, which notice, if given telephonically, shall be
promptly confirmed in writing on the next Business Day;
(g) SEC Filings and Press Releases. Promptly upon their becoming
available, copies of: (i) all Financial Statements, reports, notices and proxy
statements made publicly available by any Credit Party to its security holders;
(ii) all regular and periodic reports and all registration statements and
prospectuses, if any, filed by any Credit Party with any securities exchange or
with the Securities and Exchange Commission or any governmental or private
regulatory authority; and (iii) all press releases and other statements made
available by any Credit Party to the public concerning material changes or
developments in the business of any such Person;
(h) Subordinated Debt and Equity Notices. As soon as practicable, copies
of all material written notices given or received by any Credit Party with
respect to any Subordinated Debt or Stock of such Person, and, within two (2)
Business Days after any Credit Party obtains knowledge of any matured or
unmatured event of default with respect to any Subordinated Debt, notice of such
event of default;
(i) Supplemental Schedules. Supplemental disclosures, if any, required by
Section 5.6 of the Agreement;
(j) Litigation. Promptly upon the commencement thereof, but in any event,
not later than 5 days after service of process with respect thereto on, or the
obtaining of knowledge thereof by, any Credit Party, notice of any Litigation
commenced or threatened against any Credit Party that (i) seeks damages in
excess of $250,000, (ii) seeks injunctive relief, (iii) is asserted or
instituted against any Plan, its fiduciaries or its assets or against any Credit
Party or ERISA Affiliate in connection with any Plan, (iv) alleges criminal
misconduct by any Credit Party, (v) alleges the violation of any law regarding,
or seeks remedies in connection with, any Environmental Liabilities or (vi)
involves any product recall;
(k) Insurance Notices. Disclosure of losses or casualties required by
Section 5.4 of the Agreement;
(l) Lease Default Notices. Copies of (i) any and all default notices
received under or with respect to any leased location or public warehouse where
Collateral is located, and (ii) such other notices or documents as Agent may
request in its reasonable discretion; and
(m) Lease Amendments. Copies of all material amendments to real estate
leases.
(n) ERISA Notices. (i) as soon as possible and in any event within 10 days
after any Credit Party or any ERISA Affiliate thereof knows or has reason to
know that (A) any ERISA Event with respect to any Plan has occurred or (B) an
accumulated funding deficiency has been incurred or an application has been made
to the Secretary of the Treasury for a waiver or modification of the minimum
funding standard (including installment payments) or an extension of any
amortization period under Section 412 of the Internal Revenue Code with respect
to a Plan, a statement of a senior officer of the Borrower Representative
setting forth the details of such occurrence and the action, if any, which such
Credit Party or such ERISA Affiliate proposes to take with respect thereto, (ii)
promptly and in any event within three days after receipt thereof by any Credit
Party or any ERISA Affiliate thereof from the PBGC, copies of each notice
received by any Credit Party or any ERISA Affiliate thereof of the PBGC's
intention to terminate any Plan or to have a trustee appointed to administer any
Plan, (iii) promptly and in any event within 10 days after the filing thereof
with the Internal Revenue Service if requested by the Agent, copies of each
Schedule B (Actuarial Information) to the annual report (Form 5500 Series) with
respect to each Plan and Multiemployer Plan, (iv) promptly and in any event
within 10 days after any Credit Party or any ERISA Affiliate thereof knows or
has reason to know that a required installment within the meaning of Section 412
of the Internal Revenue Code has not been made when due with respect to a Plan,
(v) promptly and in any event within 3 days after receipt thereof by any Credit
Party or any ERISA Affiliate thereof from a sponsor of a Multiemployer Plan or
from the PBGC, a copy of each notice received by any Credit Party or any ERISA
Affiliate thereof concerning the imposition or amount of withdrawal liability
under Section 4202 of ERISA or indicating that such Multiemployer Plan may enter
reorganization status under Section 4241 of ERISA, and (vi) promptly and in any
event within 10 days after any Credit Party or any ERISA Affiliate thereof sends
notice of a plant closing or mass layoff (as defined in WARN) to employees,
copies of each such notice sent by such Credit Party or such ERISA Affiliate
thereof.
(o) Material Contracts. As soon as possible and in any event within 5 days
after execution, receipt or delivery thereof, copies of any material notices
that any Credit Party executes or receives in connection with any Material
Contract.
(p) Governmental Investigations. Unless precluded from doing so by
regulation or agreement with a Governmental Authority, promptly after submission
to any Governmental Authority, all documents and information furnished to such
Governmental Authority in connection with any investigation of any Credit Party
other than routine inquires by such Governmental Authority.
(q) Enterprise Valuation Report. As soon as practicable after request by
any Lender, an enterprise valuation report prepared by an appraiser satisfactory
to the Lenders; provided, however, that so long as no Event of Default has
occurred and is continuing, the Borrowers shall not be required to pay for more
than one enterprise valuation report (whether for one or more than one of the
Credit Parties) per year.
(r) Other Documents. Such other financial and other information respecting
any Credit Party's business or financial condition as Agent or any Lender shall,
from time to time, reasonably request.
ANNEX F (SECTION 4.1(B))
--------------
TO
CREDIT AGREEMENT
----------------
COLLATERAL REPORTS
------------------
Borrowers shall deliver or cause to be delivered the following:
(a) To Revolving Credit Agent and each Lender, upon its request, and in no
event less frequently than fifteen (15) days after the end of each Fiscal Month,
each of the following:
(i) a Borrowing Base Certificate with respect to each Borrower, in
each case accompanied by such supporting detail and documentation as shall
be requested by Revolving Credit Agent in its reasonable discretion;
(ii) with respect to each Borrower, a summary of Inventory by
location and type with a supporting perpetual Inventory report, in each
case accompanied by such supporting detail and documentation as shall be
requested by Revolving Credit Agent in its reasonable discretion; and
(iii) with respect to each Borrower, a monthly trial balance showing
Accounts outstanding aged from invoice due date as follows: 1 to 30 days,
31 to 60 days, 61 to 90 days and 91 days or more, accompanied by such
supporting detail and documentation as shall be requested by Revolving
Credit Agent in its reasonable discretion.
(b) To Revolving Credit Agent and each Lender, on a weekly basis or at
such more frequent intervals as Revolving Credit Agent may request from time to
time, collateral reports with respect to each Borrower, including all additions
and reductions (cash and non-cash) with respect to Accounts of such Borrower, in
each case accompanied by such supporting detail and documentation as shall be
requested by Revolving Credit Agent in its reasonable discretion;
(c) To Revolving Credit Agent and each Lender, at the time of delivery of
each of the monthly Financial Statements delivered pursuant to Annex E, a
reconciliation of the Accounts trial balance and month-end Inventory reports of
each Borrower to such Borrower's general ledger and monthly Financial Statements
delivered pursuant to such Annex E, in each case accompanied by such supporting
detail and documentation as shall be requested by Revolving Credit Agent in its
reasonable discretion;
(d) To Revolving Credit Agent and each Lender, at the time of delivery of
each of the quarterly or annual Financial Statements delivered pursuant to Annex
E, (i) a listing of government contracts of each Borrower subject to the Federal
Assignment of Claims Act of 1940; and (ii) a list of any applications for the
registration of any Patent, Trademark or Copyright with the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency which any Credit Party thereof has filed in the prior Fiscal Quarter;
(e) Each Borrower, at its own expense, shall deliver to Revolving Credit
Agent and each Lender the results of each physical verification, if any, which
such Borrower or any of its Subsidiaries may in their discretion have made, or
caused any other Person to have made on their behalf, of all or any portion of
their Inventory (and, if an Event of Default shall have occurred and be
continuing, each Borrower shall, upon the request of Revolving Credit Agent,
conduct, and deliver the results of, such physical verifications as Revolving
Credit Agent may require);
(f) Each Borrower, at its own expense, shall deliver to Revolving Credit
Agent and Agent and each Lender such appraisals of its assets as Revolving
Credit Agent or Agent may request at any time after the occurrence and during
the continuance of an Event of Default, such appraisals to be conducted by an
appraiser, and in form and substance, reasonably satisfactory to Agent and
Revolving Credit Agent and each Lender; and
(g) The Borrower, at its own expense, shall deliver to the Revolving
Credit Agent, the Agent, and the Lenders such other reports, statements and
reconciliations with respect to the Borrowing Base or Collateral of any or all
Credit Parties as Agent or Revolving Credit Agent or any Lender shall from time
to time request in its reasonable discretion.
(h) If the Borrowers move Inventory in the ordinary course of business to
locations for which the Borrowers have not obtained the requisite mortgagee
agreements, landlord's agreement, and/or bailee letters, if the total value of
Eligible Inventory maintained at such locations exceeds the amount of the
deductions for Eligible Inventory maintained in such locations, as reflected on
the most recent Borrowing Base Certificate delivered to the Revolving Credit
Agent, the Borrower shall, on or prior to the date of such movement of
Inventory, deliver a new Borrowing Base Certificate to the Revolving Credit
Agent indicating such movement.
ANNEX G (SECTION 6.10)
------------
TO
CREDIT AGREEMENT
----------------
FINANCIAL COVENANTS
-------------------
Borrowers shall not breach or fail to comply with any of the following
financial covenants, each of which shall be calculated in accordance with GAAP
consistently applied:
(a) Maximum Capital Expenditures. Borrowers and their Subsidiaries on a
consolidated basis shall not make Capital Expenditures that exceed (i) for the
Fiscal Year ending December 31, 2002, $5,000,000 and (ii) for each fiscal year
thereafter, the sum of (1) $5,000,000 plus (2) 35% of the amount, up to
$2,500,000, by which the Borrowers' Consolidated EBITDA for the prior year
exceeded $27,500,000, plus (3) 50% of the amount by which the Borrowers'
Consolidated EBITDA for the prior year exceeded $30,000,000.
(b) Minimum Consolidated Fixed Charge Coverage Ratio. Borrowers and their
Subsidiaries shall have, at the end of each Fiscal Quarter set forth below, a
Consolidated Fixed Charge Coverage Ratio for the Measurement Period then ended
of not less than the following:
.75x for the Fiscal Quarter ending March 31, 2002;
.75x for the Fiscal Quarter ending June 30, 2002;
.80x for the Fiscal Quarter ending September 30, 2002;
.90x for the Fiscal Quarter ending December 31, 2002;
1.00x for the Fiscal Quarter ending March 31, 2003; and
1.10x for each Fiscal Quarter ending thereafter.
(c) Maximum Consolidated Senior Leverage Ratio. Borrowers and their
Subsidiaries shall have, at the end of each Fiscal Quarter set forth below, a
Consolidated Senior Leverage Ratio of not more than the following:
3.00x for the Fiscal Quarter ending December 31, 2001;
3.00x for the Fiscal Quarter ending March 31, 2002;
3.25x for the Fiscal Quarter ending June 30, 2002;
3.25x for the Fiscal Quarter ending September 30, 2002;
2.75x for the Fiscal Quarter ending December 31, 2002;
2.75x for the Fiscal Quarter ending March 31, 2003; and
2.50x for each Fiscal Quarter ending thereafter.
(d) Minimum Consolidated Senior Interest Coverage Ratio. Borrowers and
their Subsidiaries shall have at the end of each Fiscal Quarter set forth below,
a Consolidated Senior Interest Coverage Ratio for the applicable Measurement
Period of not less than the following:
2.75x for the Fiscal Quarter ending March 31, 2002;
2.75x for the Fiscal Quarter ending June 30, 2002; and
3.00 x for each Fiscal Quarter ending thereafter.
(e) Minimum Consolidated Total Interest Coverage Ratio. Borrowers and
their Subsidiaries shall have at the end of each Fiscal Quarter set forth below,
a Consolidated Interest Coverage Ratio for the Measurement Period then ended of
not less than the following:
.85x for the Fiscal Quarter ending March 31, 2002;
.85x for the Fiscal Quarter ending June 30, 2002;
1.00x for the Fiscal Quarter ending September 30, 2002;
1.15x for the Fiscal Quarter ending December 31, 2002;
1.15x for the Fiscal Quarter ending March 31, 2003; and
1.25x for each Fiscal Quarter ending thereafter.
For the purposes of the calculation of the Financial Covenants set forth in this
Annex G, the "EBITDA" shall be subject to the following adjustments for the
following periods:
Quarter 1, 2001 $922,000
Quarter 2, 2001 $174,000
Quarter 3, 2001 $10,085,000
Quarter 4, 2001 $427,000
Unless otherwise specifically provided herein, any accounting term used in
the Agreement shall have the meaning customarily given such term in accordance
with GAAP, and all financial computations hereunder shall be computed in
accordance with GAAP consistently applied. That certain items or computations
are explicitly modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the foregoing. If any "Accounting Changes" (as defined
below) occur and such changes result in a change in the calculation of the
financial covenants, standards or terms used in the Agreement or any other
Operative Document, then Borrowers, Agent and Lenders agree to enter into
negotiations in order to amend such provisions of the Agreement so as to
equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating Borrowers' and their Subsidiaries' financial condition
shall be the same after such Accounting Changes as if such Accounting Changes
had not been made; provided, however, that the agreement of Requisite Lenders to
any required amendments of such provisions shall be sufficient to bind all
Lenders. "Accounting Changes" means (a) changes in accounting principles
required by the promulgation of any rule, regulation, pronouncement or opinion
by the Financial Accounting Standards Board of the American Institute of
Certified Public Accountants (or successor thereto or any agency with similar
functions), (b) changes in accounting principles concurred in by any Borrower's
certified public accountants; (c) purchase accounting adjustments under A.P.B.
16 and/or 17 and EITF 88-16, and the application of the accounting principles
set forth in FASB 109, including the establishment of reserves pursuant thereto
and any subsequent reversal (in whole or in part) of such reserves; and (d) the
reversal of any reserves established as a result of purchase accounting
adjustments. All such adjustments resulting from expenditures made subsequent to
the Closing Date (including capitalization of costs and expenses or payment of
pre-Closing Date liabilities) shall be treated as expenses in the period the
expenditures are made and deducted as part of the calculation of EBITDA in such
period. If Agent, Borrowers and Requisite Lenders agree upon the required
amendments, then after appropriate amendments have been executed and the
underlying Accounting Change with respect thereto has been implemented, any
reference to GAAP contained in the Agreement or in any other Operative Document
shall, only to the extent of such Accounting Change, refer to GAAP, consistently
applied after giving effect to the implementation of such Accounting Change. If
Agent, Borrowers and Requisite Lenders cannot agree upon the required amendments
within thirty (30) days following the date of implementation of any Accounting
Change, then all Financial Statements delivered and all calculations of
financial covenants and other standards and terms in accordance with the
Agreement and the other Operative Documents shall be prepared, delivered and
made without regard to the underlying Accounting Change.
ANNEX H (SECTION 9.9(A))
--------------
to
CREDIT AGREEMENT
----------------
WIRE TRANSFER INFORMATION
-------------------------
General Electric Capital Corporation:
Bank Name: Bankers Trust
ABA #: 000000000
City & State: New York, New York
Account No.: 00000000
Re: Precision Partners, Inc
Ableco Finance LLC:
Bank Name: Chase Manhattan Bank of Texas, N.A.
ABA #: 000000000
Account No.: 00102619468
BNF: Wires-Clearing-Asset Backed Securities
Re: Xxxxx Xxxxxxx / Ableco Finance/Acct. # 2316401 - Precision Partners
ANNEX I (SECTION 11.10)
---------------
TO
CREDIT AGREEMENT
----------------
NOTICE ADDRESSES
----------------
(A) If to Agent or GE Capital, at
General Electric Capital Corporation
------------------------------------
------------------------------------
Attention: _________________________
Telecopier No.: ____________________
Telephone No.: ____________________
with copies to:
Attention:
Telecopier No.:
Telephone No.:
and
General Electric Capital Corporation
------------------------------------
------------------------------------
Attention: ________________________
Telecopier No.: ____________________
Telephone No.: ____________________
(B) If to Revolving Credit Agent or ___________, at
------------------------------------
------------------------------------
------------------------------------
Attention: _________________________
Telecopier No.: ____________________
Telephone No.: ____________________
with copies to:
Attention:
Telecopier No.:
Telephone No.:
(C) If to any Borrower, to Borrower Representative, at
Attention:
Telecopier No.:
Telephone No.:
with copies to:
Attention:
Telecopier No.:
Telephone No.:
(D) If to Ableco, at
Attention:
Telecopier No.:
Telephone No.:
with copies to:
Attention:
Telecopier No.:
Telephone No.:
ANNEX J (FROM ANNEX A - COMMITMENTS DEFINITION)
--------------------------------
to
CREDIT AGREEMENT
----------------
Lender(s)
Revolving Loan Commitment
[XYZ] Term Loan Commitment:
$
--------------------------
[ABC] Term Loan Commitment:
$
--------------------------
[DEF] Term Loan Commitment:
$
--------------------------
[GHI] Capital Lease Commitment:
$
--------------------------
DISCLOSURE SCHEDULE 1.1
-----------------------
to
CREDIT AGREEMENT
----------------
Revolving Credit Agent:
-----------------------
-----------------------
-----------------------
DISCLOSURE SCHEDULE 1.3
-----------------------
to
CREDIT AGREEMENT
----------------
Sources and Uses of Funds
DISCLOSURE SCHEDULE 1.9
-----------------------
to
CREDIT AGREEMENT
----------------
Wire Instructions
For Agent
Bank Name: Bankers Trust
ABA #: 000000000
City & State: New York, New York
Account No.: 00000000
Re: Precision Partners, Inc.
DISCLOSURE SCHEDULE 3.1
-----------------------
to
CREDIT AGREEMENT
----------------
Jurisdictions of Incorporation of each Credit Party
and
Organizational Identification Number of each Credit Party
DISCLOSURE SCHEDULE 3.2
-----------------------
to
CREDIT AGREEMENT
----------------
Chief Executive Office, Principal Place of Business
Federal Employer Identification Number
of each Credit Party
DISCLOSURE SCHEDULE 3.4(A)
--------------------------
to
CREDIT AGREEMENT
----------------
Financial Statements
DISCLOSURE SCHEDULE 3.5
-----------------------
to
CREDIT AGREEMENT
----------------
Any contract, lease or other agreement or instrument entered into by any Credit
Party or which has become binding upon any Credit Party's assets
DISCLOSURE SCHEDULE 3.6
-----------------------
to
CREDIT AGREEMENT
----------------
List of Real Property
owned, leased, subleased, or used by any Credit Party
DISCLOSURE SCHEDULE 3.7
-----------------------
to
CREDIT AGREEMENT
----------------
Collective Bargaining Agreements, Management Agreements,
Consulting Agreements and Employment agreements
DISCLOSURE SCHEDULE 3.8
-----------------------
to
CREDIT AGREEMENT
----------------
Subsidiaries, Joint Ventures or Partnerships
and List of All Issued and Outstanding Stock of each Credit Party
DISCLOSURE SCHEDULE 3.11
------------------------
to
CREDIT AGREEMENT
----------------
Tax Returns for which Filing Periods have been Extended
DISCLOSURE SCHEDULE 3.12
------------------------
to
CREDIT AGREEMENT
----------------
ERISA
DISCLOSURE SCHEDULE 3.13
------------------------
to
CREDIT AGREEMENT
----------------
Pending or Threatened Litigation
DISCLOSURE SCHEDULE 3.15
------------------------
to
CREDIT AGREEMENT
----------------
Intellectual Property
DISCLOSURE SCHEDULE 3.17
------------------------
to
CREDIT AGREEMENT
----------------
Hazardous Materials
DISCLOSURE SCHEDULE 3.18
------------------------
to
CREDIT AGREEMENT
----------------
Insurance Policies
DISCLOSURE SCHEDULE 3.19
------------------------
to
CREDIT AGREEMENT
----------------
Bank Accounts
DISCLOSURE SCHEDULE 3.20
------------------------
to
CREDIT AGREEMENT
----------------
Governmental Contracts
DISCLOSURE SCHEDULE 3.21
------------------------
to
CREDIT AGREEMENT
----------------
Change in Business Relationships
DISCLOSURE SCHEDULE 3.22
------------------------
to
CREDIT AGREEMENT
----------------
Agreements and Other Documents
DISCLOSURE SCHEDULE 5.1
-----------------------
to
CREDIT AGREEMENT
----------------
Trade Names
DISCLOSURE SCHEDULE 5.10
------------------------
to
CREDIT AGREEMENT
----------------
Collateral Locations
DISCLOSURE SCHEDULE 6.2
-----------------------
to
CREDIT AGREEMENT
----------------
Existing Investments
DISCLOSURE SCHEDULE 6.3
-----------------------
to
CREDIT AGREEMENT
----------------
Outstanding Indebtedness of each Credit Party
as of the Closing Date
DISCLOSURE SCHEDULE 6.4(A)
to
CREDIT AGREEMENT
Transactions with other Credit Parties
DISCLOSURE SCHEDULE 6.7
-----------------------
to
CREDIT AGREEMENT
----------------
Liens
DISCLOSURE SCHEDULE 6.8
-----------------------
to
CREDIT AGREEMENT
----------------
Disposition of Assets
EXHIBIT 1.1.1(A)
----------------
to
CREDIT AGREEMENT
----------------
Form of Notice of Revolving Credit Advance
EXHIBIT 1.1.1(B)
----------------
to
CREDIT AGREEMENT
----------------
Form of Revolving Note
EXHIBIT 1.1.2(A)
----------------
to
CREDIT AGREEMENT
----------------
Form of Term Note
EXHIBIT 1.4(E)
--------------
to
CREDIT AGREEMENT
----------------
Form of Notice of Conversion
EXHIBIT 4.1(B)
--------------
to
CREDIT AGREEMENT
----------------
Form of Borrowing Base Certificate
EXHIBIT 9.1(A)
--------------
to
CREDIT AGREEMENT
----------------
Form of Assignment Agreement
