CREDIT AGREEMENT
dated as of
December 22, 2006
among
JACO ELECTRONICS, INC.
and
INTERFACE ELECTRONICS CORP.
Borrowers
The Lenders Party Hereto
and
THE CIT GROUP/BUSINESS CREDIT, INC.,
as Agent
and
CIT CAPITAL SECURITIES, LLC
as Syndication Agent and
as Sole Bookrunner and Sole Lead Arranger
i
TABLE OF CONTENTS
Page
ARTICLE I Definitions 1
SECTION 1.01 Defined Terms............................................................................1
SECTION 1.02 Classification of Loans and Borrowings..................................................28
SECTION 1.03 Terms Generally.........................................................................28
SECTION 1.04 Accounting Terms; GAAP..................................................................28
ARTICLE II The Credits...........................................................................................29
SECTION 2.01 The Facility............................................................................29
SECTION 2.02 Loans...................................................................................29
SECTION 2.03 Loans and Borrowings....................................................................30
SECTION 2.04 Requests for Borrowings.................................................................30
SECTION 2.05 [Intentionally Omitted].................................................................31
SECTION 2.06 Protective Advances.....................................................................31
SECTION 2.07 Swingline Loans.........................................................................32
SECTION 2.08 Letters of Credit.......................................................................33
SECTION 2.09 Funding of Borrowings...................................................................39
SECTION 2.10 Interest Elections......................................................................40
SECTION 2.11 Termination or Reduction of Commitments.................................................41
SECTION 2.12 Repayment of Loans; Evidence of Debt....................................................42
SECTION 2.13 Prepayment of Loans.....................................................................43
SECTION 2.14 Fees....................................................................................45
SECTION 2.15 Interest................................................................................46
SECTION 2.16 Alternate Rate of Interest..............................................................46
SECTION 2.17 Increased Costs.........................................................................47
SECTION 2.18 Break Funding Payments..................................................................48
SECTION 2.19 Taxes...................................................................................48
SECTION 2.20 Payments Generally; Allocation of Proceeds; Sharing of Set-offs.........................51
SECTION 2.21 Mitigation Obligations; Replacement of Lenders..........................................54
SECTION 2.22 Indemnity for Returned Payments.........................................................54
ARTICLE III Representations and Warranties.......................................................................55
SECTION 3.01 Organization; Powers....................................................................55
SECTION 3.02 Authorization; Enforceability...........................................................55
SECTION 3.03 Governmental Approvals; No Conflicts....................................................55
SECTION 3.04 Financial Condition; No Material Adverse Change.........................................55
SECTION 3.05 Intellectual Property...................................................................56
SECTION 3.06 Litigation..............................................................................56
SECTION 3.07 Compliance with Laws....................................................................57
SECTION 3.08 Investment and Holding Company Status...................................................57
SECTION 3.09 Taxes...................................................................................57
SECTION 3.10 ERISA...................................................................................57
SECTION 3.11 Disclosure..............................................................................57
SECTION 3.12 Material Agreements.....................................................................58
SECTION 3.13 Solvency................................................................................59
SECTION 3.14 Intentionally Omitted...................................................................60
SECTION 3.15 Capitalization and Subsidiaries.........................................................60
SECTION 3.16 Common Enterprise.......................................................................60
SECTION 3.17 Security Interest in Collateral.........................................................60
SECTION 3.18 Labor Matters...........................................................................61
SECTION 3.19 Affiliate Transactions..................................................................61
SECTION 3.20 Broker's and Transaction Fees...........................................................61
SECTION 3.21 Title; Real Property....................................................................61
SECTION 3.22 Environment.............................................................................63
SECTION 3.23 Deposit Accounts........................................................................63
SECTION 3.24 Patriot Act.............................................................................63
ARTICLE IV Conditions 64
SECTION 4.01 Effective Date..........................................................................64
SECTION 4.02 Each Credit Event.......................................................................66
ARTICLE V Affirmative Covenants..................................................................................66
SECTION 5.01 Financial Statements; Borrowing Base and Other Information..............................66
SECTION 5.02 Notices of Material Events..............................................................70
SECTION 5.03 Existence; Conduct of Business..........................................................71
SECTION 5.04 Payment of Obligations..................................................................72
SECTION 5.05 Maintenance of Properties and Intellectual Property Rights..............................72
SECTION 5.06 Books and Records; Inspection Rights....................................................72
SECTION 5.07 Compliance with Laws....................................................................72
SECTION 5.08 Use of Proceeds and Letters of Credit...................................................73
SECTION 5.09 Insurance...............................................................................73
SECTION 5.10 Appraisals..............................................................................73
SECTION 5.11 Additional Collateral; Further Assurances...............................................74
SECTION 5.12 Cash Management.........................................................................75
SECTION 5.13 Post-Closing Obligations................................................................76
ARTICLE VI Negative Covenants....................................................................................76
SECTION 6.01 Indebtedness............................................................................76
SECTION 6.02 Liens...................................................................................78
SECTION 6.03 Fundamental Changes; Asset Sales........................................................79
SECTION 6.04 Investments, Loans, Advances, Guarantees and Acquisitions...............................80
SECTION 6.05 Swap Agreements.........................................................................81
SECTION 6.06 Restricted Payments.....................................................................82
SECTION 6.07 Transactions with Affiliates............................................................82
SECTION 6.08 Restrictive Agreements..................................................................82
SECTION 6.09 Prepayment of Indebtedness; Subordinated Indebtedness...................................83
SECTION 6.10 Capital Expenditures....................................................................83
SECTION 6.11 Financial Covenants.....................................................................83
SECTION 6.12 Activities of Inactive Subsidiary.......................................................83
SECTION 6.13 Hazardous Materials.....................................................................84
ARTICLE VII Events of Default....................................................................................84
SECTION 7.01 Events of Default.......................................................................84
SECTION 7.02 Application of Funds....................................................................87
ARTICLE VIII The Agent...........................................................................................88
ARTICLE IX Miscellaneous.........................................................................................91
SECTION 9.01 Notices.................................................................................91
SECTION 9.02 Electronic Transmissions................................................................92
SECTION 9.03 Waivers; Amendments.....................................................................93
SECTION 9.04 Expenses; Indemnity; Damage Waiver......................................................96
SECTION 9.05 Successors and Assigns..................................................................98
SECTION 9.06 Survival...............................................................................102
SECTION 9.07 Counterparts; Integration; Effectiveness...............................................102
SECTION 9.08 Severability...........................................................................102
SECTION 9.09 Right of Setoff........................................................................102
SECTION 9.10 Governing Law; Jurisdiction; Consent to Service of Process.............................103
SECTION 9.11 WAIVER OF JURY TRIAL...................................................................104
SECTION 9.12 Headings...............................................................................104
SECTION 9.13 Confidentiality........................................................................104
SECTION 9.14 Several Obligations; Non-reliance; Violation of Law....................................105
SECTION 9.15 USA PATRIOT Act and OFAC...............................................................105
SECTION 9.16 Disclosure.............................................................................106
SECTION 9.17 Execution of Loan Documents............................................................106
SECTION 9.18 Interest Rate Limitation...............................................................106
SECTION 9.19 Administrative Borrower; Joint and Several Liability...................................106
SECTION 9.20 Subordination and Contribution.........................................................109
SCHEDULES:
Commitment Schedule Schedule 3.05 - Intellectual Property Schedule 3.06 -
Disclosed Matters Schedule 3.09 - Taxes Schedule 3.12 - Material Agreements
Schedule 3.15 - Capitalization and Subsidiaries Schedule 3.17 - Financing
Statements Schedule 3.18 - Labor Matters Schedule 3.19 - Affiliate Transactions
Schedule 3.21 - Properties Schedule 3.22 - Environmental Matters Schedule 3.23 -
Deposit Accounts Schedule 6.01 - Existing Indebtedness Schedule 6.02 - Existing
Liens Schedule 6.04 - Existing Investments Schedule 6.08 - Existing Restrictions
EXHIBITS:
Exhibit A - Form of Assignment and Assumption Exhibit B - Form of Borrowing Base
Certificate Exhibit C - Form of Compliance Certificate Exhibit D - Closing
Checklist Exhibit E - Form of Discount Note Exhibit F - Form of Notice of
Drawing
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of December 22, 2006 (as it may be amended or
modified from time to time, this "Agreement"), among JACO ELECTRONICS, INC., a
New York corporation (the "Parent"), and INTERFACE ELECTRONICS CORP., a
Massachusetts corporation ("Interface"; together with the Parent, collectively,
the "Borrowers"), the Lenders party hereto, THE CIT GROUP/BUSINESS CREDIT, INC.,
as Agent, Swingline Lender and Issuing Bank, and CIT CAPITAL SECURITIES, LLC, as
Syndication Agent, Sole Bookrunner and Sole Lead Arranger.
The parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01 Defined Terms. As used in this Agreement, the following terms
have the meanings specified below:
-------------
"ABR," when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Account" has the meaning assigned to such term in the Collateral
Agreement.
"Account Debtor" means any Person obligated on an Account.
"Acquisition" means any transaction or series of related transactions
for the purpose of or resulting, directly or indirectly, in (a) the acquisition
of all or substantially all of the assets of a Person, or of any business or
division of a Person, (b) the acquisition of in excess of 50% of the Equity
Interests of any Person, or otherwise causing any Person to become a Subsidiary,
or (c) a merger, amalgamation or consolidation or any other combination with
another Person (other than a Person that is a Subsidiary) provided, that, the
applicable Borrower or the Subsidiary is the surviving entity.
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/100 of 1%) equal to (a) the LIBO Rate for such Interest
Period and, in the case of a Eurodollar Borrowing, multiplied by (b) the
Statutory Reserve Rate.
"Administrative Borrower" has the meaning set forth in Section 9.19.
"Administrative Questionnaire" means an Administrative Questionnaire in
a form supplied by the Agent.
"Affiliate" means, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Agent" means The CIT Group/Business Credit, Inc., in its capacity as
agent for the Secured Parties hereunder, together with its successors and
assigns.
"Aggregate Commitment" means the aggregate of the Commitments of all
the Lenders, as reduced from time to time pursuant to the terms hereof, which
Aggregate Commitment shall initially be in the amount of $55,000,000.
"Aggregate Credit Exposure" means, at any time, the aggregate Credit
Exposure of all the Revolving Lenders.
"Alternate Base Rate" means, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.
"Applicable Percentage" means, with respect to any Lender, (a) with
respect to Revolving Loans or Swingline Loans, a portion equal to a fraction the
numerator of which is such Lender's Revolving Commitment and the denominator of
which is the aggregate Revolving Commitment of all Revolving Lenders (if the
Revolving Commitments have terminated or expired, the Applicable Percentage
shall be determined based upon the Revolving Commitments most recently in
effect, giving effect to any assignments), (b) with respect to Protective
Advances or with respect to the Aggregate Credit Exposure prior to the Maturity
Date, a portion equal to a fraction the numerator of which is such Lender's
Commitment and the denominator of which is the Aggregate Commitment of all
Lenders, and (c) with respect to Protective Advances or with respect to the
Aggregate Credit Exposure after the Maturity Date, a portion equal to a fraction
the numerator of which is such Lender's Credit Exposure and the denominator of
which is the Aggregate Credit Exposure.
"Applicable Rate" means, for any day, with respect to any ABR Loan or
Eurodollar Loan payable hereunder, as the case may be, the applicable rate per
annum set forth below under the caption "ABR Spread" or "Eurodollar Spread," as
the case may be, based upon the Fixed Charge Coverage Ratio on the last day of
each of the three most recently ended calendar months:
Fixed Charge
Coverage Ratio ABR Spread Eurodollar Spread Commitment Fee
----------------------------------- ---------------------- ---------------------- ----------------------
=> 1.75x 0.25% 1.75% 0.25%
----------------------------------- ---------------------- ---------------------- ----------------------
=> 1.50x but < 1.75x 0.50% 2.00% 0.25%
----------------------------------- ---------------------- ---------------------- ----------------------
=> 1.25x but < 1.50x 0.75% 2.25% 0.25%
----------------------------------- ---------------------- ---------------------- ----------------------
< 1.25x 1.00% 2.50% 0.375%
=================================== ====================== ====================== ======================
For the period commencing on the Effective Date and ending on the first
anniversary thereof, the Applicable Rate for the ABR Spread and the Eurodollar
Spread shall be as set forth in the pricing grid in the applicable columns
opposite the row entitled "=> 1.25x but <1.50x" and the Applicable Rate for the
Commitment Fee shall be as set forth in the pricing grid in the column opposite
the row entitled "=> 1.75x". If, as a result of any restatement of or other
adjustment to the financial statements of the Borrowers or for any other reason,
the Agent determines that (a) the Fixed Charge Coverage Ratio as calculated by
the Borrowers as of any applicable date was inaccurate and (b) a proper
calculation of the Fixed Charge Coverage Ratio would have resulted in different
pricing for any period, then (i) if the proper calculation of the Fixed Charge
Coverage Ratio would have resulted in higher pricing for such period, the
Borrowers shall automatically and retroactively be obligated to pay to the Agent
and Lenders, promptly on demand by the Agent, an amount equal to the excess of
the amount of interest and fees that should have been paid for such period over
the amount of interest and fees actually paid for such period; and (ii) if the
proper calculation of the Fixed Charge Coverage Ratio would have resulted in
lower pricing for such period, Agent and Lenders shall have no obligation to
repay any interest or fees to the Borrowers; provided that if, as a result of
any restatement or other event a proper calculation of the Fixed Charge Coverage
Ratio would have resulted in higher pricing for one or more periods and lower
pricing for one or more other periods (due to the shifting of income or expenses
form one period to another period or any similar reason), then the amount
payable by the Borrowers pursuant to clause (i) above shall be based upon the
excess, if any, of the amount of interest and fees that should have been paid
for all applicable periods over the amount of interest and fees paid for all
such periods.
"Approved Fund" has the meaning assigned to such term in Section 9.05.
"Assignment and Assumption" means an assignment and assumption entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.05), and accepted by the Agent, in the form of Exhibit A
or any other form approved by the Agent.
"Authorized Officer" means, with respect to any Person, any of the
principal executive officers, managing members or general partners of such
Person but, in any event, with respect to financial matters, a Financial
Officer.
"Availability" means, at any time, an amount equal to the lesser of (a)
the Revolving Commitment and (b) the Borrowing Base, in each case, minus the
Revolving Credit Exposure of all Lenders.
"Availability Block" means $500,000, or such lesser amount as Agent, in
its Permitted Discretion, shall determine.
"Availability Period" means the period from and including the Effective
Date to but excluding the earlier of the Maturity Date and the date of
termination of the Revolving Commitment.
"Available Commitment" means, at any time, the Revolving Commitment
then in effect minus the Revolving Credit Exposure of all Revolving Lenders at
such time.
"Average 20-Day Availability" means, at any time, the average daily
Availability for the immediately preceding twenty (20) Business Day period.
"Banking Services" means each and any of the following bank services
provided to any Loan Party by any Lender or any of such Lender's Affiliates: (a)
commercial credit cards, purchasing cards or other similar charge cards, (b)
stored value cards, and (c) treasury management services (including, without
limitation, controlled disbursement, automated clearinghouse transactions,
return items, overdrafts and interstate depository network services).
"Banking Services Obligations" of the Loan Parties means any and all
obligations of the Loan Parties, whether absolute or contingent and howsoever
and whensoever created, arising, evidenced or acquired (including all renewals,
extensions and modifications thereof and substitutions therefor) in connection
with Banking Services.
"Blocked Account" means any deposit/collection account established
pursuant to a Blocked Account Agreement; collectively, such accounts are
referred to as the "Blocked Accounts."
"Blocked Account Agreement" means an agreement among one or more of the
Loan Parties, the Agent, and a Clearing Bank, in form and substance satisfactory
to the Agent, concerning the collection of payments which represent the proceeds
of Accounts and other Collateral of a Loan Party.
"Board" means the Board of Governors of the Federal Reserve System of
the United States of America.
"Borrower" and "Borrowers" have the respective meanings set forth in
the preamble to this Agreement.
"Borrowing" means (a) Revolving Loans of the same Class and Type, made,
converted or continued on the same date and, in the case of Eurodollar Loans, as
to which a single Interest Period is in effect, (b) a Swingline Loan and (c) a
Protective Advance.
"Borrowing Base" means, at any time, the sum of (a) 85% of Borrowers'
Eligible Accounts at such time, plus (b) the lesser of (i) 60% of Borrowers'
Eligible Inventory, valued on an average cost basis, consistent with the
Borrowers' practices as of the Effective Date, (ii) 85% of the Net Recovery Rate
of Borrowers' Eligible Inventory, multiplied by the value of such Inventory
determined on an average cost basis, consistent with the Borrowers' practices as
of the Effective Date, and (iii) $25,000,000, minus (c) the Availability Block,
minus (d) Reserves.
"Borrowing Base Certificate" means a certificate, signed by a Financial
Officer of the Administrative Borrower, in the form of Exhibit B or another form
which is acceptable to the Agent in its sole discretion.
"Borrowing Request" means a request by the Administrative Borrower for
a Revolving Borrowing in accordance with Section 2.04.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to remain closed; provided, that, when used in connection with a Eurodollar
Loan, the term "Business Day" shall also exclude any day on which banks are not
open for dealings in dollar deposits in the London interbank market.
"Calculation Date" means the last Business Day of each calendar week.
"Capital Expenditures" means, without duplication, any expenditure or
commitment to expend money for any purchase or other acquisition of any asset
which would be classified as a fixed or capital asset on a consolidated balance
sheet of the Parent and its Subsidiaries prepared in accordance with GAAP.
"Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal or movable property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"CERCLA" means the United States Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. xx.xx. 9601 et
------
seq.).
"Change in Control" means (a) the ownership by any one Person (other
than Xxxxxxx Xxxxxx and Xxxx Xxxxxx) of more than forty (40%) percent of the
common stock of Parent, or (b) Parent shall cease to own, directly or
indirectly, free and clear of all Liens or other encumbrances, 100% of the
outstanding Equity Interests of any other Borrower.
"Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement, or (c) compliance by any Lender or the Issuing
Bank (or, for purposes of Section 2.17(b), by any lending office of such Lender
or by such Lender's or the Issuing Bank's holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
"Class", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans,
and when used in reference to any Commitment, refers to such Commitment as a
Revolving Commitment.
"Clearing Bank" means any banking institution with whom a Payment
Account has been established pursuant to a Blocked Account Agreement.
"Closing Checklist" means the closing checklist attached hereto as
Exhibit D.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" means all "Collateral", as defined in any Collateral
Document, whether such "Collateral" is now existing or hereafter acquired.
"Collateral Access Agreement" has the meaning assigned to such term in
the Collateral Agreement.
"Collateral Agreement" means that certain Collateral Agreement, dated
as of the date hereof, between the Borrowers and the Agent, for the benefit of
the Agent and the Secured Parties.
"Collateral Documents" means, collectively, the Security Agreements and
any other security documents delivered pursuant to Section 4.01(b) or Section
5.11 to secure payment of the Obligations.
"Collection Account" has the meaning assigned to such term in Section
5.12(b).
"Commitment" means, with respect to each Lender, such Lender's
Revolving Commitment, together with the commitment of such Lender to acquire
participations in Protective Advances hereunder, as such Revolving Commitment
may be (a) reduced from time to time pursuant to Section 2.11, and (b) reduced
or increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.05. The initial amount of each Lender's Commitment is set
forth on the Commitment Schedule, or in the Assignment and Assumption pursuant
to which such Lender shall have assumed its Commitment, as applicable.
"Commitment Schedule" means the Schedule attached hereto identified as
such on Annex I.
"Contracts" has the meaning assigned to such term in Section 3.12.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Controlled Disbursement Account" means, collectively, any accounts of
the Borrowers maintained as a zero balance, cash management account pursuant to
and under any agreement between the Borrowers and the Agent, as modified and
amended from time to time, and through which all disbursements of the Borrowers,
any Loan Party and any designated Subsidiary of the Borrowers are made and
settled on a daily basis with no uninvested balance remaining overnight.
"Credit Exposure" means, as to any Lender at any time, the sum of (a)
such Lender's Revolving Credit Exposure at such time, plus (b) an amount equal
to such Lender's Applicable Percentage, if any, of the aggregate principal
amount of Protective Advances outstanding at such time.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Defaulting Lender" has the meaning assigned to such term in Section
2.09(b).
"Departing Lender" has the meaning assigned to such term in Section
2.21(b).
"Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.
"Document" has the meaning assigned to such term in the Collateral
Agreement.
"Dollars" or "$" refers to lawful money of the United States of
America.
"EBITDA" means for any period Net Income for such period plus, to the
extent deducted from revenues for such period in determining Net Income, (a)
Interest Expense, (b) expense for taxes paid or accrued net of tax refunds, (c)
depreciation, (d) amortization and other non-cash charges, (e) extraordinary
losses (as determined in accordance with GAAP) and non-cash non-recurring
losses, in each case incurred other than in the ordinary course of business and
(f) cash non-recurring losses incurred other than in the ordinary course of
business in an amount not to exceed $1,000,000 in any Fiscal Year or $3,000,000
over the term of this Agreement, minus, to the extent included in Net Income for
such period, extraordinary gains (as determined in accordance with GAAP)
realized other than in the ordinary course of business, all calculated for the
Parent and its Subsidiaries on a consolidated basis.
"E-Fax" means any system used to receive or transmit faxes
electronically.
"Effective Date" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.03).
"Electronic Transmission" means each document, instruction,
authorization, file, information and any other communication transmitted, posted
or otherwise made or communicated by e-mail, E-Fax, Internet or extranet-based
site or any other equivalent electronic service, whether owned, operated or
hosted by the Agent, any of the Agent's Related Persons or any other Person.
"E-Signature" means the process of attaching to or logically
associating with an Electronic Transmission an electronic symbol, encryption,
digital signature or process (including, without limitation, the name or an
abbreviation of the name of the party transmitting the Electronic Transmission)
with the intent to sign, authenticate or accept such Electronic Transmission.
"E-Systems" means any electronic system, including IntralinksTM and any
other Internet or extranet-based site, whether such electronic system is owned,
operated or hosted by the Agent, any of its Related Persons or any other Person,
providing for access to data protected by passcodes or other security system.
"Eligible Accounts" means, at any time, the Accounts of the applicable
Borrowers which the Agent determines in its Permitted Discretion are eligible as
the basis for the extension of Revolving Loans and Swingline Loans hereunder.
Without limiting the Agent's discretion provided herein, Eligible Accounts shall
not include any Account:
(a) which is not subject to a first priority perfected security
interest in favor of the Agent;
(b) which is subject to any Lien other than (i) a Lien in favor of
the Agent and (ii) a Permitted Encumbrance which does not have
priority over the Lien in favor of the Agent;
(c) with respect to which more than 90 days have elapsed since the
date of the original invoice therefor or which is more than 60
days past the due date for payment;
(d) which is owing by an Account Debtor for which more than
50% of the Accounts owing from such Account Debtor and its
Affiliates are ineligible hereunder;
(e) which is owing by an Account Debtor (other than Benchmark
Electronics Inc. and Celestica, Inc.) to the extent the
aggregate amount of Accounts owing from such Account Debtor
and its Affiliates to such Borrowers exceeds 25% of the
aggregate Eligible Accounts; and with respect to Benchmark
Electronics Inc. and Celestica, Inc. to the extent the
aggregate amount of Accounts owing from each such Account
Debtor and its Affiliates to such Borrowers exceeds 30% of the
aggregate Eligible Accounts;
(f) with respect to which any covenant, representation, or
warranty relating to such Account contained in this Agreement
or in the Security Agreements has been breached in any
material respect or is not true;
(g) which (i) does not arise from the sale of goods or performance
of services in the ordinary course of business, (ii) is not
evidenced by an invoice, or other documentation satisfactory
to the Agent, which has been sent to the Account Debtor, (iii)
represents a progress billing, (iv) is contingent upon such
Borrowers' completion of any further performance, or (v)
represents a sale on a xxxx-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment which is billed
prior to actual sale to the end user, cash-on-delivery or any
other repurchase or return basis;
(h) for which the goods giving rise to such Account have not been
shipped to the Account Debtor or for which the services giving
rise to such Account have not been performed by such
Borrowers;
(i) with respect to which any check or other instrument of payment
has been returned uncollected for any reason;
(j) which is owed by an Account Debtor which (i) has applied for
suffered, or consented to the appointment of any receiver,
interim receiver, receiver and manager, custodian, trustee,
or liquidator of its assets, (ii) has had possession of all
or a material part of its property taken by any receiver,
interim receiver, receiver and manager, custodian, trustee
or liquidator, (iii) has filed, or has had filed against it,
any request or petition for liquidation, reorganization,
arrangement, adjustment of debts, adjudication as bankrupt,
winding-up, or voluntary or involuntary case under any
state, provincial or federal bankruptcy laws, (iv) to the
knowledge of such Borrowers, has admitted in writing its
inability, or is generally unable to, pay its debts as they
become due, (v) to the knowledge of such Borrowers, has
become insolvent, or (vi) has ceased operation of its
business; (k) which is owed by any Account Debtor which has
sold all or substantially all of its assets;
(l) which is owed by an Account Debtor which (i) does not maintain
its chief executive office in the U.S. or Canada or (ii) is
not organized under applicable law of the U.S. or any state of
the U.S. or Canada or any province of Canada unless, in either
case, such Account is backed by a letter of credit, or other
credit support acceptable to the Agent from a customary credit
risk insurer and which is in the possession of the Agent;
(m) which is owed in any currency other than Dollars;
(n) which is owed by (i) the government (or any department,
agency, public corporation, or instrumentality thereof) of any
country other than the U.S. unless such Account is backed by a
Letter of Credit acceptable to the Agent and which is in the
possession of the Agent, or (ii) the government of the U.S.,
or any department, agency, public corporation, or
instrumentality thereof, unless the Federal Assignment of
Claims Act of 1940, as amended (31 U.S.C. ss. 3727 et seq. and
41 U.S.C. ss. 15 et seq.), and any other steps necessary to
perfect the Lien of the applicable Agent in such Account have
been complied with to the Agent's satisfaction;
(o) which is owed by any Affiliate, employee, director, or officer
of any Loan Party;
(p) which, for any Account Debtor, exceeds a credit limit
determined by the Agent of which the Administrative Borrower
has been previously notified, to the extent of such excess;
(q) which is owed by an Account Debtor or any Affiliate of such
Account Debtor (other than a Lender or any Affiliate of a
Lender) which is the holder of Indebtedness issued or incurred
by any Loan Party, but only to the extent of such
Indebtedness;
(r) which is subject to any counterclaim, deduction, defense,
setoff or dispute, but only to the extent of the amount of
such counterclaim, deduction, defense, setoff or dispute,
unless the Agent, in its Permitted Discretion, has established
an appropriate Reserve and determines to include such Account
as an Eligible Account;
(s) which is evidenced by any promissory note, chattel paper, or
instrument;
(t) which is owed by an Account Debtor located in any jurisdiction
that requires, as a condition to access to the courts of such
jurisdiction, that a creditor qualify to transact business,
file a business activities report or other report or form, or
take one or more other actions, unless such Borrowers have so
qualified, filed such reports or forms, or taken such actions
(and, in each case, paid any required fees or other charges),
except to the extent such Borrowers may qualify subsequently
as a foreign entity authorized to transact business in such
state or jurisdiction and gain access to such courts, without
incurring any cost or penalty reasonably viewed by the Agent
to be material in amount, and such later qualification cures
any access to such courts to enforce payment of such Account;
(u) with respect to which such Borrowers have made any agreement
with the Account Debtor for any reduction thereof, but only to
the extent of such reduction, other than discounts and
adjustments given in the ordinary course of business; or
(v) which the Agent determines in its Permitted Discretion will
not be paid by reason of the Account Debtor's inability to
pay.
In the event that an Account which was previously an Eligible Account
ceases to be an Eligible Account hereunder, the applicable Borrowers shall
notify the Agent thereof on and at the time of submission to the Agent of the
next Borrowing Base Certificate.
"Eligible Inventory" means, at any time, the Inventory owned by one of
the applicable Borrowers which the Agent determines in its Permitted Discretion
is eligible as the basis for the extension of Revolving Loans and Swingline
Loans hereunder. Without limiting the Agent's discretion provided herein,
Eligible Inventory shall not include any Inventory:
(a) which is not subject to a first priority perfected Lien in
favor of the Agent;
(b) which is subject to any Lien other than (i) a Lien in favor of
the Agent and (ii) a Permitted Encumbrance which does not have
priority over the Lien in favor of the Agent;
(c) which is, in the Agent's Permitted Discretion, slow moving,
obsolete, unmerchantable, defective, unfit for sale, not
salable at prices approximating at least the cost of such
Inventory in the ordinary course of business or unacceptable
due to age, type, category and/or quantity;
(d) with respect to which any covenant, representation, or
warranty contained in this Agreement or any Security Agreement
has been breached in any material respect or is not true;
(e) which does not conform in all material respects to all
standards imposed by any governmental authority;
(f) which is not finished goods or which constitutes
work-in-process, subassemblies (unless the Agent determines,
in its Permitted Discretion, to include such work-in-process
or subassemblies as Eligible Inventory), packaging and
shipping material, manufacturing supplies other than scrap
steel, display items, xxxx-and-hold goods, returned or
repossessed goods, defective goods, goods held on consignment,
or goods which are not of a type held for sale in the ordinary
course of business;
(g) which is not located in the U.S. or Canada is in transit with
a common carrier from vendors and suppliers, except, that,
Inventory located in Singapore may be deemed eligible for the
purposes of this clause (g) up to an aggregate amount of
$1,000,000 provided that (i) Agent receives a Collateral
Access Agreement, (ii) under applicable law, Agent has a first
priority perfected Lien on such Inventory and (iii) Agent
receives such other documentation (including, upon Agent's
reasonable request, opinion letter(s)) as Agent may require;
(h) which is located in any location leased by the Borrowers
unless (i) the lessor has delivered to the Agent a Collateral
Access Agreement or (ii) a Reserve for rent, charges, and
other amounts due or to become due with respect to such
facility has been established by the Agent in its Permitted
Discretion;
(i) which is located in any third party warehouse or is in the
possession of a bailee and is not evidenced by a Document,
unless (i) such warehouseman or bailee has delivered to the
Agent a Collateral Access Agreement and such other
documentation as the Agent may require or (ii) an appropriate
Reserve has been established by the Agent in its Permitted
Discretion;
(j) which is the subject of a consignment by any Borrower as
consignor;
(k) which is perishable; or
(l) which contains or bears any intellectual property rights
licensed to the Borrowers unless the Agent is satisfied that
it may sell or otherwise dispose of such Inventory without (i)
infringing the rights of such licensor, (ii) violating any
contract with such licensor, or (iii) incurring any liability
with respect to payment of royalties other than royalties
incurred pursuant to sale of such Inventory under the current
licensing agreement.
In the event that Inventory which was previously Eligible Inventory
ceases to be Eligible Inventory hereunder, the Borrowers shall notify the Agent
thereof on and at the time of submission to the Agent of the next Borrowing Base
Certificate.
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, or binding agreements
issued, promulgated or entered into by any Governmental Authority, relating in
any way to the pollution or protection of the environment or the preservation or
reclamation of natural resources, including those relating to the management,
release or threatened release of any Hazardous Material, or to employee health
and safety matters.
"Environmental Liabilities" means all Liabilities (including costs of
Remedial Actions, natural resource damages and costs and expenses of
investigation and feasibility studies) that may be imposed on, incurred by or
asserted against any Loan Party 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 or otherwise, arising under any Environmental Law or in
connection with any environmental, health or safety condition or with any
Release or resulting from the ownership, lease, sublease or other operation or
occupation of property by any Loan Party, whether on, prior to or after the date
hereof.
"Equity Interests" means, with respect to any Person, shares of capital
stock, partnership interests, membership interests in a limited liability
company, beneficial interests in a trust or other equity ownership interests in
such Person, and any warrants, options or other rights entitling the holder
thereof to purchase or acquire any such equity interest.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means Loan Parties, their Subsidiaries and
Affiliates, but excluding those Persons having a Controlling or ownership
interest in Parent.
"ERISA Event" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30 day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by any Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by any Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by any
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by any Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from any Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in Article
VII.
"Excluded Taxes" means, with respect to any Person, (a) income or
franchise taxes imposed on or measured by (or for which of two or more
alternative bases is based on or measured by reference to) such Person's net
income, (b) taxes imposed by the jurisdiction under the laws of which such
Person is organized or doing business in which its principal office is located
and, in addition, in the case of any Lender, in which its applicable lending
office is located, (c) any branch profits taxes imposed by the United States of
America or any other jurisdiction, (d) any gift, inheritance, succession or
similar taxes, (e) withholding tax imposed with respect to amounts payable to a
Non-U.S. Lender to the extent that such withholding tax is in effect and is
applicable to such Non-U.S. Lender (after giving effect to any treaty or other
applicable basis for reduction or exemption) on the date such Non-U.S. Lender
becomes a party to this Agreement (or designates a new lending office) and (f)
any tax that is attributable to a Lender's failure to comply with Section
2.19(e); provided, that clause (e) above shall not include amounts that arise
(i) as a result of an assignment or the designation of a new lending office made
at the request of the Administrative Borrower under Section 2.21(b), or (ii) to
the extent that such Lender (or its assignor, if any) was entitled, at the time
of designation of a new lending office (or assignment), to receive additional
amounts from the Borrowers with respect to such withholding tax pursuant to
Section 2.19(a).
"Existing Lender" means GMAC Commercial Finance LLC.
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"Existing Letter(s) of Credit" means (a) that certain standby letter of
credit issued by Bank of New York for the benefit of Samsung Semiconductor USA,
in the face amount of $2,250,000, which expires on February, 28, 2007; (b) that
certain standby letter of credit issued by GMAC Commercial Finance LLC for the
benefit of Sharp Micro Electronics, in the face amount of $250,000, which
expires on December 31, 2006; and (c) that certain standby letter of credit
issued by GMAC Commercial Finance LLC for the benefit of Lambada America, in the
face amount of $100,000, which expires on January 5, 2007.
"Exposure" means, at any time, the aggregate principal amount of
outstanding Loans at such time. The Exposure of any Lender at any time shall be
the aggregate principal amount of its outstanding Loans at such time.
"Extraordinary Receipts" means any Net Cash Proceeds exceeding
$100,000, received by any Loan Party or any of its Subsidiaries not in the
ordinary course of business (and not consisting of proceeds described in Section
2.13(b)(ii), (iii) or (iv) hereof), including, without limitation, (i) foreign,
federal, state or local tax refunds, (ii) pension plan reversions, (iii)
proceeds of insurance, (iv) judgments, proceeds of settlements or other
consideration of any kind in connection with any cause of action, (v)
condemnation awards (and payments in lieu thereof), (vi) indemnity payments and
(vii) any purchase price adjustment received in connection with any purchase
agreement.
"Fair Market Value" shall mean, with respect to real or immovable
property of any Person, the fair market value thereof as determined in the most
recent appraisal received by the Agent in accordance with the terms hereof,
which appraisal shall be performed in a manner reasonably acceptable to the
Agent by an appraiser reasonably acceptable to the Agent.
"Fee Letter" shall mean the Fee Letter dated as of the date hereof.
"Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such date, 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 that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for
such day for such transactions received by the Agent from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of the Administrative Borrower.
"Fiscal Quarter" means a fiscal quarter of the Parent and its
Subsidiaries ending on September 30, December 31, March 31 or June 30 of each
year.
"Fiscal Year" means the fiscal year of the Parent and its Subsidiaries
ending on June 30 of each year.
"Fixed Charge Coverage Ratio" means, the ratio, determined as of the
end of each Fiscal Quarter of the Parent for the most-recently ended four Fiscal
Quarters, of (a) EBITDA for such four Fiscal Quarters, minus Capital
Expenditures during such four Fiscal Quarters (excluding Capital Expenditures to
the extent financed with Indebtedness for borrowed money (other than
Indebtedness incurred hereunder)) to (b) Fixed Charges for such four Fiscal
Quarters, all calculated for the Parent and its Subsidiaries on a consolidated.
"Fixed Charges" means, with reference to any period, without
duplication, cash Interest Expense for such period, plus scheduled principal
payments on Indebtedness required to be made during such period, plus expense
for taxes paid in cash during such period, plus dividends or distributions paid
in cash during such period, plus Capital Lease Obligation payments during such
period, all calculated for the Parent and its Subsidiaries on a consolidated
basis.
"Flex-Pricing Provisions" means any term or provision of any fee
letter, commitment letter or term sheet delivered in connection with the
transaction which is the subject of this Agreement which purports to permit the
Syndication Agent or the lead arranger to change any or all of the structure,
terms or pricing of the credit facility evidenced by this Agreement either
before or after the Effective Date in order to aid the Syndication Agent and/or
lead arranger in the successful syndication of such credit facility either
before or after the Effective Date,
"Funding Accounts" has the meaning assigned to such term in Section
4.01(h).
"GAAP" means generally accepted accounting principles in the United
States of America.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government, including without limitation the Surface Transportation Board.
"Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.
"Hazardous Material" means any substance, material or waste that is
classified, regulated or otherwise characterized under any Environmental Law as
hazardous, toxic, a contaminant or a pollutant or by other words of similar
meaning or regulatory effect, including petroleum or any fraction thereof,
asbestos, polychlorinated biphenyls and radioactive substances.
"Inactive Subsidiary" means Nexus Custom Electronics, Inc., a
Delaware corporation.
-------------------
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
under conditional sale or other title retention agreements relating to property
acquired by such Person, (d) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding accounts payable
incurred in the ordinary course of business and not overdue by more than 60
days), (e) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on property owned or acquired by such Person, whether or not the
Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person
of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty, (i) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances, (j)
obligations under any liquidated earn-out, (k) all Swap Obligations (and the
amount of Indebtedness under any Swap Obligation shall be deemed the Net
Xxxx-to-Market Exposure thereunder) and (l) obligations of such Person to
purchase securities or other property arising out of or in connection with the
sale of the same or substantially similar securities or property or any other
Off-Balance Sheet Liability. The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result
of such Person's ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such Person is
not liable therefor.
"Indemnified Taxes" means taxes imposed by any taxing authority on any
Lender with respect to the Loan Documents other than Excluded Taxes.
"Indemnitee" has the meaning set forth in Section 9.04(b).
"Interest Election Request" means a request by the Administrative
Borrower to convert or continue a Borrowing in accordance with Section 2.10.
"Interest Expense" means, with reference to any period, the interest
expense (net of interest income) of the Parent and its Subsidiaries calculated
on a consolidated basis for such period.
"Interest Payment Date" means (a) with respect to any ABR Loan (other
than a Swingline Loan), the last day of each calendar quarter and the Maturity
Date, (b) with respect to any Eurodollar Loan, the last day of the Interest
Period applicable to the Borrowing of which such Loan is a part, and in the case
of a Eurodollar Borrowing with an Interest Period of more than three months'
duration, each day prior to the last day of such Interest Period that occurs at
intervals of three months' duration after the first day of such Interest Period
and the Maturity Date and (c) with respect to any Swingline Loan, the day that
such Loan is required to be repaid and the Maturity Date.
"Interest Period" means with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two or three months
thereafter, as the Administrative Borrower may elect; provided, that, (i) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day, unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day and (ii) any
Interest Period that commences on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month of such Interest Period. For purposes hereof, the date
of a Borrowing initially shall be the date on which such Borrowing is made and,
in the case of a Revolving Borrowing, thereafter shall be the effective date of
the most recent conversion or continuation of such Borrowing.
"Inventory" has the meaning assigned to such term in the Collateral
Agreement.
"Investment Grade" means a rating of (a) "BBB" or better by S&P or (b)
"Baa" or better by Moody's.
"Issuing Bank" has the meaning set forth in Section 2.08(a)(i).
"Joinder Agreement" has the meaning assigned to such term in Section
5.11.
"Lenders" means the Persons listed on the Commitment Schedule and any
other Person that shall have become a party hereto pursuant to an Assignment and
Assumption, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Assumption. Unless the context otherwise requires, the term
"Lenders" includes the Swingline Lenders and the Issuing Bank.
"Letter of Credit" means documentary or standby letters of credit
issued for the account of a Borrower by any Issuing Bank for which Agent and
Lenders have incurred Letter of Credit Obligations. Each Existing Letter of
Credit shall be deemed to constitute a Letter of Credit issued hereunder on the
Effective Date for all purposes of the Loan Documents.
"Letter of Credit Fee" has the meaning assigned to such term in Section
2.08(d).
"Letter of Credit Guaranty" has the meaning assigned to such term in
Section 2.08(a).
"Letter of Credit Obligations" means all outstanding obligations
incurred by Agent and Lenders at the request of any Borrower, whether direct or
indirect, contingent or otherwise, due or not due, in connection with the
issuance of Letters of Credit by any Issuing Bank or the purchase of a
participation as set forth in Section 2.08 with respect to any Letter of Credit.
The amount of such Letter of Credit Obligations shall equal the maximum amount
that may be payable by Agent or Lenders in respect of all outstanding Letter of
Credit and, without duplication, Letter of Credit Guarantees plus all
unreimbursed amounts with respect to drawings thereon.
"Letter of Credit Sublimit" has the meaning assigned to such term in
Section 2.08(a).
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Dow Xxxxx Market Service
(or on any successor page or any successor to such Service, or any substitute
page or substitute for such Service, providing rate quotations comparable to
those currently provided on such page of such Service, as determined by the
Agent from time to time for purposes of providing quotations of interest rates
applicable to dollar deposits in the London interbank market) at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period, as the rate for dollar deposits with a maturity comparable to
such Interest Period. In the event that such rate is not available at such time
for any reason, then the "LIBO Rate" with respect to such Eurodollar Borrowing
for such Interest Period shall be determined by reference to such other
comparable publicly available service for displaying the offered rate for dollar
deposits in the London interbank market as may be selected by the Agent and, in
the absence of availability, such other method to determine such Eurodollar rate
as may be selected by the Agent in its Permitted Discretion.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset, and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loan" or "Loans" means the loans and advances made by the Lenders
pursuant to this Agreement, including Swingline Loans and Protective Advances.
"Loan Documents" means this Agreement, any promissory notes issued
pursuant to this Agreement, any Letter of Credit applications, the Collateral
Documents, the Fee Letter and all other agreements, instruments, documents and
certificates identified in Section 4.01 executed and delivered to, or in favor
of, the Agent or any Lenders and including all other pledges, powers of
attorney, consents, assignments, contracts, notices, letter of credit agreements
and all other written matter whether heretofore, now or hereafter executed by or
on behalf of any Loan Party, or any employee of any Loan Party, and delivered to
the Agent or any Lender in connection with the Agreement or the transactions
contemplated thereby. Any reference in this 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 this Agreement or such Loan Document as the same may be in
effect at any and all times such reference becomes operative.
"Loan Parties" means each of the Borrowers, each Subsidiary signatory
hereto, and each Subsidiary made a party hereto pursuant to Section 5.11.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations or financial condition of the Parent and its
Subsidiaries taken as a whole, (b) the ability of any Loan Party to perform any
of its obligations under the Loan Documents to which it is a party, (c) the
Collateral, or the Agent's Liens (on behalf of itself and the Secured Parties)
on the Collateral or the priority of such Liens, or (d) the rights of or
benefits available to the Agent or the Lenders thereunder.
"Material Environmental Liabilities" means Environmental Liabilities
exceeding $250,000 in the aggregate.
"Material Indebtedness" means Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of one or more Swap Agreements, of
any one or more of the Parent and its Subsidiaries in an aggregate principal
amount exceeding $250,000. For purposes of determining Material Indebtedness,
the "obligations" of the Parent or any of its Subsidiaries in respect of any
Swap Agreement at any time shall be the maximum aggregate amount (giving effect
to any netting agreements) that the Parent or such Subsidiary would be required
to pay if such Swap Agreement were terminated at such time.
"Maturity Date" means December 22, 2009 or any earlier date on which
the Revolving Commitments are reduced to zero or otherwise terminated pursuant
to the terms hereof.
"Moody's" means Xxxxx'x Investors Service, Inc. or if such company
shall cease to issue ratings, another nationally recognized statistical rating
company selected in good faith by mutual agreement of the Agent and the
Administrative Borrower.
"Mortgaged Properties" means the real or immovable property now or
hereafter subject to a Mortgage granted in favor of the Agent for the benefit of
the Lenders.
"Mortgages" means any mortgage, deed of trust or other agreement which
conveys or evidences a Lien in favor of the Agent, for the benefit of the Agent
and the Secured Parties, on real or immovable property of a Loan Party,
including any amendment, modification or supplement thereto.
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"Net Cash Proceeds" means, if in connection with (a) an asset
disposition, cash proceeds net of (i) commissions, brokers' fees, legal,
accounting and professionals' fees and other reasonable and customary
transaction costs, fees and expenses properly attributable to such transaction
and payable by such Loan Party in connection therewith (in each case, paid to
non-Affiliates), (ii) transfer taxes paid in connection therewith, (iii) amounts
payable to holders of senior Liens on such asset (to the extent such Liens
constitute Permitted Encumbrances hereunder), if any, and (iv) cash taxes paid
in connection therewith, (b) the issuance or incurrence of Indebtedness, cash
proceeds net of attorneys' fees, investment banking fees, accountants' fees,
underwriting discounts and commissions and other customary fees and expenses
actually incurred in connection therewith, (c) an equity issuance, cash proceeds
net of underwriting discounts and commissions and other reasonable costs paid to
non-Affiliates in connection therewith or (d) Extraordinary Receipts, cash
proceeds received net of (i) expenses related thereto payable by such Loan Party
in connection therewith (in each case, paid to non-Affiliates), (ii) transfer
taxes paid, and (iii) cash taxes paid in connection therewith.
"Net Income" means, with reference to any period, the net income (or
loss) of the Parent and its Subsidiaries calculated on a consolidated basis for
such period.
"Net Xxxx-to-Market Exposure" shall mean, with respect to any Person,
as of any date of determination, the excess (if any) of all unrealized losses
over all unrealized profits of such Person arising from Swap Agreement
transactions. As used in this definition, "unrealized losses" means the fair
market value of the cost to such Person of replacing such Swap Agreement
transactions as of the date of determination (assuming the Swap Agreement
transactions were to be terminated as of that date), and "unrealized profits"
means the fair market value of the gain to such Person of replacing such Swap
Agreement transactions as of the date of determination (assuming such Swap
Agreement transactions were to be terminated as of that date).
"Net Orderly Liquidation Value" means, with respect to Inventory or
equipment of any Person, the orderly liquidation value thereof as determined in
a manner acceptable to the Agent by an appraiser reasonably acceptable to the
Agent, net of all costs of liquidation thereof.
"Net Recovery Rate" means the quotient of (a) the estimated net income,
payments and proceeds from the sale, exchange, collection or other disposition
of each Loan Party's Inventory (as determined on a Net Orderly Liquidation Value
basis), based on an appraisal provided by an appraiser retained or approved by
the Agent and (b) the cost of the Eligible Inventory as of the effective date of
the estimate provided pursuant to clause (a) of this definition.
"Non-Consenting Lender" has the meaning assigned to such term in
Section 9.03(f).
"Non-U.S. Lender" means a Lender or a Participant that is (a) organized
under the laws of a jurisdiction other than the United States, any State thereof
or the District of Columbia or (b) organized under the laws of the United
States, any State thereof, or the District of Columbia and whose separate
existence from a Person that is not treated as a "United States person" for
purposes of Section 7701(a)(30) of the Code is disregarded for federal income
tax purposes under Treasury Regulations Section 301.7701-3 or any similar
provision.
"Non-U.S. Plan" means any pension, retirement, superannuation or
similar policy or arrangement sponsored, maintained or contributed to by any
Borrower in a jurisdiction other than the United States.
"Non-U.S. Subsidiary" means any Subsidiary that is organized under the
laws of a jurisdiction other than the United States or any State thereof or the
District of Columbia.
"Notice of Drawing" has the meaning assigned to such term in Section
2.05(c)(i).
"Obligations" means: (a) all unpaid principal of and accrued and unpaid
interest on the Loans (including interest that accrues or that would accrue but
for the filing of a bankruptcy case or similar proceeding by a Loan Party,
whether or not such interest would be an allowable claim under any applicable
bankruptcy or other similar proceeding, and other obligations accruing or
arising after commencement of any case under any bankruptcy or similar laws by
or against any Loan Party (or that would accrue or arise but for the
commencement of any such case)); (b) all obligations of the Agent under Letter
of Credit Guaranties; (c) without duplication, the Borrower's liabilities to the
Agent under any instrument of guaranty or indemnity, or arising under any
guaranty, endorsement or undertaking which the Agent, on behalf of the Lenders,
may make or issue to others for the account of the Borrower, including any
accommodations extended by the Agent with respect to applications for Letters of
Credit, the Agent's acceptance of drafts or the Agent's endorsement of notes or
other instruments for the Borrower's account and benefit; and (d) and all
accrued and unpaid fees and all expenses, reimbursements, indemnities and other
obligations of the Loan Parties to the Lenders or to any Lender, the Agent or
any indemnified party arising under the Loan Documents. Obligations shall also
include all Banking Services Obligations and all Swap Obligations owed by a Loan
Party to one or more Lenders or their respective Affiliates (or to an entity
that was a Lender or Affiliate of a Lender at the time such arrangement was
consummated), provided that no Banking Service Obligation or Swap Obligation
shall constitute an "Obligation" unless within a reasonable time after such
Banking Service arrangement is implemented or Swap Agreement is executed, the
Lender or Affiliate of a Lender party thereto shall have delivered (i) written
notice to the Agent stating (x) that such a transaction has been entered into
and constitutes an Obligation entitled to the benefits of the Collateral
Documents and (y) the maximum dollar amount of the Borrowers' obligations
thereunder (which amount may be included as a Reserve hereunder) and (ii) in the
case of any Banking Service Obligation or Swap Obligation provided by an
Affiliate of a Lender, such Lender Affiliate's written designation of the Agent
as its agent for purposes of the Collateral Documents and acknowledgment of the
terms set forth in Article VIII hereof.
"Off-Balance Sheet Liability" of a Person means (a) any repurchase
obligation or liability of such Person with respect to accounts or notes
receivable sold by such Person, (b) any indebtedness, liability or obligation
under any sale and leaseback transaction which is not a Capital Lease
Obligation, (c) any indebtedness, liability or obligation under any so-called
"synthetic lease" transaction entered into by such Person, or (d) any
indebtedness, liability or obligation arising with respect to any other
transaction which is the functional equivalent of or takes the place of
borrowing but which does not constitute a liability on the balance sheets of
such Person, but excluding from this clause (d) operating leases.
"Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies (but, for
the avoidance of doubt, not including any income or withholding taxes) arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement or any other Loan Document.
"Overadvance" has the meaning set forth in Section 2.02(c).
"Overadvance Loan" means an ABR Borrowing made when an Overadvance
exists or is caused by the funding thereof.
"Parent" has the meaning set forth in the preamble to this Agreement.
"Participant" has the meaning set forth in Section 9.05.
"Patriot Act" means USA Patriot Act (Title III of Pub. L. 107-56 (
signed into law October 26, 2001)).
-----------
"Payment Account" means each bank account established pursuant to the
Security Documents, to which the funds of the Borrowers (including proceeds of
Accounts and other Collateral) are deposited or credited, and which is
maintained in the name of Agent or any Loan Party, or any of them, as the Agents
may determine, on terms acceptable to the Agents.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"Permit" means, with respect to any Person, any permit, approval,
authorization, license, registration, certificate, concession, grant, franchise,
variance or permission from, and any other agreement, document, undertaking,
lease, indenture, mortgage, deed of trust or other instrument with, any
Governmental Authority, in each case whether or not having the force of law and
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.
"Permitted Acquisition" has the meaning set forth in Section 6.04(i).
"Permitted Discretion" means a determination made by Agent in the
exercise of its reasonable judgment (from the perspective of a secured
asset-based lender), exercised in good faith, based upon its consideration of
any factor that (a) would reasonably be expected to materially adversely affect
the quantity, quality, mix or value of any material portion of the Collateral,
the enforceability or priority of the Agent's Liens with respect to any material
portion of the Collateral, or the amount that the Agent and Lenders could
receive in liquidation of any material portion of the Collateral; (b) indicates
that any collateral report or financial information delivered by any Loan Party
is incomplete, inaccurate or misleading in any material respect; (c) materially
increases the likelihood of any proceeding under debtor relief laws involving
any Loan Party; or (d) creates or would reasonably be expected to result in a
Default or Event of Default. In exercising such judgment, Agent may consider any
factors that would materially increase the credit risk of lending to Borrowers
on the security of the Collateral.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 5.04 other than those
arising pursuant to ERISA;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in
the ordinary course of business and securing obligations that
are not overdue by more than 60 days or are being contested in
compliance with Section 5.04;
(c) pledges and deposits made in the ordinary course of business
in compliance with workers' compensation, unemployment
insurance and other social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in
each case in the ordinary course of business;
(e) judgment liens in respect of judgments that do not constitute
an Event of Default under clause (k) of Article VII;
(f) easements, zoning restrictions, rights-of-way and encumbrances
on real or immovable property that do not secure any monetary
obligations and do not materially detract from the value of
the affected property or materially interfere with the
ordinary conduct of business of a Borrower or any Subsidiary;
(g) Liens in favor of the Agent granted pursuant to any Loan
Document; and
(h) title exceptions identified on the title policies delivered on
or prior to the Effective Date pursuant to Section 4.01(b).
"Permitted Investments" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the
United States of America (or by any agency thereof to the
extent such obligations are backed by the full faith and
credit of the United States of America), in each case maturing
within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from
the date of acquisition thereof and rated, at such date of
acquisition, at least A-1 by S&P, at least P-1 by Moody's;
(c) investments in certificates of deposit, banker's acceptances
and time deposits maturing within 270 days from the date of
acquisition thereof issued or guaranteed by or placed with,
and money market deposit accounts issued or offered by, any
domestic office of any commercial bank organized under the
laws of the United States of America or any State thereof
which has a combined capital and surplus and undivided profits
of not less than $100,000,000;
(d) fully collateralized repurchase agreements with a term of not
more than 30 days for securities described in clause (a) above
and entered into with a financial institution satisfying the
criteria described in clause (c) above; and
(e) money market funds that (i) have substantially all of their
assets invested continuously in the types of investments
listed in clauses (a), (b), (c) and (d) above, (ii) are rated
AAA by S&P, Aaa by Moody's and (iii) have portfolio assets of
at least $5,000,000,000.
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which any Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Post-Closing Letter" means that certain Post-Closing Letter dated as
of the date hereof by the Loan Parties in favor of the Agent.
"Prepayment Fee" means a fee payable to the Agent, for the benefit of
the applicable Lenders, in the following amount:
Period during which early termination or reduction occurs Revolving Loan Prepayment Fee
------------------------------------------------------------------ -----------------------------------------
On or prior to the first anniversary of the date of this 1.0% of the Aggregate Commitment
Agreement terminated
------------------------------------------------------------------ -----------------------------------------
After the first anniversary of the date of this Agreement but on 0.5% of the
Aggregate Commitment or prior to the second anniversary of the date of this
Agreement terminated
------------------------------------------------------------------ -----------------------------------------
After the second anniversary of the date of this Agreement No Prepayment Fee
------------------------------------------------------------------ -----------------------------------------
"Prime Rate" means in respect of ABR Loans, the rate of interest per
annum publicly announced from time to time by JPMorgan Chase Bank (or its
successor) as its prime rate in effect at its principal office in New York City
(or if such rate is at any time not available, the prime rate so quoted by any
banking institution as determined by the Agent in its sole discretion); each
change in the Prime Rate shall be effective on the date such change is publicly
announced as being effective.
"Projections" has the meaning assigned to such term in Section 5.01(f).
"Protective Advance" has the meaning assigned to such term in Section
2.06.
"Register" has the meaning set forth in Section 9.05.
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Release" means any release, threatened release, spill, emission,
leaking, pumping, pouring, emitting, emptying, escape, injection, deposit,
disposal, discharge, dispersal, dumping, leaching or migration of Hazardous
Material into or through the environment.
"Remedial Action" means all actions required to (a) clean up, remove,
treat or in any other way address any Hazardous Material in the indoor or
outdoor environment, (b) prevent or minimize any Release so that a Hazardous
Material does not migrate or endanger or threaten to endanger public health or
welfare or the indoor or outdoor environment or (c) perform pre-remedial studies
and investigations and post-remedial monitoring and care with respect to any
Hazardous Material.
"Report" means reports prepared in good faith by the Agent or another
Person showing the results of appraisals, field examinations or audits
pertaining to the Borrowers' assets from information furnished by or on behalf
of the Borrowers, after the Agent has exercised its rights of inspection
pursuant to this Agreement, which Reports may be distributed to the Lenders by
the Agent.
"Required Lenders" means, at any time, (a) if there are two (2) Lenders
or less, all Lenders, or (b) if there are three (3) or more Lenders, Lenders
having Commitments representing a majority of the Aggregate Commitment at such
time or, if the Commitments of the Lenders have been terminated, Lenders
representing a majority of the Aggregate Credit Exposure.
"Reserves" means (i) any and all reserves which the Agent deems
necessary, in its Permitted Discretion, to from time to time establish against
the gross amounts of Eligible Accounts and Eligible Inventory (including,
without limitation, reserves for rent at locations leased by any Borrower and
for which no Collateral Access Agreement is in effect, to the extent property at
such locations is included in the Borrowing Base; reserves for consignee's,
warehousemen's and bailee's charges at locations for which no Collateral Access
Agreement is in effect, to the extent property at such locations is included in
the Borrowing Base; reserves for dilution of Accounts; reserves for Inventory
shrinkage; reserves for customs charges and shipping charges related to any
Inventory in transit; reserves for contingent liabilities of any Borrower;
reserves for uninsured losses of any Borrower and reserves for taxes, fees,
assessments, and other governmental charges) and (ii) any and all reserves for
Swap Obligations of any Loan Party which any Lender to whom Swap Obligations are
owing directs the Agent to establish, or which the Agent deems necessary in its
Permitted Discretion to establish, from time to time against the gross amounts
of Eligible Accounts and Eligible Inventory.
"Reset Date" has the meaning set forth in Section 2.24(a).
"Restricted Payment" means any dividend or other distribution (whether
in cash, securities or other property) with respect to any Equity Interests in
any Borrower or any Subsidiary, or any payment (whether in cash, securities or
other property), including any sinking fund or similar deposit, on account of
the purchase, redemption, retirement, acquisition, cancellation or termination
of any such Equity Interests in any Borrower or any Subsidiary or any option,
warrant or other right to acquire any such Equity Interests in any Borrower or
any Subsidiary.
"Revolving Commitment" means, with respect to each Revolving Lender,
the commitment of such Lender to make Revolving Loans and to acquire
participations in Letters of Credit and Swingline Loans hereunder, as such
commitment may be (a) reduced from time to time pursuant to Section 2.11, and
(b) reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 9.05. The initial amount of each Revolving Lender's
Revolving Commitment is set forth on the Commitment Schedule, or in the
Assignment and Assumption pursuant to which such Lender shall have assumed its
Revolving Commitment, as applicable. The initial aggregate amount of the
Revolving Lenders' Revolving Commitments is $55,000,000.
"Revolving Credit Exposure" means, with respect to any Revolving Lender
at any time, the sum of (a) the outstanding principal amount of such Revolving
Lender's Revolving Loans plus (b) an amount equal to its Applicable Percentage
of the sum of (i) the aggregate principal amount of all Protective Advances and
Swingline Loans outstanding at such time, plus (ii) the aggregate amount of
Letter of Credit Obligations outstanding at such time.
"Revolving Lenders" means, as of any date of determination, Lenders
having a Revolving Commitment or, if the Revolving Commitments have been
terminated, the Lenders having Revolving Credit Exposure.
"Revolving Loan" means a Loan made pursuant to Section 2.02(a).
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw Hill Companies, Inc. or if such company shall cease to issue ratings,
another nationally recognized statistical rating company selected in good faith
by mutual agreement of the Agent and the Administrative Borrower.
"Secured Parties" means, collectively, (a) the Agent, (b) the Lenders,
(c) an Issuing Bank, (d) any Person indemnified under the Loan Documents and (e)
any Lender or an Affiliate of any Lender with respect to any Banking Services
Obligation or Swap Obligation that constitutes an Obligation.
"Security Agreements" means the Collateral Agreement and any other
pledge or security agreement entered into, after the date of this Agreement by
any other Loan Party (as required by this Agreement or any other Loan Document),
or any other Person, as the same may be amended, restated or otherwise modified
from time to time.
"Settlement" has the meaning assigned to such term in Section 2.07(c).
"Settlement Date" has the meaning assigned to such term in Section
2.07(c).
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board with respect to the Adjusted LIBO Rate, for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board). Such reserve percentages shall include those imposed
pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute
eurocurrency funding and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Lender under such Regulation D or any comparable
regulation. The Statutory Reserve Rate shall be adjusted automatically on and as
of the effective date of any change in any reserve percentage.
"Subordinated Indebtedness" of a Person means any Indebtedness of such
Person the payment of which is subordinated to payment of the Obligations to the
written satisfaction of the Agent.
"subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.
"Subsidiary" means any subsidiary of any Borrower or a Loan Party, as
applicable other than the Inactive Subsidiary.
"Swap Agreement" means any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement involving, or
settled by reference to, one or more rates, currencies, commodities, equity or
debt instruments or securities, or economic, financial or pricing indices or
measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions; provided, that, no phantom
stock or similar plan providing for payments only on account of services
provided by current or former directors, officers, employees or consultants of
any Borrower or any Subsidiary shall be a Swap Agreement.
"Swap Obligations" of a Person means any and all obligations of such
Person, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (a) any and all Swap
Agreements, and (b) any and all cancellations, buy backs, reversals,
terminations or assignments of any Swap Agreement transaction.
"Swingline Lender" means The CIT Group/Business Credit, Inc., in its
capacity as lender of the Swingline Loans hereunder.
"Swingline Loan" has the meaning assigned to such term in Section
2.07(a).
"Syndication Agent" means CIT Capital Securities, LLC, in its capacity
as syndication agent with respect to the Loans.
"tax", "Tax" or "Taxes" means any and all present or future taxes,
levies, imposts, duties, deductions, charges or withholdings imposed by any
Governmental Authority, together with any interest, penalties or additions to
tax imposed thereon or with respect thereto.
"Tax Sharing Agreement" means any tax sharing agreement or arrangement,
as the same may be amended from time to time, in form and substance reasonably
satisfactory to the Agent, between and among the Borrowers or between Parent or
any other Borrower and one or more other Persons, provided, that, in the later
case (x) in no event shall the amount paid by the Borrowers to such other Person
or Persons pursuant to all such agreements and/or arrangements exceed a
reasonable estimate of the amount that the Parent would be required to pay for
taxes (including interest, penalties and additions to tax and including
estimated taxes) were it to file a consolidated, combined, unitary or similar
tax return for itself and its subsidiaries as if it were the common parent (or
analogous person) with respect to a consolidated, combined, unitary or similar
tax group, (y) in the event that such reasonable estimate exceeds the actual
amount that Parent would be required to pay exceeds such reasonable estimate,
such other Person or Persons are required to repay the excess to Parent or the
other Borrowers within a reasonable period after the later of the date on which
such excess is determined and the date on which such other Person or Persons
receives any refund related to such excess and (z) the agreement or arrangement
contains an acknowledgement by Parent or any other Person entitled to receive
payments from Parent or any other Borrower that payments under such agreement or
arrangement may be restricted by the terms of this Agreement.
"Total Exposure" means the Aggregate Credit Exposure.
"Transactions" means the execution, delivery and performance by the
Borrowers of this Agreement and the other Loan Documents, the borrowing of Loans
and other credit extensions, the use of the proceeds thereof and the issuance of
Letters of Credit hereunder.
"Transfer" has the meaning assigned to such term in Section 2.06(b).
"Transfer Date" has the meaning assigned to such term in Section
2.06(b).
"Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.
"U.S. Subsidiary" means each Subsidiary which is not a Non-U.S.
Subsidiary; "U.S. Subsidiaries" means all such Subsidiaries.
"UCC" means the Uniform Commercial Code as in effect from time to time
in the State of New York or any other state the laws of which are required to be
applied in connection with the issue of perfection of security interests.
"Unliquidated Obligations" means, at any time, any Obligations (or
portion thereof) that are contingent in nature or unliquidated at such time,
including any Obligation that is: (i) an obligation to reimburse a bank for
drawings not yet made under a letter of credit issued by it; (ii) any other
obligation (including any guarantee) that is contingent in nature at such time;
or (iii) an obligation to provide collateral to secure any of the foregoing
types of obligations.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02 Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by
--------------------------------------- Class (e.g., a "Revolving Loan") or by
Type (e.g., a "Eurodollar Loan") or by Class and Type (e.g., a "Revolving
Eurodollar Loan"). Borrowings also may be classified and referred to by Class
(e.g., a "Revolving Borrowing") or by Type (e.g., a "Eurodollar Borrowing") or
by Class and Type (e.g., a "Revolving Eurodollar Borrowing").
SECTION 1.03 Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein) unless the context
requires otherwise, (b) any reference herein to any Person shall be construed to
include such Person's successors and assigns unless the context requires
otherwise, (c) the words "herein", "hereof" and "hereunder", and words of
similar import, shall be construed to refer to this Agreement in its entirety
and not to any particular provision hereof, (d) all references herein to
Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e)
the words "asset" and "property" shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.
SECTION 1.04 Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided, that, if the
Borrower notifies the Agent that the Borrower requests an amendment to any
provision hereof to eliminate the effect of any change occurring after the date
hereof in GAAP or in the application thereof on the operation of such provision
(or if the Agent notifies the Borrower that the Required Lenders request an
amendment to any provision hereof for such purpose), regardless of whether any
such notice is given before or after such change in GAAP or in the application
thereof, then such provision shall be interpreted on the basis of GAAP as in
effect and applied immediately before such change shall have become effective
until such notice shall have been withdrawn or such provision amended in
accordance herewith.
ARTICLE II
The Credits
SECTION 2.01 The Facility.
(a) Subject to the terms and conditions set forth herein, each Lender
agrees to make Loans to the Borrowers from time to time during the
Availability Period, each in an aggregate principal amount that will
not result in (i) such Lender's Exposure exceeding such Lender's
Commitment or (ii) (A) on the Effective Date, the Total Exposure
exceeding the Aggregate Commitment and (B) thereafter, the Aggregate
Credit Exposure exceeding the Aggregate Commitment. The facility shall
be composed of Revolving Loans, Swingline Loans and Protective Advances
as set forth below.
(b) Within the foregoing limits and subject to the terms and conditions set
forth herein, the Borrowers may borrow, prepay and reborrow Loans from
each Revolving Lender during the Availability Period.
SECTION 2.02 Loans.
(a) Subject to the terms and conditions set forth herein, each Revolving
Lender agrees to make Revolving Loans to the Borrowers at any time and
from time to time during the Availability Period in an aggregate
principal amount that will not result in (i) such Lender's Exposure
exceeding such Lender's Commitment, (ii) the Aggregate Credit Exposure
exceeding the Aggregate Commitments or (iii) the Aggregate Credit
Exposure exceeding the Borrowing Base then in effect. (b) Within the
foregoing limits and subject to the terms and conditions set forth
herein, the Borrowers may borrow, prepay and reborrow Revolving Loans.
(c) Overadvances. If the Aggregate Revolving Credit Exposure exceeds the
Borrowing Base at any time (an "Overadvance"), such ------------
----------- excess amount shall be payable by Borrowers on demand by
the Agent. All Overadvances shall constitute Obligations secured by
the Collateral and entitled to all benefits of the Loan Documents.
Unless its authority has been revoked in writing by Required Lenders,
the Agent may require Revolving Lenders to honor requests for
Overadvance Loans and to forbear from requiring Borrowers to cure an
Overadvance, as long as (i) the Overadvance does not continue for more
than 30 consecutive days (and no Overadvance may exist for at least
five consecutive days thereafter before further Overadvance Loans are
required), and (ii) the Overadvance, together with any Protective
Advances made pursuant to Section 2.06(a)(i) and (ii), do
--------------------------- not exceed $5,000,000. Overadvance Loans
may be made even if the conditions precedent set forth in Section 4.02
have not ------------ been satisfied. In no event shall Overadvance
Loans be required that would cause the Aggregate Revolving Credit
Exposure to exceed the Aggregate Commitments. Any funding of an
Overadvance Loan or sufferance of an Overadvance shall not constitute
a waiver by the Agent or Revolving Lenders of the Event of Default
caused thereby. In no event shall any Borrower or other Loan Party be
deemed a beneficiary of this Section 2.03(c) nor authorized to enforce
any of its terms ---------------
SECTION 2.03 Loans and Borrowings.
(a) Each Loan shall be made as part of a Borrowing consisting of Loans of
the same Class and Type made by the Lenders ratably in accordance with
their respective Commitments of the applicable Class. Any Protective
Advance shall be made in accordance with the procedures set forth in
Section 2.06.
(b) Subject to Section 2.15, each Borrowing shall be denominated in Dollars
and comprised entirely of ABR Loans or Eurodollar Loans as the
applicable Borrower may request in accordance herewith. Each Swingline
Loan shall be denominated in Dollars and shall be an ABR Loan. Each
Lender at its option may make any Eurodollar Loan by causing any
domestic or foreign branch or Affiliate of such Lender to make such
Loan; provided, that, any exercise of such option shall not affect the
obligation of the Borrowers to repay such Loan in accordance with the
terms of this Agreement.
(c) At the commencement of each Interest Period for any Eurodollar
Revolving Borrowing, such Borrowing shall be in an aggregate amount
that is an integral multiple of $1,000,000 and not less than
$1,000,000. ABR Revolving Borrowings may be in any amount. Borrowings
of more than one Type and Class may be outstanding at the same time;
provided, that, there shall not at any time be more than a total of
five (5) Eurodollar Revolving Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the Borrowers
shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto
would end after the Maturity Date.
SECTION 2.04 Requests for Borrowings. To request a Borrowing, the Administrative
Borrower shall notify the Agent of such request by telephone (or, if permitted
by Agent, by request posted to Agent's StuckeyNet system) (a) in the case of a
Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three
Business Days before the date of the proposed Borrowing or (b) in the case of an
ABR Borrowing, not later than 1:00 p.m., New York City time, on the day of the
proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable
and shall be confirmed promptly by hand delivery, facsimile or Electronic
Transmission to the Agent of a written Borrowing Request in a form approved by
the Agent and signed by the Borrower. Each such telephonic and written Borrowing
Request shall specify the following information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
(iv) in the case of a Eurodollar Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period
contemplated by the definition of the term "Interest Period";
(v) in the case of a Revolving Borrowing, the Availability (after
giving effect to such Borrowing); and
(vi) if not a conversion or continuance, the Borrower to whom the
proceeds from such Borrowing are to be disbursed.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrowers shall be
deemed to have selected an Interest Period of one month's duration. Promptly
following receipt of a Borrowing Request in accordance with this Section, the
Agent shall advise each Lender of the details thereof and of the amount of such
Lender's Loan to be made as part of the requested Borrowing.
SECTION 2.05 [Intentionally Omitted]
SECTION 2.06 Protective Advances.
(a) Subject to the limitations set forth below, the Agent is authorized by the
Borrowers and the Lenders, from time to time in the Agent's sole discretion
(but shall have absolutely no obligation to), to make Loans to the
Borrowers, on behalf of all Lenders, which the Agent, in its Permitted
Discretion, deems necessary or desirable (i) to preserve or protect the
Collateral or any portion thereof, (ii) to enhance the likelihood of, or
maximize the amount of, repayment of the Loans and other Obligations, or
(iii) to pay any other amount chargeable to or required to be paid by the
Borrowers pursuant to the terms of this Agreement, including payments of
principal, interest, fees, premiums, reimbursable expenses (including
costs, fees and expenses as described in Section 9.04) and other sums
payable under the Loan Documents (any of such Loans are -------------
herein referred to as "Protective Advances"); provided, that, no Protective
Advance shall cause the Aggregate Credit Exposure to exceed the Aggregate
Commitments; provided, further, that, the aggregate amount of Protective
Advances -------- ------- ---- outstanding at any time, which were made
pursuant to clauses (i) and (ii) above, together with the aggregate amount
of all ----------- ---- Overadvance Loans made pursuant to Section 2.01(c),
shall not exceed at any time $5,000,000. Protective Advances may be
---------------- made even if the conditions precedent set forth in Section
4.02 have not been satisfied. The Protective Advances shall be ------------
secured by the Liens in favor of the Agent in and to the Collateral and
shall constitute Obligations hereunder. All Protective Advances shall be
ABR Borrowings. The Agent's authorization to make Protective Advances may
be revoked at any time by the Required Lenders. Any such revocation must be
in writing and shall become effective prospectively upon the Agent's
receipt thereof. At any time that there is sufficient Availability and the
conditions precedent set forth in Section -------- 4.02 have been
satisfied, the Agent may request the Lenders to make a Revolving Loan to
repay a Protective Advance. At any ---- other time the Agent may require
the Lenders to fund their risk participations described in Section 2.06(b).
---------------
(b) Upon the making of a Protective Advance by the Agent (whether before or
after the occurrence of a Default), each Lender shall be deemed, without
further action by any party hereto, to have unconditionally and irrevocably
purchased from the Agent without recourse or warranty, an undivided
interest and participation in such Protective Advance in proportion to its
Applicable Percentage of the Aggregate Commitment. Each Lender shall
transfer (a "Transfer") the amount of such Lender's Applicable Percentage
of the outstanding principal amount of the applicable Protective Advance
with respect to such purchased interest and participation promptly when
requested to the Agent, to such account of the Agent as the Agent may
designate, but in any case not later than 3:00 p.m., New York City time, on
the Business Day notified (if notice is provided by the Agent prior to
12:00 p.m. New York City time, and otherwise on the immediately following
Business Day (the "Transfer Date"). Transfers may occur during the
existence of a Default and whether or not the applicable conditions
precedent set forth in Section 4.02 have then been satisfied. Such amounts
transferred to the Agent shall be applied against the amount ------------
of the Protective Advance and, together with Lender's Applicable Percentage
of such Protective Advance, shall constitute Loans of such Lenders,
respectively. If any such amount is not transferred to the Agent by any
Lender on such Transfer Date, the Lender shall be entitled to recover such
amount on demand from such Lender together with interest thereon as
specified in Section 2.09. From and after the date, if any, on which any
Lender is required to fund, and funds, its ------------- participation in
any Protective Advance purchased hereunder, the Agent shall promptly
distribute to such Lender, such Lender's Applicable Percentage of all
payments of principal and interest and all proceeds of Collateral received
by the Agent in respect of such Protective Advance.
SECTION 2.07 Swingline Loans.
(a) The Agent, the Swingline Lender and the Lenders agree that in order to
facilitate the administration of this Agreement and the other Loan
Documents, promptly after the Administrative Borrower requests an ABR
Borrowing, the Swingline Lender may elect, in its sole discretion, to have
the terms of this Section 2.07(a) apply to such Borrowing Request by
advancing, on --------------- behalf of the Lenders and in the amount
requested, same day funds to the Borrowers on the applicable Borrowing date
to a Funding Account (each such Loan made solely by the Swingline Lender
pursuant to this Section 2.07(a) is referred to in this ---------------
Agreement as a "Swingline Loan"), with settlement among them as to the
Swingline Loans to take place on a periodic basis as set forth in Section
2.07(c). Each Swingline Loan shall be subject to all the terms and
conditions applicable to other ABR ---------------- Loans funded by the
Lenders, except that all payments thereon shall be payable to the Swingline
Lender solely for its own account. In addition, the Borrowers hereby
authorize the Swingline Lender to, and the Swingline Lender shall, subject
to the terms and conditions set forth herein (but without any further
written notice required), not later than 2:00 p.m., New York City time, on
each Business Day, make available to the Borrowers by means of a credit to
a Funding Account, the proceeds of a Swingline Loan to the extent necessary
to pay items to be drawn on any Blocked Account that day (as determined
based on notice from the Agent). The aggregate amount of Swingline Loans
outstanding at any time shall not exceed $10,000,000. The Swingline Lender
shall not make any Swingline Loan if the requested Swingline Loan exceeds
Availability (after giving effect to such Swingline Loan). Swingline Loans
may not be made if the Swingline Lender has been notified by the Agent or
the Required Lenders that a Default has occurred and is continuing and that
Swingline Loans may not be made. All Swingline Loans shall be ABR
Borrowings.
(b) Upon the making of a Swingline Loan (whether before or after the occurrence
of a Default and regardless of whether a Settlement has been requested with
respect to such Swingline Loan), each Lender shall be deemed, without
further action by any party hereto, to have unconditionally and irrevocably
purchased from the Swingline Lender or the Agent, as the case may be,
without recourse or warranty, an undivided interest and participation in
such Swingline Loan in proportion to its Applicable Percentage of the
Revolving Commitment. The Swingline Lender or the Agent may, at any time,
require the Lenders to fund their participations. From and after the date,
if any, on which any Lender is required to fund, and funds, its
participation in any Swingline Loan purchased hereunder, the Agent shall
promptly distribute to such Lender, such Lender's Applicable Percentage of
all payments of principal and interest and all proceeds of Collateral
received by the Agent in respect of such Loan.
(c) The Agent, on behalf of the Swingline Lender, shall request settlement (a
"Settlement") with the Lenders on at least a weekly basis or on any date
that the Agent elects, by notifying the Lenders of such requested
Settlement by facsimile, telephone or Electronic Transmission (and in the
case of telephone, promptly followed by facsimile) no later than 12:00
p.m., New York City time on the date of such requested Settlement (the
"Settlement Date"). Each Lender (other than the Swingline Lender, in the
case of the Swingline Loans) shall transfer the amount of such Lender's
Applicable Percentage of the outstanding principal amount of the applicable
Loan with respect to which Settlement is requested to the Agent, to such
account of the Agent as the Agent may designate, not later than 3:00 p.m.,
New York City time, on such Settlement Date. Settlements may occur during
the existence of a Default and whether or not the applicable conditions
precedent set forth in Section 4.02 have then been satisfied. Such amounts
transferred to the Agent shall be applied against the amounts of the
------------ Swingline Lender's Swingline Loans and, together with
Swingline Lender's Applicable Percentage of such Swingline Loan, shall
constitute Loans of such Lenders, respectively. If any such amount is not
transferred to the Agent by any Lender on such Settlement Date, the
Swingline Lender shall be entitled to recover such amount on demand from
such Lender together with interest thereon as specified in Section 2.09.
------------
SECTION 2.08 Letters of Credit.
(a) Issuance.
(i) Subject to the terms and conditions of this Agreement, the Agent and
Revolving Lenders agree to incur, from time to time prior to the Maturity
Date, upon the request of the Administrative Borrower and for a Borrower's
account, Letter of Credit Obligations by causing Letters of Credit to be
issued by (i) Agent (or an Affiliate thereof), (ii) a Revolving Lender (or
an Affiliate thereof) selected by or acceptable to the Agent or (iii) a
bank or other legally authorized Person selected by or acceptable to the
Agent in its sole discretion and guaranteed by the Agent (a "Letter of
Credit Guaranty") (each of (i) through (iii), an "Issuing Bank"). The
aggregate amount of all such --------------------------- -------------
Letter of Credit Obligations shall not at any time exceed the least of (A)
FIVE MILLION ($5,000,000) DOLLARS (the "Letter of Credit Sublimit"), and
(B) the aggregate Revolving Commitments less the aggregate outstanding
principal -------------------------- balance of the Revolving Loans and
Swingline Loans, and (C) the Borrowing Base less the aggregate outstanding
principal balance of the Revolving Loans, Overadvances, Protective Advances
and Swingline Loans. No such Letter of Credit shall have an expiry date
that is more than one year following the date of issuance thereof, unless
otherwise determined by Agent in its sole discretion (including with
respect to customary evergreen provisions), and neither 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 that is later than the Maturity Date.
(b) Advances Automatic; Participations.
(i) In the event that the Agent or any Issuing Bank shall make any payment on
or pursuant to any Letter of Credit Obligation, such payment shall then be
deemed automatically to constitute a Revolving Loan under Section 2.02 of
this Agreement ------------ regardless of whether a Default or Event of
Default has occurred and is continuing and notwithstanding the Borrowers'
failure to satisfy the conditions precedent set forth in Section 4.02, and
each Revolving Lender shall be ------------ obligated to pay its Applicable
Percentage thereof in accordance with this Agreement. The failure of any
Revolving Lender to make available to the Agent or Issuing Bank for Agent's
or Issuing Bank's own account its Applicable Percentage of any such
Revolving Loan or payment by 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 Agent or Issuing Bank its Applicable
Percentage thereof, but no Revolving Lender shall be responsible for the
failure of any other Revolving Lender to make available such other
Revolving Lender's Applicable Percentage of any such payment.
(ii) If it shall be illegal or unlawful for Borrower to incur Revolving Loans as
contemplated by paragraph (b)(i) above because of an Event of Default
described in Section 7.01(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
Issuing Bank, or if the Issuing Bank 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
Agent (or such Issuing Bank, as the case may be) an undivided interest and
participation equal to such Revolving Lender's Applicable Percentage (based
on the Revolving 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
Agent (or such Issuing Bank, as the case may be) an undivided interest and
participation in such Revolving Lender's Applicable Percentage (based on
the Revolving 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 this
Agreement with respect to Revolving Loans.
(c) Cash Collateral.
(i) If the Borrowers are required to provide cash collateral for any Letter of
Credit Obligations pursuant to this Agreement prior to the Maturity Date,
the Borrowers will pay to Agent for the ratable benefit of itself and
Revolving Lenders cash or cash equivalents acceptable to 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. Such funds or Cash Equivalents shall be held by
Agent in an interest bearing cash collateral account (the "Cash Collateral
Account") maintained at a bank ------------------------ - or financial
institution acceptable to Agent. The Cash Collateral Account shall be in
the name of Administrative Borrower and shall be pledged to, and subject to
the control of, Agent, for the benefit of Agent and Revolving Lenders, in a
manner satisfactory to Agent. Borrowers hereby pledge and grant to Agent,
on behalf of itself and the Lenders, a security interest in all such funds
and Cash Equivalents held in the 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. This Agreement, including this Section 2.08, shall
------------ constitute a security agreement under applicable law.
(ii) If any Letter of Credit Obligations, whether or not then due and payable,
shall for any reason be outstanding on the Maturity Date, Borrowers shall
either (A) provide cash collateral therefore in the manner described above,
or (B) cause all such Letters of Credit and guaranties thereof, if any, to
be canceled and returned, or (C) deliver a stand-by letter (or letters) of
credit in guarantee 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 are be satisfactory to Agent in its sole discretion.
(iii) From time to time after funds are deposited in the Cash Collateral Account
by the Borrowers, whether before or after the Maturity Date, Agent may
apply such funds or Cash Equivalents then held in the Cash Collateral
Account to the payment of any amounts, and in such order as Agent may
elect, as shall be or shall become due and payable by the Borrowers to
Agent and Lenders with respect to such Letter of Credit Obligations of the
Borrowers and, upon the satisfaction in full of all Letter of Credit
Obligations of the Borrowers, to any other Obligations then due and
payable.
(iv) Neither any 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 Cash Collateral Account, except that upon the
termination of all Letter of Credit Obligations and the payment of all
amounts payable by the Borrowers to Agent and Lenders in respect thereof,
any funds remaining in the Cash Collateral Account shall be applied to
other Obligations then due and owing and upon payment in full of such
Obligations any remaining amount shall be paid to the Borrowers or as
otherwise required by law. Interest earned on deposits in the Cash
Collateral Account shall be held as additional Collateral for the
Obligations.
(d) Fees and Expenses. Each Borrower agrees to pay to Agent for the benefit of
Revolving Lenders, as compensation to such ------------------ Lenders for
Letter of Credit Obligations incurred hereunder, (i) all costs and expenses
incurred by Agent or any Revolving Lender on account of such Letter of
Credit Obligations, and (ii) for each month during which any Letter of
Credit Obligation shall remain outstanding, a fee (the "Letter of Credit
Fee") (A) during the period from and including the Effective Date
-------------------- through and including the first anniversary of the
date of the Credit Agreement, 2.25% on the face amount of each Letter of
Credit and (B) from and after the first anniversary of the date of the
Credit Agreement, the Applicable Rate for Eurodollar Loans per annum on the
face amount of each Letter of Credit. The Letter of Credit Fee shall be due
and payable monthly on the first day of each month. In addition, Borrowers
shall pay to any Issuing Bank, on demand, such fees (including all per
annum fees), charges and expenses of such Issuing Bank 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.
Borrowers shall give Agent at least five (5) Business Days'
prior written notice requesting the incurrence of any Letter
of Credit Obligation. The notice shall be accompanied by the
form of the Letter of Credit (which shall be acceptable to the
Issuing Bank) and a application therefor completed to the
satisfaction of the Issuing Bank.
(f) Obligation Absolute. The obligation of the Borrowers to
reimburse 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 Agent
or the Issuing Bank, as applicable, with respect to Letters of
Credit shall be unconditional and irrevocable. Such
obligations of the Borrowers and Revolving Lenders shall be
paid strictly in accordance with the terms hereof under all
circumstances including the following:
(i) any lack of validity or enforceability of any Letter of Credit
or this Agreement or the other Loan Documents or any other
agreement;
(ii) the existence of any claim, setoff, defense or other right
that any Borrower or any of its 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), Agent, any Lender, or any
other Person, whether in connection with this Agreement, the
Letter of Credit, the transactions contemplated herein or
therein or any unrelated transaction (including any underlying
transaction between Borrower or any of its 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 the Agent (except as otherwise expressly provided
in paragraph (g)(ii)(C) below) or any Issuing Bank under any
Letter of Credit or guaranty thereof against presentation of a
demand, draft or certificate or other document that does not
comply with the terms of such Letter of Credit or such
guaranty;
(v) any other circumstance or event whatsoever, that is similar to
any of the foregoing; or
(vi) the fact that a Default or an Event of Default has occurred
and is continuing.
(g) Indemnification; Nature of Lenders' Duties.
(i) In addition to amounts payable as elsewhere provided in this Agreement,
each Borrower hereby agrees to pay and to protect, indemnify, and save
harmless Agent, each Issuing Bank and each Lender from and against any and
all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys' fees and allocated costs of
internal counsel) that the Agent, Issuing Bank or any 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 the Agent
or any Lender seeking indemnification or of any Issuing Bank 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 as a result of the gross negligence or
willful misconduct of the Agent, Issuing Bank or such Lender (as finally
determined by a court of competent jurisdiction).
(ii) As between the Agent, the Issuing Bank and any Lender, on one hand, and the
Borrowers, the 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 none of the Agent, the Issuing Bank or any Lender shall be
responsible for: (A) the form, validity, sufficiency, accuracy, genuineness
or legal effect of any document issued by any party in connection with the
application for an 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) 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, that may prove to be invalid or ineffective for any reason; (C)
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 or Issuing Bank under
any Letter of Credit (or guaranty thereof), Agent or Issuing Bank 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) errors, omissions, interruptions or delays
in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they may be in cipher; (E) errors in
interpretation of technical terms; (F) 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) the credit of the proceeds of any drawing under any Letter of
Credit or guaranty thereof; and (H) any consequences arising from causes
beyond the control of Agent, Issuing Bank or any Lender. None of the above
shall affect, impair, or prevent the vesting of any of Agent's, Issuing
Bank's or any Lender's rights or powers hereunder or under this Agreement.
(iii) Nothing contained herein shall be deemed to limit or to expand
any waivers, covenants, or indemnities made by the any
Borrower in favor of any Issuing Bank in any letter of credit
application, reimbursement agreement or similar document,
instrument or agreement between such Borrower and such Issuing
Bank.
(h) Subrogation Rights; Letter of Credit Guaranty.
(i) Upon any payments made by Agent to an Issuing Bank under a
Letter of Credit Guaranty, the Agent, for the benefit of the
Lenders, shall acquire by subrogation, any rights, remedies,
duties or obligations granted to or undertaken by the
applicable Borrower to the Issuing Bank in any application for
Letter of Credit, any standing agreement relating to Letters
of Credit or otherwise, all of which shall be deemed to have
been granted to Agent, for the benefit of the Lenders, and
apply in all respects to the Agent and shall be in addition to
any rights, remedies, duties or obligations contained herein.
(ii) Each Borrower hereby authorizes and directs any Issuing Bank
which is not a Lender hereunder to deliver to the Agent all
instruments, documents, and other writings and property
received by such Issuing Bank pursuant to such Letter of
Credit and to accept and rely upon the Agent's instructions
with respect to all matters arising in connection with such
Letter of Credit and the related application.
(iii) Any and all charges, commissions, fees, and costs incurred by
the Issuing Bank relating to Letters of Credit issued by an
Issuing Bank which is not a Lender hereunder in reliance on a
Letter of Credit Guaranty shall be Letter of Credit
Obligations for purposes of this Agreement and immediately
shall be reimbursable by Borrowers to Agent.
SECTION 2.09 Funding of Borrowings.
(a) Each Lender shall make each Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available funds
by 2:00 p.m., New York City time, to the account of the Agent most
recently designated by it for such purpose by notice to the Lenders;
provided, that, Swingline Loans shall be made as provided in Section
2.07. The Agent will make each such Loan available to the relevant
Borrowers by promptly crediting the amounts so received, in like funds,
to a Funding Account designated by the Administrative Borrower in the
Borrowing Request; provided, that, a Protective Advance shall be
retained by the Agent.
(b) Unless the Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to
the Agent such Lender's share of such Borrowing, the Agent may assume that
such Lender has made such share available on such date in accordance with
Section 2.09(a) and may, in reliance upon such assumption, make available
to --------------- the Borrowers a corresponding amount. In such event, if
a Lender has not in fact made its share of the Borrowing available to the
Agent (a "Defaulting Lender"), then the Defaulting Lender agrees to pay to
the Agent forthwith on demand such corresponding amount with interest
thereon, for each day from and including the date such amount is made
available to the Borrowers to but excluding the date of payment to the
Agent, at the Federal Funds Effective Rate. If such Defaulting Lender pays
such amount to the Agent, then such amount shall constitute such Defaulting
Lender's Loan included in such Borrowing. The Agent shall not be obligated
to transfer to a Defaulting Lender any payments made by the Borrowers to
the Agent for the Defaulting Lender's benefit, and, in the absence of such
transfer to the Defaulting Lender, the Agent shall transfer any such
payments to each other non-Defaulting Lender ratably in accordance with
their Applicable Percentage of the Commitments (but only to the extent that
such Defaulting Lender's Borrowing was funded by the other Lenders) or, if
so directed by the Administrative Borrower and if no Default has occurred
and is continuing (and to the extent such Defaulting Lender's Borrowing was
not funded by the other Lenders), retain the same to be re-advanced to the
Borrowers as if such Defaulting Lender had made Loans to the Borrowers.
Subject to the foregoing, the Agent may hold and, in its Permitted
Discretion, setoff such Defaulting Lender's funding shortfall against that
Defaulting Lender's Applicable Percentage of all payments received from the
Borrowers or re-lend to the Borrowers for the account of such Defaulting
Lender the amount of all such payments received and retained by the Agent
for the account of such Defaulting Lender. Until a Defaulting Lender cures
its failure to fund its Applicable Percentage of any Borrowing (i) solely
for the purposes of voting or consenting to matters with respect to the
Loan Documents, such Defaulting Lender shall be deemed not to be a "Lender"
and such Defaulting Lender's Commitment shall be deemed to be zero, (ii)
such Defaulting Lender shall not be entitled to any portion of the
commitment fee, and (iii) the commitment fee shall accrue in favor of the
Lenders that have funded their respective Applicable Percentages of such
requested Borrowing and shall be allocated among such non-Defaulting
Lenders ratably based on their Applicable Percentage of the Commitments.
This Section 2.09(b) shall remain effective with respect to such Defaulting
---------------- Lender until (x) the Obligations under this Agreement
shall have been declared or shall have become immediately due and payable,
(y) the non-Defaulting Lenders, the Agent, and the Borrowers shall have
waived such Defaulting Lender's default in writing, or (z) the Defaulting
Lender makes its Applicable Percentage of the Borrowing and pays to the
Agent all amounts owing by the Defaulting Lender in respect thereof. The
operation of this Section 2.09(b) shall not be construed to increase
--------------- or otherwise affect the Commitment of any Lender, to
relieve or excuse the performance by such Defaulting Lender or any other
Lender of its duties and obligations hereunder, or to relieve or excuse the
performance by the Borrowers of their duties and obligations hereunder.
SECTION 2.10 Interest Elections
(a) Each Borrowing initially shall be of the Type specified in the
applicable Borrowing Request and, in the case of a Eurodollar
Borrowing, shall have an initial Interest Period as specified in
such Borrowing Request. Thereafter, the Borrowers may elect to
convert such Borrowing to a different Type or to continue such
Borrowing and, in the case of a Eurodollar Borrowing, may elect
Interest Periods therefor, all as provided in this Section 2.10.
The Borrowers may elect different ------------ options with
respect to different portions of the affected Borrowing, in which
case each such portion shall be allocated ratably among the
Lenders holding the Loans comprising such Borrowing, and the
Loans comprising each such portion shall be considered a separate
Borrowing. This Section 2.10 shall not apply to Swingline
Borrowings or Protective Advances, which ------------ may not be
converted or continued.
(b) To make an election pursuant to this Section 2.10, the
Administrative Borrower shall notify the Agent of such
election by telephone by the time that a Borrowing Request
would be required under Section 2.04 if the Borrowers were
requesting a Revolving Borrowing of the Class and Type
resulting from such election to be made on the effective date
of such election. Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly
by hand delivery, facsimile or Electronic Transmission to the
Agent of a written Interest Election Request in a form
approved by the Agent and signed by the Administrative
Borrower.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section
2.03:
(i) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to
different portions thereof, the portions thereof to be
allocated to each resulting Borrowing (in which case the
information to be specified pursuant to clauses (iii) and (iv)
below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect
to such election, which shall be a period contemplated by the
definition of the term "Interest Period."
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrowers shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the Agent
shall advise each affected Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(e) If the Administrative Borrower fails to deliver a timely Interest
Election Request with respect to a Eurodollar Revolving Borrowing prior
to the end of the Interest Period applicable thereto, then, unless such
Borrowing is repaid as provided herein, at the end of such Interest
Period such Borrowing shall be converted to an ABR Borrowing.
Notwithstanding any contrary provision hereof, if a Default has
occurred and is continuing and the Agent or the Required Lenders so
notifies the Administrative Borrower, then, so long as a Default is
continuing (i) no outstanding Revolving Borrowing may be converted to
or continued as a Eurodollar Borrowing and (ii) unless repaid, each
Eurodollar Revolving Borrowing shall be converted to an ABR Borrowing
at the end of the Interest Period applicable thereto.
SECTION 2.11 Termination or Reduction of Commitments.
(a) The Commitments shall terminate on the Maturity Date and from year to
year thereafter, unless sooner terminated pursuant to the terms hereof.
Agent may, at its option (or shall at the direction of any Lender in
writing received by Agent at least ninety (90) days prior to the
Maturity Date or the anniversary of any Maturity Date, as the case may
be), terminate this Agreement and the other Loan Documents effective on
the Maturity Date or on the anniversary of the Maturity Date in any
year by giving to the Administrative Borrower at least sixty (60) days
prior written notice; provided, that, this Agreement and all other Loan
Documents must be terminated simultaneously.
(b) The Borrowers may at any time terminate the Revolving Commitments upon
(i) the payment in full of all outstanding Loans, together with accrued
and unpaid interest thereon, (ii) the cancellation and return of all
outstanding Letters of Credit (or alternatively, with respect to each
such Letter of Credit, the furnishing to the Agent of a cash deposit as
required by Section 2.08(c)), (iii) the payment in full of the accrued
and unpaid fees, including applicable Prepayment Fee (if any) and any
payments required under Section 2.18, and (iv) the payment in full of
all reimbursable expenses and other Obligations together with accrued
and unpaid interest thereon.
(c) The Borrowers may from time to time reduce the Commitments upon payment
of the applicable Prepayment Fee (if any); provided, that, (i) each
reduction of the Commitments shall be in an amount that is an integral
multiple of $1,000,000 and not less than $1,000,000 and (ii) the
Borrowers shall not reduce the Commitments if, after giving effect to
any concurrent repayment of the Revolving Loans in accordance with
Section 2.12, the Aggregate Credit Exposure would exceed the Borrowing
Base then in effect.
(d) The Administrative Borrower shall notify the Agent of any election to
terminate or reduce the Commitments under Section -------- 2.11(a), (b) or
(c) at least three Business Days prior to the effective date of such
termination or reduction, specifying ------- --- --- such election and the
effective date thereof. Promptly following receipt of any notice, the Agent
shall advise the affected Lenders of the contents thereof. Each notice
delivered by the Administrative Borrower pursuant to this Section 2.11(d)
---------------- shall be irrevocable; provided, that, a notice of
termination of the Commitments delivered by the Administrative Borrower may
state that such notice is conditioned upon the effectiveness of other
credit facilities, in which case such notice may be revoked by the
Administrative Borrower (by notice to the Agent on or prior to the
specified effective date) if such condition is not satisfied. Any
termination or reduction of the Commitments of either Class shall be
permanent. Each reduction of the Commitments of either Class shall be made
ratably among the applicable Lenders in accordance with their respective
Commitments of such Class.
SECTION 2.12 Repayment of Loans; Evidence of Debt.
(a) Each of the Borrowers hereby unconditionally promises to pay to the
Agent for the account of each Lender the then unpaid principal amount
of each Loan on the Maturity Date. Each of the Borrowers hereby
unconditionally promises to pay to the Agent the then unpaid amount of
each Protective Advance on the earlier of the Maturity Date and demand
by the Agent.
(b) Each Business Day, at or before 12:00 noon, New York City time, the
Agent shall apply all immediately available funds credited to the
Collection Account first to prepay any Protective Advances that may be
outstanding, pro rata, second to prepay any Swingline Loans that may be
outstanding, pro rata, and third to prepay the Revolving Loans made by
Lenders, pro rata.
(c) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrowers to
such Lender resulting from each Loan made by such Lender, including the
amounts of principal and interest payable and paid to such Lender from
time to time hereunder.
(d) The Agent shall maintain accounts in which it shall record (i) the
amount of each Loan made hereunder, the Class and Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the
Borrowers to each Lender hereunder, and (iii) the amount of any sum
received by the Agent hereunder for the account of the Lenders and each
Lender's share thereof.
(e) The entries made in the accounts maintained pursuant to Section 2.12(d)
shall be prima facie evidence of the existence and amounts of the
obligations recorded therein; provided, that, the failure of any Lender
or the Agent to maintain such accounts or any error therein shall not
in any manner affect the obligation of the Borrowers to repay the Loans
in accordance with the terms of this Agreement.
(f) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, each of the applicable Borrowers shall
prepare, execute and deliver to such Lender a promissory note payable
to such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) and in a form approved by the Agent. Thereafter,
the Loans evidenced by such promissory note and interest thereon shall
at all times (including after assignment pursuant to Section 9.05) be
represented by one or more promissory notes in such form payable to the
payee named therein (or to such payee and its registered assigns)
except to the extent that any such Lender subsequently returns any such
promissory note for cancellation and requests that such Loans once
again be evidenced as described in Section 2.12(c) and (d).
SECTION 2.13 Prepayment of Loans.
(a) Voluntary Prepayments. The Borrowers shall have the right at any time
and from time to time to prepay any Borrowing in whole or in part,
subject to prior notice in accordance with Section 2.13(d) and the
payment of the amounts required under Section 2.18.
(b) Mandatory Prepayments. (i) The Borrowers shall immediately repay, or
provide cash collateral for, the Revolving Loans, and/or Swingline
Loans if at any time after the Effective Date the Total Exposure
exceeds the lesser of (A) the Commitments and (B) the Borrowing Base
then in effect, to the extent required to eliminate such excess.
(ii) Immediately upon receipt by any Loan Party of the Net Cash Proceeds of
any asset disposition (other than sales of inventory or obsolete or
worn out property in the ordinary course of business), the Borrowers,
shall prepay the Obligations, in an amount equal to 100% of such Net
Cash Proceeds as set forth in Section 2.13(c).
(iii) If any Borrower issues Equity Interests (other than Equity Interests
issued to another Loan Party) or any Loan Party issues Indebtedness
(other than Indebtedness permitted by Sections 6.01(a) through (j) or
6.01(l)) or if any Loan Party receives any dividend or distribution
from a Person other than a Loan Party, the Borrowers shall prepay the
Obligations in an amount equal to 100% of the Net Cash Proceeds of such
issuance or the amount of such dividend or distribution no later than
the Business Day following the date of receipt of such Net Cash
Proceeds or such dividend or distribution as set forth in Section
2.13(c).
(iv) Any insurance or condemnation proceeds to be applied to the Obligations
in accordance with Section 5.09 shall be applied as set forth in
Section 2.13(c). If the precise amount of insurance or condemnation
proceeds allocable to Inventory as compared to Equipment, fixtures and
real or immovable property is not otherwise determined, the allocation
and application of those proceeds shall be determined by the Agent, in
its Permitted Discretion.
(v) Immediately upon receipt by any Loan Party of any Extraordinary
Receipts, the Borrowers shall prepay the Obligations in an amount equal
to 100% of the Net Cash Proceeds received by such Person in connection
with such Extraordinary Receipts as set forth in Section 2.13(c).
(vi) Without in any way limiting the foregoing, immediately upon receipt by
any Loan Party of proceeds of any sale of any Collateral, the Borrowers
shall cause such Loan Party to deliver such proceeds to the Agent, or
deposit such proceeds in a deposit account subject to a control
agreement acceptable to the Agent. All of such proceeds not required to
be applied as provided in Section 2.13(c) shall be freely available to
the Borrowers, except as provided in Section 2.12(b). Nothing in this
Section 2.13(b) shall be construed to constitute the Agent's or any
Lender's consent to any transaction that is not permitted by other
provisions of this Agreement or the other Loan Documents.
(c) All such amounts required to be prepaid by the Borrowers pursuant to
Sections 2.13(b)(ii), (iii), (iv) and (v) shall be applied, first to
prepay any Protective Advances that may be outstanding, second to
prepay the Swingline Loans without a corresponding reduction in the
Commitment and third to prepay the Revolving Loans without a
corresponding reduction in the Commitment.
(d) The Administrative Borrower shall notify the Agent (and, in the case of
prepayment of a Swingline Loan, the applicable Swingline Lender) by
telephone (confirmed by facsimile or Electronic Transmission) of any
prepayment hereunder (i) in the case of prepayment of a Eurodollar
Borrowing, not later than 11:00 a.m., New York City time, three Business
Days before the date of prepayment, (ii) in the case of prepayment of an
ABR Borrowing (other than a Swingline Loan), not later than 11:00 a.m., New
York City time, one Business Day before the date of prepayment and (iii) in
the case of prepayment of a Swingline Loan, not later than 12:00 noon, New
York City time, on the date of prepayment. Each such notice shall be
irrevocable and shall specify the prepayment date and the principal amount
of each Borrowing or portion thereof to be prepaid; provided, that, if a
notice of prepayment is given in connection with a conditional notice of
termination of the Commitments as contemplated by Section 2.11, then such
notice of prepayment may be revoked if such notice of termination is
revoked in ------------- accordance with Section 2.11. Promptly following
receipt of any such notice relating to a Borrowing, the Agent shall advise
------------ the applicable Lenders of the contents thereof. Each partial
prepayment of any Revolving Borrowing shall be in an amount that would be
permitted in the case of an advance of a Revolving Borrowing of the same
Type as provided in Section 2.03. ------------- Each prepayment of a
Revolving Borrowing shall be applied ratably to the Revolving Loans
included in the prepaid Borrowing.
SECTION 2.14 Fees.
-----
(a) The Borrowers agree to pay to the Agent for the account of each
Revolving Lender a commitment fee, which shall accrue at the Applicable
Rate per annum on the average daily amount of the Available Commitment
of such Revolving Lender during the period from and including the
Effective Date to but excluding the date on which such Lenders'
Revolving Commitments terminate. Accrued commitment fees shall be
payable in arrears on the last day of each calendar quarter and on the
date on which the Revolving Commitments terminate, commencing on the
first such date to occur after the date hereof. All commitment fees in
respect of Commitments shall be payable in Dollars and shall be
computed on the basis of the actual number of days elapsed (including
the first day but excluding the last day) in a year of 360 days.
(b) The Borrowers agree to pay to the Lead Arranger and Agent, for its own
account, fees due and payable pursuant to the Fee Letter and fees
payable in the amounts and at the times separately agreed upon between
the Borrowers and the Agent.
(c) In consideration of the issuance of any Letter of Credit pursuant to
Section 2.08 hereof, the Borrower agrees to pay (i) to the Agent, for
the ratable benefit of the Lenders, the Letter of Credit Fee and (ii)
to the Agent or Issuing Bank, as applicable, all other fees, expenses
and amounts payable under Sections 2.08(d) or (h).
(d) The Borrower agrees to reimburse the Agent for any and all reasonable
charges, fees, commissions, costs and expenses charged to the Agent for
the Borrower's account by an Issuing Bank in connection with, or
arising out of, Letters of Credit or out of transactions relating
thereto, when charged to or paid by the Agent, or as may be due upon
any termination of this Agreement.
(e) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Agent (or to the Issuing Bank, in
the case of fees payable to it) for distribution, in the case of
commitment fees and participation fees, to the Lenders or Lead Arranger
entitled thereto. Fees paid shall not be refundable under any
circumstances.
SECTION 2.15 Interest.
(a) The Loans comprising each ABR Borrowing (including each Swingline Loan)
shall bear interest at the Alternate Base Rate plus the Applicable
Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear interest at
the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Rate.
(c) Each Protective Advance shall bear interest at the Alternate Base Rate
plus the Applicable Rate for Revolving Loans plus 2%.
(d) Notwithstanding the foregoing, during the occurrence and continuance of
an Event of Default, the Agent or the Required Lenders may, at their
option, by notice to the Administrative Borrower (which notice may be
revoked at the option of the Required Lenders notwithstanding any
provision of Section 9.03 requiring the consent of "each Lender
affected thereby" for reductions in interest rates), declare that (x)
all Loans shall bear interest at 2% plus the rate otherwise applicable
to such Loans as provided in the preceding subsections of this Section
2.15, or (y) in the case of any other amount outstanding hereunder,
such amount shall accrue at 2% plus the rate applicable to such fee or
other obligation as provided hereunder.
(e) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan, upon termination of the Revolving
Commitments and on the Maturity Date; provided, that, (i) interest
accrued pursuant to Section 2.15(d) shall be payable on demand, (ii) in
the event of any repayment or prepayment of any Loan (other than a
prepayment of an ABR Revolving Loan prior to the end of the
Availability Period), accrued interest on the principal amount repaid
or prepaid shall be payable on the date of such repayment or
prepayment, and (iii) in the event of any conversion of any Eurodollar
Revolving Loan prior to the end of the current Interest Period
therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion.
(f) All interest hereunder shall be computed on the basis of a year of 360
days, and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). The applicable
Alternate Base Rate or Adjusted LIBO Rate shall be determined by the
Agent, and such determination shall be conclusive absent manifest
error.
SECTION 2.16 Alternate Rate of Interest. If prior to the commencement of
any Interest Period for a Eurodollar Borrowing:
--------------------------
(a) the Agent determines (which determination shall be conclusive absent
manifest error) that adequate and reasonable means do not exist for
ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable,
for such Interest Period; or
(b) the Agent is advised by the Required Lenders that the Adjusted LIBO
Rate or the LIBO Rate, as applicable, for such Interest Period will not
adequately and fairly reflect the cost to such Lenders (or Lender) of
making or maintaining their Loans (or its Loan) included in such
Borrowing for such Interest Period;
then the Agent shall give notice thereof to the Administrative Borrower and the
Lenders by telephone or facsimile as promptly as practicable thereafter and,
until the Agent notifies the Administrative Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing of the applicable Class
shall be ineffective, and (ii) if any Borrowing Request requests a Eurodollar
Revolving Borrowing of the applicable Class, such Borrowing shall be made as an
ABR Borrowing.
SECTION 2.17 Increased Costs.
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit, deposit insurance or similar requirement against
assets of, deposits with or for the account of, or credit
extended by, any Lender (except any such reserve requirement
reflected in the Adjusted LIBO Rate); or
(ii) impose on any Lender or the London interbank market any other
condition affecting this Agreement or Eurodollar Loans made by
such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan), then the Borrowers will pay to such Lender
such additional amount or amounts as will compensate such Lender for such
additional costs incurred or reduction suffered.
(b) If any Lender determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of
return on such Lender's capital or on the capital of such Lender's
holding company, if any, as a consequence of this Agreement or the
Loans made by such Lender to a level below that which such Lender or
such Lender's holding company could have achieved but for such Change
in Law (taking into consideration such Lender's policies and the
policies of such Lender's holding company with respect to capital
adequacy), then from time to time the Borrowers will pay to such Lender
such additional amount or amounts as will compensate such Lender or
such Lender's holding company for any such reduction suffered.
(c) A certificate of a Lender setting forth the amount or amounts necessary
to compensate such Lender or its holding company, as specified in
Section 2.17(a) or (b) shall be delivered to the Administrative
Borrower and shall be conclusive absent manifest error. The Borrowers
shall pay such Lender the amount shown as due on any such certificate
within 10 days after receipt thereof.
(d) Failure or delay on the part of any Lender to demand compensation
pursuant to this Section 2.17 shall not constitute a waiver of such
Lender's right to demand such compensation; provided, that, the
Borrowers shall not be required to compensate a Lender pursuant to this
Section for any increased costs or reductions incurred more than 180
days prior to the date that such Lender notifies the Administrative
Borrower of the Change in Law giving rise to such increased costs or
reductions and of such Lender's intention to claim compensation
therefor; provided further that, if the Change in Law giving rise to
such increased costs or reductions is retroactive, then the 180-day
period referred to above shall be extended to include the period of
retroactive effect thereof.
SECTION 2.18 Break Funding Payments. In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto, (c) the failure to borrow, convert, continue or
prepay any Eurodollar Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under Section
2.13(d) and is revoked in accordance therewith), or (d) the assignment of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Administrative Borrower pursuant to
Section 2.21, then, in any such event, the applicable Borrowers shall compensate
each Lender for the loss, cost and expense attributable to such event. In the
case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be
deemed to include an amount determined by such Lender to be the excess, if any,
of (i) the amount of interest which would have accrued on the principal amount
of such Loan had such event not occurred, at the Adjusted LIBO Rate that would
have been applicable to such Loan, for the period from the date of such event to
the last day of the then current Interest Period therefor (or, in the case of a
failure to borrow, convert or continue, for the period that would have been the
Interest Period for such Loan), over (ii) the amount of interest which would
accrue on such principal amount for such period at the interest rate which such
Lender would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the Eurodollar
market. A certificate of any Lender setting forth any amount or amounts that
such Lender is entitled to receive pursuant to this Section 2.18 shall be
delivered to the Administrative Borrower and shall be conclusive absent manifest
error. The applicable Borrowers shall pay such Lender the amount shown as due on
any such certificate within 10 days after receipt thereof.
SECTION 2.19 Taxes.
(a) Any and all payments by or on account of any obligation of any
Borrowers or any other Loan Party under this Agreement or any other
Loan Document shall be made free and clear of and without deduction for
any Indemnified Taxes; provided, that, if any Borrowers or the Agent
shall be required to deduct any Indemnified Taxes from such payments,
then (i) such Borrowers shall increase the sum payable by an amount
equal to the sum of (x) the amount deducted in respect of such
Indemnified Taxes and (y) all Taxes applicable to additional sums
payable under this Section 2.19(a), (ii) such Borrowers and/or the
Agent shall make such deductions, and (iii) such Borrowers and/or the
Agent shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.
(b) In addition, each of the Borrowers shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Each of the Borrowers shall indemnify the Agent, and each Lender, within 20
days after written demand therefor, for the full amount of any Indemnified
Taxes paid by the Agent or such Lender, as the case may be, on or with
respect to any payment by or on account of any obligation of such Borrowers
or any other Loan Party under this Agreement or any other Loan Document
(including Indemnified Taxes imposed or asserted on or attributable to
amounts payable under this Section 2.19) and any ------------ reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority; provided, however, that the applicable
Lender shall -------- ------- reasonably assist (consistent with its
preexisting internal policies applied on a nondiscriminatory basis and
legal and regulatory restrictions) Borrowers to recover the amounts paid
pursuant to this subsection (c) from the relevant Governmental Authority.
(d) As soon as practicable after any payment of Indemnified Taxes by any
Borrowers to a Governmental Authority, the Administrative Borrower
shall deliver to the Agent (i) if reasonably available, the original or
a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, (ii) a copy of the return reporting such
payment or (iii) other evidence of such payment reasonably satisfactory
to the Agent.
(e) Each Lender organized under the Laws of a jurisdiction outside the United
States shall, on or prior to the date such Lender becomes a party to this
Agreement, or any of the Loan Documents or any similar related agreement,
and from time to time thereafter as requested in writing by the Loan
Parties or the Agent (but only so long thereafter as such Lender remains
lawfully able to do so), provide each of the Loan Parties and the Agent
with two original Internal Revenue Service Form W-8 (e.g., X-0 XXX, X-0
ECI), as appropriate, or any successor or other form prescribed by the
Internal Revenue Service, certifying that such Lender is exempt from or
entitled to a reduced rate of United States federal withholding tax on
payments pursuant to this Agreement, or any similar, relevant agreement. If
the forms provided by a Lender at the time such Lender first becomes a
party to this Agreement, or any similar, relevant agreement indicates a
United States federal interest withholding tax rate in excess of zero, U.S.
federal withholding tax at such rate shall be considered excluded from
Indemnified Taxes unless and until such Lender provides the appropriate
form certifying that a lesser rate applies, whereupon U.S. federal
withholding tax only at such lesser rate shall be considered excluded from
Indemnified Taxes for periods governed by such form. If any form or
document referred to in this subsection (e) requires the disclosure of
information, other than information necessary to compute the Tax payable
and information required by Internal Revenue Service Form W-8, or any
successor form prescribed by the Internal Revenue Service, that the Lender
reasonably considers to be confidential, the Lender shall give notice
thereof to the Loan Parties and the Agent and shall not be obligated to
include in such form or document such confidential information. No Lender
shall be entitled to payment pursuant to subsection (a), (b) or (c) of this
Section 2.19 with respect to any Taxes which resulted directly from such
Lender's change in account, permanent establishment or other branch through
which such Lender receives any payment pursuant to the Loan Documents
(although such Lender shall be entitled to payment for Taxes arising or
attributable to acts or events subsequent to such change in account,
permanent establishment or branch). For purposes of this subsection (e),
the terms "United ------- States" shall have the meaning specified in
Section 7701 of the Internal Revenue Code.
(f) If the Agent or a Lender determines, in its sole discretion exercised in
good faith, that it has received a refund, whether in the form of a
payment, credit or offset, of any Indemnified Taxes as to which it has been
indemnified by any Borrowers or with respect to which any Borrowers have
paid additional amounts pursuant to Section 2.19(a), it shall pay over such
refund ---------------- to such Borrowers (but only to the extent of
indemnity payments made, or additional amounts paid, by such Borrowers
under this Section 2.19 with respect to the Indemnified Taxes giving rise
to such refund), net of all out-of-pocket expenses and ------------ Taxes
of the Agent or such Lender and without interest (other than any interest
paid, credited or allowed as an offset, by the relevant Governmental
Authority with respect to such refund, which interest shall be paid to such
Borrowers); provided, that such Borrowers, upon the request of the Agent or
such Lender, agree to repay the amount paid over to such Borrowers (plus
any penalties, interest or other charges imposed by the relevant
Governmental Authority) to the Agent or such Lender in the event the Agent
or such Lender is required to repay such refund to such Governmental
Authority. Nothing in this Section 2.19 shall be construed to require the
Agent or any Lender to make available its tax returns (or any other
------------- information which it deems confidential) to the Borrowers or
any other Person.
(g) For any period with respect to which an Lender organized under the laws of
a jurisdiction outside the United States has failed to provide the Loan
Parties or the Agent with the appropriate form described in subsection (e)
(other than a failure due to a change in Law with respect to the necessity
to complete and submit such forms occurring after the date on which a form
originally was required to be provided), such Lender shall not be entitled
to any payment or indemnification under this Section 2.19 with respect to
U.S. federal withholding taxes by reason of such failure; provided,
however, that should a -------- ------- Lender become subject to Taxes
because of its failure to deliver a form required hereunder, the Loan
Parties shall take such steps as such Lender shall reasonably request to
reasonably assist (consistent with its preexisting internal policies
applied on a nondiscriminatory basis and legal and regulatory restrictions)
such Lender to recover such Taxes.
(h) No amounts will be payable by the Loan Parties under this Section 2.19
to the extent that such amounts (i) are otherwise covered (but not
payable to an Lender) under the Loan Documents and/or (ii) have been
paid pursuant to another Loan Document or another section of this
Agreement.
(i) Each Lender agrees to use reasonable efforts to utilize and claim tax
credits or deductions ("Foreign Tax Credits") with respect to Taxes
that are paid or indemnified pursuant to subsection (a), (b), or (c) of
this Section 2.19. If any Lender claims a reduction in Tax or tax
refund for any Foreign Tax Credits with respect to Taxes that are paid
or indemnified pursuant to subsection (a), (b), or (c) of this Section
2.19, such Lender shall remit to the Loan Parties, as applicable, the
actual tax savings attributable to such Foreign Tax Credits.
(j) In the event that any Lender is entitled, on the effective date of any
Assignment and Assumption under and as defined in this Agreement, to the
benefits of a payment pursuant to subsection (a), (b) or (c) of this
Section 2.19, the assignee of such Lender shall be entitled, without
duplication, to no greater benefits of payment (in addition to any future
benefits of payment that may arise with respect to such assignee) that
would have been available to such Lender had such Lender not entered into
such Assignment and Assumption (or such comparable assignment) with such
assignee and then only to the extent the relevant costs are incurred by
such assignee. Anything in this Section 2.19 to the contrary
notwithstanding, the Loan Parties shall not be required to indemnify or
make a payment with respect to Other Taxes on any such Assignment and
Assumption (or on any such comparable assignment) except to the extent such
Assignment and Assumption (or such comparable assignment) is requested by
the Loan Parties or is required by law.
(k) Upon any payment of any amount with respect to any Taxes by the Loan
Parties to any Lender under this Section 2.19, the Loan Parties, as
applicable, shall be subrogated to all rights of such Lender to seek
recovery or reimbursement from any other Person in connection with such
amount.
(l) The Lender or Agent shall not be obligated to contest a Tax indemnified
by the Loan Parties under the Loan Documents that is asserted in the
name of such Agent or Lender nor will the Loan Parties be permitted to
contest such a Tax, unless there is a reasonable basis for such
contest. Except as described above, the Agent or Lender shall cooperate
with the Loan Parties and the Loan Parties shall have the right to
contest and to control any contest for the recovery of Taxes that are
asserted in the name of the Agent or Lender that are indemnified by the
Loan Parties under the Loan Documents, to the extent that the contest
and its resolution does not materially disadvantage the Agent or
Lender.
SECTION 2.20 Payments Generally; Allocation of Proceeds; Sharing of Set-offs.
----------------------------------------------------------------
(a) The Borrowers shall make each payment required to be made by them hereunder
(whether of principal, interest or fees or of amounts payable under Section
2.17, 2.18 or 2.19, or otherwise) prior to 12:00 noon, New York City time,
on the date when ------------ ---- ---- due, in immediately available
funds, without set off or counterclaim. All such payments shall be made to
the Agent at its offices at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
except payments to be made directly to the Issuing Bank or Swingline Lender
as expressly provided herein and except that payments pursuant to Sections
2.17, 2.18, 2.19 and 9.04 shall be made ------------- ---- ---- ----
directly to the Persons entitled thereto and payments pursuant to the other
Loan Documents shall be made to the Persons specified therein. The Agent
shall distribute any such payments received by it for the account of any
other Person to the appropriate recipient promptly following receipt
thereof. If any payment hereunder shall be due on a day that is not a
Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension. All payments
hereunder shall be made in Dollars. Solely for purposes of determining the
amount of Loans available for borrowing purposes, checks and cash or other
immediately available funds from collections of items of payment and
proceeds of any Collateral shall be applied in whole or in part against the
Obligations, on the day of receipt, subject to actual collection.
(b) Any proceeds of Collateral received by the Agent (i) not constituting
either (A) a specific payment of principal, interest, fees or other sum
payable under the Loan Documents (which shall be applied as specified by
the Administrative Borrower), (B) a mandatory prepayment (which shall be
applied in accordance with Section 2.13), or (C) amounts to be applied from
the ------------- Collection Account (which shall be applied in accordance
with Section 2.12(b)), or (ii) after an Event of Default has
---------------- occurred and is continuing and the Agent so elects or the
Required Lenders so direct, such funds shall be applied ratably first, to
pay any fees, indemnities, or expense reimbursements including amounts then
due to the Agent and the Issuing Bank ----- from the Borrowers (other than
in connection with Banking Services Obligations or Swap Obligations),
second, to pay any fees ------ or expense reimbursements then due to the
Lenders from the Borrowers (other than in connection with Banking Services
Obligations or Swap Obligations), third, to pay interest due in respect of
the Protective Advances, fourth, to pay the ----- ------ principal of the
Protective Advances, fifth, to payment of any amounts owing by the
Borrowers with respect to Banking ----- Services Obligations and Swap
Obligations, and sixth, to the payment of any other Obligation due to the
Agent or any Secured ----- Party by the Borrowers. Notwithstanding anything
to the contrary contained in this Agreement, unless so directed by the
Administrative Borrower, or unless a Default is in existence, neither the
Agent nor any Lender shall apply any payment which it receives to any
Eurodollar Loan of a Class, except (a) on the expiration date of the
Interest Period applicable to any such Eurodollar Loan, or (b) in the
event, and only to the extent, that there are no outstanding ABR Loans of
the same Class and, in any event, the applicable Borrowers shall pay the
break funding payment required in accordance with Section 2.18.
------------ The Agent and the Lenders shall have the continuing and
exclusive right to apply and reverse and reapply any and all such proceeds
and payments to any portion of the Obligations owing to the Agent and
Lenders.
(c) At the election of the Agent, all payments of principal, interest, fees,
premiums, reimbursable expenses (including, without limitation, all
reimbursement for fees and expenses pursuant to Section 9.04), and other
sums payable under the Loan ------------- Documents, may be paid from the
proceeds of Borrowings made hereunder whether made following a request by
the Administrative Borrower pursuant to Section 2.04 or a deemed request as
provided in this Section 2.20 or may be deducted from any deposit
------------ ------------ account of the applicable Borrowers under the
control of the Agent pursuant to a control agreement in form and substance
satisfactory to the Agent. The Borrowers hereby irrevocably authorize (i)
the Agent to make a Borrowing for the purpose of paying each payment of
principal, interest and fees as it becomes due hereunder or any other
amount due under the Loan Documents and agree that all such amounts charged
shall constitute Loans (including Swingline Loans and Protective Advances)
and that all such Borrowings shall be deemed to have been requested
pursuant to Sections 2.04, 2.06 or 2.07, as applicable, ------------- ----
---- and (ii) the Agent to charge any deposit account of the Borrowers
maintained with the Agent for each payment of principal, interest and fees
as it becomes due hereunder or any other amount due under the Loan
Documents.
(d) If any Lender shall, by exercising any right of set off or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any
of its Loans resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Loans and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Loans of other Lenders to the extent necessary so
that the benefit of all such payments shall be shared by the Lenders
ratably in accordance with the aggregate amount of principal of and accrued
interest on their respective Loans; provided, that, (i) if any such
participations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest,
and (ii) the provisions of this subsection shall not be construed to apply
to any payment made by the Borrowers pursuant to and in accordance with the
express terms of this Agreement or any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of
its Loans to any assignee or participant, other than to the Borrowers or
any Subsidiary or Affiliate thereof (as to which the provisions of this
subsection shall apply). The Borrowers consent to the foregoing and agree,
to the extent they may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against the Borrowers rights of set-off and counterclaim with
respect to such participation as fully as if such Lender were a direct
creditor of the Borrowers in the amount of such participation.
(e) Unless the Agent shall have received notice from the Administrative
Borrower prior to the date on which any payment is due to the Agent for the
account of the Lenders or the Issuing Bank hereunder that the Borrowers
will not make such payment, the Agent may assume that the applicable
Borrowers have made such payment on such date in accordance herewith and
may, in reliance upon such assumption, distribute to the applicable Lenders
or the Issuing Bank, as the case may be, the amount due. In such event, if
the applicable Borrowers have not in fact made such payment, then each of
such Lenders or the Issuing Bank, as the case may be, severally agrees to
repay to the Agent forthwith on demand the amount so distributed to such
Lender or the Issuing Bank with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the
date of payment to the Agent, at the greater of the Federal Funds Effective
Rate and a rate determined by the Agent in accordance with banking industry
rules on interbank compensation.
(f) If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.07, 2.08(d) or (e), 2.09(b), 2.20(e) or 9.04(c),
then the Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Agent
for the account of such Lender to satisfy such Lender's obligations
under such Sections until all such unsatisfied obligations are fully
paid.
SECTION 2.21 Mitigation Obligations; Replacement of Lenders. If any Lender
requests compensation under Section 2.17, or if the Borrowers are required to
pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.19, then:
(a) such Lender shall use reasonable efforts to designate a different
lending office for funding or booking its Loans hereunder or to assign
its rights and obligations hereunder to another of its offices,
branches or affiliates, if, in the reasonable judgment of such Lender,
such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 2.17 or 2.19, as the case may be, and (ii)
would not subject such Lender to any unreimbursed cost or expense and
would not otherwise be disadvantageous to such Lender;
(b) the Borrowers may, at their sole expense and effort, require such Lender or
any Defaulting Lender (such Lender or Defaulting Lender herein, a
"Departing Lender"), upon notice from the Administrative Borrower to the
Departing Lender and the Agent, to assign and delegate, without recourse
(in accordance with and subject to the restrictions contained in Section
9.05), all of ------------ such Departing Lender's interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided, that, (i) the Borrowers shall have received the
prior written consent of the Agent, which consent shall not unreasonably be
withheld, (ii) the Departing Lender shall have received payment of an
amount equal to the outstanding principal of its Loans and Swingline Loans,
accrued interest thereon, accrued fees and all other amounts payable to it
hereunder, from the assignee (to the extent of such outstanding principal
and accrued interest and fees) or the applicable Borrowers (in the case of
all other amounts), and (iii) in the case of any such assignment resulting
from a claim for compensation under Section 2.17 or ------------- payments
required to be made pursuant to Section 2.19, such assignment will result
in a reduction in such compensation or ------------ payments. A Departing
Lender shall not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrowers to require such assignment and
delegation cease to apply and the Borrowers shall have consented thereto.
SECTION 2.22 Indemnity for Returned Payments. If after receipt of any payment
which is applied to the payment of all or any part of the Obligations, the Agent
or any Lender is for any reason compelled to surrender such payment or proceeds
to any Person because such payment or application of proceeds is invalidated,
declared fraudulent, set aside, determined to be void or voidable as a
preference, impermissible setoff, or a diversion of trust funds, or for any
other reason, then the Obligations or part thereof intended to be satisfied
shall be revived and continued and this Agreement shall continue in full force
as if such payment or proceeds had not been received by the Agent or such Lender
and the Borrowers shall be liable to pay to the Agent and the Lenders, and each
Borrower hereby indemnifies the Agent and the Lenders and holds the Agent and
the Lenders harmless for the amount of such payment or proceeds surrendered. The
provisions of this Section 2.22 shall be and remain effective notwithstanding
any contrary action which may have been taken by the Agent or any Lender in
reliance upon such payment or application of proceeds, and any such contrary
action so taken shall be without prejudice to the Agent's and the Lenders'
rights under this Agreement and shall be deemed to have been conditioned upon
such payment or application of proceeds having become final and irrevocable. The
provisions of this Section 2.22 shall survive the termination of this Agreement.
ARTICLE III
Representations and Warranties
The Borrowers represent and warrant to the Agent, the Lenders and the
Issuing Bank that:
SECTION 3.01 Organization; Powers. Each of the Loan Parties and each of its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to so qualify could not reasonably be expected to have a Material
Adverse Effect, is qualified to do business in, and is in good standing in,
every jurisdiction where such qualification is required.
SECTION 3.02 Authorization; Enforceability. The Transactions are within each
Loan Party's corporate powers and have been duly authorized by all necessary
corporate and, if required, stockholder action. The Loan Documents to which each
Loan Party is a party have been duly executed and delivered by such Loan Party
and constitute a legal, valid and binding obligation of such Loan Party,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors' rights
generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.
SECTION 3.03 Governmental Approvals; No Conflicts. The Transactions (a) do not
require any consent or approval of, registration or filing with, or any other
action by, any Governmental Authority, except such as have been obtained or made
and are in full force and effect and except any filings of the Mortgages or any
of the foregoing which are immaterial in nature and except for filings necessary
to perfect Liens created under the Loan Documents, as contemplated by Section
3.17, (b) will not violate any applicable law or regulation or the charter,
by-laws or other organizational documents of any Loan Party or its Subsidiaries
or any order of any Governmental Authority, (c) will not violate or result in a
default under any material indenture, agreement or other instrument binding upon
any Loan Party or its Subsidiaries or its assets, or give rise to a right
thereunder to require any payment to be made by any Loan Party or its
Subsidiaries, and (d) will not result in the creation or imposition of any Lien
on any asset of any Loan Party or its Subsidiaries except Liens created under
the Loan Documents.
SECTION 3.04 Financial Condition; No Material Adverse Change.
(a) The Projections, copies of which have heretofore been furnished to each
Lender, has been prepared giving effect (as if such events had occurred
on such date) to (i) consummation of the Transactions, (ii) the Loans
and other extensions of credit hereunder to be made on the Effective
Date and the use of proceeds thereof and (iii) the payment of fees and
expenses in connection with the foregoing. The Projections have been
prepared based on good faith estimates and assumptions believed to be
reasonable at the time made, it being recognized by the Lenders that
such information as to future events are not to be viewed as facts and
that actual results during the period or periods covered by any such
projections may differ materially from the projected results.
(b) The Parent has heretofore furnished to the Agent (i) audited combined
balance sheets of Parent and its Subsidiaries as of the Fiscal Year ending
June 30, 2006 and the notes thereto and the related combined statements of
operations, shareholders' equity and cash flows of Parent and its
Subsidiaries for the Fiscal Years then ended and (ii) unaudited combined
balance sheets of Parent and its Subsidiaries as of the Fiscal Quarter
ending September 30, 2006 and the related combined statements of
operations, shareholders' equity and cash flows of Parent and its
Subsidiaries for the Fiscal Quarters then ended. Such financial statements
present fairly, in all material respects, the financial position and
results of operations and cash flows of Parent and its Subsidiaries as of
such dates and for such periods in accordance with GAAP, subject to year
end audit adjustments and the absence of footnotes in the case of the
statements referred to in clause (ii) above. -----------
(c) Since June 30, 2006, there has been no change in the business, assets,
operations or financial condition of Parent and its Subsidiaries, taken
as a whole, which could reasonably be expected to have a Material
Adverse Effect.
SECTION 3.05 Intellectual Property. Except as would not result in a Material
Adverse Effect, each Loan Party and its Subsidiaries owns, or is licensed to
use, all trademarks, tradenames, copyrights, patents and other intellectual
property necessary to the current and future anticipated conduct of the Loan
Parties' and their Subsidiaries' business, a correct and complete list of which,
as of the Effective Date and after giving effect to the consummation of the
Transactions, is set forth on Schedule 3.05, and, to the Loan Parties'
knowledge, the use thereof by the Loan Parties and their Subsidiaries does not
infringe in any material respect upon the rights of any other Person, and the
Loan Parties either (i) own the entire right, title and interest thereto or (ii)
hold such interest pursuant to a valid, subsisting and enforceable license.
SECTION 3.06 Litigation. (a) Except as disclosed on Schedule 3.06, there are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of any Loan Party, threatened
against or affecting the Loan Parties or their Subsidiaries (i) as to which
there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve this Agreement or the Transactions.
(a) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate,
has resulted in, or materially increased the likelihood of, a Material
Adverse Effect.
SECTION 3.07 Compliance with Laws. Each Loan Party is in compliance with all
laws, regulations and orders of any Governmental Authority applicable to it or
its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 3.08 Investment and Holding Company Status. No Loan Party nor any of its
Subsidiaries is an "investment company" as defined in, or subject to regulation
under, the Investment Company Act of 1940, as amended.
SECTION 3.09 Taxes. Except as disclosed on Schedule 3.09, each Loan Party and
its Subsidiaries has timely filed or caused to be filed all federal and other
material Tax returns and reports required to have been filed by it and has paid
or caused to be paid all Taxes required to have been paid by it, except (x)
Taxes that are being contested in good faith by appropriate proceedings and for
which the applicable Loan Party or Subsidiary has set aside on its books
adequate reserves and (y) Taxes the non-payment of which, in the aggregate, is
not reasonably expected to have a Material Adverse Effect. Except as disclosed
on Schedule 3.09, no Tax liens have been filed and no material claims have been
asserted in writing with respect to any such Taxes.
SECTION 3.10 ERISA.
------
(a) No ERISA Event has occurred or is reasonably expected to occur that, when
taken together with all other such ERISA Events for which liability is
reasonably expected to occur, could reasonably be expected to result in a
Material Adverse Effect. The present value of all accumulated benefit
obligations under each Plan (based on the assumptions used for purposes of
Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by
an amount that could reasonably be expected to result in a Material Adverse
Effect the fair market value of the assets of such Plan, and the present
value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial
Accounting Standards No. 87) did not, as of the date of the most recent
financial statements reflecting such amounts, exceed by more than $100,000
the fair market value of the assets of all such underfunded Plans.
(b) No Non-U.S. Plan has incurred any unfunded liability which could
reasonably be expected to give rise to a Material Adverse Effect.
(c) Except as required by applicable law, or which could not reasonably be
expected to give rise to a Material Adverse Effect, neither the
Borrowers nor any Subsidiary thereof maintains, sponsors or contributes
to any plan, policy or arrangement that provides medical benefits to
retirees or their beneficiaries.
SECTION 3.11 Disclosure. Each Loan Party and its Subsidiaries have disclosed to
the Agent all agreements, instruments and corporate or other restrictions to
which they are subject, and all other matters known to it, in each case that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. No reports, financial statements, certificates or other
information furnished by or on behalf of the Borrowers to the Agent or any
Lender in connection with the negotiation of this Agreement or delivered
hereunder (as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, that, with respect to
projected financial information, the Borrowers represent only that such
projected statements are based on good faith estimates and assumptions believed
to be reasonable at the time made.
SECTION 3.12 Material Agreements. Schedule 3.12 attached hereto contains a
correct and complete list, as of the Effective Date, of the following contracts,
agreements, or arrangements (other than those entered into in the ordinary
course of business) to which the Loan Parties are a party (the "Contracts"):
(a) notes, mortgages, indentures, loan or credit agreements, security
agreements each of which secures Indebtedness, and other agreements and
instruments reflecting obligations for borrowed money or other monetary
Indebtedness or otherwise relating to the borrowing of money by, or the
extension of credit to the Loan Parties, in each case creating an
actual or potential obligation of the Loan Parties of not less than
$500,000, or commitments to enter into any such agreements or
commitments;
(b) management, consulting and employment agreements and written
agreements, commitments, representations, promises or communications to
enter into the same other than as previously approved by Parent where
such agreement is terminable upon not more than sixty (60) days' prior
notice without further Liability of the Loan Parties thereunder;
(c) (i) with respect to real or immovable property, option agreements,
purchase and sale agreements, lease agreements or other agreements
involving the Mortgaged Properties, and (ii) with respect to equipment,
machinery, personal or movable property or other assets, tangible or
intangible, option agreements, purchase and sale agreements, lease
agreements or other agreements involving amounts payable by or to the
Loan Parties of $250,000 or more;
(d) agreements and purchase orders for the purchase or sale of goods,
services, supplies or capital assets that have continuing obligations
to perform and (i) have terms of more than one year, are subject to
automatic renewal or are indefinite and (ii) involved an annual payment
of more than $250,000 during at least one of the last three Fiscal
Years or, to the knowledge of the Loan Parties, would reasonably be
expected to involve the payment of more than $250,000 during any Fiscal
Year in the future;
(e) partnership, joint venture, stockholders' or other similar agreements
with any Person;
(f) contracts or agreements between or among the Loan Parties, on the one
hand, and any current or former director, officer or Affiliate of the
Loan Parties, on the other hand, with respect to the business as
conducted by the Loan Parties on the date of execution of this
Agreement except for contracts and agreements between the Loan Parties;
(g) outstanding guarantees, subordination agreements, indemnity agreements
and other similar types of agreements, whether or not entered into in
the ordinary course of business, which any Loan Party is or may become
liable for or obligated to discharge, or any asset of any Loan Party is
or may become subject to the satisfaction of, any Indebtedness,
obligation, performance or undertaking of any other Person, except for
(i) indemnification agreements contained in any of the instruments
listed in the schedules hereto or any other customary indemnity
provisions included in agreements for the purchase or sale of goods,
services or supplies and (ii) any of the foregoing in which, in each
case, the aggregate obligation of any Loan Party thereunder is less
than $250,000;
(h) contracts, orders, decrees or judgments preventing or restricting the
Loan Parties from carrying on any business activity or competing with
any Person or prohibiting or limiting disclosure of confidential or
proprietary information;
(i) agreements, contracts or commitments relating to the acquisition by any
Loan Party of the outstanding capital stock or equity interest of any
business enterprise or the disposition of any assets or properties of
any Loan Party (excluding dispositions of real or immovable property)
within the last five Fiscal Years;
(j) agreements, contracts or commitments with independent contractors,
distributors, dealers, manufacturers' representatives or sales agencies
that involved the payment of commissions during at least one of the
last three Fiscal Years of more than $250,000 or, to the knowledge of
the Loan Parties, would reasonably be expected to involve the payment
of more than $250,000 during any Fiscal Year in the future;
(k) all contracts that (i) limit or contain restrictions on the ability of
any Loan Party to declare or pay dividends on, to make any other
distribution in respect of or to issue or purchase, redeem or otherwise
acquire its capital stock, to incur Indebtedness, to incur or suffer to
exist any Lien, to purchase or sell any assets or properties, to change
the lines of business in which it participates or engages or to engage
in any Business Combination, or (ii) require any Loan Party to maintain
specified financial ratios or levels of net worth or other indicia of
financial condition; and
(l) all Plans, Multiemployer Plans and Non-U.S. Plans.
Except as disclosed in Schedule 3.12, there is not under (i) any
material contract to which any Borrower is a party or (ii) any instrument or
agreement governing Material Indebtedness any existing material breach or
material default (or event or condition, which after notice or lapse of time, or
both, would constitute a material breach or material default) by any Loan Party
with respect thereto.
SECTION 3.13 Solvency
(a) Immediately after the consummation of the Transactions and immediately
following the making of each Borrowing and the issuance of each Letter of
Credit, if any, and after giving effect to the application of the proceeds
of such Borrowing or such issuance of a Letter of Credit, with respect to
any Loan Party, (i) the fair value of the assets of each Loan Party, at a
fair valuation, will exceed its debts and liabilities, subordinated,
contingent or otherwise; (ii) the present fair saleable value of the
property of each Loan Party will be greater than the amount that will be
required to pay the probable liability of its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (iii) each Loan Party will be able to pay its
debts and liabilities, subordinated, contingent or otherwise, as such debts
and liabilities become absolute and matured; and (iv) each Loan Party will
not have unreasonably small capital with which to conduct the businesses in
which it is engaged as such businesses are now conducted and are proposed
to be conducted after the date hereof.
(b) No Loan Party intends to, or will permit any of its Subsidiaries to,
and believes that it or any of its Subsidiaries will, incur debts
beyond its ability to pay such debts as they mature, taking into
account the timing of and amounts of cash to be received by it or any
such Subsidiary and the timing of the amounts of cash to be payable on
or in respect of its Indebtedness or the Indebtedness of any such
Subsidiary.
SECTION 3.14 Intentionally Omitted.
SECTION 3.15 Capitalization and Subsidiaries. As of the Effective Date and after
giving effect to the consummation of the Transactions, Schedule 3.15 sets forth
(a) a correct and complete list of the name and relationship to the Parent of
each and all of the Parent's Subsidiaries, (b) a true and complete listing of
each class of each Loan Party's authorized Equity Interests, of which all of
such issued shares are validly issued, outstanding, fully paid and
non-assessable, and (c) the type of entity of each Loan Party and each of its
Subsidiaries. All of the issued and outstanding Equity Interests owned by any
Loan Party has been (to the extent such concepts are relevant with respect to
such ownership interests) duly authorized and issued and is fully paid and non
assessable.
SECTION 3.16 Common Enterprise. The successful operation and condition of each
of the Loan Parties is dependent on the continued successful performance of the
functions of the group of the Loan Parties as a whole and the successful
operation of each of the Loan Parties is dependent on the successful performance
and operation of each other Loan Party. Each Loan Party expects to derive
benefit (and its board of directors or other governing body has determined that
it may reasonably be expected to derive benefit), directly or indirectly, from
(i) successful operations of each of the other Loan Parties, and (ii) the credit
extended by the Lenders to the Borrowers hereunder, both in their separate
capacities and as members of the group of companies. Each Loan Party has
determined that execution, delivery, and performance of this Agreement and any
other Loan Documents to be executed by such Loan Party is within its purpose,
will be of direct and indirect benefit to such Loan Party, and is in its best
interest.
SECTION 3.17 Security Interest in Collateral. The provisions of this Agreement
and the other Loan Documents will, when executed and delivered, create legal and
valid Liens on all the Collateral in favor of the Agent, for the benefit of the
Agent and the Secured Parties, and (upon the filing of UCC-1 financing
statements in the jurisdictions listed on Schedule 3.17, the filing, recording
or registering of financing statements or analogous documents under other
applicable personal property security laws in the jurisdictions listed on
Schedule 3.17), such Liens constitute perfected and continuing Liens on the
Collateral, securing the Obligations, enforceable against the applicable Loan
Party and all third parties, and having priority over all other Liens on the
Collateral except for (a) Permitted Encumbrances, to the extent any such
Permitted Encumbrances would have priority over the Liens in favor of the Agent
pursuant to any applicable law, and (b) Liens perfected only by possession
(including possession of any certificate of title) to the extent the Agent has
not obtained or do not maintain possession of such Collateral.
SECTION 3.18 Labor Matters. As of the Effective Date and after giving effect to
the consummation of the Transactions (a) except as set forth on Schedule 3.18,
there is no collective bargaining agreement or other material labor contract
covering employees of any Borrower, (b) no union or other labor organization is
seeking to organize, or to be recognized as, a collective bargaining unit of
employees of any Borrower or for any similar purpose, and (c) there is no
pending or (to the best of the Borrowers' knowledge) threatened, strike, work
stoppage, material unfair labor practice claim, or other material labor dispute
against or affecting the Borrowers or their Subsidiaries or their employees.
SECTION 3.19 Affiliate Transactions. Except as set forth on Schedule 3.19, as of
the Effective Date and after giving effect to the consummation of the
Transactions, there are no existing or proposed agreements, arrangements,
understandings, or transactions between any Loan Party and any Affiliates (other
than Subsidiaries) of any Loan Party or any members of their respective
immediate families.
SECTION 3.20 Broker's and Transaction Fees. No Loan Party has any obligation to
any Person in respect of any finder's, broker's or investment banker's fees in
connection with the Transactions.
SECTION 3.21 Title; Real Property.
(a) Each Loan Party has good and marketable title to, or valid leasehold
interests in, all real or immovable property and good title to all personal
or movable property, in each case that is purported to be owned or leased
by it, including those reflected on the most recent financial statements
delivered by the Loan Parties or purported to have been acquired by any
Loan Party after the date of such financial statements (except as sold or
otherwise disposed of since such date as permitted by this Agreement), and
none of such properties and assets is subject to any Lien, except Liens
permitted under Section -------- 6.02. The Loan Parties have received all
deeds, assignments, waivers, consents, non-disturbance and recognition or
similar agreements, bills of sale and other documents in respect of, and
have duly effected all recordings, filings and other actions necessary to
establish, protect and perfect, the Loan Parties' right, title and interest
in and to all such property that is included in the Borrowing Base.
(b) Set forth on Schedule 3.21 is a complete and accurate list of all real
or immovable property owned, leased, licensed or otherwise used in the
operations of the business of each Loan Party and showing the current
street address (including, where applicable, county, state and other
relevant jurisdictions), record owner (if owned) or leasehold interest
holder and, (if leased) lessee or other user thereof. Each of such
leases and subleases is valid and enforceable in accordance with its
terms (except as such enforceability may be subject to or limited by
bankruptcy, insolvency, reorganization or other similar laws) and is in
full force and effect, and to each Loan Party's knowledge, no default
by any party to any material lease or material sublease exists.
(c) Except as set forth on Schedule 3.21, as of the Effective Date, no Loan
Party owns or holds, or is obligated under, subject to or a party to,
any lease, option, right of first refusal or other right (contractual
or otherwise) to purchase, acquire, sell, assign, dispose of or lease
any Mortgaged Property or any material real or immovable property of
such Loan Party.
(d) No portion of any real or immovable property of any Loan Party has suffered
any material damage by fire or other casualty loss that has not heretofore
been completely repaired and restored to substantially its original
condition other than losses covered by insurance the proceeds of which are,
or will be, applied toward the restoration of such property (if permitted
hereunder) or which property is immaterial to the current business of such
Loan Party. As of the Effective Date, except as set forth on Schedule 3.21,
no portion of any Mortgaged Property is located in a special flood hazard
area as designated by -------------- any federal Governmental Authority. To
the knowledge of each Loan Party, no portion of any real or immovable
property of any Loan Party (not including any Mortgaged Property) is
located in a special flood hazard area as designated by any federal
Governmental Authority, except where such location of any real or immovable
property, individually, or together with any other real or immovable
property of any Loan Party, in a special flood hazard area could not
reasonably be expected to have a Material Adverse Effect.
(e) All permits required to have been issued or appropriate to enable all
real or immovable property of the Loan Parties 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,
other than those that, in the aggregate, would not have a Material
Adverse Effect.
(f) No Loan Party has received any written notice, or has any knowledge, of
any pending or threatened condemnation proceeding affecting any real or
immovable property of the Loan Parties or any part thereof, except
those that, in the aggregate, would not have a Material Adverse Effect.
(g) Each real or immovable property owned, leased or otherwise used in the
operation of business of any Loan Party is in condition and repair
consistent with prudent industry practice in the business of such Loan
Party as currently conducted, suitable for its intended purposes and
the operation of the business of the applicable Loan Party thereon, and
there exist no material defects in the same.
SECTION 3.22 Environment. Except as set forth on Schedule 3.22:
----------- -------------
(a) The operations of each Loan Party are and have been for the past four
years in compliance with all applicable Environmental Laws, other than
(i) any past non-compliance for which there are no remaining
obligations or liabilities, and (ii) non-compliances that, in the
aggregate, would not have a reasonable likelihood of resulting in a
Material Adverse Effect.
(b) No Lien in favor of any Governmental Authority securing, in whole or in
part, Environmental Liabilities is attached to any property of any Loan
Party and, to the knowledge of any Loan Party, no facts, circumstances
or conditions exist that could reasonably be expected to result in any
such Lien attaching to any such property.
(c) No Loan Party has caused or suffered to occur a Release of Hazardous
Materials on, at, in, under, above, to, or from any real or immovable
property of any Loan Party and each such real or immovable property is
free of contamination by any Hazardous Materials except for such
Release or contamination that could not reasonably be expected to
result, in the aggregate, in a Material Adverse Effect.
(d) No Loan Party, or to its knowledge, any corporate predecessor, (i) is
or has been engaged in operations, or (ii) knows of any facts,
circumstances or conditions, including receipt of any information
request or notice of potential responsibility under CERCLA or similar
Environmental Laws, that, in the aggregate, would have a reasonable
likelihood of resulting in Material Environmental Liabilities, except
as could not reasonably be expected to result, in the aggregate, in a
Material Adverse Effect.
(e) Each Loan Party has made available to the Agent copies of the
environmental reports, reviews and audits and other documents
pertaining to actual or potential Environmental Liabilities set forth
on Schedule 3.22.
SECTION 3.23 Deposit Accounts. Schedule 3.23 lists all banks and other financial
institutions at which any Loan Party or any of its Subsidiaries maintains
deposit or other accounts as of the Effective Date, including any Blocked
Accounts, and such Schedule correctly identifies the name of each depository,
the name in which the account is held, a description of the purpose of the
account and the complete account number therefor.
SECTION 3.24 Patriot Act. Each Loan Party is in compliance, in all material
respects, with the (a) the Trading with the Enemy Act, as amended, and each of
the foreign assets control regulations of the United States Treasury Department
(31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation
or executive order relating thereto, and (b) the Uniting And Strengthening
America By Providing Appropriate Tools Required To Intercept And Obstruct
Terrorism (USA Patriot Act of 2001). No part of the proceeds of the Loans will
be used, directly or indirectly, for any payments to any governmental official
or employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.
ARTICLE IV
Conditions
SECTION 4.01 Effective Date. The obligations of the Lenders to make Loans and to
assist the Company in obtaining initial Letters of Credit hereunder shall not
become effective until the date on which each of the following conditions is
satisfied (or waived in accordance with Section 9.03):
(a) The Agent (or its counsel) shall have received from each party hereto
either (i) a counterpart of this Agreement signed on behalf of such
party or (ii) written evidence satisfactory to the Agent (which may
include facsimile transmission of a signed signature page of this
Agreement) that such party has signed a counterpart of this Agreement.
(b) The Agent shall have received duly executed copies of the Loan
Documents and such other certificates, documents, instruments and
agreements as the Agent shall reasonably request in connection with the
transactions contemplated by this Agreement and the other Loan
Documents, including written opinions of the Loan Parties' counsel,
addressed to the Agent, the Issuing Bank and the Lenders, each in form
and substance reasonably satisfactory to the Agent.
(c) The Agent shall have received evidence satisfactory to the Agent that, upon
the filing and recording of instruments delivered by each Borrower, the
Agent for the benefit of the Secured Parties shall have a valid and
perfected first priority security interest in the Collateral (except as may
be agreed to by the Agent), including copies of UCC and other applicable
personal property Lien search reports and all effective financing
statements listed therein, in each case as may be reasonably required by
the Agent, all certificates, instruments and other documents representing
all Securities (as defined in the UCC) being pledged pursuant to the
Collateral Documents and, as the case may be, updated powers or
endorsements executed in blank by a duly authorized officer with power to
transfer such Securities and all control agreements that, in the reasonable
judgment of the Agent, shall be required for perfection of any deposit
account of any Loan Party, each duly executed by the Loan Party maintaining
such account and the applicable financial institutions, securities
intermediaries and commodity intermediaries with respect thereto.
(d) The Agent shall have received, in form and substance satisfactory to
Agent, all releases, terminations and such other documents as Agent may
request to evidence and effectuate the termination by the Existing
Lender of its respective financing arrangements with Borrowers and the
termination and release by it of any interest in and to any assets and
properties of each Borrower, duly authorized, executed and delivered by
it, including, but not limited to, (i) UCC termination statements for
all UCC financing statements previously filed by it or its
predecessors, as secured party and any Borrower, as debtor; and (ii)
satisfactions and discharges of any mortgages, deeds of trust or deeds
to secure debt by any Borrower or Guarantor in favor of it, in form
acceptable for recording with the appropriate Governmental Authority.
(e) All legal (including tax implications) and regulatory matters,
including, but not limited to compliance with applicable requirements
of Regulations U, T and X of the Board of Governors of the Federal
Reserve System, shall be satisfactory to the Agent and the Lenders.
(f) After giving effect to all Borrowings to be made on the Effective Date
and the issuance of any Letters of Credit on the Effective Date and
payment of all fees and expenses due hereunder, and with all of the
Loan Parties' indebtedness, liabilities, and obligations current, the
Borrowers' Availability shall not be less than $3,500,000.
(g) The Agent shall have received all fees and other amounts due and
payable on or prior to the Effective Date, including, to the extent
invoiced, reimbursement or payment of all out of pocket expenses
required to be reimbursed or paid by the Borrowers hereunder.
(h) The Borrowers shall have delivered to the Agent a notice setting forth
the deposit accounts of the Borrowers (the "Funding Accounts") to which
the Agent is authorized by the Borrowers to transfer the proceeds of
any Borrowings requested or authorized pursuant to this Agreement.
(i) The Agent shall be reasonably satisfied with the form of (i) the
audited combined balance sheets of Parent and its Subsidiaries as of
the Fiscal Year ending June 30, 2006, and the notes thereto and the
related combined statements of operations, shareholders' equity and
cash flows of Parent and its Subsidiaries for the years then ended and
(ii) the unaudited combined balance sheets of Parent and its
Subsidiaries as of the Fiscal Quarter Ending September 30, 2006 and the
related combined statements of operations, shareholders' equity and
cash flows of Parent and its Subsidiaries for the periods then ended.
(j) The Agent or its Affiliates shall have received projections and shall
have conducted a field examination of the Borrowers' assets,
liabilities, cash management systems, books and records, all of which
shall be reasonably satisfactory to the Agent in all respects.
(k) The Borrowers shall have delivered to the Agent evidence of insurance
with respect to the Loan Parties customary for similarly situated
companies, including reasonably satisfactory endorsements naming the
Agent as mortgagee, loss payee and additional insured on all such
policies.
(l) The Borrowers shall have delivered to the Agent a solvency certificate,
in form and substance reasonably satisfactory to the Agent, together
with such other evidence of solvency reasonably requested by the Agent,
confirming the solvency of each Borrower and its Subsidiaries after
giving effect to the Transactions.
(m) The Agent shall have received, in form and substance satisfactory to
the Agents, duly executed Blocked Account Agreements or similar
agreements required by this Agreement.
(n) The Loan Parties shall have delivered such other documents as the
Agent, the Issuing Bank, any Lender or their respective counsel may
have reasonably requested.
SECTION 4.02 Each Credit Event. The obligation of each Lender to make a Loan on
the occasion of any Borrowing, and the issuance of any Letter of Credit
(including any extension or amendment thereto), in each case is subject to the
satisfaction of the following conditions:
(a) The representations and warranties of the Borrowers set forth in this
Agreement shall be true and in all material respects, correct on and as
of the date of such Borrowing.
(b) At the time of and immediately after giving effect to such Borrowing,
no Event of Default shall have occurred and be continuing.
(c) In the case of any such Borrowing, the Agent shall have received a
Borrowing Request pursuant to Section 2.04 and, in the case of any such
Letter of Credit, the Agent and Issuing Bank shall have received all
documentation pursuant to Section 2.08(e).
(d) After giving effect to any Borrowing, Availability is not less than
zero.
Each Borrowing shall be deemed to constitute a representation and warranty by
the Borrowers on the date thereof as to the matters specified in Sections
4.02(a), (b) and (c).
ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated, the principal of
and interest on each Loan and all other Obligations (other than contingent
indemnification obligations to the extent no claim giving rise thereto has been
asserted and Letter of Credit Obligations that have been fully cash
collateralized) shall have been paid in full, Borrowers jointly and severally
covenant and agree with the Agent and the Lenders that:
SECTION 5.01 Financial Statements; Borrowing Base and Other Information. The
Borrowers will furnish to the Agent, for itself and
----------------------------------------------------------- Lenders:
(a) within 90 days after the end of each Fiscal Year of the Parent its audited
consolidated balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such year,
together with unaudited business segment reporting to the extent required
by GAAP and the Securities and Exchange Commission, setting forth in each
case in comparative form the figures for the previous Fiscal Year, all
reported on by independent public accountants of recognized national
standing (without a "going concern" qualification, paragraph of emphasis or
explanatory note or any like qualification, explanation or exception and
without any qualification or exception as to the scope of such audit) to
the effect that such consolidated financial statements present fairly in
all material respects the financial condition and results of operations of
the Parent and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, accompanied by any management
letter prepared by said accountants;
(b) within 45 days after the end of each of the first three Fiscal Quarters of
the Parent other than the first Fiscal Quarter after the Effective Date,
and within 90 days after the end of the first Fiscal Quarter of the Parent
after the Effective Date, its consolidated and consolidating balance sheet
and related statements of operations, stockholders' equity and cash flows
as of the end of and for such Fiscal Quarter and the then elapsed portion
of the Fiscal Year, together with unaudited business segment reporting to
the extent required by GAAP and the Securities and Exchange Commission,
setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet,
as of the end of) the previous Fiscal Year, all certified by one of its
Financial Officers as presenting fairly in all material respects the
financial condition and results of operations of the Parent and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes;
(c) within 30 days after the end of each fiscal month of the Parent, its
unaudited consolidated and consolidating balance sheet and related
statements of operations, stockholders' equity and cash flows as of the
end of and for such fiscal month and the then elapsed portion of the
Fiscal Year, setting forth in each case in comparative form the figures
for the corresponding period or periods of (or, in the case of the
balance sheet, as of the end of) the previous Fiscal Year, all
certified by one of its Financial Officers as presenting fairly in all
material respects the financial condition and results of operations of
the Parent and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end
audit adjustments and the absence of footnotes;
(d) concurrently with any delivery of financial statements under clause (a),
(b) or (c) above, a certificate of a Financial ---------- --- --- Officer
of the Administrative Borrower in substantially the form of Exhibit C (i)
certifying, in the case of the financial --------- statements delivered
under clause (b) or (c), as presenting fairly in all material respects the
financial condition and ---------- --- results of operations of the Parent
and its consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes, (ii) certifying as to whether a
Default has occurred and, if a Default has occurred, specifying the details
thereof and any action taken or proposed to be taken with respect thereto,
(iii) setting forth reasonably detailed calculations demonstrating
compliance with Section 6.11, and (iv) stating whether any change in GAAP
or in the application thereof has occurred since the date of ------------
the audited financial statements referred to in Section 3.04 which affects
the financial statements accompanying such ------------- certificate and,
if any such change has occurred, specifying the effect of such change on
the financial statements accompanying such certificate;
(e) concurrently with any delivery of financial statements under clause (a)
above, a certificate of the accounting firm that reported on such
financial statements stating whether they obtained knowledge during the
course of their examination of such financial statements of any Default
(which certificate may be limited to the extent required by accounting
rules or guidelines);
(f) as soon as available, but in any event not more than 45 days prior to
the end of each Fiscal Year of the Parent, but not less than 15 days
prior to the end of such Fiscal Year, a copy of the financial plan and
forecast (including a projected consolidated and consolidating balance
sheet, income statement, funds flow statement and schedule of projected
Availability) of the Parent for each month of the immediately
succeeding Fiscal Year of the Parent (the "Projections") in form
reasonably satisfactory to the Agent;
(g) as soon as available but in any event within two (2) Business Days of
the end of each calendar week and at such other times as may be
reasonably requested by the Agent, in each case as of the period then
ended, a Borrowing Base Certificate and supporting information in
connection therewith;
(h) as soon as available but in any event within ten (10) Business Days of
the end of each calendar month and at such other times as may be
requested by the Agent, in each case as of the period then ended:
(i) a detailed aging of the Borrowers' Accounts (1) including all invoices
aged by invoice date and (2) reconciled to the Borrowing Base
Certificate delivered as of such date prepared in a manner reasonably
acceptable to the Agent, together with a summary specifying the name,
address, and balance due for each Account Debtor;
(ii) a schedule detailing the Borrowers' Inventory, in form satisfactory to the
Agent, (1) by location (showing Inventory in transit, any Inventory located
with a third party under any consignment, bailee arrangement, or warehouse
agreement), by class (raw material, work-in-process and finished goods), by
product type, and by volume on hand, which Inventory shall be valued at the
lower of cost (determined on a first-in, first-out basis) or market and
adjusted for Reserves as the Agent have previously indicated to the
Borrowers are deemed by the Agent to be appropriate in their Permitted
Discretion, (2) including a report of any variances or other results of
Inventory counts performed by the Borrowers since the last Inventory
schedule (including information regarding sales or other reductions,
additions, returns, credits issued by Borrowers and complaints and claims
made against the Borrowers), and (3) reconciled to the Borrowing Base
Certificate delivered as of such date;
(iii) a worksheet of calculations prepared by the Borrowers to determine
Eligible Accounts and Eligible Inventory, such worksheets detailing the
Accounts and Inventory excluded from Eligible Accounts and Eligible
Inventory and the reason for such exclusion;
(iv) a reconciliation of the Borrowers' Accounts and Inventory between the
amounts shown in the Borrowers' general ledger and financial statements
and the reports delivered pursuant to clauses (i) and (ii) above;
(v) a reconciliation of the loan balance per the Borrowers' general ledger
to the loan balance under this Agreement; and
(vi) a schedule detailing the obligations of each Borrower and each of the
Borrowers' Subsidiaries in respect of any Swap Agreement (for purposes
of this subsection, the "obligations" of any Borrower or any Subsidiary
in respect of any Swap Agreement at any time shall be the maximum
aggregate amount (giving effect to any netting agreements) that such
Borrower or such Subsidiary would be required to pay if such Swap
Agreement were terminated at such time);
(i) as soon as available but in any event within ten days of the end of
each calendar month and at such other times as may be requested by the
Agent, as of the month then ended, a schedule and aging of the
Borrowers' accounts payable;
(j) promptly upon the request of the Agent:
(i) copies of invoices in connection with the invoices issued by the
Borrowers in connection with any Accounts, credit memos, shipping and
delivery documents, and other information related thereto;
(ii) copies of purchase orders, invoices, and shipping and delivery
documents in connection with any Inventory or Equipment purchased by
any Loan Party; and
(iii) a schedule detailing the balance of all intercompany accounts of the
Loan Parties;
(k) as soon as available but in any event within three days of the end of
each calendar week and at such other times as may be requested by the
Agent, as of the period then ended, the Borrowers' sales journal, and
debit memo/credit memo journal;
(l) as soon as possible and in any event within twenty days of filing
thereof, copies of all tax returns filed by any Loan Party with the
Internal Revenue Service;
(m) as soon as possible and in any event within two-hundred and seventy
days after the close of the Fiscal Year of the Parent, a statement of
the unfunded liabilities of each Plan, certified as correct by an
actuary enrolled under ERISA;
(n) within thirty days of the first Business Day of each September, a
certificate of good standing for each Loan Party from the appropriate
governmental officer in its jurisdiction of incorporation, formation,
or organization and a customer list for the Loan Parties and their
Subsidiaries, with the name, mailing address and phone number of each
customer;
(o) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed
by any Borrower or any Subsidiary with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of
the functions of said Commission, or with any national securities
exchange, or distributed by any Borrower to its shareholders generally,
as the case may be; and
(p) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of
any Borrower or any Subsidiary, or compliance with the terms of this
Agreement as the Agent or any Lender may reasonably request.
SECTION 5.02 Notices of Material Events. The Borrowers will furnish to the Agent
and each Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) the assertion by the holder of any Indebtedness of any Loan Party in
excess of $250,000 that any default exists with respect thereto or that
any Loan Party is not in compliance therewith;
(c) receipt of any notice of any governmental investigation or any
litigation commenced or threatened against any Loan 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, (iv) alleges criminal misconduct by any Loan Party, (v)
alleges the violation of any law regarding, or seeks remedies in
connection with, any Environmental Laws; or (vi) involves any product
recall;
(d) any Lien (other than Permitted Encumbrances) securing a claim or claims
made or asserted against any of the Collateral;
(e) commencement of any proceedings contesting any tax, fee, assessment, or
other governmental charge in excess of $250,000;
(f) the opening of any new deposit account by any Loan Party with any bank
or other financial institution;
(g) any loss, damage, or destruction to the Collateral in the amount of
$250,000 or more, whether or not covered by insurance;
(h) any and all default notices sent or received under or with respect to
(i) any leased location where more than $100,000 of Collateral is
located or (ii) public warehouse where more than $100,000 of Collateral
is located (which shall be delivered within two Business Days after
receipt thereof);
(i) all material amendments to any material real estate lease, together
with a copy of each such amendment;
(j) immediately after becoming aware of any pending or threatened strike,
work stoppage, unfair labor practice claim, or other labor dispute
affecting any Borrower or any of their Subsidiaries in a manner which
could reasonably be expected to have a Material Adverse Effect;
(k) the fact that a Loan Party has entered into a Swap Agreement or an
amendment to a Swap Agreement, together with copies (unless a Lender is
a party thereto) of all agreements evidencing such Swap Agreement or
amendments thereto (which shall be delivered within two Business Days);
(l) the occurrence of any ERISA Event or underfunding of any Non-U.S. Plan
that, alone or together with any other ERISA Events that have occurred,
could reasonably be expected to result in a liability for the Loan
Parties and their Subsidiaries greater than $250,000; and
(m) (i) (A) the occurrence of unpermitted Releases of Hazardous Material of
which any Loan Party is aware, (B) the receipt by any Loan Party of any
notice of violation of or potential liability or similar notice under,
or the existence of any condition that could reasonably be expected to
result in violations of or liabilities under, any Environmental Law or
(C) the commencement of, or any material change to, any action,
investigation, suit, proceeding, claim, demand, dispute alleging a
violation of or liability under any Environmental Law, that, for each
of clauses (A), (B) and (C) (and, in the case of clause (C), if
adversely determined), in the aggregate for each such clause, could
reasonably be expected to result in Environmental Liabilities in excess
of $250,000;
(i) the receipt by any Loan Party of notification (A) that any property of
any Loan Party is subject to any Lien in favor of any Governmental
Authority securing, in whole or in part, Environmental Liabilities in
excess of $250,000 or (B) that any Governmental Authority is seeking
such a Lien; and
(ii) any acquisition of Securities (as defined in the UCC), other real or
immovable property or any other property, any proposed leasing of
property or any other action by any Loan Party, in each case the
consequences of which, in the aggregate, have a reasonable likelihood
of resulting in Environmental Liabilities in excess of $250,000; and
(n) any other development that results in, or could reasonably be expected
to result in, a Material Adverse Effect.
(o) Each notice delivered under this Section 5.02 shall be accompanied by a
statement of a Financial Officer or other executive officer of the
Administrative Borrower setting forth the details of the event or
development requiring such notice and any action taken or proposed to
be taken with respect thereto.
SECTION 5.03 Existence; Conduct of Business. Each Borrower will, and will cause
each other Loan Party and its Subsidiaries to, (a) do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business, and maintain all requisite authority to conduct
its business in each jurisdiction in which its business is conducted, provided,
that, the foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 6.03 and (b) carry on and conduct its
business in substantially the same manner and in substantially the same fields
of enterprise as it is presently conducted.
SECTION 5.04 Payment of Obligations. Each Borrower will, and will cause each
other Loan Party and its Subsidiaries to, pay or discharge when due all Material
Indebtedness and all other material liabilities and obligations, including
taxes, except where (a) the validity or amount thereof is being contested in
good faith by appropriate proceedings, (b) such Loan Party and its Subsidiaries
have set aside on their books adequate reserves with respect thereto in
accordance with GAAP, (c) such liabilities would not result in aggregate
liabilities in excess of $100,000 and (d) none of the Collateral becomes subject
to forfeiture or loss as a result of the contest.
SECTION 5.05 Maintenance of Properties and Intellectual Property Rights. Each
Borrower will, and will cause each other Loan Party and its Subsidiaries to, (a)
keep and maintain all property material to the conduct of its business in good
working order and condition sufficient and advisable for the ordinary operations
of such Loan Party, and (b) obtain and maintain in effect at all times all
material franchises, governmental authorizations, intellectual property rights,
licenses and permits, which are necessary for it to own its property or conduct
its business as conducted on the date of this Agreement.
SECTION 5.06 Books and Records; Inspection Rights. Each Borrower will, and will
cause each other Loan Party and its Subsidiaries to, keep proper books of record
and account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. Each Borrower will, and
will cause each other Loan Party and its Subsidiaries to, permit any
representatives designated by the Agent (no more than twice during any calendar
year, other than during the existence and continuation of an Event of Default)
or any Lender (only upon the existence and continuation of an Event of Default),
upon reasonable prior notice, to visit and inspect its properties, to examine
and make extracts from its books and records, and to discuss its affairs,
finances and condition with its officers and independent accountants, all at
such reasonable times and as often as reasonably requested. The Borrowers
acknowledge, and upon the request of the Agent will cause each other Loan Party
to acknowledge, that the Agent, after exercising its right of inspection, may
prepare and distribute to the Lenders certain Reports pertaining to the Loan
Parties' assets for internal use by the Agent and the Lenders. After the
occurrence and during the continuance of any Event of Default, the Borrower
will, and will cause each other Loan Party to, provide the Agent and each Lender
with access to its suppliers.
SECTION 5.07 Compliance with Laws. Each Borrower will, and will cause each other
Loan Party and its Subsidiaries to, comply with all laws, rules, regulations and
orders of any Governmental Authority applicable to it or its property, except
where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 5.08 Use of Proceeds and Letters of Credit. The proceeds of the Loans
will be used only (i) to pay fees and expenses in connection with the
Transactions, (ii) for working capital needs and general corporate purposes of
the Borrowers and the other Loan Parties and (iii) to effectuate the termination
of the Borrowers' financing arrangements with the Existing Lender and (iv) to
finance Acquisitions permitted by Section 6.04. No part of the proceeds of any
Loan will be used, whether directly or indirectly, (i) for any purpose that
entails a violation of any of the Regulations of the Board, including
Regulations T, U and X, or (ii) to make any Acquisition, except as expressly
permitted pursuant to the terms hereof. Letters of Credit will be issued only to
support the working capital needs and general corporate purposes of the
Borrowers and the other Loan Parties.
SECTION 5.09 Insurance. Each Borrower will, and will cause each other Loan Party
and each Subsidiary of a Loan Party to, maintain with financially sound and
reputable carriers, insurance against: (i) loss or damage by fire and loss in
transit; (ii) theft, burglary, pilferage, larceny, embezzlement, and other
criminal activities; (iii) business interruption; (iv) general liability; and
(v) and such other hazards, as is customary in the business of such Person. All
such insurance shall be in amounts, cover such assets and be under policies
acceptable to the Agent in their Permitted Discretion. All policies covering the
casualty of the Collateral are to be made payable to the Agent for the benefit
of the Secured Parties, as its interests may appear, in case of loss, under a
standard non-contributory "lender" or "secured party" clause and are to contain
such other provisions as the Agent may reasonably require to fully protect the
Secured Parties' interest in the Collateral and to any payments to be made under
such policies. All certificates of insurance are to be delivered to the Agent,
with the loss payable and additional insured endorsement in favor of the Agent,
and shall provide for not less than 30 days' prior written notice to the Agent
of the exercise of any right of cancellation and that any loss payable
thereunder shall be payable notwithstanding any act or negligence of any Loan
Party or any Secured Party which might, absent such agreement, result in a
forfeiture of all or a part of such insurance payment. The Borrowers will not,
and will not permit any other Loan Party and its Subsidiaries to, use or permit
any property to be used in any manner which would be reasonably likely to render
inapplicable any insurance coverage. The Borrowers will cause any insurance or
condemnation proceeds received by any Loan Party in excess of $500,000 to be
immediately forwarded to the Agent and the Agent will apply any such proceeds to
the reduction of the Obligations in accordance with Section 2.13(b)(iv) and
Section 2.13(c). Original policies or certificates thereof reasonably
satisfactory to the Agent evidencing such insurance shall be delivered to the
Agent at least 30 days prior to the expiration of the existing or preceding
policies.
SECTION 5.10 Appraisals. At any time that the Agent requests, each Borrower
will, and will cause each other Loan Party to, at the sole expense of the Loan
Parties, provide the Agent with appraisals or updates thereof of their Inventory
from an appraiser selected and engaged by the Agent, and prepared on a basis
satisfactory to the Agent, such appraisals and updates to include, without
limitation, information required by applicable law and regulations; provided,
however, if no Event of Default shall have occurred and be continuing, only one
(1) such appraisal or update per calendar year shall be conducted; provided,
further, that the Agent may require appraisals or updates more frequently at its
own expense.
SECTION 5.11 Additional Collateral; Further Assurances.
(a) The Borrowers will, unless the Required Lenders otherwise consent,
cause each Subsidiary of any Loan Party (excluding any Non-U.S.
Subsidiary) formed or acquired after the date of this Agreement in
accordance with the terms of this Agreement to become a Borrower by
executing this Agreement through a joinder agreement in form and
substance reasonably satisfactory to the Agent (the "Joinder
Agreement"). Upon execution and delivery thereof, each such Person (i)
shall automatically become a Loan Party hereunder and thereupon shall
have all of the rights, benefits, duties, and obligations in such
capacity under the Loan Documents, and (ii) will grant Liens to the
Agent, for the benefit of the Agent and the Secured Parties, in any
property of such Loan Party which constitutes Collateral.
(b) Each Borrower will, and will cause each other Loan Party to cause (i) 100%
of the issued and outstanding Equity Interests of each of its domestic
Subsidiaries to be subject at all times to a first priority, perfected Lien
(subject to Permitted Encumbrances) in favor of the Agent pursuant to the
terms and conditions of the Loan Documents or other security documents as
the Agent shall reasonably request, and (ii) 65% of the issued and
outstanding Equity Interests entitled to vote (within the meaning of Treas.
Reg. Section 1.956-2(c)(2)) and 100% of the issued and outstanding Equity
Interests not entitled to vote (within the meaning of Treas. Reg. Section
1.956-2(c)(2)) in each Non-U.S. Subsidiary directly owned by any Borrower
or any Subsidiary to be subject at all times to a first priority, perfected
Lien (subject to Permitted Encumbrances) in favor of the Agent pursuant to
the terms and conditions of the Loan Documents or other security documents
as the Agent shall reasonably request; provided, that, if, as a result of a
change in applicable law after the date hereof, a pledge of a greater
percentage than 65% of the issued and outstanding Equity Interests entitled
to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) could not
reasonably be expected to cause (1) undistributed earnings of such Non-U.S.
Subsidiary (as determined for federal income tax purposes) to be treated as
a deemed dividend to such Non-U.S. Subsidiary's domestic parent or (2)
other material adverse tax consequences, then the Borrowers will take steps
to cause such greater percentage to be subject to a first priority,
perfected Lien (subject to Permitted Encumbrances) in favor of the Agent.
(c) Without limiting the foregoing, each Borrower will, and will cause each
other Loan Party and each Subsidiary of a Loan Party which is required
to become a Loan Party pursuant to the terms of this Agreement to,
execute and deliver, or cause to be executed and delivered, to the
Agent such documents and agreements, and will take or cause to be taken
such actions as the Agent may, from time to time, reasonably request to
carry out the terms and conditions of this Agreement and the other Loan
Documents, including but not limited to all items of the type required
by Section 4.01 (as applicable).
(d) To the extent permitted hereunder, if any Loan Party proposes to
acquire a fee ownership interest in real property after the date of
this Agreement, the Borrower will, and will cause each other Loan Party
to, first provide to the Agent a mortgage or deed of trust granting the
Agent a first priority Lien on such real property, together with
environmental audits, mortgage title insurance commitment, real
property survey, local counsel opinion(s), and, if required by the
Agent, supplemental casualty insurance and flood insurance, and such
other documents, instruments or agreements reasonably requested by the
Agent, in each case, in form and substance reasonably satisfactory to
the Agent.
SECTION 5.12 Cash Management.
(a) Each Borrower shall (i) instruct each depository institution for a
deposit account to cause all amounts on deposit and available at the
close of each Business Day in such deposit account to be swept to one
of the Borrowers' concentration accounts no less frequently than on a
daily basis, such instructions to be irrevocable unless otherwise
agreed to by the Agent, and (ii) enter into Blocked Account Agreements
with respect to all deposit accounts. All amounts received by a
Borrower or any of its Subsidiaries and any Clearing Bank in respect of
any deposit account, in addition to all other cash received from any
other source, shall upon receipt be deposited into a deposit account.
Each Loan Party agrees that it will not cause proceeds of such deposit
accounts to be otherwise redirected.
(b) Each Blocked Account Agreement shall require wire transfers no less
frequently than once per Business Day (unless the Commitments have been
terminated and the Obligations hereunder and under the other Loan
Documents have been paid in full), of all available cash balances and
cash receipts, including the then contents or then entire ledger
balance of each Blocked Account net of such minimum balance (not to
exceed $10,000 per account), if any, required by the bank at which such
Blocked Account is maintained to an account maintained with the Agent
(the "Collection Account"). Each Loan Party agrees that it will not
cause proceeds of any Blocked Account to be otherwise redirected.
(c) All collected amounts received in the Collection Account shall be
distributed and applied on a daily basis in accordance with Section
2.12(b).
(d) If any cash or cash equivalents owned by any Loan Party (other than (i)
de minimis cash or cash equivalents from time to time inadvertently
misapplied by any Loan Party, (ii) funds in any deposit account the
amounts in which are solely swept into any Blocked Account and (iii)
any funds which are held by any Borrower and any of their respective
Subsidiaries on behalf of any customer in the ordinary course of
business) are deposited to any account, or held or invested in any
manner, otherwise than in a Blocked Account subject to a Blocked
Account Agreement, the Agent shall be entitled to require the
applicable Loan Party to close such account and have all funds therein
transferred to a Blocked Account, and to cause all future deposits to
be made to a Blocked Account.
(e) The Collection Account shall at all times be under the sole dominion and
control of the Agent. Each Loan Party hereby acknowledges and agrees that,
except to the extent otherwise provided in the Security Agreements (i) such
Loan Party has no right of withdrawal from the Collection Account, (ii) the
funds on deposit in the Collection Account shall at all times continue to
be collateral security for all of the obligations of the Loan Parties
hereunder and under the other Loan Documents, and (iii) the funds on
deposit in the Collection Account shall be applied as provided in this
Agreement. In the event that, notwithstanding the provisions of this
Section 5.12, any Loan Party receives or otherwise has dominion and
------------- control of any proceeds or collections required to be
transferred to the Collection Account, such proceeds and collections shall
be held in trust by such Loan Party for the Agent, shall not be commingled
with any of such Loan Party's other funds or deposited in any account of
such Loan Party and shall promptly be deposited into the Collection Account
or dealt with in such other fashion as such Loan Party may be instructed by
the Agent.
SECTION 5.13 Post-Closing Obligations. The Loan Parties shall comply with each
requirement set forth in the Post-Closing Letter on or before the date referred
to in the Post-Closing Letter with respect to such requirement.
ARTICLE VI
Negative Covenants
Until the Commitments have expired or been terminated, the principal of
and interest on each Loan and all other Obligations (other than contingent
indemnification obligations to the extent no claim giving rise thereto has been
asserted and Letter of Credit Obligations that have been fully cash
collateralized) shall have been paid in full, Borrowers jointly and severally
covenant and agree with the Agent and the Lenders that:
SECTION 6.01 Indebtedness. The Borrowers will not, and will not permit any other
Loan Party or its Subsidiaries to, create, incur or suffer to exist any
Indebtedness, except:
(a) the Obligations;
(b) Indebtedness existing on the date hereof and set forth on Schedule 6.01
and extensions, renewals and replacements of any such Indebtedness in
accordance with clause (f) hereof;
(c) Indebtedness of any Loan Party to any other Loan Party or a Non-U.S.
Subsidiary, provided, that:
(i) the applicable Loan Parties and Non-U.S. Subsidiaries shall have
executed on the Effective Date a demand note to evidence any such
intercompany Indebtedness owing at any time by any applicable Loan
Party to another applicable Loan Party or Non-U.S. Subsidiary, which
demand notes shall be in form and substance reasonably satisfactory to
the Agent and shall be pledged and delivered to the Agent pursuant to
the Security Agreement as additional collateral security for the
Obligations;
(ii) each Loan Party shall record all intercompany transactions on its books
and records in a manner reasonably satisfactory to the Agent; and
(iii) the obligations of the Loan Parties under any such Intercompany Notes
shall be subordinated to the Obligations hereunder in accordance with
Section 9.20.
(d) Guarantees by a Loan Party of Indebtedness of any other Loan Party if
the primary obligation is expressly permitted elsewhere in this Section
6.01;
(e) Indebtedness of any Loan Party incurred to finance the acquisition,
construction or improvement of any fixed or capital assets, including
Capital Lease Obligations and any Indebtedness assumed in connection
with the acquisition of any such assets or secured by a Lien on any
such assets prior to the acquisition thereof, and extensions, renewals
and replacements of any such Indebtedness in accordance with clause (f)
hereof; provided, that, (i) such Indebtedness is incurred prior to or
within 90 days after such acquisition or the completion of such
construction or improvement, and (ii) the aggregate principal amount of
Indebtedness permitted by this clause (e) shall not exceed $500,000 at
any time outstanding;
(f) Indebtedness which represents an extension, refinancing, or renewal of any
of the Indebtedness described in clauses (b), ----------- (c), (e), (j) and
(l) hereof; provided, that, (i) the principal amount or interest rate of
such Indebtedness is not --- --- --- increased, (ii) any Liens securing
such Indebtedness are not extended to any additional property of any Loan
Party, (iii) such extension, refinancing or renewal does not result in a
shortening of the average weighted maturity of the Indebtedness so
extended, refinanced or renewed, (iv) the terms of any such extension,
refinancing, or renewal are not less favorable to the obligor thereunder
than the original terms of such Indebtedness and (v) if the Indebtedness
that is refinanced, renewed, or extended was subordinated in right of
payment to the Obligations, then the terms and conditions of the
refinancing, renewal, or extension Indebtedness must include subordination
terms and conditions that are at least as favorable to the Agent and the
Lenders as those that were applicable to the refinanced, renewed, or
extended Indebtedness;
(g) Indebtedness consisting of reimbursement or indemnification obligations
incurred in the ordinary course of business in favor of any Person
providing worker's compensation, health, disability or other employee
benefits or property, casualty or liability insurance to any of the
Loan Parties (including obligations in respect of letters of credit
obtained in the ordinary course of business for the benefit of any such
Person);
(h) Indebtedness of any Loan Party in respect of performance bonds, bid
bonds, appeal bonds, surety bonds, self-insurance obligations and
similar obligations and trade-related letters of credit, in each case
provided in the ordinary course of business, including those to secure
health, safety, and environmental obligations;
(i) Indebtedness in respect of deposits or advances received in the
ordinary course of business in connection with the sale of goods and
services;
(j) unsecured Indebtedness that is subordinated to the Obligations in a manner
satisfactory to the Agent and the proceeds of which are used concurrently
to finance the consideration for Permitted Acquisitions or the making of
Restricted Payments permitted under Section 6.06; provided, that, (i) the
maturity date of such Indebtedness is no sooner than twelve months
------------ -------- ---- after the Maturity Date, (ii) the terms of such
Indebtedness do not require any scheduled amortization, sinking fund or
other payments (other than scheduled payments of interest) prior to the
maturity date of such Indebtedness, (iii) the Fixed Charge Coverage Ratio,
as of the last day of the Fiscal Quarter ended immediately prior to the
date of incurrence of such Indebtedness and after giving pro forma effect
to the incurrence of such Indebtedness, is at least 1.5:1.0 and (iv) the
Borrowers' Average 20-Day Availability is not less than $5,000,000 and the
Borrowers' Availability as of the date of the incurrence of such
Indebtedness is not less than $5,000,000;
(k) Swap Obligations to the extent permitted under Section 6.05; and
(l) other unsecured Indebtedness in an aggregate principal amount not
exceeding $500,000 at any time outstanding.
SECTION 6.02 Liens. The Borrowers will not, and will not permit any other Loan
Party or its Subsidiaries to, create, incur, assume or permit to exist any Lien
on any property or asset now owned or hereafter acquired by it, or assign or
sell any income or revenues (including accounts receivable) or rights in respect
of any thereof, except:
(a) Permitted Encumbrances;
(b) the filing of financing statements or the equivalent thereof in any
applicable jurisdiction solely as a precautionary measure in connection
with operating leases or consignment of goods;
(c) leases or subleases of assets or properties of a Loan Party, in each
case entered into in the ordinary course of such Loan Party's business
so long as such leases do not, individually or in the aggregate (i)
interfere in any material respect with the ordinary conduct or business
of such Loan Party and (ii) materially impair the use or the value of
the property or assets subject thereto;
(d) Liens on assets acquired in a Permitted Acquisition after the Effective
Date existing at the time of acquisition thereof by a Loan Party;
provided, that, such Liens were not incurred in connection with, or in
contemplation of, such acquisition and do not extend to any assets of
such Loan Party other than the specific assets so acquired;
(e) any Lien on any property or asset of any Loan Party or its Subsidiaries
existing on the date hereof and set forth in Schedule 6.02; provided,
that, (i) such Lien shall not apply to any other property or asset of
such Loan Party, and (ii) such Lien shall secure only those obligations
which it secures on the date hereof and extensions, renewals and
replacements thereof that do not increase the outstanding principal
amount thereof;
(f) Liens on fixed or capital assets acquired, constructed or improved by a
Loan Party or its Subsidiaries; provided, that, (i) such security
interests secure Indebtedness permitted by clause (e) of Section 6.01,
(ii) such security interests and the Indebtedness secured thereby are
incurred prior to or within 90 days after such acquisition or the
completion of such construction or improvement, (iii) the Indebtedness
secured thereby does not exceed the cost of acquiring, constructing or
improving such fixed or capital assets, and (iv) such security
interests shall not apply to any other property or assets of such Loan
Party or its Subsidiaries; and
(g) other Liens not of a type set forth in clauses (a) through (f) above
incurred in the ordinary course of business of any Loan Party that do
not in the aggregate exceed $250,000; provided, that, no such Lien
shall secure Indebtedness for borrowed money or any Swap Obligation.
Notwithstanding the foregoing, none of the Liens permitted pursuant to this
Section 6.02 (other than any Lien junior to the Lien of the Agent described in
clause (a) (but only to the extent not yet due), (b) (to the extent securing
obligations that are not overdue), (c) or (e) in the definition of Permitted
Encumbrances) may at any time attach to any Loan Party's (1) Accounts and (2)
Inventory.
SECTION 6.03 Fundamental Changes; Asset Sales
(a) The Borrowers will not, and will not permit any other Loan Party or its
Subsidiaries to, merge into or consolidate with any other Person, or permit
any other Person to merge into or consolidate with it or liquidate or
dissolve, or amend or terminate its articles of incorporation, charter,
certificate of formation, by-laws, operating, management or partnership
agreement or other organizational document, or change its Fiscal Year,
except that, if at the time thereof and immediately after giving effect
thereto no Event of Default shall have occurred and be continuing (i) any
Borrower may merge into any other Borrower and (ii) any Loan Party (other
than any Borrower) may merge into (1) any Borrower in a transaction in
which the Borrower is the surviving corporation or (2) any other Loan Party
(other than any Borrower); provided, that, any such -------- ---- merger
involving a Person that is not a wholly owned Subsidiary immediately prior
to such merger shall not be permitted unless also permitted by Section
6.04. ------------
(b) The Borrowers will not, and will not permit any other Loan Party to, sell,
transfer, lease or otherwise dispose of (in one transaction or in a series
of transactions) any of its assets, or all or substantially all of the
stock of any of its Subsidiaries (in each case, whether now owned or
hereafter acquired), except that, so long as no Event of Default exists,
any Loan Party may sell, transfer, lease or otherwise dispose of (1) its
assets to any Loan Party, if at the time thereof and immediately after
giving effect thereto no Event of Default shall have occurred and be
continuing, (2) Inventory in the ordinary course of business, (3) equipment
that is obsolete or no longer useful in its business; provided, that, (x)
the Administrative Borrower shall provide prompt written notice to the
Agent of any equipment that is sold, transferred, leased or otherwise
disposed of and (y) such Loan Party complies with the mandatory prepayment
provisions in Section 2.13, and (4) ------------ other assets having a book
value not exceeding $250,000 in the aggregate in any Fiscal Year. The Net
Cash Proceeds of any sale or disposition permitted pursuant to this Section
6.03(b) (other than pursuant to clause (i)(2) of this Section
--------------- -------------- -------- 6.03(b)) shall be delivered to the
Agent as required by Sections 2.13(b) and (c) and applied to the
Obligations as set forth ----------------- --- therein.
(c) The Borrowers will not, and will not permit any other Loan Party or its
Subsidiaries to, engage in any business other than businesses of the
type conducted by the Borrowers and their Subsidiaries on the date of
execution of this Agreement and businesses reasonably related thereto.
SECTION 6.04 Investments, Loans, Advances, Guarantees and Acquisitions. The
Borrowers will not, and will not permit any other Loan Party or its Subsidiaries
to, purchase, hold or acquire (including pursuant to any merger or amalgamation
with any Person that was not a Loan Party and a wholly owned Subsidiary prior to
such merger or amalgamation) any capital stock, evidences of indebtedness or
other securities (including any option, warrant or other right to acquire any of
the foregoing) of, make or permit to exist any loans or advances to, Guarantee
any obligations of, or make or permit to exist any investment or any other
interest in, any other Person, or purchase or otherwise acquire (in one
transaction or a series of transactions) any assets of any other Person
constituting a business unit (whether through purchase of assets, merger,
amalgamation or otherwise), except:
(a) Permitted Investments, subject to control agreements in favor of the
Agent for the benefit of the Secured Parties or otherwise subject to a
perfected security interest in favor of the Agent for the benefit of
the Secured Parties;
(b) investments by any Loan Party existing on the date hereof in the Equity
Interests of its Subsidiaries;
(c) loans or advances made by a Loan Party to any other Loan Party
permitted by Section 6.01;
(d) investments in a wholly-owned Non-U.S. Subsidiary that is not a Loan
Party by any Borrower, provided, that, the aggregate amount of all
investments made under this clause (d) shall not exceed $250,000;
(e) Guarantees constituting Indebtedness permitted by Section 6.01;
(f) other investments in existence on the date of this Agreement and
described in Schedule 6.04;
(g) loans or advances made by a Loan Party to its employees on an
arms-length basis in the ordinary course of business consistent with
past practices for travel and entertainment expenses, relocation costs
and similar purposes 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;
(h) subject to Section 4.3(c) of the Collateral Agreement, notes payable,
or stock or other securities issued by Account Debtors to a Loan Party
pursuant to negotiated agreements with respect to settlement of such
Account Debtor's Accounts in the ordinary course of business,
consistent with past practices;
(i) investments incurred in order to consummate Acquisitions provided, that,
(i) the Fixed Charge Coverage Ratio, as of the last day of the Fiscal
Quarter ended immediately prior to the date of consummation of such
Acquisition and after giving pro forma effect to such Acquisition, is at
least 1.5:1.0, (ii) the Borrowers' Average 20-Day Availability is not less
than $5,000,000, and after giving effect to such Acquisition, the Borrowers
shall have a minimum pro forma Availability as of the date of consummation
of such Acquisition (after giving effect to the funding of all Revolving
Loans and the issuance of all Letters of Credit to be funded or issued as
of such date) of not less than $5,000,000, (iii) the Borrowers shall have
obtained the prior, effective written consent or approval to such
Acquisition of the board of directors or equivalent governing body of the
Person being acquired or whose assets are being acquired, (iv) the Person
or business which is the subject of such Acquisition is in the same or
similar line of business as the Borrowers, (v) all governmental and
material third-party approvals necessary in connection with such
Acquisition shall have been obtained and be in full force and effect, (vi)
if acquiring a Person, such Person becomes a wholly owned Subsidiary of a
Borrower and a Loan Party, (vii) the Agent shall be reasonably satisfied
with the form and substance of the purchase or acquisition agreement
executed in connection with such Acquisition and with all other material
agreements, instruments and documents implementing such Acquisition or
executed in connection therewith and such Acquisition shall be consummated
in accordance with the terms of such documents and in compliance with
applicable law and regulatory approvals, (viii) no Default or Event of
Default shall have occurred and be continuing or would result therefrom and
all representations and warranties contained in this Agreement shall be
true and correct in all material respects on the date of the consummation
of such Acquisition, and (ix) on or before the date of consummation of such
Acquisition, the Agent shall have received (A) all documents required by
the provisions of Section 5.11 with respect to any Person purchased or
formed in connection with such Acquisition and which will ------------
become a Subsidiary of a Borrower and (B) if requested by the Agent, a
certificate from the Administrative Borrower executed by an Authorized
Officer of the Administrative Borrower certifying to the Agent and the
Lenders as to the matters set forth in the foregoing clauses (i) through
(viii) (each such acquisition, a "Permitted Acquisition" and collectively,
"Permitted ----------- ------ Acquisitions");
(j) Swap Agreements otherwise permitted under Section 6.05; and
(k) non-cash consideration received in connection with the sale, transfer,
lease or disposal of any asset in compliance with Section 6.03(b).
SECTION 6.05 Swap Agreements. The Borrowers will not, and will not permit any
other Loan Party or its Subsidiaries to, enter into any Swap Agreement, except
(a) Swap Agreements entered into to hedge or mitigate risks to which any Loan
Party or its Subsidiaries has actual exposure (other than those in respect of
Equity Interests of any Loan Party or its Subsidiaries), and (b) Swap Agreements
entered into in order to effectively cap or collar interest rates with respect
to any interest-bearing liability of the Loan Party or its Subsidiaries or to
exchange interest rates (from fixed to floating rates, from one floating rate to
another floating rate or otherwise) with respect to any interest-bearing
investment of the Loan Party or its Subsidiaries.
SECTION 6.06 Restricted Payments. The Borrowers will not, and will not permit
any other Loan Party or any Subsidiary of any Loan Party to, declare or make, or
agree to pay or make, directly or indirectly, any Restricted Payment, except:
(a) any Loan Party may declare and pay dividends with respect to its Equity
Interests payable solely in additional shares of its common stock,
(b) so long as no Default or Event of Default shall have occurred and be
continuing, Subsidiaries of the Loan Parties may declare and pay
dividends ratably with respect to their Equity Interests to any other
Loan Party; and
(c) so long as no payment default, bankruptcy or insolvency default, or
Event of Default shall have occurred and be continuing, each Borrower
may make distributions or payments, directly or indirectly, to (i)
Parent or any Borrower to be used by Parent or such Borrower to pay
franchise taxes and other fees required to maintain Parent's or such
Borrower's corporate existence, and (ii) another Borrower or to Parent
under a Tax Sharing Agreement and (iii) another Borrower or Parent to
be used to pay taxes (including estimated taxes) directly attributable
to (or arising as a result of) such other Borrower's or Parent's being
required to include in its income for tax purposes income of the
Borrower making the payment or a Subsidiary of such Borrower.
SECTION 6.07 Transactions with Affiliates. The Borrowers will not, and will not
permit any other Loan Party or its Subsidiaries to, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Affiliates, except (a) in the ordinary course of business at prices and
on terms and conditions not less favorable to the Loan Party or its Subsidiaries
than could be obtained on an arm's-length basis from unrelated third parties,
(b) transactions between or among a Loan Party and another Loan Party that is a
wholly owned Subsidiary of a Loan Party not involving any other Affiliate, (c)
any Restricted Payment permitted by Section 6.06 or (d) as may be set forth on
Schedule 3.19.
SECTION 6.08 Restrictive Agreements. The Borrowers will not, and will not permit
any other Loan Party or its Subsidiaries to, directly or indirectly, enter into,
incur or permit to exist any agreement or other arrangement that prohibits,
restricts or imposes any condition upon (a) the ability of such Loan Party or
any of its Subsidiaries to create, incur or permit to exist any Lien upon any of
its property or assets, or (b) the ability of any Subsidiary of a Loan Party to
pay dividends or other distributions with respect to any shares of its capital
stock or to make or repay loans or advances to the Borrowers or any other
Subsidiary of any Borrower or to Guarantee Indebtedness of the Borrowers or any
other Subsidiary of any Borrower; provided, that, (i) the foregoing shall not
apply to restrictions and conditions imposed by law or by this Agreement, (ii)
the foregoing shall not apply to restrictions and conditions existing on the
date hereof identified on Schedule 6.08 (but shall apply to any extension or
renewal of, or any amendment or modification expanding the scope of, any such
restriction or condition), (iii) the foregoing shall not apply to customary
restrictions and conditions contained in agreements relating to the sale of a
Subsidiary pending such sale, provided such restrictions and conditions apply
only to the Subsidiary that is to be sold and such sale is permitted hereunder,
(iv) clause (a) of the foregoing shall not apply to restrictions or conditions
imposed by any agreement relating to secured Indebtedness permitted by this
Agreement if such restrictions or conditions apply only to the property or
assets securing such Indebtedness, and (v) clause (a) of the foregoing shall not
apply to customary provisions in leases restricting the assignment thereof.
SECTION 6.09 Prepayment of Indebtedness; Subordinated Indebtedness. The
Borrowers will not, and will not permit any Loan Party to, directly or
indirectly, purchase, redeem, defease or prepay any principal of, premium, if
any, interest or other amount payable in respect of any Indebtedness prior to
its scheduled maturity, 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 Section 6.03; (iii)
Indebtedness permitted by Section 6.01(b), (c), (e), (j) and (l), in each case
upon any refinancing thereof in accordance with Section 6.01(f); and (iv) so
long as no default or Event of Default shall have occurred and be continuing,
Indebtedness permitted by Section 6.01(d) or Section 6.01(l).
No Loan Party shall make any amendment or modification to the
indenture, note or other agreement evidencing or governing any Subordinated
Indebtedness, or directly or indirectly voluntarily prepay, defease or in
substance defease, purchase, redeem, retire or otherwise acquire, any
Subordinated Indebtedness.
SECTION 6.10 Capital Expenditures. The Borrowers will not, and will not permit
any Loan Party or its Subsidiaries to, expend, or be committed to expend, in
excess of (a) $700,000 for Capital Expenditures during the Borrowers' 2007
Fiscal Year in the aggregate for the Borrowers and the other Loan Parties, and
(b) $500,000 for Capital Expenditures during any Fiscal Year thereafter in the
aggregate for the Borrowers and the other Loan Parties, provided, however, that
the amount of permitted Capital Expenditures during any Fiscal Year will be
increased by the positive amount equal to the amount (if any), equal to the
difference obtained by taking the Capital Expenditures limit specified above for
the immediately preceding Fiscal Year minus the actual amount of any Capital
Expenditures expended during such immediately preceding Fiscal Year (the "Carry
Over Amount"), and for purposes of measuring compliance herewith, the Carry Over
Amount shall be deemed to be the first amount spent on Capital Expenditures in
that succeeding year. Any Carry Over Amount not used in any applicable Fiscal
Year may not be carried over to any subsequent Fiscal Year.
SECTION 6.11 Financial Covenants.
(a) Fixed Charge Coverage Ratio. In the event that the Borrowers'
Availability, for any five (5) consecutive days, is less than
$5,000,000 (the "Trigger Event"), Borrowers will not permit the Fixed
Charge Coverage Ratio as of the last day of any Fiscal Quarter,
commencing as of the end of the Fiscal Quarter immediately preceding
the Fiscal Quarter in which the Trigger Event occurred, to be less than
1.1:1.0.
SECTION 6.12 Activities of Inactive Subsidiary. Inactive Subsidiary will not
engage in any trade or business, or own any assets (other than its rights in the
litigation described in Schedule 3.06) or incur any Indebtedness and, for the
purpose of the Loan Documents, shall not constitute a Loan Party.
SECTION 6.13 Hazardous Materials. No Loan Party or its Subsidiaries shall cause
or suffer to exist any release of any Hazardous Material on, at, in, under,
above, to or from any real or immovable property owned, leased, subleased or
otherwise operated or occupied by any Loan Party or its Subsidiaries that would
violate any Environmental Law, form the basis for any Environmental Liabilities
or otherwise adversely affect the value or marketability of any real or
immovable property owned, leased, subleased or otherwise operated or occupied by
any Loan Party or any other property, other than such violations, Environmental
Liabilities and effects that would not, in the aggregate, have a Material
Adverse Effect.
ARTICLE VII
Events of Default
SECTION 7.01 Events of Default. If any of the following events ("Events of
Default") shall occur:
(a) the Borrowers shall fail to pay any principal of any Loan or
reimbursement obligations in respect of any Letter of Credit when and
as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or otherwise;
(b) the Borrowers shall fail to pay any interest on any Loan or any fee or
other amount (other than such amount referred to in Article VII, clause
(a)) payable under this Agreement, within three Business Days after the
same shall become due and payable, whether at the due date thereof or
at a date fixed for prepayment thereof or otherwise;
(c) any representation or warranty made or deemed made by or on behalf of
any Loan Party or any Subsidiary of any Loan Party in or in connection
with this Agreement or any Loan Document or any amendment or
modification thereof or waiver thereunder, or in any report,
certificate, financial statement or other document furnished pursuant
to or in connection with this Agreement or any Loan Document or any
amendment or modification thereof or waiver thereunder, shall prove to
have been materially incorrect when made or deemed made;
(d) any Loan Party shall fail to observe or perform any covenant, condition
or agreement contained in Sections 5.01, 5.02(a), 5.03 (with respect to
a Loan Party's existence), 5.08 or in Article VI;
(e) any Loan Party shall fail to observe or perform any covenant, condition
or agreement contained in this Agreement (other than those which
constitute a default under another clause of this Article VII), and
such failure shall continue unremedied for a period of (i) 5 days after
the earlier of such breach or notice thereof from the Agent (which
notice will be given at the request of any Lender) if such breach
relates to terms or provisions of Section 5.02 (other than Section
5.02(a)), 5.03 (other than with respect to a Loan Party's existence)
through 5.07, 5.09 and 5.10 of this Agreement or (ii) 30 days after the
earlier of such breach or notice thereof from Agent (which notice will
be given at the request of any Lender) if such breach relates to terms
or provisions of any other section of this Agreement;
(f) any Loan Party or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect
of any Material Indebtedness, when and as the same shall become due and
payable after giving effect to any applicable grace period;
(g) any event or condition occurs that results in any Material Indebtedness
becoming due prior to its scheduled maturity or that enables or permits
(with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent
on its or their behalf to cause any Material Indebtedness to become
due, or to require the prepayment, repurchase, redemption or defeasance
thereof, prior to its scheduled maturity; provided, that, this clause
(g) shall not apply to secured Indebtedness that becomes due as a
result of the voluntary sale or transfer of the property or assets
securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization or other relief
in respect of a Loan Party or its Subsidiary or either of its debts, or
of a substantial part of its assets, under any federal, state,
provincial or foreign bankruptcy, insolvency, reorganization,
adjustment of debt, receivership or similar law now or hereafter in
effect or (ii) the appointment of a receiver, receiver and manager,
interim receiver, trustee, custodian, sequestrator, conservator or
similar official for any Loan Party or its Subsidiary or for a
substantial part of either of its assets, and, in any such case, such
proceeding or petition shall continue undismissed or unstayed for 60
consecutive days or an order or decree approving or ordering any of the
foregoing shall be entered;
(i) any Loan Party or its Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or
other relief under any federal, state, provincial or foreign bankruptcy,
insolvency, reorganization, adjustment of debt, receivership or similar law
now or hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition
described in clause (h) of this Article, (iii) apply ---------- for or
consent to the appointment of a receiver, receiver and manager, interim
receiver, trustee, custodian, sequestrator, conservator or similar official
for such Loan Party or its Subsidiary or for a substantial part of either
of its assets, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;
(j) any Loan Party or its Subsidiary shall become unable, admit in writing
its inability or fail generally to pay its debts as they become due;
(k) one or more judgments for the payment of money in an aggregate amount
in excess of $500,000 shall be rendered against any Loan Party or its
Subsidiary and the same shall remain undischarged for a period of 30
consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to
attach or levy upon any assets of any Loan Party or its Subsidiary to
enforce any such judgment or any Loan Party or its Subsidiary shall
fail within 30 days to discharge one or more non-monetary judgments or
orders which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect, which judgments or orders,
in any such case, are not stayed on appeal or otherwise being
appropriately contested in good faith by proper proceedings diligently
pursued;
(l) (i) a Lien shall have arisen, or in the reasonable opinion of the
Required Lenders, may reasonably be expected to arise, under the terms
of ERISA or the Code with respect to any Plan, or (ii) an ERISA Event
or unfunded liability arising under a Non-U.S. Plan shall have occurred
that, in the opinion of the Required Lenders, when taken together with
all other ERISA Events and unfunded Non-U.S. Plan liabilities that have
occurred, could reasonably be expected to result in a Material Adverse
Effect;
(m) a Change in Control shall occur;
(n) the occurrence of any "default", as defined in any Loan Document (other
than this Agreement) or the breach of any of the terms or provisions of
any Loan Document (other than this Agreement), which default or breach
continues beyond any period of grace therein provided;
(o) any Collateral Document shall for any reason fail to create a valid and
perfected first priority security interest in any Collateral purported
to be covered thereby, except as permitted by the terms of any
Collateral Document or this Agreement, or any Collateral Document shall
fail to remain in full force or effect or any action shall be taken to
discontinue or to assert the invalidity or unenforceability of any
Collateral Document, or any Loan Party shall fail to comply with any of
the terms or provisions of any Collateral Document;
(p) any material provision of any Loan Document for any reason ceases to be
valid, binding and enforceable in accordance with its terms (or any
Loan Party shall challenge the enforceability of any Loan 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 Loan Documents has
ceased to be or otherwise is not valid, binding and enforceable in
accordance with its terms);
(q) any Loan Party is criminally indicted or convicted under any law that
may reasonably be expected to lead to a forfeiture of any property of
such Loan; or
(r) the subordination provisions of any agreement or instrument governing
any Subordinated Indebtedness are for any reason revoked or
invalidated, or otherwise cease to be in full force and effect, any
Person contests in any manner the validity or enforceability thereof,
of the Indebtedness hereunder is for any reason subordinated or does
not have the priority contemplated by the Loan Documents or such
subordination provisions;
then, and in every such event (other than an event with respect to any Borrower
described in clause (h) or (i) of this Article VII), and at any time thereafter
during the continuance of such event, the Agent may, and at the request of the
Required Lenders shall, by notice to the Administrative Borrower, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and/or
(ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrowers accrued hereunder,
shall become due and payable immediately, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrowers;
and in case of any event with respect to any Borrower described in clause (h) or
(i) of this Article VII, the Commitments shall automatically terminate and the
principal of the Loans then outstanding, together with accrued interest thereon
and all fees and other obligations of the Borrowers accrued hereunder, shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrowers. Upon
the occurrence and the continuance of an Event of Default, the Agent may, and at
the request of the Required Lenders shall, increase the rate of interest
applicable to the Loans and other Obligations as set forth in Section 2.15(d)
and exercise any rights and remedies provided to the Agent under the Loan
Documents or at law or equity, including all remedies provided under the UCC.
SECTION 7.02 Application of Funds. After (a) an Event of Default has occurred
and is continuing and the Agent so elects or the Required Lenders so direct and
(b) the exercise of remedies provided for in this Article VII (or after the
Loans have automatically become immediately due and payable and the Letter of
Credit Obligations have automatically been required to be cash collateralized as
set forth in Section 7.01), any amounts received on account of the Obligations
shall be applied by the Agent in the following order:
first, to pay any fees, indemnities, expense reimbursements or
other Obligations then due to the Agent in its capacity as such,
second, to pay all amounts then due and payable to the Agent on account of
Protective Advances,
------
third, to pay all amounts then owed to the Swingline Lender on account of
Swingline Loans,
-----
fourth, to ratably pay all amounts owed to the Issuing Bank(s) on account of
Letter of Credit Obligations,
------
fifth, to ratably pay all interest and fees owed on account of the Revolving
Loans
-----
sixth, to ratably pay all principal amounts of the Revolving Loans then
outstanding,
-----
seventh, to provide cash collateral for any outstanding Letters of Credit,
-------
eighth, to ratably pay any other expense reimbursements or
other Obligations then due and payable to the Lenders (other than with
respect to Banking Services Obligations and Swap Obligations), and
ninth, to ratably pay of any amounts owing by the Borrowers
with respect to Banking Services Obligations and Swap Obligations.
The Agent and the Lenders shall have the continuing and exclusive right to apply
and reverse and reapply any and all such proceeds and payments to any portion of
the Obligations owing to the Agent and Lenders.
ARTICLE VIII
The Agent
(a) Each of the Lenders and the Issuing Bank hereby irrevocably appoints
the Agent as its agent and authorizes the Agent to take such actions on
its behalf and to exercise such powers as are delegated to the Agent by
the terms of the Loan Documents, together with such actions and powers
as are reasonably incidental thereto.
(b) The financial institution serving as the Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender
and may exercise the same as though it were not the Agent, and such
financial institution and its Affiliates may accept deposits from, lend
money to and generally engage in any kind of business with the Loan
Parties or any Subsidiary of a Loan Party or other Affiliate thereof as
if it were not the Agent hereunder.
(c) The Agent shall not have any duties or obligations except those expressly
set forth in the Loan Documents. Without limiting the generality of the
foregoing, (a) the Agent shall not be subject to any fiduciary or other
implied duties, regardless of whether an Event of Default has occurred and
is continuing, (b) the Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated by the Loan
Documents that the Agent is required to exercise in writing as directed by
the applicable Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in
Section 9.03), and (c) ------------- except as expressly set forth in the
Loan Documents, the Agent shall not have any duty to disclose, and shall
not be liable for the failure to disclose, any information relating to any
Loan Party or any of its Subsidiaries that is communicated to or obtained
by the financial institution serving as the Agent or any of its Affiliates
in any capacity. The Agent shall not be liable for any action taken or not
taken by it with the consent or at the request of the Required Lenders (or
such other number or percentage of the Lenders as shall be necessary under
the circumstances as provided in Section 9.03) or in the -------------
absence of its own gross negligence or willful misconduct. The Agent shall
be deemed not to have knowledge of any Event of Default unless and until
written notice thereof is given to the Agent by the Administrative Borrower
or a Lender, and the Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation
made in or in connection with any Loan Document, (ii) the contents of any
certificate, report or other document delivered hereunder or in connection
with any Loan Document, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth in any Loan
Document, (iv) the validity, enforceability, effectiveness or genuineness
of any Loan Document or any other agreement, instrument or document, or (v)
the satisfaction of any condition set forth in Article IV, the Closing
Checklist or elsewhere in any Loan Document, other than to confirm
----------- receipt of items expressly required to be delivered to the
Agent.
(d) The Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be
genuine and to have been signed or sent by the proper Person. The Agent
also may rely upon any statement made to it orally or by telephone and
believed by it to be made by the proper Person, and shall not incur any
liability for relying thereon. The Agent may consult with legal counsel
(who may be counsel for the Borrowers), independent accountants and
other experts selected by it, and shall not be liable for any action
taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.
(e) The Agent may perform any and all its duties and exercise its rights
and powers by or through any one or more sub-agents appointed by the
Agent. The Agent and any such sub-agent may perform any and all its
duties and exercise its rights and powers through their respective
Related Parties. The exculpatory provisions of the preceding paragraphs
shall apply to any such sub-agent and to the Related Parties of the
Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities
provided for herein as well as activities as the Agent.
(f) Subject to the appointment and acceptance of a successor Agent as provided
in this paragraph, so long as no Event of Default exists, the Agent may
resign at any time by notifying the Lenders, the Issuing Bank and the
Administrative Borrower upon 30 days' prior written notice. Upon any such
resignation, the applicable Required Lenders shall have the right, in
consultation with the Administrative Borrower, to appoint a successor. If
no successor shall have been so appointed by such Required Lenders and
shall have accepted such appointment within 30 days after the retiring
Agent gives notice of its resignation, then the retiring Agent may, on
behalf of the Lenders and the Issuing Bank, appoint a successor Agent which
shall be a commercial bank or an Affiliate of any such commercial bank.
Upon the acceptance of its appointment as Agent hereunder by a successor,
such successor shall succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations hereunder. The fees
payable by the Borrowers to a successor Agent shall be the same as those
payable to its predecessor unless otherwise agreed between the Borrowers
and such successor. After the Agent's resignation hereunder, the provisions
of this Article -------- VIII and Section 9.04 shall continue in effect for
the benefit of the retiring Agent, its sub agents and their respective ----
------------ Related Parties in respect of any actions taken or omitted to
be taken by any of them while it was acting as Agent.
(g) Each Lender acknowledges that it has, independently and without
reliance upon the Agent or any other Lender and based on such documents
and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Agent or any other Lender and based on such documents and information
as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this
Agreement, any other Loan Document or related agreement or any document
furnished hereunder or thereunder.
(h) The Agent shall not have any obligation to any of the Lenders to ensure
that the Collateral exists, is owned by the Loan Parties, is cared for,
protected or insured, is unencumbered by others, or that the Liens
granted to the Agent therein have been properly, sufficiently or
lawfully created, perfected, protected or enforced, or that such Liens
are entitled to any particular priority, it being understood and agreed
that in respect of the Collateral, or any act, omission, or event
related thereto, the Agent may act in any manner it may deem
appropriate, in its sole discretion given the Agent's own interest in
the Collateral in its capacity as one of the Lenders and that the Agent
shall not have any other duty or liability whatsoever to any Lender as
to any of the foregoing.
(i) Each Lender hereby appoints each other Lender as its agent for the
purpose of perfecting Liens, for the benefit of the Agent and the
Secured Parties, in assets which, in accordance with Article 9 of the
UCC or any other applicable law can be perfected only by possession.
Should any Lender (other than the Agent) obtain possession of any such
Collateral, such Lender shall notify the Agent thereof, and, promptly
upon the Agent's request therefor shall deliver such Collateral to the
Agent or otherwise deal with such Collateral in accordance with the
Agent's instructions.
(j) Each Lender hereby agrees that (a) it is deemed to have requested that the
Agent furnish such Lender, promptly after it becomes available, a copy of
each Report prepared by or on behalf of the Agent; (b) the Agent (i) makes
no representation or warranty, express or implied, as to the completeness
or accuracy of any Report or any of the information contained therein or
any inaccuracy or omission contained in or relating to a Report, and (ii)
shall not be liable for any information contained in any Report; (c) the
Reports are not comprehensive audits or examinations, and that the Agent,
or any other party performing any audit or examination will inspect only
specific information regarding the Loan Parties and will rely significantly
upon the Loan Parties' books and records, as well as on representations of
the Loan Parties' personnel and that the Agent undertakes no obligation to
update, correct or supplement the Reports; (d) it will keep all Reports
confidential and strictly for its internal use, not share the Report with
any Loan Party and not distribute any Report to any other Person except as
otherwise permitted pursuant to this Agreement; and (e) without limiting
the generality of any other indemnification provision contained in this
Agreement, it will pay and protect, and indemnify, defend, and hold the
Agent and any such other Person preparing a Report harmless from and
against, the claims, actions, proceedings, damages, costs, expenses, and
other amounts (including reasonable attorney fees) incurred by the Agent,
CIT and its Affiliates and any such other Person preparing a Report as the
direct or indirect result of any third parties who might obtain all or part
of any Report through the indemnifying Lender.
(k) CIT Capital Securities, LLC, in its capacities as Syndication Agent and
Sole Bookrunner and Sole Lead Arranger hereunder, shall not have any
right, power, obligation, liability, responsibility or duty under this
Agreement other than those applicable to all Lenders as such.
ARTICLE IX
Miscellaneous
SECTION 9.01 Notices.
(a) Except in the case of notices and other communications expressly
permitted to be given by telephone (and subject to Section 9.01(b)),
all notices and other communications provided for herein shall be in
writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by facsimile or
Electronic Transmission, as follows:
(i) if to any Loan Party, to the Administrative Borrower at:
Jaco Electronics, Inc.
000 Xxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxx Xxxx
Facsimile No: (000) 000-0000
E-mail: xxxxx@xxxxxxxxx.xxx
(ii) if to the Agent or the Swingline Lender, to the Agent at:
The CIT Group/Business Credit, Inc.
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx XxXxxxxx
Facsimile No: (000) 000-0000
E-mail: Xxxxx.xxxxxxxx@xxx.xxx
with copy to:
CIT Business Capital
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Facsimile No: 212 771-1759
E-mail: xxxxx.xxxxxxxx@xxx.xxx
(iii) if to any other Lender, to it at its address or facsimile number or
e-mail address set forth in its Administrative Questionnaire.
(b) Any party hereto may change its address or facsimile number for notices
and other communications hereunder by notice to the other parties
hereto.
(c) All such notices and other communications (i) sent by hand or overnight
courier service, or mailed by certified or registered mail, shall be
deemed to have been given when received, or (ii) sent by facsimile
shall be deemed to have been given when sent, provided that if not
given during normal business hours for the recipient, shall be deemed
to have been given at the opening of business on the next Business Day
for the recipient, or (iii) sent by Electronic Transmission shall be
deemed to have been given (A) if delivered by posting to an E-System or
other Intranet or extranet-based website, prior to 5:00 p.m., New York
City time, on the date of such posting and (B) if delivered by any
other Electronic Transmission, prior to 5:00 p.m., New York City time,
on the date of transmission thereof.
SECTION 9.02 Electronic Transmissions.
(a) Authorization. The Agent and its Related Persons are authorized to
transmit, post or otherwise make or communicate, in its ------------- sole
discretion (but shall not be required to do so), Electronic Transmissions
in connection with any Loan Document and the transactions contemplated
therein; provided, however, that no notice to any Loan Party shall be made
by posting to an -------- ------- Internet or extranet-based site or other
equivalent service but may be made by e-mail or E-Fax. Each of the
Administrative Borrower and each Secured Party hereby acknowledges and
agrees, and each of the Administrative Borrower shall cause each other Loan
Party to acknowledge and agree, that the use of Electronic Transmissions is
not necessarily secure and that there are risks associated with such use,
including, without limitation, risks of interception, disclosure and abuse
and each indicates it assumes and accepts such risks by hereby authorizing
the Agent and its Related Persons to transmit Electronic Transmissions.
(b) Signatures. No Electronic Transmission shall be denied legal effect merely
because it is made electronically. Electronic ---------- Transmissions that
are not readily capable of bearing either a signature or a reproduction of
a signature may be signed, and shall be deemed signed, by attaching to, or
logically associating with such Electronic Transmission, an E-Signature,
upon which each Secured Party and Loan Party may rely and assume the
authenticity thereof. Each Electronic Transmission containing a signature,
a reproduction of a signature or an E-Signature shall, for all intents and
purposes, have the same effect and weight as a signed paper original. Each
E-Signature shall be deemed sufficient to satisfy any requirement for a
"signature" and each Electronic Transmission shall be deemed sufficient to
satisfy any requirement for a "writing", in each case including pursuant to
any Loan Document, the UCC, the Federal Uniform Electronic Transactions
Act, the Electronic Signatures in Global and National Commerce Act and any
substantive or procedural law governing such subject matter. Each party or
beneficiary hereto agrees not to contest the validity or enforceability of
an Electronic Transmission or E-Signature under the provisions of any
applicable law requiring certain documents to be in writing or signed;
provided, however, that nothing herein shall limit such party's or
beneficiary's right to contest whether an Electronic Transmission or
E-Signature has been altered after transmission.
(c) Separate Agreements. All uses of an E-System shall be governed by and
subject to, in addition to this Section 9.02, separate terms and
conditions posted or referenced in such E-System and related
agreements, documents or other instruments executed by Secured Parties
and Loan Parties in connection with such use.
(d) Limitation of Liability. All E-Systems and Electronic Transmissions shall
be provided "as is" and "as available". Neither ----------------------- the
Agent nor any of its Related Persons warrants the accuracy, adequacy or
completeness of any E-Systems or Electronic Transmission and disclaims all
liability for errors or omissions therein. No warranty of any kind is made
by the Agent or any of its Related Persons in connection with any E-Systems
or Electronic Communication, including any warranty of merchantability,
fitness for a particular purpose, non-infringement of third party rights or
freedom from viruses or other code defects. Each of the Administrative
Borrower and each Secured Party (other than the Agent) agrees (and each of
Parent and the Administrative Borrower shall cause each other Loan Party to
agree) that the Agent have no responsibility for maintaining or providing
any equipment, software, services or any testing required in connection
with all Electronic Transmissions or otherwise required for any E-System.
SECTION 9.03 Waivers; Amendments.
(a) No failure or delay by the Agent, the Issuing Bank or any Lender in
exercising any right or power hereunder or under any other Loan Document
shall operate as a waiver thereof, nor shall any single or partial exercise
of any such right or power, or any abandonment or discontinuance of steps
to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and
remedies of the Agent, the Issuing Bank and the Lenders hereunder and under
any other Loan Document are cumulative and are not exclusive of any rights
or remedies that they would otherwise have. No waiver of any provision of
any Loan Document or consent to any departure by any Loan Party therefrom
shall in any event be effective unless the same shall be permitted by
Section 9.03(b), and then such waiver or consent shall ---------------- be
effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a
Loan or issuance of a Letter of Credit shall not be construed as a waiver
of Event of Default, regardless of whether the Agent, any Lender or the
Issuing Bank may have had notice or knowledge of such Event of Default at
the time.
(b) Neither this Agreement nor any other Loan Document nor any provision hereof
or thereof may be waived, amended or modified except (i) in the case of
this Agreement, pursuant to an agreement or agreements in writing entered
into by the Borrowers and the Required Lenders, or (ii) in the case of any
other Loan Document, pursuant to an agreement or agreements in writing
entered into by the Agent and the Loan Party or Loan Parties that are
parties thereto, with the consent of the Required Lenders; provided, that,
no such agreement shall (i) increase the Commitment of any Lender without
the written consent of such Lender (provided, that, the Agent may make
Protective Advances as set forth in Section 2.06), (ii) reduce or forgive
------------ the principal amount of any Loan owing to any Lender or reduce
the rate of interest thereon, or reduce or forgive any interest or fees
payable hereunder, without the written consent of such Lender, (iii)
postpone the maturity of any Loan owing to any Lender, or any scheduled
date of payment of the principal amount of any Loan owing to any Lender, or
any date for the payment of any interest, fees or other Obligations payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment of any Lender,
without the written consent of such Lender; provided further that the
Aggregate Commitments hereunder may not be increased except with the
consent of each Lender, (iv) change Section 2.12(b), Section 2.13(c), or
Section 2.20(b) in a manner that would alter the manner in which
---------------- ---------------- --------------- payments are shared,
without the written consent of each Lender, (v) increase the advance rates
or components of the Borrowing Base if such increase would increase
Availability or include additional categories of Collateral set forth in
the definition of Borrowing Base if such inclusion would increase
Availability, in each case without the written consent of each Lender, (vi)
increase the limit on Protective Advances set forth in Section 2.06(a),
without the written consent of each ---------------- Lender, (vii) change
any of the provisions of this Section 9.03(b) or the definition of
"Required Lenders" or any other ---------------- provision of any Loan
Document specifying the number or percentage of Lenders (or Lenders of any
Class) required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without the written consent
of each Lender, (viii) except as provided in Section 9.03(d) or (e) or in
any Collateral Document, release all or ---------------- --- substantially
all of the Collateral, without the written consent of each Lender; provided
further that no such agreement shall amend, modify or otherwise affect the
rights or duties of the Agent, the Issuing Bank or the Swingline Lenders
hereunder without the prior written consent of the Agent, the Issuing Bank
or the Swingline Lenders, as the case may be, or (ix) contractually
subordinate any of the Liens granted to the Agent without the consent of
each Lender, provided, however, this subparagraph (ix) shall not apply to a
subordination of the Liens granted to the Agent if such subordination
arises pursuant to the granting of liens or superpriority claims pursuant
to section 364 of title 11 of the United States Code (the "Bankruptcy
Code") or any other provision of the Bankruptcy Code.
(c) The Agent may (i) amend the Commitment Schedule to reflect assignments
entered into pursuant to Section 9.05, (ii) waive payment of the fee
required under Section 9.05(b)(ii)(D) and (iii) upon the request of the
Syndication Agent or the lead arranger, implement any Flex-Pricing
Provisions contained in the Fee Letter or any separate letter agreement
with respect to fees payable to Agent or any commitment letter
delivered in connection with the transaction which is the subject of
this Agreement without obtaining the consent of any other party to this
Agreement.
(d) The Lenders hereby irrevocably authorize the Agent, at its option and in
its sole discretion, to release any Liens granted to the Agent by the Loan
Parties on any Collateral (i) upon the termination of the Aggregate
Commitment, payment and satisfaction in full in cash of all Obligations
(other than Unliquidated Obligations), and the cash collateralization of
all Unliquidated Obligations in a manner satisfactory to each affected
Lender, (ii) constituting property being sold or disposed of if the Loan
Party disposing of such property certifies to the Agent that the sale or
disposition is made in compliance with the terms of this Agreement (and the
Agent may rely conclusively on any such certificate, without further
inquiry), (iii) constituting property in which no Loan Party has at any
time during the term of this Agreement owned any interest, (iv)
constituting property leased to a Loan Party under a lease which has
expired or been terminated in a transaction permitted under this Agreement,
(v) owned by or leased to any Loan Party which is subject to a purchase
money security interest or which is a Capital Lease Obligation, in either
case, entered into by such Loan Party pursuant to Section 6.01,
------------ or (vi) as required to effect any sale or other disposition of
such Collateral in connection with any exercise of remedies of the Agent
and the Lenders pursuant to Article VII. Upon request by the Agent at any
time, the Lenders will confirm in writing the Agent's authority to cause
the Agent to release any Liens upon particular types or items of Collateral
pursuant to this Section 9.03. Except as provided in the immediately
preceding sentence, the Agent will not release any Liens on -------------
Collateral without the prior written authorization of the Required Lenders
or if required by Section 9.03(b)(vii), all the ---------------------
Lenders; provided, that, the Agent may in its Permitted Discretion, cause
the Agent release their Liens on Collateral valued in the aggregate not in
excess of $500,000 during any calendar year without the prior written
authorization of the Required Lenders.
(e) Upon receipt by the Agent of any authorization required pursuant to Section
9.03(d) from the Required Lenders of the Agent's --------------- authority
to cause the release of any Liens upon particular types or items of
Collateral, and upon at least five Business Days prior written request by
the Loan Parties, the Agent shall (and are hereby irrevocably authorized by
the Lenders to) execute such documents as may be necessary to evidence the
release of the Agent's Liens upon such Collateral; provided, that, (i) the
Agent shall not be required to execute any such document on terms which, in
the Agent's opinion, would expose the Agent to liability or create any
obligation or entail any consequence other than the release of such Liens
without recourse or warranty, and (ii) such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of the Loan Parties in
respect of) all interests retained by the Loan Parties, including the
proceeds of any sale, all of which shall continue to constitute part of the
Collateral.
(f) If, in connection with any proposed amendment, waiver or consent requiring
the consent of "each Lender" or "each Lender affected thereby," the consent
of the Required Lenders is obtained, but the consent of other necessary
Lenders is not obtained (any such Lender whose consent is necessary but not
obtained being referred to herein as a "Non-Consenting ----------------
Lender"), then, so long as the Agent is not a Non-Consenting Lender, the
Borrowers may elect to replace a Non-Consenting Lender as a Lender party to
this Agreement, provided, that, concurrently with such replacement, (i)
another bank or other -------- ---- entity which is reasonably satisfactory
to the Borrowers and the Agent shall agree, as of such date, to purchase
for cash the Loans and other Obligations due to the Non-Consenting Lender
pursuant to an Assignment and Assumption and to become a Lender for all
purposes under this Agreement and to assume all obligations of the
Non-Consenting Lender to be terminated as of such date and to comply with
the requirements of Section 9.05(b), and (ii) the Borrowers shall pay to
such Non-Consenting --------------- Lender in same day funds on the day of
such replacement (1) all interest, fees and other amounts then accrued but
unpaid to such Non-Consenting Lender by the Borrowers hereunder to and
including the date of termination, including without limitation payments
due to such Non-Consenting Lender under Sections 2.17 and 2.19, and (2) an
amount, if any, equal to the payment ------------- ---- which would have
been due to such Lender on the day of such replacement under Section 2.18
had the Loans and Acceptance ------------- Obligations of such
Non-Consenting Lender been prepaid on such date rather than sold to the
replacement Lender.
SECTION 9.04 Expenses; Indemnity; Damage Waiver.
(a) Expenses. (i) The Borrowers shall pay all reasonable, documented out of
pocket expenses incurred by the Agent and the -------- Syndication Agent
and their respective Affiliates, including the reasonable fees, charges and
disbursements of counsel for the Agent, in connection with the syndication
and distribution (including, without limitation, via the internet or
through a service such as Intralinks) of the credit facilities provided for
herein, the preparation and administration of the Loan Documents or any
amendments, modifications or waivers of the provisions of the Loan
Documents (whether or not the transactions contemplated hereby or thereby
shall be consummated), (ii) the Borrowers shall pay all reasonable
out-of-pocket expenses incurred by the Issuing Bank in connection with the
issuance, amendment, renewal or extension of any Letter of Credit or any
demand for payment thereunder, and (iii) the Borrowers shall pay all
out-of-pocket expenses incurred by the Agent, the Syndication Agent, the
Issuing Bank or any Lender, including the fees, charges and disbursements
of any counsel for the Agent, the Issuing Bank or any Lender, in connection
with the enforcement, collection or protection of its rights in connection
with the Loan Documents, including its rights under this Section 9.04, or
in connection with the Loans made or ------------- Letters of Credit issued
hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters
of Credit; provided however that such obligation shall be subject to the
-------- limitations set forth in Section 5.10; provided, further that to
the extent that the costs and expenses referred to in ------------- clause
(iii) consist of fees, charges and disbursements of counsel, the Borrowers
shall be obligated to pay such fees, charges and disbursements for counsel
to the Agent and for only one counsel acting for all Lenders (other than
the Agent). Expenses being reimbursed by the Borrowers under this Section
9.04(a) include, without limiting the generality of the ----------------
foregoing, costs and expenses incurred in connection with:
(1) appraisals of all or any portion of the Collateral (including
travel, lodging, meals and other out of pocket expenses of the
appraisers) as permitted under the terms of this Agreement;
(2) field examinations and the preparation of Reports at either
the Agent's then customary charge (such charge is currently
$1,000 per day (or portion thereof) for each Person employed
by the Agent with respect to each field examination) or at the
fee charged by a third party retained by the Agent, plus in
each case reasonable travel, lodging, meals and other out of
pocket expenses, in each case as permitted under the
Agreement;
(3) lien and title searches and title insurance; provided, that,
neither the Agent, the Syndication Agent, the Issuing Bank nor
any Lender shall be entitled to reimbursement for title
insurance with respect to the Mortgaged Properties unless such
title insurance is obtained in connection with the initial
inclusion of the Mortgaged Properties in the Borrowing Base or
is obtained with the consent of the Administrative Borrower;
(4) taxes, fees and other charges for filing financing statements and
continuations, and other actions to perfect, protect, and continue the
Agent's Liens;
(5) sums paid or incurred to take any action required of any Loan Party under
the Loan Documents that such Loan Party fails to pay or take; and
(6) costs and expenses of forwarding loan proceeds, collecting checks and other
items of payment, and establishing and maintaining the accounts and lock
boxes, and costs and expenses of preserving and protecting the Collateral.
All of the foregoing costs and expenses may be charged to the Borrowers as
Revolving Loans or to another deposit account, all as described in Section
2.20(c).
(b) Indemnities. The Borrowers shall indemnify the Agent, the Syndication
Agent, the Issuing Bank and each Lender, and each ----------- Related Party
of any of the foregoing Persons (each such Person being called an
"Indemnitee") against, and hold each Indemnitee harmless from, on an
after-Tax basis, any and all losses, claims, damages, penalties,
liabilities and related expenses, including the fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted
against any Indemnitee arising out of, in connection with, or as a result
of (i) the execution or delivery of the Loan Documents or any agreement or
instrument contemplated thereby, the performance by the parties hereto of
their respective obligations thereunder or the consummation of the
Transactions or any other transactions contemplated hereby, (ii) any Loan
or Letter of Credit or the use of the proceeds therefrom (including any
refusal by the Issuing Bank to honor a demand for payment under a Letter of
Credit if the documents presented in connection with such demand do not
strictly comply with the terms of such Letter of Credit), (iii) any actual
or alleged presence or release of Hazardous Materials on or from any
property owned or operated by the Borrowers or any of their Subsidiaries,
or any Environmental Liability related in any way to the Borrowers or any
of their Subsidiaries, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based
on contract, tort or any other theory and regardless of whether any
Indemnitee is a party thereto; provided, that, such indemnity shall not, as
to any Indemnitee, be available to the extent that such losses, claims,
damages, penalties, liabilities or related expenses resulted from the gross
negligence or willful misconduct of such Indemnitee.
(c) To the extent that (i) the Borrowers fail to pay any amount required to
be paid by them to the Agent, the Issuing Bank or the Swingline Lender
under Section 9.04(a) or (b) or (ii) the Agent conducts an appraisal or
update at its own expense pursuant to Section 5.10, each Lender
severally agrees to pay to the Agent, the Issuing Bank or the Swingline
Lender, as the case may be, such Lender's Applicable Percentage
(determined as of the time that the applicable unreimbursed expense or
indemnity payment is sought) of such unpaid amount; provided, that, the
unreimbursed expense or indemnified loss, claim, damage, penalty,
liability or related expense, as the case may be, was incurred by or
asserted against the Agent, Issuing Bank or Swingline Lender in its
capacity as such.
(d) The relationship between any Loan Party on the one hand and the Lenders,
the Issuing Bank and the Agent on the other hand shall be solely that of
debtor and creditor. Neither the Agent, the Issuing Bank nor any Lender (i)
shall have any fiduciary responsibilities to any Loan Party, or (ii)
undertakes any responsibility to any Loan Party to review or inform such
Loan Party of any matter in connection with any phase of any Loan Party's
business or operations. To the extent permitted by applicable law, no Loan
Party shall assert, and each hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or
any agreement or instrument contemplated hereby, the Transactions, any Loan
or Letter of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable promptly after
written demand therefor.
(f) In no event shall any Indemnitee be liable on any theory of liability
for any special, indirect, consequential or punitive damages (including
any loss of profits, business or anticipated savings).
SECTION 9.05 Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby (including any Affiliate of an Issuing Bank that issues
any Letter of Credit), except that (i) the Borrowers may not assign or
otherwise transfer any of their rights or obligations hereunder without the
prior written consent of each Lender (and any attempted assignment or
transfer by the Borrowers without such consent shall be null and void), and
(ii) no Lender may assign or otherwise transfer its rights or obligations
hereunder except in accordance with this Section. Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and
assigns permitted hereby (including any Affiliate of an Issuing Bank that
issues any Letter of Credit), Participants (to the extent provided in
Section 9.05(c)) and, to the extent ---------------- expressly contemplated
hereby, the Related Parties of the Agent, the Issuing Bank and the Lenders)
any legal or equitable right, remedy or claim under or by reason of this
Agreement.
(b) (i) Subject to the conditions set forth in Section 9.05(b)(ii), any Lender
may assign to one or more assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it) with the prior written
consent (such consent not to be unreasonably withheld or delayed) of:
(A) the Administrative Borrower, provided, that, no consent of the
Administrative Borrower shall be required for an assignment to (v) a
Lender, (w) an Affiliate of a Lender, (x) an Approved Fund, (y) in
connection with any merger, consolidation, sale, transfer or other
disposition of all or any substantial portion of the business or loan
portfolio of the assigning Lender or (z) if a Default has occurred and is
continuing, any other assignee;
(B) the Agent, provided, that, the consent of the Agent will not be necessary
for assignments among Lenders or Affiliates of Lenders or in connection
with any merger, consolidation, sale, transfer or other disposition of all
or any substantial portion of the business or loan portfolio of the
assigning Lender; and
(C) the Issuing Bank.
(ii) Assignments shall be subject to the following additional conditions:
(A) except in the case of an assignment to a Lender or an Affiliate of a Lender
or an assignment of the entire remaining amount of the assigning Lender's
Commitment or Loans of any Class, the amount of the Commitment or Loans of
the assigning Lender subject to each such assignment (determined as of the
date the Assignment and Assumption with respect to such assignment is
delivered to the Agent) shall not be less than $5,000,000 unless each of
the Administrative Borrower and the Agent otherwise consent, provided,
that, no such consent of the Administrative Borrower shall be required if
an Event of Default has occurred and is continuing;
(B) after giving effect to any partial assignment, the assignor's Commitments
and Revolving Credit Exposure shall not be less than $1,000,000;
(C) each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender's rights and obligations under this
Agreement;
(D) the parties to each assignment shall execute and deliver to the Agent an
Assignment and Assumption, together with a processing and recordation fee
of $3,500, in the case of fees payable to the Agent; and
(E) the assignee, if it shall not be a Lender, shall deliver to the Agent an
Administrative Questionnaire.
For the purposes of this Section 9.05(b), the term "Approved
Fund" has the following meaning:
"Approved Fund" means any Person (other than a natural person)
that is engaged in making, purchasing, holding or investing in bank loans and
similar extensions of credit in the ordinary course of its business and that is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender, or (c) an
entity or an Affiliate of an entity that administers or manages a Lender.
(i) Subject to acceptance and recording thereof pursuant to Section
9.05(b)(iv), from and after the effective date specified in each
Assignment and Assumption the assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment
and Assumption, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of
the interest assigned by such Assignment and Assumption, be released
from its obligations under this Agreement (and, in the case of an
Assignment and Assumption covering all of the assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of
Sections 2.16, 2.17, 2.18 and 9.04). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not
comply with this Section 9.05 shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights
and obligations in accordance with Section 9.05(c).
(ii) The Agent, acting for this purpose as an agent of the Borrowers, shall
maintain at one of its offices a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitment of, and principal amount of
and interest owing on, the Loans owing to, each Lender pursuant to the
terms hereof from time to time (the "Register"). The entries in the
Register shall be conclusive, -------- and the Borrowers, the Agent, the
Issuing Banks and the Lenders may treat each Person whose name is recorded
in the Register pursuant to the terms hereof as the absolute owner of any
Obligations held by such Person, as included in the Register, for all
purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Administrative Borrower,
the Issuing Banks and any Lender, at any reasonable time and from time to
time upon reasonable prior notice.
(iii) Upon its receipt of a duly completed Assignment and Assumption executed by
an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in Section
9.05(b) and any written consent to such assignment required by
--------------- Section 9.05(b), the Agent shall accept such Assignment and
Assumption and record the information contained therein --------------- in
the Register; provided, that, if either the assigning Lender or the
assignee shall have failed to make any -------- ---- payment required to be
made by it pursuant to Section 2.06, 2.07, 2.08(d) or (e), 2.09(b), 2.20(d)
or 9.04(c), the ------------ ---- ------- --- ------- ------- ------- Agent
shall have no obligation to accept such Assignment and Assumption and
record the information therein in the Register unless and until such
payment shall have been made in full, together with all accrued interest
thereon. No assignment shall be effective for purposes of this Agreement
unless it has been recorded in the Register as provided in this paragraph.
(c) (i) Any Lender may, without the consent of the Borrowers, the Agent, the
Issuing Bank or the Swingline Lenders, sell participations to one or more
banks or other entities (a "Participant") in all or a portion of such
Lender's rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans owing to it); provided, that, (A)
such Lender's obligations under this Agreement shall remain unchanged, (B)
such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, and (C) the Borrowers, the Agent, the
Issuing Bank and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to
which a Lender sells such a participation shall provide that such Lender
shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement;
provided, that, such agreement or instrument may provide that such Lender
will not, without the consent of the Participant, agree to any amendment,
modification or waiver described in the first proviso to Section 9.03(b)
that affects such Participant. Subject to Section 9.05(c)(ii), the
Borrowers agree that each Participant --------------- --------------------
shall be entitled to the benefits of Sections 2.17, 2.18 and 2.19 to the
same extent as if it were a Lender and had acquired -------------- ----
---- its interest by assignment pursuant to Section 9.05(b). To the extent
permitted by law, each Participant also shall be ---------------- entitled
to the benefits of Section 9.09 as though it were a Lender, provided such
Participant agrees to be subject to ------------- Section 2.20(c) as though
it were a Lender. ---------------
(ii) A Participant shall not be entitled to receive any greater payment
under Section 2.17 or 2.19 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant
is made with the Administrative Borrower's prior written consent. A
Participant that would be a Non-U.S. Lender if it were a Lender shall
not be entitled to the benefits of Section 2.19 unless the
Administrative Borrower is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the
Borrowers, to comply with Section 2.19(e) as though it were a Lender.
(d) Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement to secure obligations
of such Lender or an Affiliate of such Lender, including without
limitation any pledge or assignment to secure obligations to a Federal
Reserve Bank, and this Section 9.05 shall not apply to any such pledge
or assignment of a security interest; provided, that, no such pledge or
assignment of a security interest shall release a Lender from any of
its obligations hereunder or substitute any such pledgee or assignee
for such Lender as a party hereto.
SECTION 9.06 Survival. All covenants, agreements, representations and warranties
made by the Loan Parties in the Loan Documents and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement or any
other Loan Document shall be considered to have been relied upon by the other
parties hereto and shall survive the execution and delivery of the Loan
Documents and the making of any Loans and issuance of any Letters of Credit,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the Agent, the Issuing Bank or any Lender may have had
notice or knowledge of any Event of Default or incorrect representation or
warranty at the time any credit is extended hereunder, and shall continue in
full force and effect as long as the principal of or any accrued interest on any
Loan or any fee or any other amount payable under this Agreement is outstanding
and unpaid or any Letter of Credit is outstanding and so long as the Commitments
have not expired or terminated. The provisions of Sections 2.17, 2.18, 2.19 and
9.04 and Article VIII shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loans, the expiration or termination of the Letters of Credit
and the Commitments or the termination of this Agreement or any provision
hereof.
SECTION 9.07 Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and any separate letter agreements with respect to fees payable
to the Agent constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by the Agent and when the Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Delivery of an executed counterpart of a signature page of this Agreement by
facsimile or electronic scan shall be effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 9.08 Severability. Any provision of any Loan Document held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions thereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.09 Right of Setoff. If an Event of Default shall have occurred and be
continuing or if any Borrower or any other Loan Party becomes insolvent, however
evidenced, each Lender and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other obligations at any time owing by such
Lender or Affiliate to or for the credit or the account of the Borrowers or such
Loan Party against any of and all the Obligations held by such Lender,
irrespective of whether or not such Lender shall have made any demand under the
Loan Documents and although such obligations may be unmatured. The rights of
each Lender under this Section 9.09 are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.
SECTION 9.10 Governing Law; Jurisdiction; Consent to Service of Process
(a) THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY EXPRESS
CHOICE OF LAW PROVISION) SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, BUT GIVING EFFECT TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
(b) EACH LOAN PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF
AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF
ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK
STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF
THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS
BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT ANY
ADMINISTRATIVE AGENT, ISSUING BANK OR LENDER MAY OTHERWISE HAVE TO BRING
ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.
(c) Each Loan Party hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection
which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or
any other Loan Document in any court referred to in Section 9.10(b).
Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 9.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party
to this Agreement to serve process in any other manner permitted by
law.
SECTION 9.11 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
SECTION 9.12 Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.13 Confidentiality
(a) Each of the Agent, the Issuing Bank and the Lenders agree to maintain the
confidentiality of the Information (as defined below), except that
Information may be disclosed (i) to its and its Affiliates' directors,
officers, employees and agents, including accountants, legal counsel and
other advisors (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (ii) to
the extent requested by any regulatory authority, (iii) to the extent
required by applicable laws or regulations or by any subpoena or similar
legal process, (iv) to any other party to this Agreement, (v) in connection
with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (vi) subject to an agreement
containing provisions substantially the same as those of this Section, to
(A) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement, or
(B) any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to the Loan Parties and their obligations,
(vii) with the consent of the Administrative Borrower, or (viii) to the
extent such Information (A) becomes publicly available other than as a
result of a breach of this Section, or (B) becomes available to any Agent,
Issuing Bank or Lender on a non-confidential basis from a source other than
the Borrowers. For the purposes of this Section 9.13, "Information" means
all information received from the Borrowers ------------- -----------
relating to the Borrowers or their business, other than any such
information that is available to any Agent, Issuing Bank or Lender on a
non-confidential basis prior to disclosure by the Borrowers; provided,
that, in the case of information received -------- ---- from the Borrowers
after the date hereof, such information is clearly identified at the time
of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section 9.13 shall be
considered to ------------ have complied with its obligation to do so if
such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information. Notwithstanding the foregoing, Agent or any
Lender may issue and disseminate to the public general information
describing this credit facility, including the names and addresses of the
Borrowers and a general description of the Borrowers' businesses, and may
(so long as the Administrative Borrower has previously reviewed and
approved the form of such advertisement or promotional materials) use
Borrowers' names in published advertising and other promotional materials.
(b) In the event that Agent, the Issuing Bank or any Lender receives a request
or demand to disclose any confidential information pursuant to any subpoena
or court order, Agent, the Issuing Bank or any Lender, as the case may be,
agrees (i) to the extent permitted by applicable law or if permitted by
applicable law, to the extent Agent, the Issuing Bank or any such Lender
determines in good faith that it will not create any risk of liability to
Agent, the Issuing Bank or any such Lender, Agent, the Issuing Bank or any
such Lender will promptly notify Administrative Borrower of such request so
that Administrative Borrower may seek a protective order or other
appropriate relief or remedy and (ii) if disclosure of such information is
required, disclose such information and, subject to reimbursement by
Borrowers of Agent's, Issuing Bank's or such Lender's expenses, cooperate
with Administrative Borrower in the reasonable efforts to obtain an order
or other reliable assurance that confidential treatment will be accorded to
such portion of the disclosed information which Administrative Borrower so
designates, to the extent permitted by applicable law or if permitted by
applicable law, to the extent Agent, Issuing Bank or such Lender determines
in good faith that it will not create any risk of liability to Agent,
Issuing Bank or such Lender.
SECTION 9.14 Several Obligations; Non-reliance; Violation of Law. The respective
obligations of the Lenders hereunder are several and not joint and the failure
of any Lender to make any Loan or perform any of its obligations hereunder shall
not relieve any other Lender from any of its obligations hereunder. Each Lender
hereby represents that it is not relying on or looking to any margin stock for
the repayment of the Borrowings provided for herein. Anything contained in this
Agreement to the contrary notwithstanding, neither the Issuing Bank nor any
Lender shall be obligated to extend credit to the Borrowers in violation of any
limitation or prohibition provided by any applicable statute or regulation.
SECTION 9.15 USA PATRIOT Act and OFAC.
(a) Each Lender that is subject to the requirements of the Patriot Act
hereby notifies the Borrowers that pursuant to the requirements of the
Patriot Act, it is required to obtain, verify and record information
that identifies the Borrowers, which information includes the names and
addresses of the Borrowers and other information that will allow such
Lender to identify the Borrowers in accordance with the Patriot Act.
(b) A Lender will not assign, sell participations, syndicate all or a portion
of a Loan or any interest therein to any Person who is (i) listed on the
Specially Designated Nationals and Blocked Persons List maintained by the
U.S. Department of Treasury Office of Foreign Assets Control ("OFAC")
and/or on any other similar list maintained by the OFAC pursuant to any
authorizing statute, Executive Order or regulation (collectively, "OFAC
Laws and Regulations"); or (ii) either (A) included within the term
"designated national" as defined in the Cuban Assets Control Regulations,
31 C.F.R. Part 515, or (B) designated under Sections 1(a), 1(b), 1(c) or
1(d) of Executive Order No. 13224, 66 Fed. Reg. 49079 (published September
25, 2001) or similarly designated under any related enabling legislation or
any other similar executive orders (collectively, the "Executive Orders").
SECTION 9.16 Disclosure. Each Loan Party and each Lender hereby acknowledges and
agrees that the Agent and/or the Affiliates from time to time may hold
investments in, make other loans to or have other relationships with any of the
Loan Parties and their respective Affiliates.
SECTION 9.17 Execution of Loan Documents. The Lenders hereby empower and
authorize the Agent, on behalf of the Lenders, to execute and deliver to the
Loan Parties the other Loan Documents and all related agreements, certificates,
documents, or instruments as shall be necessary or appropriate to effect the
purposes of the Loan Documents. Each Lender agrees that any action taken by the
Agent or the Required Lenders in accordance with the terms of this Agreement or
the other Loan Documents, and the exercise by the Agent or the Required Lenders
of their respective powers set forth therein or herein, together with such other
powers that are reasonably incidental thereto, shall be binding upon all of the
Lenders. The Lenders acknowledge that all of the Obligations hereunder
constitute one debt, secured pari passu by all of the Collateral.
SECTION 9.18 Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with
all fees, charges and other amounts which are treated as interest on such Loan
under applicable law (collectively the "Charges"), shall exceed the maximum
lawful rate (the "Maximum Rate") which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section 9.18 shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
SECTION 9.19 Administrative Borrower; Joint and Several Liability.
----------------------------------------------------
(a) Each Borrower hereby irrevocably appoints Jaco Electronics, Inc., as the
borrowing agent and attorney-in-fact for all Borrowers (the "Administrative
Borrower") which appointment shall remain in full force and effect unless
and until the Agent ------------------------ shall have received prior
written notice signed by each Borrower that such appointment has been
revoked and that another Borrower has been appointed Administrative
Borrower. Each Borrower hereby irrevocably appoints and authorizes the
Administrative Borrower (i) to provide the Agent, Issuing Bank and Lenders
with all notices with respect to Borrowings and Letters of Credit obtained
for the benefit of any Borrower and all other notices and instructions
under this Agreement and (ii) to take such action as the Administrative
Borrower deems appropriate on its behalf to obtain Borrowings and Letters
of Credit and to exercise such other powers as are reasonably incidental
thereto to carry out the purposes of this Agreement. It is understood that
the handling of the Funding Accounts, Collection Account, Blocked Accounts
and Collateral of Borrowers in a combined fashion, as more fully set forth
herein, is done solely as an accommodation to Borrowers in order to utilize
the collective borrowing powers of Borrowers in the most efficient and
economical manner and at their request, and that no Agent, Issuing Bank or
Lender shall incur any liability to any Borrower as a result hereof. Each
Borrower expects to derive benefit, directly or indirectly, from the
handling of the Funding Accounts, Collection Account, Blocked Accounts and
the Collateral in a combined fashion since the successful operation of each
Borrower is dependent on the continued successful performance of the
integrated group. To induce the Agent, Issuing Bank and Lenders to do so,
and in consideration thereof, each Borrower hereby jointly and severally
agrees to indemnify Agent, Issuing Bank and each Lender and hold it
harmless against any and all liability, expense, loss or claim of damage or
injury, made against such Lender by any Borrower or by any third party
whosoever, arising from or incurred by reason of (a) the handling of the
Funding Accounts, Collection Account, Blocked Accounts and Collateral of
Borrowers as herein provided, (b) such Agent, Issuing Bank or Lender
relying on any instructions of the Administrative Borrower, or (c) any
other action taken by the Agent, Issuing Bank or Lenders hereunder or under
the other Loan Documents, except that Borrowers will have no liability
under this Section 9.19 with ------------ respect to any liability that has
been finally determined by a court of competent jurisdiction to have
resulted solely from the gross negligence or willful misconduct of such
indemnified party.
(b) Unless otherwise specifically provided herein, all references to "Borrower"
or "Borrowers" herein shall refer to and include each of the Borrowers
separately and all representations contained herein shall be deemed to be
separately made by each of them, and each of the covenants, agreements and
obligations set forth herein shall be deemed to be the joint and several
covenants, agreements and obligations of them. Any notice, request,
consent, report or other information or agreement delivered to any Agent or
Lender by the Borrowers shall be deemed to be ratified by, consented to and
also delivered by the other Borrowers. Each Borrower recognizes and agrees
that each covenant and agreement of "Borrower" or "Borrowers" under this
Agreement and the other Loan Documents shall create a joint and several
obligation of the Borrowers, which may be enforced against Borrowers,
jointly or against each of the Borrowers separately.
(c) All Loans to the Borrowers, upon funding, shall be deemed to be jointly
funded to and received by the Borrowers. Each Borrower jointly and
severally agrees to pay, and shall be jointly and severally liable under
this Agreement for, all Obligations of the Borrowers, regardless of the
manner or amount in which proceeds of such Loans are used, allocated,
shared, or disbursed by or among the Borrowers themselves, or the manner in
which Agent and/or any Lender accounts for such Loans or other extensions
of credit on its books and records. Each Borrower shall be liable for all
amounts due to Agent and/or any Lender under this Agreement, regardless of
which Borrower actually receives Loans or other extensions of credit
hereunder or the amount of such Loans and extensions of credit received or
the manner in which Agent and/or such Lender accounts for such Loans or
other extensions of credit on its books and records. Each Borrower's
Obligations with respect to Loans and other extensions of credit made to
it, and such Borrower's Obligations arising as a result of the joint and
several liability of such Borrower hereunder, with respect to Loans made to
the other Borrowers hereunder, shall be separate and distinct obligations,
but all such Obligations of the Borrowers shall be primary obligations of
such Borrower. The Borrowers acknowledge and expressly agree with the
Agent, the Issuing Bank and each Lender that the joint and several
liability of each Borrower is required solely as a condition to, and is
given solely as inducement for and in consideration of, credit or
accommodations extended or to be extended under the Loan Documents to any
or all of the other Borrowers. Each Borrower's obligations under this
Agreement and as an obligor under the Collateral Documents shall be
separate and distinct obligations. Upon any Event of Default, the Agents
may proceed directly and at once, without notice, against any Borrower to
collect and recover the full amount, or any portion of the Obligations,
without first proceeding against any other Borrower or any other Person, or
against any security or collateral for the Obligations. Each Borrower
consents and agrees that the Agent shall be under no obligation to marshal
any assets in favor of any Borrower or against or in payment of any or all
of the Obligations.
(d) With respect to any Borrower's Obligations arising as a result of the
joint and several liability of the Borrowers hereunder with respect to
Loans or other extensions of credit made to any of the other Borrowers
hereunder, such Borrower waives, until the Obligations shall have been
indefeasibly paid in full, the Commitments and this Agreement shall
have been terminated, any right to enforce any right of subrogation or
any remedy which Agent and/or any Lender now has or may hereafter have
against any other Borrower, any endorser or any guarantor of all or any
part of the Obligations, and any benefit of, and any right to
participate in, any security or collateral given to Agent and/or any
Lender to secure payment of the Obligations or any other liability of
any Borrower to Agent and/or any Lender.
(e) Subject to Section 9.19(d), to the extent that any Borrower shall be
required to pay a portion of the Obligations which ---------------- shall
exceed the amount of Loans other extensions of credit received by such
Borrower and all interest, costs, fees and expenses attributable to such
Loans or other extensions of credit, then such Borrower shall be reimbursed
by the other Borrowers for the amount of such excess. This Section 9.19(e)
is intended only to define the relative rights of Borrowers,
---------------- and nothing set forth in this Section 9.19(e) is intended
or shall impair the obligations of each Borrower, jointly and
---------------- severally, to pay to Agent, the Issuing Bank and Lenders
the Obligations as and when the same shall become due and payable in
accordance with the terms hereof. Notwithstanding anything to the contrary
set forth in this Section 9.19(e) or any ---------------- other provisions
of this Agreement, it is the intent of the parties hereto that the
liability incurred by each Borrower in respect of the Obligations of the
other Borrowers (and any Lien granted by each Borrower to secure such
Obligations), not constitute a fraudulent conveyance or fraudulent transfer
under the provisions of any applicable law of any state or other
governmental unit ("Fraudulent Conveyance"). Consequently, each Borrower,
Agent, the Issuing Bank and each Lender hereby ---------------------- agree
that if a court of competent jurisdiction determines that the incurrence of
liability by any Borrower in respect of the Obligations of any other
Borrower (or any Liens granted by such Borrower to secure such Obligations)
would, but for the application of this sentence, constitute a Fraudulent
Conveyance, such liability (and such Liens) shall be valid and enforceable
only to the maximum extent that would not cause the same to constitute a
Fraudulent Conveyance, and this Agreement and the other Loan Documents
shall automatically be deemed to have been amended accordingly, nunc pro
tunc.
(f) Each Borrower's obligation to pay and perform the Obligations shall be
absolute, unconditional and irrevocable, and shall be paid and
performed strictly in accordance with the terms of this Agreement under
any and all circumstances whatsoever and irrespective of (i) any lack
of validity or enforceability of this Agreement, or any term or
provision therein, as to any other Borrower, or (ii) any other event or
circumstance whatsoever, whether or not similar to any of the
foregoing, that might, but for the provisions of this Section,
constitute a legal or equitable discharge of, or provide a right of
setoff against, any Borrower's obligations hereunder.
SECTION 9.20 Subordination and Contribution.
(a) Each Borrower hereby agrees that any Indebtedness of any other Borrower now
or hereafter owing to such Borrower, whether heretofore, now or hereafter
created (the "Borrower Subordinated Debt"), is hereby subordinated to all
of the Obligations ---------------------------- and that, except as
permitted under Section 6.9, the Borrower Subordinated Debt shall not be
paid in whole or in part until ----------- the Obligations have been paid
in full and this Agreement is terminated and of no further force or effect.
No Borrower shall accept any payment of or on account of any Borrower
Subordinated Debt at any time in contravention of the foregoing. Each
payment on the Borrower Subordinated Debt received in violation of any of
the provisions hereof shall be deemed to have been received by such
Borrower as trustee for the Secured Parties and shall be paid over to the
Agent immediately on account of the Obligations, but without otherwise
affecting in any manner such Borrower's liability hereunder. Each Borrower
agrees to file all claims against the Borrower from whom the Borrower
Subordinated Debt is owing in any bankruptcy or other proceeding in which
the filing of claims is required by law in respect of any Borrower
Subordinated Debt, and the Agent shall be entitled to all of such
Borrower's rights thereunder. If for any reason a Borrower fails to file
such claim at least ten Business Days prior to the last date on which such
claim should be filed, such Borrower hereby irrevocably appoints the Agent
as its true and lawful attorney-in-fact, and the Agent is hereby authorized
to act as attorney-in-fact in such Borrower's name to file such claim or,
in the Agent's discretion, to assign such claim to and cause proof of claim
to be filed in the name of the Agent or its nominee. In all such cases,
whether in administration, bankruptcy or otherwise, the person or persons
authorized to pay such claim shall pay to the Agent the full amount payable
on the claim in the proceeding, and, to the full extent necessary for that
purpose, each Borrower hereby assigns to the Agent all of such Borrower's
rights to any payments or distributions to which such Borrower otherwise
would be entitled. If the amount so paid is greater than such Borrower's
liability hereunder, the Agent shall pay the excess amount to the party
entitled thereto. In addition, each Borrower hereby irrevocably appoints
the Agent as its attorney-in-fact to exercise all of such Borrower's voting
rights in connection with any bankruptcy proceeding or any plan for the
reorganization of the Borrower from whom the Borrower Subordinated Debt is
owing.
(b) Additionally, to the extent that any Borrower shall be required to pay a
portion of the Obligations which shall exceed the amount of loans, advances
or other extensions of credit received by such Borrower and all interest,
costs, fees and expenses attributable to such loans, advances or other
extensions of credit, then such Borrower shall be reimbursed by the other
Borrowers for the amount of such excess. This Section 9.20(b) is intended
only to define the relative rights of Borrowers, ---------------- and
nothing set forth in this Section 9.20(b) is intended or shall impair the
obligations of each Borrower, jointly and ---------------- severally, to
pay to Agent and Lenders the Obligations as and when the same shall become
due and payable in accordance with the terms hereof. Notwithstanding
anything to the contrary set forth in this Section 9.20(b) or any other
provisions of ---------------- this Agreement, it is the intent of the
parties hereto that the liability incurred by each Borrower in respect of
the Obligations of the other Borrowers (and any Lien granted by each
Borrower to secure such Obligations), not constitute a fraudulent
conveyance or fraudulent transfer under the provisions of any applicable
law of any state or other governmental unit ("Fraudulent Conveyance").
Consequently, each Borrower, each Agent and the Lender hereby agree that if
a court of competent jurisdiction determines that the incurrence of
liability by any Borrower in respect of the Obligations of any other
Borrower (or any Liens granted by such Borrower to secure such Obligations)
would, but for the application of this sentence, constitute a Fraudulent
Conveyance, such liability (and such Liens) shall be valid and enforceable
only to the maximum extent that would not cause the same to constitute a
Fraudulent Conveyance, and this Agreement and the other Loan Documents
shall automatically be deemed to have been amended accordingly, nunc pro
tunc.
(c) If for the purpose of obtaining judgment in any court it is necessary to
convert a sum due from any Borrower under any Loan Document in the currency
expressed to be payable in any Loan Document (the "specified currency")
into another currency, the parties hereto agree, to the fullest extent that
they may effectively do so, that the rate of exchange used shall be that at
which in accordance with normal banking procedures the Agent could purchase
the specified currency with such other currency at the Agent's New York
office at 11:00 A.M. (Eastern time) on the Business Day preceding that on
which final judgment is given. The obligations of each Borrower in respect
of any sum due to any Lender or the Agent under any Loan Document shall,
notwithstanding any judgment in a currency other than the specified
currency, be discharged only to the extent that on the Business Day
following receipt by such Lender or the Agent (as the case may be) of any
sum adjudged to be so due in such other currency such Lender or the Agent
(as the case may be) may in accordance with normal banking procedures
purchase the specified currency with such other currency. If the amount of
the specified currency so purchased is less than the sum originally due to
such Lender or the Agent, as the case may be, in the specified currency,
each Borrower agrees, to the fullest extent that it may effectively do so,
as a separate obligation and notwithstanding any such judgment, to
indemnify such Lender or the Agent, as the case may be, against such loss.
[SIGNATURE PAGES FOLLOW]
Credit Agreement Signature Page
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
JACO ELECTRONICS, INC.
By: /s/ Xxxxxxx X. Xxxx
----------------------------------------
Name: Xxxxxxx X. Xxxx
--------------------------------------
Title: CFO
-------------------------------------
INTERFACE ELECTRONICS CORP.
By: /s/ Xxxxxxx X. Xxxx
----------------------------------------
Name: Xxxxxxx X. Xxxx
--------------------------------------
Title: EVP
-------------------------------------
THE CIT GROUP/BUSINESS CREDIT, INC., individually, as
Agent, Lender and Swingline Lender
By: /s/ Xxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxxx
----------------------------------------
Title: Sr. Vice President
----------------------------------------
THE CIT GROUP/BUSINESS CREDIT, INC., individually, as
Issuing Bank
By: /s/ Xxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxxx
----------------------------------------
Title: Sr. Vice President
----------------------------------------
Annex I
COMMITMENT SCHEDULE
Lender Revolving Commitment
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The CIT Group/Business Credit, Inc. $55,000,000
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Total $55,000,000
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