EXHIBIT (b)(3)
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SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
AMONG
KEVCO, INC.
CERTAIN LENDERS
AND
NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE AGENT
December 1, 1997
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TABLE OF CONTENTS
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Page
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ARTICLE 1
Definitions
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Section 1.1 Defined Terms........................................... 1
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Section 1.2 Amendments and Renewals................................. 24
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Section 1.3 Construction............................................ 24
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ARTICLE 2
Advances
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Section 2.1 The Advances........................................... 24
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Section 2.2 Manner of Borrowing and Disbursement................... 25
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Section 2.3 Interest............................................... 27
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Section 2.4 Fees................................................... 28
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Section 2.5 Prepayment and Payments................................ 29
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Section 2.6 Reduction of Commitments............................... 32
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Section 2.7 Non-Receipt of Funds by the Administrative Agent....... 32
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Section 2.8 Payment of Principal of Advances....................... 33
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Section 2.9 Reimbursement.......................................... 35
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Section 2.10 Manner of Payment...................................... 35
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Section 2.11 LIBOR Lending Offices.................................. 37
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Section 2.12 Sharing of Payments.................................... 37
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Section 2.13 Calculation of LIBOR Rate.............................. 38
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Section 2.14 Booking Loans.......................................... 38
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Section 2.15 Taxes.................................................. 38
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Section 2.16 Letters of Credit...................................... 42
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ARTICLE 3
Conditions Precedent
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Section 3.1 Conditions Precedent to Refinancing of the Existing
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Credit Agreement, the Loan Documents, the Initial Advances
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and the Initial Letters of Credit...................... 47
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Section 3.2 Conditions Precedent to All Advances and Letters
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of Credit.............................................. 50
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Section 3.3 Conditions Precedent to Conversions and Continuations.. 51
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ARTICLE 4
Representations and Warranties
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Section 4.1 Representations and Warranties............................ 51
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Section 4.2 Survival of Representations and Warranties, etc........... 58
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ARTICLE 5
General Covenants
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Section 5.1 Preservation of Existence and Similar Matters.......... 58
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Section 5.2 Business; Compliance with Applicable Law............... 58
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Section 5.3 Maintenance of Properties.............................. 58
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Section 5.4 Accounting Methods and Financial Records............... 59
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Section 5.5 Insurance.............................................. 59
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Section 5.6 Payment of Taxes and Claims............................ 59
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Section 5.7 Visits and Inspections................................. 59
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Section 5.8 Payment of Indebtedness................................ 59
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Section 5.9 Use of Proceeds........................................ 60
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Section 5.10 Indemnity.............................................. 60
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Section 5.11 Environmental Law Compliance........................... 61
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Section 5.12 Further Assurances..................................... 62
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Section 5.13 Subsidiaries........................................... 63
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ARTICLE 6
Information Covenants
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Section 6.1 Quarterly Financial Statements and Information.......... 64
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Section 6.2 Annual Financial Statements and Information;
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Certificate of No Default.............................. 64
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Section 6.3 Compliance Certificate.................................. 64
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Section 6.4 Copies of Other Reports and Notices..................... 64
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Section 6.5 Notice of Litigation, Default and Other Matters......... 65
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Section 6.6 ERISA Reporting Requirements............................ 66
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ARTICLE 7
Negative Covenants
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Section 7.1 Indebtedness........................................... 67
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Section 7.2 Liens.................................................. 68
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Section 7.3 Investments............................................ 68
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Section 7.4 Liquidation, Merger, New Subsidiaries.................. 69
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Section 7.5 Sale of Assets......................................... 69
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Section 7.6 Acquisitions........................................... 69
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Section 7.7 Restricted Payments.................................... 70
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Section 7.8 Affiliate Transactions................................. 70
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Section 7.9 Compliance with ERISA.................................. 71
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Section 7.10 Leverage Ratio......................................... 71
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Section 7.11 Fixed Charge Coverage Ratio............................ 71
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Section 7.12 Net Worth.............................................. 71
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Section 7.13 Sale and Leaseback..................................... 72
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Section 7.14 Sale or Discount of Receivables........................ 72
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Section 7.15 Capital Expenditures................................... 72
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Section 7.16 Amendments and Waivers of Institutional Debt or
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Subordinated Debt...................................... 72
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ARTICLE 8
Default
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Section 8.1 Events of Default...................................... 73
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Section 8.2 Remedies............................................... 76
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ARTICLE 9
Changes in Circumstances
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Section 9.1 LIBOR Basis Determination Inadequate................... 76
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Section 9.2 Illegality............................................. 77
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Section 9.3 Increased Costs........................................ 77
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Section 9.4 Effect On Base Rate Advances........................... 78
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Section 9.5 Capital Adequacy....................................... 78
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Section 9.6 Replacement Lender..................................... 79
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ARTICLE 10
Agreement Among Lenders
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Section 10.1 Agreement Among Lenders................................ 79
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Section 10.2 Lender Credit Decision................................. 82
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Section 10.3 Benefits of Article.................................... 82
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ARTICLE 11
Miscellaneous
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Section 11.1 Notices............................................... 82
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Section 11.2 Expenses.............................................. 83
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Section 11.3 Waivers............................................... 84
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Section 11.4 Determination by the Lenders Conclusive and Binding... 84
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Section 11.5 Set-Off............................................... 84
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Section 11.6 Assignment............................................ 85
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Section 11.7 Counterparts.......................................... 87
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Section 11.8 Severability.......................................... 87
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Section 11.9 Interest and Charges.................................. 88
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Section 11.10 Headings.............................................. 88
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Section 11.11 Amendment and Waiver.................................. 88
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Section 11.12 Exception to Covenants................................ 89
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Section 11.13 No Liability of Issuing Bank.......................... 89
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Section 11.14 Amendment, Restatement, Extension, Renewal
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and Increase.......................................... 89
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SECTION 11.15 GOVERNING LAW......................................... 90
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SECTION 11.16 WAIVER OF JURY TRIAL.................................. 90
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SECTION 11.17 ENTIRE AGREEMENT...................................... 90
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
SECOND AMENDED AND RESTATED CREDIT AGREEMENT is dated as of December 1,
1997, among KEVCO , INC., a Texas corporation ("Borrower"), the Lenders from
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time to time party hereto, and NATIONSBANK OF TEXAS, N.A., a national banking
association, as administrative agent for the Lenders.
BACKGROUND
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The Lenders have been requested to provide the Borrower the funds to (a)
consummate the Shelter Components Transaction (as hereinafter defined), (b)
refinance a portion of the existing debt of the Borrower and its Subsidiaries
(as hereinafter defined) and Shelter Components (as hereinafter defined) and its
Subsidiaries, including, but not limited to the debt of Kevco Delaware (as
hereinafter defined) outstanding pursuant to the terms of that certain Amended
and Restated Credit Agreement, dated as of February 27, 1997, among Kevco
Delaware, the lenders party thereto, and NationsBank of Texas, N.A., as the
Administrative Agent, as amended (the "Existing Credit Agreement"), (c) pay
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certain fees and expenses related to the Shelter Components Transaction, and (d)
finance the ongoing working capital and general corporate requirements of the
Borrower and its Subsidiaries. The Lenders have agreed to provide a portion of
such financing, subject to the terms and conditions set forth below.
In consideration of the mutual covenants and agreements contained herein,
and other good and valuable consideration hereby acknowledged, the parties
hereto agree that the Existing Credit Agreement shall be amended, restated and
superseded as follows:
ARTICLE 1
Definitions
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Section 1.1 Defined Terms. For purposes of this Agreement:
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"Acquisitions" means any transaction pursuant to which the Borrower or any
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of its Subsidiaries, (a) whether by means of a capital contribution or purchase
or other acquisition of stock or other securities or other equity participation
or interest, (i) acquires more than 50% of the equity interest in any Person
pursuant to a solicitation by the Borrower or such Subsidiary of tenders of
equity securities of such Person, or through one or more negotiated block,
market, private or other transactions not involving a tender offer, or a
combination of any of the foregoing, (ii) except as permitted by Section 7.3(f)
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hereof with respect to a newly-formed corporation and Section 7.4(b) hereof with
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respect to an existing Subsidiary of the Borrower, makes any corporation a
Subsidiary of the Borrower or such Subsidiary, or causes any corporation, other
than a Subsidiary of the Borrower or such Subsidiary, to be merged into the
Borrower or such
Subsidiary (or agrees to be merged into any other corporation other than a
wholly-owned Subsidiary of the Borrower or such Subsidiary), or (iii) agrees to
purchase all or substantially all of the assets of any corporation, pursuant to
a merger, purchase of assets or other reorganization providing for the delivery
or issuance to the holders of such corporation's then outstanding securities, in
exchange for such securities, of cash or securities of the Borrower or such
Subsidiary, or any combination thereof, or (b) purchases all or substantially
all of the business or assets of any Person or of any operating division of any
Person.
"Acquisition Consideration" means the consideration given by the Borrower
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or any of its Subsidiaries for an Acquisition, including but not limited to the
sum of (without duplication) (a) the fair market value of any cash, property or
services given, plus (b) consideration paid with the proceeds of Indebtedness
permitted pursuant to this Agreement, plus (c) the amount of any Indebtedness
and Operating Leases (calculated to be the product of annual rentals multiplied
by six) assumed, incurred or guaranteed in connection with such Acquisition by
the Borrower or any of its Subsidiaries that is a Subsidiary immediately prior
to such Acquisition.
"Adjusted LIBOR Rate" means, for any LIBOR Advance for any Interest Period
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therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100th of 1%) determined by the Administrative Agent to be equal to the
quotient obtained by dividing (a) the LIBOR Rate for such LIBOR Advance for such
Interest Period by (b) 1 minus the Reserve Requirement for such LIBOR Advance
for such Interest Period.
"Adjustment Date" means, for purposes of the Applicable Base Rate Margin,
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the Applicable LIBOR Rate Margin, the commitment fees payable pursuant to
Section 2.4(a) hereof and the Letter of Credit fees payable pursuant to Section
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2.16(f)(i) hereof, the date which is two Business Days after the date of receipt
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by the Administrative Agent of the financial statements required to be delivered
pursuant to Section 6.1 or 6.2 hereof, as applicable, and the Compliance
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Certificate required pursuant to Section 6.3 hereof.
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"Administrative Agent" means NationsBank of Texas, N.A., a national banking
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association, as administrative agent for Lenders, or such successor
administrative agent appointed pursuant to Section 10.1(b) hereof.
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"Advance" means any amount advanced by the Lenders to the Borrower pursuant
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to Article 2 hereof on the occasion of any borrowing.
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"Affiliate" means any Person that, directly or indirectly, through one or
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more Persons, Controls or is Controlled By or Under Common Control with such
Person, or in the case of any Lender which is an investment fund, the investment
advisor thereof and any investment fund having the same investment advisor.
"Agreement" means this Second Amended and Restated Credit Agreement, as
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amended, modified, supplemented or restated from time to time to the extent
remitted pursuant hereto.
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"Agreement Date" means the date of this Agreement.
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"Applicable Base Rate Margin" means the following per annum percentages,
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applicable in the following situations:
Facility A
Term Loan Facility
Advances and B Term
Revolving Loan
Applicability Advances Advances
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(a) The Leverage Ratio is greater than or 0.750 1.250
equal to 5.00 to 1
(b) The Leverage Ratio is greater than or 0.500 1.000
equal to 4.50 to 1 but less than 5.00 to 1
(c) The Leverage Ratio is greater than or 0.250 0.750
equal to 3.75 to 1 but less than 4.50 to 1
(d) The Leverage Ratio is less than 3.75 to 1 0.000 0.500
The Applicable Base Rate Margin payable by the Borrower on the Base Rate
Advances outstanding hereunder shall be adjusted on each Adjustment Date as
tested by using the Leverage Ratio for the most recent four fiscal quarters. If
the financial statements required pursuant to Section 6.1 or 6.2 hereof, as
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applicable, and the related Compliance Certificate are not received by the
Administrative Agent by the date required, the Applicable Base Rate Margin shall
be determined as if the Leverage Ratio is greater than or equal to 5.00 to 1
until such time as such financial statements and Compliance Certificate are
received. Notwithstanding the foregoing, the Applicable Base Rate Margin from
and after the Agreement Date until and including two Business Days following the
date of receipt of the financial statements for the fiscal quarter ending June
30, 1998 and related Compliance Certificate shall be determined as if the
Leverage Ratio is greater than or equal to 5.00 to 1.
"Applicable Environmental Laws" means applicable laws pertaining to health
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or the environment, including without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 (as amended from time
to time, "CERCLA"), the Resource Conservation and Recovery Act of 1976, as
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amended by the Used Oil Recycling Act of 1980, the Solid Waste Disposal Act
amendments of 1980, and the Hazardous and Solid Waste Amendments of 1984 (as
amended from time to time, "RCRA"), the Texas Water Code, and the Texas Solid
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Waste Disposal Act.
"Applicable Law" means (a) in respect of any Person, all provisions of
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constitutions, statutes, rules, regulations and orders of governmental bodies or
regulatory agencies applicable to such Person and its properties, including,
without limiting the foregoing, all orders and decrees
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of all courts and arbitrators in proceedings or actions to which the Person in
question is a party, and (b) in respect of contracts relating to interest or
finance charges that are made or performed in the State of Texas, "Applicable
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Law" shall mean the laws of the United States of America, including without
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limitation 12 USC (S)(S) 85 and 86, as amended from time to time, and any other
statute of the United States of America now or at any time hereafter prescribing
the maximum rates of interest on loans and extensions of credit, and the laws of
the State of Texas, including, without limitation, Article 5069-IH, Title 79,
Revised Civil Statutes of Texas, 1925, as amended ("Art. IH"), if applicable,
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and if Art. IH is not applicable, Article 5069-ID, Title 79, Revised Civil
Statutes, 1925, as amended ("Art. ID"), and any other statute of the State of
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Texas now or at any time hereafter prescribing maximum rates of interest on
loans and extensions of credit; provided that the parties hereto agree that the
provisions of Chapter 15, Title 79, Revised Civil Statutes of Texas, 1925, as
amended, shall not apply to Advances, this Agreement, the Notes or any other
Loan Documents.
"Applicable LIBOR Rate Margin" means the following per annum percentages,
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applicable in the following situations:
Facility A
Term Loan Facility
Advances and B Term
Revolving Loan
Applicability Advances Advances
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(a) The Leverage Ratio is greater than or 2.250 2.750
equal to 5.00 to 1
(b) The Leverage Ratio is greater than or 2.000 2.500
equal to 4.50 to 1 but less than 5.00 to 1
(c) The Leverage Ratio is greater than or 1.750 2.250
equal to 3.75 to 1 but less than 4.50 to 1
(d) The Leverage Ratio is greater than or 1.500 2.000
equal to 3.00 to 1 but less than 3.75 to 1
(e) The Leverage Ratio is less than 3.00 to 1 1.250 1.750
The Applicable LIBOR Rate Margin payable by the Borrower on the LIBOR Advances
outstanding hereunder shall be adjusted on each Adjustment Date as tested by
using the Leverage Ratio for the most recent four fiscal quarters. If the
financial statements required pursuant to Section 6.1 or 6.2 hereof, as
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applicable, and the related Compliance Certificate are not received by the
Administrative Agent by the date required, the Applicable LIBOR Rate Margin
shall be determined as if the Leverage Ratio is greater than or equal to 5.00 to
1 until such time as such financial statements and Compliance Certificate are
received. Notwithstanding the foregoing, the Applicable LIBOR Rate Margin from
and after the Agreement Date until and including two Business Days following the
date of receipt of the audited financial statements for the fiscal quarter
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ending June 30, 1998 and the related Compliance Certificates shall be determined
as if the Leverage Ratio is greater than or equal to 5.00 to 1.
"Applicable Specified Percentages" means the Revolving Credit Specified
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Percentage, the Facility A Term Loan Specified Percentage, the Facility B Term
Loan Specified Percentage, or the Total Specified Percentage, as applicable in
the context used.
"Art. 1.04" shall have the meaning ascribed thereto in the definition of
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"Applicable Law."
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"Assignees" means any assignee of a Lender pursuant to an Assignment
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Agreement and shall have the meaning ascribed thereto in Section 11.6 hereof.
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"Assignment Agreement" shall have the meaning ascribed thereto in Section
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11.6 hereof.
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"Authorized Signatory" means such senior personnel of the Borrower or any
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of its Subsidiaries as may be duly authorized and designated in writing by the
Borrower, or any of its Subsidiaries to execute documents, agreements and
instruments on behalf of the Borrower or any Subsidiary, and to request Advances
hereunder.
"Base Cash Flow" means, for any period, determined in accordance with GAAP
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on a consolidated basis for the Borrower and its Subsidiaries, the sum of (a)
EBITDA minus (b) Capital Expenditures.
"Base Rate Advance" means any Advance bearing interest at the Base Rate
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Basis.
"Base Rate Basis" means, for any day, a per annum interest rate equal to
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the higher of (a) the sum of (i) 0.50% plus (ii) the Federal Funds Rate on such
day plus (iii) the Applicable Base Rate Margin, or (b) the sum of (i) the Prime
Rate on such day plus (ii) the Applicable Base Rate Margin. The Base Rate Basis
shall be adjusted automatically as of the opening of business on the effective
date of each change in the Prime Rate or Federal Funds Rate, as applicable, to
account for such change.
"Borrower" means Kevco, Inc., a Texas corporation.
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"Borrower Intellectual Property Security Agreement" means the Borrower
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Intellectual Property Security Agreement and Assignment executed by the
Borrower, substantially in the form of Exhibit N hereto, as amended, modified,
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renewed, supplemented or restated from time to time.
"Borrower Pledge Agreement" means that certain Borrower Pledge Agreement
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executed by the Borrower, substantially in the form of Exhibit H hereto, as
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amended, renewed, supplemented or restated from time to time.
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"Borrower Security Agreement" means the security agreement relating to all
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assets of the Borrower, substantially in the form of Exhibit D hereto, as
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amended, modified, renewed, supplemented or restated from time to time.
"Business Day" means a day on which commercial banks are open (a) for the
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transaction of business in Dallas, Texas and (b) with respect to any LIBOR
Advance, for the transaction of international business (including dealings in
Dollar deposits) in London, England.
"Capital Expenditures" means, for any period, expenditures made by the
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Borrower and its Subsidiaries to acquire or construct fixed assets, plant and
equipment (including renewals, improvements and replacements during such period
and the aggregate amount of items leased or acquired under Capital Leases at the
cost of the item) computed in accordance with GAAP, consistently applied.
"Capital Leases" means capital leases and subleases, as defined in the
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Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 13, dated November 1976, as amended.
"Capital Stock" means, as to any Person, the equity interests in such
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Person, including, without limitation, the shares of each class of Capital Stock
in any Person that is a corporation, each class of partnership interest in any
Person that is a partnership, and each class of membership interest in any
Person that is a limited liability company.
"Capitalized Lease Obligations" means that portion of any obligation of the
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Borrower or any of its Subsidiaries as lessee under a lease which at the time
would be required to be capitalized on a balance sheet prepared in accordance
with GAAP.
"Cash and Cash Equivalents" means with respect to the Borrower and each of
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its Subsidiaries (a) cash, (b) securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof having maturities of not more than six months from the
date of acquisition, (c) certificates of deposit and eurodollar time deposits
with maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any Lender or with any domestic commercial bank
having capital and surplus in excess of $500,000,000, (d) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in clauses (b) and (c) entered into with any financial institution
meeting the qualifications specified in clause (c) above, and (e) commercial
paper issued by any Lender or the Borrower corporation of any Lender, and
commercial paper rated A-1 or the equivalent thereof by Standard & Poor's
Ratings Group, a Division of XxXxxx-Xxxx, Inc., a New York corporation or P-1 or
the equivalent thereof by Xxxxx'x Investors Service, Inc. and in each case
maturing within six months after the date of acquisition.
"Change of Control" means the occurrence of any of the following: (a) the
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sale, lease or transfer of all or substantially all of the Borrower's assets to
any Person or group (as such term
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is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended),
(b) the adoption of a plan relating to the liquidation or dissolution of the
Borrower, (c) the acquisition by any Person or group (as such term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, "Group")
(other than a Person organized for the benefit of, or a Group of Persons
consisting of, Xxxxx X. Xxxxxx and members of his related family, provided that
Xxxxx X. Xxxxxx is the beneficial owner of at least fifty percent of the
ownership of such Person or Group or such Person or Group is "controlled" by
Xxxxx X. Xxxxxx [within the meaning of "Control" as set forth in this
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Agreement as though such Person or Group were a corporation]) of a direct or
indirect majority in interest (more than 50%) of the voting power of the voting
stock of the Borrower by way of merger or consolidation or otherwise, (d) Xxxxx
X. Xxxxxx (and a Person organized for the benefit of, or a Group of Persons
consisting of, Xxxxx X. Xxxxxx and members of his related family, provided that
Xxxxx X. Xxxxxx is the beneficial owner of at least fifty percent of the
ownership of such Person or Group or such Person or Group is "controlled" by
Xxxxx X. Xxxxxx [within the meaning of "Control" as set forth in this Agreement
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as though such Person or Group were a corporation]) shall fail to own at least
25% of the voting power of the voting stock of the Borrower, (e) any Person or
group (as such term is used in Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended) shall own a percentage of the voting power of the voting
stock of the Borrower which is greater than or equal to the percentage owned by
Xxxxx X. Xxxxxx, or (f) any "change in control" or "change of control" or
similar term howsoever defined or designated in any agreement governing any
Institutional Debt of the Borrower or any of its Subsidiaries.
"COBRA" shall have the meaning specified in Section 4.1(l) hereof.
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"Code" means the Internal Revenue Code of 1986, as amended.
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"Collateral" means any collateral granted by any Person to the
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Administrative Agent to secure the Obligations.
"Collateral Document" means any document under which Collateral is granted
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and any document related thereto.
"Commercial Letter of Credit" means any letter of credit issued by the
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Issuing Bank pursuant to Section 2.16(a) hereof, which is drawable upon
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presentation of documents evidencing the sale or shipment of goods purchased by
the Borrower or any of its Subsidiaries in the ordinary course of its business.
"Commitments" means, collectively, the Revolving Credit Commitment, the
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Facility A Term Loan Commitment and the Facility B Term Loan Commitment.
"Compliance Certificate" means a certificate, signed by an Authorized
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Signatory, in substantially the form of Exhibit E, appropriately completed.
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"Consensual Lien" means only those Liens described in clauses (f) and (h)
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of the definition of Permitted Liens.
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"Control" or "Controlled By" or "Under Common Control" means possession,
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directly or indirectly, of power to direct or cause the direction of management
or policies (whether through ownership of voting securities, by contract or
otherwise); provided, however, that in any event any Person which beneficially
owns, directly or indirectly, 20% or more (in number of votes) of the securities
having ordinary voting power for the election of directors of a corporation
shall be conclusively presumed to control such corporation.
"Controlled Group" means as of the applicable date, as to any Person not an
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individual, all members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) which are under common control with
such Person and which, together with such Person, are treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code; provided, however,
that the Subsidiaries of the Borrower shall be deemed to be members of the
Borrower's Controlled Group.
"Current Assets" means, for the Borrower and its Subsidiaries determined in
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accordance with GAAP on a consolidated basis, all current assets.
"Current Liabilities" means, for the Borrower and its Subsidiaries
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determined in accordance with GAAP on a consolidated basis, all current
liabilities.
"Debtor Relief Laws" means any applicable liquidation, conservatorship,
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bankruptcy, moratorium, rearrangement, insolvency, reorganization or similar
debtor relief Laws affecting the rights of creditors generally from time to time
in effect.
"Deed of Trust" means any leasehold or fee simple Deed of Trust or
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Mortgage, as applicable, relating to the real property and leasehold interests
in real property of the Borrower and each of its Subsidiaries required to be
pledged by the Administrative Agent, in substantially the form set forth in
Exhibit L-1 and Exhibit L-2 hereto, as amended, modified, renewed, supplemented
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or restated from time to time.
"Default" means an Event of Default and/or any of the events specified in
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Section 8.1, regardless of whether there shall have occurred any passage of time
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or giving of notice that would be necessary in order to constitute such event an
Event of Default.
"Default Rate" means a simple per annum interest rate equal to (a) with
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respect to Base Rate Advances the lesser of (i) the Highest Lawful Rate or (ii)
the Base Rate Basis plus two percent or (b) with respect to LIBOR Advances, the
lesser of (i) the Highest Lawful Rate or (ii) the LIBOR Basis plus two percent.
"Determining Lenders" means, on any date of determination, any combination
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of Lenders whose Total Specified Percentages aggregate at least 51%; provided,
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however, in the event that all of the Commitments have been terminated,
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"Determining Lenders" means, on any date of determination, any combination of
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Lenders having at least 51% of the Advances then outstanding.
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"Dividend" means, as to any Person, (a) any declaration or payment of any
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dividend (other than a stock dividend) on, or the making of any distribution,
loan, advance or investment to or in any holder of, any shares of Capital Stock
of such Person (other than salaries and bonuses paid in the ordinary course of
business), and (b) any purchase, redemption or other acquisition or retirement
for value by such Person of any shares of Capital Stock of such Person (other
than the redemption or repurchase by Encore Industries, Inc. of shares of its
Capital Stock owned by Persons other than Xxxxx Supply, Inc. not to exceed
$25,000 in aggregate amount).
"Dollar" or "$" means the lawful currency of the United States of America.
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"EBITDA" means, for any period, determined in accordance with GAAP on a
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consolidated basis for the Borrower and its Subsidiaries, the sum of (a) Pretax
Net Income (excluding therefrom, to the extent included in determining Pretax
Net Income, any items of extraordinary gain, including net gains on the sale of
assets other than asset sales in the ordinary course of business, and adding
thereto, to the extent included in determining Pretax Net Income, any items of
extraordinary loss, including net losses on the sale of assets other than asset
sales in the ordinary course of business), plus (b) interest expense, plus (c)
depreciation and amortization, plus (d) to the extent deducted in calculating
Pretax Net Income, non-cash charges incurred in connection with the Shelter
Components Transaction not to exceed $2,000,000 in aggregate amount.
"Eligible Assignee" means (a) any Lender; (b) a commercial bank organized
-----------------
under the laws of the United States, or any state thereof, and having total
assets in excess of $1,000,000,000; (c) a savings and loan association or
savings bank organized under the laws of the United States, or any state
thereof, having total assets in excess of $500,000,000, and not in receivership
or conservatorship; (d) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development, or a political subdivision of any such country, and having total
assets in excess of $1,000,000,000, provided that such bank is acting through a
branch or agency located in the country in which it is organized or another
country which is described in this clause; (e) the central bank of any country
which is a member of the Organization for Economic Cooperation and Development;
(f) a finance company, insurance company or other financial institution or fund
(whether a corporation, partnership, trust or other entity) that is engaged in
making, purchasing or otherwise investing in commercial loans in the ordinary
course of its business and having a combined capital and surplus or total assets
of at least $100,000,000, (g) any other entity (other than a natural person)
that is an "accredited investor" (as defined in Regulation D under the
Securities Act of 1933) which extends credit or buys loans as one of its
businesses, and (h) any other entity approved by both the Borrower and the
Administrative Agent, provided that, no Affiliate of the Borrower shall qualify
as an Eligible Assignee; provided, however, with respect to any Eligible
-------- -------
Assignee described in clauses (f) or (g) above, for any such Eligible Assignee
to have a Revolving Credit Specified Percentage hereunder its obligation to fund
Revolving Credit Advances shall be irrevocably guaranteed by a Person that
otherwise qualifies as an Eligible Assignee under any of clauses (a), (b), (c)
or (d) above.
-9-
"Equity Offering" means any offering, sale or issuance of Capital Stock of
---------------
the Borrower other than in respect of the exercise of stock options of such
stock.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and any regulation promulgated thereunder.
"ERISA Event" means, with respect to the Borrower and its Subsidiaries, (a)
-----------
a Reportable Event (other than a Reportable Event not subject to the provision
for 30-day notice to the PBGC under regulations issued under Section 4043 of
ERISA), (b) the withdrawal of any such Person or any member of its Controlled
Group from a Plan subject to Title IV of ERISA during a plan year in which it
was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, (c) the
filing of a notice of intent to terminate under Section 4041(c) of ERISA, (d)
the institution of proceedings to terminate a Plan by the PBGC, (e) the failure
to make required contributions which could result in the imposition of a lien
under Section 412 of the Code or Section 302 of ERISA, or (f) any other event or
condition which might reasonably be expected to constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan or the imposition of any liability under Title IV of ERISA
other than PBGC premiums due but not delinquent under Section 4007 of ERISA;
provided, however, that ERISA Event shall not include the termination by Service
-------- -------
Supply of its employee stock option plan.
"Escrow Agreement" has the meaning given to such term in the Senior
----------------
Subordinated Notes Indenture.
"Event of Default" means any of the events specified in Section 8.1,
---------------- -----------
provided that any requirement for notice or lapse of time has been satisfied.
"Excess Cash Flow" means, for the Borrower and its Subsidiaries on a
----------------
consolidated basis for any period, an amount equal to (a) EBITDA for such period
minus (b) the sum of (without duplication) (i) scheduled payments of
Indebtedness for such period, (ii) cash interest expense for such period, (iii)
cash income taxes for such period, (iv) actual Capital Expenditures during such
period, (v) prepayments, whether voluntary or involuntary, of Indebtedness
during such period, and (vi) Working Capital Adjustment.
"Existing Letters of Credit" means those Letters of Credit outstanding on
--------------------------
the Agreement Date, as described on Schedule 9 hereto.
----------
"Facility A Term Loan Advance" means an Advance made pursuant to Section
---------------------------- -------
2.1(b) hereof.
------
"Facility A Term Loan Commitment" means $40,000,000, as terminated pursuant
-------------------------------
to Section 2.1(b) hereof.
--------------
"Facility A Term Loan Maturity Date" means December 31, 2003, or the
----------------------------------
earlier date of acceleration of the Facility A Term Loan Advances pursuant to
Section 8.2 hereof.
-----------
-10-
"Facility A Term Loan Notes" means the promissory notes of the Borrower
--------------------------
evidencing Facility A Term Loan Advances hereunder, substantially in the form of
Exhibit B hereto, together with any extension, renewal or amendment thereof, or
---------
substitution therefor.
"Facility A Term Loan Specified Percentage" means, as to any Lender, the
-----------------------------------------
percentage indicated beside its name on Schedule 1 hereto as its Facility A Term
----------
Loan Specified Percentage, or as adjusted or specified in any amendment to this
Agreement or in any Assignment Agreement.
"Facility B Term Loan Advance" means an Advance made pursuant to Section
---------------------------- -------
2.1(c) hereof.
------
"Facility B Term Loan Commitment" means $50,000,000, as terminated pursuant
-------------------------------
to Section 2.1(c) hereof.
--------------
"Facility B Term Loan Maturity Date" means December 31, 2004, or the
----------------------------------
earlier date of acceleration of the Facility B Term Loan Advances pursuant to
Section 8.2 hereof.
-----------
"Facility B Term Loan Notes" means the promissory notes of the Borrower
--------------------------
evidencing Facility B Term Loan Advances hereunder, substantially in the form of
Exhibit C hereto, together with any extension, renewal or amendment thereof, or
---------
substitution therefor.
"Facility B Term Loan Specified Percentage" means, as to any Lender, the
-----------------------------------------
percentage indicated beside its name on Schedule 1 hereto as its Facility B Term
----------
Loan Specified Percentage, or as adjusted or specified in any amendment to this
Agreement or in any Assignment Agreement.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
------------------
upwards if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of Dallas on the Business Day next
succeeding such day, provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate quoted to the
Administrative Agent on such day on such transactions as determined by
Administrative Agent.
"Fee Letter" has the meaning specified in Section 2.4(b) hereof.
---------- --------------
"Fixed Charges" means, for any date of calculation, calculated for the
-------------
Borrower and its Subsidiaries on a consolidated basis, the sum of, without
duplication and excluding any mandatory or voluntary prepayments of
Indebtedness, (a) interest expense (including interest expense pursuant to
Capitalized Lease Obligations), plus (b) scheduled principal payments of
Indebtedness, in each case for the applicable period immediately preceding the
date of calculation.
-11-
"Fixed Charge Coverage Ratio" means the ratio of Base Cash Flow to Fixed
---------------------------
Charges.
"GAAP" means generally accepted accounting principles applied on a
----
consistent basis, set forth in the Opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants, or their successors
which are applicable in the circumstances as of the date in question. The
requisite that such principles be applied on a consistent basis shall mean that
the accounting principles observed in a current period are comparable in all
material respects to those applied in a preceding period.
"Guaranty" or "Guaranteed", means (a) as applied to an obligation of
-------- ----------
another Person, (i) a guaranty, direct or indirect, in any manner, of any part
or all of such obligation, and (ii) an agreement, direct or indirect, contingent
or otherwise, the practical effect of which is to assure in any way the payment
or performance (or payment of damages in the event of nonperformance) of any
part or all of such obligation, including, without limiting the foregoing, any
reimbursement obligations with respect to amounts which may be drawn by
beneficiaries of outstanding letters of credit and (b) an agreement, direct or
indirect, contingent or otherwise, to maintain net worth, working capital,
earnings or other financial performance of another Person.
"Highest Lawful Rate" means at the particular time in question the maximum
-------------------
rate of interest which, under Applicable Law, the Lenders are then permitted to
charge on the Obligations. If the maximum rate of interest which, under
Applicable Law, the Lenders are permitted to charge on the Obligations shall
change after the date hereof, the Highest Lawful Rate shall be automatically
increased or decreased, as the case may be, from time to time as of the
effective time of each change in the Highest Lawful Rate without notice to the
Borrower. For purposes of determining the Highest Lawful Rate under the
Applicable Law of the State of Texas, the applicable rate ceiling shall be (a)
the weekly rate ceiling described in and computed in accordance with the
provisions of Art. ID, or (b) if the parties subsequently contract as allowed by
Applicable Law, the quarterly ceiling or the annualized ceiling computed
pursuant to Art. ID.
"Indebtedness" means, with respect to any Person, (a) all items which in
------------
accordance with GAAP would be included in determining total liabilities as shown
on the liability side of a balance sheet of such Person, (b) all obligations
secured by any Lien on any property or asset owned by such Person (other than
accounts payable arising in the ordinary course of business), whether or not the
obligation secured thereby shall have been assumed, (c) to the extent not
otherwise included, all Capitalized Lease Obligations of such Person, all
obligations in respect of letters of credit, bankers' acceptances and similar
instruments, and all obligations under Interest Hedge Agreements, (d) any
"withdrawal liability" of such Person, as such term is defined under Part I of
Subtitle E of Title IV of ERISA, (e) any Guaranty of such Person of any
obligation of another Person constituting obligations of a type set forth above,
and (f) all preferred stock issued by such Person and required by the terms
thereof to be redeemed, or for which mandatory sinking fund payments are due, by
a fixed date.
"Indemnified Matters" has the meaning specified in Section 5.10(a) hereof.
------------------- ---------------
-12-
"Indemnitees" has the meaning specified in Section 5.10(a) hereof.
----------- ---------------
"Institutional Debt" means unsecured Indebtedness for borrowed money which
------------------
may be raised by the Borrower or any of its Subsidiaries in the private
placement or public debt markets pursuant to the terms satisfactory to the
Determining Lenders, but which shall exclude Subordinated Debt.
"Intellectual Property Security Agreements" mean, collectively, the
-----------------------------------------
Borrower Intellectual Property Security Agreement and each Subsidiary
Intellectual Property Security Agreement.
"Interest Hedge Agreements" means any and all agreements, devices or
-------------------------
arrangements designed to protect at least one of the parties thereto from the
fluctuations of interest rates, exchange rates or forward rates applicable to
such party's assets, liabilities or exchange transactions, including, but not
limited to, dollar-denominated or cross-currency interest rate exchange
agreements, forward currency exchange agreements, interest rate cap or collar
protection agreements, forward rate currency or interest rate options, puts and
warrants, as the same may be amended or modified and in effect from time to
time, and any and all cancellations, buy backs, reversals, terminations or
assignments of any of the foregoing.
"Interest Period" means the period beginning on the day any LIBOR Advance
---------------
is made and ending one, two, three or six months thereafter (as the Borrower
shall select); provided, however, that all of the foregoing provisions are
-------- -------
subject to the following:
(a) if any Interest Period would otherwise end on a day which is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day, unless the result of such extension would be to extend such
Interest Period into another calendar month, in which event such Interest
Period shall end on the immediately preceding Business Day;
(b) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on
the last Business Day of a calendar month;
(c) the Borrower may not select any Interest Period in respect of
Advances having an aggregate principal amount less than $1,000,000; and
(d) there shall be outstanding at any one time no more than six
Interest Periods in the aggregate.
"Investment" means any acquisition of assets of any Person which is not an
----------
Acquisition, or any direct or indirect purchase or other acquisition of, or
beneficial interest in, Capital Stock or other securities of any other Person
which is not an Acquisition, or any direct or indirect loan, advance (other than
advances to employees for moving and travel expenses, drawing accounts and
similar expenditures in the ordinary course of business) or capital contribution
to, or investment
-13-
in any other Person, including without limitation the occurrence or sufferance
of Indebtedness or the purchase of accounts receivable of any other Person that
are not current assets or do not arise in the ordinary course of business.
"Issuing Bank" means NationsBank of Texas, N.A. in its capacity as issuer
------------
of the Letters of Credit.
"Kevco Delaware" means Kevco Delaware, Inc., a Delaware corporation and
--------------
wholly-owned Subsidiary of the Borrower.
"Landlord's Waivers" means, collectively, the Landlord's Agreement and
------------------
Landlord's Waiver and Consent relating to leasehold interests of the Borrower
and each of its Subsidiaries, in substantially the form set forth in Exhibit M-1
-----------
and Exhibit M-2 hereto, as amended, modified, renewed, supplemented or restated
-----------
from time to time.
"Lender" means each financial institution shown on the signature pages
------
hereof so long as such financial institution maintains a portion of any of the
Commitments or is owed any part of the Obligations (including the Administrative
Agent in its individual capacity), and each Assignee that hereafter becomes
party hereto pursuant to Section 11.6 hereof, subject to the limitations set
------------
forth therein.
"L/C Cash Collateral Account" has the meaning specified in Section 2.16(h)
--------------------------- ---------------
hereof.
"L/C Related Documents" has the meaning specified in Section 2.16(e)
--------------------- ---------------
hereof.
"Letter of Credit" has the meaning specified in Section 2.16(a) hereof.
---------------- ---------------
"Letter of Credit Agreement" has the meaning specified in Section
-------------------------- -------
2.16(b)(i) hereof.
----------
"Letter of Credit Facility" means the amount of Letters of Credit the
-------------------------
Issuing Bank may issue pursuant to Section 2.16(a) hereof.
---------------
"Leverage Ratio" means, for any date of determination (which shall be as of
--------------
the first day of any fiscal quarter), the ratio of Total Debt as of the date of
determination to EBITDA for the immediately preceding four fiscal quarters. For
purpose of calculation of the Leverage Ratio only, with respect to assets not
owned at all times during the four fiscal quarters immediately preceding the
date of calculation of EBITDA, there shall be (i) included in EBITDA the pro
forma EBITDA of any assets acquired during any such four fiscal quarters for the
twelve months preceding the date of calculation and (ii) excluded from EBITDA
the EBITDA of any assets disposed of during any of such fiscal quarters for the
twelve months preceding the date of calculation.
"LIBOR Advance" means an Advance which the Borrower requests to be made as
-------------
a LIBOR Advance or which is reborrowed as a LIBOR Advance, in accordance with
the provisions of Section 2.2 hereof.
-----------
-14-
"LIBOR Basis" means a simple per annum interest rate equal to the lesser of
-----------
(a) the Highest Lawful Rate, or (b) the sum of the LIBOR Rate plus the
Applicable LIBOR Rate Margin. Once determined, the LIBOR Basis shall remain
unchanged during the applicable Interest Period.
"LIBOR Lending Office" means, with respect to a Lender, the office
--------------------
designated as its LIBOR Lending Office on Schedule 2 attached hereto, and such
----------
other office of the Lender or any of its affiliates hereafter designated by
notice to the Borrower and the Administrative Agent.
"LIBOR Rate" means, for any for any Interest Period the rate per annum
----------
(rounded upwards, if necessary, to the nearest 1/100th of 1%) appearing on
Telerate Page 3750 (or any successor page) as the London interbank offered rate
for deposits in Dollars at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period for a term comparable to
such Interest Period. If for any reason such rate is not available, the term
"LIBOR Rate" shall mean, for any LIBOR Advance for any Interest Period therefor,
the rate per annum (rounded upwards, if necessary, to the nearest 1/100th of 1%)
appearing on Reuters Screen LIBO Page as the London interbank offered rate for
deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period for a term comparable to such
Interest Period; provided, however, if more than one rate is specified on
-------- -------
Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of
all such rates (rounded upwards, if necessary, to the nearest 1/100th of 1%).
"Lien" means, with respect to any property, any mortgage, lien, pledge,
----
collateral assignment, hypothecation, charge, security interest, title retention
agreement, levy, execution, seizure, attachment, garnishment or other
encumbrance of any kind in respect of such property, whether or not xxxxxx,
vested or perfected.
"Loan Documents" means this Agreement, the Notes, the Security Agreements,
--------------
the Fee Letter, any Interest Hedge Agreements entered into with any Lender or
any Affiliate of any Lender, each Subsidiary Guaranty, each Subordination
Agreement, the Pledge Agreements, the Deeds of Trust, and any other agreement
executed, delivered or performable by any Obligor in connection herewith or as
security for the Obligations.
"Material Adverse Effect" means any act or circumstance or event that (a)
-----------------------
causes a Default, (b) otherwise could reasonably be expected to be material and
adverse to the business, assets, liabilities, financial condition, results of
operations, business or prospects of the Borrower and its Subsidiaries taken as
a whole, or (c) in any manner whatsoever does or could reasonably be expected to
materially and adversely affect the validity or enforceability of any Loan
Documents.
"Maximum Amount" means the maximum amount of interest which, under
--------------
Applicable Law, the Lenders are permitted to charge on the Obligations.
"Monthly Date" means the last day of each month during the term of this
------------
Agreement.
-15-
"Multiemployer Plan" means, as to any Person, at any time, a "multiemployer
------------------
plan" within the meaning of Section 4001(a)(3) of ERISA and to which such Person
or any member of its Controlled Group is making, or is obligated to make
contributions or has made, or been obligated to make, contributions.
"NationsBank" means NationsBank of Texas, N.A., a national banking
-----------
association, in its capacity as a Lender.
"Necessary Authorization" means any right, franchise, license, permit,
-----------------------
consent, approval or authorization from, or any filing or registration with, any
governmental or other regulatory authority or any Person necessary or
appropriate to enable the Borrower or any of its Subsidiaries to maintain and
operate its business and properties.
"Negative Pledge" means any agreement, contract or other arrangement
---------------
whereby the Borrower or any of its Subsidiaries are prohibited from, or would
otherwise be in default as a result of, creating, assuming, incurring or
suffering to exist, directly or indirectly, any Lien on any of its assets.
"Net Cash Proceeds" means, with respect to any sale, lease, transfer or
-----------------
disposition of any asset by or Indebtedness or Capital Stock of any Person, the
aggregate amount of cash received by such Person in connection with such
transaction minus reasonable fees, costs and expenses and related taxes.
"Net Income" means net profit (or loss) after taxes of the Borrower and its
----------
Subsidiaries, on a consolidated basis, determined in accordance with GAAP.
"Net Worth" means, for the Borrower and its Subsidiaries, on a consolidated
---------
basis, determined in accordance with GAAP, the sum of (a) Capital Stock taken at
stated or par value, plus (b) capital surplus plus (c) retained earnings minus
(d) treasury stock.
"Notes" means, collectively, the Revolving Credit Notes, the Facility A
-----
Term Loan Notes and the Facility B Term Loan Notes.
"Notice of Issuance" has the meaning specified in Section 2.16(b) hereof.
------------------ ---------------
"Obligations" means (a) all obligations of any nature (whether matured or
-----------
unmatured, fixed or contingent, including the Reimbursement Obligations) of the
Borrower or any of its Subsidiaries to any Lender or any Affiliate of any Lender
under the Loan Documents as they may be amended from time to time, and (b) all
obligations of the Borrower or any Subsidiary for losses, damages, expenses or
any other liabilities of any kind that any Lender or any Affiliate of any Lender
may suffer by reason of a breach by the Borrower or any of its Subsidiaries of
any obligation, covenant or undertaking with respect to any Loan Document.
"Obligor" means the Borrower and each of its Subsidiaries.
-------
-16-
"Operating Lease" means any operating lease, as defined in the Financial
---------------
Accounting Standard Board Statement of Financial Accounting Standards No. 13,
dated November, 1976 or otherwise in accordance with GAAP.
"Ownership Information" has the meaning specified in Section 11.6(j)
--------------------- ---------------
hereof.
"Participant" has the meaning specified in Section 11.6(c) hereof.
----------- ---------------
"Participation" has the meaning specified in Section 11.6(c) hereof.
------------- ---------------
"Payment Date" means the last day of the Interest Period for any LIBOR
------------
Advance.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
----
succeeding to any or all of its functions under ERISA.
"Permitted Liens" means, as applied to any Person:
---------------
(a) Any Lien in favor of the Lenders or the Administrative Agent to
secure the Obligations hereunder;
(b) (i) Liens on real estate for ad valorem taxes not yet delinquent,
and other sums not yet due thereunder, (ii) Liens on leasehold interests
created by the lessor in favor of any mortgagee of the leased premises, and
(iii) Liens for taxes, assessments, governmental charges, levies or claims
that are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves shall have been set aside on
such Person's books, but only so long as no foreclosure, restraint, sale or
similar proceedings have been commenced with respect thereto;
(c) Liens of carriers, landlords, warehousemen, mechanics, laborers
and materialmen and other similar Liens incurred in the ordinary course of
business for sums not yet due or being contested in good faith, if such
reserve or appropriate provision, if any, as shall be required by GAAP
shall have been made therefor;
(d) Liens incurred in the ordinary course of business in connection
with worker's compensation, unemployment insurance or similar legislation;
(e) Easements, right-of-way, restrictions and other similar
encumbrances on the use of real property which do not interfere with the
ordinary conduct of the business of such Person;
(f) Liens created to secure the purchase price of assets (which
includes, but is not limited to, equipment and leased equipment) acquired
by such Person or created to secure Indebtedness permitted by Section
-------
7.1(c) hereof, which is incurred solely for the purpose of financing the
------
acquisition of such assets and incurred at the time of acquisition,
-17-
so long as each such Lien shall at all times be confined solely to the
asset or assets so acquired (and proceeds thereof), and refinancings
thereof so long as any such Lien remains solely on the asset or assets
acquired and the amount of Indebtedness related thereto is not increased;
(g) Liens in respect of judgments or awards for which appeals or
proceedings for review are being prosecuted and in respect of which a stay
of execution upon any such appeal or proceeding for review shall have been
secured, provided that (i) such Person shall have established adequate
reserves for such judgments or awards, (ii) such judgments or awards shall
be fully insured and the insurer shall not have denied coverage, or (iii)
such judgments or awards shall have been bonded to the satisfaction of the
Determining Lenders;
(h) Any Liens which are described on Schedule 3 hereto, and Liens
----------
resulting from the refinancing of the related Indebtedness, provided that
the Indebtedness secured thereby shall not be increased and the Liens shall
not cover additional assets of the Borrower;
(i) Prior to the Shelter Components Merger, Liens on Capital Stock of
Shelter Components; and
(j) Liens on proceeds of the Senior Subordinated Notes with respect to
the Escrow Agreement.
"Person" means an individual, corporation, partnership, limited liability
------
company, trust or unincorporated organization, or a government or any agency or
political subdivision thereof.
"Plan" means an employee benefit plan as defined in Section 3(3) of ERISA
----
(including a Multiemployer Plan) pursuant to which any employees of the
Borrower, its Subsidiaries or any member of their Controlled Group participate.
"Pledge Agreements" mean, collectively, the Borrower Pledge Agreement and
-----------------
each Subsidiary Pledge Agreement.
"Pretax Net Income" means net profit (or loss) before taxes of the Borrower
-----------------
and its Subsidiaries, on a consolidated basis, determined in accordance with
GAAP.
"Prime Rate" means, at any time, the prime interest rate announced or
----------
published by the Reference Lender from time to time as its reference rate for
the determination of interest rates for loans of varying maturities in Dollars
to United States residents of varying degrees of creditworthiness and being
quoted at such time by the Reference Lender as its "prime rate;" it being
understood that such rate may not be the lowest rate of interest charged by the
Reference Lender.
-18-
"Quarterly Date" means the last day of each March, June, September and
--------------
December, beginning December 31, 1997.
"Reference Lender" means NationsBank; provided that if NationsBank's
----------------
portion of the Commitments shall terminate and it shall have no Advances
outstanding hereunder, NationsBank shall cease to be the Reference Lender, and
the Administrative Agent (after consultation with Borrower) shall, with notice
to the Borrower and the Lenders, designate another Lender as the Reference
Lender.
"Register" has the meaning specified in Section 11.6(j) hereof.
-------- ---------------
"Reimbursement Obligations" means, in respect of any Letter of Credit as at
-------------------------
any date of determination, the sum of (a) the maximum aggregate amount which is
then available to be drawn under such Letter of Credit plus (b) the aggregate
amount of all drawings under such Letter of Credit and not theretofore
reimbursed by the Borrower.
"Release Date" means the date on which the Notes have been paid, all other
------------
Obligations due and owing have been paid and performed in full, and the
Commitments have been terminated.
"Reportable Event" shall have the meaning set forth in Section 4043(b) of
----------------
ERISA.
"Reserve Requirement" means, at any time, the maximum rate at which
-------------------
reserves (including, without limitation, any marginal, special, supplemental or
emergency reserves) are required to be maintained under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) by member banks of the Federal Reserve System against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the effect
of the foregoing, the Reserve Requirement shall reflect any other reserves
required to be maintained by such member banks with respect to (i) any category
of liabilities which includes deposits by reference to which the Adjusted LIBOR
Rate (as the case may be) is to be determined, or (ii) any category of
extensions of credit or other assets which include LIBOR Advances. The Adjusted
LIBOR Rate shall be adjusted automatically on and as of the effective date of
any change in the Reserve Requirement.
"Restricted Payments" means, collectively, (a) Dividends, (b) loans to
-------------------
directors, officers and employees of the Borrower and its Subsidiaries and (c)
any (i) payment or prepayment of principal, premium or penalty on any
Subordinated Debt of the Borrower or any of its Subsidiaries or any defeasance,
redemption, purchase, repurchase or other acquisition or retirement for value,
in whole or in part, of any Subordinated Debt (including, without limitation,
the setting aside of assets or the deposit of funds therefor) of the Borrower or
any of its Subsidiaries, (ii) payment of liquidated damages or payment or
prepayment of interest on any Subordinated Debt, and (iii) payment, if any,
arising under the Tax Indemnification Agreement.
"Revolving Commitment Fee" has the meaning specified in Section 2.4(a)
------------------------ --------------
hereof.
-19-
"Revolving Commitment Maturity Date" means December 31, 2003, or the
----------------------------------
earlier date of termination in whole of the Revolving Credit Commitment pursuant
to Section 2.6 or 8.2 hereof.
----------- ---
"Revolving Credit Advance" means an Advance made pursuant to Section 2.1(a)
------------------------ --------------
hereof.
"Revolving Credit Commitment" means $35,000,000.00, as reduced or
---------------------------
terminated pursuant to Sections 2.6 or 8.2 hereof.
------------ ---
"Revolving Credit Note" means the Promissory Note of Borrower evidencing
---------------------
Revolving Credit Advances hereunder, substantially in the form of Exhibit A
---------
hereto, given in renewal and replacement of the promissory note evidencing
revolving credit advances under the Existing Credit Agreement, together with any
extension, renewal, or amendment thereof, or substitution therefor.
"Revolving Credit Specified Percentage" means, as to any Lender, the
-------------------------------------
percentage indicated beside its name on Schedule 1 hereto as its Revolving
----------
Credit Specified Percentage, or as adjusted or specified in any amendment to
this Agreement or in any Assignment Agreement.
"SCC Acquisition" means SCC Acquisition Corp., an Indiana corporation and
---------------
wholly-owned Subsidiary of the Borrower, which upon the Shelter Components
Merger will be merged with Shelter Components, with Shelter Components as the
surviving corporation.
"Security Agreements" mean, collectively, the Borrower Security Agreement
-------------------
and each Subsidiary Security Agreement.
"Senior Subordinated Notes" means (a) those certain senior subordinated
-------------------------
notes of the Borrower due 2007 to be issued by the Borrower in connection with
the Shelter Components Transaction which shall be subordinated to the
Obligations on the terms set forth in the Senior Subordinated Notes Indenture
and (b) all senior subordinated notes of the Borrower issued in exchange for the
Senior Subordinated Notes on terms substantially identical to the terms of the
Senior Subordinated Notes.
"Senior Subordinated Notes Indenture" means that certain Indenture, dated
-----------------------------------
as of December 1, 1997, by and among the Borrower, certain of its Subsidiaries
as guarantors, and United States Trust Company of New York, as Trustee.
"Shelter Components" means Shelter Components Corporation, an Indiana
------------------
corporation.
"Shelter Components Merger" means the merger of SCC Acquisition with and
-------------------------
into Shelter Components, with Shelter Components as the surviving corporation.
"Shelter Components Merger Agreement" means that certain Agreement and Plan
-----------------------------------
of Merger, dated as of October 21, 1997, by and among the Borrower, SCC
Acquisition and Shelter Components, as amended, modified and supplemented.
-20-
"Shelter Components Merger Documents" means the Shelter Components Merger
-----------------------------------
Agreement and all other contracts, agreements or documents executed or delivered
in connection with the Shelter Components Merger, as amended, modified and
supplemented.
"Shelter Components Tender" means the acquisition by the Borrower or SCC
-------------------------
Acquisition of more than 50% (on a fully-diluted basis) of the issued and
outstanding Capital Stock of Shelter Components.
"Shelter Components Transaction" means, collectively, (a) the Shelter
------------------------------
Components Tender, (b) the Shelter Components Merger, (c) the issuance by the
Borrower of the Senior Subordinated Notes, and (d) the refinancing of certain
Indebtedness of the Borrower and its Subsidiaries.
"Shepherd Acquisition" means, collectively, the acquisition by Shelter
--------------------
Components of (a) the MH/RV division of Shepherd Products Co. and (b) certain
assets of National Shelter Products for an aggregate purchase price with respect
to clause (a) and (b) not to exceed $10,200,000.
"Solvent" means, with respect to any Person, that the fair value of the
-------
assets of such Person (both at fair valuation and at present fair saleable
value) is, on the date of determination, greater than the total amount of
liabilities (including contingent and unliquidated liabilities) of such Person
as of such date and that, as of such date, such Person is able to pay all
liabilities of such Person as such liabilities mature and such Person does not
have unreasonably small capital with which to carry on its business. In
computing the amount of contingent or unliquidated liabilities at any time, such
liabilities will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability discounted to present value
at rates believed to be reasonable by such Person.
"Special Counsel" means the law firm of Xxxxxxx, Xxxxxxx & Xxxxxxx, P.C.,
---------------
or such other legal counsel as the Administrative Agent may select.
"Specified Percentage" means, as applicable or as the context requires, the
--------------------
Revolving Credit Specified Percentage, the Facility A Term Loan Specified
Percentage or the Facility B Term Loan Specified Percentage.
"Standby Letter of Credit" means any letter of credit issued by the Issuing
------------------------
Bank pursuant to Section 2.16(a) hereof which is not a Commercial Letter of
---------------
Credit.
"Subordinated Debt" means (a) the Senior Subordinated Notes and (b) any
-----------------
other Indebtedness of the Borrower or any Subsidiary having maturities and
terms, and which is subordinated to payment of the Obligations in a manner,
approved in writing by the Administrative Agent and the Determining Lenders,
with only such changes or amendments as approved by the Administrative Agent and
the Determining Lenders.
-21-
"Subsidiary" of any Person means any corporation, partnership, limited
----------
liability company, joint venture, trust or estate or other Person of which (or
in which) more than 50% of:
(a) the outstanding Capital Stock having voting power to elect a
majority of the Board of Directors of such corporation (irrespective of
whether at the time Capital Stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency),
(b) the interest in the capital or profits of such partnership or
joint venture,
(c) the beneficial interest of such trust or estate, or
(d) the equity interest of such other Person,
is at the time directly or indirectly owned by such Person, by such Person and
one or more of its Subsidiaries or by one or more of such Person's Subsidiaries.
"Subsidiary Intellectual Property-Security Agreement" means that certain
---------------------------------------------------
Subsidiary Intellectual Property Security Agreement and Assignment executed by
each Subsidiary of the Borrower, substantially in the form of Exhibit O hereto,
---------
as amended, renewed, supplemented or restated from time to time.
"Subsidiary Guaranty" means that certain Subsidiary Guaranty executed by
-------------------
each Subsidiary of the Borrower, substantially in the form of Exhibit G hereto,
---------
as amended, modified, renewed, supplemented or restated from time to time.
"Subsidiary Pledge Agreement" means that certain Subsidiary Pledge
---------------------------
Agreement executed by each Subsidiary of the Borrower, substantially in the form
of Exhibit K hereto, as amended, renewed, supplemented or restated from time to
---------
time.
"Subsidiary Security Agreement" means that certain Subsidiary Security
-----------------------------
Agreement executed by each Subsidiary of Borrower, substantially in the form of
Exhibit I hereto, as amended, renewed, supplemented or restated from time to
---------
time.
"Tax Indemnification Agreement" means that certain Tax Indemnification and
-----------------------------
Distribution Agreement, dated as of November 6, 1996 among the Borrower and the
shareholders of record of the Borrower immediately prior to the consummation of
the Offering, in the form of Exhibit J hereto.
---------
"Taxes" has the meaning specified in Section 2.15 hereof.
----- ------------
"Term Loan Advance" means a Facility A Term Loan Advance or a Facility B
-----------------
Term Loan Advance.
-22-
"Total Debt" means, as of any date of determination, determined for the
----------
Borrower and its Subsidiaries on a consolidated basis (a) indebtedness for
borrowed money, (b) obligations evidenced by bonds, debentures, notes or other
similar instruments, (c) obligations to pay the deferred purchase price of
property or services other than trade payables incurred in the ordinary course
of business, and (d) Capitalized Lease Obligations.
"Total Specified Percentage" means, as to any Lender, the percentage
--------------------------
indicated beside its name on Schedule 1 hereto as its total Specified
----------
Percentage, or as adjusted or specified in any amendment to this Agreement or in
any Assignment Agreement.
"UCC" means the Uniform Commercial Code of Texas, as amended from time to
---
time.
"Unfunded Purchase Price" means the aggregate purchase price to be paid by
-----------------------
the Borrower or SCC Acquisition with respect to Capital Stock of Shelter
Components at the time of the Shelter Components Merger not acquired pursuant to
the Shelter Components Tender.
"Unused Portion" means an amount equal to the result of (a) the Revolving
--------------
Credit Commitment minus (b) the sum of (i) the outstanding Revolving Credit
Advances plus (ii) outstanding Reimbursement Obligations in respect of the
Letters of Credit.
"Working Capital" means an amount equal to Current Assets minus Current
---------------
Liabilities.
"Working Capital Adjustment" means, for any period, an amount equal to
--------------------------
Working Capital at the end of such period minus Working Capital at the beginning
of such period.
Section 1.2 Amendments and Renewals. Each definition of an agreement in
-----------------------
this Article 1 shall include such agreement as amended to date, and as amended
---------
or renewed from time to time in accordance with its terms, but only with the
prior written consent of the Determining Lenders.
Section 1.3 Construction. The terms defined in this Article 1 (except as
------------ ---------
otherwise expressly provided in this Agreement) for all purposes shall have the
meanings set forth in Section 1.1 hereof, and the singular shall include the
-----------
plural, and vice versa, unless otherwise specifically required by the context.
All accounting terms used in this Agreement which are not otherwise defined
herein shall be construed in accordance with GAAP on a consolidated basis for
the Borrower and its Subsidiaries, unless otherwise expressly stated herein.
Notwithstanding anything in this Agreement to the contrary, for purposes of
calculation of the financial covenants herein and the definitions related
thereto, the financial results of any Subsidiary prior to its acquisition shall
be included in such calculation to the extent that fiscal quarters occurring
prior to such acquisition are included in any such calculation.
-23-
ARTICLE 2
Advances
--------
Section 2.1 The Advances.
------------
(a) Revolving Credit Advances. Each Lender severally agrees, upon the
-------------------------
terms and subject to the conditions of this Agreement, to make Revolving Credit
Advances to the Borrower from time to time in an aggregate amount not to exceed
its Revolving Credit Specified Percentage less its Specified Percentage of the
aggregate amount of all Reimbursement Obligations then outstanding (assuming
compliance with all conditions to drawing) for the purposes set forth in Section
-------
5.9 hereof. Subject to Section 2.9 hereof, Revolving Credit Advances may be
--- -----------
repaid and then reborrowed. Notwithstanding any provision in any Loan Document
to the contrary, in no event shall the principal amount of all outstanding
Revolving Credit Advances and Reimbursement Obligations exceed the Revolving
Credit Commitment.
(b) Facility A Term Loan Advances. Each Lender severally agrees, upon the
-----------------------------
terms and subject to the conditions of this Agreement, to make Facility A Term
Loan Advances to the Borrower in an aggregate amount not to exceed its Facility
A Specified Percentage of the Facility A Term Loan Commitment for the purposes
set forth in Section 5.9 hereof. Notwithstanding any provision in any Loan
-----------
Document to the contrary, in no event shall the principal amount of all
outstanding Facility A Term Loan Advances exceed the Facility A Term Loan
Commitment. Immediately upon the making of the second Facility A Term Loan
Advance on the day of the Shelter Components Merger, the Facility A Term Loan
Commitment shall be automatically terminated. Facility A Term Loan Advances may
not be repaid and then reborrowed.
(c) Facility B Term Loan Advances. Each Lender severally agrees, upon the
-----------------------------
terms and subject to the conditions of this Agreement, to make Facility B Term
Loan Advances to the Borrower in an aggregate amount not to exceed its Facility
B Specified Percentage of the Facility B Term Loan Commitment for the purposes
set forth in Section 5.9 hereof. The Facility B Term Loan Advances shall be
-----------
made in two Advances, the first of such Advances in the aggregate amount of
$30,000,000 shall occur on December 4, 1997 and the second of such Advances in
the aggregate amount of $20,000,000 shall occur no later than January 5, 1998.
Notwithstanding any provision in any Loan Document to the contrary, in no event
shall the principal amount of all outstanding Facility B Term Loan Advances
exceed the Facility B Term Loan Commitment. Immediately upon the making of the
second Facility B Term Loan Advance on the day of the Shelter Components Merger,
the Facility B Term Loan Commitment shall be automatically terminated. Facility
B Term Loan Advances may not be repaid and then reborrowed.
(d) Type and Number of Advances. Any Advance shall, at the option of the
---------------------------
Borrower as provided in Section 2.2 hereof (and, in the case of LIBOR Advances,
-----------
subject to availability and to the provisions of Article 9 hereof), be made as a
---------
Base Rate Advance or a LIBOR Advance;
-24-
provided that there shall not be outstanding to any Lender, at any one time,
more than six LIBOR Advances.
Section 2.2 Manner of Borrowing and Disbursement.
------------------------------------
(a) Base Rate Advances. In the case of Base Rate Advances, the Borrower,
------------------
through an Authorized Signatory, shall give the Administrative Agent prior to
11:00 a.m., Dallas, Texas time, on the date of any proposed Base Rate Advance
irrevocable written notice, or irrevocable telephonic notice followed
immediately by written notice (provided, however, that the Borrower's failure to
confirm any telephonic notice in writing shall not invalidate any notice so
given), of its intention to borrow or reborrow a Base Rate Advance hereunder.
Such notice of borrowing shall specify the requested funding date, which shall
be a Business Day, the amount of the proposed aggregate Base Rate Advances to be
made by the Lenders, and whether such Advance is a Revolving Credit Advance,
Facility A Term Loan Advance or Facility B Term Loan Advance.
(b) LIBOR Advances. In the case of LIBOR Advances, the Borrower, through
--------------
an Authorized Signatory, shall give the Administrative Agent at least three
Business Days' irrevocable written notice, or irrevocable telephonic notice
followed immediately by written notice (provided, however, that the Borrower's
failure to confirm any telephonic notice in writing shall not invalidate any
notice so given), of its intention to borrow or reborrow a LIBOR Advance
hereunder. Notice shall be given to the Administrative Agent prior to 11:00
a.m., Dallas, Texas time, in order for such Business Day to count toward the
minimum number of Business Days required. LIBOR Advances shall in all cases be
subject to availability and to Article 9 hereof. For LIBOR Advances, the notice
---------
of borrowing shall specify the requested funding date, which shall be a Business
Day, the amount of the proposed aggregate LIBOR Advances to be made by Lenders,
whether such Advance is a Revolving Credit Advance, Facility A Term Loan Advance
or Facility B Term Loan Advance, and the Interest Period selected by the
Borrower, provided that no such Interest Period shall extend past the Revolving
Commitment Maturity Date, the Facility A Term Loan Maturity Date or the Facility
B Term Loan Maturity Date, as appropriate, or prohibit or impair the Borrower's
ability to comply with Section 2.5 or 2.8 hereof.
----------- ---
(c) Continuation/Conversion. Subject to Sections 2.1 and 2.9 hereof, at
----------------------- ------------ ---
least three Business Days prior to each Payment Date for a LIBOR Advance, the
Borrower, through an Authorized Signatory, shall give the Administrative Agent
irrevocable written notice, or irrevocable telephonic notice followed
immediately by written notice (provided, however, that the Borrower's failure to
confirm any telephonic notice in writing shall not invalidate any notice so
given), specifying whether all or a portion of such LIBOR Advance outstanding on
the Payment Date (i) is to be repaid and then reborrowed in whole or in part as
a LIBOR Advance, (ii) is to be repaid and then reborrowed in whole or in part as
a Base Rate Advance, or (iii) is to be repaid and not reborrowed; provided,
however, notwithstanding anything in this Agreement to the contrary, if on any
Payment Date a Default shall exist, such LIBOR Advance may only be reborrowed as
a Base Rate Advance. Notice shall be given to the Administrative Agent prior to
11:00 a.m., Dallas, Texas time, in order for such Business Day to count toward
the minimum number of
-25-
Business Days required. Upon such Payment Date, such LIBOR Advance shall,
subject to the provisions hereof, be so repaid and, as applicable, reborrowed.
(d) Minimum Amounts. The aggregate amount of Base Rate Advances to be
---------------
made by the Lenders on any day shall be in a principal amount which is at least
$500,000 and which is an integral multiple of $100,000; provided, however, that
such amount may equal the unused amount of the applicable commitment. The
aggregate amount of LIBOR Advances having the same Interest Period and to be
made by the Lenders on any day shall be in a principal amount which is at least
$1,000,000 and which is an integral multiple of $500,000.
(e) Notice and Disbursement. The Administrative Agent shall promptly
-----------------------
notify the Lenders of each notice received from the Borrower pursuant to this
Section. Failure of the Borrower to give any notice in accordance with Section
-------
2.2(c) hereof shall result in a repayment of any such existing Advance on the
------
applicable Payment Date by a Refinancing Advance which is a Base Rate Advance.
Each Lender shall, not later than noon, Dallas, Texas time, on the date of any
Advance that is not a Refinancing Advance, deliver to the Administrative Agent,
at its address set forth herein, such Lender's Revolving Credit Specified
Percentage, Facility A Term Loan Specified Percentage and Facility B Term Loan
Specified Percentage, as the case may be, of such Advance in immediately
available funds in accordance with the Administrative Agent's instructions.
Prior to 2:00 p.m., Dallas, Texas time, on the date of any Advance hereunder,
the Administrative Agent shall, subject to satisfaction of the conditions set
forth in Article 3, disburse the amounts made available to the Administrative
---------
Agent by the Lenders by (i) transferring such amounts by wire transfer pursuant
to the Borrower's instructions, or (ii) in the absence of such instructions,
crediting such amounts to the account of the Borrower maintained with the
Administrative Agent. All Advances shall be made by each Lender according to its
Revolving Credit Specified Percentage. All Facility A Term Loan Advances shall
be made by each Lender according to its Facility A Term Loan Specified
Percentage. All Facility B Term Loan Advances shall be made by each Lender in
accordance with its Facility B Term Loan Specified Percentage.
Section 2.3 Interest.
--------
(a) On Base Rate Advances.
---------------------
(i) The Borrower shall pay interest on the outstanding unpaid
principal amount of the Base Rate Advances outstanding from time to time,
until such Base Rate Advances are due (whether at maturity, by reason of
acceleration, by scheduled reduction, or otherwise) and repaid at a simple
interest rate per annum equal to the Base Rate Basis for the Base Rate
Advances as in effect from time to time, provided that interest on the Base
Rate Advances shall not exceed the Maximum Amount. If at any time the Base
Rate Basis would exceed the Highest Lawful Rate, interest payable on the
Base Rate Advances shall be limited to the Highest Lawful Rate, but the
Base Rate Basis shall not thereafter be reduced below the Highest Lawful
Rate until the total amount of interest accrued on the Base Rate Advances
equals the amount of interest that would have accrued if the Base Rate
Basis had been in effect at all times.
-26-
(ii) Interest on the Base Rate Advances shall be computed on the basis
of a year of 365 or 366 days, as applicable, for the number of days
actually elapsed, and shall be payable in arrears on each Quarterly Date
and on the Revolving Commitment Maturity Date, the Facility A Term Loan
Maturity Date or the Facility B Term Loan Maturity Date, as appropriate.
(b) On LIBOR Advances.
-----------------
(i) The Borrower shall pay interest on the unpaid principal amount of
each LIBOR Advance, from the date such Advance is made until it is due
(whether at maturity, by reason of acceleration, by scheduled reduction, or
otherwise) and repaid, at a rate per annum equal to the LIBOR Basis for
such Advance. The Administrative Agent, whose determination shall be
controlling in the absence of manifest error, shall determine the LIBOR
Basis on the second Business Day prior to the applicable funding date and
shall notify the Borrower and the Lenders of such LIBOR Basis.
(ii) Subject to Section 11.9 hereof, interest on each LIBOR Advance
------------
shall be computed on the basis of a 360-day year for the actual number of
days elapsed, and shall be payable in arrears on the applicable Payment
Date and on the Revolving Commitment Maturity Date, the Facility A Term
Loan Maturity Date and the Facility B Term Loan Maturity Date, as
appropriate; provided, however, that if the Interest Period for such
Advance exceeds three months, interest shall also be due and payable in
arrears on each three-month anniversary of the commencement of such
Interest Period during such Interest Period.
(c) Interest if No Notice of Selection of Interest Rate Basis. If the
---------------------------------------------------------
Borrower fails to give the Administrative Agent timely notice of its selection
of a LIBOR Basis or an Interest Period for a LIBOR Advance, or if for any reason
a determination of a LIBOR Basis for any Advance is not timely concluded due to
the fault of the Borrower, the appropriate Base Rate Basis shall apply to the
applicable Advance.
(d) Interest After an Event of Default. (i) After an Event of Default
----------------------------------
(other than an Event of Default specified in Section 8.1(f) or (g) hereof) and
-------------- ---
during any continuance thereof, at the option of Determining Lenders, and (ii)
after an Event of Default specified in Section 8.1(f) or (g) hereof and during
-------------- ---
any continuance thereof, automatically and without any action by the
Administrative Agent or any Lender, the Obligations shall bear interest at a
rate per annum equal to the Default Rate. Such interest shall be payable on the
earlier of demand or the Revolving Commitment Maturity Date , the Facility A
Term Loan Maturity Date or the Facility B Term Loan Maturity Date, as
appropriate, and shall accrue until the earlier of (i) waiver or cure (to the
satisfaction of the Determining Lenders) of the applicable Event of Default,
(ii) agreement by the Lenders to rescind the charging of interest at the Default
Rate, or (iii) payment in full of the Obligations. The Lenders shall not be
required to accelerate the maturity of the Advances, to exercise any other
rights or remedies under the Loan Documents, or to give notice to the Borrower
-27-
of the decision to charge interest at the Default Rate. The Lenders will
undertake to notify the Borrower, after the effective date, of the decision to
charge interest at the Default Rate.
Section 2.4 Fees.
----
(a) Revolving Commitment Fee. Subject to Section 11.9 hereof, the Borrower
------------------------ ------------
agrees to pay to the Administrative Agent, for the ratable account of the
Lenders, a commitment fee on the daily average Unused Portion at the following
per annum percentages, applicable in the following situations:
Applicability Percentage
------------- ----------
(i) The Leverage Ratio is greater than or equal to 3.00 to 1 0.500%
(ii) The Leverage Ratio is less than 3.00 to 1 0.375%
The commitment fee shall be payable in arrears on each Quarterly Date and on the
Revolving Commitment Maturity Date. The commitment fee shall be adjusted on
each Adjustment Date. If the financial statements required pursuant to Section
-------
6.1 or 6.2 hereof, as applicable, and the Compliance Certificate required
--- ---
pursuant to Section 6.3 hereof are not received by the Administrative Agent by
-----------
the date required, the commitment fee shall be determined as if the Leverage
Ratio is greater than or equal or 3.00 to 1 until such time as such financial
statements and Compliance Certificate are received. Notwithstanding the
foregoing, from and including the Agreement Date to and including two Business
Days following the date of receipt by the Administrative Agent of the financial
statements for June 30, 1998 and related Compliance Certificate, the commitment
fee shall be determined as if the Leverage Ratio is greater than or equal to
3.00 to 1. Subject to Section 11.9 hereof, the commitment fee shall be
------------
calculated on the basis of a 360-day year for the actual number of days elapsed.
(b) Other Fees. Subject to Section 11.9 hereof, the Borrower agrees to
---------- ------------
pay to the Administrative Agent, for the account of the Administrative Agent and
one of its Affiliates, the fees provided for in the letter agreement (the "Fee
---
Letter"), dated as of the Agreement Date, between the Borrower and the
------
Administrative Agent on the dates and in the amounts specified therein.
Section 2.5 Prepayment and Payments.
-----------------------
(a) Voluntary LIBOR Advance Prepayments. Upon three Business Days' prior
-----------------------------------
telephonic notice (to be promptly followed by written notice) by an Authorized
Signatory to the Administrative Agent, LIBOR Advances may be voluntarily prepaid
but only so long as the Borrower concurrently reimburses the Lenders in
accordance with Section 2.9 hereof. Any notice of prepayment shall be
-----------
irrevocable.
-28-
(b) Mandatory Prepayment. On or before the date of any reduction of the
--------------------
Revolving Credit Commitment, the Borrower shall prepay applicable outstanding
Revolving Credit Advances in an amount necessary to reduce the sum of
outstanding Revolving Credit Advances and Reimbursement Obligations to an amount
less than or equal to the Revolving Credit Commitment as so reduced. To the
extent required by the preceding sentence, the Borrower shall first prepay all
Base Rate Advances and shall thereafter prepay LIBOR Advances. To the extent
that any prepayment requires that a LIBOR Advance be repaid on a date other than
the last day of its Interest Period, the Borrower shall reimburse each Lender in
accordance with Section 2.9 hereof. To the extent that aggregate outstanding
-----------
Revolving Credit Advances and Reimbursement Obligations exceed the Revolving
Credit Commitment after any reduction thereof, the Borrower shall repay any such
excess amount and all accrued interest attributable to such excess Revolving
Credit Advances on the date of such reduction.
(c) Prepayments from Sales of Assets. Concurrently with the receipt of Net
--------------------------------
Cash Proceeds from the sale or disposition by the Borrower or any of its
Subsidiaries of any assets (including the Capital Stock of any Subsidiary) sold
or disposed of (other than (i) the sale of inventory and other assets sold in
the ordinary course of business, (ii) the sale or other disposition of worn out
or obsolete assets, (iii) the sale or other disposition of Cash Equivalents in
the ordinary course of business, and (iv) the sale or other disposition of
assets in which the Net Cash Proceeds thereof are used within 90 days of such
sale to purchase assets of similar value and quality and business utility to
those assets sold) during any fiscal year in which the aggregate Net Cash
Proceeds previously received from such asset sales during such fiscal year
exceeds $500,000, the Borrower shall prepay Advances in a principal amount equal
to the lesser of (A) 100% of the amount by which aggregate Net Cash Proceeds
received from such asset sales during such fiscal year exceeds $500,000 or (B)
an amount, if any, which would result in the Leverage Ratio being less than 3.50
to 1 after such prepayment. Any such prepayments shall (i) include accrued
interest to the date of such prepayment on the principal amount prepaid, (ii) be
applied pro rata to all of the unpaid scheduled installment payments of the
--- ----
Facility A Term Loan Advances and the Facility B Term Loan Advances, in each
case pro rata based upon the respective principal amounts of such installment
--- ----
payments then unpaid (provided, however, if at any time that there are no
Facility A Term Loan Advances and Facility B Term Loan Advances outstanding, any
such prepayment shall be applied to repay outstanding Revolving Credit Advances
and to permanently reduce the Revolving Credit Commitment by the amount of such
prepayment), (iii) not be subject to the notice and minimum payment provisions
of this Section 2.5; provided, however, the Borrower shall be required to
-----------
reimburse each Lender for any loss cost or expense incurred by each Lender in
connection with any such prepayment as set forth in Section 2.9 hereof if any
-----------
prepayment results in a LIBOR Advance being paid on a day other than the last
day of an Interest Period for such LIBOR Advance, and (iv) be applied first to
Base Rate Advances, if any, and then to LIBOR Advances.
(d) Prepayments from Excess Cash Flow. Commencing on March 31, 1999 and on
---------------------------------
each March 31 thereafter, the Borrower shall prepay Facility A Term Loan
Advances and Facility B Term Loan Advances in an aggregate principal amount
equal to the lesser of (i) 75% of Excess Cash Flow, if any, for the fiscal year
ending immediately preceding each such March 31
-29-
or (ii) an amount, if any, which would result in the Leverage Ratio being less
than 3.50 to 1 after such prepayment. Any such prepayments shall (i) include
accrued interest to the date of such prepayment on the principal amount prepaid,
(ii) be applied pro rata to all of the unpaid scheduled installment payments of
--- ----
the Facility A Term Loan Advances and the Facility B Term Loan Advances, in each
case pro rata based upon the respective principal amounts of such installment
--- ----
payments then unpaid, (iii) not be subject to the notice and minimum payment
provisions of this Section 2.5; provided, however, the Borrower shall be
-----------
required to reimburse each Lender for any loss cost or expense incurred by each
Lender in connection with any such prepayment as set forth in Section 2.9 hereof
-----------
if any prepayment results in a LIBOR Advance being paid on a day other than the
last day of an Interest Period for such LIBOR Advance, and (iv) be applied first
to Base Rate Advances, if any, and then to LIBOR Advances.
(e) Prepayment from Sales of Capital Stock. Concurrently with the receipt
--------------------------------------
of Net Cash Proceeds from the sale or disposition by the Borrower or any of its
Subsidiaries to any Person (other than (i) to the Borrower or any of its
Subsidiaries and (ii) sales of Capital Stock the Net Proceeds of which are
concurrently applied to complete an Acquisition permitted pursuant to Section
-------
7.6 hereof) of any Capital Stock of the Borrower, the Borrower shall prepay the
---
Facility A Term Loan Advances and the Facility B Term Loan Advances in an
aggregate principal amount equal to the lesser of (A) 50% of such Net Cash
Proceeds or (B) an amount, if any, which would result in the Leverage Ratio
being less than 3.50 to 1 after such prepayment. Any such prepayments shall (i)
include accrued interest to the date of such prepayment on the principal amount
prepaid, (ii) be applied pro rata to all of the unpaid scheduled installment
--- ----
payments of the Facility A Term Loan Advances and the Facility B Term Loan
Advances, in each case pro rata based upon the respective principal amounts of
--- ----
such installment payments then unpaid (provided, however, if at any time there
are no Facility A Term Loan Advances and Facility B Term Loan Advances
outstanding, any such prepayment shall be applied to repay outstanding Revolving
Credit Advances and to permanently reduce the Revolving Credit Commitment by the
amount of such prepayment), (iii) not be subject to the notice and minimum
payment provisions of this Section 2.5; provided, however, the Borrower shall be
-----------
required to reimburse each Lender for any loan, cost or expense incurred by each
Lender in connection with any such prepayment as set forth in Section 2.9 hereof
-----------
if any prepayment results in a LIBOR Advance being paid on a day other than the
last day of an Interest Period for such LIBOR Advance, and (iv) be applied first
to Base Rate Advances, if any, and then to LIBOR Advances.
(f) Prepayment from Issuance of Institutional Debt and Subordinated Debt.
--------------------------------------------------------------------
Concurrently with the receipt of Net Cash Proceeds from the issuance of
Institutional Debt and Subordinated Debt (excluding the Senior Subordinated
Notes) by the Borrower or any of its Subsidiaries to any Person, the Borrower
shall prepay the Facility A Term Loan Advances and the Facility B Term Loan
Advances in an aggregate principal amount equal to the lesser of (i) 100% of
such Net Cash Proceeds and (ii) an amount, if any, which would result in the
Leverage Ratio being less than 3.50 to 1 after such prepayment. Any such
prepayments shall (i) include accrued interest to the date of such prepayment on
the principal amount prepaid, (ii) be applied pro rata to all of the unpaid
--- ----
scheduled installment payments of the Facility A Term Loan Advances and the
Facility B Term Loan Advances, in each case pro rata based upon the respective
--- ----
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principal amounts of such installment payments then unpaid (provided, however,
if at any time there are no Facility A Term Loan Advances and Facility B Term
Loan Advances outstanding, any such prepayment shall be applied to repay
outstanding Revolving Credit Advances and to permanently reduce the Revolving
Credit Commitment by the amount of such prepayment), (iii) not be subject to the
notice and minimum payment provisions of this Section 2.5; provided, however,
-----------
the Borrower shall be required to reimburse each Lender for any loan, cost or
expense incurred by each Lender in connection with any such prepayment as set
forth in Section 2.9 hereof, if any prepayment results in a LIBOR Advance being
-----------
paid on a day other than the last day of an Interest Period for such LIBOR
Advance, and (iv) be applied first to Base Rate Advances, if any and then to
LIBOR Advances.
(g) Payments, Generally. Any partial payment of a (i) Base Rate Advance
-------------------
shall be in a principal amount which is at least $100,000 and which is an
integral multiple of $100,000 and (ii) a LIBOR Rate Advance shall be in a
principal amount which is at least $1,000,000 and which is an integral multiple
of $500,000, and to the extent that any payment of a LIBOR Advance is made on a
date other than the last day of its Interest Period, the Borrower shall
reimburse each Lender (to the extent required) in accordance with Section 2.9
-----------
hereof. Any voluntary prepayment of any Term Loan Advance shall be applied pro
---
rata to all of the unpaid scheduled installment payments of the Facility A Term
----
Loan Advances and the Facility B Term Loan Advances, in each case pro rata based
--- ----
upon the respective principal amount of such installment payment then unpaid.
Section 2.6 Reduction of Commitments.
------------------------
(a) Voluntary Reduction. The Borrower shall have the right, upon not less
-------------------
than 10 Business Days' notice by an Authorized Signatory to the Administrative
Agent (if telephonic, to be confirmed by telex or in writing on or before the
date of reduction or termination), which shall promptly notify the Lenders, to
terminate or reduce the Revolving Credit Commitment, in whole or in part. Each
partial termination shall be in an aggregate amount which is at least $5,000,000
and which is an integral multiple of $100,000, and no voluntary reduction in the
Revolving Credit Commitment shall cause any LIBOR Advance to be repaid prior to
the last day of its Interest Period, unless the Borrower shall reimburse each
Lender (to the extent required) in accordance with Section 2.9 hereof.
-----------
(b) Mandatory Reduction. On the Revolving Commitment Maturity Date, the
-------------------
Revolving Credit Commitment shall automatically reduce to zero. In addition,
the Revolving Credit Commitment shall be permanently reduced by the amount of
any prepayment of Revolving Credit Advances pursuant to Sections 2.5(c), (e) and
--------------- ---
(f) hereof.
---
(c) General Requirements. Upon any reduction of the Revolving Credit
--------------------
Commitment pursuant to this Section, the Borrower shall immediately make a
repayment of applicable Advances in accordance with Section 2.5(b) hereof. The
--------------
Borrower shall reimburse each Lender for any loss or out-of-pocket expense
incurred by each Lender in connection with any such payment, as set forth in
Section 2.9 hereof to the extent applicable. The Borrower shall not have any
-----------
right to
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rescind any termination or reduction. Once reduced, the Revolving Credit
Commitment may not be increased or reinstated.
Section 2.7 Non-Receipt of Funds by the Administrative Agent. Unless the
------------------------------------------------
Administrative Agent shall have been notified by a Lender prior to the date of
any proposed Advance (which notice shall be effective upon receipt) that such
Lender does not intend to make the proceeds of such Advance available to the
Administrative Agent, the Administrative Agent may assume that such Lender has
made such proceeds available to the Administrative Agent on such date, and the
Administrative Agent may in reliance upon such assumption (but shall not be
required to) make available to the Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Administrative Agent
by such Lender, the Administrative Agent shall be entitled to recover such
amount on demand from such Lender (or, if such Lender fails to pay such amount
forthwith upon such demand, from the Borrower) together with interest thereon in
respect of each day during the period commencing on the date such amount was
available to the Borrower and ending on (but excluding) the date the
Administrative Agent receives such amount from the Lender, with interest thereon
at a per annum rate equal to the lesser of (i) the Highest Lawful Rate or (ii)
the Federal Funds Rate. No Lender shall be liable for any other Lender's
failure to fund an Advance hereunder.
Section 2.8 Payment of Principal of Advances.
--------------------------------
(a) Revolving Credit Advances. To the extent not otherwise required to be
-------------------------
paid earlier as provided herein, the principal amount of the Revolving Credit
Advances shall be due and payable on the Revolving Commitment Maturity Date.
(b) Facility A Term Loan Advances. To the extent not otherwise required
-----------------------------
to be paid earlier as provided herein, the principal amount of the Facility A
Term Loan Advances shall be repaid on each Quarterly Date and on the Facility A
Term Loan Maturity Date in such amounts as set forth next to each such date
below:
Amount of Reduction of Facility A
Quarterly Date Term Loan Advances as of each Date
-------------- ----------------------------------
March 31, 1999 $1,250,000
June 30, 1999 $1,250,000
September 30, 1999 $1,250,000
December 31, 1999 $1,250,000
March 31, 2000 $1,875,000
June 30, 2000 $1,875,000
September 30, 2000 $1,875,000
December 31, 2000 $1,875,000
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March 31, 2001 $1,875,000
June 30, 2001 $1,875,000
September 30, 2001 $1,875,000
December 31, 2001 $1,875,000
March 31, 2002 $2,500,000
June 30, 2002 $2,500,000
September 30, 2002 $2,500,000
December 31, 2002 $2,500,000
March 31, 2003 $2,500,000
June 30, 2003 $2,500,000
September 30, 2003 $2,500,000
December 31, 2003 $2,500,000
or such other amount of Facility A
Term Loan Advances then outstanding
(c) Facility B Term Loan Advances. To the extent not otherwise required to
-----------------------------
be paid earlier as provided herein, the principal amount of the Facility B Term
Loan Advances shall be repaid on each Quarterly Date and on the Facility B Term
Loan Maturity Date in such amounts as set forth next to each such date below:
Amount of Reduction of Facility B
Quarterly Date Term Loan Advances as of each Date
-------------- ----------------------------------
March 31, 1998 $ 125,000
June 30, 1998 $ 125,000
September 30, 1998 $ 125,000
December 31, 1998 $ 125,000
March 31, 1999 $ 125,000
June 30, 1999 $ 125,000
September 30, 1999 $ 125,000
December 31, 1999 $ 125,000
March 30, 2000 $ 125,000
June 30, 2000 $ 125,000
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September 30, 2000 $ 125,000
December 31, 2000 $ 125,000
March 31, 2001 $ 125,000
June 30, 2001 $ 125,000
September 30, 2001 $ 125,000
December 31, 2001 $ 125,000
March 31, 2002 $ 125,000
June 30, 2002 $ 125,000
September 30, 2002 $ 125,000
December 31, 2002 $ 125,000
March 31, 2003 $ 125,000
June 30, 2003 $ 125,000
September 30, 2003 $ 125,000
December 31, 2003 $ 125,000
March 31, 2004 $11,750,000
June 30, 2004 $11,750,000
September 30, 2004 $11,750,000
December 31, 2004 $11,750,000
or such other amount of Facility B
Term Loan Advances then outstanding
Section 2.9 Reimbursement. Whenever any Lender shall sustain or incur any
-------------
losses or reasonable out-of-pocket expenses in connection with (a) failure by
the Borrower to borrow any LIBOR Advance after having given notice of its
intention to borrow in accordance with Section 2.2 hereof (whether by reason of
-----------
the Borrower's election not to proceed or the non-fulfillment of any of the
conditions set forth in Article 3 hereof), (b) any prepayment for any reason of
---------
any LIBOR Advance in whole or in part (including a prepayment pursuant to
Section 9.3(b) hereof) on other than the last day of an Interest Period
--------------
applicable to such LIBOR Advance, (c) any prepayment of any of its LIBOR
Advances that is not made on any date specified in a notice of prepayment given
by the Borrower, or (d) the selling by such Lender (provided that such Lender
was a Lender on the Agreement Date) of it rights and obligations under this
Agreement to an Eligible Assignee within 180 days after the Agreement Date, the
Borrower agrees to pay to any such Lender, upon its demand, an amount sufficient
to compensate such Lender for all such losses and out-of-pocket expenses
(provided that with respect to sales pursuant to clause (d) above, the selling
Lender shall only be reimbursed for the lost profits and reasonable
-34-
expenses incurred by such Lender in connection with the re-employment of funds
prepaid as a result of such a sale), subject to Section 11.9 hereof. Such
------------
Lender's good faith determination of the amount of such losses or out-of-pocket
expenses, calculated in its usual fashion, absent manifest error, shall be
controlling. Such losses shall include, without limiting the generality of the
foregoing, lost profits and reasonable expenses incurred by such Lender in
connection with the re-employment of funds prepaid, repaid, converted or not
borrowed, converted or paid, as the case may be. Upon request of the Borrower,
such Lender shall provide a certificate setting forth the amount to be paid to
it by the Borrower hereunder and calculations therefor.
Section 2.10 Manner of Payment.
-----------------
(a) Payment Timing and Type. Each payment (including prepayments) by the
-----------------------
Borrower of the principal of or interest on the Advances, fees, and any other
amount owed under this Agreement or any other Loan Document shall be made not
later than 12:00 noon (Dallas, Texas time) on the date specified for payment
under this Agreement to the Administrative Agent at the Administrative Agent's
office, in lawful money of the United States of America constituting immediately
available funds.
(b) Non-Business Day Payments. If any payment under this Agreement or any
-------------------------
other Loan Document shall be specified to be made upon a day which is not a
Business Day, it shall be made on the next succeeding day which is a Business
Day, unless, with respect to a payment due in respect of a LIBOR Advance, such
Business Day falls in another calendar month, in which case payment shall be
made on the preceding Business Day. Any extension of time shall in such case be
included in computing interest and fees, if any, in connection with such
payment.
(c) Payments without Deduction. The Borrower agrees to pay principal,
--------------------------
interest, fees and all other amounts due under the Loan Documents without
deduction for set-off or counterclaim or any deduction whatsoever.
(d) Apportionment of Payments.
-------------------------
(i) Prior to (A) the occurrence of an Event of Default and (B)
delivery by the Determining Lenders of the notice to the Administrative
Agent referred to in Section 2.10(d)(ii)(B) below, all payments in respect
----------------------
of the Obligations shall be applied in the following order:
(1) first, to pay the Administrative Agent's fees and expenses
-----
incurred on behalf of the Lenders then due and payable;
(2) second, to pay all other fees then due and payable under the Loan
------
Documents;
(3) third, to pay all other amounts other than principal and interest
-----
(including, without limitation, expense reimbursements and
indemnities) not otherwise
-35-
referred in clauses (1) and (2) immediately preceding then due
and payable under the Loan Documents;
(4) fourth, to pay interest then due and payable on the Advances, to
------
be applied in accordance with the Applicable Specified
Percentages.
(5) fifth, to pay principal then due and payable on the Advances, to
-----
be applied in accordance with Applicable Specified Percentages.
(ii) After (A) the occurrence of an Event of Default and (B) the
Determining Lenders shall have delivered the notice to the Administrative
Agent to apply payments in respect of the Obligations as provided in this
Section 2.10(d)(ii), all payments in respect of the Obligations shall be
-------------------
applied in the following order:
(1) first, to pay the Administrative Agent's fees and expenses
-----
incurred on behalf of the Lender then due and payable;
(2) second, to pay all other fees then due and payable under the Loan
------
Documents;
(3) third, to pay all other amounts other than principal and interest
-----
(including; without limitation, expense reimbursements and
indemnities) not otherwise referred to in claims (1) and (2)
immediately preceding then due and payable under the Loan
Documents;
(4) fourth, to pay interest then due and payable on the Advances, to
------
be applied in accordance with each Lenders' Total Specified
Percentage; and
(5) fifth, to pay principal then due and payable, to be applied in
-----
accordance with each Lender's Total Specified Percentage.
Section 2.11 LIBOR Lending Offices. Each Lender's initial LIBOR Lending
---------------------
Office is set forth opposite its name in Schedule 2 attached hereto. Each
----------
Lender shall have the right at any time and from time to time to designate a
different office of itself or of any Affiliate as such Lender's LIBOR Lending
Office, and to transfer any outstanding LIBOR Advance to such LIBOR Lending
Office. No such designation or transfer shall result in any liability on the
part of the Borrower for increased costs or expenses resulting solely from such
designation or transfer (except any such transfer which is made by a Lender
pursuant to Section 9.2 or 9.3 hereof, or otherwise for the purpose of complying
----------- ---
with Applicable Law). Increased costs for expenses resulting from a change in
law occurring subsequent to any such designation or transfer shall be deemed not
to result solely from such designation or transfer.
Section 2.12 Sharing of Payments. Any Lender obtaining a payment (whether
-------------------
voluntary or involuntary, due to the exercise of any right of set-off, or
otherwise) on account of its Advances
-36-
(other than pursuant to Section 2.4(b), 2.15, 2.16(d), 9.3 or 9.5) in excess of
-------------- ---- ------- --- ---
its share of payments made by the Borrower according to (a) before the
Determining Lenders have delivered the notice to the Administrative Agent
referred to in Section 2.10(d)(ii)(B) above, its Applicable Specified
----------------------
Percentage, and (b) after the occurrence of an Event of Default and provided
that the Determining Lenders have delivered the notice to the Administrative
Agent referred to in Section 2.10(d)(ii)(B) above, its Total Specified
----------------------
Percentage, then in each case, such Lender shall purchase from each other Lender
such participation in the Advances made by such other Lender as shall be
necessary to cause such purchasing Lender to share a ratable portion of the
excess payment with each other Lender (based on its Applicable Specified
Percentage so long as there does not exist an Event of Default, and based on its
Total Specified Percentage if there exists an Event of Default and the
Determining Lenders have delivered notice to the Administrative Agent referred
to in Section 2.10(d)(ii)(B) above); provided, however, that if all or any
----------------------
portion of such excess payment is thereafter recovered from such purchasing
Lender, the purchase shall be rescinded and the purchase price restored to the
extent of such recovery, but without interest. The Borrower agrees that any
Lender so purchasing a participation from another Lender pursuant to this
Section, to the fullest extent permitted by law, may exercise all its rights of
payment (including the right of set-off) with respect to such participation as
fully as if such Lender were the direct creditor of the Borrower in the amount
of such participation.
Section 2.13 Calculation of LIBOR Rate. The provisions of this Agreement
-------------------------
relating to calculation of the LIBOR Rate are included only for the purpose of
determining the rate of interest or other amounts to be paid hereunder that are
based upon such rate, it being understood that each Lender shall be entitled to
fund and maintain its funding of all or any part of a LIBOR Advance as it sees
fit.
Section 2.14 Booking Loans. Any Lender may make, carry or transfer
-------------
Advances at, to or for the account of any of its branch offices or the office of
any Affiliate. No such action shall result in any liability on the part of the
Borrower from such action (except any such action which is made by a Lender
pursuant to Section 9.2 or 9.3 hereof, or otherwise for the purpose of complying
----------- ---
with Applicable Law).
Section 2.15 Taxes.
-----
(a) Any and all payments by the Borrower and each other Obligor hereunder
and under the other Loan Documents shall be made, in accordance with Section
-------
2.10, free and clear of and without deduction for any and all present or future
----
taxes, levies, imposts, deductions, charges and withholdings, and all
liabilities with respect thereto, excluding, in the case of each Lender and the
---------
Administrative Agent, taxes imposed on, based upon or measured by its overall
net income, net worth or capital, and franchise taxes, doing business taxes or
minimum taxes imposed on it, (i) by the jurisdiction under the laws of which
such Lender or the Administrative Agent (as the case may be) is organized and
in which it has its applicable lending office or any political subdivision
thereof; (ii) by any other jurisdiction, or any political subdivision thereof,
other than those imposed by reason of (A) an asserted relation of such
jurisdiction to the transactions contemplated by this Agreement, (B) the
activities of the Borrower in such jurisdiction, or (C) the activities in
-37-
connection with the transactions contemplated by this Agreement of a Lender or
the Administrative Agent; (iii) by reason of failure by the Lender or the
Administrative Agent to comply with the requirements of paragraph (e) of this
Section 2.15; and (iv) in the case of any Lender, any Taxes in the nature of
------------
transfer, stamp, recording or documentary taxes resulting from a transfer (other
than as a result of foreclosure) by such Lender of all or any portion of its
interest in this Agreement, the Notes or any other Loan Documents (all such non-
excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
-----
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to any Lender or the Administrative Agent, (x) the sum payable shall
be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
-------
2.15) such Lender or the Administrative Agent (as the case may be) receives an
----
amount equal to the sum it would have received had no such deductions been made,
(y) the Borrower shall make such deductions and (z) the Borrower shall pay the
full amount deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(b) In addition, the Borrower agrees to pay any and all stamp and
documentary taxes and any and all other excise and property taxes, charges and
similar levies (other than Taxes described in clause (iv) of the first sentence
of Section 2.15(a)) that arise from any payment made hereunder or from the
---------------
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter referred to as "Other Taxes").
-----------
(c) The Borrower will indemnify each Lender and the Administrative Agent
for the full amount of Taxes and Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.15) paid by such Lender or the Administrative Agent (as the case may
------------
be) and all liabilities (including penalties, additions to tax, interest and
reasonable expenses) arising therefrom or with respect thereto whether or not
such Taxes or Other Taxes were correctly or legally asserted, other than
penalties, additions to tax, interest and expenses arising as a result of gross
negligence on the part of such Lender or the Administrative Agent, provided,
--------
however, that the Borrower shall have no obligation to indemnify such Lender or
-------
the Administrative Agent unless and until such Lender or the Administrative
Agent shall have delivered to the Borrower a certificate setting forth in
reasonable detail the basis of the Borrower's obligation to indemnify such
Lender or the Administrative Agent pursuant to this Section 2.15. This
------------
indemnification shall be made within 30 days from the date such Lender or the
Administrative Agent (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the Borrower
will furnish to the Administrative Agent the original or a certified copy of a
receipt evidencing payment thereof. If no Taxes are payable in respect of any
payment hereunder, the Borrower will furnish to the Administrative Agent a
certificate from each appropriate taxing authority, or an opinion of counsel
acceptable to the Administrative Agent, in either case stating that such payment
is exempt from or not subject to Taxes, provided, however, that such certificate
-------- -------
or opinion need only be given if: (i) the Borrower makes any payment from any
account located outside the United States, or (ii) the payment is made by a
payor that is not a United States Person. For purposes of this
-38-
Section 2.15 the terms "United States" and "United States Person" shall have the
------------ ------------- --------------------
meanings set forth in Section 7701 of the Code.
(e) Each Lender which is not a United States Person hereby agrees that:
(i) it shall, no later than the Agreement Date (or, in the case of a
Lender which becomes a party hereto pursuant to Section 11.6 after the
------------
Agreement Date, the date upon which such Lender becomes a party hereto)
deliver to the Borrower through the Administrative Agent, with a copy to
the Administrative Agent:
(A) if any lending office is located in the United States of
America, two (2) accurate and complete signed originals of Internal
Revenue Service Form 4224 or any successor thereto ("Form 4224"),
---------
(B) if any lending office is located outside the United States
of America, two (2) accurate and complete signed originals of Internal
Revenue Service Form 1001 or any successor thereto ("Form 1001").
---------
in each case indicating that such Lender is on the date of delivery thereof
entitled to receive payments of principal, interest and fees for the
account of such lending office or lending offices under this Agreement free
from withholding of United States Federal income tax;
(ii) if at any time such Lender changes its lending office or lending
offices or selects an additional lending office it shall, at the same time
or reasonably promptly thereafter but only to the extent the forms
previously delivered by it hereunder are no longer effective, deliver to
the Borrower through the Administrative Agent, with a copy to the
Administrative Agent, in replacement for the forms previously delivered by
it hereunder:
(A) if such changed or additional lending office is located in
the United States of America, two (2) accurate and complete signed
originals of Form 4224; or
(B) otherwise, two (2) accurate and complete signed originals of
Form 1001, in each case indicating that such Lender is on the date of
delivery thereof entitled to receive payments of principal, interest
and fees for the account of such changed or additional lending office
under this Agreement free from withholding of United States Federal
income tax;
(iii) it shall, before or promptly after the occurrence of any event
(including the passing of time but excluding any event mentioned in clause
(ii) above) requiring a change in the most recent Form 4224 or Form 1001
previously delivered by such Lender and if the delivery of the same be
lawful, deliver to the Borrower through the Administrative Agent with a
copy to the Administrative Agent, two (2) accurate and complete original
-39-
signed copies of Form 4224 or Form 1001 in replacement for the forms
previously delivered by such Lender;
(iv) it shall, promptly upon the request of the Borrower to that
effect, deliver to the Borrower such other forms or similar documentation
as may be required from time to time by any applicable law, treaty, rule or
regulation in order to establish such Lender's tax status for withholding
purposes;
(v) it shall notify the Borrower within 30 days after any event
(including an amendment to, or a change in any applicable law or regulation
or in the written interpretation thereof by any regulatory authority or any
judicial authority, or by ruling applicable to such Lender of any
governmental authority charged with the interpretation or administration of
any law) shall occur that results in such Lender no longer being capable of
receiving payments without any deduction or withholding of United States
federal income tax; and
(vi) if such Lender is not a "bank" or other person described in
Section 881(c)(3) of the Code and cannot deliver either Form 4224 or Form
1001, a statement that such Lender is not a "bank" under Section
881(c)(3)(A) of the Code and two original copies of Internal Revenue
Service Form W-8 (or any successor form), properly completed and duly
executed by such Lender.
(f) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.15 shall survive the payment in full of principal and interest
------------
hereunder.
(g) Any Lender claiming any additional amounts payable pursuant to this
Section 2.15 shall use its reasonable best efforts (consistent with its internal
------------
policy and legal and regulatory restrictions) to change the jurisdiction of its
lending office, if the making of such a change would avoid the need for, or
reduce the amount of, any such additional amounts which may thereafter accrue
and would not, in the reasonable judgment of such Lender, be materially
disadvantageous to such Lender.
(h) Each Lender (and the Administrative Agent with respect to payments to
the Administrative Agent for its own account) agrees that (i) it will take all
reasonable actions by all usual means to maintain all exemptions, if any,
available to it from United States withholding taxes (whether available by
treaty, existing administrative waiver, by virtue of the location of any
Lender's lending office) and (ii) otherwise cooperate with the Borrower to
minimize amounts payable by the Borrower under this Section 2.15; provided,
------------ --------
however, the Lenders and the Administrative Agent shall not be obligated by
-------
reason of this Section 2.15(h) to contest the payment of any Taxes or Other
---------------
Taxes or to disclose any information regarding its tax affairs or tax
computations or reorder its tax or other affairs or tax or other planning.
Subject to the foregoing, to the extent the Borrower pays sums pursuant to this
Section 2.15 and the Lender or the Administrative Agent receives a refund of any
------------
or all of such sums, such refund shall be applied
-40-
to reduce any amounts then due and owing under this Agreement or, to the extent
that no amounts are due and owing under this Agreement at the time such refunds
are received, the party receiving such refund shall promptly pay over all such
refunded sums to the Borrower, provided that no Default or Event of Default is
in existence at such time.
Section 2.16 Letters of Credit.
-----------------
(a) The Letter of Credit Facility. The Borrower may request the Issuing
-----------------------------
Bank, on the terms and conditions hereinafter set forth, to issue, and the
Issuing Bank shall, if so requested, issue, letters of credit (including the
Existing Letters of Credit, the "Letters of Credit") for the account of the
-----------------
Borrower or for the joint account of the Borrower and any of its Subsidiaries
from time to time on any Business Day from the date of the initial Advance until
the Revolving Commitment Maturity Date in an aggregate maximum amount (assuming
compliance with all conditions to drawing) not to exceed, at any time
outstanding, the lesser of (i) $10,000,000 (the "Letter of Credit Facility") and
-------------------------
(ii) the sum of (A) the Revolving Credit Commitment minus (B) the aggregate
-----
principal amount of Revolving Credit Advances then outstanding. No Letter of
Credit shall have an expiration date (including all rights of renewal) later
than the earlier of (i) 45 days before the Revolving Commitment Maturity Date or
(ii) eighteen months after the date of issuance thereof. Immediately upon the
issuance of each Letter of Credit (or upon satisfaction of the conditions
precedent set forth in Sections 3.1 and 3.2 hereof with respect to the Existing
------------ ---
Letters of Credit), the Issuing Bank shall be deemed to have sold and
transferred to each Lender, and each Lender shall be deemed to have purchased
and received from the Issuing Bank, in each case irrevocably and without any
further action by any party, an undivided interest and participation in such
Letter of Credit, each drawing thereunder and the obligations of the Borrower
under this Agreement in respect thereof in an amount equal to the product of (x)
such Lender's Specified Percentage times (y) the maximum amount available to be
drawn under such Letter of Credit (assuming compliance with all conditions to
drawing). Within the limits of the Letter of Credit Facility, and subject to
the limits referred to above, the Borrower may request the issuance of Letters
of Credit under this Section 2.16(a), repay any Revolving Credit Advances
---------------
resulting from drawings thereunder pursuant to Section 2.16(c) and request the
---------------
issuance of additional Letters of Credit under this Section 2.16(a).
---------------
(b) Request for Issuance.
--------------------
(i) Each Letter of Credit shall be issued upon notice, given not later
than 11:00 a.m. (Dallas time) on the third Business Day prior to the date
of the proposed issuance of such Letter of Credit, by the Borrower to the
Issuing Bank. Each Letter of Credit shall be issued upon notice given in
accordance with the terms of any separate agreement between the Borrower
and the Issuing Bank in form and substance reasonably satisfactory to the
Borrower and the Issuing Bank providing for the issuance of Letters of
Credit pursuant to this Agreement and containing terms and conditions not
inconsistent with this Agreement (a "Letter of Credit Agreement"), provided
-------------------------- --------
that if any such terms and conditions are inconsistent with this Agreement,
this Agreement shall control. Each such notice of issuance of a Letter of
Credit by the Borrower (a "Notice of Issuance") shall be
------------------
-41-
by telex, telecopier or cable, specifying therein, in the case of a Letter
of Credit, the requested (A) date of such issuance (which shall be a
Business Day), (B) maximum amount of such Letter of Credit, (C) expiration
date of such Letter of Credit, (D) name and address of the beneficiary of
such Letter of Credit, (E) form of such Letter of Credit and (F) such other
information as shall be required pursuant to the relevant Letter of Credit
Agreement. If the requested terms of such Letter of Credit are acceptable
to the Issuing Bank in its reasonable discretion, the Issuing Bank will,
upon fulfillment of the applicable conditions set forth in Article 3
---------
hereof, make such Letter of Credit available to the Borrower at its office
referred to in Section 11.1 or as otherwise agreed with the Borrower in
------------
connection with such issuance.
(ii) The Issuing Bank shall furnish to each Lender after each
Quarterly Date (or each Monthly Date, if requested by any Lender) a (A)
written report summarizing issuance and expiration dates of Letters of
Credit issued during the preceding fiscal quarter and drawings during such
fiscal quarter under all Letters of Credit and setting forth Lender's
participation therein and (B) if requested by any Lender, a copy of each
Letter of Credit issued during the preceding fiscal quarter.
(c) Drawing and Reimbursement. The payment by the Issuing Bank of a draft
-------------------------
drawn under any Letter of Credit shall constitute for all purposes of this
Agreement the making by the Issuing Bank of an Revolving Credit Advance, which
shall bear interest at the Base Rate Basis, in the amount of such draft (but
without any requirement for compliance with the conditions set forth in Article
-------
3 hereof). In the event that a drawing under any Letter of Credit is not
-
reimbursed by the Borrower by 11:00 a.m. (Dallas time) on the first Business Day
after such drawing, the Issuing Bank shall promptly notify Administrative Agent
and each other Lender. Each such Lender shall, on the first Business Day
following such notification, make a Revolving Credit Advance, which shall bear
interest at the Base Rate Basis, and shall be used to repay the applicable
portion of the Issuing Bank's Advance with respect to such Letter of Credit, in
an amount equal to the amount of its participation in such drawing for
application to reimburse the Issuing Bank (but without any requirement for
compliance with the applicable conditions set forth in Article 3 hereof) and
---------
shall make available to the Administrative Agent for the account of the Issuing
Bank, by deposit at the Administrative Agent's office, in same day funds, the
amount of such Advance. In the event that any Lender fails to make available to
the Administrative Agent for the account of the Issuing Bank the amount of such
Advance, the Issuing Bank shall be entitled to recover such amount on demand
from such Lender together with interest thereon at a rate per annum equal to the
lesser of (i) the Highest Lawful Rate or (ii) the Federal Funds Rate.
(d) Increased Costs. If any change in any law or regulation or in the
---------------
interpretation thereof by any court or administrative or governmental authority
charged with the administration thereof shall either (i) impose, modify or deem
applicable any reserve, special deposit or similar requirement against letters
of credit or guarantees issued by, or assets held by, or deposits in or for the
account of, the Issuing Bank or any Lender or (ii) impose on the Issuing Bank or
any Lender any other condition regarding this Agreement or such Lender or any
Letter of Credit, and the result of any event referred to in the preceding
clause (i) or (ii) shall be to increase the cost to
-42-
the Issuing Bank of issuing or maintaining any Letter of Credit or to any Lender
of purchasing any participation therein or making any Advance pursuant to
Section 2.16(c), then, upon demand by the Issuing Bank or such Lender, the
---------------
Borrower shall, subject to Section 11.9 hereof, pay to the Issuing Bank or such
------------
Lender, from time to time as specified by the Issuing Bank or such Lender,
additional amounts that shall be sufficient to compensate the Issuing Bank or
such Lender for such increased cost. A certificate as to the amount of such
increased cost, submitted to the Borrower by the Issuing Bank or such Lender,
shall include in reasonable detail the basis for the demand for additional
compensation and shall be controlling for all purposes, absent manifest error.
The obligations of the Borrower under this Section 2.16(d) shall survive
---------------
termination of this Agreement. The Issuing Bank or any Lender claiming any
additional compensation under this Section 2.16(d) shall use reasonable efforts
---------------
(consistent with legal and regulatory restrictions) to reduce or eliminate any
such additional compensation which may thereafter accrue and which efforts would
not, in the sole discretion of the Issuing Bank or such Lender, be otherwise
disadvantageous.
(e) Obligations Absolute. The obligations of the Borrower under this
--------------------
Agreement with respect to any Letter of Credit, any Letter of Credit Agreement
and any other agreement or instrument relating to any Letter of Credit or any
Revolving Credit Advance pursuant to Section 2.16(c) shall be unconditional and
---------------
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement, such Letter of Credit Agreement and such other agreement or
instrument under all circumstances, including, without limitation, the following
circumstances:
(i) any lack of validity or enforceability of this Agreement, any
other Loan Document, any Letter of Credit Agreement, any Letter of Credit
or any other agreement or instrument relating thereto (collectively, the
"L/C Related Documents");
----------------------
(ii) (A) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations of the Borrower in
respect of the Letters of Credit or any Revolving Credit Advance pursuant
to Section 2.16(c) or (B) any other amendment or waiver of or any consent
---------------
to departure from all or any of the L/C Related Documents;
(iii) the existence of any claim, set-off, defense or other right
that the Borrower may have at any time against any beneficiary or any
transferee of a Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank, any
Lender or any other Person, whether in connection with this Agreement, the
transactions contemplated hereby or by the L/C Related Documents or any
unrelated transaction;
(iv) any statement or any other document presented under a 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;
(v) payment by the Issuing Bank under a Letter of Credit against
presentation of a draft or certificate that does not comply with the terms
of the Letter of Credit, except for any payment made upon the Issuing
Bank's gross negligence or willful misconduct;
-43-
(vi) any exchange, release or non-perfection of any collateral, or
any release or amendment or waiver of or consent to departure from any
guarantee, for all or any of the Obligations of the Borrower in respect of
the Letters of Credit or any Revolving Credit Advance pursuant to Section
-------
2.16(c); or
-------
(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including, without limitation, any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the Borrower or a guarantor, other than the Issuing's Bank
gross negligence or wilful misconduct.
(f) Compensation for Letters of Credit.
----------------------------------
(i) Credit Fee. Subject to Section 11.9 hereof, the Borrower shall
---------- ------------
pay to the Administrative Agent for the account of each Lender a fee (which
shall be payable quarterly in arrears on each Quarterly Date and on the
Revolving Commitment Maturity Date) equal to (A) with respect to Standby
Letters of Credit, the product of 100% of the applicable LIBOR Rate Margin
for Revolving Credit Advances in effect from time to time multiplied by the
average daily amount available for drawing under all Standby Letters of
Credit, and (B) with respect to Commercial Letters of Credit, the product
of 50% of the Applicable LIBOR Rate Margin for Revolving Credit Advances in
effect from time to time multiplied by the average daily amount available
for drawings under all Commercial Letters of Credit.
(ii) Issuance Fee. Subject to Section 11.9 hereof, the Borrower
------------ ------------
shall pay to the Administrative Agent for the account of the Issuing Bank
an issuance fee (which shall be payable on the date of issuance of each
Letter of Credit) in an amount equal to the greater of (a) $250 or (b) the
product of (x) 0.125% times (y) the face amount of the Letter of Credit
being issued.
(g) L/C Cash Collateral Account.
---------------------------
(i) Upon the occurrence of an Event of Default and demand by the
Administrative Agent pursuant to Section 8.2(c) (but in the case of an
--------------
Event of Default specified in Section 8.11(f) or (g) hereof without any
--------------- ---
demand or taking of any other action by the Administrative Agent or any
Lender), the Borrower will promptly pay to the Administrative Agent in
immediately available funds an amount equal to the maximum amount then
available to be drawn under the Letters of Credit then outstanding. Any
amounts so received by the Administrative Agent shall be deposited by the
Administrative Agent in a deposit account maintained by the Issuing Bank
(the "L/C Cash Collateral Account").
---------------------------
(ii) As security for the payment of all Reimbursement Obligations
and for any other Obligations, the Borrower hereby grants, conveys,
assigns, pledges, sets over and transfers to the Administrative Agent (for
the benefit of the Issuing Bank and Lenders), and
-44-
creates in the Administrative Agent's favor (for the benefit of the
Issuing Bank and Lenders) a Lien in, all money, instruments and securities
at any time held in or acquired in connection with the L/C Cash Collateral
Account, together with all proceeds thereof. The L/C Cash Collateral
Account shall be under the sole dominion and control of the Administrative
Agent and the Borrower shall have no right to withdraw or to cause the
Administrative Agent to withdraw any funds deposited in the L/C Cash
Collateral Account. At any time and from time to time, upon the
Administrative Agent's request, the Borrower promptly shall execute and
deliver any and all such further instruments and documents, including UCC
financing statements, as may be necessary, appropriate or desirable in the
Administrative Agent's judgment to obtain the full benefits (including
perfection and priority) of the security interest created or intended to be
created by this paragraph (ii) and of the rights and powers herein granted.
The Borrower shall not create or suffer to exist any Lien on any amounts or
investments held in the L/C Cash Collateral Account other than the Lien
granted under this paragraph (ii) and Liens arising by operation of Law and
not by contract which secure amounts not yet due and payable.
(iii) The Administrative Agent shall (A) apply any funds in the L/C
Cash Collateral Account on account of Reimbursement Obligations when the
same become due and payable if and to the extent that the Borrower shall
fail directly to pay such Reimbursement Obligations and (B) after the
Revolving Commitment Maturity Date, apply any proceeds remaining in the L/C
Cash Collateral Account first to pay any unpaid Obligations then
-----
outstanding hereunder and then to refund any remaining amount to the
----
Borrower.
(iv) The Borrower, no more than once in any calendar month, may
direct the Administrative Agent to invest the funds held in the L/C Cash
Collateral Account (so long as the aggregate amount of such funds exceeds
any relevant minimum investment requirement) in (A) direct obligations of
the United States or any agency thereof, or obligations guaranteed by the
United States or any agency thereof and (B) one or more other types of
investments permitted by the Determining Lenders, in each case with such
maturities as the Borrower, with the consent of the Determining Lenders,
may specify, pending application of such funds on account of Reimbursement
Obligations or on account of other Obligations, as the case may be. In the
absence of any such direction from the Borrower, the Administrative Agent
shall invest the funds held in the L/C Cash Collateral Account (so long as
the aggregate amount of such funds exceeds any relevant minimum investment
requirement) in one or more types of investments with the consent of the
Determining Lenders with such maturities as the Borrower, with the consent
of the Determining Lenders, may specify, pending application of such funds
on account of Reimbursement Obligations or on account of other Obligations,
as the case may be. All such investments shall be made in the
Administrative Agent's name for the account of the Lenders, subject to the
ownership interest therein of the Borrower. The Borrower recognizes that
any losses or taxes with respect to such investments shall be borne solely
by the Borrower, and the Borrower agrees to hold the Administrative Agent
and the Lenders harmless from any and all such losses and taxes.
Administrative Agent may
-45-
liquidate any investment held in the L/C Cash Collateral Account in order
to apply the proceeds of such investment on account of the Reimbursement
Obligations (or on account of any other Obligation then due and payable, as
the case may be) without regard to whether such investment has matured and
without liability for any penalty or other fee incurred (with respect to
which the Borrower hereby agrees to reimburse the Administrative Agent) as
a result of such application.
(v) After the establishment of the L/C Cash Collateral Account
pursuant to Section 2.16(h)(i) hereof, the Borrower shall pay to the
------------------
Administrative Agent the fees customarily charged by the Issuing Bank with
respect to the maintenance of accounts similar to the L/C Cash Collateral
Account.
ARTICLE 3
Conditions Precedent
--------------------
Section 3.1 Conditions Precedent to Refinancing of the Existing Credit
----------------------------------------------------------
Agreement, the Loan Documents, the Initial Advances and the Initial Letters of
------------------------------------------------------------------------------
Credit. The effectiveness of the amendments to the Existing Credit Agreement
------
and each other Loan Document (as defined in the Existing Credit Agreement), and
the effectiveness of each Revolving Credit Note, Facility A Term Loan Note and
Facility B Term Loan Note and each other Loan Document executed and delivered by
the Borrower and/or its Subsidiaries pursuant to the terms of this Agreement,
and obligation of each Lender to make the initial Advance and the obligations of
the Issuing Bank to issue the initial Letters of Credit, is subject to (i)
receipt by the Administrative Agent of each of the following, in form and
substance satisfactory to each Lender, with a copy (except for the Notes) for
each Lender, and (ii) satisfaction of the following conditions:
(a) A loan certificate of each Obligor certifying as to the accuracy of its
representations and warranties in the Loan Documents, certifying that no Default
has occurred, and including a certificate of incumbency with respect to each
Authorized Signatory, and including (i) a copy of the Articles or Certificate of
Incorporation of such Obligor certified to be true, complete and correct by the
secretary of state of its state of incorporation, (ii) a copy of the By-Laws of
such Obligor, as in effect on the Agreement Date, (iii) a copy of the
resolutions of such Obligor authorizing it to execute, deliver and perform the
Loan Documents to which it is a party, and (iv) a copy of a certificate of good
standing and a certificate of existence for its state of incorporation and each
state in which the nature of its business requires it to be qualified to do
business;
(b) a duly executed Revolving Credit Note, Facility A Term Loan Note and
Facility B Term Loan Note payable to the order of each Lender with a related
Commitment and in an amount for each Lender equal to its Specified Percentage of
each such Commitment, respectively;
(c) UCC-11 searches in appropriate jurisdictions where Collateral is
located;
-46-
(d) opinion of counsel to the Borrower and each Subsidiary addressed to the
Lenders and in form and substance satisfactory to the Lenders, dated as of the
date of the Shelter Components Tender, and covering the matters set forth in
Sections 4.1(a), (b), (c), (h), (m), (n) and (p) and such other matters incident
--------------- --- --- --- --- --- ---
to the transactions contemplated hereby as the Administrative Agent or Special
Counsel may reasonably request;
(e) reimbursement for the Administrative Agent for Special Counsel's
reasonable and customary fees (on an hourly basis) and expenses rendered through
the date hereof;
(f) evidence that all corporate proceedings of each Obligor taken in
connection with the transactions contemplated by this Agreement and the other
Loan Documents shall be reasonably satisfactory in form and substance to the
Lenders and Special Counsel; and the Lenders shall have received copies of all
documents or other evidence which the Administrative Agent, Special Counsel or
any Lender may reasonably request in connection with such transactions;
(g) any fees required to be paid pursuant to the Fee Letter;
(h) duly executed and completed Security Agreements, Intellectual Property
Security Agreements and Pledge Agreements executed by the Borrower and each of
its Subsidiaries (other than Shelter Components and each of its Subsidiaries),
granting a first priority perfected Lien in all Collateral covered thereby,
together with related financing statements, stock powers, stock certificates
evidencing 100% of the issued and outstanding Capital Stock of each Subsidiary
of the Borrower (other than Shelter Components and each of its Subsidiaries),
and insurance certificates listing the Administrative Agent as loss payee and
additional insured and otherwise in a form required by the Collateral Documents;
(i) a duly executed and completed Subsidiary Guaranty by each Subsidiary of
the Borrower (other than Shelter Components and each of its Subsidiaries);
(j) duly executed and completed Deeds of Trusts, together with such
surveys, environmental reports and title insurance policies or commitments as
shall be required by the Administrative Agent, in form or substance satisfactory
to the Administrative Agent and Special Counsel;
(k) simultaneously with the making of the initial Advance, executed UCC-3
Termination Statements to be filed in appropriate jurisdictions to terminate all
Liens against assets of the Borrower and its subsidiaries (including Shelter
Components and its Subsidiaries) other than Permitted Liens;
(l) all Shelter Components Merger Documents which are existing and
available on the date of the initial Advance, which shall be on terms and
conditions acceptable to the Administrative Agent;
-47-
(m) the Shelter Components Tender shall have occurred contemporaneously on
terms and conditions acceptable to the Lenders;
(n) evidence satisfactory to the Administrative Agent, that
contemporaneously with the Shelter Components Tender (i) the Borrower shall
receive contemporaneously at least $105,000,000 in gross proceeds from the sale
of the Senior Subordinated Notes; (iii) the aggregate amount of Total Debt plus
the Unfunded Purchase Price does not exceed $215,000,000; and (iv) the Unused
Portion shall be equal to or greater than the sum of (A) $20,000,000 plus (B)
the Unfunded Purchase Price;
(o) a pro forma balance sheet of the Borrower and its Subsidiaries as of
the Agreement Date, taking into account the Shelter Components Transaction and
reflecting estimated purchase price accounting adjustments and such other
information relating to the Shelter Components Transaction as the Administrative
Agent shall request;
(p) after giving effect to the Shelter Components Transaction, there shall
have occurred no material adverse change in the business, assets, operations,
prospects or condition (financial or otherwise) of the Borrower and its
Subsidiaries (including Shelter Components and its Subsidiaries), taken as a
whole, since December 31, 1996;
(q) a solvency opinion (taking into account the Shelter Components
Transaction) with respect to the Borrower and its Subsidiaries delivered by a
financial advisor acceptable to the Lenders, in form and substance satisfactory
to the Administrative Agent;
(r) duly executed Landlord's Waivers required by the Administrative Agent
and in form and substance satisfactory to the Administrative Agent, dated as of
the Agreement Date; and
(s) in form and substance reasonably satisfactory to the Lenders and
Special Counsel, such other documents, instruments and certificates as the
Administrative Agent or any Lender may reasonably require in connection with the
transactions contemplated hereby.
Upon contemporaneous satisfaction of the conditions set forth in this
Section 3.1, all Indebtedness under the Existing Credit Agreement shall have
-----------
been (or shall be simultaneously with the initial Advance hereunder) refinanced
in full, and all obligations of the Borrower and its Subsidiaries in respect of
the Existing Credit Agreement (other than (i) with respect to the Existing
Letters of Credit, and (ii) those obligations which expressly survive
termination thereof) shall terminate.
Section 3.2 Conditions Precedent to All Advances and Letters of Credit.
----------------------------------------------------------
The obligation of each Lender to make each Advance hereunder (including the
initial Advance) and the obligation of the Issuing Bank to issue each Letter of
Credit (including the initial Letter of Credit) is subject to fulfillment of the
following conditions immediately prior to or contemporaneously with each such
Advance:
-48-
(a) With respect to each Advance and each issuance of a Letter of Credit,
all of the representations and warranties of the Borrower under this Agreement,
which, pursuant to Section 4.2 hereof, are made at and as of the time of such
-----------
Advance or Letter of Credit, shall be true and correct at such time in all
material respects, both before and after giving effect to the application of the
proceeds of such Advance or Letter of Credit;
(b) The incumbency of the Authorized Signatories shall be as stated in the
certificate of incumbency delivered in the Borrower's loan certificate pursuant
to Section 3.1(a) or as subsequently modified and reflected in a certificate of
--------------
incumbency delivered to the Administrative Agent. The Lenders may, without
waiving this condition, consider it fulfilled and a representation by the
Borrower made to such effect if no written notice to the contrary, dated on or
before the date of such Advance or Letter of Credit, is received by the
Administrative Agent from the Borrower prior to the making of such Advance;
(c) There shall not exist a Default or Event of Default hereunder;
(d) The aggregate Advances and Letters of Credit, after giving effect to
such proposed Advance or Letter of Credit, shall not exceed the maximum
principal amount then permitted to be outstanding hereunder;
(e) No order, judgment, injunction or decree of any Tribunal shall purport
to enjoin or restrain any Lender or the Issuing Bank from making any Advance or
issuing any Letter of Credit;
(f) There shall be no action, suit or proceeding pending against, or, to
the Borrower's current actual knowledge, threatened against the Borrower or any
of its Subsidiaries, or in any of their respective properties, in any court or
before any arbitrator of any kind or before or by any governmental body which
could reasonably be expected to have a Material Adverse Effect; and
(g) There shall have occurred no material adverse change in the business,
assets, condition (financial or otherwise) or results of operations of the
Borrower and its Subsidiaries (including Shelter Components and its
Subsidiaries), taken as a whole since December 31, 1997 (but after giving effect
to the Shelter Components Transaction).
Notwithstanding the above, the obligation of each Lender to make a
Revolving Credit Advance pursuant to Section 2.16(c) shall be absolute and
---------------
unconditional and shall not be affected by any circumstances, including, without
limitation, (i) the occurrence of any Default or Event of Default, unless the
Issuing Bank had actual knowledge of such Default or Event of Default prior to
the issuance of such, (ii) the failure of the Borrower to satisfy any condition
set forth in this Section 3.2 if waived by the Lenders having Revolving Credit
-----------
Specified Percentages aggregating at least 51% or the Issuing Bank did not have
actual knowledge that such condition had not been met, or (iii) any other
circumstance, happening or event whatsoever.
-49-
Section 3.3 Conditions Precedent to Conversions and Continuations. The
-----------------------------------------------------
obligation of the Lenders to convert any existing Base Rate Advance into a LIBOR
Advance or to continue any existing LIBOR Advance is subject to the condition
precedent that on the date of such conversion or continuation no Default or
Event of Default shall have occurred and be continuing or would result from the
making of such conversion or continuation. The acceptance of the benefits of
each such conversion and continuation shall constitute a representation and
warranty by the Borrower to each of the Lenders that no Default or Event of
Default shall have occurred and be continuing or would result from the making of
such conversion or continuation.
ARTICLE 4
Representations and Warranties
------------------------------
Section 4.1 Representations and Warranties. The Borrower hereby
------------------------------
represents and warrants to each Lender as follows:
(a) Organization; Power; Qualification. As of the Agreement Date, the
----------------------------------
respective jurisdiction of incorporation or organization and percentage
ownership by the Borrower or another Subsidiary of the Subsidiaries listed on
Schedule 5 are true and correct. Each of the Borrower and its Subsidiaries is a
----------
corporation, partnership or limited liability company duly organized, validly
existing and in good standing under the laws of its state of organization. Each
of the Borrower and its Subsidiaries has the corporate or other legal power and
authority to own its properties and to carry on its business as now being and
hereafter proposed to be conducted. Each of the Borrower and its Subsidiaries
is authorized to do business, duly qualified and in good standing as set forth
in Schedule 8 and no qualification or authorization is necessary in any other
----------
jurisdictions in which the character of its properties or the nature of its
business requires such qualification or authorization except where the failure
to be so qualified or authorized would not have a Material Adverse Effect.
(b) Authorization. The Borrower has corporate power and has taken all
-------------
necessary corporate action to authorize it to borrow hereunder. Each Obligor
has corporate or other legal power and has taken all necessary corporate or
other legal action to execute, deliver and perform the Loan Documents to which
it is party in accordance with the terms thereof, and to consummate the
transactions contemplated thereby. Each Loan Document has been duly executed
and delivered by the Obligor executing it. Each of the Loan Documents to which
an Obligor is a party is a legal, valid and binding respective obligation of
such Obligor, enforceable in accordance with its terms, subject, to enforcement
of remedies, to the following qualifications: (i) equitable principles
generally, and (ii) Debtor Relief Laws (insofar as any such law relates to the
bankruptcy, insolvency or similar event of the Borrower or any Subsidiary).
(c) Compliance with Other Loan Documents and Contemplated Transactions.
------------------------------------------------------------------
The execution, delivery and performance by each Obligor of the Loan Documents to
which it is a party, and the consummation of the transactions contemplated
thereby, do not and will not
-50-
(i) require any consent or approval not already obtained, (ii) violate any
Applicable Law, (iii) conflict with, result in a breach of, or constitute a
default under the certificate of incorporation, by-laws, partnership agreement,
operating agreement or other similar governing document or agreement of such
Obligor, (iv) conflict with, result in a breach of, or constitute a default
under any Necessary Authorization, indenture, agreement or other instrument, to
which such Obligor is a party or by which they or their respective properties
may be bound which could reasonably be expected to have a Material Adverse
Effect, or (v) result in or require the creation or imposition of any Lien upon
or with respect to any property now owned or hereafter acquired by such Obligor,
except Permitted Liens.
(d) Business. The Borrower and its Subsidiaries are engaged primarily in
--------
the business of the manufacture and distribution of plumbing and building
products for manufactured housing and recreational vehicles and activities
directly related thereto.
(e) Licenses, etc. All Necessary Authorizations have been duly obtained,
--------------
and are in full force and effect without any known conflict with the rights of
others and free from any unduly burdensome restrictions, unless the failure to
obtain or have in effect such Necessary Authorizations would not result in a
Material Adverse Effect. The Borrower and its Subsidiaries are and will
continue to be in compliance in all material respects with all provisions
thereof. No circumstance exists which might impair the utility of the Necessary
Authorization or the right to renew such Necessary Authorization the effect of
which would have a Material Adverse Effect. No Necessary Authorization is the
subject of any pending or, to the best of the Borrower's knowledge, threatened
challenge, suspension, cancellation or revocation.
(f) Compliance with Law. The Borrower and its Subsidiaries are in
-------------------
compliance in all respects with all Applicable Laws, except where the failure to
so comply would not have a Material Adverse Effect, taken as a whole.
(g) Title to Properties. The Borrower and its Subsidiaries have good and
-------------------
indefeasible title to, or a valid leasehold interest in, all of their material
assets. None of their assets are subject to any Liens, except Permitted Liens.
No financing statement or other Lien filing (except relating to Permitted Liens)
is on file in any state or jurisdiction that names the Borrower or any of its
Subsidiaries as debtor or covers (or purports to cover) any assets of the
Borrower or any of its Subsidiaries. The Borrower and its Subsidiaries have not
signed any such financing statement or filing, nor any security agreement
authorizing any Person to file any such financing statement or filing (except
relating to Permitted Liens).
(h) Litigation. Except as reflected on Schedule 4 hereto, there is no
---------- ----------
action, suit or proceeding pending against, or, to the Borrower's current actual
knowledge, threatened against the Borrower, or in any other manner relating
directly and adversely to the Borrower or any of its Subsidiaries, or any of
their properties, in any court or before any arbitrator of any kind or before or
by any governmental body in which the amount claimed (in excess of applicable
insurance) exceeds $100,000.
-51-
(i) Taxes. All federal, state and other tax returns of the Borrower and
-----
its Subsidiaries required by law to be filed have been duly filed or extensions
have been timely filed, and all federal, state and other taxes, assessments and
other governmental charges or levies upon the Borrower, its Subsidiaries or any
of their properties, income, profits and assets, which are due and payable, have
been paid, unless the same are being diligently contested in good faith by
appropriate proceedings, with adequate reserves established therefor, and no
Lien (other than a Permitted Lien) has attached and no foreclosure, distraint,
sale or similar proceedings have been commenced. The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of their
taxes are, in the judgment of the Borrower, adequate.
(j) Financial Statements; Material Liabilities. The Borrower has furnished
------------------------------------------
or caused to be furnished to the Lenders copies of its December 31, 1996 annual
financial statements and the Borrower has furnished or caused to be furnished
copies of its September 30, 1997 quarterly financial statements, which were
prepared in good faith and are complete in all material respects and present
fairly in accordance with GAAP the financial position of the Borrower and its
Subsidiaries, as appropriate, as at such dates and the results of operations for
the periods then ended. The Borrower has furnished or caused to be furnished to
the Lenders copies of the December 31, 1996 annual financial statements and the
September 30, 1997 quarterly financial statements of Shelter Components and its
Subsidiaries, which were prepared in good faith and are complete in all material
respects and present fairly in accordance with GAAP the financial position of
Shelter Components and its Subsidiaries as at such dates and the results of
operations for the periods then ended. None of the Borrower and its
Subsidiaries or Shelter Components and its Subsidiaries, taken as a whole, have
any material liabilities, contingent or otherwise, nor material losses, except
as set forth in said annual financial statements and quarterly financial
statements, as appropriate.
(k) No Adverse Change. Since December 31, 1996, no event or circumstance
-----------------
has occurred or arisen that constitutes as a Material Adverse Effect.
(l) ERISA. None of the Borrower or its Controlled Group maintains or
-----
contributes to any Plan other than those disclosed to the Administrative Agent
in writing. Each such Plan (other than any Multiemployer Plan) is in compliance
in all material respects with the applicable provisions of ERISA, the Code, and
any other applicable Federal or state law, rule or regulation. With respect to
each Plan (other than any Multiemployer Plan) of the Borrower and each member of
its Controlled Group, all reports required under ERISA or any other Applicable
Law to be filed with any governmental authority, the failure of which to file
could reasonably result in liability of the Borrower or any member of its
Controlled Group in excess of $50,000, have been duly filed. All such reports
are true and correct in all material respects as of the date given. No Plan of
the Borrower or any member of its Controlled Group has been terminated under
Section 4041(c) of ERISA nor has any accumulated funding deficiency (as defined
in Section 412(a) of the Code) been incurred (without regard to any waiver
granted under Section 412 of the Code), nor has any funding waiver from the
Internal Revenue Service been received or requested the result of which could
reasonably be expected to have Material Adverse Effect. None of the Borrower or
any member of its Controlled Group has failed to make any contribution or pay
any amount due or
-52-
owing as required under the terms of any such Plan, or by Section 412 of the
Code or Section 302 of ERISA by the due date under Section 412 of the Code and
Section 302 of ERISA the result of which could reasonably be expected to have
Material Adverse Effect. There has been no ERISA Event or any event requiring
disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any
Plan or its related trust of the Borrower or any member of its Controlled Group
since the effective date of ERISA. The present value of the benefit liabilities,
as defined in Title IV of ERISA, of each Plan subject to Title IV of ERISA
(other than a Multiemployer Plan) of the Borrower and each member of its
Controlled Group does not exceed by more than $50,000 the present value of the
assets of each such Plan as of the most recent valuation date using each such
Plan's actuarial assumptions at such date. There are no pending, or to the best
of the Borrower's knowledge threatened, claims, lawsuits or actions (other than
routine claims for benefits in the ordinary course) asserted or instituted
against, and neither the Borrower nor any member of its Controlled Group has
knowledge of any threatened litigation or claims against, the assets of any Plan
or its related trust or against any fiduciary of a Plan with respect to the
operation of such Plan the result of which could reasonably be expected to have
Material Adverse Effect. None of the Borrower or, to the best of the Borrower's
knowledge, any member of its Controlled Group has engaged in any prohibited
transactions, within the meaning of Section 406 of ERISA or Section 4975 of the
Code, in connection with any Plan the result of which could reasonably be
expected to have Material Adverse Effect. None of the Borrower or any member of
its Controlled Group has withdrawn from any Multiemployer Plan, nor has incurred
or reasonably expects to incur (A) any liability under Title IV of ERISA (other
than premiums due under Section 4007 of ERISA to the PBGC), (B) any withdrawal
liability (and no event has occurred which with the giving of notice under
Section 4219 of ERISA would result in such liability) under Section 4201 of
ERISA as a result of a complete or partial withdrawal (within the meaning of
Section 4203 or 4205 of ERISA) from a Multiemployer Plan, or (C) any liability
under Section 4062 of ERISA to the PBGC or to a trustee appointed under Section
4042 of ERISA. None of the Borrower, any member of its Controlled Group, or any
organization to which the Borrower or any member of its Controlled Group is a
successor or parent corporation within the meaning of ERISA Section 4069(b), has
engaged in a transaction within the meaning of ERISA Section 4069 the result of
which could reasonably be expected to have Material Adverse Effect. None of the
Borrower or any member of its Controlled Group maintains or has established any
Plan, which is a welfare benefit plan within the meaning of Section 3(1) of
ERISA and which provides for continuing benefits or coverage for any participant
or any beneficiary of any participant after such participant's termination of
employment, except as may be required by the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"). Each of Borrower and its
-----
Controlled Group which maintains a Plan which is a welfare benefit plan within
the meaning of Section 3(1) of ERISA has complied in all material respects with
any applicable notice and continuation requirements of COBRA and the regulations
thereunder. None of the Borrower or any member of its Controlled Group
maintains, has established, or has ever participated in a multiemployer welfare
benefit arrangement within the meaning of Section 3(40)(A) of ERISA.
(m) Compliance with Regulations G, T, U and X. The Borrower is not engaged
-----------------------------------------
principally or as one of its important activities in the business of extending
credit for the purpose
-53-
of purchasing or carrying any margin stock within the meaning of Regulations G,
T, U and X of the Board of Governors of the Federal Reserve System. No more than
25% of the assets of the Borrower and its Subsidiaries will be margin stock.
None of the Borrower and its Subsidiaries nor any agent acting on their behalf,
have taken or will knowingly take any action which might cause this Agreement or
any other Loan Documents to violate any regulation of the Board of Governors of
the Federal Reserve System or to violate the Securities Exchange Act of 1934, in
each case as in effect now or as the same may hereafter be in effect. Neither
the making of any Advances, the issuance of any Letters of Credit nor the
application of any proceeds thereof will violate, or be inconsistent with, the
provisions of Regulations G, T, U and X of the Board of Governors of the Federal
Reserve System.
(n) Governmental Regulation. The Borrower and its Subsidiaries are not
-----------------------
required to obtain any Necessary Authorization that has not already been
obtained from, or effect any material filing or registration that has not
already been effected with, any federal, state or local regulatory authority in
connection with the execution and delivery of this Agreement or any other Loan
Document, or the performance thereof, in accordance with their respective terms,
including any borrowing hereunder; provided, however, an assignment of Accounts
-------- -------
will need to be filed pursuant to the Assignment of Claims Act with respect to
Accounts in which the account debtor in respect thereof is the United States or
any department, or agency or instrumentality thereof, and certain other filings
and assignments may be necessary to comply with governmental rules concerning
Accounts in which the account debtor in respect thereof is any state of the
United States or any county, city, town, municipality or division of such State.
(o) Absence of Default. The Borrower and its Subsidiaries are in
------------------
compliance in all material respects with all of the provisions of their
certificate of incorporation and by-laws, and no event has occurred or failed to
occur, which has not been remedied or waived, the occurrence or non-occurrence
of which constitutes, or which with the passage of time or giving of notice or
both would constitute, (i) an Event of Default or (ii) a default by the Borrower
or any of its Subsidiaries under any material indenture, agreement or other
instrument, or any judgment, decree or order to which the Borrower or any of its
Subsidiaries or by which they or any of their material properties is bound.
(p) Investment Company Act. The Borrower is not required to register under
----------------------
the provisions of the Investment Company Act of 1940, as amended. Neither the
entering into or performance by the Borrower of this Agreement nor the issuance
of the Notes violates any provision of such act or requires any consent,
approval, or authorization of, or registration with, the Securities and Exchange
Commission or any other governmental or public body of authority pursuant to any
provisions of such act.
(q) Environmental Matters. Neither the Borrower nor any of its
---------------------
Subsidiaries has any current actual knowledge that any substance deemed
hazardous by any Applicable Environmental Law, has been installed (i) on any
real property fee title to which is now owned by the Borrower or any of its
Subsidiaries or (ii) by Borrower or any of its Subsidiaries on any real property
leased by the Borrower or any of its Subsidiaries, in either case in a manner
which does not comply with
-54-
Applicable Environmental Laws. The Borrower and its Subsidiaries are not in
material violation of or subject to any existing, pending or, to the best of the
Borrower's knowledge, threatened investigation or inquiry by any governmental
authority or to any material remedial obligations under any Applicable
Environmental Laws. The Borrower and its Subsidiaries have not obtained and are
not required to obtain any permits, licenses or similar authorizations other
than certificates of occupancy and building permits to construct, occupy,
operate or use any buildings, improvements, fixtures, and equipment forming a
part of any real property owned or leased by the Borrower or any Subsidiary by
reason of any Applicable Environmental Laws. The Borrower and its Subsidiaries
undertook, at the time of acquisition of fee title to any real property,
reasonable inquiry into the previous ownership and uses of such real property
consistent with good commercial or customary practice. The Borrower and its
Subsidiaries have taken reasonable steps to determine, and the Borrower and its
Subsidiaries have no current actual knowledge, that any hazardous substances or
solid wastes have been disposed of or otherwise released (i) on or to the real
property fee title to which is owned by the Borrower or any of its Subsidiaries
or (ii) by Borrower or any of its Subsidiaries on or to any real property leased
by Borrower or any of its Subsidiaries, all within the meaning of the Applicable
Environmental Laws.
(r) Certain Fees. No broker's, finder's or other fee or commission will be
------------
payable by the Borrower (other than to the Lenders hereunder) with respect to
the making of the Commitments or the Advances hereunder. The Borrower agrees to
indemnify and hold harmless the Administrative Agent and each Lender from and
against any claims, demand, liability, proceedings, costs or expenses asserted
with respect to or arising in connection with any such fees or commissions.
(s) Necessary Authorizations. No event has occurred which permits (or with
------------------------
the passage of time would permit) the revocation or termination of any Necessary
Authorization, or which could result in the imposition of any restriction
thereon of such a nature that could reasonably be expected to be classified as a
Material Adverse Effect.
(t) Patents, Etc. The Borrower and its Subsidiaries have collectively
------------
obtained or applied for all patents, trademarks, service marks, trade names,
copyrights, licenses and other rights, free from burdensome restrictions, that
are necessary for the operation of their business as presently conducted and as
proposed to be conducted. Nothing has come to the current actual knowledge of
the Borrower or any of its Subsidiaries to the effect that (i) any process,
method, part or other material presently contemplated to be employed by the
Borrower or any Subsidiary may infringe any patent, trademark, service xxxx,
trade name, copyright, license or other right owned by any other Person, or (ii)
there is pending or overtly threatened any claim or litigation against or
affecting the Borrower or any Subsidiary contesting its right to sell or use any
such process, method, part or other material, which if determined adversely to
the Borrower or any Subsidiary could reasonably be expected to be classified as
a Material Adverse Effect.
(u) Disclosure. Neither this Agreement nor any other document, certificate
----------
or statement which has been furnished to any Lender by or on behalf of the
Borrower or any Subsidiary in connection herewith contained any untrue statement
of a material fact or omitted to
-55-
state a material fact necessary in order to make the statement contained herein
and therein not misleading at the time it was furnished. There is no fact known
to the Borrower and not known to the public generally that could reasonably be
expected to materially adversely affect the assets or business of the Borrower
and its Subsidiaries, or in the future could reasonably be expected (so far as
the Borrower can now foresee) to have a Material Adverse Effect, which has not
been set forth in this Agreement or in the documents, certificates and
statements furnished to the Lenders by or on behalf of the Borrower prior to the
date hereof in connection with the transaction contemplated hereby.
(v) Solvency. The Borrower is, and Borrower and its Subsidiaries on a
--------
consolidated basis are, Solvent.
(w) Labor Relations. Except as set forth on Schedule 10 hereto, neither
--------------- -----------
the Borrower nor any of its Subsidiaries is a party to a collective bargaining
agreement or similar agreement, and the Borrower and each of its Subsidiaries is
in compliance in all material respects with all Laws respecting employment and
employment practices, terms and conditions of employment, wages and hours and
other laws related to the employment of its employees, except where the failure
to comply could not reasonably be expected to result in a Material Adverse
Effect, and there are no arrears in the payment of wages, withholding or social
security taxes, unemployment insurance premiums or other similar obligations of
the Borrower or any of its Subsidiaries or for which the Borrower or any such
Subsidiary may be responsible other than in the ordinary course of business,
except for such unpaid or unwithheld arrears which could not reasonably be
expected to result in a Material Adverse Effect. There is no strike, work
stoppage or labor dispute with any union or group of employees pending or
overtly threatened involving Borrower or any of its Subsidiaries that could
reasonably be expected to have a Material Adverse Effect.
(x) Common Enterprise. The Borrower and its Subsidiaries are engaged in
-----------------
the businesses set forth in Section 4.1(d) hereof. These operations require
--------------
financing on a basis such that the credit supplied can be made available from
time to time to the Borrower and various of its Subsidiaries, as required for
the continued successful operation of the Borrower and its Subsidiaries as a
whole. The Borrower and its Subsidiaries expect to derive benefit (and the
boards of directors of the Borrower and its Subsidiaries have determined that
the Borrower and its Subsidiaries may reasonably be expected to derive benefit),
directly or indirectly, from the credit extended by the Lenders hereunder, both
in their separate capacities and as members of the group of companies, since the
successful operation and condition of the Borrower and its Subsidiaries is
dependent on the continued successful performance of the functions of the group
as a whole.
Section 4.2 Survival of Representations and Warranties, etc. All
-----------------------------------------------
representations and warranties made under this Agreement and the other Loan
Documents shall be deemed to be made at and as of the Agreement Date and at and
as of the date of each Advance, and each shall be true and correct when made,
except to the extent (a) previously fulfilled in accordance with the terms
hereof, (b) applicable to a specific date or otherwise subsequently
inapplicable, or (c) previously waived in writing by the Determining Lenders
with respect to any particular factual circumstance.
-56-
All such representations and warranties shall survive, and not be waived by, the
execution hereof by any Lender, any investigation or inquiry by any Lender, or
by the making of any Advance under this Agreement.
ARTICLE 5
General Covenants
-----------------
So long as any of the Obligations are outstanding and unpaid or any
Commitment is outstanding (whether or not the conditions to borrowing have been
or can be fulfilled):
Section 5.1 Preservation of Existence and Similar Matters. The Borrower
---------------------------------------------
shall, and shall cause each Subsidiary to:
(a) preserve and maintain, or timely obtain and thereafter preserve and
maintain, its existence, rights, franchises, licenses, authorizations, consents,
privileges and all other Necessary Authorizations from federal, state and local
governmental bodies and any tribunal (regulatory or otherwise), the loss of
which could have a Material Adverse Effect; and
(b) qualify and remain qualified and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization, unless the failure to do
so could not have a Material Adverse Effect.
Section 5.2 Business; Compliance with Applicable Law. The Borrower and
----------------------------------------
its Subsidiaries shall (a) engage primarily in the businesses set forth in
Section 4.1(d) hereof, and (b) comply in all material respects with the
--------------
requirements of all Applicable Law.
Section 5.3 Maintenance of Properties. The Borrower shall, and shall
-------------------------
cause each Subsidiary to, maintain or cause to be maintained all its properties
(whether owned or held under lease) in reasonably good repair, working order and
condition, taken as a whole, and from time to time make or cause to be made all
appropriate (in the reasonable judgment of the Borrower) repairs, renewals,
replacements, additions, betterment and improvements thereto.
Section 5.4 Accounting Methods and Financial Records. The Borrower shall,
----------------------------------------
and shall cause each Subsidiary to, maintain a system of accounting established
and administered in accordance with GAAP, keep adequate records and books of
account in which complete entries will be made and all transactions reflected in
accordance with GAAP, and keep accurate and complete records of its respective
assets. The Borrower and each of its Subsidiaries shall maintain a fiscal year
ending on the last day of December.
Section 5.5 Insurance. The Borrower shall, and shall cause each
---------
Subsidiary to, maintain insurance from responsible companies in such amounts and
against such risks as shall be customary and usual in the industry for companies
of similar size and capability, but in no event
-57-
less than the amount and types insured as of the Agreement Date. Each insurance
policy shall provide for at least 30 days' prior notice to the Administrative
Agent of any proposed termination or cancellation of such policy, whether on
account of default or otherwise.
Section 5.6 Payment of Taxes and Claims. The Borrower shall, and shall
---------------------------
cause each Subsidiary to, pay and discharge all taxes, assessments and
governmental charges or levies imposed upon it or its income or properties prior
to the date on which penalties attach thereto, and all lawful material claims
for labor, materials and supplies which, if unpaid, might become a Lien upon any
of its properties; except that no such tax, assessment, charge, levy or claim
need be paid which is being diligently contested in good faith by appropriate
proceedings and for which adequate reserves shall have been set aside on the
appropriate books, but only so long as no Lien (other than a Permitted Lien)
shall attach with respect thereto and no foreclosure, distraint, sale or similar
proceedings shall have been commenced. The Borrower shall, and shall cause each
of its Subsidiaries to, timely file all information returns (or extensions of
such filing deadlines) required by federal, state or local tax authorities.
Section 5.7 Visits and Inspections. The Borrower shall, and shall cause
----------------------
each of its Subsidiaries to, promptly permit representatives of the
Administrative Agent or any Lender from time to time after notice by the
Administrative Agent or any Lender no later than the previous Business Day to
(a) visit and inspect the properties of the Borrower and its Subsidiaries as
often as the Administrative Agent or any Lender shall reasonably deem advisable,
(b) audit, inspect and make extracts from and copies of the Borrower's and each
such Subsidiary's books and records, and (c) discuss with the Borrower's and
each such Subsidiary's directors, officers, employees and auditors its business,
assets, liabilities, financial positions, results of operations and business
prospects. The Borrower shall pay the reasonable expenses related to
inspections and audits performed by the Administrative Agent or any Lender.
Prior to the occurrence of an Event of Default, all such visits and inspections
shall be conducted during normal business hours and shall not be conducted more
often than once per fiscal quarter. Following the occurrence and during the
continuance of an Event of Default, such visits and inspections shall be
conducted at any time requested by the Administrative Agent or any Lender
without any requirement for advance notice.
Section 5.8 Payment of Indebtedness. Subject to Section 5.6 hereof, the
----------------------- -----------
Borrower shall, and shall cause each of its Subsidiaries to, pay its
Indebtedness when and as the same becomes due, other than amounts (other than
the Obligations) duly and diligently disputed in good faith.
Section 5.9 Use of Proceeds. The Borrower shall use the proceeds of
---------------
Advances and the Letters of Credit to (a) consummate the Shelter Components
Transaction and pay certain outstanding Indebtedness of the Borrower and its
Subsidiaries, including payment in full of all obligations and Indebtedness
under the Existing Credit Agreement, (b) pay certain fees and expenses related
to the Shelter Components Transaction, and (c) financing the ongoing working
capital and general corporate requirements of the Borrower and its Subsidiaries,
including Acquisitions permitted hereunder.
-58-
SECTION 5.10 INDEMNITY.
---------
(a) THE BORROWER AGREES TO DEFEND, PROTECT, INDEMNIFY AND HOLD HARMLESS THE
ADMINISTRATIVE AGENT, EACH LENDER, THE ISSUING BANK, EACH OF THEIR RESPECTIVE
AFFILIATES, AND EACH OF THEIR RESPECTIVE (INCLUDING SUCH AFFILIATES') OFFICERS,
DIRECTORS, TRUSTEES, EMPLOYEES, AGENTS, ATTORNEYS, SHAREHOLDERS AND CONSULTANTS
(INCLUDING, WITHOUT LIMITATION, THOSE RETAINED IN CONNECTION WITH THE
SATISFACTION OR ATTEMPTED SATISFACTION OF ANY OF THE CONDITIONS SET FORTH
HEREIN) OF EACH OF THE FOREGOING (COLLECTIVELY, "INDEMNITEES") FROM AND AGAINST
-----------
ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, CLAIMS, REASONABLE COSTS, REASONABLE EXPENSES AND REASONABLE
DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER (INCLUDING, WITHOUT LIMITATION,
THE REASONABLE FEES AND DISBURSEMENTS OF COUNSEL FOR SUCH INDEMNITEES IN
CONNECTION WITH ANY INVESTIGATIVE, ADMINISTRATIVE OR JUDICIAL PROCEEDING,
WHETHER OR NOT SUCH INDEMNITEES SHALL BE DESIGNATED A PARTY THERETO), IMPOSED
ON, INCURRED BY, OR ASSERTED AGAINST SUCH INDEMNITEES (WHETHER DIRECT, INDIRECT
OR CONSEQUENTIAL AND WHETHER BASED ON ANY FEDERAL, STATE, OR LOCAL LAWS AND
REGULATIONS, UNDER COMMON LAW OR AT EQUITABLE CAUSE, OR ON CONTRACT, TORT OR
OTHERWISE, ARISING FROM OR CONNECTED WITH THE PAST, PRESENT OR FUTURE OPERATIONS
OF THE BORROWER, OR ANY OF ITS SUBSIDIARIES OR THEIR RESPECTIVE PREDECESSORS IN
INTEREST, OR THE PAST, PRESENT OR FUTURE ENVIRONMENTAL CONDITION OF PROPERTY OF
THE BORROWER OR ANY OF ITS SUBSIDIARIES), IN ANY MANNER RELATING TO OR ARISING
OUT OF THIS AGREEMENT, THE LOAN DOCUMENTS, OR ANY ACT, EVENT OR TRANSACTION OR
ALLEGED ACT, EVENT OR TRANSACTION RELATING OR ATTENDANT THERETO, THE MANAGEMENT
OF THE ADVANCES, INCLUDING IN CONNECTION WITH, OR AS A RESULT, IN WHOLE OR IN
PART, OF ANY NEGLIGENCE OF ADMINISTRATIVE AGENT OR ANY LENDER (OTHER THAN THOSE
MATTERS RAISED EXCLUSIVELY BY A PARTICIPANT AGAINST THE
ADMINISTRATIVE AGENT OR ANY LENDER AND NOT THE BORROWER), OR THE USE OR INTENDED
USE OF THE PROCEEDS OF THE ADVANCES HEREUNDER, OR IN CONNECTION WITH ANY
INVESTIGATION OF ANY POTENTIAL MATTER COVERED HEREBY, BUT EXCLUDING (I) ANY
CLAIM OR LIABILITY THAT ARISES AS THE RESULT OF THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF ANY INDEMNITEE, AS FINALLY JUDICIALLY DETERMINED BY A COURT OF
COMPETENT JURISDICTION, AND (II) MATTERS RAISED BY ONE LENDER AGAINST ANOTHER
LENDER OR BY ANY SHAREHOLDERS OF A LENDER AGAINST A LENDER OR ITS MANAGEMENT
(COLLECTIVELY, "INDEMNIFIED MATTERS"). TO THE EXTENT
-------------------
-59-
THAT ANY INDEMNIFIED MATTER INVOLVES ONE OR MORE INDEMNITEES, SUCH INDEMNITEES
SHALL USE THE SAME LEGAL COUNSEL UNLESS ANY INDEMNITEE IN ITS REASONABLE
DISCRETION DETERMINES THAT CONFLICTS EXIST OR MAY ARISE IN CONNECTION WITH SUCH
REPRESENTATION.
(b) IN ADDITION, THE BORROWER SHALL PERIODICALLY, UPON REQUEST, REIMBURSE
EACH INDEMNITEE FOR ITS REASONABLE LEGAL AND OTHER ACTUAL REASONABLE EXPENSES
(INCLUDING THE REASONABLE COST OF ANY INVESTIGATION AND PREPARATION) INCURRED IN
CONNECTION WITH ANY INDEMNIFIED MATTER; PROVIDED, HOWEVER, THAT PRIOR TO THE
OCCURRENCE OF A DEFAULT, THE ADMINISTRATIVE AGENT OR LENDERS, AS APPLICABLE,
SHALL OBTAIN THE BORROWER'S PREVIOUS CONSENT BEFORE THE INCURRENCE OF ANY LEGAL
AND OTHER EXPENSES OTHER THAN THOSE INCURRED IN CONNECTION WITH THE
DOCUMENTATION OF THIS CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THOSE
INCURRED IN CONNECTION WITH THE EXERCISE OF ANY RIGHTS UNDER SECTION 5.7 HEREOF.
-----------
THE REIMBURSEMENT, INDEMNITY AND CONTRIBUTION OBLIGATIONS UNDER THIS SECTION
SHALL BE IN ADDITION TO ANY LIABILITY WHICH THE BORROWER MAY OTHERWISE HAVE,
SHALL EXTEND UPON THE SAME TERMS AND CONDITIONS TO EACH INDEMNITEE, AND SHALL BE
BINDING UPON AND INURE TO THE BENEFIT OF ANY SUCCESSORS, ASSIGNS, HEIRS AND
PERSONAL REPRESENTATIVES OF THE BORROWER, THE ADMINISTRATIVE AGENT, THE LENDERS
AND ALL OTHER INDEMNITEES. THIS SECTION SHALL SURVIVE ANY TERMINATION OF THIS
AGREEMENT AND PAYMENT OF THE OBLIGATIONS.
Section 5.11 Environmental Law Compliance. The use which the Borrower or
----------------------------
any of its Subsidiaries intends to make of any real property which is owned or
leased by it will not result in the disposal or other release of any hazardous
substance or solid waste on or to such real property which is in violation of
Applicable Environmental Laws. As used herein, the terms "hazardous substance"
and "release" as used in this Section shall have the meanings specified in
CERCLA (as defined in the definition of Applicable Environmental Laws), and the
terms "solid waste" and "disposal" shall have the meanings specified in RCRA (as
defined in the definition of Applicable Environmental Laws); provided, however,
that if CERCLA or RCRA is amended so as to broaden or lessen the meaning of any
term defined thereby, such broader or lesser meaning shall apply subsequent to
the effective date of such amendment; and provided further, to the extent that
any other law applicable to the Borrower, any of its Subsidiaries or any of
their properties establishes a meaning for "hazardous substance," "release,"
"solid waste," or "disposal" which is broader or lesser than that specified in
either CERCLA or RCRA, such broader or lesser meaning shall apply. The Borrower
agrees to indemnify and hold the Administrative Agent and each Lender harmless
from and against, and to reimburse them with respect to, any and all claims,
demands, causes of action, loss, damage, liabilities, reasonable costs and
reasonable expenses (including reasonable attorneys' fees and courts costs) of
any kind or character, known or
-60-
unknown, fixed or contingent, asserted against or incurred by any of them at any
time and from time to time by reason of or arising out of (a) the failure of the
Borrower or any Subsidiary to perform any of their obligations hereunder
regarding asbestos or Applicable Environmental Laws, (b) any violation on or
before the Release Date of any Applicable Environmental Law in effect on or
before the Release Date, and (c) any act, omission, event or circumstance
existing or occurring on or prior to the Release Date (including without
limitation the presence on such real property or release from such real property
of hazardous substances or solid wastes disposed of or otherwise released on or
prior to the Release Date), resulting from or in connection with the ownership
of the real property, regardless of whether the act, omission, event or
circumstance constituted a violation of any Applicable Environmental Law at the
time of its existence or occurrence; provided that, the Borrower shall not be
under any obligation to indemnify the Administrative Agent or any Lender to the
extent that any such liability arises as the result of the gross negligence or
willful misconduct of such Person, as finally judicially determined by a court
of competent jurisdiction. The provisions of this paragraph shall survive the
Release Date and shall continue thereafter in full force and effect.
Section 5.12 Further Assurances. At any time or from time to time upon
------------------
the reasonable request by the Administrative Agent, the Borrower or any
Subsidiary of the Borrower shall execute and deliver such further documents and
do such other acts and things as the Administrative Agent may reasonably request
in order to effect fully the purposes of this Agreement and the other Loan
Documents and to provide for payment of the Obligations in accordance with the
terms of this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, the Borrower agrees to (a) update and deliver to
the Administrative Agent Schedule 4 hereto at the time of delivery of the
----------
financial statements set forth in Sections 6.1 and 6.2 hereof if the information
------------ ---
provided therein is not complete and correct, (b) update and deliver to the
Administrative Agent Schedule 1 to the Security Agreements promptly upon
----------
discovery if the information provided therein is not complete and correct, and
(c) execute and deliver to the Administrative Agent Deeds of Trust with respect
to any real property hereafter acquired by the Borrower or any of its
Subsidiaries, as applicable, together with surveys and environmental reports in
form satisfactory to the Administrative Agent and title insurance thereon in
form and amounts satisfactory to the Administrative Agent, and such board
resolutions, officer's certificates, corporate and other documents and opinions
of counsel as the Administrative Agent shall reasonably request with respect
thereto. Immediately after completion of the Shelter Components Tender and the
making of the initial Advance hereunder, (a) Shelter Components and each of its
Subsidiaries shall execute a Subsidiary Guaranty and Collateral Documents
granting a first priority Lien in all of their respective assets to secure the
Obligations, and (b) the Lenders shall receive such documents, board
resolutions, officer's certificates and opinions of counsel as the
Administrative Agent shall reasonably request in connection with the actions
described in clause (a) immediately preceding. Upon consummation of the Shelter
Components Merger, (a) 100% of the Capital Stock of Shelter Components and each
of its Subsidiaries shall be pledged to secure the Obligations and (b) the
Lenders shall receive such documents, board resolutions, officer's certificates,
and opinions of counsel as the Administrative Agent shall reasonably request in
connection with the actions described in clause (a) immediately preceding.
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Section 5.13 Subsidiaries. Except as is otherwise provided in Section
------------ -------
5.12 above with respect to Shelter Components and its Subsidiaries, at any time
----
that any Person becomes a Subsidiary, (a) such Subsidiary shall execute a
Subsidiary Guaranty of the Obligations and Collateral Documents granting a first
priority Lien in all its assets to secure the Obligations, (b) 100% of such
Subsidiary's Capital Stock shall be pledged to secure the Obligations, and (c)
the Lenders shall receive such documents, board resolutions, officer's
certificates and opinions of counsel as the Administrative Agent shall
reasonably request in connection with the actions described in clauses (a) and
(b) above.
Section 5.14 Deeds of Trust. If the Determining Lenders shall so request
--------------
in writing, the Borrower shall, and shall cause each Subsidiary to, within five
Business Days of such request, create and deliver to the Administrative Agent
(a) any Deeds of Trust, together with related fixture filings and financing
statements, concerning any real property owned by the Borrower or such
Subsidiary not previously pledged hereunder, (b) such other documents and
instruments as the Administrative Agent shall deem necessary in its sole
judgment to grant or assure the Lenders a first priority, perfected Lien in any
real property owned by the Borrower or such Subsidiary, and (c) opinions of
counsel to the Borrower and each Subsidiary, in form and substance reasonably
satisfactory to the Administrative Agent, with respect to the execution and
enforceability of the Deeds of Trust and related documents. As an accommodation
to the Borrower, to the extent that any mortgage or similar tax is required to
be paid in connection with the filing and recordation of any Deed of Trust,
Lenders agree to limit the amount of Debt secured by such Deed of Trust to an
amount not in excess of 120% of the fair market value of the Collateral subject
to such Deed of Trust determined at the time of filing of such Deed of Trust.
ARTICLE 6
Information Covenants
---------------------
So long as any of the Obligations are outstanding and unpaid or any
Commitment is outstanding (whether or not the conditions to borrowing have been
or can be fulfilled), the Borrower shall furnish or cause to be furnished to
each Lender, subject to such Lender having executed a Confidentiality Agreement:
Section 6.1 Quarterly Financial Statements and Information. Within 45
----------------------------------------------
days after the end of each fiscal quarter, a consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such fiscal quarter and the
related consolidated statement of income for such fiscal quarter and for the
elapsed portion of the year ended with the last day of such fiscal quarter, and
consolidated statement of cash flow of the Borrower and its Subsidiaries for the
elapsed portion of the year ended with the last day of such fiscal quarter; all
of which shall be certified by the president or chief financial officer or other
officer of the Borrower acceptable to the Administrative Agent, to be, in his or
her opinion acting solely in his or her capacity as an officer of the Borrower,
complete and correct in all material respects and to present fairly, in
accordance with GAAP, the financial position and results of operations of the
Borrower and its Subsidiaries
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as at the end of and for such fiscal quarter, and for the elapsed portion of the
year ended with the last day of such fiscal quarter, subject only to normal
year-end adjustments.
Section 6.2 Annual Financial Statements and Information; Certificate of No
--------------------------------------------------------------
Default.
-------
(a) Within 90 days after the end of each fiscal year, a copy of the
consolidated balance sheets of the Borrower and its Subsidiaries, as of the end
of the current and prior fiscal years and (ii) the consolidated statements of
earnings of the Borrower and its Subsidiaries and consolidated statements of
changes in shareholders' equity of the Borrower and its Subsidiaries, and
statements of changes in cash flow of the Borrower and its Subsidiaries as of
and through the end of such fiscal year, all of which are prepared in accordance
with GAAP, and certified by independent certified public accounts acceptable to
the Lenders (provided, however, any big six public accounting firm shall be
acceptable to the Lenders), whose opinion shall be in scope and substance in
accordance with generally accepted auditing standards and shall be unqualified.
(b) Simultaneously with the delivery of the statements required by this
Section 6.2, a letter from the Borrower's public accountants certifying that no
-----------
Default was detected during the examination of the Borrower and its
Subsidiaries.
Section 6.3 Compliance Certificate. At the time financial statements are
----------------------
furnished pursuant to Sections 6.1 and 6.2 hereof, the Compliance Certificate,
------------ ---
completed as provided therein.
Section 6.4 Copies of Other Reports and Notices.
-----------------------------------
(a) Promptly upon their becoming available, a copy of (i) all material
reports or letters submitted to any Obligor by accountants in connection with
any annual, interim or special audit, including without limitation any report
prepared in connection with the annual audit referred to in Section 6.2 hereof,
-----------
and, if requested by the Administrative Agent, any other comment letter
submitted to management in connection with any such audit, (ii) each financial
statement, report, notice or proxy statement sent by any Obligor to stockholders
generally, (iii) each regular, periodic or other report and any registration
statement (other than statements on Form S-8) or prospectus (or material written
communication in respect of any thereof) filed by any Obligor with any
securities exchange, with the Securities and Exchange Commission or any
successor agency, and (iv) all press releases concerning material financial
aspects of any Obligor;
(b) Promptly upon becoming aware that (i) the holder(s) of any note(s) or
other evidence of indebtedness or other security of any Obligor in excess of
$100,000 in the aggregate has given notice or taken any action with respect to a
breach, failure to perform, claimed default or event of default thereunder, (ii)
any occurrence or non-occurrence of any event which constitutes or which with
the passage of time or giving of notice or both could constitute a material
breach by any Obligor under any material agreement or instrument other than this
Agreement to which any Obligor is a party or by which any of their properties
may be bound, or (iii) any event, circumstance or condition which could
reasonably be expected to be classified as a Material
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Adverse Effect, a written notice specifying the details thereof (or the nature
of any claimed default or event of default) and what action is being taken or is
proposed to be taken with respect thereto;
(c) Promptly upon becoming aware that any party to any Capitalized Lease
Obligations or any other lease obligations of any Obligor, in each case, in
excess of $100,000, has given notice or taken any action with respect to a
breach, failure to perform, claimed default or event of default thereunder, a
written notice specifying the details thereof (or the nature of any claimed
default or event of default) and what action is being taken or is proposed to be
taken with respect thereto;
(d) Promptly upon receipt thereof, information with respect to and copies
of any notices received from any federal, state or local regulatory agencies or
any tribunal relating to any order, ruling, law, information or policy that
relates to a breach of or noncompliance with any Law by any Obligor, or might
result in the payment of money by any Obligor in an amount of $100,000 or more
in the aggregate, or otherwise have a Material Adverse Effect, or result in the
loss or suspension of any Necessary Authorization;
(e) Promptly upon receipt from any governmental agency, or any government,
political subdivision or other entity, any material notice, correspondence,
hearing, proceeding or order regarding or affecting any Obligor, or any of their
respective properties or businesses; and
(f) From time to time and promptly upon each request, such data,
certificates, reports, statements, documents or further information regarding
the assets, business, liabilities, financial position, projections, results of
operations or business prospects of any Obligor, as the Administrative Agent or
any Lender may reasonably request.
Section 6.5 Notice of Litigation, Default and Other Matters. Prompt
-----------------------------------------------
notice of the following events after the Borrower has knowledge or notice
thereof:
(a) The commencement of all proceedings and investigations by or before any
governmental body, and all actions and proceedings in any court or before any
arbitrator involving claims for damages (including punitive damages) in excess
of $100,000 (after deducting the amount with respect to any Obligor is insured),
against or in any other way relating directly to any Obligor, or any of their
respective properties or businesses;
(b) Promptly upon the happening of any condition or event of which the
Borrower has current actual knowledge which constitutes a Default, a written
notice specifying the nature and period of existence thereof and what action is
being taken or is proposed to be taken with respect thereto; and
(c) Any material adverse change with respect to the business, assets,
liabilities, financial position, results of operations or prospective business
of any Obligor, other than changes in the ordinary course of business which have
not had and are not likely to have a Material Adverse Effect.
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Section 6.6 ERISA Reporting Requirements.
----------------------------
(a) Promptly and in any event (i) within 30 days after the Borrower or any
member of its Controlled Group has current actual knowledge that any ERISA Event
described in clause (a) of the definition of ERISA Event or any event described
in Section 4063(a) of ERISA with respect to any Plan of the Borrower or any
member of its Controlled Group has occurred, and (ii) within 10 days after the
Borrower or any member of its Controlled Group has current actual knowledge that
any other ERISA Event with respect to any Plan of the Borrower or any member of
its Controlled Group has occurred or a request for a minimum funding waiver
under Section 412 of the Code with respect to any Plan of the Borrower or any
member of its Controlled Group, a written notice describing such event and
describing what action is being taken or is proposed to be taken with respect
thereto, together with a copy of any notice of event that is given to the PBGC;
(b) Promptly and in any event within three Business Days after receipt
thereof by the Borrower or any member of its Controlled Group from the PBGC,
copies of each notice received by the Borrower or any member of its Controlled
Group of the PBGC's intention to terminate any Plan or to have a trustee
appointed to administer any Plan;
(c) Promptly and in any event within 30 days after the filing thereof by
the Borrower or any member of its Controlled Group with the United States
Department of Labor or the Internal Revenue Service, copies of each annual
report (including Schedule B thereto, if applicable) with respect to each Plan
of which the Borrower or any member of its Controlled Group is the "plan
sponsor";
(d) Promptly, and in any event within 10 Business Days after receipt
thereof, a copy of any correspondence the Borrower or any member of its
Controlled Group receives from the Plan Sponsor (as defined by Section
4001(a)(10) of ERISA) of any Plan concerning potential withdrawal liability
pursuant to Section 4219 or 4202 of ERISA, and a statement from the chief
financial officer of the Borrower or such member of its Controlled Group setting
forth details as to the events giving rise to such potential withdrawal
liability and the action which the Borrower or such member of its Controlled
Group is taking or proposes to take with respect thereto;
(e) Notification within 30 days of any material increases in the benefits
of any existing Plan which is not a Multiemployer Plan, or the establishment of
any new Plans, or the commencement of contributions to any Plan to which the
Borrower or any member of its Controlled Group was not previously contributing
which would in either case result in a material liability to the Borrower;
(f) Notification within three Business Days after the Borrower or any
member of its Controlled Group knows that the Borrower or any such member of its
Controlled Group has filed or intends to file a notice of intent to terminate
any Plan under a distress termination within the meaning of Section 4041(c) of
ERISA and a copy of such notice; and
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(g) Within three Business Days after receipt of written notice of
commencement thereof, notice of all actions, suits and proceedings before any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting the Borrower or any member of
its Controlled Group with respect to any Plan, except those which, in the
aggregate, if adversely determined could not have a Material Adverse Effect.
ARTICLE 7
Negative Covenants
------------------
So long as any of the Obligations are outstanding and unpaid or any
Commitment is outstanding (whether or not the conditions to borrowing have been
or can be fulfilled):
Section 7.1 Indebtedness. The Borrower shall not, and shall not permit
------------
any of its Subsidiaries to, create, assume, incur or otherwise become or remain
obligated in respect of, or permit to be outstanding, or suffer to exist any
Indebtedness, except:
(a) Indebtedness under the Loan Documents;
(b) Accounts payable, accrued liabilities and deferred taxes incurred in
the ordinary course of business;
(c) Indebtedness, including, in respect of Capitalized Lease Obligations,
incurred to purchase, or to finance the purchase of, assets which constitute
property, plant and equipment, not to exceed $5,000,000 in aggregate principal
amount outstanding at any time;
(d) Interest hedging obligations under Interest Hedge Agreements entered
into with any Lender or any of their respective Affiliates;
(e) Indebtedness existing on the Agreement Date which is described on
Schedule 7 hereto, including renewals (but no increases) thereof;
----------
(f) Indebtedness in respect of endorsement of negotiable instruments in the
ordinary course of business;
(g) Indebtedness in respect of the Senior Subordinated Notes;
(h) Institutional Debt and Subordinated Debt, provided that the Net Cash
Proceeds of such Institutional Debt and Subordinated Debt are applied in
accordance with Section 2.5(f) hereof;
--------------
(i) Indebtedness in respect of the Shepherd Acquisition not to exceed
$4,000,000 in aggregate amount; and
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(j) Other Indebtedness not to exceed $2,500,000 in aggregate amount
outstanding at any time.
Section 7.2 Liens. The Borrower shall not, and shall not permit any of
-----
its Subsidiaries to, create, assume, incur, permit or suffer to exist, directly
or indirectly, any Lien on any of its assets, whether now owned or hereafter
acquired, except Permitted Liens. Except with respect to the Senior
Subordinated Notes, the Borrower shall not, and shall not permit any of its
Subsidiaries to, agree with any other Person that it shall not create, assume,
incur, permit or suffer to exist or to be created, assumed, incurred or
permitted to exist, directly or indirectly, any Lien on any of its assets.
Section 7.3 Investments. The Borrower shall not, and shall not permit any
-----------
of its Subsidiaries to, make any Investment, except that the Borrower may
purchase or otherwise acquire and own:
(a) Marketable, direct obligations of, or guaranteed by, the United States
of America and maturing in one year or less of the date of purchase;
(b) Commercial paper maturing not more than 270 days from the date of
creation thereof issued by U.S. corporations that have a rating of A-1/P-1 or
better by Xxxxx'x Investors Service, Inc. or Standard & Poor's Ratings Group, a
Division of XxXxxx-Xxxx, Inc., a New York corporation;
(c) Certificates of deposit maturing in one year or less of the date of
purchase of domestic banks which banks' debt obligations have one of the two
highest ratings obtainable from Xxxxx'x Investors Service, Inc. or Standard &
Poor's Ratings Group, a Division of XxXxxx-Xxxx, Inc., a New York corporation;
(d) Accounts receivable that arise in the ordinary course of business and
are payable on standard terms;
(e) Investments in existence on the Agreement Date which are described on
Schedule 6 hereto;
----------
(f) Investments in Subsidiaries; provided that (i) such Subsidiary shall
have executed a Subsidiary Guaranty of the Obligations and Collateral Documents
granting a first priority Lien in all its assets to secure the Obligations and
(ii) 100% of such Subsidiary's Capital Stock shall be pledged to secure the
Obligations; and
(g) Other Investments not to exceed $250,000 in aggregate amount.
Section 7.4 Liquidation, Merger, New Subsidiaries. The Borrower shall
-------------------------------------
not, and shall not permit any of its Subsidiaries to, at any time:
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(a) liquidate or dissolve itself (or suffer any liquidation or dissolution)
or otherwise wind up; or
(b) enter into any merger or consolidation (i) unless with respect to a
merger or consolidation, the Borrower shall be the surviving corporation, unless
the merger or consolidation involves a Subsidiary of the Borrower and the
Borrower is not merging or consolidating with another Person, and either (A)
such Subsidiary shall be the surviving corporation, (B) the survivor of the
merger becomes a Subsidiary of the Borrower that becomes a party to a Subsidiary
Security Agreement (and any other appropriate Collateral Documents) and a
Subsidiary Guaranty and 100% of whose Capital Stock is pledged to secure the
Obligations or (C) the entity formed becomes a party to a Subsidiary Security
Agreement (and any other appropriate Collateral Documents) and a Subsidiary
Guaranty and has 100% of its Capital Stock pledged to secure the Obligations,
such Subsidiary shall be the surviving corporation, (ii) if such transaction
shall be utilized to circumvent compliance with any term or provision herein and
(iii) unless no Default or Event of Default shall then be in existence or occur
as a result of such transaction.
Section 7.5 Sale of Assets. The Borrower shall not, and shall not permit
--------------
any of its Subsidiaries to, sell, lease, abandon, transfer or otherwise dispose
of assets in an aggregate amount during any fiscal year in excess of $500,000,
except (i) sales of inventory and other assets sold in the ordinary course of
business, (ii) sales or other dispositions of worn out or obsolete assets, (iii)
sales of Cash Equivalents in the ordinary course of business, (iv) sale of
assets in which the Net Cash Proceeds thereof are used within 90 days of such
sale to purchase assets of similar value and quality and business utility to
those assets sold, or (v) asset sales, the Net Cash Proceeds of which are
applied in accordance with Section 2.5(c) hereof.
--------------
Section 7.6 Acquisitions. The Borrower shall not, and shall not permit
------------
any of its Subsidiaries to, make any Acquisition (excluding the Acquisition of
Shelter Components); provided, however, if immediately prior to and after giving
effect to the proposed Acquisition there shall not exist a Default or Event of
Default, then the Borrower or any of its Subsidiaries may make Acquisitions so
long as (i) such Acquisition shall not be opposed by the board of directors of
the Person being acquired, (ii) Lenders shall have received written notice at
least 15 Business Days prior to the date of such Acquisition, (iii) the
Administrative Agent shall have received at least 15 Business Days prior to the
date of such Acquisition a Compliance Certificate setting forth the covenant
calculations both immediately prior to and after giving effect to the proposed
Acquisition, (iv) the assets, property or business acquired shall be in the
business described in Section 4.1(d) hereof and the Administrative Agent for the
--------------
benefit of the Lenders shall have a first priority Lien in such assets, (v) if
the Acquisition results in a Subsidiary, (A) such Subsidiary shall execute a
Subsidiary Guaranty of the Obligations and Collateral Documents granting a first
priority Lien in all its assets to secure the Obligations, (B) 100% of such
Subsidiary's Capital Stock shall be pledged to secure the Obligations, and (C)
the Lenders receive such documents, board resolutions, officer's certificates
and opinions of counsel as the Administrative Agent shall reasonably request in
connection with the actions described in clauses (A) and (B) above, and (vi) the
aggregate Acquisition Consideration (excluding the Shepherd Acquisition)
expended by the Borrower and its Subsidiaries for Acquisitions during any
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period of four consecutive fiscal quarters (commencing October 1, 1997) shall
not exceed $25,000,000.
Section 7.7 Restricted Payments. The Borrower shall not, and shall not
-------------------
permit any of its Subsidiaries to, directly or indirectly declare, pay or make
any Restricted Payments, except (a) Dividends payable by a Subsidiary to the
Borrower or another Subsidiary, (b) Dividends payable in stock and not cash, (c)
liquidated damages with respect to the Senior Subordinated Notes, (d) regularly
scheduled payments of interest on Subordinated Debt, (e) payments under the Tax
Indemnification Agreement not to exceed $500,000 in an aggregate amount during
any fiscal year, and (f) loans to directors, officers and employees of the
Borrower and its Subsidiaries not to exceed $50,000 in aggregate amount during
any fiscal year; provided, further, however, the Borrower shall not pay or make
any Restricted Payments permitted by this Section 7.5 unless there shall exist
-----------
no Default prior to or after giving effect to any such proposed Restricted
Payment.
Section 7.8 Affiliate Transactions. Except (a) for those certain (i)
----------------------
lease agreements for the Borrower's facilities in Newton, Kansas, and Elkhart,
Indiana, with K & E Land and Leasing, a Texas general partnership, (ii)
equipment lease agreements with K & E Land and Leasing, and (iii) lease of six
automobiles from a partnership with certain officers of Service Supply, all of
which leases described in clauses (i), (ii) and (iii) immediately preceding are
reflected on Borrower's financial statements as Capitalized Leases and (b) as
otherwise expressly permitted herein to the contrary, the Borrower shall not,
and shall not permit any Subsidiary to, at any time engage in any transaction
with an Affiliate (other than the Borrower or any of its Subsidiaries), nor make
an assignment or other transfer of any of its assets or properties to any
Affiliate (other than the Borrower or any of its Subsidiaries), on terms
materially less advantageous to the Borrower or any of its Subsidiaries than
would be the case if such transaction had been effected with a non-Affiliate
(other than advances to employees in the ordinary course of business). The
Borrower shall not, and shall not permit any of its Subsidiaries to, in any
event incur or suffer to exist any Indebtedness or Guaranty in favor of any
Affiliate, unless such Affiliate shall subordinate the payment and performance
thereof to the Obligations on terms, conditions and documentation satisfactory
to the Determining Lenders.
Section 7.9 Compliance with ERISA. The Borrower shall not, and shall not
---------------------
permit any of its Subsidiaries to, directly or indirectly, or permit any member
of its Controlled Group to directly or indirectly, (a) terminate any Plan so as
to result in any material (in the opinion of the Determining Lenders) liability
to the Borrower or any member of its Controlled Group taken as a whole, (b)
permit to exist any ERISA Event, or any other event or condition which presents
the risk of a material (in the opinion of the Determining Lenders) liability of
the Borrower or any member of its Controlled Group taken as a whole, (c) make a
complete or partial withdrawal (within the meaning of Section 4201 of ERISA)
from any Multiemployer Plan so as to result in any material (in the reasonable
opinion of the Determining Lenders) liability to the Borrower or any member of
its Controlled Group taken as a whole, (d) enter into any new Plan or modify any
existing Plan so as to increase its obligations thereunder except in the
ordinary course of business consistent with past practice which could result in
any material (in the opinion of the Determining Lenders) liability to the
Borrower or any member of its Controlled Group taken as a whole, or
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(e) permit the present value of all benefit liabilities, as defined in Title IV
of ERISA, under each Plan of the Borrower or any member of its Controlled Group
(using the actuarial assumptions utilized by each such Plan) to exceed the fair
market value of Plan assets allocable to such benefits, all determined as of the
most recent valuation date for each such Plan, by $50,000.
Section 7.10 Leverage Ratio. The Borrower shall not permit the Leverage
--------------
Ratio to be greater than (a) 5.25 to 1 at the end of any fiscal quarter
occurring during the period from the Agreement Date to but not including
December 31, 1998, (b) 4.75 to 1 at the end of any fiscal quarter occurring
during the period from and including December 31, 1998 to but not including
December 31, 1999, (c) 4.25 to 1 at the end of any fiscal quarter occurring
during the period from and including December 31, 1999 to but not including
December 31, 2000, and (d) 3.75 to 1 at December 31, 2000 and at the end of any
fiscal quarter thereafter; provided, however, for purposes of determining the
Leverage Ratio for purposes of this Section 7.10 only, there shall be added to
------------
EBITDA on a non-cumulative basis an amount of (i) $5,300,000 at Xxxxxxxx 00,
0000, (xx) $5,000,000 at March 31, 1998, and (iii) $3,750,000 at June 30, 1998.
Section 7.11 Fixed Charge Coverage Ratio. The Borrower shall not permit
---------------------------
the Fixed Charge Coverage Ratio to be less than (a) 1.25 to 1 at the end of the
fiscal quarters ending March 31, 1998, June 30, 1998 and September 30, 1998,
calculated in each case from January 1, 1998 to and including each such fiscal
quarter and (b) 1.50 to 1 at the end of any fiscal quarter thereafter,
calculated for the four fiscal quarters preceding the date of determination.
Section 7.12 Net Worth. The Borrower shall not permit the Net Worth at
---------
any time to be less than the sum of (a) $35,000,000, plus (b) 50% of cumulative
Net Income for the period from and including December 31, 1997 (but excluding
from the calculation of such cumulative Net Income the effect, if any, of any
fiscal quarter (or portion of a fiscal quarter not yet ended) for which Net
Income was a negative number), plus (c) 50% of the Net Cash Proceeds of any
Equity Offering, plus (d) 50% of the amount of any Subordinated Debt which is
converted into or exchanged for equity of the Borrower or any of its
Subsidiaries.
Section 7.13 Sale and Leaseback. The Borrower shall not, and shall not
------------------
permit any of its Subsidiaries to, enter into any arrangement whereby it sells
or transfers any of its assets, and thereafter rents or leases such assets.
Section 7.14 Sale or Discount of Receivables. The Borrower shall not, and
-------------------------------
shall not permit any of its Subsidiaries to, directly or indirectly, sell, with
or without recourse, for discount or otherwise, any notes or accounts
receivable.
Section 7.15 Capital Expenditures. The Borrower shall not permit the
--------------------
Capital Expenditures (exclusive of Acquisitions) to be paid or incurred by it
and its Subsidiaries to exceed (a) $12,000,000 in aggregate amount during the
period from the Agreement Date to and including December 31, 1998 and (b) 1% of
cumulative net revenues of the Borrower and its Subsidiaries from and after
January 1, 1998.
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Section 7.16 Amendments and Waivers of Institutional Debt or Subordinated
------------------------------------------------------------
Debt. The Borrower shall not, and shall not permit any Subsidiary to, change or
----
amend (or take any action or fail to take any action the result of which is an
effective amendment or change) or accept any waiver or consent with respect to,
any document, instrument or agreement relating to any Institutional Debt or
Subordinated Debt that would result in (a) an increase in the principal,
interest, overdue interest, fees or other amounts payable under the
Institutional Debt or Subordinated Debt, (b) an acceleration in any date fixed
for payment or prepayment of principal, interest, fees or other amounts payable
under the Institutional Debt or Subordinated Debt (including, without
limitation, as a result of any redemption), (c) a reduction in any percentage of
holders of the Institutional Debt or Subordinated Debt required under the terms
of the Institutional Debt or Subordinated Debt to take (or refrain from taking)
any action under the Institutional Debt or Subordinated Debt, (d) a change in
the definition of "Change of Control" or "Change in Control" or similar event or
circumstance, however defined or designated, as provided in the Institutional
Debt or Subordinated Debt which would result in such definition being more
restrictive than such definition in this Agreement, (e) a change in any of the
subordination provisions of the Institutional Debt or Subordinated Debt, (f) a
change in any covenant, term or provision in the Institutional Debt or
Subordinated Debt which would result in such term or provision being more
restrictive than the terms of this Agreement and the other Loan Documents or (g)
a change in any term or provision of the Institutional Debt or Subordinated Debt
that could have, in any material respect, an adverse effect on the interest of
the Lenders.
ARTICLE 8
Default
-------
Section 8.1 Events of Default. Each of the following shall constitute an
-----------------
Event of Default, whatever the reason for such event, and whether voluntary,
involuntary, or effected by operation of law or pursuant to any judgment or
order of any court or any order, rule or regulation of any governmental or non-
governmental body:
(a) Any representation or warranty made under any Loan Document shall prove
to have been incorrect or misleading in any material respect when made;
(b) The Borrower shall default in the payment of any (i) principal under
any Note when due and (ii) interest under any Note or under any other Loan
Document or any fees payable hereunder or any other costs, fees, expenses or
other amounts payable hereunder or under the other Loan Documents, when due,
which Default with respect to clause (ii) above is not cured within five
Business Days after the occurrence thereof;
(c) The Borrower or any of its Subsidiaries shall default in the
performance or observance of any agreement or covenant contained in Section 5.1
-----------
or Article 7 hereof;
---------
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(d) The Borrower or any of its Subsidiaries shall default in the
performance or observance of any other agreement or covenant contained in this
Agreement not specifically referred to elsewhere in this Section 8.1, and such
-----------
default shall not be cured within a period of 30 days after the earlier of
notice from the Administrative Agent thereof or actual notice thereof by the
Borrower or such Subsidiary;
(e) Any Obligor shall default or breach in the performance or observance of
any agreement or covenant (after the expiration of any applicable notice and
cure or grace period) in any of the Loan Documents (other than this Agreement);
(f) There shall be commenced an involuntary proceeding or an involuntary
petition shall be filed in a court having competent jurisdiction seeking (i)
relief in respect of any Obligor or a substantial part of the property or assets
of such Obligor under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other applicable Federal or state bankruptcy law or
other similar law, (ii) the appointment of a receiver, liquidator, assignee,
trustee, custodian, sequestrator or similar official of any Obligor, or of any
substantial part of its property or assets, or (iii) the winding-up or
liquidation of the affairs of any Obligor, and any such proceeding or petition
shall continue unstayed and in effect for a period of 60 consecutive days;
(g) Any Obligor shall (i) file a petition, answer or consent seeking relief
under Title 11 of the United States Code, as now constituted or hereafter
amended, or any other applicable Federal or state bankruptcy law or other
similar law, (ii) consent to the institution of proceedings thereunder or to the
filing of any such petition or to the appointment or taking of possession of a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of any Obligor or of any substantial part of their respective
properties, (iii) file an answer admitting the material allegations filed
against it in any such proceeding, (iv) make a general assignment for the
benefit of creditors, (v) fail generally to pay its debts as they become due, or
(vi) take any action in furtherance of any such action;
(h) A final judgment or judgments shall be entered by any court against any
Obligor for the payment of money which exceeds $250,000 in the aggregate, or a
warrant of attachment or execution or similar process shall be issued or levied
against property of the any Obligor which, together with all other such property
of such Obligor subject to other such process, exceeds in value $250,000 in the
aggregate, and if such judgment or award is not insured or, within 30 days after
the entry, issue or levy thereof, such judgment, warrant or process shall not
have been paid or discharged or stayed pending appeal, or if, after the
expiration of any such stay, such judgment, warrant or process shall not have
been paid or discharged;
(i) With respect to any Plan of the Borrower or any member of its
Controlled Group: (i) the Borrower, any such member, or any other party-in-
interest or disqualified person shall engage in transactions which in the
aggregate would reasonably result in a direct or indirect liability to the
Borrower or any member of its Controlled Group in excess of $100,000 under
Section 409 or 502 of ERISA or Section 4975 of the Code; (ii) the Borrower or
any member of its Controlled Group shall incur any accumulated funding
deficiency, as defined in Section 412
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of the Code, in the aggregate in excess of $100,000, or request a funding waiver
from the Internal Revenue Service for contributions in the aggregate in excess
of $100,000; (iii) the Borrower or any member of its Controlled Group shall
incur any withdrawal liability in the aggregate in excess of $100,000 as a
result of a complete or partial withdrawal within the meaning of Section 4203 or
4205 of ERISA, or any other liability with respect to a Plan in excess of
$100,000, unless the amount of such liability has been funded within the Plan or
pursuant to one or more insurance contracts; (iv) the Borrower or any member of
its Controlled Group shall fail to make a required contribution by the due date
under Section 412 of the Code or Section 302 of ERISA which would result in the
imposition of a lien under Section 412 of the Code or Section 302 of ERISA; (v)
the Borrower, any member of its Controlled Group or any Plan sponsor shall
notify the PBGC of an intent to terminate, or the PBGC shall institute
proceedings to terminate, or the PBGC shall institute proceedings to terminate,
any Plan subject to Title IV of ERISA; (vi) a Reportable Event shall occur with
respect to a Plan subject to Title IV of ERISA, and within 15 days after the
reporting of such Reportable Event to the Administrative Agent, the
Administrative Agent shall have notified the Borrower in writing that the
Determining Lenders have made a determination that, on the basis of such
Reportable Event, there are reasonable grounds for the termination of such Plan
by the PBGC or for the appointment by the appropriate United States District
Court of a trustee to administer such Plan and as a result thereof an Event of
Default shall have occurred hereunder; (vii) a trustee shall be appointed by a
court of competent jurisdiction to administer any Plan or the assets thereof;
(viii) the benefits of any Plan shall be increased, or the Borrower or any
member of its Controlled Group shall begin to maintain, or begin to contribute
to, any Plan, without the prior written consent of the Determining Lenders; or
(ix) any ERISA Event with respect to a Plan subject to Title IV of ERISA shall
have occurred, and 30 days thereafter (A) such ERISA Event, other than such
event described in clause (f) of the definition of ERISA Event herein, (if
correctable) shall not have been corrected and (B) the then present value of
such Plan's benefit liabilities, as defined in Title IV of ERISA, shall exceed
the then current value of assets accumulated in such Plan; provided, however,
that the events listed in subsections (v) through (ix) shall constitute Events
of Default only if, as of the date thereof or any subsequent date, the amount of
liability that the Borrower or any member of its Controlled Group reasonably is
likely to incur in the aggregate under Section 4062, 4063, 4064, 4219 or 4023 of
ERISA or any other provision of law with respect to all such Plans, computed by
the actuary of the Plan taking into account any applicable rules and regulations
of the PBGC at such time, and based on the actuarial assumptions used by the
Plan, resulting from or otherwise associated with such event exceeds $100,000;
(j) All or any material portion of the Collateral or the Loan Documents
shall be the subject of any proceeding instituted by any Person other than a
Lender (except in connection with any Lender's exercise of any remedies under
the Loan Documents), or there shall exist any litigation with respect to all or
any material portion of the Collateral or the Loan Documents, or any Person
shall challenge in any manner whatsoever the validity or enforceability of all
or any portion of the Loan Documents or the Collateral; provided, however, that
during any such time any such circumstance shall be bonded or stayed in
accordance with Applicable Law and to the satisfaction of each Lender, such
circumstance shall not be an Event of Default;
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(k) Any Obligor shall default in the payment of any Indebtedness or any
lease obligations in an aggregate amount of $250,000 or more beyond any grace
period provided with respect thereto, or shall default in the performance of any
agreement or instrument under which such Indebtedness is created or evidenced
beyond any applicable grace period, or any other event or condition shall occur
in respect of such Indebtedness, if the effect of such default, event or
condition is to permit or cause the holder of such Indebtedness (or a trustee on
behalf of any such holder) to cause such Indebtedness to become due, repurchased
or redeemed prior to its date of maturity;
(l) Any lease of any Obligor shall terminate or cease to be effective, and
termination or cessation thereof, together with all other leases, if any, which
have been terminated or cease to be effective, could reasonably be expected to
have a Material Adverse Effect; provided, however, that termination or cessation
of a lease shall not constitute an Event of Default if another lease reasonably
satisfactory to each Lender is contemporaneously substituted therefor;
(m) Any provision of any Loan Document shall for any reason cease to be
valid and binding on or enforceable against any party to it (other than the
Administrative Agent or any Lender) in all material respects, or any such party
shall so state in writing;
(n) Any Collateral Document shall for any reason (other than pursuant to
the terms thereof) cease to create a valid and perfected first priority Lien in
any Collateral; or
(o) A Change of Control shall have occurred.
Section 8.2 Remedies. If an Event of Default shall have occurred and
--------
shall be continuing:
(a) With the exception of an Event of Default specified in Section 8.1(f)
--------------
or (g) hereof, the Administrative Agent shall, (i) upon the direction of the
---
Lenders whose Revolving Credit Specified Percentages aggregate at least 51%,
terminate the Revolving Credit Commitment, and/or (ii) upon the direction of the
Determining Lenders, terminate the Commitments and/or declare the principal of
and interest on the Advances and all Obligations and other amounts owed under
the Loan Documents to be forthwith due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived,
anything in the Loan Documents to the contrary notwithstanding.
(b) Upon the occurrence of an Event of Default specified in Section 8.1(f)
--------------
or (g) hereof, such principal, interest and other amounts shall thereupon and
---
concurrently therewith become due and payable and the Commitments shall
forthwith terminate, all without any action by the Administrative Agent, any
Lender or any holders of the Notes and without presentment, demand, protest or
other notice of any kind, all of which are expressly waived, anything in the
Loan Documents to the contrary notwithstanding.
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(c) If any Letter of Credit shall be then outstanding, the Administrative
Agent may demand upon the Borrower to, and forthwith upon such demand (but in
the case of an Event of Default specified in Section 8.1(f) or (g) hereof,
--------------
without any demand or taking of any other action by the Administrative Agent or
any Lender), the Borrower shall, pay to the Administrative Agent in same day
funds at the office of the Administrative Agent in such demand for deposit in
the L/C Cash Collateral Account, an amount equal to the maximum amount available
to be drawn under the Letters of Credit then outstanding.
(d) The Administrative Agent, and the Lenders may exercise all of the post-
default rights granted to them under the Loan Documents or under Applicable Law.
(e) The rights and remedies of the Administrative Agent and the Lenders
hereunder shall be cumulative, and not exclusive.
ARTICLE 9
Changes in Circumstances
------------------------
Section 9.1 LIBOR Basis Determination Inadequate. If with respect to any
------------------------------------
proposed LIBOR Advance for any Interest Period, any Lender determines that (i)
deposits in dollars (in the applicable amount) are not being offered to that
Lender in the relevant market for such Interest Period or (ii) the LIBOR Rate
for such proposed LIBOR Advance does not adequately cover the cost to such
Lender of making and maintaining such proposed LIBOR Advance for such Interest
Period, such Lender shall forthwith give notice thereof to the Borrower,
whereupon until such Lender notifies the Borrower that the circumstances giving
rise to such situation no longer exist, the obligation of such Lender to make
LIBOR Advances shall be suspended.
Section 9.2 Illegality. If any applicable law, rule or regulation, or any
----------
change therein or adoption thereof, or interpretation or administration thereof
by any governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by any Lender (or
its LIBOR Lending Office) with any request or directive (whether or not having
the force of law) of any such authority, central bank or comparable agency,
shall make it unlawful or impossible for such Lender (or its LIBOR Lending
Office) to make, maintain or fund its LIBOR Advances, such Lender shall so
notify the Borrower and the Administrative Agent. Before giving any notice to
the Borrower pursuant to this Section, the notifying Lender shall designate a
different LIBOR Lending Office or other lending office if such designation will
avoid the need for giving such notice and will not, in the sole judgment of the
Lender, be materially disadvantageous to the Lender. Upon receipt of such
notice, notwithstanding anything contained in Article 2 hereof, the Borrower
---------
shall repay in full the then outstanding principal amount of each LIBOR Advance
owing to the notifying Lender, together with accrued interest thereon, on either
(a) the last day of the Interest Period applicable to such Advance, if the
Lender may lawfully continue to maintain and fund such Advance to such day, or
(b) immediately, if the Lender may not lawfully continue to fund and maintain
such Advance to such day. Concurrently
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with repaying each affected LIBOR Advance owing to such Lender if the Borrower
does not terminate this Agreement, notwithstanding anything contained in
Article 2 hereof, the Borrower shall borrow a Base Rate Advance from such
---------
Lender, and such Lender shall make such Base Rate Advance, in an amount such
that the outstanding principal amount of the Advances owing to such Lender shall
equal the outstanding principal amount of the Advances owing immediately prior
to such repayment.
Section 9.3 Increased Costs.
---------------
(a) If any applicable law, rule or regulation, or any change in or adoption
of any law, rule or regulation, or any interpretation or administration thereof
by any governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof or compliance by any Lender (or its
LIBOR Lending Office) with any request or directive (whether or not having the
force of law) of any such authority, central bank or compatible agency:
(i) shall subject a Lender (or its LIBOR Lending Office) to any Tax
(net of any tax benefit engendered thereby) with respect to its LIBOR
Advances or its obligation to make such Advances, or shall change the basis
of taxation of payments to a Lender (or to its LIBOR Lending Office) of the
principal of or interest on its LIBOR Advances or in respect of any other
amounts due under this Agreement, as the case may be, or its obligation to
make such Advances (except for changes in the rate of tax on the overall
net income, net worth or capital of the Lender and franchise taxes, doing
business taxes or minimum taxes imposed upon such Lender); or
(ii) shall impose, modify or deem applicable any reserve (including,
without limitation, any imposed by the Board of Governors of the Federal
Reserve System), special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, a Lender's
LIBOR Lending Office or shall impose on the Lender (or its LIBOR Lending
Office) or on the United States market for certificates of deposit or the
London interbank market any other condition affecting its LIBOR Advances or
its obligation to make such Advances;
and the result of any of the foregoing is to increase the cost to a Lender (or
its LIBOR Lending Office) of making or maintaining any LIBOR Advances, or to
reduce the amount of any sum received or receivable by a Lender (or its LIBOR
Lending Office) with respect thereto, by an amount deemed by a Lender to be
material, then, within 15 days after demand by a Lender, the Borrower agrees to
pay to such Lender such additional amount as will compensate such Lender for
such increased costs or reduced amounts, subject to Section 11.9 hereof. The
------------
affected Lender will as soon as practicable notify the Borrower of any event of
which it has knowledge, occurring after the date hereof, which will entitle such
Lender to compensation pursuant to this Section and will designate a different
LIBOR Lending Office or other lending office if such designation will avoid the
need for, or reduce the amount of, such compensation and will not, in the sole
judgment of the affected Lender made in good faith, be disadvantageous to such
Lender.
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(b) A certificate of any Lender claiming compensation under this Section
and setting forth the additional amounts to be paid to it hereunder and
calculations therefor shall be controlling in the absence of manifest error. In
determining such amount, a Lender may use any reasonable averaging and
attribution methods. If a Lender demands compensation under this Section, the
Borrower may at any time, upon at least five Business Days' prior notice to the
Lender, after reimbursement to the Lender by the Borrower in accordance with
this Section of all costs incurred, prepay in full the then outstanding LIBOR
Advances of the Lender, together with accrued interest thereon to the date of
prepayment, along with any reimbursement required under Section 2.9 hereof.
-----------
Concurrently with prepaying such LIBOR Advances, the Borrower shall borrow a
Base Rate Advance from the Lender, and the Lender shall make such Base Rate
Advance, in an amount such that the outstanding principal amount of the Advances
owing to such Lender shall equal the outstanding principal amount of the
Advances owing immediately prior to such prepayment.
Section 9.4 Effect On Base Rate Advances. If notice has been given
----------------------------
pursuant to Section 9.1, 9.2 or 9.3 hereof suspending the obligation of a Lender
----------- --- ---
to make LIBOR Advances, or requiring LIBOR Advances of a Lender to be repaid or
prepaid, then, unless and until the Lender notifies the Borrower that the
circumstances giving rise to such repayment no longer apply, all Advances which
would otherwise be made by such Lender as LIBOR Advances shall be made instead
as Base Rate Advances.
Section 9.5 Capital Adequacy. If either (a) the introduction of or any
----------------
change in or in the interpretation of any law, rule or regulation or (b)
compliance by a Lender with any law, rule or regulation or any guideline or
request from any central bank or other governmental authority (whether or not
having the force of law) affects or would affect the amount of capital required
or expected to be maintained by a Lender or any corporation controlling such
Lender, and such Lender determines that the amount of such capital is increased
by or based upon the existence of such Lender's commitment or Advances hereunder
and other commitments or advances of such Lender of this type, then, within 30
days after written notice and demand by such Lender, subject to Section 11.9,
------------
the Borrower shall pay to such Lender, from time to time as specified by such
Lender, additional amounts sufficient to compensate such Lender with respect to
such circumstances, to the extent that such Lender reasonably determines in good
faith such increase in capital to be allocable to the existence of such Lender's
portion of the Commitments hereunder. A certificate as to such amounts submitted
to the Borrower by a Lender hereunder, shall, in the absence of manifest error,
be conclusive and binding for all purposes.
Section 9.6 Replacement Lender. If the Borrower becomes obligated to pay
------------------
additional amounts to any Lender described in Section 9.2, 9.3 or 9.5, the
----------- --- ---
Borrower may designate a financial institution reasonably acceptable to the
Administrative Agent to replace such Lender by purchasing for cash and receiving
an assignment of such Lender's obligations under the Loan Documents and the
rights of such Lender under the Loan Documents without recourse to or warranty
by, or expense to, such Lender, for a purchase price equal to the outstanding
amounts owing to such Lender (including such additional amounts owing to such
Lender pursuant to Section 9.2, 9.3 or 9.5) and such Lender shall be deemed
----------- --- ---
released from all of its obligations under the Loan Documents. Upon execution
of an Assignment Agreement, such other financial institution shall be deemed to
be a "Lender" for all purposes of this Agreement as set forth in Section 11.6
------------
hereof.
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ARTICLE 10
Agreement Among Lenders
-----------------------
Section 10.1 Agreement Among Lenders. The Lenders agree among themselves
-----------------------
that:
(a) Administrative Agent. Each Lender hereby appoints the Administrative
--------------------
Agent as its nominee in its name and on its behalf, to receive all documents and
items to be furnished hereunder; to act as nominee for and on behalf of all
Lenders under the Loan Documents; to, except as otherwise expressly set forth
herein, take such action as may be requested by the Determining Lenders,
provided that, unless and until the Administrative Agent shall have received
such requests, the Administrative Agent may take such administrative action, or
refrain from taking such administrative action, as it may deem advisable and in
the best interests of the Lenders; to arrange the means whereby the proceeds of
the Advances of the Lenders are to be made available to the Borrower; to
distribute promptly to each Lender information, requests and documents received
from the Borrower, and each payment (in like funds received) with respect to any
of such Lender's Advances, fee or other amount; and to deliver to the Borrower
requests, demands, approvals and consents received from the Lenders.
Administrative Agent agrees to promptly distribute to each Lender, at such
Lender's address set forth below information, requests, documents and payments
received from the Borrower. The Administrative Agent shall have no fiduciary
relationship in respect of any Lender by reason of this Agreement or any other
Loan Document. The Administrative Agent shall have no duties or responsibilities
except those expressly set forth in this Agreement. The duties of the
Administrative Agent are mechanical and administrative in nature.
(b) Replacement of Administrative Agent. Should the Administrative Agent
-----------------------------------
or any successor Administrative Agent ever cease to be a Lender hereunder, or
should the Administrative Agent or any successor Administrative Agent ever
resign as Administrative Agent, or should the Administrative Agent or any
successor Administrative Agent ever be removed with cause or without cause by
the action of all Lenders (other than the Administrative Agent), then the Lender
appointed by the other Lenders (provided that no Event of Default exists, with
the consent of the Borrower, which consent shall not be unreasonably withheld)
shall forthwith become the Administrative Agent, and the Borrower and the
Lenders shall execute such documents as any Lender may reasonably request to
reflect such change. If the Administrative Agent also then serves in the
capacity of the Issuing Bank, such resignation or removal shall constitute
resignation or removal of the Issuing Bank and the successor Administrative
Agent shall serve in the capacity of the Issuing Bank; provided, however, if the
Administrative Agent also serves in the capacity of the Issuing Bank and no
successor Administrative Agent is appointed, the retiring Administrative Agent
shall remain as the Issuing Bank. Any resignation or removal of the
Administrative Agent or any successor Administrative Agent shall become
effective upon the
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appointment by the Lenders of a successor Administrative Agent; provided,
however, if no successor Administrative Agent shall have been so appointed and
shall have accepted such appointment within 30 days after the retiring
Administrative Agent's giving of notice of resignation or the Lenders' removal
of the retiring Administrative Agent, then the retiring Administrative Agent
may, on behalf of the Lenders, appoint a successor Administrative Agent, which
shall be a commercial bank organized under the Laws of the United States of
America or of any State thereof and having a combined capital and surplus of at
least $500,000,000. Upon the acceptance of any appointment as the Administrative
Agent hereunder by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations under
the Loan Documents, provided that if the retiring or removed Administrative
Agent is unable to appoint a successor Administrative Agent, the Administrative
Agent shall, after the expiration of a 60 day period from the date of notice, be
relieved of all obligations as Administrative Agent hereunder. Notwithstanding
any Administrative Agent's resignation or removal hereunder, the provisions of
this Article shall continue to inure to its benefit as to any actions taken or
omitted to be taken by it while it was the Administrative Agent under this
Agreement.
(c) Expenses. Each Lender shall pay its pro rata share, based on its Total
--------
Specified Percentage, of any expenses paid by the Administrative Agent directly
and solely in connection with any of the Loan Documents if Administrative Agent
does not receive reimbursement therefor from other sources within 60 days after
the date incurred, unless payment of such fees is being diligently disputed by
such Lender or the Borrower in good faith. Any amount so paid by the Lenders to
the Administrative Agent shall be returned by the Administrative Agent pro rata
to each paying Lender to the extent later paid by the Borrower or any other
Person on the Borrower's behalf to the Administrative Agent.
(d) Delegation of Duties. The Administrative Agent may execute any of its
--------------------
duties hereunder by or through officers, directors, employees, attorneys or
agents, and shall be entitled to (and shall be protected in relying upon) advice
of counsel concerning all matters pertaining to its duties hereunder.
(e) Reliance by Administrative Agent. The Administrative Agent and its
--------------------------------
officers, directors, employees, attorneys and agents shall be entitled to rely
and shall be fully protected in relying on any writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telex or teletype
message, statement, order, or other document or conversation reasonably believed
by it or them in good faith to be genuine and correct and to have been signed or
made by the proper Person and, with respect to legal matters, upon opinions of
counsel selected the Administrative Agent. The Administrative Agent may, in its
reasonable judgment, deem and treat the payee of any Note as the owner thereof
for all purposes hereof.
(f) Limitation of Administrative Agent's Liability. Neither the
----------------------------------------------
Administrative Agent nor any of its officers, directors, employees, attorneys or
agents shall be liable for any action taken or omitted to be taken by it or them
hereunder in good faith and believed by it or them to
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be within the discretion or power conferred to it or them by the Loan Documents
or be responsible for the consequences of any error of judgment, except for its
or their own gross negligence or wilful misconduct. Except as aforesaid, the
Administrative Agent shall be under no duty to enforce any rights with respect
to any of the Advances, or any security therefor. The Administrative Agent shall
not be compelled to do any act hereunder or to take any action towards the
execution or enforcement of the powers hereby created or to prosecute or defend
any suit in respect hereof, unless indemnified to its satisfaction against loss,
cost, liability and expense. The Administrative Agent shall not be responsible
in any manner to any Lender for the effectiveness, enforceability, genuineness,
validity or due execution of any of the Loan Documents, or for any
representation, warranty, document, certificate, report or statement made herein
or furnished in connection with any Loan Documents, or be under any obligation
to any Lender to ascertain or to inquire as to the performance or observation of
any of the terms, covenants or conditions of any Loan Documents on the part of
the Borrower. TO THE EXTENT NOT REIMBURSED BY THE BORROWER, EACH LENDER HEREBY
SEVERALLY INDEMNIFIES AND HOLDS HARMLESS THE ADMINISTRATIVE AGENT, PRO RATA
ACCORDING TO ITS TOTAL SPECIFIED PERCENTAGE, FROM AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, EXPENSES AND/OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY
BE IMPOSED ON, ASSERTED AGAINST, OR INCURRED BY THE ADMINISTRATIVE AGENT IN ANY
WAY WITH RESPECT TO ANY LOAN DOCUMENTS OR ANY ACTION TAKEN OR OMITTED BY THE
ADMINISTRATIVE AGENT UNDER THE LOAN DOCUMENTS (INCLUDING ANY NEGLIGENT ACTION OF
THE ADMINISTRATIVE AGENT), EXCEPT TO THE EXTENT THE SAME RESULT FROM GROSS
NEGLIGENCE OR WILFUL MISCONDUCT BY THE ADMINISTRATIVE AGENT.
(g) Liability Among Lenders. No Lender shall incur any liability (other
-----------------------
than the sharing of expenses and other matters specifically set forth herein and
in the other Loan Documents) to any other Lender, except for acts or omissions
in bad faith.
(h) Rights as Lender. With respect to its commitment hereunder, the
----------------
Advances made by it and the Notes issued to it, the Administrative Agent shall
have the same rights as a Lender and may exercise the same as though it were not
the Administrative Agent, and the term "Lender" or "Lenders" shall, unless the
context otherwise indicates, include the Administrative Agent in its individual
capacity. The Administrative Agent or any Lender may accept deposits from, act
as trustee under indentures of, and generally engage in any kind of business
with, the Borrower and any of its Affiliates, and any Person who may do business
with or own securities of the Borrower or any of its Affiliates, all as if the
Administrative Agent were not the Administrative Agent hereunder and without any
duty to account therefor to the Lenders.
Section 10.2 Lender Credit Decision. Each Lender acknowledges that it
----------------------
has, independently and without reliance upon the Administrative Agent or any
other Lender and based upon the financial statements referred to in Sections
--------
4.1(j), 6.1 and 6.2 hereof, and such other
------ --- ---
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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
Administrative Agent or any other Lender and based upon such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and the
other Loan Documents.
Section 10.3 Benefits of Article. None of the provisions of this Article
-------------------
shall inure to the benefit of any Person other than Lenders; consequently, no
Person shall be entitled to rely upon, or to raise as a defense, in any manner
whatsoever, the failure of the Administrative Agent or any Lender to comply with
such provisions.
ARTICLE 11
Miscellaneous
-------------
Section 11.1 Notices.
-------
(a) All notices and other communications under this Agreement shall be in
writing (except in those cases where giving notice by telephone is expressly
permitted) and shall be deemed to have been given on the date personally
delivered or sent by telecopy (answerback received), or three days after deposit
in the mail, designated as certified mail, return receipt requested, postage-
prepaid, or one day after being entrusted to a reputable commercial overnight
delivery service, or one day after being delivered to the telegraph office or
sent out by telex addressed to the party to which such notice is directed at its
address determined as provided in this Section. All notices and other
communications under this Agreement shall be given to the parties hereto at the
following addresses:
(i) If to the Borrower, at:
Kevco, Inc.
University Centre I, Suite 200
0000 Xxxxx Xxxxxxxxxx
Xxxx Xxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxx
with a copy to:
Xxxxxxx Xxxxxx L.L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
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(ii) If to the Administrative Agent, at:
NationsBank of Texas, N.A.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxxx, Senior Vice President
(iii) If to a Lender, at its address shown below its name on the
signature pages hereof, or if applicable, set forth in its
Assignment Agreement.
(b) Any party hereto may change the address to which notices shall be
directed by giving 10 days' written notice of such change to the other parties.
Section 11.2 Expenses. The Borrower shall promptly pay:
--------
(a) all reasonable out-of-pocket expenses of the Administrative Agent in
connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Loan Documents, the transactions contemplated hereunder
and thereunder, and the making of Advances hereunder, including without
limitation the reasonable fees and disbursements of Special Counsel;
(b) all reasonable out-of-pocket expenses and reasonable attorneys' fees of
the Administrative Agent in connection with the administration of the
transactions contemplated in this Agreement and the other Loan Documents and the
preparation, negotiation, execution and delivery of any waiver, amendment or
consent by the Administrative Agent relating to this Agreement or the other Loan
Documents; and
(c) after the occurrence of an Event of Default, all costs, out-of-pocket
expenses and attorneys' fees of the Administrative Agent and each Lender
incurred for enforcement, collection, restructuring, refinancing and "work-out",
or otherwise incurred in obtaining performance under the Loan Documents, which
in each case shall include without limitation fees and expenses of consultants,
counsel for the Administrative Agent and any Lender, and administrative fees for
the Administrative Agent. Notwithstanding anything to the contrary contained
herein, prior to the occurrence of an Event of Default, the Borrower shall have
no obligation to pay legal fees or expenses of any Lender other than the
reasonable legal fees and expenses of the Administrative Agent.
Section 11.3 Waivers. The rights and remedies of the Lenders under this
-------
Agreement and the other Loan Documents shall be cumulative and not exclusive of
any rights or remedies which they would otherwise have. No failure or delay by
the Administrative Agent or any Lender in exercising any right shall operate as
a waiver of such right. The Lenders expressly reserve the right to require
strict compliance with the terms of this Agreement in connection with any
funding of a request for an Advance. In the event that any Lender decides to
fund an Advance at a time when the Borrower is not in strict compliance with the
terms of this Agreement, such decision by such Lender shall not be deemed to
constitute an undertaking by the Lender to fund any further
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requests for Advances or preclude the Lenders from exercising any rights
available under the Loan Documents or at law or equity. Any waiver or indulgence
granted by the Lenders shall not constitute a modification of this Agreement,
except to the extent expressly provided in such waiver or indulgence, or
constitute a course of dealing by the Lenders at variance with the terms of the
Agreement such as to require further notice by the Lenders of the Lenders'
intent to require strict adherence to the terms of the Agreement in the future.
Any such actions shall not in any way affect the ability of the Administrative
Agent or the Lenders, in their discretion, to exercise any rights available to
them under this Agreement or under any other agreement, whether or not the
Administrative Agent or any of the Lenders are a party thereto, relating to the
Borrower.
Section 11.4 Determination by the Lenders Conclusive and Binding. Any
---------------------------------------------------
calculation or material determination required or expressly permitted to be made
by the Administrative Agent or any Lender under this Agreement shall be made in
its reasonable judgment and in good faith, and shall when made, absent manifest
error, be controlling.
Section 11.5 Set-Off. In addition to any rights now or hereafter granted
-------
under Applicable Law and not by way of limitation of any such rights, upon the
occurrence of an Event of Default, each Lender and any subsequent holder of any
Note, and any assignee or participant in any Note is hereby authorized by the
Borrower at any time or from time to time, without notice to the Borrower or any
other Person, any such notice being hereby expressly waived, to set-off,
appropriate and apply any deposits (general or special (except trust and escrow
accounts), time or demand, including without limitation Indebtedness evidenced
by certificates of deposit, in each case whether matured or unmatured) and any
other Indebtedness at any time held or owing by such Lender or holder to or for
the credit or the account of the Borrower, against and on account of the
Obligations and other liabilities of the Borrower to such Lender or holder,
irrespective of whether or not (a) the Lender or holder shall have made any
demand hereunder, or (b) the Lender or holdershall have declared the principal
of and interest on the Advances and other due hereunder to be due and payable
as permitted by Section 8.2. Any sums obtained by any Lender or by any assignee,
-----------
participant or subsequent holder of any Note shall be subject to pro rata
treatment of all Obligations and other liabilities hereunder.
Section 11.6 Assignment.
----------
(a) The Borrower may not assign or transfer any of its rights or
obligations hereunder or under the other Loan Documents without the prior
written consent of all of the Lenders.
(b) No Lender shall be entitled to assign its interest in this Agreement,
its Notes or its Advances, except as hereinafter set forth.
(c) Lender may at any time sell participations in all or any part of its
Advances (collectively, "Participations") to any banks or other financial
--------------
institutions ("Participants") provided that such Participation shall not confer
------------
on any Person (other than the parties hereto) any right to vote on, approve or
sign amendments or waivers, or any other independent benefit or any legal or
equitable right, remedy or other claim under this Agreement or any other Loan
Documents,
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other than the right to vote on, approve, or sign amendments or waivers or
consents with respect to items that would result in (i) any increase in the
commitment of any Participant; or (ii)(A) the extension of the date of maturity
of, or (B) the extension of the due date for any payment of principal, interest
or fees respecting, or (C) the reduction of the amount of any installment of
principal or interest on or the change or reduction of any mandatory reduction
required hereunder, or (D) a reduction of the rate of interest on, the Advances,
the Letters of Credit, or the Reimbursement Obligations; or (iii) the release of
security for the Obligations, including without limitation any guarantee; or
(iv) the reduction of any fees payable hereunder. Notwithstanding the foregoing,
any Lender may sell a Participation to any of its Affiliates which is a bank or
financial institution without the consent of the Borrower, provided that such
Participation shall not confer any Person (other than the parties hereto) any
right to vote on, approve or sign amendments or waivers, or any other
independent benefit or any legal or equitable right, remedy or other claim under
this Agreement or any other Loan Documents. Notwithstanding the foregoing, the
Borrower agrees that the Participants shall be entitled to the benefits of
Article 9 and Section 11.5 hereof as though they were Lenders and the Lenders
--------- ------------
may provide copies of all financial information received from the Borrower to
such Participants. To the fullest extent it may effectively do so under
Applicable Law, the Borrower agrees that any Participant may exercise any and
all rights of banker's lien, set-off and counterclaim with respect to this
Participation as fully as if such Participant were the holder of the Advances in
the amount of its Participation.
(d) Each Lender may assign to one or more Eligible Assignees its rights and
obligations under this Agreement and the other Loan Documents; provided,
--------
however, that (i) each such assignment shall be subject to the prior written
-------
consent of the Administrative Agent and Borrower, which consent shall not be
unreasonably withheld (provided, however, notwithstanding anything herein to the
-------- -------
contrary, no consent of the Borrower is required for any assignment (A) during
any time that any Event of Default has occurred and is continuing, (B) to an
Affiliate or (C) to an existing Lender hereunder), (ii) the applicable Lender,
the Administrative Agent and Eligible Assignee shall execute and deliver to the
Administrative Agent an Assignment and Acceptance Agreement (an "Assignment
----------
Agreement") in substantially the form of Exhibit F hereto, together with the
--------- ---------
Notes subject to such assignment, (iii) the Eligible Assignee or the assigning
Lender, as the case may be, shall deliver to the Administrative Agent a
processing fee of $3,000; and (iv) no such Assignment shall be in an amount of
less than $5,000,000.00, unless the portion of the Commitment of a Lender is
less than $5,000,000, in which case such assignment may be in the total amount
of such Lender's portion of the Commitment. Upon such execution, delivery and
acceptance from and after the effective date specified in each Assignment, which
effective date shall be at least three Business Days after the execution thereof
and the recordation of the information therein in the Register pursuant to
Section 11.6(j) hereof, (A) the Eligible Assignee thereunder shall be party
---------------
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment, have the rights and obligations of a
Lender hereunder and (B) the applicable Lender shall, to the extent that rights
and obligations hereunder have been assigned by it pursuant to such Assignment,
relinquish such rights and be released from such obligations under this
Agreement.
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(e) Notwithstanding anything in clause (d) above to the contrary, (i) any
Lender may assign and pledge all or any portion of its Advances and Notes to any
Federal Reserve Bank as collateral security pursuant to Regulation A of F.R.S.
Board and any Operating Circular issued by such Federal Reserve Bank and (ii)
any Lender that is a fund may at any time assign or pledge all or any portion of
its rights under this Agreement to secure such Lender's Indebtedness; provided,
however, that no such assignment under this clause (e) shall release the
assignor Lender from its obligations hereunder.
(f) Upon its receipt of an Assignment Agreement executed by a Lender and an
Eligible Assignee, and any Note or Notes subject to such assignment, the
Borrower shall, within five Business Days after its receipt of such Assignment
Agreement, at no expense to the Borrower, execute and deliver to the
Administrative Agent in exchange for the surrendered Notes new Notes to the
order of such Eligible Assignee in an amount equal to the portion of the
Advances and Commitments assigned to it pursuant to such Assignment Agreement
and new Notes to the order of the Administrative Agent in an amount equal to the
portion of the Advances and Commitments retained by it hereunder. Such new
Notes shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Notes, shall be dated the effective date of such
Assignment Agreement and shall otherwise be in substantially the form of
Exhibit A, B or C hereto, as applicable.
------- - - -
(g) Any Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 11.6, disclose to
------------
the Eligible Assignee or Participant or proposed assignee or participant, any
information relating to the Borrower furnished to such Lender by or on behalf of
the Borrower, provided such Person has executed a Confidentiality Agreement.
(h) Except as specifically set forth in this Section 11.6, nothing in this
------------
Agreement or any other Loan Documents, expressed or implied, is intended to or
shall confer on any Person other than the respective parties hereto and thereto
and their successors and assignees permitted hereunder and thereunder any
benefit or any legal or equitable right, remedy or other claim under this
Agreement or any other Loan Documents.
(i) Notwithstanding anything in this Section 11.6 to the contrary, no
------------
Eligible Assignee or Participant shall be entitled to receive any greater
payment under Section 2.15 or Section 9.3 than such assigning or participating
------------ -----------
Lender or any other Lender would have been entitled to receive with respect to
the interest assigned or participated to such Eligible Assignee or Participant.
(j) The Register. The Administrative Agent shall maintain at its address
------------
referred to in Section 11.1 a copy of each Assignment Agreement delivered to and
------------
accepted by it a register (the "Register") for the recordation of the names and
--------
addresses of the Lenders, any U.S. taxpayer identification number, the Specified
Percentages of the Lenders (the "Ownership Information"), whether such Lender is
---------------------
an original Lender or the assignee of another Lender pursuant to an Assignment
Agreement and the effective date and amount of each Assignment Agreement
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delivered to and accepted by it and the parties thereto. Any transfer of an
ownership interest in any Advance, including any right to principal or interest
payable with respect to such Advance, shall be subject to and conditioned upon
the due recordation of such transfer and Ownership Information with respect to
the transferee in the Register and such transfer shall be effective only upon
such recordation (and not prior thereto). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register as a Lender hereunder for all purposes hereof.
The Register shall be available for inspection by the Borrower or any Lender at
any reasonable time and from time to time upon reasonable prior notice.
Section 11.7 Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
Section 11.8 Severability. Any provision of this Agreement which is for
------------
any reason prohibited or found or held invalid or unenforceable by any court or
governmental agency shall be ineffective to the extent of such prohibition or
invalidity or unenforceability without invalidating the remaining provisions
hereof in such jurisdiction or affecting the validity or enforceability of such
provision in any other jurisdiction.
Section 11.9 Interest and Charges. It is not the intention of any parties
--------------------
to this Agreement to make an agreement in violation of the laws of any
applicable jurisdiction relating to usury. Regardless of any provision in any
Loan Documents, no Lender shall ever be entitled to receive, collect or apply,
as interest on the Obligations, any amount in excess of the Maximum Amount. If
any Lender or participant ever receives, collects or applies, as interest, any
such excess, such amount which would be excessive interest shall be deemed a
partial repayment of principal and treated hereunder as such; and if principal
is paid in full, any remaining excess shall be paid to the Borrower. In
determining whether or not the interest paid or payable, under any specific
contingency, exceeds the Maximum Amount, the Borrower and the Lenders shall, to
the maximum extent permitted under Applicable Law, (a) characterize any
nonprincipal payment as an expense, fee or premium rather than as interest, (b)
exclude voluntary prepayments and the effect thereof, and (c) amortize, prorate,
allocate and spread in equal parts, the total amount of interest throughout the
entire contemplated term of the Obligations so that the interest rate is uniform
throughout the entire term of the Obligations; provided, however, that if the
Obligations are paid and performed in full prior to the end of the full
contemplated term thereof, and if the interest received for the actual period of
existence thereof exceeds the Maximum Amount, the Lenders shall refund to the
Borrower the amount of such excess or credit the amount of such excess against
the total principal amount of the Obligations owing, and, in such event, the
Lenders shall not be subject to any penalties provided by any laws for
contracting for, charging or receiving interest in excess of the Maximum Amount.
This Section shall control every other provision of all agreements pertaining to
the transactions contemplated by or contained in the Loan Documents.
Section 11.10 Headings. Headings used in this Agreement are for
--------
convenience only and shall not be used in connection with the interpretation of
any provision hereof.
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Section 11.11 Amendment and Waiver. The provisions of this Agreement may
--------------------
not be amended, modified or waived except by the written agreement of the
Borrower and the Determining Lenders; provided, however, that no such amendment,
modification or waiver shall be made (a) without the consent of all Lenders, if
it would (i) increase any Specified Percentage or commitment of any Lender, or
(ii) extend the date of maturity of, extend the due date for any payment of
principal or interest on, reduce the amount of any installment of principal or
interest on, or reduce the rate of interest on, any Advance, the Reimbursement
Obligations or other amount owing under any Loan Documents, or (iii) release any
security for or guaranty of the Obligations (except pursuant to this Agreement),
or (iv) reduce the fees payable hereunder, or (v) revise this Section 11.11, or
-------------
(vi) waive the date for payment of any of the Obligations, or (vii) amend the
definition of "Determining Lenders," "Revolving Credit Percentage", "Facility A
Term Loan Specified Percentage", "Facility B Term Loan Specified Percentage" or
"Total Specified Percentage"; (b) without the consent of the Administrative
Agent, if it would alter the rights, duties or obligations of the Administrative
Agent; or (c) without the consent of the Issuing Bank, if it would alter the
rights, duties or obligations of the Issuing Bank. Notwithstanding anything in
this Agreement to the contrary, no amendment, waiver or consent that changes the
allocations of payments between the Facility A Term Loan Advances and the
Facility B Term Loan Advances may be without the express written consent of the
following: Lenders holding more than 50% of all outstanding Facility A Term Loan
Advances and the Lenders holding more than 50% of all outstanding Facility B
Term Loan Advances. Neither this Agreement nor any term hereof may be amended
orally, nor may any provision hereof be waived orally but only by an instrument
in writing signed by the Administrative Agent and, in the case of an amendment,
by the Borrower.
Section 11.12 Exception to Covenants. Neither the Borrower nor any
----------------------
Subsidiary shall be deemed to be permitted to take any action or fail to take
any action which is permitted as an exception to any of the covenants contained
herein or which is within the permissible limits of any of the covenants
contained herein if such action or omission would result in the breach of any
other covenant contained herein.
Section 11.13 No Liability of Issuing Bank. The Borrower assumes all
----------------------------
risks of the acts or omissions of any beneficiary or transferee of any Letter of
Credit with respect to its use of such Letter of Credit. Neither the Issuing
Bank nor any Lender nor any of their respective officers or directors shall be
liable or responsible for: (a) the use that may be made of any Letter of Credit
or any acts or omissions of any beneficiary or transferee in connection
therewith; (b) the validity, sufficiency or genuineness of documents, or of any
endorsement thereon, even if such documents should prove to be in any or all
respects invalid, insufficient, fraudulent or forged; (c) payment by the Issuing
Bank against presentation of documents that do not comply with the terms of a
Letter of Credit, including failure of any documents to bear any reference or
adequate reference to the Letter of Credit, except for any payment made upon the
Issuing Bank's gross negligence or willful misconduct; or (d) any other
circumstances whatsoever in making or failing to make payment under any Letter
of Credit, except that the Borrower shall have a claim against the Issuing Bank,
------
and the Issuing Bank shall be liable to the Borrower, to the extent of any
direct, but not consequential, damages suffered by the Borrower that the
Borrower proves were caused by
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(i) the Issuing Bank's willful misconduct or gross negligence in determining
whether documents presented under any Letter of Credit comply with the terms of
the Letter of Credit or (ii) the Issuing Bank's willful failure to make lawful
payment under a Letter of Credit after the presentation to it of a draft and
certificates strictly complying with the terms and conditions of the Letter of
Credit. In furtherance and not in limitation of the foregoing, the Issuing Bank
may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary.
Section 11.14 Amendment, Restatement, Extension, Renewal and Increase.
-------------------------------------------------------
This Agreement is a renewal, extension, amendment, increase and restatement of
the Existing Credit Agreement, and is not a novation of the "Obligations" (as
defined in the Existing Credit Agreement). All terms and provisions of this
Agreement supersede in their entirety the Existing Credit Agreement. All Liens
covering the Collateral, or any part thereof, executed in connection with the
Existing Credit Agreement shall remain valid, binding and enforceable Liens
against the Persons which granted such Liens.
SECTION 11.15 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
-------------
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
TEXAS; PROVIDED, HOWEVER, THAT PURSUANT TO ARTICLE 5069-15.10(B), TITLE 79,
REVISED CIVIL STATUTES OF TEXAS, 1925, AS AMENDED, IT IS AGREED THAT THE
PROVISIONS OF CHAPTER 15, TITLE 79, REVISED CIVIL STATUTES OF TEXAS, 1925, AS
AMENDED, SHALL NOT APPLY TO THE ADVANCES, THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS. THE LOAN DOCUMENTS ARE PERFORMABLE IN DALLAS, DALLAS COUNTY, TEXAS,
AND BORROWER AND EACH SURETY, GUARANTOR, ENDORSER AND ANY OTHER PARTY EVER
LIABLE FOR PAYMENT OF ANY MONEY PAYABLE WITH RESPECT TO THE LOAN DOCUMENTS,
JOINTLY AND SEVERALLY WAIVE THE RIGHT TO BE SUED ELSEWHERE. THE BORROWER AND
EACH LENDER AGREE THAT THE STATE AND FEDERAL COURTS OF TEXAS LOCATED IN DALLAS,
TEXAS SHALL HAVE EXCLUSIVE JURISDICTION OVER PROCEEDINGS IN CONNECTION WITH THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 11.16 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
--------------------
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY KNOWINGLY VOLUNTARILY, IRREVOCABLY
AND INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR RELATED TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. THIS
PROVISION IS A MATERIAL INDUCEMENT TO EACH LENDER ENTERING INTO THIS AGREEMENT
AND MAKING ANY ADVANCES HEREUNDER.
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SECTION 11.17 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER WITH THE
----------------
OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
==========================================
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
==========================================
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IN WITNESS WHEREOF, this Credit Agreement is executed as of the date first
set forth above.
BORROWER: KEVCO, INC.
By: /s/ XXXXXXX X. XXXXXX
-----------------------------
Xxxxxxx X. Xxxxxx
Vice President
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ADMINISTRATIVE AGENT: NATIONSBANK OF TEXAS, N.A., as Administrative
Agent
By: /s/ XXXX XXXXXXX
-----------------------------
Xxxx Xxxxxxx
Senior Vice President
LENDERS: NATIONSBANK OF TEXAS, N.A., as a Lender
By: /s/ XXXX XXXXXXX
-----------------------------
Xxxx Xxxxxxx
Senior Vice President
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxxx
Senior Vice President
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THE SUMITOMO BANK, LIMITED
By: /s/ XXXXX XXXXXX
---------------------------------
Name: Xxxxx X. Xxxxxx
----------------------------
Title: Vice President
---------------------------
By: /s/ XXXX X. XXXXXX
---------------------------------
Name: Xxxx X. Xxxxxx
----------------------------
Title: Vice President and Manager
---------------------------
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxx
Vice President
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NATIONAL CITY BANK KENTUCKY
By: /s/ XXX X. XXXXXX
-----------------------------
Name: Xxx X. Xxxxxx
------------------------
Title: V.P.
-----------------------
000 Xxxxx 0xx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxx X. Xxxxxx
Vice President
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GUARANTY FEDERAL BANK, F.S.B.
By: /s/ XXXXXX X. XXXX
-----------------------------
Name: Xxxxxx X. Xxxx
------------------------
Title: Vice President
-----------------------
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxx
Vice President
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