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LOAN AND SECURITY AGREEMENT
by and among
MIDAS, INC.
and
EACH OF ITS SUBSIDIARIES THAT ARE NAMED HEREIN AS BORROWERS
as Borrowers,
EACH OF ITS SUBSIDIARIES THAT ARE NAMED HEREIN AS GUARANTORS
as Guarantors,
THE LENDERS THAT ARE SIGNATORIES HERETO
as the Lenders,
and
BANK ONE, NA
as Administrative Agent
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BANC ONE CAPITAL MARKETS, INC.
as Arranger
Dated as of March 27, 2003
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TABLE OF CONTENTS
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1. DEFINITIONS AND CONSTRUCTION..............................................................1
1.1 Definitions...............................................................................1
1.2 Accounting Terms.........................................................................29
1.3 Code.....................................................................................30
1.4 Construction.............................................................................30
1.5 Schedules and Exhibits...................................................................30
2. LOAN AND TERMS OF PAYMENT................................................................30
2.1 Revolver Advances........................................................................30
2.2 Term Loans...............................................................................31
2.3 Borrowing Procedures and Settlements.....................................................32
2.4 Payments.................................................................................37
2.5 Overadvances.............................................................................38
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations..............39
2.7 Cash Management..........................................................................40
2.8 Crediting Payments; Float Charge.........................................................42
2.9 Designated Account.......................................................................42
2.10 Maintenance of Loan Account; Statements of Obligations...................................42
2.11 Fees.....................................................................................43
2.12 Letters of Credit........................................................................43
2.13 LIBOR Option.............................................................................45
2.14 Capital Requirements.....................................................................47
2.15 Joint and Several Liability of Borrowers.................................................48
2.16 Fixed Rate Breakage Fee..................................................................51
2.17 Amendments...............................................................................51
3. CONDITIONS; TERM OF AGREEMENT............................................................52
3.1 Conditions Precedent to the Initial Extension of Credit..................................52
3.2 Conditions Precedent to all Extensions of Credit.........................................56
3.3 Term.....................................................................................56
3.4 Effect of Termination....................................................................56
3.5 Early Termination by Borrowers...........................................................56
4. CREATION OF SECURITY INTEREST............................................................57
4.1 Grant of Security Interest...............................................................57
4.2 Negotiable Collateral....................................................................57
4.3 Collection of Accounts and General Intangibles...........................................57
4.4 Filing of Financing Statements; Commercial Tort Claims, Etc..............................58
4.5 Power of Attorney........................................................................58
4.6 Right to Inspect.........................................................................59
4.7 Control Agreements.......................................................................59
4.8 License..................................................................................59
4.9 Intellectual Property....................................................................60
4.10 Further Assurances.......................................................................61
5. REPRESENTATIONS AND WARRANTIES...........................................................61
5.1 No Encumbrances..........................................................................61
5.2 Eligible Accounts........................................................................61
5.3 Eligible Inventory.......................................................................61
5.4 Equipment................................................................................61
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5.5 Location of Inventory and Equipment......................................................61
5.6 Inventory Records........................................................................61
5.7 Location of Chief Executive Office; FEIN.................................................62
5.8 Due Organization and Qualification; Subsidiaries.........................................62
5.9 Due Authorization; No Conflict...........................................................62
5.10 Litigation...............................................................................64
5.11 No Material Adverse Change...............................................................64
5.12 Fraudulent Transfer......................................................................64
5.13 Employee Benefits........................................................................64
5.14 Environmental Condition..................................................................64
5.15 Brokerage Fees...........................................................................64
5.16 Intellectual Property....................................................................64
5.17 Leases...................................................................................65
5.18 DDAs.....................................................................................65
5.19 Complete Disclosure......................................................................65
5.20 Indebtedness.............................................................................65
5.21 Regulation U.............................................................................65
5.22 Permits, Etc.............................................................................65
5.23 Material Contracts.......................................................................65
5.24 Employee and Labor Matters...............................................................66
5.25 Franchisees, Customers and Suppliers.....................................................66
5.26 Properties...............................................................................66
5.27 Taxes....................................................................................69
6. AFFIRMATIVE COVENANTS....................................................................69
6.1 Accounting System........................................................................69
6.2 Collateral Reporting.....................................................................69
6.3 Financial Statements, Reports, Certificates..............................................71
6.4 Return...................................................................................73
6.5 Maintenance of Properties................................................................74
6.6 Taxes....................................................................................74
6.7 Insurance................................................................................74
6.8 Location of Inventory and Equipment......................................................75
6.9 Compliance with Laws.....................................................................75
6.10 Leases...................................................................................75
6.11 Brokerage Commissions....................................................................75
6.12 Existence................................................................................76
6.13 Environmental............................................................................76
6.14 Other Disclosure Updates.................................................................76
6.15 Commercial Tort Claims; Organizational ID Number.........................................76
6.16 Inventory Divestiture Plan...............................................................76
7. NEGATIVE COVENANTS.......................................................................76
7.1 Indebtedness.............................................................................77
7.2 Liens....................................................................................77
7.3 Restrictions on Fundamental Changes......................................................77
7.4 Disposal of Assets.......................................................................77
7.5 Change Name..............................................................................78
7.6 Guarantee................................................................................78
7.7 Nature of Business.......................................................................78
7.8 Prepayments and Amendments...............................................................78
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7.9 Consignments.............................................................................78
7.10 Distributions............................................................................78
7.11 Accounting Methods.......................................................................78
7.12 Investments..............................................................................79
7.13 Transactions with Affiliates and Franchisees.............................................79
7.14 Suspension...............................................................................79
7.15 Compensation.............................................................................79
7.16 Use of Proceeds..........................................................................79
7.17 Change in Location of Chief Executive Office; Inventory and Equipment with
Bailees..................................................................................79
7.18 Securities Accounts......................................................................80
7.19 Parent...................................................................................80
7.20 Financial Covenants......................................................................80
7.21 Inventory Divestiture Plan...............................................................82
7.22 Insurance Service Management.............................................................82
8. EVENTS OF DEFAULT........................................................................82
9. THE LENDER GROUP'S RIGHTS AND REMEDIES...................................................84
9.1 Rights and Remedies......................................................................84
9.2 Remedies Cumulative......................................................................86
10. TAXES AND EXPENSES.......................................................................87
11. WAIVERS; INDEMNIFICATION.................................................................87
11.1 Demand; Protest; etc.....................................................................87
11.2 The Lender Group's Liability for Collateral..............................................87
11.3 Indemnification..........................................................................87
12. NOTICES..................................................................................88
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER...............................................89
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS...............................................90
14.1 Assignments and Participations...........................................................90
14.2 Participations...........................................................................90
14.3 Assignments..............................................................................91
14.4 Dissemination of Information.............................................................92
14.5 Tax Treatment............................................................................92
15. AMENDMENTS; WAIVERS; SUBORDINATION.......................................................93
15.1 Amendments and Waivers...................................................................93
15.2 Replacement of Holdout Lender............................................................93
15.3 No Waivers; Cumulative Remedies..........................................................94
15.4 Subordination of Lien....................................................................94
16. AGENT; THE LENDER GROUP..................................................................94
16.1 Appointment; Nature of Relationship......................................................94
16.2 Powers...................................................................................95
16.3 General Immunity.........................................................................95
16.4 No Responsibility for Loans, Recitals, etc...............................................95
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16.5 Action on Instructions of Lenders........................................................95
16.6 Employment of Agents and Counsel.........................................................95
16.7 Reliance on Documents; Counsel...........................................................95
16.8 Agent's Reimbursement and Indemnification................................................96
16.9 Notice of Default........................................................................96
16.10 Rights as a Lender.......................................................................96
16.11 Lender Credit Decision...................................................................96
16.12 Successor Agent..........................................................................96
16.13 Delegation to Affiliates.................................................................97
16.14 Withholding Taxes........................................................................97
16.15 Collateral Matters.......................................................................99
16.16 Sharing of Payments......................................................................99
16.17 Agency for Perfection...................................................................100
16.18 Payments by Agent to the Lenders........................................................100
16.19 Concerning the Collateral and Related Loan Documents 100
16.20 Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders;
Other Reports and Information...........................................................100
16.21 Several Obligations; No Liability.......................................................101
17. GENERAL PROVISIONS......................................................................102
17.1 Effectiveness...........................................................................102
17.2 Section Headings........................................................................102
17.3 Interpretation..........................................................................102
17.4 Severability of Provisions..............................................................102
17.5 Amendments in Writing...................................................................102
17.6 Counterparts; Telefacsimile Execution...................................................102
17.7 Revival and Reinstatement of Obligations................................................102
17.8 Integration.............................................................................103
17.9 MIC as Agent for Borrowers..............................................................103
18. GUARANTY................................................................................103
18.1 Guaranty; Limitation of Liability.......................................................103
18.2 Guaranty Absolute.......................................................................104
18.3 Waiver..................................................................................104
18.4 Continuing Guaranty; Assignments........................................................105
18.5 Subrogation.............................................................................105
18.6 Joint and Several Obligations...........................................................105
18.7 Judgment Currency.......................................................................105
18.8 Automatic Limitation....................................................................106
19. TERMINATION.............................................................................106
EXHIBITS AND SCHEDULES
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Exhibit A-1 Form of Assignment and Acceptance
Exhibit B-1 Form of Borrowing Base Certificate
Exhibit C-1 Form of Compliance Certificate
Exhibit L-1 Form of LIBOR Notice
Schedule A-1 Agent's Account
Schedule C-1 Commitments
Schedule B-1 Business Transformation Charges
Schedule D-1 Designated Account
Schedule E-1 Eligible Inventory Locations
Schedule L-1 Leased Real Property
Schedule N-1 Lender Notice Addresses
Schedule P-1 Permitted Liens
Schedule R-1 Real Property Collateral
Schedule 2.7(a) Cash Management Banks
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7 Chief Executive Office; FEIN
Schedule 5.8(b) Capitalization of Borrowers
Schedule 5.8(c) Capitalization of Borrowers' Subsidiaries
Schedule 5.10 Litigation
Schedule 5.13 ERISA
Schedule 5.14 Environmental Matters
Schedule 5.16 Intellectual Property
Schedule 5.18 Demand Deposit Accounts
Schedule 5.20 Permitted Indebtedness
Schedule 5.23 Material Contracts
Schedule 5.24 Employee and Labor Matters
Schedule 5.25 Account Debtors; Franchisee Terminations
Schedule 5.26(c) Exceptions to Title
LOAN AND SECURITY AGREEMENT
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THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into as of
March 27, 2003, between and among, on the one hand, the lenders identified on
the signature pages hereof (such lenders, together with their respective
successors and assigns, are referred to hereinafter each individually as a
"Lender" and collectively as the "Lenders"), BANK ONE, NA, a national banking
association having its principal office in Chicago, Illinois, as administrative
agent for the Lenders ("Agent"), and on the other hand, MIDAS, INC., a Delaware
corporation ("Parent"), each of Parent's Subsidiaries identified on the
signature pages hereof as a "Borrower" (such Subsidiaries are referred to
hereinafter each individually as a "Borrower", and collectively, jointly and
severally, as the "Borrowers"), and each of Parent's Subsidiaries identified on
the signature pages hereof as a "Guarantor" (together with the Parent, each
individually as a "Guarantor" and collectively, jointly and severally, as the
"Guarantors").
WHEREAS, the Existing Lenders have made loans and other financial
accommodations to Parent and MIC pursuant to the Existing Credit Agreement (the
"Existing Bank Loans");
WHEREAS, Borrowers desire to (i) refinance with the proceeds of Advances
the portion of the Existing Bank Loans which is currently secured by a first
lien on certain assets of certain of Parent's Subsidiaries, (ii) refinance the
remaining portion of the Existing Bank Loans with the Term A Loans and the Term
B Loans and (iii) obtain a working capital facility.
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following terms shall
have the following definitions:
"Account Debtor" means any Person who is or who may become obligated under,
with respect to, or on account of, an Account, chattel paper, or a General
Intangible.
"Accounts" means, as to any Person, all of such Person's now owned or
hereafter acquired right, title, and interest with respect to "accounts" (as
that term is defined in the Code), and any and all supporting obligations in
respect thereof.
"ACH Transactions" means any cash management or related services (including
the Automated Clearing House processing of electronic funds transfers through
the direct Federal Reserve Fedline system) provided by Bank One or its
Affiliates for the account of any Loan Party.
"Additional Documents" has the meaning set forth in Section 4.4(c).
"Administrative Borrower" has the meaning set forth in Section 17.9.
"Advances" has the meaning set forth in Section 2.1(a).
"Affiliate" means, as applied to any Person, any other Person who, directly
or indirectly, controls, is controlled by, or is under common control with, such
Person. For purposes of this definition, "control" means the possession,
directly or indirectly, of the power to direct the management and policies of a
Person, whether through the ownership of Stock, by contract, or otherwise;
provided, however, that, for purposes of the definition of Eligible Accounts and
Section 7.14 hereof: (a) any Person which owns
directly or indirectly 10% or more of the securities having ordinary voting
power for the election of directors or other members of the governing body of a
Person or 10% or more of the partnership or other ownership interests of a
Person (other than as a limited partner of such Person) shall be deemed to
control such Person; (b) each director (or comparable manager) of a Person shall
be deemed to be an Affiliate of such Person; and (c) each partnership or joint
venture in which a Person is a partner or joint venturer shall be deemed to be
an Affiliate of such Person. Neither Agent nor any Lender shall be deemed to be
an Affiliate of any Loan Party.
"Agent" means Bank One, solely in its capacity as administrative agent for
the Lenders hereunder and not in its individual capacity, and any successor
thereto.
"Agent Advances" has the meaning set forth in Section 2.3(c)(i).
"Agent-Related Persons" means Agent together with its Affiliates, officers,
directors, employees, and agents.
"Agent's Account" means the account identified on Schedule A-1.
"Agent's Liens" means (i) the Liens granted by the Loan Parties to Agent
for the benefit of Agent and the Revolver Lenders to secure the Revolver
Obligations and (ii) the Liens granted by Loan Parties to Agent for the benefit
of Agent and the Term Loan Lenders to secure the Term Loan Obligations, in each
case under this Agreement or the other Loan Documents.
"Agreement" has the meaning set forth in the preamble hereto.
"Applicable Base Rate Margin" means, with respect to Advances, 2.75%, and
with respect to the Term A Loan, 5.0%.
"Applicable LIBOR Rate Margin" means, with respect to Advances, 3.75%, with
respect to Letter of Credit Fees, 3.75%, and with respect to the Term A Loan,
6.0%.
"Approved Fund" means any Fund that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers or manages a Lender.
"APWI Canada" means APWI Canada, Inc., a corporation organized under the
laws of Canada.
"Arranger" means Banc One Capital Markets, Inc.
"Assignee" has the meaning set forth in Section 14.1.
"Assignment and Acceptance" means an Assignment and Acceptance in the form
of Exhibit A-1.
"Authorized Person" means any member of Senior Management of Administrative
Borrower.
"Availability" means, as of any date of determination, if such date is a
Business Day, and determined at the close of business on the immediately
preceding Business Day, if such date of determination is not a Business Day, the
amount that Administrative Borrower is entitled to borrow as
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Advances under Section 2.1 (after giving effect to Revolver Usage and all
sublimits and reserves applicable hereunder).
"Availability Reserve" means (a) prior to the Field Audit Completion Date,
$0, and (b) at any time thereafter, 15% of the extant Revolver Commitment.
"Bank One" means Bank One, NA, a national banking association having its
principal office in Chicago, Illinois, in its individual capacity, and its
successors.
"Bank Product Agreements" means those certain cash management service
agreements entered into from time to time by Parent or its Subsidiaries in
connection with any of the Bank Products.
"Bank Product Obligations" means all obligations, liabilities, contingent
reimbursement obligations, fees, and expenses owing by Parent or its
Subsidiaries to Bank One or its Affiliates pursuant to or evidenced by the Bank
Product Agreements and irrespective of whether for the payment of money, whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, and including all such amounts that a Loan Party is
obligated to reimburse to Agent or any member of the Lender Group as a result of
Agent or such member of the Lender Group purchasing participations or executing
indemnities or reimbursement obligations with respect to the Bank Products
provided to Parent or its Subsidiaries pursuant to the Bank Product Agreements.
"Bank Product Reserves" means, as of any date of determination, the amount
of reserves that Agent has established (based upon Bank One's or its Affiliate's
reasonable determination of the credit exposure in respect of then extant Bank
Products) for Bank Products then provided or outstanding, provided that in order
to qualify as Bank Product Reserves, such reserves must be established and
disclosed to Administrative Borrower at the time Bank One or its Affiliates
provides the Applicable Bank Product.
"Bank Products" means any service or facility extended to Parent or its
Subsidiaries by Bank One or any Affiliate of Bank One including: (a) credit
cards, (b) credit card processing services, (c) debit cards, (d) purchase cards,
(e) ACH Transactions, (f) cash management, including controlled disbursement,
accounts or services, or (g) Hedge Agreements.
"Bankruptcy Code" means, as applicable, (i) the United States Bankruptcy
Code, (ii) the Bankruptcy and Insolvency Act (Canada) or (iii) the Companies'
Creditors Arrangement Act (Canada), or any similar legislation in a relevant
jurisdiction, in each case as in effect from time to time.
"Base LIBOR Rate" means with respect to a LIBOR Rate Loan for the relevant
Interest Period, the applicable British Bankers' Association LIBOR rate for
deposits in U.S. dollars as reported by any generally recognized financial
information service as of 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period, and having a maturity equal to such
Interest Period, provided that, if no such British Bankers' Association LIBOR
rate is available to the Agent, the applicable Base LIBOR Rate for the relevant
Interest Period shall instead be the rate determined by Agent to be the rate at
which Bank One or one of its Affiliate banks offers to place deposits in U.S.
dollars with first-class banks in the London interbank market at approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period, in the approximate amount of Bank One's relevant LIBOR Rate
Loan and having a maturity equal to such Interest Period.
"Base Rate" means for any day, a rate of interest per annum equal to the
higher of (i) the Prime Rate for such day and (ii) the sum of the Federal Funds
Effective Rate for such day plus 1/2% per annum.
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"Base Rate Loan" means each portion of an Advance or a Term Loan that bears
interest at a rate determined by reference to the Base Rate.
"Benefit Plan" means a "defined benefit plan" (as defined in Section 3(35)
of ERISA) or a benefit plan under Canadian Employee Benefit Laws for which any
Loan Party or any Subsidiary or ERISA Affiliate of any Loan Party has been an
"employer" (as defined in Section 3(5) of ERISA) or has held equivalent status
under Canadian Employee Benefit Laws within the past six years.
"Board of Directors" means, with respect to any Person, the board of
directors (or comparable managers) of such Person or any committee thereof duly
authorized to act on behalf thereof.
"Books" means, as to any Person, all of such Person's now owned or
hereafter acquired books and records (including all of its Records indicating,
summarizing, or evidencing its assets (including the Collateral) or liabilities,
all of such Person's Records relating to its or their business operations or
financial condition, and all of its or their goods or General Intangibles
related to such information).
"Borrower" and "Borrowers" have the respective meanings set forth in the
preamble to this Agreement.
"Borrowing" means a borrowing hereunder consisting of Advances (or term
loans, in the case of the Term Loans) made on the same day by the Lenders (or
Agent on behalf thereof), or by Agent in the case of an Agent Advance, in each
case, to Administrative Borrower.
"Borrowing Base" has the meaning set forth in Section 2.1(a).
"Borrowing Base Certificate" means a certificate substantially in the form
of Exhibit B-1 delivered by a member of Senior Management of Administrative
Borrower to Agent.
"Business Day" means (i) with respect to any borrowing, payment or rate
selection of LIBOR Rate Loans, a day (other than a Saturday or Sunday) on which
banks generally are open in Chicago and New York City for the conduct of
substantially all of their commercial lending activities, interbank wire
transfers can be made on the Fedwire system and dealings in United States
dollars are carried on in the London interbank market and (ii) for all other
purposes, a day (other than a Saturday or Sunday) on which banks generally are
open in Chicago for the conduct of substantially all of their commercial lending
activities and interbank wire transfers can be made on the Fedwire system.
"Business Transformation Charges" means, with respect to Parent and its
Subsidiaries for any period and without duplication of amounts included as
special or restructuring charges determined in accordance with GAAP for such
period, operating expenses in respect of the Inventory Divestiture Plan in an
aggregate amount not in excess of $5,700,336 as described on Schedule B-1.
"Canadian Documents" means the Canadian Security Agreement, the Canadian
Pledge Agreement and the Canadian Guaranty.
"Canadian Employee Benefits Laws" means the Canadian Pension Plan Act
(Canada), the Pension Benefit Act (Ontario), the Health Insurance Act (Ontario),
the Employment Standard Act (Ontario), and any federal, provincial or local
counterparts or equivalents, in each case, as amended from time to time.
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"Canadian Guarantors" means collectively Midas Canada Holdings, Midas
Canada, Midas Canada Realty and APWI Canada.
"Canadian Guaranty" means that certain Guaranty executed and delivered by
the Canadian Guarantors in favor of Agent, for the benefit of Lender Group, in
form and substance satisfactory to Agent.
"Canadian Income Tax Act" means the Income Tax Act (Canada), R.S.C. 1985
C.1 (5th Supp), as amended.
"Canadian Pledge Agreement" means that certain Stock Pledge Agreement
executed and delivered by the Canadian Guarantors in favor of Agent, for the
benefit of Lender Group, in form and substance satisfactory to Agent.
"Canadian Security Agreement" means that certain Security Agreement
executed and delivered by the Canadian Guarantors in favor of Agent, for the
benefit of Lender Group, in form and substance satisfactory to Agent.
"Capital Expenditures" means, with respect to Parent and its Subsidiaries
for any period, the sum of (i) the aggregate of all expenditures by Parent and
its Subsidiaries during such period that in accordance with GAAP are or should
be included in "property, plant and equipment" or in a similar fixed asset
account on its balance sheet, whether such expenditures are paid in cash or
financed and including all Capitalized Lease Obligations paid or payable during
such period, and (ii) to the extent not covered by clause (i) above, the
aggregate of all expenditures by Parent and its Subsidiaries during such period
to acquire by purchase or otherwise the business or fixed assets of, or the
capital Stock of, any other Person.
"Capital Lease" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means any Indebtedness represented by
obligations under a Capital Lease.
"Cash Collateral" means the available cash balance of a cash collateral
account maintained by MIC with Agent.
"Cash Equivalents" means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either S&P or Xxxxx'x,
(c) commercial paper maturing no more than 270 days from the date of acquisition
thereof and, at the time of acquisition, having a rating of A-1 or P-1, or
better, from S&P or Xxxxx'x, and (d) certificates of deposit or bankers'
acceptances maturing within 1 year from the date of acquisition thereof either
(i) issued by any bank organized under the laws of the United States or any
state thereof which bank has a rating of A or A2, or better, from S&P or
Xxxxx'x, or (ii) certificates of deposit less than or equal to $100,000 in the
aggregate issued by any other bank insured by the Federal Deposit Insurance
Corporation.
"Cash Management Account" has the meaning set forth in Section 2.7(a).
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"Cash Management Agreements" means those certain cash management service
agreements, in form and substance satisfactory to Agent, each of which is among
Administrative Borrower, Agent, and one of the Cash Management Banks.
"Cash Management Bank" has the meaning set forth in Section 2.7(a).
"Cash Restructuring Charges" means cash charges with respect to the
refinancing of Indebtedness, the exiting of the PWI business, the closing of
distribution centers, the closing or refranchising of Company-Owned Stores, the
closing and outsourcing of the manufacturing operations located in Hartford,
Wisconsin, and related corporate downsizing, including, but not limited to, cash
charges pertaining to the termination of lease commitments, decommissioning
charges, shipping and handling relating to the closing of facilities, facility
abandonment, environmental and legal charges, severance and related costs and
contract termination charges, all such Cash Restructuring Charges subject to a
maximum aggregate amount not to exceed $12,600,000 for the fiscal year ended
December 28, 2002 and $35,000,000 for the two fiscal year period ending January
1, 2005. Cash Restructuring Charges shall include accruals for outstanding
warranty claims to the extent permitted by Agent in its Permitted Discretion.
"Change of Control" means (a) any "person" or "group" (within the meaning
of Sections 13(d) and 14(d) of the Exchange Act) becomes the beneficial owner
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
20%, or more, of the Stock of Parent having the right to vote for the election
of members of the Board of Directors, or (b) a majority of the members of the
Board of Directors do not constitute Continuing Directors, or (c) any Loan Party
ceases to directly own and control 100% of the outstanding capital Stock of each
of its Subsidiaries extant as of the Closing Date.
"Closing Date" means the date of the making of the initial Advance (or
other extension of credit) hereunder.
"Closing Date Business Plan" means the set of Projections of the Loan
Parties for the 2 year period following the Closing Date (on a month by month
basis), in form and substance (including as to scope and underlying assumptions
and giving effect to the Inventory Divestiture Plan) satisfactory to Agent.
"Code" means the Illinois Uniform Commercial Code, as in effect from time
to time.
"Collateral" means all assets and property of each Loan Party other than
the Parent, including all of such Loan Party's now owned or hereafter acquired
right, title, and interest in and to each of the following:
(a) Accounts,
(b) Books,
(c) Equipment,
(d) Deposit Accounts,
(e) General Intangibles,
(f) Inventory,
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(g) Investment Property,
(h) Negotiable Collateral,
(i) Real Property Collateral,
(j) money or other assets of each such Loan Party that now or
hereafter come into the possession, custody, or control of any member of
the Lender Group, and
(k) the proceeds and products, whether tangible or intangible, of
any of the foregoing, including proceeds of insurance covering any or all
of the foregoing, and any and all Accounts, Books, Deposit Accounts,
Equipment, General Intangibles, Inventory, Investment Property, Negotiable
Collateral, Real Property, money, deposit accounts, or other tangible or
intangible property resulting from the sale, exchange, collection, or other
disposition of any of the foregoing, or any portion thereof or interest
therein, and the proceeds thereof.
"Collateral Access Agreement" means a landlord waiver, bailee letter, or
acknowledgement agreement of any lessor, warehouseman, processor, consignee, or
other Person in possession of, or having a Lien upon, any Equipment or Inventory
or any Books, in each case, in form and substance satisfactory to Agent.
"Collections" means all cash, checks, notes, instruments, and other items
of payment (including insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds) received by any Loan Party, regardless of whether any
such payment constitutes the proceeds of Collateral.
"Commercial Tort Claim Assignment" has the meaning set forth in Section
4.4(b).
"Commitment" means, with respect to each Lender, its Revolver Commitment,
its Term A Loan Commitment, its Term B Loan Commitment or its Total Commitment,
as the context requires, and, with respect to all Lenders, their Revolver
Commitments, their Term A Loan Commitments, their Term B Loan Commitments or
their Total Commitments, as the context requires, in each case as such Dollar
amounts are set forth beside such Lender's name under the applicable heading on
Schedule C-1 or on the signature page of the Assignment and Acceptance pursuant
to which such Lender became a Lender hereunder in accordance with the provisions
of Section 14.1.
"Company-Owned Store" means a retail location owned and operated by a Loan
Party.
"Compliance Certificate" means a certificate substantially in the form of
Exhibit C-1 delivered by a member of Senior Management of Parent to Agent.
"Consolidated Net Income" means, with respect to any Person for any period,
the net income (loss) of such Person and its Subsidiaries for such period,
determined on a consolidated basis and in accordance with GAAP.
"Continuing Director" means (a) any member of the Board of Directors of
Parent who was a director (or comparable manager) of Parent on the Closing Date,
and (b) any individual who becomes a member of the Board of Directors of Parent
after the Closing Date if such individual was appointed or nominated for
election to the Board of Directors of Parent by a majority of the Continuing
Directors, but excluding any such individual originally proposed for election in
opposition to the Board of Directors of Parent in office at the Closing Date in
an actual or threatened election contest relating to the election of the
directors (or comparable managers) of Parent (as such terms are used in Rule
14a-11 under
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the Exchange Act) and whose initial assumption of office resulted from such
contest or the settlement thereof.
"Contribution Agreement" means a contribution agreement executed and
delivered by each Borrower and Guarantor, the form and substance of which is
satisfactory to Agent.
"Control Agreement" means a control agreement, in form and substance
satisfactory to Agent, executed and delivered by the applicable Loan Party,
Agent, and the applicable securities intermediary with respect to a Securities
Account or a bank with respect to a DDA or a cash collateral account.
"Copyright Security Agreement" means a copyright security agreement
executed and delivered by each Loan Party and Agent, the form and substance of
which is satisfactory to Agent.
"Credit Card Assignment Agreement" means an irrevocable assignment and
agreement, in form and substance satisfactory to Agent, between a Credit Card
Processor, Agent and certain of the Loan Parties, as determined by Agent, as
amended or otherwise modified from time to time.
"Credit Card Processor" means a credit card service company acceptable to
Agent in its sole discretion.
"Daily Balance" means, with respect to an Obligation on each day during the
term of this Agreement, the amount of such Obligation owed at the end of such
day.
"DDA" means any checking or other demand deposit account maintained by any
Loan Party.
"Default" means an event, condition, or default that, with the giving of
notice, the passage of time, or both, would be an Event of Default.
"Defaulting Lender" means any Lender that fails to make any Advance (or
other extension of credit) that it is required to make hereunder on the date
that it is required to do so hereunder.
"Defaulting Lender Rate" means (a) the Base Rate for the first 3 days from
and after the date the relevant payment is due, and (b) thereafter, at the
interest rate then applicable to Advances that are Base Rate Loans (inclusive of
the Applicable Base Rate Margin applicable thereto).
"Deposit Account" means any deposit account (as that term is defined in the
Code) or any DDA.
"Designated Account" means that certain DDA of Administrative Borrower
identified on Schedule D-1.
"Dilution" means, as of any date of determination, a percentage established
by Agent in its Permitted Discretion on the Field Audit Completion Date based on
the results of the Agent's field examination that is the result of dividing the
Dollar amount of (a) bad debt write-downs, discounts, advertising allowances,
credits, or other dilutive items (other than payments) with respect to the
Accounts during the applicable period established by Agent on the Field Audit
Completion Date in its Permitted Discretion, by (b) the Eligible Loan Parties'
gross xxxxxxxx plus the Dollar amount of clause (a) to the extent included
therein.
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"Dilution Reserve" means, as of any date of determination, an amount
sufficient to reduce the advance rate against Eligible Accounts by one
percentage point for each percentage point by which Dilution is in excess of the
percentage established by Agent in its Permitted Discretion on the Field Audit
Completion Date based on the results of the Agent's field examination; provided
that such percentage may be revised from time to time thereafter in Agent's
Permitted Discretion to address the results of any audit performed by Agent.
"Disbursement Letter" means an instructional letter executed and delivered
by Administrative Borrower to Agent regarding the extensions of credit to be
made on the Closing Date, the form and substance of which is satisfactory to
Agent.
"Dollars" or "$" means United States dollars.
"EBITDA" means, with respect to any fiscal period, Parent's and its
Subsidiaries Consolidated Net Income, minus extraordinary gains, plus, to the
extent deducted in determining Consolidated Net Income, interest expense, income
taxes, Cash Restructuring Charges, depreciation and amortization, and other
non-cash charges, all for such period and all as determined in accordance with
GAAP. Solely for the purpose of calculating EBITDA in respect of the financial
covenants set forth in Sections 7.20(a)(i), (ii) and (iii) and Section
7.20(b)(i), (x) Business Transformation Charges shall be an add-back to EBITDA
in amounts equal to $2,900,000 and $2,800,336 for the fiscal quarters ending
September 27, 2003 and January 3, 2004, respectively, and (y) an amount equal to
$975,000 will be an add-back to EBITDA for each of the fiscal quarters ending
June 29, 2002, September 28, 2002 and December 28, 2002.
"EBITDAR" means with respect to any fiscal period, EBITDA plus Net Rent for
such period, all as determined in accordance with GAAP.
"Eligible Accounts" means those Accounts created by one of the Eligible
Loan Parties in the ordinary course of its business, that arise out of its sale
of goods that comply with each of the representations and warranties respecting
Eligible Accounts made by such Eligible Loan Party under the Loan Documents, and
that are not excluded as ineligible by virtue of one or more of the criteria set
forth below; provided, however, that such criteria may be revised from time to
time by Agent in Agent's Permitted Discretion to address the results of any
audit performed by or for the benefit of Agent. In determining the amount to be
included, Eligible Accounts shall be calculated net of customer deposits and
unapplied cash remitted to the Eligible Loan Parties. Eligible Accounts shall
not include the following:
(a) Accounts that the Account Debtor has failed to pay within 90
days of the statement date (provided statements include all invoices for
the applicable statement period and are rendered not less frequently than
monthly) or otherwise within 90 days of the invoice date, or that have
payment terms of more than 90 days,
(b) Accounts owed by an Account Debtor where 25% (or such greater
percentage as determined by Agent in its Permitted Discretion on the Field
Audit Completion Date based on the results of Agent's field examination) or
more of all Accounts owed by that Account Debtor are deemed ineligible
under clause (a) above,
(c) Accounts with respect to which the Account Debtor is an
employee, Affiliate, or agent of any Loan Party,
(d) Accounts arising in a transaction wherein goods are placed on
consignment or are sold pursuant to a guaranteed sale, a sale or return, a
sale on approval, a xxxx
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and hold, or any other terms by reason of which the payment by the Account
Debtor may be conditional,
(e) Accounts that are not payable in Dollars (or in the case of
Accounts of APWI Canada and Midas Canada, Canadian Dollars),
(f) Accounts with respect to which the Account Debtor either (i)
does not maintain its chief executive office in the United States or
Canada, or (ii) is not organized under the laws of the United States or
organized under or a resident of any state thereof, Canada or any province
thereof, or (iii) is the government of any foreign country or foreign
sovereign state, or of any state, province, municipality, or other
political subdivision thereof, or of any department, agency, public
corporation, or other instrumentality thereof, unless (y) the Account is
supported by an irrevocable letter of credit reasonably satisfactory to
Agent (as to form, substance, and issuer or domestic confirming bank) that
has been delivered to Agent and is directly drawable by Agent, or (z) the
Account is covered by credit insurance in form, substance, and amount, and
by an insurer, reasonably satisfactory to Agent,
(g) Accounts with respect to which the Account Debtor is either (i)
the United States, Canada or any department, agency, or instrumentality of
the United States or Canada (exclusive, however, of Accounts with respect
to which the applicable Eligible Loan Party has complied, to the reasonable
satisfaction of Agent, with the Assignment of Claims Act, 31 USC ss. 3727
or the Financial Administration Act (Canada)), or (ii) any state of the
United States or province of Canada (exclusive, however, of (A) Accounts
owed by any state or province that does not have a statutory counterpart to
the Assignment of Claims Act or the Financial Administration Act (Canada)
or (B) Accounts owed by any state that does have a statutory counterpart to
the Assignment of Claims Act as to which the applicable Eligible Loan Party
has complied to Agent's satisfaction),
(h) Accounts with respect to which the Account Debtor is a creditor
of any Loan Party or any of its Subsidiaries, has or has asserted a right
of setoff, has disputed its liability, or has made any claim with respect
to its obligation to pay the Account, to the extent of such claim, right of
setoff, or dispute,
(i) Accounts with respect to an Account Debtor whose total
obligations owing to Eligible Loan Parties exceed 10% (such percentage as
applied to a particular Account Debtor being subject to reduction by Agent
in its Permitted Discretion if the creditworthiness of such Account Debtor
deteriorates) of all Eligible Accounts, to the extent of the obligations
owing by such Account Debtor in excess of such percentage,
(j) Accounts with respect to which the Account Debtor is subject to
an Insolvency Proceeding, is known by any Loan Party not to be Solvent, has
gone out of business, or as to which a Loan Party has received notice of an
imminent Insolvency Proceeding or a material impairment of the financial
condition of such Account Debtor,
(k) Accounts with respect to which the Account Debtor is located in
the states of New Jersey, Minnesota, or West Virginia (or any other state
that requires a creditor to file a business activity report or similar
document in order to bring suit or otherwise enforce its remedies against
such Account Debtor in the courts or through any judicial process of such
state), unless the applicable Eligible Loan Party has qualified to do
business in New Jersey, Minnesota, West Virginia, or such other states, or
has filed a business activities report with the applicable
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division of taxation, the department of revenue, or with such other state
offices, as appropriate, for the then-current year, or is exempt from such
filing requirement,
(l) Accounts, the collection of which, Agent, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's
financial condition,
(m) Accounts that are not subject to a valid and perfected first
priority Agent's Lien securing the Revolver Obligations,
(n) Accounts with respect to which (i) the goods giving rise to
such Account have not been shipped and billed to the Account Debtor, or
(ii) the services giving rise to such Account have not been performed and
billed to the Account Debtor,
(o) Accounts that represent the right to receive progress payments
or other advance xxxxxxxx that are due prior to the completion of
performance by the applicable Borrower of the subject contract for goods or
services,
(p) Accounts arising out of any payment obligations under any
Franchise Agreement, other than any Accounts arising directly from the sale
of Inventory to any franchisee in the ordinary course of business, or
(q) Accounts arising from a single transaction owed by an Account
Debtor in excess of $500,000.
Notwithstanding the foregoing criteria and exclusions, at the request of
Administrative Borrower, Accounts generated from sales of Inventory pursuant to
the Inventory Divestiture Plan shall be permitted to be Eligible Accounts for up
to 30 days after the creation of such Accounts in Agent's Permitted Discretion
including, without limitation, Agent's satisfaction with the identity and
creditworthiness of the applicable Account Debtor.
"Eligible Inventory" means Inventory of Eligible Loan Parties consisting of
finished goods held for sale in the ordinary course of the Eligible Loan
Parties' business that complies with each of the representations and warranties
respecting Eligible Inventory made by the Eligible Loan Parties' in the Loan
Documents, and that is not excluded as ineligible by virtue of the one or more
of the criteria set forth below; provided, however, that such criteria may be
revised from time to time by Agent in Agent's Permitted Discretion to address
the results of any audit or appraisal performed by or for the benefit of Agent.
In determining the amount to be so included, Inventory shall be determined on a
first-in-first-out basis and valued at the lower of cost (excluding capitalized
overhead and the Eligible Loan Parties' Inventory valuation reserves) or market
on a basis consistent with the Eligible Loan Parties' historical accounting
practices. An item of Inventory shall not be included in Eligible Inventory if:
(a) an Eligible Loan Party does not have good, valid, and
marketable title thereto,
(b) it is not located at one of the locations in the United States
or Canada set forth on Schedule E-1 (as updated from time to time) or, if
such Inventory is in transit from one such location to another such
location, the gross value of such in transit Inventory is in excess of
$10,000,000 at any one time,
(c) it does not satisfy one of the following categories: (i) such
Inventory is located on Owned Real Property of a Loan Party and used in
connection with the operation of a
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Company-Owned Store or any manufacturing, warehousing or distribution
operations of the Loan Parties, or (ii) such Inventory is located (a) on
Leased Real Property or (b) in a contract warehouse and used in connection
with any manufacturing, warehousing or distribution operations of the Loan
Parties, provided that, in the case of this subclause (ii), (x) such
location (other than in respect of a Company-Owned Store) is subject to a
Collateral Access Agreement executed by the lessor, warehouseman, or other
third party and (y) such location is a Company-Owned Store and is subject
to a Collateral Access Agreement executed by the lessor, warehouseman, or
other third party within sixty (60) days of the Closing Date, and provided
further that, in the case of each subclause under this clause (c), such
Inventory must be segregated or otherwise separately identifiable from
goods of others, if any, stored on the premises,
(d) it is not subject to a valid and perfected first priority Agent's
Lien securing the Revolver Obligation,
(e) it consists of goods returned (unless returned in accordance with
the terms of an Eligible Loan Party's programs or promotions established in
the ordinary course of business and available and in form for immediate
resale) or rejected by an Eligible Loan Party's customers, or
(f) it consists of goods that are obsolete or slow moving,
unmerchantable, restrictive or custom items, work-in-process, raw
materials, or goods that constitute spare parts, packaging and shipping
materials, supplies used or consumed in a Borrower's business, xxxx and
hold goods, defective goods, "seconds," or Inventory acquired on
consignment.
"Eligible Loan Parties" means the Loan Parties other than Parent; provided
that APWI Canada, Inc. and Midas Canada Inc. shall not be Eligible Loan Parties
until the requirements of Section 2.7(g) have been satisfied.
"Eligible Transferee" means (a) a commercial bank organized under the laws
of the United States, or any state thereof, and having total assets in excess of
$250,000,000, (b) 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 which has total
assets in excess of $250,000,000, provided that such bank is acting through a
branch or agency located in the United States, (c) a finance company, insurance
company, or other financial institution or fund that is engaged in making,
purchasing, or otherwise investing in commercial loans in the ordinary course of
its business and having (together with its Affiliates) total assets in excess of
$250,000,000, (d) any Affiliate (other than individuals) of a Lender that was
party hereto as of the Closing Date, including an Approved Fund, and (e) any
other Person approved by Agent (which approval shall not be unreasonably
withheld or delayed); provided that no Person who operates or franchises
automotive repair facilities shall be an Eligible Transferee.
"Environmental Actions" means any complaint, summons, citation, notice,
order, claim, litigation, investigation, judicial or administrative proceeding,
judgment, letter, or other communication from any Governmental Authority, or any
third party involving violations or alleged violations of Environmental Law or
releases of Hazardous Materials, (a) from any assets, properties, or businesses
of any Loan Party or any predecessor in interest, (b) from adjoining properties
or businesses, or (c) from or onto any facilities which received Hazardous
Materials generated by any Loan Party or any predecessor in interest.
"Environmental Law" means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, permit,
binding and enforceable guideline, binding and
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enforceable written policy or rule of common law now or hereafter in effect and
in each case as amended, or, to the extent binding on any Loan Party, any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment relating to the environment,
human health, employee health and safety, or Hazardous Materials, including
CERCLA; RCRA; the Federal Water Pollution Control Act, 33 USCss. 1251 et seq.;
the Toxic Substances Control Act, 15 USC, ss. 2601 et seq.; the Clean Air Act,
42 USCss. 7401 et seq.; the Safe Drinking Water Act, 42 XXX.xx. 3803 et seq.;
the Oil Pollution Act of 1990, 33 XXX.xx. 2701 et seq.; the Emergency Planning
and the Community Right-to-Know Act of 1986, 42 XXX.xx. 11001 et seq.; the
Hazardous Material Transportation Act, 49 USCss. 1801 et seq.; and the
Occupational Safety and Health Act, 29 XXX.xx. 651 et seq. (to the extent it
regulates occupational exposure to Hazardous Materials); the Canadian
Environmental Protection Act (Canada); the Fisheries Act (Canada); the
Transportation of Dangerous Goods Act (Canada); the Environmental Protection Act
(Ontario); the Water Resource Act (Ontario); the Waste Management Act (British
Columbia); the Environmental Quality Act (Quebec); and any federal, state,
provincial, local or foreign counterparts or equivalents, in each case as
amended from time to time.
"Environmental Liabilities and Costs" means all liabilities, monetary
obligations, Remedial Actions, losses, damages, punitive damages, consequential
damages, treble damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts, or consultants, and costs of
investigation and feasibility studies), fines, penalties, sanctions, and
interest incurred as a result of any claim or demand by any Governmental
Authority or any third party, and which relate to any Environmental Action.
"Environmental Lien" means any Lien in favor of any Governmental Authority
for Environmental Liabilities and Costs.
"Environmental Reserves" means reserves (determined from time to time by
Agent in its Permitted Discretion) for the estimated costs of Remedial Action
associated with any Real Property Collateral.
"Equipment" means, as to any Person, all of such Person's now owned or
hereafter acquired right, title, and interest with respect to equipment,
machinery, machine tools, motors, furniture, furnishings, fixtures, vehicles
(including motor vehicles), tools, parts, goods (other than consumer goods, farm
products, or Inventory), wherever located, including all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose employees are
treated as employed by the same employer as the employees of a Loan Party under
IRC Section 414(b), (b) any trade or business subject to ERISA whose employees
are treated as employed by the same employer as the employees of a Loan Party
under IRC Section 414(c), (c) solely for purposes of Section 302 of ERISA and
Section 412 of the IRC, any organization subject to ERISA that is a member of an
affiliated service group of which a Loan Party is a member under IRC Section
414(m), or (d) solely for purposes of Section 302 of ERISA and Section 412 of
the IRC, any Person subject to ERISA that is a party to an arrangement with a
Loan Party and whose employees are aggregated with the employees of a Loan Party
under IRC Section 414(o).
"ERISA Event" means (a) a Reportable Event with respect to any Benefit Plan
or Multiemployer Plan, (b) the withdrawal of a Loan Party, any of its
Subsidiaries or ERISA Affiliates from a Benefit Plan during a plan year in which
it was a "substantial employer" (as defined in
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Section 4001(a)(2) of ERISA), (c) the providing of notice of intent to terminate
a Benefit Plan in a distress termination (as described in Section 4041(c) of
ERISA), (d) the institution by the PBGC of proceedings to terminate a Benefit
Plan or Multiemployer Plan, (e) any event or condition (i) that provides a basis
under Section 4042(a)(1), (2), or (3) of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan or Multiemployer Plan,
or (ii) that may result in termination of a Multiemployer Plan pursuant to
Section 4041A of ERISA, (f) the partial or complete withdrawal within the
meaning of Sections 4203 and 4205 of ERISA, of a Loan Party, any of its
Subsidiaries or ERISA Affiliates from a Multiemployer Plan, (g) the providing of
any security to any Plan under Section 401(a)(29) of the IRC by a Loan Party or
its Subsidiaries or any of their ERISA Affiliates or (h) any equivalent event,
action, condition, proceeding or otherwise under Canadian Employee Benefit Laws.
"Event of Default" has the meaning set forth in Section 8.
"Excess Cash Flow" means, for any fiscal period of Parent, (i) EBITDAR for
such period, less (ii) Fixed Charges for such period, less (iii) optional
principal payments on Indebtedness during such period, less (iv) Cash
Restructuring Charges for such period to the extent not included in the
determination of Fixed Charges for such period.
"Exchange Act" means the Securities Exchange Act of 1934, as in effect from
time to time.
"Existing Agent" means Bank One, NA, as agent for the Existing Lenders.
"Existing Credit Agreement" means the Credit Agreement dated as of January
22, 1998, by and among the Parent and MIC, as borrowers, Credit Suisse First
Boston, as co-agent, the lenders named therein and the Existing Agent, as
modified, amended and supplemented prior to the Closing Date.
"Existing Lenders" means the lenders party to the Existing Credit
Agreement.
"Existing Note Agreement" means the Note and Guarantee Agreement, dated as
of April 15, 1998, by and among MIC, as issuer, the Parent, as guarantor, and
each of the purchasers named therein, as modified, amended and supplemented
prior to the Closing Date.
"Existing Noteholders" means the holders of the Existing Notes.
"Existing Notes" means the 6.89% Guaranteed Senior Notes due 2005 issued by
MIC in the initial aggregate principal amount of $75,000,000.
"Extraordinary Receipts" means any Collections received by the Parent or
any of its Subsidiaries not in the ordinary course of business (and not
consisting of proceeds described in Section 2.4(c)(iii) hereof), including, (i)
foreign, United States, state or local tax refunds, (ii) pension plan
reversions, (iii) proceeds of insurance (including proceeds of the key man life
insurance policies), but excluding insurance with respect to Accounts and
Inventory, (iv) judgments, proceeds of settlements or other consideration of any
kind in connection with any cause of action, except in connection with the
settlement of Accounts in the ordinary course of business, (v) condemnation
awards (and payments in lieu thereof), but excluding condemnation awards with
respect to Inventory, (vi) indemnity payments and (vii) any purchase price
adjustment received in connection with any purchase agreement.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum 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 for such day (or, if such day
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is not a Business Day, for the immediately preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations at approximately
10:00 a.m. (Chicago time) on such day on such transactions received by Agent
from three Federal funds brokers of recognized standing selected by Agent in its
sole discretion.
"Fee Letter" means that certain fee letter, dated as of March 25, 2003,
among MIC, Parent, the Arranger and Agent, in form and substance satisfactory to
Agent.
"FEIN" means Federal Employer Identification Number.
"Fiat Magneti Agreements" means (i) the Agreement for Strategic Alliance,
dated October 1, 1998, by and between MIC and Magneti SpA, and (ii) the License
Agreement and the other agreements and documents executed and delivered in
connection therewith, each as amended or otherwise modified from time to time.
"Field Audit Completion Date" means the date on which Agent notifies the
Administrative Borrower that Agent has (i) completed its field examination
(which Agent shall use commercially reasonable efforts to complete by April 30,
2003) and (ii) received an update to the Inventory appraisal conducted by Great
American Group in November 2002, the results of each of which are satisfactory
to Agent in its Permitted Discretion.
"Fiscal Year" means the fiscal year of the Parent and its Subsidiaries
consisting of the accounting period of 52 or 53 weeks ending on the last
Saturday of December or the first Saturday of January in each calendar year.
"Fixed Charges" means for any fiscal period of Parent, without duplication,
(i) Capital Expenditures (net of third party financing), plus (ii) cash taxes
paid, cash interest expense, scheduled principal payments on Indebtedness
(including, without limitation, payments in respect of Capital Leases and
finance leases) made during such period, payments made pursuant to Section
2.4(c)(v), dividends, Net Rent and Cash Restructuring Charges in excess of
budgeted amounts provided in the Closing Date Business Plan, all for such period
and all as determined in accordance with GAAP.
"Fixed Rate Breakage Fee" has the meaning set forth in Section 2.16.
"Franchise Agreement" means any franchise agreement to which a Loan Party
is a party as a franchisor and which is related to the franchising of the
business of operating automotive specialty shops and any other agreements,
documents and leases executed and delivered in connection therewith.
"Fund" means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.
"Funding Date" means the date on which a Borrowing occurs.
"Funding Losses" has the meaning set forth in Section 2.13(b)(ii).
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States, consistently applied.
"General Intangibles" means with respect to any Person, all of such
Person's now owned or hereafter acquired right, title, and interest with respect
to general intangibles (including payment
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intangibles, contract rights, rights to payment, judgments, rights arising under
common law, statutes, or regulations, choses or things in action, goodwill,
patents, designs, inventions, trade secrets, trade names, d/b/a's, Internet
domain names, logos, trademarks, servicemarks, copyrights, blueprints, drawings,
purchase orders, customer lists, monies due or recoverable from pension funds,
route lists, rights to payment and other rights under any royalty or licensing
agreements, infringement claims, computer programs, information contained on
computer disks or tapes, software, literature, reports, catalogs, money, deposit
accounts, insurance premium rebates, tax refunds, and tax refund claims), and
any and all supporting obligations in respect thereof, and any other
non-tangible personal property other than goods, Accounts, Investment Property,
and Negotiable Collateral.
"Governing Documents" means, with respect to any Person, the certificate or
articles of incorporation, by-laws, or other organizational documents of such
Person.
"Governmental Authority" means any federal (including the federal
government of Canada), provincial, state, local, or other governmental or
administrative body, instrumentality, department, agency, any court, tribunal,
administrative hearing body, arbitration panel, commission, or other similar
dispute-resolving panel or body.
"Guarantor" means each person named on the signature pages hereto as a
"Guarantor," and each Person that guarantees, pursuant to Section 6.17 or
otherwise, all or any part of the Obligations.
"Guaranty" means the Guaranty set forth in Section 18 hereof, the Canadian
Guaranty and any other guaranty executed and delivered by a Guarantor in favor
of Agent, for the benefit of the Lender Group, in form and substance
satisfactory to Agent.
"Hazardous Materials" means (a) substances that are defined or listed in,
or otherwise classified pursuant to, any applicable laws or regulations
(including any Environmental Law) as "hazardous substances," "hazardous
materials," "hazardous wastes," "toxic substances," or any other formulation
intended to define, list, or classify substances by reason of deleterious
properties such as ignitability, corrosivity, reactivity, carcinogenicity,
reproductive toxicity, or "EP toxicity", (b) oil, petroleum, or petroleum
derived substances, natural gas, natural gas liquids, synthetic gas, drilling
fluids, produced waters, and other wastes associated with the exploration,
development, or production of crude oil, natural gas, or geothermal resources,
(c) any flammable substances or explosives or any radioactive materials, (d)
asbestos in any form or electrical equipment that contains any oil or dielectric
fluid containing levels of polychlorinated biphenyls in excess of 50 parts per
million, and (e) any other substance, the storage, manufacture, disposal,
treatment, generation, use, transportation, remediation, release into or
concentration in the environment of which is prohibited, controlled, regulated
or licensed by any Governmental Authority under any Environmental Law.
"Hedge Agreement" means any and all transactions, agreements, or documents
now existing or hereafter entered into between Parent or its Subsidiaries and
Bank One or its Affiliates, which provide for an interest rate, credit,
commodity or equity swap, cap, floor, collar, forward foreign exchange
transaction, currency swap, cross currency rate swap, currency option, or any
combination of, or option with respect to, these or similar transactions, for
the purpose of hedging Parent's or its Subsidiaries' exposure to fluctuations in
interest or exchange rates, loan, credit exchange, security or currency
valuations or commodity prices.
"Holdout Lender" has the meaning set forth in Section 15.2.
"Indebtedness" means, with respect to any Person, (a) all obligations for
borrowed money, (b) all obligations evidenced by bonds, debentures, notes, or
other similar instruments and all
-16-
reimbursement or other obligations in respect of letters of credit, bankers
acceptances, interest rate swaps, or other financial products, (c) all
obligations under Capital Leases, (d) all obligations or liabilities of others
secured by a Lien on any asset of a Person or its Subsidiaries, irrespective of
whether such obligation or liability is assumed, (e) all obligations for the
deferred purchase price of assets (other than trade debt incurred in the
ordinary course of business and repayable in accordance with customary trade
practices), (f) all obligations with respect to sale-leaseback transactions, and
(g) any obligation guaranteeing or intended to guarantee (whether directly or
indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse) any
obligation, or any agreement to maintain the net worth or working capital or
financial condition, of any other Person; provided, however, that solely for the
purpose of calculating the total leverage ratio set forth in Section 7.20(a)(i),
(x) contingent obligations in respect of guarantees by a Loan Party of
Indebtedness of its franchisees shall constitute Indebtedness only to the extent
that such contingent obligations exceed $5,000,000 in the aggregate and (y)
obligations in respect of sale-leaseback transactions shall constitute
Indebtedness only to the extent that the present value of such obligations
exceeds $39,000,000 in the aggregate.
"Indemnified Liabilities" has the meaning set forth in Section 11.3.
"Indemnified Person" has the meaning set forth in Section 11.3.
"Insolvency Proceeding" means any proceeding commenced by or against any
Person under any provision of the Bankruptcy Code (including the Bankruptcy and
Insolvency Act (Canada) and the Companies Creditors Arrangement Act (Canada)) or
under any other state or federal bankruptcy or insolvency law, assignments for
the benefit of creditors, formal or informal moratoria, compositions, extensions
generally with creditors, or proceedings seeking reorganization, arrangement, or
other similar relief.
"Insurance Service Management" means Insurance Service Management, Inc., a
Delaware corporation.
"Intercompany Subordination Agreement" means a subordination agreement
executed and delivered by the Loan Parties and Agent, the form and substance of
which is satisfactory to Agent.
"Intercreditor Agreement" means the Intercreditor Agreement among Agent (in
its capacity as agent for the Revolver Lenders and as agent for the Term Loan
Lenders), the Revolver Lenders, the Term Loan Lenders, the Noteholders, U.S.
Bank National Association, as collateral agent for the Noteholders, and the Loan
Parties the form and substance of which is satisfactory to Agent.
"Interest Period" means, with respect to each LIBOR Rate Loan, a period
commencing on the date of the making of such LIBOR Rate Loan and ending 1, 2, or
3 months thereafter; provided, however, that (a) if any Interest Period would
end on a day that is not a Business Day, such Interest Period shall be extended
(subject to clauses (c)-(e) below) to the next succeeding Business Day, (b)
interest shall accrue at the applicable rate based upon the LIBOR Rate from and
including the first day of each Interest Period to, but excluding, the day on
which such Interest Period expires, (c) any Interest Period that would end on a
day that is not a Business Day shall be extended to the next succeeding Business
Day unless such Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Business Day, (d) with respect
to an 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), the Interest Period shall end on the
last Business Day of the calendar month that is 1, 2, or 3 months after the date
on which the Interest Period began, as applicable, and (e) Borrowers (or
Administrative Borrower on behalf thereof) may not elect an Interest Period
which will end after the Maturity Date.
-17-
"Inventory" means all Loan Parties' now owned or hereafter acquired right,
title, and interest with respect to inventory, including goods held for sale or
lease or to be furnished under a contract of service, goods that are leased by a
Loan Party as lessor, goods that are furnished by a Loan Party under a contract
of service, and raw materials, work in process, or materials used or consumed in
a Loan Party's business.
"Inventory Divestiture Plan" means the plan delivered to Agent and Lenders
on the Closing Date, the form and substance of which is satisfactory to Agent in
its Permitted Discretion.
"Investment" means, with respect to any Person, any investment by such
Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practices), purchases or other
acquisitions for consideration of Indebtedness or Stock, and any other items
that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP.
"Investment Property" means, with respect to any Person, all of such
Person's now owned or hereafter acquired right, title, and interest with respect
to "investment property" as that term is defined in the Code, and any and all
supporting obligations in respect thereof.
"IRC" means the Internal Revenue Code of 1986, as in effect from time to
time.
"Issuing Lender" means Bank One or any other Lender that, at the request of
Administrative Borrower and with the consent of Agent, agrees, in such Lender's
sole discretion, to become an Issuing Lender for the purpose of issuing L/Cs
pursuant to Section 2.12.
"Leased Real Property" means any leasehold interests in real property now
held or hereafter acquired by a Loan Party and the improvements thereto.
"L/C" has the meaning set forth in Section 2.12(a).
"L/C Disbursement" means a payment made by the Issuing Lender pursuant to a
Letter of Credit.
"Lender" and "Lenders" have the respective meanings set forth in the
preamble to this Agreement, and shall include any other Person made a party to
this Agreement in accordance with the provisions of Section 14.1.
"Lender Group" means, individually and collectively, each of the Lenders
(including the Issuing Lender) and Agent.
"Lender Group Expenses" means all (a) out-of-pocket costs or expenses
(including taxes, and insurance premiums) required to be paid by Borrowers under
any of the Loan Documents that are paid or incurred by any one or more members
of the Lender Group, (b) fees or charges paid or incurred by any one or more
members of the Lender Group in connection with the Lender Group's transactions
with any Loan Party, including fees or charges for photocopying, notarization,
couriers and messengers, telecommunication, public record searches (including
tax lien, judgment searches, and UCC and PPSA searches for liens under the
Uniform Commercial Code and PPSA (as applicable) and including searches with the
patent and trademark office or the copyright office), filing, recording,
publication, appraisal (including periodic Collateral appraisals or business
valuations, real estate surveys, real estate title
-18-
policies and endorsements, insurance reviews and audits and environmental audits
(to the extent of the fees and charges, and up to the amount of any limitation,
contained in this Agreement), (c) costs and expenses incurred by Agent or any
one or more members of the Lender Group in the disbursement of funds to or for
the account of Borrowers (by wire transfer or otherwise), (d) charges paid or
incurred by any one or more members of the Lender Group resulting from the
dishonor of checks of the Loan Parties, (e) reasonable costs and expenses paid
or incurred by the Lender Group to correct any default or enforce any provision
of the Loan Documents, or in gaining possession of, maintaining, handling,
preserving, storing, shipping, selling, preparing for sale, or advertising to
sell the Collateral, or any portion thereof, irrespective of whether a sale is
consummated, (f) audit fees and expenses of the Agent to the extent of the fees
and charges, and up to the amount of any limitation, contained in this
Agreement, (g) reasonable costs and expenses of third party claims or any other
suit paid or incurred by any one or more members of the Lender Group in
enforcing or defending the Loan Documents or in connection with the transactions
contemplated by the Loan Documents or any one or more members of the Lender
Group's relationship with Borrowers or any guarantor of the Obligations, (h)
Agent's reasonable fees and expenses (including reasonable attorneys' fees and
expenses) incurred in advising, structuring, drafting, reviewing, administering,
syndicating or amending the Loan Documents, and (i) Agent's and each Lender's
reasonable fees and expenses (including reasonable attorneys', accountants', and
other advisory fees and expenses) incurred in terminating, enforcing (including
attorneys' fees and expenses incurred in connection with a "workout," a
"restructuring," or an Insolvency Proceeding concerning any Loan Party or in
exercising rights or remedies under the Loan Documents), or defending the Loan
Documents, irrespective of whether suit is brought, or in taking any Remedial
Action concerning the Collateral.
"Lender-Related Person" means, with respect to any Lender, such Lender,
together with such Lender's Affiliates, and the officers, directors, employees,
and agents of such Lender.
"Letter of Credit" means an L/C.
"Letter of Credit Fee" has the meaning set forth in Section 2.6(b).
"Letter of Credit Usage" means, as of any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit.
"LIBOR Deadline" has the meaning set forth in Section 2.13(b)(i).
"LIBOR Notice" means a written notice in the form of Exhibit L-1.
"LIBOR Option" has the meaning set forth in Section 2.13(a).
"LIBOR Rate" means with respect to a LIBOR Rate Loan for the relevant
Interest Period, the quotient of (a) the Base LIBOR Rate applicable to such
Interest Period, divided by (b) one minus the Reserve Requirement (expressed as
a decimal) applicable to such Interest Period.
"LIBOR Rate Loan" means each portion of an Advance or the Term A Loans that
bears interest at a rate determined by reference to the LIBOR Rate.
"Lien" means any interest in an asset securing an obligation owed to, or a
claim by, any Person other than the owner of the asset, whether such interest
shall be based on the common law, statute, or contract, whether such interest
shall be recorded or perfected, and whether such interest shall be contingent
upon the occurrence of some future event or events or the existence of some
future circumstance or circumstances, including the lien, right of distraint or
security interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security
-19-
agreement, conditional sale or trust receipt, or from a lease, consignment, or
bailment for security purposes and also including reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases, and other title exceptions and encumbrances affecting Real Property.
"Loan" means an Advance, a Term A Loan or a Term B Loan.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Bank Product Agreements, the
Cash Management Agreements, the Control Agreements, the Copyright Security
Agreement, the Disbursement Letter, the Fee Letter, each Guaranty, the Letters
of Credit, the Mortgages, the Canadian Documents, the Credit Card Assignment
Agreement, the Contribution Agreement, the Patent Security Agreement, the Pledge
Agreement, the Trademark Security Agreement, the Intercompany Subordination
Agreement, the Intercreditor Agreement, any note or notes executed by a Borrower
in connection with this Agreement and payable to a member of the Lender Group,
and any other agreement entered into, now or in the future, by any Loan Party
and the Lender Group in connection with this Agreement.
"Loan Party" means any Borrower and any Guarantor.
"Magneti SpA" means Magneti Marelli Services S.p.A (as successor to Magneti
Marelli, S.p.A).
"Material Adverse Change" means (a) a material adverse change in the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of a Loan Party individually, or the Loan
Parties taken as a whole, (b) a material impairment of a Loan Party's ability to
perform its obligations under the Loan Documents to which it is a party or of
the Lender Group's ability to enforce the Obligations or realize upon the
Collateral, or (c) a material impairment of the enforceability or priority of
the Agent's Liens with respect to the Collateral; provided, that the
consummation of the transactions contemplated by the Inventory Divestiture Plan
shall not, solely by itself, constitute a Material Adverse Change.
"Material Contracts" means any agreement or contract of any Loan Party
which (a) involves consideration to such Loan Party of $500,000 or more in any
year, (b) involves consideration by such Loan Party of $500,000 or more in any
year, (c) imposes financial obligations on any Loan Party of $500,000 or more in
any year (other than any agreement that by its terms may be terminated by any
Borrower or any Subsidiary upon sixty (60) days' notice or less, but including
any franchise agreement which would otherwise constitute a Material Contract) or
(d) is otherwise material (or, together with related agreements and contracts,
is material) to the business, operations, financial condition, performance or
properties of the Loan Parties, taken as a whole, excluding, however, customer
purchase orders or purchase orders to any vendor, in each case entered into in
the ordinary course of a Loan Party's business. The Material Contracts shall in
any event include the Fiat Magneti Agreements and the Note Documents.
"Maturity Date" has the meaning set forth in Section 3.3.
"Maximum Availability" shall have the meaning set forth in Section 2.1(a).
"Maximum Revolver Amount" means $40,000,000, subject to Section 2.1(f).
"MIC" means Midas International Corporation, a Delaware corporation.
-20-
"Midas Canada" means Midas Canada Inc., a corporation organized under the
laws of Ontario.
"Midas Canada Holdings" means Midas Canada Holdings Limited, a corporation
organized under the laws of Ontario.
"Midas Canada Realty" means Midas Realty Corporation of Canada Inc., a
corporation organized under the laws of Ontario.
"Minimum Liquidity" means the amount, as of the date any determination
thereof is to be made, equal to Availability, plus the amount of cash (including
Cash Collateral to the extent not included in Availability) and Cash Equivalents
of the Borrowers subject to a Control Agreement in favor of Agent (or otherwise
under the control of Agent) for the benefit of the Lender Group (but otherwise
unrestricted).
"Moody's" means Xxxxx'x Investors Service, Inc. and its successors.
"Mortgages" means, individually and collectively, one or more mortgages,
deeds of trust, or deeds to secure debt, executed and delivered by a Loan Party
in favor of Agent, for the benefit of the Lender Group, in form and substance
satisfactory to Agent, that encumber the Real Property Collateral and the
related improvements thereto.
"Multiemployer Plan" means a "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) or such equivalent plan under Canadian Employee Benefit
Laws to which a Loan Party, any of its Subsidiaries, or any ERISA Affiliate has
contributed, or was obligated to contribute, within the past six years.
"Negotiable Collateral" means, with respect to any Person, all of such
Person's now owned and hereafter acquired right, title, and interest with
respect to letters of credit, letter of credit rights, instruments, promissory
notes, drafts, documents, and chattel paper (including electronic chattel paper
and tangible chattel paper), and any and all supporting obligations in respect
thereof.
"Net Cash Proceeds" means (a) with respect to any event described in
Section 2.4(c)(iii) (a "Sale Event"), the sum of cash or readily marketable cash
equivalents received (including by way of a cash generating sale or discounting
of a note or receivable, but excluding any other consideration received in the
form of assumption by the acquiring Person of debt or other obligations relating
to the properties or assets so disposed of or received in any other non-cash
form) therefrom, whether at the time of such disposition or subsequent thereto,
or (b) with respect to any event described in Section 2.4(c)(vi), cash or
readily marketable cash equivalents received (but excluding any other non-cash
form) therefrom, whether at the time of such disposition, sale or issuance or
subsequent thereto, net, in either case, of all legal, title and recording tax
expenses, commissions and other fees and all costs and expenses incurred and all
federal state, local and other taxes required to be accrued as a liability as a
consequence of such transactions and, in the case of a Sale Event, net of all
payments made by any Loan Party on any Indebtedness which is secured by such
assets pursuant to a Permitted Lien (other than the Agent's Liens) upon or with
respect to such assets or which must by the terms of such Lien, or in order to
obtain a necessary consent to such Sale Event, or by applicable law be repaid
out of the proceeds from such Sale Event.
"Net Liquidation Percentage" means the percentage of the book value of
Borrowers' Inventory that is estimated to be recoverable in an orderly
liquidation of such Inventory, such percentage to be as determined from time to
time by a qualified appraisal company approved by Agent.
-21-
"Net Rent" means, with respect to any fiscal period, (i) Parent's and its
Subsidiaries', (a) gross rent expense, less (b) sublease rental income from
franchisees and other Persons which are not Affiliates that reduced gross rent
expense, as presented in the relevant footnotes to the most recent annual
financial statements of Parent, divided by (ii) four (4).
"Net Restructuring Charges" means Cash Restructuring Charges, net of all
tax benefits in respect thereof.
"Net Worth" means, at any date of determination, the consolidated
shareholders' equity of Parent and its consolidated Subsidiaries, plus minority
interest, as determined in accordance with GAAP.
"Note Agreement" means the Note, Guaranty and Security Agreement dated as
of the Closing Date among the Loan Parties, U.S. Bank National Association, as
Collateral Agent, and the Noteholders.
"Note Documents" means the Note Agreement, the Notes and any agreements or
instruments evidencing, securing or guaranteeing the obligations thereunder.
"Noteholders" means the holders of the Notes.
"Notes" means, collectively, the Guaranteed Secured Term A Notes due
October 3, 2004 in the initial aggregate principal amount of $31,415,094 and the
Guaranteed Secured Term B Notes due October 3, 2004 in the initial aggregate
principal amount of $13,584,906, in each case issued by the Borrowers and
guaranteed by the Guarantors.
"Obligations" means (a) all loans (including the Term Loans), Advances,
debts, principal, interest (including any interest that, but for the provisions
of the Bankruptcy Code, would have accrued), contingent reimbursement
obligations with respect to outstanding Letters of Credit, premiums, liabilities
(including all amounts charged to Borrowers' Loan Account pursuant hereto),
obligations, fees (including the fees provided for in the Fee Letter), charges,
costs, Lender Group Expenses (including any fees or expenses that, but for the
provisions of the Bankruptcy Code, would have accrued), lease payments,
guaranties, covenants, and duties of any kind and description owing by Borrowers
to the Lender Group pursuant to or evidenced by the Loan Documents and
irrespective of whether for the payment of money, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
and including all interest not paid when due and all Lender Group Expenses that
Borrowers are required to pay or reimburse by the Loan Documents, by law, or
otherwise, and (b) all Bank Product Obligations ( including, without limitation,
all Revolver Obligations and all Term Loan Obligations). Any reference in this
Agreement or in the Loan Documents to the Obligations shall include all
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, and supplements, thereto and thereof, as applicable, both prior
and subsequent to any Insolvency Proceeding.
"Operating Lease" means, with respect to any Person, any lease (including
leases which may be terminated by the lessee at any time) of any property
(whether real, personal or mixed) which is not a Capital Lease other than any
such lease in which that Person is the lessor or sublessor.
"Optional Overadvances" has the meaning set forth in Section 2.3(g).
"Overadvance" has the meaning set forth in Section 2.5.
"Owned Real Property" means any fee interests in real property now owned or
hereafter acquired by any Loan Party and the improvements thereto.
-22-
"Parent" has the meaning set forth in the preamble to this Agreement.
"Participant" has the meaning set forth in Section 14.2(a).
"Patent Security Agreement" means a patent security agreement executed and
delivered by Loan Parties and Agent, the form and substance of which is
satisfactory to Agent.
"PBGC" means the Pension Benefit Guaranty Corporation as defined in Title
IV of ERISA, or any successor thereto or equivalent entity under Canadian
Employee Benefit Laws.
"Permitted Discretion" means a determination made in good faith and in the
exercise of reasonable (from the perspective of a secured asset-based lender)
business judgment.
"Permitted Dispositions" means (a) sales or other dispositions by a Loan
Party or its Subsidiary of Equipment that is substantially worn, damaged, or
obsolete in the ordinary course of business, (b) sales by a Loan Party or its
Subsidiary of Inventory to buyers in the ordinary course of business, (c) the
sale or other disposition of Inventory and Equipment pursuant to the Inventory
Divestiture Plan for which a Loan Party receives cash consideration at the
closing of any transaction or otherwise consummated on terms and conditions
acceptable to Agent in its Permitted Discretion, (d) the use or transfer of
money or Cash Equivalents by a Loan Party or its Subsidiaries in a manner that
is not prohibited by the terms of this Agreement or the other Loan Documents,
(e) the licensing by any Loan Party or its Subsidiaries, on a non-exclusive
basis, of patents, trademarks, copyrights, and other intellectual property
rights in the ordinary course of business, (f) the sale or closing of
Company-Owned Stores which are not profitable, (g) so long as no Event of
Default has occurred and is continuing, the sale of Real Property Collateral, or
any part thereof, not used by any Loan Party, (h) the sale of motor vehicles for
fair market value, (i) the refranchising of Company-Owned Stores, (j) leases of
Owned Real Property of the Loan Parties in the ordinary course of business
consistent with past practices and (k) the disposition and outsourcing of the
Loan Parties' manufacturing operations located in Hartford, Wisconsin.
"Permitted Investments" means (a) investments in Cash Equivalents, (b)
investments in negotiable instruments for collection, (c) advances made in
connection with purchases of goods or services in the ordinary course of
business, (d) investments by any Borrower in any other Borrower or any US
Guarantor in the ordinary course of business consistent with past practices,
provided that if any such investment is in the form of Indebtedness, such
Indebtedness investment shall be subject to the terms and conditions of the
Intercompany Subordination Agreement and, upon request of Agent at any time,
such Indebtedness shall be evidenced by promissory notes acceptable to Agent
which shall be pledged and delivered to Agent as security for the Revolver
Obligations and the Term Loan Obligations, and (e) investments in the form of
securities of publicly-held companies in an amount not in excess of $10,000 in
the aggregate.
"Permitted Liens" means (a) (i) Liens held by Agent for the benefit of
Agent and the Revolver Lenders and (ii) Liens held by Agent for the benefit of
Agent and the Term Loan Lenders, (b) Liens for unpaid taxes that either (i) are
not yet due or delinquent, or (ii) do not constitute an Event of Default
hereunder and are the subject of Permitted Protests, (c) Liens set forth on
Schedule P-1, (d) the interests of lessors under Operating Leases, (e) purchase
money Liens or the interests of lessors under Capital Leases to the extent that
such Liens or interests secure Permitted Purchase Money Indebtedness and so long
as such Lien attaches only to the asset purchased or acquired and the proceeds
thereof, (f) Liens arising by operation of law in favor of warehousemen,
landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in
the ordinary course of business and not in connection with the borrowing of
money, and which Liens either (i) are for sums not yet delinquent, or (ii) are
the subject of Permitted Protests, (g) Liens arising from deposits made in
connection with obtaining worker's
-23-
compensation or other unemployment insurance, (h) Liens or deposits to secure
performance of bids, tenders, or leases incurred in the ordinary course of
business and not in connection with the borrowing of money, (i) Liens granted as
security for surety or appeal bonds in connection with obtaining such bonds in
the ordinary course of business, (j) Liens resulting from any judgment or award
that is not an Event of Default hereunder, (k) with respect to the Real Property
Collateral, Liens, encumbrances, easements, rights of way, restrictions of
record, and zoning restrictions that are exceptions to the policies for title
insurance issued in connection with the Mortgages, as accepted by Agent, (l)
with respect to any Real Property for which Agent has elected not to obtain a
policy for title insurance, encumbrances, title defects, title exceptions,
easements, rights of way, restrictions of record, and zoning restrictions that
do not materially interfere with or impair the use or operation thereof, (m)
Liens arising from leases and subleases with franchisees entered into in the
ordinary course of business consistent with past practices, (n) licenses of
intellectual property granted by the Loan Parties under Franchise Agreements in
the ordinary course of business consistent with past practices and (o) Liens in
favor of the Noteholders securing the Notes so long as such Liens are junior in
priority of payment to the Agent's Liens securing the Revolver Obligations and
pari passu with the Agent's Liens securing the Term Loan Obligations, in each
case as set forth in the Intercreditor Agreement.
"Permitted Protest" means the right of Parent or any of its Subsidiaries,
as applicable) to protest any Lien (other than any such Lien that secures the
Obligations), taxes (other than payroll taxes or taxes that are the subject of a
United States or Canadian federal tax lien), or rental payment, provided that
(a) a reserve with respect to such obligation is established on the Books in
such amount as is required under GAAP, (b) any such protest is instituted
promptly and prosecuted diligently by Parent or any of its Subsidiaries, as
applicable, in good faith, and (c) Agent is satisfied that, while any such
protest is pending, there will be no impairment of the enforceability, validity,
or priority of any of the Agent's Liens.
"Permitted Purchase Money Indebtedness" means, as of any date of
determination, Purchase Money Indebtedness incurred after the Closing Date in an
aggregate amount outstanding at any one time not in excess of $5,000,000.
"Person" means natural persons, corporations, limited liability companies,
limited partnerships, general partnerships, limited liability partnerships,
joint ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and governments and agencies
and political subdivisions thereof.
"Personal Property Collateral" means all Collateral other than Real
Property.
"Plan" means any employee benefit plan, program, or arrangement maintained
or contributed to by a Loan Party or with respect to which it may incur
liability subject to ERISA.
"Pledge Agreement" means a pledge and security agreement, in form and
substance satisfactory to Agent, executed and delivered by each Loan Party
(including the Parent) that owns Stock of a Subsidiary of Parent or that is the
holder of any promissory notes to be delivered to Agent pursuant to Section 4.2.
"PPSA" means the Personal Property Security Act of the applicable Canadian
province or provinces in respect of the Canadian Guarantors.
"Prime Rate" means a rate per annum equal to the prime rate of interest
announced from time to time by Bank One or its parent (which is not necessarily
the lowest rate charged to any customer), changing when and as said prime rate
changes.
-24-
"Priority Event" shall have meaning set forth in the Intercreditor
Agreement.
"Pro Rata Share" means:
(a) with respect to a Lender's obligation to make Advances and
receive payments of principal, interest, fees, costs, and expenses with
respect thereto, (x) prior to the Revolver Commitment being terminated, the
percentage obtained by dividing (i) such Lender's Revolver Commitment, by
(ii) the aggregate Revolver Commitments of all Lenders and (y) from and
after the time the Revolver Commitment has been terminated, the percentage
obtained by dividing (i) the aggregate unpaid principal amount of such
Lender's Revolver Usage by (ii) the aggregate unpaid principal amount of
all Revolver Usage,
(b) with respect to a Lender's obligation to participate in Letters
of Credit, to reimburse the Issuing Lender, and to receive payments of fees
with respect thereto, (x) prior to the Revolver Commitment being
terminated, the percentage obtained by dividing (i) such Lender's Revolver
Commitment, by (ii) the aggregate Revolver Commitments of all Lenders and
(y) from and after the time the Revolver Commitment has been terminated,
the percentage obtained by dividing (i) the aggregate unpaid principal
amount of such Lender's Revolver Usage by (ii) the aggregate unpaid
principal amount of all Revolver Usage,
(c) with respect to a Lender's right to receive payments of
interest, fees, and principal with respect to the Term A Loan, the
percentage obtained by dividing (i) the outstanding principal amount of
such Lender's Term A Loans by (ii) the outstanding principal amount of the
Term A Loans,
(d) with respect to a Lender's right to receive payments of
interest, fees, and principal with respect to the Term B Loans, the
percentage obtained by dividing (i) the outstanding principal amount of
such Lender's Term B Loans by (ii) the outstanding principal amount of the
Term B Loans, and
(e) with respect to all other matters as to a particular Lender
(including the indemnification obligations arising under Section 16.8), the
percentage obtained by dividing (i) such Lender's Revolver Commitment plus
the unpaid principal amount of such Lender's portion of the Term A Loans
plus the unpaid principal amount of such Lender's portion of the Term B
Loans, by (ii) the aggregate amount of Revolver Commitments of all Lenders
plus the unpaid principal amount of the Term A Loans plus the unpaid
principal amount of the Term B Loans; provided, however, that in the event
the Revolver Commitments have been terminated, Pro Rata Share shall be the
percentage obtained by dividing (A) the principal amount of such Lender's
Revolver Usage plus the unpaid principal amount of such Lender's Term A
Loans plus the unpaid principal amount of such Lender's Term B Loans by (B)
the principal amount of all Revolver Usage plus the unpaid principal amount
of the Term A Loans plus the unpaid principal amount of the Term B Loans.
"Projections" means the Loan Parties forecasted (a) balance sheets, (b)
profit and loss statements, and (c) cash flow statements, all prepared on a
consistent basis with the Loan Parties' historical financial statements,
together with appropriate supporting details and a statement of underlying
assumptions.
"Purchase Money Indebtedness" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within 20 days after, the acquisition of any fixed assets for the purpose
of financing all or any part of the acquisition cost thereof.
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"PWI" means Parts Warehouse, Inc., a Delaware corporation.
"Real Property" means any estates or interests in real property now owned
or hereafter acquired by any Borrower and the improvements thereto.
"Real Property Collateral" means the parcel or parcels of Real Property
identified on Schedule R-1 and any Real Property hereafter acquired by a Loan
Party.
"Real Property Reserves" means reserves for the estimated rental costs for
not more than a three (3) month period for Inventory locations for which
Collateral Access Agreements are required, but have not been received, as
determined by Agent in its Permitted Discretion.
"Records" means information that is inscribed on a tangible medium or which
is stored in an electronic or other medium and is retrievable in perceivable
form.
"Register" has the meaning specified therefore in Section 14.3(d).
"Remedial Action" means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate, or in any way address
Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions identified at 42 USC xx.xx. 9601 (23-24).
"Remedies Notice" means a written notice delivered pursuant to the
Intercreditor Agreement which instructs Agent to accelerate the Obligations
and/or to commence the taking of other remedies.
"Report" has the meaning set forth in Section 16.20.
"Reportable Event" means any of the events described in Section 4043(c) of
ERISA or the regulations thereunder other than a Reportable Event as to which
the provision of 30 days' notice to the PBGC is waived under applicable
regulations.
"Required Lenders" means, at any time, Required Revolver Lenders and
Required Term Lenders.
"Required Liquidity" means Minimum Liquidity in an amount equal to (i) for
the period from the Closing Date through and including January 3, 2004,
$20,000,000, (ii) for the period from January 4, 2004 through and including July
3, 2004, $15,000,000 and (iii) thereafter, $10,000,000. At the request of
Administrative Borrower, such amounts may be reduced with the consent of Agent
in its sole discretion.
"Required Revolver Lenders" means Revolver Lenders whose Pro Rata Shares of
the Revolver Commitment aggregate 66?% or more or, if the Revolver Commitment
has been terminated, the aggregate unpaid principal amount of such Lender's
Revolver Usage divided by the aggregate unpaid principal amount of all Revolver
Usage; provided, that if there are two (2) Lenders with a Revolver Commitment,
then the reference to 66?% shall be deemed to be a reference to 100%.
"Required Term Lenders" means Lenders holding Term A Loans and Term B Loans
whose Pro Rata Shares of such Loans aggregate 51% or more.
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"Reserve Requirement" means with respect to an Interest Period, the maximum
aggregate reserve requirement (including all basic, supplemental, marginal and
other reserves) which is imposed under Regulation D on eurocurrency liabilities.
"Revolver Commitment" means, with respect to each Lender, its Revolver
Commitment, and, with respect to all Lenders, their Revolver Commitments, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on Schedule C-1 or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.3.
"Revolver Lenders" means Lenders having a Revolver Commitment and shall
include the Issuing Lender.
"Revolver Obligations" means all Obligations other than Term Loan
Obligations.
"Revolver Rate Increase" has the meaning set forth in Section 2.17(b).
"Revolver Usage" means, as of any date of determination, the sum of (a) the
then extant amount of outstanding Advances, plus (b) the then extant amount of
the Letter of Credit Usage.
"Risk Participation Liability" means, as to each Letter of Credit, all
reimbursement obligations of Borrowers to the Issuing Lender with respect to a
Letter of Credit, consisting of (a) the amount available to be drawn or which
may become available to be drawn, (b) all amounts that have been paid by the
Issuing Lender in respect of a Letter of Credit to the extent not reimbursed by
Borrowers, whether by the making of an Advance or otherwise, and (c) all accrued
and unpaid interest, fees, and expenses payable with respect thereto.
"S&P" means Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, and its successors.
"SEC" means the United States Securities and Exchange Commission and any
successor thereto.
"Securities Account" means a "securities account" as that term is defined
in the Code.
"Senior Management" means, with respect to any Loan Party, any of the chief
executive officer, the chief financial officer, the treasurer, any assistant
treasurer and/or the controller of such Loan Party.
"Settlement" has the meaning set forth in Section 2.3(f)(i).
"Settlement Date" has the meaning set forth in Section 2.3(f)(i).
"Solvent" means, with respect to any Person on a particular date, that on
such date (a) the fair value of the assets of such Person, at a fair valuation,
will exceed the debts and liabilities, subordinated, contingent or otherwise, of
such Person; (b) the present fair saleable value of the assets of such Person
will be greater than the amount that will be required to pay the probable
liability of such Person on its debts and other liabilities, subordinated,
contingent or otherwise, as such debts and other liabilities become absolute and
matured; (c) such Person will be able to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (d)
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such Person will not have unreasonably small capital with which to conduct the
businesses in which it is engaged as such businesses are now conducted and are
proposed to be conducted.
"Stock" means all shares, options, warrants, interests, participations, or
other equivalents (regardless of how designated) of or in a Person, whether
voting or nonvoting, including common stock, preferred stock, or any other
"equity security" (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the SEC under the Exchange Act).
"Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.
"Taxes" has the meaning set forth in Section 16.14.
"Term A Loan Amount" means $61,084,905.66.
"Term A Loan Commitment" means, with respect to each Lender, its Term A
Loan Commitment, and, with respect to all Lenders, their Term A Loan
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 or on the signature
page of the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder in accordance with the provisions of Section 14.1.
"Term A Loan Lender" means each Lender having a Term A Loan Commitment or a
portion of the Term A Loans.
"Term A Loans" has the meaning set forth in Section 2.2.
"Term B Loans" has the meaning set forth in Section 2.2.
"Term B Loan Amount" means $26,415,094.33.
"Term B Loan Commitment" means, with respect to each Lender, its Term B
Loan Commitment, and, with respect to all Lenders, their Term B Loan
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 or on the signature
page of the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder in accordance with the provisions of Section 14.1.
"Term B Loan Lender" means each Lender having a Term B Commitment Loan or a
portion of the Term B Loans. "Term B Loan PIK Amount" means, as of any date of
determination, the amount of all interest accrued with respect to the Term B
Loans that has been paid in kind by being added to the balance thereof in
accordance with Section 2.6(a)(v).
"Term B Rate" has the meaning set forth in Section 2.6(a)(v).
"Term Loan Lenders" means, collectively, the Term A Loan Lenders and the
Term B Loan Lenders.
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"Term Loan Obligations" means all Obligations arising solely in respect of
the Term Loans or due and payable solely to the Term Loan Lenders.
"Term Loan Repayment Trigger" means the Borrowers' failure to repay the
Term Loans and the Notes (through internally generated funds and mandatory
prepayments described in Section 2.4(c) used for optional prepayments) in an
aggregate principal amount of at least $33,000,000 by January 4, 2004.
"Term Loans" means, collectively, the Term A Loans and the Term B Loans.
"Termination Event" means (i) a Reportable Event with respect to any
Benefit Plan, (ii) any event that causes any Loan Party or any of its ERISA
Affiliates to incur liability under Section 409, 502(i), 502(l), 515, 4062,
4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 4971 or 4975 of the
IRC, (iii) the filing of a notice of intent to terminate a Benefit Plan or the
treatment of a Benefit Plan amendment as a termination under Section 4041 of
ERISA, (iv) the institution of proceedings by the PBGC to terminate a Benefit
Plan, (v) any other event or condition which might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Benefit Plan, or (vi) any equivalent event, action, condition,
proceeding or otherwise under Canadian Employee Benefit Laws.
"Total Commitment" means, with respect to a Lender, the aggregate of such
Lender's Commitments, and, with respect to all Lenders, all Commitments of the
Lenders, in each case as such Dollar amounts are set forth beside such Lender's
name under the applicable heading on Schedule C-1 attached hereto or on the
signature page of the Assignment and Acceptance pursuant to which such Lender
became a Lender hereunder in accordance with the provisions of Section 14.1.
"Trademark Security Agreement" means a trademark security agreement
executed and delivered by each Borrower and Agent, the form and substance of
which is satisfactory to Agent.
"Transferee" has the meaning set forth in Section 14.4.
"UCC Filing Authorization Letter" means a letter executed by each Loan
Party authorizing Agent to file appropriate financing statements on Form UCC-1
in such office or offices as may be necessary or, in the opinion of Agent,
desirable to perfect the Liens to be created by each applicable Loan Document.
"US Guarantor" means a Guarantor, other than Parent or any Canadian
Guarantor.
"Voidable Transfer" has the meaning set forth in Section 17.7.
"Warrant Agreement" means the Warrant Agreement dated as of the Closing
Date among Parent, the Term Loan Lenders and the Noteholders, the form and
substance of which is satisfactory to the Term Loan Lenders.
"Warrants" means the detachable warrants to purchase common stock of Parent
issued pursuant to the Warrant Agreement.
1.2 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrowers" or the term "Parent" is used in respect
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of a financial covenant or a related definition, it shall be understood to mean
Parent and its Subsidiaries on a consolidated basis unless the context clearly
requires otherwise.
1.1 Code. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein.
1.2 Construction. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein or in the Interceditor Agreement). Any reference herein to any
Person shall be construed to include such Person's successors and assigns. Any
requirement of a writing contained herein or in the other Loan Documents shall
be satisfied by the transmission of a Record and any Record transmitted shall
constitute a representation and warranty as to the accuracy and completeness of
the information contained therein.
1.3 Schedules and Exhibits. All of the schedules and exhibits attached to
this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 Revolver Advances.
(a) Subject to the terms and conditions of this Agreement, and during the
term of this Agreement, each Lender with a Revolver Commitment agrees
(severally, not jointly or jointly and severally) to make advances ("Advances")
to Administrative Borrower in an amount at any one time outstanding not to
exceed such Lender's Pro Rata Share of an amount equal to the lesser of (i) the
Maximum Revolver Amount less the Letter of Credit Usage less the sum of (x) the
Availability Reserve, (y) the Bank Products Reserve and (z) the Environmental
Reserves, and (ii) the Borrowing Base less the Letter of Credit Usage ("Maximum
Availability"). For purposes of this Agreement, "Borrowing Base," as of any date
of determination, shall mean the result of:
(x) the sum of:
(i) 85% of the amount of Eligible Accounts, less the amount, if
any, of the Dilution Reserve, and
(ii) the least of:
(A) 50% of the cost of Eligible Inventory,
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(B) 85% times the then extant Net Liquidation Percentage
times the book value of the Eligible Inventory,
(C) $37,000,000, and
(iii) 100% of the amount of Cash Collateral, minus
(y) the sum of (i) the Bank Products Reserve, (ii) the Real Property
Reserves, (iii) the Environmental Reserves, (iv) the Availability Reserve
and (v) the aggregate amount of reserves, if any, established by Agent
under Section 2.1(b).
(b) Anything to the contrary in this Section 2.1 notwithstanding, Agent
shall have the right to establish reserves in such amounts, and with respect to
such matters, as Agent in its Permitted Discretion shall deem necessary or
appropriate, against the Borrowing Base, including, without limitation, reserves
with respect to (i) sums that Borrowers are required to pay (such as taxes,
assessments, insurance premiums, or, in the case of leased assets, rents or
other amounts payable under such leases) and have failed to pay under any
Section of this Agreement or any other Loan Document, (ii) amounts owing by
Borrowers to any Person to the extent secured by a Lien on, or trust over, any
of the Collateral (other than any existing Permitted Lien set forth on Schedule
P-1 which is specifically identified thereon as entitled to have priority over
the Agent's Liens), which Lien or trust, in the Permitted Discretion of Agent,
likely would have a priority superior to the Agent's Liens (such as Liens or
trusts in favor of landlords, warehousemen, carriers, mechanics, materialmen,
laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales, or
other taxes where given priority under applicable law) in and to such item of
the Collateral, and (iii) such other reserves as Agent may deem appropriate in
the exercise of its Permitted Discretion.
(c) Notwithstanding the definitions of Borrowing Base, Eligible Accounts,
Eligible Inventory and Net Liquidation Percentage such definitions may be
modified by Agent in its Permitted Discretion from time to time based on the
results of field audits undertaken by or at the direction of Agent from time to
time; provided, that in no event shall the advance rates set forth in clauses
(x)(i), (x)(ii)(A) and (x)(ii)(B) of Section 2.1(a) be increased to rates in
excess of 85%, 50% and 85%, respectively, without the prior written consent of
each Revolver Lender.
(d) The Lenders with Revolver Commitments shall have no obligation to make
additional Advances hereunder to the extent such additional Advances would cause
the Revolver Usage to exceed the Maximum Revolver Amount.
(e) Amounts borrowed pursuant to this Section may be repaid and, subject to
the terms and conditions of this Agreement, reborrowed at any time during the
term of this Agreement.
(f) Notwithstanding anything contained in this Agreement, until the first
day after the Field Audit Completion Date on which, on a pro forma basis, there
is Availability (including, without limitation, after giving effect to the
Availability Reserve) of at least $1, the Maximum Revolver Amount shall be
deemed to be equal to $20,000,000 for all purposes of this Agreement (other than
Section 2.11(a)).
2.2 Term Loans.
(a) Subject to the terms and conditions of this Agreement, each Lender with
a Term A Loan Commitment agrees (severally, not jointly or jointly and
severally) to make term loans
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(collectively, the "Term A Loans") on the Closing Date to MIC in an amount equal
to such Lender's Pro Rata Share of the Term A Loan Amount by converting a
portion of the obligations owing to such Lender under the Existing Credit
Agreement into a Term A Loan.
(b) Subject to the terms and conditions of this Agreement, each Lender with
a Term B Loan Commitment agrees (severally, not jointly or jointly and
severally) to make term loans (collectively, the "Term B Loans") on the Closing
Date to MIC in an amount equal to such Lender's Pro Rata Share of the Term B
Loan Amount by converting a portion of the obligations owing to such Lender
under the Existing Credit Agreement into a Term B Loan.
(c) MIC may, at any time, subject to Sections 2.13(c) and 2.16, prepay all
or a portion of the Term Loans without penalty or premium; provided, that except
in connection with the repayment in full of all of the Obligations, (i) the
Required Liquidity shall be satisfied immediately after giving effect to such
prepayment and (ii) immediately before and immediately after giving effect to
such prepayment, no Event of Default shall have occurred and be continuing. The
application of all such prepayments, and the apportionment of such prepayments
among the Term Loans and the Notes, shall be subject to the terms of the
Intercreditor Agreement. Each prepayment shall be applied pro rata to the Term
Loans against the remaining installments of principal due on the Term Loans in
the inverse order of maturity. The outstanding unpaid principal balance
(including the Term B Loan PIK Amount) and all accrued and unpaid interest under
the Term Loans (including the Term B Loan PIK Amount) shall be due and payable
on the date of termination of this Agreement, whether by its terms, by
prepayment, or by acceleration. All amounts outstanding under the Term Loans
(including the Term B Loan PIK Amount) shall constitute Term Loan Obligations.
(d) The Loan Parties and the Lender Group agree that (i) each Warrant not
subject to clawback under the Warrant Agreement has a value of $5.00 per warrant
share, (ii) each Warrant subject to clawback under the Warrant Agreement has a
value of $0.00 per warrant share and (iii) they will not take a position
inconsistent with the foregoing on any federal, state, local and/or foreign tax
return or any information statement.
2.3 Borrowing Procedures and Settlements.
(a) Procedure for Borrowing. Each Borrowing shall be made after the Closing
Date by an irrevocable written request by an Authorized Person delivered to
Agent (which notice must be received by Agent no later than 12:00 noon (Chicago
time) on the requested Funding Date in the case of a request for a Base Rate
Loan specifying (i) the amount of such Borrowing and (ii) the requested Funding
Date. At Agent's election, in lieu of delivering the above-described written
request, any Authorized Person may give Agent telephonic notice of such request
by the required time, with such telephonic notice to be confirmed in writing
within 24 hours of the giving of such notice.
(b) Making of Advances.
(i) Promptly after receipt of a request for a Borrowing pursuant
to Section 2.3(a), Agent shall notify the Lenders, not later than 2:00
p.m. (Chicago time) on the Funding Date applicable thereto, by
telecopy, telephone, or other similar form of transmission, of the
requested Borrowing. At Agent's sole option, either (A) each Lender
shall make the amount of such Lender's Pro Rata Share of the requested
Borrowing available to Agent in immediately available funds, to
Agent's Account, not later than 3:00 p.m. (Chicago time) on the
Funding Date applicable thereto or (B) Agent shall advance sufficient
funds in respect of such Borrowing and settle with the Lenders
pursuant to Section 2.3(d). After Agent's receipt of the proceeds of
such Advances to the extent applicable, and upon satisfaction of the
applicable conditions precedent
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set forth in Section 3 hereof, Agent shall make the proceeds thereof
available to Administrative Borrower on the applicable Funding Date by
transferring immediately available funds equal to such proceeds
received by Agent to Administrative Borrower's Designated Account;
provided, however, that, subject to the provisions of Section 2.3(g),
Agent shall not make or request any Lender to make, and no Lender
shall have the obligation to make, any Advance if Agent shall have
actual knowledge that (1) one or more of the applicable conditions
precedent set forth in Section 3 will not be satisfied on the
requested Funding Date for the applicable Borrowing unless such
condition has been waived, or (2) the requested Borrowing would exceed
the Availability on such Funding Date.
(ii) Unless Agent receives notice from a Lender on or prior to
the Closing Date or, with respect to any Borrowing after the Closing
Date, at least one (1) Business Day prior to the date of such
Borrowing, that such Lender will not make available as and when
required hereunder to Agent for the account of Administrative Borrower
the amount of that Lender's Pro Rata Share of the Borrowing, Agent may
assume that each Lender has made or will make such amount available to
Agent in immediately available funds on the Funding Date and Agent may
(but shall not be so required), in reliance upon such assumption, make
available to Administrative Borrower on such date a corresponding
amount. If and to the extent any Lender shall not have made its full
amount available to Agent in immediately available funds and Agent in
such circumstances has made available to Administrative Borrower such
amount, that Lender shall on the Business Day following such Funding
Date make such amount available to Agent, together with interest at
the Defaulting Lender Rate for each day during such period. A notice
submitted by Agent to any Lender with respect to amounts owing under
this subsection shall be conclusive, absent manifest error. If such
amount is so made available, such payment to Agent shall constitute
such Lender's Advance on the date of Borrowing for all purposes of
this Agreement. If such amount is not made available to Agent on the
Business Day following the Funding Date, Agent will notify
Administrative Borrower of such failure to fund and, upon demand by
Agent, Borrowers shall pay such amount to Agent for Agent's account,
together with interest thereon for each day elapsed since the date of
such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Advances composing such Borrowing. The
failure of any Lender to make any Advance on any Funding Date shall
not relieve any other Lender of any obligation hereunder to make an
Advance on such Funding Date, but no Lender shall be responsible for
the failure of any other Lender to make the Advance to be made by such
other Lender on any Funding Date.
(iii) Agent shall not be obligated to transfer to a Defaulting
Lender any payments made by Borrowers to Agent for the Defaulting
Lender's benefit, and, in the absence of such transfer to the
Defaulting Lender, Agent shall transfer any such payments to each
other non-Defaulting Lender member of the Lender Group ratably in
accordance with their Commitments (but only to the extent that such
Defaulting Lender's Advance was funded by the other members of the
Lender Group) or, if so directed by Administrative Borrower and if no
Default or Event of Default had occurred and is continuing (and to the
extent such Defaulting Lender's Advance was not funded by the Lender
Group), retain same to be re-advanced to Borrowers as if such
Defaulting Lender had made Advances to Borrowers. Subject to the
foregoing, Agent may hold and, in its Permitted Discretion, re-lend to
Borrowers for the account of such Defaulting Lender the amount of all
such payments received and retained by it for the account of such
Defaulting Lender. Solely for the purposes of voting or consenting to
matters with respect to the Loan Documents, such Defaulting Lender
shall be deemed not to be a "Lender" and such Lender's Commitment
shall be deemed to be zero. This Section shall remain effective with
respect to such Lender until (x) the Obligations under this Agreement
shall have been declared or shall have become immediately due and
payable, (y) the non-Defaulting
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Lenders, Agent, and Administrative Borrower shall have waived such
Defaulting Lender's default in writing, or (z) the Defaulting Lender
makes its Pro Rata Share of the applicable Advance and pays to Agent
all amounts owing by Defaulting Lender in respect thereof. The
operation of this Section shall not be construed to increase or
otherwise affect the Commitment of any Lender, to relieve or excuse
the performance by such Defaulting Lender or any other Lender of its
duties and obligations hereunder, or to relieve or excuse the
performance by Borrowers of their duties and obligations hereunder to
Agent or to the Lenders other than such Defaulting Lender. Any such
failure to fund by any Defaulting Lender shall constitute a material
breach by such Defaulting Lender of this Agreement and shall entitle
Administrative Borrower at its option, upon written notice to Agent,
to arrange for a substitute Lender to assume the Commitment of such
Defaulting Lender, such substitute Lender to be acceptable to Agent.
In connection with the arrangement of such a substitute Lender, the
Defaulting Lender shall have no right to refuse to be replaced
hereunder, and agrees to execute and deliver a completed form of
Assignment and Acceptance Agreement in favor of the substitute Lender
(and agrees that it shall be deemed to have executed and delivered
such document if it fails to do so) subject only to being repaid its
share of the outstanding Obligations (other than Bank Product
Obligations) (including an assumption of its Pro Rata Share of the
Risk Participation Liability) without any premium or penalty of any
kind whatsoever; provided further, however, that any such assumption
of the Commitment of such Defaulting Lender shall not be deemed to
constitute a waiver of any of the Lender Group's or Borrowers' rights
or remedies against any such Defaulting Lender arising out of or in
relation to such failure to fund.
(c) Agent Advances.
(i) Agent hereby is authorized by Borrowers and the Lenders, from
time to time in Agent's sole discretion, (1) after the occurrence and
during the continuance of a Default or an Event of Default, or (2) at
any time that any of the other applicable conditions precedent set
forth in Section 3.2 have not been satisfied, to make Advances to
Borrowers on behalf of the Lenders that Agent, in its Permitted
Discretion deems necessary or desirable (A) to preserve or protect the
Collateral, or any portion thereof, (B) to enhance the likelihood of
repayment of the Obligations (other than the Bank Product
Obligations), or (C) to pay any other amount chargeable to Borrowers
pursuant to the terms of this Agreement, including Lender Group
Expenses and the costs, fees, and expenses described in Section 10
(any of the Advances described in this Section 2.3(d) shall be
referred to as "Agent Advances"); provided, that notwithstanding
anything to the contrary contained in this Section 2.3(d), the
aggregate principal amount of Agent Advances outstanding at any time,
together with the aggregate principal amount of all Optional
Overadvances made pursuant to Section 2.3(g) and outstanding at such
time, shall not exceed an amount equal to $5,000,000. Each Agent
Advance is an Advance hereunder and shall be subject to all the terms
and conditions applicable to other Advances, except that no such Agent
Advance shall be eligible for the LIBOR Option and all payments
thereon shall be payable to Agent solely for its own account (and for
the account of the holder of any participation interest with respect
to such Agent Advance).
(ii) The Agent Advances shall be repayable by Borrowers on demand
and secured by the Agent's Liens granted to Agent under the Loan
Documents, shall constitute Advances and Obligations hereunder, and
shall bear interest at the rate applicable from time to time to
Advances that are Base Rate Loans.
(d) Settlement. It is agreed that each Lender's funded portion of the
Advances is intended by the Lenders to equal, at all times, such Lender's Pro
Rata Share of the outstanding Advances. Such agreement notwithstanding, Agent
and the other Lenders agree (which
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agreement shall not be for the benefit of or enforceable by Borrowers) that in
order to facilitate the administration of this Agreement and the other Loan
Documents, settlement among them as to the Advances, the Optional Overadvances
and the Agent Advances shall take place on a periodic basis in accordance with
the following provisions:
(i) Agent shall request settlement ("Settlement") with the Lenders on
a weekly basis, or on a more frequent basis if so determined by Agent, (1)
for itself, with respect to each Agent Advance, Optional Overadvance, and
Advance made pursuant to Section 2.3(b)(i)(B), and (2) with respect to
Collections received, as to each by notifying the Lenders by telecopy,
telephone, or other similar form of transmission, of such requested
Settlement, no later than 2:00 p.m. (Chicago time) on the Business Day
immediately prior to the date of such requested Settlement (the date of
such requested Settlement being the "Settlement Date"). Such notice of a
Settlement Date shall include a summary statement of the amount of
outstanding Advances, Optional Overadvances, and Agent Advances for the
period since the prior Settlement Date. Subject to the terms and conditions
contained herein (including Section 2.3(b)(iii)): (y) if a Lender's balance
of the Advances, Optional Overadvances, and Agent Advances exceeds such
Lender's Pro Rata Share of the Advances, Optional Overadvances, and Agent
Advances as of a Settlement Date, then Agent shall, by no later than 12:00
p.m. (Chicago time) on the Settlement Date, transfer in immediately
available funds to the account of such Lender as such Lender may designate,
an amount such that each such Lender shall, upon receipt of such amount,
have as of the Settlement Date, its Pro Rata Share of the Advances,
Optional Overadvances, and Agent Advances, and (z) if a Lender's balance of
the Advances, Optional Overadvances, and Agent Advances is less than such
Lender's Pro Rata Share of the Advances, Optional Overadvances, and Agent
Advances as of a Settlement Date, such Lender shall no later than 12:00
p.m. (Chicago time) on the Settlement Date transfer in immediately
available funds to the Agent's Account, an amount such that each such
Lender shall, upon transfer of such amount, have as of the Settlement Date,
its Pro Rata Share of the Advances, Optional Overadvances, and Agent
Advances. Such amounts made available to Agent under clause (z) of the
immediately preceding sentence shall be applied against the amounts of the
applicable Agent Advances and Optional Overadvances and shall constitute
Advances of such Lenders. If any such amount is not made available to Agent
by any Lender on the Settlement Date applicable thereto to the extent
required by the terms hereof, Agent shall be entitled to recover for its
account such amount on demand from such Lender together with interest
thereon at the Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of the Advances,
Optional Overadvances, and Agent Advances is less than, equal to, or
greater than such Lender's Pro Rata Share of the Advances, Optional
Overadvances, and Agent Advances as of a Settlement Date, Agent shall, as
part of the relevant Settlement, apply to such balance the portion of
payments actually received in good funds by Agent with respect to
principal, interest and fees payable by Borrowers and allocable to the
Lenders hereunder, and proceeds of Collateral. To the extent that a net
amount is owed to any such Lender after such application, such net amount
shall be distributed by Agent to that Lender as part of such next
Settlement.
(iii) During the period between Settlement Dates, Agent with respect
to Optional Overadvances, Agent Advances and Advances made pursuant to
Section 2.3(b)(i)(B), and each Lender with respect to the Advances other
than Optional Overadvances, Agent Advances and Advances made pursuant to
Section 2.3(b)(i)(B), shall be entitled to interest at the applicable rate
or rates payable under this Agreement on the daily amount of funds employed
by Agent, or the Lenders, as applicable.
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(e) Notation. Agent shall record on its books the principal amount of the
Advances owing to each Lender, including Agent Advances and Optional
Overadvances owing to Agent, and the interests therein of each Lender, from time
to time. In addition, each Lender is authorized, at such Lender's option, to
note the date and amount of each payment or prepayment of principal of such
Lender's Advances in its books and records, including computer records, such
books and records constituting conclusive evidence, absent manifest error, of
the accuracy of the information contained therein.
(f) Lenders' Failure to Perform. All Advances (other than Advances made
pursuant to Section 2.3(b)(i)(B), Optional Overadvances and Agent Advances)
shall be made by the Lenders contemporaneously and in accordance with their Pro
Rata Shares. It is understood that (i) no Lender shall be responsible for any
failure by any other Lender to perform its obligation to make any Advance (or
other extension of credit) hereunder, nor shall any Commitment of any Lender be
increased or decreased as a result of any failure by any other Lender to perform
its obligations hereunder, and (ii) no failure by any Lender to perform its
obligations hereunder shall excuse any other Lender from its obligations
hereunder.
(g) Optional Overadvances. Any contrary provision of this Agreement
notwithstanding, the Lenders hereby authorize Agent and Agent, may, but is not
obligated to, knowingly and intentionally, continue to make Advances to
Borrowers notwithstanding that an Overadvance exists or thereby would be created
("Optional Overadvances"), so long as (i) after giving effect to such Advances,
the Revolver Usage does not exceed the Borrowing Base by more than an amount
equal to $5,000,000 (based on the most recently delivered Borrowing Base
Certificate), (ii) after giving effect to such Advances the outstanding Revolver
Usage (except for and excluding amounts charged to the Loan Account for
interest, fees, or Lender Group Expenses) does not exceed the Maximum Revolver
Amount, and (iii) the aggregate principal amount of Optional Overadvances,
together with the aggregate principal amount of all Agent Advances made pursuant
to Section 2.3(c) and outstanding at such time, does not exceed at any time an
amount equal to $5,000,000. The foregoing provisions are for the exclusive
benefit of Agent and the Lenders and are not intended to benefit Borrowers in
any way. The Advances that are made pursuant to this Section 2.3(g) shall be
subject to the same terms and conditions as any other Advance except that they
shall not be eligible for the LIBOR Option and the rate of interest applicable
thereto shall be the rate applicable to Advances that are Base Rate Loans under
Section 2.6(c) hereof without regard to the presence or absence of a Default or
Event of Default.
(i) In the event Agent obtains actual knowledge that the Revolver
Usage exceeds the amounts permitted by the preceding paragraph, regardless
of the amount of, or reason for, such excess, Agent shall notify Revolver
Lenders as soon as practicable (and prior to making any (or any additional)
Optional Overadvances (except for and excluding amounts charged to the Loan
Account for interest, fees, or Lender Group Expenses) unless Agent
determines that prior notice would result in imminent harm to the
Collateral or its value), and the Lenders with Revolver Commitments
thereupon shall, together with Agent, jointly determine the terms of
arrangements that shall be implemented with Borrowers and intended to
reduce, within a reasonable time, the outstanding principal amount of the
Advances to Borrowers to an amount permitted by the preceding paragraph. In
the event Agent or any Revolver Lender disagrees over the terms of
reduction or repayment of any Overadvance, the terms of reduction or
repayment thereof shall be implemented according to the determination of
the Required Revolver Lenders.
(ii) Each Lender with a Revolver Commitment shall be obligated to
settle with Agent as provided in Section 2.3(d) for the amount of such
Lender's Pro Rata Share of any unintentional Overadvances by Agent reported
to such Lender, any Optional Overadvances, and any Overadvances resulting
from the charging to the Loan Account of interest, fees, or
Lender Group Expenses.
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2.4 Payments.
(a) Payments by Borrowers.
(i) Except as otherwise expressly provided herein, all payments by
Borrowers shall be made to Agent's Account for the account of the Lender
Group and shall be made in immediately available funds, no later than 12:00
noon (Chicago time) on the date specified herein. Any payment received by
Agent later than 12:00 noon (Chicago time) shall be deemed to have been
received on the following Business Day and any applicable interest or fee
shall continue to accrue until such following Business Day.
(ii) Unless Agent receives notice from Administrative Borrower prior
to the date on which any payment is due to the Lenders that Borrowers will
not make such payment in full as and when required, Agent may assume that
Borrowers have made (or will make) such payment in full to Agent on such
date in immediately available funds and Agent may (but shall not be so
required), in reliance upon such assumption, distribute to each Lender on
such due date an amount equal to the amount then due such Lender. If and to
the extent Borrowers do not make such payment in full to Agent on the date
when due, each Lender severally shall repay to Agent on demand such amount
distributed to such Lender, together with interest thereon at the
Defaulting Lender Rate for each day from the date such amount is
distributed to such Lender until the date repaid.
(b) Apportionment and Application.
(i) Except (A) as otherwise provided with respect to Defaulting
Lenders and (B) following the occurrence of a Priority Event, aggregate
principal and interest payments shall be apportioned ratably among the
Lenders (according to the unpaid principal balance of the Obligations to
which such payments relate held by each Lender) and payments of fees and
expenses shall be apportioned ratably among the Lenders having a Pro Rata
Share of the type of Commitment or Obligation to which a particular fee
relates.
(ii) Agent promptly shall distribute to each Lender, pursuant to the
applicable wire instructions received from each Lender in writing, such
funds as it may be entitled to receive, subject to a Settlement delay as
provided in Section 2.3(f).
(c) Mandatory Prepayments.
(i) If on any day the Revolver Usage exceeds the Maximum Availability,
Borrowers shall immediately pay to Agent an amount equal to such excess to
be applied to the outstanding principal of the Advances;
(ii) If on any day the Revolver Commitment is terminated pursuant to
Section 9.1, Borrowers shall immediately repay in full the Term Loans.
(iii) Immediately upon the receipt by any Loan Party of any proceeds
of any sale or disposition by any Loan Party or its Subsidiaries of
property or assets, including any collections of Accounts generated from
the sale of such property or assets, (other than a Permitted Disposition
described in clause (b) or (d) of the definition of such term) or the
receipt by any Loan Party of the proceeds of any insurance policy with
respect to Inventory or condemnation awards with respect to Inventory,
Borrowers shall prepay the outstanding principal amount of the Term Loans
and the Advances in accordance with Section 2.4(d) in an amount
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equal to 100% of the Net Cash Proceeds or the insurance or condemnation
proceeds received by such Person in connection with such sales or
dispositions or such casualty or condemnation event to the extent that the
aggregate amount of Net Cash Proceeds received by all Loan Parties and
their Subsidiaries (and not paid to Agent as a prepayment of the Term Loans
and the Advances) for all such sales or dispositions shall exceed
$1,000,000 since the Closing Date (other than sales or dispositions of
property or assets, insurance proceeds or condemnation awards with respect
to Inventory or any proceeds thereof (including collections of Accounts) in
respect of the Inventory Divestiture Plan all of which shall be applied in
accordance with Section 2.4(d)). Nothing contained in this subclause (iii)
shall permit any Loan Party or any of its Subsidiaries to sell or otherwise
dispose of any property or assets other than in accordance with Section
7.4.
(iv) Upon the receipt by any Loan Party or any of its Subsidiaries of
any Extraordinary Receipts in excess of $1,000,000 in the aggregate in any
Fiscal Year, except for such amounts applied for repairs, replacements or
restoration in accordance with Section 6.7(b), Borrowers shall prepay the
outstanding principal of the Term Loans and the Advances in accordance with
Section 2.4(d) below in an amount equal to 100% of such Extraordinary
Receipts, net of any reasonable expenses incurred in collecting such
Extraordinary Receipts.
(v) Within ten (10) Business Days of delivery to the Agent of each of
the monthly financial statements in respect of the last month of a fiscal
quarter pursuant to Section 6.3(b), beginning with the fiscal quarter ended
June 28, 2003, or, if such financial statements are not delivered to the
Agent on the date such statements are required to be delivered pursuant to
Section 6.3(b), ten (10) Business Days after the date such statements are
required to be delivered to Agent pursuant to Section 6.3(b), Borrowers
shall pay to Agent an amount equal to 75% of the Excess Cash Flow for the
three-month period covered by such financial statements, to be applied in
accordance with Section 2.4(d).
(vi) Upon the issuance or incurrence by any Loan Party or any of its
Subsidiaries of any Indebtedness (other than Indebtedness referred to in
Section 7.1), or the sale or issuance by any Loan Party or any of its
Subsidiaries of any shares of its Stock, the Borrowers shall prepay the
outstanding amount of the Term Loans and the Advances in accordance with
Section 2.4(d) in an amount equal to 100% of the Net Cash Proceeds received
by such Person in connection therewith. The provisions of this subsection
(vi) shall not be deemed to be implied consent to any such issuance,
incurrence or sale otherwise prohibited by the terms and conditions of this
Agreement.
(d) Application of Payments. All prepayments of the Term Loans shall be
apportioned among the Term Loans and the Notes in accordance with the terms of
the Intercreditor Agreement. Each prepayment pursuant to subclauses (c)(iii),
(c)(iv), (c)(v) and (c)(vi) above shall, (A) so long as no Priority Event shall
have occurred and be continuing, be applied, subject to (x) the prior payment of
any amounts due pursuant to clause (c)(i) above and (y) except for prepayments
pursuant to clause (c)(v) above, the prior satisfaction of the Required
Liquidity, first, pro rata, to the outstanding principal amount of the Term A
Loans and the Term B Loans, until paid in full, and second, to the outstanding
principal amount of the Advances (together with a corresponding permanent
reduction in the Revolver Commitment), until paid in full, and (B) if a Priority
Event shall have occurred and be continuing, be applied in accordance with
Section 4.2 of the Intercreditor Agreement. To the extent requested by Agent,
the Administrative Borrower shall provide a detailed calculation of the amounts
and the apportionment of such mandatory prepayments accompanied by a certificate
of an Authorized Person.
2.5 Overadvances. Except as provided in Section 2.3(c) or 2.3(g), if, at
any time or for any reason, the amount of Obligations (other than Bank Product
Obligations) owed by Borrowers to
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the Lender Group pursuant to Sections 2.1 and 2.12 is greater than either the
Dollar or percentage limitations set forth in Section 2.1 or 2.12 (an
"Overadvance"), Borrowers immediately shall pay to Agent, in cash, the amount of
such excess, which amount shall be applied in accordance with Section 2.4(c)(i).
In addition, Borrowers hereby promise to pay the Obligations (including
principal, interest, fees, costs, and expenses) in Dollars in full to the Lender
Group as and when due and payable under the terms of this Agreement and the
other Loan Documents.
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and
Calculations.
(a) Interest Rates. Except as provided in clause (c) below, all Obligations
(except for undrawn Letters of Credit and except for Bank Product Obligations),
whether or not charged to the Loan Account pursuant to the terms hereof, shall
bear interest on the Daily Balance thereof as follows:
(i) if the relevant Obligation is an Advance that is a LIBOR Rate
Loan, at a per annum rate equal to the LIBOR Rate plus the Applicable LIBOR
Rate Margin for Advances;
(ii) if the relevant Obligation is an Advance that is a Base Rate
Loan, at a per annum rate equal to the Base Rate plus the Applicable Base
Rate Margin for Advances;
(iii) if the relevant Obligation is a portion of the Term A Loans that
is a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate plus the
Applicable LIBOR Rate Margin for the Term A Loans;
(iv) if the relevant Obligation is a portion of the Term A Loans that
is a Base Rate Loan, at a per annum rate equal to the Base Rate plus the
Applicable Base Rate Margin for the Term A Loans;
(v) if the relevant Obligation is a portion of the Term B Loans
(inclusive of any Term B Loan PIK Amount), at a per annum rate equal to
18.0% (the "Term B Rate"); provided, however, that, in the case of this
subclause (v), that portion of such interest equal to 6.0% per annum (or
8.0% per annum on and after the occurrence of the Term Loan Repayment
Trigger) shall be paid-in-kind by being added to the outstanding principal
amount of the Term B Loans (inclusive of any Term B Loan PIK Amount
theretofore so added) on the first day of each calendar quarter; and
(vi) otherwise, at a per annum rate equal to the Base Rate from time
to time in effect plus the Applicable Base Rate Margin for Advances.
(b) Letter of Credit Fee. Borrowers shall pay Agent (for the ratable
benefit of the Lenders with a Revolver Commitment, subject to any letter
agreement between Agent and individual Lenders), a Letter of Credit fee ("Letter
of Credit Fees") (in addition to the charges, commissions, fees, and costs set
forth in Section 2.12(e)) which shall accrue at a per annum rate equal to the
product of (x) the Applicable LIBOR Rate Margin for Letter of Credit Fee times
(y) the Daily Balance of the undrawn amount of all outstanding Letters of
Credit.
(c) Default Rate. Upon the occurrence and during the continuation of an
Event of Default at the election of Agent or the Required Lenders,
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(i) all Obligations (except for undrawn Letters of Credit and except
for Bank Product Obligations) whether or not charged to the Loan Account
pursuant to the terms hereof shall bear interest on the Daily Balance
thereof at a per annum rate equal to two (2) percentage points above the
per annum rate otherwise applicable hereunder, and
(ii) the Letter of Credit fee provided for above shall be increased to
two (2) percentage points above the per annum rate otherwise applicable
hereunder.
(d) Payment. Subject to Section 2.13(a), interest and all other fees
payable hereunder shall be due and payable, in arrears, on the first day of each
month, beginning May 1, 2003 (or, in the case of fees, such other date on which
such fees are due and payable pursuant to the terms of the Fee Letter), at any
time that Obligations or Commitments are outstanding, provided that Letter of
Credit Fees shall be payable monthly in advance, on the first day of each month.
Borrowers hereby authorize Agent, from time to time without prior notice to
Borrowers, to, and Agent agrees that it will, charge such interest and fees, all
Lender Group Expenses (as and when incurred), the charges, commissions, fees,
and costs provided for in Section 2.12(e) (as and when accrued or incurred), the
fees and costs provided for in Section 2.11 (as and when accrued or incurred),
and all other payments as and when due and payable under any Loan Document
(including the installments due and payable with respect to the Term Loans and
including any amounts due and payable to Bank One or its Affiliates in respect
of Bank Products up to the amount of the then extant Bank Products Reserve) to
Borrowers' Loan Account, which amounts thereafter shall constitute Advances
hereunder and shall accrue interest at the rate then applicable to Advances
hereunder. Any interest not paid when due shall be compounded by being charged
to Borrowers' Loan Account and shall thereafter constitute Advances hereunder
and shall accrue interest at the rate then applicable to Advances that are Base
Rate Loans hereunder.
(e) Computation. All interest and fees chargeable under the Loan Documents
shall be computed on the basis of a 360 day year for the actual number of days
elapsed. In the event the Base Rate is changed from time to time hereafter, the
rates of interest hereunder based upon the Base Rate automatically and
immediately shall be increased or decreased by an amount equal to such change in
the Base Rate.
(f) Intent to Limit Charges to Maximum Lawful Rate. In no event shall the
interest rate or rates payable under this Agreement, plus any other amounts paid
in connection herewith, exceed the highest rate permissible under any law that a
court of competent jurisdiction shall, in a final determination, deem
applicable. Borrowers and the Lender Group, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, however, that, anything contained herein
to the contrary notwithstanding, if said rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, ipso facto, as
of the date of this Agreement, Borrowers are and shall be liable only for the
payment of such maximum as allowed by law, and payment received from Borrowers
in excess of such legal maximum, whenever received, shall be applied to reduce
the principal balance of the Obligations to the extent of such excess.
2.7 Cash Management.
(a) The Loan Parties shall (i) establish and maintain cash management
services of a type and on terms satisfactory to Agent at one or more of the
banks set forth on Schedule 2.7(a) (each a "Cash Management Bank"), and shall
request in writing and otherwise take such reasonable steps to ensure that all
of its Account Debtors forward payment of the amounts owed by them directly to
such Cash Management Bank, and (ii) deposit or cause to be deposited promptly,
and in any event no later than the first Business Day after the date of receipt
thereof, all Collections (including those sent
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directly by Account Debtors to a Cash Management Bank) into a bank account in
Agent's name (a "Cash Management Account") at one of the Cash Management Banks.
(b) Each Cash Management Bank shall establish and maintain Cash Management
Agreements with Agent and the Loan Parties, in form and substance acceptable to
Agent. Each such Cash Management Agreement shall provide, among other things,
that (i) all items of payment deposited in such Cash Management Account and
proceeds thereof are held by such Cash Management Bank agent or
bailee-in-possession for Agent, (ii) the Cash Management Bank has no rights of
setoff or recoupment or any other claim against the applicable Cash Management
Account, other than for payment of its service fees and other charges directly
related to the administration of such Cash Management Account and for returned
checks or other items of payment, and (iii) it immediately will forward by daily
sweep all amounts in the applicable Cash Management Account to the Agent's
Account. Notwithstanding the foregoing, funds on deposit in local deposit
accounts which are maintained for PWI or retail stores owned by a Loan Party
shall only be required to be transferred on a weekly basis (or more frequently
as directed by Agent if the deposits in such accounts aggregate $750,000 or more
at any time or if an Event of Default has occurred and is continuing) by sweep
to the Agent's Account.
(c) So long as no Default or Event of Default has occurred and is
continuing, Administrative Borrower may amend Schedule 2.7(a) to add or replace
a Cash Management Account Bank or Cash Management Account; provided, however,
that (i) such prospective Cash Management Bank shall be satisfactory to Agent
and Agent shall have consented in writing in advance to the opening of such Cash
Management Account with the prospective Cash Management Bank, and (ii) prior to
the time of the opening of such Cash Management Account, the Loan Parties and
such prospective Cash Management Bank shall have executed and delivered to Agent
a Cash Management Agreement. Borrowers shall close any of their Cash Management
Accounts (and establish replacement cash management accounts in accordance with
the foregoing sentence) promptly and in any event within 30 days of notice from
Agent that the creditworthiness of any Cash Management Bank is no longer
acceptable in Agent's reasonable judgment, or as promptly as practicable and in
any event within 60 days of notice from Agent that the operating performance,
funds transfer, or availability procedures or performance of the Cash Management
Bank with respect to Cash Management Accounts or Agent's liability under any
Cash Management Agreement with such Cash Management Bank is no longer acceptable
in Agent's reasonable judgment.
(d) The Cash Management Accounts shall be cash collateral accounts, with
all cash, checks and similar items of payment in such accounts securing payment
of the Obligations, and in which the Loan Parties are hereby deemed to have
granted a Lien to Agent.
(e) To the extent required by Agent, all credit and debit card payments
from the Account Debtors of the Loan Parties (i) shall be processed through a
Credit Card Processor and (ii) shall be subject to a Credit Card Assignment
Agreement.
(f) To the extent required by Agent, each of Canadian Guarantors shall (i)
establish and maintain one or more depository accounts, under the dominion and
control of Agent pursuant to a Control Agreement among Agent, Canadian
Guarantors, as applicable, and the applicable Canadian financial institution, in
form and substance satisfactory to Agent, in respect of its Collections and (ii)
instruct all of its Account Debtors to remit all such Collections to such
depository accounts. Each of the Canadian Guarantors shall at all times deposit
all Collections into such accounts that are received by it from any source
promptly, and in any event no later than the first Business Day, after the date
of receipt thereof.
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(g) Prior to the date on which APWI Canada, Inc. and Midas Canada Inc.
shall be permitted to become Eligible Loan Parties, such Loan Parties shall have
complied with the provisions of Sections 2.7(a) and (b).
2.8 Crediting Payments; Float Charge. The receipt of any payment item by
Agent (whether from transfers to Agent by the Cash Management Banks pursuant to
the Cash Management Agreements or otherwise) shall not be considered a payment
on account unless such payment item is a wire transfer of immediately available
federal funds made to the Agent's Account or unless and until such payment item
is honored when presented for payment. Should any payment item not be honored
when presented for payment, then Borrowers shall be deemed not to have made such
payment and interest shall be calculated accordingly. Anything to the contrary
contained herein notwithstanding, any payment item shall be deemed received by
Agent only if it is received into the Agent's Account on a Business Day on or
before 11:00 a.m. (Chicago time). If any payment item is received into the
Agent's Account on a non-Business Day or after 11:00 a.m. (Chicago time) on a
Business Day, it shall be deemed to have been received by Agent as of the
opening of business on the immediately following Business Day. From and after
the Closing Date, Agent shall be entitled to charge Borrowers for one (1)
Business Day of `clearance' or `float' at the rate applicable to Base Rate Loans
under Section 2.6 on all Collections that are received by Borrowers (regardless
of whether forwarded by the Cash Management Banks to Agent). This
across-the-board one (1) Business Day clearance or float charge on all
Collections is acknowledged by the parties to constitute an integral aspect of
the pricing of the financing of Borrowers and shall apply irrespective of
whether or not there are any outstanding monetary Obligations; the effect of
such clearance or float charge being the equivalent of charging one (1) Business
Day of interest on such Collections. The parties acknowledge and agree that the
economic benefit of the foregoing provisions of this Section 2.8 shall be for
the exclusive benefit of Agent.
2.9 Designated Account. Agent is authorized to make the Advances and the
Term Loans, and Issuing Lender is authorized to issue the Letters of Credit,
under this Agreement based upon telephonic or other instructions received from
anyone purporting to be an Authorized Person, or without instructions if
pursuant to Section 2.6(d). Administrative Borrower agrees to establish and
maintain the Designated Account with the Designated Account Bank for the purpose
of receiving the proceeds of the Advances requested by Borrowers and made by
Agent or the Lenders hereunder. Unless otherwise agreed by Agent and
Administrative Borrower, any Advance or Agent Advance requested by Borrowers and
made by Agent or the Lenders hereunder shall be made to the Designated Account.
2.10 Maintenance of Loan Account; Statements of Obligations. Agent shall
maintain an account on its books in the name of Borrowers (the "Loan Account")
on which Borrowers will be charged with the Term Loans, all Advances (including
Agent Advances and Optional Overadvances) made by Agent or the Lenders to
Borrowers or for Borrowers' account, the Letters of Credit issued by Issuing
Lender for Borrowers' account, and with all other payment Obligations hereunder
or under the other Loan Documents (except for Bank Product Obligations),
including accrued interest, fees and expenses, and Lender Group Expenses. In
accordance with Section 2.8, the Loan Account will be credited with all payments
received by Agent from Borrowers or for Borrowers' account, including all
amounts received in the Agent's Account from any Cash Management Bank. Agent
shall render statements regarding the Loan Account to Administrative Borrower,
including principal, interest, fees, and including an itemization of all charges
and expenses constituting Lender Group Expenses owing, and such statements shall
be conclusively presumed to be correct and accurate and constitute an account
stated between Borrowers and the Lender Group unless, within 30 days after
receipt thereof by Administrative Borrower, Administrative Borrower shall
deliver to Agent written objection thereto describing the error or errors
contained in any such statements.
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2.11 Fees. Borrowers shall pay to Agent the following fees and charges,
which fees and charges shall be non-refundable when paid (irrespective of
whether this Agreement is terminated thereafter) and shall be apportioned among
the Lenders in accordance with the terms of letter agreements between Agent and
individual Lenders:
(a) Unused Line Fee. On the first day of each month during the term of
this Agreement, an unused line fee in the amount equal to 0.50% per annum
times the result of (a) the Maximum Revolver Amount, less (b) the sum of
(i) the average Daily Balance of Advances that were outstanding during the
immediately preceding month, plus (ii) the average Daily Balance of the
Letter of Credit Usage during the immediately preceding month;
(b) Fee Letter. As and when due and payable under the terms of the Fee
Letter, Borrowers shall pay to Agent the fees set forth in the Fee Letter;
and
(c) Audit, Appraisal, and Valuation Charges. For the separate account
of Agent, audit, appraisal, and valuation fees and other fees and charges
as follows, (i) a fee of $850 per day, per auditor, plus out-of-pocket
expenses for each audit of a Loan Party performed by personnel employed by
Agent, (ii) if implemented, a one time charge of $3,000 plus out-of-pocket
expenses for expenses for the establishment of electronic collateral
reporting systems, (iii) the actual charges paid or incurred by Agent if it
elects to employ the services of one or more third Persons to perform
audits of the Loan Parties, to appraise the Collateral, or any portion
thereof, or to assess a Loan Party's business valuation and (iv) such
additional fees and expenses as shall be requested by Agent in its
Permitted Discretion with respect to property subject to the Inventory
Divestiture Plan; provided that, in the absence of a continuing Event of
Default, the Borrowers shall not be required to pay for more than (i) four
audits of the Loan Parties in any Fiscal Year, (ii) two appraisals of the
Inventory in any Fiscal Year and (iii) one appraisal of the Real Property
in any year.
2.12 Letters of Credit.
(a) Subject to the terms and conditions of this Agreement, the Issuing
Lender agrees to issue letters of credit for the account of Borrowers (each, an
"L/C"). To request the issuance of an L/C (or the amendment, renewal, or
extension of an outstanding L/C), Administrative Borrower shall hand deliver or
telecopy (or transmit by electronic communication, if arrangements for doing so
have been approved by the Issuing Lender) to the Issuing Lender and Agent (at
least five (5) Business Days in advance of the requested date of issuance,
amendment, renewal, or extension) a notice requesting the issuance of an L/C, or
identifying the L/C to be amended, renewed, or extended, the date of issuance,
amendment, renewal, or extension, the date on which such L/C is to expire, the
amount of such L/C, the name and address of the beneficiary thereof, and such
other information as shall be necessary to prepare, amend, renew, or extend such
L/C. The Issuing Lender shall have no obligation to issue a Letter of Credit if
any of the following would result after giving effect to the requested Letter of
Credit:
(i) the Letter of Credit Usage would exceed the Borrowing Base less
the amount of outstanding Advances, or
(ii) the Letter of Credit Usage would exceed $7,000,000, or
(iii) the Letter of Credit Usage would exceed the Maximum Revolver
Amount less the then extant amount of outstanding Advances less the then
extent amount of any reserves; or
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(iv) the requested Letter of Credit would mature less than thirty days
prior to the Maturity Date.
Each Letter of Credit shall be in form and substance acceptable to the
Issuing Lender (in the exercise of its Permitted Discretion), including the
requirement that the amounts payable thereunder must be payable in Dollars. If
Issuing Lender is obligated to advance funds under a Letter of Credit, Borrowers
immediately shall reimburse such L/C Disbursement to Issuing Lender by paying to
Agent an amount equal to such L/C Disbursement not later than 11:00 a.m.,
Chicago time, on the date that such L/C Disbursement is made, if Administrative
Borrower shall have received written or telephonic notice of such L/C
Disbursement prior to 10:00 a.m., Chicago time, on such date, or, if such notice
has not been received by Administrative Borrower prior to such time on such
date, then not later than 11:00 a.m., Chicago time, on (i) the Business Day that
Administrative Borrower receives such notice, if such notice is received prior
to 10:00 a.m., Chicago time, on the date of receipt, and, in the absence of such
reimbursement, the L/C Disbursement immediately and automatically shall be
deemed to be an Advance hereunder and, thereafter, shall bear interest at the
rate then applicable to Advances that are Base Rate Loans under Section 2.6. To
the extent an L/C Disbursement is deemed to be an Advance hereunder, Borrowers'
obligation to reimburse such L/C Disbursement shall be discharged and replaced
by the resulting Advance. Promptly following receipt by Agent of any payment
from Borrowers pursuant to this paragraph, Agent shall distribute such payment
to the Issuing Lender or, to the extent that Lenders have made payments pursuant
to Section 2.12(c) to reimburse the Issuing Lender, then to such Lenders and the
Issuing Lender as their interest may appear.
(b) Promptly following receipt of a notice of L/C Disbursement pursuant to
Section 2.12(a), each Lender with a Revolver Commitment agrees to fund its Pro
Rata Share of any Advance deemed made pursuant to the foregoing subsection on
the same terms and conditions as if Borrowers had requested such Advance and
Agent shall promptly pay to Issuing Lender the amounts so received by it from
the Lenders. By the issuance of a Letter of Credit (or an amendment to a Letter
of Credit increasing the amount thereof) and without any further action on the
part of the Issuing Lender or the Lenders with Revolver Commitment, the Issuing
Lender shall be deemed to have granted to each Lender with a Revolver
Commitment, and each Lender with a Revolver Commitment shall be deemed to have
purchased, a participation in each Letter of Credit, in an amount equal to its
Pro Rata Share of the Risk Participation Liability of such Letter of Credit, and
each such Lender agrees to pay to Agent, for the account of the Issuing Lender,
such Lender's Pro Rata Share of any payments made by the Issuing Lender under
such Letter of Credit. In consideration and in furtherance of the foregoing,
each Lender with a Revolver Commitment hereby absolutely and unconditionally
agrees to pay to Agent, for the account of the Issuing Lender, such Lender's Pro
Rata Share of each L/C Disbursement made by the Issuing Lender and not
reimbursed by Borrowers on the date due as provided in clause (a) of this
Section, or of any reimbursement payment required to be refunded to Borrowers
for any reason. Each Lender with a Revolver Commitment acknowledges and agrees
that its obligation to deliver to Agent, for the account of the Issuing Lender,
an amount equal to its respective Pro Rata Share pursuant to this Section
2.12(b) shall be absolute and unconditional and such remittance shall be made
notwithstanding the occurrence or continuation of an Event of Default or Default
or the failure to satisfy any condition set forth in Section 3 hereof. If any
such Lender fails to make available to Agent the amount of such Lender's Pro
Rata Share of any payments made by the Issuing Lender in respect of such Letter
of Credit as provided in this Section, Agent (for the account of the Issuing
Lender) shall be entitled to recover such amount on demand from such Lender
together with interest thereon at the Defaulting Lender Rate until paid in full.
(c) Each Borrower hereby agrees to indemnify, save, defend, and hold the
Lender Group harmless from any loss, cost, expense, or liability, and reasonable
attorneys fees incurred by the Lender Group arising out of or in connection with
any Letter of Credit; provided, however, that no Borrower shall be obligated
hereunder to indemnify for any loss, cost, expense, or liability that is caused
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by the gross negligence or willful misconduct of the Issuing Lender or any other
member of the Lender Group. Each Borrower agrees to be bound by the Issuing
Lender's interpretations of any L/C issued by Issuing Lender to or for such
Borrower's account, even though this interpretation may be different from such
Borrower's own, and each Borrower understands and agrees that the Lender Group
shall not be liable for any error, negligence, or mistake, whether of omission
or commission, in following Borrowers' instructions or those contained in the
Letter of Credit or any modifications, amendments, or supplements thereto.
(d) Any and all customary charges, commissions, fees, and costs incurred by
the Issuing Lender shall be Lender Group Expenses for purposes of this Agreement
and immediately shall be reimbursable by Borrowers to Agent for the account of
the Issuing Lender; it being acknowledged and agreed by each Borrower that such
charges, commissions, fees and costs may be changed from time to time, and that
the Issuing Lender also imposes a schedule of customary charges for amendments,
extensions, drawings, and renewals.
(e) If by reason of (i) any change in any applicable law, treaty, rule, or
regulation or any change in the interpretation or application thereof by any
Governmental Authority, or (ii) compliance by the Lender Group with any
direction, request, or requirement (irrespective of whether having the force of
law) of any Governmental Authority or monetary authority including, Regulation D
of the Federal Reserve Board as from time to time in effect (and any successor
thereto):
(i) any reserve, deposit, or similar requirement is or shall be
imposed or modified in respect of any Letter of Credit issued hereunder, or
(ii) there shall be imposed on the Lender Group any other condition
regarding any Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Administrative Borrower, and Borrowers shall pay on demand such amounts
as Agent may specify to be necessary to compensate the Lender Group for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Base Rate Loans hereunder. The determination by Agent of any
amount due pursuant to this Section, as set forth in a certificate setting forth
the calculation thereof in reasonable detail, shall, in the absence of manifest
or demonstrable error, be final and conclusive and binding on all of the parties
hereto.
2.13 LIBOR Option.
(a) Interest and Interest Payment Dates. In lieu of having interest
charged at the rate based upon the Base Rate, Borrowers shall have the
option (the "LIBOR Option") to have interest on all or a portion of the
Advances or the Term A Loans be charged at a rate of interest based upon
the LIBOR Rate. Interest on LIBOR Rate Loans shall be payable in arrears on
the earliest of (i) the first day of each month beginning May 1, 2003, (ii)
the occurrence of an Event of Default in consequence of which the Required
Lenders or Agent on behalf thereof elect to accelerate the maturity of all
or any portion of the Obligations, or (iii) termination of this Agreement
pursuant to the terms hereof. On the last day of each applicable Interest
Period, unless Administrative Borrower properly has exercised the LIBOR
Option with respect thereto, the interest rate applicable to such LIBOR
Rate Loan automatically shall convert to the rate of interest then
applicable to Base Rate Loans of the same type hereunder. At any time
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that an Event of Default has occurred and is continuing, Borrowers no
longer shall have the option to request that Advances or the Term A Loans
bear interest at the LIBOR Rate and Agent shall have the right to convert
the interest rate on all outstanding LIBOR Rate Loans to the rate then
applicable to Base Rate Loans hereunder.
(b) LIBOR Election.
(i) Administrative Borrower may, at any time and from time to
time, so long as no Event of Default has occurred and is continuing,
elect to exercise the LIBOR Option by notifying Agent prior to 11:00
a.m. (Chicago time) at least 3 Business Days prior to the commencement
of the proposed Interest Period (the "LIBOR Deadline"). Notice of
Administrative Borrower's election of the LIBOR Option for a permitted
portion of the Advances or the Term A Loans and an Interest Period
pursuant to this Section shall be made by delivery to Agent of a LIBOR
Notice received by Agent before the LIBOR Deadline, or by telephonic
notice received by Agent before the LIBOR Deadline (to be confirmed by
delivery to Agent of a LIBOR Notice received by Agent prior to 2:00
p.m. (Chicago time) on the same day). Promptly upon its receipt of
each such LIBOR Notice, Agent shall provide a copy thereof to each of
the Lenders having a Revolver Commitment.
(ii) Each LIBOR Notice shall be irrevocable and binding on
Borrowers. In connection with each LIBOR Rate Loan, each Borrower
shall indemnify, defend, and hold Agent and the Lenders harmless
against any loss, cost, or expense incurred by Agent or any Lender as
a result of (a) the payment of any principal of any LIBOR Rate Loan
other than on the last day of an Interest Period applicable thereto
(including as a result of an Event of Default), (b) the conversion of
any LIBOR Rate Loan other than on the last day of the Interest Period
applicable thereto, or (c) the failure to borrow, convert, continue or
prepay any LIBOR Rate Loan on the date specified in any LIBOR Notice
delivered pursuant hereto (such losses, costs, and expenses,
collectively, "Funding Losses"). Funding Losses shall, with respect to
Agent or any Lender, be deemed to equal the amount determined by Agent
or such Lender to be the excess, if any, of (i) the amount of interest
that would have accrued on the principal amount of such LIBOR Rate
Loan had such event not occurred, at the LIBOR Rate that would have
been applicable thereto, for the period from the date of such event to
the last day of the then current Interest Period therefore (or, in the
case of a failure to borrow, convert or continue, for the period that
would have been the Interest Period therefore), minus (ii) the amount
of interest that would accrue on such principal amount for such period
at the interest rate which Agent or such Lender would be offered were
it to be offered, at the commencement of such period, Dollar deposits
of a comparable amount and period in the London interbank market. A
certificate of Agent or a Lender delivered to Administrative Borrower
setting forth any amount or amounts that Agent or such Lender is
entitled to receive pursuant to this Section shall be conclusive
absent manifest error.
(iii) Borrowers shall have not more than 5 LIBOR Rate Loans in
effect at any given time. Borrowers only may exercise the LIBOR Option
for LIBOR Rate Loans of at least $1,000,000 and integral multiples of
$500,000 in excess thereof.
(c) Prepayments. Borrowers may prepay LIBOR Rate Loans at any time;
provided, however, that in the event that LIBOR Rate Loans are prepaid on any
date that is not the last day of the Interest Period applicable thereto,
including as a result of any automatic prepayment through the required
application by Agent of proceeds of Collections in accordance with Section
2.4(b) or for any other reason, including early termination of the term of this
Agreement or acceleration of all or any portion of the Obligations pursuant to
the terms hereof, each Borrower shall indemnify, defend, and hold
Agent and the Lenders and their Participants harmless against any and all
Funding Losses in accordance with clause (b) above.
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(d) Special Provisions Applicable to LIBOR Rate.
(i) The LIBOR Rate may be adjusted by Agent with respect to any
Lender on a prospective basis to take into account any additional or
increased costs to such Lender of maintaining or obtaining any
eurodollar deposits or increased costs due to changes in applicable
law occurring subsequent to the commencement of the then applicable
Interest Period, including changes in tax laws (except changes of
general applicability in corporate income tax laws) and changes in the
reserve requirements imposed by the Board of Governors of the Federal
Reserve System (or any successor), excluding the Reserve Percentage,
which additional or increased costs would increase the cost of funding
loans bearing interest at the LIBOR Rate. In any such event, the
affected Lender shall give Administrative Borrower and Agent notice of
such a determination and adjustment and Agent promptly shall transmit
the notice to each other Lender and, upon its receipt of the notice
from the affected Lender, Administrative Borrower may, by notice to
such affected Lender (y) require such Lender to furnish to
Administrative Borrower a statement setting forth the basis for
adjusting such LIBOR Rate and the method for determining the amount of
such adjustment, or (z) repay the LIBOR Rate Loans with respect to
which such adjustment is made (together with any amounts due under
clause (b)(ii) above).
(ii) In the event that any change in market conditions or any
law, regulation, treaty, or directive, or any change therein or in the
interpretation of application thereof, shall at any time after the
date hereof, in the reasonable opinion of any Lender, make it unlawful
or impractical for such Lender to fund or maintain LIBOR Advances or
to continue such funding or maintaining, or to determine or charge
interest rates at the LIBOR Rate, such Lender shall give notice of
such changed circumstances to Agent and Administrative Borrower and
Agent promptly shall transmit the notice to each other Lender and (y)
in the case of any LIBOR Rate Loans of such Lender that are
outstanding, the date specified in such Lender's notice shall be
deemed to be the last day of the Interest Period of such LIBOR Rate
Loans, and interest upon the LIBOR Rate Loans of such Lender
thereafter shall accrue interest at the rate then applicable to Base
Rate Loans, and (z) Borrowers shall not be entitled to elect the LIBOR
Option until such Lender determines that it would no longer be
unlawful or impractical to do so.
(e) No Requirement of Matched Funding. Anything to the contrary
contained herein notwithstanding, neither Agent, nor any Lender, nor any of
their Participants, is required actually to acquire eurodollar deposits to
fund or otherwise match fund any Obligation as to which interest accrues at
the LIBOR Rate. The provisions of this Section shall apply as if each
Lender or its Participants had match funded any Obligation as to which
interest is accruing at the LIBOR Rate by acquiring eurodollar deposits for
each Interest Period in the amount of the LIBOR Rate Loans.
2.14 Capital Requirements. If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law, rule, regulation
or guideline regarding capital requirements for banks or bank holding
companies, or any change in the interpretation or application thereof by
any Governmental Authority charged with the administration thereof, or (ii)
compliance by such Lender or its parent bank holding company with any
guideline, request or directive of any such entity regarding capital
adequacy (whether or not having the force of law), will have the effect of
reducing the return on such Lender's or such holding company's capital as a
consequence of such Lender's Commitments hereunder to a level below that
which such Lender or such holding company could have achieved but for such
adoption, change, or compliance (taking into consideration such Lender's or
such holding company's then existing policies with respect to capital
adequacy and assuming the full utilization of such entity's capital)
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by any amount deemed by such Lender to be material, then such Lender may
notify Administrative Borrower and Agent thereof. Following receipt of such
notice, Borrowers agree to pay such Lender on demand the amount of such
reduction of return of capital as and when such reduction is determined,
payable within 90 days after presentation by such Lender of a statement in
the amount and setting forth in reasonable detail such Lender's calculation
thereof and the assumptions upon which such calculation was based (which
statement shall be deemed true and correct absent manifest error). In
determining such amount, such Lender may use any reasonable averaging and
attribution methods.
2.15 Joint and Several Liability of Borrowers.
(a) Each Borrower is accepting joint and several liability hereunder and
under the other Loan Documents in consideration of the financial accommodations
to be provided by the Agent and the Lenders under this Agreement, for the mutual
benefit, directly and indirectly, of each Borrower and in consideration of the
undertakings of the other Borrowers to accept joint and several liability for
the Revolver Obligations and the Term Loan Obligations.
(b) Each Borrower, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Borrowers, with respect to the payment and
performance of all of the Revolver Obligations and the Term Loan Obligations
(including, without limitation, any Obligations arising under this Section
2.15), it being the intention of the parties hereto that all the Obligations
shall be the joint and several obligations of each Person composing Borrowers
without preferences or distinction among them.
(c) If and to the extent that any of Borrowers shall fail to make any
payment with respect to any of the Obligations as and when due or to perform any
of the Obligations in accordance with the terms thereof, then in each such event
the other Persons composing Borrowers will make such payment with respect to, or
perform, such Obligation.
(d) The Obligations of each Person composing Borrowers under the provisions
of this Section 2.15 constitute the absolute and unconditional, full recourse
Obligations of each Person composing Borrowers enforceable against each such
Borrower to the full extent of its properties and assets, irrespective of the
validity, regularity or enforceability of this Agreement or any other
circumstances whatsoever.
(e) Except as otherwise expressly provided in this Agreement, each Person
composing Borrowers hereby waives notice of acceptance of its joint and several
liability, notice of any Advances or Letters of Credit issued under or pursuant
to this Agreement, notice of the occurrence of any Default, Event of Default, or
of any demand for any payment under this Agreement, notice of any action at any
time taken or omitted by Agent or Lenders under or in respect of any of the
Obligations, any requirement of diligence or to mitigate damages and, generally,
to the extent permitted by applicable law, all demands, notices and other
formalities of every kind in connection with this Agreement (except as otherwise
provided in this Agreement). Each Person composing Borrowers hereby assents to,
and waives notice of, any extension or postponement of the time for the payment
of any of the Obligations, the acceptance of any payment of any of the
Obligations, the acceptance of any partial payment thereon, any waiver, consent
or other action or acquiescence by Agent or Lenders at any time or times in
respect of any default by any other Person composing Borrowers in the
performance or satisfaction of any term, covenant, condition or provision of
this Agreement, any and all other indulgences whatsoever by Agent or Lenders in
respect of any of the Obligations, and the taking, addition, substitution or
release, in whole or in part, at any time or times, of any security for any of
the Obligations or the addition, substitution or release, in whole or in part,
of any Person composing Borrowers. Without limiting the generality of the
foregoing, each Borrower assents to any
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other action or delay in acting or failure to act on the part of any Agent or
Lender with respect to the failure by any Person composing Borrowers to comply
with any of its respective Obligations, including, without limitation, any
failure strictly or diligently to assert any right or to pursue any remedy or to
comply fully with applicable laws or regulations thereunder, which might, but
for the provisions of this Section 2.15 afford grounds for terminating,
discharging or relieving any Person composing Borrowers, in whole or in part,
from any of its Obligations under this Section 2.15, it being the intention of
each Person composing Borrowers that, so long as any of the Obligations
hereunder remain unsatisfied, the Obligations of such Person composing Borrowers
under this Section 2.15 shall not be discharged except by performance and then
only to the extent of such performance. The Obligations of each Person composing
Borrowers under this Section 2.15 shall not be diminished or rendered
unenforceable by any winding up, reorganization, arrangement, liquidation,
reconstruction or similar proceeding with respect to any Person composing
Borrowers or any Agent or Lender. The joint and several liability of the Persons
composing Borrowers hereunder shall continue in full force and effect
notwithstanding any absorption, merger, amalgamation or any other change
whatsoever in the name, constitution or place of formation of any of the Persons
composing Borrowers or any Agent or Lender.
(f) Each Person composing Borrowers represents and warrants to Agent and
Lenders that such Borrower is currently informed of the financial condition of
Borrowers and of all other circumstances which a diligent inquiry would reveal
and which bear upon the risk of nonpayment of the Obligations. Each Person
composing Borrowers further represents and warrants to Agent and Lenders that
such Borrower has read and understands the terms and conditions of the Loan
Documents. Each Person composing Borrowers hereby covenants that such Borrower
will continue to keep informed of Borrowers' financial condition, the financial
condition of other guarantors, if any, and of all other circumstances which bear
upon the risk of nonpayment or nonperformance of the Obligations.
(g) Each of the Persons composing Borrowers waives all rights and defenses
arising out of an election of remedies by the Agent or any Lender, even though
that election of remedies, such as a nonjudicial foreclosure with respect to
security for a guaranteed obligation, has destroyed the Agent's or such Lender's
rights of subrogation and reimbursement against such Borrower by the operation
of Section 580(d) of the California Code of Civil Procedure or otherwise.
(h) Each of the Persons composing Borrowers waives all rights and defenses
that such Borrower may have because the Obligations are secured by Real
Property. This means, among other things:
(i) Agent and Lenders may collect from such Borrower without first
foreclosing on any Real or Personal Property Collateral pledged by
Borrowers.
(ii) If Agent or any Lender forecloses on any Real Property Collateral
pledged by Borrowers:
A. The amount of the Obligations may be reduced only by the price
for which that collateral is sold at the foreclosure sale, even if the
collateral is worth more than the sale price.
B. Agent and Lenders may collect from such Borrower even if Agent
or Lenders, by foreclosing on the Real Property Collateral, has
destroyed any right such Borrower may have to collect from the other
Borrowers.
This is an unconditional and irrevocable waiver of any rights and defenses such
Borrower may have because the Obligations are secured by Real Property. These
rights and defenses include, but are not
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limited to, any rights or defenses based upon Section 580a, 580b, 580d or 726 of
the California Code of Civil Procedure.
(i) The provisions of this Section 2.15 are made for the benefit of the
Agent, the Lenders and their respective successors and assigns, and may be
enforced by it or them from time to time against any or all of the Persons
composing Borrowers as often as occasion therefor may arise and without
requirement on the part of any such Agent, Lender, successor or assign first to
marshal any of its or their claims or to exercise any of its or their rights
against any of the other Persons composing Borrowers or to exhaust any remedies
available to it or them against any of the other Persons composing Borrowers or
to resort to any other source or means of obtaining payment of any of the
Obligations hereunder or to elect any other remedy. The provisions of this
Section 2.15 shall remain in effect until all of the Obligations shall have been
paid in full or otherwise fully satisfied. If at any time, any payment, or any
part thereof, made in respect of any of the Obligations, is rescinded or must
otherwise be restored or returned by any Agent or Lender upon the insolvency,
bankruptcy or reorganization of any of the Persons composing Borrowers, or
otherwise, the provisions of this Section 2.15 will forthwith be reinstated in
effect, as though such payment had not been made.
(j) Each of the Persons composing Borrowers hereby agrees that it will not
enforce any of its rights of contribution or subrogation against the other
Persons composing Borrowers with respect to any liability incurred by it
hereunder or under any of the other Loan Documents, any payments made by it to
the Agent or the Lenders with respect to any of the Obligations or any
collateral security therefor until such time as all of the Obligations have been
paid in full in cash. Any claim which any Borrower may have against any other
Borrower with respect to any payments to any Agent or Lender hereunder or under
any other Loan Documents are hereby expressly made subordinate and junior in
right of payment, without limitation as to any increases in the Obligations
arising hereunder or thereunder, to the prior payment in full in cash of the
Obligations and, in the event of any insolvency, bankruptcy, receivership,
liquidation, reorganization or other similar proceeding under the laws of any
jurisdiction relating to any Borrower, its debts or its assets, whether
voluntary or involuntary, all such Obligations shall be paid in full in cash
before any payment or distribution of any character, whether in cash, securities
or other property, shall be made to any other Borrower therefor.
(k) Each of the Persons composing Borrowers hereby agrees that, after the
occurrence and during the continuance of any Default or Event of Default, the
payment of any amounts due with respect to the indebtedness owing by any
Borrower to any other Borrower is hereby subordinated to the prior payment in
full in cash of the Obligations. Each Borrower hereby agrees that after the
occurrence and during the continuance of any Default or Event of Default, such
Borrower will not demand, xxx for or otherwise attempt to collect any
indebtedness of any other Borrower owing to such Borrower until the Obligations
shall have been paid in full in cash. If, notwithstanding the foregoing
sentence, such Borrower shall collect, enforce or receive any amounts in respect
of such indebtedness, such amounts shall be collected, enforced and received by
such Borrower as trustee for the Lender Group, and such Borrower shall deliver
any such amounts to the Agent for application to the Obligations in accordance
with Section 2.4(b).
(l) It is understood that while the amount of the Obligations for which
Borrowers have joint and several liability hereunder is not limited, if in any
action or proceeding involving any state, federal or foreign bankruptcy,
insolvency or other law affecting the rights or creditors generally, this joint
and several liability would be held or determined to be void, invalid or
unenforceable on account of the amount of the aggregate liability under this
Section 2.15, then, notwithstanding any other provision of this Section 2.15 to
the contrary, the aggregate amount of such liability shall, without any further
action of the Agent, the Lenders or any other Person, be automatically limited
and reduced to the highest amount which is valid and enforceable as determined
in such action or proceeding.
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2.16 Fixed Rate Breakage Fee. Upon any prepayment of all or any portion of
the Term B Loans (regardless of the source of such prepayment and whether
voluntary, by acceleration or otherwise), Borrowers shall pay Agent, for the
benefit of the Term B Loan Lenders, an amount (the "Fixed Rate Breakage Fee")
equal to the present value, for each successive month in the remaining term of
such prepaid Term B Loans, of (1) the yield as reported in the Federal Reserve
statistical release H.15 (519) under the caption "U.S. Government
Securities/Treasury Constant Maturities" (hereinafter "H.15 (519)") for a
Treasury Note with a term equal to that remaining on such Loan (which will be
obtained by interpolating between the yield reported on the H.15 (519) for
specific whole years) on the Closing Date less (2) the yield as reported on the
date of such prepayment in the H.15 (519) for a Treasury Note with a term equal
to that remaining on such Term B Loans (which will be obtained by interpolating
between the yield reported on the H.15 (519) for specific whole years) on the
date of such prepayment, multiplied by (a) the outstanding principal balance of
such Loan at the time of prepayment for purposes of calculating such amount for
the month during which such prepayment occurs and by (b) the principal balance
that would have been outstanding at the beginning of each successive month in
the remaining term of such Loan had the amortization schedule set forth for such
Loan been adhered to; provided, that the rate determined in (2) above will be
used as the discount rate in computing such present value. The Fixed Rate
Breakage Fee represents the Term B Loan Lenders' reinvestment loss resulting
from making a fixed rate loan.
2.17 Amendments.
(a) The Applicable LIBOR Rate Margin and Applicable Base Rate Margin for
Term A Loans shall be automatically increased on the date that any Revolver Rate
Increase takes effect by the amount of such Revolver Rate Increase and such
increase in such margins shall remain in effect for so long as such Revolver
Rate Increase remains in effect. There shall be an increase in the Applicable
LIBOR Rate Margin and Applicable Base Rate Margin for Term A Loan each time a
Revolver Rate Increase takes effect. The Term B Rate shall be automatically
increased on the date that any Revolver Rate Increase takes effect by the amount
of such Revolver Rate Increase and such increase in the Term B Rate shall remain
in effect for so long as such Revolver Rate Increase remains in effect. There
shall be an increase in the Term B Rate each time a Revolver Rate Increase takes
effect.
(b) For purposes of this Agreement, a "Revolver Rate Increase" shall mean
any increase in the rate of interest payable on the outstanding Advances under
this Agreement, but the term Revolver Rate Increase shall (i) expressly exclude
any increases resulting solely from the provisions (other than the provisions
referred to in clause (ii) below) of this Agreement as in effect on the date
hereof, including, without limitation, increases in such rate of interest
resulting solely from (x) changes in the Base Rate or the LIBOR Rate, and (y)
increases pursuant to any of Section 2.6(c), 2.6(e), 2.13, 2.14, 2.15 and 2.16
of this Agreement, but (ii) expressly include any increase pursuant to or
incurred in connection with the syndication or similar transfer of any Revolver
Commitment or Advance under this Agreement or any similar changes, whether or
not consented to by any of the Term Loan Lenders.
(c) The Borrowers shall be obligated to pay to each Term Loan Lender its
Pro Rata Share of an amount equal to the Term Lender Equivalent of each
Additional Revolver Fee paid under this Agreement, such payment to be made to
the Term Loan Lenders concurrent with, and on the same terms as, the payment of
such Additional Revolver Fee under this Agreement. For purposes of this
Agreement, an "Additional Revolver Fee " shall mean any additional or increased
fee or premium payable in respect of the Advances or Revolver Commitment that is
not required to be paid under this Agreement as in effect on the date hereof,
but the term Additional Revolver Fee shall expressly include any additional fee
or premium or increase pursuant to the syndication or similar transfer of any
Revolver Commitment or Advance under this Agreement or any similar changes,
whether or not consented to by any of the Borrowers. For purposes of this
Agreement, the "Term Lender Equivalent" of an Additional
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Revolver Fee shall mean (i) in the case of an Additional Revolver Fee which is
calculated on the basis of a number of basis points or percentage points, an
amount with respect to the outstanding principal amount of the Term Loans that
is calculated on the basis of the same number of basis points or percentage
points, and (ii) in the case of any other Additional Revolver Fee which is paid,
an amount equal to the amount of such Additional Revolver Fee multiplied by a
fraction, the numerator of which is the aggregate outstanding principal balance
of the Term Loans, and the denominator of which is the outstanding aggregate
principal balance of the Notes and the Term Loans.
(d) The Applicable LIBOR Rate Margin and Applicable Base Rate Margin for
Advances and Letter of Credit Fees shall be automatically increased on the date
that any increase in the interest rates or margins applicable to the Notes or
the Term Loans takes effect by the amount of such increase and such increase in
such margins shall remain in effect for so long as such increase remains in
effect but such increases shall expressly exclude any increases resulting solely
from the provisions of this Agreement as in effect on the date hereof,
including, without limitation, increases in such rate of interest resulting
solely from (x) changes in the Base Rate or the LIBOR Rate, and (y) increases
pursuant to any of Section 2.6(c), 2.6(e), 2.13, 2.14, 2.15 and 2.16 of this
Agreement. There shall be an increase in the Applicable LIBOR Rate Margin and
Applicable Base Rate Margin for Advances and Letter of Credit Fees each time an
increase in the interest rates or margins applicable to the Notes or the Term
Loans takes effect.
(e) The Borrowers shall be obligated to pay to each Revolver Lenders its
Pro Rata Share of an amount equal to the Revolver Equivalent of each Additional
Fee paid in respect of the Term Loans or the Notes, such payment to be made to
the Revolver Lenders concurrent with, and on the same terms as, the payment of
such Additional Fee. For purposes of this Agreement, an "Additional Fee" shall
mean any additional or increased fee or premium payable in respect of the Term
Loans or the Notes that is not required to be paid under this Agreement or the
Note Agreement, as applicable, as in effect on the date hereof. For purposes of
this Agreement, the "Revolver Equivalent" of an Additional Fee shall mean (i) in
the case of an Additional Fee which is calculated on the basis of a number of
basis points or percentage points, an amount with respect to the outstanding
principal amount of the Advances that is calculated on the basis of the same
number of basis points or percentages points, and (ii) in the case of any other
Additional Fee which is paid, an amount equal to the amount of such Additional
Fee multiplied by a fraction, the numerator of which is the aggregate
outstanding principal balance of the Advances, and the denominator of which is
the outstanding aggregate principal balance of the Advances and the Term Loans
or the Notes, as applicable.
(f) The Administrative Borrower shall give the Term Loan Lenders prompt
notice of any Revolver Rate Increase or Additional Revolver Fee and give the
Revolver Lenders prompt notices of any increase in the interest rates or margins
applicable to the Term Loans or the Notes or any Additional Fee.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to the Initial Extension of Credit. The obligation
of the Lender Group (or any member thereof) to make the initial Advance (or
otherwise to extend any initial credit provided for hereunder, including by
converting such Lender's Existing Bank Loans to Loans hereunder), is subject to
the fulfillment, to the satisfaction of Agent, of each of the conditions
precedent set forth below:
(a) Agent shall have received (i) the UCC Filing Authorization Letter duly
executed by each Loan Party (as applicable), (ii) satisfactory evidence of the
filing of all (A) UCC and PPSA financing statements with respect to the first
priority Lien created hereunder and (B) UCC and PPSA financing statements with
respect to the second priority Lien created hereunder, in each case in such
office or offices as may be necessary or, in the opinion of Agent, desirable to
perfect the security interests purported to be created by each applicable Loan
Document, and (iii) the results of its UCC,
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PPSA, judgment and tax lien searches, which searches shall not have revealed any
Liens on the assets or properties of the Loan Parties other than Permitted Liens
and Liens to be terminated on the Closing Date;
(b) Agent shall have received each of the following documents, in form and
substance satisfactory to Agent and Lenders, duly executed, and each such
document shall be in full force and effect:
(i) promissory notes evidencing a Lender's Commitments,
(ii) the Contribution Agreement,
(iii) the Copyright Security Agreement,
(iv) the Disbursement Letter,
(v) each Guaranty,
(vi) the Mortgages,
(vii) the Patent Security Agreement,
(viii) the Warrant Agreement and the Warrants in favor of the Term
Loan Lenders,
(ix) UCC termination statements and other documentation evidencing the
termination by Existing Agent of its Liens in and to and control over the
properties and assets of the Loan Parties,
(x) the Pledge Agreement, together with (A) all certificates
representing the shares of Stock pledged thereunder, as well as Stock
powers with respect thereto endorsed in blank and (B) all promissory notes
pledged thereunder, as well as allonges thereto or other appropriate
transfer certificates endorsed in blank,
(xi) the Canadian Documents, together with (A) all certificates
representing the shares of Stock pledged thereunder, as well as Stock
powers with respect thereto endorsed in blank and (B) all promissory notes
pledged thereunder, as well as allonges thereto or other appropriate
transfer certificates endorsed in blank,
(xii) the Trademark Security Agreement, and
(xiii) the Intercompany Subordination Agreement;
(c) Agent shall have received a certificate from the Secretary of each
Borrower attesting to the resolutions of such Borrower's Board of Directors
authorizing its execution, delivery, and performance of this Agreement and the
other Loan Documents to which such Borrower is a party and authorizing specific
officers of such Borrower to execute the same;
(d) Agent shall have received copies of each Borrower's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of such Borrower;
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(e) Agent shall have received a certificate of status with respect to each
Borrower, dated within 10 days of the Closing Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of such
Borrower, which certificate shall indicate that such Borrower is in good
standing in such jurisdiction;
(f) Agent shall have received certificates of status with respect to each
Borrower, each dated within 30 days of the Closing Date, such certificates to be
issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of such Borrower) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Borrower is in good standing in such
jurisdictions;
(g) Agent shall have received a certificate from the Secretary of each
Guarantor attesting to the resolutions of such Guarantor's Board of Directors
authorizing its execution, delivery, and performance of the Loan Documents to
which such Guarantor is a party and authorizing specific officers of such
Guarantor to execute the same;
(h) Agent shall have received copies of each Guarantor's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of such Guarantor;
(i) Agent shall have received a certificate of status with respect to each
Guarantor, dated within 10 days of the Closing Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of such
Guarantor, which certificate shall indicate that such Guarantor is in good
standing in such jurisdiction;
(j) Agent shall have received certificates of status with respect to each
Guarantor, each dated within 30 days of the Closing Date, such certificates to
be issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of such Guarantor) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Guarantor is in good standing in such
jurisdictions;
(k) Agent shall have received a certificate of insurance, together with the
endorsements thereto, as are required by Section 6.7, the form and substance of
which shall be satisfactory to Agent;
(l) Agent shall have received Collateral Access Agreements with respect to
the Leased Real Property used in the manufacturing, warehousing or distribution
operations of the Loan Parties, and the Agent may establish in reserve against
the Borrowing Base for any such Leased Real Property with respect to which the
Agent has not received a Collateral Access Agreement;
(m) Agent shall have received opinions of Loan Parties' counsel in form and
substance satisfactory to Agent;
(n) Agent shall have received satisfactory evidence (including a
certificate of the chief financial officer of Parent) that all tax returns
required to be filed by the Loan Parties have been timely filed and all taxes
upon the Loan Parties or their properties, assets, income, and franchises
(including Real Property taxes and payroll taxes) have been paid prior to
delinquency, except such taxes that are the subject of a Permitted Protest;
(o) Borrowers shall have paid all fees and expenses required to be paid by
the Borrowers on the Closing Date under this Agreement, the Fee Letter and the
other Loan Documents, including without limitation a closing fee to each Term
Loan Lender equal to 1.0% times each of its Term A Loan Commitment and its Term
B Loan Commitment;
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(p) Borrowers shall pay all Lender Group Expenses incurred in connection
with the transactions evidenced by this Agreement;
(q) Agent shall have received (i) mortgagee title insurance policies (or
marked commitments to issue the same) for the Real Property listed on Schedule
R-1 issued by a title insurance company satisfactory to Agent (each a "Mortgage
Policy" and, collectively, the "Mortgage Policies") in amounts satisfactory to
Agent assuring Agent that the Mortgages on such Real Property Collateral are
valid and enforceable first priority mortgage Liens (or, in the case of the Term
Loan Obligation, a second priority mortgage Lien) on such Real Property
Collateral free and clear of all defects and encumbrances except Permitted
Liens, and the Mortgage Policies otherwise shall be in form and substance
satisfactory to Agent;
(r) the Agent shall have received any existing surveys of the Real Property
Collateral to the extent such surveys are available on the Closing Date;
(s) the Loan Parties shall have received all licenses, approvals or
evidence of other actions required by any Governmental Authority in connection
with the execution and delivery by Borrowers of this Agreement or any other Loan
Document or with the consummation of the transactions contemplated hereby and
thereby;
(t) Agent shall have received a certificate from an Authorized Person
certifying (i) as to (A) the truth and accuracy of the representations and
warranties of the Loan Parties contained in Section 5 and (B) the absence of any
Defaults or Events of Default, (ii) that after giving effect to the incurrence
of Indebtedness under this Agreement and the issuance of the Notes, the Loan
Parties, taken as a whole, are Solvent and (iii) as to a true and complete copy
of the Inventory Divestiture Plan attached thereto;
(u) if so requested by Agent, Magneti SpA shall have executed an agreement
in favor of Agent acknowledging Agent's Lien on any royalty payments payable to
any Loan Party under the Fiat Magneti Agreements and Agent's right to receive
such payments directly after the occurrence and during the continuance of an
Event of Default;
(v) there shall exist no claim, action, suit, investigation, litigation or
proceeding, pending or threatened in any court or before any arbitrator or
governmental instrumentality which relates to this Agreement or the transactions
contemplated hereby or which, in the opinion of Lender Group, has any reasonable
likelihood of having a Material Adverse Effect;
(w) Agent shall have received satisfactory evidence of the refinancing of
all amounts owing under, and the termination of, the Existing Note Agreement and
the Existing Notes;
(x) Borrowers shall have paid to the Existing Lenders all accrued and
unpaid interest and fees owing under the Existing Credit Agreement; and
(y) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Agent.
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3.2 Conditions Precedent to all Extensions of Credit. The obligation of the
Revolver Lenders to make any Advance (or to extend any other credit hereunder),
or of Issuing Lender to issue, amend, renew or extend any Letter of Credit,
shall be subject to the following conditions precedent (which conditions may be
waived in the sole discretion of the Required Revolver Lenders):
(a) the representations and warranties contained in this Agreement and the
other Loan Documents shall be true and correct in all material respects on and
as of the date of such extension of credit, as though made on and as of such
date (except to the extent that such representations and warranties relate
solely to an earlier date);
(b) no Default or Event of Default shall have occurred and be continuing on
the date of such extension of credit, nor shall either result from the making
thereof;
(c) no injunction, writ, restraining order, or other order of any nature
prohibiting, directly or indirectly, the extending of such credit shall have
been issued and remain in force by any Governmental Authority against any Loan
Party, Agent, any Lender, or any of their Affiliates; and
(d) no Material Adverse Change shall have occurred.
3.3 Term. This Agreement shall become effective upon the execution and
delivery hereof by Borrowers, Agent, and the Lenders and shall continue in full
force and effect for a term ending on October 3, 2004 (the "Maturity Date").
3.4 Effect of Termination. On the date of termination of this Agreement,
all Obligations (including contingent reimbursement obligations of Borrowers
with respect to any outstanding Letters of Credit and including all Bank Product
Obligations) immediately shall become due and payable without notice or demand
(including (a) either (i) providing cash collateral (or a replacement letter of
credit acceptable to Agent) to be held by Agent for the benefit of those Lenders
with a Revolver Commitment in an amount equal to 105% of the then extant Letter
of Credit Usage, or (ii) causing the original Letters of Credit to be returned
to the Issuing Lender and (b) providing cash collateral to be held by Agent for
the benefit of Bank One or its Affiliates with respect to the then extant Bank
Products Obligations which are due and payable at such time). No termination of
this Agreement, however, shall relieve or discharge Borrowers of their duties,
Obligations, or covenants hereunder and the Agent's Liens in the Collateral
shall remain in effect until all Obligations have been fully and finally
discharged and the Lender Group's obligations to provide additional credit
hereunder have been terminated. When this Agreement has been terminated and all
of the Obligations have been fully and finally discharged and the Lender Group's
obligations to provide additional credit under the Loan Documents have been
terminated irrevocably, Agent will, at Borrowers' sole expense, execute and
deliver any UCC or PPSA termination statements, lien releases, mortgage
releases, re-assignments of trademarks, discharges of security interests, and
other similar discharge or release documents (and, if applicable, in recordable
form) as are reasonably necessary to release, as of record, the Agent's Liens
and all notices of security interests and liens previously filed by Agent with
respect to the Obligations.
3.5 Early Termination by Borrowers. Borrowers have the option, at any time
upon 30 days prior written notice by Administrative Borrower to Agent, to
terminate this Agreement by paying to Agent, for the benefit of the Lender
Group, in cash, the Obligations (including (a) either (i) providing cash
collateral (or a replacement letter of credit acceptable to Agent) to be held by
Agent for the benefit of those Lenders with a Revolver Commitment in an amount
equal to 105% of the then extant Letter of Credit Usage, or (ii) causing the
original Letters of Credit to be returned to the Issuing Lender, and (b)
providing cash collateral to be held by Agent for the benefit of Bank One or its
Affiliates with respect to the then extant Bank Product Obligations), in full.
If Administrative Borrower has sent a notice of
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termination pursuant to the provisions of this Section, then the Commitments
shall terminate and Borrowers shall be obligated to repay the Obligations
(including (a) either (i) providing cash collateral to be held by Agent for the
benefit of those Lenders with a Revolver Commitment in an amount equal to 105%
of the then extant Letter of Credit Usage, or (ii) causing the original Letters
of Credit to be returned to the Issuing Lender, and (b) providing cash
collateral to be held by Agent for the benefit of Bank One or its Affiliates
with respect to the then extant Bank Product Obligations), in full in cash, on
the date set forth as the date of termination of this Agreement in such notice.
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest.
(a) Each Loan Party other than Parent and the Canadian Guarantors (it being
agreed that, solely for the purpose of this Section 4, the Loan Parties shall
not include the Parent and the Canadian Guarantors) hereby grants to Agent, for
the benefit of the Revolver Lenders, a continuing first priority security
interest in all of its right, title, and interest in all currently existing and
hereafter acquired or arising Personal Property Collateral in order to secure
prompt repayment of any and all of the Revolver Obligations and the Guaranteed
Revolver Obligations in accordance with the terms and conditions of the Loan
Documents and in order to secure prompt performance by the Loan Parties of each
of their covenants and duties under the Loan Documents.
(b) Each Loan Party hereby grants to Agent, for the benefit of the Term
Loan Lenders, a continuing second priority security interest in all of its
right, title, and interest in all currently existing and hereafter acquired or
arising Personal Property Collateral in order to secure prompt repayment of any
and all of the Term Loan Obligations and the Guaranteed Term Loan Obligations in
accordance with the terms and conditions of the Loan Documents and in order to
secure prompt performance by the Loan Parties of each of their covenants and
duties under the Loan Documents.
(c) The Agent's Liens in and to the Personal Property Collateral shall
attach to all Personal Property Collateral without further act on the part of
Agent or the Loan Parties. Anything contained in this Agreement or any other
Loan Document to the contrary notwithstanding, except for Permitted
Dispositions, the Loan Parties have no authority, express or implied, to dispose
of any item or portion of the Collateral.
4.2 Negotiable Collateral. In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, and if and to
the extent that perfection or priority of Agent's security interest is dependent
on or enhanced by possession, the applicable Loan Party, immediately upon the
request of Agent, shall endorse and deliver physical possession of such
Negotiable Collateral to Agent.
4.3 Collection of Accounts and General Intangibles. Agent or Agent's
designee may (a) at any time after the occurrence and during the continuation of
an Event of Default (or at any time if required by the laws of the jurisdiction
in which the Account Debtor is located in order for Agent to perfect its Lien in
such collateral) notify Account Debtors of the Loan Parties that the Accounts,
chattel paper, or General Intangibles have been assigned to Agent or that Agent
has a security interest therein, (b) contact Account Debtors for the purpose of
verifying the balances of Accounts owing by such Account Debtors, or (c) at any
time after the occurrence and during the continuation of an Event of Default,
collect the Accounts, chattel paper, or General Intangibles directly and charge
the collection costs and expenses to the Loan Account. Each Loan Party agrees
that it will hold in trust for the Lender Group, as the Lender Group's trustee,
any Collections that it receives and immediately deliver such Collections to
Agent or a Cash Management Bank in their original form as received by the
applicable Loan Party.
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4.4 Filing of Financing Statements; Commercial Tort Claims, Etc.
(a) Each Loan Party authorizes Agent to file any financing statement
required hereunder, and any continuation statement or amendment with respect
thereto, in any appropriate filing office without the signature of such Loan
Party where permitted by applicable law. Each Loan Party hereby ratifies the
filing of any financing statement, and any continuation statement or amendment
with respect thereto, filed without the signature of such Loan Party prior to
the date hereof.
(b) If any Loan Party acquires any commercial tort claims after the date
hereof, such Loan Party shall immediately deliver to Agent a written description
of such commercial tort claim and shall deliver one or more written agreements,
in form and substance satisfactory to Agent, pursuant to which such Loan Party
shall pledge and collaterally assign all of its right, title and interest in and
to such commercial tort claim to Agent for the benefit of Agent and the Revolver
Lenders as security for the Revolver Obligations and the Guaranteed Revolver
Obligations and for the benefit of Agent and the Term Loan Lenders as security
for the Term Loan Obligations and the Guaranteed Term Loan Obligations (a
"Commercial Tort Claim Assignment").
(c) At any time upon the request of Agent, any Loan Party shall execute and
deliver to Agent, any and all financing statements, original financing
statements in lieu of continuation statements, amendments to financing
statements, fixture filings, security agreements, pledges, assignments,
Commercial Tort Claim Assignments, endorsements of certificates of title, and
all other documents (the "Additional Documents") that Agent may request in its
Permitted Discretion, in form and substance satisfactory to Agent, to perfect
and continue perfected or better perfect the Agent's Liens in the Collateral
(whether now owned or hereafter arising or acquired), and in order to fully
consummate all of the transactions contemplated hereby and under the other Loan
Documents.
(d) At any time upon the request of Agent, the Loan Parties shall execute
and deliver to Agent, any and all Additional Documents that Agent may request in
its Permitted Discretion, in form and substance satisfactory to Agent, to create
and perfect and continue perfected or better perfect the Agent's Liens in the
Collateral (whether now owned or hereafter arising or acquired, tangible or
intangible, real or personal), to create and perfect Liens in favor of Agent in
any Real Property acquired after the Closing Date, and in order to fully
consummate all of the transactions contemplated hereby and under the other Loan
Documents, including any Mortgages. To the maximum extent permitted by
applicable law, each Loan Party authorizes Agent to execute any such Additional
Documents in the applicable Loan Party's name and authorizes Agent to file such
executed Additional Documents in any appropriate filing office. To the maximum
extent permitted by applicable law, each Loan Party authorizes the filing of any
such Additional Documents without the signature of such Loan Party in any
appropriate filing office. In addition, on such periodic basis as Agent shall
require, each Loan Party shall (i) provide Agent with a report of all new
patentable, copyrightable, or trademarkable materials acquired or generated by
such Loan Party during the prior period, (ii) cause all patents, copyrights, and
trademarks acquired or generated by such Loan Party that are not already the
subject of a registration with the appropriate filing office (or an application
therefor diligently prosecuted) to be registered with such appropriate filing
office in a manner sufficient to impart constructive notice of such Loan Party
ownership thereof, and (iii) cause to be prepared, executed, and delivered to
Agent supplemental schedules to the applicable Loan Documents to identify such
patents, copyrights, and trademarks as being subject to the security interests
created thereunder.
4.5 Power of Attorney. Each Loan Party hereby irrevocably makes,
constitutes, and appoints Agent (and any of Agent's officers, employees, or
agents designated by Agent) as such Loan Party's true and lawful attorney, with
power to (a) if such Loan Party refuses to, or fails timely to execute and
deliver any of the documents described in Section 4.4, sign the name of such
Loan Party on any of the
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documents described in Section 4.4, (b) at any time that an Event of Default has
occurred and is continuing, sign such Loan Party's name on any invoice or xxxx
of lading relating to the Collateral, drafts against Account Debtors, or notices
to Account Debtors, (c) send requests for verification of Accounts, (d) endorse
such Loan Party's name on any Collection item that may come into the Lender
Group's possession, (e) at any time that an Event of Default has occurred and is
continuing, make, settle, and adjust all claims under such Loan Party's policies
of insurance (including, without limitation, any insurance policies obtained for
the benefit of a Loan Party by a franchisee thereof) and make all determinations
and decisions with respect to such policies of insurance, and (f) at any time
that an Event of Default has occurred and is continuing, settle and adjust
disputes and claims respecting the Accounts, chattel paper, or General
Intangibles directly with Account Debtors, for amounts and upon terms that Agent
determines to be reasonable, and Agent may cause to be executed and delivered
any documents and releases that Agent determines to be necessary. The
appointment of Agent as each Borrower's attorney, and each and every one of its
rights and powers, being coupled with an interest, is irrevocable until all of
the Obligations have been fully and finally repaid and performed and the Lender
Group's obligations to extend credit hereunder are terminated.
4.6 Right to Inspect. Agent and each Lender (through any of their
respective officers, employees, or agents) shall have the right, from time to
time hereafter (subject to the limitations in this Agreement) to inspect the
Books and to check, test, and appraise the Collateral in order to verify the
financial condition or the amount, quality, value, condition of, or any other
matter relating to, the Collateral.
4.7 Control Agreements. Each Loan Party agrees that it will not transfer
assets out of any Securities Accounts other than as permitted under Section 7.19
and, if to another securities intermediary, unless such Loan Party, Agent, and
the substitute securities intermediary have entered into a Control Agreement.
Each Loan Party hereby agrees to take any and all action that Agent requests in
order for Agent to obtain control in accordance with Sections 9-104, 9-105,
9-106 and 9-107 of the Code with respect to any Securities Accounts, DDA's,
chattel paper, Investment Property and letter-of-credit rights. No arrangement
contemplated hereby or by any Control Agreement in respect of any Securities
Accounts or other Investment Property or any DDA, electronic chattel paper or
letter-of-credit rights shall be modified by any Loan Party without the prior
written consent of Agent. Upon the occurrence and during the continuance of a
Default or Event of Default, Agent may notify any securities intermediary to
liquidate the applicable Securities Account or any related Investment Property
maintained or held thereby and remit the proceeds thereof to the Agent's
Account.
4.8 License. Agent is hereby granted a license or other right to use,
following the occurrence and during the continuance of an Event of Default,
without charge, each Loan Party's labels, patents, copyrights, rights of use of
any name, trade secrets, trade names, trademarks, service marks, customer lists
and advertising matter, or any property of a similar nature, as it pertains to
the Collateral, in completing production of, advertising for sale, and selling
any Collateral, and, following the occurrence and during the continuance of an
Event of Default, each Loan Party's rights under all licenses and all franchise
agreements shall inure to Agent's benefit. In addition, each Debtor hereby
irrevocably agrees that Agent may, following the occurrence and during the
continuance of an Event of Default, sell any of such Loan Party's Inventory
directly to any Person, including without limitation Persons who have previously
purchased such Loan Party's Inventory from such Loan Party and in connection
with any such sale or other enforcement of Agent's rights under this Agreement,
may sell Inventory which bears any trademark owned by or licensed to such Loan
Party and any Inventory that is covered by any copyright owned by or licensed to
such Loan Party and Agent may finish any work in process and affix any trademark
owned by or licensed to such Loan Party and sell such Inventory as provided
herein. This right and license shall inure to the benefit of all successors,
assigns and transferees of Agent, whether by voluntary conveyance, operation of
law, assignment, transfer, foreclosure, deed in lieu of foreclosure or
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otherwise. Such right and license is granted free of charge and does not require
the consent of any other Person. Each Loan Party represents and warrants that
there are no restrictions on Agent's ability and no other license, consent or
approval of any Person or Governmental Authority is required for Agent, to sell
or dispose of any Inventory or other Collateral.
4.9 Intellectual Property.
(a) Each Loan Party (either itself or through licensees) will (i) continue
to maintain each trademark (or trademark registration) material to its business
in full force and effect free from any claim of abandonment for non-use, (ii)
maintain as in the past the quality of products and services offered under such
trademark (or trademark registration), (iii) use such trademark (or trademark
registration) with the appropriate notice of registration and all other notices
and legends required by applicable law, and (iv) not (and not permit any
licensee or sublicensee thereof to) do any act or knowingly omit to do any act
whereby such trademark (or trademark registration) may become invalidated or
impaired in any way.
(b) No Loan Party (either itself or through licensees) will do any act, or
omit to do any act, whereby any material patent (or patent registration) may
become forfeited, abandoned or dedicated to the public.
(c) Each Loan Party (either itself or through licensees) (i) will employ
each material copyright (or copyright registration) and (ii) will not (and will
not permit any licensee or sublicensee thereof to) do any act or knowingly omit
to do any act whereby any material copyrights (or copyright registrations) may
become invalidated or otherwise impaired. No Loan Party will (either itself or
through licensees) do any act whereby any material copyrights (or copyright
registrations) may fall into the public domain.
(d) No Loan Party (either itself or through licensees) will do any act that
knowingly uses any material intellectual property to infringe the intellectual
property rights of any other Person.
(e) Each Loan Party will notify Agent immediately if it knows, or has
reason to know, that any application or registration relating to any material
intellectual property may become forfeited, abandoned or dedicated to the
public, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, the United States Copyright
Office or any court or tribunal in any country) regarding, such Loan Party's
ownership of, or the validity of, any material intellectual property or such
Loan Party's right to register the same or to own and maintain the same.
(f) Whenever any Loan Party, either by itself or through any agent,
employee, licensee or designee, shall file an application for the registration
of any intellectual property with the United States Patent and Trademark Office,
the United States Copyright Office or any similar office or agency in any other
country or any political subdivision thereof, such Loan Party shall report such
filing to Agent and update Schedule 5.16. Upon the request of Agent, such Loan
Party shall execute and deliver, and have recorded, any and all agreements,
instruments, documents, and papers as Agent may request to evidence Agent's Lien
in any copyright, patent or trademark and the goodwill and general intangibles
of such Loan Party relating thereto or represented thereby.
(g) Such Loan Party will take all reasonable and necessary steps to
maintain and pursue each application (and to obtain the relevant registration)
and to maintain each registration of all material intellectual property owned by
it.
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(h) In the event that any material intellectual property is infringed upon
or misappropriated or diluted by a third party, such Loan Party shall (i) take
such actions Agent shall reasonably deem appropriate under the circumstances to
protect such intellectual property and (ii) if such intellectual property is of
economic value, xxx for infringement, misappropriation or dilution, to seek
injunctive relief where appropriate and to recover any and all damages for such
infringement, misappropriation or dilution.
4.10 Further Assurances. Each Loan Party shall cause all of its properties
to be subject to the Agent's Liens and take all actions and execute all
documents requested by Agent to grant, perfect and/or maintain such Liens,
including, without limitation, the execution and delivery of Mortgages in
respect of Real Property acquired after the Closing Date. Each Loan Party
covenants and agrees that it will notify Agent not less than thirty (30) days
prior to acquiring in fee after the Closing Date any Real Property.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement, each Loan
Party makes the following representations and warranties to the Lender Group
which shall be true, correct, and complete, in all material respects, as of the
date hereof, and shall be true, correct, and complete, in all material respects,
as of the Closing Date, and at and as of the date of the making of each Advance
(or other extension of credit) made thereafter, as though made on and as of the
date of such Advance (or other extension of credit) (except to the extent that
such representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:
5.1 No Encumbrances. Each Loan Party has good and indefeasible title to its
Collateral and the Real Property, free and clear of Liens except for Permitted
Liens.
5.2 Eligible Accounts. The Eligible Accounts are bona fide existing payment
obligations of Account Debtors created by the sale and delivery of Inventory to
such Account Debtors in the ordinary course of an Eligible Loan Party's
business. As to each Account that is identified by Administrative Borrower as an
Eligible Account in a borrowing base report submitted to Agent, such Account is
an Eligible Account and is otherwise not excluded as ineligible by virtue of one
or more of the excluding criteria set forth in the definition of Eligible
Accounts.
5.3 Eligible Inventory. All Eligible Inventory is of good and merchantable
quality, free from material defects. As to each item of Inventory that is
identified by Administrative Borrower as Eligible Inventory in a borrowing base
report submitted to Agent, such Inventory is Eligible Inventory and is otherwise
not excluded as ineligible by virtue of one or more of the excluding criteria
set forth in the definition of Eligible Inventory.
5.4 Equipment. Except as set forth on Schedule 5.4, all of the Equipment is
used or held for use in Loan Parties' business and is fit for such purposes.
5.5 Location of Inventory and Equipment. The Inventory and Equipment are
located only at the locations identified on Schedule 5.5 (as updated in
accordance with Section 6.9) and such Schedule identifies whether such Inventory
and Equipment is stored with a bailee, warehouseman or similar party.
5.6 Inventory Records. Each Loan Party keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its Inventory and
the book value thereof.
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5.7 Location of Chief Executive Office; FEIN.
(a) The chief executive office of each Loan Party is located at the address
indicated in Schedule 5.7.
(b) Each Loan Party's FEIN and organizational identification number (if
any) is identified in Schedule 5.7.
(c) None of the Loan Parties holds any commercial tort claims as of the
date hereof, except as identified in Schedule 5.7.
5.8 Due Organization and Qualification; Subsidiaries.
(a) Each Loan Party is duly organized and existing and in good standing
under the laws of the jurisdiction of its organization and qualified to do
business in any state or province where the failure to be so qualified
reasonably could be expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.8(b) is a complete and accurate description of
the authorized capital Stock of each Loan Party, by class, and, as of the
Closing Date, a description of the number of shares of each such class that are
issued and outstanding. Other than as described on Schedule 5.8(b) or as
otherwise permitted under this Agreement, there are no subscriptions, options,
warrants, or calls relating to any shares of each Loan Party's capital Stock,
including any right of conversion or exchange under any outstanding security or
other instrument. No Loan Party is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its
capital Stock or any security convertible into or exchangeable for any of its
capital Stock.
(c) Set forth on Schedule 5.8(c) is a complete and accurate list of each
Loan Party's direct and indirect Subsidiaries, showing: (i) the jurisdiction of
their organization; (ii) the number of shares of each class of common and
preferred Stock authorized for each of such Subsidiaries; and (iii) the number
and the percentage of the outstanding shares of each such class owned directly
or indirectly by the applicable Loan Party. All of the outstanding capital Stock
of each such Subsidiary has been validly issued and is fully paid and
non-assessable.
(d) Except as set forth on Schedule 5.8(c), there are no subscriptions,
options, warrants, or calls relating to any shares of any Loan Party's
Subsidiaries' capital Stock, including any right of conversion or exchange under
any outstanding security or other instrument. No Loan Party or any of its
respective Subsidiaries is subject to any obligation (contingent or otherwise)
to repurchase or otherwise acquire or retire any shares of any Loan Party's
Subsidiaries' capital Stock or any security convertible into or exchangeable for
any such capital Stock.
5.9 Due Authorization; No Conflict.
(a) As to each Borrower, the execution, delivery, and performance by such
Borrower of this Agreement and the Loan Documents to which it is a party have
been duly authorized by all necessary action on the part of such Borrower.
(b) As to each Borrower, the execution, delivery, and performance by such
Borrower of this Agreement and the Loan Documents to which it is a party do not
and will not (i) violate any provision of federal, state, or local law or
regulation applicable to any Borrower, the Governing Documents of any Borrower,
including, without limitation, any laws, rules and regulations related to
franchising and licensing applicable to the Loan Parties and their business,
assets and properties, or any
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order, judgment, or decree of any court or other Governmental Authority binding
on any Borrower, (ii) conflict with, result in a breach of, or constitute (with
due notice or lapse of time or both) a default under any material contractual
obligation of any Borrower (including any franchise agreement), (iii) result in
or require the creation or imposition of any Lien of any nature whatsoever upon
any properties or assets of Borrower, other than Permitted Liens, or (iv)
require any approval of any Borrower's interestholders or franchisees, or any
approval or consent of any Person under any material contractual obligation of
any Borrower (including any franchise agreement).
(c) Other than the filing of financing statements, fixture filings, and
Mortgages, the execution, delivery, and performance by each Borrower of this
Agreement and the Loan Documents to which such Borrower is a party do not and
will not require any registration with, consent, or approval of, or notice to,
or other action with or by, any Governmental Authority or other Person.
(d) As to each Borrower, this Agreement and the other Loan Documents to
which such Borrower is a party, and all other documents contemplated hereby and
thereby, when executed and delivered by such Borrower will be the legally valid
and binding obligations of such Borrower, enforceable against such Borrower in
accordance with their respective terms, except as enforcement may be limited by
equitable principles or by bankruptcy, insolvency, reorganization, moratorium,
or similar laws relating to or limiting creditors' rights generally.
(e) The Agent's Liens are validly created, perfected, first priority (in
the case of the Liens securing the Revolver Obligations) and second priority (in
the case of the Liens securing the Term Loan Obligations) Liens, subject only to
Permitted Liens.
(f) The execution, delivery, and performance by each Guarantor of the Loan
Documents to which it is a party have been duly authorized by all necessary
action on the part of Guarantor.
(g) The execution, delivery, and performance by each Guarantor of the Loan
Documents to which it is a party do not and will not (i) violate any provision
of federal, provincial, state, or local law or regulation applicable to such
Guarantor, including without limitation, any laws, rules and regulations related
to franchising and licensing applicable to the Loan Parties, the Governing
Documents of such Guarantor, or any order, judgment, or decree of any court or
other Governmental Authority binding on such Guarantor, (ii) conflict with,
result in a breach of, or constitute (with due notice or lapse of time or both)
a default under any material contractual obligation of such Guarantor (including
any franchise agreement), (iii) result in or require the creation or imposition
of any Lien of any nature whatsoever upon any properties or assets of such
Guarantor, other than Permitted Liens, or (iv) require any approval of such
Guarantor's interestholders or any approval or consent of any Person under any
material contractual obligation of such Guarantor (including any franchise
agreement).
(h) The execution, delivery, and performance by each Guarantor of the Loan
Documents to which such Guarantor is a party do not and will not require any
registration with, consent, or approval of, or notice to, or other action with
or by, any Governmental Authority or other Person.
(i) The Loan Documents to which each Guarantor is a party, and all other
documents contemplated hereby and thereby, when executed and delivered by such
Guarantor will be legally valid and binding obligations of such Guarantor,
enforceable against such Guarantor in accordance with their respective terms,
except as enforcement may be limited by equitable principles or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or limiting
creditors' rights generally.
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5.10 Litigation. Other than those matters disclosed on Schedule 5.10, there
are no actions, suits, or proceedings pending or, to the best knowledge of Loan
Parties, threatened against any of the Loan Parties, or any of their
Subsidiaries, as applicable, except for (a) matters that are fully covered by
insurance (subject to customary deductibles), and (b) matters arising after the
Closing Date that, if decided adversely to any Loan Party, or any of their
Subsidiaries, as applicable, reasonably could not be expected to result in a
Material Adverse Change.
5.11 No Material Adverse Change. All financial statements relating to the
Loan Parties that have been delivered by the Loan Parties to the Lender Group
have been prepared in accordance with GAAP (except, in the case of unaudited
financial statements, for the lack of footnotes and being subject to year-end
audit adjustments) and present fairly in all material respects, the Loan
Parties' financial condition as of the date thereof and results of operations
for the period then ended. There has not been a Material Adverse Change with
respect to the Loan Parties since the date of the latest financial statements
submitted to the Lender Group on or before the Closing Date.
5.12 Fraudulent Transfer.
(a) Each of MIC and Midas Realty Corporation is Solvent.
(b) No transfer of property is being made by any Loan Party and no
obligation is being incurred by any Loan Party in connection with the
transactions contemplated by this Agreement or the other Loan Documents with the
intent to hinder, delay, or defraud either present or future creditors of Loan
Parties.
5.13 Employee Benefits. None of the Loan Parties, any of their
Subsidiaries, or any of their ERISA Affiliates maintains or contributes to any
Benefit Plan, other than those listed on Schedule 5.13. Each Loan Party, each of
its Subsidiaries and each ERISA Affiliate have satisfied the minimum funding
standards of ERISA, the IRC and Canadian Employee Benefits Laws, as applicable,
with respect to each Benefit Plan to which it is obligated to contribute. No
ERISA Event has occurred nor has any other event occurred that may result in an
ERISA Event that reasonably could be expected to result in a Material Adverse
Change. No Borrower or its Subsidiaries or any ERISA Affiliate is required to
provide security to any Benefit Plan under Section 401(a)(29) of the IRC.
5.14 Environmental Condition. Except as set forth on Schedule 5.14, (a) to
Loan Parties' knowledge, none of Loan Parties' properties or assets has ever
been used by any Loan Party or by previous owners or operators in the disposal
of, or to produce, store, handle, treat, release, or transport, any Hazardous
Materials, where such production, storage, handling, treatment, release or
transport was in violation, in any material respect, of applicable Environmental
Law, (b) to Loan Parties' knowledge, none of Loan Parties' properties or assets
has ever been designated or identified in any manner pursuant to any
Environmental Law as a Hazardous Materials disposal site, (c) none of Loan
Parties have received notice that a Lien arising under any Environmental Law has
attached to any revenues or to any Real Property owned, leased or operated by
Loan Parties, and (d) none of Loan Parties have been identified in, or been the
subject of, any Environmental Action.
5.15 Brokerage Fees. Loan Parties have not utilized the services of any
broker or finder in connection with Loan Parties' obtaining financing from the
Lender Group under this Agreement and no brokerage commission or finders fee is
payable by Loan Parties in connection herewith.
5.16 Intellectual Property. Each Loan Party owns, or holds licenses in, all
trademarks, trade names, copyrights, patents, patent rights and licenses that
are necessary to the conduct of its business as currently conducted. Attached
hereto as Schedule 5.16 is a true, correct, and complete
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listing of all material patents, patent applications, trademarks, trademark
applications, copyrights, and copyright registrations as to which any Loan Party
is the owner or is an exclusive licensee.
5.17 Leases. The Loan Parties enjoy peaceful and undisturbed possession
under all leases material to the business of the Loan Parties and to which the
Loan Parties are a party or under which the Loan Parties are operating. All of
such leases are valid and subsisting and no material default by the Loan Parties
exists under any of them.
5.18 DDAs. Set forth on Schedule 5.18 are all of the DDAs of each Loan
Party, including, with respect to each depository (i) the name and address of
that depository, and (ii) the account numbers of the accounts maintained with
such depository.
5.19 Complete Disclosure. All factual information (taken as a whole)
furnished by or on behalf of the Loan Parties in writing to Agent or any Lender
(including all information contained in the Schedules hereto or in the other
Loan Documents) for purposes of or in connection with this Agreement, the other
Loan Documents or any transaction contemplated herein or therein is, and all
other such factual information (taken as a whole) hereafter furnished by or on
behalf of the Loan Parties in writing to the Agent or any Lender will be, true
and accurate in all material respects on the date as of which such information
is dated or certified and not incomplete by omitting to state any fact necessary
to make such information (taken as a whole) not misleading in any material
respect at such time in light of the circumstances under which such information
was provided. On the Closing Date, the Closing Date Business Plan represents,
and as of the date on which any other Projections are delivered to Agent, such
additional Projections represent the Loan Parties' good faith best estimate of
their future performance for the periods covered thereby.
5.20 Indebtedness. Set forth on Schedule 5.20 is a true and complete list
of all Indebtedness of each Loan Party outstanding immediately prior to the
Closing Date that is to remain outstanding after the Closing Date (including
Indebtedness evidenced by the Notes) and such Schedule accurately reflects the
aggregate principal amount of such Indebtedness and the principal terms thereof.
5.21 Regulation U. None of the Loan Parties is or will be engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulations T, U or X of the Board of Governors of
the Federal Reserve System), and no proceeds of any Advance or Term Loan (or
other extension of credit hereunder) will be used to purchase or carry any
margin stock or to extend credit to others for the purpose of purchasing or
carrying any margin stock.
5.22 Permits, Etc. Each Loan Party has, and is in compliance with, all
permits, licenses, franchises, authorizations, approvals, entitlements and
accreditations required for such Person lawfully to own, lease, manage or
operate, or to acquire, each business and the Real Property currently owned,
leased, managed or operated, or to be acquired, by such Person except for such
permits, licenses, franchises, authorizations, approvals, entitlements and
accreditations the absence of which could not reasonably be expected to result
in a Material Adverse Change. No condition exists or event has occurred which,
in itself or with the giving of notice or lapse of time or both, would result in
the suspension, revocation, impairment, forfeiture or non-renewal of any such
permit, license, franchises, authorization, approval, entitlement or
accreditation, and to Loan Parties' knowledge, there is no claim that any
thereof is not in full force and effect.
5.23 Material Contracts. Set forth on Schedule 5.23 is a complete and
accurate list as of the Closing Date of all Material Contracts of the Loan
Parties, showing the parties and subject matter thereof and amendments and
modifications thereto. Each such Material Contract (i) is in full force and
effect and is binding upon and enforceable against each Loan Party that is a
party thereto and, to Loan
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Parties' knowledge, all other parties thereto in accordance with its terms, (ii)
has not been otherwise amended or modified, and (iii) is not in default due to
the action of any Loan Party or, to Loan Parties' knowledge, any other party
thereto, except for such defaults that could not reasonably be expected to
result in a Material Adverse Change.
5.24 Employee and Labor Matters. Except as set forth on Schedule 5.24,
there is (a) no unfair labor practice complaint pending or, to Loan Parties'
knowledge, threatened against any Loan Party before any Governmental Authority
and no grievance or arbitration proceeding pending or threatened against any
Loan Party which arises out of or under any collective bargaining agreement, (b)
no strike, labor dispute, slowdown, stoppage or similar action or grievance
pending or, to the best knowledge of Loan Parties, threatened against any Loan
Party and (c) no union representation question existing with respect to the
employees of any Loan Party and no union organizing activity taking place with
respect to any of the employees of any of them. Neither any Loan Party nor any
ERISA Affiliate of any Loan Party has incurred any liability or obligation under
the Worker Adjustment and Retraining Notification Act ("WARN") or similar state
law, which remains unpaid or unsatisfied. The hours worked and payments made to
employees of each Loan Party have not been in violation of the Fair Labor
Standards Act or any other applicable legal requirements. All material payments
due from any Loan Party on account of workers compensation, wages and employee
health and welfare insurance and other benefits have been paid or accrued as a
liability on the books of such Loan Party.
5.25 Franchisees, Customers and Suppliers. There exists no actual or, to
Loan Parties' knowledge, threatened termination, cancellation or limitation of,
or modification to or change in, the business relationship between (a) any Loan
Party, on the one hand, and any franchisees, or any group thereof, on the other
hand, (b) any Loan Party, on the one hand, and any municipality, customer or any
group thereof, on the other hand or (c) any Loan Party, on the one hand, and any
supplier thereof or distributor therefor, on the other hand, which termination,
cancellation, limitation, modification or change in any such case could,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Change. Set forth on Schedule 5.25 is a true and complete list of each
Eligible Loan Party's Account Debtors as of the Closing Date and a list of all
franchisees for which any Loan Party has received a notice of or otherwise has
knowledge of the cancellation of a Franchise Agreement from December 31, 2002
through the Closing Date.
5.26 Properties.
(a) General.
Each Loan Party has good, marketable and insurable fee simple title (or, in
the case of Leased Real Property, good, marketable and insurable leasehold
title) to each parcel of Real Property Collateral, free and clear of all Liens
except for Permitted Liens. The Permitted Liens encumbering the Real Property
(x) do not include any deeds of trust in favor of any party other than Agent
(other than in the case of deeds of trust permitted under clause (m) of the
definition of Permitted Liens), (y) do not and will not adversely affect the
value, operation or use of the applicable Real Property (as currently used) or
any Loan Party's ability to repay any of the Obligations, and (z) could not,
either individually or in the aggregate, reasonably be expected to result in a
Material Adverse Change. As of the Closing Date, no Loan Party owns any Real
Property that is not listed on Schedule R-1 hereto or leases or has any other
interest in any Real Property that is not listed on Schedule L-1.
(b) Mortgages.
Each Mortgage (A) when executed and properly recorded in the appropriate
records, will create a valid, perfected, first priority Lien on the Real
Property described in such Mortgage and (B) when
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executed and when all Uniform Commercial Code and PPSA financing statements
required to be filed in connection therewith are properly filed, will create a
valid, perfected, first priority Lien (in the case of Revolver Obligations) and
second priority Lien (in respect of Term Loan Obligations) in and to, and
perfected collateral assignments of, all personalty (including all leases and
rents referred to therein) described in such Mortgage, all in accordance with
the terms thereof, in each case subject only to any applicable Permitted Liens.
There are no claims for payment for work, labor or materials affecting any real
properties to be encumbered by the Mortgages which are or may become a lien
prior to, or of equal priority with, the Liens created by the Mortgages and
which, either individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Change.
(c) Compliance.
The Real Property and the use thereof complies in all respects with (A) all
applicable federal, state, county, municipal and other governmental statutes,
laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions
of Governmental Authorities affecting such property or any part thereof, or the
construction, use, alteration or operation thereof, or any part thereof
including, without limitation, building and zoning ordinances and codes; (B) all
permits, licenses and authorizations and regulations relating thereto; and (C)
all covenants, agreements, leases, restrictions and encumbrances contained in
any instruments, either of record or otherwise enforceable against any Loan
Party, affecting such property or any part thereof, including, without
limitation, any which may require repairs, modifications or alterations in or to
such property or any part thereof or in any way limit the use and enjoyment
thereof, except in each case to the extent any such failure to comply, either
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Change. No Loan Party is in default or violation of any
requirement of any Governmental Authority, except to the extent such default or
violation, either individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Change. There has not been committed by
any Loan Party, or by any other Person in occupancy of or involved with the
operation or use of the Real Property, any act or omission affording the federal
government or any other Governmental Authority the right of forfeiture as
against any such property or any part thereof or any monies paid in performance
of the Loan Parties' obligations under any of the Loan Documents.
(d) Condemnation.
No temporary or permanent taking by any Governmental Authority as the
result or in lieu or in anticipation of the exercise of the right of
condemnation or eminent domain or other proceeding has been commenced or, to the
best knowledge of each Loan Party, is threatened or contemplated with respect to
all or any portion of any parcel of Real Property or for the relocation of
roadways providing access to any parcel of Real Property, except to the extent
any such taking, either individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Change.
(e) Utilities and Public Access.
Each parcel of Real Property has rights of access to public ways and is
served by water, sewer, sanitary sewer and storm drain facilities adequate to
service such property for its respective intended uses, except to the extent
such lack of rights or service, either individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Change. All public
utilities necessary to the full use and enjoyment of each parcel of Real
Property are located either in the public right-of-way abutting such property
(which are connected so as to serve such property without passing over other
property) or in recorded easements serving such property, except to the extent
the foregoing, either individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Change. All roads necessary for the use
of each parcel of Real Property for its current purpose have been
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completed and dedicated to public use and accepted by all Governmental
Authorities, except to the extent such lack of such roads, either individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Change.
(f) Separate Lots.
The Real Property owned by each Loan Party comprises an entire, separate
and distinct tax lot (or series of lots) and does not include a portion of any
tax lot that includes any Real Property that is not owned by such Loan Party.
(g) Boundaries.
Except as disclosed on the surveys delivered to Agent on or prior to the
Closing Date and the title commitments for the Real Property Collateral, all
improvements located on each parcel of Real Property lie wholly within the
boundaries and building restriction lines of such property, and no improvements
on adjoining properties encroach upon such property, and no easements or other
encumbrances upon the applicable property encroach upon any of the improvements,
so as to affect the value or marketability of the applicable property, except to
the extent any such encroachment, either individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Change.
(h) Filing and Recording Taxes.
All mortgage, mortgage recording, stamp, intangible or other similar tax
required to be paid by any Person under applicable legal requirements currently
in effect in connection with the execution, delivery, recordation, filing,
registration, perfection or enforcement of any of the Loan Documents, including,
without limitation, the Mortgages, have been paid, and, under current legal
requirements, each of the Mortgages is enforceable in accordance with their
respective terms by the holder thereof, subject to principles of bankruptcy,
insolvency and other laws generally applicable to creditors' rights and the
enforcement of debtors' obligations.
(i) Certificate of Occupancy; Licenses.
All certifications, permits, licenses and approvals, including, without
limitation, certificates of completion and occupancy permits and any applicable
liquor license required for the legal use, occupancy and operation of each
parcel of Real Property in the business and operations of the Loan Parties have
been obtained and are in full force and effect. The use being made of each such
property is in conformity with the certificate of occupancy issued for such
property.
(j) Mortgage Provisions.
Nothing contained in this Section 5.26 shall limit any representation or
warranty of any Loan Party as may be set forth in its Mortgage, including,
without limitation, Section 4.05 thereof; provided, however, that the following
provisions shall apply as to each applicable Mortgage: (x) exceptions disclosed
by any Loan Party as expressly set forth in Schedule 5.26(c) hereof shall be
deemed exceptions to the representations and warranties made by such Loan Party
in its Mortgage and (y) a breach by any Loan Party of a provision contained in
Section 4.05 of its Mortgage shall not, in and of itself, constitute an Event of
Default, unless Agent determines, in its Permitted Discretion, that such breach,
when considered individually or in the aggregate with other breaches of such
section or any other facts that may then exist, may result in a Material Adverse
Change.
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5.27 Taxes. All tax payments, returns and reports, assessments for worker's
compensation, pension plan payments, unemployment insurance payments, employment
standards payments (including claims by employees for unpaid wages, vacation pay
and overtime pay), excise taxes, health insurance premiums and any other
statutory payments required to be made by a Loan Party pursuant to applicable
law (including all federal, state, provincial and local tax returns) have been
made when due and/or properly filed on a timely basis and are true, complete and
correct, except to the extent that the validity of such assessments or taxes are
the subject of a Permitted Protest.
6. AFFIRMATIVE COVENANTS.
Each Loan Party covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations and the
termination of this Agreement, each Loan Party shall and shall cause each of its
respective Subsidiaries to do all of the following:
6.1 Accounting System. Maintain a system of accounting that enables Parent
and its Subsidiaries to produce financial statements in accordance with GAAP and
maintain records pertaining to the Collateral that contain information as from
time to time reasonably may be requested by Agent. Parent and its Subsidiaries
also shall keep an inventory reporting system that shows all additions, sales,
claims, returns, and allowances with respect to the Inventory.
6.2 Collateral Reporting. Provide Agent (and if so requested by a Lender,
with copies for such Lender) with the following documents at the following times
in form satisfactory to Agent:
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Weekly or as (a) a sales journal, collection journal, and credit register
required since the last such schedule;
(b) notice of all returns, disputes, or claims in excess of
$100,000 in the aggregate;
(c) a Borrowing Base Certificate;
(d) Inventory reports specifying each Borrower's cost of its
Inventory, by category, together with, if requested by
Agent, additional detail showing additions to and deletions
from the Inventory;
(e) an Inventory report, together with, if requested by Agent, a
detailed listing thereof;
(f) a summary aging of the Accounts, together with, if requested
by Agent, a detailed listing thereof;
(g) a summary aging, by vendor, of Borrowers' accounts payable
and any book overdraft together with, if requested by Agent,
a detailed listing thereof;
(h) a report of all in-transit Inventory, together with, if
requested by Agent, a detailed listing thereof;
(i) a reconciliation of cash balances in Cash Collateral
accounts; and (j) an update as to restructuring efforts.
Bi-Weekly (k) a 13-week rolling cash flow report.
Monthly (not (l) a calculation of Dilution for the prior month; and
later than
the 30th day
of each month) (m) a reconciliation of month end Inventory, in-transit
Inventory, Accounts and accounts payable to the weekly
reports in respect thereof and to the balance sheet for such
month.
Quarterly (n) a report regarding each Loan Party's accrued, but unpaid, ad
valorem taxes.
Upon request by(o) a detailed list of each Loan Party's Account Debtors;
Agent
(p) copies of invoices in connection with the Accounts, credit
memos, remittance advices, deposit slips, shipping and
delivery documents in connection with the Accounts and, for
Inventory and Equipment acquired by Borrowers, purchase
orders and invoices; and
(q) such other reports as to the Collateral, or the financial
condition of Loan Parties as Agent may request.
As necessary (r) notice of the failure of one or more Eligible Accounts or
Eligible Inventory in excess of $100,000 in the aggregate to
cease satisfying the definitions thereof or any other
eligibility criteria established by Agent in its Permitted
Discretion.
In addition, each Loan Party agrees to cooperate fully with Agent to
facilitate and implement a system of electronic collateral reporting in order to
provide electronic reporting of each of the items set forth above.
6.3 Financial Statements, Reports, Certificates. Deliver to Agent, with
copies to each Lender:
(a) as soon as available, but in any event within 30 days (45 days (or such
lesser number of days as may be required pursuant to the Exchange Act) in the
case of a month that is the end of one of the first 3 fiscal quarters in a
fiscal year) after the end of each month during each of Parent's fiscal years,
(i) a company prepared consolidated and consolidating (based on
internal management reports) balance sheet, income statement
(including cash interest), and statement of cash flow covering
Parent's and its Subsidiaries' operations during such period,
(ii) a certificate signed by the chief financial officer of
Parent to the effect that:
A. the consolidated financial statements delivered hereunder have
been prepared in accordance with GAAP (except for the lack of
footnotes and being subject to year-end audit adjustments) and fairly
present in all material respects the financial condition of Parent and
its Subsidiaries,
B. the representations and warranties of the Loan Parties
contained in this Agreement and the other Loan Documents are true and
correct in all material respects on and as of the date of such
certificate, as though made on and as of such date (except to the
extent that such representations and warranties relate solely to an
earlier date), and
C. there does not exist any condition or event that constitutes a
Default or Event of Default (or, to the extent of any non-compliance,
describing such non-compliance as to which he or she may have
knowledge and what action the Loan Parties have taken, are taking, or
propose to take with respect thereto), and
(iii) for each month that is the date on which a financial covenant in
Section 7.20 is to be tested, a Compliance Certificate demonstrating, in
reasonable detail, compliance at the end of such period with the applicable
financial covenants contained in Section 7.20, and
(b) as soon as available, but in any event within 90 days (or such lesser
number of days as may be required pursuant to the Exchange Act) after the end of
each of Parent's fiscal years,
(i) consolidated financial statements of Parent and its Subsidiaries for
each such fiscal year, audited by independent certified public accountants
reasonably acceptable to Agent and certified, without any qualifications
(including, without limitation, (A) any going concern or like qualification or
exception or (B) any qualification as to the scope of such audit), by such
accountants to have been prepared in accordance with GAAP (such audited
financial statements to include a balance sheet, income statement, and statement
of cash flow and, if prepared, such accountants' letter to management),
(ii) a certificate of such accountants addressed to Agent and the Lenders
stating that such accountants do not have knowledge of the existence of any
Default or Event of Default under Section 7.20,
(c) as soon as available, but in any event on or prior to the last day of
each Fiscal Year, copies of the Loan Parties' Projections, in form and substance
(including as to scope and underlying assumptions) satisfactory to Agent, in its
Permitted Discretion, for the forthcoming 3 years, year by year, and for the
next Fiscal Year, month by month, certified by an Authorized Person as being
such officer's good faith best estimate of the financial performance of the Loan
Parties during the period covered thereby, and
(d) if and when filed by any Loan Party,
(i) 10-Q quarterly reports, Form 10-K annual reports, and Form 8-K current
reports,
(ii) any other filings made by any Loan Party with the SEC,
(iii) copies of Loan Parties' federal income tax returns, and any
amendments thereto, filed with the Internal Revenue Service, and
(iv) any other information that is provided by Parent to its shareholders
generally,
(e) if and when filed by any Loan Party and as requested by Agent,
satisfactory evidence of payment of applicable excise taxes in each
jurisdictions (i) in which any Loan Party conducts business or is required to
pay any such excise tax, (ii) where any Loan Party's failure to pay any such
applicable excise tax would result in a Lien on the properties or assets of any
Borrower, or (iii) where any Loan Party's failure to pay any such applicable
excise tax reasonably could be expected to result in a Material Adverse Change,
(f) as soon as a Loan Party has knowledge of any event or condition that
constitutes a Default or an Event of Default, notice thereof and a statement of
the curative action that such Loan Party proposes to take with respect thereto,
(g) (i) promptly and in any event (A) within 10 days after any Loan Party
or any ERISA Affiliate thereof knows or has reason to know that any Termination
Event described in clause (i) of the definition of Termination Event with
respect to any Benefit Plan has occurred, (B) within 10 days after any Loan
Party or any ERISA Affiliate thereof knows or has reason to know that any other
Termination Event with respect to any Benefit Plan has occurred, or (C) within
10 days after any Loan Party or any ERISA Affiliate thereof knows or has reason
to know that an accumulated funding deficiency has been incurred or an
application has been made to the Secretary of the Treasury for a waiver or
modification of the minimum funding standard (including installment payments) or
an extension of any
amortization period under Section 412 of the IRC or the equivalent provision
under any federal, state, local or foreign counterparts or equivalents thereof
with respect to a Benefit Plan, a statement of an Authorized Person setting
forth the details of such occurrence and the action, if any, which such Loan
Party or such ERISA Affiliate propose to take with respect thereto, (ii)
promptly and in any event within 3 days after receipt thereof by any Loan Party
or any ERISA Affiliate thereof from the PBGC, copies of each notice received by
any Loan Party or any ERISA Affiliate thereof of the PBGC's intention to
terminate any Plan or to have a trustee appointed to administer any Plan, (iii)
promptly and in any event within 10 days after the filing thereof with the
Internal Revenue Service if requested by Agent, copies of each Schedule B
(Actuarial Information) or the federal, state, local or foreign equivalent
thereof to the annual report (Form 5500 Series) or the federal, state, local or
foreign equivalent thereof with respect to each Benefit Plan and Multiemployer
Plan, (iv) promptly and in any event within 10 days after any Loan Party or any
ERISA Affiliate thereof knows or has reason to know that a required installment
within the meaning of Section 412 of the IRC or the equivalent provision under
any federal, state, local or foreign counterparts or equivalents thereof has not
been made when due with respect to a Benefit Plan, (v) promptly and in any event
within 3 days after receipt thereof by any Loan Party or any ERISA Affiliate
thereof from a sponsor of a Multiemployer Plan or from the PBGC, a copy of each
notice received by any Loan Party or any ERISA Affiliate thereof concerning the
imposition or amount of withdrawal liability under Section 4202 of ERISA or the
equivalent provision under any federal, state, local or foreign counterparts or
equivalents thereof or indicating that such Multiemployer Plan may enter
reorganization status under Section 4241 of ERISA or the equivalent provision
under any federal, state, local or foreign counterparts or equivalents thereof,
and (vi) promptly and in any event within 10 days after any Loan Party or any
ERISA Affiliate thereof send notice of a plant closing or mass layoff (as
defined in the Worker Adjustment and Retraining Notification Act) to employees,
copies of each such notice sent by any Loan Party or any ERISA Affiliate
thereof,
(h) upon the request of Agent, any other report reasonably requested
relating to the financial condition of the Loan Parties, and
(i) (x) promptly after receipt or delivery thereof, copies of any material
notices that any Loan Party receives from or sends to any Person in connection
with the Note Documents, the Fiat Magneti Agreements and any Franchise
Agreements, and (y) promptly after the effective date thereof, any amendments,
modifications, waivers or other changes to any of the foregoing agreements;
provided that only material amendments, modifications, waivers or other changes
to any Franchise Agreements need be delivered to Agent.
In addition to the financial statements referred to above, the Loan Parties
agree that no Loan Party, or any Subsidiary of a Loan Party, will have a fiscal
year different from that of Parent. The Loan Parties agree that their
independent certified public accountants are authorized to communicate with
Agent and to release to Agent whatever financial information concerning the Loan
Parties that Agent reasonably may request; provided that Administrative Borrower
shall have the right to be present in respect of any such communications. Each
Loan Party waives the right to assert a confidential relationship, if any, it
may have with any accounting firm or service bureau in connection with any
information requested by Agent pursuant to or in accordance with this Agreement,
and agrees that Agent may contact directly any such accounting firm or service
bureau in order to obtain such information; provided that Agent will give
Administrative Borrower reasonable prior notice thereof and permit such Loan
Party to participate in any such discussions.
6.4 Return. Cause returns and allowances as between Loan Parties and their
Account Debtors, to be on the same basis and in accordance with the usual
customary practices of the applicable Loan Party (including special promotions
and programs), as they exist at the time of the execution and delivery of this
Agreement. If, at a time when no Event of Default has occurred and is
continuing, any Account Debtor returns any Inventory to any Loan Party, the
applicable Loan Party promptly shall determine the reason for such return and,
if the applicable Loan Party accepts such return, issue a credit memorandum
(with a copy to be sent to Agent upon request) in the appropriate amount to such
Account Debtor. If, at a time when an Event of Default has occurred and is
continuing, any Account Debtor returns any Inventory to any Loan Party, the
applicable Loan Party promptly shall determine the reason for such return and,
if Agent consents (which consent shall not be unreasonably withheld or required
in connection with special promotions or programs), issue a credit memorandum
(with a copy to be sent to Agent upon request) in the appropriate amount to such
Account Debtor.
6.5 Maintenance of Properties. Maintain and preserve in all material
respects all of its properties (including Real Property) which are necessary or
useful in the proper conduct to its business in good working order and
condition, ordinary wear and tear excepted, and comply at all times with the
provisions of all leases to which it is a party as lessee, so as to prevent any
loss or forfeiture thereof or thereunder.
6.6 Taxes. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against the Loan
Parties or any of their assets to be paid in full, before delinquency or before
the expiration of any extension period, except to the extent that the validity
of such assessment or tax shall be the subject of a Permitted Protest. The Loan
Parties will make timely payment or deposit of all tax payments and withholding
taxes required of it by applicable laws, including the Canadian Income Tax Act
and including those laws concerning F.I.C.A., F.U.T.A., state disability, and
local, state, and federal or provincial income taxes, and will, upon request,
furnish Agent with proof satisfactory to Agent indicating that the applicable
Loan Party has made such payments or deposits. Upon the request of Agent, the
Loan Parties shall deliver satisfactory evidence of payment of applicable excise
taxes in each jurisdictions in which any Loan Party is required to pay any such
excise tax.
6.7 Insurance.
(a) At Borrowers' expense, maintain, and cause each of the Loan Parties'
franchisees to maintain, insurance respecting the property and assets of the
Loan Parties wherever located, covering loss or damage by fire, theft,
explosion, and all other hazards and risks as ordinarily are insured against by
other Persons engaged in the same or similar businesses. The Loan Parties also
shall maintain, and cause each of the Loan Parties' franchisees, to the extent
such franchisees are required pursuant to the terms of the applicable Franchise
Agreement, to maintain, business interruption, public liability, and product
liability insurance, as well as insurance against larceny, embezzlement, and
criminal misappropriation. All such policies of insurance shall be in such
amounts and with such insurance companies as are reasonably satisfactory to
Agent. Borrowers shall deliver copies of all such policies (other than
franchisees' policies) to Agent with a satisfactory lender's loss payable
endorsement naming Agent as payee or additional insured, as appropriate. Each
policy of insurance or endorsement shall contain a clause requiring the insurer
to give not less than 30 days prior written notice to Agent in the event of
cancellation of the policy for any reason whatsoever.
(b) Administrative Borrower shall give Agent prompt notice of any loss
covered by insurance as set forth in Section 6.7(a). Agent shall have the
exclusive right to adjust any losses payable under any such insurance policies
in excess of $250,000 (or in any amount after the occurrence and during the
continuance of an Event of Default), without any liability to the Loan Parties
whatsoever in respect of such adjustments. Except as provided in the proviso at
the end of this sentence and except with respect to any proceeds of insurance in
respect of Inventory, any monies in excess of $250,000 received as payment for
any loss under any insurance policy mentioned above (other than liability
insurance policies) or as payment of any award or compensation for condemnation
or taking by
eminent domain, shall be paid over to Agent to be applied at the option of the
Required Lenders either to the prepayment of the Obligations or shall be
disbursed to Administrative Borrower under staged payment terms reasonably
satisfactory to the Required Lenders for application to the cost of repairs,
replacements, or restorations; provided that, so long as no Default or Event of
Default shall have occurred and be continuing, monies received as payment for
any such loss under any insurance policy or any such condemnation or taking in
an amount not exceeding $250,000 for any such occurrence may be used to replace,
repair or restore Collateral if such payments are deposited in a DDA subject to
a Control Agreement and used in accordance with Section 2.4(d). Any such
repairs, replacements, or restorations shall be effected with reasonable
promptness and shall be of a value at least equal to the value of the items or
property destroyed prior to such damage or destruction.
(c) The Loan Parties shall not take out separate insurance concurrent in
form or contributing in the event of loss with that required to be maintained
under this Section 6.8, unless Agent is included thereon as named insured with
the loss payable to Agent under a lender's loss payable endorsement or its
equivalent. Administrative Borrower immediately shall notify Agent whenever such
separate insurance is taken out, specifying the insurer thereunder and full
particulars as to the policies evidencing the same, and copies of such policies
promptly shall be provided to Agent.
6.8 Location of Inventory and Equipment. Keep the Inventory and Equipment
only at the locations identified on Schedule 5.5; provided, however, that
Administrative Borrower may amend Schedule 5.5 so long as such amendment occurs
by written notice to Agent not less than 30 days prior to the date on which the
Inventory or Equipment is moved to such new location, so long as such new
location is within the continental United States, and Canada and so long as, at
the time of such written notification, the applicable Loan Party provides any
financing statements or fixture filings necessary to perfect and continue
perfected the Agent's Liens on such assets and also provides to Agent a
Collateral Access Agreement for each Leased Real Property used in the
manufacturing, warehousing and distribution operations of the Loan Parties,
provided, that as to all such Leased Real Property, if Agent shall not have
received a Collateral Access Agreement from the owner and lessor with respect to
such location, duly authorized, executed and delivered by such owner and lessor
(or agent shall determine to accept a Collateral Access Agreement that does not
include all required provisions or provisions in the form otherwise required by
the Agents), Agent may, at its option, establish such reserves in respect of
amounts at any time due or to become due to the owner and lessor thereof as
Agent shall determine.
6.9 Compliance with Laws. Comply with the requirements of all applicable
laws, rules, regulations, and orders of any Governmental Authority, including
the Fair Labor Standards Act, the Americans With Disabilities Act, and all laws,
rules and regulations related to franchising and licensing as applicable to the
Loan Parties and their business, assets and properties, which compliance shall
be satisfactory to the Lender Group, other than laws, rules, regulations, and
orders the non-compliance with which, individually or in the aggregate, would
not result in and reasonably could not be expected to result in a Material
Adverse Change.
6.10 Leases. Pay when due all rents and other amounts payable under any
leases to which any Loan Party is a party or by which any Loan Party's
properties and assets are bound, unless such payments are the subject of a
Permitted Protest.
6.11 Brokerage Commissions. Pay any and all brokerage commission or finders
fees incurred in connection with or as a result of Borrowers' obtaining
financing from the Lender Group under this Agreement. Borrowers agree and
acknowledge that payment of all such brokerage commissions or finders fees shall
be the sole responsibility of Borrowers, and each Borrower agrees to indemnify,
defend, and hold Agent and the Lender Group harmless from and against any claim
of any broker or finder arising out of Borrowers' obtaining financing from the
Lender Group under this Agreement.
6.12 Existence. At all times preserve and keep in full force and effect
each Loan Party's valid existence and good standing and any rights and
privileges material to Loan Parties' businesses.
6.13 Environmental.
(a) Keep any property either owned, leased or operated by any Loan Party
free of any Environmental Liens or post bonds or other financial assurances
sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens, (b) comply, in all material respects, with Environmental
Laws and provide to Agent documentation of such compliance which Agent
reasonably requests, (c) promptly notify Agent of any release of a Hazardous
Material of any reportable quantity from or onto property owned, leased or
operated by any Loan Party and take any Remedial Actions required to xxxxx said
release that are required pursuant to applicable Environmental Law, (d) promptly
provide Agent with written notice within 10 days of the receipt of any of the
following: (i) notice that an Environmental Lien has been filed against any of
the real or personal property of any Loan Party or (ii) commencement of any
Environmental Action or notice that an Environmental Action will be filed
against any Loan Party, and (iii) notice of a violation, citation, or other
administrative order which reasonably could be expected to result in a Material
Adverse Change, and (e) upon the request of Agent in its sole discretion based
on the results of Phase I environmental surveys, cause Phase II environmental
surveys to be conducted with respect to any Real Property owned by any Loan
Party with the report thereon delivered to Agent.
6.14 Other Disclosure Updates. Promptly and in no event later than 5
Business Days after obtaining knowledge thereof, (a) notify Agent if any written
information, exhibit, or report furnished to the Lender Group contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made, and (b) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement,
filing, or recordation thereof. Without limiting the generality of the
foregoing, the Loan Parties shall supplement each Schedule hereto, or any
representation herein or in any other Loan Document, with respect to any matter
hereafter arising that, if existing or occurring at the date of this Agreement,
would have been required to be set forth or described in such Schedule or as an
exception to such representation or that is necessary to correct any information
in such Schedule or representation which has been rendered inaccurate thereby
(and, in the case of any supplements to any Schedule, such Schedule shall be
appropriately marked to show the changes made therein); provided that no such
supplement to any such Schedule or representation shall amend, supplement or
otherwise modify any Schedule or representation, or be or be deemed a waiver of
any Default or Event of Default resulting from the matters disclosed therein,
except as consented to in accordance with Section 15.1.
6.15 Commercial Tort Claims; Organizational ID Number. Immediately upon
obtaining any commercial tort claim, deliver to Agent an updated Schedule 5.7
and the other documents required under Section 4.4. Immediately upon obtaining
an organizational identification number (to the extent such Loan Party has not
been issued such number on or prior to the Closing Date), notify Agent in
writing and deliver to Agent an updated Schedule 5.7.
6.16 Inventory Divestiture Plan. Use its best efforts to consummate the
Inventory Divestiture Plan in all material respects on or before the applicable
completion date set forth therein.
7. NEGATIVE COVENANTS.
Each Loan Party covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations and the
termination of this Agreement, Parent and each Loan Party will not and will not
permit any of its Subsidiaries to do any of the following:
7.1 Indebtedness. Create, incur, assume, permit, guarantee, or otherwise
become or remain, directly or indirectly, liable with respect to any
Indebtedness, except the following ("Permitted Indebtedness"):
(a) Indebtedness evidenced by this Agreement and the other Loan Documents
and Indebtedness evidenced by the Notes (and guarantees thereof);
(b) Indebtedness existing as of the Closing Date set forth on Schedule
5.20;
(c) Permitted Purchase Money Indebtedness;
(d) refinancings, renewals, or extensions of Indebtedness permitted under
clauses (b) and (c) of this Section 7.1 (and continuance or renewal of any
Permitted Liens associated therewith) so long as: (i) the terms and conditions
of such refinancings, renewals, or extensions do not, in Agent's Permitted
Discretion, materially impair the prospects of repayment of the Obligations by
the Loan Parties or materially impair Loan Parties' creditworthiness, (ii) such
refinancings, renewals, or extensions do not result in an increase in the
principal amount of, or interest rate with respect to, the Indebtedness so
refinanced, renewed, or extended, (iii) such refinancings, renewals, or
extensions do not result in a shortening of the average weighted maturity of the
Indebtedness so refinanced, renewed, or extended, nor are they on terms or
conditions, that, taken as a whole, are materially more burdensome or
restrictive to the applicable Loan Party, and (iv) if the Indebtedness that is
refinanced, renewed, or extended was subordinated in right of payment to the
Obligations, then the terms and conditions of the refinancing, renewal, or
extension Indebtedness must include subordination terms and conditions that are
at least as favorable to the Lender Group as those that were applicable to the
refinanced, renewed, or extended Indebtedness; and
(e) Indebtedness comprising Permitted Investments.
7.2 Liens. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(d) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).
7.3 Restrictions on Fundamental Changes.
(a) Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock.
(b) Liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution).
(c) Other than Permitted Dispositions, convey, sell, lease, license,
assign, transfer, or otherwise dispose of, in one transaction or a series of
transactions, all or any substantial part of its assets.
7.4 Disposal of Assets. Other than Permitted Dispositions, convey, sell,
lease, license, assign, transfer, or otherwise dispose of any of the assets of
any Loan Party.
7.5 Change Name. Change any Loan Party's name, organizational
identification number, state of incorporation, FEIN, corporate structure, or
identity, or add any new fictitious name; provided, however, that a Loan Party
may change its name upon at least 30 days prior written notice to Agent of such
change and Agent's acknowledgement thereof and so long as, at the time of such
written notification, such Person provides any financing statements or fixture
filings necessary to perfect and continue perfected the Agent's Liens.
7.6 Guarantee. Except pursuant to or as otherwise permitted by this
Agreement or a Guaranty, guarantee or otherwise become in any way liable with
respect to the obligations of any third Person except by endorsement of
instruments or items of payment for deposit to the account of Borrowers or which
are transmitted or turned over to Agent.
7.7 Nature of Business. Make any change in the principal nature of any Loan
Party's business.
7.8 Prepayments and Amendments.
(a) Except in connection with a refinancing permitted by Section 7.1(d),
prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness of any
Loan Party, other than the Obligations in accordance with this Agreement.
(b) (i) Except in connection with a refinancing permitted by Section
7.1(d), directly or indirectly, amend, modify, alter, increase, or change any of
the terms or conditions of any agreement, instrument, document, indenture, or
other writing evidencing or concerning Indebtedness permitted under Sections
7.1(b), (c) or (e), (ii) directly or indirectly, amend, modify, alter or change
any of the terms or conditions of any of the Fiat Magneti Agreements or (iii)
enter into any amendment or modification to the Notes or the Note Documents to
the extent prohibited by the Intercreditor Agreement.
(c) Directly or indirectly, by deposit of monies or otherwise, make any
payment on account of any principal, premium or interest payable in connection
with any Indebtedness under the Notes other than in accordance with the terms of
the Intercreditor Agreement.
7.9 Consignments. Consign any Inventory in an aggregate amount in excess of
$2,000,000 at any time, or sell any Inventory on xxxx and hold, sale or return,
sale on approval, or other conditional terms of sale.
7.10 Distributions. Other than distributions or declaration and payment of
dividends by any Subsidiary of a Parent to a Loan Party, make any distribution
or declare or pay any dividends (in cash or other property, other than common
Stock) on, or purchase, acquire, redeem, or retire any of a Loan Party's Stock,
of any class, whether now or hereafter outstanding; provided that Parent may
redeem or acquire shares of restricted common Stock of Parent from management
employees of the Loan Parties in settlement of such employees' tax obligations
in respect thereof in a maximum aggregate amount not in excess of $500,000 per
Fiscal Year.
7.11 Accounting Methods. Modify or change its method of accounting (other
than as may be required to conform to GAAP) or enter into, modify, or terminate
any agreement currently existing, or at any time hereafter entered into with any
third party accounting firm or service bureau for the preparation or storage of
the Loan Parties accounting records without said accounting firm or service
bureau agreeing to provide Agent information regarding the Collateral or Loan
Parties' financial condition.
7.12 Investments. Except for Permitted Investments, directly or indirectly,
make or acquire any Investment, or incur any liabilities (including contingent
obligations) for or in connection with any Investment; provided, however, that
the Loan Parties shall not have Permitted Investments (other than in the Cash
Management Accounts) in deposit accounts or Securities Accounts in excess of
$250,000 outstanding at any one time unless the applicable Loan Party and the
applicable securities intermediary or bank have entered into Control Agreements
or similar arrangements governing such Permitted Investments, as Agent shall
determine in its Permitted Discretion, to perfect (and further establish) the
Agent's Liens in such Permitted Investments.
7.13 Transactions with Affiliates and Franchisees. Directly or indirectly
enter into or permit to exist any transaction with any Affiliate of any Loan
Party or any franchisee of a Loan Party except for transactions that are in the
ordinary course of such Loan Party's business, upon fair and reasonable terms
and that are no less favorable to such Loan Party than would be obtained in an
arm's length transaction with a non-Affiliate or non-franchisee; provided that
any such transaction or series of transactions having a value in excess of
$500,000 shall be disclosed to Agent; provided further that nothing in this
Section 7.13 shall restrict a Loan Party's ability to lease and sublease its
properties, enter into amendments to Franchise Agreements or otherwise enter
into transactions otherwise permitted hereunder in the ordinary course of
business consistent with past practices.
7.14 Suspension. Suspend or go out of a substantial portion of its business
other than Permitted Dispositions.
7.15 Compensation. Increase the annual fee or per-meeting fees paid to the
members of its Board of Directors during any Fiscal Year by more than 15% over
the prior Fiscal Year; except as provided in employment and incentive
compensation plans or agreements in effect as of the Closing Date, pay or accrue
total cash compensation, during any Fiscal Year, to its officers and senior
management employees in an aggregate amount in excess of 115% of that paid or
accrued in the prior Fiscal Year.
7.16 Use of Proceeds. Use the proceeds of (a) the Term Loans for any
purpose other than to repay the outstanding Indebtedness under the Existing
Credit Agreement and the Existing Notes, and (b) the Advances for any purpose
other than (i) on the Closing Date, (A) to repay the outstanding secured
Indebtedness under the Existing Credit Agreement in an aggregate amount not in
excess of $12,500,000, (B) to fund working capital in the ordinary course of
business of the Loan Parties, and (C) to pay transactional fees, costs, and
expenses incurred in connection with this Agreement, the other Loan Documents,
and the transactions contemplated hereby and thereby, and (ii) thereafter,
consistent with the terms and conditions hereof, for its lawful and permitted
purposes.
7.17 Change in Location of Chief Executive Office; Inventory and Equipment
with Bailees. Relocate its chief executive office to a new location without
Administrative Borrower providing 30 days prior written notification thereof to
Agent and so long as, at the time of such written notification, the applicable
Loan Party provides any financing statements or fixture filings necessary to
perfect and continue perfected the Agent's Liens and, if such new location is
leased by such Loan Party, also provides to Agent a Collateral Access Agreement
with respect to such new location. The Inventory and Equipment shall not at any
time now or hereafter be stored with a bailee, warehouseman, or similar party
without Agent's prior written consent and, unless Agent otherwise consents,
unless such bailee, warehouseman, or similar party has executed a Collateral
Access Agreement. If Agent shall not have received a Collateral Access
Agreement, as provided in this Section 7.17, from the owner and lessor with
respect to such leased location, duly authorized, executed and delivered by such
owner and lessor (or Agent shall determine to accept a Collateral Access
Agreement that does not include all required provisions or provisions in the
form otherwise required by the Agents), Agent may, at its option, establish
such reserves in respect of amounts at any time due or to become due to the
owner and lessor thereof as Agent shall determine.
7.18 Securities Accounts. Establish or maintain any Securities Account
unless Agent shall have received a Control Agreement in respect of such
Securities Account, except for any Securities Account containing assets of less
than $5,000 individually or $10,000 in the aggregate. Each Loan Party agrees to
not transfer assets out of any Securities Account; provided, however, that, so
long as no Event of Default has occurred and is continuing or would result
therefrom, Loan Parties may use such assets (and the proceeds thereof) to the
extent not prohibited by this Agreement.
7.19 Parent. Parent shall have no assets other than assets subject to the
Agent's Liens.
7.20 Financial Covenants.
(a) Permit:
(i) Total Leverage Ratio. The ratio of (x) Indebtedness outstanding at the
end of each period set forth below, less the amount of cash and Cash Equivalents
of the Borrowers subject to a Control Agreement in favor of the Agent for the
benefit of the Lender Group (but otherwise unrestricted) at the end of such
period, to (y) EBITDA for such period, to exceed the ratio set forth opposite
such period:
Period Ratio
------ -----
For the 12 month period ending March 29, 2003 5.25:1.00
--------------------------------------------- ---------
For the 12 month period ending June 28, 2003 6.00:1.00
-------------------------------------------- ---------
For the 12 month period ending September 27, 2003 6.10:1.00
------------------------------------------------- ---------
For the 12 month period ending January 3, 2004 4.10:1.00
---------------------------------------------- ---------
For the 12 month period ending April 3, 2004 3.70:1.00
-------------------------------------------- ---------
For the 12 month period ending July 3, 2004 3.60:1.00
------------------------------------------- ---------
For the 12 month period ending October 2, 2004 2.75:1.00
(ii) Fixed Charge Coverage Ratio. The ratio of (x) EBITDAR as of the end of
each period set forth below to (y) Fixed Charges for such period to be less than
the ratio set forth below opposite such period:
Period Ratio
------ -----
For the 3 month period ending March 29, 2003 0.75:1.00
-------------------------------------------- ---------
For the 6 month period ending June 28, 2003 0.90:1.00
Period Ratio
------ ------
For the 9 month period ending September 27, 2003 1.10:1.00
------------------------------------------------ ---------
For the 12 month period ending January 3, 2004 1.10:1.00
----------------------------------------------- ---------
For the 12 month period ending April 3, 2004 1.25:1.00
-------------------------------------------- ---------
For the 12 month period ending July 3, 2004 1.25:1.00
-------------------------------------------- ---------
For the 12 month period ending October 2, 2004 1.25:1.00
(iii) Interest Coverage Ratio. The ratio of (x) EBITDA for each period set
forth below to (y) cash interest expense on a consolidated basis for such period
to be less than the ratio set forth below opposite such period:
Period Ratio
------ -----
For the 12 month period ending March 29, 2003 1.75:1.00
--------------------------------------------- ---------
For the 12 month period ending June 28, 2003 1.35:1.00
-------------------------------------------- ---------
For the 12 month period ending September 27, 2003 1.10:1.00
------------------------------------------------- ---------
For the 12 month period ending January 3, 2004 1.60:1.00
---------------------------------------------- ---------
For the 12 month period ending April 3, 2004 1.75:1.00
-------------------------------------------- ---------
For the 12 month period ending July 3, 2004 2.00:1.00
------------------------------------------- ---------
For the 12 month period ending October 2, 2004 2.15:1.00
(b) Fail to maintain:
(i) Minimum EBITDA. EBITDA for each period set forth below of not less than
the amount set forth below opposite such period:
Period Amount
------ ------
For the 12 month period ending March 29, 2003 $ 29,000,000
--------------------------------------------- ------------
For the 12 month period ending June 28, 2003 $ 23,500,000
-------------------------------------------- ------------
For the 12 month period ending September 27, 2003 $ 22,000,000
------------------------------------------------- ------------
For the 12 month period ending January 3, 2004 $ 30,000,000
Period Amount
------ ------
For the 12 month period ending April 3, 2004 $ 33,000,000
-------------------------------------------- ------------
For the 12 month period ending July 3, 2004 $ 35,000,000
------------------------------------------- ------------
For the 12 month period ending October 2, 2004 $ 37,500,000
(ii) Minimum Net Worth. Net Worth, at the end of any fiscal quarter, to be
less than the sum of (a) 75% of Net Worth as of December 28, 2002 plus (b) 50%
of positive Consolidated Net Income, if any, for each fiscal quarter ending
after the Closing Date and on or prior to the date of determination, minus (c)
Net Restructuring Charges plus (d) 100% of the amount of Net Cash Proceeds
realized by Parent or any of its Subsidiaries from the issuance of equity
securities after the Closing Date.
(c) Make:
(i) Capital Expenditures. Capital Expenditures (A) in excess of $5,000,000
for the Fiscal Year ended January 3, 2004 or (B) in excess of $2,500,000 for the
nine-month period ended October 2, 2004.
7.21 Inventory Divestiture Plan. Enter into any agreement or arrangement in
connection with the Inventory Divestiture Plan which would result in a material
increase in the average cost of Inventory to the Loan Parties or their
franchisees or enter into any agreement or arrangement that would limit or
impair the Loan Parties' ability to effectuate the Inventory Divestiture Plan.
7.22 Insurance Service Management. Permit any proceeds of the Loans to be
transferred to or otherwise used by or for the benefit of Insurance Service
Management, make any loans, advances or contributions to, or other Investments
in, or for the benefit of, Insurance Service Management in excess of $150,000 in
the aggregate, guaranty or otherwise become liable for any obligations of
Insurance Service Management or sell, lease, assign or otherwise transfer any
assets or property to Insurance Service Management.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
8.1 If the Loan Parties fail to pay (i) when due and payable or when
declared due and payable (whether by acceleration or otherwise), all or any
portion of the principal of any Advance, Loan, Letter of Credit Usage or the
Guaranteed Obligations or (ii) within three (3) days after the date when due and
payable or when declared due and payable (whether by acceleration or otherwise),
any other amounts constituting Obligations or Guaranteed Obligations (including
any interest which, but for the provisions of the Bankruptcy Code, would have
accrued on such amounts) or reimbursement of Lender Group Expenses;
8.2 If the Loan Parties fail to perform, keep, or observe any term,
provision, condition, covenant, or agreement contained in Section 6.2, 6.3, 6.6,
6.7 or 6.12 or in Section 7 of this Agreement or in any of the other Loan
Documents or in the Warrant or the Warrant Agreement;
8.3 If the Loan Parties fail to perform, keep, or observe any other term,
provision, condition, covenant, or agreement contained in this Agreement or in
any of the other Loan Documents and such failure shall remain uncured for thirty
(30) days;
8.4 If any material portion of any Loan Party's or any of its Subsidiaries'
assets is attached, seized, subjected to a writ or distress warrant, levied
upon, or comes into the possession of any third Person which has not been
discharged, vacated or stayed within thirty (30) days;
8.5 If an Insolvency Proceeding is commenced by any Loan Party or any of
its Subsidiaries;
8.6 If an Insolvency Proceeding is commenced against any Loan Party, or any
of its Subsidiaries, and any of the following events occur: (a) the applicable
Loan Party or the Subsidiary consents to the institution of the Insolvency
Proceeding against it, (b) the petition commencing the Insolvency Proceeding is
not timely controverted, (c) the petition commencing the Insolvency Proceeding
is not dismissed within 60 calendar days of the date of the filing thereof;
provided, however, that, during the pendency of such period, Agent (including
any successor agent) and each other member of the Lender Group shall be relieved
of their obligation to extend credit hereunder, (d) an interim trustee is
appointed to take possession of all or any substantial portion of the properties
or assets of, or to operate all or any substantial portion of the business of,
any Loan Party or any of its Subsidiaries, or (e) an order for relief shall have
been entered therein;
8.7 If any Loan Party or any of its Subsidiaries is enjoined, restrained,
or in any way prevented by court order from continuing to conduct all or any
material part of its business affairs;
8.8 Other than in respect of Permitted Protests, if a notice of Lien, levy,
or assessment is filed of record with respect to any Loan Party's or any of its
Subsidiaries' assets by the United States or Canada, or any department, agency,
or instrumentality thereof, or by any state, provincial, county, municipal, or
governmental agency, or if any taxes or debts owing at any time hereafter to any
one or more of such entities becomes a Lien, whether xxxxxx or otherwise, upon
any Loan Party's or any of its Subsidiaries' assets and the same is not paid on
the payment date thereof;
8.9 If a judgment or other claim becomes a Lien or encumbrance upon any
material portion of any Loan Party's or any of its Subsidiaries' properties or
assets;
8.10 If there is a default in any Material Contract to which any Loan Party
or any of its Subsidiaries is a party, including, without limitation, under the
Notes or any Note Document, and such default (a) occurs at the final maturity of
the obligations thereunder, or (b) results in a right by the other party
thereto, irrespective of whether exercised, to accelerate the maturity of the
applicable Loan Party's or its Subsidiaries' obligations thereunder, to
terminate such agreement, or to refuse to renew such agreement pursuant to an
automatic renewal right therein;
8.11 If any Loan Party or any of its Subsidiaries makes any payment on
account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment is
permitted by the terms of the subordination provisions applicable to such
Indebtedness;
8.12 If any misstatement or misrepresentation exists now or hereafter in
any warranty, representation, statement, or Records made to the Lender Group by
any Loan Party, its Subsidiaries, or any officer, employee, agent, or director
of any Loan Party or any of its Subsidiaries;
8.13 If there if a loss, suspension or revocation of ,or failure to renew,
any license or permit now held or hereafter acquired by any Loan Party or any of
its Subsidiaries and such loss, suspension, revocation or failure to renew could
reasonably be expected to have a Material Adverse Change;
8.14 If the obligation of any Guarantor under its Guaranty is limited or
terminated by operation of law or by such Guarantor thereunder;
8.15 If this Agreement or any other Loan Document that purports to create a
Lien, shall, for any reason, fail or cease to create a valid and perfected and,
except to the extent permitted by the terms hereof or thereof, first priority
Lien on or security interest (in respect of the Revolver Obligations), or second
priority Lien on or security interest (in respect of the Term Loan Obligations),
in the Collateral covered hereby or thereby;
8.16 If any Loan Party or any of its Subsidiaries or any of their ERISA
Affiliates shall have made a complete or partial withdrawal from a Multiemployer
Plan, and, as a result of such complete or partial withdrawal, such Loan Party
or any of its Subsidiaries or such ERISA Affiliate incurs a withdrawal liability
in an annual amount exceeding $250,000; or a Multiemployer Plan enters
reorganization status under Section 4241 of ERISA, and, as a result thereof, a
Loan Party's or such Subsidiary's, or such ERISA Affiliate's annual contribution
requirement with respect to such Multiemployer Plan increases in an annual
amount exceeding $250,000;
8.17 If any Termination Event with respect to any Benefit Plan shall have
occurred, and, 30 days thereafter, (i) such Termination Event (if correctable)
shall not have been corrected, and (ii) the then current value of such Benefit
Plan's vested benefits exceeds the then current value of assets allocable to
such benefits in such Benefit Plan by more than $250,000 (or, in the case of a
Termination Event involving liability under Section 409, 502(i), 502(l), 515,
4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 4971 or 4975 of
the Code, the liability is in excess of such amount);
8.18 Any provision of any Loan Document shall at any time for any reason be
declared to be null and void, or the validity or enforceability thereof shall be
contested by any Loan Party, or a proceeding shall be commenced by any Borrower,
or by any Governmental Authority having jurisdiction over any Loan Party,
seeking to establish the invalidity or unenforceability thereof, or any Loan
Party shall deny that any Loan Party has any liability or obligation purported
to be created under any Loan Document;
8.19 A Material Adverse Change shall occur;
8.20 A Change of Control shall occur; or
8.21 If there is a default by any Loan Party under any Warrant or the
Warrant Agreement.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence, and during the continuation,
of an Event of Default the Agent may, and if directed by the Required Revolver
Lenders, Required Term Lenders or Required Lenders, as applicable, in accordance
with the Intercreditor Agreement, the Agent shall, on behalf of the Lender
Group:
(a) declare all or any portion of the Obligations, whether evidenced by
this Agreement, by any of the other Loan Documents, or otherwise, immediately
due and payable;
(b) direct the Lender Group to cease advancing money or extending credit to
or for the benefit of Borrowers under this Agreement, under any of the Loan
Documents, or under any other agreement between Borrowers and the Lender Group;
(c) cause the Loan Parties to hold all returned Inventory in trust for the
Lender Group, segregate all returned Inventory from all other assets of the Loan
Parties or in the Loan Parties' possession and conspicuously label said returned
Inventory as the property of the Lender Group;
(d) send notices of the existence of Events of Default to any Person;
(e) terminate the Lender Group's obligations under this Agreement and any
of the other Loan Documents immediately and without notice as to any future
liability or obligation of the Lender Group, but without affecting any of the
Agent's Liens in the Collateral and without affecting the Obligations;
(f) settle or adjust disputes and claims directly with Account Debtors for
amounts and upon terms which Agent considers advisable, and in such cases, Agent
will credit the Loan Account with only the net amounts received by Agent in
payment of such disputed Accounts after deducting all Lender Group Expenses
incurred or expended in connection therewith;
(g) without notice to or demand upon any Loan Party, make such payments and
do such acts as Agent considers necessary or reasonable to protect its security
interests in the Collateral. Each Loan Party agrees to assemble the Personal
Property Collateral if Agent so requires, and to make the Personal Property
Collateral available to Agent at a place that Agent may designate which is
reasonably convenient to both parties. Each Loan Party authorizes Agent to enter
the premises where the Personal Property Collateral is located, to take and
maintain possession of the Personal Property Collateral, or any part of it, and
to pay, purchase, contest, or compromise any Lien that in Agent's determination
appears to conflict with the Agent's Liens and to pay all expenses incurred in
connection therewith and to charge the Loan Account therefor. With respect to
any of Loan Parties' owned or leased premises, each Loan Party hereby grants
Agent a license to enter into possession of such premises and to occupy the
same, without charge, in order to exercise any of the Lender Group's rights or
remedies provided herein, at law, in equity, or otherwise;
(h) without notice to any Loan Party (such notice being expressly waived),
and without constituting an acceptance of any collateral in full or partial
satisfaction of an obligation (within the meaning of the Code), set off and
apply to the Obligations any and all (i) balances and deposits of any Loan Party
held by the Lender Group (including any amounts received in the Cash Management
Accounts), or (ii) Indebtedness at any time owing to or for the credit or the
account of any Loan Party held by the Lender Group;
(i) hold, as cash collateral, any and all balances and deposits of any Loan
Party held by the Lender Group, and any amounts received in the Cash Management
Accounts, to secure the full and final repayment of all of the Obligations;
(j) ship, reclaim, recover, store, finish, maintain, repair, prepare for
sale, advertise for sale, and sell (in the manner provided for herein) the
Personal Property Collateral;
(k) sell the Personal Property Collateral at either a public or private
sale, or both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such places (including the Loan Parties' premises)
as Agent determines is commercially reasonable. It is not necessary that the
Personal Property Collateral be present at any such sale;
(l) give notice of the disposition of the Personal Property Collateral as
follows:
(i) give Administrative Borrower (for the benefit of the Loan Parties) a
notice in writing of the time and place of public sale, or, if the sale is a
private sale or some other disposition other than a public sale is to be made of
the Personal Property Collateral, the time on or after which the private sale or
other disposition is to be made; and
(ii) personally deliver or mail such notice, postage prepaid, to
Administrative Borrower as provided in Section 12, at least 10 days before the
earliest time of disposition set forth in the notice; provided, that no notice
need be given prior to the disposition of any portion of the Personal Property
Collateral that is perishable or threatens to decline speedily in value or that
is of a type customarily sold on a recognized market;
(m) on behalf of the Lender Group, credit bid and purchase at any public
sale;
(n) seek the appointment of a receiver or keeper to take possession of all
or any portion of the Collateral or to operate same and, to the maximum extent
permitted by law, seek the appointment of such a receiver without the
requirement of prior notice or a hearing; and
(o) foreclose any or all of the Mortgages and sell the Real Property or
cause the Real Property to be sold in accordance with the provisions of the
Mortgages and applicable law and exercise any and all other rights or remedies
available to Agent, on behalf of the Lender Group, under the Mortgages or any of
the other Loan Documents, at law or in equity, with respect to the Collateral
encumbered by the Mortgages.
The election of remedies set forth herein are subject to the terms and
provisions of the Intercreditor Agreement.
The Lender Group shall have all other rights and remedies available to it
at law or in equity or pursuant to any other Loan Documents. Any deficiency that
exists after disposition of the Collateral as provided above will be paid
immediately by the Loan Parties. Subject to the Intercreditor Agreement, any
excess will be returned, without interest and subject to the rights of third
Persons, by Agent to Administrative Borrower (for the benefit of the applicable
Loan Parties).
9.2 Remedies Cumulative. The rights and remedies of the Lender Group under
this Agreement, the other Loan Documents, and all other agreements shall be
cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
10. TAXES AND EXPENSES.
If any Loan Party fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Agent, in its Permitted
Discretion and without prior notice to any Loan Party, may do any or all of the
following: (a) make payment of the same or any part thereof, (b) set up such
reserves in the Loan Account as Agent deems necessary to protect the Lender
Group from the exposure created by such failure, or (c) in the case of the
failure to comply with Section 6.8 hereof, obtain and maintain insurance
policies of the type described in Section 6.8 and take any action with respect
to such policies as Agent deems prudent. Any such amounts paid by Agent shall
constitute Lender Group Expenses and any such payments shall not constitute an
agreement by the Lender Group to make similar payments in the future or a waiver
by the Lender Group of any Event of Default under this Agreement. Agent need not
inquire as to, or contest the validity of, any such expense, tax, or Lien and
the receipt of the usual official notice for the payment thereof shall be
conclusive evidence that the same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 Demand; Protest; etc. Each Loan Party waives demand, protest, notice
of protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by the
Lender Group on which any such Loan Party may in any way be liable.
11.2 The Lender Group's Liability for Collateral. Each Loan Party hereby
agrees that: (a) so long as the Lender Group complies with its obligations, if
any, under the Code, the Lender Group shall not in any way or manner be liable
or responsible for: (i) the safekeeping of the Collateral, (ii) any loss or
damage thereto occurring or arising in any manner or fashion from any cause,
(iii) any diminution in the value thereof, or (iv) any act or default of any
carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all
risk of loss, damage, or destruction of the Collateral shall be borne by the
Loan Parties.
11.3 Indemnification.
(a) General. Each Loan Party shall pay, indemnify, defend, and hold the
Agent-Related Persons, the Lender-Related Persons with respect to each Lender,
each Participant, and each of their respective officers, directors, employees,
agents, and attorneys-in-fact (each, an "Indemnified Person") harmless (to the
fullest extent permitted by law) from and against any and all claims, demands,
suits, actions, investigations, proceedings, and damages, and all reasonable
attorneys fees and disbursements and other costs and expenses actually incurred
in connection therewith (as and when they are incurred and irrespective of
whether suit is brought), at any time asserted against, imposed upon, or
incurred by any of them (a) in connection with or as a result of or related to
the execution, delivery, enforcement, performance, or administration of this
Agreement, any of the other Loan Documents, or the transactions contemplated
hereby or thereby, and (b) with respect to any investigation, litigation, or
proceeding related to this Agreement, any other Loan Document, or the use of the
proceeds of the credit provided hereunder (irrespective of whether any
Indemnified Person is a party thereto), or any act, omission, event, or
circumstance in any manner related thereto (all the foregoing, collectively, the
"Indemnified Liabilities"). The foregoing to the contrary notwithstanding, Loan
Parties shall have no obligation to any Indemnified Person under this Section
11.3 with respect to any Indemnified Liability that a court of competent
jurisdiction finally determines to have resulted from the gross negligence or
willful misconduct of such Indemnified Person. This provision shall survive the
termination of this
Agreement and the repayment of the Obligations. If any Indemnified Person makes
any payment to any other Indemnified Person with respect to an Indemnified
Liability as to which Loan Parties were required to indemnify the Indemnified
Person receiving such payment, the Indemnified Person making such payment is
entitled to be indemnified and reimbursed by Loan Parties with respect thereto.
WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED
PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART CAUSED
BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR
OF ANY OTHER PERSON.
(b) Environmental Indemnity. Without limiting Section 11.3(a) hereof, each
Loan Party shall pay, indemnify, defend, and hold harmless each Indemnified
Person against any and all Environmental Liabilities and Costs and all other
claims, demands, penalties, fines, liability (including strict liability),
losses, damages, costs and expenses (including reasonable legal fees and
expenses, consultant fees and laboratory fees), arising out of (i) any releases
or threatened releases of any Hazardous Materials (x) at any property presently
or formerly owned or operated by such Loan Party or any Subsidiary of such Loan
Party, or any predecessor in interest, or (y) generated and disposed of by such
Loan Party or any Subsidiary of such Loan Party, or any predecessor in interest;
(ii) any violations of Environmental Laws; (iii) any Environmental Action
relating to such Loan Party or any Subsidiary of such Loan Party, or any
predecessor in interest; (iv) any personal injury (including wrongful death) or
property damage (real or personal) arising out of exposure to Hazardous
Materials used, handled, generated, transported or disposed by such Loan Party
or any Subsidiary of such Loan Party, or any predecessor in interest; and (v)
any breach of any warranty or representation regarding environmental matters
made by the Loan Parties in Section 5.14 or the breach of any covenant made by
the Loan Parties in Section 6.15.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by Loan
Parties or Agent to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as Administrative Borrower or Agent, as applicable, may
designate to each other in accordance herewith), or telefacsimile to Loan
Parties in care of Administrative Borrower or to Agent, as the case may be, at
its address set forth below:
If to Administrative
Borrower: MIDAS INTERNATIONAL CORPORATION
0000 Xxxxxxxxx Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
Attn: Chief Financial Officer
Fax No. (000) 000-0000
with copies to: XXXXXXXXX XXXXXXX, P.C.
00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
Fax No. (000) 000-0000
If to Agent: BANK ONE, NA
000 Xxxxx XxXxxxx Xxxxxx
0xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx Khaniaeva
Fax No. (000) 000-0000
with copies to: BANK ONE, NA
0 Xxxx Xxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxxxx
Fax No. (000) 000-0000
WINSTON & XXXXXX
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxx, Esq.
Fax No. (000) 000-0000
Agent and Loan Parties may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other party. All notices or demands sent in accordance with this Section 12,
other than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. All notices or demands given to any Lender shall be made at
its address set forth on Schedule N-1. Each Loan Party acknowledges and agrees
that notices sent by the Lender Group in connection with the exercise of
enforcement rights against Collateral under the provisions of the Code shall be
deemed sent when deposited in the mail or personally delivered, or, where
permitted by law, transmitted by telefacsimile or any other method set forth
above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO
ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL
BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF ILLINOIS.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION
WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED
ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF XXXX, STATE OF
ILLINOIS, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF
ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. LOAN PARTIES AND THE LENDER GROUP
WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO
ASSERT THE DOCTRINE
OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS
BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).
LOAN PARTIES AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF
THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. LOAN PARTIES AND THE LENDER GROUP REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A
COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 Assignments and Participations. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of Borrowers and the
Lender Group and their respective successors and assigns permitted hereby,
except that (i) Borrowers shall not have the right to assign its rights or
obligations under the Loan Documents without the prior written consent of the
Lender Group, (ii) any assignment by any Lender must be made in compliance with
Section 14.3, and (iii) any transfer by Participation must be made in compliance
with Section 14.2. Any attempted assignment or transfer by any party not made in
compliance with this Section 14.1 shall be null and void, unless such attempted
assignment or transfer is treated as a participation in accordance with Section
14.3(b). The parties to this Agreement acknowledge that clause (ii) of this
Section 14.1 relates only to absolute assignments and this Section 14.1 does not
prohibit assignments creating security interests, including, without limitation,
(x) any pledge or assignment by any Lender of all or any portion of its rights
under this Agreement and any note to a Federal Reserve Bank or (y) in the case
of a Lender which is a Fund, any pledge or assignment of all or any portion of
its rights under this Agreement and any note to its trustee in support of its
obligations to its trustee; provided, however, that no such pledge or assignment
creating a security interest shall release the transferor Lender from its
obligations hereunder unless and until the parties thereto have complied with
the provisions of Section 14.3. Agent may treat the Person which made any Loan
or which holds any note as the owner thereof for all purposes hereof unless and
until such Person complies with Section 14.3; provided, however, that Agent may
in its discretion (but shall not be required to) follow instructions from the
Person which made any Loan or which holds any note to direct payments relating
to such Loan or note to another Person. Any assignee of the rights to any Loan
or any note agrees by acceptance of such assignment to be bound by all the terms
and provisions of the Loan Documents. Any request, authority or consent of any
Person, who at the time of making such request or giving such authority or
consent is the owner of the rights to any Loan (whether or not a note has been
issued in evidence thereof), shall be conclusive and binding on any subsequent
holder or assignee of the rights to such Loan.
14.2 Participations.
(a) Permitted Participants; Effect. Any Lender may at any time sell to one
or more banks or other entities ("Participants") participating interests in any
Loan owing to such Lender, any note held by such Lender, any Commitment of such
Lender or any other interest of such Lender under the Loan Documents. In the
event of any such sale by a Lender of participating interests to a Participant,
such Lender's obligations under the Loan Documents shall remain unchanged, such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, such Lender shall remain the owner of its Loans
and the holder of any note issued to it in evidence thereof for
all purposes under the Loan Documents, all amounts payable by Borrowers under
this Agreement shall be determined as if such Lender had not sold such
participating interests, and Borrowers and Agent shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under the Loan Documents.
(b) Voting Rights. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, modification or waiver of
any provision of the Loan Documents other than any amendment, modification or
waiver with respect to any Loan or Commitment in which such Participant has an
interest which would require consent of all of the Lenders pursuant to the terms
of Section 15.1 or of any other Loan Document.
(c) Benefit of Certain Provisions. Borrowers agree that each Participant
shall be deemed to have the right of setoff provided in Section 9.1 in respect
of its participating interest in amounts owing under the Loan Documents to the
same extent as if the amount of its participating interest were owing directly
to it as a Lender under the Loan Documents, provided that each Lender shall
retain the right of setoff provided in Section 9.1 with respect to the amount of
participating interests sold to each Participant. The Lenders agree to share
with each Participant, and each Participant, by exercising the right of setoff
provided in Section 9.1, agrees to share with each Lender, any amount received
pursuant to the exercise of its right of setoff, such amounts to be shared in
accordance with this Agreement as if each Participant were a Lender. Borrowers
further agree that each Participant shall be entitled to the benefits of
Sections 2.13(d), 2.14, 2.16 and 16.17 to the same extent as if it were a Lender
and had acquired its interest by assignment pursuant to Section 14.3, provided
that (i) a Participant shall not be entitled to receive any greater payment
under Sections 2.13(d), 2.14, 2.16 and 16.17 than the Lender who sold the
participating interest to such Participant would have received had it retained
such interest for its own account, unless the sale of such interest to such
Participant is made with the prior written consent of Borrowers, and (ii) any
Participant not incorporated under the laws of the United States of America or
any State thereof agrees to comply with the provisions of Section 16.17 to the
same extent as if it were a Lender.
14.3 Assignments.
(a) Permitted Assignments. Any Lender may at any time assign to one or more
Eligible Transferees (a "Purchaser") all or any part of its rights and
obligations under the Loan Documents. Such assignment shall be made on an
Assignment and Acceptance or in such other form as may be agreed to by the
parties thereto and acceptable to Agent. Each such assignment with respect to a
Purchaser which is not a Lender or an Affiliate of a Lender or an Approved Fund
shall either be in an amount equal to the entire applicable Commitment and Loans
of the assigning Lender or (unless Agent otherwise consents) be in an aggregate
amount not less than $5,000,000 or, if less, the entire Commitment and Loans of
such Lender. The amount of the assignment shall be based on the Commitment or
outstanding Advances or Term Loans (if the Commitment has been terminated)
subject to the assignment, determined as of the date of such assignment or as of
the "Trade Date," if the "Trade Date" is specified in the assignment.
(b) Consents. The consent of Agent (which consent shall not be unreasonably
withheld) shall be required prior to an assignment becoming effective unless the
Purchaser is a Lender with a Revolver Commitment (in the case of an assignment
of the Revolver Commitment) or is a Lender, an Affiliate of a Lender or an
Approved Fund (in the case of an assignment of any other Commitment or Loans).
The consent of the Issuing Lender shall be required prior to an assignment of a
Revolver Commitment becoming effective unless the Purchaser is a Lender with a
Revolver Commitment.
(c) Effect; Effective Date. Upon (i) delivery to Agent of an Assignment and
Acceptance, together with any consents required by Sections 14.3(a) and 14.3(b),
and (ii) payment of a $3,500 fee to Agent for processing such assignment (unless
such fee is waived by Agent), such assignment shall become effective on the
effective date specified in such assignment. The assignment shall contain a
representation by the Purchaser to the effect that none of the consideration
used to make the purchase of the Commitment and Loans under the applicable
assignment agreement constitutes "plan assets" as defined under ERISA and that
the rights and interests of the Purchaser in and under the Loan Documents will
not be "plan assets" under ERISA. On and after the effective date of such
assignment, such Purchaser shall for all purposes be a Lender party to this
Agreement and any other Loan Document executed by or on behalf of the Lenders
and shall have all the rights and obligations of a Lender under the Loan
Documents, to the same extent as if it were an original party thereto, and the
transferor Lender shall be released with respect to the Commitment and Loans
assigned to such Purchaser without any further consent or action by each
Borrower, the Lenders or Agent. In the case of an assignment covering all of the
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a Lender hereunder but shall continue to be entitled to the
benefits of, and subject to, those provisions of this Agreement and the other
Loan Documents which survive payment of the Obligations and termination of the
applicable agreement. Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 14.3
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with Section 14.2.
Upon the consummation of any assignment to a Purchaser pursuant to this Section
14.3(c), the transferor Lender, Agent and Borrowers shall, if the transferor
Lender or the Purchaser desires that its Loans be evidenced by notes, make
appropriate arrangements so that new notes or, as appropriate, replacement notes
are issued to such transferor Lender and new notes or, as appropriate,
replacement notes, are issued to such Purchaser, in each case in principal
amounts reflecting their respective Commitments, as adjusted pursuant to such
assignment.
(d) Register. Agent, acting solely for this purpose as an agent of
Borrowers, shall maintain at one of its offices in Chicago, Illinois a copy of
each assignment delivered to it and a register for the recordation of the names
and addresses of the Lenders, and the Commitments of, and principal amounts of
the Loans owing to, each Lender pursuant to the terms hereof from time to time
(the "Register"). The entries in the Register shall be conclusive, and
Borrowers, Agent and the Lenders may treat each Person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by Borrowers and any Lender, at any reasonable time and
from time to time upon reasonable prior notice.
14.4 Dissemination of Information. Borrowers authorize each Lender to
disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and any
prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of each Borrower and its Subsidiaries, including
without limitation any information contained in any Reports; provided that each
Transferee and prospective Transferee agrees to be bound by Section 16.23(d) of
this Agreement.
14.5 Tax Treatment. If any interest in any Loan Document is transferred to
any Transferee which is not incorporated under the laws of the United States or
any State thereof, the transferor Lender shall cause such Transferee,
concurrently with the effectiveness of such transfer, to comply with the
provisions of Section 16.8.
15. AMENDMENTS; WAIVERS; SUBORDINATION.
15.1 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by Loan Parties therefrom, shall be effective unless the same shall be
in writing and signed by the Required Lenders (or, as provided herein, Required
Revolver Lenders), Agent at the request of the Required Lenders (or, as provided
herein, Required Revolver Lenders) and Administrative Borrower (on behalf of all
Loan Parties), and then any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given; provided,
however, that no such waiver, amendment, or consent shall, unless in writing and
signed by all of the Lenders affected thereby and Administrative Borrower (on
behalf of all Loan Parties) and acknowledged by Agent, do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any other Loan
Document for any payment of principal, interest, fees, or other amounts due
hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on, any loan or other
extension of credit hereunder, or reduce any fees or other amounts payable
hereunder or under any other Loan Document,
(d) change the percentage of the Loans or Commitments that is required to
take any action hereunder (other than the definition of "Required Revolver
Lenders");
(e) amend, modify or waive Section 2.4(b)(i) or Section 15.4;
(f) amend, modify or waive this Section or any provision of the Agreement
providing for consent or other action by all Lenders;
(g) release Collateral other than as permitted by Section 15.4 or 16.16;
(h) contractually subordinate any of the Agent's Liens; or
(i) release any Borrower or Guarantor from any obligation for the payment
of money;
provided, further, that no amendment, waiver or consent shall, unless in writing
and signed by Agent or Issuing Lender, affect the rights or duties of Agent or
Issuing Lender, as applicable, under this Agreement or any other Loan Document.
The foregoing notwithstanding, any amendment, modification, waiver, consent,
termination, or release of, or with respect to, any provision of this Agreement
or any other Loan Document that relates only to the relationship of the Lender
Group among themselves, and that does not affect the rights or obligations of
Loan Parties, shall not require consent by or the agreement of Loan Parties.
Agent and the Lenders shall not amend this Agreement if such amendment
would be prohibited by the Intercreditor Agreement.
15.2 Replacement of Holdout Lender. If any action to be taken by the Lender
Group or Agent hereunder requires the unanimous consent, authorization, or
agreement of all Lenders, and a Lender ("Holdout Lender") fails to give its
consent, authorization, or agreement, then Agent, upon at least 5 Business Days
prior irrevocable notice to the Holdout Lender, may permanently replace the
Holdout Lender with one or more substitute Lenders (each, a "Replacement
Lender"), and the Holdout
Lender shall have no right to refuse to be replaced hereunder. Such notice to
replace the Holdout Lender shall specify an effective date for such replacement,
which date shall not be later than 15 Business Days after the date such notice
is given.
Prior to the effective date of such replacement, the Holdout Lender and
each Replacement Lender shall execute and deliver an Assignment and Acceptance
Agreement, subject only to the Holdout Lender being repaid its share of the
outstanding Obligations (including an assumption of its Pro Rata Share of the
Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance Agreement prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance Agreement. The replacement of any Holdout Lender
shall be made in accordance with the terms of Section 14.1. Until such time as
the Replacement Lenders shall have acquired all of the Obligations, the
Commitments, and the other rights and obligations of the Holdout Lender
hereunder and under the other Loan Documents, the Holdout Lender shall remain
obligated to make the Holdout Lender's Pro Rata Share of Advances and to
purchase a participation in each Letter of Credit, in an amount equal to its Pro
Rata Share of the Risk Participation Liability of such Letter of Credit.
15.3 No Waivers; Cumulative Remedies. No failure by Agent or any Lender to
exercise any right, remedy, or option under this Agreement or, any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent's and each
Lender's rights thereafter to require strict performance by Borrowers of any
provision of this Agreement. Agent's and each Lender's rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have.
15.4 Subordination of Lien. The Liens securing the Term Loan Obligations
are junior in priority of payment to the Liens securing the Revolver Obligations
as set forth in the Intercreditor Agreement.
16. AGENT; THE LENDER GROUP.
16.1 Appointment; Nature of Relationship. Bank One, NA is hereby appointed
by each of the Lenders as its contractual representative (herein referred to as
"Agent") hereunder and under each other Loan Document, and each of the Lenders
irrevocably authorizes Agent to act as the contractual representative of such
Lender with the rights and duties expressly set forth herein and in the other
Loan Documents. Agent agrees to act as such contractual representative upon the
express conditions contained in this Section 16. Notwithstanding the use of the
defined term "Agent," it is expressly understood and agreed that Agent shall not
have any fiduciary responsibilities to any Lender by reason of this Agreement or
any other Loan Document and that Agent is merely acting as the contractual
representative of the Lenders with only those duties as are expressly set forth
in this Agreement and the other Loan Documents. In its capacity as the Lenders'
contractual representative, Agent (i) does not hereby assume any fiduciary
duties to any of the Lenders, (ii) is a "representative" of the Lenders within
the meaning of the term "secured party" as defined in the Illinois Uniform
Commercial Code and (iii) is acting as an independent contractor, the rights and
duties of which are limited to those expressly set forth in this Agreement and
the other Loan Documents. Each of the Lenders hereby agrees to assert no claim
against Agent on any agency theory or any other theory of liability for breach
of fiduciary duty, all of which claims each Lender hereby waives.
16.2 Powers. Agent shall have and may exercise such powers under the Loan
Documents as are specifically delegated to Agent by the terms of each thereof,
together with such powers as are reasonably incidental thereto. Agent shall have
no implied duties to the Lenders, or any obligation to the Lenders to take any
action thereunder except any action specifically provided by the Loan Documents
to be taken by Agent.
16.3 General Immunity. Neither Agent nor any of its directors, officers,
agents or employees shall be liable to Borrowers, the Lenders or any Lender for
any action taken or omitted to be taken by it or them hereunder or under any
other Loan Document or in connection herewith or therewith except to the extent
such action or inaction is determined in a final non-appealable judgment by a
court of competent jurisdiction to have arisen from the gross negligence or
willful misconduct of such Person.
16.4 No Responsibility for Loans, Recitals, etc. Neither Agent nor any of
its directors, officers, agents or employees shall be responsible for or have
any duty to ascertain, inquire into, or verify (a) any statement, warranty or
representation made in connection with any Loan Document or any borrowing
hereunder; (b) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender; (c) the satisfaction of any condition specified in Section 3, except
receipt of items required to be delivered solely to Agent; (d) the existence or
possible existence of any Default or Event of Default; (e) the validity,
enforceability, effectiveness, sufficiency or genuineness of any Loan Document
or any other instrument or writing furnished in connection therewith; (f) the
value, sufficiency, creation, perfection or priority of any Lien in any
collateral security; or (g) the financial condition of Borrowers or any
guarantor of any of the Obligations or of any of Borrowers' or any such
guarantor's respective Subsidiaries. Agent shall have no duty to disclose to the
Lenders information that is not required to be furnished by Borrowers to Agent
at such time, but is voluntarily furnished by Borrowers to Agent (either in its
capacity as Agent or in its individual capacity).
16.5 Action on Instructions of Lenders. Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder and under any other
Loan Document in accordance with written instructions signed by the Required
Lenders, and such instructions and any action taken or failure to act pursuant
thereto shall be binding on all of the Lenders. The Lenders hereby acknowledge
that Agent shall be under no duty to take any discretionary action permitted to
be taken by it pursuant to the provisions of this Agreement or any other Loan
Document unless it shall be requested in writing to do so by the Required
Lenders. Agent shall be fully justified in failing or refusing to take any
action hereunder and under any other Loan Document unless it shall first be
indemnified to its satisfaction by the Lenders pro rata against any and all
liability, cost and expense that it may incur by reason of taking or continuing
to take any such action.
16.6 Employment of Agents and Counsel. Agent may execute any of its duties
as Agent hereunder and under any other Loan Document by or through employees,
agents, and attorneys-in-fact and shall not be answerable to the Lenders, except
as to money or securities received by it or its authorized agents, for the
default or misconduct of any such agents or attorneys-in-fact selected by it
with reasonable care. Agent shall be entitled to advice of counsel concerning
the contractual arrangement between Agent and the Lenders and all matters
pertaining to Agent's duties hereunder and under any other Loan Document.
16.7 Reliance on Documents; Counsel. Agent shall be entitled to rely upon
any note, notice, consent, certificate, affidavit, letter, telegram, statement,
paper or document believed by it to be genuine and correct and to have been
signed or sent by the proper person or persons, and, in respect to legal
matters, upon the opinion of counsel selected by Agent, which counsel may be
employees of Agent.
16.8 Agent's Reimbursement and Indemnification. The Lenders agree to
reimburse and indemnify Agent ratably in proportion to their respective
Commitments (or, if the Commitments have been terminated, in proportion to their
Commitments immediately prior to such termination) (i) for any amounts not
reimbursed by Borrowers for which Agent is entitled to reimbursement by
Borrowers under the Loan Documents, (ii) for any other expenses incurred by
Agent on behalf of the Lenders, in connection with the preparation, execution,
delivery, administration and enforcement of the Loan Documents (including,
without limitation, for any expenses incurred by Agent in connection with any
dispute between Agent and any Lender or between two or more of the Lenders) and
(iii) for any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against Agent in any
way relating to or arising out of the Loan Documents or any other document
delivered in connection therewith or the transactions contemplated thereby
(including, without limitation, for any such amounts incurred by or asserted
against Agent in connection with any dispute between Agent and any Lender or
between two or more of the Lenders), or the enforcement of any of the terms of
the Loan Documents or of any such other documents, provided that (i) no Lender
shall be liable for any of the foregoing to the extent any of the foregoing is
found in a final non-appealable judgment by a court of competent jurisdiction to
have resulted from the gross negligence or willful misconduct of Agent and (ii)
any indemnification required pursuant to Section 11.3 shall, notwithstanding the
provisions of this Section 16.8, be paid by the relevant Lender in accordance
with the provisions thereof. The obligations of the Lenders under this Section
16.8 shall survive payment of the Obligations and termination of this Agreement.
16.9 Notice of Default. Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless
Agent has received written notice from a Lender or Borrowers referring to this
Agreement describing such Default or Event of Default and stating that such
notice is a "notice of default". In the event that Agent receives such a notice,
Agent shall give prompt notice thereof to the Lenders.
16.10 Rights as a Lender. In the event Agent is a Lender, Agent shall have
the same rights and powers hereunder and under any other Loan Document with
respect to its Commitment and its Loans as any Lender and may exercise the same
as though it were not Agent, and the term "Lender" or "Lenders" shall, at any
time when Agent is a Lender, unless the context otherwise indicates, include
Agent in its individual capacity. Agent and its Affiliates may accept deposits
from, lend money to, and generally engage in any kind of trust, debt, equity or
other transaction, in addition to those contemplated by this Agreement or any
other Loan Document, with Borrowers or any of its Subsidiaries in which each
Borrower or such Subsidiary is not restricted hereby from engaging with any
other Person. Agent, in its individual capacity, is not obligated to remain a
Lender.
16.11 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Agent, the Arranger or any other Lender
and based on the financial statements prepared by Borrowers and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and the other Loan Documents.
Each Lender also acknowledges that it will, independently and without reliance
upon Agent, the Arranger or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and the
other Loan Documents.
16.12 Successor Agent. Agent may resign at any time by giving written
notice thereof to the Lenders and Borrowers, such resignation to be effective
upon the appointment of a successor Agent or, if no successor Agent has been
appointed, forty-five days after the retiring Agent gives notice of its
intention to resign. Agent may be removed at any time with or without cause by
written notice received
by Agent from the Required Lenders, such removal to be effective on the date
specified by the Required Lenders. Upon any such resignation or removal, the
Required Lenders shall have the right to appoint, on behalf of Borrowers and the
Lenders, a successor Agent. If no successor Agent shall have been so appointed
by the Required Lenders within thirty days after the resigning Agent's giving
notice of its intention to resign, then the resigning Agent may appoint, on
behalf of Borrowers and the Lenders, a successor Agent. Notwithstanding the
previous sentence, Agent may at any time without the consent of each Borrower or
any Lender, appoint any of its Affiliates which is a commercial bank as a
successor Agent hereunder. If Agent has resigned or been removed and no
successor Agent has been appointed, the Lenders may perform all the duties of
Agent hereunder and Borrowers shall make all payments in respect of the
Obligations to the applicable Lender and for all other purposes shall deal
directly with the Lenders. No successor Agent shall be deemed to be appointed
hereunder until such successor Agent has accepted the appointment. Any such
successor Agent shall be a commercial bank having capital and retained earnings
of at least $100,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
resigning or removed Agent. Upon the effectiveness of the resignation or removal
of Agent, the resigning or removed Agent shall be discharged from its duties and
obligations hereunder and under the Loan Documents. After the effectiveness of
the resignation or removal of an Agent, the provisions of this Section 16 shall
continue in effect for the benefit of such Agent in respect of any actions taken
or omitted to be taken by it while it was acting as Agent hereunder and under
the other Loan Documents. In the event that there is a successor to Agent by
merger, or Agent assigns its duties and obligations to an Affiliate pursuant to
this Section 16.12, then the term "Prime Rate" as used in this Agreement shall
mean the prime rate, base rate or other analogous rate of the new Agent.
16.13 Delegation to Affiliates. Loan Parties and the Lenders agree that
Agent may delegate any of its duties under this Agreement to any of its
Affiliates. Any such Affiliate (and such Affiliate's directors, officers, agents
and employees) which performs duties in connection with this Agreement shall be
entitled to the same benefits of the indemnification, waiver and other
protective provisions to which Agent is entitled under this Agreement.
16.14 Withholding Taxes.
(a) If any Lender is a "foreign corporation, partnership or trust" within
the meaning of the IRC and such Lender claims exemption from, or a reduction of,
U.S. withholding tax under Sections 1441 or 1442 of the IRC, such Lender agrees
with and in favor of Agent and Borrowers, to deliver to Agent and Administrative
Borrower:
(i) if such Lender claims an exemption from withholding tax pursuant to its
portfolio interest exception, (A) a statement of the Lender, signed under
penalty of perjury, that it is not a (I) a "bank" as described in Section
881(c)(3)(A) of the IRC, (II) a 10% shareholder (within the meaning of Section
881(c)(3)(B) of the IRC), or (III) a controlled foreign corporation described in
Section 881(c)(3)(C) of the IRC, and (B) a properly completed IRS Form W-8BEN,
before the first payment of any interest under this Agreement and at any other
time reasonably requested by Agent or Administrative Borrower;
(ii) if such Lender claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed IRS Form
W-8BEN before the first payment of any interest under this Agreement and at any
other time reasonably requested by Agent or Administrative Borrower;
(iii) if such Lender claims that interest paid under this Agreement is
exempt from United States withholding tax because it is effectively connected
with a United
States trade or business of such Lender, two properly completed and executed
copies of IRS Form W-8ECI before the first payment of any interest is due under
this Agreement and at any other time reasonably requested by Agent or
Administrative Borrower;
(iv) such other form or forms as may be required under the IRC or other
laws of the United States as a condition to exemption from, or reduction of,
United States withholding tax.
Such Lender agrees promptly to notify Agent and Administrative Borrower of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Lender claims exemption from, or reduction of, withholding tax
under a United States tax treaty by providing IRS Form W-8BEN and such Lender
sells, assigns, grants a participation in, or otherwise transfers all or part of
the Obligations of Borrowers to such Lender, such Lender agrees to notify Agent
of the percentage amount in which it is no longer the beneficial owner of
Obligations of Borrowers to such Lender. To the extent of such percentage
amount, Agent will treat such Lender's IRS Form W-8BEN as no longer valid.
(c) If any Lender is entitled to a reduction in the applicable withholding
tax, Agent may withhold from any interest payment to such Lender an amount
equivalent to the applicable withholding tax after taking into account such
reduction. If the forms or other documentation required by subsection (a) of
this Section are not delivered to Agent, then Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.
(d) If the IRS or any other Governmental Authority of the United States or
other jurisdiction asserts a claim that Agent did not properly withhold tax from
amounts paid to or for the account of any Lender (because the appropriate form
was not delivered, was not properly executed, or because such Lender failed to
notify Agent of a change in circumstances which rendered the exemption from, or
reduction of, withholding tax ineffective, or for any other reason) such Lender
shall indemnify and hold Agent harmless for all amounts paid, directly or
indirectly, by Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to Agent
under this Section, together with all costs and expenses (including attorneys
fees and expenses). The obligation of the Lenders under this subsection shall
survive the payment of all Obligations and the resignation or replacement of
Agent.
(e) All payments made by Loan Parties hereunder or under any note or other
Loan Document will be made without setoff, counterclaim, or other defense,
except as required by applicable law other than for Taxes (as defined below).
All such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction (other than the United States) or by any political subdivision or
taxing authority thereof or therein (other than of the United States) with
respect to such payments (but excluding, any tax imposed by any jurisdiction or
by any political subdivision or taxing authority thereof or therein (i) measured
by or based on the net income or net profits of a Lender, or (ii) to the extent
that such tax results from a change in the circumstances of the Lender,
including a change in the residence, place of organization, or principal place
of business of the Lender, or a change in the branch or lending office of the
Lender participating in the transactions set forth herein) and all interest,
penalties or similar liabilities with respect thereto (all such non-excluded
taxes, levies, imposts, duties, fees, assessments or other charges being
referred to collectively as "Taxes"). If any Taxes are so levied or imposed,
each Loan Party agrees to pay the full amount of such Taxes, and such additional
amounts as may be necessary so that every payment of all amounts due under this
Agreement or under any note, including any amount paid pursuant to this Section
16.11(e) after withholding or deduction for or on account of any Taxes, will not
be less than the amount provided for herein; provided, however, that Loan
Parties shall not be required to increase any such amounts payable to Agent or
any Lender (i) that is not organized under the laws of the United States, if
such Person fails to comply with the other requirements of this Section 16.11,
or (ii) if the increase in such amount payable results from Agent's or such
Lender's own willful misconduct or gross negligence. Administrative Borrower
will furnish to Agent as promptly as possible after the date the payment of any
Taxes is due pursuant to applicable law certified copies of tax receipts
evidencing such payment by Loan Parties.
16.15 Collateral Matters.
(a) The Lenders hereby irrevocably authorize Agent, at its option and in
its sole discretion, to release any Lien on any Collateral (i) upon the
termination of the Commitments and payment and satisfaction in full by Borrowers
of all Obligations, (ii) constituting property being sold or disposed of if a
release is required or desirable in connection therewith and if Administrative
Borrower certifies to Agent that the sale or disposition is permitted under
Section 7.4 of this Agreement or the other Loan Documents (and Agent may rely
conclusively on any such certificate, without further inquiry), (iii)
constituting property in which no Loan Party owned any interest at the time the
security interest was granted or at any time thereafter, or (iv) constituting
property leased to a Loan Party under a lease that has expired or is terminated
in a transaction permitted under this Agreement. Except as provided above or in
the Intercreditor Agreement, Agent will not execute and deliver a release of any
Lien on any Collateral without the prior written authorization of (y) if the
release is of all or any material portion of the Collateral, all of the Lenders,
or (z) otherwise, the Required Lenders. Upon request by Agent or Administrative
Borrower at any time, the Lenders will confirm in writing Agent's authority to
release any such Liens on particular types or items of Collateral pursuant to
this Section 16.15; provided, however, that (1) Agent shall not be required to
execute any document necessary to evidence such release on terms that, in
Agent's opinion, would expose Agent to liability or create any obligation or
entail any consequence other than the release of such Lien without recourse,
representation, or warranty, and (2) such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of a Loan Party in respect of)
all interests retained by a Loan Party, including, the proceeds of any sale, all
of which shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the Lenders to
assure that the Collateral exists or is owned by Loan Parties or is cared for,
protected, or insured or has been encumbered, or that the Agent's Liens have
been properly or sufficiently or lawfully created, perfected, protected, or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent pursuant to any of the Loan Documents, it being understood
and agreed that in respect of the Collateral, or any act, omission, or event
related thereto, subject to the terms and conditions contained herein, Agent may
act in any manner it may deem appropriate, in its sole discretion given Agent's
own interest in the Collateral in its capacity as one of the Lenders and that
Agent shall have no other duty or liability whatsoever to any Lender as to any
of the foregoing, except as otherwise provided herein.
16.16 Sharing of Payments. If, at any time or times any Lender shall
receive (i) by payment, foreclosure, setoff, or otherwise, any proceeds of
Collateral or any payments with respect to the Obligations arising under, or
relating to, this Agreement or the other Loan Documents, except for any such
proceeds or payments received by such Lender from Agent pursuant to the terms of
this Agreement, or (ii) payments from Agent in excess of such Lender's Pro Rata
Share portion of all such distributions by Agent, such Lender promptly shall (1)
turn the same over to Agent, in kind, and with such endorsements
as may be required to negotiate the same to Agent, or in immediately available
funds, as applicable, for the account of all of the Lenders and for application
to the Obligations in accordance with the applicable provisions of this
Agreement and the Intercreditor Agreement, or (2) purchase, without recourse or
warranty, an undivided interest and participation in the Obligations owed to the
other Lenders so that such excess payment received shall be applied ratably as
among the Lenders in accordance with their Pro Rata Shares; provided, however,
that if all or part of such excess payment received by the purchasing party is
thereafter recovered from it, those purchases of participations shall be
rescinded in whole or in part, as applicable, and the applicable portion of the
purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.
16.17 Agency for Perfection. Agent hereby appoints each other Lender as its
agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent's Liens in assets which, in accordance with Article 9 of
the Code can be perfected only by possession. Should any Lender obtain
possession of any such Collateral, such Lender shall notify Agent thereof, and,
promptly upon Agent's request therefor shall deliver such Collateral to Agent or
in accordance with Agent's instructions.
16.18 Payments by Agent to the Lenders. All payments to be made by Agent to
the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice to Agent. Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium, or interest of the Obligations.
16.19 Concerning the Collateral and Related Loan Documents. Each member of
the Lender Group authorizes and directs Agent to enter into this Agreement, the
Intercreditor Agreement and the other Loan Documents relating to the Collateral,
for the benefit of the Lender Group. Each member of the Lender Group agrees that
any action taken by Agent in accordance with the terms of this Agreement, the
Intercreditor Agreement or the other Loan Documents relating to the Collateral
and the exercise by Agent of its powers set forth therein or herein, together
with such other powers that are reasonably incidental thereto, shall be binding
upon all of the Lenders.
16.20 Field Audits and Examination Reports; Confidentiality; Disclaimers by
Lenders; Other Reports and Information. By becoming a party to this Agreement,
each Lender:
(a) is deemed to have requested that Agent furnish such Lender, promptly
after it becomes available, a copy of each field audit or examination report
(each a "Report" and collectively, "Reports") prepared by or at the request of
Agent, and Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i) make any
representation or warranty as to the accuracy of any Report, and (ii) shall not
be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding the Loan
Parties and will rely significantly upon the Books, as well as on
representations of the Loan Parties personnel,
(d) agrees to keep all Reports and other material, non-public information
regarding the Loan Parties and their Subsidiaries and their operations, assets,
and existing and
contemplated business plans in a confidential manner; it being understood and
agreed by Loan Parties that in any event such Lender may make disclosures (a) to
counsel for and other advisors, accountants, and auditors to such Lender, (b)
reasonably required by any bona fide potential or actual Assignee or Participant
in connection with any contemplated or actual assignment or transfer by such
Lender of an interest herein or any participation interest in such Lender's
rights hereunder, (c) of information that has become public by disclosures made
by Persons other than such Lender, its Affiliates, assignees, transferees, or
Participants, or (d) as required or requested by any court, governmental or
administrative agency, pursuant to any subpoena or other legal process, or by
any law, statute, regulation, or court order; provided, however, that, unless
prohibited by applicable law, statute, regulation, or court order, such Lender
shall notify Administrative Borrower of any request by any court, governmental
or administrative agency, or pursuant to any subpoena or other legal process for
disclosure of any such non-public material information concurrent with, or where
practicable, prior to the disclosure thereof, and
(e) without limiting the generality of any other indemnification provision
contained in this Agreement, agrees: (i) to hold Agent and any such other Lender
preparing a Report harmless from any action the indemnifying Lender may take or
conclusion the indemnifying Lender may reach or draw from any Report in
connection with any loans or other credit accommodations that the indemnifying
Lender has made or may make to Borrowers, or the indemnifying Lender's
participation in, or the indemnifying Lender's purchase of, a loan or loans of
Borrowers; and (ii) to pay and protect, and indemnify, defend and hold Agent,
and any such other Lender preparing a Report harmless from and against, the
claims, actions, proceedings, damages, costs, expenses, and other amounts
(including, attorneys fees and costs) incurred by Agent and any such other
Lender preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by a Loan Party to Agent that has not been contemporaneously
provided by such Loan Party to such Lender, and, upon receipt of such request,
Agent shall provide a copy of same to such Lender, (y) to the extent that Agent
is entitled, under any provision of the Loan Documents, to request additional
reports or information from a Loan Party, any Lender may, from time to time,
reasonably request Agent to exercise such right as specified in such Lender's
notice to Agent, whereupon Agent promptly shall request of a Loan Party the
additional reports or information reasonably specified by such Lender, and, upon
receipt thereof from such Loan Party, Agent promptly shall provide a copy of
same to such Lender, and (z) any time that Agent renders to a Loan Party a
statement regarding the Loan Account, Agent shall send a copy of such statement
to each Lender. Agent shall have no liability to any Lender for the accuracy or
completeness of any Report or other information furnished to the Lenders or any
loss suffered by any Lender in connection with any such Reports or information.
16.21 Several Obligations; No Liability. Notwithstanding that certain of
the Loan Documents now or hereafter may have been or will be executed only by or
in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Lenders to make any credit
available hereunder shall constitute the several (and not joint) obligations of
the respective Lenders on a ratable basis, according to their respective
Commitments, to make an amount of such credit not to exceed, in principal
amount, at any one time outstanding, the amount of their respective Commitments.
Nothing contained herein shall confer upon any Lender any interest in, or
subject any Lender to any liability for, or in respect of, the business, assets,
profits, losses, or liabilities of any other Lender. Each Lender shall be solely
responsible for notifying its Participants of any matters relating to the Loan
Documents to the extent any such notice may be required, and no Lender shall
have any obligation, duty, or liability to any Participant of any other Lender.
Except as provided in Section 16.8, no member of the Lender Group shall have any
liability for the acts or any other member of the Lender
Group. No Lender shall be responsible to any Loan Party or any other Person for
any failure by any other Lender to fulfill its obligations to make credit
available hereunder, nor to advance for it or on its behalf in connection with
its Commitment, nor to take any other action on its behalf hereunder or in
connection with the financing contemplated herein.
17. GENERAL PROVISIONS.
17.1 Effectiveness. This Agreement shall be binding and deemed effective
when executed by Borrowers, Agent, and each Lender whose signature is provided
for on the signature pages hereof and the satisfaction of the conditions set
forth in Section 3.1.
17.2 Section Headings. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.
17.3 Interpretation. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against the Lender Group or
Borrowers, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
17.4 Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
17.5 Amendments in Writing. This Agreement only can be amended by a writing
in accordance with Section 15.1.
17.6 Counterparts; Telefacsimile Execution. This Agreement may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
17.7 Revival and Reinstatement of Obligations. If the incurrence or payment
of the Obligations by any Borrower or Guarantor or the transfer to the Lender
Group of any property should for any reason subsequently be declared to be void
or voidable under any state or federal law relating to creditors' rights,
including provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (collectively, a "Voidable Transfer"), and if the Lender Group is
required to repay or restore, in whole or in part, any such Voidable Transfer,
or elects to do so upon the reasonable advice of its counsel, then, as to any
such Voidable Transfer, or the amount thereof that the Lender Group is required
or elects to repay or restore, and as to all reasonable costs, expenses, and
attorneys fees of the Lender Group related thereto, the liability of each Loan
Party automatically shall be revived, reinstated, and restored and shall exist
as though such Voidable Transfer had never been made.
17.8 Integration. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
17.9 MIC as Agent for Borrowers. Each Borrower hereby irrevocably appoints
MIC as the borrowing agent and attorney-in-fact for all Borrowers (the
"Administrative Borrower") which appointment shall remain in full force and
effect unless and until Agent shall have received prior written notice signed by
each Borrower that such appointment has been revoked and that another Borrower
has been appointed Administrative Borrower. Each Borrower hereby irrevocably
appoints and authorizes the Administrative Borrower (i) to provide Agent with
all notices with respect to Advances and Letters of Credit obtained for the
benefit of any Borrower and all other notices and instructions under this
Agreement and (ii) to take such action as the Administrative Borrower deems
appropriate on its behalf to obtain Advances and Letters of Credit and to
exercise such other powers as are reasonably incidental thereto to carry out the
purposes of this Agreement. It is understood that the handling of the Loan
Account and Collateral of Borrowers in a combined fashion, as more fully set
forth herein, is done solely as an accommodation to Borrowers in order to
utilize the collective borrowing powers of Borrowers in the most efficient and
economical manner and at their request, and that Lender Group shall not incur
liability to any Borrower as a result hereof. Each Borrower expects to derive
benefit, directly or indirectly, from the handling of the Loan Account and the
Collateral in a combined fashion since the successful operation of each Borrower
is dependent on the continued successful performance of the integrated group. To
induce the Lender Group to do so, and in consideration thereof, each Loan Party
hereby jointly and severally agrees to indemnify each member of the Lender Group
and hold each member of the Lender Group harmless against any and all liability,
expense, loss or claim of damage or injury, made against the Lender Group by any
Loan Party or by any third party whosoever, arising from or incurred by reason
of (a) the handling of the Loan Account and Collateral of Loan Parties as herein
provided, (b) the Lender Group's relying on any instructions of the
Administrative Borrower, or (c) any other action taken by the Lender Group
hereunder or under the other Loan Documents, except that Loan Parties will have
no liability to the relevant Agent-Related Person or Lender-Related Person under
this Section 17.9 with respect to any liability that has been finally determined
by a court of competent jurisdiction to have resulted solely from the gross
negligence or willful misconduct of such Agent-Related Person or Lender-Related
Person, as the case may be.
18. GUARANTY.
18.1 Guaranty; Limitation of Liability.
(a) Each Guarantor (other than the Canadian Guarantors; it being understood
that, solely for purposes of this Section 18, the Guarantors shall not include
the Canadian Guarantors) hereby unconditionally and irrevocably jointly and
severally guarantees the punctual payment when due, whether at stated maturity,
by acceleration or otherwise, of all Revolver Obligations of Borrowers owing to
the Revolving Lenders now or hereafter existing under any Loan Document, whether
for principal, interest fees, expenses or otherwise (such obligations, to the
extent not paid by Borrowers, being the "Guaranteed Revolver Obligations"). Each
Guarantor hereby unconditionally and irrevocably jointly and severally
guarantees the punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of all Term Loan Obligations of Borrowers owing to
the Term Loan Lenders now or hereafter existing under any Loan Document, whether
for principal, interest fees, expenses or otherwise (such obligations, to the
extent not paid by Borrowers, being the "Guaranteed Term Loan Obligations"). The
Guaranteed Revolver Obligations and the Guaranteed Term Loan Obligations are
collectively referred to as the "Guaranteed Obligations". Each Guarantor hereby
unconditionally and irrevocably jointly and severally agrees to pay any and all
reasonable expenses (including reasonable counsel fees and expenses) incurred by
Agent and Lenders in enforcing any rights under the guaranty set forth in this
Section 18.
Without limiting the generality of the foregoing, the Guarantors' liability
shall extend to all amounts that constitute part of the Guaranteed Obligations
and would be owed by Borrowers to Lenders under any Loan Document but for the
fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving any Borrower.
(b) Notwithstanding anything to the contrary contained in this Section 18,
the recourse of Agent for the Guaranteed Obligations of the Parent described in
paragraph(a) of this Section 18.1 is limited to the "Pledged Collateral" as
defined in the Pledge Agreement dated the date hereof owed by the Parent.
18.2 Guaranty Absolute. Each Guarantor guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Loan
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of Lenders with
respect thereto. The obligations of each Guarantor under this Section 18 are
independent of the Guaranteed Obligations, and a separate action or actions may
be brought and prosecuted against each Guarantor to enforce such obligations,
irrespective of whether any action is brought against any Borrower or whether
any Borrower is joined in any such action or actions. The liability of each
Guarantor under this Section 18 shall be irrevocable, absolute and unconditional
irrespective of, and each Guarantor hereby irrevocably waives any defenses it
may now or hereafter have in any way relating to, any or all of the following:
(a) any lack of validity or enforceability of any Loan Document or any
agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Guaranteed Obligations, or any other amendment or
waiver of or any consent to departure from any Loan Document, including, without
limitation, any increase in the Guaranteed Obligations resulting from the
extension of additional credit to any Borrower or otherwise;
(c) any taking, exchange, release or non-perfection of any Collateral, or
any taking, release or amendment or waiver of or consent to departure from any
other guaranty, for all or any of the Guaranteed Obligations;
(d) any change, restructuring or termination of the corporate structure or
existence of any Borrower or Guarantor; or
(e) any other circumstance (including, without limitation, any statute of
limitations) or any existence of or reliance on any representation by Lenders
that might otherwise constitute a defense available to, or a discharge of, any
Guarantor, any Borrower or any other guarantor or surety.
This Section 18 shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by Lenders or any other Person, all as though such
payment had not been made.
18.3 Waiver. Each Guarantor hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Section 18 and any requirement that Agent or Lenders
exhaust any right or take any action against Borrowers or any other Person or
any Collateral. Each Guarantor acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated herein and that
the waiver set forth in this Section 18 is knowingly made in contemplation of
such benefits. Each Guarantor hereby waives any
right to revoke this Section 18, and acknowledges that this Section 18 is
continuing in nature and applies to all Guaranteed Obligations, whether existing
now or in the future.
18.4 Continuing Guaranty; Assignments. This Section 18 is a continuing
guaranty and shall (a) remain in full force and effect until the later of the
cash payment in full of the Guaranteed Obligations (other than indemnification
obligations as to which no claim has been made) and all other amounts payable
under this Section 18 and the Maturity Date, (b) be binding upon each Guarantor,
their respective successors and assigns and (c) inure to the benefit of and be
enforceable by Agent and Lenders and its successors, pledgees, transferees and
assigns. Without limiting the generality of the foregoing clause(c), any Lender
may pledge, assign or otherwise transfer all or any portion of its rights and
obligations under this Agreement (including, without limitation, all or any
portion of its loans owing to it and any note held by it) to any other Person,
and such other Person shall thereupon become vested with all the benefits in
respect thereof granted such Lender herein or otherwise, in each case as
provided in Section 14.1.
18.5 Subrogation. No Guarantor will exercise any rights that it may now or
hereafter acquire against any Borrower or any other insider guarantor that arise
from the existence, payment, performance or enforcement of such Guarantor's
obligations under this Section 18, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or indemnification and any
right to participate in any claim or remedy of Lenders against any Borrower or
any other insider guarantor or any Collateral, whether or not such claim, remedy
or right arises in equity or under contract, statute or common law, including,
without limitation, the right to take or receive from any Borrower or any other
insider guarantor, directly or indirectly, in cash or other property or by
set-off or in any other manner, payment or security solely on account of such
claim, remedy or right, unless and until all of the Guaranteed Obligations and
all other amounts payable under this Section 18 shall have been paid in full in
cash and this Agreement shall have terminated. If any amount shall be paid to
any Guarantor in violation of the immediately preceding sentence at any time
prior to the later of the payment in full in cash of the Guaranteed Obligations
and all other amounts payable under this Section 18 and the termination of this
Agreement, such amount shall be held in trust for the benefit of Lenders and
shall forthwith be paid to Agent to be credited and applied to the Guaranteed
Obligations and all other amounts payable under this Section 18, whether matured
or unmatured, in accordance with the terms of this Agreement, or to be held as
collateral for any Guaranteed Obligations or other amounts payable under this
Section 18 thereafter arising. If (i) any Guarantor shall make payment to
Lenders of all or any part of the Guaranteed Obligations, (ii) all of the
Guaranteed Obligations and all other amounts payable under this Section 18 shall
be paid in full in cash and (iii) this Agreement has terminated, Lenders will,
at such Guarantor's request and expense, execute and deliver to such Guarantor
appropriate documents, without recourse and without representation or warranty,
necessary to evidence the transfer by subrogation to such Guarantor of an
interest in the Guaranteed Obligations resulting from such payment by such
Guarantor.
18.6 Joint and Several Obligations. All of the Guaranteed Obligations of
the Guarantors hereunder and the other Loan Documents are joint and several.
Lenders may, in their sole and absolute discretion, enforce the provisions
hereof against any of the Guarantors, subject to Section 18.1(b), and shall not
be required to proceed against all Guarantors jointly or seek payment from the
Guarantors ratably.
18.7 Judgment Currency. The specification under this Agreement of US
Dollars and payment in the City of Chicago is of the essence. Each Guarantor's
obligations hereunder and under the other Loan Documents to make payments in US
Dollars shall not be discharged or satisfied by any tender or recovery pursuant
to any judgment expressed in or converted into any currency other than US
Dollars, except to the extent that such tender or recovery results in the
effective receipt by Lender Group and Agent of the full amount of US Dollars
expressed to be payable to the Agent and Lender Group under this
Agreement or the other Loan Documents. If, for the purpose of obtaining or
enforcing judgment in any court, it is necessary to convert into or from any
currency other than US Dollars (such other currency being hereinafter referred
to as the "Judgment Currency") an amount due in US Dollars, the rate of exchange
used shall be that at which Lender Group or Agent could, in accordance with
normal banking procedures, purchase US Dollars with the Judgment Currency on the
Business Day preceding that on which final judgment is given. The obligation of
each Guarantor in respect of any such sum due from it to Lender Group or Agent
hereunder shall, notwithstanding any judgment in such Judgment Currency, be
discharged only to the extent that, on the Business Day immediately following
the date on which Lender Group or Agent receives any sum adjudged to be so due
in the Judgment Currency, Lender Group or Agent may, in accordance with normal
banking procedures, purchase US Dollars with the Judgment Currency. If the US
Dollars so purchased are less than the sum originally due to Agent or Lender
Group in US Dollars, each Guarantor agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify Lender Group and the Agents
against such loss, and if the US Dollars so purchased exceed the sum originally
due to Lender Group or the Agents in US Dollars, the applicable Lender and Agent
severally agree to remit to such Guarantor such excess.
18.8 Automatic Limitation. It is understood that while the amount of the
Guaranteed Obligations guaranteed hereby is not limited, if in any action or
proceeding involving any state, federal or foreign bankruptcy, insolvency or
other law affecting the rights or creditors generally, this guaranty would be
held or determined to be void, invalid or unenforceable on account of the amount
of the aggregate liability under this guaranty, then, notwithstanding any other
provision of this guaranty to the contrary, the aggregate amount of such
liability shall, without any further action of the Agent, the Lenders or any
other Person, be automatically limited and reduced to the highest amount which
is valid and enforceable as determined in such action or proceeding.
19 TERMINATION.
Upon the effectiveness of this Agreement, Existing Agent and each Existing
Lender hereby agrees that all obligations and liabilities under or in respect of
the Existing Credit Agreement and all documents, agreements and liens granted
thereunder are hereby terminated and the Loan Parties are released from their
obligations thereunder (except, in all cases, for indemnification and other
obligations which survive the termination thereof). The Loan Parties hereby
terminate and release Existing Agent, each Existing Lender and each of their
respective officers, directors, employees, agents and advisors (collectively,
the "Released Parties") from any and all claims and/or actions of any kind or
nature whatsoever against any Released Party under or in respect of the Existing
Credit Agreement and all documents and instruments delivered in connection
therewith and agrees that the Existing Agent and the Existing Lenders shall have
no further obligations, liabilities, duties, responsibilities or commitments
under the Existing Credit Agreement or any documents and instruments delivered
in connection therewith.
[signature pages to follow]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above written.
BORROWERS:
MIDAS INTERNATIONAL CORPORATION,
a Delaware corporation
By:
Name:
Title:
PARTS WAREHOUSE, INC.,
a Delaware corporation
By:
Name:
Title:
DEALERS WHOLESALE, INC.,
a Delaware corporation
By:
Name:
Title:
INTERNATIONAL PARTS CORPORATION,
a Delaware corporation
By:
Name:
Title:
MUFFLER CORPORATION OF AMERICA,
a Illinois corporation By:
Name:
Title:
XXXX, INC.,
a Delaware corporation
By:
Name:
Title:
S-1
MIDAS PROPERTIES, INC.,
a New York corporation
By:
Name:
Title:
MIDAS REALTY CORPORATION,
a Delaware corporation
By:
Name:
Title:
COSMIC HOLDINGS LLC,
a Delaware limited liability
company By:
Name:
Title:
COSMIC HOLDINGS CORPORATION,
a Delaware corporation
By:
Name:
Title:
GUARANTORS:
MIDAS, INC.,
a Delaware corporation
By:
Name:
Title:
PROGRESSIVE AUTOMOTIVE SYSTEMS,
INC.,
a Delaware corporation
By:
Name:
Title:
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MIDAS ILLINOIS INC.,
a Illinois corporation
By:
Name:
Title:
MIDAS INTERNATIONAL CORPORATION,
a Wyoming corporation
By:
Name:
Title:
MIDAS CANADA HOLDINGS LIMITED,
an Ontario corporation By:
Name:
Title:
MIDAS CANADA INC.,
an Ontario corporation
By:
Name:
Title:
MIDAS REALTY CORPORATION OF
CANADA INC.,
an Ontario corporation
By:
Name:
Title:
APWI CANADA, INC.,
a Canada corporation
By:
Name:
Title:
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MIDAS AUTOMOTIVE HOLDINGS, B.V.,
a Netherlands corporation
By:
Name:
Title: a Managing Director
MIDAS AUTOMOTIVE INTERNATIONAL,
B.V.,
a Netherlands corporation
By:
Name:
Title: a Managing Director
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BANK ONE, NA, as Agent and
as a Lender
By:
Name:
Title:
CREDIT SUISSE FIRST BOSTON,
as a Lender
By:
Name:
Title:
ABN AMRO BANK N.V., as a Lender
By:
Name:
Title:
By:
Name:
Title:
BNP PARIBAS, as a Lender
By:
Name:
Title:
By:
Name:
Title:
MIZUHO CORPORATE BANK, LTD.
By:
Name:
Title:
THE NORTHERN TRUST COMPANY
By:
Name:
Title:
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U.S. BANK NATIONAL ASSOCIATION
By:
Name:
Title:
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Schedule A-1 Agent's Account
An account at a bank designated by Agent from time to time as the account
into which Borrowers shall make all payments to Agent for the benefit of the
Lender Group and into which the Lender Group shall make all payments to Agent
under this Agreement and the other Loan Documents; unless and until Agent
notifies Administrative Borrower and the Lender Group to the contrary, Agent's
Account shall be:
Bank: Bank One, NA
Chicago, Illinois
ABA: 000000000
Acct No.: 64442538
Ref.: US-Midas
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Schedule C-1 Commitments
Revolver Term A Loan Term B Loan Total
Lender Commitment Commitment Commitment Commitment
------ ---------- ---------- ---------- ----------
Bank One, NA $ 40,000,000.00 $15,271,226.42 $ 6,603,773.58 $ 61,875,000
Credit Suisse First $ 0 $10,689,858.49 $ 4,622,641.51 $ 15,312,500
Boston
ABN Amro Bank N.V. $ 0 $ 7,635,613.21 $ 3,301,886.79 $ 10,937,500
BNP Paribas $ 0 $ 7,635,613.21 $ 3,301,886.79 $ 10,937,500
Mizuho Corporate Bank, $ 0 $ 7,635,613.21 $ 3,301,886.79 $ 10,937,500
Ltd.
The Northern Trust $ 0 $ 7,635,613.21 $ 3,301,886.79 $ 10,937,500
Company
U.S. Bank National $ 0 $ 4,581,367.92 $ 1,981,132.08 $ 6,562,500
Association
All Lenders $40,000,000 $61,084,905.66 $ 26,415,094.33 $ 127,500,000
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Schedule D-1 Designated Account
Account number 0000000 of Administrative Borrower maintained with
Administrative Borrower's Designated Account Bank, or such other deposit account
of Administrative Borrower (located within the United States) that has been
designated as such, in writing, by Administrative Borrower to Agent.
"Designated Account Bank" means Bank One, NA, whose office is located at 0
Xxxx Xxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, and whose ABA number is 000000000.
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Schedule N-1
Lender Notice Addresses
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