EXHIBIT 10.1
LOAN AND SECURITY AGREEMENT
Execution Copy
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LOAN AND SECURITY AGREEMENT
by and among
OUTSOURCING SERVICES GROUP, INC.
as Parent,
and
EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO
as Borrowers,
THE LENDERS THAT ARE SIGNATORIES HERETO
as the Lenders,
and
FOOTHILL CAPITAL CORPORATION
as the Arranger and Administrative Agent,
Dated as of October 30, 2002
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LOAN AND SECURITY AGREEMENT
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THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into as of
October 30, 2002, 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"), FOOTHILL CAPITAL CORPORATION, a
California corporation, as the arranger and administrative agent for the Lenders
("Agent"), and, on the other hand, OUTSOURCING SERVICES GROUP, INC., a Delaware
corporation ("Parent"), and each of Parent's Subsidiaries identified on the
signature pages hereof (such Subsidiaries are referred to hereinafter each
individually as a "Borrower", and individually and collectively, jointly and
severally, as the "Borrowers").
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 all of Loan Parties' 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 Xxxxx Fargo or
its Affiliates for the account of Parent or its Subsidiaries.
"Additional Documents" has the meaning set forth in Section 4.4.
"Administrative Borrower" has the meaning set forth in Section
17.9.
"Advances" has the meaning set forth in Section 2.1.
"Aerosol" means Aerosol Services Company, a California
corporation.
"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
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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 general partner or
joint venturer shall be deemed to be an Affiliate of such Person.
"Agent" means Foothill, solely in its capacity as agent for the
Lenders hereunder, and any successor thereto.
"Agent's Account" means the account identified on Schedule A-1.
"Agent Advances" has the meaning set forth in Section 2.3(e)(i).
"Agent's Liens" means the Liens granted by Loan Parties to Agent
for the benefit of the Lender Group under this Agreement or the other Loan
Documents.
"Agent-Related Persons" means Agent together with its Affiliates,
officers, directors, employees, and agents.
"Agreement" has the meaning set forth in the preamble hereto.
"Applicable Prepayment Premium" means, as of any date of
determination, an amount equal to (a) with respect to Advances, (i) during the
period of time from and after the date of the execution and delivery of this
Agreement up to the date that is the first anniversary of the Closing Date, 2%
times the Maximum Revolver Amount, (ii) during the period of time from and
including the date that is the first anniversary of the Closing Date up to the
date that is the second anniversary of the Closing Date, 1% times the Maximum
Revolver Amount and (iii) during the period of time from and including the date
that is the second anniversary of the Closing Date up to the Maturity Date, zero
(0); provided, however, that if this Agreement or the Revolver Commitment is
terminated at any time after the first anniversary of the Closing Date based
upon a material dispute between Loan Parties, on the one hand, and Agent, on the
other hand, regarding discretionary reserves implemented by Agent pursuant to
Section 2.1(b), then the Applicable Prepayment Premium with respect to Advances
otherwise payable hereunder shall be reduced by fifty percent (50%) so long as
the following conditions are met: (A) no Default or Event of Default shall have
occurred and be continuing, (B) the aggregate amount of the discretionary
reserves implemented by Agent that are the subject of the dispute shall equal or
exceed $4,000,000 and (C) such discretionary reserves shall have been
implemented based on Agent's general assessment of Loan Parties'
creditworthiness and cannot be tied to any specific items (it being understood
and agreed that reserves implemented for taxes, dilution, inventory appraisals
and the like would not constitute discretionary reserves for purposes of this
clause (c)); provided, further, that if this Agreement or the Revolver
Commitment is terminated at any time as a result of Loan Parties entering into a
new financing arrangement with Xxxxx Fargo or any Affiliate of Xxxxx Fargo, then
the Applicable Prepayment Premium with respect to Advances shall be deemed to be
zero (0); and (b) with respect to Term Loans, (i) during the period of time from
and after the date of the execution and delivery of this Agreement until and
including December 31, 2003, 7% times the Term Loan Amount, (ii) from and after
January 1, 2004 until
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and including December 31, 2004, 4% times the Term Loan Amount; provided,
however, that if the Term Loans are terminated or refinanced simultaneously with
the refinancing or termination of the Senior Subordinated Notes during such time
period, the Applicable Prepayment Premium with respect to Term Loans shall be
deemed to be zero (0), and (iii) from and after January 1, 2005 up to the
Maturity Date, zero (0); provided, further, that if all or any portion of the
Term Loans are prepaid with Sale/Casualty Proceeds pursuant to Section
2.4(b)(vi), the Applicable Prepayment Premium with respect to such prepayments
shall be deemed to be zero (0).
"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 officer or other employee of
Parent.
"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 Borrowers are entitled to borrow as Advances
under Section 2.1 (after giving effect to all then outstanding Obligations
(other than Bank Products Obligations) and all sublimits and reserves applicable
hereunder).
"Bank Product Agreements" means those certain 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 Xxxxx Fargo 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 Borrower 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 Products" means any service or facility extended to Parent
or its Subsidiaries by Xxxxx Fargo or any Affiliate of Xxxxx Fargo 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.
"Bank Product Reserves" means, as of any date of determination,
the amount of reserves that Agent has established (based upon Xxxxx Fargo'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.
"Bankruptcy Code" means (i) the United States Bankruptcy Code,
(ii) the Bankruptcy and Insolvency Act (Canada), or (iii) the Companies'
Creditors Arrangement Act
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(Canada), as applicable and as in effect from time to time or any similar
legislation in a relevant jurisdiction.
"Base LIBOR Rate" means the rate per annum, determined by Agent
in accordance with its customary procedures, and utilizing such electronic or
other quotation sources as it considers appropriate (rounded upwards, if
necessary, to the next 1/16%), on the basis of the rates at which Dollar
deposits are offered to major banks in the London interbank market on or about
11:00 a.m. (California time) 2 Business Days prior to the commencement of the
applicable Interest Period, for a term and in amounts comparable to the Interest
Period and amount of the LIBOR Rate Loan requested by Parent in accordance with
this Agreement, which determination shall be conclusive in the absence of
manifest error.
"Base Rate" means, the rate of interest announced within Xxxxx
Fargo at its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate" is one of Xxxxx Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as Xxxxx Fargo may designate.
"Base Rate Loan" means each portion of an Advance that bears
interest at a rate determined by reference to the Base Rate.
"Base Rate Margin" means 0.50 percentage points; provided,
however, that if, as of any fiscal quarter of Parent commencing on or after
Parent's fiscal year ended December 31, 2002, EBITDA for the immediately
preceding 12-month period equals or exceeds the following amount, then
commencing on the first day of the fiscal month of Parent next following the
receipt of the applicable Section 6.3 financial statements, "Base Rate Margin"
shall have the meaning as set forth in the following table. The determination of
EBITDA for purposes of this definition shall be based upon (i) in the case of
each month of each of Parent's fiscal years, other than the last month thereof,
the internal financial statements delivered to Agent pursuant to Section 6.3(a)
and accompanied by a Compliance Certificate showing the calculation of EBITDA;
and (ii) in the case of the last month of each of Parent's fiscal years, the
fiscal year end audited financial statements delivered to Agent pursuant to
Section 6.3(b). Notwithstanding the foregoing, if Parent fails to deliver to
Agent the financial statements required pursuant to Section 6.3, then for any
such fiscal quarter the "Base Rate Margin" shall mean 0.50 percentage points.
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Trailing 12-month EBITDA Base Rate Margin means:
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greater than $26,500,000 0.25 percentage points
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$26,500,000 or less 0.50 percentage points
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"Board of Directors" means the board of directors of a Person
duly authorized to act on behalf thereof.
"Books" means all of each Loan Party's and its Subsidiaries' 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 each Loan Party's or its
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Subsidiaries' 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 Swing Lender in the case of a Swing
Loan, 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.
"Business Day" means any day that is not a Saturday, Sunday, or
other day on which national banks are authorized or required to close, except
that, if a determination of a Business Day shall relate to a LIBOR Rate Loan,
the term "Business Day" also shall exclude any day on which banks are closed for
dealings in Dollar deposits in the London interbank market.
"Canadian Cash Management Agreements" means those certain cash
management service agreements, in form and substance satisfactory to Agent, each
of which is among Agent, one of the Guarantors (other than Parent) and one of
the Cash Management Banks.
"Canadian Employee Benefits Legislation" means the Canada Pension
Plan Act (Canada), the Pension Benefits Standards Act (Canada), the Pension
Benefits Act (Ontario), the Health Insurance Act (Ontario) and the Employment
Standards Act (Ontario).
"Canadian Guarantees" means those certain general and continuing
guarantees executed and delivered by each of Kolmar Canada and OSG Xxxxx-Xxx in
favor of Agent, for the benefit of the Lender Group, in form and substance
satisfactory to Agent.
"Canadian Security Agreements" means security agreements executed
and delivered by each of Kolmar Canada and OSG Xxxxx-Xxx, in form and substance
satisfactory to Agent.
"Canadian Security Documents" means the Canadian Guarantees and
the Canadian Security Agreements.
"CapEx Deficiency" has the meaning set forth in Section 7.20(b).
"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 Account" means an account maintained by one or
more Borrowers with a banking institution selected by Borrowers and reasonably
acceptable to Agent
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pursuant to the terms of a control agreement, the form and substance of which is
satisfactory to 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 one (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 one (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 one (1) year from the date of acquisition thereof
that are 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) in an amount less than or equal to $100,000 in the
aggregate issued by any other bank insured by the Federal Deposit Insurance
Corporation.
"Cash Management Bank" has the meaning set forth in Section
2.7(a).
"Cash Management Account" has the meaning set forth in Section
2.7(a).
"Cash Management Agreements" means, collectively, the U.S. Cash
Management Agreements and the Canadian Cash Management Agreements.
"Change of Control" means (a) Permitted Holders shall no longer
collectively (i) hold, directly or indirectly, at least forty percent (40%) of
the outstanding Stock of Parent or (ii) have the power by contract or by share
ownership to elect a majority of the Board of Directors of Parent or (b) Parent
or any Borrower ceases to directly own and control 100% of the outstanding
capital Stock of each of their respective Restricted Subsidiaries extant as of
the Closing Date.
"CIPO" has the meaning set forth in Section 6.16(b).
"Closing Date" means the date of the making of the initial
Advance (or other extension of credit) hereunder or the date on which Agent
sends Parent a written notice that each of the conditions precedent set forth in
Section 3.1 either have been satisfied or have been waived.
"Closing Date Business Plan" means the set of Projections of
Parent and its Subsidiaries (excluding Norwich) for the three (3) year period
following the Closing Date (on a year by year basis, and for the one (1) year
period following the Closing Date, on a month by month basis), in form and
substance (including as to scope and underlying assumptions) satisfactory to
Agent.
"Code" means the Uniform Commercial Code, as in effect from time
to time in the State of New York; provided, that to the extent that the Code is
used to define any term herein or in the other Loan Documents and such term is
defined differently in different Articles of the Code, the definition of such
term contained in Article 9 shall govern; provided further, that
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in the event that, by reason of mandatory provisions of law, any or all of the
creation, attachment, perfection or priority of, or remedies with respect to,
the Lender Group's security interest in any Collateral is governed by the
Uniform Commercial Code, or other legislation governing such matters, as enacted
and in effect from time to time in a jurisdiction other than the State of New
York, the term "Code" shall mean the Uniform Commercial Code or such other
legislation, as the case may be, as enacted and in effect in such other
jurisdiction solely for purposes of the provisions thereof relating to such
creation, attachment, perfection, priority or remedies and for purposes of
definitions related to such provisions.
"Collateral" means all of each Borrower's now owned or hereafter
acquired right, title, and interest in and to each of the following:
(a) Accounts,
(b) Books,
(c) Equipment,
(d) General Intangibles,
(e) Inventory,
(f) Investment Property,
(g) Negotiable Collateral,
(h) Real Property Collateral,
(i) any "commercial tort claims" as that term is defined
in the Code, as set forth on Schedule C-2 hereto,
(j) money or other assets of each such Borrower 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, Equipment, General
Intangibles, Inventory, Investment Property, Negotiable Collateral, Real
Property, money, "commercial tort claims," 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.
Notwithstanding anything to the contrary set forth in this definition of
Collateral, Collateral shall not include any rights or interests in any
contract, lease, permit, license, charter or license agreement covering real or
personal property, as such, if under the terms of such contract, lease, permit,
license, charter or license agreement, or applicable law with respect thereto,
the valid grant of a security interest or lien therein to Agent is prohibited
and such prohibition has not been or is not waived or the consent of the other
party to such contract, lease, permit, license,
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charter or license agreement has not been or is not otherwise obtained or under
applicable law such prohibition cannot be waived; provided, that the foregoing
exclusion shall in no way be construed to apply if any such prohibition is
unenforceable under the UCC or other applicable law or construed so as to limit,
impair or otherwise affect Agent's unconditional continuing security interests
in and liens upon any rights or interests of Borrowers in or to the proceeds
thereof, including, without limitation, monies due or to become due under any
such contract, lease, permit, license charter or license agreement (including
any Accounts).
"Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in the Equipment or Inventory, 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) of Loan Parties.
"Commitment" means, with respect to each Lender, its Revolver
Commitment, its Term Loan Commitment, or its Total Commitment, as the context
requires, and, with respect to all Lenders, their Revolver Commitments, Term
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.
"Compliance Certificate" means a certificate substantially in the
form of Exhibit C-1 delivered by the chief financial officer of Parent 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 the applicable bank with respect to a deposit account.
"Copyrights" means all unregistered and registered copyrights
owned or licensed by Loan Parties in any and all schematics, technology,
know-how, computer software programs or applications (in both source code and
object form code), documents, items, materials and all other works that are
protectable under copyright law, and all registrations, applications for
registrations, renewals and extensions thereof, whether now existing or acquired
in the future.
"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.
"Daily Balance" means, with respect to each day during the term
of this Agreement, the amount of an Obligation owed at the end of such day.
"DDA" means any checking or other demand deposit account
maintained by any Loan Party.
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"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 Base Rate Margin applicable thereto).
"Designated Account" means certain DDA of Administrative Borrower
identified on Schedule D-1.
"Dilution" means, as of any date of determination, a percentage,
based upon the experience of the immediately prior 90 days, that is the result
of dividing the Dollar amount of (a) bad debt write-downs, discounts,
advertising allowances, credits, or other dilutive items with respect to the
Accounts during such period, by (b) Eligible Loan Parties' xxxxxxxx with respect
to Accounts during such period (excluding extraordinary items).
"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 5%.
"Disbursement Letter" means an instructional letter executed and
delivered by Parent 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.
"Due Diligence Letter" means the due diligence letter sent by
Agent's counsel to Parent, together with Parent's completed responses to the
inquiries set forth therein, the form and substance of such responses to be
satisfactory to Agent.
"EBITDA" means, with respect to any fiscal period, Parent's and
its Subsidiaries' (other than Norwich's):
(a) consolidated net earnings (or loss), as determined
in accordance with GAAP,
(b) plus income tax expenses less income tax benefits,
(c) plus depreciation expenses,
(d) plus amortization expenses,
(e) plus net interest expense,
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(f) plus non-cash non-recurring extraordinary items,
(g) plus non-cash net expenses due to implementation of
changes in accounting standards or rules required in accordance with GAAP or
post-closing SEC rule changes requiring a different accounting treatment,
(h) plus expenses attributable to Restructuring Charges,
(i) plus non-cash expenses attributable to compensation
or incentives pursuant to a plan approved by the Parent's Board of Directors,
(j) plus a one-time cash expense attributable to the
transactions contemplated by the Loan Documents that, after consultation with
its accountants, Parent determines to expense rather than capitalize,
(k) minus any non-cash net gains, or plus any non-cash
net losses, attributable to unrealized foreign currency translation adjustments,
not to exceed $500,000,
(l) plus any non-cash losses, or minus any non-cash
gains, attributable to a disposal of fixed assets, to the extent that such
disposal constitutes a Permitted Disposition.
"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 or rendition of services, that comply with each of the
representations and warranties respecting Eligible Accounts made by Eligible
Loan Parties 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 fixed and revised from time to time by Agent in
Agent's Permitted Discretion to address the results of any audit performed by
Agent from time to time after the Closing Date; provided, however, that Accounts
created by OSG Xxxxx-Xxx and Kolmar Canada shall not exceed $5,000,000 at any
time. In determining the amount to be included, Eligible Accounts shall be
calculated net of customer deposits and unapplied cash remitted to 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 original invoice date; provided, however, that with
respect to Accounts as to which Fashion Fare Cosmetics is the Account Debtor, an
aggregate amount of up to $1,250,000 may be outstanding at any one time for more
than 90 days and up to 120 days from the original invoice date;
(b) Accounts that the Account Debtor has failed to pay
within 60 days after the due date;
(c) Accounts owed by an Account Debtor (or its
Affiliates) where fifty percent (50%) or more of all Accounts owed by that
Account Debtor (or its Affiliates) are deemed ineligible under clause (a) above,
(d) Accounts with respect to which the Account Debtor is
an employee, Affiliate, or agent of any Eligible Loan Party,
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(e) 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 and hold (unless the Account Debtor and the
applicable Eligible Loan Party have entered into an agreement with respect to
the xxxx and hold terms that is acceptable to Agent in all respects in its sole
and absolute discretion), or any other terms by reason of which the payment by
the Account Debtor may be conditional,
(f) Accounts that are not payable in Dollars; provided,
that Accounts created by OSG Xxxxx-Xxx and Kolmar Canada and originated in
Canada may be payable in Canadian dollars (subject to the $5,000,000 limitation
specified above),
(g) Accounts with respect to which the Account Debtor
either (i) is neither organized under nor qualified to do business in the United
States, Canada or any state or province thereof or (ii) is the government of any
foreign country or 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 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, satisfactory to
Agent,
(h) Accounts with respect to which the Account Debtor is
either (i) the United States or 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
Section 3727 or the Financial Administration Act (Canada)), or (ii) any state of
the United States or any province of Canada (exclusive, however, of (y) Accounts
owed by any state that does not have a statutory counterpart to the Assignment
of Claims Act or (z) 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),
(i) Accounts with respect to which the Account Debtor is
a creditor of any Eligible Loan Party, 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,
(j) 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,
(k) Accounts with respect to which the Account Debtor is
subject to an Insolvency Proceeding, is not Solvent, has gone out of business,
or as to which an Eligible Loan Party has received notice of an imminent
Insolvency Proceeding or a material impairment of the financial condition of
such Account Debtor,
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(l) 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 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,
(m) Accounts, the collection of which, Agent, in its
Permitted Discretion, believes to be doubtful by reason of the Account Debtor's
financial condition,
(n) Accounts that are not subject to a valid and
perfected first priority Agent's Lien,
(o) 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, or
(p) 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 Eligible Loan Party of the subject contract for
goods or services.
"Eligible Finished Goods Inventory" means Inventory of Eligible
Loan Parties consisting of first quality finished goods held for sale in the
ordinary course of Eligible Loan Parties' business located at one of the
business locations of Eligible Loan Parties set forth on Schedule E-1 (or
in-transit between any such locations), that complies with each of the
representations and warranties respecting Eligible Finished Goods Inventory made
by Eligible Loan Parties in the Loan Documents, and that is not excluded as
ineligible by virtue of one or more of the criteria set forth below; provided,
however, that such criteria may be fixed and revised from time to time by Agent
in Agent's Permitted Discretion to address the results of any audit or appraisal
performed by Agent from time to time after the Closing Date. In determining the
amount to be so included, Inventory shall be valued at the lower of cost or
market on a basis consistent with Eligible Loan Parties' historical accounting
practices. An item of Inventory shall not be included in Eligible Finished Goods
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 or in transit from one such
location to another such location,
(c) it is located on real property leased by an Eligible
Loan Party or in a contract warehouse, in each case, unless it is subject to a
Collateral Access Agreement executed by the lessor, warehouseman, or other third
party, as the case may be, and unless it is segregated or otherwise separately
identifiable from goods of others, if any, stored on the premises,
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(d) it is not subject to a valid and perfected first
priority security Agent's Lien,
(e) it consists of goods returned or rejected by an
Eligible Loan Party's customers, or
(f) it consists of goods that are obsolete or slow
moving, work-in-process, raw materials, or goods that constitute spare parts,
packaging and shipping materials, supplies used or consumed in an Eligible Loan
Party's business, xxxx and hold goods, defective goods, "seconds", or Inventory
acquired on consignment.
"Eligible Inventory" means, collectively, Eligible Finished Goods
Inventory and Eligible Raw Materials Inventory.
"Eligible Loan Party(ies)" means any and all of Borrowers, OSG
Xxxxx-Xxx and Kolmar Canada.
"Eligible Raw Materials Inventory" means Inventory of Eligible
Loan Parties consisting of raw materials, including packaging and components
(the value of such packaging and components shall not exceed $4,000,000 at any
time), to be used in Eligible Loan Parties' production process located at one of
the business locations of Eligible Loan Parties set forth on Schedule E-1 (or
in-transit between any such locations), that complies with each of the
representations and warranties respecting Eligible Raw Materials Inventory made
by Eligible Loan Parties in the Loan Documents, and that is not excluded as
ineligible by virtue of one or more of the criteria set forth below; provided,
however, that such criteria may be fixed and revised from time to time by Agent
in Agent's Permitted Discretion to address the results of any audit or appraisal
performed by Agent from time to time after the Closing Date. In determining the
amount to be so included, Inventory shall be valued at the lower of cost or
market on a basis consistent with Eligible Loan Parties' historical accounting
practices. An item of Inventory shall not be included in Eligible Raw Materials
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 or in transit from one such
location to another such location,
(c) it is located on real property leased by an Eligible
Loan Party or in a contract warehouse, in each case, unless it is subject to a
Collateral Access Agreement executed by the lessor, warehouseman, or other third
party, as the case may be, and unless it is 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 security Agent's Lien,
(e) it consists of goods returned or rejected, or
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(f) it consists of goods that are obsolete or slow
moving, work-in-process, finished goods, or goods that constitute spare parts,
supplies used or consumed in an Eligible Loan Party's business, xxxx and hold
goods, defective goods, "seconds," or Inventory acquired on consignment.
"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, without limitation, a Related
Fund, (e) so long as no Event of Default has occurred and is continuing, any
other Person approved by Agent and Parent, and (f) during the continuation of an
Event of Default, any other Person approved by Agent.
"Environmental Actions" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or Releases of Hazardous Materials from (a) 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,
binding and enforceable guideline, binding and enforceable written policy or
rule of common law now or hereafter in effect and in each case as amended, or
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, to the extent binding on Loan
Parties or their Subsidiaries, relating to the environment, employee health and
safety, or Hazardous Materials, including CERCLA; RCRA; the Federal Water
Pollution Control Act, 33 U.S.C. Section 1251 et seq; the Toxic Substances
Control Act, 15 U.S.C., Section 2601 et seq; the Clean Air Act, 42 U.S.C.
Section 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 3803 et
seq.; the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 et seq.; the
Emergency Planning and the Community Right-to-Know Act of 1986, 42 U.S.C.
Section 11001 et seq.; the Hazardous Material Transportation Act, 49 U.S.C.
Section 1801 et seq.; and the Occupational Safety and Health Act, 29 U.S.C.
Section 651 et seq. (to the extent it regulates occupational exposure to
Hazardous Materials); the Canadian Environmental Protection Act (Canada); the
Fisheries Act (Canada); the Environmental Protection Act (Ontario); the
Environment Act (Nova Scotia); the Water Resource Act (Ontario); Environmental
Protection and Enhancement Act (Alberta), Waste Management Act (British
Columbia), Environment Act (Manitoba), Contaminated Sites Remediation Act
(Manitoba), Environment Quality Act (Quebec), any federal, state, province and
local or foreign counterparts or equivalents, in each case as amended from time
to time.
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"Environmental Liabilities and Costs" means all liabilities
(including strict liability), 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, environmental site
assessments, and feasibility studies), fines, penalties, sanctions, and interest
incurred as a result of any Environmental Action, claim or demand by any
Governmental Authority or any third party, and which relate to any violations of
Environmental Laws, Remedial Actions, Releases or threatened Releases of
Hazardous Materials from or onto (i) any property presently or formerly owned by
Parent or any of its Subsidiaries or a predecessor in interest, or (ii) any
facility which received Hazardous Materials generated by Parent or any of its
Subsidiaries or a predecessor in interest.
"Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
"Equipment" means all of Loan Parties' 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.
"Event of Default" has the meaning set forth in Section 8.
"Excess Availability" means the amount, as of the date any
determination thereof is to be made, equal to Availability minus the aggregate
amount, if any, of all trade payables and other liabilities of Eligible Loan
Parties not reasonably within terms or aged in excess of their historical levels
with respect thereto and all book overdrafts in excess of their historical
practices with respect thereto, in each case as determined by Agent in its
Permitted Discretion.
"Excess Cash Flow Ratio" means, with respect to any period of
determination, the ratio of (i)(a) EBITDA for such period less (b) capital
expenditures made within such period to (ii) Interest Expense for such period.
"Exchange Act" means the Securities Exchange Act of 1934, as in
effect from time to time.
"Existing Lender" means BT Commercial Corporation.
"Fee Letter" means that certain fee letter, dated as of even date
herewith, among Borrowers and Agent, in form and substance satisfactory to
Agent.
"FEIN" means Federal Employer Identification Number.
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"FG Report" means an FG Held for Rework/Destruction report in a
form substantially similar to the report(s) delivered to Agent prior to the
Closing Date.
"Foothill" means Foothill Capital Corporation, a California
corporation.
"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; provided,
however, that if there occurs after the date of this Agreement any change in
GAAP that affects in any respect the calculation of any covenant contained in
Section 7.20 hereof, Agent and Borrowers shall negotiate in good faith
amendments to the provisions of this Agreement that relate to the calculation of
any such covenant with the intent of having the respective positions of Lenders
and Borrowers after such change in GAAP conform as nearly as possible to their
respective positions as of the date of this Agreement, and, until any such
amendments have been agreed upon by all Lenders, each covenant in Section 7.20
hereof shall be calculated as if no such change in GAAP had occurred.
"General Intangibles" means all of Loan Parties' now owned or
hereafter acquired right, title, and interest with respect to general
intangibles (including payment intangibles, contract rights, rights to payment,
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill, patents, trade names, 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 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, state, local,
provincial, or other governmental or administrative body, instrumentality,
department, or agency or any court, tribunal, administrative hearing body,
arbitration panel, commission, or other similar dispute-resolving panel or body.
"GSC Partners" means, collectively, GSC Partners CDO Fund III,
Limited, a Cayman Islands entity, GSC Recovery II, L.P., a Delaware limited
partnership, and GSC Recovery IIA, L.P., a Delaware limited partnership.
"Guarantors" means Parent, OSG Xxxxx-Xxx and Kolmar Canada.
"Guarantor Security Agreement" means a security agreement
executed and delivered by Parent and Agent, the form and substance of which is
satisfactory to Agent.
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"Guaranty" means that certain general continuing guaranty
executed and delivered by Parent in favor of Agent, for the benefit of the
Lender Group, in form and substance satisfactory to Agent.
"Hazardous Materials" shall include, without regard to amount
and/or concentration (a) any element, compound, or chemical that is defined,
listed or otherwise classified as a contaminant, pollutant, toxic pollutant,
toxic or hazardous substances, extremely hazardous substance or chemical,
hazardous waste, medical waste, biohazardous or infectious waste, special waste,
or solid waste under Environmental Laws; (b) petroleum, petroleum-based or
petroleum-derived products; (c) polychlorinated biphenyls; (d) any substance
exhibiting a hazardous waste characteristic including but not limited to
corrosivity, ignitibility, toxicity or reactivity as well as any radioactive or
explosive materials; and (e) any raw materials, building components, including
but not limited to asbestos-containing materials and manufactured products
containing Hazardous Materials
"Hedge Agreement" means any and all transactions, agreements, or
documents now existing or hereafter entered into between Parent or its
Restricted Subsidiaries and Xxxxx Fargo 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 Restricted
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 (a) all obligations for borrowed money, (b)
all obligations evidenced by bonds, debentures, notes, or other similar
instruments and all 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 Parent or its Restricted 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), and (f) any obligation guaranteeing or intended to
guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
discounted, or sold with recourse) any obligation of any other Person.
"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 or under any other
state, provincial 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.
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"Intangible Assets" means, with respect to any Person, that
portion of the book value of all of such Person's assets that would be treated
as intangibles under GAAP.
"Intellectual Property Right" means any trademark, copyright,
service xxxx, trade name, patent (including any registrations or applications
for registration of any of the foregoing), license, or trade secret including,
but not limited to, any such legal rights included in any schematics,
technology, know-how, computer software programs or applications (in both source
code and object code form) or in other tangible or intangible information or
material.
"Intercompany Subordination Agreement" means a subordination
agreement executed and delivered by Borrowers, Guarantors and Agent, the form
and substance of which is satisfactory to Agent.
"Interest Coverage Ratio" means, for the relevant period, the
ratio determined by dividing (a) EBITDA for such period by (b) all Interest
Expense for such period.
"Interest Expense" means, with respect to Parent and its
Subsidiaries (other than Norwich) and during a particular period, total interest
expense, as determined in accordance with GAAP, that is current and payable in
cash during such period.
"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, 3, or 6 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 any 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, 3, or 6 months
after the date on which the Interest Period began, as applicable, and (e)
Borrowers (or Parent on behalf thereof) may not elect an Interest Period which
will end after the Maturity Date.
"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.
"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
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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 all of Loan Parties' now owned or
hereafter acquired right, title, and interest with respect to "investment
property" as that term is defined in the Code, or with respect to "money" and
"security" as such terms are defined in the PPSA, 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 Foothill or any other Lender that, at the
request of Parent 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 or L/C
Undertakings pursuant to Section 2.12.
"Judgment Conversion Date" has the meaning set forth in Section
2.16.
"Judgment Currency" has the meaning set forth in Section 2.16.
"Kolmar" means Kolmar Laboratories, Inc., a Delaware corporation.
"Kolmar Canada" means Kolmar Canada Inc., a corporation
incorporated under the laws of Ontario, Canada.
"Kolmar Mexico" means Kolmar Mexico, S.A. de CV, a Mexican
corporation (sociedad anonima de capital variable).
"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.
"L/C Undertaking" has the meaning set forth in Section 2.12(a).
"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) costs or expenses
(including taxes, and insurance premiums) required to be paid by a Loan Party
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 any one or more members of
the Lender Group's transactions with Loan Parties, including, fees or charges
for photocopying, notarization, couriers and messengers, telecommunication,
public record searches (including tax lien, litigation, and UCC searches and
including searches with the patent and trademark office, the copyright office,
or the department of motor vehicles), filing,
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recording, publication, appraisals (including Collateral appraisals or business
valuations to the extent of the fees and charges (and up to the amount of any
limitation) contained in this Agreement, real estate surveys, real estate title
policies and endorsements, and environmental audits, (c) costs and expenses
incurred by 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, (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 any one or more members of the
Lender Group related to audit examinations of the Books 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 relationship of any one or more members of
the Lender Group with any Loan Party or any other guarantor of the Obligations,
(h) Agent's and each Lender's reasonable fees and expenses (including attorneys
fees) incurred in advising, structuring, drafting, reviewing, administering, or
amending the Loan Documents, and (i) Agent's and each Lender's reasonable fees
and expenses (including attorneys fees) 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 or an L/C Undertaking, as the
context requires.
"Letter of Credit Usage" means, as of any date of determination,
the aggregate undrawn amount of all outstanding Letters of Credit plus 100% of
the amount of outstanding time drafts accepted by an Underlying Issuer as a
result of drawings under Underlying Letters of Credit.
"Leverage Ratio" means a ratio determined as of the relevant
calculation date by dividing (x) the Senior Debt as of the last day of the
applicable period by (y) EBITDA for the immediately preceding 12-month period.
"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 Rate" means, for each Interest Period for each LIBOR Rate
Loan, the rate per annum determined by Agent (rounded upwards, if necessary, to
the next 1/16%) by dividing (a) the Base LIBOR Rate for such Interest Period, by
(b) 100% minus the Reserve
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Percentage. The LIBOR Rate shall be adjusted on and as of the effective day of
any change in the Reserve Percentage.
"LIBOR Rate Loan" means each portion of an Advance that bears
interest at a rate determined by reference to the LIBOR Rate.
"LIBOR Rate Margin" means 2.75 percentage points; provided,
however, that if, as of any fiscal quarter of Parent commencing on or after
Parent's fiscal year ended December 31, 2002, EBITDA for the immediately
preceding 12-month period equals or exceeds the following amount, then
commencing on the first day of the fiscal month of Parent next following the
receipt of the applicable Section 6.3 financial statements, "LIBOR Rate Margin"
shall have the meaning as set forth in the following table. The determination of
EBITDA for purposes of this definition shall be based upon (i) in the case of
each month of each of Parent's fiscal years, other than the last month thereof,
the internal financial statements delivered to Agent pursuant to Section 6.3(a)
and accompanied by a Compliance Certificate showing the calculation of EBITDA;
and (ii) in the case of the last month of each of Parent's fiscal years, the
fiscal year end audited financial statements delivered to Agent pursuant to
Section 6.3(b). Notwithstanding the foregoing, if Parent fails to deliver to
Agent the financial statements required pursuant to Section 6.3, then for any
such fiscal quarter the "LIBOR Rate Margin" shall mean 2.75 percentage points.
------------------------------------------------------------------------
Trailing 12-month EBITDA LIBOR Rate Margin means:
------------------------------------------------------------------------
greater than $26,500,000 2.50 percentage points
------------------------------------------------------------------------
$26,500,000 or less 2.75 percentage points
------------------------------------------------------------------------
"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 or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security 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 Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Bank Product
Agreements, the Cash Management Agreements, the Canadian Guarantees, the
Canadian Security Agreements, the Cash Management Side Letter Agreement, the
Control Agreements, the Copyright Security Agreement, the Disbursement Letter,
the Due Diligence Letter, the Fee Letter, the Guarantor Security Agreement, the
Guaranty, the Intercompany Subordination Agreement, the Letters of Credit, the
Mortgages, the Officers' Certificate, the Patent Security Agreement, the
Securities Pledge Agreement, the Trademark Security Agreement, any note or notes
executed by a Borrower in connection with this Agreement and payable to a member
of the Lender Group, and
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any other agreement entered into, now or in the future, by any Borrower and
the Lender Group in connection with this Agreement.
"Loan Party(ies)" means any and all Borrowers and Guarantors.
"Loan Party Collateral" means, with respect to any Loan Party,
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) General Intangibles,
(e) Inventory,
(f) Investment Property,
(g) Negotiable Collateral,
(h) Real Property Collateral,
(i) any "commercial tort claims" as that term is defined
in the Code, as set forth on Schedule C-2 hereto,
(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, Equipment, General
Intangibles, Inventory, Investment Property, Negotiable Collateral, Real
Property, money, "commercial tort claims," 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.
Notwithstanding anything to the contrary set forth in this definition of Loan
Party Collateral, Loan Party Collateral shall not include any rights or
interests in any contract, lease, permit, license, charter or license agreement
covering real or personal property, as such, if under the terms of such
contract, lease, permit, license, charter or license agreement, or applicable
law with respect thereto, the valid grant of a security interest or lien therein
to Agent is prohibited and such prohibition has not been or is not waived or the
consent of the other party to such contract, lease, permit, license, charter or
license agreement has not been or is not otherwise obtained or under applicable
law such prohibition cannot be waived; provided, that the foregoing exclusion
shall in no way be construed to apply if any such prohibition is unenforceable
under the UCC or other applicable law or construed so as to limit, impair or
otherwise affect Agent's unconditional
-22-
continuing security interests in and liens upon any rights or interests of Loan
Parties in or to the proceeds thereof, including, without limitation, monies due
or to become due under any such contract, lease, permit, license charter or
license agreement (including any Accounts).
"Marking Quarter" means each of (i) Parent's fiscal quarter ended
in March, 2003 and (ii) any fiscal quarter of Parent thereafter if prepayment of
PIK Interest was not permitted pursuant to Section 2.2(c) during the immediately
preceding fiscal quarter.
"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 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 Agent's Liens with respect to
the Collateral as a result of an action or failure to act on the part of a Loan
Party.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Revolver Amount" means $40,000,000.
"Member of the Controlled Group" means each trade or business,
whether or not incorporated, which would be treated as a single employer with
Loan Parties under Section 4001 of ERISA or Section 414(b), (c), (m) or (o) of
the IRC.
"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 and Lenders whose Pro Rata Shares aggregate at
least 51% of the Term Loan Commitments, that encumber the Real Property
Collateral and the related improvements thereto.
"Multiemployer Plan" means a plan described in Section 3(37) of
ERISA.
"Negotiable Collateral" means all of Loan Parties' 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 Liquidation Percentage" means the percentage of the
appraised blended value of Eligible Finished Goods Inventory and Eligible Raw
Materials Inventory under a conversion scenario 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 selected by
Agent.
"Non-Product Invoice Listing Report" means a Non-Product Invoice
Listing Report in a form substantially similar to the report(s) delivered to
Agent prior to the Closing Date.
"Norwich" means OSG Norwich Pharmaceuticals, Inc., a Delaware
corporation.
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"Notice of Direction" has the meaning set forth in Section
2.4(b)(vii).
"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, any Applicable
Prepayment 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 Loan Parties 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 Loan Parties are required to pay or reimburse by
the Loan Documents, by law, or otherwise, and (b) all Bank Product 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.
"Officers' Certificate" means the representations and warranties
of officers form submitted by Agent to Parent, together with the Loan Parties'
completed responses to the inquiries set forth therein, the form and substance
of such responses to be satisfactory to Agent.
"Originating Lender" has the meaning set forth in Section
14.1(e).
"OSG Xxxxx-Xxx" means OSG Xxxxx-Xxx Inc., a corporation
amalgamated under the laws of Ontario, Canada.
"Overadvance" has the meaning set forth in Section 2.5.
"Parent" has the meaning set forth in the preamble to this
Agreement.
"Participant" has the meaning set forth in Section 14.1(e).
"Participant Register" has the meaning set forth in Section
14.1(i).
"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.
"Pay-Off Letter" means a letter, in form and substance
satisfactory to Agent, from Existing Lender to Agent respecting the amount
necessary to repay in full all of the obligations of Loan Parties owing to
Existing Lender and obtain a release of all of the Liens existing in favor of
Existing Lender in and to the assets of Loan Parties.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor entity.
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"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
OSG Xxxxx-Xxx, any Borrower or its Restricted Subsidiaries of Equipment that is
substantially worn, damaged, or obsolete in the ordinary course of business, (b)
sales by OSG Xxxxx-Xxx, any Borrower or its Restricted Subsidiaries of Inventory
to buyers in the ordinary course of business, (c) the use or transfer of money
or Cash Equivalents by OSG Xxxxx-Xxx, any Borrower or its Restricted
Subsidiaries in a manner that is not prohibited by the terms of this Agreement
or the other Loan Documents, (d) the licensing by OSG Xxxxx-Xxx, any Borrower or
its Restricted Subsidiaries, on a non-exclusive basis, of patents, trademarks,
copyrights, and other intellectual property rights in the ordinary course of
business, (e) any individual sale or other disposition by OSG Xxxxx-Xxx, any
Borrower or its Restricted Subsidiaries of Equipment or Real Property Collateral
consented to by all Lenders with Term Loan Commitments; provided, that, so long
as no Default or Event of Default shall have occurred and be continuing and no
Default or Event of Default shall result therefrom, such consent shall not be
required if the amount (based upon net book value) of such Equipment or Real
Property Collateral sold or otherwise disposed of does not exceed $750,000 in
any calendar year and (f) sales or other dispositions by OSG Xxxxx-Xxx, any
Borrowers or their Restricted Subsidiaries of assets described on Schedule F-1
(to the extent set forth therein).
"Permitted Holders" means Xxxxxx + Xxxxxx Investment Partnership
L.P., a Delaware limited partnership, HarbourVest Partners IV - Direct Fund,
L.P., a Delaware limited partnership, HarbourVest Partners V - Direct Fund,
L.P., a Delaware limited partnership and ASC Investment Partners, L.P., a
Delaware limited partnership.
"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 Loan Party in any other Loan Party
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, (e) investments in Kolmar Mexico, in an
aggregate amount not to exceed $250,000 outstanding at any one time and (f) the
investment held by Parent to support its workers compensation obligations in
Georgia, not to exceed $250,000.
"Permitted Liens" means (a) Liens held by Agent for the benefit
of Agent and the Lenders, (b) Liens for unpaid taxes that either (i) are not yet
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, wage claimants, 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 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
-25-
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) Liens with respect to the Real Property Collateral that are
exceptions to the commitments for title insurance issued in connection with the
Mortgages, as accepted by Agent and Lenders whose Pro Rata Shares aggregate at
least 51% of the Term Loan Commitments, and (l) with respect to any Real
Property that is not part of the Real Property Collateral, easements, rights of
way, and zoning restrictions that do not materially interfere with or impair the
use or operation thereof.
"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 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 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 $2,500,000.
"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
Borrowers' Real Property.
"Piedmont" means Piedmont Laboratories, Inc., a Georgia
corporation.
"PIK Amount" means 25% of the amount of accrued PIK Interest as
of the most recent Marking Quarter; provided, however, if the most recent
Marking Quarter is four (4) or more fiscal quarters prior to the applicable
fiscal quarter, then the PIK Amount shall be zero (0).
"PIK Interest" means, as of any date of determination, the amount
of all interest accrued with respect to the Term Loans that has been
paid-in-kind by being added to the principal balance thereof in accordance with
Section 2.6(a)(ii).
"PIK Margin" means 2.00 percentage points; provided, however,
that if, as of any fiscal quarter of Parent commencing on or after Parent's
fiscal year ended December 31, 2002, (i) the Term Loan Designee delivers to
Agent and Parent the PIK Margin Adjustment Request, (ii) Agent does not dispute
the calculations set forth in the PIK Margin Adjustment Request, and (iii)
Leverage Ratio as of the last day of the immediately preceding 12-month period
equals or is less than the following amount, then commencing on the first day of
the fiscal month of Parent next following the receipt of the PIK Margin
Adjustment Request, "PIK Margin" shall have the meaning as set forth in the
following table. The determination of Leverage Ratio for purposes of
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this definition shall be based upon (x) in the case of each month of each of
Parent's fiscal years, other than the last month thereof, the internal financial
statements delivered to Agent pursuant to Section 6.3(a) and accompanied by a
Compliance Certificate showing the calculation of Leverage Ratio; and (y) in the
case of the last fiscal month of each of Parent's fiscal years, the fiscal year
end audited financial statements delivered to Agent pursuant to Section 6.3(b).
Notwithstanding the foregoing, if Parent fails to deliver to Agent the financial
statements required pursuant to Section 6.3, then for any such fiscal quarter
the "PIK Margin" shall mean 2.00 percentage points.
------------------------------------------------------------------------
Leverage Ratio PIK Margin means:
------------------------------------------------------------------------
less than 2.7:1 1.00 percentage points
------------------------------------------------------------------------
less than 2.5:1 0.00 percentage points
------------------------------------------------------------------------
"PIK Margin Adjustment Request" means a written statement that
(a) specifies that the Term Loan Designee is satisfied that the PIK Margin
should be adjusted and sets forth the back-up calculations used in making such
determination, reconciled against the financials delivered by Borrowers pursuant
to Section 6.3 and (b) sets forth the adjusted PIK Margin.
"PIK Request" means a written statement that (a) specifies that
the Term Loan Designee is satisfied that the Borrowers are required to prepay
PIK Interest in the applicable fiscal quarter pursuant to Section 2.2(c) and
sets forth the back-up calculations used in making such determinations,
reconciled against the financials delivered by Borrowers pursuant to Section 6.3
and (b) sets forth the calculation of applicable PIK Amount.
"Plans" has the meaning set forth in Section 5.13(a).
"Pledged Notes" means the promissory notes pledged to Agent, for
the benefit of the Lenders, pursuant to the Securities Pledge Agreement.
"PPSA" means the Personal Property Security Act (Ontario).
"Prepayment Reserve" means a reserve established by Agent in the
amount of the lesser of (i) $5,000,000 and (ii) fifty percent (50%) of the total
of all prepayments of the Term Loans made by Borrowers in accordance with this
Agreement.
"Projections" means Parent's consolidated forecasted (a) balance
sheets, (b) profit and loss statements, and (c) cash flow statements, all
prepared on a consistent basis with Parent's historical financial statements,
together with appropriate supporting details and a statement of underlying
assumptions.
"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 reduced to
zero, 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 or reduced to zero,
-27-
the percentage obtained by dividing (i) the aggregate unpaid principal amount of
such Lender's Advances by (ii) the aggregate unpaid principal amount of all
Advances,
(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 reduced
to zero, 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 or reduced
to zero, the percentage obtained by dividing (i) the aggregate unpaid principal
amount of such Lender's Advances by (ii) the aggregate unpaid principal amount
of all Advances,
(c) with respect to a Lender's obligation to make the
Term Loans and receive payments of interest, fees, and principal with respect
thereto, (x) prior to the Term Loan Commitment being reduced to zero, the
percentage obtained by dividing (i) such Lender's Term Loan Commitment, by (ii)
the aggregate Term Loan Commitments of all Lenders and (y) from and after the
time the Term Loan Commitment has been terminated or reduced to zero, the
percentage obtained by dividing (i) the aggregate unpaid principal amount of
such Lender's Term Loans by (ii) the aggregate unpaid principal amount of all
Term Loans,
(d) with respect to all other matters as to a particular
Lender (including the indemnification obligations arising under Section 16.7),
the percentage obtained by dividing (i) such Lender's Total Commitment, by (ii)
the aggregate amount of Total Commitments of all Lenders; provided, however,
that, in each case, if all the Commitments have been terminated, Pro Rata Share
shall be determined according to the Commitments in effect immediately prior to
such termination.
"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.
"Real Property" means any estates or interests in real property
now owned or hereafter acquired by any Loan Party 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 Borrower.
"Record" 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 set forth in Section 14.1(h).
"Registered Loan" has the meaning set forth in Section 2.13.
"Registered Note" has the meaning set forth in Section 2.13.
"Related Fund" means a fund or account managed by a Lender or an
Affiliate of a Lender or its investment manager.
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"Release" means any spilling, leaking, pumping, emitting,
emptying, discharging, injecting, escaping, leaching, migrating, dumping, or
disposing of Hazardous Materials (including the abandonment or discarding of
barrels, containers or other closed receptacles containing Hazardous Materials)
into the environment.
"Reinvestment Period" has the meaning set forth in Section
2.4(b)(vii).
"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 authorized by 42 USC Section 9601 or similar
legislation in any jurisdiction.
"Replacement Lender" has the meaning set forth in Section 15.2.
"Report" has the meaning set forth in Section 16.17.
"Required Availability" means Excess Availability and
unrestricted cash and Cash Equivalents in an amount of not less than $5,000,000.
"Required Lenders" means, at any time, (a) Agent and (b) Lenders
whose Pro Rata Shares aggregate 51% of the Total Commitments, or if the
Commitments have been terminated irrevocably, 51% of the Obligations (other than
Bank Product Obligations) then outstanding.
"Reserve Percentage" means, on any day, for any Lender, the
maximum percentage prescribed by the Board of Governors of the Federal Reserve
System (or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of that Lender, but so
long as such Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.
"Restricted Subsidiary" means any Subsidiary of Parent or any
Borrower, other than the Unrestricted Subsidiaries.
"Restructuring Charges" means the expenses not to exceed
$7,000,000 incurred prior to June 30, 2003 in connection with the transactions
described on Schedule R-2.
"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 14.1.
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"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 an L/C Undertaking, 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 to the Underlying Issuer 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.
"Sale/Casualty Proceeds" has the meaning set forth in Section
2.4(b)(vi).
"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.
"Securities Pledge Agreement" means a securities pledge
agreement, in form and substance satisfactory to Agent, executed and delivered
by each Loan Party.
"Senior Debt" means, as of the date of determination, the
aggregate principal amount of outstanding Obligations of Borrowers.
"Senior Subordinated Notes" means Parent's 10.875% Senior
Subordinated Notes due 2006 issued pursuant to the Senior Subordinated Note
Indenture.
"Senior Subordinated Note Indenture" means that certain indenture
dated as of March 3, 1998, by and between Parent, as issuer, the Guarantors
named therein, and First Trust National Association, as trustee, as such
indenture has been amended from time to time.
"Senior Subordinated Note Indenture Documents" means the Senior
Subordinated Notes, the Senior Subordinated Note Indenture and all other
documents, agreements, exhibits instruments and schedules executed and delivered
in connection therewith.
"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).
"Solvency Certificate" means a certificate substantially in the
form of Exhibit S-1.
"Solvent" means, with respect to any Person on a particular date,
that such Person is not insolvent (as such term is defined in the Uniform
Fraudulent Transfer Act) or is not an "insolvent person" (as such term is
defined in the Bankruptcy and Insolvency Act (Canada)).
-30-
"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).
"Subject Date" has the meaning set forth in Section 2.2(c).
"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.
"Swing Lender" means Foothill or any other Lender that, at the
request of Parent and with the consent of Agent agrees, in such Lender's sole
discretion, to become the Swing Lender hereunder.
"Swing Loan" has the meaning set forth in Section 2.3(d)(i).
"System Reserve" means a reserve established by Agent in the
amount of $500,000, which reserve may be reduced by Agent upon Borrowers'
completion of collateral audits (satisfactory in all respects to Agent).
"Taxes" has the meaning set forth in Section 16.11(e).
"Term Loans" has the meaning set forth in Section 2.2(b).
"Term Loan Amount" means $30,000,000.
"Term Loan Commitment" means, with respect to each Lender, its
Term Loan Commitment, and, with respect to all Lenders, their Term 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 Loan Designee" means a Person identified to Agent in
writing, by Lenders whose Pro Rata Shares aggregate at least 51% of the Term
Loan Commitments.
"Term Loan Margin" means 13.50% plus the PIK Margin.
"Total Commitment" means, with respect to each Lender, its Total
Commitment, and, with respect to all Lenders, their Total Commitments, 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.
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"Trademark Security Agreement" means a trademark security
agreement executed and delivered by each Loan Party and Agent, the form and
substance of which is satisfactory to Agent.
"Underlying Issuer" means a third Person which is the beneficiary
of an L/C Undertaking and which has issued a letter of credit at the request of
the Issuing Lender for the benefit of Borrowers.
"Underlying Letter of Credit" means a letter of credit that has
been issued by an Underlying Issuer.
"Unrestricted Subsidiaries" means those Subsidiaries of Parent
that are identified on Schedule U-1 hereto.
"U.S. Cash Management Agreements" means those certain cash
management service agreements, in form and substance satisfactory to Agent, each
of which is among Agent, one of the Cash Management Banks, and certain of the
Borrowers or Parent.
"Voidable Transfer" has the meaning set forth in Section 17.7.
"WARN" means the Worker Adjustment and Retraining Notification
Act or a similar state, provincial or local law.
"Xxxxx Fargo" means Xxxxx Fargo Bank, National Association, a
national banking association.
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 of a financial
covenant or a related definition, it shall be understood to mean Parent and its
Subsidiaries (excluding Norwich) on a consolidated basis unless the context
clearly requires otherwise.
1.3 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.
1.4 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,
-32-
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, joinders, and supplements set forth herein). 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.
1.5 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 Section 2.2(b) and the other 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 Borrowers 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, or (ii) the Borrowing Base less the Letter of Credit Usage. For purposes
of this Agreement, "Borrowing Base," as of any date of determination, shall mean
the result of:
(x) the lesser of (i) 85% of the amount of
Eligible Accounts, less the amount, if any,
of the Dilution Reserve, and
(ii) an amount equal to Loan Parties'
Collections with respect to Accounts for the
immediately preceding 60 day period, plus
(y) the lowest of
(i) the sum of the following:
(A) 60% of the value of
Eligible Finished Goods Inventory, plus
(B) 35% of the value of
Eligible Raw Materials Inventory,
(ii) 45% of the amount of credit
availability created by clause (x) above,
and
(iii) $13,500,000, minus
(z) the sum of (i) the Bank Products Reserve, (ii)
the System Reserve, (iii) the Prepayment Reserve,
and (iv) the aggregate amount of reserves, if any,
established by Agent under Section 2.1(b).
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(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
reserves with respect to (i) sums that Loan Parties 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 has failed to pay under any
Section of this Agreement or any other Loan Document, and (ii) amounts owing by
Loan Parties to any Person to the extent secured by a Lien on, or trust over,
any of the Loan Parties' Collateral (other than any existing Permitted Lien set
forth on Schedule P-1 which is specifically identified thereon as entitled to
have priority over Agent's Liens), which Lien or trust, in the Permitted
Discretion of Agent likely would have a priority superior to 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 Loan Parties' Collateral.
(c) 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.
(d) 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.
2.2 Term Loans.
(a) Subject to Section 2.2(b) and the other terms and conditions
of this Agreement, each Lender with a Term Loan Commitment agrees (severally,
not jointly or jointly and severally) to make advances on the Closing Date
(collectively, "Term Loans") to Borrowers in an aggregate amount equal to such
Lender's Pro Rata Share of the Term Loan Amount. All outstanding Term Loans
shall be repaid on the Maturity Date, on which date the unpaid balance of all
Term Loans shall be due and payable in full, together with all accrued and
unpaid interest on such amount. Subject to the last sentence of this Section
2.2(a), Borrowers may prepay all or any portion of the outstanding principal
amount of the Term Loans at any time upon not less than 60 days prior written
notice to Agent and each Lender with a Term Loan Commitment, provided that upon
such prepayment, Borrowers shall also pay (i) the Applicable Prepayment Premium
on the portion of the Term Loans prepaid and (ii) all accrued and unpaid
interest on the principal amount so prepaid to the date of such prepayment. All
Term Loans shall constitute Obligations. Notwithstanding anything to the
contrary contained in this Agreement or any other Loan Document, Borrowers shall
not prepay any principal in respect of Term Loans at any time unless (A) no
Event of Default shall have occurred and be continuing on the date of such
prepayment, nor shall an Event of Default result therefrom, (B) after giving
effect to such prepayment, Borrowers shall have Excess Availability in an amount
that equals or exceeds $10,000,000, (C) except with respect to prepayments
pursuant to Section 2.2(c),such prepayment is in an increment or increments of
at least $500,000 and (D) Borrowers shall not have made any other prepayments
pursuant to this Section 2.2(a) during such fiscal quarter.
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(b) Notwithstanding any provision of Section 2.1 or this Section
2.2 to the contrary, in no event shall any Lender be obligated to make any
Advances to any Borrower under Section 2.1(a) if, after giving effect to such
advances, the aggregate amount of all outstanding Advances and Term Loans made
to Borrowers under Sections 2.1(a) and 2.2(a) would exceed the amount permitted
under Section 4.12 and clause (ii) of the definition of Permitted Indebtedness,
in each case in the Senior Subordinated Note Indenture.
(c) Within 5 Business Days after Agent has received financial
statements under Section 6.3(a) with respect to each fiscal quarter of Parent
(the last day of such fiscal quarter being the "Subject Date"), the Term Loan
Designee shall deliver to Agent and Parent the PIK Request, so long as (i) no
Default or Event of Default shall have occurred and be continuing on the Subject
Date; (ii) Borrowers shall have maintained EBITDA of at least $26,500,000 for
the 12-month period immediately preceding the Subject Date; (iii) Borrowers
shall have maintained a Leverage Ratio as of the Subject Date that equals or is
less than 2.5:1; and (iv) after giving effect to the prepayment contemplated in
the following sentence, Borrowers shall have Excess Availability in an amount
that equals or exceeds $10,000,000. If Agent does not dispute the calculations
set forth in the PIK Request, within 5 Business Days after Agent has receives
the PIK Request, Borrowers shall prepay the applicable PIK Amount. The
determinations of EBITDA and Leverage Ratio for purposes of this Section 2.2(c)
shall be based upon financial statements for such fiscal quarter, delivered to
Agent and the Term Loan Designee pursuant to Section 6.3(a) and accompanied by a
Compliance Certificate showing the calculations of EBITDA and Leverage Ratio.
Notwithstanding the foregoing, if Parent fails to deliver to Agent the financial
statements required pursuant to Section 6.3, or if the Term Loan Designee fails
to deliver to Agent the PIK Request, then for any such fiscal quarter such
prepayment shall not permitted.
2.3 Borrowing Procedures and Settlements
(a) Procedure for Borrowing. Each Borrowing shall be made by an
irrevocable written request by an Authorized Person delivered to Agent (which
notice must be received by Agent no later than 10:00 a.m. (California time) on
the Business Day prior to the date that is the requested Funding Date in the
case of a request for an Advance or Term Loan specifying (i) the amount of such
Borrowing, and (ii) the requested Funding Date, which shall be a Business Day;
provided, however, that in the case of a request for Swing Loan in an amount of
$4,000,000 or less, such notice will be timely received if it is received by
Agent no later than 10:00 a.m. (California time) on the Business Day that is the
requested Funding Date) specifying (i) the amount of such Borrowing, and (ii)
the requested Funding Date, which shall be a Business Day. 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) Agent's Election. Promptly after receipt of a request for a
Borrowing pursuant to Section 2.3(a), Agent shall elect, in its discretion, (i)
to have the terms of Section 2.3(c) apply to such requested Borrowing, or (ii)
if the Borrowing is for an Advance, to request Swing Lender to make a Swing Loan
pursuant to the terms of Section 2.3(d) in the amount of the requested
Borrowing; provided, however, that if Swing Lender declines in its sole
discretion to
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make a Swing Loan pursuant to Section 2.3(d), Agent shall elect to have the
terms of Section 2.3(c) apply to such requested Borrowing.
(c) Making of Advances.
(i) In the event that Agent shall elect to have the terms of this
Section 2.3(c) apply to a requested Borrowing as described in Section
2.3(b), then promptly after receipt of a request for a Borrowing
pursuant to Section 2.3(a), Agent shall notify the Lenders, not later
than 1:00 p.m. (California time) on the Business Day immediately
preceding the Funding Date applicable thereto, by telecopy, telephone,
or other similar form of transmission, of the requested Borrowing. 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 10:00 a.m. (California time) on the
Funding Date applicable thereto. After Agent's receipt of the proceeds
of such Advances (or Term Loans, as applicable), upon satisfaction of
the applicable conditions precedent 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(i), Agent shall not request any Lender to make, and no
Lender shall have the obligation to make, any Advance (or its portion of
the Term Loans) 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 (in accordance with
Section 15.1 hereof), 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 Borrowers 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 Borrowers 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 Borrowers
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
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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 or Term Loan on any Funding Date shall not relieve any other
Lender of any obligation hereunder to make an Advance or Term Loan on
such Funding Date, but no Lender shall be responsible for the failure of
any other Lender to make the Advance or Term Loan 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 or Term Loan was funded by the other members of the
Lender Group) or, if so directed by Parent 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 Lenders,
Agent, and Parent shall have waived such Defaulting Lender's default in
writing, or (z) the Defaulting Lender makes its Pro Rata Share of the
applicable Advance or Term Loan 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 Parent 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
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(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 Groups' or Borrowers'
rights or remedies against any such Defaulting Lender arising out of or
in relation to such failure to fund.
(d) Making of Swing Loans.
(i) In the event Agent shall elect, with the consent of Swing
Lender, as a Lender, to have the terms of this Section 2.3(d) apply to a
requested Borrowing as described in Section 2.3(b), Swing Lender as a
Lender shall make such Advance in the amount of such Borrowing (any such
Advance made solely by Swing Lender as a Lender pursuant to this Section
2.3(d) being referred to as a "Swing Loan" and such Advances being
referred to collectively as "Swing Loans") available to Borrowers on the
Funding Date applicable thereto by transferring immediately available
funds to Administrative Borrower's Designated Account. Each Swing Loan
is an Advance hereunder and shall be subject to all the terms and
conditions applicable to other Advances, except that no such Swing Loan
shall be eligible for the LIBOR Option and all payments on any Swing
Loan shall be payable to Swing Lender as a Lender solely for its own
account (and for the account of the holder of any participation interest
with respect to such Swing Loan). Subject to the provisions of Section
2.3(i), Agent shall not request Swing Lender as a Lender to make, and
Swing Lender as a Lender shall not make, any Swing Loan if Agent has
actual knowledge that (i) 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 (ii) the requested Borrowing would exceed the Availability on
such Funding Date. Swing Lender as a Lender shall not otherwise be
required to determine whether the applicable conditions precedent set
forth in Section 3 have been satisfied on the Funding Date applicable
thereto prior to making, in its sole discretion, any Swing Loan.
(ii) The Swing Loans shall be secured by Agent's Liens, 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.
(e) 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 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
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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(e) shall be referred to as "Agent Advances"); provided, that
notwithstanding anything to the contrary contained in this Section
2.3(e), the aggregate principal amount of Agent Advances outstanding at
any time, when taken together with the aggregate principal amount of
Overadvances made in accordance with Section 2.3(i) hereof outstanding
at any time, shall not exceed an amount equal to the lesser of (x) 10%
of the Borrowing Base then in effect and (y) $4,000,000. 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) Agent Advances shall be repayable on demand and secured by
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.
(f) 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, Swing Lender, and the other Lenders agree (which 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 Swing Loans, and 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) on behalf of Swing Lender, with respect to each
outstanding Swing Loan, (2) for itself, with respect to each Agent
Advance, and (3) 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.
(California 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, Swing Loans,
and Agent Advances for the period since the prior Settlement Date.
Subject to the terms and conditions contained herein (including Section
2.3(c)(iii)): (y) if a Lender's balance of the Advances, Swing Loans,
and Agent Advances exceeds such Lender's Pro Rata Share of the Advances,
Swing Loans, and Agent Advances as of a Settlement Date, then Agent
shall, by no later than 12:00 p.m. (California 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, Swing Loans, and Agent
Advances, and (z) if a Lender's
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balance of the Advances, Swing Loans, and Agent Advances is less than
such Lender's Pro Rata Share of the Advances, Swing Loans, and Agent
Advances as of a Settlement Date, such Lender shall no later than 12:00
p.m. (California time) on the Settlement Date transfer in immediately
available funds to 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, Swing Loans, 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 Swing Loan or Agent Advance and, together with the portion of
such Swing Loan or Agent Advance representing Swing Lender's Pro Rata
Share thereof, 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,
Swing Loans, and Agent Advances is less than, equal to, or greater than
such Lender's Pro Rata Share of the Advances, Swing Loans, 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) Between Settlement Dates, Agent, to the extent no Agent
Advances or Swing Loans are outstanding, may pay over to Swing Lender
any payments received by Agent, that in accordance with the terms of
this Agreement would be applied to the reduction of the Advances, for
application to Swing Lender's Pro Rata Share of the Advances. If, as of
any Settlement Date, Collections received since the then immediately
preceding Settlement Date have been applied to Swing Lender's Pro Rata
Share of the Advances other than to Swing Loans, as provided for in the
previous sentence, Swing Lender shall pay to Agent for the accounts of
the Lenders, and Agent shall pay to the Lenders, to be applied to the
outstanding Advances of such Lenders, an amount such that each Lender
shall, upon receipt of such amount, have, as of such Settlement Date,
its Pro Rata Share of the Advances. During the period between Settlement
Dates, Swing Lender with respect to Swing Loans, Agent with respect to
Agent Advances, and each Lender (subject to the effect, if any, of any
letter agreements between Agent and individual Lenders) with respect to
the Advances other than Swing Loans and Agent Advances, shall be
entitled to interest at the applicable rate or rates payable under this
Agreement on the daily amount of funds employed by Swing Lender, Agent,
or the Lenders, as applicable.
(g) Notation. Agent shall record on its books the principal
amount of the Advances and Term Loans owing to each Lender, including the Swing
Loans owing to Swing
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Lender, and Agent Advances 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 and Term Loans 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.
(h) Lenders' Failure to Perform. All Advances (other than Swing
Loans and Agent Advances) and Term Loans 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 Term Loan (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.
(i) Optional Overadvances.
(i) Any contrary provision of this Agreement notwithstanding, the
Lenders hereby authorize Agent or Swing Lender, as applicable, and Agent
or Swing Lender, as applicable, may, but is not obligated to, knowingly
and intentionally, continue to make Advances (including Swing Loans) to
Borrowers notwithstanding that an Overadvance exists or thereby would be
created, so long as (A) after giving effect to such Advances (including
a Swing Loan), the Revolver Usage does not exceed the Borrowing Base by
more than $4,000,000, (B) after giving effect to such Advances
(including a Swing Loan) 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, (C)
the aggregate principal amount of Overadvances made pursuant to this
Section 2.3(i), when taken together with the aggregate principal amount
of Agent Advances made pursuant to Section 2.3(e), does not exceed at
any time an amount equal to the lesser of (x) 10% of the Borrowing Base
then in effect and (y) $4,000,000 and (D) at the time of the making of
any such Advance (including a Swing Loan), Agent does not believe, in
good faith, that the Overadvance created by such Advance will be
outstanding for more than 90 days. The foregoing provisions are for the
exclusive benefit of Agent, Swing Lender, and the Lenders and are not
intended to benefit Borrowers in any way. The Advances and Swing Loans,
as applicable, that are made pursuant to this Section 2.3(i) shall be
subject to the same terms and conditions as any other Advance or Swing
Loan, as applicable, 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.
(ii) 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 Lenders as soon as practicable (and prior to making any (or any
additional) intentional Overadvances
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(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 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 Lenders.
(iii) Each Lender with a Revolver Commitment shall be obligated
to settle with Agent as provided in Section 2.3(f) for the amount of
such Lender's Pro Rata Share of any unintentional Overadvances by Agent
reported to such Lender, any intentional Overadvances made as permitted
under this Section 2.3(i), and any Overadvances resulting from the
charging to the Loan Account of interest, fees, or Lender Group
Expenses.
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 11:00 a.m. (California time) on the date specified herein. Any
payment received by Agent later than 11:00 a.m. (California 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 Parent 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 as otherwise provided with respect to Defaulting
Lenders and except as otherwise provided in the Loan Documents
(including any letter agreements between Agent and individual Lenders),
aggregate principal and
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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 (other than fees or expenses that are for Agent's separate
account, after giving effect to any letter agreements between Agent and
individual Lenders) 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. Subject to Sections 2.4(b)(vi) and (vii), all
payments shall be remitted to Agent and all such payments (other than
payments received while no Default or Event of Default has occurred and
is continuing and which relate to the payment of principal or interest
of specific Obligations or which relate to the payment of specific fees)
and all proceeds of Accounts or other Collateral received by Agent shall
be applied as follows:
A. first, to pay any Lender Group Expenses then due to
Agent under the Loan Documents, until paid in full,
B. second, to pay any Lender Group Expenses then due to
the Lenders under the Loan Documents, on a ratable basis, until
paid in full,
C. third, to pay any fees then due to Agent (for its
separate accounts) under the Loan Documents until paid in full,
D. fourth, to pay any fees then due to any or all of the
Lenders under the Loan Documents, on a ratable basis, until paid
in full; provided, however, that if an Event of Default has
occurred and is continuing, the priority of the payment of fees
due in respect of Term Loans shall be deferred to item
"fourteenth" below,
E. fifth, to pay interest due in respect of all Agent
Advances, until paid in full,
F. sixth, ratably to pay interest due in respect of the
Advances, the Term Loans (other than PIK Interest) and the Swing
Loans, until paid in full; provided, however, that if an Event of
Default has occurred and is continuing, the priority of the
payment of interest due in respect of Term Loans shall be
deferred to item "fifteenth" below,
G. seventh, to pay the principal of all Agent Advances
until paid in full,
H. eighth, to pay the principal of all Swing Loans until
paid in full,
I. ninth, so long as no Event of Default has occurred
and is continuing, and at Agent's election (which election Agent
agrees will not be made if an Overadvance would be created
thereby), to pay amounts then due and owing by Administrative
Borrower or its Restricted Subsidiaries in respect of Bank
Products, until paid in full,
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J. tenth, so long as no Event of Default has occurred
and is continuing, to pay the principal of all Advances until
paid in full,
K. eleventh, so long as no Event of Default has occurred
and is continuing, ratably to pay all principal amounts then due
and payable (other than as a result of an acceleration thereof)
with respect to Term Loans (including outstanding and unpaid PIK
Interest), until paid in full,
L. twelfth, if an Event of Default has occurred and is
continuing, ratably (i) to pay the principal of all Advances
until paid in full, and (ii) to Agent, to be held by Agent, for
the benefit of Xxxxx Fargo or its Affiliates, as applicable, as
cash collateral in an amount up to the amount of the Bank
Products Reserve established prior to the occurrence of, and not
in contemplation of, the subject Event of Default until
Administrative Borrower's and its Restricted Subsidiaries'
obligations in respect of the then extant Bank Products have been
paid in full or the cash collateral amount has been exhausted,
M. thirteenth, if an Event of Default has occurred and
is continuing, to Agent, to be held by Agent, for the ratable
benefit of Issuing Lender and those Lenders having a Revolver
Commitment, as cash collateral in an amount up to 105% of the
then extant Letter of Credit Usage until paid in full,
N. fourteenth, if an Event of Default has occurred and
is continuing, ratably to pay any fees then due in respect of
Term Loans, until paid in full,
O. fifteenth, if an Event of Default has occurred and is
continuing, ratably to pay interest due in respect of the Term
Loans (other than PIK Interest),
P. sixteenth, if an Event of Default has occurred and is
continuing, to pay the outstanding principal balance of the Term
Loans (including outstanding and unpaid PIK Interest), until paid
in full,
Q. seventeenth, ratably to pay any other Obligations
(including Bank Product Obligations) until paid in full, and
R. eighteenth, to Borrowers (to be wired to the
Designated Account) or such other Person entitled thereto under
applicable law.
The application of these prepayments in a particular order shall in no
way be deemed to represent an agreement on the part of any Lender that
the amounts due it are subordinate in right of payment to the amounts
due any other Lender, but rather shall be an agreement among the Lenders
with respect to the order in which certain fees and expenses shall be
paid, and the order in which loans shall be deemed to be prepaid.
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(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).
(iii) In each instance, so long as no Event of Default has
occurred and is continuing, Section 2.4(b) shall not be deemed to apply
to any payment by Borrowers specified by Borrowers to be for the payment
of specific Obligations then due and payable (or prepayable) under any
provision of this Agreement.
(iv) For purposes of the foregoing, "paid in full" means payment
of all amounts owing under the Loan Documents according to the terms
thereof, including loan fees, service fees, professional fees, interest
(and specifically including interest accrued after the commencement of
any Insolvency Proceeding), default interest, interest on interest, and
expense reimbursements, whether or not the same would be or is allowed
or disallowed in whole or in part in any Insolvency Proceeding.
(v) In the event of a direct conflict between the priority
provisions of this Section 2.4 and other provisions contained in any
other Loan Document, it is the intention of the parties hereto that such
priority provisions in such documents shall be read together and
construed, to the fullest extent possible, to be in concert with each
other and with the intent of the Lenders as expressed herein. In the
event of any actual, irreconcilable conflict that cannot be resolved as
aforesaid, the terms and provisions of this Section 2.4 and the intent
of the Lenders as expressed herein shall control and govern.
(vi) Notwithstanding anything to the contrary contained in this
Agreement or any other Loan Document but subject to Loan Parties' rights
under clause (vii) of this Section 2.4(b), all proceeds received by
Agent, directly or indirectly, from (A) the sale or other disposition
of, or in connection with any casualty, loss or condemnation of, any
Loan Party Collateral consisting of Equipment or Real Property (the
"Sale/Casualty Proceeds"), (x) if such Sale/Casualty Proceeds are in an
amount less than or equal to $250,000 in the aggregate in any calendar
year, shall be applied in accordance with Section 2.4(b)(i), and (y) if
such Sale/Casualty Proceeds are in an amount in excess of $250,000 in
the aggregate in any calendar year, shall be applied, first, to the
Obligations in respect of the Term Loans then outstanding, and the
remainder of such proceeds shall be applied in accordance with Section
2.4(b)(i); provided, that, if the Sale/Casualty Proceeds result from a
disposition of the assets or Stock of any Loan Party or casualty, loss
or condemnation of any Loan Party Collateral, and such assets, Stock or
Loan Party Collateral includes both (1) Equipment and/or Real Property
and (2) other assets, then such proceeds shall be applied as follows and
in the following order: (i) first, an amount equal to the book value of
the Eligible Loan Parties' Accounts Receivable and Inventory (determined
at the time of such disposition or event resulting in such insurance or
condemnation proceeds), shall be applied to the Advances until paid in
full; (ii) second, an
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amount equal to the book value of the Equipment and/or Real Property
(determined at the time of such disposition or event resulting in such
insurance or condemnation proceeds) shall be applied first, to the
Obligations in respect of the Term Loans until paid in full, and second,
to the Obligations in respect of the Advances until paid in full; and
(iii) third, the remaining proceeds shall be applied first, to the
Obligations in respect of Advances until paid in full, second, to the
Obligations in respect of the Term Loans until paid in full, and third,
to all other Obligations until paid in full and (B) the sale or other
disposition of the Stock of Norwich shall be applied on a pro rata basis
to the Obligations in respect of the Advances and to the Obligations in
respect of the Term Loans.
(vii) Unless a Default or an Event of Default shall have occurred
and be continuing, Loan Parties may apply the Sale/Casualty Proceeds
that would otherwise be required to be applied to the Obligations in
accordance with Section 2.4(b)(vi)(A) to replace, repair or otherwise
restore the Equipment or Real Property subject to a sale, disposition,
casualty, loss or condemnation by delivering a certificate (the "Notice
of Direction") of an Authorized Person to Agent that (x) states in
detail how Borrowers elect to apply such proceeds and (y) directs Agent
to either:
A. deposit all such Sale/Casualty Proceeds into a Cash
Collateral Account, which Sale/Casualty Proceeds when so
deposited (w) shall constitute Loan Party Collateral, securing
the payment of the Obligations then outstanding, (x) may be
withdrawn by the Borrowers solely to replace, repair or restore
the Loan Party Collateral consisting of Equipment or Real
Property that was sold or otherwise disposed of, or the subject
of the casualty, loss or condemnation, with other Equipment or
Real Property that is useful in the business of the Borrowers;
provided, that (1) such withdrawal must be made and such Loan
Party Collateral replaced, repaired or restored within 180 days
(the "Reinvestment Period") after the date of receipt by the
applicable Loan Party of such proceeds in connection with the
applicable sale, disposition, loss, casualty or condemnation
(provided, that if the applicable Loan Party does not receive at
least 75% of such proceeds on the date of such sale or similar
disposition, then the applicable starting date for such 180-day
period shall be the date of such sale or similar disposition),
(2) the amount withdrawn may not exceed the amount of
Sale/Casualty Proceeds deposited in connection with all such
sales, dispositions, losses, casualties and condemnations, and
(3) no Default or Event of Default shall have occurred and be
continuing at the time of such withdrawal, and (y) upon the
occurrence and during the continuance of a Default or an Event of
Default, or after the Reinvestment Period shall have expired,
shall be applied by Agent to the Obligations in respect of the
Term Loans then outstanding in accordance with Section
2.4(b)(vi)(A), assuming for purposes of such application that the
$250,000 basket set forth in Section 2.4(b)(vi)(A)(x) has been
fully used, or
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B. apply all such Sale/Casualty Proceeds to repay the
Obligations in respect of the Advances; provided, that (w) Agent
shall establish a reserve against both the Maximum Revolver
Amount and the Borrowing Base in the amount of such Sale/Casualty
Proceeds, (x) Agent may release such reserve only in connection
with the Borrowers obtaining an Advance in order to replace,
repair or restore the Loan Party Collateral consisting of
Equipment or Real Property sold or otherwise disposed of, or
subject of a casualty, loss or condemnation, with other Equipment
or Real Property that is useful in the business of the Borrowers
and (y) notwithstanding anything to the contrary, including
without limitation, the occurrence of an Event of Default
(including the Events of Default described in Sections 8.4 or
8.5), if the proceeds of any Advance described in subclause (x)
above are not used to replace, repair or restore Loan Party
Collateral consisting of Equipment or Real Property within the
Reinvestment Period, Agent, on behalf of the Borrowers, shall
make an Advance or an Agent Advance in the amount of such
Sale/Casualty Proceeds and shall use the proceeds of such Advance
or Agent Advance to repay, ratably, the Obligations in respect of
the Term Loans.
Notwithstanding anything to the contrary contained in this
clause (vii), (I) the sum of the aggregate amount of deposits in the
Cash Collateral Account pursuant to subparagraph (A) above plus the
aggregate amount of proceeds applied to the Advances pursuant to
subparagraph (B) above shall not exceed the maximum amount of capital
expenditures permitted pursuant to Section 7.20(b) in the applicable
fiscal year; (II) Agent shall not comply with a Notice of Direction
under this clause (vii) unless and until it receives (1) the Notice of
Direction, satisfactory to Agent in its Permitted Discretion, and (2)
written confirmation from Lenders whose Pro Rata Shares aggregate at
least 51% of the Term Loan Commitments that they are satisfied with the
Notice of Direction and (III) Agent shall not release the reserves
established pursuant to subparagraph (B) above unless and until it
receives evidence satisfactory to Agent in its sole discretion
(including written confirmation from Lenders whose Pro Rata Shares
aggregate at least 51% of the Term Loan Commitments) that Borrowers have
used the proceeds of the Advances to replace, repair or restore the
subject Loan Party Collateral within the Reinvestment Period in the
manner described in the Notice of Direction. Any prepayments of the Term
Loans hereunder would be subject to the Applicable Prepayment Premium as
set forth in Section 2.2.
The agreements of the parties concerning the application of proceeds
from particular types of Loan Party Collateral shall be deemed to
represent an agreement with respect to the order in which Obligations
shall be prepaid and, under certain circumstances, commitments reduced,
rather than an agreement among the parties that any payment due any
Lender is subordinated to the payments due any other Lender.
2.5 Overadvances. If, at any time or for any reason, the amount of
Obligations (other than Bank Product Obligations) owed by Borrowers to the
Lender Group pursuant to
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Sections 2.1 and 2.12 is greater than either the Dollar or percentage
limitations set forth in Sections 2.1 or 2.12 (an "Overadvance"), Borrowers
immediately shall pay to Agent, in cash, the amount of such excess, which amount
shall be used by Agent to reduce the Obligations in accordance with the
priorities set forth in Section 2.4(b). 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) that have been 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 LIBOR Rate Margin, (ii) if the relevant
Obligation is a Term Loan, at a per annum rate equal to the Term Loan Margin;
provided, however, that so long as no Event of Default has occurred and is
continuing, interest on the Daily Balance of the Term Loans at a per annum rate
equal to PIK Margin shall, in the absence of an election by Borrowers to pay
such interest in cash, be paid-in-kind, by being added to the principal balance
of the Term Loan Amount (inclusive of any PIK Interest theretofore so added but
exclusive of any amounts paid pursuant to Section 2.2(c)), and (iii) otherwise,
at a per annum rate equal to the Base Rate plus the Base Rate Margin.
The foregoing notwithstanding, at no time shall any portion of
the Obligations (other than Bank Product Obligations) bear interest on the Daily
Balance thereof at a per annum rate less than 4.50%. To the extent that interest
accrued hereunder at the rate set forth herein would be less than the foregoing
minimum daily rate, the interest rate chargeable hereunder for such day
automatically shall be deemed increased to the minimum rate.
(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
(in addition to the charges, commissions, fees, and costs set forth in Section
2.12(e)) which shall accrue at a rate equal to 2.50% per annum times 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 (and at the election of Agent or the
Required Lenders in the case of all Obligations other than Obligations
attributable to Term Loans, or at the election of Lenders whose Pro Rata Shares
aggregate at least 51% of the Term Loan Commitments, in the case of Obligations
attributable to Term Loans),
(i) all Obligations (except for undrawn Letters
of Credit and except for Bank Product Obligations) that
have been 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 4.00 percentage
points above the per annum rate otherwise applicable
hereunder, and
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(ii) the Letter of Credit fee provided for above
shall be increased to 4.00 percentage points above the
per annum rate otherwise applicable hereunder.
(d) Payment. Except as provided in Section 2.13(a),
interest, Letter of Credit fees, and all other fees payable hereunder shall be
due and payable, in arrears, on the first day of each month at any time that
Obligations or Commitments are outstanding. Borrowers hereby authorize Agent,
from time to time, without prior notice to Borrowers, to charge and, Agent
agrees to 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 Xxxxx Fargo 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; provided, that, notwithstanding the
foregoing, with respect to interest on a Term Loan, such amounts thereafter
shall constitute Term Loans hereunder and shall accrue interest at the rate then
applicable to Term Loans 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 Base Rate Loans hereunder; provided, that, notwithstanding the
foregoing, with respect to interest on a Term Loan, such amounts thereafter
shall constitute Term Loans hereunder and shall accrue interest at the rate then
applicable to Term Loans hereunder.
(e) Computation. Subject to the Interest Act (Canada) as
applicable under the Canadian Security Documents, 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.
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(a) Eligible 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 their 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 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 Eligible 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 as 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 Agent's Account.
(c) So long as no Default or Event of Default has
occurred and is continuing, Parent 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, Eligible Loan Parties
and such prospective Cash Management Bank shall have executed and delivered to
Agent a Cash Management Agreement. Eligible Loan Parties 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 Eligible Loan Parties
are hereby deemed to have granted a Lien to Agent.
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 Agent's
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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 Agent's Account on a Business Day on or before 11:00 a.m.
(California time). If any payment item is received into Agent's Account on a
non-Business Day or after 11:00 a.m. (California 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 and Terms Loans requested by Borrowers
and made by Agent or the Lenders hereunder. Unless otherwise agreed by Agent and
Parent, any Advance, Term Loan, Agent Advance, or Swing Loan 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 all Advances and Term Loans (including
Agent Advances and Swing Loans) made by Agent, Swing Lender, 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 Agent's Account from any Cash Management Bank. Agent shall
render statements regarding the Loan Account to Parent, 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 Parent, Parent 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 any 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
0.375% 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 Fees. 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 charges as
follows: (i) a fee of $850 per day, per auditor, plus out-of-pocket expenses for
each financial audit of a Loan Party performed by personnel employed by Agent,
(ii) the actual charges paid or incurred by Agent, for each appraisal of the
Loan Party Collateral performed by personnel employed by Agent, and (iii) the
actual charges paid or incurred by Agent if it elects to employ the services of
one or more third Persons to perform financial audits of Loan Parties, to
appraise the Loan Party Collateral, or any portion thereof, or to assess a Loan
Party's business valuation; provided, that, notwithstanding the foregoing, so
long as no Event of Default shall have occurred, Loan Parties shall not be
responsible for the charges incurred in connection with (v) appraisals of Loan
Party Collateral (other than Equipment, Inventory and Real Property) to the
extent that such appraisals are conducted more frequently than two (2) times
each calendar year (it being understood and agreed that the foregoing shall not
prohibit or restrict Agent from performing, or causing the performance of, such
appraisals more frequently than two (2) times each calendar year), (w) financial
audits of Loan Parties to the extent that such audits are conducted more
frequently than four (4) times each calendar year (it being understood and
agreed that the foregoing shall not prohibit or restrict Agent from performing,
or causing the performance of, such audits more frequently than four (4) times
each calendar year), (x) appraisals of the Equipment and Real Property to the
extent that such appraisals are conducted more frequently than one (1) time each
calendar year (it being understood and agreed that the foregoing shall not
prohibit or restrict Agent from performing, or causing the performance of, such
appraisals more frequently than one (1) time each calendar year), (y) business
valuation assessments to the extent that such assessments are conducted more
frequently than one time each calendar year (it being understood and agreed that
the foregoing shall not prohibit or restrict Agent from performing, or causing
the performance of, such assessments more frequently than one time each calendar
year) and (z) Inventory appraisals (it being understood and agreed that the
foregoing shall not prohibit or restrict Agent from performing, or causing the
performance of, any Inventory appraisals).
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") or to purchase participations or execute
indemnities or reimbursement obligations (each such
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undertaking, an "L/C Undertaking") with respect to letters of credit issued by
an Underlying Issuer (as of the Closing Date, the prospective Underlying Issuer
is to be Xxxxx Fargo) for the account of Borrowers. To request the issuance of
an L/C or an L/C Undertaking (or the amendment, renewal, or extension of an
outstanding L/C or L/C Undertaking), Parent 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 (reasonably in
advance of the requested date of issuance, amendment, renewal, or extension) a
notice requesting the issuance of an L/C or L/C Undertaking, or identifying the
L/C or L/C Undertaking to be amended, renewed, or extended, the date of
issuance, amendment, renewal, or extension, the date on which such L/C or L/C
Undertaking is to expire, the amount of such L/C or L/C Undertaking, the name
and address of the beneficiary thereof (or of the Underlying Letter of Credit,
as applicable), and such other information as shall be necessary to prepare,
amend, renew, or extend such L/C or L/C Undertaking. If requested by the Issuing
Lender, Borrowers also shall be an applicant under the application with respect
to any Underlying Letter of Credit that is to be the subject of an L/C
Undertaking. 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 $5,000,000
or
(iii) the Letter of Credit Usage would exceed the
Maximum Revolver Amount less the then extant amount of
outstanding Advances.
Borrowers and the Lender Group acknowledge and agree that certain
Underlying Letters of Credit may be issued to support letters of credit that
already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying 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., California time, on the date that such L/C Disbursement is
made, if Parent shall have received written or telephonic notice of such L/C
Disbursement prior to 10:00 a.m., California time, on such date, or, if such
notice has not been received by Parent prior to such time on such date, then not
later than 11:00 a.m., California time, on (i) the Business Day that Parent
receives such notice, if such notice is received prior to 10:00 a.m., California
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.
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(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 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 Underlying Issuer's regulations and interpretations of any
Underlying Letter of Credit or by 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. Each Borrower understands
that the L/C Undertakings may require Issuing Lender to indemnify the Underlying
Issuer for certain costs or liabilities arising out of claims by Borrowers
against such Underlying Issuer. Each Borrower hereby agrees to indemnify, save,
defend, and hold the Lender Group harmless with respect to any loss, cost,
expense (including reasonable attorneys fees), or liability incurred by the
Lender Group under any L/C Undertaking as a result of the Lender Group's
indemnification of any Underlying Issuer; 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.
(d) Each Borrower hereby authorizes and directs any
Underlying Issuer to deliver to the Issuing Lender all instruments, documents,
and other writings and property received by such Underlying Issuer pursuant to
such Underlying Letter of Credit and to accept and rely upon the Issuing
Lender's instructions with respect to all matters arising in connection with
such Underlying Letter of Credit and the related application.
(e) Any and all charges, commissions, fees, and costs
incurred by the Issuing Lender relating to Underlying Letters of Credit 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, as of the Closing Date, the
issuance charge imposed by the prospective Underlying Issuer is .825% per annum
times the face amount of each Underlying Letter of Credit, that such issuance
charge may be changed from time to time, and that the Underlying Issuer also
imposes a schedule of charges for amendments, extensions, drawings, and
renewals.
(f) 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
Underlying Issuer or 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 Underlying Issuer or
the Lender Group any other condition regarding any Underlying
Letter of Credit or 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 Parent, 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.
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(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 be charged at a rate of interest based upon the LIBOR Rate. Interest on
LIBOR Rate Loans shall be payable on the earliest of (i) the last day of the
Interest Period applicable thereto, (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 that an
Event of Default has occurred and is continuing, Borrowers no longer shall have
the option to request that Advances 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. (California 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 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 5:00 p.m.
(California 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 therefor (or, in the case of a failure to
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borrow, convert or continue, for the period that would have been
the Interest Period therefor), 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 Parent 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 7 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.
(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 Parent 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, Parent may, by
notice to such affected Lender (y) require such Lender to
furnish to Parent 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
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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 Parent 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.
(f) Registered Notes. Administrative Borrower agrees to
record each Term Loan on the Register referred to in Section 14.1(h). Each Term
Loan recorded on the Register (the "Registered Loan") may not be evidenced by
promissory notes other than Registered Notes (as defined below). Upon the
registration of each Term Loan, each Borrower agrees, at the request of any
Lender, to execute and deliver to such Lender a promissory note, in conformity
with the terms of this Agreement, in registered form to evidence such Registered
Loan, in form and substance reasonably satisfactory to such Lender, and
registered as provided in Section 14.1(h) (a "Registered Note"), payable to the
order of such Lender and otherwise duly completed. Once recorded on the
Register, each Term Loan may not be removed from the Register so long as it or
they remain outstanding, and a Registered Note may not be exchanged for a
promissory note that is not a Registered Note.
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), has 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) by any amount deemed by such Lender to be material, then such
Lender may notify Parent 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
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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 Agent and the Lenders under this Agreement, for the mutual
benefit, directly and indirectly, of all Borrowers and in consideration of the
undertakings of the other Borrowers to accept joint and several liability for
the 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 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 Borrower 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, Term Loans 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 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
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Borrowers. Without limiting the generality of the foregoing, each Borrower
assents to any 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 each Guarantor, 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 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 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, to the extent
permitted by applicable law, 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 Property Collateral or Personal Property
Collateral pledged by Borrowers.
(ii) If Agent or any Lender forecloses on any Real Property
Collateral pledged by Borrowers:
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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 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
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
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
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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 Agent, and
Agent shall deliver any such amounts to the Administrative Agent for application
to the Obligations in accordance with Section 2.4(b).
2.16 Judgment Currency.
(a) This is an international financial transaction in
which the specification of a currency and payment in New York City is of the
essence. Dollars shall be the currency of account in the case of all payments
pursuant to or arising under this Agreement or under any other Loan Document,
and all such payments shall be made to Agent's Account in immediately available
funds. To the fullest extent permitted by applicable law, the Obligations of
each Loan Party to Agent and the Lenders under this Agreement and under the
other Loan Documents shall not be discharged by any amount paid in any other
currency or in any other manner than to Agent's Account to the extent that the
amount so paid after conversion under this Agreement and transfer to Agent's
Account does not yield the amount of Dollars in New York City due under this
Agreement and under the other Loan Documents. If, for the purposes of obtaining
or enforcing judgment against Loan Parties in any court in any jurisdiction in
connection with this Agreement or any other Loan Document, it becomes necessary
to convert into any other currency (such other currency being referred to as the
"Judgment Currency") an amount due under this Agreement or any Loan Document in
Dollars other than Judgment Currency, the conversion shall be made at the rate
of exchange prevailing on the Business Day immediately preceding (a) the date of
actual payment of the amount due, in the case of any proceeding in the courts of
any jurisdiction that would give effect to such conversion being made on such
date, or (b) the date on which the judgment is given, in the case of any
proceeding in the courts of any other jurisdiction (the applicable date as of
which such conversion is made pursuant to this Section 2.16 being hereinafter
referred to as the "Judgment Conversion Date").
(b) If, in the case of any proceeding in the court of
any jurisdiction referred to in subsection (a) above, there is a change in the
rate of exchange prevailing between the Judgment Conversion Date and the date of
actual receipt for value of the amount due, Loan Parties shall pay such
additional amount (if any and in any event not a lesser amount) as may be
necessary to ensure that the amount actually received in the Judgment Currency,
when converted at the rate of exchange prevailing on the date of payment, will
produce the amount of Dollars which could have been purchased with the amount of
the Judgment Currency stipulated in the judgment or judicial order at the rate
of exchange prevailing on the Judgment Conversion Date. The term "rate of
exchange" in this Section means the spot rate of exchange at which Agent would,
on the relevant date at or about 12:00 noon (California time), be prepared to
sell Dollars against the Judgment Currency.
(c) Any amount due from Loan Parties under this Section
2.16 shall not be affected by judgment being obtained for any other amounts due
under or in respect of this Agreement or any other Loan Document.
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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 credit provided for hereunder), is subject
to the fulfillment, to the satisfaction of Agent, of each of the conditions
precedent set forth below:
(a) the Closing Date shall occur on or before October
30, 2002;
(b) Agent shall have received all financing statements
required by Agent, duly authorized by the applicable Borrowers, and Agent shall
have received searches reflecting the filing of all such financing statements;
(c) Agent shall have received each of the following
documents, in form and substance satisfactory to Agent, duly executed, and each
such document shall be in full force and effect:
(i) the Canadian Guarantees,
(ii) the Canadian Security Agreements,
(iii) the Control Agreements,
(iv) the Copyright Security Agreement,
(v) the Disbursement Letter,
(vi) the Due Diligence Letter,
(vii) the Fee Letter,
(viii) the Guarantor Security Agreement,
(ix) the Guaranty,
(x) the Intercompany Subordination Agreement,
(xi) the Mortgages,
(xii) the Officers' Certificate,
(xiii) the Patent Security Agreement,
(xiv) the Pay-Off Letter, together with UCC termination
statements (and Canadian equivalents) and other documentation
evidencing the termination by Existing Lender of its Liens in
and to the properties and assets of the Loan Parties,
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(xv) the Securities Pledge Agreement, together with all
Pledged Notes and certificates representing the shares of Stock
pledged thereunder, as well as Stock powers with respect thereto
endorsed in blank,
(xvi) the Trademark Security Agreement, and
(xvii) the U.S. Cash Management Agreements;
(d) Agent shall have received a certificate from the
Secretary of each Borrower (i) 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 and (ii)
certifying the names and true signatures of the officers of each Borrower
authorized to sign each Loan Document;
(e) 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;
(f) Agent shall have received a certificate of status
with respect to each Borrower, dated within 15 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;
(g) 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;
(h) Agent shall have received a certificate from the
Secretary of each Guarantor (i) attesting to the resolutions of such Guarantor's
Board of Directors authorizing its execution, delivery, and performance of the
Loan Documents to which such Guarantors are a party and authorizing specific
officers of such Guarantor to execute the same, and (ii) certifying the names
and true signatures of the officers of each Guarantor authorized to sign each
Loan Document;
(i) 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;
(j) Agent shall have received a certificate of status
with respect to each Guarantor, dated within 15 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
Guarantors is in good standing in such jurisdiction;
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(k) 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 Guarantors is in good
standing in such jurisdictions;
(l) Agent shall have received a certificate of
insurance, together with the endorsements thereto, as are required by Section
6.8, the form and substance of which shall be satisfactory to Agent and Lenders
whose Pro Rata Shares aggregate at least 51% of the Term Loan Commitments;
(m) Agent shall have received Collateral Access
Agreements with respect to the following locations: (i) Outsourcing Services
Group, Corporate Center, 00 Xxxxxxxx Xxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000, (ii)
Aerosol Services Company, 000 Xxxxx Xxxxx Xxxxxx, Xxxx xx Xxxxxxxx, Xxxxxxxxxx
00000, (iii) Aerosol Services Company, 000 Xxxxx Xxxxx Xxxxxx, Xxxx xx Xxxxxxxx,
Xxxxxxxxxx 00000, (iv) Aerosol Services Company, 00000 Xxx Xxxxxx, Xxxx xx
Xxxxxxxx, Xxxxxxxxxx 00000, (v) Piedmont Laboratories, 0000 Xxxxxx Xxxxx,
Xxxxxxxxxxx, Xxxxxxx 00000, (vi) Acupac Packaging, 00 Xxxxxx Xxxxxx Xxxx,
Xxxxxx, Xxx Xxxxxx 00000, (vii) Kolmar Laboratories, Xxxxxxxxx Xxxxxx, Xxxx
Xxxxxx, Xxx Xxxx 00000, (viii) Precision Packaging and Services, 0000 Xxxx Xxxx,
Xxxxxx, Xxxx 00000, (ix) Precision Packaging and Services, 0000 Xxxx Xxxxx,
Xxxxxxxxxx, Xxxx 00000, and (x) OSG Xxxxx-Xxx, 00/00 Xxxxxx Xxxx South,
Brampton, Ontario, Canada X0X 0X0;
(n) Agent shall have received opinions of Borrowers' and
Guarantors' counsel in form and substance satisfactory to Agent;
(o) 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 Loan Parties have been timely filed and all
taxes upon 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;
(p) Borrowers shall have the Required Availability at
Closing after giving effect to the initial extensions of credit hereunder;
(q) Agent shall have completed its business, legal, and
collateral due diligence, including (i) a collateral audit and review of
Borrowers' books and records and verification of Borrowers' representations and
warranties to the Lender Group, the results of which shall be satisfactory to
Agent, (ii) an inspection of each of the locations where Inventory is located,
the results of which shall be satisfactory to Agent, (iii) a distressed
enterprise valuation of the Borrowers' businesses performed by an independent
appraisal company acceptable to Agent, the results of which shall be
satisfactory to Agent, and (iv) a quality of earnings analysis and confirmation
of the reported trailing twelve months EBITDA (other than Norwich) of at least
$21,700,000 as of May 31, 2002 by a financial professional acceptable to Agent,
the results of which shall be satisfactory to Agent.
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(r) Agent shall have received completed reference checks
with respect to Borrowers' senior management, the results of which are
satisfactory to Agent in its sole discretion;
(s) Agent shall have received an appraisal of the Net
Liquidation Percentage applicable to Borrowers' Inventory and an appraisal of
Equipment, the results of which shall be satisfactory to Agent;
(t) Agent shall have received Loan Parties' Closing Date
Business Plan;
(u) Borrowers shall pay all Lender Group Expenses
incurred in connection with the transactions evidenced by this Agreement;
(v) Agent shall have received mortgagee title insurance
policies (or marked commitments to issue the same) for the Real Property
Collateral issued by a title insurance company satisfactory to Agent and Lenders
whose Pro Rata Shares aggregate at least 51% of the Term Loan Commitments (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 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 and Lenders whose Pro Rata Shares aggregate at
least 51% of the Term Loan Commitments. In addition, Borrowers shall have paid
to such title insurance company all expenses and premiums of such title
insurance company in connection with the issuance of the Mortgage Policies and
in addition shall have paid to such title insurance company an amount equal to
the recording, stamp, mortgage and/or intangibles taxes payable in connection
with the recording of the Mortgages in the appropriate county recording offices;
(w) Agent shall have received a real estate survey with
respect to each parcel composing the Real Property Collateral (other than the
property owned by Piedmont Laboratories located in Gainesville, Georgia and the
property owned by Kolmar Canada located in Barrie, Ontario); the surveyors
retained for such surveys, the scope of the surveys, and the results thereof
shall be acceptable to Agent and Lenders whose Pro Rata Shares aggregate at
least 51% of the Term Loan Commitments;
(x) Agent's senior credit committee shall have approved
the execution of this Agreement and the transactions contemplated hereby;
(y) Each of Agent and its counsel shall have reviewed,
and shall be satisfied in all respects, with the Senior Subordinated Note
Documents, including, without limitation, (i) review of the executed
Supplemental Indenture to the Senior Subordinated Note Indenture, dated as of
October 29, 2002, and the related consent of the trustee thereto, and (ii)
satisfaction that the obligations under the Senior Subordinated Note Documents
are fully subordinated to the Obligations;
(z) Agent shall have received satisfactory evidence
(including a certificate of the chief financial officer of Parent) that
Borrowers are in compliance with all covenants
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contained in the Senior Subordinated Note Documents after giving effect to the
Borrowings made hereunder;
(aa) 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 Loan Parties of this Agreement or
any other Loan Document or with the consummation of the transactions
contemplated hereby and thereby;
(bb) Xxxxx Fargo shall have authorized Agent to
underwrite and hold a $40,000,000 Revolver Commitment;
(cc) Agent shall have conducted a field visit of
Borrowers' facilities at 000 Xxxxxx Xxxx, Xxxxxx, Xxxx 00000 and 00 Xxxxxx
Xxxxxx Xxxx Xxxxxx, Xxx Xxxxxx 00000, as part of an audit by or on behalf of
Agent, and Agent shall be satisfied with the results thereof; and
(dd) 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.
3.2 Conditions Subsequent to the Initial Extension of Credit. The
obligation of the Lender Group (or any member thereof) to continue to make
Advances (or otherwise extend credit hereunder) is subject to the fulfillment,
on or before the date applicable thereto, of each of the conditions subsequent
set forth below (the failure by Borrowers to so perform or cause to be performed
constituting an Event of Default):
(a) within 30 days after the Closing Date, deliver to
Agent certified copies of the policies of insurance, together with the
endorsements thereto, as are required by Section 6.8, the form and substance of
which shall be satisfactory to Agent and its counsel;
(b) within 60 days after the Closing Date, deliver to
Agent a phase-I environmental site assessment report with respect to each parcel
composing the Real Property Collateral; the environmental consultants and
surveyors retained for such reports, the scope of the reports, and the results
thereof shall be acceptable to Agent and Lenders whose Pro Rata Shares aggregate
at least 51% of the Term Loan Commitments;
(c) Agent shall have conducted a field visit of Kolmar
Canada and OSG Xxxxx-Xxx as part of the first audit after the Closing Date by or
on behalf of Agent, and Agent shall be satisfied with the results thereof;
(d) on or before November 30, 2002, Agent shall have
received an ALTA as-built survey with respect to the property owned by Piedmont
Laboratories located in Gainesville, Georgia; the surveyor retained for such
survey, the scope of the survey, and the results thereof shall be acceptable to
Agent and Lenders whose Pro Rata Shares aggregate at least 51% of the Term Loan
Commitments;
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(e) within 30 days after the Closing Date, Agent shall
have received duly executed copies of the Canadian Cash Management Agreements,
and such agreements shall be in full force and effect;
(f) within 30 days after the Closing Date, Parent shall
have delivered to Agent Collateral Access Agreements with respect to the
following locations: (i) 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxx Xxxxxx, 00000 and (ii)
Kolmar Laboratories, 000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000; and
(g) within 15 days after the Closing Date, Borrowers
shall have secured, with respect to the Real Property Collateral situated in
Port Jervis, NY, flood insurance in an amount at least equal to $5,000,000.
3.3 Conditions Precedent to all Extensions of Credit. The obligation of
the Lender Group (or any member thereof) to make all Advances (or to extend any
other credit hereunder) shall be subject to the following conditions precedent:
(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 Borrower, Agent, any Lender, or any of their Affiliates; and
(d) no Material Adverse Change shall have occurred.
3.4 Term. This Agreement shall continue in full force and effect for a
term ending on January 15, 2006 (the "Maturity Date"). The foregoing
notwithstanding, the Lender Group, upon the election of the Required Lenders,
shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.
3.5 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
Products Obligations) immediately shall become due and payable without notice or
demand (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 Xxxxx Fargo or its Affiliates
with respect to the then extant Bank Products Obligations). No termination of
this Agreement, however, shall relieve or discharge
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Borrowers of their duties, Obligations, or covenants hereunder and 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 termination statements (or Canadian equivalents), 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,
Agent's Liens and all notices of security interests and liens previously filed
by Agent with respect to the Obligations.
3.6 Early Termination by Borrowers. Borrowers have the option, at any
time upon 60 days prior written notice by Parent 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 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 Xxxxx Fargo or
its Affiliates with respect to the then extant Bank Products Obligations), in
full, together with the Applicable Prepayment Premium (to be allocated based
upon this Agreement and any letter agreements between Agent and individual
Lenders). If Parent has sent a notice of 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
Xxxxx Fargo or its Affiliates with respect to the then extant Bank Products
Obligations), in full, together with the Applicable Prepayment Premium, on the
date set forth as the date of termination of this Agreement in such notice. In
the event of the termination of this Agreement and repayment of the Obligations
at any time prior to the Maturity Date, for any other reason, including (a)
termination upon the election of the Required Lenders to terminate after the
occurrence of an Event of Default, (b) foreclosure and sale of Collateral, (c)
sale of the Collateral in any Insolvency Proceeding, or (iv) restructure,
reorganization or compromise of the Obligations by the confirmation of a plan of
reorganization, or any other plan of compromise, restructure, or arrangement in
any Insolvency Proceeding, then, in view of the impracticability and extreme
difficulty of ascertaining the actual amount of damages to the Lender Group or
profits lost by the Lender Group as a result of such early termination, and by
mutual agreement of the parties as to a reasonable estimation and calculation of
the lost profits or damages of the Lender Group, Borrowers shall pay the
Applicable Prepayment Premium to Agent (to be allocated based this Agreement and
upon letter agreements between Agent and individual Lenders), measured as of the
date of such termination.
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest. Each Borrower hereby grants to Agent,
for the benefit of the Lender Group and (with respect to Bank Product
Obligations) Xxxxx Fargo and its
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Affiliates, a continuing 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
Obligations in accordance with the terms and conditions of the Loan Documents
and in order to secure prompt performance by Borrowers of each of their
covenants and duties under the Loan Documents. 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 Borrowers. Anything contained in
this Agreement or any other Loan Document to the contrary notwithstanding,
except for Permitted Dispositions, Borrowers 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 Borrower, immediately upon the
request of Agent, shall endorse and deliver physical possession of such
Negotiable Collateral to Agent.
4.3 Collection of Accounts, General Intangibles, and Negotiable
Collateral. At any time after the occurrence and during the continuation of an
Event of Default, Agent or Agent's designee may (a) notify Account Debtors of
Borrowers that the Accounts, chattel paper, or General Intangibles have been
assigned to Agent or that Agent has a security interest therein, or (b) collect
the Accounts, chattel paper, or General Intangibles directly and charge the
collection costs and expenses to the Loan Account. Each Borrower agrees that it
will hold in trust for the Lender Group, as the Lender Group's trustee, any
Collections that it receives and immediately will deliver said Collections to
Agent or a Cash Management Bank in their original form as received by the
applicable Borrower.
4.4 Delivery of Additional Documentation Required. At any time upon the
request of Agent, Borrowers shall execute and deliver to Agent, any and all
financing statements, original financing statements in lieu of continuation
statements, fixture filings, security agreements, pledges, mortgages, surveys,
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 Agent's Liens in the Collateral (whether now owned or hereafter
arising or acquired), 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. To
the maximum extent permitted by applicable law, each Borrower authorizes Agent
to execute any such Additional Documents in the applicable Borrower's name and
authorize Agent to file such executed Additional Documents in any appropriate
filing office. In addition, on such periodic basis as Agent shall require,
Borrowers shall (a) provide Agent with a report of all new patentable,
copyrightable, or trademarkable materials acquired or generated by Borrowers
during the prior period, (b) to the extent required pursuant to Section 6.16,
cause all patents, copyrights, and trademarks acquired or generated by Borrowers
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 Borrowers' ownership thereof, and (c) cause to be prepared, executed,
and delivered to Agent supplemental schedules to the applicable
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Loan Documents to identify such patents, copyrights, and trademarks as being
subject to the security interests created thereunder.
4.5 Power of Attorney. Each Borrower hereby irrevocably makes,
constitutes, and appoints Agent (and any of Agent's officers, employees, or
agents designated by Agent) as such Borrower's true and lawful attorney, with
power to (a) if such Borrower refuses to, or fails timely to execute and deliver
any of the documents described in Section 4.4, sign the name of such Borrower on
any of the documents described in Section 4.4, (b) at any time that an Event of
Default has occurred and is continuing, sign such Borrower'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 Borrower'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 Borrower's
policies of insurance 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 (through any of its officers, employees, or
agents) shall have the right (so long as no Default or Event of Default shall
have occurred and be continuing, during normal business hours), from time to
time hereafter, to inspect the Books and to check, test, and appraise the
Collateral in order to verify Loan Parties' 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 each of the applicable Loan
Party, Agent, and the substitute securities intermediary have entered into a
Control Agreement. No arrangement contemplated hereby or by any Control
Agreement in respect of any Securities Accounts or other Investment Property
shall be modified by Loan Parties 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 Agent's Account.
4.8 Commercial Tort Claims. Each Loan Party shall promptly notify Agent
in writing upon incurring or otherwise obtaining a commercial tort claim, as
that term is defined in the Code, after the date hereof against any third party
and, upon request of Agent, promptly amend Schedule C-2 to this Agreement,
authorize the filing of additional or amendments to existing financing
statements and do such other acts or things deemed necessary or desirable by
Agent to give Agent a security interest in any such commercial tort claim.
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5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement,
Parent and each Borrower 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 Loan Party Collateral and 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 or the rendition of services to such Account Debtors in the ordinary
course of Eligible Loan Parties' business, owed to Loan Parties without
defenses, disputes, offsets, counterclaims, or rights of return or cancellation.
As to each Account that is identified by the Administrative Borrower as an
Eligible Account in a borrowing base report submitted to Agent, such Account is
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. (a) All Eligible Finished Goods Inventory is of
good and merchantable quality, free from defects. As to each item of Inventory
that is identified by the Administrative Borrower as Eligible Finished Goods
Inventory in a borrowing base report submitted to Agent, such Inventory is not
excluded as ineligible by virtue of one or more of the excluding criteria set
forth in the definition of Eligible Finished Goods Inventory.
(b) All Eligible Raw Materials Inventory is of good and
merchantable quality, free from defects. As to each item of Inventory that is
identified by the Administrative Borrower as Eligible Raw Materials Inventory in
a borrowing base report submitted to Agent, such Inventory is not excluded as
ineligible by virtue of one or more of the excluding criteria set forth in the
definition of Eligible Raw Materials Inventory.
5.4 Equipment. All of the Equipment is used or held for use in Loan
Parties' business and is fit, in all material respects, for such purposes.
5.5 Location of Inventory and Equipment. Except as set forth on Schedule
5.5(a), the Inventory and Equipment are not stored with a bailee, warehouseman,
or similar party and are located only at the locations identified on Schedule
5.5(b).
5.6 Inventory Records. Each Loan Party keeps correct and accurate, in
all material respects, 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 and Organizational I.D.
Number. The chief executive office and other locations of each Loan Party is
located at the address indicated in Schedule 5.7 and each Loan Party's FEIN and
Organizational I.D. Number is identified in Schedule 5.7. Parent's exact legal
name is as set forth in the first paragraph hereof and each Loan Party's exact
legal name is as identified on the signature pages hereof and no Loan Party has
been known by any other name other than those specified on 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 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), 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.
Except as set forth on Schedule 5.8(b), 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 Parent's and each Borrower'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 Parent and the applicable
Borrower. 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(b), there are no
subscriptions, options, warrants, or calls relating to any shares of Parent's or
any Borrower's Restricted Subsidiaries' capital Stock, including any right of
conversion or exchange under any outstanding security or other instrument.
Neither Parent nor any Borrower or any of their respective Subsidiaries is
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of Parent's or any Borrower'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 that is material and
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applicable to any Borrower, the Governing Documents of any Borrower, or any
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, without limitation, Section 4.12 of the
Senior Subordinated Note Indenture) (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 any approval or consent of any Person under any
material contractual obligation of any Borrower.
(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, except where the failure to obtain such registration, consent,
approval, notice or other action reasonably could not be expected to result in a
Material Adverse Change.
(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) Upon proper filing of financing statements, fixture
filings, and Mortgages, Agent's Liens will be validly created, perfected, and
first priority Liens, subject only to Permitted Liens;
(f) The execution, delivery, and performance by
Guarantors of the Loan Documents to which they are parties have been duly
authorized by all necessary action on the part of Guarantors.
(g) The execution, delivery, and performance by
Guarantors of the Loan Documents to which they are parties do not and will not
(i) violate any provision of federal, provincial, state, or local law or
regulation that is material and applicable to Guarantors, the Governing
Documents of Guarantors, or any order, judgment, or decree of any court or other
Governmental Authority binding on Guarantors, (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 Guarantors, (iii) result in or
require the creation or imposition of any Lien of any nature whatsoever upon any
properties or assets of Guarantors, other than Permitted Liens, or (iv) require
any approval of Guarantors' interestholders or any approval or consent of any
Person under any material contractual obligation of Guarantors.
(h) The execution, delivery, and performance by
Guarantors of the Loan Documents to which Guarantors are parties 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
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other Person, except where the failure to obtain such registration, consent,
approval, notice or other action reasonably could not be expected to result in a
Material Adverse Change.
(i) The Loan Documents to which Guarantors are parties,
and all other documents contemplated hereby and thereby, when executed and
delivered by Guarantors will be legally valid and binding obligations of
Guarantors, enforceable against Guarantors 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.
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
the Loan Parties, threatened against 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 Loan Parties, 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
Loan Parties that have been delivered by 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, 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
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 Loan Party 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.
(a) Schedule 5.13 lists (i) all "employee benefit plans"
within the meaning of Section 3(3) of ERISA and equivalent Canadian Employee
Benefits Legislation, (ii) all employment agreements, including, but not limited
to, any individual benefit arrangement, policy or practice with respect to any
current or former employee or director of Loan Parties or Member of the
Controlled Group, and (iii) all other employee benefit, bonus or other incentive
compensation, stock option, stock purchase, stock appreciation, severance pay,
lay-off or reduction in force, change in control, sick pay, vacation pay, salary
continuation, retainer, leave of absence, educational assistance, service award,
employee discount, fringe benefit plans, arrangements, policies or practices,
whether legally binding or not, to which any Loan Party or
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any Member of the Controlled Group maintains, contributes to or has any
obligation to or liability for (collectively, the "Plans").
(b) No Loan Party nor any Member of the Controlled Group
has ever contributed to, or ever been obligated to contribute to, a
Multiemployer Plan or multi employer plan within the meaning of Section 413(b)
or (c) of the IRC.
(c) No Loan Party maintains or contributes to any
welfare benefit plan which provides health benefits to an employee after the
employee's termination of employment or retirement except as required under
Section 4980B of the IRC and Sections 601 through 608 of ERISA or equivalent
Canadian Employee Benefits Legislation.
(d) Each Plan which is an "employee benefit plan", as
defined in Section 3(3) of ERISA or equivalent Canadian Employee Benefits
Legislation, complies by its terms and in operation with the requirements
provided by any and all statutes, orders or governmental rules or regulations
currently in effect and applicable to the Plan, including but not limited to
ERISA, the IRC and Canadian Employee Benefits Legislation.
(e) All reports, forms and other documents required to
be filed with any governmental entity with respect to any Plan (including
summary plan descriptions, Forms 5500 and summary annual reports) have been
timely filed and are accurate.
(f) Each Plan intended to qualify under Section 401(a)
of the IRC has been determined by the Internal Revenue Service to so qualify
after January 1, 1985, and each trust maintained pursuant thereto has been
determined by the Internal Revenue Service to be exempt from taxation under
Section 501 of the IRC. Nothing has occurred since the date of the Internal
Revenue Service's favorable determination letter that could adversely affect the
qualification of the Plan and its related trust. Each Loan Party and each Member
of the Controlled Group have timely and properly applied for a written
determination by the Internal Revenue Service on the qualification of each such
Plan and its related trust under Section 401(a) of the IRC, as amended by the
Tax Reform Act of 1986 and subsequent legislation enacted through the date
hereof, and Section 501 of the IRC. Each Plan has complied with the Canadian
Employee Benefits Legislation applicable to this Section 5.13(f).
(g) All contributions for all periods ending prior to
the Closing Date (including periods from the first day of the current plan year
to the Closing Date) have been made prior to the Closing Date by Loan Parties in
accordance with past practice and the recommended contribution in any applicable
actuarial report.
(h) All insurance premiums (including premiums to the
Pension Benefit Guaranty Corporation) have been paid in full, subject only to
normal retrospective adjustments in the ordinary course, with regard to the
Plans for plan years ending on or before the Closing Date.
(i) As of the Closing Date, no Plan described on
Schedule 5.13 and subject to Title IV of ERISA and Canadian Employee Benefits
Legislation, and no employee benefit plan maintained by a Member of the
Controlled Group and subject to Title IV of ERISA and equivalent Canadian
Employee Benefits Legislation, has benefit liabilities (as defined in
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Section 4001(a)(16) of ERISA and under equivalent Canadian Employee Benefits
Legislation) exceeding the assets of such plan or has been completely or
partially terminated.
(j) With respect to each Plan:
(i) no prohibited transactions (as defined in Section
406 or 407 of ERISA or Section 4975 of the IRC or under
equivalent Canadian Employee Benefits Legislation) have occurred
for which a statutory exemption is not available;
(ii) no reportable event (as defined in Section 4043 of
ERISA or under equivalent Canadian Employee Benefits
Legislation) has occurred as to which a notice would be required
to be filed with the Pension Benefit Guaranty Corporation or
with the equivalent Canadian Governmental Authority;
(iii) no action or claims (other than routine claims for
benefits made in the ordinary course of Plan administration for
which Plan administrative review procedures have not been
exhausted) are pending, threatened or imminent against or with
respect to the Plan, any employer who is participating (or who
has participated) in any Plan or any fiduciary (as defined in
Section 3(21) of ERISA or in equivalent Canadian Employee
Benefits Legislation) of the Plan;
(iv) no Loan Party, nor any fiduciary, has any knowledge
of any facts which could give rise to any such action or claim;
and
(v) such Plan provides that it may be amended or
terminated at any time and, except for benefits protected under
Section 411(d) of the IRC or under equivalent Canadian Employee
Benefits Legislation, all benefits payable to current employees,
terminated employees or any beneficiary may be amended or
terminated by any Loan Party at any time without liability.
(k) No Loan Party, nor any Member of the Controlled
Group, has any liability or is threatened with any liability (whether joint or
several) (i) for the termination of any single employer plan under Sections 4062
or 4064 of ERISA or any multiple employer plan under Section 4063 of ERISA or
under equivalent Canadian Employee Benefits Legislation, (ii) for any lien
imposed under Section 302(f) of ERISA, Section 412(n) of the IRC or under
equivalent Canadian Employee Benefits Legislation, (iii) for any interest
payments required under Section 302(e) of ERISA, Section 412(m) of the IRC or
under equivalent Canadian Employee Benefits Legislation, (iv) for any excise tax
imposed by Sections 4971, 4975, 4976, 4977 or 4979 of the IRC or under
equivalent Canadian Employee Benefits Legislation, (v) for any minimum funding
contributions under Section 302(c)(11) of ERISA, Section 412(c)(11) of the IRC
or under equivalent Canadian Employee Benefits Legislation, (vi) to a fine under
Section 502 of ERISA or under equivalent Canadian Employee Benefits Legislation,
or (vii) for any transaction within the meaning of Section 4069 of ERISA or
under equivalent Canadian Employee Benefits Legislation.
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(l) No Loan Party has incurred any withdrawal liability
with respect to any Multiemployer Plan within the meaning of Sections 4201 and
4204 of ERISA or under equivalent Canadian Employee Benefits Legislation, and no
liabilities exist with respect to withdrawals from any Multiemployer Plans which
could subject any Loan Party to any controlled group liability under Section
4001(b) of ERISA or under equivalent Canadian Employee Benefits Legislation.
(m) All of the Plans listed on Schedule 5.13, to the
extent applicable, are in compliance with the continuation of group health
coverage provisions contained in Section 4980B of the IRC and Section 601
through 608 of ERISA and under equivalent Canadian Employee Benefits
Legislation.
(n) True, correct and complete copies of all documents
creating or evidencing any Plan listed on Schedule 5.13 have been delivered to
Agent, and true, correct and complete copies of all reports, forms and other
documents required to be filed with any governmental entity (including summary
plan descriptions, Forms 5500 and summary annual reports for all plans subject
to ERISA and Canadian Employee Benefits Legislation) have been delivered to
Agent. There are no negotiations, demands or proposals which are pending or have
been made which concern matters now covered, or that would be covered, by the
type of agreements listed on Schedule 5.13.
(o) All expenses and liabilities relating to all of the
Plans described on Schedule 5.13 have been, and will on the Closing Date, be
fully and properly accrued on Loan Parties' books and records and disclosed in
accordance with GAAP and in Plan financial statements.
(p) No Loan Party or any Member of the Controlled Group
has any liability, contingent or otherwise, with respect to any plan, fund
(including, without limitation, any superannuation fund) or other similar
program established or maintained outside the United States of America or
Canada, which plan, fund or similar program provides, or results in, retirement
income, a deferral of income in contemplation of retirement or payments to be
made upon termination of employment, and which plan is not subject to ERISA, the
IRC or Canadian Employee Benefits Legislation
5.14 Environmental Condition. Except as set forth on Schedule 5.14, (a)
to the Loan Parties' knowledge, none of the Loan Parties' properties or assets
has ever been used 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 is in
violation, in any material respect, of applicable Environmental Law, (b) none of
the Loan Parties' properties or assets are currently or, to Loan Parties'
knowledge, has ever been designated or identified in any manner pursuant to any
Environmental Law as a Hazardous Materials disposal site, (c) none of the Loan
Parties has received notice that an Environmental Lien has attached to any
revenues or to any Real Property owned or operated by the Loan Parties, (d) all
Loan Parties are in compliance with Environmental Laws in all material respects,
(e) there has been no Release in violation of Environmental Laws at any of the
properties owned or operated by any Loan Party or a predecessor in interest
(with respect to properties currently owned or operated by a Loan Party), or at
any disposal or treatment facility which received
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Hazardous Materials generated by such Loan Party or any predecessor in interest
(with respect to properties currently owned or operated by a Loan Party), (f) no
Environmental Actions have been asserted against any Loan Party or any
predecessor in interest (with respect to properties currently owned or operated
by a Loan Party) nor does any Loan Party have knowledge or notice of any
threatened or pending Environmental Action against such Loan Party or any
predecessor in interest (with respect to properties currently owned or operated
by a Loan Party), and (g) no Environmental Actions have been asserted against
any facilities that may have received Hazardous Materials generated by any Loan
Party or any predecessor in interest (with respect to properties currently owned
or operated by a Loan Party).
5.15 Brokerage Fees. Except as set forth on Schedule 5.15, Borrowers
have not utilized the services of any broker or finder in connection with
Borrowers' obtaining financing from the Lender Group under this Agreement and no
brokerage commission or finders fee is payable by Borrowers in connection
herewith.
5.16 Intellectual Property.
(a) Each Loan Party owns, or holds licenses in, all
Intellectual Property Rights that are necessary to the conduct of its business
as currently conducted. Attached hereto as Schedule 5.16(a) is a true, correct,
and complete listing of all material patents, patent applications, trademarks,
trademark applications and copyrights (including copyright registrations and
applications) as to which each Loan Party is the owner or is a licensee.
(b) Each Loan Party represents and warrants that it has
taken all actions reasonably necessary to protect its material Intellectual
Property Rights, including, without limitation, (i) protecting the secrecy and
confidentiality of such Loan Party's confidential information and trade secrets
by limiting access thereto; and (ii) taking all actions reasonably necessary to
ensure that no material trade secret of such Loan Party falls or has fallen into
the public domain. Each Loan Party has only entered into such source code
licenses as set forth in Schedule 5.16(b).
(c) No past or present employee or contractor of any
Loan Party has any ownership interest, license, permission or other Intellectual
Property Right in or to any material Intellectual Property Rights of such Loan
Party that interferes with its value to or use by such Loan Party.
(d) Other than as set forth on Schedule 5.16, each Loan
Party has made all necessary payments, filings and recordations to protect and
maintain its interest in material Intellectual Property Rights in the United
States or any other jurisdiction, including, without limitation, (i) making all
necessary registration, maintenance, and renewal fee payments; and (ii) filing
all necessary documents, including, without limitation, all applications for
registration of copyrights, trademarks, and patents.
(e) No claim has been made and is continuing or, to the
best of Loan Parties' knowledge, threatened that the use by any Loan Party of
any item of General Intangibles is invalid or unenforceable or that the use by
such Loan Party of any General Intangibles does or may violate the rights of any
Person, other than any such claim which would not cause a Material
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Adverse Change. To the best of each Loan Party's knowledge, there is currently
no infringement or unauthorized use of any item of Intellectual Property Rights
contained on Schedule 5.16(a).
(f) Other than as set forth on Schedule 5.16, each Loan
Party has filed applications and taken any and all other actions reasonably
necessary to register all material Copyrights, in good faith in accordance with
the procedures and regulations of the U.S. Copyright Office (or any similar
office of any other jurisdiction in which any such Copyrights are used).
5.17 Leases. Loan Parties enjoy peaceful and undisturbed possession
under all leases material to the business of Loan Parties and to which Loan
Parties are a party or under which Loan Parties are operating. All of such
leases are valid and subsisting and no material default by 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 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 Loan Parties in writing to 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 Projections represent, and as of
the date on which any other Projections are delivered to Agent, such additional
Projections represent Loan Parties' good faith best estimate of its 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 and such
Schedule accurately reflects the aggregate principal amount of such Indebtedness
and the principal terms thereof.
5.21 Senior Subordinated Note Indenture Documents. Parent has delivered
to Agent true and correct copies of the Senior Subordinated Note Indenture
Documents. All of the representations and warranties of Parent and any Loan
Party in the Senior Subordinated Note Indenture Documents were at the time made
or deemed made true and correct in all respects.
5.22 Real Property Collateral. Set forth on Schedule R-1 is a true and
complete list of all Real Property Collateral of Borrowers as of the Closing
Date, including, with respect to each property, (i) whether such Real Property
Collateral is owned or leased, (ii) the identity of the owner or lessee and
(iii) the location of such Real Property Collateral.
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5.23 Taxes and Payments. Loan Parties and their Subsidiaries have filed
all federal, state and provincial income tax returns and all other material tax
returns, domestic and foreign, required to be filed by them and have paid all
taxes and assessments payable by them which have become due, except for those
contested in good faith and adequately disclosed and fully provided for on the
financial statements of Loan Parties and their Subsidiaries, in accordance with
GAAP and for which Loan Parties and their Subsidiaries, as applicable, have
provided adequate reserves (in the good faith judgment of the management of Loan
Parties). Loan Parties have provided adequate reserves (in the good faith
judgment of the management of Loan Parties) for the payment of all federal,
state, province, local and foreign income taxes applicable for the current
fiscal year to date. Except as set forth on Schedule 5.23, there is no action,
suit, proceeding, investigation, audit, or claim now pending or, to the
knowledge of Loan Party threatened, by any authority regarding any taxes
relating to any of Loan Parties or their Subsidiaries that could reasonably be
expected to result in a material liability to any Loan Party or their
Subsidiaries. Except as set forth on Schedule 5.23, as of the Closing Date, none
of the Loan Parties or their Subsidiaries have entered into an agreement or
waiver or been requested to enter into an agreement or waiver extending any
statute of limitations relating to the payment or collection of taxes of any of
the Loan Parties or their Subsidiaries, or is aware of any circumstances that
would cause the taxable years or other taxable periods of any Loan Parties or
their Subsidiaries not to be subject to the normally applicable statute of
limitations.
5.24 Employee and Labor Matters. There is (i) no unfair labor practice
complaint pending or, to the best knowledge of any Loan Party, threatened
against any Loan Party before any Governmental Authority and no grievance or
arbitration proceeding is pending or threatened against any Loan Party which
arises out of or under any collective bargaining agreement, (ii) no strike,
labor dispute, slowdown, stoppage or similar action or grievance pending or
threatened against any Loan Party. None of the Loan Parties or any Member of the
Controlled Group has incurred any liability or obligation under WARN, which
remains unpaid or unsatisfied. The hours worked and payments made to employees
of any Loan Party have not been in violation of the Fair Labor Standards Act or
any other applicable legal requirements, including equivalent Canadian
provincial legislation, other than isolated and immaterial violations that, in
the aggregate, would not result in a Material Adverse Change. All material
payments due from any Loan Party on account of wages and employee health and
welfare insurance and other benefits have been paid or accrued as a liability on
the books of the Loan Parties.
6. AFFIRMATIVE COVENANTS.
Each Borrower and Parent 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, Borrowers and Parent shall
and shall cause each of their respective Restricted Subsidiaries (and with
respect to the covenants contained in Section 6.14, Borrowers and Parent shall
cause each of their respective Subsidiaries) to do all of the following:
6.1 Accounting System. Maintain a system of accounting that enables Loan
Parties 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. Loan Parties also shall keep an
inventory reporting system that shows all additions, sales, claims, returns, and
allowances with respect to the Inventory.
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6.2 Collateral Reporting. Provide Agent with the following documents
(with all applicable amounts to be reflected in Dollars) at the following times
in form satisfactory to Agent:
================================================================================
Daily (a) a sales journal, collection journal, and credit
register since the last such schedule and a calculation of
the Borrowing Base as of such date, and
(b) notice of all returns, disputes, or claims.
--------------------------------------------------------------------------------
Monthly (not later (c) Inventory reports specifying each Loan Party's cost of
than the 10th day its Inventory, by category, with additional detail showing
of each month) additions to and deletions from the Inventory.
(d) a detailed calculation of the Borrowing Base
(including detail regarding those Accounts that are not
Eligible Accounts),
(e) a detailed aging, by total, of the Accounts, together
with a reconciliation to the detailed calculation of the
Borrowing Base previously provided to Agent,
(f) a summary aging, by vendor, of Loan Parties' accounts
payable and any book overdraft,
(g) a calculation of Dilution for the prior month,
(h) a xxxx and hold report (in the case of Kolmar),
(i) a Non-Product Invoice Listing Report (in the case of
Kolmar),
(j) an allowance accrual schedule (in the case of
Aerosol), and
(k) FG Reports (in the case of Piedmont).
--------------------------------------------------------------------------------
Quarterly (l) a detailed list of each Loan Party's customers, and
(m) a report regarding each Loan Party's accrued, but
unpaid, ad valorem taxes.
--------------------------------------------------------------------------------
Upon request by (n) copies of invoices in connection with the Accounts,
Agent credit memos, remittance advices, deposit slips, shipping
and delivery documents in connection with the Accounts
and, for Inventory and Equipment acquired by Loan Parties,
purchase orders and invoices, and
(o) such other reports as to the Collateral, or the
financial condition of Loan Parties, as Agent may request.
================================================================================
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In addition, each Borrower 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 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 balance sheet,
income statement, 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 financial statements delivered hereunder
have been prepared in accordance with GAAP (except for
the order and details of presentation, the lack of
footnotes and being subject to year-end audit
adjustments, so long as such exceptions are consistent
with financial statements delivered to Agent prior to
the execution and delivery of this Agreement) and fairly
present in all material respects the financial condition
of Parent and its Subsidiaries,
B. the representations and warranties of
Borrowers 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 Borrowers have taken, are taking, or
propose to take with respect thereto),
(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,
(iv) a Solvency Certificate, and
(b) as soon as available, but in any event within 90
days after the end of each of Parent's fiscal years,
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(i) financial statements of Parent and its Subsidiaries
on a consolidated basis for each such fiscal year, audited by
independent certified public accountants reasonably acceptable
to Agent and certified, without any qualifications (including
any "going concern" exception or qualification), 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, and
(iii) a certificate executed by the chief financial
officer of Parent stating that Parent and Loan Parties have paid
all applicable deemed dividend taxes for the preceding fiscal
year and setting forth the amount of such taxes,
(c) as soon as available, but in any event within 30
days after the start of each of Parent's fiscal years,
(i) copies of Loan Parties' Projections, in form and
substance (including as to scope and underlying assumptions)
satisfactory to Agent, in its sole discretion, for the
forthcoming 3 years, year by year, and for the forthcoming
fiscal year, month by month, certified by the chief financial
officer of Parent as being such officer's good faith best
estimate of the financial performance of Parent and its
Subsidiaries during the period covered thereby,
(d) if and when filed by Parent or any Borrower,
(i) 10-Q quarterly reports, Form 10-K annual reports,
and Form 8-K current reports,
(ii) any other filings made by Parent or any Borrower
with the SEC,
(iii) copies of Loan Parties' federal income tax
returns, and any amendments thereto, filed with the Internal
Revenue Service or Canada Customs and Revenue Agency, 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 in which (i) 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
Loan Party, 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,
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(f) as soon as any 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 Loan Parties propose to take with
respect thereto, and
(g) upon the request of Agent, any other report
reasonably requested relating to the financial condition of Loan Parties.
In addition to the financial statements referred to above, Parent
and Borrowers agree to deliver financial statements prepared on both a
consolidated and consolidating basis and that no Borrower, or any Restricted
Subsidiary of a Borrower, will have a fiscal year different from that of Parent.
Borrowers agree that their independent certified public accountants are
authorized to communicate with Agent and to release to Agent whatever financial
information concerning Borrowers that Agent reasonably may request. Each
Borrower 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 agree that Agent may contact directly any such accounting firm or service
bureau in order to obtain such information.
6.4 Guarantor Reports. Cause Guarantors to deliver their annual
financial statements at the time when Parent provides its audited financial
statements to Agent.
6.5 Return. Cause returns and allowances as between Eligible Loan
Parties and their Account Debtors, to be on the same basis and in accordance
with the usual customary practices of the applicable Eligible Loan Party, 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 Eligible Loan Party, the applicable Eligible Loan
Party promptly shall determine the reason for such return and, if the applicable
Eligible Loan Party accepts such return, issue a credit memorandum (with a copy
to be sent to Agent) 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 Eligible Loan Party, the applicable Eligible Loan
Party promptly shall determine the reason for such return and, if Agent consents
(which consent shall not be unreasonably withheld), issue a credit memorandum
(with a copy to be sent to Agent) in the appropriate amount to such Account
Debtor.
6.6 Maintenance of Properties. Maintain and preserve all of its
properties 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.
6.7 Taxes. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against 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. Loan
Parties will make timely payment or deposit of all tax payments and withholding
taxes required of it by applicable laws, including those laws concerning
F.I.C.A., F.U.T.A., (and their equivalent in any other jurisdiction, where
applicable) federal, state or provincial disability, and local, state,
provincial and federal income taxes, and will, upon request, furnish Agent with
proof
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satisfactory to Agent indicating that the applicable Loan Party has made such
payments or deposits. Loan Parties shall deliver satisfactory evidence of
payment of applicable excise taxes in each jurisdiction in which any Loan Party
is required to pay any such excise tax.
6.8 Insurance.
(a) At Borrowers' expense, maintain insurance respecting
its property and assets 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. Borrowers
also shall 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 and Lenders whose Pro Rata Shares aggregate at least 51% of the Term Loan
Commitments. Borrowers shall deliver copies of all such policies to Agent with a
satisfactory lender's loss payable endorsement naming Agent as sole loss 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) Parent shall give Agent prompt notice of any loss
covered by such insurance. Agent shall have the exclusive right to adjust any
losses and settle any claims with the relevant insurers payable under any such
insurance policies (other than liability insurance policies) in excess of
$50,000, without any liability to Borrowers whatsoever in respect of such
adjustments. Subject to Sections 2.4(b)(vi) and 2.4(b)(vii), any monies 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. 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) Borrowers 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
additional named insured with the loss payable to Agent under a lender's loss
payable endorsement or its equivalent. Parent 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.
(d) At Borrowers' expense, maintain a key man life
insurance policy with respect to Xxxxxx Xxxxxx in the amount equal to
$10,000,000. Borrowers shall furnish Agent with an "Absolute Assignment" of such
key man life insurance policy, shall record such "Absolute Assignment" with the
issuer of the respective policy, and shall furnish proof of such issuer's
acceptance of such assignment. All proceeds payable under such key man life
insurance
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policy shall be payable to Agent to be applied on account of the Obligations in
accordance with Section 2.4(b).
(e) Unless otherwise agreed or required, in furtherance
of Section 6.8(a) above, at Borrowers' sole cost and expense, maintain, or cause
to be maintained, the following policies of insurance, with respect to each
parcel composing the Real Property Collateral:
(i) Casualty insurance against loss or damage by fire,
lightning and such other perils as are included in a standard
"special form" policy (formerly known as an "all-risk"
endorsement policy), and against loss or damage by all other
risks and hazards covered by a standard extended coverage
insurance policy including, without limitation, riot and civil
commotion, vandalism, malicious mischief, burglary and theft in
an amount equal to the greater of (A) the then full replacement
cost of the improvements, without deduction for physical
depreciation and (B) such amount that the insurer would not deem
any Borrower a co-insurer under said policies. Each insurance
policy required under this Section 6.8(e) shall contain a
"Replacement Cost" provision or endorsement with a waiver of
depreciation and an "Agreed Amount" or "No Coinsurance"
provision or endorsement and shall have a deductible no greater
than $1,000,000, or 7 days average value for time elements with
respect to the insurance described in clause (iii) below.
(ii) Commercial General Liability insurance, including a
broad form comprehensive general liability endorsement and
coverages for broad form property damage, contractual damages
and personal injuries (including death resulting therefrom) and
containing minimum limits per occurrence of $1,000,000.00 and
$2,000,000.00 in the aggregate for any policy year with a
deductible no greater than $50,000 ($100,000 for the "Today's
Sponge").
(iii) Rental loss and/or business interruption insurance
in an amount equal to $20,000,000 covering a period of up to
twelve (12) months.
(iv) Insurance against loss or damage from (A) leakage
of sprinkler systems and (B) explosion of steam boilers, air
conditioning equipment, high pressure piping, machinery and
equipment, pressure vessels or similar apparatus now or
hereafter installed on the improvements (without exclusion for
explosions).
(v) Flood insurance if any part of the Real Property
Collateral is located in an area identified by the Federal
Emergency Management Agency as an area having special flood
hazards, within fifteen (15) days after the Closing Date, in an
amount at least equal to $5,000,000.
(vi) If the Real Property Collateral is or ever becomes
non-conforming with respect to zoning, ordinance or law coverage
to compensate for loss of value or property resulting from
operation of law and the cost of demolition and the
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increased cost of construction in such amounts as may be
requested by the Borrowers.
(vii) Such other insurance as may from time to time be
reasonably required by Agent in order to protect the interests
of the Lenders.
6.9 Location of Inventory and Equipment. Keep the Inventory and
Equipment only at the locations identified on Schedule 5.5(b); provided,
however, that Parent may amend Schedule 5.5(b) 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 or Canada, and so long as, at
the time of such written notification, the applicable Borrower provides any
financing statements or fixture filings necessary to perfect and continue
perfected Agent's Liens on such assets and also provides to Agent a Collateral
Access Agreement.
6.10 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 and the Americans With Disabilities Act,
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.
6.11 Leases. Pay when due, taking into account any applicable grace
periods, 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.
6.12 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.
6.13 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
franchises material to Loan Parties' businesses.
6.14 Environmental.
(a) Keep any property either owned 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 or operated by
any Loan Party and take, or cause to be taken, any Remedial Actions required to
xxxxx said release or otherwise
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to come into compliance with applicable Environmental Law, and (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, (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.
6.15 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.
6.16 Intellectual Property Rights.
(a) Each Borrower agrees that, should it obtain an
ownership interest in any Intellectual Property Right which is not now a part of
the Collateral, (i) any such Intellectual Property Right shall automatically
become Collateral and (ii) with respect to any ownership interest in any
material Intellectual Property Right that a Loan Party should obtain, it shall
give prompt written notice thereof to Agent in accordance with Section 12
hereof. Each Borrower authorizes Agent to modify this Agreement by amending
Schedule 5.16(a) (and will cooperate reasonably with Agent in effecting any such
amendment) to include any Intellectual Property Right which becomes part of the
Collateral under this Section.
(b) With respect to material Intellectual Property
Rights, each Borrower agrees, subject to the last sentence of this subsection,
to take all necessary steps, including, without limitation, making all necessary
payments and filings in connection with registration, maintenance, and renewal
of copyrights, trademarks, and patents in the U.S. Copyright Office, the U.S.
Patent and Trademark Office, any other appropriate government agencies in
foreign jurisdictions, including the Canadian Intellectual Property Office
("CIPO"), or in any court, to maintain each such Intellectual Property Right.
Each Borrower agrees to take corresponding steps with respect to each new or
acquired material Intellectual Property Right to which it is now or later
becomes entitled. Any expenses incurred in connection with such activities shall
be borne solely by Borrower. No Loan Party shall discontinue use of or otherwise
abandon any material Intellectual Property Right without the written consent of
Agent, unless such Loan Party shall have previously determined that such use or
the pursuit or maintenance of such registration is no longer desirable in the
conduct of such Loan Party's business and that the loss thereof will not cause a
Material Adverse Change, in which case, such Loan Party will give notice of any
such abandonment to Agent pursuant to the terms of Section 12 hereof. Nothing in
this subsection shall require any Loan Party to formally protect by registration
any Intellectual Property Right that such Loan Party reasonably determines in
good faith should be maintained only as a trade secret or that such Loan Party
reasonably determines is not material to its business.
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(c) Each Loan Party will continue to take all actions it
recognizes as reasonably necessary to protect such Loan Party's material
Intellectual Property Rights. Borrowers further agrees to give Agent prompt
written notice in accordance with Section 12 hereof if any Loan Party enters
into any agreements after the Closing Date pursuant to which it grants any right
to a third party to use or access the source code of any computer software
programs or applications of which such Borrower is the owner or licensee. Each
Borrower authorizes Agent to modify this Agreement by amending Schedule 5.16(b)
(and will cooperate reasonably with Agent in effecting any such amendment) to
include any such additional license grant(s).
(d) Each Borrower agrees to notify Agent promptly and in
writing if it learns (i) that any item of the Intellectual Property Rights
contained on Schedule 5.16(a) may be determined to have become abandoned or
dedicated or (ii) of any adverse determination or the institution of any
proceeding (including, without limitation, the institution of any proceeding in
the U.S. Copyright Office, U.S. Patent and Trademark Office and any other
appropriate government agencies in foreign jurisdictions, including CIPO, or any
court) regarding any item of the Intellectual Property Rights that would cause a
Material Adverse Change.
(e) In the event that any Loan Party becomes aware that
any item of the General Intangibles is infringed or misappropriated by a third
party, such Loan Party shall promptly notify Agent and shall take such actions
as Loan Parties (after consulting with Agent) deem appropriate under the
circumstances to protect such General Intangibles, including, without
limitation, suing for infringement or misappropriation and for an injunction
against such infringement or misappropriation, unless any such infringement or
misappropriation would not cause a Material Adverse Change. Any expense incurred
in connection with such activities shall be borne solely by Loan Parties.
(f) Borrowers agree that, should any Loan Party obtain
an ownership interest in, or license of, material Copyrights after the Closing
Date, Borrower shall, promptly after such acquisition, file applications and
take any and all other actions reasonably necessary to register all such
Copyrights in good faith in accordance with the procedures and regulations of
the U.S. Copyright Office (or any similar office of any other jurisdiction in
which any such Copyrights are used, including CIPO).
6.17 Attendance at Board Meetings and Other Rights of GSC Partners.
Parent covenants that it will permit GSC Partners to have one observer attend,
participate by video or phone conference, each regular meeting of the Board of
Directors of Parent. Parent will send to GSC Partners or its designee the notice
of the time and place of any such meeting in the same manner and at the same
time as notice is sent to the directors or committee members, as the case may
be; provided, that GSC Partners or its designee shall always receive at least 24
hours' prior notice of any such meeting. Parent shall also provide to GSC
Partners copies of all notices, reports, minutes, consents and other documents
at the time and in the manner as they are provided to the board of directors or
committees. The Board of Directors of Parent shall meet at least four (4) times
per calendar year. In addition, GSC Partners shall have the right to (a) consult
regularly with management of Parent and the Borrowers, (b) meet at least
quarterly with management of Parent and the Borrowers, (c) visit the premises of
Parent and the Borrowers, at
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reasonable times and in reasonable places, and (d) receive non-public
information requested by GSC Partners.
6.18 Asset Dispositions. Promptly report to Agent any sales or other
dispositions by any Borrower or its Restricted Subsidiaries of Equipment or Real
Property Collateral in an amount (based upon net book value) in excess of
$50,000, on an individual basis, or $250,000, in the aggregate in any calendar
year. Agent may, in its sole discretion, implement reserves for such sales or
dispositions pursuant to Section 2.1(b).
6.19 ERISA and Labor Matters. The Loan Parties shall notify the Agent of
the following: (A) as soon as possible and in any event (1) within 10 days after
any Loan Party or any Member of the Controlled Group thereof knows or has reason
to know that any "reportable event" as defined under Section 4043(c) of ERISA or
under equivalent Canadian Employee Benefits Legislation with respect to any Plan
has occurred or (2) within 10 days after any Loan Party or any Member of the
Controlled Group 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 or equivalent Canadian Governmental Authority 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 under
equivalent Canadian Employee Benefits Legislation with respect to a Plan, (B)
promptly and in any event within 3 days after receipt thereof by any Loan Party
or any Member of the Controlled Group thereof from the PBGC or equivalent
Canadian Governmental Authority, copies of each notice received by any Loan
Party or any Member of the Controlled Group thereof of the PBGC's or equivalent
Canadian Governmental Authority's intention to terminate any Plan or to have a
trustee appointed to administer any Plan, (C) promptly and in any event within
10 days after any Loan Party or any Member of the Controlled Group thereof knows
or has reason to know that a required installment within the meaning of Section
412 of the Internal Revenue Code or under equivalent Canadian Employee Benefits
Legislation has not been made when due with respect to a Plan, (D) promptly and
in any event within 3 days after receipt thereof by any Loan Party or any Member
of the Controlled Group thereof from a sponsor of a Multiemployer Plan or from
the PBGC or equivalent Canadian Governmental Authority, a copy of each notice
received by any Loan Party or any Member of the Controlled Group thereof
concerning the imposition or amount of withdrawal liability under Section 4202
of ERISA or under equivalent Canadian Employee Benefits Legislation or
indicating that such Multiemployer Plan may enter reorganization status under
Section 4241 of ERISA or under equivalent Canadian Employee Benefits
Legislation, and (E) promptly and in any event within 10 days after any Loan
Party or any Member of the Controlled Group thereof sends notice of a plant
closing or mass layoff (as defined in WARN) to employees, copies of each such
notice sent by such Loan Party or such Member of the Controlled Group thereof.
6.20 Excess Availability. Borrowers shall maintain at all times Excess
Availability of at least $2,500,000.
7. NEGATIVE COVENANTS.
Each Borrower and Parent covenants and agrees that, so long as
any credit hereunder shall be available and until full and final payment of the
Obligations, Borrowers and
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Parent will not and will not permit any of their respective Restricted
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:
(a) Indebtedness evidenced by this Agreement and the
other Loan Documents, together with Indebtedness owed to Underlying Issuers with
respect to Underlying Letters of Credit;
(b) Indebtedness 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 judgment, materially impair the prospects of repayment of the
Obligations by Borrowers or materially impair Borrowers' 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 Borrower, 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, amalgamations or recapitalization, or reclassify its Stock.
(b) Liquidate, wind up, or dissolve itself (or suffer
any liquidation or dissolution).
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(c) 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 Borrower or Restricted Subsidiary.
7.5 Change Name. Change any Loan Party's name, 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 by Parent
to Agent of such change and so long as, at the time of such written
notification, such Loan Party provides any financing statements or fixture
filings necessary to perfect and continue perfected Agent's Liens.
7.6 Guarantee. 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 Loan Parties or
which are transmitted or turned over to Agent.
7.7 Nature of Business. Make any change in the principal nature of Loan
Parties' 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 (i) the prepayment of Purchase Money
Indebtedness in an aggregate amount not to exceed $250,000 and (ii) the
Obligations in accordance with this Agreement, and
(b) 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) or (c), other than amendments to the Senior Subordinated
Note Indenture pursuant to Section 9.01(1) thereof.
7.9 Change of Control. Cause, permit, or suffer, directly or indirectly,
any Change of Control.
7.10 Consignments. Consign any Inventory or sell any Inventory on xxxx
and hold (but excluding Inventory on xxxx and hold having a fair market value
(determined in Agent's Permitted Discretion) in an aggregate amount not to
exceed $500,000), sale or return, sale on approval, or other conditional terms
of sale.
7.11 Distributions. Except as set forth on Schedule 7.11, other than
distributions or declaration and payment of dividends by an Eligible Loan Party
to another Eligible 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 any Loan Party's Stock, of any class, whether
now or hereafter outstanding;
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7.12 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 Loan Parties' accounting records without said accounting firm or
service bureau agreeing to provide Agent information regarding the Collateral or
Loan Parties' financial condition.
7.13 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 Parent and its Restricted Subsidiaries shall not have Permitted
Investments (other than in the Cash Management Accounts) in deposit accounts or
Securities Accounts in excess of $25,000 outstanding at any one time unless the
Parent or any of its Restricted Subsidiaries, as applicable, 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) Agent's Liens in
such Permitted Investments.
7.14 Transactions with Affiliates. Except as set forth on Schedule 7.14,
which sets forth Affiliate transactions currently being carried out and which
may continue in accordance with past practices (but in no event to exceed the
amounts set forth on Schedule 7.14), directly or indirectly enter into or permit
to exist any transaction with any Affiliate of any Borrower except for
transactions that are in the ordinary course of Loan Parties' business, upon
fair and reasonable terms, that are fully disclosed to Agent, and that are no
less favorable to Loan Parties than would be obtained in an arm's length
transaction with a non-Affiliate.
7.15 Suspension. Suspend or go out of a substantial portion of its
business.
7.16 Compensation. Increase the annual fee or per-meeting fees paid to
the members of its Board of Directors during any year by more than 25% over the
prior year; pay or accrue total cash compensation, during any year, to its
officers and senior management employees in an aggregate amount in excess of
125% of that paid or accrued in the prior year.
7.17 Use of Proceeds. Use the proceeds of the Advances and the Term
Loans for any purpose other than (a) on the Closing Date, (i) to repay in full
the outstanding principal, accrued interest, and accrued fees and expenses owing
to Existing Lender, and (ii) 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 (b) thereafter, consistent
with the terms and conditions hereof, for its lawful and permitted purposes.
7.18 Change in Location of Chief Executive Office; Inventory and
Equipment with Bailees. Relocate its chief executive office to a new location
without Parent 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 Agent's Liens and 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.
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7.19 Securities Accounts. Establish or maintain any Securities Account
unless Agent shall have received a Control Agreement in respect of such
Securities Account. Borrowers agree 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, Borrowers may use such assets (and
the proceeds thereof) to the extent not prohibited by this Agreement.
7.20 Financial Covenants. (a) Fail to maintain:
(i) Minimum EBITDA. EBITDA, measured on a fiscal
quarter-end basis, of not less than the required amount set
forth in the following table for the applicable period set forth
opposite thereto;
------------------------------------------------------------------------
Applicable Amount Applicable Period
------------------------------------------------------------------------
$19,750,000 For the 12 month period
ending on the last day of the fiscal month of
September, 2002
------------------------------------------------------------------------
$19,350,000 For the 12 month period
ending on the last day of the fiscal month of
December, 2002
------------------------------------------------------------------------
$20,450,000 For the 12 month period
ending on the last day of the fiscal month of
March, 2003
------------------------------------------------------------------------
$19,000,000 For the 12 month period
ending on the last day of the fiscal month of
June, 2003
------------------------------------------------------------------------
$20,150,000 For the 12 month period
ending on the last day of the fiscal month of
September, 2003
------------------------------------------------------------------------
$21,650,000 For the 12 month period
ending on the last day of the fiscal month of
December, 2003
------------------------------------------------------------------------
$21,650,000 For the 12 month period
ending each fiscal quarter thereafter
------------------------------------------------------------------------
(ii) Leverage Ratio. Leverage Ratio, measured on a
fiscal quarter-end basis, of not less than the applicable
Leverage Ratio set forth in the following table for the
applicable period set forth opposite thereto;
------------------------------------------------------------------------
Applicable Leverage Ratio Applicable Period
------------------------------------------------------------------------
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------------------------------------------------------------------------
3.00 For the 12 month period
ending on the last day of the fiscal month of
September, 2002
------------------------------------------------------------------------
3.00 For the 12 month period
ending on the last day of the fiscal month of
December, 2002
------------------------------------------------------------------------
3.00 For the 12 month period
ending on the last day of the fiscal month of
March, 2003
------------------------------------------------------------------------
3.00 For the 12 month period
ending on the last day of the fiscal month of
June, 2003
------------------------------------------------------------------------
3.00 For the 12 month period
ending on the last day of the fiscal month of
September, 2003
------------------------------------------------------------------------
2.75 For the 12 month period
ending on the last day of the fiscal month of
December, 2003
------------------------------------------------------------------------
2.75 For the 12 month period
ending each fiscal quarter thereafter
------------------------------------------------------------------------
(iii) Interest Coverage Ratio. Interest Coverage Ratio,
measured on a fiscal quarter-end basis, of not less than the
applicable Interest Coverage Ratio set forth in the following
table for the applicable period set forth opposite thereto.
------------------------------------------------------------------------
Applicable Interest Coverage Applicable Period
Ratio
------------------------------------------------------------------------
1.30 For the 12 month period
ending on the last day of the fiscal month of
September, 2002
------------------------------------------------------------------------
1.27 For the 12 month period
ending on the last day of the fiscal month of
December, 2002
------------------------------------------------------------------------
1.29 For the 12 month period
ending on the last day of the fiscal month of
March, 2003
------------------------------------------------------------------------
1.14 For the 12 month period
------------------------------------------------------------------------
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------------------------------------------------------------------------
ending on the last day of the fiscal month of
June, 2003
------------------------------------------------------------------------
1.18 For the 12 month period
ending on the last day of the fiscal month of
September, 2003
------------------------------------------------------------------------
1.26 For the 12 month period
ending on the last day of the fiscal month of
December, 2003
------------------------------------------------------------------------
1.26 For the 12 month period
ending each fiscal quarter thereafter
------------------------------------------------------------------------
(b) Capital Expenditures. Make capital expenditures in
any fiscal year in excess of the amount of $8,000,000 for each fiscal year;
provided, that if the amount of capital expenditures actually made by Loan
Parties during any fiscal year during the term of this Agreement is less than
$8,000,000 (such difference, the "CapEx Deficiency"), then, so long as, as of
the end of such fiscal year, (a) no Default or Event of Default then exists or
has occurred and is continuing and (b) the Borrowers have Excess Availability in
an amount that equals or exceeds $10,000,000 (after giving effect to payments
that will be made by Borrowers in respect of, and in an amount deemed equal to,
the capital expenditure amounts rolled over from the immediately preceding
fiscal year pursuant to this Section 7.20(b)), the applicable limitation in the
immediately succeeding fiscal year shall be equal to the sum of (x) $8,000,000
plus (y) the least of (I) the CapEx Deficiency, (II) $2,000,000 and (III) the
amount of capital expenditures that would cause the Excess Cash Flow Ratio
(after giving effect to payments that will be made by Borrowers in respect of,
and in an amount deemed equal to, the capital expenditure amounts rolled over
from the immediately preceding fiscal year pursuant to this Section 7.20(b)) to
exceed 1.00. The determination of Excess Cash Flow Ratio for purposes of this
Section 7.20(b) shall be based upon Parent's financial statements delivered to
Agent pursuant to Section 6.3(b)(i) and accompanied by a Compliance Certificate
showing the calculation of Excess Cash Flow Ratio.
7.21 ERISA
(a) Engage or permit any Loan Party or any Member of the
Controlled Group to engage, in any transaction described in Section 4069 of
ERISA or in equivalent Canadian Employee Benefit Legislation;
(b) engage, or permit any Loan Party or Member of the
Controlled Group to engage, in any prohibited transaction described in Section
406 of ERISA or 4975 of the IRC or in equivalent Canadian Employee Benefit
Legislation for which a statutory or class exemption is not available or a
private exemption has not previously been obtained from the U.S. Department of
Labor or equivalent Canadian Governmental Authority;
(c) adopt or permit any Loan Party or Member of the
Controlled Group to adopt any plan or any employee welfare plan within the
meaning of Section 3(1) of ERISA or in equivalent Canadian Employee Benefit
Legislation which provides benefits to employees after
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termination of employment other than as required by Section 4980B of the IRC by
equivalent Canadian Employee Benefit Legislation or applicable law;
(d) fail to make any contribution or payment to any
Multiemployer Plan which it or any Member of the Controlled Group may be
required to make under any agreement relating to such Multiemployer Plan, or any
law pertaining thereto; or
(e) fail, or permit any Loan Party or any Member of the
Controlled Group to fail, to pay any required installment or any other payment
required under Section 412 of the IRC or under equivalent Canadian Employee
Benefit Legislation on or before the due date for such installment or other
payment.
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 Loan Parties fail to pay when due and payable or when declared
due and payable, all or any portion of the Obligations (whether of principal,
interest (including any interest which, but for the provisions of the Bankruptcy
Code, would have accrued on such amounts), fees and charges due the Lender
Group, reimbursement of Lender Group Expenses, or other amounts constituting
Obligations);
8.2 If (a) any Loan Party fails to perform, keep, or observe any term,
provision, condition, covenant, or agreement contained in Sections 6.2 or 6.3
and such failure or neglect continues for a period of five (5) days after the
date on which such failure or neglect first occurs, or (b) any Loan Party fails
to perform, keep, or observe any term, provision, condition, covenant, or
agreement contained in any other section of this Agreement or in any of the
other Loan Documents; provided, however, that, during any period of time that
any such failure or neglect of such Loan Party referred to in this Section 8.2
exists, even if such failure or neglect is not yet an Event of Default by virtue
of the existence of a grace period or the pre-condition of the giving of a
notice, the Lenders shall be relieved of their obligations to extend any credit
under this Agreement;
8.3 If any material portion of any Loan Party's or any of Parent's
Restricted Subsidiaries' assets is attached, seized, subjected to a writ or
distress warrant, levied upon, or comes into the possession of any third Person;
8.4 If an Insolvency Proceeding is commenced by any Loan Party or any of
its Restricted Subsidiaries;
8.5 If an Insolvency Proceeding is commenced against any Loan Party, or
any of its Restricted 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
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successor agent) and each other member of the Lender Group shall be relieved of
their obligations 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 Restricted Subsidiaries, or (e) an order for relief
shall have been entered therein;
8.6 If any Loan Party or any of its Restricted 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;
8.7 If a notice of Lien, levy, or assessment is filed of record with
respect to any Loan Party's or any of its Restricted Subsidiaries' assets, where
the obligation giving rise to the Lien, levy or assessment is in excess of
$50,000, by the United States or Canada, or any department, agency, or
instrumentality thereof, or by any state, province, 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 Restricted Subsidiaries' assets and the same is
not paid on the payment date thereof;
8.8 If a judgment or other claim becomes a Lien or encumbrance upon any
material portion of any Loan Party's or any of its Restricted Subsidiaries'
properties or assets, unless all such judgments and claims, in the aggregate, do
not exceed $50,000;
8.9 If there is a default in any material agreement to which any Loan
Party or any of its Restricted Subsidiaries is a party 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 Restricted
Subsidiaries' obligations thereunder, to terminate such agreement, or to refuse
to renew such agreement pursuant to an automatic renewal right therein;
8.10 If any Loan Party or any of its Restricted 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;
8.11 If any misstatement or misrepresentation exists now or hereafter in
any warranty, representation, statement, or Record made to the Lender Group by
any Loan Party, its Restricted Subsidiaries, or any officer, employee, agent, or
director of any Loan Party or any of its Restricted Subsidiaries;
8.12 If the obligation of any Guarantor under the Guaranty or any
Canadian Guarantees, as applicable, is limited or terminated by operation of law
or by such Guarantor thereunder;
8.13 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 the Collateral covered hereby or
thereby; or
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8.14 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 Loan
Party, 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.
8.15 An event related to a Plan which results in or could reasonably be
expected to result in liability of any Loan Party in an aggregate amount in
excess of $1,000,000.
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 Required Lenders (at their election
but without notice of their election and without demand) may authorize and
instruct Agent to do any one or more of the following on behalf of the Lender
Group (and Agent, acting upon the instructions of the Required Lenders, shall do
the same on behalf of the Lender Group), all of which are authorized by
Borrowers:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable;
(b) 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) Terminate this Agreement and any of the other Loan
Documents as to any future liability or obligation of the Lender Group, but
without affecting any of Agent's Liens in the Collateral and without affecting
the Obligations;
(d) 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;
(e) Cause Borrowers to hold all returned Inventory in
trust for the Lender Group, segregate all returned Inventory from all other
assets of Borrowers or in Borrowers' possession and conspicuously label said
returned Inventory as the property of the Lender Group;
(f) 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 Borrower 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 Borrower
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 Agent's
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Liens and to pay all expenses incurred in connection therewith and to charge
Borrowers' Loan Account therefor. With respect to any of Borrowers' owned or
leased premises, each Borrower 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;
(g) Without notice to any Borrower (such notice being
expressly waived), and without constituting a retention of any collateral in
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 Borrower
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 Borrower held by the Lender Group;
(h) Hold, as cash collateral, any and all balances and
deposits of any Borrower 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;
(i) 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. Each Borrower hereby grants to
Agent a license or other right to use, without charge, such Borrower's labels,
patents, copyrights, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any property of a similar nature, as it pertains to the
Personal Property Collateral, in completing production of, advertising for sale,
and selling any Personal Property Collateral and such Borrower's rights under
all licenses and all franchise agreements shall inure to the Lender Group's
benefit;
(j) 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
Borrowers' premises) as Agent determines is commercially reasonable. It is not
necessary that the Personal Property Collateral be present at any such sale;
(k) Agent shall give notice of the disposition of the
Personal Property Collateral as follows:
(i) Agent shall give Parent (for the benefit of the
applicable Borrower) 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) The notice shall be personally delivered or mailed,
postage prepaid, to Parent as provided in Section 12, at least
10 days before the earliest time of disposition set forth in the
notice; no notice needs to 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;
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(l) Agent, on the direction of the Lender Group, may
credit bid and purchase at any public sale;
(m) Agent may 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, may seek the appointment of
such a receiver without the requirement of prior notice or a hearing;
(n) The Lender Group shall have all other rights and
remedies available to it at law or in equity pursuant to any other Loan
Documents; and
(o) Any deficiency that exists after disposition of the
Personal Property Collateral as provided above will be paid immediately by
Borrowers. 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 Borrower).
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 sole 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
Borrowers' 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 Borrower 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,
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and guarantees at any time held by the Lender Group on which any such Borrower
may in any way be liable.
11.2 The Lender Group's Liability for Collateral. Each Borrower hereby
agrees that: (a) so long as the Lender Group complies with its obligations, if
any, under the Code, Agent 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 Borrowers.
11.3 Indemnification. Each Borrower shall pay, indemnify, defend, and
hold 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,
Borrowers 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 Borrowers were required to
indemnify the Indemnified Person receiving such payment, the Indemnified Person
making such payment is entitled to be indemnified and reimbursed by Borrowers
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 ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or
demands by Borrowers 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 Parent or Agent, as applicable, may designate to
each other in
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accordance herewith), or telefacsimile to Borrowers in care of Parent or to
Agent, as the case may be, at its address set forth below:
If to Parent or to
Administrative Borrower: OUTSOURCING SERVICES GROUP, INC.
00 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx
Fax No. (000) 000-0000
with copies to:
PAUL, HASTINGS, XXXXXXXX & XXXXXX LLP
000 Xxxx Xxxxxx Xxxxx
Xxxxxxxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
Fax: 000-000-0000
If to Agent: FOOTHILL CAPITAL CORPORATION
Xxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attn: Business Finance Division Manager
Fax No. (000) 000-0000
with copies to: XXXXXXXX & XXXXXXXX LLP
1290 Avenue of the Americas, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxx X. Xxxxxxx, Esq.
Fax No: 000-000-0000
Except as otherwise expressly provided in any Loan Document, each
Borrower 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.
Agent and Borrowers 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.
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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 NEW YORK.
(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 NEW
YORK, STATE OF NEW YORK, 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. BORROWERS 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).
BORROWERS 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. BORROWERS 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.
(a) Any Lender may, with the written consent of Agent
(provided that no written consent of Agent shall be required in connection with
any assignment and delegation by a Lender to an Eligible Transferee), assign and
delegate to one or more assignees (each, an "Assignee") all, or any ratable part
of all, of the Obligations, the Commitments and the other rights and obligations
of such Lender hereunder and under the other Loan Documents, in a
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minimum amount of $5,000,000 (except that such minimum amount shall not apply to
an Affiliate of a Lender or to a Related Fund); provided, however, that
Borrowers and Agent may continue to deal solely and directly with such Lender in
connection with the interest so assigned to an Assignee until (i) written notice
of such assignment, together with payment instructions, addresses, and related
information with respect to the Assignee, have been given to Parent and Agent by
such Lender and the Assignee, (ii) such Lender and its Assignee have delivered
to Parent and Agent an Assignment and Acceptance in form and substance
satisfactory to Agent, and (iii) the assignor Lender or Assignee has paid to
Agent for Agent's separate account a processing fee in the amount of $5,000.
Anything contained herein to the contrary notwithstanding, the consent of Agent
shall not be required (and payment of any fees shall not be required) (x) if
such assignment is in connection with any merger, consolidation, sale, transfer,
or other disposition of all or any substantial portion of the business or loan
portfolio of such Lender or (y) the assignee is an Affiliate (other than
individuals) of a Lender or a Related Fund. Each Lender agrees to use reasonable
efforts to discuss the identity of proposed Assignees and Participants to the
extent practicable under the circumstances, except that such agreement by the
Lenders shall not apply to any proposed Assignees and Participants that are
Affiliates of a Lender or any Related Fund (it being understood that this
provision shall not be deemed to require the consent of any Loan Party to any
assignment or participation).
(b) From and after the date that Agent notifies the
assignor Lender (with a copy to Parent) that it has received an executed
Assignment and Acceptance and payment of the above-referenced processing fee,
(i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Lender
under the Loan Documents, and (ii) the assignor Lender shall, to the extent that
rights and obligations hereunder and under the other Loan Documents have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
(except with respect to Section 11.3 hereof) and be released from its
obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement and the other Loan Documents, such Lender
shall cease to be a party hereto and thereto), and such assignment shall affect
a novation between Borrowers and the Assignee.
(c) By executing and delivering an Assignment and
Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm
to and agree with each other and the other parties hereto as follows: (1) other
than as provided in such Assignment and Acceptance, such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrowers or the performance or observance by Borrowers of any of their
obligations under this Agreement or any other Loan Document furnished pursuant
hereto, (3) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (4) such Assignee will, independently and without
reliance upon Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at
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the time, continue to make its own credit decisions in taking or not taking
action under this Agreement, (5) such Assignee appoints and authorizes Agent to
take such actions and to exercise such powers under this Agreement as are
delegated to Agent, by the terms hereof, together with such powers as are
reasonably incidental thereto, and (6) such Assignee agrees that it will perform
all of the obligations which by the terms of this Agreement are required to be
performed by it as a Lender.
(d) Immediately upon each Assignee's making its
processing fee payment under the Assignment and Acceptance and receipt and
acknowledgment by Agent of such fully executed Assignment and Acceptance, this
Agreement shall be deemed to be amended to the extent, but only to the extent,
necessary to reflect the addition of the Assignee and the resulting adjustment
of the Commitments arising therefrom. The Commitment allocated to each Assignee
shall reduce such Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time sell to one or more
commercial banks, financial institutions, or other Persons not Affiliates of
such Lender (a "Participant") participating interests in its Obligations, the
Commitment, and the other rights and interests of that Lender (the "Originating
Lender") hereunder and under the other Loan Documents; provided, however, that
(i) the Originating Lender shall remain a "Lender" for all purposes of this
Agreement and the other Loan Documents and the Participant receiving the
participating interest in the Obligations, the Commitments, and the other rights
and interests of the Originating Lender hereunder shall not constitute a
"Lender" hereunder or under the other Loan Documents and the Originating
Lender's obligations under this Agreement shall remain unchanged, (ii) the
Originating Lender shall remain solely responsible for the performance of such
obligations, (iii) Borrowers, Agent, and the Lenders shall continue to deal
solely and directly with the Originating Lender in connection with the
Originating Lender's rights and obligations under this Agreement and the other
Loan Documents, (iv) no Lender shall transfer or grant any participating
interest under which the Participant has the right to approve any amendment to,
or any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment to, or consent or waiver with
respect to, this Agreement or of any other Loan Document would (A) extend the
final maturity date of the Obligations hereunder in which such Participant is
participating, (B) reduce the interest rate applicable to the Obligations
hereunder in which such Participant is participating, (C) release all or a
material portion of the Collateral or guaranties (except to the extent expressly
provided herein or in any of the Loan Documents) supporting the Obligations
hereunder in which such Participant is participating, (D) postpone the payment
of, or reduce the amount of, the interest or fees payable to such Participant
through such Lender, (E) change the amount or due dates of scheduled principal
repayments or prepayments or premiums, or (F) subordinate the Liens of Agents
for the benefit of the Lender Group to the Liens of any other creditor of
Borrowers; and (v) all amounts payable by Borrowers hereunder shall be
determined as if such Lender had not sold such participation; except that, if
amounts outstanding under this Agreement are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of setoff in respect
of its participating interest in amounts owing under this Agreement to the same
extent as if the amount of its participating interest were owing directly to it
as a Lender under this Agreement. The rights of any Participant only shall be
derivative through the Originating Lender with whom such Participant
participates and no Participant shall have any rights under this Agreement or
the other Loan Documents or any
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direct rights as to the other Lenders, Agent, Borrowers, the Collections, the
Collateral, or otherwise in respect of the Obligations. No Participant shall
have the right to participate directly in the making of decisions by the Lenders
among themselves. The provisions of this Section 14.1(e) are solely for the
benefit of the Lender Group, and Borrowers shall not have any rights as third
party beneficiaries of such provisions.
(f) In connection with any such assignment or
participation or proposed assignment or participation, a Lender may disclose all
documents and information which it now or hereafter may have relating to
Borrowers or Borrowers' business.
(g) Any other provision in this Agreement
notwithstanding, any Lender may at any time create a security interest in, or
pledge, all or any portion of its rights under and interest in this Agreement in
favor of any Federal Reserve Bank in accordance with Regulation A of the Federal
Reserve Bank or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal
Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law.
(h) Administrative Borrower shall maintain, or cause to
be maintained, a register (the "Register") on which it enters the name of a
Lender as the registered owner of each Term Loan, as the case may be, held by
such Lender. A Registered Loan (and the Registered Note, if any, evidencing the
same) may be assigned or sold in whole or in part only by registration of such
assignment or sale on the Register (and each Registered Note shall expressly so
provide). Any assignment or sale of all or part of such Registered Loan (and the
Registered Note, if any, evidencing the same) may be effected only by
registration of such assignment or sale on the Register, together with the
surrender of the Registered Note, if any, evidencing the same duly endorsed by
(or accompanied by a written instrument of assignment or sale duly executed by)
the holder of such Registered Note, whereupon, at the request of the designated
assignee(s) or transferee(s), one or more new Registered Notes in the same
aggregate principal amount shall be issued to the designated assignee(s) or
transferee(s). Prior to the registration of assignment or sale of any Registered
Loan (and the Registered Note, if any evidencing the same), Borrowers shall
treat the Person in whose name such Loan (and the Registered Note, if any,
evidencing the same) is registered as the owner thereof for the purpose of
receiving all payments thereon and for all other purposes, notwithstanding
notice to the contrary. In the case of an assignment or delegation covered by
Section 14.1(a)(y), the assigning Lender shall maintain a comparable Register on
behalf of the Administrative Borrower.
(i) In the event that a Lender that is a registered
owner of a Term Loan sells participations in the Registered Loan, such Lender
shall maintain a register on which it enters the name of all participants in the
Registered Loans held by it (the "Participant Register"). A Registered Loan (and
the Registered Note, if any, evidencing the same) may be participated in whole
or in part only by registration of such participation on the Participant
Register (and each Registered Note shall expressly so provide). Any
participation of such Registered Loan (and the Registered Note, if any,
evidencing the same) may be effected only by the registration of such
participation on the Participant Register.
14.2 Successors. This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the parties hereto; provided,
however, that Borrowers may not
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assign this Agreement or any rights or duties hereunder without the Lenders'
prior written consent and any prohibited assignment shall be absolutely void ab
initio. No consent to assignment by the Lenders shall release any Borrower from
its Obligations. A Lender may assign this Agreement and the other Loan Documents
and its rights and duties hereunder and thereunder pursuant to Section 14.1
hereof and, except as expressly required pursuant to Section 14.1 hereof, no
consent or approval by any Borrower is required in connection with any such
assignment.
15. AMENDMENTS; WAIVERS.
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 Borrowers therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by Agent at the written request
of the Required Lenders) and Parent (on behalf of all Borrowers) 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 Parent (on behalf of all Borrowers) 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 Commitments that is
required to take any action hereunder,
(e) amend, modify or waive this Section or any provision
of this Agreement providing for consent or other action by all Lenders,
(f) release Collateral other than as permitted by
Section 16.12,
(g) change the definition of "Required Lenders" or "Pro
Rata Share,"
(h) contractually subordinate any of Agent's Liens,
(i) release any Loan Party from any obligation for the
payment of money, or
(j) change the definition of Borrowing Base or the
definitions of Eligible Accounts, Eligible Canadian Accounts, Eligible Finished
Goods Inventory, Eligible Inventory,
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Eligible Raw Materials Inventory, Maximum Revolver Amount, Term Loan Amount or
change, modify or waive Section 2.1(b) or Section 2.4(b); or
(k) amend, modify or waive any of the provisions of
Section 16.
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, affect
the rights or duties of Agent, Issuing Lender, or Swing 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 Borrowers, shall not require
consent by or the agreement of Borrowers.
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 Term Loans
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
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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.
16. AGENT; THE LENDER GROUP.
16.1 Appointment and Authorization of Agent. Each Lender hereby
designates and appoints Foothill as its representative under this Agreement and
the other Loan Documents and each Lender hereby irrevocably authorizes Agent to
take such action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to Agent by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. Agent
agrees to act as such on the express conditions contained in this Section 16.
The provisions of this Section 16 are solely for the benefit of Agent, and the
Lenders, and Borrowers shall have no rights as a third party beneficiary of any
of the provisions contained herein. Any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that Foothill
is merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert under or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that Agent shall have the
right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Obligations, the Collateral,
the Collections, and related matters, (b) execute or file any and all financing
or similar statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to the Loan Documents, (c) make Advances and Term Loans, for itself or on behalf
of Lenders as provided in the Loan Documents, (d) exclusively receive, apply,
and distribute the Collections as provided in the Loan Documents, (e) open and
maintain such bank accounts and cash management arrangements as Agent deems
necessary and appropriate in accordance with the Loan Documents for the
foregoing purposes with respect to the Collateral and the Collections, (f)
perform, exercise, and enforce any and all other rights and remedies of the
Lender Group with respect to Borrowers, the Obligations, the Collateral, the
Collections, or otherwise related to any of same as provided in the Loan
Documents, and (g) incur and pay such Lender Group Expenses as Agent may deem
necessary or appropriate for the performance and fulfillment of its functions
and powers pursuant to the Loan Documents.
16.2 Delegation of Duties. Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be
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responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects as long as such selection was made without gross negligence or
willful misconduct.
16.3 Liability of Agent. None of Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Borrower or any Subsidiary or
Affiliate of any Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the Books or properties of Borrowers or the books or
records or properties of any of Borrowers' Restricted Subsidiaries or
Affiliates.
16.4 Reliance by Agent. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrowers
or counsel to any Lender), independent accountants and other experts selected by
Agent. Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless Agent shall first receive
such advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by Lenders against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any such action. Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a request or
consent of the Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.
16.5 Notice of Default or Event of Default. Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders, except
with respect to Defaults or Events of Default of which Agent has actual
knowledge, unless Agent shall have received written notice from a Lender or
Parent referring to this Agreement, describing such Default or Event of Default,
and stating that such notice is a "notice of default." Agent promptly will
notify the Lenders of its receipt of any such notice or of any Event of Default
of which Agent has actual knowledge. If any Lender obtains actual knowledge of
any Event of Default, such Lender promptly shall notify the other Lenders and
Agent of such Event of Default. Each Lender shall be solely responsible for
giving any notices to its Participants, if any. Subject to Section 16.4, Agent
shall take such action with respect to such Default or Event of Default as may
be requested by the Required Lenders in
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accordance with Section 9; provided, however, that unless and until Agent has
received any such request, Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable.
16.6 Credit Decision. Each Lender acknowledges that none of
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Borrowers
and their Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to Borrowers. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document. Except for notices, reports, and other documents
expressly herein required to be furnished to the Lenders by Agent, Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of Borrowers and any other
Person party to a Loan Document that may come into the possession of any of
Agent-Related Persons.
16.7 Costs and Expenses; Indemnification. Agent may incur and pay Lender
Group Expenses to the extent Agent reasonably deems necessary or appropriate for
the performance and fulfillment of its functions, powers, and obligations
pursuant to the Loan Documents, including court costs, reasonable attorneys fees
and expenses, costs of collection by outside collection agencies and auctioneer
fees and costs of security guards or insurance premiums paid to maintain the
Collateral, whether or not Borrowers are obligated to reimburse Agent or Lenders
for such expenses pursuant to this Agreement or otherwise. Agent is authorized
and directed to deduct and retain sufficient amounts from Collections received
by Agent to reimburse Agent for such out-of-pocket costs and expenses prior to
the distribution of any amounts to Lenders. In the event Agent is not reimbursed
for such costs and expenses from Collections received by Agent, each Lender
hereby agrees that it is and shall be obligated to pay to or reimburse Agent for
the amount of such Lender's Pro Rata Share thereof. Whether or not the
transactions contemplated hereby are consummated, the Lenders shall indemnify
upon demand Agent-Related Persons (to the extent not reimbursed by or on behalf
of Borrowers and without limiting the obligation of Borrowers to do so),
according to their Pro Rata Shares, from and against any and all Indemnified
Liabilities; provided, however, that no Lender shall be liable for the payment
to any Agent-Related Person of any portion of such Indemnified Liabilities
resulting solely from such Person's gross negligence or willful misconduct nor
shall any Lender be liable for the obligations of any Defaulting Lender in
failing to make an Advance or other extension of credit hereunder. Without
limitation of the foregoing, each Lender shall reimburse Agent upon demand for
such
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Lender's ratable share of any costs or out-of-pocket expenses (including
attorneys fees and expenses) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein
or therein, to the extent that Agent is not reimbursed for such expenses by or
on behalf of Borrowers. The undertaking in this Section shall survive the
payment of all Obligations hereunder and the resignation or replacement of
Agent.
16.8 Agent in Individual Capacity. Foothill and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking,
lending, trust, financial advisory, underwriting, or other business with
Borrowers and their Subsidiaries and Affiliates and any other Person (other than
the Lender Group) party to any Loan Documents as though Foothill were not Agent
hereunder, and, in each case, without notice to or consent of the other members
of the Lender Group. The other members of the Lender Group acknowledge that,
pursuant to such activities, Foothill or its Affiliates may receive information
regarding Borrowers or their Affiliates and any other Person (other than the
Lender Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrowers or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include Foothill in its individual capacity.
16.9 Successor Agent. Agent may resign as Agent upon 45 days notice to
the Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent has materially
breached or failed to perform any material provision of this Agreement or of
applicable law, the Required Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term "Agent" shall mean such successor Agent and the retiring Agent's
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Section 16 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor Agent has accepted
appointment as Agent by the date which is 45 days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
Agent hereunder until such time, if any, as the Lenders appoint a successor
Agent as provided for above.
16.10 Lender in Individual Capacity. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with
Borrowers and their Subsidiaries and Affiliates and any other Person
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(other than the Lender Group) party to any Loan Documents as though such Lender
were not a Lender hereunder without notice to or consent of the other members of
the Lender Group. The other members of the Lender Group acknowledge that,
pursuant to such activities, such Lender and its respective Affiliates may
receive information regarding Borrowers or their Affiliates and any other Person
(other than the Lender Group) party to any Loan Documents that is subject to
confidentiality obligations in favor of Borrowers or such other Person and that
prohibit the disclosure of such information to the Lenders, and the Lenders
acknowledge that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver such Lender will use its reasonable
best efforts to obtain), such Lender not shall be under any obligation to
provide such information to them. With respect to the Swing Loans and Agent
Advances, Swing Lender shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the sub-agent of Agent.
16.11 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, United States 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 Parent:
(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 Parent;
(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 Parent;
(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 Parent; and
(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 Parent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
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(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 Borrowers 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 a Lender, including a change in the residence, place of organization, or
principal place of business of a Lender, or a change in the branch or lending
office of a 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 Borrower 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 Borrowers 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
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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. Borrowers
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 Borrowers.
16.12 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 Parent
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 Borrower owned any interest at the time the security interest was
granted or at any time thereafter, or (iv) constituting property leased to a
Borrower under a lease that has expired or is terminated in a transaction
permitted under this Agreement. Except as provided above, 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 substantial portion of the
Collateral, all of the Lenders, or (z) otherwise, the Required Lenders. Upon
request by Agent or Parent 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 16.12; 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 Borrowers in respect of)
all interests retained by Borrowers, 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 Borrowers or is
cared for, protected, or insured or has been encumbered, or that 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, absent Agent's gross negligence or
willful misconduct (as finally determined by a court of competent jurisdiction),
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.
16.13 Restrictions on Actions by Lenders; Sharing of Payments.
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(a) Each of the Lenders agrees that it shall not,
without the express consent of Agent, and that it shall, to the extent it is
lawfully entitled to do so, upon the request of Agent, set off against the
Obligations, any amounts owing by such Lender to Borrowers or any deposit
accounts of Borrowers now or hereafter maintained with such Lender. Each of the
Lenders further agrees that it shall not, unless specifically requested to do so
by Agent, take or cause to be taken any action, including, the commencement of
any legal or equitable proceedings, to foreclose any Lien on, or otherwise
enforce any security interest in, any of the Collateral the purpose of which is,
or could be, to give such Lender any preference or priority against the other
Lenders with respect to the Collateral.
(b) 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 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, 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.
16.14 Agency for Perfection. Agent hereby appoints each other Lender as
its agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting 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.
16.15 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.
16.16 Concerning the Collateral and Related Loan Documents. Each member
of the Lender Group authorizes and directs Agent to enter into this 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 or the other Loan Documents
relating to the Collateral and the exercise by Agent of
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its powers set forth herein or therein, together with such other powers that are
reasonably incidental thereto, shall be binding upon all of the Lenders.
16.17 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 Borrowers and will rely significantly upon the Books, as well as on
representations of Borrowers' personnel,
(d) agrees to keep all Reports and other material,
non-public information regarding Borrowers and their Subsidiaries and their
operations, assets, and existing and contemplated business plans in a
confidential manner; it being understood and agreed by Borrowers that in any
event such Lender may make disclosures (i) to counsel for and other advisors,
accountants, and auditors to such Lender, (ii) 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,
provided, that such Assignee or Participant has agreed or agrees to be bound by
the terms of this Section 16.17, (iii) of information that has become public by
disclosures made by Persons other than such Lender, its Affiliates, assignees,
transferees, or Participants, or (iv) 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 Parent 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,
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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 Borrowers to Agent that has not been contemporaneously
provided by Borrowers 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 Borrowers, 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 Parent the additional
reports or information reasonably specified by such Lender, and, upon receipt
thereof from Parent, Agent promptly shall provide a copy of same to such Lender,
and (z) any time that Agent renders to Parent a statement regarding the Loan
Account, Agent shall send a copy of such statement to each Lender.
16.18 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 Agent (if any) 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 16.7, 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 Borrower 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.
16.19 Legal Representation of Agent. In connection with the negotiation,
drafting, and execution of this Agreement and the other Loan Documents, or in
connection with future legal representation relating to loan administration,
amendments, modifications, waivers, or enforcement of remedies, Xxxxxxxx &
Xxxxxxxx LLP ("Xxxxxxxx") only has represented and only shall represent Foothill
in its capacity as Agent and as a Lender. Each other Lender hereby acknowledges
that Xxxxxxxx does not represent it in connection with any such matters.
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.
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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 Loan Party 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, provincial 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 Loan Parties 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.
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17.9 Kolmar as Agent for Borrowers. (a) Each Borrower hereby irrevocably
appoints Kolmar 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 to take such action as the
Administrative Borrower deems appropriate on its behalf to obtain Advances and
Letters of Credit.
(b) Each Borrower hereby irrevocably appoints and
authorizes Parent to provide Agent with all notices with respect to Advances,
Term Loans and Letters of Credit obtained for the benefit of any Borrower and
all other notices and instructions under this Agreement and to exercise such
other powers as are reasonably incidental thereto to carry out the purposes of
this Agreement.
(c) 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 Borrower
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
Borrower or by any third party whosoever, arising from or incurred by reason of
(a) the handling of the Loan Account and Collateral of Borrowers as herein
provided, (b) the Lender Group's relying on any instructions of Parent or the
Administrative Borrower, or (c) any other action taken by the Lender Group
hereunder or under the other Loan Documents, except that Borrowers 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.
[Two signature pages to follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed and delivered as of the date first above written.
OUTSOURCING SERVICES GROUP, INC.
a Delaware corporation, as Parent
By: /s/ Xxxxx Xxxxxx
------------------------
Title: Vice President and Chief Financial Officer
AEROSOL SERVICES COMPANY, INC.
a California corporation, as Borrower
By: /s/ Xxxxx Xxxxxx
------------------------
Title: Vice President and Chief Financial Officer
PIEDMONT LABORATORIES, INC.
a Georgia corporation, as Borrower
By: /s/ Xxxxx Xxxxxx
------------------------
Title: Vice President and Chief Financial Officer
ACUPAC PACKAGING, INC.
a New Jersey corporation, as Borrower
By: /s/ Xxxxx Xxxxxx
------------------------
Title: Vice President and Chief Financial Officer
KOLMAR LABORATORIES, INC.
a Delaware corporation, as Borrower
By: /s/ Xxxxx Xxxxxx
------------------------
Title: Vice President and Chief Financial Officer
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PRECISION PACKAGING AND SERVICES, INC.
an Ohio corporation, as Borrower
By: /s/ Xxxxx Xxxxxx
------------------------
Title: Vice President and Chief Financial Officer
FOOTHILL CAPITAL CORPORATION,
a California corporation, as Agent and as a Lender
By: /s/ Xxxx Xxxxxx
------------------------
Title: Vice President
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