EXHIBIT 10(a)
EXECUTION VERSION
AMENDED AND RESTATED
REVOLVING CREDIT AND SECURITY AGREEMENT
PNC BANK, NATIONAL ASSOCIATION (AGENT AND LENDER)
AND
LESCO, INC.
LESCO SERVICES, INC.
LESCO TECHNOLOGIES, LLC
AND
AIM LAWN & GARDEN PRODUCTS, INC.
(BORROWERS)
OCTOBER 7, 2005
TABLE OF CONTENTS
Page
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I. DEFINITIONS............................................................... 1
1.1. Accounting Terms................................................ 1
1.2. General Terms................................................... 1
1.3. Uniform Commercial Code Terms................................... 17
1.4. Certain Matters of Construction................................. 17
II. ADVANCES, PAYMENTS....................................................... 17
2.1. (a) Revolving Advances.......................................... 17
2.2. Procedure for Borrowing Advances................................ 18
2.3. Disbursement of Advance Proceeds................................ 20
2.4. Intentionally Omitted........................................... 21
2.5. Maximum Advances................................................ 21
2.6. Repayment of Advances........................................... 21
2.7. Repayment of Excess Advances.................................... 21
2.8. Statement of Account............................................ 21
2.9. Letters of Credit............................................... 22
2.10. Issuance of Letters of Credit................................... 22
2.11. Requirements For Issuance of Letters of Credit.................. 23
2.12. Disbursements, Reimbursement.................................... 23
2.13. Repayment of Participation Advances............................. 24
2.14. Documentation................................................... 25
2.15. Determination to Honor Drawing Request.......................... 25
2.16. Nature of Participation and Reimbursement Obligations........... 25
2.17. Indemnity....................................................... 26
2.18. Liability for Acts and Omissions................................ 27
2.19. Additional Payments............................................. 28
2.20. Manner of Borrowing and Payment................................. 28
2.21. Use of Proceeds................................................. 30
2.22. Defaulting Lender............................................... 30
III. INTEREST AND FEES....................................................... 31
3.1. Interest........................................................ 31
3.2. Letter of Credit Fees........................................... 31
3.3. Facility Fee.................................................... 32
3.4. Intentionally Omitted........................................... 32
3.5. Computation of Interest and Fees................................ 32
3.6. Maximum Charges................................................. 33
3.7. Increased Costs................................................. 33
3.8. Basis For Determining Interest Rate Inadequate or Unfair........ 34
3.9. Capital Adequacy................................................ 34
3.10. Gross Up for Taxes.............................................. 35
3.11. Withholding Tax Exemption....................................... 35
IV. COLLATERAL: GENERAL TERMS................................................ 36
4.1. Security Interest in the Collateral............................. 36
4.2. Perfection of Security Interest................................. 36
4.3. Disposition of Collateral....................................... 37
4.4. Preservation of Collateral...................................... 37
4.5. Ownership of Collateral......................................... 38
4.6. Defense of Agent's and Lenders' Interests....................... 38
4.7. Books and Records............................................... 38
4.8. Financial Disclosure............................................ 39
4.9. Compliance with Laws............................................ 39
4.10. Inspection of Premises.......................................... 39
4.11. Insurance....................................................... 40
4.12. Failure to Pay Insurance........................................ 41
4.13. Payment of Taxes................................................ 41
4.14. Payment of Leasehold Obligations................................ 42
4.15. Receivables..................................................... 42
4.16. Inventory....................................................... 44
4.17. Maintenance of Equipment........................................ 44
4.18. Exculpation of Liability........................................ 45
4.19. Environmental Matters........................................... 45
4.20. Financing Statements............................................ 47
V. REPRESENTATIONS AND WARRANTIES............................................ 47
5.1. Authority....................................................... 47
5.2. Formation and Qualification..................................... 48
5.3. Survival of Representations and Warranties...................... 48
5.4. Tax Returns..................................................... 48
5.5. Financial Statements............................................ 48
5.6. Corporate Name.................................................. 49
5.7. O.S.H.A. and Environmental Compliance........................... 50
5.8. Solvency; No Litigation, Violation, Indebtedness or Default..... 50
5.9. Patents, Trademarks, Copyrights and Licenses.................... 51
5.10. Licenses and Permits............................................ 52
5.11. Default of Indebtedness......................................... 52
5.12. No Default...................................................... 52
5.13. No Burdensome Restrictions...................................... 52
5.14. No Labor Disputes............................................... 52
5.15. Margin Regulations.............................................. 53
5.16. Investment Company Act.......................................... 53
5.17. Disclosure...................................................... 53
5.18. Intentionally Omitted........................................... 53
5.19. Swaps........................................................... 53
5.20. Conflicting Agreements.......................................... 53
5.21. Application of Certain Laws and Regulations..................... 53
5.22. Business and Property of Borrowers.............................. 54
5.23. Section 20 Subsidiaries......................................... 54
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5.24. Anti-Terrorism Laws............................................. 54
VI. AFFIRMATIVE COVENANTS.................................................... 55
6.1. Payment of Fees................................................. 55
6.2. Conduct of Business and Maintenance of Existence and Assets..... 55
6.3. Violations...................................................... 55
6.4. Government Receivables.......................................... 55
6.5. Intentionally Omitted........................................... 56
6.6. Fixed Charge Coverage Ratio..................................... 56
6.7. [Intentionally Omitted]......................................... 56
6.8. Landlord's Waivers.............................................. 56
6.9. Execution of Supplemental Instruments........................... 56
6.10. Payment of Indebtedness, Including Taxes, Etc................... 56
6.11. Standards of Financial Statements............................... 57
6.12. Inventory Appraisals............................................ 57
6.13. Field Examinations.............................................. 57
6.14. Anti-Terrorism Laws............................................. 57
VII. NEGATIVE COVENANTS...................................................... 57
7.1. Merger, Consolidation, Acquisition and Sale of Assets........... 58
7.2. Creation of Liens............................................... 58
7.3. Guarantees...................................................... 58
7.4. Investments..................................................... 58
7.5. Loans........................................................... 58
7.6. Intentionally Omitted........................................... 58
7.7. Dividends....................................................... 58
7.8. Indebtedness.................................................... 59
7.9. Nature of Business.............................................. 59
7.10. Transactions with Affiliates.................................... 60
7.11. Leases.......................................................... 60
7.12. Subsidiaries.................................................... 60
7.13. Fiscal Year and Accounting Changes.............................. 60
7.14. Pledge of Credit................................................ 60
7.15. Amendment of Articles of Incorporation, By-Laws................. 60
7.16. Compliance with ERISA........................................... 60
7.17. Prepayment of Indebtedness...................................... 61
7.18. Other Agreements................................................ 61
VIII. CONDITIONS PRECEDENT................................................... 61
8.1. Conditions to Initial Advances.................................. 61
8.2. Conditions to Each Advance...................................... 64
IX. INFORMATION AS TO BORROWER............................................... 65
9.1. Disclosure of Material Matters.................................. 65
9.2. Borrowing Base; Schedules....................................... 65
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9.3. Consummation of Bank Products................................... 66
9.4. Litigation...................................................... 66
9.5. Material Occurrences............................................ 66
9.6. Government Receivables.......................................... 66
9.7. Annual Financial Statements..................................... 66
9.8. Quarterly Financial Statements.................................. 67
9.9. Intentionally Omitted........................................... 67
9.10. Other Reports................................................... 67
9.11. Additional Information.......................................... 67
9.12. Projected Operating Budget...................................... 68
9.13. Variances From Operating Budget................................. 68
9.14. Notice of Suits, Adverse Events................................. 68
9.15. ERISA Notices and Requests...................................... 68
9.16. Additional Documents............................................ 69
X. EVENTS OF DEFAULT......................................................... 69
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT............................... 72
11.1. Rights and Remedies............................................. 72
11.2. Agent's Discretion.............................................. 73
11.3. Setoff.......................................................... 73
11.4. Rights and Remedies not Exclusive............................... 73
11.5. Allocation of Payments After Event of Default................... 73
XII. WAIVERS AND JUDICIAL PROCEEDINGS........................................ 74
12.1. Waiver of Notice................................................ 74
12.2. Delay........................................................... 74
12.3. Jury Waiver..................................................... 74
XIII. EFFECTIVE DATE AND TERMINATION......................................... 75
13.1. Term............................................................ 75
13.2. Termination..................................................... 75
XIV. REGARDING AGENT......................................................... 76
14.1. Appointment, Intercreditor Agreement............................ 76
14.2. Nature of Duties................................................ 76
14.3. Lack of Reliance on Agent and Resignation....................... 77
14.4. Certain Rights of Agent......................................... 77
14.5. Reliance........................................................ 77
14.6. Notice of Default............................................... 78
14.7. Indemnification................................................. 78
14.8. Agent in its Individual Capacity................................ 78
14.9. Delivery of Documents........................................... 78
14.10. Borrowers' Undertaking to Agent................................. 79
14.11. No Reliance on Agent's Customer Identification Program.......... 79
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XV. BORROWING AGENCY......................................................... 79
15.1. Borrowing Agency Provisions..................................... 79
15.2. Waiver of Subrogation........................................... 80
XVI. MISCELLANEOUS........................................................... 80
16.1. Governing Law................................................... 80
16.2. Entire Understanding............................................ 81
16.3. Successors and Assigns; Participations; New Lenders............. 83
16.4. Application of Payments, Overadvances for GE Capital Proceeds... 84
16.5. Indemnity....................................................... 85
16.6. Notice.......................................................... 85
16.7. Survival........................................................ 87
16.8. Severability.................................................... 88
16.9. Expenses........................................................ 88
16.10. Injunctive Relief............................................... 88
16.11. Consequential Damages........................................... 88
16.12. Captions........................................................ 88
16.13. Counterparts; Telecopied Signatures............................. 89
16.14. Construction.................................................... 89
16.15. Confidentiality; Sharing Information............................ 89
16.16. Publicity....................................................... 90
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AMENDED AND RESTATED
REVOLVING CREDIT AND SECURITY AGREEMENT
Amended and Restated Revolving Credit and Security Agreement (this
"Agreement"), dated as of October 7, 2005, among LESCO, INC., a corporation
organized under the laws of the State of Ohio ("LESCO"), LESCO SERVICES, INC., a
corporation organized under the laws of the State of Ohio ("LSI"), LESCO
TECHNOLOGIES, LLC, a limited liability company organized under the laws of the
State of Nevada ("Technologies"), and AIM LAWN & GARDEN PRODUCTS, INC., a
corporation organized under the laws of the State of Ohio ("AIM") (each a
"Borrower" and collectively "Borrowers"), PNC BANK, NATIONAL ASSOCIATION, and
the FINANCIAL INSTITUTIONS WHICH MAY HEREAFTER BECOME A PARTY HERETO
(collectively, the "Lenders" and individually a "Lender"), and PNC BANK,
NATIONAL ASSOCIATION ("PNC"), as agent for Lenders (PNC, in such capacity, the
"Agent").
IN CONSIDERATION of the mutual covenants and undertakings herein contained,
Borrowers, Lenders and Agent hereby agree as follows:
I. DEFINITIONS.
1.1. Accounting Terms.
As used in this Agreement, the Note, or any certificate, report or other
document made or delivered pursuant to this Agreement, accounting terms not
defined in Section 1.2 or elsewhere in this Agreement and accounting terms
partly defined in Section 1.2 to the extent not defined, shall have the
respective meanings given to them under GAAP; provided, however, whenever such
accounting terms are used for the purposes of determining compliance with
financial covenants in this Agreement, such accounting terms shall be defined in
accordance with GAAP as applied in preparation of the audited financial
statements of Borrowers for the fiscal year ended December 31, 2004.
1.2. General Terms.
For purposes of this Agreement the following terms shall have the following
meanings:
"Accountants" shall have the meaning set forth in Section 9.7 hereof.
"Accounts Sales Agreement" shall mean that certain Portfolio Purchase
and Sale Agreement dated as of December 16, 2003 by and among Borrowers and GE
Capital pursuant to which GE Capital is purchasing certain Receivables of LESCO.
"ACH Transactions" shall mean any cash management or related services
including the automated clearing house transfer of funds by the Agent for the
account of any Borrower pursuant to agreement or overdrafts.
"Advances" shall mean and include the Revolving Advances and Letters
of Credit and GE Proceeds Advances.
"Affiliate" of any Person shall mean (a) any Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with
such Person, or (b) any Person who is a director or officer (i) of such Person,
(ii) of any Subsidiary of such Person or (iii) of any Person described in clause
(a) above. For purposes of this definition, control of a Person shall mean the
power, direct or indirect, (x) to vote 5% or more of the securities having
ordinary voting power for the election of directors of such Person, or (y) to
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise.
"Agent" shall have the meaning set forth in the preamble to this
Agreement and shall include its successors and assigns.
"Alternate Base Rate" shall mean, for any day, a rate per annum equal
to the higher of (i) the Base Rate in effect on such day and (ii) the Federal
Funds Open Rate in effect on such day plus 1/2 of 1%.
"Anti-Terrorism Laws" shall mean any Applicable Law relating to
terrorism or money laundering, including Executive Order No. 13224, the USA
Patriot Act, the Laws comprising or implementing the Bank Secrecy Act, and the
Laws administered by the United States Treasury Department's Office of Foreign
Asset Control (as any of the foregoing Laws may from time to time be amended,
renewed, extended, or replaced).
"Applicable Law" shall mean all laws, rules and regulations applicable
to the person, conduct, transaction, covenant, Other Document or contract in
question, including all applicable common law and equitable principles; all
provisions of all applicable state, federal and foreign constitutions, statutes,
rules, regulations and orders of any Governmental Body, and all orders,
judgments and decrees of all courts and arbitrators.
"Assignment of Account" shall mean the existing pledge by LESCO of the
BlackRock Account, together with all amendments, supplements, modifications,
substitutions and replacements thereto and thereof.
"Authority" shall have the meaning set forth in Section 4.19(d).
"Bank Products" shall mean any one or more of the following types of
services or facilities extended to any Borrower by the Agent or any Lender, or
any Affiliate of the Agent or any Lender in reliance on the Agent's or such
Lender's agreement, respectively, to indemnify such Affiliate: (a) credit cards,
(b) ACH Transactions, (c) Interest Rate Protection Agreements, and (d) foreign
exchange contracts.
"Bank Products Reserves" shall mean all reserves which the Agent from
time to time establishes in its sole discretion for the Bank Products then
provided or outstanding.
"Base Rate" shall mean the base commercial lending rate of PNC as
publicly announced to be in effect from time to time, such rate to be adjusted
automatically, without notice, on the effective date of any change in such rate.
This rate of interest is determined from
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time to time by PNC as a means of pricing some loans to its customers and is
neither tied to any external rate of interest or index nor does it necessarily
reflect the lowest rate of interest actually charged by PNC to any particular
class or category of customers of PNC.
"Blocked Accounts" shall have the meaning set forth in Section
4.15(h).
"Blocked Person" shall have the meaning assigned to such term in
Section 5.24.
"Borrower" or "Borrowers" shall have the meaning set forth in the
preamble to this Agreement and shall extend to all permitted successors and
assigns of such Persons.
"Borrowing Base Certificate" shall mean a certificate duly executed by
an officer of Borrowing Agent appropriately completed and in substantially the
form of Exhibit A hereto.
"Borrowers on a consolidated basis" shall mean LESCO, LSI,
Technologies and AIM.
"Borrowers' Account" shall have the meaning set forth in Section 2.8.
"Borrowing Agent" shall mean LESCO.
"Business Day" shall mean any day other than Saturday or Sunday or a
legal holiday on which commercial banks are authorized or required by law to be
closed for business in East Brunswick, New Jersey and, if the applicable
Business Day relates to any Eurodollar Rate Loans, such day must also be a day
on which dealings are carried on in the London interbank market.
"Cash on Deposit" shall mean the aggregate amount of permitted
investments under Section 7.4 and cash balances in LESCO's deposit accounts to
the extent that such permitted investments and cash deposits (i) are assigned to
the Agent to secure the Obligations pursuant to the Assignment of Account or
other agreement acceptable to the Agent, and (ii) are subject to a first
priority security interest in favor of the Agent.
"Cash on Deposit Advance Rate" shall have the meaning set forth in
Section 2.1(a)(y)(ii) hereof.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601 et
seq.
"Change of Control" shall mean (a) the occurrence of any event
(whether in one or more transactions) which results in a transfer of control of
any Borrower to a Person who is not an Original Owner or (b) any merger or
consolidation of or with any Borrower or sale of all or substantially all of the
property or assets of any Borrower. For purposes of this definition, "control of
Borrower" shall mean the power, direct or indirect (x) to vote 50% or more of
the securities having ordinary voting power for the election of directors of any
Borrower or (y) to direct or cause the direction of the management and policies
of any Borrower by contract or otherwise.
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"Change of Ownership" shall mean (a) 50% or more of the common stock
or other ownership interests of any Borrower is no longer owned or controlled by
(including for the purposes of the calculation of percentage ownership, any
shares of common stock or other ownership interests into which any capital stock
or other ownership interests of any Borrower held by any of the Original Owners
is convertible or for which any such shares of the capital stock or other
ownership interests of any Borrower or of any other Person may be exchanged and
any shares of common stock or other ownership interests issuable to such
Original Owners upon exercise of any warrants, options or similar rights which
may at the time of calculation be held by such Original Owners) a Person who is
an Original Owner or (b) any merger, consolidation or sale of substantially all
of the property or assets of any Borrower.
"Charges" shall mean all taxes, charges, fees, imposts, levies or
other assessments, including, without limitation, all net income, gross income,
gross receipts, sales, use, ad valorem, value added, transfer, franchise,
profits, inventory, capital stock, license, withholding, payroll, employment,
social security, unemployment, excise, severance, stamp, occupation and property
taxes, custom duties, fees, assessments, liens, claims and charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts, imposed by any taxing or other authority, domestic or
foreign (including, without limitation, the Pension Benefit Guaranty Corporation
or any environmental agency or superfund), upon the Collateral, or any of the
Borrowers.
"Closing Date" shall mean October 7, 2005, or such other date as may
be agreed to by the parties hereto.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time and the regulations promulgated thereunder.
"Collateral" shall mean and include:
(a) all Receivables;
(b) all Equipment;
(c) all General Intangibles;
(d) all Inventory;
(e) all Investment Property, including, without limitation, Account
No. 25994 at BlackRock Provident Institutional Funds in the name of "PNC Bank
National Association, Pledgee f/b/o Lesco Inc.", the "BlackRock Account";
(f) all of each Borrower's right, title and interest in and to (i) its
respective goods and other property including, but not limited to, all
merchandise returned or rejected by Customers, relating to or securing any of
the Receivables; (ii) all of each Borrower's rights as a consignor, a consignee,
an unpaid vendor, mechanic, artisan, or other lienor, including stoppage in
transit, setoff, detinue, replevin, reclamation and repurchase; (iii) all
additional amounts due to any Borrower from any Customer relating to the
Receivables; (iv) other property, including warranty claims, relating to any
goods securing this Agreement; (v) all of each Borrower's
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contract rights, rights of payment which have been earned under a contract
right, instruments (including promissory notes), documents, chattel paper
(including electronic chattel paper), warehouse receipts, deposit accounts,
letters of credit, and money; (vi) all commercial tort claims (whether now
existing or hereafter arising); (vii) if and when obtained by any Borrower, all
real and personal property of third parties in which such Borrower has been
granted a lien or security interest as security for the payment or enforcement
of Receivables; and (viii) any other goods, personal property or real property
now owned or hereafter acquired in which any Borrower has expressly granted a
security interest or may in the future grant a security interest to Agent
hereunder, or in any amendment or supplement hereto or thereto, or under any
other agreement between Agent and any Borrower;
(g) all of each Borrower's ledger sheets, ledger cards, files,
correspondence, records, books of account, business papers, computers, computer
software (owned by any Borrower or in which it has an interest), computer
programs, tapes, disks and documents relating to (a), (b), (c), (d), (e) or (f)
of this Paragraph; and
(h) all proceeds and products of (a), (b), (c), (d), (e), (f) and (g)
in whatever form, including, but not limited to: cash, deposit accounts (whether
or not comprised solely of proceeds), certificates of deposit, insurance
proceeds (including hazard, flood and credit insurance), negotiable instruments
and other instruments for the payment of money, chattel paper, security
agreements, documents, eminent domain proceeds, condemnation proceeds and tort
claim proceeds.
"Commitment Percentage" of any Lender shall mean the percentage set
forth below such Lender's name on the signature page hereof as same may be
adjusted upon any assignment by a Lender pursuant to Section 16.3(b) hereof.
"Commitment Transfer Supplement" shall mean a document in the form of
Exhibit 16.3 hereto, properly completed and otherwise in form and substance
satisfactory to Agent by which the Purchasing Lender purchases and assumes a
portion of the obligation of Lenders to make Advances under this Agreement.
"Consents" shall mean all filings and all licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental authorities
and other third parties, domestic or foreign, necessary to carry on any
Borrower's business, including, without limitation, any Consents required under
all applicable federal, state or other applicable law.
"Controlled Group" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with any Borrower, are treated as a single
employer under Section 414 of the Code.
"Customer" shall mean and include the account debtor with respect to
any Receivable and/or the prospective purchaser of goods, services or both with
respect to any contract or contract right, and/or any party who enters into or
proposes to enter into any contract or other arrangement with any Borrower,
pursuant to which such Borrower is to deliver any personal property or perform
any services.
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"Default" shall mean an event which, with the giving of notice or
passage of time or both, would constitute an Event of Default.
"Default Rate" shall have the meaning set forth in Section 3.1 hereof.
"Defaulting Lender" shall have the meaning set forth in Section
2.22(a) hereof.
"Depository Accounts" shall have the meaning set forth in Section
4.15(h) hereof.
"Disputanta Sales Agreement" shall mean that certain Asset Purchase
Agreement, dated October 24, 2002, between the Disputanta Purchaser as purchaser
and LESCO as seller.
"Disputanta Note" shall mean that certain promissory note, dated
November 4, 2002, made by the Disputanta Purchaser in favor of LESCO in the
stated principal amount of $1,850,000.
"Disputanta Purchaser" shall mean KPAC Holdings, Inc., a Virginia
corporation.
"Documents" shall have the meaning set forth in Section 8.1(c) hereof.
"Dollar" and the sign "$" shall mean lawful money of the United States
of America.
"Domestic Rate Loan" shall mean any Advance that bears interest based
upon the Alternate Base Rate.
"Earnings Before Interest and Taxes" shall mean for any period the sum
of (i) net income (or loss) of Borrowers on a consolidated basis for such
period, plus (ii) all interest expense of Borrowers on a consolidated basis for
such period, plus (iii) all charges against income of Borrowers on a
consolidated basis for such period for federal, state and local taxes.
"EBITDA" shall mean for any period the sum of (i) Earnings Before
Interest and Taxes for such period plus (ii) depreciation expenses for such
period, plus (iii) amortization expenses for such period; provided however, the
effect of the following items shall be excluded from the calculation of EBITDA
to the extent that such items are included in EBITDA in the first instance: (a)
acceleration of expenses in connection with the Borrowers' restructuring
effected in January, 2002, (b) nonrecurring fees charged by the Agent and the
Lenders under this Agreement, (c) charges taken in the fourth fiscal quarter of
2004 in an amount not in excess of $5,200,000 related to termination of LESCO's
purchase of Novex product pursuant to the Disputanta Sales Agreement between
LESCO and the Disputanta Purchaser (including charges taken for the termination
payment made by LESCO to the Disputanta Purchaser, reductions in the value of
Novex Inventory, write-off of the Disputanta Note, and related legal expenses),
and (d) charges in the amount of $35,000,000 taken in the fourth fiscal quarter
of 2005 with respect to the sale of the assets to the TCS Sales Agreement.
"Eligible Inventory" shall mean and include Inventory excluding work
in process, with respect to each Borrower valued at the lower of cost (average
cost method) or market value, which is not, in Agent's reasonable opinion,
obsolete, slow moving or unmerchantable and
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which Agent, in its sole reasonable discretion, shall not deem ineligible
Inventory, based on such considerations as Agent may from time to time deem
appropriate including, without limitation, whether the Inventory is subject to a
perfected, first priority security interest in favor of Agent and whether the
Inventory conforms to all standards imposed by any governmental agency, division
or department thereof which has regulatory authority over such goods or the use
or sale thereof. Any Inventory located on a leased premises for which the Agent
has not received a satisfactory landlord's or warehouseman's agreement within
ninety (90) days after the Closing Date shall be excluded from Eligible
Inventory unless such Inventory is subject to a reserve in an amount established
by the Agent in it sole reasonable discretion (but in the case of leased
premises, in no event more than three months of rental payments for such
premises). Eligible Inventory shall exclude all Inventory in-transit; provided
however, (i) Stores-on-Wheels Inventory which meets the other criteria set forth
above and for which title has passed to a Borrower and which is insured to the
full value thereof shall be included in Eligible Inventory, and (ii) Inventory
in transit by common carrier from one of the Borrowers' locations set forth on
Schedule 4.5 to another of the Borrower's locations set forth on Schedule 4.5
and which is insured to the full value thereof shall be included in Eligible
Inventory, subject to applicable reserves established by the Agent with respect
to unpaid freight charges related to such in-transit Inventory.
"Environmental Complaint" shall have the meaning set forth in Section
4.19(d) hereof.
"Environmental Laws" shall mean all federal, state and local
environmental, land use, zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances and codes relating to the protection of the
environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of Hazardous
Substances and the rules, regulations, policies, published guidelines, written
interpretations, decisions, orders and directives of federal, state and local
governmental agencies and authorities with respect thereto.
"Equipment" shall mean and include as to each Borrower all of such
Borrower's goods (other than Inventory) whether now owned or hereafter acquired
and wherever located including, without limitation, all equipment, machinery,
apparatus, motor vehicles, fittings, furniture, furnishings, fixtures, parts,
accessories and all replacements and substitutions therefor or accessions
thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time and the rules and regulations promulgated
thereunder.
"Eurodollar Rate" shall mean for any Eurodollar Rate Loan for the then
current Interest Period relating thereto the interest rate per annum determined
by PNC by dividing (the resulting quotient rounded upwards, if necessary, to the
nearest 1/100th of 1% per annum) (a) the rate of interest determined by PNC in
accordance with its usual procedures (which determination shall be conclusive
absent manifest error) to be the average of the London interbank offered rates
for U.S. Dollars quoted by the British Bankers' Association as set forth on
Moneyline Telerate (or appropriate successor or, if British Banker's Association
or its successor ceases to provide such quotes, a comparable replacement
determined by Agent) display page 3750 (or such other
7
display page on Moneyline Telerate Service as may replace display page 3750) two
(2) Business Days prior to the first day of such Interest Period for an amount
comparable to such Eurodollar Rate Loan and having a borrowing date and a
maturity comparable to such Interest Period by (b) a number equal to 1.00 minus
the Reserve Percentage. The Eurodollar Rate may also be expressed by the
following formula:
Average of London interbank offered
rates quoted by BBA as shown on
Eurodollar Rate = Moneyline Telerate display page 3750
or appropriate successor
------------------------------------
1.00 - Reserve Percentage
"Eurodollar Rate Loan" shall mean an Advance at any time that bears
interest based on the Eurodollar Rate.
"Event of Default" shall mean the occurrence of any of the events set
forth in Article X hereof.
"Executive Order No. 13224" shall mean the Executive Order No. 13224
on Terrorist Financing, effective September 24, 2001, as the same has been, or
shall hereafter be, renewed, extended, amended or replaced.
"Existing Loan Agreement" shall mean that certain Revolving Credit and
Security Agreement dated as of December 30, 2003, as amended, among the
Borrowers, PNC Bank, National Association, as administrative agent, and the
other lenders for which PNC Bank serves as administrative agent.
"Federal Funds Effective Rate" for any day shall mean the rate per
annum (based on a year of 360 days and actual days elapsed and rounded upward to
the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or
any successor) on such day as being the weighted average of the rates on
overnight federal funds transactions arranged by federal funds brokers on the
previous trading day, as computed and announced by such Federal Reserve Bank (or
any successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the "Federal Funds
Effective Rate" as of the date of this Agreement; provided, if such Federal
Reserve Bank (or its successor) does not announce such rate on any day, the
"Federal Funds Effective Rate" for such day shall be the Federal Funds Effective
Rate for the last day on which such rate was announced.
"Federal Funds Open Rate" shall mean the rate per annum determined by
the Agent in accordance with its usual procedures (which determination shall be
conclusive absent manifest error) to be the open rate for federal funds
transactions as of the opening of business for federal funds transactions among
members of the Federal Reserve System arranged by federal funds brokers on such
day, as quoted by Xxxxxx Guybutler, any successor entity thereto, or any other
broker selected by the Bank, as set forth on the applicable Telerate display
page; provided, however; that if such day is not a Business Day, the Federal
Funds Open Rate for such day shall be the Open Rate on the immediately preceding
Business Day, or if no such rate shall be quoted by a Federal funds broker at
such time, such other rate as determined by the Agent in accordance with its
usual procedures.
8
"Fee Letter" shall mean the fee letter, dated October 7, 2005, among
Borrowers and PNC.
"Fixed Charge Coverage Ratio" shall mean and include, with respect to
any fiscal period, the ratio of (a) EBITDA minus Non-Financed Capital
Expenditures, minus income taxes expensed on a consolidated basis (but excluding
any non-recurring tax adjustments related to any of the exclusions set forth in
items (a) or (b) in the definition of "EBITDA" herein), all the foregoing during
such period to (b) Fixed Charges during such period.
"Fixed Charges" shall mean the sum of consolidated interest expense of
the Borrowers on a consolidated basis, Senior Debt Payments, principal on other
Indebtedness for borrowed money, and payments under capitalized leases, the
foregoing all as determined in conformity with GAAP.
"Formula Amount" shall have the meaning set forth in Section 2.1(a).
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time.
"GE Capital" shall mean GE Capital Financial Inc., a Utah industrial
loan corporation.
"GE Capital Proceeds" shall mean proceeds of any of the Borrowers'
accounts receivable purchased by GE Capital pursuant to the Account Sales
Agreement or payments due under the GE Program Agreement from customers of any
of the Borrowers.
"GE Proceeds Advance" shall have the meaning set forth in Section
16.4(b).
"General Intangibles" shall mean and include as to each Borrower all
of such Borrower's general intangibles, whether now owned or hereafter acquired
including, without limitation, all payment intangibles, choses in action, causes
of action, corporate or other business records, inventions, designs, patents,
patent applications, equipment formulations, manufacturing procedures, quality
control procedures, trademarks, service marks, trade secrets, goodwill,
copyrights, design rights, software, computer information, source codes, codes,
records and dates, registrations, licenses, franchises, customer lists, tax
refunds, tax refund claims, computer programs, all claims under guaranties,
security interests or other security held by or granted to such Borrower to
secure payment of any of the Receivables by a Customer (other than to the extent
covered by Receivables) all rights of indemnification and all other intangible
property of every kind and nature (other than Receivables).
"GE Program Agreement" shall mean that certain Private Label Business
Credit Program Agreement, dated as of December 16, 2003, by and among Borrowers
and GE Capital.
"Governmental Body" shall mean any nation or government, any state or
other political subdivision thereof or any entity exercising the legislative,
judicial, regulatory or administrative functions of or pertaining to a
government.
"Hazardous Discharge" shall have the meaning set forth in Section
4.19(d) hereof.
9
"Hazardous Substance" shall mean, without limitation, any flammable
explosives, radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or
related materials as defined in CERCLA, the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA, or any other
applicable Environmental Law and in the regulations adopted pursuant thereto.
"Hazardous Wastes" shall mean all wastes subject to regulation under
CERCLA, RCRA or applicable state law, and any other applicable Federal and state
laws now in force or hereafter enacted relating to hazardous waste disposal.
"Indebtedness" of a Person at a particular date shall mean all
obligations of such Person which in accordance with GAAP would be classified
upon a balance sheet as liabilities (except capital stock and surplus earned or
otherwise) and in any event, without limitation by reason of enumeration, shall
include all indebtedness, debt and other similar monetary obligations of such
Person whether direct or guaranteed, and all premiums, if any, due at the
required prepayment dates of such indebtedness, and all indebtedness secured by
a Lien on assets owned by such Person, whether or not such indebtedness actually
shall have been created, assumed or incurred by such Person. Any indebtedness of
such Person resulting from the acquisition by such Person of any assets subject
to any Lien shall be deemed, for the purposes hereof, to be the equivalent of
the creation, assumption and incurring of the indebtedness secured thereby,
whether or not actually so created, assumed or incurred.
"Ineligible Security" shall mean any security which may not be
underwritten or dealt in by member banks of the Federal Reserve System under
Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as
amended.
"Intercreditor Agreement" shall mean that certain Intercreditor
Agreement dated as of December 30, 2003, between GE Capital and the Agent,
together with that certain Consent and Agreement executed by each Borrower for
the benefit of the Agent and GE Capital, as the foregoing may be amended,
modified, extended or restated from time to time.
"Interest Period" shall mean the period provided for any Eurodollar
Rate Loan pursuant to Section 2.2(b).
"Interest Rate Protection Agreements" shall mean documentation for
interest rate swaps in a standard International Swap Dealer Association
Agreement or such other form as is acceptable to the Agent which provide for the
method of calculating the reimbursable amount of the provider's credit exposure
in a reasonable and customary basis.
"Inventory" shall mean and include as to each Borrower all of such
Borrower's now owned or hereafter acquired goods, merchandise and other personal
property, wherever located, to be furnished under any consignment arrangement,
contract of service or held for sale or lease, all raw materials, work in
process, finished goods and materials and supplies of any kind, nature or
description which are or might be used or consumed in such Borrower's business
or used in selling or furnishing such goods, merchandise and other personal
property, and all documents of title or other documents representing them.
10
"Inventory Advance Rate" shall have the meaning set forth in Section
2.1(a)(y)(i) hereof.
"Investment Property" shall mean and include as to each Borrower, all
of such Borrower's now owned or hereafter acquired securities (whether
certificated or uncertificated), securities entitlements, securities accounts,
commodities contracts and commodities accounts.
"Issuer" shall mean any Person who issues a Letter of Credit and/or
accepts a draft pursuant to the terms hereof.
"Leasehold Interests" shall mean all of each Borrower's right, title
and interest in and to the leasehold interests identified on Schedule 4.19
hereto.
"Lender" and "Lenders" shall have the meaning ascribed to such term in
the preamble to this Agreement and shall include each Person which becomes a
transferee, successor or assign of any Lender.
"Letter of Credit Fees" shall have the meaning set forth in Section
3.2.
"Letters of Credit" shall have the meaning set forth in Section 2.9.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, security interest, lien (whether statutory or otherwise), Charge,
claim or encumbrance, or preference, priority or other security agreement or
preferential arrangement held or asserted in respect of any asset of any kind or
nature whatsoever including, without limitation, any conditional sale or other
title retention agreement, any lease having substantially the same economic
effect as any of the foregoing, and the filing of, or agreement to give, any
financing statement under the Uniform Commercial Code or comparable law of any
jurisdiction.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the condition, operations, assets, business or prospects of the Borrowers, taken
as a whole, (b) the Borrowers' ability to pay the Obligations in accordance with
the terms thereof, (c) the value of the Collateral, or Agent's Liens on the
Collateral or the priority of any such Lien or (d) the practical realization of
the benefits of Agent's and each Lender's rights and remedies under this
Agreement and the Other Documents.
"Maximum Face Amount" shall mean, with respect to any outstanding
Letter of Credit, the face amount of such Letter of Credit including all
automatic increases provided for in such Letter of Credit, whether or not any
such automatic increase has become effective.
"Maximum Revolving Advance Amount" shall mean $50,000,000.
"Monthly Advances" shall have the meaning set forth in Section 3.1
hereof.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Sections 3(37) and 4001(a)(3) of ERISA.
11
"Net Orderly Liquidation Value" shall mean with regard to any
Inventory, the net proceeds that could be expected from an orderly liquidation
sale of such Inventory based upon an appraisal of the Borrowers' Inventory
conducted by an appraisal firm selected by the Agent, which appraisal of the net
proceeds would be calculated after all expenses, professionally managed, with
the seller obligated to sell over a defined period assuming that (a) the
Borrowers' facilities are in limited operation, utilizing select current
employees of the Borrowers, for the purpose of liquidating the Inventory, (b)
the Inventory would be disposed of on a piecemeal basis or through appropriate
groupings, under a scenario whereby the purchasers are buying "as is, where is"
for cash or cash equivalent, (c) the terms are sold on a Free On Board ("FOB")
warehouse basis, and (d) taking into consideration current economic trends,
condition, location and marketability.
"Non-Financed Capital Expenditures" shall mean capital expenditures of
the Borrowers which are not financed by any third party lender but shall include
capital expenditures which are financed with Revolving Advances.
"Note" shall mean the Revolving Credit Note.
"Obligations" shall mean and include any and all loans, advances,
debts, liabilities, obligations, covenants and duties owing by Borrowers to
Lenders or Agent or any Affiliate of Agent or any Lender of any kind or nature,
present or future (including, without limitation, any interest accruing thereon
after maturity, or after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding relating to
any Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding), whether or not evidenced by any note, guaranty
or other instrument, whether arising under any agreement, instrument or
document, (including, without limitation, this Agreement and the Other
Documents) whether or not for the payment of money, whether arising by reason of
an extension of credit, opening of a letter of credit, loan, equipment lease or
guarantee, under any interest or currency swap, future, option or other similar
agreement (including the Interest Rate Protection Agreement) entered into with
the Agent or any Lender or any of their respective Affiliates, or in any other
manner, whether arising out of overdrafts or deposit or other accounts or
electronic funds transfers (whether through automated clearing houses or
otherwise) or out of the Agent's or any Lender's or any of their respective
Affiliate's non-receipt of or inability to collect funds or otherwise not being
made whole in connection with depository transfer check or other similar
arrangements, whether direct or indirect (including those acquired by assignment
or participation), absolute or contingent, joint or several, due or to become
due, now existing or hereafter arising, contractual or tortious, liquidated or
unliquidated, regardless of how such indebtedness or liabilities arise or by
what agreement or instrument they may be evidenced or whether evidenced by any
agreement or instrument, including, but not limited to, any and all of any
Borrower's Indebtedness and/or liabilities under this Agreement, the Other
Documents or under any other agreement between Agent or Lenders or any of their
respective Affiliates and any Borrower and any amendments, extensions, renewals
or increases and all costs and expenses of Agent and any Lender or any of their
respective Affiliates incurred in the documentation, negotiation, modification,
enforcement, collection or otherwise in connection with any of the foregoing,
including but not limited to reasonable attorneys' fees and expenses and all
obligations of any Borrower to Agent or Lenders to perform acts or refrain from
taking any action.
12
"Original Owners" shall mean the shareholders of LESCO as of the
Closing Date.
"Other Documents" shall mean the Note, the Assignment of Account, the
Patent, Trademark and Copyright Security Agreement and any and all other
agreements, instruments and documents, including, without limitation,
guaranties, pledges, powers of attorney, consents, and all other writings
heretofore, now or hereafter executed by any Borrower and/or delivered to Agent
or any Lender in respect of the transactions contemplated by this
"Parent" of any Person shall mean a corporation or other entity
owning, directly or indirectly at least 50% of the shares of stock or other
ownership interests having ordinary voting power to elect a majority of the
directors of the Person, or other Persons performing similar functions for any
such Person.
"Participant" shall mean each Person who shall be granted the right by
any Lender to participate in any of the Advances and who shall have entered into
a participation agreement in form and substance satisfactory to such Lender.
"Patent, Trademark and Copyright Security Agreement" shall mean the
Patent, Trademark and Copyright Security Agreement executed and delivered by
each of the Borrowers to the Agent for the benefit of the Lenders.
"Payment Office" shall mean initially Xxx Xxxxx Xxxxxx Xxxxxxxxx,
Xxxxxx Xxxxx, Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000; thereafter, such other office of
Agent, if any, which it may designate by notice to Borrowing Agent and to each
Lender to be the Payment Office.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permitted Encumbrances" shall mean (a) Liens in favor of Agent for
the benefit of Agent and Lenders; (b) Liens for taxes, assessments or other
governmental charges not delinquent or being contested in good faith and by
appropriate proceedings and with respect to which proper reserves have been
taken by Borrowers; provided, that, the Lien shall have no effect on the
priority of the Liens in favor of Agent or the value of the assets in which
Agent has such a Lien and a stay of enforcement of any such Lien shall be in
effect; (c) matters of record disclosed on the title insurance commitments
obtained pursuant to Section 8.1(r), (d) Liens disclosed in the financial
statements or notes thereto referred to in Section 5.5, the existence of which
Agent has consented to in writing; (e) deposits or pledges to secure obligations
under worker's compensation, social security or similar laws, or under
unemployment insurance; (f) deposits or pledges to secure bids, tenders,
contracts (other than contracts for the payment of money), leases, statutory
obligations, surety and appeal bonds and other obligations of like nature
arising in the ordinary course of any Borrower's business and an escrow in an
amount not in excess of $3,650,000 to support LESCO's obligations under the
Strongsville Assignment Agreement which will be used to reimburse The Xxxxxxx
Company for certain obligations of LESCO; (g) judgment Liens that have been
stayed or bonded and mechanics', workers', materialmen's or other like Liens
arising in the ordinary course of any Borrower's business with respect to
obligations which are not due or which are being contested in good faith by the
applicable Borrower; (h) Liens placed upon fixed assets hereafter acquired to
secure a portion of the purchase price thereof, provided that (x) any such lien
shall not encumber any other property
13
of the Borrowers and (y) the aggregate amount of Indebtedness secured by such
Liens incurred as a result of such purchases during any fiscal year shall not
exceed the amount provided for in Section 7.6; (i) Liens which individually or
in the aggregate do not encumber Collateral having a value in excess of
$500,000; (j) Liens on assets of LESCO in favor of TCS granted under the TCS
Supply Agreement to secure the obligations of LESCO under the TCS Supply
Agreement, provided such Liens are subject to the terms of the Subordination
Agreement, and (l) Liens disclosed on Schedule 1.2(p).
"Person" shall mean any individual, sole proprietorship, partnership,
corporation, business trust, joint stock company, trust, unincorporated
organization, association, limited liability company, institution, public
benefit corporation, joint venture, entity or government (whether Federal,
state, county, city, municipal or otherwise, including any instrumentality,
division, agency, body or department thereof).
"Plan" shall mean any employee benefit plan within the meaning of
Section 3(3) of ERISA, maintained for employees of Borrowers or any member of
the Controlled Group or any such Plan to which any Borrower or any member of the
Controlled Group is required to contribute on behalf of any of its employees.
"Pro Forma Balance Sheet" shall have the meaning set forth in Section
5.5(a) hereof.
"Pro Forma Financial Statements" shall have the meaning set forth in
Section 5.5(b) hereof.
"Projections" shall have the meaning set forth in Section 5.5(b)
hereof.
"Purchasing Lender" shall have the meaning set forth in Section 16.3
hereof.
"RCRA" shall mean the Resource Conservation and Recovery Act, 42
U.S.C. Sections 6901 et seq., as amended.
"Real Property" shall mean all of each Borrower's right, title and
interest in and to owned premises and premises leased pursuant to a ground
lease, all the foregoing as identified on Schedule 4.19 hereto.
"Receivables" shall mean and include, as to each Borrower, all of such
Borrower's accounts, contract rights, instruments (including those evidencing
indebtedness owed to Borrowers by their Affiliates), documents, chattel paper
(including electronic chattel paper), general intangibles relating to accounts,
drafts and acceptances, credit card receivables, and all other forms of
obligations owing to such Borrower arising out of or in connection with the sale
or lease of Inventory or the rendition of services, all supporting obligations,
guarantees and other security therefor, whether secured or unsecured, now
existing or hereafter created, and whether or not specifically sold or assigned
to Agent hereunder.
"Release" shall have the meaning set forth in Section 5.7(c)(i)
hereof.
14
"Reportable Event" shall mean a reportable event described in Section
4043(b) of ERISA or the regulations promulgated thereunder.
"Required Lenders" shall mean Lenders holding at least fifty-one
percent (51%) of the Advances and, if no Advances are outstanding, shall mean
Lenders holding at least fifty-one percent (51%) of the Commitment Percentages;
provided however, if there are two or less Lenders at any given time, then
"Required Lenders" shall mean all the Lenders.
"Reserve Percentage" shall mean the maximum effective percentage in
effect on any day as prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for determining the reserve requirements (including,
without limitation, supplemental, marginal and emergency reserve requirements)
with respect to eurocurrency funding.
"Revolving Advances" shall mean Advances made other than Letters of
Credit.
"Revolving Credit Note" shall mean, collectively, the promissory notes
referred to in Section 2.1(a) hereof.
"Revolving Interest Rate" shall mean an interest rate per annum equal
to (a) the sum of the Alternate Base Rate minus one half of one percent (0.50%)
with respect to Domestic Rate Loans, and (b) the sum of the Eurodollar Rate plus
one and one-fourth percent (1.25%) with respect to Eurodollar Rate Loans.
"Section 20 Subsidiary" shall mean the Subsidiary of the bank holding
company controlling PNC, which Subsidiary has been granted authority by the
Federal Reserve Board to underwrite and deal in certain Ineligible Securities.
"Senior Debt Payments" shall mean and include all cash actually
expended by Borrowers to make (a) interest payments on any Advances hereunder,
plus, (b) payments for all fees, commissions and charges set forth herein and
with respect to any Advances, plus (c) capitalized lease payments, plus (d)
payments with respect to any other Indebtedness for borrowed money, plus (e) to
the extent not included in EBITDA, recurring fees paid to GE Capital with
respect to the Accounts Sales Agreement and/or the GE Program Agreement;
provided, Senior Debt Payments shall not include nonrecurring fees charged by
the Agent and the Lenders under this Agreement or by GE Capital under the
Accounts Sales Agreement and/or the GE Program Agreement which are payable on or
before the Closing Date.
"Settlement Date" shall mean the Closing Date and thereafter Wednesday
of each week unless such day is not a Business Day in which case it shall be the
next succeeding Business Day.
"Stores-on-Wheels Inventory" shall mean Inventory which is located on
motor vehicles owned or leased by a Borrower and from which such Borrower sells
such Inventory to its Customers in the ordinary course of business.
"Strongsville Assignment Agreement" shall mean that certain Assignment
and Assumption of Lease Agreement among LSI, as assignor, The Xxxxxxx Company,
as assignee,
15
and LESCO pursuant to which LSI shall transfer its rights under the Strongsville
Lease to The Xxxxxxx Company.
"Strongsville Lease Agreement" shall mean that certain Lease Agreement
dated June 13, 2000 between Lescar Company, as landlord, and LESCO, as tenant,
with respect to LESCO's lease of the real property and improvements located at
15885 Xxxxxxx Road, Strongsville, Cuyahoga County, Ohio.
"Subordination Agreement" shall mean that certain Subordination
Agreement between TCS and the Agent with respect to the subordination of the
liens of TCS in the assets of LESCO to the Liens of the Agent in the assets of
LESCO, in substantially the form of Exhibit 8.1(r).
"Subsidiary" shall mean a corporation or other entity of whose shares
of stock or other ownership interests having ordinary voting power (other than
stock or other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.
"TCS" shall mean Turf Care Supply Corp., a Delaware corporation.
"TCS Sales Agreement" shall mean that certain Asset Purchase Agreement
dated as of July 26, 2005, as amended, between LESCO, as seller, and TCS, as
buyer.
"TCS Supply Agreement" shall mean that certain Long-Term Supply
Agreement effective as of October 1, 2005, between TCS, as supplier, and LESCO.
"Term" shall have the meaning set forth in Section 13.1 hereof.
"Termination Event" shall mean (i) a Reportable Event with respect to
any Plan or Multiemployer Plan; (ii) the withdrawal of any Borrower or any
member of the Controlled Group from a Plan or Multiemployer Plan during a plan
year in which such entity was a "substantial employer" as defined in Section
4001(a)(2) of ERISA; (iii) the providing of notice of intent to terminate a Plan
in a distress termination described in Section 4041(c) of ERISA; (iv) the
institution by the PBGC of proceedings to terminate a Plan or Multiemployer
Plan; (v) any event or condition (a) which might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan or Multiemployer Plan, or (b) that may result in
termination of a Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi)
the partial or complete withdrawal within the meaning of Sections 4203 and 4205
of ERISA, of any Borrower or any member of the Controlled Group from a
Multiemployer Plan.
"Toxic Substance" shall mean and include any material present on the
Real Property or the Leasehold Interests which has been shown to have
significant adverse effect on human health or which is subject to regulation
under the Toxic Substances Control Act (TSCA), 15 U.S.C. Sections 2601 et seq.,
applicable state law, or any other applicable Federal or state laws now in force
or hereafter enacted relating to toxic substances. "Toxic Substance" includes
but is not limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based
paints.
16
"Transactions" shall have the meaning set forth in Section 5.5 hereof.
"Transferee" shall have the meaning set forth in Section 16.3(b)
hereof.
"Undrawn Availability" at a particular date shall mean an amount equal
to (a) the lesser of (i) the Formula Amount plus outstanding Letters of Credit
or (ii) the Maximum Revolving Advance Amount, minus (b) the sum of (i) the
outstanding amount of Advances plus (ii) all amounts due and owing to Borrowers'
trade creditors which are outstanding beyond sixty (60) days from the due date,
plus (iii) fees and expenses for which Borrowers are liable but which have not
been paid or charged to Borrowers' Account.
"USA Patriot Act" shall mean the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001, Public Law 107-56, as the same has been, or shall hereafter be, renewed,
extended, amended or replaced.
"Week" shall mean the time period commencing with the opening of
business on a Wednesday and ending on the end of business the following Tuesday.
1.3. Uniform Commercial Code Terms.
All terms used herein and defined in the Uniform Commercial Code as adopted
in the State of Ohio from time to time shall have the meaning given therein
unless otherwise defined herein. To the extent the definition of any category or
type of Collateral is expanded by any amendment, modification or revision to the
Uniform Commercial Code, such expanded definition will apply automatically as of
the date of such amendment, modification or revision.
1.4. Certain Matters of Construction.
The terms "herein", "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular section,
paragraph or subdivision. Any pronoun used shall be deemed to cover all genders.
Wherever appropriate in the context, terms used herein in the singular also
include the plural and vice versa. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations. Unless otherwise provided, all references to any instruments or
agreements to which Agent is a party, including, without limitation, references
to any of the Other Documents, shall include any and all modifications or
amendments thereto and any and all extensions or renewals thereof.
II. ADVANCES, PAYMENTS.
2.1. (a) Revolving Advances.
Subject to the terms and conditions set forth in this Agreement, each
Lender, severally and not jointly, will make Revolving Advances to Borrowers in
aggregate amounts outstanding at any time equal to such Lender's Commitment
Percentage of the lesser of (x) the Maximum
17
Revolving Advance Amount less the aggregate amount of outstanding Letters of
Credit and GE Proceeds Advances or (y) an amount equal to the sum of:
(i) up to the lesser of (A) 70%, subject to the provisions of
Section 2.1(c) hereof ("Inventory Advance Rate"), of the value of
Eligible Inventory, or (B) 85% of the Net Orderly Liquidation Value of
the Inventory at any one time; plus
(ii) one hundred percent (100%), subject to the provisions of
Section 2.1(c) hereof ("Cash on Deposit Advance Rate"), of Cash on
Deposit in excess of $5,000,000 (the Inventory Advance Rate and the
Cash on Deposit Advance Rate shall be referred to collectively, as the
"Advance Rates"), minus
(iii) the amount by which the availability for Revolving Advances
based upon Stores-on-Wheels Inventory under item (i) above exceeds
$10,000,000; minus
(iv) the aggregate amount of outstanding Letters of Credit and GE
Proceeds Advances, minus
(v) the Bank Products Reserves and such other reserves as Agent
may reasonably deem proper and necessary from time to time.
The amount derived from (a) the sum of Section 2.1(a)(y)(i) and (ii) minus
the sum of (b) Sections 2.1 (a)(y)(iii), (iv) and (v) at any time and from time
to time shall be referred to as the "Formula Amount". The Revolving Advances
shall be evidenced by one or more secured promissory notes (collectively, the
"Revolving Credit Note") substantially in the form attached hereto as Exhibit
2.1(a).
(b) Intentionally Omitted.
(c) Discretionary Rights. Until such time as a current appraisal is
conducted on the Borrowers' Inventory and reviewed to the satisfaction of the
Agent, the Inventory Advance Rate shall be set at 60%. Subject to Section 16.2,
the Advance Rates may be increased or decreased by Agent at any time and from
time to time in the exercise of its reasonable discretion. Each Borrower
consents to any such increases or decreases and acknowledges that decreasing the
Advance Rates or increasing the reserves may limit or restrict Advances
requested by Borrowing Agent.
2.2. Procedure for Borrowing Advances.
(a) Borrowing Agent on behalf of any Borrower may notify Agent prior
to 11:00 a.m. on a Business Day of a Borrower's request to incur, on that day, a
Revolving Advance hereunder. Should any amount required to be paid as interest
hereunder, or as fees or other charges under this Agreement or any Other
Document, or with respect to any other Obligation, become due, same shall be
deemed a request for a Revolving Advance as of the date such payment is due, in
the amount required to pay in full such interest, fee, charge or Obligation
18
under this Agreement or any other agreement with Agent or Lenders, and such
request shall be irrevocable.
(b) Notwithstanding the provisions of (a) above, in the event any
Borrower desires to obtain a Eurodollar Rate Loan, Borrowing Agent shall give
Agent at least three (3) Business Days' prior written notice, specifying (i) the
date of the proposed borrowing (which shall be a Business Day), (ii) the type of
borrowing and the amount on the date of such Advance to be borrowed, which
amount shall be in a minimum amount of $1,000,000 and in integral multiples of
$500,000 thereafter, and (iii) the duration of the first Interest Period
therefor. Interest Periods for Eurodollar Rate Loans shall be for one, two or
three months; provided, if an Interest Period would end on a day that is not a
Business Day, it shall end on the next succeeding Business Day unless such day
falls in the next succeeding calendar month in which case the Interest Period
shall end on the next preceding Business Day. No Eurodollar Rate Loan shall be
made available to Borrower during the continuance of a Default or an Event of
Default.
(c) Each Interest Period of a Eurodollar Rate Loan shall commence on
the date such Eurodollar Rate Loan is made and shall end on such date as
Borrowing Agent may elect as set forth in subsection (b)(iii) above provided
that the exact length of each Interest Period shall be determined in accordance
with the practice of the interbank market for offshore Dollar deposits and no
Interest Period shall end after the last day of the Term.
Borrowing Agent shall elect the initial Interest Period
applicable to a Eurodollar Rate Loan by its notice of borrowing given to Agent
pursuant to Section 2.2(b) or by its notice of conversion given to Agent
pursuant to Section 2.2(d), as the case may be. Borrowing Agent shall elect the
duration of each succeeding Interest Period by giving irrevocable written notice
to Agent of such duration not less than three (3) Business Days prior to the
last day of the then current Interest Period applicable to such Eurodollar Rate
Loan. If Agent does not receive timely notice of the Interest Period elected by
Borrowing Agent, Borrowers shall be deemed to have elected to convert to a
Domestic Rate Loan subject to Section 2.2(d) hereinbelow.
(d) Provided that no Event of Default shall have occurred and be
continuing, any Borrower may, on the last Business Day of the then current
Interest Period applicable to any outstanding Eurodollar Rate Loan, or on any
Business Day with respect to Domestic Rate Loans, convert any such loan into a
loan of another type in the same aggregate principal amount provided that any
conversion of a Eurodollar Rate Loan shall be made only on the last Business Day
of the then current Interest Period applicable to such Eurodollar Rate Loan. If
a Borrower desires to convert a loan, Borrowing Agent shall give Agent not less
than three (3) Business Days' prior written notice to convert from a Domestic
Rate Loan to a Eurodollar Rate Loan or one (1) Business Day's prior written
notice to convert from a Eurodollar Rate Loan to a Domestic Rate Loan,
specifying the date of such conversion, the loans to be converted and if the
conversion is from a Domestic Rate Loan to any other type of loan, the duration
of the first Interest Period therefor. After giving effect to each such
conversion, there shall not be outstanding more than five (5) Eurodollar Rate
Loans, in the aggregate.
(e) Intentionally Omitted.
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(f) Each Borrower shall indemnify Agent and Lenders and hold Agent and
Lenders harmless from and against any and all losses or expenses that Agent and
Lenders may sustain or incur as a consequence of any prepayment, conversion of
or any default by any Borrower in the payment of the principal of or interest on
any Eurodollar Rate Loan or failure by any Borrower to complete a borrowing of,
a prepayment of or conversion of or to a Eurodollar Rate Loan after notice
thereof has been given, including, but not limited to, any interest payable by
Agent or Lenders to lenders of funds obtained by it in order to make or maintain
its Eurodollar Rate Loans hereunder. A certificate as to any additional amounts
payable pursuant to the foregoing sentence submitted by Agent or any Lender to
Borrowing Agent shall be conclusive absent manifest error.
(g) Notwithstanding any other provision hereof, if any applicable law,
treaty, regulation or directive, or any change therein or in the interpretation
or application thereof, shall make it unlawful for any Lender (for purposes of
this subsection (g), the term "Lender" shall include any Lender and the office
or branch where any Lender or any corporation or bank controlling such Lender
makes or maintains any Eurodollar Rate Loans) to make or maintain its Eurodollar
Rate Loans, the obligation of Lenders to make Eurodollar Rate Loans hereunder
shall forthwith be cancelled and Borrowers shall, if any affected Eurodollar
Rate Loans are then outstanding, promptly upon request from Agent, either pay
all such affected Eurodollar Rate Loans or convert such affected Eurodollar Rate
Loans into loans of another type. If any such payment or conversion of any
Eurodollar Rate Loan is made on a day that is not the last day of the Interest
Period applicable to such Eurodollar Rate Loan, Borrowers shall pay Agent, upon
Agent's request, such amount or amounts as may be necessary to compensate
Lenders for any loss or expense sustained or incurred by Lenders in respect of
such Eurodollar Rate Loan as a result of such payment or conversion, including
(but not limited to) any interest or other amounts payable by Lenders to lenders
of funds obtained by Lenders in order to make or maintain such Eurodollar Rate
Loan. A certificate as to any additional amounts payable pursuant to the
foregoing sentence submitted by Lenders to Borrowing Agent shall be conclusive
absent manifest error.
2.3. Disbursement of Advance Proceeds.
All Advances shall be disbursed from whichever office or other place Agent
may designate from time to time and, together with any and all other Obligations
of Borrowers to Agent or Lenders, shall be charged to Borrowers' Account on
Agent's books. During the Term, Borrowers may use the Revolving Advances by
borrowing, prepaying and reborrowing, all in accordance with the terms and
conditions hereof. The proceeds of each Revolving Advance requested by Borrowers
or deemed to have been requested by Borrowers under Section 2.2(a) hereof shall,
with respect to requested Revolving Advances to the extent Lenders make such
Revolving Advances, be made available to the applicable Borrower on the day so
requested by way of credit to such Borrower's operating account at PNC, or such
other bank as Borrowing Agent may designate following notification to Agent, in
immediately available federal funds or other immediately available funds or,
with respect to Revolving Advances deemed to have been requested by any
Borrower, be disbursed to Agent to be applied to the outstanding Obligations
giving rise to such deemed request.
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2.4. Intentionally Omitted.
2.5. Maximum Advances.
The aggregate balance of Revolving Advances outstanding at any time shall
not exceed the lesser of (a) Maximum Revolving Advance Amount less outstanding
Letters of Credit, or (b) the Formula Amount.
2.6. Repayment of Advances.
(a) The Revolving Advances shall be due and payable in full on the
last day of the Term subject to earlier prepayment as herein provided.
(b) Each Borrower recognizes that the amounts evidenced by checks,
notes, drafts or any other items of payment relating to and/or proceeds of
Collateral may not be collectible by Agent on the date received. In
consideration of Agent's agreement to conditionally credit Borrowers' Account as
of the Business Day on which Agent receives those items of payment, each
Borrower agrees that, in computing the charges under this Agreement, all items
of payment shall be deemed applied by Agent on account of the Obligations one
(1) Business Day after the Business Day Agent receives such payments via wire
transfer or electronic depository check. Agent is not, however, required to
credit Borrowers' Account for the amount of any item of payment which is
unsatisfactory to Agent in the Agent's reasonable discretion, and Agent may
charge Borrowers' Account for the amount of any item of payment which is
returned to Agent unpaid.
(c) All payments of principal, interest and other amounts payable
hereunder, or under any of the Other Documents shall be made to Agent at the
Payment Office not later than 1:00 P.M. (New York Time) on the due date therefor
in lawful money of the United States of America in federal funds or other funds
immediately available to Agent. Agent shall have the right to effectuate payment
on any and all Obligations due and owing hereunder by charging Borrowers'
Account or by making Advances as provided in Section 2.2 hereof.
(d) Borrowers shall pay principal, interest, and all other amounts
payable hereunder, or under any related agreement, without any deduction
whatsoever, including, but not limited to, any deduction for any setoff or
counterclaim.
2.7. Repayment of Excess Advances.
The aggregate balance of Advances outstanding at any time in excess of the
maximum amount of Advances permitted hereunder shall be immediately due and
payable without the necessity of any demand, at the Payment Office, whether or
not a Default or Event of Default has occurred.
2.8. Statement of Account.
Agent shall maintain, in accordance with its customary procedures, a loan
account ("Borrowers' Account") in the name of Borrowers in which shall be
recorded the date and amount of each Advance made by Agent and the date and
amount of each payment in respect
21
thereof; provided, however, the failure by Agent to record the date and amount
of any Advance shall not adversely affect Agent or any Lender. Each month, Agent
shall send to Borrowing Agent a statement showing the accounting for the
Advances made, payments made or credited in respect thereof, and other
transactions between Agent and Borrowers, during such month. The monthly
statements shall be deemed correct and binding upon Borrowers in the absence of
manifest error and shall constitute an account stated between Lenders and
Borrowers unless Agent receives a written statement of Borrowers' specific
exceptions thereto within thirty (30) days after such statement is received by
Borrowing Agent. The records of Agent with respect to the loan account shall be
conclusive evidence absent manifest error of the amounts of Advances and other
charges thereto and of payments applicable thereto.
2.9. Letters of Credit.
Subject to the terms and conditions hereof and upon prior request by
Borrowing Agent to Agent by 10:00 a.m. on the date which is five (5) Business
Days prior to the proposed issuance thereof, Agent shall issue or cause the
issuance of Letters of Credit ("Letters of Credit") on behalf of any Borrower;
provided, however, that Agent will not be required to issue or cause to be
issued any Letters of Credit to the extent that the face amount of such Letters
of Credit would then cause the sum of (i) the outstanding Revolving Advances
plus (ii) outstanding Letters of Credit and GE Proceeds Advances to exceed the
lesser of (x) the Maximum Revolving Advance Amount or (y) the Formula Amount.
The maximum amount of outstanding Letters of Credit shall not exceed $20,000,000
in the aggregate at any time. All disbursements or payments related to Letters
of Credit shall be deemed to be Domestic Rate Loans consisting of Revolving
Advances and shall bear interest at the Revolving Interest Rate for Domestic
Rate Loans; Letters of Credit that have not been drawn upon shall not bear
interest. The term "Letters of Credit" shall include the Letters of Credit set
forth on Schedule 2.9, each of which shall be deemed to be issued pursuant to
this Agreement as of the date hereof.
2.10. Issuance of Letters of Credit.
(a) Borrowing Agent, on behalf of Borrowers, may request Agent to
issue or cause the issuance of a Letter of Credit by delivering to Agent at the
Payment Office, Agent's form of Letter of Credit Application (the "Letter of
Credit Application") completed to the satisfaction of Agent; and, such other
certificates, documents and other papers and information as Agent may reasonably
request. Borrowing Agent, on behalf of Borrowers, also has the right to give
instructions and make agreements with respect to any application, any applicable
letter of credit and security agreement, any applicable letter of credit
reimbursement agreement and/or any other applicable agreement, any letter of
credit and the disposition of documents, disposition of any unutilized funds,
and to agree with Agent upon any amendment, extension or renewal of any Letter
of Credit.
(b) Each Letter of Credit shall, among other things, (i) provide for
the payment of sight drafts, other written demands for payment, or acceptances
of usance drafts when presented for honor thereunder in accordance with the
terms thereof and when accompanied by the documents described therein and (ii)
have an expiry date not later than twelve (12) months after such Letter of
Credit's date of issuance and in no event later than the last day of the Term.
Each standby Letter of Credit shall be subject either to the Uniform
22
Customs and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500, and any amendments or revision thereof
adhered to by the Issuer ("UCP 500") or the International Standby Practices
(ISP98-International Chamber of Commerce Publication Number 590) (the "ISP98
Rules"), as determined by Agent, and each trade Letter of Credit shall be
subject to UCP 500.
(c) Agent shall use its reasonable efforts to notify Lenders of the
request by Borrowing Agent for a Letter of Credit hereunder.
2.11. Requirements For Issuance of Letters of Credit.
Borrowing Agent shall authorize and direct any Issuer to name the
applicable Borrower as the "Applicant" or "Account Party" of each Letter of
Credit. If Agent is not the Issuer of any Letter of Credit, Borrowing Agent
shall authorize and direct the Issuer to deliver to Agent all instruments,
documents, and other writings and property received by the Issuer pursuant to
the Letter of Credit and to accept and rely upon Agent's instructions and
agreements with respect to all matters arising in connection with the Letter of
Credit, the application therefor.
2.12. Disbursements, Reimbursement.
(a) Immediately upon the issuance of each Letter of Credit, each
Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from Agent a participation in such Letter of Credit and each drawing
thereunder in an amount equal to such Lender's Commitment Percentage of the
Maximum Face Amount of such Letter of Credit and the amount of such drawing,
respectively.
(b) In the event of any request for a drawing under a Letter of Credit
by the beneficiary or transferee thereof, Agent will promptly notify Borrowing
Agent. Provided that Borrowing Agent shall have received such notice, the
Borrowers shall reimburse (such obligation to reimburse Agent shall sometimes be
referred to as a "Reimbursement Obligation") Agent prior to 12:00 Noon, New York
time on each date that an amount is paid by Agent under any Letter of Credit
(each such date, a "Drawing Date") in an amount equal to the amount so paid by
Agent. In the event Borrowers fail to reimburse Agent for the full amount of any
drawing under any Letter of Credit by 12:00 Noon, New York time, on the Drawing
Date, Agent will promptly notify each Lender thereof, and Borrowers shall be
deemed to have requested that a Domestic Rate Loan be made by the Lenders to be
disbursed on the Drawing Date under such Letter of Credit, subject to the amount
of the unutilized portion of the lesser of Maximum Revolving Advance Amount or
the Formula Amount and subject to Section 8.2 hereof. Any notice given by Agent
pursuant to this Section 2.12(b) may be oral if immediately confirmed in
writing; provided that the lack of such an immediate confirmation shall not
affect the conclusiveness or binding effect of such notice.
(c) Each Lender shall upon any notice pursuant to Section 2.12(b) make
available to Agent an amount in immediately available funds equal to its
Commitment Percentage of the amount of the drawing, whereupon the participating
Lenders shall (subject to Section 2.12(d)) each be deemed to have made a
Domestic Rate Loan to Borrowers in that amount. If any Lender so notified fails
to make available to Agent the amount of such Lender's
23
Commitment Percentage of such amount by no later than 2:00 p.m., New York time
on the Drawing Date, then interest shall accrue on such Lender's obligation to
make such payment, from the Drawing Date to the date on which such Lender makes
such payment (i) at a rate per annum equal to the Federal Funds Open Rate during
the first three days following the Drawing Date and (ii) at a rate per annum
equal to the rate applicable to Domestic Rate Loans on and after the fourth day
following the Drawing Date. Agent will promptly give notice of the occurrence of
the Drawing Date, but failure of Agent to give any such notice on the Drawing
Date or in sufficient time to enable any Lender to effect such payment on such
date shall not relieve such Lender from its obligation under this Section
2.12(c), provided that such Lender shall not be obligated to pay interest as
provided in Section 2.12(c) (i) and (ii) until and commencing from the date of
receipt of notice from Agent of a drawing.
(d) With respect to any unreimbursed drawing that is not converted
into a Domestic Rate Loan to Borrowers in whole or in part as contemplated by
Section 2.12(b), because of Borrowers' failure to satisfy the conditions set
forth in Section 8.2 (other than any notice requirements) or for any other
reason, Borrowers shall be deemed to have incurred from Agent a borrowing (each
a "Letter of Credit Borrowing") in the amount of such drawing. Such Letter of
Credit Borrowing shall be due and payable on demand (together with interest) and
shall bear interest at the rate per annum applicable to a Domestic Rate Loan.
Each Lender's payment to Agent pursuant to Section 2.12(c) shall be deemed to be
a payment in respect of its participation in such Letter of Credit Borrowing and
shall constitute a "Participation Advance" from such Lender in satisfaction of
its Participation Commitment under this Section 2.12.
(e) Each Lender's Participation Commitment shall continue until the
last to occur of any of the following events: (x) Agent ceases to be obligated
to issue or cause to be issued Letters of Credit hereunder; (y) no Letter of
Credit issued or created hereunder remains outstanding and uncancelled and (z)
all Persons (other than the Borrowers) have been fully reimbursed for all
payments made under or relating to Letters of Credit.
2.13. Repayment of Participation Advances.
(a) Upon (and only upon) receipt by Agent for its account of
immediately available funds from Borrowers (i) in reimbursement of any payment
made by the Agent under the Letter of Credit with respect to which any Lender
has made a Participation Advance to Agent, or (ii) in payment of interest on
such a payment made by Agent under such a Letter of Credit, Agent will pay to
each Lender, in the same funds as those received by Agent, the amount of such
Lender's Commitment Percentage of such funds, except Agent shall retain the
amount of the Commitment Percentage of such funds of any Lender that did not
make a Participation Advance in respect of such payment by Agent.
(b) If Agent is required at any time to return to any Borrower, or to
a trustee, receiver, liquidator, custodian, or any official in any insolvency
proceeding, any portion of the payments made by Borrowers to Agent pursuant to
Section 2.13(a) in reimbursement of a payment made under the Letter of Credit or
interest or fee thereon, each Lender shall, on demand of Agent, forthwith return
to Agent the amount of its Commitment Percentage of any amounts so returned by
Agent plus interest at the Federal Funds Effective Rate.
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2.14. Documentation.
Each Borrower agrees to be bound by the terms of the Letter of Credit
Application and, absent manifest error, by Agent's interpretations of any Letter
of Credit issued on behalf of such Borrower and by Agent's written regulations
and customary practices relating to letters of credit, though Agent's
interpretations may be different from such Borrower's own. In the event of a
conflict between the Letter of Credit Application and this Agreement, this
Agreement shall govern. It is understood and agreed that, except in the case of
gross negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final non-appealable judgment), Agent shall not be liable for
any error, negligence and/or mistakes, whether of omission or commission, in
following the Borrowing Agent's or any Borrower's instructions or those
contained in the Letters of Credit or any modifications, amendments or
supplements thereto.
2.15. Determination to Honor Drawing Request.
In determining whether to honor any request for drawing under any Letter of
Credit by the beneficiary thereof, Agent shall be responsible only to determine
that the documents and certificates required to be delivered under such Letter
of Credit have been delivered and that they comply on their face with the
requirements of such Letter of Credit and that any other drawing condition
appearing on the face of such Letter of Credit has been satisfied in the manner
so set forth.
2.16. Nature of Participation and Reimbursement Obligations.
Each Lender's obligation in accordance with this Agreement to make the
Revolving Advances or Participation Advances as a result of a drawing under a
Letter of Credit, and the obligations of Borrowers to reimburse Agent upon a
draw under a Letter of Credit, shall be absolute, unconditional and irrevocable,
and shall be performed strictly in accordance with the terms of this Section
2.16 under all circumstances, including the following circumstances:
(a) any set-off, counterclaim, recoupment, defense or other right
which such Lender may have against Agent, any Borrower or any other Person for
any reason whatsoever;
(b) the failure of any Borrower or any other Person to comply, in
connection with a Letter of Credit Borrowing, with the conditions set forth in
this Agreement for the making of a Revolving Advance, it being acknowledged that
such conditions are not required for the making of a Letter of Credit Borrowing
and the obligation of the Lenders to make Participation Advances under Section
2.12;
(c) any lack of validity or enforceability of any Letter of Credit;
(d) any claim of breach of warranty that might be made by Borrower or
any Lender against the beneficiary of a Letter of Credit, or the existence of
any claim, set-off, recoupment, counterclaim, crossclaim, defense or other right
which any Borrower or any Lender may have at any time against a beneficiary, any
successor beneficiary or any transferee of any Letter of Credit or the proceeds
thereof (or any Persons for whom any such transferee may be acting), Agent or
any Lender or any other Person, whether in connection with this Agreement,
25
the transactions contemplated herein or any unrelated transaction (including any
underlying transaction between any Borrower or any Subsidiaries of such Borrower
and the beneficiary for which any Letter of Credit was procured);
(e) the lack of power or authority of any signer of (or any defect in
or forgery of any signature or endorsement on) or the form of or lack of
validity, sufficiency, accuracy, enforceability or genuineness of any draft,
demand, instrument, certificate or other document presented under or in
connection with any Letter of Credit, or any fraud or alleged fraud in
connection with any Letter of Credit, or the transport of any property or
provisions of services relating to a Letter of Credit, in each case even if
Agent or any of Agent's Affiliates has been notified thereof;
(f) payment by Agent under any Letter of Credit against presentation
of a demand, draft or certificate or other document which does not comply with
the terms of such Letter of Credit;
(g) the solvency of, or any acts or omissions by, any beneficiary of
any Letter of Credit, or any other Person having a role in any transaction or
obligation relating to a Letter of Credit, or the existence, nature, quality,
quantity, condition, value or other characteristic of any property or services
relating to a Letter of Credit;
(h) any failure by the Agent or any of Agent's Affiliates to issue any
Letter of Credit in the form requested by Borrowing Agent, unless the Agent has
received written notice from Borrowing Agent of such failure within three (3)
Business Days after the Agent shall have furnished Borrowing Agent a copy of
such Letter of Credit and such error is material and no drawing has been made
thereon prior to receipt of such notice;
(i) any Material Adverse Effect on any Borrower;
(j) any breach of this Agreement or any Other Document by any party
thereto;
(k) the occurrence or continuance of an insolvency proceeding with
respect to any Borrower;
(l) the fact that a Default or Event of Default shall have occurred
and be continuing;
(m) the fact that the Term shall have expired or this Agreement or the
Obligations hereunder shall have been terminated; and
(n) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing.
2.17. Indemnity.
In addition to amounts payable as provided in Section 16.5, each Borrower
hereby agrees to protect, indemnify, pay and save harmless Agent and any of
Agent's Affiliates that have issued
26
a Letter of Credit from and against any and all claims, demands, liabilities,
damages, taxes, penalties, interest, judgments, losses, costs, charges and
expenses (including reasonable fees, expenses and disbursements of counsel and
allocated costs of internal counsel) which the Agent or any of Agent's
Affiliates may incur or be subject to as a consequence, direct or indirect, of
the issuance of any Letter of Credit, other than as a result of (A) the gross
negligence or willful misconduct of the Agent as determined by a final and
non-appealable judgment of a court of competent jurisdiction or (b) the wrongful
dishonor by the Agent or any of Agent's Affiliates of a proper demand for
payment made under any Letter of Credit, except if such dishonor resulted from
any act or omission, whether rightful or wrongful, of any present or future de
jure or de facto Governmental Body (all such acts or omissions herein called
"Governmental Acts").
2.18. Liability for Acts and Omissions.
As between Borrowers and Agent and Lenders, each Borrower assumes all risks
of the acts and omissions of, or misuse of the Letters of Credit by, the
respective beneficiaries of such Letters of Credit. In furtherance and not in
limitation of the respective foregoing, Agent shall not be responsible for: (i)
the form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for an
issuance of any such Letter of Credit, even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent or forged
(even if Agent shall have been notified thereof); (ii) the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any such Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) the failure of the beneficiary of
any such Letter of Credit, or any other party to which such Letter of Credit may
be transferred, to comply fully with any conditions required in order to draw
upon such Letter of Credit or any other claim of any Borrower against any
beneficiary of such Letter of Credit, or any such transferee, or any dispute
between or among any Borrower and any beneficiary of any Letter of Credit or any
such transferee; (iv) errors, omissions, interruptions or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex or otherwise,
whether or not they be in cipher; (v) errors in interpretation of technical
terms; (vi) any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any such Letter of Credit or of the
proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter
of Credit of the proceeds of any drawing under such Letter of Credit; or (viii)
any consequences arising from causes beyond the control of Agent, including any
governmental acts, and none of the above shall affect or impair, or prevent the
vesting of, any of Agent's rights or powers hereunder. Nothing in the preceding
sentence shall relieve Agent from liability for Agent's gross negligence or
willful misconduct (as determined by a court of competent jurisdiction in a
final non-appealable judgment) in connection with actions or omissions described
in such clauses (i) through (viii) of such sentence. In no event shall Agent or
Agent's Affiliates be liable to any Borrower for any indirect, consequential,
incidental, punitive, exemplary or special damages or expenses (including
without limitation attorneys' fees), or for any damages resulting from any
change in the value of any property relating to a Letter of Credit.
Without limiting the generality of the foregoing, Agent and each of its
Affiliates (i) may rely on any oral or other communication believed in good
faith by Agent or such Affiliate to have been authorized or given by or on
behalf of the applicant for a Letter of Credit, (ii) may honor any presentation
if the documents presented appear on their face substantially to comply
27
with the terms and conditions of the relevant Letter of Credit; (iii) may honor
a previously dishonored presentation under a Letter of Credit, whether such
dishonor was pursuant to a court order, to settle or compromise any claim of
wrongful dishonor, or otherwise, and shall be entitled to reimbursement to the
same extent as if such presentation had initially been honored, together with
any interest paid by Agent or its Affiliates; (iv) may honor any drawing that is
payable upon presentation of a statement advising negotiation or payment, upon
receipt of such statement (even if such statement indicates that a draft or
other document is being delivered separately), and shall not be liable for any
failure of any such draft or other document to arrive, or to conform in any way
with the relevant Letter of Credit; (v) may pay any paying or negotiating bank
claiming that it rightfully honored under the laws or practices of the place
where such bank is located; and (vi) may settle or adjust any claim or demand
made on Agent or its Affiliate in any way related to any order issued at the
applicant's request to an air carrier, a letter of guarantee or of indemnity
issued to a carrier or any similar document (each an "Order") and honor any
drawing in connection with any Letter of Credit that is the subject of such
Order, notwithstanding that any drafts or other documents presented in
connection with such Letter of Credit fail to conform in any way with such
Letter of Credit. Nothing in the preceding sentence shall relieve Agent from
liability for Agent's gross negligence or willful misconduct (as determined by a
court of competent jurisdiction in a final non-appealable judgment) in
connection with actions or omissions described in such clauses (i) through (vii)
of such sentence. In no event shall Agent or Agent's Affiliates be liable to any
Borrower for any indirect, consequential, incidental, punitive, exemplary or
special damages or expenses (including without limitation attorneys' fees), or
for any damages resulting from any change in the value of any property relating
to a Letter of Credit.
In furtherance and extension and not in limitation of the specific
provisions set forth above, any action taken or omitted by Agent under or in
connection with the Letters of Credit issued by it or any documents and
certificates delivered thereunder, if taken or omitted in good faith and without
gross negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final non-appealable judgment), shall not put Agent under any
resulting liability to any Borrower or any Lender.
2.19. Additional Payments.
Any sums expended by Agent or any Lender due to any Borrower's failure to
perform or comply with its obligations under this Agreement or any Other
Document including, without limitation, any Borrower's obligations under
Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be charged to Borrowers'
Account as a Revolving Advance and added to the Obligations.
2.20. Manner of Borrowing and Payment.
(a) Each borrowing of Revolving Advances shall be advanced according
to the applicable Commitment Percentages of Lenders.
(b) Each payment (including each prepayment) by Borrowers on account
of the principal of and interest on the Revolving Advances, shall be applied to
the Revolving Advances pro rata according to the applicable Commitment
Percentages of Lenders. Except as expressly provided herein, all payments
(including prepayments) to be made by any Borrower on
28
account of principal, interest and fees shall be made without set off or
counterclaim and shall be made to Agent on behalf of the Lenders to the Payment
Office, in each case on or prior to 1:00 P.M., New York time, in Dollars and in
immediately available funds.
(c) (i) Notwithstanding anything to the contrary contained in Sections
2.13(a) and (b) hereof, commencing with the first Business Day following the
Closing Date, each borrowing of Revolving Advances shall be advanced by Agent
and each payment by any Borrower on account of Revolving Advances shall be
applied first to those Revolving Advances advanced by Agent. On or before 1:00
P.M., New York time, on each Settlement Date commencing with the first
Settlement Date following the Closing Date, Agent and Lenders shall make certain
payments as follows: (I) if the aggregate amount of new Revolving Advances made
by Agent during the preceding Week (if any) exceeds the aggregate amount of
repayments applied to outstanding Revolving Advances during such preceding Week,
then each Lender shall provide Agent with funds in an amount equal to its
applicable Commitment Percentage of the difference between (w) such Revolving
Advances and (x) such repayments and (II) if the aggregate amount of repayments
applied to outstanding Revolving Advances during such Week exceeds the aggregate
amount of new Revolving Advances made during such Week, then Agent shall provide
each Lender with funds in an amount equal to its applicable Commitment
Percentage of the difference between (y) such repayments and (z) such Revolving
Advances.
(ii) Each Lender shall be entitled to earn interest at the
applicable Revolving Interest Rate on outstanding Advances which it
has funded.
(iii) Promptly following each Settlement Date, Agent shall submit
to each Lender a certificate with respect to payments received and
Advances made during the Week immediately preceding such Settlement
Date. Such certificate of Agent shall be conclusive in the absence of
manifest error.
(d) If any Lender or Participant (a "benefited Lender") shall at any
time receive any payment of all or part of its Advances, or interest thereon, or
receive any Collateral in respect thereof (whether voluntarily or involuntarily
or by set-off) in a greater proportion than any such payment to and Collateral
received by any other Lender, if any, in respect of such other Lender's
Advances, or interest thereon, and such greater proportionate payment or receipt
of Collateral is not expressly permitted hereunder, such benefited Lender shall
purchase for cash from the other Lenders a participation in such portion of each
such other Lender's Advances, or shall provide such other Lender with the
benefits of any such Collateral, or the proceeds thereof, as shall be necessary
to cause such benefited Lender to share the excess payment or benefits of such
Collateral or proceeds ratably with each of the other Lenders; provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. Each Lender so purchasing a portion of another
Lender's Advances may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.
(e) Unless Agent shall have been notified by telephone, confirmed in
writing, by any Lender that such Lender will not make the amount which would
constitute its applicable
29
Commitment Percentage of the Advances available to Agent, Agent may (but shall
not be obligated to) assume that such Lender shall make such amount available to
Agent on the next Settlement Date and, in reliance upon such assumption, make
available to Borrowers a corresponding amount. Agent will promptly notify
Borrowers of its receipt of any such notice from a Lender. If such amount is
made available to Agent on a date after such next Settlement Date, such Lender
shall pay to Agent on demand an amount equal to the product of (i) the daily
average Federal Funds Effective Rate (computed on the basis of a year of 360
days) during such period as quoted by Agent, times (ii) such amount, times (iii)
the number of days from and including such Settlement Date to the date on which
such amount becomes immediately available to Agent. A certificate of Agent
submitted to any Lender with respect to any amounts owing under this paragraph
(e) shall be conclusive, in the absence of manifest error. If such amount is not
in fact made available to Agent by such Lender within three (3) Business Days
after such Settlement Date, Agent shall be entitled to recover such an amount,
with interest thereon at the rate per annum then applicable to such Revolving
Advances hereunder, on demand from Borrowers; provided, however, that Agent's
right to such recovery shall not prejudice or otherwise adversely affect
Borrowers' rights (if any) against such Lender.
2.21. Use of Proceeds.
Borrowers shall apply the proceeds of Advances to provide for their working
capital needs, to pay fees and expenses relating to this transaction and the
transactions contemplated by the Accounts Sales Agreement, for capital
expenditures and for general corporate purposes of the Borrowers.
2.22. Defaulting Lender.
(a) Notwithstanding anything to the contrary contained herein, in the
event any Lender (x) has refused (which refusal constitutes a breach by such
Lender of its obligations under this Agreement) to make available its portion of
any Advance or (y) notifies either Agent or Borrowing Agent that it does not
intend to make available its portion of any Advance (if the actual refusal would
constitute a breach by such Lender of its obligations under this Agreement)
(each, a "Lender Default"), all rights and obligations hereunder of such Lender
(a "Defaulting Lender") as to which a Lender Default is in effect and of the
other parties hereto shall be modified to the extent of the express provisions
of this Section 2.22 while such Lender Default remains in effect.
(b) Advances shall be incurred pro rata from Lenders (the
"Non-Defaulting Lenders") which are not Defaulting Lenders based on their
respective Commitment Percentages, and no Commitment Percentage of any Lender or
any pro rata share of any Advances required to be advanced by any Lender shall
be increased as a result of such Lender Default. Amounts received in respect of
principal of any type of Advances shall be applied to reduce the applicable
Advances of each Lender pro rata based on the aggregate of the outstanding
Advances of that type of all Lenders at the time of such application; provided,
that, such amount shall not be applied to any Advances of a Defaulting Lender at
any time when, and to the extent that, the aggregate amount of Advances of any
Non-Defaulting Lender exceeds such Non-Defaulting Lender's Commitment Percentage
of all Advances then outstanding.
30
(c) A Defaulting Lender shall not be entitled to give instructions to
Agent or to approve, disapprove, consent to or vote on any matters relating to
this Agreement and the Other Documents. All amendments, waivers and other
modifications of this Agreement and the Other Documents may be made without
regard to a Defaulting Lender and, for purposes of the definition of "Required
Lenders", a Defaulting Lender shall be deemed not to be a Lender and not to have
Advances outstanding.
(d) Other than as expressly set forth in this Section 2.22, the rights
and obligations of a Defaulting Lender (including the obligation to indemnify
Agent) and the other parties hereto shall remain unchanged. Nothing in this
Section 2.22 shall be deemed to release any Defaulting Lender from its
obligations under this Agreement and the Other Documents, shall alter such
obligations, shall operate as a waiver of any default by such Defaulting Lender
hereunder, or shall prejudice any rights which any Borrower, Agent or any Lender
may have against any Defaulting Lender as a result of any default by such
Defaulting Lender hereunder.
(e) In the event a Defaulting Lender retroactively cures to the
satisfaction of Agent the breach which caused a Lender to become a Defaulting
Lender, such Defaulting Lender shall no longer be a Defaulting Lender and shall
be treated as a Lender under this Agreement.
III. INTEREST AND FEES.
3.1. Interest.
Interest on Revolving Advances shall be payable in arrears on the first day
of each month with respect to Domestic Rate Loans and, with respect to
Eurodollar Rate Loans, at the end of each Interest Period. Interest charges
shall be computed on the actual principal amount of Advances outstanding during
the month (the "Monthly Advances") at a rate per annum equal to the applicable
Revolving Interest Rate. Whenever, subsequent to the date of this Agreement, the
Alternate Base Rate is increased or decreased, the applicable Revolving Interest
Rate for Domestic Rate Loans shall be similarly changed without notice or demand
of any kind by an amount equal to the amount of such change in the Alternate
Base Rate during the time such change or changes remain in effect. The
Eurodollar Rate shall be adjusted with respect to Eurodollar Rate Loans without
notice or demand of any kind on the effective date of any change in the Reserve
Percentage as of such effective date. Upon and after the occurrence of an Event
of Default, and during the continuation thereof, the Obligations shall bear
interest at the applicable Revolving Interest Rate plus two percent (2%) per
annum (the "Default Rate").
3.2. Letter of Credit Fees.
(a) Borrowers shall pay (x) to Agent, for the benefit of Lenders, fees
for each Letter of Credit for the period from and excluding the date of issuance
of same to and including the date of expiration or termination, equal to the
average daily face amount of each outstanding Letter of Credit multiplied by one
percent (1.00%), such fees to be calculated on the basis of a 360-day year for
the actual number of days elapsed and to be payable quarterly in arrears on the
first day of each January, April, July, and October and on the last day of the
Term and (y) to the Issuer, for its own account, fees for each Letter of Credit
for the period from and excluding the date of issuance of same to and including
the date of expiration or termination, equal to the
31
average daily face amount of each outstanding Letter of Credit multiplied by one
fourth of one percent (0.25%), such fees to be calculated on the basis of a
360-day year for the actual number of days elapsed and to be payable quarterly
in arrears on the first day of each January, April, July, and October and on the
last day of the Term , and (z) to the Issuer, for its own account any and all
fees and expenses as agreed upon by the Issuer and the Borrowing Agent in
connection with any Letter of Credit, including, without limitation, in
connection with the opening, amendment or renewal of any such Letter of Credit
and any acceptances created thereunder and shall reimburse Agent for any and all
fees and expenses, if any, paid by Agent to the Issuer (all of the foregoing
fees, the "Letter of Credit Fees"). All such charges shall be deemed earned in
full on the date when the same are due and payable hereunder and shall not be
subject to rebate or proration upon the termination of this Agreement for any
reason. Any such charge in effect at the time of a particular transaction shall
be the charge for that transaction, notwithstanding any subsequent change in the
Issuer's prevailing charges for that type of transaction. All Letter of Credit
Fees payable hereunder shall be deemed earned in full on the date when the same
are due and payable hereunder and shall not be subject to rebate or proration
upon the termination of this Agreement for any reason.
Upon request of the Agent following the occurrence of an Event of
Default, Borrowers will cause cash to be deposited and maintained in an account
with Agent, as cash collateral, in an amount equal to one hundred and five
percent (105%) of the outstanding Letters of Credit, and each Borrower hereby
irrevocably authorizes Agent, in its discretion, on such Borrower's behalf and
in such Borrower's name, to open such an account and to make and maintain
deposits therein, or in an account opened by such Borrower, in the amounts
required to be made by such Borrower, out of the proceeds of Receivables or
other Collateral or out of any other funds of such Borrower coming into any
Lender's possession at any time. Agent will invest such cash collateral (less
applicable reserves) in such short-term money-market items as to which Agent and
such Borrower mutually agree and the net return on such investments shall be
credited to such account and constitute additional cash collateral. No Borrower
may withdraw amounts credited to any such account except upon payment and
performance in full of all Obligations and termination of this Agreement.
3.3. Facility Fee.
If, for any month during the Term, the average daily unpaid balance of the
sum of the Revolving Advances plus Letters of Credit outstanding for each day of
such month does not equal the Maximum Revolving Advance Amount, then Borrowers
shall pay to Agent for the ratable benefit of Lenders a fee at a rate equal to
one fourth of one percent (0.25%) per annum on the amount by which the Maximum
Revolving Advance Amount exceeds such average daily unpaid balance of Revolving
Advances plus Letters of Credit outstanding. Such fee shall be payable to Agent
quarterly in arrears on each January 1, April 1, July 1 and October 1.
3.4. Intentionally Omitted.
3.5. Computation of Interest and Fees.
Interest and fees hereunder shall be computed on the basis of a year of 365
or 366 days, as the case may be, and for the actual number of days elapsed. If
any payment to be made
32
hereunder becomes due and payable on a day other than a Business Day, the due
date thereof shall be extended to the next succeeding Business Day and interest
thereon shall be payable at the applicable Revolving Interest Rate during such
extension.
3.6. Maximum Charges.
In no event whatsoever shall interest and other charges charged hereunder
exceed the highest rate permissible under law. In the event interest and other
charges as computed hereunder would otherwise exceed the highest rate permitted
under law, such excess amount shall be first applied to any unpaid principal
balance owed by Borrowers, and if the then remaining excess amount is greater
than the previously unpaid principal balance, Lenders shall promptly refund such
excess amount to Borrowers and the provisions hereof shall be deemed amended to
provide for such permissible rate.
3.7. Increased Costs.
In the event that any applicable law, treaty or governmental regulation, or
any change therein or in the interpretation or application thereof, or
compliance by any Lender (for purposes of this Section 3.7, the term "Lender"
shall include Agent or any Lender and any corporation or bank controlling Agent
or any Lender) and the office or branch where Agent or any Lender (as so
defined) makes or maintains any Eurodollar Rate Loans with any request or
directive (whether or not having the force of law) from any central bank or
other financial, monetary or other authority, shall:
(a) subject Agent or any Lender to any tax of any kind whatsoever with
respect to this Agreement or any Other Document or change the basis of taxation
of payments to Agent or any Lender of principal, fees, interest or any other
amount payable hereunder or under any Other Documents (except for changes in the
rate of tax on the overall net income of Agent or any Lender by the jurisdiction
in which it maintains its principal office);
(b) impose, modify or hold applicable any reserve, special deposit,
assessment or similar requirement against assets held by, or deposits in or for
the account of, advances or loans by, or other credit extended by, any office of
Agent or any Lender, including (without limitation) pursuant to Regulation D of
the Board of Governors of the Federal Reserve System; or
(c) impose on Agent or any Lender or the London interbank Eurodollar
market any other condition with respect to this Agreement or any Other Document;
and the result of any of the foregoing is to increase the cost to Agent or any
Lender of making, renewing or maintaining its Advances hereunder by an amount
that Agent or such Lender deems to be material or to reduce the amount of any
payment (whether of principal, interest or otherwise) in respect of any of the
Advances by an amount that Agent or such Lender reasonably deems to be material,
then, in any case Borrowers shall promptly pay Agent or such Lender, upon its
demand, such additional amount as will compensate Agent or such Lender for such
additional cost or such reduction, as the case may be, provided that the
foregoing shall not apply to increased costs which are reflected in the
Eurodollar Rate. Agent or such Lender shall certify
33
the amount of such additional cost or reduced amount to Borrowers, and such
certification shall be conclusive absent manifest error.
3.8. Basis For Determining Interest Rate Inadequate or Unfair.
In the event that Agent or any Lender shall have reasonably determined
that:
(a) reasonable means do not exist for ascertaining the Eurodollar Rate
for any Interest Period;
(b) Dollar deposits in the relevant amount and for the relevant
maturity are not available in the London interbank Eurodollar market, with
respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate Loan,
or a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate Loan,
then Agent shall give Borrowing Agent prompt written, telephonic or telegraphic
notice of such determination. If such notice is given, (i) any such requested
Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless Borrowing
Agent shall notify Agent no later than 10:00 a.m. (New York City time) two (2)
Business Days prior to the date of such proposed borrowing, that its request for
such borrowing shall be cancelled or made as an unaffected type of Eurodollar
Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have
been converted to an affected type of Eurodollar Rate Loan shall be continued as
or converted into a Domestic Rate Loan, or, if Borrowing Agent shall notify
Agent, no later than 10:00 a.m. (New York City time) two (2) Business Days prior
to the proposed conversion, shall be maintained as an unaffected type of
Eurodollar Rate Loan, and (iii) any outstanding affected Eurodollar Rate Loans
shall be converted into a Domestic Rate Loan, or, if Borrowing Agent shall
notify Agent, no later than 10:00 a.m. (New York City time) two (2) Business
Days prior to the last Business Day of the then current Interest Period
applicable to such affected Eurodollar Rate Loan, shall be converted into an
unaffected type of Eurodollar Rate Loan, on the last Business Day of the then
current Interest Period for such affected Eurodollar Rate Loans. Until such
notice has been withdrawn, Lenders shall have no obligation to make an affected
type of Eurodollar Rate Loan or maintain outstanding affected Eurodollar Rate
Loans and no Borrower shall have the right to convert a Domestic Rate Loan or an
unaffected type of Eurodollar Rate Loan into an affected type of Eurodollar Rate
Loan.
3.9. Capital Adequacy.
(a) In the event that Agent or any Lender shall have determined that
any applicable law, rule, regulation or guideline regarding capital adequacy, or
any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by Agent or any
Lender (for purposes of this Section 3.9, the term "Lender" shall include Agent
or any Lender and any corporation or bank controlling Agent or any Lender) and
the office or branch where Agent or any Lender (as so defined) makes or
maintains any Eurodollar Rate Loans with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on Agent or any Lender's capital as a consequence
34
of its obligations hereunder to a level below that which Agent or such Lender
could have achieved but for such adoption, change or compliance (taking into
consideration Agent's and each Lender's policies with respect to capital
adequacy) by an amount deemed by Agent or any Lender to be material, then, from
time to time, Borrowers shall pay upon demand to Agent or such Lender such
additional amount or amounts as will compensate Agent or such Lender for such
reduction. In determining such amount or amounts, Agent or such Lender may use
any reasonable averaging or attribution methods. The protection of this Section
3.9 shall be available to Agent and each Lender regardless of any possible
contention of invalidity or inapplicability with respect to the applicable law,
regulation or condition.
(b) A certificate of Agent or such Lender setting forth such amount or
amounts as shall be necessary to compensate Agent or such Lender with respect to
Section 3.9(a) hereof when delivered to Borrowers shall be conclusive absent
manifest error.
3.10. Gross Up for Taxes.
If any Borrower shall be required by Applicable Law to withhold or deduct
any taxes from or in respect of any sum payable under this Agreement or any of
the Other Documents, (a) the sum payable to Agent or such Lender shall be
increased as may be necessary so that, after making all required withholding or
deductions, Agent or such Lender (as the case may be) receives an amount equal
to the sum it would have received had no such withholding or deductions been
made, (b) such Borrower shall make such withholding or deductions, and (c) such
Borrower shall pay the full amount withheld or deducted to the relevant taxation
authority or other authority in accordance with Applicable Law.
3.11. Withholding Tax Exemption.
Each Lender or assignee or participant of a Lender that is not incorporated
under the Laws of the United States of America or a state thereof (and, upon the
written request of Agent, each other Lender or assignee or participant of a
Lender) agrees that it will deliver to each Borrower and Agent two (2) duly
completed appropriate valid Withholding Certificates (as defined under Section
1.1441-1(c)(16) of the Income Tax Regulations (the "Regulations")) certifying
its status (i.e. U.S. or foreign person) and, if appropriate, making a claim of
reduced, or exemption from, U.S. withholding tax on the basis of an income tax
treaty or an exemption provided by the Code. The term "Withholding Certificate"
means a Form W-9; a Form W-8BEN; a Form W-8ECI; a Form W-8IMY and the related
statements and certifications as required under Section 1.1441-1(e)(2) and/or
(3) of the Regulations; a statement described in Section 1.871-14(c)(2)(v) of
the Regulations; or any other certificates under the Code or Regulations that
certify or establish the status of a payee or beneficial owner as a U.S. or
foreign person. Each Lender, assignee or participant required to deliver to each
Borrower and Agent a Withholding Certificate pursuant to the preceding sentence
shall deliver such valid Withholding Certificate as follows: (A) each Lender
which is a party hereto on the Closing Date shall deliver such valid Withholding
Certificate at least five (5) Business Days prior to the first date on which any
interest or fees are payable by any Borrower hereunder for the account of such
Lender; (B) each assignee or participant shall deliver such valid Withholding
Certificate at least five (5) Business Days before the effective date of such
assignment or participation (unless Agent in its sole reasonable discretion
shall permit such assignee or participant to deliver such valid Withholding
35
Certificate less than five (5) Business Days before such date in which case it
shall be due on the date specified by Agent). Each Lender, assignee or
participant which so delivers a valid Withholding Certificate further undertakes
to deliver to each Borrower and Agent two (2) additional copies of such
Withholding Certificate (or a successor form) on or before the date that such
Withholding Certificate expires or becomes obsolete or after the occurrence of
any event requiring a change in the most recent Withholding Certificate so
delivered by it, and such amendments thereto or extensions or renewals thereof
as may be reasonably requested by any Borrower or Agent. Notwithstanding the
submission of a Withholding Certificate claiming a reduced rate of or exemption
from U.S. withholding tax, Agent shall be entitled to withhold United States
federal income taxes at the full 30% withholding rate if in its reasonable
judgment it is required to do so under the due diligence requirements imposed
upon a withholding agent under Section 1.1441-7(b) of the Regulations. Further,
Agent is indemnified under Section 1.1461-1(e) of the Regulations against any
claims and demands of any Lender or assignee or participant of a Lender for the
amount of any tax it deducts and withholds in accordance with regulations under
Section 1441 of the Code.
Each Bank or assignee or participant of a Bank that is not incorporated
under the Laws of the United States of America or a state thereof (and is not
excepted from the certification requirement contained in Section 313 of the USA
Patriot Act and the applicable regulations because it is both (i) an affiliate
of a depository institution or foreign bank that maintains a physical presence
in the United states or foreign county, and (ii) subject to supervision by a
banking authority regulating such affiliated depository institution or foreign
bank) shall deliver to the Agent the certification, or, if applicable,
recertification, certifying that such Bank is not a "shell" and certifying to
other matters as required by Section 313 of the USA Patriot Act and the
applicable regulations: (1) within 10 days after the Closing Date, and (2) as
such other times as are required under the USA Patriot Act.
IV. COLLATERAL: GENERAL TERMS.
4.1. Security Interest in the Collateral.
To secure the prompt payment and performance to Agent and each Lender of
the Obligations, each Borrower hereby assigns, pledges and grants to Agent for
its benefit and for the ratable benefit of each Lender a continuing security
interest in and to all of its Collateral, whether now owned or existing or
hereafter acquired or arising and wheresoever located. Each Borrower shall xxxx
its books and records as may be necessary or appropriate to evidence, protect
and perfect Agent's security interest and shall cause its financial statements
to reflect such security interest. Each Borrower shall promptly provide Agent
with written notice of all commercial tort claims, such notice to contain the
case title together with the applicable court and a brief description of the
claim(s). Upon delivery of each such notice, such Borrower shall be deemed to
hereby grant to Agent a security interest and lien in and to such commercial
tort claims and all proceeds thereof.
4.2. Perfection of Security Interest.
Each Borrower shall take all action that may be necessary or desirable, or
that Agent may request, so as at all times to maintain the validity, perfection,
enforceability and priority of
36
Agent's security interest in the Collateral or to enable Agent to protect,
exercise or enforce its rights hereunder and in the Collateral, including, but
not limited to, (i) immediately discharging all Liens other than Permitted
Encumbrances, (ii) obtaining landlords' or mortgagees' lien waivers, (iii)
delivering to Agent, endorsed or accompanied by such instruments of assignment
as Agent may specify, and stamping or marking, in such manner as Agent may
specify, any and all chattel paper, instruments, letters of credits and advices
thereof and documents evidencing or forming a part of the Collateral, (iv)
entering into warehousing, lockbox and other custodial arrangements satisfactory
to Agent, and (v) executing and delivering financing statements, control
agreements, instruments of pledge, mortgages, notices and assignments, in each
case in form and substance satisfactory to Agent, relating to the creation,
validity, perfection, maintenance or continuation of Agent's security interest
under the Uniform Commercial Code or other applicable law. Agent is hereby
authorized to file financing statements without the signature of any Borrower in
accordance with the Uniform Commercial Code as adopted in the State of Ohio from
time to time. By its signature hereto, each Borrower hereby authorizes Agent to
file against such Borrower, one or more financing, continuation, or amendment
statements pursuant to the Uniform Commercial Code in form and substance
satisfactory to Agent (which statements may have a description of collateral
which is broader than that set forth herein). All charges, expenses and fees
Agent may incur in doing any of the foregoing, and any local taxes relating
thereto, shall be charged to Borrowers' Account as a Revolving Advance of a
Domestic Rate Loan and added to the Obligations, or, at Agent's option, shall be
paid to Agent for the ratable benefit of Lenders immediately upon demand.
4.3. Disposition of Collateral.
Each Borrower will safeguard and protect all Collateral for Agent's general
account and make no disposition thereof whether by sale, lease or otherwise
except (a) the sale of Inventory in the ordinary course of business, (b) the
sale of Receivables in accordance with the terms of the Accounts Sales
Agreement, (c) the transfer of assets in accordance with the terms of the TCS
Sales Agreement, and (d) the disposition or transfer for cash or cash
equivalents of obsolete and worn-out Equipment in the ordinary course of
business during any fiscal year having an aggregate fair market value of not
more than $1,000,000.
4.4. Preservation of Collateral.
In addition to the rights and remedies set forth in Section 11.1 hereof,
Agent: (a) may at any time take such steps as Agent deems necessary to protect
Agent's interest in and to preserve the Collateral, including the hiring of such
security guards or the placing of other security protection measures as Agent
may deem appropriate; (b) may employ and maintain at any of any Borrower's
premises a custodian who shall have full authority to do all acts necessary to
protect Agent's interests in the Collateral; (c) may lease warehouse facilities
to which Agent may move all or part of the Collateral; (d) may use any
Borrower's owned or leased lifts, hoists, trucks and other facilities or
equipment for handling or removing the Collateral; and (e) shall have, and is
hereby granted, a right of ingress and egress to the places where the Collateral
is located, and may proceed over and through any of Borrower's owned or leased
property. Each Borrower shall cooperate fully with all of Agent's efforts to
preserve the Collateral and will take such actions to preserve the Collateral as
Agent may direct. All of Agent's expenses of preserving the Collateral,
including any expenses relating to the bonding of a custodian, shall be charged
to
37
Borrowers' Account as a Revolving Advance of a Domestic Rate Loan and added to
the Obligations.
4.5. Ownership of Collateral.
With respect to the Collateral, at the time the Collateral becomes subject
to Agent's security interest: (a) each Borrower shall be the sole owner of and
fully authorized and able to sell, transfer, pledge and/or grant a first
priority security interest in each and every item of the its respective
Collateral to Agent; and, except for Permitted Encumbrances the Collateral shall
be free and clear of all Liens and encumbrances whatsoever; (b) each document
and agreement executed by each Borrower or delivered to Agent or any Lender in
connection with this Agreement shall be true and correct in all respects; (c)
all signatures and endorsements of each Borrower that appear on such documents
and agreements shall be genuine and each Borrower shall have full capacity to
execute same; and (d) each Borrower's Equipment and Inventory shall be located
at or in transit to the locations set forth on Schedule 4.5 and shall not be
removed from such location(s) without the prior written consent of Agent except
with respect to (i) the sale of Inventory in the ordinary course of business,
(ii) transfers of Equipment and Inventory between such locations, and (iii)
disposition of Equipment to the extent permitted in Section 4.3 hereof.
4.6. Defense of Agent's and Lenders' Interests.
Until (a) payment and performance in full of all of the Obligations and (b)
termination of this Agreement, Agent's interests in the Collateral shall
continue in full force and effect. During such period no Borrower shall, without
Agent's prior written consent, pledge, sell (except Inventory in the ordinary
course of business and Equipment to the extent permitted in Section 4.3 hereof),
assign, transfer, create or suffer to exist a Lien upon or encumber or allow or
suffer to be encumbered in any way except for Permitted Encumbrances, any part
of the Collateral. Each Borrower shall defend Agent's interests in the
Collateral against any and all Persons whatsoever. At any time following demand
by Agent for payment of all Obligations pursuant to Section 11.1, Agent shall
have the right to take possession of the indicia of the Collateral and the
Collateral in whatever physical form contained, including without limitation:
labels, stationery, documents, instruments and advertising materials. If Agent
exercises this right to take possession of the Collateral, Borrowers shall, upon
demand, assemble it in the best manner possible and make it available to Agent
at a place reasonably convenient to Agent. In addition, with respect to all
Collateral, Agent and Lenders shall be entitled to all of the rights and
remedies set forth herein and further provided by the Uniform Commercial Code or
other applicable law. Each Borrower shall, and Agent may, at its option,
instruct all suppliers, carriers, forwarders, warehousers or others receiving or
holding cash, checks, Inventory, documents or instruments in which Agent holds a
security interest to deliver same to Agent and/or subject to Agent's order and
if they shall come into any Borrower's possession, they, and each of them, shall
be held by such Borrower in trust as Agent's trustee, and such Borrower will
immediately deliver them to Agent in their original form together with any
necessary endorsement.
4.7. Books and Records.
Each Borrower shall (a) keep proper books of record and account in which
full, true and correct entries will be made of all dealings or transactions of
or in relation to its business and
38
affairs; (b) set up on its books accruals with respect to all taxes,
assessments, charges, levies and claims; and (c) on a reasonably current basis
set up on its books, from its earnings, allowances against doubtful Receivables,
advances and investments and all other proper accruals (including without
limitation by reason of enumeration, accruals for premiums, if any, due on
required payments and accruals for depreciation, obsolescence, or amortization
of properties), which should be set aside from such earnings in connection with
its business. All determinations pursuant to this subsection shall be made in
accordance with, or as required by, GAAP consistently applied in the opinion of
such independent public accountant as shall then be regularly engaged by
Borrowers.
4.8. Financial Disclosure.
Each Borrower hereby irrevocably authorizes and directs all accountants and
auditors employed by such Borrower at any time during the Term to exhibit and
deliver to Agent and each Lender copies of any of any Borrower's financial
statements, trial balances or other accounting records of any sort in the
accountant's or auditor's possession, and to disclose to Agent and each Lender
any information such accountants may have concerning such Borrower's financial
status and business operations. Each Borrower hereby authorizes all federal,
state and municipal authorities to furnish to Agent and each Lender copies of
reports or examinations relating to such Borrower, whether made by such Borrower
or otherwise; however, Agent and each Lender will attempt to obtain such
information or materials directly from such Borrower prior to obtaining such
information or materials from such accountants or such authorities.
4.9. Compliance with Laws.
Each Borrower shall comply in all material respects with all acts, rules,
regulations and orders of any legislative, administrative or judicial body or
official applicable to its respective Collateral or any part thereof or to the
operation of such Borrower's business the non-compliance with which could
reasonably be expected to have a Material Adverse Effect. Each Borrower may,
however, contest or dispute any acts, rules, regulations, orders and directions
of those bodies or officials in any reasonable manner, provided that any related
Lien is inchoate or stayed and sufficient reserves are established to the
reasonable satisfaction of Agent to protect Agent's Lien on or security interest
in the Collateral. The Collateral at all times shall be maintained in accordance
with the requirements of all insurance carriers which provide insurance with
respect to the Collateral so that such insurance shall remain in full force and
effect.
4.10. Inspection of Premises.
At all reasonable times Agent and each Lender shall have full access to and
the right to audit, check, inspect and make abstracts and copies from each
Borrower's books, records, audits, correspondence and all other papers relating
to the Collateral and the operation of each Borrower's business. Agent, any
Lender and their agents may enter upon any of each Borrower's premises at any
time during business hours and at any other reasonable time, and from time to
time, for the purpose of inspecting the Collateral and any and all records
pertaining thereto and the operation of such Borrower's business.
39
4.11. Insurance.
Each Borrower shall bear the full risk of any loss of any nature whatsoever
with respect to the Collateral. At each Borrower's own cost and expense in
amounts and with carriers acceptable to Agent, each Borrower shall (a) keep all
its insurable properties and properties in which each Borrower has an interest
insured against the hazards of fire, flood, sprinkler leakage, those hazards
covered by extended coverage insurance and such other hazards, and for such
amounts, as is customary in the case of companies engaged in businesses similar
to such Borrower's including, without limitation, business interruption
insurance; (b) maintain a bond in such amounts as is customary in the case of
companies engaged in businesses similar to such Borrower insuring against
larceny, embezzlement or other criminal misappropriation of insured's officers
and employees who may either singly or jointly with others at any time have
access to the assets or funds of such Borrower either directly or through
authority to draw upon such funds or to direct generally the disposition of such
assets; (c) maintain public and product liability insurance against claims for
personal injury, death or property damage suffered by others; (d) maintain all
such worker's compensation or similar insurance as may be required under the
laws of any state or jurisdiction in which such Borrower is engaged in business;
(e) furnish Agent with (i) copies of all policies and evidence of the
maintenance of such policies by the renewal thereof at least thirty (30) days
before any expiration date, and (ii) appropriate loss payable endorsements in
form and substance satisfactory to Agent, naming Agent as a co-insured and loss
payee as its interests may appear with respect to all insurance coverage
referred to in clauses (a), and (c) above, and providing (A) that all proceeds
thereunder shall be payable to Agent, (B) no such insurance shall be affected by
any act or neglect of the insured or owner of the property described in such
policy, and (C) that such policy and loss payable clauses may not be cancelled,
amended or terminated unless at least thirty (30) days' prior written notice is
given to Agent. In the event of any loss thereunder, the carriers named therein
hereby are directed by Agent and the applicable Borrower to make payment for
such loss to Agent and not to such Borrower and Agent jointly. If any insurance
losses are paid by check, draft or other instrument payable to any Borrower and
Agent jointly, Agent may endorse such Borrower's name thereon and do such other
things as Agent may deem advisable to reduce the same to cash. Agent is hereby
authorized to adjust and compromise claims under insurance coverage referred to
in clauses (a) and (b) above. All loss recoveries received by Agent upon any
such insurance may be applied to the Obligations, in such order as Agent in its
sole discretion shall determine. Any surplus shall be paid by Agent to Borrowers
or applied as may be otherwise required by law. Any deficiency thereon shall be
paid by Borrowers to Agent, on demand. Anything hereinabove to the contrary
notwithstanding, and subject to the fulfillment of the conditions set forth
below, Agent shall remit to Borrowers insurance proceeds received by Agent
during any calendar year under insurance policies procured and maintained by
Borrowers which insure Borrowers' insurable properties to the extent such
insurance proceeds do not exceed $1,000,000 in the aggregate during such
calendar year or $500,000 per occurrence. In the event the amount of insurance
proceeds received by Agent for any occurrence exceeds $500,000, then Agent shall
not be obligated to remit the insurance proceeds to Borrowers unless Borrowers
shall provide Agent with evidence reasonably satisfactory to Agent that the
insurance proceeds will be used by Borrowers to repair, replace or restore the
insured property which was the subject of the insurable loss. In the event
Borrowers have previously received (or, after giving effect to any proposed
remittance by Agent to Borrowers would receive) insurance proceeds which equal
or exceed $1,000,000 in the aggregate during any calendar year, then Agent may,
in its sole
40
discretion, either remit the insurance proceeds to Borrowers upon Borrowers
providing Agent with evidence reasonably satisfactory to Agent that the
insurance proceeds will be used by Borrowers to repair, replace or restore the
insured property which was the subject of the insurable loss, or apply the
proceeds to the Obligations, as aforesaid. The agreement of Agent to remit
insurance proceeds in the manner above provided shall be subject in each
instance to satisfaction of each of the following conditions: (x) No Event of
Default or Default shall then have occurred, and (y) Borrowers shall use such
insurance proceeds to repair, replace or restore the insurable property which
was the subject of the insurable loss and for no other purpose.
4.12. Failure to Pay Insurance.
If any Borrower fails to obtain insurance as hereinabove provided, or to
keep the same in force, Agent, if Agent so elects, may obtain such insurance and
pay the premium therefor on behalf of such Borrower, and charge Borrowers'
Account therefor as a Revolving Advance of a Domestic Rate Loan and such
expenses so paid shall be part of the Obligations.
4.13. Payment of Taxes.
Each Borrower will pay, when due, all taxes, assessments and other Charges
lawfully levied or assessed upon such Borrower or any of the Collateral
including, without limitation, real and personal property taxes, assessments and
charges and all franchise, income, employment, social security benefits,
withholding, and sales taxes, except to the extent that such Borrower is
contesting or disputing such taxes, assessments or Charges in good faith, by
protest, administrative or judicial appeal or similar proceedings all conducted
in an expeditious manner, provided that any related tax lien is stayed and
sufficient reserves are established to the reasonable satisfaction of the Agent
to protect the security interest and Liens on the Collateral in favor of the
Agent for the benefit of the Lenders. If any tax by any governmental authority
is or may be imposed on or as a result of any transaction between any Borrower
and Agent or any Lender which Agent or any Lender may be required to withhold or
pay or if any taxes, assessments, or other Charges remain unpaid after the date
fixed for their payment, or if any claim shall be made which, in Agent's or any
Lender's reasonable opinion, may possibly create a valid Lien on the Collateral,
Agent may without notice to Borrowers pay the taxes, assessments or other
Charges and each Borrower hereby indemnifies and holds Agent and each Lender
harmless in respect thereof. Agent will not pay any taxes, assessments or
Charges to the extent that any Borrower has contested or disputed those taxes,
assessments or Charges in good faith, by expeditious protest, administrative or
judicial appeal or similar proceeding provided that any related tax lien is
stayed and sufficient reserves are established to the reasonable satisfaction of
Agent to protect Agent's security interest in or Lien on the Collateral. The
amount of any payment by Agent under this Section 4.13 shall be charged to
Borrowers' Account as a Revolving Advance of a Domestic Rate Loan and added to
the Obligations and, until Borrowers shall furnish Agent with an indemnity
therefor (or supply Agent with evidence satisfactory to Agent that due provision
for the payment thereof has been made), Agent may hold without interest any
balance standing to Borrowers' credit and Agent shall retain its security
interest in any and all Collateral held by Agent.
41
4.14. Payment of Leasehold Obligations.
Each Borrower shall at all times pay, when and as due, its rental
obligations under all leases under which it is a tenant, and shall otherwise
comply, in all material respects, with all other terms of such leases and keep
them in full force and effect and, at Agent's request will provide evidence of
having done so, except to the extent that such Borrower is contesting or
disputing a rental obligation or other lease term in good faith in an
expeditious manner, provided that sufficient reserves are established to the
reasonable satisfaction of the Agent to protect the security interest and Liens
on the Collateral in favor of the Agent for the benefit of the Lenders.
4.15. Receivables.
(a) Nature of Receivables. Each of the Receivables shall be a bona
fide and valid account representing a bona fide indebtedness incurred by the
Customer therein named, for a fixed sum as set forth in the invoice relating
thereto (provided immaterial or unintentional invoice errors shall not be deemed
to be a breach hereof) with respect to an absolute sale or lease and delivery of
goods upon stated terms of a Borrower, or work, labor or services theretofore
rendered by a Borrower as of the date each Receivable is created. Same shall be
due and owing in accordance with the applicable Borrower's standard terms of
sale without dispute, setoff or counterclaim except as may be stated on the
accounts receivable schedules delivered by Borrowers to Agent.
(b) Solvency of Customers. Each Customer, to the best of each
Borrower's knowledge, as of the date each Receivable is created, is and will be
solvent and able to pay all Receivables on which the Customer is obligated in
full when due or with respect to such Customers of any Borrower who are not
solvent such Borrower has set up on its books and in its financial records bad
debt reserves adequate to cover such Receivables.
(c) Locations of Borrower. Each Borrower's chief executive office is
located at the addresses set forth on Schedule 4.15(c) hereto. Until written
notice is given to Agent by Borrowing Agent of any other office at which any
Borrower keeps its records pertaining to Receivables, all such records shall be
kept at such executive office.
(d) Collection of Receivables. Until any Borrower's authority to do so
is terminated by Agent (which notice Agent may give at any time following the
occurrence of an Event of Default or a Default or when Agent in its sole
discretion deems it to be in Lenders' best interest to do so), each Borrower
will, at such Borrower's sole cost and expense, but on Agent's behalf and for
Agent's account, collect as Agent's property and in trust for Agent all amounts
received on Receivables, and shall not commingle such collections with any
Borrower's funds or use the same except to pay Obligations. Subject to Section
4.15(h) hereof and the terms of the Intercreditor Agreement, each Borrower
shall, upon request, deliver to Agent, or deposit in the Blocked Account, in
original form and on the date of receipt thereof, all checks, drafts, notes,
money orders, acceptances, cash and other evidences of Indebtedness.
(e) Notification of Assignment of Receivables. At any time following
the occurrence of an Event of Default or a Default and subject to the terms of
the Intercreditor Agreement, Agent shall have the right to send notice of the
assignment of, and Agent's security
42
interest in, the Receivables to any and all Customers or any third party holding
or otherwise concerned with any of the Collateral. Following such notice and
subject to the terms of the Intercreditor Agreement, Agent shall have the sole
right to collect the Receivables, take possession of the Collateral, or both.
Agent's actual collection expenses, including, but not limited to, stationery
and postage, telephone and telegraph, secretarial and clerical expenses and the
salaries of any collection personnel used for collection, may be charged to
Borrowers' Account and added to the Obligations.
(f) Power of Agent to Act on Borrowers' Behalf. Subject to the terms
of the Intercreditor Agreement, Agent shall have the right to receive, endorse,
assign and/or deliver in the name of Agent or any Borrower any and all checks,
drafts and other instruments for the payment of money relating to the
Receivables, and each Borrower hereby waives notice of presentment, protest and
non-payment of any instrument so endorsed. Each Borrower hereby constitutes
Agent or Agent's designee as such Borrower's attorney with power (i) to endorse
such Borrower's name upon any notes, acceptances, checks, drafts, money orders
or other evidences of payment or Collateral; (ii) to sign such Borrower's name
on any invoice or xxxx of lading relating to any of the Receivables, drafts
against Customers, assignments and verifications of Receivables; (iii) to send
verifications of Receivables to any Customer; (iv) to sign such Borrower's name
on all financing statements or any other documents or instruments deemed
necessary or appropriate by Agent to preserve, protect, or perfect Agent's
interest in the Collateral and to file same; (v) to demand payment of the
Receivables; (vi) to enforce payment of the Receivables by legal proceedings or
otherwise; (vii) to exercise all of Borrowers' rights and remedies with respect
to the collection of the Receivables and any other Collateral; (viii) to settle,
adjust, compromise, extend or renew the Receivables; (ix) to settle, adjust or
compromise any legal proceedings brought to collect Receivables; (x) to prepare,
file and sign such Borrower's name on a proof of claim in bankruptcy or similar
document against any Customer; (xi) to prepare, file and sign such Borrower's
name on any notice of Lien, assignment or satisfaction of Lien or similar
document in connection with the Receivables; and (xii) to do all other acts and
things necessary to carry out this Agreement. All acts of said attorney or
designee are hereby ratified and approved, and said attorney or designee shall
not be liable for any acts of omission or commission nor for any error of
judgment or mistake of fact or of law, unless done maliciously or with gross
(not mere) negligence; this power being coupled with an interest is irrevocable
while any of the Obligations remain unpaid. Agent shall have the right at any
time following the occurrence of an Event of Default or Default, to change the
address for delivery of mail addressed to any Borrower to such address as Agent
may designate and to receive, open and dispose of all mail addressed to any
Borrower.
(g) No Liability. Neither Agent nor any Lender shall, under any
circumstances or in any event whatsoever, have any liability for any error or
omission or delay of any kind occurring in the settlement, collection or payment
of any of the Receivables or any instrument received in payment thereof, or for
any damage resulting therefrom. Following the occurrence of an Event of Default
or Default Agent may, without notice or consent from any Borrower, xxx upon or
otherwise collect, extend the time of payment of, compromise or settle for cash,
credit or upon any terms any of the Receivables or any other securities,
instruments or insurance applicable thereto and/or release any obligor thereof.
Agent is authorized and empowered to accept following the occurrence of an Event
of Default or Default the return of the
43
goods represented by any of the Receivables, without notice to or consent by any
Borrower, all without discharging or in any way affecting any Borrower's
liability hereunder.
(h) Establishment of a Lockbox Account, Dominion Account. Subject to
the terms of the Intercreditor Agreement, all proceeds of Collateral shall, at
the direction of Agent, be deposited by Borrowers into a lockbox account,
dominion account or such other "blocked account" ("Blocked Accounts") as Agent
may require pursuant to an arrangement with such bank as may be selected by
Borrowers and be acceptable to Agent. Prior to the occurrence of an Event of
Default, proceeds of sales of inventory which are collected at the service
center locations of the Borrowers shall not be required to be deposited into the
Blocked Accounts until each such service has collected $5,000 since the time of
its last deposit to the Blocked Accounts; provided however, in the event that
the aggregate collected funds at all service center locations exceed $500,000 at
any one time, Borrowers shall upon the request of the Agent cause such funds in
excess of $500,000 to be transferred to the Blocked Accounts. Borrowers shall
issue to any such bank, an irrevocable letter of instruction directing said bank
to transfer such funds so deposited to Agent, either to any account maintained
by Agent at said bank or by wire transfer to appropriate account(s) of Agent.
All funds deposited in such Blocked Account shall immediately become the
property of Agent and Borrowers shall obtain the agreement by such bank to waive
any offset rights against the funds so deposited. Neither Agent nor any Lender
assumes any responsibility for such blocked account arrangement, including
without limitation, any claim of accord and satisfaction or release with respect
to deposits accepted by any bank thereunder. Alternatively, Agent may establish
depository accounts ("Depository Accounts") in the name of Agent at a bank or
banks for the deposit of such funds and Borrowers shall deposit all proceeds of
Collateral or cause same to be deposited, in kind, in such Depository Accounts
of Agent in lieu of depositing same to the Blocked Accounts. Notwithstanding the
foregoing, the requirements of this Section 4.15(h) shall not be applicable
until such time after the Closing Date as: (i) Undrawn Availability is less than
$10,000,000 on any date, or (ii) an Event of Default has occurred.
(i) Adjustments. Subsequent the occurrence of an Event of Default, no
Borrower will, without Agent's consent, compromise or adjust any Receivables (or
extend the time for payment thereof) or accept any returns of merchandise or
grant any additional discounts, allowances or credits thereon except for those
compromises, adjustments, returns, discounts, credits and allowances as have
been heretofore customary in the business of such Borrower.
4.16. Inventory.
To the extent Inventory held for sale or lease has been produced by any
Borrower, it has been and will be produced by such Borrower in accordance with
the Federal Fair Labor Standards Act of 1938, as amended, and all rules,
regulations and orders thereunder.
4.17. Maintenance of Equipment.
The Equipment shall be maintained in good operating condition and repair
(reasonable wear and tear excepted) and all necessary replacements of and
repairs thereto shall be made so that the value and operating efficiency of the
Equipment shall be maintained and preserved.
44
Borrower shall use and operate the Equipment in material compliance with all
Applicable Law. Each Borrower shall have the right to sell Equipment to the
extent set forth in Section 4.3 hereof.
4.18. Exculpation of Liability.
Nothing herein contained shall be construed to constitute Agent or any
Lender as any Borrower's agent for any purpose whatsoever, nor shall Agent or
any Lender be responsible or liable for any shortage, discrepancy, damage, loss
or destruction of any part of the Collateral wherever the same may be located
and regardless of the cause thereof. Neither Agent nor any Lender, whether by
anything herein or in any assignment or otherwise, assume any of any Borrower's
obligations under any contract or agreement assigned to Agent or such Lender,
and neither Agent nor any Lender shall be responsible in any way for the
performance by any Borrower of any of the terms and conditions thereof.
4.19. Environmental Matters.
(a) Borrowers shall ensure that the Real Property and Leasehold
Interests are in material compliance with all Environmental Laws and they shall
not place or permit to be placed any Hazardous Substances on any Real Property
or Leasehold Interests except as permitted by applicable law or appropriate
governmental authorities.
(b) LESCO has established and shall maintain its "Environmental Safety
Compliance Policy" to assure and monitor continued compliance with all
applicable Environmental Laws.
(c) Borrowers shall (i) employ in connection with the use of the Real
Property and Leasehold Interests appropriate technology necessary to maintain
material compliance with any applicable Environmental Laws and (ii) dispose of
any and all Hazardous Waste generated at the Real Property and Leasehold
Interests only at facilities, and transport with carriers, that maintain valid
permits under RCRA and any other applicable Environmental Laws. Borrowers shall
use their best efforts to obtain certificates of disposal, such as hazardous
waste manifest receipts, from all treatment, transport, storage or disposal
facilities or operators employed by Borrowers in connection with the transport
or disposal of any Hazardous Waste generated at the Real Property or Leasehold
Interests.
(d) In the event any Borrower obtains, gives or receives notice of any
Release or threat of Release of reportable quantities of any Hazardous
Substances at the Real Property or Leasehold Interests (any such event being
hereinafter referred to as a "Hazardous Discharge") or receives any notice of
violation, request for information or notification that it is potentially
responsible for investigation or cleanup of environmental conditions at the Real
Property or Leasehold Interests, demand letter or complaint, order, citation, or
other written notice with regard to any Hazardous Discharge or violation of
Environmental Laws affecting the Real Property, Leasehold Interests or any
Borrower's interest therein (any of the foregoing is referred to herein as an
"Environmental Complaint") from any Person, including any state agency
responsible in whole or in part for environmental matters in the state in which
the Real Property or Leasehold Interests are located or the United States
Environmental Protection Agency (any such person or entity hereinafter the
"Authority"), then Borrowing Agent shall, within five (5)
45
Business Days, give written notice of same to Agent detailing facts and
circumstances of which any Borrower is aware giving rise to the Hazardous
Discharge or Environmental Complaint. Notwithstanding the foregoing, notice
shall not be required to be given with respect to demands, complaints or notices
of private (non-governmental) parties which are not material. Such information
is to be provided to allow Agent to protect its security interest in the
Collateral located on the Real Property and is not intended to create nor shall
it create any obligation upon Agent or any Lender with respect thereto.
Borrowers shall promptly forward to Agent copies of all documents and
reports concerning a Hazardous Discharge at the Real Property or Leasehold
Interests that any Borrower is required to file under any Environmental Laws.
Such information is to be provided solely to allow Agent to protect Agent's
security interest in the Collateral located on the Real Property and is not
intended to create nor shall it create any obligation upon Agent or any Lender
with respect thereto.
(e) Borrowers shall promptly forward to Agent copies of any written
request for information, notification of potential liability, demand letter
relating to potential responsibility with respect to the investigation or
cleanup of Hazardous Substances at any other site owned, operated or used by any
Borrower to dispose of Hazardous Substances and shall continue to forward copies
of correspondence between any Borrower and the Authority regarding such claims
to Agent until the claim is settled.
(f) Borrowers shall timely respond to any Hazardous Discharge or
Environmental Complaint and take all necessary action in order to safeguard the
health of any Person and to avoid subjecting the Collateral to any Lien. If any
Borrower shall fail to respond promptly to any Hazardous Discharge or
Environmental Complaint or any Borrower shall fail to comply with any of the
requirements of any applicable Environmental Laws in any material respect, Agent
on behalf of Lenders may, but without the obligation to do so, for the sole
purpose of protecting Agent's interest in Collateral: (A) give such notices or
(B) enter onto the Real Property or Leasehold Interests (or authorize third
parties to enter onto such Real Property or Leasehold Interests) and take such
actions as Agent (or such third parties as directed by Agent) reasonably deem
necessary to clean up, remove, mitigate or otherwise deal with any such
Hazardous Discharge or Environmental Complaint. All reasonable costs and
expenses incurred by Agent and Lenders (or such third parties) in the exercise
of any such rights, including any sums paid in connection with any judicial or
administrative investigation or proceedings, fines and penalties, together with
interest thereon from the date expended at the Default Rate for Domestic Rate
Loans constituting Revolving Advances shall be paid upon demand by Borrowers,
and until paid shall be added to and become a part of the Obligations secured by
the Liens created by the terms of this Agreement or any other agreement between
Agent, any Lender and any Borrower.
(g) Upon the written request of Agent in Agent's reasonable
discretion, Borrowers shall provide Agent, at Borrowers' expense, with an
environmental site assessment or environmental audit report prepared by an
environmental consultant acceptable to the Agent in its reasonable discretion,
to assess the existence of a Hazardous Discharge and the potential costs in
connection with abatement, cleanup and removal of any Hazardous Substances found
on, under, at or within the Real Property or Leasehold Interests. Any report or
investigation of such
46
Hazardous Discharge proposed and in a form acceptable to an appropriate
Authority that is charged to oversee the clean-up of such Hazardous Discharge
shall be acceptable to Agent. If such estimates, individually or in the
aggregate, exceed $450,000, Agent shall have the right to require Borrowers to
post a bond, letter of credit or other security reasonably satisfactory to Agent
to secure payment of these costs and expenses.
(h) Borrowers shall defend and indemnify Agent and Lenders and hold
Agent, Lenders and their respective employees, agents, directors and officers
harmless from and against all loss, liability, damage and expense, claims,
costs, fines and penalties, including reasonable attorney's fees, suffered or
incurred by Agent or Lenders under or on account of any Environmental Laws,
including, without limitation, the assertion of any Lien thereunder, with
respect to any Hazardous Discharge, the presence of any Hazardous Substances
affecting the Real Property, whether or not the same originates or emerges from
the Real Property or any contiguous real estate, except to the extent such loss,
liability, damage and expense is attributable to any Hazardous Discharge
resulting from actions on the part of Agent or any Lender. Borrowers'
obligations under this Section 4.19 shall arise upon the discovery of the
presence of any Hazardous Substances at the Real Property, whether or not any
federal, state, or local environmental agency has taken or threatened any action
in connection with the presence of any Hazardous Substances. Borrowers'
obligation and the indemnifications hereunder shall survive the termination of
this Agreement.
(i) For purposes of Section 4.19 and 5.7, all references to Real
Property shall be deemed to include all of Borrowers' right, title and interest
in and to its owned and leased premises.
4.20. Financing Statements.
Except as respects the financing statements filed by Agent and the
financing statements described on Schedule 1.2(p), no financing statement
covering any of the Collateral or any proceeds thereof is on file in any public
office.
V. REPRESENTATIONS AND WARRANTIES.
Each Borrower represents and warrants as follows:
5.1. Authority.
Each Borrower has full power, authority and legal right to enter into this
Agreement and the Other Documents and to perform all its respective Obligations
hereunder and thereunder. This Agreement and the Other Documents constitute the
legal, valid and binding obligation of such Borrower enforceable against such
Borrower in accordance with their terms, except as such enforceability may be
limited by any applicable bankruptcy, insolvency, moratorium or similar laws
affecting creditors' rights generally. The execution, delivery and performance
of this Agreement and of the Other Documents (a) are within such Borrower's
corporate or limited liability company powers, have been duly authorized, are
not in contravention of law or the terms of such Borrower's by-laws, certificate
of incorporation or other applicable documents relating to such Borrower's
formation or to the conduct of such Borrower's business or of any
47
material agreement or undertaking to which such Borrower is a party or by which
such Borrower is bound, and (b) will not conflict with nor result in any breach
in any of the provisions of or constitute a default under or result in the
creation of any Lien except Permitted Encumbrances upon any asset of such
Borrower under the provisions of any agreement, charter document, instrument,
by-law, or other instrument to which such Borrower is a party or by which it or
its property may be bound.
5.2. Formation and Qualification.
(a) Each Borrower is duly incorporated or organized and in good
standing or full force and effect under the laws of the state listed on Schedule
5.2(a) and is qualified to do business and is in good standing or in full force
and effect in the states listed on Schedule 5.2(a) which constitute all states
in which qualification and good standing or full force and effect are necessary
for such Borrower to conduct its business and own its property and where the
failure to so qualify could reasonably be expected to have a Material Adverse
Effect. Each Borrower has delivered to Agent true and complete copies of its
articles of incorporation and by-laws or operating agreement and will promptly
notify Agent of any amendment or changes thereto.
(b) The only Subsidiaries of each Borrower are listed on Schedule
5.2(b).
5.3. Survival of Representations and Warranties.
All representations and warranties of such Borrower contained in this
Agreement and the Other Documents shall be true at the time of such Borrower's
execution of this Agreement and the Other Documents, and shall survive the
execution, delivery and acceptance thereof by the parties thereto and the
closing of the transactions described therein or related thereto.
5.4. Tax Returns.
Each Borrower's federal tax identification number is set forth on Schedule
5.4. Each Borrower has filed all federal, state and local tax returns and other
reports each is required by law to file and has paid all taxes, assessments,
fees and other governmental charges that are due and payable, except to the
extent that such Borrower is contesting or disputing such taxes, assessments or
Charges in good faith, by protest, administrative or judicial appeal or similar
proceedings all conducted in an expeditious manner, provided that any related
tax lien is stayed and sufficient reserves are established to the reasonable
satisfaction of the Agent to protect the security interest and Liens on the
Collateral in favor of the Agent for the benefit of the Lenders. Federal, state
and local income tax returns of each Borrower have been examined and reported
upon by the appropriate taxing authority or closed by applicable statute and
satisfied for all fiscal years prior to and including the fiscal year ending
December 31, 2002. The provision for taxes on the books of each Borrower are
adequate for all years not closed by applicable statutes, and for its current
fiscal year, and no Borrower has any knowledge of any deficiency or additional
assessment in connection therewith not provided for on its books.
5.5. Financial Statements.
(a) The pro forma balance sheet of Borrowers on a consolidated basis,
which is based on financial statements for the seven (7) months ended July,
2005, taking into account
48
pro forma adjustments related to the consummation of the transactions
contemplated under this Agreement and under the TCS Sales Agreement and the TCS
Supply Agreement, (the "Pro Forma Balance Sheet") furnished to Agent on the
Closing Date reflects the consummation of the TCS Sales Agreement and the other
transactions contemplated under this Agreement (the "Transactions") and is
accurate, complete and correct and fairly reflects the financial condition of
Borrowers on a consolidated basis as of the Closing Date after giving effect to
the Transactions, and has been prepared in accordance with GAAP, consistently
applied. The Pro Forma Balance Sheet has been certified as accurate, complete
and correct in all material respects by the Vice President and Chief Financial
Officer of LESCO. All financial statements referred to in this subsection
5.5(a), including the related schedules and notes thereto, have been prepared,
in accordance with GAAP, except as may be disclosed in such financial
statements.
(b) The five year cash flow projections of the Borrowers on a
consolidated basis for the fiscal years ended December 31, 2005, 2006, 2007,
2008 and 2009, and their projected balance sheets as of the Closing Date, copies
of which are annexed hereto as Exhibit 5.5(b) (the "Projections") were prepared
under the supervision of the Chief Financial Officer of LESCO, are based on
underlying assumptions which provide a reasonable basis for the projections
contained therein and reflect Borrowers' judgment based on present circumstances
of the most likely set of conditions and course of action for the projected
period, all the foregoing subject to the forward looking cautionary language and
risk factors set forth in LESCO's periodic statements filed from time to time
with the Securities and Exchange Commission. The cash flow Projections together
with the Pro Forma Balance Sheet, are referred to as the "Pro Forma Financial
Statements".
(c) The consolidated and consolidating balance sheets of the
Borrowers, their Subsidiaries and such other Persons described therein
(including the accounts of all Subsidiaries for the respective periods during
which a subsidiary relationship existed) as of December 31, 2004 and the related
statements of income, changes in stockholder's equity, and changes in cash flow
for the period ended on such date, the consolidated balance sheet and
consolidated statements being accompanied by reports thereon containing opinions
without qualification by independent certified public accountants, copies of
which have been delivered to Agent, have been prepared in accordance with GAAP,
consistently applied (except for changes in application in which such
accountants concur and present fairly the financial position of the Borrowers at
such date and the results of their operations for such period. Since December
31, 2004, there has been no change in the condition, financial or otherwise, of
Borrowers as shown on the consolidated balance sheet as of such date and, other
than in connection with the consummation of the transactions contemplated by the
TCS Sales Agreement, no change in the aggregate value of machinery, equipment
and Real Property owned by Borrowers, except changes in the ordinary course of
business, none of which individually or in the aggregate has been materially
adverse.
5.6. Corporate Name.
Except as set forth on Schedule 5.6, no Borrower (a) has been known by any
other corporate name in the past five years, (b) sells Inventory under any other
name, and (c) has been the surviving corporation of a merger or consolidation or
acquired all or substantially all of the assets of any Person during the
preceding five (5) years.
49
5.7. O.S.H.A. and Environmental Compliance.
(a) Each Borrower has duly complied with, and its facilities,
business, assets, property, Leasehold Interests and Equipment are in compliance
in all material respects with, the provisions of the Federal Occupational Safety
and Health Act (29 U.S.C. Section 651, et seq.) and all applicable Environmental
Laws; except as set forth on Schedule 5.7, there are no material outstanding
citations, notices or orders of non-compliance issued to any Borrower or
relating to its business, assets, property, Leasehold Interests or Equipment
under any such laws, rules or regulations.
(b) Each Borrower has been issued all material required federal, state
and local licenses, certificates or permits relating to all applicable
Environmental Laws.
(c) (i) There are no visible signs of material releases, spills,
discharges, leaks or disposal (collectively referred to as "Releases") of
Hazardous Substances at, upon, under or within any Real Property or Leasehold
Interests; (ii) during its ownership or lease of the Real Property and Leasehold
Interests, no underground storage tanks or polychlorinated biphenyls were placed
on the Real Property and Leasehold Interests, and to the Borrowers' knowledge
there are no underground storage tanks or polychlorinated biphenyls on the Real
Property or Leasehold Interests which were placed on the Real Property of
Leasehold Improvements prior to the Borrower's purchase or lease of Real
Property or Leasehold Interests; (iii) during its ownership or lease of the Real
Property and Leasehold Interests, neither the Real Property nor any Leasehold
Interests has ever been used as a treatment, storage or disposal facility of
Hazardous Waste, and to the Borrowers knowledge, neither the Real Property nor
any Leasehold Interests has ever been used as a treatment, storage or disposal
facility of Hazardous Waste prior to the Borrower's purchase or lease of the
Real Property or Leasehold Interests; and (iv) no Hazardous Substances are
present on the Real Property or Leasehold Interests, excepting (i) such
quantities as are handled in accordance with all applicable manufacturer's
instructions and governmental regulations and in proper storage containers and
as are necessary for the operation of the commercial business of any Borrower,
and (ii) Hazardous Substances placed on the Real Property and Leasehold
Interests prior to the Borrowers' purchase or lease of the Real Property and
Leasehold Interests, of which the Borrower has no knowledge of the presence of
such Hazardous Substances.
5.8. Solvency; No Litigation, Violation, Indebtedness or Default.
(a) Borrowers are solvent, able to pay their debts as they mature,
have capital sufficient to carry on their business and all businesses in which
they are about to engage, and (i) as of the Closing Date, the fair present
saleable value of their assets, calculated on a going concern basis, is in
excess of the amount of their liabilities and (ii) subsequent to the Closing
Date, the fair saleable value of their assets (calculated on a going concern
basis) will be in excess of the amount of their liabilities.
(b) Except as disclosed in Schedule 5.8(b), no Borrower has (i) any
pending or threatened litigation, arbitration, actions or proceedings which
involve the possibility of having a Material Adverse Effect, and (ii) any
liabilities nor indebtedness for borrowed money other than the Obligations.
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(c) No Borrower is in violation of any applicable statute, regulation
or ordinance in any respect which could reasonably be expected to have a
Material Adverse Effect, nor is any Borrower in material violation of any order
of any court, governmental authority or arbitration board or tribunal.
(d) No Borrower nor any member of the Controlled Group maintains or
contributes to any Plan other than those listed on Schedule 5.8(d) hereto.
Except as set forth in Schedule 5.8(d), (i) no Plan has incurred any
"accumulated funding deficiency", as defined in Section 302(a)(2) of ERISA and
Section 412(a) of the Code, whether or not waived, and each Borrower and each
member of the Controlled Group has met all applicable minimum funding
requirements under Section 302 of ERISA in respect of each Plan, (ii) each Plan
which is intended to be a qualified plan under Section 401(a) of the Code as
currently in effect has been determined by the Internal Revenue Service to be
qualified under Section 401(a) of the Code and the trust related thereto is
exempt from federal income tax under Section 501(a) of the Code, (iii) no
Borrower nor any member of the Controlled Group has incurred any liability to
the PBGC other than for the payment of premiums, and there are no premium
payments which have become due which are unpaid, (iv) no Plan has been
terminated by the plan administrator thereof nor by the PBGC, and there is no
occurrence which would cause the PBGC to institute proceedings under Title IV of
ERISA to terminate any Plan, (v) at this time, the current value of the assets
of each Plan exceeds the present value of the accrued benefits and other
liabilities of such Plan and no Borrower nor any member of the Controlled Group
knows of any facts or circumstances which would materially change the value of
such assets and accrued benefits and other liabilities, (vi) no Borrower nor any
member of the Controlled Group has materially breached any of the
responsibilities, obligations or duties imposed on it by ERISA with respect to
any Plan, (vii) no Borrower nor any member of a Controlled Group has incurred
any liability for any excise tax arising under Section 4972 or 4980B of the
Code, and no fact exists which could give rise to any such liability, (viii) no
Borrower nor any member of the Controlled Group nor any fiduciary of, nor any
trustee to, any Plan, has engaged in a "prohibited transaction" described in
Section 406 of the ERISA or Section 4975 of the Code for which an exemption is
not available nor taken any action which would constitute or result in a
Termination Event with respect to any such Plan which is subject to ERISA, (ix)
each Borrower and each member of the Controlled Group has made all contributions
due and payable with respect to each Plan, (x) there exists no event described
in Section 4043(b) of ERISA, for which the thirty (30) day notice period
contained in 29 CFR Section 2615.3 has not been waived, (xi) no Borrower nor any
member of the Controlled Group has any fiduciary responsibility for investments
with respect to any plan existing for the benefit of persons other than
employees or former employees of any Borrower and any member of the Controlled
Group, and (xii) no Borrower nor any member of the Controlled Group has
withdrawn, completely or partially, from any Multiemployer Plan so as to incur
liability under the Multiemployer Pension Plan Amendments Act of 1980.
5.9. Patents, Trademarks, Copyrights and Licenses.
All registered patents, patent applications, trademarks, trademark
applications, service marks, service xxxx applications, copyrights, copyright
and copyright applications and all material design rights, tradenames, assumed
names, trade secrets and licenses owned or utilized by any Borrower are set
forth on Schedule 5.9 are valid and have been duly registered or filed with all
appropriate governmental authorities or are valid by reason of common law rights
and
51
constitute all of the material intellectual property rights which are necessary
for the operation of its business; there is no material objection to or pending
challenge to the validity of any such patent, trademark, copyright, design
right, tradename, trade secret or license and no Borrower is aware of any
grounds for any challenge, except as set forth in Schedule 5.9 hereto. Each
patent, patent application, patent license, trademark, trademark application,
trademark license, service xxxx, service xxxx application, service xxxx license,
design right, copyright, copyright application and copyright license owned or
held by any Borrower and all trade secrets used by any Borrower consist of
original material or property developed by such Borrower or was lawfully
acquired by such Borrower from the proper and lawful owner thereof. Each of such
items has been maintained so as to preserve the value thereof from the date of
creation or acquisition thereof. With respect to all material software used by
any Borrower, such Borrower possesses a license to use or is in possession of
all source and object codes related to each such piece of software or is the
beneficiary of a source code escrow agreement, each such source code escrow
agreement being listed on Schedule 5.9 hereto.
5.10. Licenses and Permits.
Except as set forth in Schedule 5.10, each Borrower (a) is in material
compliance with and (b) has procured and is now in possession of, all material
licenses or permits required by any applicable federal, state or local law or
regulation for the operation of its business in each jurisdiction wherein it is
now conducting or proposes to conduct business and where the failure to procure
such licenses or permits could have a Material Adverse Effect.
5.11. Default of Indebtedness.
No Borrower is in default in the payment of the principal of or interest on
any Indebtedness or under any instrument or agreement under or subject to which
any Indebtedness has been issued and no event has occurred under the provisions
of any such instrument or agreement which with or without the lapse of time or
the giving of notice, or both, constitutes or would constitute an event of
default thereunder.
5.12. No Default.
No Borrower is in default in the payment or performance of any of its
contractual obligations and no Default has occurred.
5.13. No Burdensome Restrictions.
No Borrower is party to any contract or agreement the performance of which
could have a Material Adverse Effect. No Borrower has agreed or consented to
cause or permit in the future (upon the happening of a contingency or otherwise)
any of its property, whether now owned or hereafter acquired, to be subject to a
Lien which is not a Permitted Encumbrance.
5.14. No Labor Disputes.
No Borrower is involved in any labor dispute; there are no strikes or
walkouts or union organization of any Borrower's employees threatened or in
existence and no labor contract is scheduled to expire during the Term other
than as set forth on Schedule 5.14 hereto.
52
5.15. Margin Regulations.
No Borrower is engaged, nor will it engage, principally or as one of its
important activities, in the business of extending credit for the purpose of
"purchasing" or "carrying" any "margin stock" within the respective meanings of
each of the quoted terms under Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect. No part
of the proceeds of any Advance will be used for "purchasing" or "carrying"
"margin stock" as defined in Regulation U of such Board of Governors.
5.16. Investment Company Act.
No Borrower is an "investment company" registered or required to be
registered under the Investment Company Act of 1940, as amended, nor is it
controlled by such a company.
5.17. Disclosure.
No representation or warranty made by any Borrower in this Agreement or in
any financial statement, report, certificate or any other document furnished in
connection herewith or therewith contains any untrue statement of a material
fact or omits to state any material fact necessary to make the statements herein
or therein not misleading. There is no fact known to Borrowers or which
reasonably should be known to Borrowers which Borrowers have not disclosed to
Agent in writing with respect to the transactions contemplated by this Agreement
which could reasonably be expected to have a Material Adverse Effect.
5.18. Intentionally Omitted.
5.19. Swaps.
Except for the Interest Rate Protection Agreement set forth on Schedule
5.19, no Borrower is a party to, nor will it be a party to, any swap agreement
whereby such Borrower has agreed or will agree to swap interest rates or
currencies unless the same provides that damages upon termination following an
event of default thereunder are payable on an unlimited "two-way basis" without
regard to fault on the part of either party.
5.20. Conflicting Agreements.
No provision of any mortgage, indenture, contract, agreement, judgment,
decree or order binding on any Borrower or affecting the Collateral conflicts
with, or requires any Consent which has not already been obtained to, or would
in any way prevent the execution, delivery or performance of, the terms of this
Agreement or the Other Documents.
5.21. Application of Certain Laws and Regulations.
No Borrower is subject to any statute, rule or regulation which regulates
the incurrence of any Indebtedness, including without limitation, statutes or
regulations relative to common or interstate carriers or to the sale of
electricity, gas, steam, water, telephone, telegraph or other public utility
services.
53
5.22. Business and Property of Borrowers.
Upon and after the Closing Date, Borrowers do not propose to engage in any
business other than the manufacture, sale and distribution of consumable goods
and hard goods used on golf courses and lawns and activities necessary to
conduct the foregoing. On the Closing Date, each Borrower will own all the
property and possess all of the material rights and Consents necessary for the
conduct of the business of such Borrower.
5.23. Section 20 Subsidiaries.
Borrowers do not intend to use and shall not use any portion of the
proceeds of the Advances, directly or indirectly, to purchase during the
underwriting period, or for 30 days thereafter, Ineligible Securities being
underwritten by a Section 20 Subsidiary.
5.24. Anti-Terrorism Laws.
(a) General. None of the Borrowers nor or any Affiliate of any
Borrower, is in violation of any Anti-Terrorism Law or engages in or conspires
to engage in any transaction that evades or avoids, or has the purpose of
evading or avoiding, or attempts to violate, any of the prohibitions set forth
in any Anti-Terrorism Law.
(b) Executive Order No. 13224. None of the Borrowers nor any Affiliate
thereof, or any of their respective agents acting or benefiting in any capacity
in connection with the Advances, Letters of Credit or other transactions
hereunder, is any of the following (each a "Blocked Person");
(i) a Person that is listed in the annex to, or is otherwise
subject to the provisions of, the Executive Order No. 13224;
(ii) a Person owned or controlled by, or acting for or on behalf
of, any Person that is listed in the annex to, or is otherwise subject
to the provisions of, the Executive Order No. 13224;
(iii) a Person or entity with which any Lender is prohibited from
dealing or otherwise engaging in any transaction by any Anti-Terrorism
Law;
(iv) a Person or entity that commits, threatens or conspires to
commit or supports "terrorism" as defined in the Executive Order No.
13224;
(v) a Person or entity that is named as a "specially designated
national" on the most current list published by the U.S. Treasury
Department Office of Foreign Asset Control at its official website or
any replacement website or other replacement official publication of
such list; or
(vi) a Person or entity who is affiliated or associated with a
Person or entity listed above.
54
No Borrower nor or any Affiliate thereof, or to the knowledge of any
Borrower or any Affiliate thereof, any of their respective agents acting in any
capacity in connection with the Advances, Letters of Credit or other
transactions hereunder (i) conducts any business or engages in making or
receiving any contribution of funds, goods or services to or for the benefit of
any Blocked Person, or (ii) deals in, or otherwise engages in any transaction
relating to any property or interests in property blocked pursuant to the
Executive Order No. 13224.
VI. AFFIRMATIVE COVENANTS.
Each Borrower (unless the context otherwise indicates that the provision
applies only to LESCO) shall, until payment in full of the Obligations and
termination of this Agreement:
6.1. Payment of Fees.
Pay to Agent on demand all usual and customary fees and expenses which
Agent incurs in connection with (a) the forwarding of Advance proceeds and (b)
the establishment and maintenance of any Blocked Accounts or Depository Accounts
as provided for in Section 4.15(h). Agent may, without making demand, charge
Borrowers' Account for all such fees and expenses.
6.2. Conduct of Business and Maintenance of Existence and Assets.
(a) Conduct continuously and operate actively in all material respects its
business according to good business practices and maintain all of its properties
useful or necessary in its business in good working order and condition
(reasonable wear and tear excepted and except as may be disposed of in
accordance with the terms of this Agreement), including, without limitation, all
licenses, patents, copyrights, design rights, tradenames, trade secrets and
trademarks and take all actions necessary to enforce and protect the validity of
any intellectual property right or other right included in the Collateral; (b)
keep in full force and effect its existence and comply in all material respects
with the laws and regulations governing the conduct of its business where the
failure to do so could reasonably be expected to have a Material Adverse Effect;
and (c) in all material respects make all such reports and pay all such
franchise and other taxes and license fees and do all such other acts and things
as may be lawfully required to maintain its rights, licenses, leases, powers and
franchises under the laws of the United States or any political subdivision
thereof.
6.3. Violations.
Promptly notify Agent in writing of any violation of any law, statute,
regulation or ordinance of any Governmental Body, or of any agency thereof,
applicable to any Borrower which could reasonably be expected to have a Material
Adverse Effect.
6.4. Government Receivables.
Take all steps necessary to protect Agent's interest in the Collateral
under the Federal Assignment of Claims Act or other applicable state or local
statutes or ordinances and deliver to Agent appropriately endorsed, any
instrument or chattel paper connected with any Receivable
55
arising out of contracts between any Borrower and the United States, any state
or any department, agency or instrumentality of any of them.
6.5. Intentionally Omitted.
6.6. Fixed Charge Coverage Ratio.
Commencing with the fiscal quarter ending December 31, 2005, and at the end
of each fiscal quarter thereafter, Borrowers on a consolidated basis shall
maintain a Fixed Charge Coverage Ratio of not less than 1.0 to 1.0, as
calculated at the end of each such fiscal quarter for the four fiscal quarters
then ended.
6.7. [Intentionally Omitted].
6.8. Landlord's Waivers.
Provide to the Agent executed landlord and warehouseman agreements or
reaffirmations of landlord and warehouseman agreements delivered under the
Existing Loan Agreement satisfactory to Agent with respect to all premises
leased by Borrowers at which Inventory is located (and for which Agent has not
received such agreements prior to the Closing Date) within ninety (90) days
after the Closing Date. In the event that any Inventory is located on a premises
for which an acceptable landlord or warehouseman agreement has not been obtained
during such period, the Borrowers hereby acknowledge and agree that the Agent
shall reduce the Formula Amount calculated under Section 2.1(a)(i) by an amount
established by the Agent in its sole reasonable discretion (but in the case of
leased premises, in no event more than three months of rental payments related
to such premises) for which an acceptable landlord or warehouseman agreement has
not been obtained.
6.9. Execution of Supplemental Instruments.
Execute and deliver to Agent from time to time, upon demand, such
supplemental agreements, statements, assignments and transfers, or instructions
or documents relating to the Collateral, and such other instruments as Agent may
request, in order that the full intent of this Agreement may be carried into
effect.
6.10. Payment of Indebtedness, Including Taxes, Etc.
Pay, discharge or otherwise satisfy at or before maturity (subject, where
applicable, to specified grace periods and, in the case of the trade payables,
to normal payment practices) all its obligations and liabilities of whatever
nature, including all taxes, assessments, and governmental charges upon it or
any of its properties, assets, income or profits, except when the failure to do
so could not reasonably be expected to have a Material Adverse Effect or when
the amount or validity thereof is currently being contested in good faith by
appropriate proceedings and each Borrower shall have provided for such reserves
as Agent may reasonably deem proper and necessary, subject at all times to any
applicable subordination arrangement in favor of Lenders.
56
6.11. Standards of Financial Statements.
Cause all financial statements referred to in Sections 9.7, 9.8, 9.9, 9.10,
9.11, 9.12, 9.13 and 9.14 as to which GAAP is applicable to be complete and
correct in all material respects (subject, in the case of interim financial
statements, to normal year-end audit adjustments) and to be prepared in
reasonable detail and in accordance with GAAP applied consistently throughout
the periods reflected therein (except as concurred in by such reporting
accountants or officer, as the case may be, and disclosed therein).
6.12. Inventory Appraisals.
Cause an appraisal of the Inventory of Borrowers to be performed by an
appraisal firm satisfactory to the Agent either prior to subsequent to the
Closing Date and at the expense of the Borrowers. Prior to the occurrence and
continuation of an Event of Default, additional appraisals shall be at the
expense of the Lenders. After the occurrence and during the continuation of an
Event of Default, all such appraisals shall be at the expense of the Borrowers.
6.13. Field Examinations.
Cause examinations of Collateral to be performed by the Agent or, at
Agent's option, a firm satisfactory to the Agent at least once annually. Prior
to the occurrence and continuation of an Event of Default, and so long as after
the Closing Date Undrawn Availability is greater than $10,000,000 at all times,
the Borrowers shall pay the expenses of such field examinations one time per
year. Prior to the occurrence of an Event of Default, field examinations in
excess of one time per year shall be at the expense of the Lenders. After the
occurrence and during the continuation of an Event of Default, or at such time
as Undrawn Availability does not exceed $10,000,000, all such field examinations
shall be at the expense of the Borrowers.
6.14. Anti-Terrorism Laws.
Not nor shall any of their respective Affiliates (i) conduct any business
or engage in any transaction or dealing with any Blocked Person, including the
making or receiving any contribution of funds, goods or services to or for the
benefit of any Blocked Person, (ii) deal in, or otherwise engage in any
transaction relating to, any property or interest in property blocked pursuant
to the Executive Order No. 13224; or (iii) engage in or conspire to engage in
any transaction that evades or avoids, or has the purpose of evading or
avoiding, or attempts to violate, any of the prohibitions set forth in the
Executive Order No. 13224, the USA Patriot Act or any other Anti-Terrorism Law.
Borrowers shall deliver to Lenders any certification or other evidence, from
time to time requested by any Lender in its sole discretion, confirming
Borrowers' compliance with this Section 6.14.
VII. NEGATIVE COVENANTS.
No Borrower shall, until satisfaction in full of the Obligations and
termination of this Agreement:
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7.1. Merger, Consolidation, Acquisition and Sale of Assets.
(a) Enter into any merger, consolidation or other reorganization with
or into any other Person or acquire all or a substantial portion of the assets
or stock of any Person or permit any other Person to consolidate with or merge
with it.
(b) Sell, lease, transfer or otherwise dispose of any of its
properties or assets, except (i) in the ordinary course of its business, (ii) as
provided in Section 4.3, and (iii) the sale, lease and transfer of assets which
are not Collateral for which the aggregate fair market value of such assets does
not exceed $1,000,000.
7.2. Creation of Liens.
Create or suffer to exist any Lien or transfer upon or against any of its
property or assets now owned or hereafter acquired, except Permitted
Encumbrances.
7.3. Guarantees.
Become liable upon the obligations of any Person by assumption, endorsement
or guaranty thereof or otherwise (other than to Lenders) except the endorsement
of checks in the ordinary course of business.
7.4. Investments.
Purchase or acquire obligations or stock of, or any other interest in, any
Person, except (a) obligations issued or guaranteed by the United States of
America or any agency thereof, (b) commercial paper with maturities of not more
than 180 days and a published rating of not less than A-1 or P-1 (or the
equivalent rating), (c) certificates of time deposit and bankers' acceptances
having maturities of not more than 180 days and repurchase agreements backed by
United States government securities of a commercial bank if (i) such bank has a
combined capital and surplus of at least $500,000,000, or (ii) its debt
obligations, or those of a holding company of which it is a Subsidiary, are
rated not less than A (or the equivalent rating) by a nationally recognized
investment rating agency, and (d) U.S. money market funds that invest solely in
obligations issued or guaranteed by the United States of America or an agency
thereof.
7.5. Loans.
Make advances, loans or extensions of credit to any Person, including
without limitation, any Parent, Subsidiary or Affiliate except (i) with respect
to the extension of commercial trade credit in connection with the sale of
Inventory in the ordinary course of its business, and (ii) loans by LSI and
Technologies to LESCO.
7.6. Intentionally Omitted.
7.7. Dividends.
Except for (i) non-cash dividends made in accordance with the terms of any
Borrower's incentive compensation plans, or (ii) dividends made by LSI and
Technologies to LESCO,
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declare, pay or make any dividend or distribution on any shares of the common
stock or preferred stock of any Borrower (other than dividends or distributions
payable in its stock, or split-ups or reclassifications of its stock) or apply
any of its funds, property or assets to the purchase, redemption or other
retirement of any common or preferred stock, or of any options to purchase or
acquire any such shares of common or preferred stock of any Borrower except that
so long as (a) a notice of termination with regard to this Agreement shall not
be outstanding, (b) no Event of Default or Default shall have occurred, and (c)
the purpose for such purchase, redemption or dividend shall be as set forth in
writing to Agent at least ten (10) days prior to such purchase, redemption or
dividend and such purchase, redemption or dividend shall in fact be used for
such purpose:
(A) LESCO shall be permitted to pay cash dividends if after giving effect
to such payment of cash dividends (x) the Borrowers shall have Undrawn
Availability greater than $10,000,000 during the entire period commencing ninety
(90) days prior to such dividend and after giving effect to such dividend, and
(y) there shall not exist any Event of Default or Default, and
(B) LESCO shall be permitted to repurchase or redeem its capital stock if
after giving effect to such repurchase or redemption (x) the Formula Amount
exceeds the outstanding Revolving Advances by an amount greater than $10,000,000
during the entire period commencing ninety (90) days prior to such repurchase or
redemption and after giving effect to such repurchase or redemption, (y) the
Borrowers shall have Undrawn Availability greater than $5,000,000 during the
entire period commencing ninety (90) days prior to such repurchase or redemption
and after giving effect to such repurchase or redemption, and (z) there shall
not exist any Event of Default or Default.
In addition to the foregoing, the aggregate amount of all dividends,
repurchases and redemptions made pursuant to the previous sentence shall not
exceed $30,000,000 in the aggregate.
7.8. Indebtedness.
Create, incur, assume or suffer to exist any Indebtedness (exclusive of
trade debt) except in respect of (i) Indebtedness to Lenders; (ii) Indebtedness
incurred for capital expenditures; (iii) Indebtedness set forth on Schedule 7.8;
(iv) Indebtedness of LESCO to LSI and Technologies, and (v) other unsecured
Indebtedness on terms acceptable to the Agent not in excess of $25,000,000 at
any one time outstanding.
7.9. Nature of Business.
Substantially change the nature of the business in which it is presently
engaged, nor except as specifically permitted hereby purchase or invest,
directly or indirectly, in any assets or property other than in the ordinary
course of business for assets or property which are useful in, necessary for and
are to be used in its business as presently conducted.
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7.10. Transactions with Affiliates.
Directly or indirectly, purchase, acquire or lease any property from, or
sell, transfer or lease any property to, or otherwise deal with, any Affiliate,
except transactions in the ordinary course of business, on an arm's-length basis
on terms no less favorable than terms which would have been obtainable from a
Person other than an Affiliate.
7.11. Leases.
Enter as lessee into any lease arrangement for real or personal property
(unless capitalized) if after giving effect thereto, aggregate annual rental
payments for all leased property in the aggregate for all the Borrowers would
exceed (i) $30,000,000 in the fiscal year ended December 31, 2005; or (iii)
$34,000,000 in the fiscal year ended December 31, 2006 or thereafter.
7.12. Subsidiaries.
(a) Form any Subsidiary.
(b) Enter into any partnership, joint venture or similar arrangement.
7.13. Fiscal Year and Accounting Changes.
Change its fiscal year from January 1 to December 31 or make any change (i)
in accounting treatment and reporting practices except as required by GAAP or
(ii) in tax reporting treatment except as required by law.
7.14. Pledge of Credit.
Now or hereafter pledge Agent's or any Lender's credit on any purchases or
for any purpose whatsoever or use any portion of any Advance in or for any
business other than such Borrower's business as conducted on the date of this
Agreement.
7.15. Amendment of Articles of Incorporation, By-Laws.
Amend, modify or waive any term or material provision of its Articles of
Incorporation or By-Laws unless required by law.
7.16. Compliance with ERISA.
(i) (x) Maintain, or permit any member of the Controlled Group to maintain,
or (y) become obligated to contribute, or permit any member of the Controlled
Group to become obligated to contribute, to any Plan, other than those Plans
disclosed on Schedule 5.8(d), (ii) engage, or permit any member of the
Controlled Group to engage, in any non-exempt "prohibited transaction", as that
term is defined in section 406 of ERISA and Section 4975 of the Code, (iii)
incur, or permit any member of the Controlled Group to incur, any "accumulated
funding deficiency", as that term is defined in Section 302 of ERISA or Section
412 of the Code, (iv) terminate, or permit any member of the Controlled Group to
terminate, any defined benefit
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pension plan where such event could result in any material liability for
underfunding of any Borrower or any member of the Controlled Group or the
imposition of a lien on the property of any Borrower or any member of the
Controlled Group pursuant to Section 4068 of ERISA, (v) assume, or permit any
member of the Controlled Group to assume, any obligation to contribute to any
Multiemployer Plan not disclosed on Schedule 5.8(d), (vi) incur, or permit any
member of the Controlled Group to incur, any withdrawal liability to any
Multiemployer Plan; (vii) fail promptly to notify Agent of the occurrence of any
Termination Event, (viii) fail to comply, or permit a member of the Controlled
Group to fail to comply in all material respects, with the requirements of ERISA
or the Code or other applicable laws in respect of any Plan, (ix) fail to meet,
or permit any member of the Controlled Group to fail to meet, all minimum
funding requirements under ERISA or the Code or postpone or delay or allow any
member of the Controlled Group to postpone or delay any funding requirement with
respect of any Plan.
7.17. Prepayment of Indebtedness.
At any time, directly or indirectly, prepay any Indebtedness (other than to
Lenders), or repurchase, redeem, retire or otherwise acquire any Indebtedness of
any Borrower.
7.18. Other Agreements.
Either (i) enter into any amendment or modification of the Accounts Sales
Agreement or the TCS Sales Agreement, or (ii) enter into any amendment or
modification of the TCS Supply Agreement which would adversely affect the
Collateral or be adverse in a material manner to the interests of the Lenders,
provided that Borrowers may enter into any amendments or modifications as they
expressly relate to the service levels being provided pursuant to the TSA (as
defined in the TCS Supply Agreement).
VIII. CONDITIONS PRECEDENT.
8.1. Conditions to Initial Advances.
The agreement of Lenders to make the initial Advances requested to be made
on the Closing Date is subject to the satisfaction, or waiver by Lenders,
immediately prior to or concurrently with the making of such Advances, of the
following conditions precedent:
(a) Note; Other Documents. Agent shall have received the Notes and the
Other Documents duly executed and delivered by an authorized officer of each
Borrower;
(b) Filings, Registrations and Recordings. Each document (including,
without limitation, any Uniform Commercial Code financing statement) required by
this Agreement, any related agreement or under law or reasonably requested by
the Agent to be filed, registered or recorded in order to create, in favor of
Agent, a perfected security interest in or lien upon the Collateral shall have
been properly filed, registered or recorded in each jurisdiction in which the
filing, registration or recordation thereof is so required or requested, and
Agent shall have received an acknowledgment copy, or other evidence satisfactory
to it, of each such filing, registration or recordation and satisfactory
evidence of the payment of any necessary fee, tax or expense relating thereto;
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(c) Corporate Proceedings of Borrowers. Agent shall have received a
copy of the resolutions in form and substance reasonably satisfactory to Agent,
of the Board of Directors or Board of Managers of each Borrower authorizing (i)
the execution, delivery and performance of this Agreement, the Notes and any
related agreements, (collectively the "Documents") and (ii) the granting by each
Borrower of the security interests in and liens upon the Collateral in each case
certified by the Secretary or an Assistant Secretary of each Borrower as of the
Closing Date; and, such certificate shall state that the resolutions thereby
certified have not been amended, modified, revoked or rescinded as of the date
of such certificate;
(d) Incumbency Certificates of Borrowers. Agent shall have received a
certificate of the Secretary or an Assistant Secretary of each Borrower, dated
the Closing Date, as to the incumbency and signature of the officers of each
Borrower executing this Agreement, any certificate or other documents to be
delivered by it pursuant hereto, together with evidence of the incumbency of
such Secretary or Assistant Secretary;
(e) Intentionally Omitted
(f) Intentionally Omitted
(g) Certificates. Agent shall have received a copy of the Articles or
Certificate of Incorporation or Articles of Organization of each Borrower, and
all amendments thereto, certified by the Secretary of State or other appropriate
official of its jurisdiction of incorporation together with copies of the
By-Laws or Operating Agreement of each Borrower and all agreements of each
Borrower's shareholders certified as accurate and complete by the Secretary of
each Borrower;
(h) Good Standing Certificates. Agent shall have received good
standing certificates for each Borrower dated not more than forty-five (45) days
prior to the Closing Date, issued by the Secretary of State or other appropriate
official of each Borrower's jurisdiction of incorporation and each jurisdiction
where the conduct of each Borrower's business activities or the ownership of its
properties necessitates qualification;
(i) Legal Opinion. Agent shall have received the executed legal
opinion of Xxxxx & Xxxxxxxxx in form and substance satisfactory to Agent which
shall cover such matters incident to the transactions contemplated by this
Agreement, the Notes and related agreements as Agent may reasonably require and
each Borrower hereby authorizes and directs such counsel to deliver such opinion
to Agent and Lenders;
(j) No Litigation. (v) No litigation, investigation or proceeding
before or by any arbitrator or Governmental Body shall be continuing or
threatened against any Borrower or against the officers or directors of any
Borrower (A) in connection with the Other Documents or any of the transactions
contemplated thereby and which, in the reasonable opinion of Agent, is deemed
material or (B) which could, in the reasonable opinion of Agent, have a Material
Adverse Effect; and (vi) no injunction, writ, restraining order or other order
of any nature materially adverse to any Borrower or the conduct of its business
or inconsistent with the due consummation of the Transactions shall have been
issued by any Governmental Body;
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(k) Financial Condition Certificates. Agent shall have received an
executed Financial Condition Certificate in the form of Exhibit 8.1(k).
(l) Collateral Examination. Agent shall have completed Collateral
examinations, the results of which shall be satisfactory in form and substance
to Lenders, of the Receivables and Inventory and all books and records in
connection therewith;
(m) Fees. Agent shall have received all fees payable to Agent and
Lenders on or prior to the Closing Date pursuant to Article III hereof and the
Fee Letter;
(n) Pro Forma Financial Statements. Agent shall have received a copy
of the Pro Forma Financial Statements which shall be satisfactory in all
respects to Lenders;
(o) Payment of Existing Indebtedness. The Indebtedness under the
Existing Loan Agreement shall be indefeasibly paid in full, and the Existing
Loan Agreement shall have been terminated.
(p) Accounts Sales Agreement. The Borrowers shall have delivered to
the Agent such evidence as required by the Agent that the Accounts Sales
Agreement, the GE Program Agreement, and all related documents, and the
Intercreditor Agreement remain in full force and effect after giving effect to
the Transactions, which evidence shall be satisfactory in form and content to
the Agent and the Lenders.
(q) Insurance. Agent shall have received in form and substance
satisfactory to Agent, certified copies of Borrowers' casualty insurance
policies, together with loss payable endorsements on Agent's standard form of
loss payee endorsement naming Agent as loss payee, and certified copies of
Borrowers' liability insurance policies, together with endorsements naming Agent
as a co-insured;
(r) TCS Sales Agreement. The Borrowers shall have delivered to the
Agent true and correct copies of the TCS Sales Agreement, the TCS Supply
Agreement, and all related documents, and the Subordination Agreement in the
form of Exhibit 8.1(r) attached hereto and executed by TCS, which agreements
shall be satisfactory in form and content to the Agent and the Lenders. The
Borrowers shall have effected the closing under the TCS Sales Agreement and
realized the sale proceeds with respect thereto simultaneously with the closing
of the initial Advances on the Closing Date.
(s) Intentionally Omitted.
(t) Payment Instructions. Agent shall have received written
instructions from Borrowers directing the application of proceeds of the initial
Advances made pursuant to this Agreement;
(u) Projections. Agent shall have received the Projections which shall
be acceptable to the Agent and the Lenders;
(v) Consents. Agent shall have received any and all Consents necessary
to permit the effectuation of the transactions contemplated by this Agreement
and the Other
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Documents; and, Agent shall have received such Consents and waivers of such
third parties as might assert claims with respect to the Collateral, as Agent
and its counsel shall deem necessary;
(w) No Adverse Material Change. (i) since December 31, 2002, there
shall not have occurred any event, condition or state of facts which could
reasonably be expected to have a Material Adverse Effect and (ii) no
representations made or information supplied to Agent shall have been proven to
be inaccurate or misleading in any material respect;
(x) Leasehold Agreements. Subject to Section 6.8, Agent shall have
received landlord and warehouseman agreements satisfactory to Agent with respect
to all premises leased by Borrowers at which Inventory is located;
(y) Intentionally Omitted.
(z) Contract Review. Agent shall have reviewed all material contracts
of Borrowers including, without limitation, leases, union contracts, labor
contracts, vendor supply contracts, license agreements and distributorship
agreements and such contracts and agreements shall be satisfactory in all
respects to Agent;
(aa) Closing Certificate. Agent shall have received a closing
certificate signed by the Chief Financial Officer of each Borrower dated as of
the date hereof, stating that (i) all representations and warranties set forth
in this Agreement and the Other Documents are true and correct on and as of such
date, (ii) Borrowers are on such date in compliance with all the terms and
provisions set forth in this Agreement and the Other Documents and (iii) on such
date no Default or Event of Default has occurred or is continuing;
(bb) Borrowing Base. Agent shall have received evidence from Borrowers
that the aggregate amount of Eligible Inventory is sufficient in value and
amount to support Advances in the amount requested by Borrowers on the Closing
Date; and
(cc) Other. All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the Transactions shall be
satisfactory in form and substance to Agent and its counsel.
8.2. Conditions to Each Advance.
The agreement of Lenders to make any Advance requested to be made on any
date (including, without limitation, the initial Advance), is subject to the
satisfaction of the following conditions precedent as of the date such Advance
is made:
(a) Representations and Warranties. Each of the representations and
warranties made by any Borrower in or pursuant to this Agreement and any related
agreements to which it is a party, and each of the representations and
warranties contained in any certificate, document or financial or other
statement furnished at any time under or in connection with this Agreement or
any related agreement shall be true and correct in all material respects on and
as of such date as if made on and as of such date;
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(b) No Default. No Event of Default or Default shall have occurred and
be continuing on such date, or would exist after giving effect to the Advances
requested to be made, on such date; provided, however that Agent, in its sole
discretion, may continue to make Advances notwithstanding the existence of an
Event of Default or Default and that any Advances so made shall not be deemed a
waiver of any such Event of Default or Default; and
(c) Maximum Advances. In the case of any Advances requested to be
made, after giving effect thereto, the aggregate Advances shall not exceed the
maximum amount of Advances permitted under Section 2.1 hereof.
Each request for an Advance by any Borrower hereunder shall constitute a
representation and warranty by each Borrower as of the date of such Advance that
the conditions contained in this subsection shall have been satisfied.
IX. INFORMATION AS TO BORROWER.
Each Borrower shall, until satisfaction in full of the Obligations and the
termination of this Agreement:
9.1. Disclosure of Material Matters.
Immediately upon learning thereof, report to Agent all matters materially
affecting the value, enforceability or collectibility of any portion of the
Collateral including, without limitation, any Borrower's reclamation or
repossession of, or the return to any Borrower of, a material amount of goods or
claims or disputes asserted by any Customer or other obligor.
9.2. Borrowing Base; Schedules.
Deliver to Agent on or before the last day of each month as and for the
prior month (a) Inventory reports, and (b) a Borrowing Base Certificate (which
shall be calculated as of the last day of the prior month and which shall not be
binding upon Agent or restrictive of Agent's rights under this Agreement).
Notwithstanding the foregoing, if on any date after the Closing Date Undrawn
Availability is less than $10,000,000 on any date, then the Inventory reports
shall be delivered to the Agent on a weekly basis on Tuesday of each week
evidencing the Inventory as of the previous Friday. In addition, each Borrower
will deliver to Agent at such intervals as Agent may require: (i) confirmatory
assignment schedules, (ii) copies of Customer's invoices, (iii) evidence of
shipment or delivery, and (iv) such further schedules, documents and/or
information regarding the Collateral as Agent may require including, without
limitation, trial balances and test verifications. Agent shall have the right to
confirm and verify all Receivables by any manner and through any medium it
considers advisable and do whatever it may deem reasonably necessary to protect
its interests hereunder. The items to be provided under this Section are to be
in form satisfactory to Agent and executed by each Borrower and delivered to
Agent from time to time solely for Agent's convenience in maintaining records of
the Collateral, and any Borrower's failure to deliver any of such items to Agent
shall not affect, terminate, modify or otherwise limit Agent's Lien with respect
to the Collateral.
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9.3. Consummation of Bank Products.
Promptly notify Agent prior to effecting any Interest Rate Protection
Agreement or other Bank Product with a Lender or an Affiliate of a Lender other
than PNC Bank and its Affiliates, in order to permit Agent to establish any Bank
Product Reserve deemed proper and necessary by Agent.
9.4. Litigation.
Promptly notify Agent in writing of any litigation, suit or administrative
proceeding affecting any Borrower, whether or not the claim is covered by
insurance, and of any suit or administrative proceeding, which in any such case
could reasonably be expected to have a Material Adverse Effect.
9.5. Material Occurrences.
Promptly notify Agent in writing upon the occurrence of (a) any Event of
Default or Default; (b) any event, development or circumstance whereby any
financial statements or other reports furnished to Agent fail in any material
respect to present fairly, in accordance with GAAP consistently applied, the
financial condition or operating results of any Borrower as of the date of such
statements; (c) any accumulated retirement plan funding deficiency which, if
such deficiency continued for two plan years and was not corrected as provided
in Section 4971 of the Code, could subject any Borrower to a tax imposed by
Section 4971 of the Code; (d) each and every default by any Borrower which might
result in the acceleration of the maturity of any Indebtedness, including the
names and addresses of the holders of such Indebtedness with respect to which
there is a default existing or with respect to which the maturity has been or
could be accelerated, and the amount of such Indebtedness; and (e) any other
development in the business or affairs of any Borrower which could reasonably be
expected to have a Material Adverse Effect; in each case describing the nature
thereof and the action Borrowers propose to take with respect thereto.
9.6. Government Receivables.
Notify Agent promptly if any of its Receivables arise out of contracts
between any Borrower and the United States or any department, agency or
instrumentality thereof.
9.7. Annual Financial Statements.
Furnish Agent within ninety (90) days after the end of each fiscal year of
Borrowers, financial statements of Borrowers on a consolidating and consolidated
basis including, but not limited to, statements of income and stockholders'
equity and cash flow from the beginning of the current fiscal year to the end of
such fiscal year and the balance sheet as at the end of such fiscal year, all
prepared in accordance with GAAP applied on a basis consistent with prior
practices, and in reasonable detail and, with respect to the consolidated
balance sheet and consolidated statements, reported upon without qualification
by an independent certified public accounting firm selected by Borrowers and
reasonably satisfactory to Agent (the "Accountants"). The report of the
Accountants shall be accompanied by a statement of the Accountants certifying
that (i) they have caused the Loan Agreement to be reviewed, (ii) in making the
examination
66
upon which such report was based either no information came to their attention
which to their knowledge constituted an Event of Default or a Default under this
Agreement or any related agreement or, if such information came to their
attention, specifying any such Default or Event of Default, its nature, when it
occurred and whether it is continuing, and such report shall contain or have
appended thereto calculations which set forth Borrowers' compliance with the
requirements or restrictions imposed by Sections 6.6 and 7.11 hereof. In
addition, the reports shall be accompanied by a certificate of each Borrower's
Chief Financial Officer which shall state that, based on an examination
sufficient to permit him to make an informed statement, no Default or Event of
Default exists, or, if such is not the case, specifying such Default or Event of
Default, its nature, when it occurred, whether it is continuing and the steps
being taken by such Borrower with respect to such event, and such certificate
shall have appended thereto calculations which set forth Borrowers' compliance
with the requirements or restrictions imposed by Sections 6.6 and 7.11 hereof,
including, without limitation, a calculation of the Fixed Charge Coverage Ratio.
9.8. Quarterly Financial Statements.
Furnish Agent within 45 days after the end of each fiscal quarter, an
unaudited balance sheet of Borrowers on a consolidated and consolidating basis
and unaudited statements of income and stockholders' equity and cash flow of
Borrowers on a consolidated and consolidating basis reflecting results of
operations from the beginning of the fiscal year to the end of such quarter and
for such quarter, prepared on a basis consistent with prior practices and
complete and correct in all material respects, subject to normal and recurring
year end adjustments that individually and in the aggregate are not material to
the business of Borrowers. The reports shall be accompanied by a certificate
signed by the Chief Financial Officer of each Borrower, which shall state that,
based on an examination sufficient to permit him to make an informed statement,
no Default or Event of Default exists, or, if such is not the case, specifying
such Default or Event of Default, its nature, when it occurred, whether it is
continuing and the steps being taken by Borrowers with respect to such default
and, such certificate shall have appended thereto calculations which set forth
Borrowers' compliance with the requirements or restrictions imposed by Sections
6.6 and 7.11 hereof, including, without limitation, a calculation of the Fixed
Charge Coverage Ratio.
9.9. Intentionally Omitted.
9.10. Other Reports.
Furnish Agent as soon as available, but in any event within ten (10) days
after the issuance thereof, with copies of such financial statements, reports
and returns as each Borrower shall send to its stockholders.
9.11. Additional Information.
Furnish Agent with such additional information as Agent shall reasonably
request in order to enable Agent to determine whether the terms, covenants,
provisions and conditions of this Agreement and the Notes have been complied
with by Borrowers including, without limitation (a) copies of all environmental
audits and reviews, (b) without the necessity of any
67
request by the Agent, at least on a quarterly basis, notice of any Borrower's
opening of any new office or place of business or any Borrower's closing of any
existing office or place of business; provided however, that Borrowers shall
provide Agent with 30 days prior written notice with respect to any proposed
change to the chief executive office of any Borrower, and (c) promptly upon any
Borrower's learning thereof, notice of any labor dispute to which any Borrower
may become a party, any strikes or walkouts relating to any of its plants or
other facilities, and the expiration of any labor contract to which any Borrower
is a party or by which any Borrower is bound.
9.12. Projected Operating Budget.
Furnish Agent, no later than thirty (30) days prior to the beginning of
each Borrower's fiscal years commencing with fiscal year 2006, a month by month
projected operating budget and cash flow of Borrowers on a consolidated basis
for such fiscal year (including an income statement for each month and a balance
sheet as at the end of the last month in each fiscal quarter), such projections
to be accompanied by a certificate signed by the President or Chief Financial
Officer of each Borrower to the effect that such projections have been prepared
on the basis of sound financial planning practice consistent with past budgets
and financial statements and that such officer has no reason to question the
reasonableness of any material assumptions on which such projections were
prepared..
9.13. Variances From Operating Budget.
Upon request of Agent, furnish Agent, concurrently with the delivery of the
financial statements referred to in Section 9.7 and each quarterly report, a
written report summarizing all material variances from budgets submitted by
Borrowers pursuant to Section 9.12 and a discussion and analysis by management
with respect to such variances.
9.14. Notice of Suits, Adverse Events.
Furnish Agent with prompt notice of (i) any lapse or other termination of
any Consent issued to any Borrower by any Governmental Body or any other Person
that is material to the operation of any Borrower's business, (ii) any refusal
by any Governmental Body or any other Person to renew or extend any such
Consent; and (iii) copies of any periodic or special reports filed by any
Borrower with any Governmental Body or Person, if such reports indicate any
material change in the business, operations, affairs or condition of any
Borrower, or if copies thereof are reasonably requested by Lender, and (iv)
copies of any material notices and other communications from any Governmental
Body or Person which specifically relate to any Borrower.
9.15. ERISA Notices and Requests.
Furnish Agent with immediate written notice in the event that (i) any
Borrower or any member of the Controlled Group knows or has reason to know that
a Termination Event has occurred, together with a written statement describing
such Termination Event and the action, if any, which such Borrower or any member
of the Controlled Group has taken, is taking, or proposes to take with respect
thereto and, when known, any action taken or threatened by the Internal Revenue
Service, Department of Labor or PBGC with respect thereto, (ii) any Borrower
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or any member of the Controlled Group knows or has reason to know that a
prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the Code
for which an exemption is not available) has occurred together with a written
statement describing such transaction and the action which such Borrower or any
member of the Controlled Group has taken, is taking or proposes to take with
respect thereto, (iii) a funding waiver request has been filed with respect to
any Plan together with all communications received by any Borrower or any member
of the Controlled Group with respect to such request, (iv) any increase in the
benefits of any existing defined benefit pension plan or the establishment of
any new defined benefit pension plan or the commencement of contributions to any
defined benefit pension plan to which any Borrower or any member of the
Controlled Group was not previously contributing shall occur, (v) any Borrower
or any member of the Controlled Group shall receive from the PBGC a notice of
intention to terminate a Plan or to have a trustee appointed to administer a
Plan, together with copies of each such notice, (vi) any Borrower or any member
of the Controlled Group shall receive any unfavorable determination letter from
the Internal Revenue Service regarding the qualification of a Plan under Section
401(a) of the Code, together with copies of each such letter; (vii) any Borrower
or any member of the Controlled Group shall receive a notice regarding the
imposition of withdrawal liability, together with copies of each such notice;
(viii) any Borrower or any member of the Controlled Group shall fail to make a
required installment or any other required payment under Section 412 of the Code
on or before the due date for such installment or payment; (ix) any Borrower or
any member of the Controlled Group knows that (a) a Multiemployer Plan has been
terminated, (b) the administrator or plan sponsor of a Multiemployer Plan
intends to terminate a Multiemployer Plan, or (c) the PBGC has instituted or
will institute proceedings under Section 4042 of ERISA to terminate a
Multiemployer Plan.
9.16. Additional Documents.
Execute and deliver to Agent, upon reasonable request, such documents and
agreements as Agent may, from time to time, reasonably request to carry out the
purposes, terms or conditions of this Agreement.
X. EVENTS OF DEFAULT.
The occurrence of any one or more of the following events shall constitute
an "Event of Default":
10.1 failure by any Borrower to pay any principal or interest on the
Obligations when due, whether at maturity or by reason of acceleration pursuant
to the terms of this Agreement or by notice of intention to prepay, or by
required prepayment or failure to pay any other liabilities or make any other
payment, fee or charge provided for herein when due or in any Other Document;
10.2 any representation or warranty made or deemed made by any Borrower in
this Agreement or any related agreement or in any certificate, document or
financial or other statement furnished at any time in connection herewith or
therewith shall prove to have been misleading in any material respect on the
date when made or deemed to have been made;
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10.3 failure by any Borrower to (i) furnish financial information when due
or when reasonably requested, or (ii) permit the inspection of its books or
records;
10.4 issuance of a notice of Lien, levy, assessment, injunction or
attachment against a material portion of any Borrower's property, except for
Permitted Encumbrances;
10.5 except as otherwise provided for in Sections 10.1 and 10.3, failure or
neglect of any Borrower to perform, keep or observe any term, provision,
condition, covenant herein contained, or contained in any other agreement or
arrangement, now or hereafter entered into between any Borrower and Agent or any
Lender except for a failure or neglect of any Borrower to perform, keep or
observe any term, provision, condition or covenant, contained in Sections 4.6,
4.7, 4.9, 6.4 or 9.6 hereof which is cured within five (5) days from the
occurrence of such failure or neglect;
10.6 any judgment or judgments are rendered or judgment liens filed against
any Borrower for an aggregate amount in excess of $450,000 which within thirty
(30) days of such rendering or filing is not either satisfied, stayed or
discharged of record;
10.7 any Borrower shall (i) apply for, consent to or suffer the appointment
of, or the taking of possession by, a receiver, custodian, trustee, liquidator
or similar fiduciary of itself or of all or a substantial part of its property,
(ii) make a general assignment for the benefit of creditors, (iii) commence a
voluntary case under any state or federal bankruptcy laws (as now or hereafter
in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vi) acquiesce to, or fail to have dismissed, within thirty (30) days, any
petition filed against it in any involuntary case under such bankruptcy laws, or
(vii) take any action for the purpose of effecting any of the foregoing;
10.8 any Borrower shall admit in writing its inability, or be generally
unable, to pay its debts as they become due or cease operations of its present
business;
10.9 any Affiliate or any Subsidiary of any Borrower shall (i) apply for,
consent to or suffer the appointment of, or the taking of possession by, a
receiver, custodian, trustee, liquidator or similar fiduciary of itself or of
all or a substantial part of its property, (ii) admit in writing its inability,
or be generally unable, to pay its debts as they become due or cease operations
of its present business, (iii) make a general assignment for the benefit of
creditors, (iv) commence a voluntary case under any state or federal bankruptcy
laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or
insolvent, (vi) file a petition seeking to take advantage of any other law
providing for the relief of debtors, (vii) acquiesce to, or fail to have
dismissed, within thirty (30) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (viii) take any action for the
purpose of effecting any of the foregoing;
10.10 any change in any Borrower's condition or affairs (financial or
otherwise) which in Agent's opinion has a Material Adverse Effect;
10.11 any Lien created hereunder or provided for hereby or under any
related agreement which relates to Collateral having a value in excess of
$500,000 individually or in the aggregate for any reason ceases to be or is not
a valid and perfected Lien having a first priority interest;
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10.12 a Termination Event, as such term is defined in the Accounts Sales
Agreement, shall have occurred.
10.13 there shall exist a material default by LESCO of its obligations
under the TCS Supply Agreement which would permit TCS to terminate the TCS
Supply Agreement, or the TCS Supply Agreement shall terminate prior to October
7, 2008, other than as a result of LESCO's termination of such agreement in
accordance with Section 8 thereof.
10.14 a default of the obligations of any Borrower under any other
agreement to which it is a party shall occur which adversely affects its
condition, affairs or prospects (financial or otherwise) which default is not
cured within any applicable grace period;
10.15 Any Borrower shall be required to pay any base rent, operating
expenses, additional rent or real estate taxes under the Strongsville Lease
Agreement for any period after December 31, 2005, and such amounts are not (i)
reimbursed by The Xxxxxxx Company within forty-five (45) days after the
expiration of any cure period for The Xxxxxxx Company to make such payment to
the Borrower, or (ii) paid to the Borrower within sixty (60) days after the
expiration of any cure period for such payment by The Xxxxxxx Company pursuant
to a presentation made upon the bank issuing the letter of credit in favor of
LESCO for the account of The Xxxxxxx Company.
10.16 any Change of Ownership or Change of Control shall occur;
10.17 any material provision of this Agreement shall, for any reason, cease
to be valid and binding on any Borrower, or any Borrower shall so claim in
writing to Agent;
10.18 (i) any Governmental Body shall (A) revoke, terminate, suspend or
adversely modify any material license, permit, patent trademark or tradename of
any Borrower, the continuation of which is material to the continuation of any
Borrower's business, or (B) commence proceedings to suspend, revoke, terminate
or adversely modify any such license, permit, trademark, tradename or patent and
such proceedings shall not be dismissed or discharged within sixty (60) days, or
(c) schedule or conduct a hearing on the renewal of any license, permit,
trademark, tradename or patent necessary for the continuation of any Borrower's
business and the staff of such Governmental Body issues a report recommending
the termination, revocation, suspension or material, adverse modification of
such license, permit, trademark, tradename or patent; (ii) any agreement which
is necessary or material to the operation of any Borrower's business shall be
revoked or terminated and not replaced by a substitute acceptable to Agent
within thirty (30) days after the date of such revocation or termination, and
such revocation or termination and non-replacement would reasonably be expected
to have a Material Adverse Effect;
10.19 any portion of the Collateral shall be seized or taken by a
Governmental Body, or any Borrower or the title and rights of any Borrower or
any Original Owner which is the owner of any material portion of the Collateral
shall have become the subject matter of litigation which might, in the opinion
of Agent, upon final determination, result in impairment or loss of the security
provided by this Agreement or the Other Documents;
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10.20 an event or condition specified in Sections 7.16 or 9.15 hereof shall
occur or exist with respect to any Plan and, as a result of such event or
condition, together with all other such events or conditions, any Borrower or
any member of the Controlled Group shall incur, or in the opinion of Agent be
reasonably likely to incur, a liability to a Plan or the PBGC (or both) which,
in the reasonable judgment of Agent, would have a Material Adverse Effect.
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.
11.1. Rights and Remedies.
Upon the occurrence of (i) an Event of Default pursuant to Section 10.7 all
Obligations shall be immediately due and payable and this Agreement and the
obligation of Lenders to make Advances shall be deemed terminated; and, (ii) any
of the other Events of Default and at any time thereafter (such default not
having previously been cured), at the option of Required Lenders all Obligations
shall be immediately due and payable and Lenders shall have the right to
terminate this Agreement and to terminate the obligation of Lenders to make
Advances and (iii) a filing of a petition against Borrower in any involuntary
case under any state or federal bankruptcy laws, the obligation of Lenders to
make Advances hereunder shall be terminated other than as may be required by an
appropriate order of the bankruptcy court having jurisdiction over any Borrower.
Upon the occurrence of any Event of Default, Agent shall have the right to
exercise any and all other rights and remedies provided for herein, under the
Uniform Commercial Code and at law or equity generally, including, without
limitation, the right to foreclose the security interests granted herein and to
realize upon any Collateral by any available judicial procedure and/or to take
possession of and sell any or all of the Collateral with or without judicial
process. Agent may enter any of any Borrower's premises or other premises
without legal process and without incurring liability to any Borrower therefor,
and Agent may thereupon, or at any time thereafter, in its discretion without
notice or demand, take the Collateral and remove the same to such place as Agent
may deem advisable and Agent may require Borrowers to make the Collateral
available to Agent at a convenient place. With or without having the Collateral
at the time or place of sale, Agent may sell the Collateral, or any part
thereof, at public or private sale, at any time or place, in one or more sales,
at such price or prices, and upon such terms, either for cash, credit or future
delivery, as Agent may elect. Except as to that part of the Collateral which is
perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market, Agent shall give Borrowers reasonable notification
of such sale or sales, it being agreed that in all events written notice mailed
to Borrowers at least five (5) days prior to such sale or sales is reasonable
notification. At any public sale Agent or any Lender may bid for and become the
purchaser, and Agent, any Lender or any other purchaser at any such sale
thereafter shall hold the Collateral sold absolutely free from any claim or
right of whatsoever kind, including any equity of redemption and such right and
equity are hereby expressly waived and released by each Borrower. In connection
with the exercise of the foregoing remedies, Agent is granted permission to use
all of each Borrower's trademarks, trade styles, trade names, patents, patent
applications, licenses, franchises and other proprietary rights which are used
in connection with (a) Inventory for the purpose of disposing of such Inventory
and (b) Equipment for the purpose of completing the manufacture of unfinished
goods. The proceeds realized from the sale of any Collateral shall be applied as
follows: first, to the reasonable costs, expenses and attorneys' fees and
expenses incurred by Agent for collection
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and for acquisition, completion, protection, removal, storage, sale and delivery
of the Collateral; second, to interest due upon any of the Obligations and any
fees payable under this Agreement; and, third, to the principal of the
Obligations. If any deficiency shall arise, Borrowers shall remain liable to
Agent and Lenders therefor.
11.2. Agent's Discretion.
Agent shall have the right in its sole discretion to determine which
rights, Liens, security interests or remedies Agent may at any time pursue,
relinquish, subordinate, or modify or to take any other action with respect
thereto and such determination will not in any way modify or affect any of
Agent's or Lenders' rights hereunder.
11.3. Setoff.
In addition to any other rights which Agent or any Lender may have under
applicable law, upon the occurrence of an Event of Default hereunder, Agent and
such Lender shall have a right to apply any Borrower's property held by Agent
and such Lender to reduce the Obligations.
11.4. Rights and Remedies not Exclusive.
The enumeration of the foregoing rights and remedies is not intended to be
exhaustive and the exercise of any right or remedy shall not preclude the
exercise of any other right or remedies provided for herein or otherwise
provided by law, all of which shall be cumulative and not alternative.
11.5. Allocation of Payments After Event of Default.
Notwithstanding any other provisions of this Agreement to the contrary,
after the occurrence and during the continuance of an Event of Default, all
amounts collected or received by the Agent on account of the Obligations or any
other amounts outstanding under any of the Other Documents or in respect of the
Collateral may, at Agent's discretion, be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and expenses
(including without limitation, reasonable attorneys' fees) of the Agent in
connection with enforcing the rights of the Lenders under this Agreement and the
Other Documents and any protective advances made by the Agent with respect to
the Collateral under or pursuant to the terms of this Document;
SECOND, to payment of any fees owed to the Agent;
THIRD, to the payment of all reasonable out-of-pocket costs and expenses
(including without limitation, reasonable attorneys' fees) of each of the
Lenders in connection with enforcing its rights under this Agreement and the
Other Documents or otherwise with respect to the Obligations owing to such
Lender;
FOURTH, to the payment of all of the Obligations consisting of accrued fees
and interest;
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FIFTH, to the payment of the outstanding principal amount of the
Obligations (including the payment or cash collateralization of the outstanding
Letters of Credit);
SIXTH, to all other Obligations and other obligations which shall have
become due and payable under the Other Documents or otherwise and not repaid
pursuant to clauses "FIRST" through "FIFTH" above;
SEVENTH, to the payment of the surplus, if any, to whoever may be lawfully
entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (ii) each of the Lenders shall receive (so long as it is
not a Defaulting Lender) an amount equal to its pro rata share (based on the
proportion that the then outstanding Advances held by such Lender bears to the
aggregate then outstanding Advances) of amounts available to be applied pursuant
to clauses "THIRD", "FOURTH", "FIFTH" and "SIXTH" above; and (iii) to the extent
that any amounts available for distribution pursuant to clause "FIFTH" above are
attributable to the issued but undrawn amount of outstanding Letters of Credit,
such amounts shall be held by the Agent in a cash collateral account and applied
(A) first, to reimburse the Issuer from time to time for any drawings under such
Letters of Credit and (B) then, following the expiration of all Letters of
Credit, to all other obligations of the types described in clauses "FIFTH" and
"SIXTH" above in the manner provided in this Section 11.5.
XII. WAIVERS AND JUDICIAL PROCEEDINGS.
12.1. Waiver of Notice.
Each Borrower hereby waives notice of non-payment of any of the
Receivables, demand, presentment, protest and notice thereof with respect to any
and all instruments, notice of acceptance hereof, notice of loans or advances
made, credit extended, Collateral received or delivered, or any other action
taken in reliance hereon, and all other demands and notices of any description,
except such as are expressly provided for herein.
12.2. Delay.
No delay or omission on Agent's or any Lender's part in exercising any
right, remedy or option shall operate as a waiver of such or any other right,
remedy or option or of any default.
12.3. Jury Waiver.
EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER INSTRUMENT,
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DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND
EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
XIII. EFFECTIVE DATE AND TERMINATION.
13.1. Term.
This Agreement, which shall inure to the benefit of and shall be binding
upon the respective successors and permitted assigns of each Borrower, Agent and
each Lender, shall become effective on the date hereof and shall continue in
full force and effect until October October 7, 2010 (the "Term") unless sooner
terminated as herein provided. Borrowers may terminate this Agreement at any
time upon thirty (30) days' prior written notice upon payment in full of the
Obligations.
13.2. Termination.
The termination of the Agreement shall not affect any Borrower's, Agent's
or any Lender's rights, or any of the Obligations having their inception prior
to the effective date of such termination, and the provisions hereof shall
continue to be fully operative until all transactions entered into, rights or
interests created or Obligations have been fully disposed of, concluded or
liquidated. The security interests, Liens and rights granted to Agent and
Lenders hereunder and the financing statements filed hereunder shall continue in
full force and effect, notwithstanding the termination of this Agreement or the
fact that Borrowers' Account may from time to time be temporarily in a zero or
credit position, until all of the Obligations of each Borrower have been paid or
performed in full after the termination of this Agreement or each Borrower has
furnished Agent and Lenders with an indemnification reasonably satisfactory to
Agent and Lenders with respect thereto. Accordingly, each Borrower waives any
rights which it may have under the Uniform Commercial Code to demand the filing
of termination statements with respect to the Collateral, and Agent shall not be
required to send such termination statements to each Borrower, or to file them
with any filing office, unless and until this Agreement shall have been
terminated in accordance with its terms and all Obligations paid in full in
immediately available funds. All representations, warranties, covenants, waivers
and agreements contained herein shall survive termination hereof until all
Obligations are paid or performed in full.
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XIV. REGARDING AGENT.
14.1. Appointment, Intercreditor Agreement.
Each Lender hereby designates PNC to act as Agent for such Lender under
this Agreement and the Other Documents. Each Lender hereby irrevocably
authorizes Agent to take such action on its behalf under the provisions of this
Agreement and the Other Documents and to exercise such powers and to perform
such duties hereunder and thereunder as are specifically delegated to or
required of Agent by the terms hereof and thereof and such other powers as are
reasonably incidental thereto and Agent shall hold all Collateral, payments of
principal and interest, fees (except the fees set forth in the Fee Letter and
Section 3.4), charges and collections (without giving effect to any collection
days) received pursuant to this Agreement, for the ratable benefit of Lenders.
Agent may perform any of its duties hereunder by or through its agents or
employees. Without limiting the generality of the foregoing, each of the Lenders
hereby authorizes and directs Agent to execute and deliver the Intercreditor
Agreement and the Subordination Agreement, and each Lender acknowledges and
agrees that the Intercreditor Agreement and the Subordination Agreement shall be
binding on each such Lender. As to any matters not expressly provided for by
this Agreement, the Intercreditor Agreement or the Subordination Agreement
(including without limitation, collection of the Note) Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding; provided, however, that Agent shall not be
required to take any action which exposes Agent to liability or which is
contrary to this Agreement or the Other Documents or applicable law unless Agent
is furnished with an indemnification reasonably satisfactory to Agent with
respect thereto.
14.2. Nature of Duties.
Agent shall have no duties or responsibilities except those expressly set
forth in this Agreement and the Other Documents. Neither Agent nor any of its
officers, directors, employees or agents shall be (i) liable for any action
taken or omitted by them as such hereunder or in connection herewith, unless
caused by their gross (not mere) negligence or willful misconduct, or (ii)
responsible in any manner for any recitals, statements, representations or
warranties made by any Borrower or any officer thereof contained in this
Agreement, or in any of the Other Documents 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 of the Other Documents or for
the value, validity, effectiveness, genuineness, due execution, enforceability
or sufficiency of this Agreement, or any of the Other Documents or for any
failure of any Borrower to perform its obligations hereunder. Agent shall not 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 of the Other Documents, or to inspect the properties,
books or records of any Borrower. The duties of Agent as respects the Advances
to Borrowers shall be mechanical and administrative in nature; Agent shall not
have by reason of this Agreement a fiduciary relationship in respect of any
Lender; and nothing in this Agreement, expressed or implied, is intended to or
shall be so construed as to impose upon Agent any obligations in respect of this
Agreement except as expressly set forth herein.
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14.3. Lack of Reliance on Agent and Resignation.
Independently and without reliance upon Agent or any other Lender, each
Lender has made and shall continue to make (i) its own independent investigation
of the financial condition and affairs of each Borrower in connection with the
making and the continuance of the Advances hereunder and the taking or not
taking of any action in connection herewith, and (ii) its own appraisal of the
creditworthiness of each Borrower. Agent shall have no duty or responsibility,
either initially or on a continuing basis, to provide any Lender with any credit
or other information with respect thereto, whether coming into its possession
before making of the Advances or at any time or times thereafter except as shall
be provided by any Borrower pursuant to the terms hereof. Agent shall not be
responsible to any Lender for any recitals, statements, information,
representations or warranties herein or in any agreement, document, certificate
or a statement delivered in connection with or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of this
Agreement or any Other Document, or of the financial condition of any Borrower,
or be required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of this Agreement, the
Note, the Other Documents or the financial condition of any Borrower, or the
existence of any Event of Default or any Default.
Agent may resign on sixty (60) days' written notice to each of Lenders and
Borrowing Agent and upon such resignation, the Required Lenders will promptly
designate a successor Agent reasonably satisfactory to Borrowers.
Any such successor Agent shall succeed to the rights, powers and duties of
Agent, and the term "Agent" shall mean such successor agent effective upon its
appointment, and the former Agent's rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent. After any Agent's resignation as Agent, the provisions of this Article
XIV shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement.
14.4. Certain Rights of Agent.
If Agent shall request instructions from Lenders with respect to any act or
action (including failure to act) in connection with this Agreement or any Other
Document, Agent shall be entitled to refrain from such act or taking such action
unless and until Agent shall have received instructions from the Required
Lenders; and Agent shall not incur liability to any Person by reason of so
refraining. Without limiting the foregoing, Lenders shall not have any right of
action whatsoever against Agent as a result of its acting or refraining from
acting hereunder in accordance with the instructions of the Required Lenders.
14.5. Reliance.
Agent shall be entitled to rely, and shall be fully protected in relying,
upon any note, writing, resolution, notice, statement, certificate, telex,
teletype or telecopier message, cablegram, order or other document or telephone
message believed by it to be genuine and correct and to have been signed, sent
or made by the proper person or entity, and, with respect to all legal matters
pertaining to this Agreement and the Other Documents and its duties hereunder,
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upon advice of counsel selected by it. Agent may employ agents and
attorneys-in-fact and shall not be liable for the default or misconduct of any
such agents or attorneys-in-fact selected by Agent with reasonable care other
than for Agent's gross negligence or willful misconduct.
14.6. Notice of Default.
Agent shall not be deemed to have knowledge or notice of the occurrence of
any Default or Event of Default hereunder or under the Other Documents, unless
Agent has received notice from a Lender or a Borrower referring to this
Agreement or the Other Documents, describing such Default or Event of Default
and stating that such notice is a "notice of default". In the event that Agent
receives such a notice, Agent shall give notice thereof to Lenders. Agent shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders; provided, that, unless and until
Agent shall have received such directions, 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 in the best interests of
Lenders.
14.7. Indemnification.
To the extent Agent is not reimbursed and indemnified by Borrowers, each
Lender will reimburse and indemnify Agent in proportion to its respective
portion of the Advances (or, if no Advances are outstanding, according to its
Commitment Percentage), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against Agent in performing its duties hereunder, or in any way
relating to or arising out of this Agreement or any Other Document; provided
that, Lenders shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from Agent's gross (not mere) negligence or
willful misconduct.
14.8. Agent in its Individual Capacity.
With respect to the obligation of Agent to lend under this Agreement, the
Advances made by it shall have the same rights and powers hereunder as any other
Lender and as if it were not performing the duties as Agent specified herein;
and the term "Lender" or any similar term shall, unless the context clearly
otherwise indicates, include Agent in its individual capacity as a Lender. Agent
may engage in business with any Borrower as if it were not performing the duties
specified herein, and may accept fees and other consideration from any Borrower
for services in connection with this Agreement or otherwise without having to
account for the same to Lenders.
14.9. Delivery of Documents.
To the extent Agent receives financial statements required under Sections
9.7, 9.8, 9.9, 9.10, 9.12, 9.13 and the Borrowing Base Certificate from any
Borrower pursuant to the terms of this Agreement, Agent will promptly furnish
such documents and information to Lenders.
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14.10. Borrowers' Undertaking to Agent.
Without prejudice to their respective obligations to Lenders under the
other provisions of this Agreement, each Borrower hereby undertakes with Agent
to pay to Agent from time to time on demand all amounts from time to time due
and payable by it for the account of Agent or Lenders or any of them pursuant to
this Agreement to the extent not already paid. Any payment made pursuant to any
such demand shall pro tanto satisfy the relevant Borrower's obligations to make
payments for the account of Lenders or the relevant one or more of them pursuant
to this Agreement.
14.11. No Reliance on Agent's Customer Identification Program.
Each Lender acknowledges and agrees that neither such Lender, nor any of
its Affiliates, participants or assignees, may rely on Agent to carry out such
Lender's, Affiliate's, participant's or assignee's customer identification
program, or other obligations required or imposed under or pursuant to the USA
Patriot Act or the regulations thereunder, including the regulations contained
in 31 CFR 103.121 (as hereafter amended or replaced, the "CIP Regulations"), or
any other Anti-Terrorism Law, including any program involving any of the
following items relating to or in connection with any of the Borrowers, their
Affiliates or their agents, this Agreement or the Other Documents or the
transactions hereunder or contemplated hereby: (1) any identity verification
procedures, (2) any recording keeping, (3) comparisons with government lists,
(4) customer notices or (5) other procedures required under the CIP Regulations
or such other laws.
XV. BORROWING AGENCY.
15.1. Borrowing Agency Provisions.
(a) Each Borrower hereby irrevocably designates Borrowing Agent to be
its attorney and agent and in such capacity to borrow, sign and endorse notes,
and execute and deliver all instruments, documents, writings and further
assurances now or hereafter required hereunder, on behalf of such Borrower or
Borrowers, and hereby authorizes Agent to pay over or credit all loan proceeds
hereunder in accordance with the request of Borrowing Agent.
(b) The handling of this credit facility as a co-borrowing facility
with a borrowing agent in the manner set forth in this Agreement is solely as an
accommodation to Borrowers and at their request. Neither Agent nor any Lender
shall incur liability to Borrowers as a result thereof. To induce Agent and
Lenders to do so and in consideration thereof, each Borrower hereby indemnifies
Agent and each Lender and holds Agent and each Lender harmless from and against
any and all liabilities, expenses, losses, damages and claims of damage or
injury asserted against Agent or any Lender by any Person arising from or
incurred by reason of the handling of the financing arrangements of Borrowers as
provided herein, reliance by Agent or any Lender on any request or instruction
from Borrowing Agent or any other action taken by Agent or any Lender with
respect to this Section 15.1 except due to willful misconduct or gross (not
mere) negligence by the indemnified party.
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(c) All Obligations shall be joint and several, and each Borrower
shall make payment upon the maturity of the Obligations by acceleration or
otherwise, and such obligation and liability on the part of each Borrower shall
in no way be affected by any extensions, renewals and forbearance granted to
Agent or any Lender to any Borrower, failure of Agent or any Lender to give any
Borrower notice of borrowing or any other notice, any failure of Agent or any
Lender to pursue or preserve its rights against any Borrower, the release by
Agent or any Lender of any Collateral now or thereafter acquired from any
Borrower, and such agreement by each Borrower to pay upon any notice issued
pursuant thereto is unconditional and unaffected by prior recourse by Agent or
any Lender to the other Borrowers or any Collateral for such Borrower's
Obligations or the lack thereof. Each Borrower waives all suretyship defenses.
15.2. Waiver of Subrogation.
Each Borrower expressly waives any and all rights of subrogation,
reimbursement, indemnity, exoneration, contribution of any other claim which
such Borrower may now or hereafter have against the other Borrowers or other
Person directly or contingently liable for the Obligations hereunder, or against
or with respect to the other Borrowers' property (including, without limitation,
any property which is Collateral for the Obligations), arising from the
existence or performance of this Agreement, until termination of this Agreement
and repayment in full of the Obligations.
XVI. MISCELLANEOUS.
16.1. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Ohio. Any judicial proceeding brought by or against any
Borrower with respect to any of the Obligations, this Agreement or any related
agreement may be brought in any court of competent jurisdiction in the State of
Ohio, United States of America, and, by execution and delivery of this
Agreement, each Borrower accepts for itself and in connection with its
properties, generally and unconditionally, the non-exclusive jurisdiction of the
aforesaid courts, and irrevocably agrees to be bound by any judgment rendered
thereby in connection with this Agreement. Each Borrower hereby waives personal
service of any and all process upon it and consents that all such service of
process may be made by registered mail (return receipt requested) directed to
Borrowing Agent at its address set forth in Section 16.6 and service so made
shall be deemed completed five (5) days after the same shall have been so
deposited in the mails of the United States of America, or, at the Agent's
and/or any Lender's option, by personal service upon Borrowing Agent which each
Borrower irrevocably appoints as such Borrower's Agent for the purpose of
accepting service within the State of Ohio. Nothing herein shall affect the
right to serve process in any manner permitted by law or shall limit the right
of Agent or any Lender to bring proceedings against any Borrower in the courts
of any other jurisdiction. Each Borrower waives any objection to jurisdiction
and venue of any action instituted hereunder and shall not assert any defense
based on lack of jurisdiction or venue or based upon forum non conveniens. Any
judicial proceeding by any Borrower against Agent or any Lender involving,
directly or indirectly, any matter or claim in any way arising out of, related
to or connected with this Agreement or any related agreement, shall be brought
only in a federal or state court located in the County of Cuyahoga, State of
Ohio.
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16.2. Entire Understanding.
(a) This Agreement and the documents executed concurrently herewith
contain the entire understanding between each Borrower, Agent and each Lender
and supersedes all prior agreements and understandings, if any, relating to the
subject matter hereof. Any promises, representations, warranties or guarantees
not herein contained and hereinafter made shall have no force and effect unless
in writing, signed by each Borrower's, Agent's and each Lender's respective
officers. Neither this Agreement nor any portion or provisions hereof may be
changed, modified, amended, waived, supplemented, discharged, cancelled or
terminated orally or by any course of dealing, or in any manner other than by an
agreement in writing, signed by the party to be charged. Each Borrower
acknowledges that it has been advised by counsel in connection with the
execution of this Agreement and Other Documents and is not relying upon oral
representations or statements inconsistent with the terms and provisions of this
Agreement.
(b) The Required Lenders, Agent with the consent in writing of the
Required Lenders, and Borrowers may, subject to the provisions of this Section
16.2 (b), from time to time enter into written supplemental agreements to this
Agreement or the Other Documents executed by Borrowers, for the purpose of
adding or deleting any provisions or otherwise changing, varying or waiving in
any manner the rights of Lenders, Agent or Borrowers thereunder or the
conditions, provisions or terms thereof of waiving any Event of Default
thereunder, but only to the extent specified in such written agreements;
provided, however, that no such supplemental agreement shall, without the
consent of all Lenders:
(i) increase the Maximum Revolving Advance Amount or the Commitment
Percentage or maximum dollar commitment of any Lender.
(ii) extend the maturity of any Note or the due date for any amount
payable hereunder, or decrease the rate of interest or reduce any fee
payable by Borrowers to Lenders pursuant to this Agreement.
(iii) alter the definition of the term Required Lenders or alter,
amend or modify this Section 16.2(b).
(iv) release any Collateral during any calendar year (other than in
accordance with the provisions of this Agreement) having an aggregate value
in excess of $1,000,000, or, except in mergers, consolidations, sales and
other dispositions of any Borrower permitted under Section 7.1 hereof,
release such Borrower from its Obligations hereunder.
(v) change the rights and duties of Agent.
(vi) permit any Revolving Advance to be made if after giving effect
thereto the total of Revolving Advances outstanding hereunder would exceed
the Formula Amount for more than thirty (30) consecutive Business Days or
exceed one hundred and five percent (105%) of the Formula Amount.
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(vii) increase the Inventory Advance Rate or the Cash on Deposit
Advance Rate.
Any such supplemental agreement shall apply equally to each Lender and shall be
binding upon Borrowers, Lenders and Agent and all future holders of the
Obligations. In the case of any waiver, Borrowers, Agent and Lenders shall be
restored to their former positions and rights, and any Event of Default waived
shall be deemed to be cured and not continuing, but no waiver of a specific
Event of Default shall extend to any subsequent Event of Default (whether or not
the subsequent Event of Default is the same as the Event of Default which was
waived), or impair any right consequent thereon.
In the event that Agent requests the consent of a Lender pursuant to this
Section 16.2 and such Lender shall not respond or reply to Agent in writing
within ten (10) days of delivery of such request, such Lender shall be deemed
not to have consented to the matter that was the subject of the request. In the
event that Agent requests the consent of a Lender pursuant to this Section 16.2
and such consent is denied, then PNC may, at its option, require such Lender to
assign its interest in the Advances to PNC or to another Lender or to any other
Person designated by the Agent (the "Designated Lender"), for a price equal to
the then outstanding principal amount thereof plus accrued and unpaid interest,
fees and other amounts due such Lender hereunder, which interest, fees and other
amounts shall be paid when collected from Borrowers. In the event PNC elects to
require any Lender to assign its interest to PNC or to the Designated Lender,
PNC will so notify such Lender in writing within forty five (45) days following
such Lender's denial, and such Lender will assign its interest to PNC or the
Designated Lender no later than five (5) days following receipt of such notice
pursuant to a Commitment Transfer Supplement executed by such Lender, PNC or the
Designated Lender, as appropriate, and Agent.
Notwithstanding (a) the existence of a Default or an Event of Default, (b)
that any of the other applicable conditions precedent set forth in Section 8.2
hereof have not been satisfied or (c) any other provision of this Loan
Agreement, Agent may at its discretion and without the consent of the Required
Lenders, voluntarily permit the outstanding Revolving Advances at any time to
exceed the Formula Amount by up to five percent (5%) of the Formula Amount for
up to thirty (30) consecutive Business Days. For purposes of the preceding
sentence, the discretion granted to Agent hereunder shall not preclude
involuntary overadvances that may result from time to time due to the fact that
the Formula Amount was unintentionally exceeded for any reason, including, but
not limited to, Collateral previously deemed to be "Eligible Inventory" becomes
ineligible, collections of Receivables applied to reduce outstanding Revolving
Advances are thereafter returned for insufficient funds or overadvances are made
to protect or preserve the Collateral.
In addition to (and not in substitution of) the discretionary Revolving
Advances permitted above in this Section 16.2, the Agent is hereby authorized by
the Borrowers and the Lenders, from time to time in the Agent's sole discretion,
(A) after the occurrence and during the continuation of a Default or an Event of
Default, or (b) at any time that any of the other applicable conditions
precedent set forth in Section 8.2 hereof have not been satisfied, to make
Revolving Advances to the Borrowers on behalf of the Lenders which the Agent, in
its reasonable business judgment, deems necessary or desirable (a) to preserve
or protect the Collateral, or any portion thereof, (b) to enhance the likelihood
of, or maximize the amount of,
82
repayment of the Advances and other Obligations, or (iii) to pay any other
amount chargeable to the Borrowers pursuant to the terms of this Agreement;
provided, that at any time after giving effect to any such Revolving Advances
the outstanding Revolving Advances do not exceed one hundred and five percent
(105%) of the Formula Amount".
16.3. Successors and Assigns; Participations; New Lenders.
(a) This Agreement shall be binding upon and inure to the benefit of
Borrowers, Agent, each Lender, all future holders of the Obligations and their
respective successors and assigns, except that no Borrower may assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of Agent and each Lender.
(b) Each Borrower acknowledges that in the regular course of
commercial banking business one or more Lenders may at any time and from time to
time sell participating interests in the Advances to other financial
institutions (each such transferee or purchaser of a participating interest, a
"Transferee"). Each Transferee may exercise all rights of payment (including
without limitation rights of set-off) with respect to the portion of such
Advances held by it or other Obligations payable hereunder as fully as if such
Transferee were the direct holder thereof provided that Borrowers shall not be
required to pay to any Transferee more than the amount which it would have been
required to pay to Lender which granted an interest in its Advances or other
Obligations payable hereunder to such Transferee had such Lender retained such
interest in the Advances hereunder or other Obligations payable hereunder and in
no event shall Borrowers be required to pay any such amount arising from the
same circumstances and with respect to the same Advances or other Obligations
payable hereunder to both such Lender and such Transferee. Each Borrower hereby
grants to any Transferee a continuing security interest in any deposits, moneys
or other property actually or constructively held by such Transferee as security
for the Transferee's interest in the Advances.
(c) Any Lender may with the consent of Agent which shall not be
unreasonably withheld or delayed sell, assign or transfer all or any part of its
rights under this Agreement and the Other Documents to one or more additional
banks or financial institutions and one or more additional banks or financial
institutions may commit to make Advances hereunder (each a "Purchasing Lender"),
in minimum amounts of not less than $5,000,000, pursuant to a Commitment
Transfer Supplement, executed by a Purchasing Lender, the transferor Lender, and
Agent and delivered to Agent for recording. Upon such execution, delivery,
acceptance and recording, from and after the transfer effective date determined
pursuant to such Commitment Transfer Supplement, (i) Purchasing Lender
thereunder shall be a party hereto and, to the extent provided in such
Commitment Transfer Supplement, have the rights and obligations of a Lender
thereunder with a Commitment Percentage as set forth therein, and (ii) the
transferor Lender thereunder shall, to the extent provided in such Commitment
Transfer Supplement, be released from its obligations under this Agreement, the
Commitment Transfer Supplement creating a novation for that purpose. Such
Commitment Transfer Supplement shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the addition of such
Purchasing Lender and the resulting adjustment of the Commitment Percentages
arising from the purchase by such Purchasing Lender of all or a portion of the
rights and obligations of such transferor Lender under this Agreement and the
Other Documents. Borrowers hereby consent to the addition of such Purchasing
Lender and the resulting adjustment of the
83
Commitment Percentages arising from the purchase by such Purchasing Lender of
all or a portion of the rights and obligations of such transferor Lender under
this Agreement and the Other Documents. Borrowers shall execute and deliver such
further documents and do such further acts and things in order to effectuate the
foregoing.
(d) Agent shall maintain at its address a copy of each Commitment
Transfer Supplement delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Advances owing to each Lender from
time to time. The entries in the Register shall be conclusive, in the absence of
manifest error, and Borrowers, Agent and Lenders may treat each Person whose
name is recorded in the Register as the owner of the Advance recorded therein
for the purposes of this Agreement. The Register shall be available for
inspection by Borrowers or any Lender at any reasonable time and from time to
time upon reasonable prior notice. Agent shall receive a fee in the amount of
$3,500 payable by the applicable Purchasing Lender upon the effective date of
each transfer or assignment to such Purchasing Lender.
(e) Each Borrower authorizes each Lender to disclose to any Transferee
or Purchasing Lender and any prospective Transferee or Purchasing Lender any and
all financial information in such Lender's possession concerning such Borrower
which has been delivered to such Lender by or on behalf of such Borrower
pursuant to this Agreement or in connection with such Lender's credit evaluation
of such Borrower.
16.4. Application of Payments, Overadvances for GE Capital Proceeds.
Agent shall have the continuing and exclusive right to apply or reverse and
re-apply any payment and any and all proceeds of Collateral to any portion of
the Obligations.
(a) To the extent that any Borrower makes a payment or Agent or any
Lender receives any payment or proceeds of the Collateral for any Borrower's
benefit, which are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver, custodian or any other party under any bankruptcy law,
common law or equitable cause, then, to such extent, the Obligations or part
thereof intended to be satisfied shall be revived and continue as if such
payment or proceeds had not been received by Agent or such Lender.
(b) In the event that within sixty (60) days after any date on which
Agent has applied GE Capital Proceeds in an aggregate amount for that date not
exceeding $10,000 to any portion of the Obligations or in the event that within
thirty (30) days after any date on which Agent has applied GE Capital Proceeds
in an aggregate amount for that date in excess of $10,000 to any portion of the
Obligations and, in either event, GE Capital has provided notice thereof (a "GE
Proceeds Notice") within such time to Agent and Borrowing Agent (a copy of which
Agent shall promptly provide to the Lenders):
(i) Each Lender shall, within three (3) Business Days of the date of
receipt by Agent of the GE Proceeds Notice, make an Advance (a "GE Proceeds
Advance") in an amount equal to its Commitment Percentage of the amount by
which the GE Capital Proceeds which were applied to the Obligations and
described in the GE Proceeds Notice exceeds the amount of Undrawn
Availability on the date of such Advance;
84
(ii) Each Lender's GE Proceeds Advance shall be made in immediately
available funds to the Agent and, to the extent of its receipt of GE
Proceeds Advances from the Lenders in such funds, Agent shall transmit the
same to GE Capital as directed by the GE Proceeds Notice;
(iii) Each GE Proceeds Advance shall be immediately due and payable by
Borrowers, jointly and severally, at the Payment Office without the
necessity of any demand, and at all times until paid shall accrue interest
at the Default Rate as a Domestic Rate Loan;
(iv) Each Lender shall be obligated unconditionally and irrevocably to
make GE Proceeds Advances in accordance with this Section 16.4,
notwithstanding that there is no Undrawn Availability or that any other
condition to the making of Advances has not been satisfied.
(v) To avoid duplication of Obligations relating to GE Proceeds
Advances, to the extent of the GE Proceeds Advances made by Lenders, the
Obligations intended to have been satisfied by the related GE Capital
Proceeds which were applied to the Obligations shall, solely to the extent
of the GE Proceeds Advances made by Lenders, be revived and continue as if
such amount had not been received by Agent or any such Lenders.
16.5. Indemnity.
Each Borrower shall indemnify Agent, each Lender and each of their
respective officers, directors, Affiliates, employees and agents from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, fees and disbursements of
counsel) which may be imposed on, incurred by, or asserted against Agent or any
Lender in any litigation, proceeding or investigation instituted or conducted by
any governmental agency or instrumentality or any other Person with respect to
any aspect of, or any transaction contemplated by, or referred to in, or any
matter related to, this Agreement or the Other Documents, whether or not Agent
or any Lender is a party thereto, except to the extent that any of the foregoing
arises out of the gross negligence or willful misconduct of the party being
indemnified.
16.6. Notice.
Except as otherwise provided in Section 16.1, any notice or request
hereunder may be given to Borrowing Agent or any Borrower or to Agent or any
Lender at their respective addresses set forth below or at such other address as
may hereafter be specified in a notice designated as a notice of change of
address under this Section. Any notice, request, demand, direction or other
communication (for purposes of this Section 16.6 only, a "Notice") to be given
to or made upon any party hereto under any provision of this Loan Agreement
shall be given or made by telephone or in writing (which includes by means of
electronic transmission (i.e., "e-mail") or facsimile transmission or by setting
forth such Notice on a site on the World Wide Web (a "Website Posting") if
Notice of such Website Posting (including the information necessary to
85
access such site) has previously been delivered to the applicable parties hereto
by another means set forth in this Section 16.6) in accordance with this Section
16.6. Any such Notice must be delivered to the applicable parties hereto at the
addresses and numbers set forth under their respective names on Section 16.6
hereof or in accordance with any subsequent unrevoked Notice from any such party
that is given in accordance with this Section 16.6. Any Notice shall be
effective:
(a) In the case of hand-delivery, when delivered;
(b) If given by mail, four days after such Notice is deposited with
the United States Postal Service, with first-class postage prepaid, return
receipt requested;
(c) In the case of a telephonic Notice, when a party is contacted by
telephone, if delivery of such telephonic Notice is confirmed no later than the
next Business Day by hand delivery, a facsimile or electronic transmission, a
Website Posting or an overnight courier delivery of a confirmatory Notice
(received at or before noon on such next Business Day);
(d) In the case of a facsimile transmission, when sent to the
applicable party's facsimile machine's telephone number, if the party sending
such Notice receives confirmation of the delivery thereof from its own facsimile
machine;
(e) In the case of electronic transmission, when actually received;
(f) In the case of a Website Posting, upon delivery of a Notice of
such posting (including the information necessary to access such site) by
another means set forth in this Section 16.6; and
(g) If given by any other means (including by overnight courier), when
actually received.
Any Lender giving a Notice to Borrowing Agent or any Borrower shall
concurrently send a copy thereof to the Agent, and the Agent shall promptly
notify the other Lenders of its receipt of such Notice.
(A) If to Agent or PNC at: PNC Bank, National Association
One PNC Plaza, 6th Floor
000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
86
with a copy to: PNC Bank, National Association
PNC Firstside Center
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
and a copy to:
Xxxxxxxx Xxxxxxxxx PC
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(B) If to a Lender other than Agent, as specified on the signature pages
hereof.
(C) If to Borrowing Agent
or any Borrower, at: LESCO, Inc.
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to: LESCO, Inc.
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Law Department
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
and
Xxxxx & Xxxxxxxxx LLP
3200 National City Center
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: M.H. (Bart) Xxxxx III
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
16.7. Survival.
The obligations of Borrowers under Sections 2.2(f), 3.7, 3.8, 3.9, 4.19(h)
and 16.5 shall survive termination of this Agreement and the Other Documents and
payment in full of the
87
Obligations. The obligations of the Lenders to the Agent under Section 14.7
shall survive termination of this Agreement and the Other Documents and payment
in full of the Obligations.
16.8. Severability.
If any part of this Agreement is contrary to, prohibited by, or deemed
invalid under applicable laws or regulations, such provision shall be
inapplicable and deemed omitted to the extent so contrary, prohibited or
invalid, but the remainder hereof shall not be invalidated thereby and shall be
given effect so far as possible.
16.9. Expenses.
All costs and expenses including, without limitation, reasonable attorneys'
fees (including the allocated costs of in house counsel) and disbursements
incurred by Agent on its behalf or on behalf of Lenders (a) in connection with
the entering into, modification, amendment, and administration of this Agreement
or any consents or waivers hereunder and all related agreements, documents and
instruments, or (b) in instituting, maintaining, preserving, enforcing and
foreclosing on Agent's security interest in or Lien on any of the Collateral,
whether through judicial proceedings or otherwise, or (c) in connection with any
advice given to Agent or any Lender with respect to its rights and obligations
under this Agreement and all related agreements, may be charged to Borrowers'
Account and shall be part of the Obligations. All costs and expenses including,
without limitation, reasonable attorneys' fees (including the allocated costs of
in house counsel) and disbursements incurred by Agent or Lenders (a) in all
efforts made to enforce payment of any Obligation, enforcement of this Agreement
or effect collection of any Collateral, or (b) in defending or prosecuting any
actions or proceedings arising out of or relating to Agent's or any Lender's
transactions with any Borrower, may be charged to Borrowers' Account and shall
be part of the Obligations.
16.10. Injunctive Relief.
Each Borrower recognizes that, in the event any Borrower fails to perform,
observe or discharge any of its obligations or liabilities under this Agreement,
any remedy at law may prove to be inadequate relief to Lenders; therefore,
Agent, if Agent so requests, shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving that actual
damages are not an adequate remedy.
16.11. Consequential Damages.
Neither Agent nor any Lender, nor any agent or attorney for any of them,
shall be liable to any Borrower for consequential damages arising from any
breach of contract, tort or other wrong relating to the establishment,
administration or collection of the Obligations.
16.12. Captions.
The captions at various places in this Agreement are intended for
convenience only and do not constitute and shall not be interpreted as part of
this Agreement.
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16.13. Counterparts; Telecopied Signatures.
This Agreement may be executed in any number of and by different parties
hereto on separate counterparts, all of which, when so executed, shall be deemed
an original, but all such counterparts shall constitute one and the same
agreement. Any signature delivered by a party by facsimile transmission shall be
deemed to be an original signature hereto.
16.14. Construction.
The parties acknowledge that each party and its counsel have reviewed this
Agreement and that the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement or any amendments, schedules or exhibits
thereto.
16.15. Confidentiality; Sharing Information.
(a) Agent, each Lender and each Transferee shall hold all non-public
information obtained by Agent, such Lender or such Transferee pursuant to the
requirements of this Agreement in accordance with Agent's, such Lender's and
such Transferee's customary procedures for handling confidential information of
this nature; provided, however, Agent, each Lender and each Transferee may
disclose such confidential information (a) to its examiners, affiliates, outside
auditors, counsel and other professional advisors, (b) to Agent, any Lender or
to any prospective Transferees and Purchasing Lenders, and (c) as required or
requested by any Governmental Body or representative thereof or pursuant to
legal process; provided, further that (i) unless specifically prohibited by
applicable law or court order, Agent, each Lender and each Transferee shall use
its best efforts prior to disclosure thereof, to notify the applicable Borrower
of the applicable request for disclosure of such non-public information (A) by a
Governmental Body or representative thereof (other than any such request in
connection with an examination of the financial condition of a Lender or a
Transferee by such Governmental Body) or (B) pursuant to legal process and (ii)
in no event shall Agent, any Lender or any Transferee be obligated to return any
materials furnished by any Borrower other than those documents and instruments
in possession of Agent or any Lender in order to perfect its Lien on the
Collateral once the Obligations have been paid in full and this Agreement has
been terminated.
Notwithstanding anything herein to the contrary, the information subject to
this Section 16.15 shall not include, and Agent and each Lender may disclose
without limitation of any kind, any information with respect to the "tax
treatment" and "tax structure" (in each case, within the meaning of Income Tax
Regulation Section 1.6011-4) of the transactions contemplated hereby and all
materials of any kind (including opinions or other tax analyses) that are
provided to the Agent or such Lender relating to such tax treatment and tax
structure; provided that with respect to any document or similar item that in
either case contains information concerning the tax treatment or tax structure
of the transaction as well as other information, this sentence shall only apply
to such portion of the document or similar item that relate to the tax treatment
or tax structure of the Advances, Letters of Credit and transactions
contemplated hereby.
(b) Each Borrower acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
such Borrower or one or
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more of its Affiliates (in connection with this Agreement or otherwise) by any
Lender or by one or more Subsidiaries or Affiliates of such Lender and each
Borrower hereby authorizes each Lender to share any information delivered to
such Lender by such Borrower and its Subsidiaries pursuant to this Agreement, or
in connection with the decision of such Lender to enter into this Agreement, to
any such Subsidiary or Affiliate of such Lender, it being understood that any
such Subsidiary or Affiliate of any Lender receiving such information shall be
bound by the provision of Section 16.15 as if it were a Lender hereunder. Such
authorization shall survive the repayment of the other Obligations and the
termination of the Loan Agreement.
16.16. Publicity.
Each Borrower and each Lender hereby authorizes Agent to make appropriate
announcements of the financial arrangement entered into among Borrowers, Agent
and Lenders, including, without limitation, announcements which are commonly
known as tombstones, in such publications and to such selected parties as Agent
shall in its sole and absolute discretion deem appropriate.
[SIGNATURE PAGES FOLLOW]
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[SIGNATURE PAGE 1 OF 2 TO AMENDED AND RESTATED
REVOLVING CREDIT AND SECURITY AGREEMENT]
Each of the parties has signed this Agreement as of the day and year first
above written.
LESCO, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx (SEAL)
------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Senior Vice President and
Chief Financial Officer
Address: 0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
LESCO SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx (SEAL)
------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Vice President and
Chief Financial Officer
Address: 0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
LESCO TECHNOLOGIES, LLC
By: /s/ Xxxxxxx X. Xxxxxxxxxx (SEAL)
------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Vice President and
Chief Financial Officer
Address: 0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
AIM LAWN & GARDEN PRODUCTS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx (SEAL)
------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Vice President and
Chief Financial Officer
Address: 0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
[SIGNATURE PAGE 2 OF 2 TO AMENDED AND RESTATED
REVOLVING CREDIT AND SECURITY AGREEMENT]
PNC BANK, NATIONAL ASSOCIATION,
as Lender and as Agent
By: /s/ Xxxxx X. Xxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxx
----------------------------------
Title: Vice President
---------------------------------
Address: PNC Bank, National Association
Xxx XXX Xxxxx, 0xx Xxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
-2-
LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit 2.1(a) Revolving Credit Note
Exhibit 5.5(b) Financial Projections
Exhibit 8.1(k) Financial Condition Certificate
Exhibit 8.1(r) Subordination Agreement
Exhibit 16.3 Commitment Transfer Supplement
Exhibit A Borrowing Base Certificate
SCHEDULES
Schedule 1.2(p) Permitted Encumbrances
Schedule 2.9 Letters of Credit (on Closing Date)
Schedule 4.5 Equipment and Inventory Locations
Schedule 4.15(c) Location of Executive Offices
Schedule 4.19 Real Property
Schedule 5.2(a) States of Qualification and Good Standing
Schedule 5.2(b) Subsidiaries
Schedule 5.4 Federal Tax Identification Number
Schedule 5.6 Prior Names
Schedule 5.7 Environmental
Schedule 5.8(b) Litigation
Schedule 5.8(d) Plans
Schedule 5.9 Intellectual Property, Source Code Escrow Agreements
Schedule 5.10 Licenses and Permits
Schedule 5.14 Labor Disputes
Schedule 5.19 Interest Rate Protection Agreements
Schedule 7.8 Indebtedness
