EXECUTION COPY
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of April 22,
1999 (as amended, supplemented or modified from time to time, the "Agreement")
is entered into among STELLEX TECHNOLOGIES, INC., a Delaware corporation
(formerly known as Stellex Industries, Inc., the "Borrower"), the financial
institutions from time to time parties hereto, whether by execution of this
Agreement or an Assignment and Acceptance (the "Lenders"), SOCIETE GENERALE
("SG"), in its capacity as administrative agent for the Lenders (in such
capacity, the "Administrative Agent"), FIRST UNION COMMERCIAL CORPORATION
("First Union"), in its capacity as collateral agent for the Lenders (in such
capacity, the "Collateral Agent") and as documentation agent for the Lenders (in
such capacity, the "Documentation Agent"), XXXXXX COMMERCIAL PAPER INC.
("LCPI"), in its capacity as syndication agent for the Lenders (in such
capacity, the "Syndication Agent"), and XXXXXX BROTHERS INC. and XX XXXXX
SECURITIES CORPORATION, as book-running arrangers (the "Co-Arrangers"). This
Agreement amends and restates the Amended and Restated Credit Agreement dated as
of May 29, 1998 entered into among the Borrower, the Lenders, the Administrative
Agent and the Collateral Agent.
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms. The following terms used in this Agreement
shall have the following meanings, applicable both to the singular and the
plural forms of the terms defined:
"Accommodation Obligation" means any Contractual Obligation, contingent
or otherwise, of any Person with respect to any Indebtedness, obligation or
liability of another, if the primary purpose or intent thereof by the Person
incurring the Accommodation Obligation is to provide assurance to the obligee of
such Indebtedness, obligation or liability of another Person that such
Indebtedness, obligation or liability will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders thereof
will be protected (in whole or in part) against loss in respect thereof
including, without limitation, direct and indirect guarantees, endorsements
(except for collection or deposit in the ordinary course of business), notes
co-made or discounted, recourse agreements, take-or-pay agreements, keep-well
agreements, agreements to purchase or repurchase such Indebtedness, obligation
or liability or any security therefor or to provide funds for the payment or
discharge thereof, agreements to maintain solvency, assets, level of income, or
other financial condition, and agreements to make payment other than for value
received.
"Acquisition" means the transactions contemplated by the Acquisition
Documents.
"Acquisition Agreement" means the Asset Purchase Agreement dated April
22, 1999 among Stellex Precision Machining, Inc. (formerly known as PreMach
Acquisition Corporation), as purchaser, and Precision Machining, Inc., BK
Metals, Inc., Xxxxx Xxxx Xxxxxxxx and The Xxxxx Xxxx Xxxxxxxx Trust,
collectively, as sellers.
"Acquisition Documents" means, collectively, the Acquisition Agreement,
the Escrow Agreement, the Assignment and Assumption Agreement, the Consulting
Agreement, the Xxxxxxxx Guaranty and all documents, instruments and agreements
delivered in connection therewith.
"Administrative Agent" has the meaning ascribed to such term in the
preamble hereto.
"Administrative Agent's Account" means SG's account, account number
0000000 (re: Stellex), maintained at the office of Societe Generale, New York,
New York, ABA #000000000, or such other account as the Administrative Agent may
from time to time specify in writing to the Borrower and the Lenders.
"Affiliate" means, as applied to any specified Person, any other Person
that directly or indirectly controls, is controlled by, or is under common
control with, such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling", "controlled by"
and "under common control with"), as applied to any specified Person, means the
possession, directly or indirectly, of the power to vote ten percent (10%) or
more of the Securities having voting power for the election of directors of such
specified Person or otherwise to direct or cause the direction of the management
and policies of such specified Person, whether through the ownership of voting
Securities or by contract or otherwise.
"Agents" means, collectively, the Administrative Agent, the Collateral
Agent and the Syndication Agent.
"Agreement" has the meaning ascribed to such term in the preamble
hereto.
"Applicable Revolving Loan Base Rate Margin" means initially a rate
equal to 2.00% per annum during the period from the Effective Date until the
Reset Date. Thereafter, such rate will reset quarterly on the first day of the
month following receipt by the Administrative Agent of the financial statements
delivered in accordance with Sections 7.01(a) or 7.01(b), commencing with the
fiscal quarter immediately following the Reset Date, based upon the Leverage
Ratio (as it may be adjusted on a Pro Forma Basis for any Permitted Acquisition
and Permitted Foreign Acquisition) for the immediately preceding fiscal quarter,
calculated as of the last day of such immediately preceding fiscal quarter for
the twelve-month period then ended, as set forth below:
If the Leverage Applicable Revolving Loan
Ratio is: Base Rate Margin
Equal to or greater
than 4.50 2.00%
Less than 4.50 but equal to
or greater than 4.00 1.75%
Less than 4.00 but equal to
or greater than 3.50 1.50%
Less than 3.50 1.25%
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"Applicable Revolving Loan Eurodollar Rate Margin" means initially a
rate equal to 3.00% per annum during the period from the Effective Date until
the Reset Date. Thereafter, such rate will reset quarterly on the first day of
the month following receipt by the Administrative Agent of the financial
statements delivered in accordance with Sections 7.01(a) or 7.01(b), commencing
with the fiscal quarter immediately following the Reset Date, based upon the
Leverage Ratio (as it may be adjusted on a Pro Forma Basis for any Permitted
Acquisition and Permitted Foreign Acquisition) for the immediately preceding
fiscal quarter, calculated as of the last day of such immediately preceding
fiscal quarter for the twelve-month period then ended, as set forth below:
If the Leverage Applicable Revolving Loan
Ratio is: Eurodollar Rate Margin
Equal to or greater
than 4.50 3.00%
Less than 4.50 but equal to
or greater than 4.00 2.75%
Less than 4.00 but equal to
or greater than 3.50 2.50%
Less than 3.50 2.25%
"Applicable Term A Loan Base Rate Margin" means initially a rate equal
to 2.00% per annum during the period from the Effective Date until the Reset
Date. Thereafter, such rate will reset quarterly on the first day of the month
following receipt by the Administrative Agent of the financial statements
delivered in accordance with Sections 7.01(a) or 7.01(b), commencing with the
fiscal quarter immediately following the Reset Date, based upon the Leverage
Ratio (as it may be adjusted on a Pro Forma Basis for any Permitted Acquisition
and Permitted Foreign Acquisition) for the immediately preceding fiscal quarter,
calculated as of the last day of such immediately preceding fiscal quarter for
the twelve-month period then ended, as set forth below:
If the Leverage Applicable Term A Loan
Ratio is: Base Rate Margin
Equal to or greater
than 4.50 2.00%
Less than 4.50 but equal to
or greater than 4.00 1.75%
Less than 4.00 but equal to
or greater than 3.50 1.50%
Less than 3.50 1.25%
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"Applicable Term A Loan Eurodollar Rate Margin" means initially a rate
equal to 3.00% per annum during the period from the Effective Date until the
Reset Date. Thereafter, such rate will reset quarterly on the first day of the
month following receipt by the Administrative Agent of the financial statements
delivered in accordance with Sections 7.01(a) or 7.01(b), commencing with the
fiscal quarter immediately following the Reset Date, based upon the Leverage
Ratio (as it may be adjusted on a Pro Forma Basis for any Permitted Acquisition
and Permitted Foreign Acquisition) for the immediately preceding fiscal quarter,
calculated as of the last day of such immediately preceding fiscal quarter for
the twelve-month period then ended, as set forth below:
If the Leverage Applicable Term A Loan
Ratio is: Eurodollar Rate Margin
Equal to or greater
than 4.50 3.00%
Less than 4.50 but equal to
or greater than 4.00 2.75%
Less than 4.00 but equal to
or greater than 3.50 2.50%
Less than 3.50 2.25%
"Applicable Term B Loan Base Rate Margin" means a rate equal to 2.50%
per annum.
"Applicable Term B Loan Eurodollar Rate Margin" means a rate equal to
3.50% per annum.
"Applicable Lending Office" means, with respect to a particular Lender,
its Eurodollar Lending Office in respect of provisions relating to Eurodollar
Rate Loans and its Domestic Lending Office in respect of provisions relating to
Base Rate Loans.
"Approved Fund" has the meaning ascribed to such term in Section
13.01(b).
"Asbestos Containing Material" means any material containing more than
one percent (1%) asbestos by weight.
"Asset Sale" means any sale, conveyance, transfer, lease or other
disposition of property of any Loan Party.
"Assignment and Acceptance" means an Assignment and Acceptance
substantially in the form of Exhibit A attached hereto and made a part hereof
(with blanks appropriately completed) delivered to the Administrative Agent in
connection with an assignment of a Lender's interest under this Agreement in
accordance with the provisions of Section 13.01.
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"Assignment and Assumption Agreement" means the Assignment and
Assumption dated April 22, 1999 by and between Stellex Precision Machining, Inc.
(formerly known as PreMach Acquisition Corporation), Precision Machining, Inc.,
BK Metals, Inc., Xxxxx Xxxx Xxxxxxxx and The Xxxxx Xxxx Xxxxxxxx Trust.
"Availability" means, at any particular time, the amount by which the
Maximum Revolving Credit Amount at such time exceeds the Revolving Credit
Obligations at such time.
"Base Rate" means, on any date, a fluctuating interest rate per annum
(rounded upward, if necessary, to the next highest 1/16 of 1%) equal to the
higher of:
(a) the rate of interest then most recently established by SG in
New York, New York as its base rate for Dollars loaned in the United
States, in effect on such date; and
(b) the Federal Funds Rate in effect on such date plus 1/2 of 1%.
The Base Rate is not necessarily intended to be the lowest rate of interest
determined by SG in connection with extensions of credit.
"Base Rate Loans" means all Loans which bear interest at a rate
determined by reference to the Base Rate as provided in Section 4.01(a).
"Benefit Plan" means a defined benefit plan as defined in Section 3(35)
of ERISA (other than a Multiemployer Plan) in respect of which any Stellex Party
or any ERISA Affiliate is, or within the immediately preceding six (6) years was
at the time it was an ERISA Affiliate, an "employer" as defined in Section 3(5)
of ERISA.
"Board of Directors" means the board of directors or equivalent
governing body of a Person (or the general partner of such Person, as the case
may be,) or any committee thereof duly authorized to act on behalf of such board
of directors or equivalent governing body.
"Borrower" has the meaning ascribed to such term in the preamble
hereto.
"Borrowing" means a borrowing consisting of Loans of the same Type made
on the same day by the Lenders.
"Business" means the businesses of the Borrower and its Subsidiaries on
the date hereof and any business located in the United States, Canada or any
other OECD jurisdiction related, ancillary or complementary thereto, or which is
an extension thereof.
"Business Day" means a day, in the applicable local time, which is not
a Saturday or Sunday or a legal holiday and on which banks are not required or
permitted by law or other governmental action to close (i) in New York, New
York, (ii) in the case of Eurodollar Rate Loans, in London, England and (iii) in
the case of Letter of Credit transactions for the Issuing Bank, in the place
where its office for issuance and administration of the pertinent Letter of
Credit is located.
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"Capital Expenditures" means, for any period, the aggregate of all
expenditures (whether paid in cash or other assets or accrued as a liability
(but without duplication)) during such period that, in conformity with GAAP, are
required to be included in or reflected by a Stellex Party's fixed asset account
as reflected in its balance sheets; provided, however, that Capital Expenditures
shall include, whether or not such a designation would be in conformity with
GAAP, (A) that portion of Capital Leases which is capitalized on the balance
sheet of such Stellex Party and (B) expenditures for Equipment which is
purchased simultaneously with the trade-in of existing Equipment owned by a
Stellex Party to the extent that the gross purchase price of the purchased
Equipment exceeds the book value of the Equipment being traded in at such time;
provided, further, that Capital Expenditures shall exclude, whether or not such
a designation would be in conformity with GAAP, (i) any expenditures made with
the proceeds, damages or awards under any policy of insurance with respect to
any casualty or other damage or defect or the proceeds of any taking by reason
of any public improvement or condemnation proceeding or transfer, (ii) any
Permitted Acquisition, Permitted Foreign Acquisition or Permitted Investment
relating to an acquisition of assets, (iii) any expenditures made with the
proceeds of any Asset Sale in accordance with clause (i) of the definition of
"Excluded Sale Proceeds" and (iv) the acquisition of the Precision Business or
the real estate previously owned by Phoenix Microwave Real Estate Partnership.
"Capital Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Capital Stock" means, with respect to any Person, any capital stock of
such Person, regardless of class or designation, and all warrants, options,
purchase rights, conversion or exchange rights, voting rights, calls or claims
of any character with respect thereto.
"Cash Capital Expenditures" means, for any period, that portion of
Capital Expenditures which is paid in cash.
"Cash Collateral Account" means the account opened and maintained at
First Union National Bank which account shall be governed by the terms of the
Cash Collateral Pledge Agreement and shall be under the sole dominion and
control of the Collateral Agent.
"Cash Collateral Pledge Agreement" means the Cash Collateral Pledge and
Assignment Agreement, substantially in the form of Exhibit K attached hereto and
made a part hereof, made by the Loan Parties in favor of the Collateral Agent
for the benefit of the Agents and the Lenders, as such Pledge Agreement may be
amended, supplemented or otherwise modified from time to time.
"Cash Equivalents" means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by an
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one (1) year after the date of acquisition thereof;
(ii) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one (1) year after the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Corporation or Xxxxx'x
Investors Services, Inc. (or, if at any time neither Standard & Poor's
Corporation nor Xxxxx'x Investors Services, Inc. shall be rating such
obligations, then from such other nationally recognized rating services
reasonably acceptable to the Administrative Agent) and not listed in Credit
Watch published by Standard & Poor's Corporation; (iii) commercial paper, other
than commercial paper issued by any Stellex Party or any of its Affiliates,
maturing no more than ninety (90) days after the date of creation thereof and,
at the time of acquisition, having a rating of at least A-1 or P-1 from either
Standard & Poor's Corporation or Moody's Investor's Service, Inc. (or, if at any
time neither Standard & Poor's Corporation nor Xxxxx'x Investors Service,
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Inc. shall be rating such obligations, then the highest rating from such other
nationally recognized rating services reasonably acceptable to the
Administrative Agent); (iv) domestic and Eurodollar certificates of deposit or
time deposits or bankers' acceptances maturing within ninety (90) days after the
date of acquisition thereof issued by any commercial bank organized under the
laws of the United States of America or any state thereof or the District of
Columbia or Canada having combined capital and surplus of not less than
$250,000,000; (v) repurchase obligations of the type referred to in clauses (i)
through (iv) above; and (vi) money market and mutual funds substantially all of
whose assets are comprised of securities of the types described in clauses (i)
through (v) above and cash.
"Cash Interest Expense" means, for any Financial Covenant Period, total
interest expense, whether paid or accrued (including the interest component of
Capital Leases but excluding amortization of deferred financing costs) of the
Borrower and its Subsidiaries on a consolidated basis, as determined in
conformity with GAAP.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. xx.xx. 9601 et seq., any amendments
thereto, any successor statutes, and any regulations promulgated thereunder.
"Change of Control" means the occurrence of one or more of the
following events:
(a) (i) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that
any "person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act), other than one or more Permitted Holders, is
or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5
under the Securities Exchange Act), directly or indirectly, of more
than 35% of the total voting power of the Voting Securities of the
Borrower; and (ii)the Permitted Holders "beneficially own" (as defined
in Rules 13d-3 and 13d-5 under the Securities Exchange Act), directly
or indirectly, in the aggregate less than 51% of the total voting
power of the Voting Securities of the Borrower or do not have the
right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors of the
Borrower; or
(b) the first day on which a majority of the members of the Board
of Directors of the Borrower are not Continuing Directors; or
(c) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or
substantially all, the assets of the Borrower and its Subsidiaries
taken as a whole to any "person" or group of "persons" for purposes of
Section 13(d) of the Securities Exchange Act (other than to any Wholly
Owned Subsidiary of the Borrower or to one or more Permitted Holders);
(d) the adoption of a plan of liquidation of the Borrower; or
(e) a "Change of Control" as defined under the Subordinated Note
Indenture.
"Chief Financial Officer" means the chief financial officer or vice
president of finance of the Borrower.
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"Claim" means any claim or demand, by any Person, of whatsoever kind or
nature for any alleged Liabilities and Costs, whether based in contract, tort,
implied or express warranty, strict liability, criminal or civil statute,
Permit, ordinance or regulation, common law or otherwise.
"Class" means, with respect to any Lender, its classification as a
Revolving Loan Lender, Term A Loan Lender or Term B Loan Lender.
"Closing Date" means July 1, 1997.
"Co-Arranger" has the meaning ascribed to such term in the preamble
hereto.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute and any regulations or guidelines promulgated
thereunder.
"Collateral" means all property and interests in property now owned or
hereafter acquired by any Loan Party in or upon which a Lien is granted under
any of the Loan Documents.
"Collateral Agent" has the meaning ascribed to such term in the
preamble hereto.
"Collateral Documents" means, collectively, the Security Agreements,
the Pledge Agreements, the Intellectual Property Security Agreement and the Cash
Collateral Pledge Agreement.
"Commercial Letter of Credit" means any documentary letter of credit
issued by an Issuing Bank pursuant to Section 2.04 for the account of the
Borrower, which is drawable upon presentation of documents evidencing the sale
or shipment of goods purchased by the Borrower or any of its Subsidiaries in the
ordinary course of their business.
"Commission" means the Securities and Exchange Commission and any
Person succeeding to the functions thereof.
"Commitment" means, with respect to any Lender, such Lender's Revolving
Loan Commitment, Term A Loan Commitment and Term B Loan Commitment, as modified
from time to time pursuant to the terms of this Agreement or to give effect to
any applicable Assignment and Acceptance, and "Commitments" means the aggregate
principal amount of the Commitments of all the Lenders, the maximum amount of
which shall not exceed $235,000,000.
"Commitment Fee Rate" means a rate equal to one-half of one percent
(1/2 of 1%) per annum.
"Compliance Certificate" has the meaning ascribed to such term in
Section 7.01(c).
"Consulting Agreement" means the Consulting Agreement dated April 22,
1999 among Stellex Precision Machining, Inc. (formerly known as PreMach
Acquisition Corporation), Xxxxx Xxxx Xxxxxxxx and Consulting Services, Inc.
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"Contaminant" means any waste, pollutant, hazardous substance,
extremely hazardous substance, toxic substance, hazardous waste, special waste,
infectious, biohazardous or medical waste, petroleum or petroleum-derived
substance or waste, any radioactive material, including but not limited to, any
source, special nuclear or by-product material as defined at 42 U.S.C. Section
2011 et seq., as amended or hereafter amended, asbestos, polychlorinated
biphenyls ("PCBs"), or any constituent of any such substance or waste, and
includes but is not limited to these terms as defined in any applicable
Environmental, Health or Safety Requirement of Law.
"Contractual Obligation" means, as applied to any Person, any provision
of any Securities issued by that Person or any indenture, mortgage, deed of
trust, security agreement, pledge agreement, guaranty, contract, undertaking,
agreement or instrument to which that Person is a party or by which it or any of
its properties is bound, or to which it or any of its properties is subject.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Borrower who (i) was a member of such
Board of Directors on the Effective Date or (ii) was nominated by any Permitted
Holder to serve on such Board of Directors.
"Current Assets" means, as at any date of determination, the total
assets of the Borrower and its Subsidiaries on a consolidated basis which may
properly be classified as current assets in conformity with GAAP.
"Current Liabilities" means, as at any date of determination, the
current liabilities of the Borrower and its Subsidiaries on a consolidated basis
which may properly be classified as current liabilities in conformity with GAAP.
"Customary Permitted Liens" means
(i) Liens (other than Environmental Liens and Liens in favor of
the PBGC) with respect to the payment of taxes, assessments or
governmental charges or claims, in all cases which are not yet due or
are being contested in good faith by appropriate proceedings and with
respect to which adequate reserves or other appropriate provisions are
being maintained in accordance with GAAP;
(ii) statutory Liens of landlords and Liens of suppliers,
mechanics, carriers, materialmen, warehousemen or workmen and other
Liens imposed by law created in the ordinary course of business in all
cases for amounts which are not yet due or are being contested in good
faith by appropriate proceedings and with respect to which adequate
reserves or other appropriate provisions are being maintained in
accordance with GAAP;
(iii) Liens (other than Environmental Liens and any Lien in favor
of the PBGC) incurred or deposits made in the ordinary course of
business in connection with worker's compensation, unemploy ment
insurance or other types of social security benefits or to secure the
performance of bids, tenders, sales, leases, contracts (other than for
the repayment of money), surety, appeal and performance bonds, in all
cases for amounts not yet due or which are being contested in good
faith by appropriate proceedings and with respect to which adequate
reserves or other appropriate provisions are being maintained in
accordance with GAAP; and
(iv) zoning restrictions, easements, licenses, reservations,
covenants, rights-of-way, utility easements, building restrictions and
other similar charges or encumbrances on the use of Real Property
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which do not materially interfere with the ordinary conduct of the
business of the Loan Parties and which do not materially adversely
affect the value of the Real Property.
"Debt" means, as applied to any Person at any time and without
duplication, all indebtedness, obligations or other liabilities of such Person
(i) for borrowed money or evidenced by debt securities, debentures, acceptances,
notes or other similar instruments (other than the Management Promissory Notes),
(ii) under profit payment agreements (other than those relating to "Management
Equity Interests" provided that such indebtedness, obligations or other
liabilities thereunder are only permitted to be paid if permitted under this
Agreement) or in respect of obligations to redeem, repurchase or exchange any
Securities of such Person or to pay dividends in respect of such Securities
(other than (A) dividends declared or paid in additional shares of such
Securities, (B) dividends where the failure to pay would not give the holder of
such Securities a cause of action for the payment of money or for money damages
against any Stellex Party or the right to have such Securities redeemed,
repurchased or exchanged by any Stellex Party and (C) Securities where the
obligation to redeem, repurchase or exchange such Securities is not effective
until on or after the date which is one year following the Term B Maturity
Date), (iii) with respect to letters of credit issued for such Person's account
(to the extent not accounted for in clause (i) above), (iv) to pay the deferred
purchase price of property or services, except (x) accounts payable and accrued
expenses arising in the ordinary course of business or (y) where such payment
constitutes a contingent or earn-out payment in connection with a Permitted
Acquisition, a Permitted Foreign Acquisition or with respect to acquisition of
Phoenix Microwave Corporation, provided that any such contingent or earn-out
payment does not exceed 10% of the total consideration for such Permitted
Acquisition or such Permitted Foreign Acquisition, and such contingent or
earn-out payment is not represented by a Note or (v) in respect of Capital
Leases.
"Default" means an event which, with the giving of notice or the lapse
of time, or both, would constitute an Event of Default.
"Default Rate" has the meaning ascribed to such term in Section
4.01(d).
"DOL" means the United States Department of Labor and any Person
succeeding to the functions thereof.
"Dollars" and "$" mean the lawful money of the United States.
"Domestic Entity" means a corporation that is incorporated in any State
of the United States and is engaged in a business or operation that is located
in the United States or Canada.
"Domestic Lending Office" means, with respect to any Lender, such
Lender's office, located in the United States, specified as the "Domestic
Lending Office" under its name on Exhibit B attached hereto or on the Assignment
and Acceptance by which it became a Lender or such other United States office of
such Lender as it may from time to time specify by written notice to the
Borrower and the Administrative Agent.
"EBITDA" means, for any Financial Covenant Period, (i) the Net Income,
determined on a consolidated basis for the Borrower and its Subsidiaries, for
such Financial Covenant Period plus the following amounts (without duplication)
for such Financial Covenant Period to the extent deducted in calculating such
Net Income: (A) depreciation and amortization expense, (B) interest expense, (C)
federal, state, local and foreign income taxes, (D) extraordinary or unusual
losses, (E) non-cash portion of nonrecurring losses and charges, (F) non-cash
management compensation expense, (G) amounts paid with respect to the "Retention
Plan Payments" as defined in the Xxxxxxx-Xxxxxxx Acquisition Agreement, (H) any
increase in cost of sales resulting from the write-up of inventory in accordance
with Accounting Principles Board Opinion No. 16 (or successor provision)
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and (I) any bonuses or other payments made to employees of the Precision
Business in connection with the purchase of it by Borrower in an amount not to
exceed $1,000,000 and all of which amount will be paid prior to December 31,
1999; minus (ii) the following amounts (without duplication) for such Financial
Covenant Period: (A) the amount of extraordinary gains, (B) interest income, (C)
the amount of gains on the sale of assets and (D) other non-operating, non-cash
income; each item in clauses (i) and (ii) calculated pursuant to GAAP for such
period.
"Effective Date" means the date on which all of the conditions
precedent in Sections 5.01 and 5.02 have been satisfied.
"Eligible Assignee" means (i) a Lender, an Affiliate of a Lender or an
Approved Fund of a Lender, or (ii) a commercial bank, lending institution,
finance company, insurance company, fund, or other financial institution
reasonably acceptable to the Administrative Agent, the Syndication Agent and the
Borrower (which acceptance shall not be unreasonably withheld), provided,
however, if a Default or Event of Default has occurred and is continuing, the
acceptance by the Borrower shall not be required.
"Environmental, Health or Safety Requirement of Law" means any federal,
state or local law, ordinance, rule, regulation, Permit, license or other
binding determination of any Governmental Authority relating to, imposing
liability or standards concerning, or otherwise addressing the environment,
health and/or safety, including but not limited to the Clean Air Act, the Clean
Water Act, RCRA, CERCLA, any so-called "Superfund" or "Superlien" law, the Toxic
Substances Control Act and OSHA, each as from time to time hereafter in effect.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for (i) any liability under any Environmental, Health or Safety
Requirements of Law, or (ii) damages arising from, or costs incurred by such
Governmental Authority in response to, a Release or threatened Release of a
Contaminant into the environment.
"Environmental Property Transfer Act" means any applicable requirement
of law that conditions, restricts, prohibits or requires any environmental
notification or environmental disclosure triggered by the closure of any
Property or the transfer, sale or lease of any Property or deed or title for any
Property, including, but not limited to, any so-called "Environmental Cleanup
Responsibility Act" or "Responsible Property Transfer Act."
"Equipment" means a Person's present and future owned (i) equipment and
fixtures, including, without limitation, machinery, manufacturing, distribution,
selling, computer system, data processing and office equipment, assembly
systems, tools, molds, dies, fixtures, appliances, furniture, furnishings,
vehicles, vessels, aircraft, aircraft engines, and trade fixtures, (ii) other
tangible personal property, and (iii) any and all accessions, parts and
appurtenances attached to any of the foregoing or used in connection therewith,
and any substitutions therefor and replacements, products and proceeds thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"ERISA Affiliate" means any (i) corporation which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the Code) as any Stellex Party, (ii) partnership, trade or business (whether or
not incorporated) which is under common control (within the meaning of Section
414(c) of the Code) with any Stellex Party, (iii) member of the same affiliated
service group (as defined in Section 414(m) of the Code) as any Stellex Party,
any corporation described in clause (i) above or any partnership or
11
trade or business described in clause (ii) above or (iv) other Person which is
required to be aggregated with any Stellex Party pursuant to regulations
promulgated under Section 414(o) of the Code.
"Escrow Agreement" means the Escrow Agreement dated April 22, 1999
among Xxxxx Xxxx Xxxxxxxx, Stellex Precision Machining, Inc. (formerly known as
PreMach Acquisition Corporation) and Wilmington Trust Company.
"Eurodollar Affiliate" means, with respect to each Lender, the
Affiliate of such Lender (if any) set forth below such Lender's name under the
heading "Eurodollar Affiliate" on Exhibit B attached hereto or on the Assignment
and Acceptance by which it became a Lender or such Affiliate of a Lender as it
may from time to time specify by written notice to the Borrower and the
Administrative Agent.
"Eurodollar Interest Payment Date" means (i) with respect to any
Eurodollar Rate Loan, the last day of each Eurodollar Interest Period applicable
to such Loan and (ii) with respect to any Eurodollar Rate Loan having a
Eurodollar Interest Period in excess of three (3) calendar months, the last day
of each calendar quarter during such Eurodollar Interest Period.
"Eurodollar Interest Period" has the meaning set forth in Section
4.02(b).
"Eurodollar Lending Office" means, with respect to any Lender, the
office or offices of such Lender (if any) set forth below such Lender's name
under the heading "Eurodollar Lending Office" on Exhibit B attached hereto or on
the Assignment and Acceptance by which it became a Lender or such office or
offices of such Lender as it may from time to time specify by written notice to
the Borrower and the Administrative Agent.
"Eurodollar Rate" means, with respect to any Eurodollar Interest Period
applicable to a Borrowing of Eurodollar Rate Loans, an interest rate per annum
obtained by dividing (i) the rate of interest per annum specified by notice to
the Administrative Agent by SG as the rate per annum at which deposits in
Dollars are offered by SG in London, England to major banks in the London
interbank market at approximately 11:00 a.m. (London time) on the Interest Rate
Determination Date for such Eurodollar Interest Period for a period equal to
such Eurodollar Interest Period and in an amount substantially equal to the
amount of the Eurodollar Rate Loan to be made by SG to be outstanding during
such Eurodollar Interest Period, by (ii) a percentage equal to 100% minus the
Eurodollar Reserve Percentage. The Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the Eurodollar
Reserve Percentage.
"Eurodollar Rate Loans" means those Loans outstanding which bear
interest at a rate determined by reference to the Eurodollar Rate as provided in
Section 4.01(a).
"Eurodollar Reserve Percentage" means, for any day, that percentage
which is in effect on such day, as prescribed by the Federal Reserve Board for
determining the maximum reserve requirement (including, without limitation, any
emergency, supplemental or other marginal reserve requirement) for a member bank
of the Federal Reserve System in New York, New York with respect to
"Eurocurrency Liabilities" (or in respect of any other category of liabilities
which includes deposits by reference to which the interest rate on Eurodollar
Rate Loans is determined or any category of extensions of credit or other assets
which includes loans by a non-United States office of any bank to United States
residents).
"Event of Default" means any of the occurrences set forth in Section
11.01 after the expiration of any applicable grace period and the giving of any
applicable notice, in each case as expressly provided in Section 11.01.
12
"Excess Cash Flow" means, for any Fiscal Year, EBITDA for such Fiscal
Year, minus cash interest paid during such Fiscal Year, minus Cash Capital
Expenditures made during such Fiscal Year, minus principal payments made on
Funded Debt (excluding Revolving Loans) during such Fiscal Year, minus taxes
paid in cash during such Fiscal Year, plus the decrease or minus the increase in
Working Capital during such Fiscal Year.
"Excluded Sale Proceeds" means (i) Net Cash Proceeds that are used by a
Loan Party within one year from the receipt of such Net Cash Proceeds by such
Loan Party on account of an Asset Sale to replace the asset sold in such Asset
Sale or to acquire any other assets or property used or useful in the Business
constituting Collateral or to consummate a Permitted Acquisition or Permitted
Foreign Acquisition or make a Permitted Investment, provided that such Net Cash
Proceeds are deposited into the Cash Collateral Account upon receipt of such Net
Cash Proceeds by such Loan Party until the earlier of (A) such time as such Loan
Party replaces or acquires such asset or consummates such Permitted Acquisition
or such Permitted Foreign Acquisition or makes such Permitted Investment or (B)
the first annual anniversary of the date such Net Cash Proceeds were deposited
into the Cash Collateral Account (on such first annual anniversary and at all
times thereafter, such Net Cash Proceeds shall cease to be Excluded Sale
Proceeds), (ii) Net Cash Proceeds on account of one or more Asset Sales so long
as such Net Cash Proceeds do not exceed $1,000,000 in the aggregate in any
twelve month period, (iii) proceeds from the sales of Inventory in the ordinary
course of business, (iv) proceeds from the disposition of Equipment if such
Equipment is obsolete or no longer useful in the ordinary course of such Loan
Party's business and (v) proceeds received by a Loan Party as a result of an
assignment, transfer, conveyance or other disposition with another permitted
pursuant to Section 9.02(iv).
"Excluded Securities" means, with respect to the Borrower, any common
or preferred stock issued by the Borrower other than stock that is issued
pursuant to a registered public offering, and with respect to any Loan Party
(other than the Borrower), (i) common stock issued by such Loan Party to a
seller in connection with a Permitted Acquisition or Permitted Foreign
Acquisition or management personnel in connection with management compensation
arrangements or a Permitted Acquisition or Permitted Foreign Acquisition, (ii)
any Securities issued by any Subsidiary of the Borrower to the Borrower or
another Subsidiary of the Borrower, provided that such Securities referred to in
this clause (ii) are pledged to the Collateral Agent, on terms and conditions,
and pursuant to documentation, reasonably satisfactory to the Administrative
Agent, in a manner whereby the Collateral Agent has a valid, perfected and first
priority Lien therein and (iii) Management Equity Interests.
"Farm Bureau" means Farm Bureau Life Insurance Company.
"Farm Bureau Consent" means a consent of Farm Bureau to the Collateral
Agent's Liens in the Collateral granted by Paragon Precision Products, a
California corporation, and by Stellex Aerospace, a California corporation
(formerly known as Xxxxxxxx Industries Inc.), pursuant to the Loan Documents
(including, without limitation, a pledge by Stellex Aerospace of the Paragon
Precision Products stock pursuant to the Pledge Agreement executed and delivered
by Stellex Aerospace), which consent shall be in form and substance satisfactory
to the Administrative Agent and shall have been executed and delivered by Farm
Bureau to the Administrative Agent.
"Farm Bureau Deed of Trust" means the Deed of Trust with Assignment of
Rents and Fixture Filing dated as of September 6, 1991 made by Paragon Precision
Products in favor of Farm Bureau, as such Deed of Trust may be amended,
supplemented and modified from time to time.
"Farm Bureau Guaranty" means the Guaranty dated as of September 6, 1991
by and between Farm Bureau and Stellex Aerospace, a California corporation
(formerly known as Xxxxxxxx Industries Inc.).
13
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day in New York, New York, for the next preceding
Business Day) in New York, New York by the Federal Reserve Bank of New York, or
if such rate is not so published for any day which is a Business Day in New
York, New York, the average of the quotations for such day on such transactions
received by the Administrative Agent from three federal funds brokers of
recognized standing selected by the Administrative Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any Governmental Authority succeeding to its functions.
"Fee Letter" means the Fee Letter dated February 24, 1999 among the
Borrower, SG, the Co- Arrangers and LCPI.
"Financial Covenant Period" means the immediately preceding four fiscal
quarter period; provided, however, with respect to the second, third and fourth
quarters of 1998 the amount of EBITDA, Cash Interest Expense and Capital
Expenditure used in covenant calculations shall be the amounts set forth on
Schedule 1.01(C) (as adjusted on a Pro Forma Basis for any Permitted Acquisition
and Permitted Foreign Acquisition consummated after the date hereof).
"Fiscal Year" means the fiscal year of the Borrower and its
Subsidiaries ending on December 31 of each calendar year.
"Fixed Charge Coverage Ratio" means, for any Financial Covenant Period,
the ratio of (i) EBITDA less Cash Capital Expenditures made during such period
to (ii) Cash Interest Expense plus the regularly scheduled installments of
Funded Debt payable during such period.
"Foreign Employee Benefit Plan" means any employee benefit plan as
defined in Section 3(3) of ERISA which is maintained or contributed to for the
benefit of the employees of the Borrower, any of its Subsidiaries or any of its
ERISA Affiliates, but which is not covered by ERISA pursuant to Section 4(b)(4)
of ERISA.
"Foreign Entity" means a company that is formed or created in any OECD
jurisdiction or is primarily a business or operation that is located in any such
jurisdiction.
"Foreign Pension Plan" means any Foreign Employee Benefit Plan which
under applicable local law is required to be funded through a trust or other
funding vehicle.
"Forfeiture Proceeding" means any action, proceeding or investigation
affecting any of the Stellex Parties before any court, governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, or
the receipt of notice by any such party that any of them is a subject of any
governmental inquiry or investigation, which may result in an indictment of any
of them or the seizure or forfeiture of any of their property.
"Funded Debt" means Debt which matures more than one year from the date
of its creation or matures within one year from such date but is renewable or
extendible, at the option of the debtor, to a date more than one year from such
date or arises under a revolving credit or similar agreement which obligates the
lender
14
or lenders to extend credit during a period of more than one year from such date
including, without limitation, all amounts of Funded Debt required to be paid or
prepaid within one year from the date of determination.
"Funding Date" means the date of the funding of a Loan.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants Standards Board or in such other
statements by such other entity as may be in general use by significant segments
of the accounting profession as in effect on the Effective Date.
"General Intangibles" means a Loan Party's present and future choses in
action, causes of action and all other intangible personal property of every
kind and nature (other than Receivables), including without limitation general
intangibles, contracts, corporate or other business records, designs, patents,
patent applications, trademarks, trademark applications, service marks, service
xxxx applications, trade names, tradestyles, trade secrets, operating
certificates, operating certificate applications, goodwill, registrations,
copyrights, licenses, franchises, permits, operating authorities, agent and
owner/operator contracts, certificates of public convenience, refunds or
reversions from any employee benefit plan or pension plan, covenants not to
compete, blueprints and other drawings, customer lists, tax refunds, tax refund
claims, rights and claims against carriers and shippers, and rights to
indemnification.
"Governing Documents" means, with respect to any corporation, (i) the
articles/certificate of incorporation (or the equivalent organizational
documents) of such corporation, (ii) the by-laws (or the equivalent governing
documents) of the corporation and (iii) any document setting forth the
designation, amount and/or relative rights, limitations and preferences of any
class or series of such corporation's capital stock; and, with respect to any
general partnership, (i) the partnership agreement (or the equivalent
organizational documents) of such partnership and (ii) any document setting
forth the designation, amount and/or relative rights, limitations and
preferences of any of the partnership interests; and, with respect to any
limited partnership, (i) the partnership agreement (or the equivalent
organizational documents) of such partnership, (ii) a certificate of limited
partnership (or the equivalent organizational documents) and (iii) any document
setting forth the designation, amount and/or relative rights, limitations and
preferences of any of the partnership interests.
"Government" means the United States government or any department,
instrumentality or agency thereof, or any state government or any department,
instrumentality or agency thereof.
"Governmental Authority" means any nation or government, any federal,
state, local, foreign or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Government Contracts" means (i) written contracts between any Stellex
Party and the Government; and (ii) written subcontracts between any Stellex
Party and a prime contractor who is providing goods or services to the
Government pursuant to a written contract with the Government or its prime
contractor, if applicable (the "Prime Contract"), provided that the subcontract
relates only to goods or services being provided to the Government pursuant to
the prime contract.
"Government Receivables" means Receivables where the account debtor is
the United States of America or any department, agency or instrumentality
thereof.
"Guarantors" means, collectively, each Subsidiary of the Borrower that
executes and delivers a Guaranty.
15
"Guaranty" means a Guaranty, substantially in the form of Exhibit J
attached hereto and made a part hereof.
"Holder" means any Person entitled to enforce any of the Obligations,
whether or not such Person holds any evidence of Indebtedness, including,
without limitation, each Agent, each Lender and each Issuing Bank.
"Indebtedness" means (without duplication), as applied to any Person at
any time, (a) all indebtedness, obligations or other liabilities of such Person
(i) for borrowed money or evidenced by debt securi ties, debentures,
acceptances, notes or other similar instruments, and any accrued interest, fees
and charges relating thereto, (ii) under profit payment agreements or in respect
of obligations to redeem, repurchase or exchange any Securities of such Person
or to pay dividends in respect of such Securities (other than (A) dividends
declared or paid in additional shares of such Securities, (B) dividends where
the failure to pay would not give the holder of such Securities a cause of
action for money damages against any Stellex Party or the right to have such
Securities redeemed, repurchased or exchanged by any Stellex Party), and (C)
Securities where the obligation to redeem, repurchase or exchange such
Securities is not effective until on or after the date which is one year
following the Term B Maturity Date (iii) with respect to letters of credit
issued for such Person's account, (iv) to pay the deferred purchase price of
property or services, except (x) accounts payable and accrued expenses arising
in the ordinary course of business or (y) where such payment constitutes a
contingent or earn-out payment in connection with a Permitted Acquisition, a
Permitted Foreign Acquisition or with respect to the acquisition of Phoenix
Microwave Corporation, provided that any such contingent or earn-out payment
does not exceed 10% of the total consideration for such Permitted Acquisition or
such Permitted Foreign Acquisition, and such contingent or earn-out payment is
not represented by a Note , (v) in respect of Capital Leases or (vi) which are
Accommodation Obligations; (b) all indebtedness, obligations or other
liabilities of such Person or others secured by a Lien (other than a Customary
Permitted Lien) on any property of such Person, whether or not such indebted
ness, obligations or liabilities are assumed by such Person, all as of such
time; (c) all indebtedness, obligations or other liabilities of such Person in
respect of any interest rate exchange, swap, collar, cap, hedging or similar
agreements and foreign exchange contracts, net of liabilities owed to such
Person by the counterparties thereon; (d) all preferred stock subject (upon the
occurrence of any contingency or otherwise) to mandatory redemption, (other than
preferred stock where the obligation to redeem, repurchase or exchange such
preferred stock is not effective until on or after the date which is one year
following the Term B Maturity Date); and (e) all contingent Contractual
Obligations with respect to any of the foregoing.
"Indemnified Matters" has the meaning ascribed to such term in Section
13.05.
"Indemnitees" has the meaning ascribed to such term in Section 13.05.
"Intellectual Property Security Agreement" means the Patent Security
Agreement, substantially in the form of Exhibit N attached hereto and made a
part hereof.
"Interest Coverage Ratio" means, with respect to any Financial Covenant
Period, the ratio of (i) EBITDA to (ii) Cash Interest Expense.
"Interest Rate Contracts" means interest rate exchange, swap, collar,
cap, hedging or similar agreements between the Borrower and a Lender.
"Interest Rate Determination Date" has the meaning ascribed to such
term in Section 4.02(c).
16
"Inventory" means a Loan Party's present and future (i) inventory, (ii)
goods, merchandise and other personal property furnished or to be furnished
under any contract of service or intended for sale or lease, and all goods
consigned by such Loan Party to another Person and all other items which have
previously constituted Equipment but are then currently being held for sale or
lease in the ordinary course of such Loan Party's business, (iii) raw materials,
work-in-process and finished goods, (iv) materials and supplies of any kind,
nature or description used or consumed in such Loan Party's business or in
connection with the manufacture, production, packing, shipping, advertising,
finishing or sale of any of the property described in clauses (i) through (iii)
above, (v) goods in which such Loan Party has a joint or other interest or right
of any kind (including, without limitation, goods in which such Loan Party has
an interest or right as consignee), and (vi) goods which are returned to or
repossessed by such Loan Party; in each case whether in the possession of such
Loan Party, a bailee, a consignee, or any other Person for sale, storage,
transit, processing, use or otherwise, and any and all documents for or relating
to any of the foregoing.
"Investment" means, with respect to any Person, (i) any purchase or
other acquisition by that Person of Securities, or of a beneficial interest in
Securities, issued by any other Person, (ii) any purchase by that Person of all
or substantially all of the assets of a business conducted by another Person,
and (iii) any direct or indirect loan, advance (other than prepaid expenses,
accounts receivable, advances to employees and similar items made or incurred in
the ordinary course of business as presently conducted) or capital contribution
by that Person to any other Person, including all Indebtedness to such Person
arising from a sale of property by such Person other than in the ordinary course
of its business. The amount of any Investment shall be the original cost of such
Investment, plus the cost of all additions thereto less the amount of any return
of capital or principal to the extent such return is in cash with respect to
such Investment without any adjustments for increases or decreases in value or
write-ups, write-downs or write-offs with respect to such Investment.
"IRS" means the Internal Revenue Service and any Person succeeding to
the functions thereof.
"Issue" means, with respect to any Letter of Credit, either issue, or
extend the expiry of, or renew, or increase the amount of, such Letter of
Credit, and the term "Issued" or "Issuance" shall have a corresponding meaning.
"Issuing Bank" means SG and any successor or assignee thereof.
"Xxxxxxxx Seller Note" means the promissory note dated July 1, 1997
made by KII Acquisition Corp. in favor of Xxxxxxxx Industries Holding AG in the
principal amount of $1,750,000.
"LCPI" has the meaning ascribed to such term in the preamble hereto.
"Lender" has the meaning ascribed to such term in the preamble hereto.
"Letter of Credit" means any Commercial Letter of Credit or Standby
Letter of Credit.
"Letter of Credit Obligations" means, at any particular time, the sum
of (i) all outstanding Reimbursement Obligations, plus (ii) the aggregate
undrawn face amount of all outstanding Letters of Credit, plus (iii) the
aggregate face amount of all Letters of Credit requested by the Borrower but not
yet issued (unless the request for an unissued Letter of Credit has been denied
pursuant to Section 2.04(c)(i)).
"Letter of Credit Reimbursement Agreement" means, with respect to a
Letter of Credit, such form of application therefor and form of reimbursement
agreement therefor (whether in a single or several documents, taken together) as
the Issuing Bank from which the Letter of Credit is requested may employ in the
17
ordinary course of business for its own account, with such modifications thereto
as may be agreed upon by the Issuing Bank and the Borrower and as are not
materially adverse (in the reasonable judgment of the Issuing Bank) to the
interests of the Lenders; provided, however, in the event of any conflict
between the terms hereof and of any Letter of Credit Reimbursement Agreement,
the terms hereof shall control.
"Leverage Ratio" means, for any Financial Covenant Period, the ratio of
(i) the outstanding Funded Debt for the Borrower and its Subsidiaries at the end
of such period, to (ii) EBITDA for such period.
"Liabilities and Costs" means all liabilities, obligations,
responsibilities, losses, damages, personal injury, death, punitive damages,
economic damages, consequential damages, treble damages, intentional, willful or
wanton injury, damage or threat to the environment, natural resources or public
health or welfare, costs and expenses (including, without limitation, attorney,
expert, engineering and consulting fees and costs and any fees and cost
associated with any investigation, feasibility, or Remedial Action studies),
fines, penalties and monetary sanctions, interest, direct or indirect, known or
unknown, absolute or contingent, past, present or future (in each case net of
insurance proceeds and excluding amounts for which a Person is fully indemnified
or for which a reimbursement escrow has been established).
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, conditional sale agreement, deposit arrangement, security interest,
encumbrance, lien (statutory or other), preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever in
respect of any property of a Person, whether granted voluntarily or imposed by
law, and includes the interest of a lessor under a Capital Lease or under any
financing lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement or similar notice (other
than a financing statement filed by a "true" lessor pursuant to ss. 9-408 of the
Uniform Commercial Code or with respect to goods consigned to a Stellex Party or
inventory of a third person in the possession of a Stellex Party), naming the
owner of such property as debtor, under the Uniform Commercial Code or other
comparable law of any jurisdiction.
"Loan Documents" means this Agreement, the Notes, the Fee Letter, the
Guaranty, the Collateral Documents, the Letter of Credit Reimbursement
Agreements, any Interest Rate Contracts to which any Lender or any Affiliate of
a Lender is a party, any foreign exchange contracts to which any Lender or any
Affiliate of a Lender is a party, and all other instruments, agreements and
written Contractual Obligations between any Stellex Party and any Agent, any
Issuing Bank or any Lender delivered to either such Agent, such Issuing Bank or
such Lender pursuant to or in connection with the transactions contemplated
hereby.
"Loan Parties" means the Borrower and the Guarantors. For avoidance of
doubt, a person shall be deemed to become a Loan Party only at the time it
becomes a Guarantor and a Subsidiary of the Borrower.
"Loans" means the Revolving Loans, the Term Loans and the Swing Loans.
"Management Agreement" means the Amended and Restated Management
Advisory Services Agreement dated as of May 29, 1998 among Mentmore Holdings
Corporation and the Stellex Parties that are a party thereto, as such agreement
may be amended, supplemented or modified from time to time.
"Management Equity Holder" means a holder of any Management Equity
Interests.
"Management Equity Interests" means shares of Capital Stock of the
Borrower or of a Subsidiary of the Borrower, options, warrants or stock
appreciation or similar rights, in each case held, at the time of the issuance
thereof, by any then current or former officer, employee or other member of
management (or thereafter by their estates or beneficiaries under their estates)
of the Borrower or of such Subsidiary pursuant to
18
any management equity subscription agreement, employment agreement, employee
benefit plan, stockholder agreement, stock option agreement or similar
management investor agreement and which may be required to be repurchased by the
Borrower or such Subsidiary, or which may be repurchased at the option of the
Borrower or such Subsidiary, in each case pursuant to the terms of any such
agreement under which such equity interests were issued.
"Management Promissory Notes" means promissory notes which may be
issued by the Borrower or a Subsidiary of the Borrower to the holders of any
Management Equity Interests of the Borrower or such Subsidiary in exchange for
such Management Equity Interests held by such holders; provided that (a) such
promissory notes are expressly subordinated to the Notes, (b) such notes are not
secured by any Lien on any property or assets of the Borrower or any of its
Subsidiaries, (c) such promissory notes provide that any payment that is to be
made pursuant to or in connection with the provisions of such promissory notes,
including, without limitation, payments of principal or interest on such notes,
in each case in cash, may be made only to the extent permitted under Section
9.06(iii) (as such Section may be amended or modified from time to time or any
similar provision in any agreement relating to the extension, substitution,
renewal or refinancing of the Obligations) after giving effect to all other
Restricted Junior Payments made to any other Management Equity Holder prior to
or concurrently therewith and (d) such promissory notes are on terms (other than
pricing and maturity) and conditions no less favorable to the Loan Party and the
Lenders than the subordination terms set forth in Schedule 1.01(A).
"Margin Stock" means "margin stock" as such term is defined in
Regulation U.
"Material Adverse Effect" means a material adverse effect, individually
or in the aggregate, upon (i) the condition (financial or otherwise),
operations, assets, business, properties or performance of the Borrower and its
Subsidiaries, taken as a whole, (ii) the ability of the Stellex Parties to
perform their respective obligations under the Loan Documents, or (iii) the
ability of the Lenders, any Issuing Bank or any Agent to enforce the Loan
Documents.
"Maturity Date" means, with respect to Revolving Loans, the Revolving
Termination Date; with respect to Term A Loans, Term A Maturity Date; and with
respect to Term B Loans, the Term B Maturity Date.
"Maximum Revolving Credit Amount" means, at any particular time, the
Revolving Loan Commitments at such time.
"Xxxxxxxx Guaranty" means that certain Guaranty entered into on April
22, 1999 by Xxxxx Xxxx Xxxxxxxx in favor of Stellex Precision Machining, Inc.
(formerly known as PreMach Acquisition Corporation).
"Monitor" means Stellex Monitor Aerospace, Inc. (formerly known as
Monitor Aerospace Corporation), a New York corporation.
"Monitor Acquisition" means the transactions contemplated by the
Monitor Acquisition Documents.
"Monitor Acquisition Agreement" means that certain Agreement and Plan
of Merger dated as of April 28, 1998 by and among Monitor, Stellex Aerospace
Holdings, Inc. and Soze Corp.
"Monitor Acquisition Documents" means, collectively, the Monitor
Acquisition Agreement and all documents, instruments and agreements delivered in
connection therewith.
19
"Monitor Seller Note" means that certain Non-Negotiable Offset
Promissory Note dated May 29, 1998 made by Monitor in favor of Xxxxxxx Xxxxxxx
in the original principal amount of $5,180,000.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA which is, or within the immediately preceding six (6) years
was, contributed to by either any Stellex Party or any ERISA Affiliate, at the
time it was an ERISA Affiliate.
"Net Cash Proceeds" means with respect to any Asset Sale or issuance of
Securities, an amount equal to the cash proceeds of such Asset Sale or issuance,
net of (i) reasonable attorneys' fees, accountants' fees, brokerage, consultant
and other customary fees, underwriting commissions and other reasonable fees and
expenses actually incurred in connection therewith, (ii) taxes paid or
reasonably estimated to be payable as a result thereof, (iii) the amount of
Indebtedness secured by a Lien on the asset being sold that has been repaid with
the proceeds of such Asset Sale and (iv) appropriate amounts that must be set
aside as reserves in accordance with GAAP.
"Net Income" means, for any period, the net earnings (or loss) after
taxes of the Borrower and its Subsidiaries on a consolidated basis for such
period taken as a single accounting period determined in conformity with GAAP.
"Net Worth" means the total assets of the Borrower and its Subsidiaries
on a consolidated basis less total liabilities (net of the liquidation value of
any preferred stock not classified as equity under GAAP) of the Borrower and its
Subsidiaries on a consolidated basis (excluding liabilities with respect to
Management Equity Interests and Management Promissory Notes and deferred
compensation arising in connection therewith), each determined in accordance
with GAAP, but without giving effect to the sale of inventory written-up in
accordance with Accounting Principles Board Opinion No. 16 (or successor
provision).
"Notes" means, collectively, the Revolving Loan Notes, the Term Notes
and the Swing Loan Notes.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit C attached hereto and made a part hereof.
"Notice of Continuation/Conversion" means a notice substantially in the
form of Exhibit D attached hereto and made a part hereof.
"Obligations" means all Loans, advances, debts, liabilities,
obligations, covenants and duties owing by any Stellex Party to any Agent, any
Lender, any Issuing Bank, any Affiliate of any Agent, any Lender or any Issuing
Bank, or any Person entitled to indemnification pursuant to Section 13.05 of
this Agreement, of any kind or nature, present or future, whether or not
evidenced by any note, guaranty or other instrument, whether or not for the
payment of money, whether arising by reason of an extension of credit, opening
or amendment of a Letter of Credit or payment of a draft drawn thereunder,
arising under this Agreement, the Notes or any other Loan Document, whether or
not for the payment of money, whether arising by reason of an extension of
credit, loan, guaranty, indemnification, Interest Rate Contract, foreign
exchange contract or in any other manner, whether direct or indirect (including
those acquired by assignment), absolute or contingent, due or to become due, now
existing or hereafter arising and however acquired. The term includes, without
limitation, all interest, charges, expenses, fees, attorneys' fees and
disbursements and any other sum chargeable to any Stellex Party under this
Agreement, the Notes or any other Loan Document.
20
"OECD" means the member countries of the Organization for Economic
Cooperation and Development (other than the United States).
"Officer's Certificate" means, with respect to any Person, a
certificate executed on behalf of such Person by (i) the chairman or
vice-chairman of such Person's board of directors or (ii) such Person's
president, any of its vice-presidents, its chief financial officer, vice
president of finance or its treasurer.
"OSHA" means the Occupational Safety and Health Act, 29 U.S.C. xx.xx.
651 et seq., any amendments thereto, any successor statutes, and any regulations
promulgated thereunder.
"Other Taxes" has the meaning ascribed to such term in Section 3.03(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any Person
succeeding to the functions thereof.
"Permits" means any permit, approval, authorization, license, variance,
or permission required from a Governmental Authority under an applicable
Environmental, Health or Safety Requirement of Law.
"Permitted Acquisition" means an acquisition or series of related
acquisitions by the Borrower or any other corporate Loan Party of (a) assets
constituting a business or operation that is within the definition of Business
that are located in the United States or Canada and constitute a line of
business of a Person (other than a Subsidiary of the Borrower) or (b) 100% of
the Voting Securities of a Domestic Entity or related Domestic Entities engaged
in the Business if the total consideration for such acquisition or series of
related acquisitions is greater than $20,000,000 or at least 80% of the Voting
Securities of a Domestic Entity engaged in the Business if the total
consideration for such acquisition or series of related acquisitions is equal to
or less than $20,000,000; provided that (i) such acquisition or series of
related acquisitions is made in accordance with the provisions of this
Agreement, (ii) the conditions set forth in Schedule 1.01(B) have been
satisfied, (iii) the total consideration for such acquisition or series of
related acquisitions does not exceed $50,000,000, (iv) if any proceeds of the
Loans are used to finance such acquisition or series of related acquisitions,
the amount of such proceeds does not exceed $25,000,000 and (v) after giving
effect to such acquisition or series of related acquisitions, the Availability
is at least $20,000,000.
"Permitted Disposition" means an Asset Sale where (i) the consideration
therefor does not exceed $20,000,000; (ii) the Borrower or any Loan Party
receives consideration at the time of such Asset Sale at least equal to the fair
market value of the stock and/or assets subject to such Asset Sale, as
determined by (A) the Board of Directors of the Borrower with respect to an
Asset Sale the value of which does not exceed $15,000,000 or (B) a fairness
opinion by an investment banking firm or valuation firm reasonably satisfactory
to the Administrative Agent with respect to an Asset Sale the value of which
equals or exceeds $15,000,000; (iii) at least 75% of the consideration thereof
received by the Borrower or such Subsidiary is in the form of cash or Cash
Equivalents and 100% of the Net Cash Proceeds from such Asset Sale is applied in
accordance with Section 3.01(b)(i); and (iv) the consideration thereof that is
not in the form of cash is pledged to the Collateral Agent, on terms and
conditions, and pursuant to documentation, reasonably satisfactory to the
Administrative Agent, in a manner whereby the Collateral Agent has a valid,
perfected and first priority Lien therein.
"Permitted Existing Indebtedness" means the Indebtedness identified as
such on Schedule 1.01(D).
"Permitted Existing Liens" means the Liens on assets of any Stellex
Party identified as such on Schedule 1.01(E).
21
"Permitted Foreign Acquisition" means an acquisition or series of
related acquisitions by the Borrower or any other corporate Loan Party of (a)
assets constituting a business or operation that is within the definition of
Business that are located in any OECD jurisdiction and constitute a line of
business of a Person (other than a Subsidiary of the Borrower) or (b) 100% of
the Voting Securities of a Foreign Entity or related Foreign Entities; provided
that (i) such acquisition or series of related acquisitions is made in
accordance with the provisions of this Agreement, (ii) the conditions set forth
in Schedule 1.01(B) have been satisfied, (iii) the total consideration for such
acquisition or series of related acquisitions does not exceed $20,000,000 and
(iv) after giving effect to such acquisition or series of related acquisitions,
the Availability is at least $20,000,000.
"Permitted Holders" means (i) Xxxxxxx X. Xxxxxx and Xxxxxxx X. Xxxxxx,
(ii) any spouse or immediate family member of any person named in clause (i)
hereof and any child or spouse of any spouse or immediate family member of any
such person, (iii) a trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding,
directly or indirectly, a controlling interest of which consists of any person
named in clause (i) hereof and/or such other Persons referred to in the
immediately preceding clause (ii) hereof, or (iv) the trustees of any trust
referred to in clause (iii) hereof.
"Permitted Investments" means the Investments permitted pursuant to
Sections 9.04(vii) and (ix), provided that such Investments are made in
accordance with the provisions of this Agreement.
"Person" means any natural person, corporation, limited partnership,
general partnership, joint stock company, joint venture, association, company,
trust, bank, trust company, land trust, business trust, limited liability
company or other organization, whether or not a legal entity, and any
Governmental Authority.
"Plan" means an employee benefit plan defined in Section 3(3) of ERISA
in respect of which any Stellex Party or any ERISA Affiliate is, or within the
immediately preceding six (6) years was at the time it was an ERISA Affiliate,
an "employer" as defined in Section 3(5) of ERISA.
"Pledge Agreements" means, collectively, the Pledge Agreements,
substantially in the form of Exhibit M attached hereto and made a part hereof,
referred to in the List of Closing Documents set forth on Exhibit E attached
hereto and made a part hereof.
"Precision Business" means the business and assets acquired pursuant to
the Acquisition Agreement.
"Preferred Stock" means the Senior Cumulative Redeemable Preferred
Stock issued by the Borrower on the date hereof.
"Process Agent" has the meaning ascribed to such term in Section
13.20(a).
"Pro Forma Basis" means, with respect to any Permitted Acquisition or
Permitted Foreign Acquisition, the calculation of the financial covenants set
forth in Article X and Schedule 1.01(B) and the calculation of the Leverage
Ratio in the determination of pricing and fees hereunder for the Borrower and
its Subsidiaries on a consolidated basis for the immediately preceding twelve
month period, and otherwise determined in accordance with this Agreement, as if
such Permitted Acquisition or such Permitted Foreign Acquisition had been
effected on the first day of such twelve month period, provided that all such
calculations shall take into account the pro forma effect of all Permitted
Acquisitions and Permitted Foreign Acquisitions that occur during such twelve
month period and all Permitted Acquisitions and Permitted Foreign Acquisitions
that occur after such twelve month period but on or prior to the date of
determination (including any Indebtedness
22
assumed or acquired in connection therewith and any Indebtedness incurred to
finance such Permitted Acquisition or Permitted Foreign Acquisition) as if they
had occurred on the first day of such twelve month period.
"Property" means any real or personal property, plant, building,
facility, structure, underground storage tank, equipment or unit, or other asset
owned, leased or operated by any Stellex Party (including any surface water
thereon and soil or groundwater thereunder).
"Pro Rata Share" means, with respect to any Lender, the percentage
obtained by dividing (i) with respect to a Revolving Loan Lender, such Lender's
Revolving Loan Commitment (or, if after the Revolving Termination Date, the
outstanding balances of such Lender's Revolving Loans) by the aggregate amount
of all Revolving Loan Lenders' Revolving Loan Commitments (or, if after the
Revolving Termination Date, the outstanding balances of all Revolving Loans;
(ii) with respect to a Term A Loan Lender, the outstanding amount of such Term A
Loan Lender's Term A Loans by the aggregate outstanding amount of all Term A
Loans; (iii) with respect to a Term B Loan Lender, the outstanding amount of
such Term B Loan Lender's Term B Loans by the aggregate outstanding amount of
all Term B Loans; and (iv) with respect to all Lenders, each Lender's Revolving
Loan Commitment (or, if after the Revolving Termination Date, the outstanding
balance of such Lender's Revolving Loans), such Lender's outstanding Term A
Loans and such Lender's outstanding Term B Loans by the sum of all the Lenders'
Revolving Loan Commitments (or, if after the Revolving Termination Date, the
outstanding balance of all Revolving Loans) plus the outstanding Term A Loans
plus the outstanding Term B Loans.
"Real Property" means all of each Stellex Party's present and future
right, title and interest (including, without limitation, any leasehold estate)
in (i) any plots, pieces or parcels of land, (ii) any improvements, buildings,
structures and fixtures now or hereafter located or erected thereon or attached
thereto of every nature whatsoever (the rights and interests described in
clauses (i) and (ii) above being the "Premises"), (iii) all easements, rights of
way, gores of land or any lands occupied by streets, ways, alleys, passages,
sewer rights, water courses, water rights and powers, and public places
adjoining such land, and any other interests in property constituting
appurtenances to the Premises, or which hereafter shall in any way belong,
relate or be appurtenant thereto, (iv) all hereditaments, gas, oil, minerals
(with the right to extract, sever and remove such gas, oil and minerals, and
easements, of every nature whatsoever, located in or on the Premises and (v) all
other rights and privileges thereunto belonging or appertaining and all
extensions, additions, improvements, betterments, renewals, substitutions and
replacements to or of any of the rights and interests described in clauses (iii)
and (iv) above.
"RCRA" means the Resource Conservation and Recovery Act, 42 U.S.C.
xx.xx. 6901 et seq., any amendments thereto, any successor statutes, and any
regulations promulgated thereunder.
"Receivables" means a Loan Party's present and future (i) accounts,
(ii) contract rights, chattel paper, instruments, documents, deposit accounts,
and other rights to payment of any kind, whether or not arising out of or in
connection with the sale or lease of goods or the rendering of services, and
whether or not earned by performance, (iii) any of the foregoing which are not
evidenced by instruments or chattel paper, (iv) intercompany receivables, and
any security documents executed in connection therewith, (v) proceeds of any
letters of credit or insurance policies on which such Loan Party is named as
beneficiary, (vi) claims against third parties for advances and other financial
accommodations and any other obligations whatsoever owing to such Loan Party,
(vii) rights in and to all security agreements, leases, guarantees, instruments,
securities, documents of title and other contracts securing, evidencing,
supporting or otherwise relating to any of the foregoing, together with all
rights in any goods, merchandise or Inventory which any of the foregoing may
represent, and (viii) rights in returned and repossessed goods, merchandise and
Inventory which any of the same may represent, including, without limitation,
any right of stoppage in transit.
23
"Register" has the meaning ascribed to such term in Section 13.01(c).
"Regulation T" means Regulation T of the Federal Reserve Board as in
effect from time to time.
"Regulation U" means Regulation U of the Federal Reserve Board as in
effect from time to time.
"Regulation X" means Regulation X of the Federal Reserve Board as in
effect from time to time.
"Reimbursement Date" is defined in Section 2.04(d)(i)(A).
"Reimbursement Obligations" means, as to the Borrower, the aggregate
reimbursement or repayment obligations of the Borrower with respect to amounts
drawn under Letters of Credit.
"Release" means release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration at or into the
indoor or outdoor environment or at or into or out of any real or personal
property (regardless of whether any Stellex Party owns, leases or operates it),
including the movement of Contaminants through or in the air, soil, surface
water, groundwater or any real or personal property (regardless of whether any
Stellex Party owns, leases or operates it).
"Remedial Action" means any action required to (i) clean up, remove,
treat or in any other way address Contaminants in the indoor or outdoor
environment; (ii) prevent the Release or threat of Release or minimize the
further Release of Contaminants; or (iii) perform pre-remedial studies and
investigations and post- remedial monitoring and care.
"Replacement Event" means, with respect to any Lender, the appointment
of, or the taking of possession by, a receiver, custodian, conservator, trustee
or liquidator of such Lender, or the declaration by the appropriate regulatory
authority that such Lender is insolvent.
"Replacement Lender" means a financial institution which is an Eligible
Assignee or is otherwise reasonably acceptable to the Administrative Agent and
the Borrower (which acceptance shall not be unreasonably withheld) and which is
not a Stellex Party or an Affiliate of a Stellex Party.
"Reportable Event" means any of the events described in Section 4043 of
ERISA other than an event which is not subject to the thirty (30) day notice
requirement of such regulation.
"Requirements of Law" means, as to any Person, any law, rule or
regulation, or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject including,
without limitation, the Securities Act, the Securities Exchange Act, Regulations
U and X, ERISA, the Fair Labor Standards Act, Environmental, Health or Safety
Requirement of Law and any certificate of occupancy, zoning ordinance, building
or land use requirement or any permit, approval, authorization license,
variance, or permission required from a Governmental Authority or any labor,
employment, occupational safety or health law, rule or regulation.
"Requisite Lenders" means, at any time, Lenders whose aggregate ratable
shares (stated as a percentage) of the aggregate amount of the Revolving Loan
Commitments in effect at such time plus the aggregate outstanding amount of the
Loans (other than Revolving Loans and Swing Loans) at such time are greater than
50.1%; provided, however, that, in the event that the Revolving Loan Commitments
have been terminated pursuant to the terms of this Agreement, "Requisite
Lenders" means any Lender or Lenders whose
24
aggregate ratable shares (stated as a percentage) of the aggregate outstanding
amount of the Obligations are greater than 50.1%.
"Reset Date" means September 30, 1999.
"Restricted Junior Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
capital stock of, partnership interest of or other equity interest of, a Stellex
Party now or hereafter outstanding, except a dividend payable solely in shares
of that class of stock or in any junior class of stock to the holders of that
class, (ii) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any shares of
any class of capital stock of, partnership interest of or other equity interest
of, a Stellex Party now or hereafter outstanding, (iii) any payment or
prepayment of principal of, premium, if any, or interest, fees or other charges
on or with respect to, and any redemption, purchase, retirement, defeasance,
sinking fund or similar payment and any claim for rescission with respect to,
any permitted subordinated indebtedness and (iv) any payment made to redeem,
purchase, repurchase or retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of capital
stock of, partnership interest of or other equity interest of, a Stellex Party
now or hereafter outstanding.
"Revolving Credit Obligations" means, at any particular time, the sum
of (i) the outstanding principal amount of the Swing Loans at such time, plus
(ii) the outstanding principal amount of the Revolving Loans at such time, plus
(iii) Letter of Credit Obligations outstanding at such time.
"Revolving Loan" has the meaning ascribed to such term in Section
2.01(a).
"Revolving Loan Commitment" means, with respect to any Lender, the
obligation of such Lender to make Revolving Loans pursuant to the terms and
conditions of this Agreement, and which shall not exceed the principal amount
set forth opposite such Lender's name under the heading "Revolving Loan Commit
ment" on Exhibit B attached hereto or the signature page of the Assignment and
Acceptance by which it became (or becomes) a Lender, as modified from time to
time pursuant to the terms of this Agreement or to give effect to any applicable
Assignment and Acceptance, and "Revolving Loan Commitments" means the aggregate
principal amount of the Revolving Loan Commitments of all the Lenders, the
original principal amount of which is $65,000,000.
"Revolving Loan Lender" means a Lender who has a Revolving Loan
Commitment.
"Revolving Loan Notes" has the meaning assigned thereto in Section
2.05(a).
"Revolving Termination Date" means the day which is the earliest of (A)
Xxxxx 00, 0000, (X) the termination of the Commitments pursuant to Section
11.02(a) and (C) the date of termination in whole of the Revolving Credit
Commitments pursuant to Section 3.01(a)(ii).
"Securities" means any stock, shares, voting trust certificates, bonds,
debentures, notes or other evidences of indebtedness, secured or unsecured,
convertible, subordinated or otherwise, or any certificates of interest, shares,
or participations in temporary or interim certificates for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire any of the
foregoing, but shall not include any evidence of the Obligations.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, and any successor statute.
25
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
"Security Agreements" means the Security Agreements, substantially in
the form of Exhibit L attached hereto and made a part hereof.
"SG" has the meaning ascribed to such term in the preamble hereto.
"Solvent", when used with respect to any Person, means that at the time
of determination:
(i) the fair value of its assets is in excess of the total amount
of its liabilities (including, without limitation, contingent
liabilities);
(ii) the present fair saleable value of its assets is greater
than its probable liability on its existing debts as such debts become
absolute and matured;
(iii) it is then able and expects to be able to pay its debts
(including, without limitation, contingent debts and other
commitments) as they mature; and
(iv) it has not conducted nor proposes to conduct a business for
which its assets would constitute unreasonably small capital.
"Standby Letter of Credit" means any letter of credit issued by an
Issuing Bank pursuant to Section 2.04 for the account of the Borrower, which is
not a Commercial Letter of Credit.
"Stellex Parties" means the Borrower and its Subsidiaries.
"Subordinated Note Documents" means, collectively, the Subordinated
Note Indenture and all documents, instruments and agreements delivered in
connection therewith.
"Subordinated Note Indenture" means the Indenture dated as of October
31, 1997, as amended by Supplemental Indenture No. 1 dated as of May 29, 1998
and Supplemental Indenture No. 2 dated as of March 1, 1999, between the
Borrower, the subsidiary guarantors party thereto and Marine Midland Bank, as
Trustee, pursuant to which the Subordinated Notes were issued.
"Subordinated Notes" means the 9 1/2% Senior Subordinated Notes due
2007 issued pursuant to the Subordinated Note Indenture.
"Subsidiary" means any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned or controlled by such Person, one or more of
the other subsidiaries of such Person or any combination thereof.
"Swing Loan" is defined in Section 2.03(a).
"Swing Loan Lender" means SG, in its individual capacity or, in the
event SG is not the Administrative Agent, the Administrative Agent (or any
Affiliate of the Administrative Agent designated by the Administrative Agent),
in its individual capacity.
26
"Swing Loan Note" means one or more notes evidencing the Borrower's
Obligation to repay the Swing Loans.
"Syndication Agent" has the meaning ascribed to such term in the
preamble hereto.
"Taxes" has the meaning ascribed to such term in Section 3.03(a).
"Tax Sharing Agreement" has the meaning ascribed to such term in
Section 9.08.
"Term A Loan Commitment" means, with respect to any Lender, the
obligation of such Lender to make Term A Loans pursuant to the terms and
conditions of this Agreement, and which shall not exceed the principal amount
set forth opposite such Lender's name under the heading "Term A Loan Commitment"
on Exhibit B attached hereto or the signature page of the Assignment and
Acceptance by which it became (or becomes) a Lender, as modified from time to
time pursuant to the terms of this Agreement or to give effect to any applicable
Assignment and Acceptance, and "Term A Loan Commitments" means the aggregate
principal amount of the Term A Loan Commitments of all the Lenders, the original
principal amount of which is $60,000,000.
"Term A Loan Lender" means a Lender who has a Term A Loan Commitment.
"Term A Loan Notes" has the meaning assigned thereto in Section
2.05(b).
"Term A Loans" has the meaning ascribed to such term in Section
2.02(a)(i).
"Term A Maturity Date" means the day which is the earlier of (A) March
31, 2005 and (B) the acceleration of the Loans pursuant to Section 11.02(a).
"Term B Loan Commitment" means, with respect to any Lender, the
obligation of such Lender to make Term B Loans pursuant to the terms and
conditions of this Agreement, and which shall not exceed the principal amount
set forth opposite such Lender's name under the heading "Term B Loan Commitment"
on Exhibit B attached hereto or the signature page of the Assignment and
Acceptance by which it became (or becomes) a Lender, as modified from time to
time pursuant to the terms of this Agreement or to give effect to any applicable
Assignment and Acceptance, and "Term B Loan Commitments" means the aggregate
principal amount of the Term B Loan Commitments of all the Lenders, the original
principal amount of which is $110,000,000.
"Term B Loan Lender" means a Lender who has a Term B Loan Commitment.
"Term B Loan Notes" has the meaning assigned thereto in Section
2.05(c).
"Term B Loans" has the meaning ascribed to such term in Section
2.02(a)(ii).
"Term B Maturity Date" means the day which is the earlier of (A)
September 30, 2006 and (B) the acceleration of the Loans pursuant to Section
11.02(a).
"Term Loans" means, collectively, the Term A Loans and the Term B
Loans.
"Term Notes" means, collectively, the Term A Loan Notes and the Term B
Loan Notes.
27
"Termination Event" means (i) any Reportable Event with respect to any
Benefit Plan, (ii) the withdrawal of a Stellex Party or an ERISA Affiliate from
a Benefit Plan during a plan year in which such Stellex Party or such ERISA
Affiliate was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA, (iii) the imposition of an obligation on any Stellex Party or any ERISA
Affiliate under Section 4041 of ERISA to provide affected parties written notice
of intent to terminate a Benefit Plan in a distress termination described in
Section 4041(c) of ERISA, (iv) the institution by the PBGC or any similar
foreign governmental authority of proceedings to terminate any Benefit Plan or
Foreign Pension Plan (v) any event or condition which could reasonably
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan, (vi) a foreign
governmental authority shall appoint or institute proceedings to appoint a
trustee to administer any Foreign Pension Plan, or (vii) the partial or complete
withdrawal of any Stellex Party or any ERISA Affiliate from a Multiemployer Plan
or a Foreign Pension Plan.
"Transaction Documents" means, collectively, the Loan Documents and the
Acquisition Documents.
"Type" means, with respect to any Loan, its nature as a Eurodollar Rate
Loan or a Base Rate Loan.
"Uniform Commercial Code" means the Uniform Commercial Code as enacted
in the State of New York, as it may be amended from time to time.
"Unused Commitment Fee" has the meaning ascribed to such term in
Section 4.03(a).
"Voting Securities" means with respect to any Person, Securities with
respect to any class or classes of capital stock of such Person entitling the
holders thereof ordinarily to vote in the election of the members of the board
of directors of such Person.
"Xxxxxxx-Xxxxxxx Acquisition" means the transactions contemplated by
the Xxxxxxx-Xxxxxxx Acquisition Documents.
"Xxxxxxx-Xxxxxxx Acquisition Agreement" means the Stock Purchase
Agreement dated as of August 29, 1997 by and among TSMD Acquisition,
Xxxxxxx-Xxxxxxx Company and Microwave (formerly known as X-X TSMD, Inc.).
"Xxxxxxx-Xxxxxxx Acquisition Documents" means, collectively, the
Xxxxxxx-Xxxxxxx Acquisition Agreement and all documents, instruments and
agreements delivered in connection therewith.
"Working Capital" means, as at any date of determination, the excess,
if any, of Current Assets (excluding cash and cash equivalents) over Current
Liabilities.
1.02. Computation of Time Periods. In this Agreement, in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding". Periods of days referred to in this Agreement shall be
counted in calendar days unless Business Days are expressly prescribed. Any
period determined hereunder by reference to a month or months or year or years
shall end on the day in the relevant calendar month in the relevant year, if
applicable, immediately preceding the date numerically corresponding to the
first day of such period, provided that if such period commences on the last day
of a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month during which such period is to end), such period
shall, unless otherwise expressly required by the other provisions of this
Agreement, end on the last day of the calendar month.
28
1.03. Accounting Terms. For purposes of this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to them in
conformity with GAAP.
1.04. Other Terms. Terms not otherwise defined herein which are defined
in, or used in, Article 9 of the Uniform Commercial Code shall have the
respective meanings assigned to such terms in Article 9 of the Uniform
Commercial Code.
1.05 Knowledge. As used in this Agreement the phrases "to the knowledge
of," "known by" or phrases of similar import, when applied to any Stellex Party,
shall mean that an individual holding any of the offices identified on Schedule
1.05 attached hereto is actually aware of, or should be aware of in the ordinary
course of business, the fact or other matter.
ARTICLE II
AMOUNTS AND TERMS OF LOANS
2.01. Revolving Loan Facility.
(a) Availability. Subject to the terms and conditions set forth in this
Agreement, each Revolving Loan Lender hereby severally agrees to make revolving
loans (each individually, a "Revolving Loan" and, collectively, the "Revolving
Loans") to the Borrower from time to time during the period from the Effective
Date to the Business Day immediately preceding the Revolving Termination Date,
in an amount not to exceed such Revolving Loan Lender's Pro Rata Share of the
Availability at such time; provided, however, that the initial Borrowing of
Revolving Loans shall not exceed $15,000,000. Each Base Rate Loan shall be for a
minimum amount of One Million Dollars ($1,000,000) and in integral multiples of
One Hundred Thousand Dollars ($100,000) in excess of that amount. Each
Eurodollar Rate Loan shall be for a minimum amount of Two Million Dollars
($2,000,000) and in integral multiples of One Hundred Thousand Dollars
($100,000) in excess of that amount. All Revolving Loans comprising the same
Borrowing under this Agreement shall be made by the Revolving Loan Lenders
simultaneously and proportionately to their then respective Pro Rata Shares, it
being understood that no Revolving Loan Lender shall be responsible for any
failure by any other Revolving Loan Lender to perform its obligation to make a
Revolving Loan hereunder nor shall the Commitment of any Revolving Loan Lender
be increased or decreased as a result of any such failure. Subject to the
provisions of this Agreement, the Borrower may repay any outstanding Revolving
Loan made to it on any day which is a Business Day and any amounts so repaid may
be reborrowed in accordance with the provisions of this Section 2.01(a).
(b) Notice of Borrowing. When the Borrower desires to borrow under this
Section 2.01, the Borrower shall deliver to the Administrative Agent a Notice of
Borrowing, signed by it, no later than 12:00 noon (New York time) (i) on the
proposed Funding Date, in the case of a Borrowing of Base Rate Loans, and (ii)
at least three (3) Business Days in advance of the proposed Funding Date, in the
case of a Borrowing of Eurodollar Rate Loans; provided that no Borrowing of
Eurodollar Rate Loans shall be made on the Effective Date. Such Notice of
Borrowing shall specify (i) the proposed Funding Date (which shall be a Business
Day), (ii) the amount of the proposed Borrowing, (iii) whether the proposed
Borrowing will be of Base Rate Loans or Eurodollar Rate Loans, and (iv) in the
case of Eurodollar Rate Loans, the requested Eurodollar Interest Period. In lieu
of delivering such a Notice of Borrowing, the Borrower may give the
Administrative Agent telephonic notice of any proposed Borrowing by the time
required under this Section 2.01(b) if it confirms such notice by delivery of
the Notice of Borrowing to the Administrative Agent promptly, but in no event
later than 5:00 p.m. (New York time) on the same day. Any Notice of Borrowing
(or telephonic notice in lieu thereof) given pursuant to this Section 2.01(b)
shall be irrevocable.
29
(c) Making of Revolving Loans. (i) Each Revolving Loan Lender shall
deposit an amount equal to its Pro Rata Share of the amount requested by the
Borrower to be made as Revolving Loans in the Administrative Agent's Account at
its office in New York, New York, in immediately available funds, not later than
2:00 p.m. (New York time) on any Funding Date applicable thereto. The
Administrative Agent shall make the proceeds of such amounts received by it
available to the Borrower at the Administrative Agent's office in New York, New
York on such Funding Date (or on the date received if later than such Funding
Date). The failure of any Revolving Loan Lender to deposit the amount described
above with the Administrative Agent on the applicable Funding Date shall not
relieve any other Revolving Loan Lender of its obligations hereunder to make its
Revolving Loan on such Funding Date.
(ii) Unless the Administrative Agent shall have been notified by any
Revolving Loan Lender no later than 1:00 p.m. (New York time) on the applicable
Funding Date in respect of any Borrowing of Revolving Loans that such Revolving
Loan Lender does not intend to fund its Revolving Loan requested to be made on
such Funding Date, the Administrative Agent may assume that such Revolving Loan
Lender has funded its Revolving Loan and is depositing the proceeds thereof with
the Administrative Agent on the Funding Date, and the Administrative Agent in
its sole discretion may, but shall not be obligated to, disburse a corresponding
amount to the Borrower on the Funding Date. If the Revolving Loan proceeds
corresponding to that amount are advanced to the Borrower by the Administrative
Agent but are not in fact deposited with the Administrative Agent by such
Revolving Loan Lender on or prior to the applicable Funding Date, such Revolving
Loan Lender agrees to pay, and in addition the Borrower agrees to repay, to the
Administrative Agent forthwith on demand such corresponding amount, together
with interest thereon, for each day from the date such amount is disbursed to or
for the benefit of the Borrower until the date such amount is paid or repaid to
the Administrative Agent, (A) in the case of the Borrower, at the interest rate
applicable to such Borrowing and (B) in the case of such Revolving Loan Lender,
at the Federal Funds Rate for the first Business Day, and thereafter at the
interest rate applicable to such Borrowing. If such Revolving Loan Lender shall
pay to the Administrative Agent the corresponding amount, the amount so paid
shall constitute such Revolving Loan Lender's Revolving Loan, and if both such
Revolving Loan Lender and the Borrower shall pay and repay such corresponding
amount, the Administrative Agent shall promptly pay to the Borrower such
corresponding amount. This Section 2.01(c)(ii) does not relieve any Revolving
Loan Lender of its obligation to make its Revolving Loan on any Funding Date;
nor does this Section 2.01(c)(ii) relieve the Borrower of its obligation to pay
or repay any Revolving Loan Lender funding its Revolving Loan pursuant to this
Section 2.01(c)(ii) interest on such Revolving Loan from such Funding Date until
the date on which such Revolving Loan is repaid in full.
(d) Repayment of Revolving Loans. The Revolving Loan Commitments shall
terminate, and all outstanding Revolving Loans shall be paid in full, on the
Revolving Termination Date.
2.02. Term Loan Facility.
(a) (i) Amount of Term A Loans. Subject to the terms and conditions set
forth in this Agreement, each Term A Loan Lender hereby severally agrees to make
term loans (each individually, a "Term A Loan" and, collectively, the "Term A
Loans") to the Borrower on the Effective Date in an amount not to exceed such
Lender's Term A Loan Commitment. Each Term A Loan shall be a Base Rate Loan on
the Funding Date. All Term A Loans shall be made by the Term A Loan Lenders
simultaneously and proportionately to their then respective Pro Rata Shares, it
being understood that no Term A Loan Lender shall be responsible for any failure
by any other Term A Loan Lender to perform its obligation to make a Term A Loan
hereunder nor shall the Term A Loan Commitment of any Term A Loan Lender be
increased or decreased as a result of any such failure.
(ii) Amount of Term B Loans. Subject to the terms and conditions set
forth in this Agreement, each Term B Loan Lender hereby severally agrees to make
term loans (each individually, a "Term B Loan" and,
30
collectively, the "Term B Loans") to the Borrower on the Effective Date in an
amount not to exceed such Lender's Term B Loan Commitment. Each Term B Loan
shall be a Base Rate Loan on the Funding Date. All Term B Loans shall be made by
the Term B Loan Lenders simultaneously and proportionately to their then
respective Pro Rata Shares, it being understood that no Term B Loan Lender shall
be responsible for any failure by any other Term B Loan Lender to perform its
obligation to make a Term B Loan hereunder nor shall the Term B Loan Commitment
of any Term B Loan Lender be increased or decreased as a result of any such
failure.
(b) Notice of Borrowing. When the Borrower desires to borrow under this
Section 2.02, the Borrower shall deliver to the Administrative Agent a Notice of
Borrowing, signed by it, no later than 12:00 noon (New York time) at least one
Business Day in advance of the proposed Funding Date. Such Notice of Borrowing
shall specify (i) the proposed Funding Date (which shall be a Business Day) and
(ii) the amount of the proposed Borrowing with respect to the Term Loans. All
Term Loans shall be Base Rate Loans on the Funding Date but after the Funding
Date may be converted to Eurodollar Rate Loans pursuant to Section 4.01(c). Any
Notice of Borrowing given pursuant to this Section 2.02(b) shall be irrevocable.
(c) Making of Term Loans. Each Lender shall deposit an amount equal to
its Pro Rata Share of the amount requested by the Borrowers specified in such
Notice of Borrowing to be made as Term Loans in the Administrative Agent's
Account at its office in New York, New York, in immediately available funds, not
later than 12:00 noon (New York time) on the Funding Date. Subject to the
fulfillment of the conditions precedent set forth in Sections 5.01 and 5.02, the
Administrative Agent shall make the proceeds of such amounts received by it
available to the Borrower at the Administrative Agent's office in New York, New
York on such Funding Date.
(d)(i) Repayment of Term A Loans. The principal amount of the Term A
Loans shall be payable in twenty-four (24) consecutive quarterly installments on
the last day of March, June, September and December in each year, commencing on
June 30, 1999 in the principal amounts set forth below; provided, however, that
the amount of the last such installment shall be in the amount necessary to
repay in full the outstanding principal amount of the Term A Loans:
Installment Payment Date Amount
------------------------ ------
June 30, 1999 $1,250,000
September 30, 1999 1,250,000
December 31, 1999 1,250,000
March 31, 2000 1,250,000
June 30, 2000 1,875,000
September 30, 2000 1,875,000
December 31, 2000 1,875,000
March 31, 2001 1,875,000
June 30, 2001 2,500,000
September 30, 2001 2,500,000
December 31, 2001 2,500,000
March 31, 2002 2,500,000
June 30, 2002 2,500,000
September 30, 2002 2,500,000
December 31, 2002 2,500,000
March 31, 2003 2,500,000
June 30, 2003 3,125,000
September 30, 2003 3,125,000
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December 31, 2003 3,125,000
March 31, 2004 3,125,000
June 30, 2004 3,750,000
September 30, 2004 3,750,000
December 31, 2004 3,750,000
March 31, 2005 3,750,000
(ii) Repayment of Term B Loans. The principal amount of the Term B
Loans shall be payable in thirty (30) consecutive quarterly installments on the
last day of September, December, March and June in each year, commencing on June
30, 1999 in the principal amounts set forth below; provided, however, that the
amount of the last such installment shall be in the amount necessary to repay in
full the outstanding principal amount of the Term B Loans:
Installment Payment Date Amount
June 30, 1999 $ 250,000
September 30, 1999 250,000
December 31, 1999 250,000
March 31, 2000 250,000
June 30, 2000 250,000
September 30, 2000 250,000
December 31, 2000 250,000
March 31, 2001 250,000
June 30, 2001 250,000
September 30, 2001 250,000
December 31, 2001 250,000
March 31, 2002 250,000
June 30, 2002 250,000
September 30, 2002 250,000
December 31, 2002 250,000
March 31, 2003 250,000
June 30, 2003 250,000
September 30, 2003 250,000
December 31, 2003 250,000
March 31, 2004 250,000
June 30, 2004 250,000
September 30, 2004 250,000
December 31, 2004 250,000
March 31, 2005 250,000
June 30, 2005 10,000,000
September 30, 2005 10,000,000
December 31, 2005 10,000,000
March 31, 2006 10,000,000
June 30, 2006 32,000,000
September 30, 2006 32,000,000
2.03. Swing Loans. (a) Swing Loans. Subject to the terms and conditions
set forth herein, the Swing Loan Lender may, in its sole discretion, make loans
(the "Swing Loans") to the Borrower, from time to time after the Effective Date
and prior to the Revolving Termination Date, up to an aggregate principal amount
32
at any one time outstanding which shall not exceed $5,000,000. The Swing Loan
Lender shall have no duty to make or to continue to make Swing Loans. All Swing
Loans shall be payable on demand with accrued interest thereon and shall be
secured as part of the Obligations by the Collateral and shall otherwise be
subject to all the terms and conditions applicable to Revolving Loans, except
that (x) Swing Loans shall not have a minimum amount requirement and (y) all
interest on the Swing Loans made by the Swing Loan Lender shall be payable to
the Swing Loan Lender solely for its own account.
(b) Notice of Borrowing. When the Borrower desires to borrow under this
Section 2.03, it shall deliver to the Administrative Agent an irrevocable Notice
of Borrowing, signed by it, no later than 12:00 p.m. (New York time) on the day
of the proposed Borrowing of a Swing Loan. Such Notice of Borrowing shall
specify (i) the date of the proposed Borrowing (which shall be a Business Day),
(ii) the amount of the proposed Borrowing and (iii) instructions for the
disbursement of the proceeds of the proposed Borrowing. In lieu of delivering
such a Notice of Borrowing, the Borrower shall give the Administrative Agent
irrevocable telephonic notice of any proposed Borrowing by 12:00 p.m. (New York
time) on the day of the proposed Borrowing, and shall confirm such notice by
delivery of the Notice of Borrowing by telecopy to the Administrative Agent
promptly, but in no event later than 3:00 p.m. (New York time) on the same day.
All Swing Loans shall be Base Rate Loans.
(c) Making of Swing Loans. The Swing Loan Lender shall deposit the
amount it intends to fund, if any, in respect of the Swing Loans requested by
the Borrower with the Administrative Agent at its office in New York, New York
not later than 3:00 p.m. (New York time) in immediately available funds on the
date of the proposed Borrowing applicable thereto. The Swing Loan Lender shall
not make any Swing Loan during the period commencing on the first Business Day
after it receives written notice from any Lender that one or more of the
conditions precedent contained in Section 5.02 shall not on such date be
satisfied, and ending when such conditions are satisfied, and the Swing Loan
Lender shall not otherwise be required to determine that, or take notice
whether, the conditions precedent set forth in Section 5.02 hereof have been
satisfied in connection with the making of any Swing Loan. Subject to the
preceding sentence, the Administrative Agent shall make such pro ceeds available
to the Borrower at the Administrative Agent's office in New York, New York on
the date of the proposed Borrowing and shall disburse such proceeds to the
Borrower in accordance with the Borrower's disbursement instructions set forth
in the applicable Notice of Borrowing.
(d) Repayment of Swing Loans. The Borrower shall repay the outstanding
Swing Loans owing to the Swing Loan Lender (i) upon demand by the Swing Loan
Lender and (ii) on the Revolving Termination Date. In the event that the
Borrower fails to repay any Swing Loans, together with interest thereon, as set
forth in the first sentence of this Section 2.03(d), then, upon the request of
the Swing Loan Lender, each Revolving Loan Lender shall make Revolving Loans to
the Borrower (irrespective of the satisfaction of the conditions in Section 5.02
or the requirement to deliver a Notice of Borrowing in Section 2.01(b), which
conditions and requirement such Revolving Loan Lenders irrevocably waive) in an
amount equal to such Revolving Loan Lender's Pro Rata Share of the aggregate
amount of the Swing Loans then outstanding (net of that portion of such Swing
Loan, if any, owing to such Revolving Loan Lender in its capacity as a Swing
Loan Lender) after giving effect to any prepayments and repayments made by the
Borrower, and the Borrower hereby authorizes the Administrative Agent to apply
the proceeds of such Revolving Loans to the repayment of such Swing Loans. To
the extent the Administrative Agent receives any amounts in prepayment or
repayment of outstanding Revolving Loans prior to such request, the
Administrative Agent shall apply such amounts when received to the repayment of
the Swing Loans then outstanding. The failure of any Revolving Loan Lender to
make available to the Administrative Agent its Pro Rata Share of such Revolving
Loans shall not relieve any other Revolving Loan Lender of its obligation
hereunder to make available to the Administrative Agent such other Revolving
Loan Lender's Pro Rata Share of such Revolving Loans on the date of such
request.
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2.04. Letters of Credit. Subject to the terms and conditions set forth
herein, the Issuing Bank hereby agrees to Issue for the account of the Borrower
one or more Letters of Credit during the period from the Closing Date to the
date which is the thirtieth day prior to the Revolving Termination Date, subject
to the following provisions:
(a) Types and Amounts. The Issuing Bank shall not have any obligation
to Issue, and shall not Issue any Letter of Credit at any time:
(i) if the aggregate Letter of Credit Obligations with respect to
the Issuing Bank, after giving effect to the Issuance of the Letter of
Credit requested hereunder, shall exceed $15,000,000 or any limit
imposed by law or regulation upon the Issuing Bank;
(ii) if the Issuing Bank receives written notice (A) from the
Administrative Agent at or before 12:00 p.m. (New York time) on the
date of the proposed Issuance of such Letter of Credit that
immediately after giving effect to the Issuance of such Letter of
Credit, (1) the Letter of Credit Obligations at such time would exceed
$15,000,000 or (2) the Revolving Credit Obligations at such time would
exceed the Maximum Revolving Credit Amount at such time, or (B) from
the Administrative Agent or any of the Lenders at or before 12:00 p.m.
(New York time) on the date of the proposed Issuance of such Letter of
Credit that one or more of the condi tions precedent contained in
Article V, as applicable, would not on such date be satisfied (or
waived pursuant to Section 13.09), unless such conditions are
thereafter satisfied or waived and written notice of such satisfaction
or waiver is given to the Issuing Bank by the Administrative Agent
(and the Issuing Bank shall not otherwise be required to determine
that, or take notice whether, the conditions precedent set forth in
Article V, as applicable, have been satisfied or waived); or
(iii) which has an expiration date later than the earlier of (A)
the date which occurs 180 days following the date of Issuance with
respect to a Commercial Letter of Credit or the date which occurs 360
days following the date of Issuance with respect to a Standby Letter
of Credit or (B) the fifth Business Day immediately preceding the
Revolving Termination Date; or
(iv) which is in a currency other than Dollars.
(b) Conditions. In addition to being subject to the satisfaction of the
conditions precedent contained in Article V, as applicable, the obligation of
the Issuing Bank to Issue any Letter of Credit is subject to the satisfaction in
full of the following conditions:
(i) if the Issuing Bank so requests, the Borrower shall have
executed and delivered to such Issuing Bank and the Administrative
Agent a Letter of Credit Reimbursement Agree ment and such other
documents and materials as may be required pursuant to the terms
thereof;
(ii) the terms of the proposed Letter of Credit shall be
satisfactory to the Issuing Bank in its reasonable credit judgment;
and
(iii) no order, judgment or decree of any court, arbitrator or
Governmental Authority shall purport by its terms to enjoin or
restrain the Issuing Bank from Issuing the Letter of Credit and no
law, rule or regulation applicable to the Issuing Bank and no request
or directive (whether or not having the force of law and whether or
not the failure to comply
34
therewith would be unlawful) from a Governmental Authority with
jurisdiction over the Issuing Bank shall prohibit or request that the
Issuing Bank refrain from the Issuance of letters of credit generally
or the Issuance of such Letter of Credit.
(c) Issuance of Letters of Credit. (i) The Borrower shall give the
Issuing Bank and the Administrative Agent written notice that it is requesting
that the Issuing Bank Issue a Letter of Credit not later than 12:00 p.m. (New
York time) on the third Business Day preceding the requested date for Issuance
thereof, or such shorter notice as may be acceptable to such Issuing Bank and
the Administrative Agent. Such notice shall be irrevocable unless and until such
request is denied by the applicable Issuing Bank and shall specify (A) that the
requested Letter of Credit is either a Commercial Letter of Credit or a Standby
Letter of Credit, (B) the stated amount of the Letter of Credit requested, (C)
the effective date (which shall be a Business Day) of Issuance of such Letter of
Credit, (D) the date on which such Letter of Credit is to expire, (E) the Person
for whose benefit such Letter of Credit is to be Issued, (F) other relevant
terms of such Letter of Credit and (G) the amount of the then outstanding Letter
of Credit Obligations. Such Issuing Bank shall notify the Administrative Agent
immediately upon receipt of a written notice from the Borrower requesting that a
Letter of Credit be Issued and, upon the Administrative Agent's request
therefor, send a copy of such notice to the Administrative Agent.
(ii) The Issuing Bank shall give the Administrative Agent written
notice, or telephonic notice confirmed promptly thereafter in writing, of the
Issuance of a Letter of Credit (which notice the Administrative Agent shall
promptly transmit by telegram, telex, telecopy, telephone or similar
transmission to each Lender).
(d) Reimbursement Obligations; Duties of Issuing Banks. (i)
Notwithstanding any provisions to the contrary in any Letter of Credit
Reimbursement Agreement:
(A) the Borrower shall reimburse the Issuing Bank for amounts
drawn under such Letter of Credit pursuant to Section 2.04 below, no
later than the date (the "Reimbursement Date") which is one (1)
Business Day after the Borrower receives written notice from the
Issuing Bank that a draft has been presented under such Letter of
Credit by the beneficiary thereof; and
(B) all Reimbursement Obligations with respect to any Letter of
Credit shall bear interest at the rate applicable to Base Rate Loans
that are Revolving Loans in accordance with Section 4.01(a) from the
date of the relevant drawing under such Letter of Credit until the
Reimbursement Date and thereafter at the rate applicable in accordance
with Section 4.01(d).
(ii) The Issuing Bank shall give the Administrative Agent written
notice, or telephonic notice confirmed promptly thereafter in writing, of all
drawings under a Letter of Credit and the payment (or the failure to pay when
due) by the Borrower on account of a Reimbursement Obligation (which notice the
Administrative Agent shall promptly transmit by telegram, telex, telecopy or
similar transmission to each Lender).
(iii) No action taken or omitted, in good faith and without gross
negligence, by the Issuing Bank under or in connection with any Letter of Credit
shall put the Issuing Bank under any resulting liability to any Revolving Loan
Lender, the Borrower or, so long as it is not Issued in violation of Section
2.04(a), relieve any Revolving Loan Lender of its obligations hereunder to the
Issuing Bank. Solely as between the Issuing Bank and the Revolving Loan Lenders,
in determining whether to pay under any Letter of Credit, the Issuing Bank shall
have no obligation to the Revolving Loan Lenders other than to confirm that any
documents required to be delivered under a respective Letter of Credit appear to
have been delivered and that they appear on their face to comply with the
requirements of such Letter of Credit.
35
(e) Participations. (i) Immediately upon Issuance by the Issuing Bank
of any Letter of Credit in accordance with the procedures set forth in this
Section 2.04, each Revolving Loan Lender shall be deemed to have irrevocably and
unconditionally purchased and received from the Issuing Bank, without recourse
or warranty, an undivided interest and participation in such Letter of Credit to
the extent of such Revolving Loan Lender's Pro Rata Share, including, without
limitation, all obligations of the Borrower with respect thereto (other than
amounts owing to the Issuing Bank under Section 2.04(g)) and any security
therefor and guaranty pertaining thereto.
(ii) If the Issuing Bank makes any payment under any Letter of Credit
and the Borrower does not repay such amount to the Issuing Bank on the
Reimbursement Date, the Issuing Bank shall promptly notify the Administrative
Agent, which shall promptly notify each Revolving Loan Lender, and each
Revolving Loan Lender shall promptly and unconditionally pay to the
Administrative Agent for the account of the Issuing Bank, in immediately
available funds, the amount of such Revolving Loan Lender's Pro Rata Share of
such payment (net of that portion of such payment, if any, made by such
Revolving Loan Lender in its capacity as the Issuing Bank), and the
Administrative Agent shall promptly pay to the Issuing Bank such amounts
received by it, and any other amounts received by the Administrative Agent for
the Issuing Bank's account, pursuant to this Section 2.04(e). All such payments
shall constitute Revolving Loans made to the Borrower pursuant to Section 2.01
(irrespective of the satisfaction of the conditions in Section 5.02 or the
requirement in Section 2.01(b) to deliver a Notice of Borrowing, which
conditions and requirement, for the purpose of refunding any Reimbursement
Obligation owing to the Issuing Bank, the Revolving Loan Lenders irrevocably
waive). If a Revolving Loan Lender does not make its Pro Rata Share of the
amount of such payment available to the Administrative Agent, such Revolving
Loan Lender agrees to pay to the Administrative Agent for the account of the
Issuing Bank, forthwith on demand, such amount together with interest thereon,
for the first Business Day after the date such payment was first due at the
Federal Funds Rate, and thereafter at the interest rate then applicable to a
Base Rate Loan for Revolving Loans in accordance with Section 4.01(a). The
failure of any such Revolving Loan Lender to make available to the
Administrative Agent for the account of an Issuing Bank its Pro Rata Share of
any such payment shall neither relieve any other Revolving Loan Lender of its
obligation hereunder to make available to the Administrative Agent for the
account of the Issuing Bank such other Revolving Loan Lender's Pro Rata Share of
any payment on the date such payment is to be made nor increase the obligation
of any other Revolving Loan Lender to make such payment to the Administrative
Agent. This Section 2.04(e)(ii) does not relieve the Borrower of its obligation
to pay or repay any Revolving Loan Lender funding its Pro Rata Share of such
payment pursuant to this Section 2.04(e)(ii) interest on the amount of such
payment from such date such payment is to be made until the date on which
payment is repaid in full.
(iii) Whenever the Issuing Bank receives a payment on account of a
Reimbursement Obligation, including any interest thereon, as to which any
Revolving Loan Lender has made a Revolving Loan pursuant to clause (ii) of this
Section 2.04(e)(iii), the Issuing Bank shall promptly pay to the Administrative
Agent such payment in accordance with Section 3.02. Each such payment shall be
made by the Issuing Bank or the Administrative Agent, as the case may be, on the
Business Day on which such Person receives the funds paid to such Person
pursuant to the preceding sentence, if received prior to 11:00 a.m. (New York
time) on such Business Day, and otherwise on the next succeeding Business Day.
(iv) Upon the request of any Lender, the Issuing Bank shall furnish
such Lender copies of any Letter of Credit or Letter of Credit Reimbursement
Agreement to which the Issuing Bank is party and such other documentation as
reasonably may be requested by such Lender.
(v) The obligations of a Revolving Loan Lender to make payments to the
Administrative Agent for the account of the Issuing Bank with respect to a
Letter of Credit shall be irrevocable, shall not be subject to any qualification
or exception whatsoever except willful misconduct or gross negligence of the
Issuing
36
Bank, and shall be honored in accordance with this Article II (irrespective of
the satisfaction of the conditions described in Article V, as applicable, which
conditions, for the purposes of refunding any Reimbursement Obligation owed to
the Issuing Bank, such Revolving Loan Lenders irrevocably waive) under all
circumstances, including, without limitation, any of the following
circumstances:
(A) any lack of validity or enforceability hereof or of any of
the other Loan Documents;
(B) the existence of any claim, setoff, defense or other right
which the Borrower may have at any time against a beneficiary named in
a Letter of Credit or any transferee of a beneficiary named in a
Letter of Credit (or any Person for whom any such transferee may be
act ing), the Administrative Agent, the Issuing Bank, any Lender, or
any other Person, whether in connection herewith, with any Letter of
Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transactions between the
account party and beneficiary named in any Letter of Credit);
(C) any draft, certificate or any other document presented under
the Letter of Credit having been determined to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(D) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents;
(E) any failure by the Issuing Bank to make any reports required
pursuant to Section 2.04(h) or the inaccuracy of any such report; or
(F) the occurrence of any Event of Default or Default.
(f) Payment of Reimbursement Obligations. The Borrower unconditionally
agrees to pay to the Issuing Bank, in Dollars, the amount of all Reimbursement
Obligations, interest and other amounts payable to the Issuing Bank under or in
connection with the Letters of Credit when such amounts are due and payable,
irrespective of any claim, setoff, defense or other right which the Borrower may
have at any time against the Issuing Bank or any other Person. In the event any
payment by the Borrower received by the Issuing Bank with respect to a Letter of
Credit and distributed by the Administrative Agent to the Lenders on account of
their participation is thereafter set aside, avoided or recovered from the
Issuing Bank in connection with any receiver ship, liquidation or bankruptcy
proceeding, each such Lender which received such distribution shall, upon demand
by the Issuing Bank, contribute such Lender's Pro Rata Share of the amount set
aside, avoided or recovered together with interest at the rate required to be
paid by the Issuing Bank upon the amount required to be repaid by it.
(g) Issuing Bank Charges. The Borrower shall pay to the Issuing Bank,
solely for its own account, the standard charges assessed by the Issuing Bank in
connection with the issuance, administration, amendment and payment or
cancellation of Letters of Credit and such compensation in respect of such
Letters of Credit for the Borrower's account as may be agreed upon by the
Borrower and the Issuing Bank from time to time.
(h) Issuing Bank Reporting Requirements. The Issuing Bank shall, no
later than the tenth (10th) Business Day following the last day of each calendar
month, provide to the Administrative Agent and the Borrower separate schedules
for Commercial Letters of Credit and Standby Letters of Credit issued by it, in
form
37
and substance reasonably satisfactory to the Administrative Agent, setting forth
the aggregate Letter of Credit Obligations outstanding to it at the end of each
month and any information requested by the Administrative Agent or the Borrower
relating to the date of issue, account party, amount, expiration date and
reference number of each Letter of Credit issued by it.
(i) Indemnification; Exoneration. (A) In addition to all other amounts
payable to an Issuing Bank, the Borrower hereby agrees to defend, indemnify, and
save the Administrative Agent, the Issuing Bank and each Lender harmless from
and against any and all claims, demands, liabilities, penalties, damages, losses
(other than loss of profits), costs, charges and expenses (including reasonable
attorneys' fees but excluding net income taxes) which the Administrative Agent,
the Issuing Bank or such Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the Issuance of any Letter of Credit other than as a
result of the gross negligence or willful misconduct of the Issuing Bank, as
determined by a court of competent jurisdiction, or (ii) the failure of the
Issuing Bank issuing a Letter of Credit to honor a drawing under such Letter of
Credit as a result of any act or omission, whether rightful or wrongful, of any
present or future de jure or de facto government or Governmental Authority.
(B) As between the Borrower on the one hand and the Administrative
Agent, the Lenders and the Issuing Bank on the other hand, the Borrower assumes
all risks of the acts and omissions of, or misuse of Letters of Credit by, the
respective beneficiaries of the Letters of Credit. In furtherance and not in
limitation of the foregoing, subject to the provisions of the Letter of Credit
Reimbursement Agreements, the Administrative Agent, the Issuing Bank and the
Lenders shall not be responsible for (except to the extent resulting from their
respective gross negligence or willful misconduct, as determined by a final and
nonappealable decision of a court of competent jurisdiction): (i) the form,
validity, legality, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for and
Issuance of the Letters of Credit, even if it should in fact prove to be in any
or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii)
the validity, legality or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a 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) failure of the beneficiary of
a Letter of Credit to comply duly with conditions required in order to draw upon
such Letter of Credit; (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 Letter of Credit or of
the proceeds thereof; (vii) the misapplication by the beneficiary of a Letter of
Credit of the proceeds of any drawing under such Letter of Credit; (viii) any
litigation, proceeding or charges with respect to such Letter of Credit; and
(ix) any consequences arising from causes beyond the control of the
Administrative Agent, the Issuing Bank or the Lenders.
2.05. Promise to Pay; Evidence of Debt. (a) The Borrower agrees to pay
when due the principal amount of each Revolving Loan which is made to the
Borrower, and further agrees to pay all unpaid interest accrued thereon, in
accordance with the terms of this Agreement and the promissory notes evidencing
the Revolving Loans owing to the Revolving Loan Lenders. The Borrower shall
execute and deliver to each Revolving Loan Lender a promissory note to evidence
the Revolving Loans owing to such Revolving Loan Lender and agrees to execute
and deliver to such Revolving Loan Lender and any assignee of such Revolving
Loan Lender such promissory notes as are necessary after giving effect to any
assignment thereof pursuant to Section 13.01, each substantially in the form of
Exhibit F-1 attached hereto and made a part hereof (all such promissory notes
and all amendments thereto, replacements thereof and substitutions therefor
being collectively referred to as the "Revolving Loan Notes"; and "Revolving
Loan Note" means any one of the Revolving Loan Notes).
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(b) The Borrower agrees to pay when due the principal amount of each
Term A Loan which is made to the Borrower, and further agrees to pay all unpaid
interest accrued thereon, in accordance with the terms of this Agreement and the
promissory notes evidencing the Term A Loans owing to the Term A Loan Lenders.
The Borrower shall execute and deliver to each Term A Loan Lender a promissory
note to evidence the Term A Loans owing to such Term A Loan Lender and agrees to
execute and deliver to such Term A Loan Lender and any assignee of such Term A
Loan Lender such promissory notes as are necessary after giving effect to any
assignment thereof pursuant to Section 13.01, each substantially in the form of
Exhibit F-2 attached hereto and made a part hereof (all such promissory notes
and all amendments thereto, replacements thereof and substitutions therefor
being collectively referred to as the "Term A Loan Notes"; and "Term A Loan
Note" means any one of the Term A Loan Notes).
(c) The Borrower agrees to pay when due the principal amount of each
Term B Loan which is made to the Borrower, and further agree to pay all unpaid
interest accrued thereon, in accordance with the terms of this Agreement and the
promissory notes evidencing the Term B Loans owing to the Term B Loan Lenders.
The Borrower shall execute and deliver to each Term B Loan Lender a promissory
note to evidence the Term B Loans owing to such Term B Loan Lender and agrees to
execute and deliver to such Term B Loan Lender and any assignee of such Term B
Loan Lender such promissory notes as are necessary after giving effect to any
assignment thereof pursuant to Section 13.01, each substantially in the form of
Exhibit F-3 attached hereto and made a part hereof (all such promissory notes
and all amendments thereto, replacements thereof and substitutions therefor
being collectively referred to as the "Term B Loan Notes"; and "Term B Loan
Note" means any one of the Term B Loan Notes).
(d) The Borrower agrees to pay when due the principal amount of each
Swing Loan which is made to the Borrower, and further agree to pay all unpaid
interest accrued thereon, in accordance with the terms of this Agreement and the
promissory notes evidencing the Swing Loans owing to the Swing Loan Lender. The
Borrower shall execute and deliver to the Swing Loan Lender a promissory note to
evidence the Swing Loans owing to the Swing Loan Lender and agrees to execute
and deliver to the Swing Loan Lender and any assignee of the Swing Loan Lender
such promissory notes as are necessary after giving effect to any assignment
thereof pursuant to Section 13.01, each substantially in the form of Exhibit F-4
attached hereto and made a part hereof (all such promissory notes and all
amendments thereto, replacements thereof and substitutions therefor being
collectively referred to as the "Swing Loan Notes"; and "Swing Loan Note" means
any one of the Swing Loan Notes).
2.06. Use of Proceeds of Loans. The proceeds of the Loans shall be used
(i) to finance the Acquisition, (ii) to refinance certain existing senior
indebtedness of the Borrower and its Subsidiaries, (iii) to pay the transaction
fees and expenses relating to the Acquisition and the other transactions
contemplated under this Agreement, (iv) to finance Permitted Acquisitions and
Permitted Foreign Acquisitions in accordance with the terms hereof and (iv) to
provide working capital in the ordinary course of business of the Borrower and
its Subsidiaries and for other general corporate purposes not prohibited
hereunder.
2.07. Authorized Officers, Employees and Agents. On the Effective Date
and from time to time thereafter, the Borrower shall deliver to the
Administrative Agent an Officer's Certificate setting forth the names of the
officers of the Borrower, employees and agents of the Borrower authorized to
request Loans and Letters of Credit on behalf of the Borrower and containing a
specimen signature of each such officer, employee or agent. The officers,
employees and agents so authorized shall also be authorized to act for the
Borrower in respect of all other matters relating to the Loan Documents. The
Agents shall be entitled to rely conclusively on such officer's, employee's or
agent's authority to request such Loan or Letter of Credit until the Agents
receive written notice to the contrary. In addition, the Agents shall be
entitled to rely conclusively on any written notice sent to it by telecopy. The
Agents shall have no duty to verify the authenticity of the signature appearing
on, or any
39
telecopy or facsimile of, any written Notice of Borrowing or any other document,
and, with respect to an oral request for such a Loan or Letter of Credit, the
Agents shall have no duty to verify the identity of any person representing
himself or herself as one of the officers, employees or agents authorized to
make such request or otherwise to act on behalf of the Borrower. None of the
Agents, the Issuing Banks or the Lenders shall incur any liability to the
Borrower or any other Person in acting upon any telecopy or facsimile or
telephonic notice referred to above which any Agent, any Issuing Bank or any
Lender believes to have been given by a duly authorized officer or other person
authorized to borrow on behalf of the Borrower.
ARTICLE III
PAYMENTS AND PREPAYMENTS
3.01. Prepayments; Reductions in Revolving Loan Commitments.
(a) Voluntary Prepayments/Reductions.
(i) The Borrower may, at any time and from time to time, prepay the
Loans in whole or in part upon at least one (1) Business Day's (with respect to
Base Rate Loans) or three (3) Business Days' (with respect to Eurodollar Rate
Loans) prior written notice to the Administrative Agent (which the
Administrative Agent shall promptly transmit to each Lender, it being agreed
that the failure of the Administrative Agent to give such notice shall not
affect the Borrower's right to prepay any Loan); provided, however, that (A) any
partial prepayment of Revolving Loans shall be in minimum amounts of $500,000
and in multiples of $100,000 in excess thereof and that any partial prepayment
of Term Loans shall be in minimum amounts of $1,000,000 and in multiples of
$100,000 in excess thereof, (B) Eurodollar Rate Loans may only be prepaid (1) in
whole or in part on the expiration date of the then applicable Eurodollar
Interest Period or (2) otherwise upon payment of the amounts described in
Section 4.02(f) and (C) if Term B Loans are prepaid in whole or in part at any
time during the period commencing on the Effective Date and ending on the date
which is the second anniversary thereof, the Borrower will pay the applicable
amount described in Section 4.03(c) . Any notice of prepayment given to the
Administrative Agent under this Section 3.01(a)(i) shall specify the Loans to be
prepaid, the date (which shall be a Business Day) of prepayment, and the
aggregate principal amount of the prepayment. Any prepayment of Term Loans shall
be applied in the proportions specified by the Borrower to the Term A Loans and
the Term B Loans but the amounts, if any, applied to each of the Term A Loans
and Term B Loans shall be applied pro rata to the remaining principal
installments of such Term Loans. When notice of prepayment is delivered as
provided herein, the principal amount of the Loans specified in the notice shall
become due and payable on the prepayment date specified in such notice.
(ii) The Borrower, upon at least five (5) Business Days' prior notice
to the Administrative Agent (which the Administrative Agent shall promptly
transmit to each Lender), shall have the right, at any time and from time to
time, to terminate in whole or permanently reduce ratably in part the unused
portions of the Commitments. Any partial reduction of the Commitments shall be
in an aggregate minimum amount of One Million Dollars ($1,000,000) and integral
multiples of One Hundred Thousand Dollars ($100,000) in excess of that amount,
and shall reduce the Commitment of each Lender proportionately in accordance
with such Lender's Pro Rata Share. Any notice of termination or reduction given
to the Administrative Agent under this Sec tion 3.01(a)(ii) shall specify
whether the termination or reduction is applicable to the Revolving Loan
Commitment, the date (which shall be a Business Day) of such termination or
reduction and, with respect to a partial reduction, the aggregate principal
amount thereof.
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(iii) Except as provided in this Section 3.01(a), the prepayments and
payments in respect of reductions and terminations described in clauses (i) and
(ii) of this Section 3.01(a) may be made without premium or penalty.
(b) Mandatory Prepayments/Reductions.
(i) Immediately upon any Loan Party's receipt of any Net Cash Proceeds
(other than Excluded Sale Proceeds) on account of an Asset Sale, such Loan Party
shall make or cause to be made a mandatory prepayment of the Term Loans in an
amount equal to 100% of such Net Cash Proceeds. Subject to Section 3.01(b)(iv),
each such prepayment of Term Loans shall be applied pro rata to the Term A Loans
and the Term B Loans and the amounts applied to Term A Loans and Term B Loans
shall be applied pro rata to the remaining principal installments of such Term
Loans.
(ii) Immediately upon any Loan Party's receipt of any Net Cash Proceeds
from the issuance of any Securities (other than Excluded Securities) by such
Loan Party, such Loan Party shall make or cause to be made a mandatory
prepayment of the Term Loans in an amount equal to 100% of such Net Cash
Proceeds. Notwithstanding the foregoing, a mandatory prepayment will not be
required under this Section 3.01(b)(ii) with respect to Net Cash Proceeds that
are used by a Loan Party within one year from the receipt of such Net Cash
Proceeds by such Loan Party to consummate a Permitted Acquisition or a Permitted
Foreign Acquisition or make a Permitted Investment, provided that such Net Cash
Proceeds are deposited into the Cash Collateral Account upon receipt of such Net
Cash Proceeds by such Loan Party until the earlier of (a) such time as such Loan
Party consummates such Permitted Acquisition or such Permitted Foreign
Acquisition or makes such Permitted Investment or (b) the first annual
anniversary of the date such Net Cash Proceeds were deposited into the Cash
Collateral Account (on such first annual anniversary and at all times
thereafter, such Net Cash Proceeds shall cease to be proceeds from the issuance
of Excluded Securities). Subject to Section 3.01(b)(iv), each prepayment of Term
Loans required to be made under this Section 3.01(b)(ii) shall be applied pro
rata to the Term A Loans and the Term B Loans and the amounts applied to Term A
Loans and Term B Loans shall be applied pro rata to the remaining principal
installments of such Term Loans.
(iii) On the earlier of (A) the date the financial statements of the
Borrower and its Subsidiaries are delivered to the Administrative Agent pursuant
to Section 7.01(b) and (B) the 90th day following the last day of each Fiscal
Year, the Borrower shall make or cause to be made a mandatory prepayment of the
Term Loans in an amount equal to the lesser of 75% of the Excess Cash Flow for
such Fiscal Year or the aggregate principal amount of the Term Loans outstanding
as of the date of payment; provided, however, that a mandatory prepayment of the
Term Loans in an amount equal to the lesser of 50% of the Excess Cash Flow for
such Fiscal Year or the aggregate principal amount of the Term Loans outstanding
as of the date of payment shall be required hereunder if the Leverage Ratio of
the Borrower and its Subsidiaries on a consolidated basis for the twelve month
period ending on the last day of such Fiscal Year is less than 3.50 to 1.00, and
no mandatory prepayment shall be required hereunder if the Leverage Ratio of the
Borrower and its Subsidiaries on a consolidated basis for the twelve month
period ending on the last of such Fiscal Year is less than 2.00 to 1.00. Subject
to Section 3.01(b)(iv), each such prepayment of Term Loans shall be applied pro
rata to the Term A Loans and the Term B Loans and the amounts applied to Term A
Loans and Term B Loans shall be applied pro rata to the remaining principal
installments of such Term Loans.
(iv) In the event that a mandatory prepayment is required to be made on
the Term Loans under Section 3.01(b)(i), (ii) or (iii) and Term A Loans are
outstanding (an "Option Event"), the portion of the mandatory prepayment that is
required to be applied to the Term B Loans (the "B Portion") shall be deposited
into the Cash Collateral Account and each Term B Lender shall have the option
not to have its Term B Loans prepaid. If an Option Event occurs, the
Administrative Agent shall give each Term B Lender notice (the "Option
41
Notice") that an Option Event has occurred and specify the prepayment amount
such Term B Lender will receive if its Term B Loans are prepaid. A Term B Lender
may elect not to receive such prepayment amount by giving the Administrative
Agent notice of such election within five Business Days following such Term B
Lender's receipt of the Option Notice (the "Election Period"). Any prepayment
amount that a Term B Lender elects not to receive shall be applied pro rata to
the remaining principal installments of the Term A Loans. Promptly following the
Election Period, the Administrative Agent shall withdraw the B Portion from the
Cash Collateral Account and apply that amount of the B Portion to the remaining
principal installments of the Term B Loans held by Term B Lenders that have not
made the foregoing election and that amount of the B Portion, if any, pro rata
to the remaining principal installments of the Term A Loans with respect to
amounts that would have otherwise been applied to Term B Loans held by Term B
Lenders that have made such election.
(v) Nothing in this Section 3.01(b) shall be construed to constitute
the Lenders' consent to any transaction which is not expressly permitted by
Article IX.
3.02. Payments. (a) Manner and Time of Payment. All payments of
principal, interest, fees, Reimbursement Obligations and other Obligations which
are payable to the Administrative Agent, any Lender or any Issuing Bank shall be
made without condition or deduction for any counterclaim, defense, recoupment or
set-off, in Dollars and in immediately available funds, delivered to the
Administrative Agent (or, in the case of Reimbursement Obligations, to the
Issuing Bank) not later than 1:00 p.m. (New York time) on the date due, by
deposit of such funds to the Administrative Agent's Account (or such account of
the Issuing Bank, as it may designate). The Administrative Agent shall
thereafter cause to be distributed to the Lenders their respective Pro Rata
Shares of such payments in accordance with the provisions of Section 3.02(b) if
received prior to 1:00 p.m. (New York time), and on the next succeeding Business
Day, if received thereafter, by the Administrative Agent.
(b) Apportionment of Payments. (i) Subject to the provisions of
Sections 3.01 and 3.02(b)(ii), all payments of principal in respect of
outstanding Revolving Loans shall be applied by the Administrative Agent to the
payment of the Revolving Loans owing to the Revolving Loan Lenders in accordance
with their respective Pro Rata Shares thereof, and all payments of principal in
respect of outstanding Term Loans shall be applied by the Administrative Agent
to the payment of the Term Loans owing to the Term Loan Lenders in accordance
with their respective Pro Rata Shares thereof.
(ii) After the occurrence of an Event of Default and while the same is
continuing, the Administrative Agent shall apply all payments and prepayments of
any Obligations and all proceeds of Collateral in the following order:
(A) first, to pay principal of and interest on any Loans which
the Administrative Agent may have advanced on behalf of any Lender
pursuant to Section 2.01(c)(ii) for which the Administrative Agent has
not been reimbursed by such Lender or the Borrower;
(B) second, to pay Obligations in respect of any fees, expense
reimbursements or indemnities then due to the Agents;
(C) third, to pay interest or any fees on the Loans;
(D) fourth, to pay the principal amount of the Loans then
outstanding in accordance with each Lender's Pro Rata Share;
(E) fifth, to pay obligations in respect of any expense
reimbursements or indemnities then due to any Lender; and
42
(F) sixth, to pay all other Obligations in such order as the
Administrative Agent may determine in its sole discretion.
The order of priority set forth in this Section 3.02(b)(ii) and the related
provisions of this Agreement are set forth solely to determine the rights and
priorities of the Administrative Agent and the Lenders as among themselves. If
sufficient funds are not available to fund all Obligations described in any of
the foregoing clauses (A) through (E), the available funds shall be allocated to
the Obligations described in such clause ratably.
(c) Payments on Non-Business Days. Whenever any payment to be made by
the Borrower hereunder or under the Notes is stated to be due on a day which is
not a Business Day, the payment shall instead be due on the next succeeding
Business Day, and any such extension of time shall be included in the
computation of the payment of interest and fees hereunder.
3.03. Taxes. (a) Except as provided below in this Section 3.03(a), all
payments made by the Borrower under this Agreement and the Notes shall be made
free and clear of, and without deduction or withholding for or on account of,
any present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority, excluding net
income taxes and franchise taxes (imposed in lieu of net income taxes) imposed
on any Agent or any Lender as a result of a present or former connection between
such Agent or such Lender and the jurisdiction of the Governmental Authority
imposing such tax or any political subdivision or taxing authority thereof or
therein (other than any such connection arising solely from such Agent's or such
Lender's having executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement or the Notes). If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts
payable to any Agent or any Lender hereunder or under the Notes (i) the Borrower
shall deduct or withhold the full amount of such Non- Excluded Taxes and pay
such Non-Excluded Taxes to the appropriate Governmental Authority in accordance
with applicable law and (ii) the amounts so payable to such Agent or such Lender
shall be increased to the extent necessary to yield to such Agent or such Lender
(after payment of all Non-Excluded Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Agreement and
the Notes; provided that the Borrower shall not be required to increase any such
amounts payable to any Lender unless the obligation to pay such increased
amounts would not have arisen but for a change in law (including the Code or
applicable tax treaty) occurring after the Closing Date. If the Borrower fails
to pay any Non-Excluded Taxes when due to the appropriate taxing authority or
fails to remit to the Administrative Agent the required receipts or other
required documentary evidence referred to in Section 3.03(d), the Borrower shall
indemnify the Administrative Agent and the Lenders for any incremental taxes,
interest or penalties that may become payable by the Lenders as a result of any
such failure. The covenants in this Section 3.03(a) shall survive the
termination of this Agreement and the payment of the Notes and payment of the
Obligations hereunder.
(b) Other Taxes. In addition, the Borrower agrees to pay any present or
future stamp, value-added or documentary taxes or any other excise or property
taxes, charges or similar levies which arise from (i) any payment made under any
Loan Document or (ii) the execution, delivery or registration of, or otherwise
with respect to, this Agreement, the Notes or any other Loan Document
(hereinafter referred to as "Other Taxes").
(c) Indemnification. The Borrower will indemnify each Lender, each
Issuing Bank and each Agent against, and reimburse each on demand for, the full
amount of all Non-Excluded Taxes and Other Taxes
43
(including, without limitation, any Non-Excluded Taxes or Other Taxes imposed by
any Governmental Authority on amounts payable under this Section 3.03 and any
additional income or franchise taxes resulting therefrom) incurred or paid by
such Lender, such Issuing Bank or such Agent (as the case may be) or any
Affiliate of such Lender and any liability (including penalties, interest, and
out-of-pocket expenses paid to third parties) arising therefrom or with respect
thereto, whether or not such Non-Excluded Taxes or Other Taxes were correctly or
lawfully payable. A certificate as to any amount payable to any Person under
this Section 3.03 submitted by such Person to the Borrower shall, absent
manifest error, be final, conclusive and binding upon all parties hereto. This
indemnification shall be made within thirty (30) days from the date such Person
makes written demand therefor.
(d) Receipts. Within thirty (30) days after the date of any payment of
Non-Excluded Taxes or Other Taxes by the Borrower, the Borrower will furnish to
the Administrative Agent, at its address referred to in Section 13.10, the
original or a certified copy of a receipt or other documentation reasonably
satisfactory to the Administrative Agent evidencing payment thereof. The
Borrower will furnish to the Administrative Agent upon the Administrative
Agent's request from time to time an Officer's Certificate stating that all
Non-Excluded Taxes and Other Taxes of which it is aware that are due have been
paid and that no additional Non-Excluded Taxes or Other Taxes of which it is
aware are due.
(e) Lender Certifications. Without limiting the obligations of the
Borrower under this Section 3.03, each Lender shall:
(i) deliver to the Borrower and the Administrative Agent on or
before the Effective Date or the date on which such Lender becomes a
Lender pursuant to Section 13.01, (1) in the case of a Lender that is
not created or organized under the laws of the United States or any
state thereof or that is a foreign trust (within the meaning of
Section 7701(a)(31) of the Code) either (x) two duly completed copies
of United States Internal Revenue Service Form 1001 or 4224, or
successor applicable form or forms (such as the W-8BEN, W-8IMY or
W-8EC1), as the case may be, (y) if such Lender is not a "bank" within
the meaning of Section 881(c)(3)(A) of the Code and intends to claim
exemption from U.S. Federal withholding tax under Section 871(h) or
Section 881(c) of the Code with respect to payments of "portfolio
interest", a Form W-8, or any subsequent versions thereof or
successors thereto together with a certificate executed by such Lender
claiming complete exemption from U.S. federal withholding tax on
payments of interest by the Borrower under this Agreement and the
other Loan Documents and representing that such Lender is not a bank
for purposes of Section 881(c) of the Code, is not a 10 percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Code)
of the Borrower and is not a controlled foreign corporation related to
the Borrower (within the meaning of Section 864(d)(4) of the Code), or
(z), an Internal Revenue Service Form W-8, or successor applicable
form or subsequent applicable version thereof or (2) an Internal
Revenue Service Form W-9, or successor applicable form;
(ii) deliver to the Borrower and the Administrative Agent two
further duly completed copies of any such form (or deliver the
appropriate duly completed successor form of forms) or certification
on or before the date that any such form or certification expires or
becomes obsolete and promptly after the occurrence of any event
requiring a change in the most recent form previously delivered by it
to the Borrower; and
(iii) obtain such extensions of time for filing and duly complete
such forms or certifications as may reasonably be requested by the
Borrower or the Administrative Agent;
44
unless in any such case an event (including, without limitation, any
change in treaty, law or regulation) has occurred prior to the date on
which any such delivery would otherwise be required, which renders all
such forms inapplicable or which would prevent such Lender from duly
completing and delivering any such form with respect to it and such
Lender so advises the Borrower and the Administrative Agent. Each
Person that shall become a participant pursuant to Section 13.01
shall, upon the effectiveness of the related transfer, be required to
provide to the Borrower and the Administrative Agent all the forms and
statements required of a Lender pursuant to this Section. For purposes
of this Section 3.03(e), a Form W-8BEN completed and delivered by a
Person claiming a reduced rate of withholding at source under an
income tax treaty will not be considered duly completed unless the
form contains such Person's U.S. taxpayer identification number.
Notwithstanding anything contained in this Section 3.03, no Lender shall have
any liability owing to the Borrower or any other Stellex Party for such Lender's
failure to give the applicable form or certification under this Section 3.03.
3.04. Increased Capital. If any Lender or Issuing Bank reasonably
determines that (i) the adoption or implementation of or any change in or in the
interpretation or administration of any law or regulation or any guideline or
request from any central bank or other Governmental Authority or
quasi-governmental authority exercising jurisdiction, power or control over such
Lender, such Issuing Bank or banks or financial institutions generally (whether
or not having the force of law) effective after the date hereof, compliance with
which affects or would affect the amount of capital required or expected to be
maintained by such Lender or such Issuing Bank or any corporation controlling
such Lender or such Issuing Bank and (ii) the amount of such capital is
increased by or based upon (A) the making or maintenance by any Lender of its
Loans, any Lender's participation in or obligation to participate in the Loans,
Letters of Credit or other advances made hereunder or under the Notes or the
existence of any Lender's obligation to make Loans or (B) the issuance or
maintenance by the Issuing Bank of, or the existence of the Issuing Bank's
obligation to issue, Letters of Credit, then, in any such case, upon demand by
such Lender or such Issuing Bank (with a copy of such demand to the
Administrative Agent), the Borrower agrees to immediately pay to the
Administrative Agent for the account of such Lender or such Issuing Bank, from
time to time as specified by such Lender or such Issuing Bank, additional
amounts sufficient to compensate such Lender or such Issuing Bank or such
corporation on an after-tax basis therefor. Such demand shall be accompanied by
a statement as to the amount of such compensation and include a brief summary of
the basis for such demand. Such statement shall be conclusive and binding for
all purposes, absent manifest error.
3.05. Replacement of Lenders. (a) Upon the occurrence of any event
giving rise to the operation of Section 3.04 or Section 4.01(f) or any event
giving rise to an obligation of Borrower to pay increased amounts under Section
3.03(a), which results in any Lender charging to the Borrower increased costs in
excess of those being charged generally by the Lenders, (b) if a Lender is in
breach of its obligations to fund under this Agreement, (c) in the case of a
refusal by a Lender to consent to a proposed change, waiver, discharge or
termination with respect to this Agreement which requires the consent of all
Lenders and has been approved by the Requisite Lenders and/or (d) if a Lender
delivers a notice under Section 4.02(e), the Borrower shall have the right, if
no Event of Default then exists, to replace such Lender (the "Replaced Lender")
with one or more other Eligible Assignees, none of whom shall be in default of
its obligations under this Agreement at the time of such replacement
(collectively, the "Replacement Lender") reasonably acceptable to the
Administrative Agent, provided that (i) at the time of any replacement pursuant
to this Section 3.05, the Replacement Lender shall enter into one or more
Assignment and Acceptances pursuant to Section 13.01 (and with all fees payable
pursuant to Section 13.01(d) to be paid by the Replacement Lender) pursuant to
which the Replacement Lender shall acquire
45
all of the Commitments and outstanding Loans of the Replaced Lender and, in
connection therewith, shall pay to the Replaced Lender in respect thereof an
amount equal to the sum of (A) an amount equal to the principal of, and all
accrued interest (and, if the date of such replacement is a date other than the
expiration date of the then applicable Eurodollar Interest Period, all amounts
described in Section 4.02(f)) on, all outstanding Loans of the Replaced Lender,
(B) an amount equal to all accrued, but theretofore unpaid, fees owing to the
Replaced Lender under this Agreement and (C) an amount equal to all other
outstanding Obligations owing to the Replaced Lender, and (ii) all obligations
of the Borrower owing to the Replaced Lender (other than those specifically
described in clause (i) above in respect of which the assignment purchase price
has been, or is concurrently being, paid) shall be paid in full to such Replaced
Lender concurrently with such replacement. Upon the execution of the respective
Assignment and Acceptance, the payment of amounts referred to in clauses (i) and
(ii) above and, if so requested by the Replacement Lender, delivery to the
Replacement Lender of the appropriate instruments otherwise required by this
Agreement executed by the Borrower, the Replacement Lender shall become a Lender
hereunder and the Replaced Lender shall cease to constitute a Lender hereunder,
except with respect to indemnification provisions applicable to the Replaced
Lender under this Agreement, which shall survive as to such Replaced Lender.
ARTICLE IV
INTEREST AND FEES
4.01. Interest on the Loans and other Obligations.
(a) Rate of Interest. (i) All Revolving Loans and the outstanding
amount of all other Obligations (other than Swing Loans and Term Loans) shall
bear interest on the unpaid amount thereof from the date such Revolving Loans
are made or such other Obligations are due and payable until paid in full,
except as otherwise provided in Section 4.01(d), as follows:
(A) If a Base Rate Loan or other Obligation, at a rate per annum
equal to the sum of (I) the Base Rate as in effect from time to time,
plus (II) the Applicable Revolving Loan Base Rate Margin in effect at
such time; and
(B) If a Eurodollar Rate Loan, at a rate per annum equal to the
sum of (I) the Eurodollar Rate determined for the applicable
Eurodollar Interest Period, plus (II) the Applicable Revolving
Eurodollar Rate Margin in effect from time to time during such
Eurodollar Interest Period.
(ii) All Term A Loans shall bear interest on the unpaid amount thereof
from the date such Term A Loans are made until paid in full, except as otherwise
provided in Section 4.01(d), as follows:
(A) If a Base Rate Loan, at a rate per annum equal to the sum of
(I) the Base Rate as in effect from time to time, plus (II) the
Applicable Term A Loan Base Rate Margin in effect at such time; and
(B) If a Eurodollar Rate Loan, at a rate per annum equal to the
sum of (I) the Eurodollar Rate determined for the applicable
Eurodollar Interest Period, plus (II) the Applicable Term A Loan
Eurodollar Rate Margin in effect from time to time during such
Eurodollar Interest Period.
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(iii) All Term B Loans shall bear interest on the unpaid amount thereof
from the date such Term B Loans are made until paid in full, except as otherwise
provided in Section 4.01(d), as follows:
(A) If a Base Rate Loan, at a rate per annum equal to the sum of
(I) the Base Rate as in effect from time to time, plus (II) the
Applicable Term B Loan Base Rate Margin in effect at such time; and
(B) If a Eurodollar Rate Loan, at a rate per annum equal to the
sum of (I) the Eurodollar Rate determined for the applicable
Eurodollar Interest Period, plus (II) the Applicable Term B Loan
Eurodollar Rate Margin in effect from time to time during such
Eurodollar Interest Period.
(iv) All Swing Loans shall bear interest on the unpaid amount thereof
from the date such Swing Loans are made until paid in full, except as otherwise
provided in Section 4.01(d), at a rate per annum equal to the sum of (I) the
Base Rate as in effect from time to time, plus (II) the Applicable Revolving
Loan Base Rate Margin in effect at such time minus 0.25%.
(vi) The applicable basis for determining the rate of interest on the
Loans shall be selected by the Borrower at the time a Notice of Borrowing or a
Notice of Conversion/Continuation is delivered by the Borrower to the
Administrative Agent; provided, however, the Borrower may not select the
Eurodollar Rate as the applicable basis for determining the rate of interest on
such a Loan if (x) such Loan is to be made on the Effective Date or (y) at the
time of such selection a Default or Event of Default would occur or has occurred
and is continuing. If on any day any Loan is outstanding with respect to which
notice has not been timely delivered to the Administrative Agent in accordance
with the terms hereof specifying the basis for determining the rate of interest
on that day, then for that day interest on that Loan shall be determined by
reference to the Base Rate.
(b) Interest Payments. (i) Interest accrued on each Base Rate Loan
shall be payable in arrears (A) on the first Business Day of each calendar
quarter, commencing on the first such day following the making of such Base Rate
Loan, and (B) on the applicable Maturity Date or such other date on which such
Loans become due and payable.
(ii) Interest accrued on each Eurodollar Rate Loan shall be payable in
arrears (A) on each Eurodollar Interest Payment Date applicable to such Loan and
(B) on the applicable Maturity Date or such other date on which such Loans
become due and payable.
(iii) Interest accrued on the balance of all other Obligations shall be
payable in arrears (A) on the first Business Day of each calendar quarter,
commencing on the first such day following the incurrence of such Obligation,
and (B) on each Maturity Date.
(c) Conversion or Continuation. (i) The Borrower shall have the option
(A) to convert at any time all or any part of the outstanding Base Rate Loans
(other than Swing Loans) to Eurodollar Rate Loans; (B) to convert all or any
part of outstanding Eurodollar Rate Loans having Eurodollar Interest Periods
which expire on the same date to Base Rate Loans on such expiration date; or (C)
to continue all or any part of outstanding Eurodollar Rate Loans having
Eurodollar Interest Periods which expire on the same date as Eurodollar Rate
Loans, and the succeeding Eurodollar Interest Period of such continued Loans
shall commence on such expiration date; provided, however, no such outstanding
Loan may be continued as, or be converted into, a Eurodollar Rate Loan (i) if
the continuation of, or the conversion into, would violate any of the provisions
of
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Section 4.02 or (ii) if an Event of Default would occur or has occurred and is
continuing. Any conversion into or continuation of Eurodollar Rate Loans under
this Section 4.01(c) shall be in a minimum amount of Two Million Dollars
($2,000,000) and in integral multiples of One Hundred Thousand Dollars
($100,000) in excess of that amount.
(ii) To convert or continue a Loan under Section 4.01(c)(i), the
Borrower shall deliver a Notice of Conversion/Continuation to each Lender no
later than 12:00 noon (New York time) at least three (3) Business Days in
advance of the proposed conversion/continuation date. A Notice of
Conversion/Continuation shall specify (A) the proposed conversion/continuation
date (which shall be a Business Day), (B) the principal amount of the Loan to be
converted/continued, (C) whether such Loan shall be converted and/or continued
and (D) in the case of a conversion to, or continuation of, a Eurodollar Rate
Loan, the requested Eurodollar Interest Period. In lieu of delivering a Notice
of Conversion/Continuation, the Borrower may give each Lender telephonic notice
of any proposed conversion/continuation by the time required under this Section
4.01(c)(ii), and such notice shall be confirmed in writing delivered to each
Lender promptly (but in no event later than 5:00 p.m. (New York time) on the
same day). Any Notice of Conversion/Continuation for conversion to, or
continuation of, a Loan (or telephonic notice in lieu thereof) shall be
irrevocable, and the Borrower shall be bound to convert or continue in
accordance therewith.
(d) Default Interest. Notwithstanding the rates of interest specified
in Section 4.01(a) or elsewhere herein, effective immediately upon the
occurrence of any Event of Default and for as long thereafter as such Event of
Default shall be continuing, the principal balance of all Loans and of all other
Obligations, shall bear interest at a rate which is two percent (2.0%) per annum
in excess of the rate of interest that is otherwise applicable to such Loans and
other Obligations from time to time (the "Default Rate").
(e) Computation of Interest. Interest on (i) Base Rate Loans and all
other Obligations shall be computed on the basis of the actual number of days
elapsed in the period during which interest accrues and a year of 365/366 days
and (ii) Eurodollar Rate Loans shall be computed on the basis of the actual
number of days elapsed in the period during which interest accrues and a year of
360 days. In computing interest on any Loan, the date of the making of the Loan
shall be included and the date of payment made in accordance with Section 3.02
shall be excluded; provided, however, if a Loan is repaid on the same day on
which it is made, one (1) day's interest shall be paid on such Loan.
(f) Changes; Legal Restrictions. If after the date hereof any Lender or
any Issuing Bank reasonably determines that the adoption or implementation of or
any change in or in the interpretation or administration of any law or
regulation or any guideline or request from any central bank or other
Governmental Authority or quasi-governmental authority exercising jurisdiction,
power or control over any Lender or over banks or financial institutions
generally (whether or not having the force of law), compliance with which, in
each case after the date hereof:
(i) subjects a Lender or an Issuing Bank (or its Applicable
Lending Office) to charges (other than Taxes) of any kind which is
applicable to the Commitments or Loans of the Lenders and/or the
Issuing Bank to make or maintain Eurodollar Rate Loans or to issue
and/or participate in Letters of Credit or changes the basis of
taxation of payments to that Lender or the Issuing Bank of principal,
fees, interest, or any other amount payable hereunder with respect to
Eurodollar Rate Loans or letters of Credit; or
48
(ii) imposes, modifies, or holds applicable, any reserve (other
than reserves taken into account in calculating the Eurodollar Rate),
special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities
(including those pertaining to Letters of Credit) in or for the
account of, advances or loans by, commitments made, or other credit
extended by, or any other acquisition of funds by, a Lender or an
Issuing Bank or any Applicable Lending Office or Eurodollar Affiliate
of that Lender or that Issuing Bank;
and the result of any of the foregoing is to increase the cost to that Lender or
that Issuing Bank of making, renewing or maintaining the Loans or its
Commitments or issuing or participating in the Letters of Credit or to reduce
any amount receivable thereunder; then, in any such case, upon written demand by
such Lender or such Issuing Bank (with a copy of such demand to the
Administrative Agent), the Borrower shall immediately pay to the Administrative
Agent for the account of such Lender or such Issuing Bank, from time to time as
specified by such Lender or such Issuing Bank, such amount or amounts as may be
necessary to compensate such Lender or such Issuing Bank or its Eurodollar
Affiliate, on an after-tax basis, for any such additional cost incurred or
reduced amount received. Such demand shall be accompanied by a statement as to
the amount of such compensation and include a summary of the basis for such
demand. Such statement shall be conclusive and binding for all purposes, absent
manifest error.
(g) Confirmation of Eurodollar Rate. Upon the request of the Borrower
from time to time, the Administrative Agent shall promptly provide to the
Borrower such information with respect to the applicable Eurodollar Rate as may
be reasonably requested.
4.02. Special Provisions Governing Eurodollar Rate Loans. With respect
to Eurodollar Rate Loans:
(a) Amount of Advance. Each Eurodollar Rate Loan shall be for a minimum
amount of Two Million Dollars ($2,000,000) and in integral multiples of One
Hundred Thousand Dollars ($100,000) in excess of that amount.
(b) Determination of Eurodollar Interest Period. By giving notice as
set forth in Section 2.01(b) or Section 2.02(b) (with respect to a Borrowing of
a Eurodollar Rate Loan) or Section 4.01(c) (with respect to a conversion into or
continuation of a Eurodollar Rate Loan), the Borrower shall have the option,
subject to the other provisions of this Section 4.02, to select an interest
period (a "Eurodollar Interest Period") to apply to the Loans described in such
notice, subject to the following provisions:
(i) The Borrower may only select, as to a particular Borrowing of
Eurodollar Rate Loans, a Eurodollar Interest Period of either one,
two, three or six months in duration;
(ii) In the case of immediately successive Eurodollar Interest
Periods applicable to a Borrowing of Eurodollar Rate Loans, each
successive Eurodollar Interest Period shall commence on the day on
which the next preceding Eurodollar Interest Period expires;
(iii) If any Eurodollar Interest Period would otherwise expire on
a day which is not a Business Day, such Eurodollar Interest Period
shall be extended to expire on the next succeeding Business Day if the
next succeeding Business Day occurs in the same calendar
49
month, and if there shall be no succeeding Business Day in such
calendar month, such Eurodollar Interest Period shall expire on the
immediately preceding Business Day;
(iv) The Borrower may not select a Eurodollar Interest Period as
to any Loan if such Eurodollar Interest Period terminates later than
the applicable Maturity Date;
(v) The Borrower may not select a Eurodollar Interest Period with
respect to any portion of principal of a Loan which extends beyond a
date on which the Borrower is required to make a scheduled payment of
such portion of principal; and
(vi) There shall be no more than ten (10) Eurodollar Interest
Periods in effect at any one time.
(c) Determination of Interest Rate. As soon as practicable on the
second Business Day prior to the first day of each Eurodollar Interest Period
(the "Interest Rate Determination Date"), the Administrative Agent shall
determine (pursuant to the procedures set forth in the definition of "Eurodollar
Rate") the interest rate which shall apply to Eurodollar Rate Loans, for which
an interest rate is then being determined for the applicable Eurodollar Interest
Period and shall promptly give notice thereof (in writing or by telephone
confirmed in writing) to the Borrower and to each Lender. The Administrative
Agent's determination shall be presumed to be correct, absent manifest error,
and shall be binding upon the Borrower.
(d) Interest Rate Unascertainable, Inadequate or Unfair. In the event
that at least one (1) Business Day before the Interest Rate Determination Date:
(i) the Administrative Agent reasonably determines that adequate
and fair means do not exist for ascertaining the applicable interest
rates by reference to which the Eurodollar Rate then being determined
is to be fixed;
(ii) the Requisite Lenders advise the Administrative Agent that
Dollar deposits in the principal amounts of the Eurodollar Rate Loans
comprising such Borrowing are not generally available in the London
interbank market for a period equal to such Eurodollar Interest
Period; or
(iii) Lenders of any Class whose aggregate ratable shares (stated
as a percentage) of the aggregate amount of the Commitments with
respect to such Class in effect at such time (provided, however, that
in the event that such Commitments have been terminated or are no
longer in effect at such time, Lenders whose aggregate ratable shares
(stated as a percentage) of the aggregate outstanding amount of the
Loans with respect to such Class) are greater than 50.1% advise the
Administrative Agent that the Eurodollar Rate as determined by the
Administrative Agent, after taking into account the adjustments for
reserves and increased costs provided for in Section 4.01(f), will not
adequately and fairly reflect the cost to such Lenders of funding
Loans of such Type;
then the Administrative Agent shall forthwith give notice thereof to the
Borrower, whereupon (until the Administrative Agent notifies the Borrower that
the circumstances giving rise to such suspension no longer exist) the right of
the Borrower to elect to have Loans bear interest based upon the Eurodollar Rate
shall be suspended and each outstanding Loan of such Types shall be converted
into a Base Rate Loan on the last day of the then
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current Eurodollar Interest Period therefor, and any Notice of Borrowing for
which Revolving Loans have not then been made shall be deemed to be a request
for Base Rate Loans, notwithstanding any prior election by the Borrower to the
contrary.
(e) Illegality. (i) If at any time any Lender determines (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties) that the making or continuation of any Eurodollar Rate Loan
has become unlawful or impermissible by compliance by that Lender with any law,
govern mental rule, regulation or order of any Governmental Authority (whether
or not having the force of law and whether or not failure to comply therewith
would be unlawful or would result in costs or penalties), then, and in any such
event, such Lender may give notice of that determination, in writing, to the
Borrower and the Administrative Agent, and the Administrative Agent shall
promptly transmit the notice to each other Lender.
(ii) When notice is given by a Lender under Section 4.02(e)(i), (A) the
Borrower's right to request from such Lender and such Lender's obligation, if
any, to make Eurodollar Rate Loans shall be imme diately suspended, and such
Lender shall make a Base Rate Loan as part of any requested Borrowing of
Eurodollar Rate Loans and (B) if the affected Eurodollar Rate Loan or Loans are
then outstanding, the Borrower shall immediately, or if permitted by applicable
law, no later than the date permitted thereby, upon at least one (1) Business
Day's prior written notice to the Administrative Agent and the affected Lender,
convert each such Loan into a Base Rate Loan.
(iii) If at any time after a Lender gives notice under Section
4.02(e)(i) such Lender determines that it may lawfully make Eurodollar Rate
Loans, such Lender shall promptly give notice of that determination, in writing,
to the Borrower and the Administrative Agent, and the Administrative Agent shall
promptly transmit the notice to each other Lender. The Borrower's right to
request, and such Lender's obligation, if any, to make Eurodollar Rate Loans
shall thereupon be restored.
(f) Compensation. In addition to all amounts required to be paid by the
Borrower pursuant to Section 4.01, the Borrower shall compensate each Lender,
upon demand, for all losses, expenses and liabilities (including, without
limitation, any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund or
maintain such Lender's Eurodollar Rate Loans to the Borrower but excluding any
loss of the Applicable Eurodollar Rate Margin on the relevant Loans) which that
Lender may sustain (i) if for any reason a Borrowing, conversion into or
continuation of Eurodollar Rate Loans does not occur on a date specified
therefor in a Notice of Borrowing or a Notice of Conversion/Continuation given
by the Borrower or in a telephonic request by it for borrowing or
conversion/continuation or a successive Eurodollar Interest Period does not
commence after notice therefor is given pursuant to Section 4.01(c), (ii) if for
any reason any Eurodollar Rate Loan is prepaid (including, without limitation,
mandatorily pursuant to Section 3.01(b)) on a date which is not the last day of
the applicable Eurodollar Interest Period, (iii) as a consequence of a required
conversion of a Eurodollar Rate Loan to a Base Rate Loan as a result of any of
the events indicated in Section 4.02(d) or (e) or (iv) as a consequence of any
failure by the Borrower to repay Eurodollar Rate Loans when required by the
terms hereof. The Lender making demand for such compensation shall deliver to
the Borrower concurrently with such demand a written statement in reasonable
detail as to such losses, expenses and liabilities, and this statement shall be
conclusive as to the amount of compensation due to that Lender, absent manifest
error.
(g) Affiliates Not Obligated. No Eurodollar Affiliate or other
Affiliate of any Lender shall be deemed a party hereto or shall have any
liability or obligation hereunder.
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4.03. Fees. (a) Unused Commitment Fee. The Borrower agrees to pay to
the Administrative Agent, for the account of the Revolving Loan Lenders in
accordance with their Pro Rata Shares, a fee (the "Unused Commitment Fee") on
the average amount by which (i) the Revolving Loan Commitments exceeds (ii) the
Revolving Credit Obligations minus the outstanding principal amount of the Swing
Loans, accruing for the period commencing on the Effective Date and ending on
the Revolving Termination Date, at the Commitment Fee Rate on such average
amount, payable quarterly in arrears on the first Business Day of each calendar
quarter and on the Revolving Termination Date.
(b) Letter of Credit Fee. In addition to any charges paid
pursuant to Section 2.04(g), the Borrower shall pay to the Agent, for the
account of the Revolving Loan Lenders in accordance with their respective Pro
Rata Shares:
(i) with respect to each Commercial Letter of Credit issued by
the Issuing Bank, a fee at a per annum rate equal to the Applicable
Revolving Loan Eurodollar Rate Margin on the undrawn face amount of
such Letter of Credit, payable quarterly in arrears on the first
Business Day of each calendar quarter;
(ii) with respect to each Standby Letter of Credit issued by the
Issuing Bank, a fee at a per annum rate equal to the Applicable
Revolving Loan Eurodollar Rate Margin on the undrawn face amount of
such Letter of Credit, payable quarterly in arrears on the first
Business Day of each calendar quarter; and
(iii) during the occurrence and continuation of an Event of
Default, an additional fee in an amount equal to two percent (2%) per
annum on the undrawn face amount of each Letter of Credit, payable
quarterly in arrears on the first Business Day of each calendar
quarter.
(c) Prepayment Fee. The Borrower agrees to pay to the Administrative
Agent, for the account of the Term B Lenders in accordance with their Pro Rata
Shares, a fee (the "Prepayment Fee"), in an amount equal to (i) 2.0% of the
amount of Term B Loans being prepaid in accordance with Section 3.01(a) at any
time during the period from the Effective Date to and including the date which
is the first anniversary thereof and (ii) 1% of the amount of Term B Loans being
prepaid in accordance with Section 3.01(a) at any time during the period from
the date which is the first anniversary of the Effective Date to and including
the date which is the second anniversary of the Effective Date, payable on the
date of any such prepayment.
(d) Computation of Fees. All of the above fees payable on a per annum
basis shall be computed on the basis of the actual number of days elapsed in a
year of 360 days. All such fees shall be payable in addition to, and not in lieu
of, interest, compensation, expense reimbursements, indemnification and other
Obligations.
52
ARTICLE V
CONDITIONS TO LOANS
5.01. Conditions Precedent to the Effectiveness of Amendment and Loans
on the Effective Date. This Second Amended and Restated Credit Agreement shall
become effective and the obligation of each Lender on the Effective Date to make
its initial Loan requested to be made by it and the obligation of the Issuing
Bank to Issue an initial Letter of Credit shall be subject to the satisfaction
of all of the following conditions precedent:
(a) Documents. The Administrative Agent (on behalf of itself and the
Lenders) shall have received on or before the Effective Date all of the
following:
(i) this Agreement, the Notes and all other agreements,
documents, instruments, certificates and opinions described in the
List of Closing Documents attached hereto and made a part hereof as
Exhibit E, each duly executed where appropriate and in form and
substance satisfactory to the Lenders and in sufficient copies for
each of the Lenders;
(ii) (A) audited financial statements of the Borrower and its
Subsidiaries for the fiscal year ended December 31, 1998, (B) audited
financial statements of the Precision Business for the fiscal year
ended December 31, 1997 and audited financial statements for the nine
month period ended September 30, 1998, (C) unaudited financial
statements of Phoenix Microwave Corporation for the seven month period
ended December 31, 1998 and (D) a pro-forma consolidated balance sheet
of the Borrower and its Subsidiaries as of the Effective Date, after
giving effect to the Acquisition, certified by the Chief Financial
Officer; and
(iii) such additional documentation as the Agents or the
Requisite Lenders may reasonably request.
(b) Perfection of Liens. All Uniform Commercial Code and other filing
and recording fees and taxes shall have been paid or duly provided for. All
Liens granted to the Collateral Agent with respect to the Collateral are valid
and effective and, upon the filing of the duly executed Uniform Commercial Code
financing statements (or similar filings required by the applicable statutes of
any jurisdiction in which the Collateral Agent is being granted a Lien by any
Loan Party), will be perfected and of first priority, except as otherwise
permitted under this Agreement and except for compliance with the Assignment of
Claims Act of 1940, as amended, with respect to Receivables where the account
debtor is the United States of America or any department, agency or
instrumentality thereof. All certificates representing Capital Stock included in
the Collateral shall have been delivered to the Collateral Agent (with duly
executed stock powers, as appropriate) and all instruments included in the
Collateral shall have been delivered to the Collateral Agent (duly endorsed to
the Collateral Agent).
(c) Acquisition Agreement and Related Matters. The Administrative Agent
and the Lenders shall be satisfied that: (i) the Acquisition Documents which are
to be entered into as of or prior to the Effective Date shall have been duly
approved and executed and delivered by the parties thereto, (ii) all conditions
precedent to the consummation of the transactions under the Acquisition
Agreement and the other Acquisition Documents have been met or, with the consent
of the Agents, waived and such documents are, or simultaneously with the
execution hereof, shall be, in full force and effect.
53
(d) Preferred Stock. The Administrative Agent and the Lenders shall be
satisfied that: (i) the Preferred Stock is on terms and conditions satisfactory
to the Administrative Agent and the Lenders and (ii) the Borrower has received
cash in a gross amount of at least $20,000,000 in consideration therefor.
(e) No Legal Impediments. No law, regulation, order, judgment or decree
of any Governmental Authority shall, and the Administrative Agent shall not have
received any notice that any action, suit, investigation, litigation or
proceeding is pending or threatened in any court or before any arbitrator or
Governmental Authority which (i) purports to enjoin, prohibit, restrain or
otherwise affect (A) the making of the Loans on the Effective Date or (B) the
consummation of the Acquisition or (ii) would be reasonably expected to impose
or result in the imposition of a Material Adverse Effect.
(f) Consents. Except as set forth on Schedule 5.01(A), each Stellex
Party shall have received all consents and authorizations required pursuant to
any material Contractual Obligation with any other Person and shall have
obtained all consents and authorizations of, and effected all notices to and
filings with, any Governmental Authority, in each case, as may be necessary, in
the reasonable judgment of the Agents, to allow such Stellex Party, lawfully and
without risk of rescission, (i) to execute, deliver and perform, in all material
respects, its obligations under each Transaction Document to which it is a party
and each other agreement or instrument to be executed and delivered by it
pursuant thereto or in connection therewith, (ii) to consummate the transactions
contemplated by the Transaction Documents and (iii) to create and perfect or
continue the validity and perfection of the Liens on the Collateral to be owned
by it in the manner and for the purpose contemplated by the Loan Documents.
(g) No Change in Condition. Since December 31, 1998 with respect to the
Borrower and its Subsidiaries (other than the Precision Business) and since
September 30, 1998 with respect to the Precision Business, there has occurred no
event which has had or is reasonably likely to have, individually or in the
aggregate, a material adverse effect upon (i) the condition (financial or
otherwise), operations, assets, business, properties or performance of the
Borrower and its Subsidiaries and the Precision Business, taken as a whole, (ii)
the ability of the Stellex Parties to perform their respective obligations under
the Loan Documents, or (iii) the ability of the Lenders, any Issuing Bank or any
Agent to enforce the Loan Documents.
(h) Environmental Review. A written report of an investigation
conducted by an environmental consulting firm, satisfactory to the
Administrative Agent and the Syndication Agent identifying environmental, health
and safety violations and Liabilities and Costs to which Precision Machining,
Inc. may be subject, which report shall be in form and substance satisfactory to
the Administrative Agent and the Lenders. The Administrative Agent shall have
received documentation deemed adequate by the Lenders demonstrating compliance
by the Borrower and its Subsidiaries with any applicable Environmental Property
Transfer Act.
(i) CSP Associates, Inc. Report. A written report of an investigation
of the Borrower and its Subsidiaries dated February, 1999, conducted by CSP
Associates, Inc., which report shall remain in form and substance satisfactory
to the Administrative Agent and the Lenders.
(j) Solvency Opinion. A written solvency opinion issued by Xxxxxx
Xxxxxx with respect to the Borrower and its Subsidiaries after giving effect to
the Acquisition, which opinion shall be in form and substance satisfactory to
the Administrative Agent and the Lenders.
(k) No Default. No Default or Event of Default shall have occurred and
be continuing or would result from the making of the Loans.
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(l) Representations and Warranties. All of the representations and
warranties contained in Section 6.01 and in the other Loan Documents shall be
true and complete in all material respects on and as of the Effective Date.
(m) Fees and Expenses Paid. There shall have been paid or there will,
substantially concurrently with the closing hereunder, be paid to the
Administrative Agent and to the Lenders, all fees due and payable on or before
the Effective Date and all expenses (including, without limitation, reasonable
legal fees and expenses) due and payable on or before the Effective Date.
5.02. Conditions Precedent to All Loans. The obligation of each Lender
to make any Loan requested to be made by it, and the obligation of an Issuing
Bank to Issue a Letter of Credit, on any Funding Date on or after the Effective
Date is subject to the following conditions precedent as of each such date:
(a) Representations and Warranties. As of such date (unless the
representation and warranty expressly speaks of the Effective Date), both before
and after giving effect to the Loans to be made and the Letters of Credit to be
Issued, all of the representations and warranties contained in Section 6.01 and
in the other Loan Documents shall be true and complete in all material respects.
(b) No Defaults. As of such date, no Default or Event of Default shall
have occurred and be continuing or would result from the making of the requested
Loan or the application of the proceeds therefrom or the Issuance of the Letter
of Credit.
(c) Compliance with Subordinated Note Indenture. As of such date, both
before and after giving effect to the Loans to be made or the Letters of Credit
to be Issued, the Borrower is in compliance with the terms and conditions of the
Subordinated Note Indenture.
Each request by the Borrower for a Loan, each submission by the Borrower of a
Notice of Borrowing, each acceptance by the Borrower of the proceeds of each
Loan made hereunder, each submission by the Borrower to the Issuing Bank of a
request for Issuance of a Letter of Credit and the Issuance of such Letter of
Credit, shall constitute a representation and warranty by the Borrower as of the
Funding Date in respect of such Loan that all the conditions contained in this
Section 5.02 have been satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01. Representations and Warranties of the Borrower. In order to
induce the Lenders to enter into this Agreement and to make the Loans and to
Issue the Letters of Credit, the Borrower hereby represents and warrants as
follows:
(a) Organization; Powers. Each Stellex Party (i) is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and (ii) has all requisite power and authority to
own, operate and encumber its assets and to conduct its business as presently
contemplated.
(b) Authority. (i) Each Stellex Party has the requisite power and
authority to execute, deliver and perform each of the Transaction Documents to
which it is a party.
55
(ii) No other action or proceeding on the part of any Stellex Party is
necessary to execute, deliver and perform each of the Transaction Documents to
which it is a party thereto or to consummate the transactions contemplated
thereby.
(iii) Each of the Loan Documents to which any Stellex Party is a party
has been duly executed and delivered by such Stellex Party and constitutes the
legal, valid and binding obligation of such Stellex Party, enforceable against
such Stellex Party in accordance with its terms.
(c) Ownership. Schedule 6.01(C) sets forth the ownership of the
Borrower and its Subsidiaries as of the Effective Date. The Borrower has
delivered to the Administrative Agent true and complete copies of the Governing
Documents for each Stellex Party. There exists no other agreement or
understanding (written or oral) affecting in any material respect the relative
rights, obligations or liabilities of such Stellex Party other than said
Governing Documents so delivered and such Stellex Party is in compliance in all
material respects with all of its Governing Documents.
(d) No Conflict. Except as set forth on Schedule 6.01(D), the
execution, delivery and performance by each Stellex Party of each Transaction
Document to which it is a party and the consummation of the transactions
contemplated thereby do not and will not (i) conflict with the Governing
Documents of such Stellex Party, (ii) violate any Requirements of Law (including
Regulation T, Regulation U and Regulation X) or any material Contractual
Obligation of such Stellex Party or require the termination of such material
Contractual Obligation by such Stellex Party, (iii) to the best of such Stellex
Party's knowledge, constitute a tortious inter xxxxxxx with any Contractual
Obligation of any Person or (iv) result in or require the creation or imposition
of any Lien whatsoever upon any of the property or assets of such Stellex Party,
other than Liens contemplated by the Loan Documents.
(e) Governmental Consents. Except as set forth of Schedule 6.01(E), the
execution, delivery and performance by each Stellex Party of each Transaction
Document to which it is a party and the consummation of the transactions
contemplated thereby do not and will not require any registration with, consent
or approval of, or notice to, or other action to, with or by any Governmental
Authority, except (i) filings and acknowledgments thereof necessary to perfect
security interests in the Collateral or cause any security interest in
Receivables where the account debtor is the United States of America or any
department, agency or instrumentality thereof to be valid against the United
States of America, (ii) consents and filings that have been obtained or made and
(iii) filings under the Securities Exchange Act with respect to the acquisition
of the Precision Business.
(f) Governmental Regulation. No Stellex Party is limited in its ability
to incur indebtedness or its ability to consummate the transactions contemplated
by the Transaction Documents by reason of regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act,
or the Investment Company Act of 1940, or any other federal or state statute or
regulation. No Stellex Party is an entity that is required to be registered as
an investment company under the Investment Company Act of 1940.
(g) Subsidiaries. As of the Effective Date, the Borrower has no
Subsidiaries or interests in any joint venture or partnership of any other
Person other than the Subsidiaries set forth on Schedule 6.01(C).
(h) Financial Position. True and complete copies of the following
financial statements have been delivered to the Administrative Agent and the
Lenders: (i) the audited consolidated balance sheet as at the end of fiscal year
ended December 31, 1998 and the related consolidated statements of operations,
cash flows
56
and shareholders equity and the notes thereto of the Borrower and its
Subsidiaries for such fiscal year then ended and (ii) the audited consolidated
balance sheet as at December 31, 1997 and the related consolidated statements of
operations and the notes thereto of the Precision Business and audited
consolidated balance sheet as at September 30, 1998 and the related consolidated
statements of operations and cash flow for the nine months then ended. The
foregoing financial statements were prepared in conformity with GAAP, except as
otherwise noted therein, and fairly present the financial positions and the
results of operations and equity of the Borrower and its Subsidiaries and the
Precision Business and the consolidated statement of cash flows for the Borrower
and its Subsidiaries, in each case as applicable, for each of the periods
covered thereby as at the respective dates thereof. No Stellex Party has any
Accommodation Obligation, contingent liability or liability for any Taxes,
long-term leases or commitments, not reflected in the foregoing financial
statements which will have or is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect.
(i) Projections. The Borrower has delivered to the Administrative Agent
and each Lender pursuant to Section 5.01(a) certain projected financial
statements of the Borrower and its Subsidiaries which have been prepared in good
faith.
(j) Litigation; Adverse Effects. Except as set forth in Schedules
6.01(J-1) and 6.01(P), no Stellex Party has received any notice of any action,
suit, proceeding, investigation or arbitration before or by any Governmental
Authority or private arbitrator pending nor, to the knowledge of such Stellex
Party, threatened against such Stellex Party or any of its assets (i)
challenging the validity or the enforceability of any of the Transaction
Documents or transactions contemplated thereby or (ii) which will or is
reasonably likely to result in, individually or in the aggregate, any Material
Adverse Effect. Except as set forth in Schedule 6.01(J-2), there is no material
loss contingency within the meaning of GAAP which has not been reflected in the
financial statements of the Borrower and its Subsidiaries and the Precision
Business with respect to the financial statements referred to in Section 6.01(h)
nor in any financial statements of the Borrower and its Subsidiaries delivered
hereunder. No Stellex Party is subject to, or in default with respect to, any
final judgment, writ, injunction, restraining order or order of any nature,
decree, rule or regulation of any court or Governmental Authority which will
have or is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect.
(k) No Material Adverse Effect. Since December 31, 1998 with respect to
the Borrower and its Subsidiaries (other than the Precision Business) and since
September 30, 1998 with respect to the Precision Business, there has occurred no
event which has had or is reasonably likely to have, individually or in the
aggregate, a material adverse effect upon (i) the condition (financial or
otherwise), operations, assets, business, properties or performance of the
Borrower and its Subsidiaries and the Precision Business, taken as a whole, (ii)
the ability of the Stellex Parties to perform their respective obligations under
the Loan Documents, or (iii) the ability of the Lenders, any Issuing Bank or any
Agent to enforce the Loan Documents.
(l) Payment of Taxes. Except as set forth on Schedule 6.01(L), all tax
returns and reports of each of the Borrower and its Subsidiaries required to be
filed have been timely filed and all taxes, assessments, fees and other
governmental charges shown to be due and payable on said returns have been
timely paid and all other taxes, assessments, fees and other governmental
charges imposed upon it or any of its property by any Governmental Authority
have been timely paid (other than any taxes, assessments, fees or other charges
(i) which are being contested in good faith by the Borrower or such Subsidiary,
as the case may be, by appropriate proceedings diligently instituted and
conducted and without danger of any material risk to the Collateral and (ii)
with respect to which a reserve or other appropriate provision, if any, as is
required in conformity with GAAP shall have been made. The Borrower does not
have any knowledge of any proposed assessment against it or any
57
of its Subsidiaries that has or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(m) Performance. No Stellex Party has received notice, or has actual
knowledge, that (i) it is in default in the performance, observance or
fulfillment of any Contractual Obligations applicable to it or (ii) any
condition exists which, with the giving of notice or the lapse of time or both,
would constitute a default with respect to any Contractual Obligation, which in
the case of either clause (i) or (ii), individually or in the aggregate, has had
or is reasonably likely to have a Material Adverse Effect.
(n) Disclosure. The representations and warranties of each Stellex
Party contained in the Loan Documents and all information, certificates and
other documents delivered pursuant to the terms thereof and the representations
and warranties of each Stellex Party contained in the Acquisition Documents and
in the letter dated February 24, 1999 in the Confidential Information Memorandum
dated February 1999, and all information, certificates and other documents
delivered pursuant to the terms thereof, taken as a whole, do not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained therein, in light of the circumstances
under which they were made, not misleading. No Stellex Party has intentionally
withheld any fact or facts from the Administrative Agent or the Lenders in
regard to any matter which will have or is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect.
(o) Requirements of Law. No Stellex Party is in violation of any
Requirement of Law applicable to it or its business which violation (singularly
or in the aggregate) will have or is reasonably likely to have a Material
Adverse Effect.
(p) Environmental Matters. (i) To the best of each Stellex Party's
knowledge after diligent inquiry; and except as disclosed on Schedule 6.01(P):
(A) each Stellex Party and its operations comply in all material
respects with all applicable Environmental, Health or Safety
Requirements of Law:
(B) each Stellex Party has obtained all material environmental,
health and safety Permits necessary for its operation, all
such Permits are in good standing and such Stellex Party is
in material compliance with all terms and conditions of such
Permits;
(C) as of the Effective Date, no Stellex Party nor any of its
present Property or operations nor its past Property or
operations, are subject to any investigation, judicial or
administrative proceeding, order, judgment, decree,
settlement or other agreement respecting (i) any
Environmental, Health or Safety Requirements of Law, (ii)
any Remedial Action or (iii) any Claims or Liabilities and
Costs arising from the Release or threatened Release of a
Contaminant into the environment; which in the case of
clauses (i), (ii), or (iii), individually or in the
aggregate, has had or is reasonably likely to have a
Material Adverse Effect;
(D) no Stellex Party has filed any notice:
58
(1) reporting a material Release of a Contaminant except
such releases that are in material compliance with all
Environmental, Health or Safety Requirements of Law;
(2) indicating past or present treatment, storage or
disposal of a hazardous waste, as that term is defined
under 40 C.F.R. Part 261 or any state equivalent,
except in material compliance with all Environmental,
Health or Safety Requirements of Law; or
(3) reporting a material violation of any applicable
Environmental, Health or Safety Requirement of Law;
(E) no Stellex Party's present Property or, its past Property is
listed or proposed for listing on the National Priorities
List pursuant to CERCLA ("NPL") or on the Comprehensive
Environmental Response Compensation Liability Information
System List ("CERCLIS") or any similar state list of sites
requiring Remedial Action;
(F) no Stellex Party has sent or directly arranged for the
transport of any waste or Contaminant to any site listed or
proposed for listing on the NPL or on any state list of
sites requiring Remedial Action;
(G) there is not now, nor has there ever been on or in the
Property of any Stellex Party:
(1) any treatment, recycling, storage or disposal of any
hazardous waste, as that term is defined under 40
C.F.R. Part 261 or any state equivalent, requiring a
Permit;
(2) any landfill, underground storage tank or surface
impoundment; or
(3) any polychlorinated biphenyls (PCBs) used in hydraulic
oils, electrical transformers or other equipment or any
Asbestos Containing Material;
(H) no Environmental Lien has attached to any Property of any
Stellex Party.
(ii) Except as Disclosed on Schedule 6.01(P):
(A) no Stellex Party's Property is subject to any Environmental
Property Transfer Act in connection with the transactions
contemplated by the Transaction Documents, or to the extent
such Acts are applicable to any such Property in connection
therewith, such Stellex Party has fully complied with the
requirements of such Acts prior to the Effective Date;
59
(B) as of the Effective Date, no Stellex Party has received any
written notice or claim to the effect that it is or may be
liable to any Person as a result of the Release or
threatened Release of a Contaminant into the environment;
and
(C) the Borrower and its Subsidiaries are conducting and will
continue to conduct their respective businesses and
operations in material compliance with all applicable
Environmental, Health or Safety Requirements of Law.
(q) ERISA. Neither any Stellex Party nor any ERISA Affiliate maintains
or contributes to any Plan other than those listed on Schedule 6.01(Q). Each
Plan which is intended to be qualified under Section 401(a) of the Code as
currently in effect has been determined by the IRS to be so qualified, and each
trust related to any such Plan has been determined to be exempt from federal
income tax under Section 501(a) of the Code as currently in effect. Except as
disclosed on Schedule 6.01(Q), neither any Stellex Party nor any ERISA Affiliate
maintains or contributes to any employee welfare benefit plan within the meaning
of Section 3(1) of ERISA which provides benefits to employees after termination
of employment other than as required by Part 6 of Title I of ERISA. Neither any
Stellex Party nor any ERISA Affiliate has breached in any material respect of
the responsibilities, obligations or duties imposed on it by ERISA, the Code, or
regulations promulgated thereunder with respect to any Plan. No Benefit Plan has
any accumulated funding deficiency (as defined in Section 302(a)(2) of ERISA and
412(a) of the Code) whether or not waived. Neither any Stellex Party nor any
ERISA Affiliate has any liability, whether direct or indirect, contingent or
otherwise, under Section 4063, 4064, 4069, 4204 or 4212(c) of ERISA. Neither any
Stellex Party nor any ERISA Affiliate nor any fiduciary of any Plan which is not
a Multiemployer Plan (i) has engaged in a nonexempt prohibited transaction
described in Section 406 of ERISA or 4975 of the Code or (ii) has taken or
failed to take any action which would constitute or result in a Termination
Event. Neither any Stellex Party nor any ERISA Affiliate has incurred any
liability to the PBGC which remains outstanding other than the payment of
premiums, and there are no premium payments which have become due which are
unpaid. Schedule B to the most recent annual report filed with the IRS with
respect to each Benefit Plan and furnished to the Administrative Agent is
complete and accurate. Since the date of each such Schedule B, there has been no
adverse change in the funding status or financial condition of the Benefit Plan
relating to such Schedule B. Neither any Stellex Agent nor any ERISA Affiliate
has an outstanding liability in respect of (i) a failure to make a required
contribution or payment to a Multiemployer Plan or (ii) a complete or partial
withdrawal under Section 4203 or 4205 of ERISA from a Multiemployer Plan.
Neither any Stellex Party nor any ERISA Affiliate has failed 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 other payment. Neither any Stellex
Party nor any ERISA Affiliate is required to provide security to a Benefit Plan
under Section 401(a)(29) of the Code due to a Plan amendment that results in an
increase in current liability for the plan year. Except as disclosed on Schedule
6.01(Q), neither any Stellex Party nor any ERISA Affiliate has by reason of the
transaction contemplated hereby, any obligation to make any payment to any
employee pursuant to any Plan or existing contract or arrangement. Except as
provided on Schedule 6.01(Q), no Stellex Party is the grantor of a grantor trust
established pursuant to Subpart E of Subchapter J of the Code. The Borrower has
given to the Administrative Agent copies of all of the following: each Benefit
Plan and related trust agreement (including all amendments to such Plan and
trust) in existence or committed to as of the Effective Date and the most recent
summary plan description, actuarial report, determination letter issued by the
IRS and Form 5500 (including all schedules thereto) filed in respect to each
such Benefit Plan in existence; a listing of all of the Multiemployer Plans with
the aggregate amount of the most recent annual contributions required to be made
by all Stellex Parties and all ERISA Affiliates to each such Multiemployer Plan,
any information which has been provided to a Stellex Party or an ERISA Affiliate
regarding withdrawal liability under any Multiemployer Plan and the collective
bargaining agreement pursuant to which such contribution is required to be made;
each employee welfare benefit
60
plan within the meaning of Section 3(1) of ERISA which provides benefits to
employees after termination of employment other than as required by Part 6 of
Title I of ERISA, the most recent summary plan description for such Plan and the
aggregate amount of the most recent annual payment made to terminated employees
under each such Plan.
(r) Foreign Employee Benefit Matters. Each Foreign Employee Benefit
Plan is in compliance in all material respects with all laws, regulations and
rules applicable thereto and the respective requirements of the governing
documents for such Plan. The aggregate of the liabilities to provide all of the
accrued benefits under any Foreign Pension Plan does not exceed the current fair
market value of the assets held in the trust or other funding vehicle for such
Plan. With respect to any Foreign Employee Benefit Plan maintained by any
Stellex Party or any ERISA Affiliate (other than a Foreign Pension Plan),
reasonable reserves have been established in accordance with prudent business
practice or where required by ordinary accounting practices in the jurisdiction
in which such Plan is maintained. The aggregate unfunded liabilities, after
giving effect to any reserves for such liabilities, with respect to such Plan
will not result in a material liability. There are no actions, suits or claims
(other than routine claims for benefits) pending or threatened against any
Stellex Party or any ERISA Affiliates with respect to any Foreign Employee
Benefit Plan.
(s) Labor Matters. As of the Effective Date, no Stellex Party is a
party to any collective bargaining agreement. There are no strikes, lockouts or
other disputes relating to any collective bargaining or similar agreement to
which such Stellex Party is a party which would have or is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect.
(t) Securities Activities. No Stellex Party is engaged in the business
of extending credit for the purpose of purchasing or carrying Margin Stock.
(u) Solvency. After giving effect to the making of the Loans or the
Issuance of the Letters of Credit in accordance with the terms of this
Agreement, each Stellex Party is Solvent.
(v) Patents, Trademarks, Permits, etc.; Government Approvals.
(i) Except as set forth on Schedule 6.01(V), each Stellex Party
owns, is licensed or otherwise has the lawful right to use all permits
and other governmental approvals, patents, trademarks, trade names,
copyrights, technology, know-how and processes used in or necessary
for the conduct of its business as currently conducted which are
material to its condition (financial or otherwise), operations or
performance. There are no claims pending or, to the best of such
Stellex Party's knowledge, threatened that such Stellex Party is
infringing or otherwise adversely affecting the rights of any Person
with respect to such permits and other governmental approvals,
patents, trademarks, trade names, copy rights, technology, know-how
and processes, except for such claims and infringements as do not, in
the aggregate, give rise to any liability on the part of such Stellex
Party which has or is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect.
(ii) The consummation of the transactions contemplated by the
Transaction Documents will not impair such Stellex Party's ownership
of or rights under (or the license or other right to use, as the case
may be) any permits and governmental approvals, patents, trademarks,
trade names, copyrights, technology, know-how or processes in any
manner which has or is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect.
61
(w) Insurance. Schedule 6.01(W) accurately sets forth all insurance
policies and programs in effect as of the Effective Date with respect to the
property and assets and business of each Stellex Party, specifying for each such
policy and program, (i) the amount thereof and the amount of the deductible
relating thereto, (ii) the risks insured against thereby, (iii) the name of the
insurer and each insured party thereunder, (iv) the policy or other
identification number thereof and (v) the expiration date thereof.
(x) Assets and Properties. Each Stellex Party has good and marketable
title or leasehold interests, as applicable, to all of its material assets and
property (tangible and intangible), and all such assets and property are free
and clear of all Liens except Liens securing the Obligations and Liens permitted
under Section 9.03. Substantially all of the assets and property owned by,
leased to or used by such Stellex Party are in good operating condition and
repair, ordinary wear and tear excepted, are free and clear of any known defects
except such defects as do not substantially interfere with the continued use
thereof in the conduct of normal opera tions, and are able to serve the function
for which they are currently being used, except in each case where the failure
of such asset to meet such requirements would not have or is not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect.
Neither this Agreement nor any other Transaction Document, nor any transaction
contemplated under any Transaction Document, will affect any right, title or
interest of such Stellex Party in and to any of such assets in a manner that
would have or is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect.
(y) Material Adverse Agreements. After giving effect to this Agreement,
no Stellex Party is a party to or subject to any Contractual Obligation or other
restriction contained in its Governing Documents which has or is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect.
(z) Bank Accounts. Except as set forth on Schedule 6.01(Z), no Stellex
Party maintains a bank account or deposits funds with any other financial
institution, as of the Effective Date.
(aa) Forfeiture Proceeding. No Stellex Party is engaged in or proposes
to be engaged in the conduct of any business or activity which could result in a
Forfeiture Proceeding and no Forfeiture Proceeding against it is pending or, to
the best of each Stellex Party's knowledge, threatened.
(bb) Year 2000 Compliance. Any reprogramming required to permit the
proper functioning, in and following the year 2000, of (i) the computer systems
of the Stellex Parties and (ii) the equipment containing embedded microchips
(including systems and equipment supplied by others or with which the systems of
the Stellex Parties interface) and the testing of all such systems and
equipment, as to reprogramming, will be completed by September 30, 1999. The
cost to the Stellex Parties of such reprogramming and testing and of the
reasonably foreseeable consequences of year 2000 to the Stellex Parties
(including, without limitation, reprogramming errors and the failure of others'
systems or equipment) will not result in a Default, an Event of Default or a
Material Adverse Effect. Except for such of the reprogramming referred to in the
preceding sentence as may be necessary, the computer and management information
systems of the Stellex Parties are and, with ordinary course upgrading and
maintenance, will continue to be, sufficient to permit the Stellex Parties to
conduct its business without the occurrence of a Material Adverse Effect.
(cc) Senior Indebtedness. All Obligations constitute "Senior
Indebtedness" under (i) the Subordinated Note Documents and each agreement that
extends, renews or replaces the Subordinated Notes and (ii) each document
evidencing the subordinated indebtedness referred to in Section 9.01(xi) or
(xiii).
62
(dd) Government Receivables. The aggregate amount of Government
Receivables (other than those Government Receivables that have been assigned to
the Collateral Agent in accordance with the Assignment of Claims Act of 1940, as
amended from time to time) of all Loan Parties does not exceed 5% of the
aggregate amount of Receivables of all Loan Parties.
ARTICLE VII
REPORTING COVENANTS
The Borrower covenants and agrees so long as any Commitment is
outstanding and thereafter until payment in full of the Obligations:
7.01. Financial Statements. The Borrower shall maintain a system of
accounting established and administered in accordance with sound business
practices to permit preparation of consolidated financial statements of the
Borrower and its Subsidiaries in conformity with GAAP, and each of the financial
statements described below shall be prepared from such system and records. The
Borrower shall deliver or cause to be delivered to the Administrative Agent:
(a) Quarterly Reports. As soon as practicable, and in any event
within forty-five (45) days after the end of the first three fiscal
quarters in each Fiscal Year, consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such period and the
related statements of income and cash flow of the Borrower and its
Subsidiaries for such fiscal quarter, certified by the Chief Financial
Officer of the Borrower as fairly presenting the financial position of
the Borrower and its Subsidiaries as at the dates indicated and the
results of its operations and cash flow for the fiscal quarter
indicated in accordance with GAAP, subject to normal year end
adjustments.
(b) Annual Reports. As soon as practicable, and in any event
within ninety (90) days after the end of each Fiscal Year, (i) the
audited consolidated (and unaudited consolidating) balance sheet of
the Borrower and its Subsidiaries as of the end of such Fiscal Year
and the related audited consolidated (and unaudited consolidating)
statements of income and cash flow of the Borrower and its
Subsidiaries for such Fiscal Year, and (ii) a report thereon of an
independent certified public accounting firm reasonably acceptable to
the Administrative Agent, which report shall be unqualified and shall
state that such financial statements fairly present, in all material
respects, the financial position of the Borrower and its Subsidiaries
as at the dates indicated and the results of its operations and cash
flow for the periods indicated in conformity with GAAP applied on a
basis consistent with prior years and that the examination by such
accountants in connection with such financial statements has been made
in accor dance with generally accepted auditing standards.
(c) Certificates. (i) Together with each delivery of any
financial statement pursuant to paragraphs (a) and (b) of this Section
7.01, an Officer's Certificate substantially in the form of Exhibit G
attached hereto and made a part hereof, stating that such officer has
reviewed the terms of the Loan Documents, and has made, or caused to
be made under his supervision, a review in reasonable detail of the
transactions and consolidated financial condition of the Borrower and
its Subsidiaries during the accounting period covered by such
financial statements, that such review has not disclosed the existence
during or at the end of such accounting period, and that such officer
does not have knowledge of the existence as at the date of such
Officer's Certificate, of any condition or event which constitutes an
Event of Default or Default, or, if any such condition or event
existed or exists, specifying the nature and period
63
of existence thereof and what action the Borrower has taken, is taking
and proposes to take with respect thereto.
(ii) Together with each delivery of any financial statement
pursuant to paragraphs (a) and (b) of this Section 7.01, a certificate
substantially in the form of Exhibit H attached hereto (the
"Compliance Certificate"), signed by the Borrower's Chief Financial
Officer, setting forth calculations (with such specificity as the
Lenders may reasonably request) for the period then ended which
demonstrate compliance, when applicable, with the provisions of
Article IX and Article X.
(d) Budgets; Business Plans; Financial Projections. As soon as
practicable after completion and in any event not later than
forty-five days after the beginning of each Fiscal Year (i) a budget
for such Fiscal Year; (ii) an annual business plan for such Fiscal
Year, accompanied by a report reconciling all changes and departures
from the business plan delivered to the Administrative Agent for the
preceding Fiscal Year; and (iii) a plan and financial forecast,
prepared in accordance with the Borrower's normal accounting
procedures applied on a consistent basis, for such Fiscal Year and for
the four (4) succeeding Fiscal Years (but in no event for any Fiscal
Year following Fiscal Year 2006), including, without limitation, (A) a
forecasted balance sheet and changes in financial position of the
Borrower and its Subsidiaries as at the end of such Fiscal Year and
(B) forecasted statements of income and cash flow of the Borrower and
its Subsidiaries for such Fiscal Year and changes in financial
position of the Borrower and its Subsidiaries as of the end of such
Fiscal Year.
(e) Replacement Certificate. On June 30 and December 31 of each
Fiscal Year (and more often if so requested by the Administrative
Agent), the Borrower shall provide the Administrative Agent with a
replacement certificate substantially in the form of Exhibit I
attached hereto (the "Replacement Certificate"), signed by the
Borrower's Chief Financial Officer, setting forth calculations (with
such specificity as the Lenders may reasonably request) for the period
then ended which demonstrate the Net Cash Proceeds that were used to
acquire replacement assets and Permitted Acquisitions and Permitted
Foreign Acquisitions.
7.02. Management Reports. The Borrower shall deliver or cause to be
delivered to the Administrative Agent copies of any management reports delivered
to any Stellex Party or to any officer or employee thereof by the accountants in
connection with the financial statements delivered pursuant to Section 7.01.
7.03. Other Financial Information. (a) The Borrower shall deliver or
cause to be delivered to the Administrative Agent such other information,
reports, contracts, schedules, lists, documents, agreements and instruments with
respect to (i) the Collateral or (ii) the business, condition (financial or
otherwise), operations, performance or properties of any Stellex Party as the
Administrative Agent may, from time to time, reasonably request. Each Stellex
Party hereby authorizes the Agents and their representatives to communicate
directly with the accountants and authorizes the accountants to disclose to the
Agents and such representatives and the Lenders any and all financial statements
and other information of any kind, including copies of any management letter or
the substance of any oral information, that such accountants may have with
respect to the Collateral or the condition (financial or otherwise), operations,
properties and performance of the Borrower and its Subsidiaries. The Borrower,
on or before the Effective Date, shall deliver a letter addressed to its
accountants instructing them to disclose such information in compliance with
this Section 7.03(a).
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(b) The Borrower shall deliver or cause to be delivered to the
Administrative Agent copies of all financial statements, reports and notices, if
any, sent or made available generally by the Borrower to the holders of its
publicly-held Securities or to a trustee under any indenture or filed with the
Commission, and of all press releases made available generally by the Borrower
to the public concerning material developments in the Borrower's business.
7.04. Events of Default. Promptly, and in any event within three (3)
days, upon any Stellex Party obtaining knowledge (i) of any condition or event
which constitutes a Default or an Event of Default, (ii) that any Person has
given any notice to any Stellex Party or taken any other action with respect to
a claimed default or event or condition of the type referred to in Section
11.01(e) or (iii) of any condition or event which has or is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect or adversely
affect the Collateral Agent's interest in the Collateral or adversely affect the
value of the Collateral in any material respect, such Stellex Party shall
deliver to the Administrative Agent an Officer's Certificate specifying (A) the
nature and period of existence of any such claimed default, Event of Default,
Default, condition or event, (B) the notice given or action taken by such Person
in connection therewith and (C) what action such Stellex Party has taken, is
taking and proposes to take with respect thereto.
7.05. Lawsuits. (a) Promptly, and in any event within five (5) days,
upon any Stellex Party obtaining knowledge of the institution of, or written
threat of, (i) (A) any action, suit, proceeding or arbitration against or
affecting such Stellex Party or any asset of such Stellex Party not previously
disclosed pursuant to Schedule 6.01(J) or Schedule 6.01(P) involving an alleged
liability or cost in excess of Five Million Dollars ($5,000,000) or any actions,
suits, proceedings or arbitration which in the aggregate involve money or
property valued in excess of Five Million Dollars ($5,000,000), except where the
same is fully covered by insurance (other than the applicable deductible), (B)
any investigation or proceeding before or by any Governmental Authority, the
effect of which is reasonably likely to limit, prohibit or restrict materially
the manner in which such Stellex Party currently conducts its business or to
declare any substance contained in such products manufactured or distributed by
it to be dangerous, except where the same is fully covered by insurance (other
than applicable deductible), or (C) any Forfeiture Proceeding, such Stellex
Party shall give written notice thereof to the Administrative Agent and provide
such other information as may be reasonably available to enable such Lender and
the Administrative Agent and its counsel to evaluate such matters; (ii) as soon
as practicable and in any event within forty-five (45) days after the end of
each fiscal quarter, each Stellex Party shall provide the Administrative Agent
with a litigation status report covering the institution of, or written threat
of, any action, suit, proceeding, governmental investigation or arbitration
reported pursuant to clause (i) above and shall provide such other information
at such time as may be reasonably available to enable the Administrative Agent
and its counsel to evaluate such matters; and (iii) in addition to the
requirements set forth in clauses (i) and (ii) of this Section 7.05, each
Stellex Party upon request of the Administrative Agent or the Requisite Lenders
shall promptly give written notice to the Administrative Agent of the status of
any action, suit, proceeding, governmental investigation or arbitration covered
by a report delivered pursuant to clause (i) or (ii) above and provide such
other information as may be reasonably available to it to enable the
Administrative Agent and its counsel to evaluate such matters.
7.06. Insurance. As soon as practicable and in any event by June 30 in
each fiscal year, the Borrower shall deliver to the Administrative Agent (i) an
updated Schedule 6.01(W) in form and substance reasonably satisfactory to the
Administrative Agent and the Lenders outlining all insurance policies and
programs currently in effect with respect to the property and assets and
business of the Stellex Parties, insurance coverage maintained as of the date of
such report by the Stellex Parties and the loss payment provisions of such
coverage and (ii) evidence that all premiums with respect to such coverage have
been paid when due.
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7.07. ERISA Notices. The Borrower shall deliver to the Administrative
Agent the following information and notices as soon as possible, and in any
event:
(i) within ten (10) Business Days after either a Stellex Party or
an ERISA Affiliate knows or has reason to know that a Termination
Event has occurred, a written statement of the Chief Financial Officer
of the Borrower describing such Termination Event and the action, if
any, which such Stellex Party or such ERISA Affiliate has taken, is
taking or proposes to take, with respect thereto, and, when known, any
action taken or threatened by the IRS, the DOL or the PBGC with
respect thereto;
(ii) within ten (10) Business Days after either a Stellex Party
or an ERISA Affiliate knows or has reason to know that a non-exempt
prohibited transaction (defined in Section 406 of ERISA and Section
4975 of the Code) that could reasonably be expected to have Material
Adverse Effect has occurred, a statement of the Chief Financial
Officer of the Borrower describing such transaction and the action
which any Stellex Party or any ERISA Affiliate has taken, is taking or
proposes to take with respect thereto;
(iii) within ten (10) Business Days after the filing thereof with
the DOL, the IRS or the PBGC, upon the written request of the
Administrative Agent copies of each annual report (form 5500 series),
including Schedule B thereto, filed with respect to each Benefit Plan;
(iv) within ten (10) Business Days after receipt by any Stellex
Party or any ERISA Affiliate of each upon the written request of the
Administrative Agent copies of each actuarial report for any Benefit
Plan or Multiemployer Plan and each annual report for any
Multiemployer Plan, copies of each such report;
(v) within ten (10) Business Days after the filing thereof with
the IRS, a copy of each funding waiver request filed with respect to
any Benefit Plan and all communications received by any Stellex Party
or any ERISA Affiliate with respect to such request;
(vi) within ten (10) Business Days after the occurrence thereof,
notification of any increases in the benefits of any existing Benefit
Plan or the establishment of any new Plan or the commencement of
contributions to any Benefit Plan to which any Stellex Party or any
ERISA Affiliate was not previously contributing;
(vii) within ten (10) Business Days after receipt by any Stellex
Party or any ERISA Affiliate of the PBGC's intention to terminate a
Benefit Plan or to have a trustee appointed to administer a Benefit
Plan, copies of each such notice;
(viii) within ten (10) Business Days after receipt by any Stellex
Party or any ERISA Affiliate of any unfavorable determination letter
from the IRS regarding the qualification of a Plan under Section
401(a) of the Code, copies of each such letter;
(ix) within ten (10) Business Days after receipt by any Stellex
Party or any ERISA Affiliate of a notice from a Multiemployer Plan
regarding the imposition of withdrawal liability, copies of each such
notice;
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(x) within ten (10) Business Days after any Stellex Party or any
ERISA Affiliate fails 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, a notification of such failure;
(xi) within ten (10) Business Days after any Stellex Party or any
ERISA Affiliate knows or has reason to know (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; and
(xii) within ten (10) Business Days after receipt by any Stellex
Party of a written notice from the Administrative Agent, copies of any
Foreign Employee Benefit Plan and related documents, reports and
correspondence as requested by the Administrative Agent in such
notice.
For purposes of this Section 7.07, any Stellex Party and any ERISA Affiliate
shall be deemed to know all facts actually known by the administrator of any
Plan of which such Stellex Party or such ERISA Affiliate is the plan sponsor.
7.08. Environmental Notices. (a) The Borrower shall notify the Lender
in writing, promptly, and in any event within ten (10) days, upon any Stellex
Party's receipt in writing thereof, of any:
(i) notice or claim to the effect that any Stellex Party is or
may be liable to any Person as a result of the Release or threatened
Release of any Contaminant into the environment;
(ii) notice that any Stellex Party has been identified as
potentially responsible for, or is subject to investigation by any
Governmental Authority relating to, the Release or threatened Release
of any Contaminant into the environment, or any unsafe or unhealthful
condition at any Property of any Stellex Party;
(iii) notice that any Property of any Stellex Party is subject to
an Environmental Lien;
(iv) notice of violation to any Stellex Party of any
Environmental, Health or Safety Requirement of Law;
(v) notice of commencement or threat of any judicial or
administrative proceeding alleging a violation of any Environmental,
Health or Safety Requirement of Law;
(vi) new or proposed changes to any existing Environmental,
Health or Safety Requirement of Law which reasonably could be expected
to have a Material Adverse Effect on the Property, operations or
condition (financial or otherwise) of any Stellex Party; or
(vii) any proposed acquisition of stock, assets, real estate, or
leasing of Property, or any other action by any Stellex Party that
could subject any Stellex Party to environmental, health or safety
Liabilities and Costs that could have a Material Adverse Effect.
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(b) The Borrower shall notify the Administrative Agent in writing,
promptly, and in any event within five (5) days, upon any filing or report made
by the Borrower or any other Stellex Party with any Governmental Authority with
respect to (i) the violation of any Environmental, Health or Safety Requirement
of Law, (ii) any unpermitted Release or threatened Release of a Contaminant or
(iii) any unsafe or unhealthful condition at any Property of the Borrower or any
other Stellex Party that with respect to clauses (i), (ii) and (iii) could have
a Material Adverse Effect.
(c) On March 31 of each calendar year, commencing on March 31, 2000,
the Borrower shall submit to the Administrative Agent a report providing an
update of the status of each environmental, health or safety compliance, hazard
or liability issue (a) identified in the environmental review report described
in Section 5.01; (b) each item contained on Schedule 6.01(P); and (c) each issue
identified in any notice or report required herein.
7.09. Labor Matters. Each Stellex Party shall notify the Administrative
Agent in writing, promptly, and in any event within ten (10) days, after (a)
entering into any collective bargaining agreement and (b) learning of (i) any
material labor dispute to which such Stellex Party may become a party, any
strikes, lockouts or other disputes relating to such Stellex Party's plants and
other facilities and (ii) any material liability incurred with respect to the
closing of any plant or other facility of such Stellex Party.
7.10. Other Information. Promptly, and in any event within ten (10)
days, upon receiving a request therefor from the Administrative Agent, the
Syndication Agent or the Requisite Lenders, each Stellex Party shall prepare and
deliver to the Administrative Agent such other information with respect to such
Stellex Party or the Collateral, including, without limitation, schedules
identifying and describing the Collateral and any dispositions thereof, as from
time to time may be reasonably requested by the Administrative Agent, the
Syndication Agent or the Requisite Lenders.
ARTICLE VIII
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees so long as any Commitment is
outstanding and thereafter until payment in full of the Obligations:
8.01. Existence, etc. Except for those transactions permitted under
Section 9.09, each Stellex Party shall at all times maintain its existence and
preserve and keep, or cause to be preserved and kept, in full force and effect
its rights and franchises material to its businesses except where the loss or
termination of such rights and franchises does not have or is not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect.
8.02. Powers; Conduct of Business. Each Stellex Party shall qualify and
remain qualified to do business in each jurisdiction in which the nature of its
business requires it to be so qualified except for those jurisdictions where
failure to so qualify does not have or is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect.
8.03. Compliance with Laws, etc. Each Stellex Party shall, (a) comply
with all Requirements of Law and all restrictive covenants affecting such Person
or the business, property, assets or operations of such Person and (b) obtain as
needed all Permits necessary for its operations and maintain such Permits in
good
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standing, except in the case where noncompliance with either clause (a) or (b)
above does not have or is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect.
8.04. Payment of Taxes and Claims. Each Stellex Party shall pay (a) all
taxes, assessments and other governmental charges imposed upon it or on any of
its properties or assets or in respect of any of its franchises, business,
income or property before any penalty or interest accrues thereon, the failure
to make payment of which will have or is reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect, and (b) all claims (including,
without limitation, claims for labor, services, materials and supplies) for sums
which have become due and payable prior to the same becoming subject to a Lien
upon any of such Person's properties or assets and prior to the time when any
penalty or fine shall be incurred with respect thereto; provided, however, that
no such taxes, assessments and governmental charges referred to in clause (a)
above or claims referred to in clause (b) above need be paid if being contested
in good faith by appropriate proceedings promptly instituted and diligently
conducted and if adequate reserves shall have been set aside therefor in
accordance with GAAP.
8.05. Insurance. (a) Each Stellex Party shall maintain insurance
against loss or damage of the kind customarily insured against by corporations
similarly situated with reputable insurers and with deductibles and on terms
customary for corporations similarly situated. All such policies and programs
shall be maintained with insurers reasonably satisfactory to the Administrative
Agent. Each certificate and policy relating to property damage, machinery and/or
business interruption coverage shall contain an endorsement, in form and
substance reasonably satisfactory to the Administrative Agent, showing loss
payable to the Collateral Agent, for the ratable benefit of the Lenders, and, if
required by the Administrative Agent, naming the Collateral Agent as an
additional insured under such policy. Each certificate and policy relating to
coverages other than the foregoing shall contain an endorsement, if required by
the Administrative Agent, naming the Collateral Agent as an additional insured
under such policy. Such endorsement or an independent instrument furnished to
the Administrative Agent shall provide that the insurance companies will give
the Collateral Agent at least thirty (30) days' written notice before any such
policy or policies of insurance shall be altered adversely to the interests of
the Collateral Agent and the Lenders or canceled and that no act, whether
willful or negligent, or default of any Stellex Party or any other Person shall
affect the right of the Collateral Agent to recover under such policy or
policies of insurance in case of loss or damage. In the event any Stellex Party,
at any time or times hereafter shall fail to obtain or maintain any of the
policies of insurance required herein or to pay any premium in whole or in part
relating thereto, then the Administrative Agent, without waiving or releasing
any obligation or resulting Event of Default hereunder, may at any time or times
thereafter (but shall be under no obligation to do so) obtain and maintain such
policies of insurance and pay such premiums and take any other action with
respect thereto which the Administrative Agent deems advisable; provided,
however, in the event that the Administrative Agent decides to obtain and
maintain such policies, the Administrative Agent will give notice to the
Borrower, at least ten days prior to taking any such action, and an opportunity
for the Borrower to cure such failure. All sums so disbursed by the
Administrative Agent shall be part of the Obligations hereunder, payable on
demand.
(b) Each Stellex Party will appoint or designate a person, with the
approval of the Administrative Agent, to settle or adjust such claims
individually or in the aggregate not in excess of Twenty Million Dollars
($20,000,000) during any fiscal year without the consent of the Administrative
Agent. In the event such claims exceed the foregoing amount, or claims
individually or in the aggregate have or are likely to have a Material Adverse
Effect, such settlements and adjustments thereof shall be made with the
Administrative Agent's consent, which consent shall not be unreasonably
withheld. The Net Cash Proceeds of any such insurance claim or settlement shall
be applied as follows: (i) if no Default or Event of Default then exists and the
Administrative Agent receives a certification from the applicable Stellex Party
contemporaneously with its
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receipt of such proceeds that such Stellex Party intends to use such proceeds to
replace or repair such asset, such proceeds shall be deposited into the Cash
Collateral Account in accordance with Section 3.01(b)(i) hereof, (ii) if no
Default or Event of Default then exists and no certification is received by the
Administrative Agent, such proceeds shall be applied to the outstanding balance
of the Term Loans in accordance with Section 3.02(b)(i), and (iii) if a Default
or Event of Default then exists, such proceeds shall be applied to the
Obligations in accor dance with Section 3.02(b)(i).
(c) So long as no Event of Default has occurred and is continuing, the
proceeds received under any business interruption insurance policy shall be
remitted to the Stellex Party for a period of up to twelve months. Thereafter,
the Administrative Agent shall be entitled to receive such proceeds to apply
against the Obligations.
8.06. Inspection of Property; Books and Records; Discussions. Each
Stellex Party shall permit any authorized representative(s) designated by any
Agent to visit and inspect any of the assets of such Stellex Party, to examine,
audit, check and make copies of its financial and accounting records, books,
journals, documents, orders, receipts and any correspondence and other data
relating to its businesses or the transactions contemplated by the Loan
Documents to inspect any of its Property or operations and to discuss such
Person's affairs, operations, finances, accounts and other matters with its
officers and independent certified public accountants, all upon reasonable
notice and at such reasonable times during normal business hours, as often as
may be reasonably requested; provided, however, that upon the occurrence and
during the continuance of an Event of Default each Stellex Party shall permit
any authorized representative(s) designated by any Agent or any Lender to do all
of the foregoing without notice, at any time and as often as any Agents or any
Lender may request. Each such visitation and inspection (i) by or on behalf of
any Lender shall be at such Lender's expense and (ii) by or on behalf of any
Agent shall be at the Borrower's expense; provided, however, so long as no Event
of Default exists, the Borrower shall only pay the reasonable expenses in
connection with one inspection or audit per year. Each Stellex Party shall keep
and maintain in all material respects proper books of record and account in
which entries sufficient to prepare financial statements in conformity with GAAP
shall be made of all dealings and transactions in relation to its businesses and
activities, including, without limitation, transactions and other dealings with
respect to the Collateral. If an Event of Default has occurred and is
continuing, each Stellex Party, upon the Administrative Agent's request, shall
turn over copies of any such records to the Administrative Agent or its
representatives.
8.07. Tax Identification Numbers. Each Stellex Party shall provide the
Administrative Agent in writing its tax identification number promptly upon the
availability thereof.
8.08. ERISA Compliance. Each Stellex Party shall, and shall cause each
ERISA Affiliate to, establish, maintain and operate all Plans to comply in all
material respects with the provisions of ERISA, the Code, all other applicable
laws, and the regulations and interpretations thereunder and the respective
requirements of the governing documents for such Plans. Each Stellex Party
shall, and shall cause each ERISA Affiliate to, establish, maintain and operate
all Foreign Employee Benefit Plans to comply in all material respects with all
laws, regulations and rules applicable thereto and the respective requirements
of the governing documents for such Foreign Employee Benefit Plans.
8.09. Maintenance of Property. Each Stellex Party shall maintain in all
material respects all of its owned and leased property in good, safe and
insurable condition and repair and in accordance with any applicable
manufacturers' specifications and recommendations, and not permit, commit or
suffer any waste (except in the ordinary course of business) or abandonment of
any such property and from time to time shall make
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or cause to be made all repairs, renewal and replacements thereof, except in the
case where noncompliance thereof, singularly or in the aggregate, does not have
or is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect.
8.10. Condemnation. Immediately upon learning of the institution of any
proceeding for the condemnation or other taking of any of the owned or leased
Real Property of any Stellex Party, such Stellex Party shall notify the
Administrative Agent of the pendency of such proceeding, and permit the
Administrative Agent to participate in any such proceeding, and from time to
time will deliver to the Administrative Agent all instruments reasonably
requested by the Administrative Agent to permit such participation.
8.11. Maintenance of Licenses, Permits, etc. Each Stellex Party shall
maintain in full force and effect all licenses, permits, governmental approvals,
franchises, authorizations or other rights necessary for the operation of its
business, except where the failure to obtain any of the foregoing would not have
or is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect; and notify the Administrative Agent in writing,
promptly after learning thereof, of the suspension, cancellation, revocation or
discontinuance of or of any pending or threatened action or proceeding seeking
to suspend, cancel, revoke or discontinue any such license, permit, governmental
approval, franchise authorization or right.
8.12. Year 2000 Compliance. The Borrower shall take all actions
necessary to assure that all software necessary for the current operations of
its business and the businesses of its Subsidiaries will (i) record, store,
process, calculate, present and insert time and accurate dates and calculations
for calendar dates falling on or after January 1, 2000, (ii) record, store,
process, calculate and present any information dependent on or relating to such
dates in the same manner and with the same functionality, data integrity and
performance as the software records, stores, processes, calculates and presents
calendar dates on or before December 31, 1999, and (iii) lose no functionality
with respect to the introduction of records, including but not limited to
back-up and archived information and/or data, containing dates falling on or
after January 1, 2000.
8.13. Post Closing Matters. The Loan Parties shall cause each of the
requirements set forth on Schedule 8.13 to be satisfied on or before the date
set forth opposite such requirement.
ARTICLE IX
NEGATIVE COVENANTS
The Borrower covenants and agrees so long as any Commitment is
outstanding and thereafter until payment in full of the Obligations:
9.01. Indebtedness. The Stellex Parties shall not, directly or
indirectly, create, incur, assume or otherwise become or remain liable with
respect to any Indebtedness, except:
(i) the Obligations;
(ii) trade payables in the ordinary course of business;
(iii) Permitted Existing Indebtedness;
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(iv) to the extent permitted by Section 10.05, Capital Leases and
purchase money Indebtedness incurred by the Stellex Parties to finance
the acquisition of fixed assets in an aggregate principal amount not
to exceed Twenty Five Million Dollars ($25,000,000) outstanding at any
one time;
(v) Indebtedness owing by one Loan Party to another Loan Party;
(vi) Accommodation Obligations that are permitted under Section
9.05;
(vii) Interest Rate Contracts with respect to the Loans;
(viii) other unsecured Indebtedness incurred in the ordinary
course of business in an aggregate principal amount of up to Five
Million Dollars ($5,000,000) outstanding at any time;
(ix) extensions, substitutions, renewals, and replacements of the
Deed of Trust in favor of Farm Bureau Life Insurance Company described
in item 3 on Schedule 1.01(E), provided that the amount extended,
substituted, renewed or replaced does not exceed the principal amount
outstanding at such time and that such extension, substitution,
renewal or replacement is on terms and conditions no less favorable to
Paragon Precision Products (now known as Stellex Paragon Precision,
Inc.) than such Farm Bureau Deed of Trust;
(x) Indebtedness represented by the Subordinated Notes or any
instrument evidencing subordinated indebtedness that extends, renews
or replaces the Subordinated Notes, provided that (A) the terms and
conditions of such subordinated indebtedness (other than pricing),
taken as a whole, are substantially similar to, or more favorable to
the Lenders than, the terms and conditions of the Subordinated Notes,
(B) no Default or Event of Default has occurred and is continuing
either before or after giving effect to the incurrence of such
subordinated indebtedness and (C) the Borrower has complied with the
provisions at Section 9.18(b);
(xi) subordinated indebtedness that has terms and conditions
(other than pricing), taken as a whole, that are substantially similar
to, or more favorable to the Lenders than, the terms and conditions of
the Subordinated Notes, provided that (A) after giving effect to the
incurrence of such subordinated indebtedness the Stellex Parties are
in compliance with the covenants contained in Article X, (B) no
Default or Event of Default has occurred and is continuing either
before or after giving effect to the incurrence of such subordinated
indebtedness, (C) the proceeds of such subordinated indebtedness are
applied in accordance with Section 3.01(b)(ii), and (D) the Borrower
has complied with the provisions of Section 9.18(b);
(xii) Indebtedness of a Subsidiary outstanding on or prior to the
date on which such Subsidiary was acquired by the Borrower or a
Subsidiary of the Borrower (other than Indebtedness incurred in
connection with, or in contemplation of, the transaction or series of
related transactions pursuant to which such Subsidiary became a
Subsidiary or was otherwise acquired by the Borrower or a Subsidiary
of the Borrower) and Indebtedness assumed by the Borrower or a
Subsidiary of the Borrower in connection with a Permitted Acquisition
or a Permitted Foreign Acquisition which is outstanding on or prior to
the date of such Permitted Acquisition or such Permitted Foreign
Acquisition (other than Indebtedness incurred in connection with, or
in contemplation of, such Permitted Acquisition or such Permitted
Foreign Acquisition) and any extension, substitution, renewal or
replacement of any such Indebtedness provided that the amount
extended, substituted, renewed or replaced does not exceed
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the principal amount outstanding at such time and that such extension,
substitution, renewal or replacement is on terms and conditions no
less favorable to the Lenders and the applicable Stellex Party;
provided that the aggregate permitted amount, accreted value or
liquidation preference, as applicable, of all such Indebtedness does
not exceed Seventeen Million Five Hundred Thousand Dollars
($17,500,000) at any one time outstanding;
(xiii) Indebtedness evidenced by a subordinated note, held by a
seller in connection with a Permitted Acquisition or a Permitted
Foreign Acquisition, that has terms and conditions that are
satisfactory to the Administrative Agent and the Syndication Agent and
any extension, substitution, renewal or replacement of any such
Indebtedness provided that the amount extended, substituted, renewed
or replaced does not exceed the principal amount outstanding at such
time and that such extension, substitution, renewal or replacement is
on terms and conditions no less favorable to the Lenders and the
applicable Stellex Party, provided that (A) after giving effect to the
incurrence of such subordinated indebtedness the Stellex Parties are
in compliance with the covenants contained in Article X, (B) no
Default or Event of Default has occurred and is continuing either
before or after giving effect to the incurrence of such subordinated
indebtedness, and (C) the aggregate amount of such Indebtedness and
the aggregate amount of the outstanding Indebtedness permitted under
Section 9.01(xii) does not exceed Twenty Five Million Dollars
($25,000,000) in the aggregate;
(xiv) Indebtedness of the Borrower or a Subsidiary represented by
Management Promissory Notes incurred or issued in exchange for
Management Equity Interests, in an aggregate amount not to exceed the
value (calculated in accordance with the respective agreements
pursuant to which such Management Equity Interests were issued or
exchanged) of the Management Equity Interests exchanged so long as no
Default or Event of Default has occurred and is continuing at the time
of such incurrence or issuance or would occur after giving effect to
the incurrence of such Management Promissory Note; and
(xv) Indebtedness owing by Subsidiaries that are Foreign Entities
to a Loan Party, provided that after giving effect to the incurrence
of such Indebtedness the aggregate amount of all such Indebtedness and
the aggregate amount of the Investments permitted under Section
9.04(vii) does not exceed Ten Million Dollars ($10,000,000) in the
aggregate.
9.02. Sales of Assets. The Stellex Parties shall not sell, assign,
transfer, lease, convey or otherwise dispose of any assets, whether now owned or
hereafter acquired, or any income or profits therefrom, or enter into any
agreement to do so, except:
(i) sales of Inventory in the ordinary course of business;
(ii) the disposition of Equipment if such Equipment is obsolete
or no longer useful in the ordinary course of such Stellex Party's
business;
(iii) the disposition of Property by casualty or condemnation,
provided that the proceeds of any claim or settlement in connection
therewith are applied in accordance with Section 8.05(b);
(iv) assignments, transfers, conveyances and other dispositions
from a Loan Party to another Loan Party;
73
(v) Permitted Dispositions, provided that the aggregate amount of
Permitted Dispositions in any Fiscal Year does not exceed $20,000,000
and the aggregate amount of all Permitted Dispositions does not exceed
$40,000,000;
(vi) any Loan Party may enter into a license agreement granting
licenses in respect of patents and other rights and assets with its
suppliers or customers on terms and conditions that are commercially
reasonable;
(vii) all licenses granted in the ordinary course of business;
(viii) sales of assets with an aggregate book value not in excess
of Two Million Dollars ($2,000,000) in any Fiscal Year; and
(ix) any sublease by a Stellex Party of its premises in New York
City.
9.03. Liens. The Stellex Parties shall not, directly or indirectly,
create, incur, assume or permit to exist any Lien on or with respect to the
Collateral, except:
(i) Liens created by the Loan Documents;
(ii) Permitted Existing Liens;
` (iii) Customary Permitted Liens;
(iv) Liens securing Indebtedness permitted by Section 9.01(iv)
covering only assets acquired with such Indebtedness and Liens
securing Indebtedness permitted by Section 9.01(ix) covering only the
assets subject to a Lien under the Farm Bureau Deed of Trust;
(v) a Lien with respect to a deposit made by a customer of a Loan
Party in connection with a purchase order placed by such customer so
long as such Lien is limited to the inventory covered by such purchase
order;
(vi) Liens on property (other than Inventory, Receivables and
General Intangibles) of a Person existing at the time such Person
becomes a Subsidiary of the Borrower, provided that (A) such Liens
were in existence prior to the time such Person becomes a Subsidiary
and do not extend to any other assets and (B) the sum of the
Indebtedness secured by such Liens plus the Indebtedness secured by
the Liens permitted by Section 9.03(vii) does not exceed the amount of
the Indebtedness permitted by Section 9.01(xii);
(vii) Liens on property (other than Inventory, Receivables and
General Intangibles) existing at the time of acquisition thereof by
the Borrower or a Subsidiary of the Borrower, provided that (A) such
Liens were in existence prior to the contemplation of such acquisition
and do not extend to any other assets and (B) the sum of the
Indebtedness secured by such Liens plus the Indebtedness secured by
the Liens permitted by Section 9.03(vi) does not exceed the amount of
the Indebtedness permitted by Section 9.01(xii); and
74
(viii) other Liens securing obligations incurred in the ordinary
course of business which obligations do not exceed One Million Dollars
($1,000,000) at any one time outstanding.
9.04. Investments. (a) The Stellex Parties shall not, directly or
indirectly, make or own any Investment, except:
(i) Investments in Cash Equivalents;
(ii) Investments by any Loan Party in another Loan Party;
(iii) Investments in Interest Rate Contracts permitted pursuant to
Section 9.01(vii);
(iv) Investments received in connection with the bankruptcy or
reorganization of a customer of any Loan Party or received in settlement of
delinquent obligations of or disputes with such Loan Party's customers in
the ordinary course of business;
(v) the promissory note issued by DynaLantic to Monitor on May 1, 1996
in the principal amount of $250,000;
(vi) Investments in newly formed joint ventures and partnerships in an
aggregate amount not to exceed $10,000,000;
(vii) Investments in Subsidiaries that are Foreign Entities (other
than the initial Investment in connection with Permitted Foreign
Acquisition), provided that after giving effect to such Investments the
aggregate amount of all such Investments and the aggregate amount of the
Indebtedness permitted under Section 9.01(xv) does not exceed Ten Million
Dollars ($10,000,000) in the aggregate.
(viii) other Investments not otherwise permitted under this Section
9.04 having an aggregate market value (measured on the date that such
Investment was made and without giving affect to subsequent changes in
value) not to exceed $10,000,000 outstanding at any time; provided that the
Collateral Agent has a first priority Lien with respect to all such
Investments and such Investments do not violate Section 9.09; and
(ix) loans made to employees (that are not officers or directors of a
Stellex Party) of a Stellex Party in the ordinary course of business and
loans made to officers and directors of a Stellex Party in an aggregate
amount not to exceed $1,000,000.
(b) No Stellex Party shall acquire by purchase or otherwise all or
substantially all of the business property or assets of, or stock or other
evidence of beneficial ownership of, any Person; provided, however, that (i) a
Loan Party may make a Permitted Acquisition and in connection therewith create a
Subidiary that is a Domestic Entity if: (A) in the event that such Permitted
Acquisition involves the acquisition of a Domestic Entity, such Domestic Entity
executes and delivers a Guaranty and grants a Lien to the Collateral Agent in
all of its assets pursuant to appropriate Collateral Documents, (B) the
Collateral Agent receives a Lien on the equity interests and/or assets acquired
by such Loan Party pursuant to such Permitted Acquisition and such Loan Party
executes and delivers the appropriate Collateral Documents, (C) no Default or
Event of Default has occurred and is continuing and (D) all documentation
(including, without limitation, UCC financing statements, opinions of counsel,
and appropriate consents) in connection with such Permitted Acquisition is in
form and
75
substance reasonably satisfactory to the Administrative Agent and the Collateral
Agent; and (ii) a Loan Party may make a Permitted Foreign Acquisition and in
connection therewith create a Subsidiary that is a Foreign Entity if: (A) in the
event that such Permitted Acquisition involves the acquisition of a Foreign
Entity, the Collateral Agent receives a Lien with respect to at least 66% of the
equity interests acquired by such Loan Party pursuant to such Permitted
Acquisition (with the remaining 34% being subject to a negative pledge) and such
Loan Party executes and delivers the appropriate Collateral Documents; (B) no
Default or Event of Default has occurred and is continuing; and (C) all
documentation (including, without limitation, UCC financing statements, opinions
of counsel, and appropriate consents) in connection with such Permitted
Acquisition is in form and substance reasonably satisfactory to the
Administrative Agent, the Collateral Agent and the Syndication Agent.
(c) No Stellex Party shall create any new Subsidiary (except as
permitted in Section 9.04(b)); provided, however, that a Loan Party may create a
new Subsidiary that is a corporation if (i) a Loan Party holds 100% of the
Voting Securities of such newly created Subsidiary; (ii) if such new Subsidiary
is a Domestic Entity, all of the equity interests that a Loan Party has (whether
as legal or beneficial owner), and if such new Subsidiary is not a Domestic
Entity, at least 662/3% of such equity interests, are pledged to the Collateral
Agent, on terms and conditions satisfactory to the Administrative Agent and all
of the assets of such new Subsidiary are pledged to the Collateral Agent, on
terms and conditions satisfactory to the Administrative Agent; (ii) if such new
Subsidiary is a Domestic Entity, such new Subsidiary guarantees the Obligations
on terms and conditions satisfactory to the Administrative Agent; (iii) no
Default or Event of Default has occurred and is continuing; and (iv) all
documentation (including, without limitation, security agreements, guarantees,
pledge agreements, UCC financing statements, opinions of counsel, and
appropriate consents) in connection with such new Subsidiary shall be in form
and substance reasonably satisfactory to the Administrative Agent and the
Collateral Agent and the syndication Agent.
9.05. Accommodation Obligations. The Stellex Parties shall not,
directly or indirectly, create or become or be liable with respect to any
Accommodation Obligation, except (i) recourse obligations resulting from
endorsement of negotiable instruments for collection in the ordinary course of
business, (ii) the Farm Bureau Guaranty, (iii) lease obligations under the
Agreement of Lease dated as of July 30, 1998 between 000 Xxxxx Xxxxxx
Associates, L.P., as landlord and Mentmore Holdings Corporation and Stellex
Industries, Inc., as tenant with respect to the office space where the Borrower
and Mentmore Holdings Corporation are joint tenants, (iv) Accommodation
Obligations by one Loan Party on behalf of another Loan Party but only in
connection with Indebtedness permitted under Section 9.01 (other than Section
9.01(ix)), and (v) Accommodation Obligations by one Loan Party that is the
acquiror or the target in connection with a Permitted Acquisition or a Permitted
Foreign Acquisition on behalf of another Loan Party that is the acquiror or the
target in connection with such Permitted Acquisition or such Permitted Foreign
Acquisition but only in connection with Indebtedness permitted pursuant to
Section 9.01(xii) or (xiii).
9.06. Restricted Junior Payments. The Stellex Parties shall not declare
or make any Restricted Junior Payments, except:
(i) dividends and other distributions made by any Stellex Party (other
than the Borrower) to the Borrower or another Loan Party;
(ii) payments of interest on the Subordinated Notes or the other
subordinated indebtedness permitted pursuant to Section 9.01(x) or Section
9.01(xi) or scheduled payments of principal and interest on subordinated
indebtedness incurred pursuant to Section 9.01(xiii), provided that such
payments of
76
interests are made in accordance with the provisions of the Subordinated
Note Indenture or such subordinated indebtedness;
(iii) Restricted Junior Payments made to a Management Equity Holder
pursuant to the Management Promissory Notes or to purchase Management
Equity Interests, so long as no Default or Event of Default has occurred
and is continuing or would occur after giving effect to the making of such
Restricted Junior Payment; provided that (a) the aggregate amount of such
Restricted Junior Payments does not exceed $1,500,000 during any Fiscal
Year; provided, further, that, with respect to any Fiscal Year after
December 31, 2000, (A) if the Leverage Ratio for the Borrower and its
Subsidiaries on a consolidated basis as of the last day of the immediately
preceding Fiscal Year is less than 4.0 to 1.0, then the aggregate amount of
such Restricted Junior Payments that may be made during such Fiscal Year
shall not exceed $3,500,000 and (B) if the Leverage Ratio for the Borrower
and its Subsidiaries on a consolidated basis as of the last day of the
immediately preceding Fiscal Year is less than 3.5 to 1.0, then the
aggregate amount of such Restricted Junior Payments that may be made during
such Fiscal Year shall not exceed $5,000,000;
(iv) Restricted Junior Payments made by the issuance of Management
Promissory Notes in exchange for Management Equity Interests, in an
aggregate amount not to exceed the value (calculated in accordance with the
respective agreements pursuant to which such Management Equity Interests
were issued or exchanged) of the Management Equity Interests exchanged so
long as no Default or Event of Default has occurred and is continuing at
the time of such incurrence or issuance or would occur after giving effect
to the issuance of such Management Promissory Note; and
(v) the redemption of the Preferred Stock with proceeds from the
issuance by the Borrower of common stock or preferred stock having terms
and conditions satisfactory to the Requisite Lenders.
9.07. Change in Nature of Business. The Stellex Parties shall not make
any material change in the nature or conduct of its business from the businesses
carried on as of the Effective Date other than the Permitted Acquisitions and
Permitted Foreign Acquisitions made in accordance with the provisions of this
Agreement.
9.08. Transactions with Affiliates. None of the Stellex Parties shall,
directly or indirectly, enter into or permit to exist any transaction with any
Affiliate (other than a Loan Party) of such Stellex Party except for (i)
transactions the terms of which are in the ordinary course of business, in
accordance with customary practice, and not less favorable to such Stellex Party
than those that might be obtained in an arm's length transac tion at the time
from a Person who is not an Affiliate, (ii) reasonable salaries, bonuses and
other compensation or benefits (including deferred compensation, retirement
benefits, loan arrangements, equity participation arrangements and severance
benefits or pursuant to employment agreements, employee benefit plans, stock
option agreements, management equity subscription agreements or similar
management investor agreements) paid to current and former officers, directors
and managers of such Stellex Party commensurate with salary, bonus, compensation
and benefit levels of other companies engaged in a similar business in similar
circumstances, (iii) transactions permitted under Sections 9.01(v), (xiii) and
(xiv), 9.02(iv), 9.04(ii), (vi), (but only with respect to joint ventures and
partnerships with Persons that are not Affiliates), (vii), (viii) and (ix),
9.05(iii), 9.06, 9.09(a) and 9.16, (iv) the Monitor Seller Note and (v)
tax-sharing arrangement among the Stellex Parties described in the Tax
Allocation and Indemnity Agreement among the Borrower and its Subsidiaries,
dated as of October 31, 1997, as amended by First Amendment, dated May 29, 1998
(the "Tax Sharing Agreement").
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9.09. Restriction on Fundamental Changes. (a) No Stellex Party shall
enter into any merger or consolidation, or liquidate, wind-up or dissolve (or
suffer any liquidation or dissolution), or convey, lease, sell, transfer or
otherwise dispose of, in one transaction or series of transactions, all or
substantially all of its business or assets, whether now or hereafter acquired,
except (i) Permitted Dispositions and (ii) any Loan Party may merge or
consolidate into, or convey, lease, sell, transfer or otherwise dispose of, in
one transaction or a series of related transactions, all or substantially all of
its business or assets to, another Loan Party so long as the terms and
conditions of any such transaction and the documentation in connection therewith
are in form and substance reasonably satisfactory to the Administrative Agent
and the Collateral Agent and all assets remain subject to the first priority
Lien of the Collateral Agent under the Collateral Documents.
(b) Except as permitted under this Agreement, no Stellex Party shall
change its corporate, capital or legal structure in any material respect which
is adverse to the interests of the Lenders.
(c) The Borrower shall not issue any preferred stock (other than
preferred stock that does not constitute Indebtedness) unless the terms and
conditions of such preferred stock are satisfactory to the Requisite Lenders.
(d) No Loan Party (excluding the Borrower) shall issue any Capital
Stock except
(i) Management Equity Interests; and
(ii) in connection with Permitted Acquisitions and Permitted Foreign
Acquisitions.
9.10. Sales and Leasebacks. No Stellex Party shall become liable, by
assumption or by Accommodation Obligation, with respect to any lease, whether a
Capital Lease or an operating lease, of any property (whether real or personal
or mixed) (i) which such Stellex Party has sold or transferred or will sell or
transfer to any other Person or (ii) which such Stellex Party intends to use for
substantially the same purposes as any other asset which it has sold or
transferred or will sell or transfer to any other Person in connection with such
lease, other than the sale and leaseback of real property provided that the sale
of such real property is for fair market value to a Person that is not an
Affiliate and the proceeds are applied in accordance with Section 3.01(b)(i).
9.11. Margin Regulations. No Stellex Party shall use all or any portion
of the proceeds of any Loan made under this Agreement to purchase or carry
Margin Stock.
9.12. ERISA. No Stellex Party shall, nor shall it permit any ERISA
Affiliate to, do any of the following to the extent that such act or failure to
Act would result in the aggregate, after taking into account any other such acts
or failure to act, in a Material Adverse Effect:
(i) engage, or permit any ERISA Affiliate to engage, in any prohibited
transaction described in Sections 406 of ERISA or 4975 of the Code for
which a statutory or class exemption is not available or a private
exemption has not been previously obtained from the DOL;
(ii) fail, or permit any ERISA Affiliate to fail, to timely pay
contributions or annual installments required under Section 412 of the Code
or due with respect to any waived funding deficiency with respect to any
Benefit Plan;
78
(iii) terminate, or permit any ERISA Affiliate to terminate, any
Benefit Plan which would result in any liability of any Stellex Party or
any ERISA Affiliate under Title IV of ERISA;
(iv) fail to make any contribution or payment to any Multiemployer
Plan which any Stellex Party or any ERISA Affiliate may be required to make
under any agreement relating to such Multiemployer Plan, or any law
pertaining thereto;
(v) amend, or permit any ERISA Affiliate to amend, a Benefit Plan
resulting in an increase in current liability for the plan year such that
any Stellex Party or any ERISA Affiliate is required to provide security to
such Benefit Plan under Section 401(a)(29) of the Code;
(vi) permit any unfunded liabilities with respect to any Foreign
Pension Plan; or
(vii) fail, or permit any Stellex Party or ERISA Affiliate to fail, to
pay any required contributions or payments to a Foreign Pension Plan on or
before the due date for such required installment or payment.
9.13. Amendment of Governing Documents. Except as permitted under this
Agreement, no Stellex Party shall amend, supplement or otherwise change its
Governing Documents in any material respect which is adverse to the interests of
the Lenders.
9.14. Environmental Liabilities. Except as disclosed in Schedule
6.01(P), no Stellex Party shall become subject to any Liabilities and Costs
arising out of or relating to environmental, health or safety matters which
reasonably could be expected to result in expenditures by such Stellex Party in
excess of Two Million Dollars ($2,000,000) in a particular instance or Five
Million Dollars ($5,000,000) in the aggregate, for any twelve month period.
9.15. No Activities Leading to Forfeiture. No Stellex Party shall
engage in the conduct of any business or activity which could result in a
Forfeiture Proceeding.
9.16. Management Fees and Consulting Fees. The Stellex Parties shall
not pay any management fee or consulting fee or transfer any assets to any
Affiliate, other than the following payments:
(i) the payment of management fees pursuant to the Management
Agreement (which are subordinated on the terms set forth in the
Subordination Agreement dated as of the date hereof among the Borrower,
Mentmore Holdings Corporation, the Administrative Agent and the Collateral
Agent) in an aggregate amount (exclusive of expenses) not to exceed (A)
$250,000 during each fiscal quarter in Fiscal Year 1999, (B) $312,500
during each fiscal quarter in Fiscal Year 2000, and (C) $375,000 during
each fiscal quarter in each Fiscal Year thereafter, provided, however, if
at any time (1) the Leverage Ratio for the Borrower and its Subsidiaries on
a consolidated basis for the immediately preceding twelve-month period then
ended, calculated as of the fiscal quarter ended prior to such payment, is
less than 4.00 to 1.00 and (2) the value of common equity plus additional
paid-in-capital plus the liquidation value of all redeemable and
non-redeemable preferred stock on the consolidated balance sheet of the
Borrower is at least $50,000,000, then the management fee permitted to be
paid for such fiscal quarter will be the greater of (I) $375,000 and (II)
one percent of sales for such fiscal quarter; provided that at the time of
any such payment and after giving effect to such payment no Default or
Event of Default shall have occurred and be continuing;
79
(ii) the reimbursement of reasonable business expenses incurred in the
ordinary course of business by an Affiliate on behalf of any Stellex Party,
provided that the Stellex Parties are in compliance with Section 9.08; and
(iii) the payment of investment banking fees by the Stellex Parties to
Mentmore Holdings Corporation in connection with any Permitted Acquisition
or Permitted Foreign Acquisition in an amount not to exceed one percent
(1%) of the transaction value, exclusive of expenses.
9.17. Farm Bureau Life Insurance Company. No Stellex Party shall assign
or transfer any moneys, securities or other property to Farm Bureau, or permit
any moneys, securities or other property to be in the constructive or actual
possession of or on deposit with Farm Bureau, provided, however, that payments
may be made to Farm Bureau that are due and payable under the Farm Bureau
Guaranty.
9.18. Amendment of Subordinated Documents or Preferred Stock. (a) No
Stellex Party shall (i) amend, supplement or otherwise change any provision of
the Subordinated Note Documents or any agreement that extends, renews or
replaces the Subordinated Notes, or any documents evidencing the subordinated
indebtedness referred to in Section 9.01(xi) or (xiii) or of the Preferred Stock
in any material respect which would be adverse to the interests of the Lenders
or (ii) designate any Indebtedness as "Designated Senior Indebtedness" for
purposes of the Subordinated Note Indenture.
(b) No Stellex Party shall enter into any subordinated indebtedness
permitted under Section 9.01(x) or (xi) until such Stellex Party has given the
Agents ten Business Days notice of the terms and conditions of such subordinated
indebtedness.
ARTICLE X
FINANCIAL COVENANTS
Each Stellex Party covenants and agrees so long as any Commitment is
outstanding and thereafter until payment in full of the Obligations:
10.01. Minimum Net Worth. The Net Worth of the Borrower and its
Subsidiaries on a consolidated basis at the end of each fiscal quarter of each
Fiscal Year shall not be less than the sum of (i) $5,000,000 plus (ii) an amount
equal to 50% of Net Income since the Effective Date (excluding any losses) plus
(iii) 50% of the aggregate amount of all equity contributions to the Borrower
after the Effective Date.
10.02. Minimum Interest Coverage Ratio. The Interest Coverage Ratio (as
it may be adjusted on a Pro Forma Basis for any Permitted Acquisition and
Permitted Foreign Acquisition) of the Borrower and its Subsidiaries on a
consolidated basis at the end of each Financial Covenant Period set forth below
shall not be less than the ratio set forth opposite such date:
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Financial Covenant
Period Ending: Ratio
-------------- -----
June 30, 1999 2.00 to 1.00
September 30, 1999 2.00 to 1.00
December 31, 1999 2.10 to 1.00
March 31, 2000 2.10 to 1.00
June 30, 2000 2.10 to 1.00
September 30, 2000 2.25 to 1.00
December 31, 2000 2.40 to 1.00
March 31, 2001 2.40 to 1.00
June 30, 2001 2.50 to 1.00
September 30, 2001 2.50 to 1.00
December 31, 2001 3.00 to 1.00
March 31, 2002 3.00 to 1.00
June 30, 2002 3.25 to 1.00
September 30, 2002 3.50 to 1.00
December 31, 2002 4.00 to 1.00
March 31, 2003 4.00 to 1.00
June 30, 2003 4.00 to 1.00
September 30, 2003 4.00 to 1.00
December 31, 2003 4.50 to 1.00
March 31, 2004 4.50 to 1.00
June 30, 2004 4.50 to 1.00
September 30, 2004 4.50 to 1.00
December 31, 2004 4.50 to 1.00
March 31, 2005 4.50 to 1.00
June 30, 2005 4.50 to 1.00
September 30, 2005 4.50 to 1.00
December 31, 2005 4.50 to 1.00
March 31, 2006 4.50 to 1.00
June 30, 2006 4.50 to 1.00
September 30, 2006 4.50 to 1.00
10.03. Minimum Fixed Charge Coverage Ratio. The Fixed Charge
Coverage Ratio (as it may be adjusted on a Pro Forma Basis for any Permitted
Acquisition and Permitted Foreign Acquisition) of the Borrower and its
Subsidiaries on a consolidated basis at the end of each Financial Covenant
Period set forth below shall not be less than ratio set forth opposite such
date:
Financial Covenant
Period Ending: Ratio
-------------- -----
June 30, 1999 1.15 to 1.00
September 30, 1999 1.15 to 1.00
December 31, 1999 1.35 to 1.00
March 31, 2000 1.35 to 1.00
June 30, 2000 1.35 to 1.00
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September 30, 2000 1.35 to 1.00
December 31, 2000 1.50 to 1.00
March 31, 2001 1.50 to 1.00
June 30, 2001 1.50 to 1.00
September 30, 2001 1.50 to 1.00
December 31, 2001 1.75 to 1.00
March 31, 2002 1.75 to 1.00
June 30, 2002 1.75 to 1.00
September 30, 2002 1.75 to 1.00
December 31, 2002 2.00 to 1.00
March 31, 2003 2.00 to 1.00
June 30, 2003 2.00 to 1.00
September 30, 2003 2.00 to 1.00
December 31, 2003 2.00 to 1.00
March 31, 2004 2.00 to 1.00
June 30, 2004 2.00 to 1.00
September 30, 2004 2.00 to 1.00
December 31, 2004 2.00 to 1.00
March 31, 2005 2.00 to 1.00
June 30, 2005 2.00 to 1.00
September 30, 2005 2.00 to 1.00
December 31, 2005 2.00 to 1.00
March 31, 2006 2.00 to 1.00
June 30, 2006 2.00 to 1.00
September 30, 2006 2.00 to 1.00
10.04. Maximum Leverage Ratio. The Leverage Ratio (as it may
be adjusted on a Pro Forma Basis for any Permitted Acquisition and Permitted
Foreign Acquisition) of the Borrower and its Subsidiaries on a consolidated
basis, at the end of each Financial Covenant Period set forth below, shall not
be greater than the ratio set forth opposite such date:
Financial Covenant
Period Ending: Ratio
-------------- -----
June 30, 1999 5.60 to 1.00
September 30, 1999 5.50 to 1.00
December 31, 1999 5.15 to 1.00
March 31, 2000 5.15 to 1.00
June 30, 2000 4.75 to 1.00
September 30, 2000 4.50 to 1.00
December 31, 2000 4.25 to 1.00
March 31, 2001 4.25 to 1.00
June 30, 2001 4.00 to 1.00
September 30, 2001 3.75 to 1.00
December 31, 2001 3.50 to 1.00
March 31, 2002 3.50 to 1.00
June 30, 2002 3.50 to 1.00
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September 30, 2002 3.25 to 1.00
December 31, 2002 3.25 to 1.00
March 31, 2003 3.00 to 1.00
June 30, 2003 3.00 to 1.00
September 30, 2003 3.00 to 1.00
December 31, 2003 3.00 to 1.00
March 31, 2004 3.00 to 1.00
June 30, 2004 3.00 to 1.00
September 30, 2004 3.00 to 1.00
December 31, 2004 3.00 to 1.00
March 31, 2005 3.00 to 1.00
June 30, 2005 3.00 to 1.00
September 30, 2005 3.00 to 1.00
December 31, 2005 3.00 to 1.00
March 31, 2006 3.00 to 1.00
June 30, 2006 3.00 to 1.00
September 30, 2006 3.00 to 1.00
10.05. Capital Expenditures. None of the Stellex Parties shall
make or incur any Capital Expenditures during any Fiscal Year, if, after giving
effect to such Capital Expenditures, the aggregate amount of all Capital
Expenditures made by the Stellex Parties would exceed Twelve Million Dollars
($12,000,000) for such Fiscal Year; provided, however, the Stellex Parties may
carry forward from one Fiscal Year to the next Fiscal Year (but not to any
subsequent Fiscal Year) 50% of any Capital Expenditures permitted but not
expended during any Fiscal Year provided that the amount of Capital Expenditures
carried forward to the next Fiscal Year may only be used after the Capital
Expenditures permitted for such next Fiscal Year are expended.
ARTICLE XI
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
11.01. Events of Default. Each of the following occurrences
shall constitute an Event of Default under this Agreement:
(a) Failure to Make Payments When Due. The Borrower shall fail
to pay any principal of the Loans or the Reimbursement Obligations when due, or
shall fail to pay any interest on any Note or any other Obligation within three
(3) Business Days after such interest or Obligation shall become due.
(b) Breach of Representation or Warranty. Any representation
or warranty made or deemed to have been made by any Stellex Party under,
relating to or in connection with this Agreement, the Notes, any of the other
Loan Documents or any certificate or statement furnished by any Stellex Party
pursuant to or in connection with this Agreement shall be false or misleading in
any material respect when made.
(c) Breach of Certain Covenants. Any Stellex Party shall fail
duly and punctually to perform or observe any agreement, covenant or obligation
binding on such Stellex Party under Section 7.04, Section 8.01, Section 8.02,
Section 8.03, Section 8.06, Article IX or Article X of this Agreement or under
any Loan Document.
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(d) Other Defaults. Any Stellex Party shall fail duly and
punctually to perform or observe any term, covenant or obligation binding on
such Stellex Party (i) under Article VII of this Agreement and such failure
shall continue for ten (10) Business Days after the occurrence of such failure
or (ii) under this Agreement (other than as described in Sections 11.01(a), (c)
or (d)(i)) and such failure shall continue for thirty (30) days after any
Stellex Party knew of such failure.
(e) Default as to Other Indebtedness. Any Stellex Party shall
fail to make any payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) with respect to any Indebtedness
(other than (i) an Obligation or (ii) the Xxxxxxxx Seller Note or the Monitor
Seller Note provided that the failure to make any payment under either the
Xxxxxxxx Seller Note or the Monitor Seller Note does not give rise to a default
or event of default under or in connection with any other Indebtedness which is
in an aggregate amount of $5,000,000 or more) if the aggregate amount of such
other Indebtedness is Five Million Dollars ($5,000,000) or more; or any breach,
default or event of default shall occur, or any other condition shall exist
under any instrument, agreement or indenture pertaining to any such
Indebtedness, if the effect thereof (with or without the giving of notice or
lapse of time or both) is to cause an acceleration, mandatory redemption or
other required repurchase of such Indebtedness or permit the holder or holders
of such Indebtedness to accelerate the maturity of any such Indebtedness or
require a redemption or other repurchase of such Indebtedness; or any such
Indebtedness shall be otherwise declared to be due and payable (by acceleration
or otherwise) or required to be prepaid, redeemed or otherwise repurchased by
any Stellex Party (other than by a regularly scheduled required prepayment)
prior to the stated maturity thereof; or the holder or holders of any Lien, in
any amount, shall commence foreclosure of such Lien upon property of any Stellex
Party having an aggregate value in excess of Five Million Dollars ($5,000,000).
(f) Involuntary Bankruptcy; Appointment of Receiver, etc. (i)
An involuntary case shall be commenced against any Stellex Party and the
petition shall not be dismissed, stayed, bonded or discharged for a period of
sixty (60) days; or a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of any Stellex Party in an involuntary
case, under any applicable bankruptcy, insolvency or other similar law now or
hereinafter in effect; or any other similar relief shall be granted under any
applicable federal, state, local or foreign law; or the board of directors of
any Stellex Party (or any committee thereof) adopts any resolution or otherwise
authorizes any action to approve any of the foregoing.
(ii) A decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over any Stellex Party or over
all or a substantial part of the assets of any Stellex Party shall be entered
and such decree or order shall not be stayed, dismissed or discharged for a
period of sixty (60) days; or an interim receiver, trustee or other custodian of
any Stellex Party or of all or a substantial part of the assets of any Stellex
Party shall be appointed or a warrant of attachment, execution or similar
process against any substantial part of the assets of any Stellex Party shall be
issued and any such event shall not be stayed, dismissed, bonded or discharged
for a period of sixty (60) days; or the board of directors of any Stellex Party
(or any committee thereof) adopts any resolution or otherwise authorizes any
action to approve any of the foregoing.
(g) Voluntary Bankruptcy; Appointment of Receiver, etc. Any
Stellex Party shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or shall consent to
the entry of an order for relief in an involuntary case, or to the conversion of
an involuntary case to a voluntary case, under any such law, or shall consent to
the appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of its assets; or any Stellex Party
shall make any assignment for the benefit of creditors or shall be unable or
fail, or shall admit in writing its
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inability, to pay its debts as such debts become due, or the board of directors
of any Stellex Party (or any committee thereof) adopts any resolution or
otherwise authorizes any action to approve any of the foregoing.
(h) Judgments and Attachments. Any money judgment (other than
a money judgment covered by insurance as to which the insurance company has
acknowledged coverage), writ or warrant of attachment, or similar process
against any Stellex Party or any assets of any Stellex Party involving in any
case an amount in excess of One Million Dollars ($1,000,000) is entered and
shall remain undischarged, unvacated, unbonded or unstayed for a period of
thirty (30) days.
(i) Dissolution. Any order, judgment or decree shall be
entered against any Stellex Party decreeing its involuntary dissolution or split
up and such order shall remain undischarged and unstayed for a period of thirty
(30) days; or any Stellex Party shall otherwise dissolve or cease to exist
(except as permitted under this Agreement).
(j) Loan Documents; Failure of Security. At any time, for any
reason, (i) any Loan Docu ment ceases to be in full force and effect or any
Stellex Party seeks to repudiate its obligations thereunder and the Liens
intended to be created thereby are, or any Stellex Party seeks to render such
Liens, invalid and unperfected, or (ii) Liens in favor of the Collateral Agent
and/or the Lenders contemplated by the Loan Documents shall, at any time, for
any reason, be invalidated or otherwise cease to be in full force and effect, or
such Liens shall be subordinated or shall not have the priority contemplated by
this Agreement or the Loan Documents.
(k) ERISA Liabilities. Any Termination Event occurs which will
or is reasonably likely to subject either a Stellex Party or an ERISA Affiliate
to a liability which will, or is reasonably likely to have, a Material Adverse
Effect.
(l) Waiver Application. The plan administrator of any Benefit
Plan applies under Section 412(d) of the Code for a waiver of the minimum
funding standards of Section 412(a) of the Code and the substantial business
hardship upon which the application for the waiver is based could subject either
any Stellex Party or any ERISA Affiliate to liability which will or is
reasonably likely to have a Material Adverse Effect.
(m) Change of Control. A Change of Control shall have
occurred.
(n) Government Contracts. At any time, for any reason, (i) a
notice of debarment, notice of suspension or notice of termination for default
shall have been issued to the Borrower under or in connection with any
Government Contract which could reasonably result in, a Material Adverse Effect;
(ii) a notice of debarment, notice of suspension or notice of termination for
default shall have been issued to any other party under a Government Contract as
a direct or indirect result of the Borrower's performance or malfeasance
thereunder which could reasonably result in a Material Adverse Effect; (iii) the
Borrower is barred or suspended from contracting with any Governmental
Authority; (iv) a Government investigation shall have been commenced in
connection with any Government Contract or the Borrower which could reasonably
result in criminal liability, suspension, debarment or any other adverse
administrative action arising by reason of alleged fraud, willful misconduct or
other wrongdoing; (v) a Government investigation shall have been commenced in
connection with any Contract or the Borrower which could reasonably result in
any civil liability or any other administrative action arising by reason of
alleged neglect or default or other wrongdoing which could reasonably result in
a Material Adverse Effect; (vi) the actual termination of any Contract due to
alleged fraud, willful misconduct, neglect, default or other wrongdoing which
could reasonably result in a Material Adverse Effect; or (vii) a cure notice
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issued under any Contract shall remain uncured beyond (A) the expiration of the
time period available to the Borrower pursuant to such Contract and/or such cure
notice, to cure the noticed default or (B) the date on which the other
contracting party is entitled to exercise its rights and remedies under the
Contract as a consequence of such default, which could reasonably result in a
Material Adverse Effect.
An Event of Default shall be deemed "continuing" until cured
or waived in writing in accordance with Section 13.09.
11.02. Rights and Remedies.
(a) Acceleration and Termination. Upon the occurrence of any
Event of Default described in Section 11.01(f) or 11.01(g), the Commitments
shall automatically and immediately terminate and the unpaid principal amount
of, and any and all accrued interest on, the Obligations and all accrued fees
shall automatically become immediately due and payable, without presentment,
demand, or protest or other requirements of any kind (including, without
limitation, valuation and appraisement, diligence, presentment, notice of intent
to demand or accelerate and of acceleration), all of which are hereby expressly
waived by the Borrower, and the obligations of the Lenders to make Loans
hereunder shall thereupon terminate; and upon the occurrence and during the
continuance of any other Event of Default, the Administrative Agent shall, at
the request, or may with the consent, of the Requisite Lenders, declare (i) that
the Commitments are terminated, whereupon the Commitments shall immediately
terminate, and/or (ii) the unpaid principal amount of, and any and all accrued
interest on, the Obliga tions and all accrued fees to be, and the same shall
thereupon be, immediately due and payable, without presentment, demand, or
protest or other requirements of any kind (including, without limitation,
valuation and appraisement, diligence, presentment, notice of intent to demand
or accelerate and of acceleration, except as may be specifically provided for
herein), all of which are hereby expressly waived by the Borrower.
(b) Enforcement. Each Stellex Party acknowledges that in the
event any Stellex Party fails to perform, observe or discharge any of its
respective obligations or liabilities under this Agreement or any other Loan
Document, any remedy of law may prove to be inadequate relief to the Agents and
the Lenders; therefore, the Stellex Parties agree that the Agents and the
Lenders shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving actual damages.
ARTICLE XII
THE AGENTS
12.01. Appointment. (a) Each Lender hereby designates and
appoints SG as the Administrative Agent of such Lender under this Agreement, and
each Lender hereby irrevocably authorizes the Administrative Agent to take such
action on its behalf under the provisions of this Agreement, the Notes and the
Loan Docu ments and to exercise such powers as are set forth herein or therein
together with such other powers as are reasonably incidental thereto. As to any
matters not expressly provided for by this Agreement or the other Loan
Documents, the Administrative Agent shall not be required to exercise any
discretion or take any action. Notwithstanding the foregoing, the Administrative
Agent shall be required to act or refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the instructions of the
Requisite Lenders (unless the instructions or consent of all of the Lenders is
required hereunder or thereunder) and such instructions shall be binding upon
all Lenders; provided, however, the Administrative Agent shall not be required
to take any action which (i) the Administrative Agent believes will expose it to
personal liability unless the Administrative Agent receives an indemnification
satisfactory to it from the Lenders with respect to such action or (ii) is
contrary to
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this Agreement, the Notes, the other Loan Documents or applicable law. The
Administrative Agent agrees to act as such on the express conditions contained
in this Article XII.
(b) Each Lender hereby designates and appoints First Union as
the Collateral Agent of such Lender under this Agreement, and each Lender hereby
irrevocably authorizes the Collateral Agent to take such action on its behalf
under the provisions of this Agreement, the Notes and the Loan Documents and to
exercise such powers as are set forth herein or therein together with such other
powers as are reasonably incidental thereto. As to any matters not expressly
provided for by this Agreement or the other Loan Documents, the Collateral Agent
shall not be required to exercise any discretion or take any action.
Notwithstanding the foregoing, the Collateral Agent shall be required to act or
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Requisite Lenders (unless the
instructions or consent of all of the Lenders is required hereunder or
thereunder) and such instructions shall be binding upon all Lenders; provided,
however, the Collateral Agent shall not be required to take any action which (i)
the Collateral Agent believes will expose it to personal liability unless the
Collateral Agent receives an indemnification satisfactory to it from the Lenders
with respect to such action or (ii) is contrary to this Agreement, the Notes,
the other Loan Documents or applicable law. The Collateral Agent agrees to act
as such on the express conditions contained in this Article XII.
(c) Each Lender hereby designates and appoints LCPI as the
Syndication Agent of such Lender under this Agreement, and each Lender hereby
irrevocably authorizes the Syndication Agent to take such action on its behalf
under the provisions of this Agreement, the Notes and the Loan Documents and to
exercise such powers as are set forth herein or therein together with such other
powers as are reasonably incidental thereto. As to any matters not expressly
provided for by this Agreement or the other Loan Documents, the Syndication
Agent shall not be required to exercise any discretion or take any action.
Notwithstanding the foregoing, the Syndication Agent shall be required to act or
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Requisite Lenders (unless the
instructions or consent of all of the Lenders is required hereunder or
thereunder) and such instructions shall be binding upon all Lenders; provided,
however, the Syndication Agent shall not be required to take any action which
(i) the Syndication Agent believes will expose it to personal liability unless
the Syndication Agent receives an indemnification satisfactory to it from the
Lenders with respect to such action or (ii) is contrary to this Agreement, the
Notes, the other Loan Documents or applicable law. The Syndication Agent agrees
to act as such on the express conditions contained in this Article XII.
(d) The provisions of this Article XII are solely for the
benefit of the Agents and the Lenders, and none of the Stellex Parties shall
have any rights to rely on or enforce any of the provisions hereof (other than
as expressly set forth in Section 12.07). In performing its functions and duties
under this Agreement, the Agents shall act solely as agents of the Lenders and
does not assume and shall not be deemed to have assumed any obligation or
relationship of agency, trustee or fiduciary with or for any Stellex Party. The
Agents may perform any of their respective duties hereunder, or under the Loan
Documents, by or through their respective agents or employees.
12.02. Nature of Duties. The Agents shall not have any duties
or responsibilities except those expressly set forth in this Agreement or in the
Loan Documents. The duties of the Agents shall be mechanical and administrative
in nature. The Agents shall not have by reason of this Agreement a fiduciary
relationship in respect of any Holder. Nothing in this Agreement or any of the
Loan Documents, expressed or implied, is intended to or shall be construed to
impose upon the Agents any obligations in respect of this Agreement or any of
the Loan Documents except as expressly set forth herein or therein. Each Lender
shall make its own
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independent investigation of the financial condition and affairs of the Borrower
and the other Stellex Parties in connection with the Loans hereunder and shall
make its own appraisal of the credit worthiness of the Borrower and the other
Stellex Parties initially and on a continuing basis, and the Agents shall not
have any duty or responsibility, either initially or on a continuing basis, to
provide any Holder with any credit or other information with respect thereto
(except for reports required to be delivered by the Agents under the terms of
this Agreement). If the Agents seek the consent or approval of the Lenders to
the taking or refraining from taking of any action hereunder, the Agents shall
send notice thereof to each Lender. The Agents shall promptly notify each Lender
at any time that the Lenders so required hereunder have instructed the Agents to
act or refrain from acting pursuant hereto.
12.03. Rights, Exculpation, etc. (a) Liabilities;
Responsibilities. None of the Agents, any Affiliate of any Agent, or any of
their respective officers, directors, employees, agents, attorneys or
consultants shall be liable to any Holder for any action taken or omitted by
them hereunder, under the Notes or under any of the Loan Documents, or in
connection therewith, except that no Person shall be relieved of any liability
imposed by law for gross negligence or willful misconduct. No Agent shall be
liable for any apportionment or distribution of payments made by it in good
faith, and if any such apportionment or distribution is subsequently determined
to have been made in error the sole recourse of any Holder to whom payment was
due, but not made, shall be to recover from other Holders any payment in excess
of the amount to which they are determined to have been entitled. The Agents
shall not be responsible to any Holder for any recitals, statements,
representations or warranties herein or for the execution, effectiveness,
genuineness, validity, legality, enforceability, collectability, or sufficiency
of this Agreement, the Notes or any of the other Loan Documents or the
transactions contemplated thereby, or for the financial condition of the
Borrower or any other Stellex Party. None of the Agents are making any
representation and warranty in connection with, and shall not be required to
make any inquiry concerning, the Collateral, the performance or observance of
any of the terms, provisions or conditions of this Agreement, the Notes or any
of the Loan Documents, or the financial condition of the Borrower or any other
Stellex Party, or the existence or possible existence of any Default or Event of
Default.
(b) Right to Request Instructions. Any Agent may at any time
request instructions from the Lenders (and after all Obligations owing to the
Lenders have been paid in full, from the Holders) with respect to any actions or
approvals which by the terms of any of the Loan Documents such Agent is
permitted or required to take or to grant, and such Agent shall be absolutely
entitled to refrain from taking any action or to withhold any approval and shall
not be under any liability whatsoever to any Person for refraining from any
action or with holding any approval under any of the Loan Documents until it
shall have received such instructions from those Lenders or Holders, as the case
may be, from whom such Agent is required to obtain such instructions for the
pertinent matter in accordance with the Loan Documents. Without limiting the
generality of the foregoing, no Holder shall have any right of action whatsoever
against any Agent as a result of such Agent acting or refraining from acting
under the Loan Documents in accordance with the instructions of all Lenders or,
where required by the express terms of this Agreement, a lesser proportion of
the Lenders, or of all Holders (after the Obligations owing to the Lenders have
been paid in full).
12.04. Reliance. Each Agent shall be entitled to rely upon any
written notices, statements, certificates, orders or other documents or any
telephone message believed by it in good faith to be genuine and correct and to
have been signed, sent or made by the proper Person, and with respect to all
matters pertaining to this Agreement or any of the Loan Documents and its duties
hereunder or thereunder, upon advice of legal counsel, independent public
accountants and other experts selected by it.
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12.05. Indemnification. To the extent that the Agents are not
reimbursed and indemnified by the Borrower, the Lenders will reimburse and
indemnify each Agent for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, reasonable costs,
reasonable expenses or dis bursements of any kind or nature whatsoever which may
be imposed on, incurred by, or asserted against it in any way relating to or
arising out of the Loan Documents or any action taken or omitted by such Agent
under the Loan Documents, in proportion to each Lender's Pro Rata Share;
provided that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disburse ments resulting from such Agent's gross negligence or
willful misconduct. The obligations of the Lenders under this Section 12.05
shall survive the payment in full of the Loans and all other Obligations and the
termination of this Agreement. In the event that after payment and distribution
of any amount by the Administrative Agent or the Collateral Agent to Lenders,
any Lender or third party, including any Stellex Party, any creditor of any
Stellex Party or a trustee in bankruptcy, recovers from the Administrative Agent
or the Collateral Agent any amount found to have been wrongfully paid to the
Administrative Agent or the Collateral Agent or disbursed by the Administrative
Agent or the Collateral Agent to Lenders, then Lenders, in proportion to their
respective Pro Rata Shares, shall reimburse the Administrative Agent and the
Collateral Agent for all such amounts.
12.06. The Agents Individually. With respect to the Loans made
by it, SG and First Union shall have and may exercise the same rights and powers
hereunder and is subject to the same obligations and liabilities as and to the
extent set forth herein for any other Lender. The terms "Lenders" or "Requisite
Lenders" or any similar terms shall, unless the context clearly otherwise
indicates, include SG and First Union in their respective individual capacities
as a Lender or one of the Requisite Lenders. Each of SG and First Union and
their respective Affiliates may accept deposits from, lend money to, and
generally engage in any kind of banking, trust or other business with any
Stellex Party or any of its Affiliates as if it were not acting as an Agent
pursuant hereto.
12.07. Successor Agents. (a) Resignation. Any Agent may resign
from the performance of all its functions and duties hereunder at any time by
giving at least thirty (30) days' prior written notice to the Borrower and the
Lenders. Such resignation shall take effect upon the acceptance by a successor
Agent of appointment pursuant to this Section 12.07.
(b) Appointment by Requisite Lenders. Upon any such notice of
resignation, the Requisite Lenders shall have the right to appoint a successor
Agent selected from among the Lenders, which appointment shall be subject to the
prior written approval of the Borrower (which may not be unreasonably withheld,
and shall not be required upon the occurrence and during the continuance of an
Event of Default or Default).
(c) Appointment by Retiring Agent. If a successor Agent shall
not have been appointed within the thirty (30) day period provided in paragraph
(a) of this Section 12.07, the retiring Agent shall then appoint a successor
Agent who shall serve as such Agent until such time, if any, as the Requisite
Lenders appoint a successor Agent as provided above. Each Lender shall indemnify
and hold such Agent harmless for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, reasonable
costs, reasonable expenses or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by, or asserted against it in any way relating
to or arising out of the appointment of a successor Agent pursuant to the terms
of this paragraph (c).
(d) Rights of the Successor and Retiring Agents. Upon the
acceptance of any appointment hereunder as Administrative Agent or Collateral
Agent or Syndication Agent, as the case may be, by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges
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and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under this Agreement. After any retiring Agent's
resignation hereunder as an Agent, the provisions of this Article XII shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was such Agent under this Agreement.
12.08. Relations Among Lenders. Each Lender agrees that it
will not take any legal action, nor institute any actions or proceedings,
against any Stellex Party or any other Stellex Party or with respect to any
Collateral, without the prior written consent of the Requisite Lenders. Without
limiting the generality of the foregoing, no Lender may accelerate or otherwise
enforce its portion of the Obligations, except in accordance with Section
11.02(a).
12.09. Concerning the Collateral and the Loan Documents. (a)
Authority. Subject to the terms and conditions hereof, each Lender authorizes
and directs the Collateral Agent to enter into the Loan Documents relating to
the Collateral for the benefit of the Lenders. Each Lender agrees that any
action taken by any Agent or all Lenders (or, where required by the express
terms of this Agreement, a lesser proportion of the Lenders) in accordance with
the provisions of this Agreement or the other Loan Documents, and the exercise
by any Agent or all Lenders (or, where so required, such lesser proportion) of
the powers set forth herein or therein, together with such other powers as are
reasonably incidental thereto, shall be authorized and binding upon all of the
Lenders. Without limiting the generality of the foregoing, (i) the
Administrative Agent shall have the sole and exclusive right and authority to
act as the disbursing and collecting agent for the Lenders with respect to all
payments and collections arising in connection with this Agreement and the Loan
Documents relating to the Collateral and (ii) the Collateral Agent shall have
the sole and exclusive right and authority to execute and deliver each Loan
Document relating to the Collateral and accept delivery of each such agreement
delivered by any Stellex Party; act as collateral agent for the Lenders for
purposes of the perfection of all security interests and Liens created by such
agreements and all other purposes stated therein; manage, supervise and
otherwise deal with the Collateral; take such action as is necessary or
desirable to maintain the perfection and priority of the security interests and
Liens created or purported to be created by the Loan Documents; and except as
may be otherwise specifically restricted by the terms of this Agreement or any
other Loan Document, exercise all remedies given to the Collateral Agent or the
Lenders with respect to the Collateral under the Loan Documents, applicable law
or otherwise.
(b) Release of Collateral. (i) Each Lender hereby directs the
Collateral Agent to release or to subordinate any Lien held by the Collateral
Agent for the benefit of the Lenders (A) against all of the Collateral, upon
payment in full of the Obligations and termination of this Agreement and (B)
against the Collateral sold, assigned, transferred, conveyed or otherwise
disposed of pursuant to Sections 9.02 when the Collateral Agent receives a
certificate from the Borrower pursuant to which the Borrower represents and
warrants that the Collateral is being sold, assigned, transferred, conveyed or
otherwise disposed of in compliance with Section 9.02.
(ii) Each Lender hereby directs the Collateral Agent to
execute and deliver or file such termination and partial release statements and
do such other things as are necessary to release Liens to be released pursuant
to this Section 12.09(b) promptly upon the effectiveness of any such release.
Upon request by the Collateral Agent at any time, the Lenders will confirm in
writing the Collateral Agent's authority to release particular types or items as
Collateral pursuant to this Section 12.09.
(iii) Without in any manner limiting the Collateral Agent's
authority to act without any specific or further authorization or consent by the
Lenders (as set forth in Section 12.09(b)), each Lender agrees to
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confirm in writing, upon request by the Borrower, the authority to release or
subordinate Liens in the Collateral conferred upon the Collateral Agent under
Section 12.09(b). So long as no Event of Default or Default is then continuing,
upon receipt by the Collateral Agent of any such written confirmation from the
Lenders of its authority to release any particular items or types of Collateral,
and upon at least five (5) Business Days prior written request by the Borrower,
the Collateral Agent shall (and is hereby irrevocably authorized by Lenders to)
execute such documents as may be necessary to evidence the release of the Liens
granted to the Collateral Agent for the benefit of Lenders herein or pursuant
hereto upon such Collateral; provided, that (A) the Collateral Agent shall not
be required to execute any such document on terms which, in the Collateral
Agent's opinion, would expose the Collateral Agent to liability or create any
obligation or entail any consequence other than the release of such Liens
without recourse or warranty, and (B) such release shall not in any manner
discharge, affect or impair the Obligations or any Liens upon (or obligations of
the Borrower in respect of) all interests retained by the Stellex Parties all of
which shall continue to constitute part of the Collateral.
(iv) The Collateral Agent shall have no obligation whatsoever
to the Lenders or to any other Person to assure that the Collateral exists or is
owned by any Stellex Party or is cared for, protected or insured or has been
encumbered or that the Liens granted to the Collateral Agent pursuant to the
Loan Documents have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to the Collateral Agent in this
Section 12.09 or in any of the Loan Documents, it being understood and agreed
that in respect of the Collateral, or in any act, omission or event related
thereto, the Collateral Agent may act in any manner it may deem appropriate, in
its sole discretion, given its own interest in the Collateral as one of the
Lenders and that the Collateral Agent shall have no duty or liability whatsoever
to any Lender unless required to act or refrain from acting upon the
instructions of the Lenders and then only in accordance with Section 12.01.
12.10. Co-Arrangers; Documentation Agent. The parties hereto
agree that the Co-Arrangers and the Documentation Agent have no special rights,
powers or obligations under this Agreement but are entitled, in their capacity
as Co-Arrangers and Documentation Agent hereunder, to the indemnities provided
under Section 13.05.
ARTICLE XIII
MISCELLANEOUS
13.01. Assignments and Participations. (a) Assignments. No
assignment or participation of any Lender's rights or obligations under this
Agreement and the Notes shall be made except in accordance with this Section
13.01. Each Lender may assign all or a portion of its rights and obligations
under this Agreement and the Notes in accordance with the provisions of this
Section 13.01.
(b) Limitations on Assignments. Each assignment shall be
subject to the following condi tions: (i) each assignment shall be of a
constant, and not a varying, ratable percentage of all of an assigning Lender's
rights and obligations in respect of any of its Loans or Commitments being
assigned under this Agreement and its related Note and, in the case of a partial
assignment, shall be in a minimum principal amount of Five Million Dollars
($5,000,000) (treating any two or more funds acquiring Loans or Commitments at
or about the same time, which funds are managed or advised by the same
investment advisor, as a single Eligible Assignee for purposes of satisfying
such $5,000,000 minimum) except that such limitations shall not apply to an
assignment by any Lender of any portion of its rights and obligations to another
Lender, an Affiliate of a Lender, an Approved Fund of any Lender or an
assignment by any Lender of all of its rights or obligations to
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another Person, (ii) each such assignment shall be to an Eligible Assignee, and
(iii) the parties to each such assignment, with prior written notice to the
Syndication Agent, shall execute and deliver to the Administrative Agent, for
its acceptance and recording in the Register, an Assignment and Acceptance,
together with a processing and recordation fee of Three Thousand Five Hundred
Dollars ($3,500) (provided that no fee shall be payable in the case of an
assignment to another Lender, an Affiliate of any Lender or an Approved Fund or
an assignment to or by LCPI or any of its Affiliates; and provided further that
in the case of contemporaneous assignments by a Lender to more than one fund
managed by the same investment advisor (which funds are not then Lenders
hereunder, Affiliates thereof or Approved Funds), only a single fee of $3,500
shall be payable for all such contemporaneous assignments). Notwithstanding the
foregoing, any Lender may assign any or all of its rights and obligations under
this Agreement to any of its Affiliates or to any Approved Fund without notice
to or consent of the Borrower or the Administrative Agent and without being
subject to the foregoing conditions other than notice to the Syndication Agent
and the execution and delivery to the Administrative Agent, for its acceptance
and recording in the Register, an Assignment and Acceptance. For purposes of
this Section 13.01, an "Approved Fund" shall mean, with respect to any Lender
that is a fund that invests in bank loans, any other fund that invests in bank
loans which is managed or advised by the same investment advisor as such Lender
or by an affiliate of such investment advisor. Upon such execution, delivery,
acceptance and recording in the Register, from and after the effective date
specified in each Assignment and Acceptance and accepted by the Administrative
Agent, (x) the assignment specified in such Assignment and Acceptance shall be
effective, (y) the assignee thereunder shall, in addition to any rights and
obligations hereunder held by it immediately prior to such effective date, if
any, have the rights and obligations hereunder that have been assigned to it
pursuant to such Assignment and Acceptance and shall, to the fullest extent
permitted by law, have the same rights and benefits hereunder as if it were an
original Lender hereunder, and (z) the assigning Lender shall, to the extent
that rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of such assigning Lender's
rights and obligations under this Agreement, the assigning Lender shall cease to
be a party hereto).
(c) The Register. The Administrative Agent shall maintain at
its address referred to in Section 13.09 a copy of each Assignment and
Acceptance delivered to and accepted by it and a register (the "Register") for
the recordation of the names and addresses of the Lenders and the Commitment of
each Lender from time to time and whether such Lender is an original Lender or
the assignee of another Lender pursuant to an Assignment and Acceptance. The
Administrative Agent shall incur no liability of any kind to any Stellex Party,
any Lender or any other Person with respect to its maintenance of the Register
or the recordation of information therein. The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice. No assignment shall be effective unless and
until the Assignment and Acceptance has been accepted by the Administrative
Agent and registered in the Register.
Notwithstanding anything to the contrary contained in the
previous paragraph of this Section 13.01(c), the Loans (including the Notes
evidencing such Loans) are registered obligations and the right, title, and
interest of the Lenders and their assignees in and to such Loans shall be
transferrable only upon recordation of such transfer and of the transferee and
its interest in and to the loans in the Register. No transfer by a Lender or an
assignee of any interest in any of the Loans shall be permitted or effective
unless and until the transfer and the transferee's interest in the Loan is
recorded in the Register. In addition, notwithstanding anything to the contrary
contained in Section 13.01(e), no sale of a participation shall be permitted or
effective unless and until such sale of a participating interest in principal
and interest on the Loan and any other amounts owing under this Agreement is
recorded in the Register. In the case of a participation, the Register shall
record the participant's
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interest in principal and interest on the Loan and any other amounts owing under
this Agreement that such participant has purchased. All recordations of transfer
and of the transferee's interest shall be conclusive, absent manifest error, as
to beneficial ownership of interests in the Loans. A Note shall only evidence
the Lender's or an assignee's right title and interest in and to the related
Loan, and in no event is any such Note to be considered a bearer instrument or
obligation. This Section 13.01(c) shall be construed so that the Loans are at
all times maintained in "registered form" within the meaning of Sections 163(f),
871(h)(2) and 881(c)(2) of the Internal Revenue Code and any related regulations
(or any successor provisions of the Internal Revenue Code or such regulations).
Solely for purposes of this Section 13.01(c) and for tax purposes only, the
Administrative Agent shall act as the Borrower's agent for purposes of
maintaining such notations of transfer and recordation of the beneficial
ownership of the transferee in the Register. The entries in the Register shall
be conclusive and binding for all purposes, absent manifest error, and the
Borrower and each of its Subsidiaries, the Agent and the Lenders may treat each
Person whose name is recorded in the Register (other than a participant) as a
Lender hereunder for all purposes hereof.
(d) Fee. Upon its receipt of an Assignment and Acceptance
executed by the assigning Lender and an Eligible Assignee and a processing and
recordation fee of $3500 (payable by the assigning Lender or the assignee, as
shall be agreed between them if required pursuant to Section 13.01(b)), the
Administrative Agent shall, if such Assignment and Acceptance has been completed
and is in compliance with this Agreement and in substantially the form of
Exhibit A hereto, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Borrower and the other Lenders.
(e) Participations. Each Lender may sell participations to one
or more commercial banks, lending institutions, finance companies, insurance
companies, other financial institutions or funds in or to all or a portion of
its rights and obligations under and in respect of any and all facilities under
this Agreement (including, without limitation, all or a portion of any or all of
its Commitments hereunder and the Loans owing to it); provided, however, that
(i) such Lender's obligations under this Agreement (including, without
limitation, its Commitments hereunder) shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) the Borrower, the Agents and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement, provided, however, that
the Borrower and the Administrative Agent may deal with participants in respect
of participants' rights and obligations under Section 3.03 as provided therein,
and (iv) such participant's rights to agree or to restrict such Lender's ability
to agree to the modification, waiver or release of any of the terms of the Loan
Documents or to the release of any Collateral covered by the Loan Documents, to
consent to any action or failure to act by any party to any of the Loan
Documents or any of their respective Affiliates, or to exercise or refrain from
exercising any powers or rights which any Lender may have under or in respect of
the Loan Documents or any Collateral, shall be limited to the right to consent
to (A) the increase in the Commitment of the Lender from whom such participant
purchased a participation, (B) the reduction of the principal of, or rate or
amount of interest on, the Loans subject to such participation (other than by
the payment or prepayment thereof), (C) the postponement of any date fixed for
any payment of principal of, or interest on, the Loan(s) subject to such
participation (except with respect to any modifications of the provisions
relating to prepayments of Loans and other Obligations) and (D) the release of
any guarantor of the Obligations or all or a substantial portion of the
Collateral except as provided in Section 12.09(b). Upon the sale of a
participation, the selling Lender shall notify the Administrative Agent in
writing of the name of the transferee and its interest in principal and interest
on the Loan and the Administrative Agent shall promptly record such information
in the register in accordance with Section 13.01(c). Such Lender shall notify
the Administrative Agent in writing of
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the termination of such participation and the Administrative Agent shall
promptly record such information in the Register.
(f) Information Regarding the Borrower. Any Lender may, in
connection with any assignment or participation or proposed assignment or
participation pursuant to this Section 13.01, disclose to the assignee or
participant or proposed assignee or participant, any information relating to the
Borrower furnished to such Lender by any Agent or by or on behalf of the
Borrower; provided that, prior to any such disclosure, such assignee or
participant, or proposed assignee or participant, shall agree to preserve the
confidentiality of any con fidential information described therein.
(g) Payment to Participants. With the exception of Section
3.03, anything in this Agree ment to the contrary notwithstanding, in the case
of any participation, all amounts payable by the Borrower under the Loan
Documents shall be calculated and made in the manner and to the parties required
hereby as if no such participation had been sold.
(h) Lenders' Creation of Security Interests. Notwithstanding
any other provision set forth in this Agreement, (i) any Lender may at any time
create a security interest in all or any portion of its rights under this
Agreement and its Notes (including, without limitation, Obligations owing to it
and the Notes held by it) in favor of any Federal Reserve Bank of the Federal
Reserve Board without notice to or consent of the Borrower or the Agents, and
(ii) any Lender that is a fund that invests in bank loans may, without notice to
or consent of the Borrower or the Agents, assign or pledge all or any portion of
its rights under this Agreement (including, without limitation, Obligations
owing to it and the Notes held by it) to any holders of obligations owed, or
securities issued, by such fund as security for such obligations or securities,
or to any trustee for, or any other representative of, such holders; provided
that any foreclosure or similar action by such trustee shall be subject tothe
provisions of this Section 13.01 concerning assignments.
13.02. Relations Among Lenders. Each Lender agrees that it
will not take any action, nor institute any actions or proceedings, against the
Borrower with respect to the Obligations or any Collateral, without the prior
written consent of Requisite Lenders.
13.03. Replacement of Lender. In the event that a Replacement
Event occurs and is continuing with respect to any Lender, the Borrower may
designate a Replacement Lender to assume such Lender's Commitment hereunder, to
purchase the Loans and participations of such Lender and such Lender's rights
hereunder, without recourse to or representation or warranty by, or expense to,
such Lender for a purchase price equal to the outstanding principal amount of
the Loans payable to such Lender plus any accrued but unpaid interest on such
Loans and accrued but unpaid fees owing to such Lender, and upon such
assumption, purchase and substitution, and subject to the execution and delivery
to the Administrative Agent by the Replacement Lender of documentation
satisfactory to the Administrative Agent (pursuant to which such Replacement
Lender shall assume the obligations of such original Lender under this
Agreement), the Replacement Lender shall succeed to the rights and obligations
of such Lender hereunder and such Lender shall no longer be a party hereto or
have any rights hereunder provided that the obligations of the Borrower to such
Lender under Section 13.05 hereof with respect to events occurring or
obligations arising before such replacement shall survive such replacement.
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13.04. Expenses.
(a) Generally. The Borrower agrees upon demand to pay, or
reimburse each Agent for, all of such Agent's reasonable audit, legal,
appraisal, valuation, filing, document duplication and reproduction and
investigation expenses and for all other out-of-pocket costs and expenses of
every type and nature (including, without limitation, the reasonable fees,
expenses and disbursements of legal counsel, auditors, accountants, appraisers,
printers, insurance and environmental advisers, and other consultants and
agents) incurred by such Agent in connection with (i) the preparation,
negotiation, and execution of this Agreement and the other Loan Documents; (ii)
the interpretation of this Agreement (including, without limitation, the
satisfaction or attempted satisfaction of any of the conditions set forth in
Article V), the other Loan Documents and the making of the Loans hereunder;
(iii) the creation, perfection or protection of the Liens under the Loan
Documents; (iv) the ongoing administration of this Agreement and the Loans,
including consultation with attorneys in connection therewith and with respect
to such Agent's rights and responsibilities under this Agreement and the other
Loan Documents and, to the extent provided under Section 8.06, such Agent's
periodic inspections and audits of the Borrower; (v) the protection, collection
or enforcement of any of the Obligations or the enforcement of any of the Loan
Documents; (vi) the commencement, defense or intervention in any court
proceeding relating in any way to the Obligations, the assets of the Borrower,
this Agreement or any of the other Loan Documents; (vii) the response to, and
preparation for, any subpoena or request for document production with which such
Agent is served or deposition or other proceeding in which such Agent is called
to testify, in each case, relating in any way to the Obligations, the assets of
the Borrower, this Agreement or any of the other Loan Documents; and (viii) any
amendments, consents, waivers, assignments, restatements, or supplements to any
of the Loan Documents and the preparation, negotiation, and execution of the
same.
(b) After Default. The Borrower further agrees to pay or
reimburse each Agent and each Lender upon demand for all out-of-pocket costs and
expenses, including, without limitation, attorneys' fees incurred by such Agent
or such Lender after the occurrence of an Event of Default (i) in enforcing any
Loan Document or any of the Obligations or any security therefor or exercising
or enforcing any other right or remedy available by reason of such Event of
Default; (ii) in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or in
any insolvency or bankruptcy proceeding; (iii) in commencing, defending or
intervening in any litigation or in filing a petition, complaint, answer, motion
or other pleadings in any legal proceeding relating to the Obligations, the
Property, the Borrower and related to or arising out of the transactions
contemplated hereby or by any of the other Loan Documents; and (iv) in taking
any other action in or with respect to any suit or proceeding (bankruptcy or
otherwise) described in clauses (i) through (iii) above.
13.05. Indemnity. The Borrower further agrees to defend,
protect, indemnify, and hold harmless each Agent, each Co-Arranger, the
Documentation Agent, each Lender, the Issuing Bank and the Swing Loan Lender,
and each of their respective Affiliates, and their respective officers,
directors, employees, attorneys and agents (including, without limitation, those
retained in connection with the satisfaction or attempted satisfaction of any of
the conditions set forth in Article V) (collectively, the "Indemnitees") from
and against any and all liabilities, obligations, losses (other than loss of
profits), damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or nature whatsoever (excluding any taxes and
including, without limitation, the reasonable fees and disbursements of counsel
for such Indemnitees in connection with any investigative, administrative or
judicial proceeding, whether or not such Indemnitees shall be designated a party
thereto), imposed on, incurred by, or asserted against such Indemnitees in any
manner relating to or arising out of (a) this Agreement, the Notes, the other
Loan Documents, or any act, event or transaction related or attendant thereto,
the making of the Loans, the management of such Loans, the use or intended use
of the proceeds of the
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Loans, or any of the transactions contemplated by the Loan Documents, or (b) any
Liabilities and Costs relating to or arising from any Environmental, Health or
Safety Requirements of Law, the past, present or future operations of any
Stellex Party or any of its predecessors in interest, or the past, present or
future environmental, health or safety condition of the Property of any Stellex
Party, the presence, Release or threatened Release of any Contaminant into the
environment resulting from the past, present, or future operations of any
Stellex Party (collectively, the "Indemnified Matters"); provided, however, the
Borrower shall have no obligation to an Indemnitee hereunder with respect to
Indemnified Matters caused by or resulting from the willful misconduct or gross
negligence of such Indemnitee, as determined by a court of competent
jurisdiction in a final non-appealable judgment or order. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in the preceding
sentence may be unenforceable because it is violative of any law or public
policy, the Borrower shall contribute the maximum portion which it is permitted
to pay and satisfy under applicable law, to the payment and satisfaction of all
Indemnified Matters incurred by the Indemnitees.
13.06. Change in Accounting Principles. If any change in the
accounting principles used in the preparation of the most recent financial
statements referred to in Section 7.01 are hereafter required or permitted by
the rules, regulations, pronouncements and opinions of the Financial Accounting
Standards Board or the American Institute of Certified Public Accountants (or
successors thereto or agencies with similar functions) and are adopted by the
Borrower and its Subsidiaries with the agreement of its independent certified
public accountants and such changes result in a change in the method of
calculation of any of the covenants, standards or terms found in Article IX and
Article X, the parties hereto agree to enter into negotiations in order to amend
such provisions so as to equitably reflect such changes with the desired result
that the criteria for evaluating compliance with such covenants, standards and
terms by the Borrower and its Subsidiaries shall be the same after such changes
as if such changes had not been made; provided, however, no change in GAAP that
would affect the method of calculation of any of the covenants, standards or
terms shall be given effect in such calculations until such provisions are
amended, in a manner satisfactory to the Requisite Lenders and the Borrower, to
so reflect such change in accounting principles.
13.07. Setoff. In addition to any Liens granted under the Loan
Documents and any rights now or hereafter granted under applicable law, upon the
occurrence and during the continuance of any Event of Default, each Lender and
any Affiliate of any Lender is hereby authorized by the Borrower at any time and
from time to time, without notice to any Person (any such notice being hereby
expressly waived) to set off and to appropriate and to apply any and all
deposits (general or special, including, but not limited to, indebtedness
evidenced by certificates of deposit, whether matured or unmatured (but not
including tax, payroll and trust accounts)) and any other Indebtedness at any
time held or owing by such Lender or any of its Affiliates to or for the credit
or the account of the Borrower against and on account of the Obligations of the
Borrower to such Lender or any of its Affiliates, including, but not limited to,
all Loans and all claims of any nature or description arising out of or in
connection with this Agreement or the Notes, irrespective of whether or not (i)
such Lender shall have made any demand hereunder or (ii) the Administrative
Agent, at the request or with the consent of the Requisite Lenders, shall have
declared the principal of and interest on the Loans and other amounts due
hereunder and under the Notes to be due and payable as permitted by Article XI
and even though such Obligations may be contingent or unmatured. Each Lender
agrees that it shall not, without the express consent of the Requisite Lenders,
and that it shall, to the extent it is lawfully entitled to do so, upon the
request of the Requisite Lenders, exercise its setoff rights hereunder against
any accounts of the Borrower now or hereafter maintained with such Lender or any
of its Affiliates.
13.08. Ratable Sharing. The Lenders agree among themselves
that (i) with respect to all amounts received by them which are applicable to
the payment of the Obligations (excluding the fees described
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in Sections 3.03, 3.04 and 4.01(e)) equitable adjustment will be made so that,
in effect, all such amounts will be shared among them ratably in accordance with
their Pro Rata Shares, whether received by voluntary payment, by the exercise of
the right of setoff or banker's lien, by counterclaim or cross-action or by the
enforcement of any or all of the Obligations (excluding the fees and amounts
described in Sections 3.03, 3.04 and 4.01(e)) or the Collateral, (ii) if any of
them shall by voluntary payment or by the exercise of any right of counterclaim,
setoff, banker's lien or otherwise, receive payment of a proportion of the
aggregate amount of the Obligations held by it, which is greater than the amount
which such Lender is entitled to receive hereunder, the Lender receiving such
excess payment shall purchase, without recourse or warranty, an undivided
interest and participation (which it shall be deemed to have done simultaneously
upon the receipt of such payment) in such Obligations owed to the others so that
all such recoveries with respect to such Obligations shall be applied ratably in
accordance with their Pro Rata Shares; provided, however, that if all or part of
such excess payment received by the purchasing party is thereafter recovered
from it, those purchases shall be rescinded and the purchase prices paid for
such participations shall be returned to such party to the extent necessary to
adjust for such recovery, but without interest except to the extent the
purchasing party is required to pay interest in connection with such recovery.
The Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section 13.08 may, to the fullest extent permitted by
law, exercise all its rights of payment (including, subject to Section 13.07,
the right of setoff) with respect to such participation as fully as if such
Lender were the direct creditor of the Borrower in the amount of such
participation.
13.09. Amendments and Waivers. Unless otherwise provided in
this Agreement, no amendment or modification of any provision of this Agreement
or the Notes shall be effective without the written agreement of the Requisite
Lenders and the Borrower, and no termination or waiver of any provision of this
Agreement or the Notes, or consent to any departure by the Borrower therefrom,
shall be effective without the written concurrence of the Requisite Lenders,
which the Requisite Lenders shall have the right to grant or withhold in their
sole discretion. Notwithstanding the foregoing, no amendment, modification,
termination, waiver or consent with respect to (i) mandatory prepayments, (ii)
the allocation of mandatory prepayments among the Lenders, or (iii) Section 9.03
shall be effective without the written agreement of the Borrower and Lenders
whose aggregate ratable shares (stated as a percentage) of the aggregate amount
of the Revolving Loan Commitments in effect at such time plus the aggregate
outstanding amount of the Loans (other than Revolving Loans and Swing Loans,
unless the Revolving Loan Commitments have been terminated pursuant to the terms
of this Agreement, in which case, Lenders whose aggregate ratable shares (stated
as a percentage) of the aggregate outstanding amount of all Loans) at such time
are greater than 60%. Notwithstanding the foregoing, any amendment,
modification, termination, waiver or consent with respect to any of the
following provisions of this Agreement and the Notes shall be effective only by
a written agreement, signed by each Lender: (a) waiver of any of the conditions
specified in Section 5.02 (except with respect to a condition based upon another
provision of this Agreement, the waiver of which requires only the concurrence
of the Requisite Lenders), (b) increase in the amount of the Commitment of any
Lender, (c) reduction of the principal of, rate or amount of interest on the
Loans or any fees or other amounts payable to such Lender (other than by the
payment or prepayment thereof), provided that if all of the Lenders of a
particular Class consent in writing to a reduction in the rate or amount of
interest on the outstanding Loans of that Class or fees payable in connection
therewith, such consent shall be effective with respect to such Lenders, (d)
postponement of any Maturity Date or any other date fixed for any payment of
principal of, or interest on, the Loans or any fees (except with respect to any
modifications of the provisions relating to prepay ments of Loans and other
Obligations), (e) release of all or a substantial portion of the Collateral
(except as provided in Section 12.09(b)), (f) amendment of the definition of
"Requisite Lenders", or (g) amendment of Section 13.08 or this Section 13.09.
Any waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given. No notice to or demand on the
Borrower in any case shall entitle the Borrower to any other or further notice
or demand in similar or other circumstances. Notwithstanding
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anything to the contrary contained in this Section 13.09, no amendment,
modification, waiver or consent shall affect the rights or duties of the Agents
under this Agreement or the other Loan Documents, unless made in writing and
signed by the Agents in addition to the Lenders required above to take such
action.
13.10. Notices. (a) Unless otherwise specifically provided
herein, any notice or other communication herein required or permitted to be
given shall be in writing and may be personally served, telecopied, telexed or
sent by courier service or United States certified mail and shall be deemed to
have been given when delivered in person or by courier service, upon receipt of
a telecopy or telex or four (4) Business Days after deposit in the United States
mail with postage prepaid and properly addressed. Notices to the Agents pursuant
to Articles II, III or XII shall not be effective until received by the Agents.
For the purposes hereof, the addresses of the parties hereto (until notice of a
change thereof is delivered as provided in this Section 13.10) shall be as set
forth below each party's name on Exhibit B attached hereto or the signature page
of any applicable Assignment and Acceptance, or, as to each party, at such other
address as may be designated by such party in a written notice to all of the
other parties to this Agreement.
(b) The Borrower agrees to indemnify and hold harmless each
Indemnitee from and against any and all claims, damages, liabilities,
obligations, losses, penalties, actions, judgments, suits, costs, disbursements
and expenses of any kind or nature (including, without limitation, reasonable
fees and disbursements of counsel to any such Indemnitee) which may be imposed
on, incurred by or asserted against any such Indemnitee in any manner relating
to or arising out of any action taken or omitted by such Indemnitee in good
faith in reliance on any notice or other written communication in the form of a
telecopy or facsimile purporting to be from Borrower; provided that the Borrower
shall have no obligation under this Section 13.10(b) to an Indemnitee with
respect to any indemnified matter caused by or resulting from the gross
negligence or willful misconduct of that Indemnitee, as determined by a court of
competent jurisdiction in a final non-appealable judgment or order.
13.11. Survival of Warranties and Agreements. All
representations and warranties made herein and all obligations of the Borrower
in respect of taxes, indemnification and expense reimbursement shall survive the
execution and delivery of this Agreement and the other Loan Documents, the
making and repayment of the Loans and the termination of this Agreement and
shall not be limited in any way by the passage of time or occurrence of any
event and shall expressly cover time periods when any of the Agents or any of
the Lenders may have come into possession or control of any assets of the
Borrower.
13.12. Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of any Agent or any Lender in the exercise of
any power, right or privilege under this Agreement, the Notes or any of the
other Loan Documents shall impair such power, right or privilege or be construed
to be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege. All rights and
remedies exist ing under this Agreement, the Notes and the other Loan Documents
are cumulative to and not exclusive of any rights or remedies otherwise
available.
13.13. Marshalling; Payments Set Aside. Neither any Agent nor
any Lender shall be under any obligation to xxxxxxxx any assets in favor of the
Borrower or any other Person or against or in payment of any or all of the
Obligations. To the extent that the Borrower makes a payment or payments to the
Agents or the Lenders, or any of such Persons receives payment from the proceeds
of the Collateral or exercises its rights of setoff, and such payment or
payments or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party, then to the
extent of such recovery, the obligation or part thereof originally intended
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to be satisfied, and all Liens, right and remedies therefor, shall be revived
and continued in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.
13.14. Independence of Covenants. All covenants hereunder
shall be given independent effect so that if a particular action or condition is
not permitted by any of such covenants, the fact that it would be permitted by
an exception to, or be otherwise within the limitations of, another covenant
shall not avoid the occurrence of an Event of Default or Default if such action
is taken or condition exists.
13.15. Severability. In case any provision in or obligation
under this Agreement, the Notes or the other Loan Documents shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.
13.16. Headings. Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement or be given any substantive effect.
13.17. Governing Law. THIS AGREEMENT SHALL BE INTERPRETED, AND
THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
13.18. Limitation of Liability. No claim may be made by any
Borrower, any Lender, any Agent or any other Person against any other Agent or
any other Lender or the Affiliates, directors, officers, employees, attorneys or
agents of any of them for any special, consequential or punitive damages in
respect of any claim for breach of contract or any other theory of liability
arising out of or related to the transactions contemplated by this Agreement or
the Notes or the other Loan Documents, or any act, omission or event occurring
in connection therewith; and the Borrower, each Lender and each Agent hereby
waive, release and agree not to xxx upon any such claim for any such damages,
whether or not accrued and whether or not known or suspected to exist in its
favor.
13.19. Successors and Assigns. This Agreement, the Notes and
the other Loan Documents shall be binding upon the parties thereto and their
respective successors and assigns and shall inure to the benefit of the parties
thereto and the successors and permitted assigns of the Lenders. The rights
hereunder of the Borrower, or any interest therein, may not be assigned without
the written consent of all Lenders.
13.20. Certain Consents and Waivers.
(a) Personal Jurisdiction. (i) EACH OF THE AGENTS, THE LENDERS
AND THE BORROWER IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS
PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR
FEDERAL COURT SITTING IN NEW YORK, NEW YORK, AND ANY COURT HAVING JURISDICTION
OVER APPEALS OF MATTERS HEARD IN SUCH COURTS, IN ANY ACTION OR PROCEEDING
ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT, WHETHER ARISING IN
CONTRACT, TORT, EQUITY OR OTHERWISE, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES
THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH STATE COURT OR, TO THE EXTENT PERMITTED BY LAW,
99
IN SUCH FEDERAL COURT. THE BORROWER IRREVOCABLY DESIGNATES AND APPOINTS MENTMORE
HOLDINGS CORPORATION, AS ITS AGENT (THE "PROCESS AGENT"), WITH AN OFFICE LOCATED
AT THE ADDRESS IN NEW YORK, NEW YORK SET FORTH IN THE LETTER DATED AS OF THE
EFFECTIVE DATE BETWEEN THE ADMINISTRATIVE AGENT AND THE PROCESS AGENT, FOR
SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT, SUCH SERVICE
BEING HEREBY ACKNOWLEDGED TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT.
EACH OF THE AGENTS, THE LENDERS AND THE BORROWER AGREES THAT A FINAL JUDGMENT IN
ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
THE BORROWER WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(ii) THE BORROWER AGREES THAT EACH AGENT SHALL HAVE THE RIGHT
TO PROCEED AGAINST IT OR ITS PROPERTY IN A COURT IN ANY LOCATION TO ENABLE THE
AGENTS AND THE LENDERS TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR
THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR
OF ANY AGENT OR ANY LENDER. THE BORROWER AGREES THAT IT WILL NOT ASSERT ANY
PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY ANY AGENT OR ANY LENDER TO
REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF ANY AGENT OR ANY LENDER. THE
BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN
WHICH ANY AGENT OR ANY LENDER MAY COMMENCE A PROCEEDING DESCRIBED IN THIS
SECTION.
(b) Service of Process. THE BORROWER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE PROCESS AGENT OR THE BORROWER'S NOTICE ADDRESS SPECIFIED
BELOW. THE BORROWER IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OTHER
LOAN DOCUMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT
THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT OF ANY AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER
IN THE COURTS OF ANY OTHER JURISDICTION.
(c) Waiver of Jury Trial. EACH OF THE AGENTS, THE LENDERS AND
THE BORROWER IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT.
13.21. Counterparts; Effectiveness; Inconsistencies. This
Agreement and any amendments, waivers, consents, or supplements hereto may be
executed in counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument. This Agreement shall become effective against the
Borrower, each Lender and each Agent on the date hereof when each such party
hereto executes and delivers this Agreement. This Agreement and each of the
100
other Loan Documents shall be construed to the extent reasonable to be
consistent one with the other, but to the extent that the terms and conditions
hereof are actually inconsistent with the terms and conditions of any other Loan
Document, this Agreement shall govern.
13.22. Entire Agreement. This Agreement, taken together with
all of the other Loan Documents, embodies the entire agreement and understanding
among the parties hereto and supersedes all prior agreements and understandings,
written and oral, relating to the subject matter hereof.
13.23. Confidentiality. The Lenders shall hold all nonpublic
information obtained pursuant to the requirements of this Agreement and
identified as such by the Borrower in accordance with such Lender's cus tomary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices and in any event may make
disclosure reasonably required by a bona fide offeree, transferee or participant
in connection with the contemplated transfer or participation or as required or
requested by any Governmental Authority or representative thereof or pursuant to
legal process and shall require any such offeree, transferee or participant to
agree (and require any of its offerees, transferees or participants to agree) to
comply with this Section 13.23. In no event shall any Lender be obligated or
required to return any materials furnished by the Borrower; provided, however,
each offeree shall be required to agree that if it does not become a transferee
or participant it shall return all materials furnished to it by the Borrower in
connection with this Agreement.
101
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first above written.
STELLEX TECHNOLOGIES, INC.
By: /s/
----------------------------------
Title: President
----------------------------
SOCIETE GENERALE, as Administrative Agent
By: /s/
----------------------------------
Title: President
-------------------------------
XXXXXX COMMERCIAL PAPER INC.,
as Syndication Agent
By: /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxxxx
Title: Authorized Signatory
-------------------------------
FIRST UNION COMMERCIAL CORPORATION,
as Collateral Agent
By: /s/
----------------------------------
Title: Director
-------------------------------
XXXXXX BROTHERS INC.,
as Book-running Arrangers
By: /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxxxx
Title: Authorized Signatory
-------------------------------
XX XXXXX SECURITIES CORPORATION,
as Book-running Arrangers
By: /s/
----------------------------------
Title: Director
-------------------------------
SOCIETE GENERALE, as Lender
By: /s/
----------------------------------
Title: Director
-------------------------------
FIRST UNION COMMERCIAL CORPORATION,
as Lender
By: /s/
----------------------------------
Title: Director
-------------------------------
SYNDICATED LOAN FUNDING TRUST,
as Lender
By: XXXXXX COMMERCIAL PAPER INC., not in
its individual capacity but solely as
Asset Manager
By: /s/
----------------------------------
Title: Authorized Signatory
-------------------------------
GENERAL ELECTRIC CAPITAL CORPOATION,
as Lender
By: /s/
----------------------------------
Title: Risk Manager
-------------------------------
PARIBAS CAPITAL FUNDING LLC.,
as Lender
By: /s/ Xxxxxxx X.
----------------------------------
Title: Director
-------------------------------
FLEET NATIONAL BANK,
as Lender
By: /s/
----------------------------------
Title: Vice President
-------------------------------
ARCHIMEDES FUNDING II, LTD.,
as Lender
By: ING Capital Advisors LLC
as Collateral Manager
By: /s/ Xxxxxxx X. XxXxxxx
----------------------------------
Title: Managing Director
-------------------------------
KZH ING-2 LLC, as Lender
By: /s/ Xxxxxxxx Xxxxxx
----------------------------------
Xxxxxxxx Xxxxxx
Title: Authorized Agent
-------------------------------
KZH ING-3 LLC, as Lender
By: /s/ Xxxxxxxx Xxxxxx
----------------------------------
Xxxxxxxx Xxxxxx
Title: Authorized Agent
-------------------------------
XXX XXXXXX SENIOR FLOATING RATE FUND,
as Lender
By: /s/ Xxxx X. Xxxxxxxxx
----------------------------------
Xxxx X. Xxxxxxxxx
Title: Assistant Portfolio Manager
-------------------------------
EUROPEAN AMERICAN BANK, as Lender
By: /s/ Xxxxxxx Xxxxx
----------------------------------
Title: Vice President
-------------------------------
