1
Exhibit 4.1
EXECUTION COPY
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CREDIT AGREEMENT
AMONG
THE MONARCH MACHINE TOOL COMPANY,
AS BORROWER,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO,
AND
ING (U.S.) CAPITAL LLC,
AS ADMINISTRATIVE AGENT
DATED AS OF JUNE 30, 1999
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TABLE OF CONTENTS
PAGE
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SECTION 1. DEFINITIONS.....................................................................................1
1.1 Defined Terms...................................................................................1
1.2 Other Definitional Provisions..................................................................20
SECTION 2. AMOUNT AND TERMS OF TERM LOAN COMMITMENTS......................................................21
2.1 Tranche A Term Loan Commitments................................................................21
2.2 Tranche A Term Notes...........................................................................21
2.3 Tranche B Term Loan Commitments................................................................21
2.4 Tranche B Term Notes...........................................................................22
2.5 Procedure for Term Loan Borrowing..............................................................22
2.6 Commitment Fee.................................................................................23
SECTION 3. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS...............................................23
3.1 Revolving Credit Commitments...................................................................23
3.2 Revolving Credit Notes.........................................................................23
3.3 Procedure for Revolving Credit Borrowing.......................................................24
3.4 Commitment Fee.................................................................................24
3.5 Termination or Reduction of Revolving Credit Commitments.......................................24
SECTION 4. LETTERS OF CREDIT..............................................................................25
4.1 L/C Commitment.................................................................................25
4.2 Procedure for Issuance of Letters of Credit....................................................26
4.3 Fees, Commissions and Other Charges............................................................26
4.4 L/C Participations.............................................................................27
4.5 Reimbursement Obligations of the Borrower......................................................28
4.6 Obligations Absolute...........................................................................28
4.7 Letter of Credit Payments......................................................................29
4.8 Application....................................................................................29
SECTION 5. GENERAL PROVISIONS APPLICABLE TO LOANS.........................................................29
5.1 Interest Rates and Payment Dates...............................................................29
5.2 Conversion and Continuation Options............................................................30
5.3 Minimum Amounts and Maximum Number of Tranches.................................................30
5.4 Optional Prepayments...........................................................................30
(b) Any Lender holding a Tranche B Term Loan may elect, by notice to the Administrative
Agent by telephone (confirmed by telecopy or otherwise in writing) at least one
Business Day prior to the prepayment date, to decline all or any portion of a
prepayment of its Tranche B Term Loan pursuant to this Section 5.4, in which case the
aggregate amount of prepayments that would have been applied to Tranche B Term Loans
but was so declined shall be applied to prepay Tranche A Term Loans and Tranche B Term
Loans of Lenders who accept prepayment of their Tranche B Term Loans pursuant to this
Section, on a pro-rata basis based on their respective then outstanding principal
amounts........................................................................................31
5.5 Mandatory Prepayments..........................................................................31
5.6 Computation of Interest and Fees...............................................................33
5.7 Inability to Determine Interest Rate...........................................................33
5.8 Pro Rata Treatment and Payments................................................................34
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5.9 Illegality.....................................................................................35
5.10 Requirements of Law............................................................................35
5.11 Taxes..........................................................................................36
5.12 Indemnity......................................................................................38
5.13 Lending Offices; Change of Lending Office; Replacement of Lenders..............................38
SECTION 6. REPRESENTATIONS AND WARRANTIES.................................................................39
6.1 Financial Condition............................................................................39
6.2 No Change......................................................................................41
6.3 Existence; Compliance with Law.................................................................41
6.4 Power; Authorization; Enforceable Obligations..................................................41
6.5 No Legal Bar...................................................................................42
6.6 No Material Litigation.........................................................................42
6.7 No Default.....................................................................................42
6.8 Ownership of Property; Liens...................................................................42
6.9 Intellectual Property..........................................................................42
6.10 No Burdensome Restrictions.....................................................................42
6.11 Taxes..........................................................................................42
6.12 Federal Regulations............................................................................43
6.13 ERISA..........................................................................................43
6.14 Investment Company Act; Other Regulations......................................................43
6.15 Subsidiaries...................................................................................43
6.16 Security Documents.............................................................................44
6.17 Accuracy and Completeness of Information.......................................................44
6.18 Labor Relations................................................................................45
6.19 Insurance......................................................................................45
6.20 Solvency.......................................................................................45
6.21 Purpose of Loans...............................................................................46
6.22 Environmental Matters..........................................................................46
6.23 Regulation H...................................................................................47
6.24 Year 2000 Compliance...........................................................................47
SECTION 7. CONDITIONS PRECEDENT...........................................................................47
7.1 Conditions to Initial Loans....................................................................47
7.2 Conditions to Each Loan........................................................................53
SECTION 8. AFFIRMATIVE COVENANTS..........................................................................54
8.1 Financial Statements...........................................................................54
8.2 Certificates; Other Information................................................................55
8.3 Payment of Obligations.........................................................................56
8.4 Conduct of Business and Maintenance of Existence...............................................56
8.5 Maintenance of Property; Insurance.............................................................56
8.6 Inspection of Property; Books and Records; Discussions.........................................56
8.7 Notices........................................................................................56
8.8 Environmental Laws.............................................................................57
8.9 Periodic Audit of Accounts Receivable and Inventory............................................57
8.10 Additional Collateral; Additional Guarantors...................................................58
8.11 Year 2000 Covenants............................................................................58
8.12 Interest Rate Protection Arrangements..........................................................59
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SECTION 9. NEGATIVE COVENANTS.............................................................................59
9.1 Financial Condition Covenants..................................................................59
9.2 Limitation on Indebtedness.....................................................................63
9.3 Limitation on Liens............................................................................63
9.4 Limitation on Guarantee Obligations............................................................64
9.5 Limitation on Fundamental Changes..............................................................65
9.6 Limitation on Sale of Assets...................................................................65
9.7 Limitation on Dividends........................................................................66
9.8 Limitation on Capital Expenditures.............................................................66
9.9 Limitation on Investments, Loans and Advances..................................................67
9.10 Limitation on Optional Payments and Modifications of Debt Instruments..........................67
9.11 Limitation on Transactions with Affiliates.....................................................67
9.12 Limitation on Sales and Leasebacks.............................................................68
9.13 Limitation on Changes in Fiscal Year...........................................................68
9.14 Limitation on Negative Pledge Clauses..........................................................68
9.15 Limitation on Lines of Business................................................................68
9.16 Governing Documents............................................................................68
9.17 Limitation on Subsidiary Formation.............................................................68
SECTION 10. EVENTS OF DEFAULT..............................................................................68
SECTION 11. THE ADMINISTRATIVE AGENT.......................................................................72
11.1 Appointment....................................................................................72
11.2 Delegation of Duties...........................................................................72
11.3 Exculpatory Provisions.........................................................................72
11.4 Reliance by Administrative Agent...............................................................72
11.5 Notice of Default..............................................................................73
11.6 Non-Reliance on Administrative Agent and Other Lenders.........................................73
11.7 Indemnification................................................................................74
11.8 Administrative Agent in Its Individual Capacity................................................74
11.9 Successor Administrative Agent.................................................................74
SECTION 12. MISCELLANEOUS..................................................................................75
12.1 Amendments and Waivers.........................................................................75
12.2 Notices........................................................................................75
12.3 No Waiver; Cumulative Remedies.................................................................76
12.4 Survival of Representations and Warranties.....................................................76
12.5 Payment of Expenses and Taxes..................................................................76
12.6 Successors and Assigns; Participations and Assignments.........................................77
12.7 Adjustments; Set-off...........................................................................79
12.8 Counterparts...................................................................................80
12.9 Severability...................................................................................80
12.10 Integration....................................................................................80
12.11 GOVERNING LAW..................................................................................80
12.12 Submission To Jurisdiction; Waivers............................................................80
12.13 Acknowledgements...............................................................................81
12.14 WAIVERS OF JURY TRIAL..........................................................................81
12.15 Confidentiality................................................................................81
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SCHEDULES:
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Schedule 1.1 Lenders, Commitments and Lending Offices
Schedule 2.2 Tranche A Term Loan Payments
Schedule 2.4 Tranche B Term Loan Payments
Schedule 6.6 Litigation
Schedule 6.15 Subsidiaries
Schedule 6.16 Filing Jurisdictions; Excluded Collateral
Schedule 6.19 Insurance
Schedule 6.22 Environmental Matters
Schedule 7.1(a)(viii) Mortgage Locations
Schedule 7.1(a)(ix) Leasehold Mortgage Locations
Schedule 9.2 Existing Indebtedness
Schedule 9.3 Existing Liens
Schedule 9.4 Existing Guarantee Obligations
Schedule 9.5 Permitted Restructuring
EXHIBITS:
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Exhibit A-1 Form of Tranche A Term Note
Exhibit A-2 Form of Tranche B Term Note
Exhibit A-3 Form of Revolving Credit Note
Exhibit B Form of Assignment of Precision Acquisition Documents
Exhibit C Form of Guarantee
Exhibit D Form of Leasehold Mortgage
Exhibit E Form of Mortgage
Exhibit F Form of Pledge Agreement
Exhibit G Form of Security Agreement
Exhibit H Form of Borrowing Request
Exhibit I Form of Non-Bank Status Certificate
Exhibit J Form of Secretary's Certificate
Exhibit K-1 Form of Legal Opinion
Exhibit K-2 Form of Local Counsel Legal Opinion
Exhibit K-3 Form of United Kingdom Legal Opinion
Exhibit L Form of Assignment and Acceptance
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CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of June 30, 1999, among THE MONARCH MACHINE
TOOL COMPANY, an Ohio corporation (the "BORROWER"), the lenders from time to
time parties to this Agreement (the "LENDERS") and ING (U.S.) CAPITAL LLC, as
administrative agent for the Lenders hereunder.
RECITALS
The Borrower has requested that (a) the Lenders make a tranche A term
loan to the Borrower in the aggregate principal amount of $50,000,000, the
proceeds of which would be used to partially finance the acquisition (the
"PRECISION ACQUISITION") of 100% of the issued and outstanding capital stock of
Precision Industrial Corporation, a Delaware corporation ("PRECISION"), to
refinance substantially all indebtedness of the Borrower, Precision and each of
their subsidiaries and to pay fees and expenses incurred in connection herewith
and therewith, (b) the Lenders make a tranche B term loan to the Borrower in the
aggregate principal amount of $20,000,000, the proceeds of which would be used
to partially finance the Precision Acquisition, to refinance substantially all
indebtedness of the Borrower, Precision and each of their subsidiaries and to
pay fees and expenses incurred in connection herewith and therewith, and (c) the
Lenders make available to the Borrower revolving credit loans in an aggregate
principal amount at any one time outstanding not to exceed $30,000,000, the
proceeds of which would be used to partially finance the Precision Acquisition,
to refinance substantially all indebtedness of the Borrower, Precision and each
of their subsidiaries, to finance the working capital requirements of the
Borrower and its subsidiaries in the ordinary course of business and to pay fees
and expenses incurred in connection herewith and therewith. The Lenders are
willing to make such credit available to the Borrower, but only on the terms,
and subject to the conditions, set forth in this Agreement.
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the following terms shall
have the following meanings:
"ADJUSTED CONSOLIDATED NET INCOME": for any period,
Consolidated Net Income adjusted to give effect to (i) adjustments to
Consolidated Net Worth in the ordinary course of business that are not
otherwise reflected in Consolidated Net Income in accordance with GAAP,
including, without limitation, foreign exchange translation adjustments,
pension related items and adjustments in connection with derivative
securities and (ii) the retirement of any shares of Capital Stock of the
Borrower held as assets of a pension plan in accordance with Section 5.5(b)
hereof.
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"ADMINISTRATIVE AGENT": ING (U.S.) Capital LLC, together with its
affiliates, as the arranger of the Commitments and as the Administrative
Agent for the Lenders under this Agreement and the other Loan Documents.
"AFFILIATE": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person. For purposes of this
definition, "CONTROL" of a Person (including, with its correlative
meanings, "CONTROLLED BY" and "UNDER COMMON CONTROL WITH") means the power,
directly or indirectly, either to (a) vote 10% or more of the securities
having ordinary voting power in the election of directors of such Person or
(b) direct or cause the direction of the management and policies of such
Person, whether by contract or otherwise.
"AGGREGATE OUTSTANDING RC EXTENSIONS OF CREDIT": as to any Lender at
any time, an amount equal to the sum of (a) the aggregate principal amount
of all Revolving Credit Loans made by such Lender then outstanding and (b)
such Lender's Revolving Credit Commitment Percentage of the L/C Obligations
then outstanding.
"AGREEMENT": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"APPLICABLE LENDING OFFICE": for each Lender and for each Type of Loan,
the lending office of such Lender designated for such Type of Loan on
Schedule 1.1 hereto (or any other lending office from time to time notified
to the Administrative Agent by such Lender) as the office at which its
Loans of such Type are to be made and maintained.
"APPLICABLE MARGIN": (a) for any Tranche A Term Loan or any
Revolving Credit Loan of any Type, during the period commencing on the
Closing Date and ending on the date which is six months following the
Closing Date, the rate per annum set forth under the relevant column
heading below:
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Base Rate Loans Eurodollar Loans
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1.75% 2.75%
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(b) for any Tranche A Term Loan or Revolving Credit Loan of any Type,
at any time following the date which is six months following the Closing
Date on which the Leverage Ratio, as most recently determined as of the
date the certificate containing such Leverage Ratio is delivered pursuant
to Section 8.2(b), is within any of the ranges set forth below, the rate
per annum set forth under the relevant column heading opposite the
applicable range below:
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Leverage Ratio Base Rate Loans Eurodollar Loans
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Greater than or equal 1.75% 2.75%
to 3.5
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Less than 3.5 but 1.375% 2.375%
greater than or equal
to 3.0
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Less than 3.0 but 1.00% 2.00%
greater than or equal
to 2.5
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Less than 2.5 .625% 1.625%
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PROVIDED, that in the event that the certificate containing the
determination of the Leverage Ratio is not delivered on the date specified
and otherwise in accordance with to Section 8.2(b) hereof, the applicable
margin shall be the highest rate per annum for such Type of Loan set forth
above from the date on which such certificate was required to be delivered
in accordance with Section 8.2(b) until such time as such certificate is
delivered to the Lenders.
(c) for any Tranche B Term Loan of any Type, the rate per annum set
forth under the relevant column heading below:
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Base Rate Loans Eurodollar Loans
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2.25% 3.50%
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"APPLICATION": an application, in such form as the Issuing Lender may
specify from time to time, requesting the Issuing Lender to open a Letter
of Credit.
"ASSIGNEE": as defined in Section 11.6(c).
"ASSIGNMENT AND ACCEPTANCE": as defined in Section 11.6(c).
"ASSIGNMENT OF PRECISION ACQUISITION DOCUMENTS": the assignment of the
Precision Acquisition Documents, in the form of Exhibit B attached hereto.
"AVAILABLE RC COMMITMENT": as to any Lender at any time, an amount
equal to the excess, if any, of (a) the amount of such Lender's Revolving
Credit Commitment at such time OVER (b) the Aggregate Outstanding RC
Extensions of Credit by such Lender at such time.
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"BASE RATE": for any day, the rate per annum (rounded upward, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime
Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. For purposes hereof: "PRIME RATE" shall
mean the average of the prime commercial lending interest rates publicly
announced by The Chase Manhattan Bank (National Association), Citibank,
N.A. and Xxxxxx Guaranty Trust Company of New York, as announced from time
to time at their respective head offices (the prime rate not being intended
to be the lowest rate of interest charged by such banks in connection with
extensions of credit to debtors).
"BASE RATE LOANS": Loans the rate of interest applicable to which is
based upon the Base Rate.
"BORROWER": as defined in the heading to this Agreement.
"BORROWING DATE": any Business Day specified in a notice pursuant to
Section 2.5 or 3.3 as a date on which the Borrower requests the Lenders to
make Loans hereunder.
"BORROWING REQUEST": as defined in Section 3.3.
"BUSINESS": as defined in Section 6.22.
"BUSINESS DAY": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law
to close, and, if such day relates to a borrowing of, a payment or
prepayment of principal of or interest on, or a Conversion of or into, or
an Interest Period for, a Eurodollar Loan or a notice by the Borrower with
respect to any such borrowing, payment, prepayment, Conversion or Interest
Period, which is also a day on which dealings in Dollar deposits are
carried out in the London interbank market.
"CAPITAL STOCK": any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and
all similar ownership interests in a Person (other than a corporation) and
any and all warrants or options to purchase any of the foregoing.
"CASH EQUIVALENTS": (a) securities with maturities of 90 days or less
from the date of acquisition issued or fully guaranteed or insured by the
United States Government or any agency thereof, (b) certificates of deposit
and eurodollar time deposits with maturities of 90 days or less from the
date of acquisition and overnight bank deposits of any Lender or of any
commercial bank having capital and surplus in excess of $500,000,000, (c)
repurchase obligations of any Lender or of any commercial bank satisfying
the requirements of clause (b) of this definition, having a term of not
more than seven days with respect to securities issued or fully guaranteed
or insured by the United States Government, (d) commercial paper of a
domestic issuer rated at least A-1 or the equivalent thereof by Standard
and Poor's Ratings Group ("S&P") or P-1 or
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the equivalent thereof by Xxxxx'x Investors Service, Inc. ("MOODY'S") and
in either case maturing within 90 days after the day of acquisition, (e)
securities with maturities of 90 days or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the
United States, by any political subdivision or taxing authority of any such
state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at
least A by S&P or A by Moody's, (f) securities with maturities of 90 days
or less from the date of acquisition backed by standby letters of credit
issued by any Lender or any commercial bank satisfying the requirements of
clause (b) of this definition or (g) shares of money market mutual or
similar funds which invest exclusively in assets satisfying the
requirements of clauses (a) through (f) of this definition.
"CHANGE OF CONTROL": any transaction or event occurring on or after the
date hereof as a direct or indirect result of which (a) any Person or group
shall (i) beneficially own (directly or indirectly) in the aggregate
Capital Stock of the Borrower having 35% or more of the aggregate voting
power of all Capital Stock of the Borrower at the time outstanding or (ii)
have the right or power to appoint a majority of the board of directors of
the Borrower, or (b) during any period of two consecutive years,
individuals who at the beginning of such period constituted the board of
directors of the Borrower (together with any new directors whose election
by such board of directors or whose nomination for election by the
shareholders of the Borrower was approved by a vote of a majority of the
directors of the Borrower then still in office who were either directors at
the beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute at least a
majority of the board of directors of the Borrower then in office. For
purposes of this definition, the terms "beneficially own" and "group" shall
have the respective meanings ascribed to them pursuant to Section 13(d) of
the Securities Exchange Act of 1934, as amended, except that a Person or
group shall be deemed to beneficially own all securities that such Person
or group has the right to acquire, whether such right is exercisable
immediately or only after the passage of time.
"CLOSING DATE": the date on which the conditions precedent set forth in
Section 7.1 shall be satisfied.
"CODE": the Internal Revenue Code of 1986, as amended from time to
time.
"COLLATERAL": all property and interests in property of the Loan
Parties, now owned or hereinafter acquired, upon which a Lien is purported
to be created by any Security Document.
"COMMERCIAL LETTER OF CREDIT": as defined in Section 4.1(b).
"COMMITMENTS": the collective reference to the Revolving Credit
Commitments, the Tranche A Term Loan Commitments and the Tranche B Term
Loan Commitments.
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"COMMONLY CONTROLLED ENTITY": an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of
Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414 of the Code.
"CONSOLIDATED CURRENT ASSETS": at a particular date, all amounts which
would, in conformity with GAAP, be included under current assets on a
consolidated balance sheet of the Borrower and its Subsidiaries as at such
date; PROVIDED, HOWEVER, that such amounts shall not include (a) any
amounts for any Indebtedness owing by an Affiliate of the Borrower, unless
such Indebtedness arose in connection with the sale of goods or other
property in the ordinary course of business and would otherwise constitute
current assets in conformity with GAAP, (b) any shares of stock issued by
an Affiliate of the Borrower, or (c) the cash surrender value of any life
insurance policy.
"CONSOLIDATED CURRENT LIABILITIES": at a particular date, all amounts
which would, in conformity with GAAP, be included under current liabilities
on a consolidated balance sheet of the Borrower and its Subsidiaries as at
such date.
"CONSOLIDATED EBITDA": for any period, the sum for such period of:
(a) Consolidated Net Income for such period,
(b) the sum of provisions for such period for income taxes,
interest expense, and depreciation and amortization expense used in
determining such Consolidated Net Income,
(c) amounts deducted in such period in respect of non-cash
expenses in accordance with GAAP,
(d) the amount of any aggregate net loss (or minus the amount of
any gain) during such period arising from the sale, exchange or other
disposition of capital assets and
(e) non-cash expenses deducted in such period in connection with
any earn-out agreements, stock appreciation rights, "phantom" stock
plans, employment agreements, non-competition agreements, subscription
and stockholders agreements and other incentive and bonus plans and
similar arrangements made in connection with acquisitions of Persons
or businesses by the Borrower or its Subsidiaries or the retention of
executives, officers or employees by the Borrower or its Subsidiaries,
including (but without duplication) any Person that has become a
Subsidiary during such period, on a PRO FORMA basis as if such
acquisition had occurred on the first day of such period;
PROVIDED, that Consolidated EBITDA shall in any event exclude, from and
after the Closing Date:
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(u) the effect of any write-up of any assets,
(v) the effect of any loss recognized on a sale of the Borrower's
machine tool division if completed not later than June 30, 2001,
(w) the amount of any non-cash income recognized during any
period for which Consolidated EBITDA is determined, including, without
limitation, (A) the income (or deficit) of any Person (other than a
Subsidiary) in which the Borrower or any Subsidiary has an ownership
interest, except to the extent that any such income has been actually
received by the Borrower or such Subsidiary in the form of dividends
or similar distributions, (B) the undistributed earnings of any
Subsidiary to the extent that the declaration or payment of dividends
or similar distributions by such Subsidiary is not at the time
permitted by the terms of any Contractual Obligation, Governing
Document or Requirement of Law applicable to such Subsidiary, (C) any
restoration to income of any contingency reserve, except to the extent
that provision for such reserve was made out of income accrued during
such period or such reserve is an ongoing reserve recorded in the
ordinary course of business and (D) any deferred credit representing
the excess of equity in any Subsidiary at the date of acquisition over
the cost of the investment in such Subsidiary,
(x) any aggregate net gain (but not any aggregate net loss)
during such period arising from the sale, exchange or other
disposition of capital assets (such term to include all fixed assets,
whether tangible or intangible, all inventory sold in conjunction with
the disposition of fixed assets and all securities),
(y) any net gain from the collection of the proceeds of life
insurance policies, and
(z) any gain arising from the acquisition of any securities, or
the extinguishment, under GAAP, of any Indebtedness, of the Borrower
or any Subsidiary;
PROVIDED, FURTHER, that in calculating Consolidated EBITDA, no items shall
be included or excluded more than once.
"CONSOLIDATED FIXED CHARGES": for any period, the sum of (i) the
amounts deducted for the cash portion of Consolidated Interest Expense and
Consolidated Lease Expense in determining Consolidated Net Income for such
period, (ii) the amount of scheduled payments of principal of Indebtedness
during such period, (iii) all amounts of capital expenditures made during
such period (other than capital expenditures in respect of Financing Leases
to the extent the same are included in clauses (i) or (ii) of this
definition); PROVIDED, that such amount shall not exceed $3,500,000 for any
period of four consecutive fiscal quarters (or if less than four
consecutive fiscal quarters have elapsed following the Closing Date,
$3,500,000 times 1/4, 1/2 or 3/4, respectively, for the
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period of one, two or three consecutive fiscal quarters elapsed following
the Closing Date) and (iv) the amount of cash income taxes paid during such
period.
"CONSOLIDATED INDEBTEDNESS": for any period, the sum of (a) the sum of
(i) the aggregate outstanding principal amount of the Term Loans as of the
last day of such period, (ii) the outstanding principal amount of the
Revolving Credit Loans on the last day of such period and (iii) the
outstanding face amount of the Letters of Credit on the last day of such
period and (b) the outstanding principal amount of all other Indebtedness
of the Borrower and its Subsidiaries as of the last day of such period,
determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE": for any period, the amount which, in
conformity with GAAP, would be set forth opposite the caption "interest
expense" or any like caption (including without limitation, imputed
interest included in payments under Financing Leases) on a consolidated
income statement of the Borrower and the Subsidiaries for such period
excluding the amortization of any original issue discount.
"CONSOLIDATED LEASE EXPENSE": for any period, the aggregate amount of
fixed or contingent rentals payable by the Borrower and its Subsidiaries,
determined on a consolidated basis in accordance with GAAP, for such period
with respect to leases of real and personal property.
"CONSOLIDATED NET INCOME": for any period, the consolidated net income
(or deficit) of the Borrower and the Subsidiaries for such period (taken as
a cumulative whole), determined in accordance with GAAP; PROVIDED, that
there shall be excluded (a) the income (or deficit) of any Person accrued
prior to the date it becomes a Subsidiary or is merged into or consolidated
with the Borrower or any Subsidiary, and (b) in the case of a successor to
the Borrower by consolidation or merger or as a transferee of its assets,
any earnings of the successor corporation prior to such consolidation,
merger or transfer of assets.
"CONSOLIDATED NET WORTH": as of any date of determination, all items,
which in conformity with GAAP, would be included under shareholders' equity
on a consolidated balance sheet of the Borrower.
"CONSOLIDATED SENIOR INDEBTEDNESS": for any period, the sum of (i) the
aggregate outstanding principal amount of the Term Loans as of the last day
of such period, and (ii) the outstanding principal amount of the Revolving
Credit Loans as of the last day of such period.
"CONTINUE", "CONTINUATION" and "CONTINUED" shall refer to the
continuation of a Eurodollar Loan from one Interest Period to the next
Interest Period.
"CONTRACTUAL OBLIGATION": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
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"CONVERT", CONVERSION" and "CONVERTED" shall refer to a conversion of
Base Rate Loans into Eurodollar Loans or of Eurodollar Loans into Base Rate
Loans, which may be accompanied by the transfer by a Lender (at its sole
discretion) of a Loan from one Applicable Lending Office to another.
"CREDIT EXPOSURE": as to any Lender at any time, the sum of (a) its
Revolving Credit Commitment (or, if the Revolving Credit Commitments shall
have expired or been terminated, the sum of (i) the aggregate unpaid
principal amount of its Revolving Credit Loans and (ii) its Revolving
Credit Commitment Percentage of the aggregate outstanding L/C Obligations)
and (b) the unpaid principal amount of its Term Loans.
"CREDIT EXPOSURE PERCENTAGE": as to any Lender at any time, the
fraction (expressed as a percentage), the numerator of which is the Credit
Exposure of such Lender at such time and the denominator of which is the
aggregate Credit Exposures of all of the Lenders at such time.
"DEFAULT": any of the events specified in Section 10, whether or not
any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"DOLLARS" and "$": dollars in lawful currency of the United States of
America.
"DOMESTIC SUBSIDIARY": any Subsidiary organized under the laws of the
United States or any political subdivision thereof.
"ENVIRONMENTAL LAWS": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing liability
or standards of conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"EUROCURRENCY RESERVE REQUIREMENTS": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities"
in Regulation D of such Board) maintained by a member bank of such System.
"EURODOLLAR BASE RATE": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum equal to the
corresponding
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rate appearing at page 3750 of the Dow Xxxxx Telerate Service at or about
11:00 A.M., London time, two Business Days prior to the beginning of such
Interest Period, or if such rate no longer so appears, the average of the
rates per annum at which each of The Chase Manhattan Bank (National
Association), Citibank, N.A. and Xxxxxx Guaranty Trust Company of New York
is offered Dollar deposits at or about 10:00 a.m., local time, two Business
Days prior to the beginning of such Interest Period in the interbank
eurodollar market where the eurodollar and foreign currency and exchange
operations in respect of its Eurodollar Loans are then being conducted for
delivery on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of its
Eurodollar Loan to be outstanding during such Interest Period.
"EURODOLLAR LOANS": Loans the rate of interest applicable to which is
based upon the Eurodollar Rate.
"EURODOLLAR RATE": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
EURODOLLAR BASE RATE
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"EVENT OF DEFAULT": any of the events specified in Section 10;
PROVIDED that any requirement for the giving of notice, the lapse of time,
or both, or any other condition, has been satisfied.
"EXCESS CASH FLOW": as to the Borrower and its consolidated
Subsidiaries for each fiscal year:
(a) Consolidated EBITDA for such fiscal year (excluding any portion of
Consolidated EBITDA resulting from a PRO FORMA inclusion of Consolidated
EBITDA of any Person that becomes a Subsidiary of the Borrower during such
fiscal year as if such acquisition had occurred on the first day of such
period);
PLUS (b) the decrease (if any) in the amount of the excess of
Consolidated Current Assets (excluding cash and Cash Equivalents) over
Consolidated Current Liabilities at the end of such fiscal year compared to
the amount of the excess of Consolidated Current Assets (excluding cash and
Cash Equivalents) over Consolidated Current Liabilities at the end of the
immediately preceding fiscal year of the Borrower, excluding such decrease
attributable to the sale of the machine tools division of the Borrower and
attributable to other sales of divisions or other business units by the
Borrower and its Subsidiaries;
MINUS (c) the sum of (i) the amount of (A) all regularly scheduled
payments of principal of the Term Loans actually made during such fiscal
year, (B) any voluntary prepayment of principal of the Term Loans made
during such fiscal year, (C) any
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permanent reduction in the Revolving Credit Commitments made during such
fiscal year to the extent that, before giving effect to such reduction, the
average outstanding principal balance of the Revolving Credit Loans for the
thirty (30) days prior to such reduction exceeds the aggregate Revolving
Credit Commitments after giving effect to such reduction and (D) any
voluntary prepayment of other permitted Indebtedness to the extent not
subject to reborrowing, made during such fiscal year, (ii) the amount of
all interest payments actually made in cash during such fiscal year by the
Borrower and its consolidated Subsidiaries, (iii) the amount of capital
expenditures (other than capital expenditures in respect of Financing
Leases) actually made during such fiscal year by the Loan Parties to the
extent permitted by Section 9.8, (iv) cash income taxes paid by the Loan
Parties during such fiscal year and (v) the increase (if any) in the amount
of the excess of Consolidated Current Assets (excluding cash and Cash
Equivalents) over Consolidated Current Liabilities at the end of such
fiscal year compared to the amount of the excess of Consolidated Current
Assets (excluding cash and Cash Equivalents) over Consolidated Current
Liabilities at the end of the immediately preceding fiscal year of the
Borrower, excluding such increase attributable to the sale of the machine
tools division of the Borrower and attributable to other sales of divisions
or other business units by the Borrower and its Subsidiaries.
"FEDERAL FUNDS EFFECTIVE RATE": for any day, 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 on
the next succeeding Business Day by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by
the Administrative Agent from three federal funds brokers of recognized
standing selected by it.
"FEE LETTER": the Fee Letter, dated June 2, 1999, between the
Administrative Agent and the Borrower, as the same may be amended,
supplemented or otherwise modified from time to time.
"FINANCING LEASE": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
"FOREIGN PLEDGE AGREEMENT": with respect to any Foreign Subsidiary
organized under the laws of the United Kingdom, the pledge agreement to be
executed and delivered by the Loan Parties, in form and substance
satisfactory to the Administrative Agent, as the same may be amended,
supplemented or otherwise modified from time to time.
"FOREIGN SUBSIDIARY": any Subsidiary of the Borrower which is
organized under the laws of a jurisdiction outside of the United States.
"GAAP": generally accepted accounting principles in the United States
of America in effect from time to time.
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"GOVERNING DOCUMENTS": as to any Person, its articles or certificate
of incorporation and by-laws, its partnership agreement, its certificate of
formation and operating agreement, and/or the other organizational or
governing documents of such Person.
"GOVERNMENTAL AUTHORITY": any nation or government, any state or other
political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"GUARANTEE": the Guarantee to be executed and delivered by the
Subsidiaries, substantially in the form of Exhibit C, as the same may be
amended, supplemented or otherwise modified from time to time.
"GUARANTEE OBLIGATION": as to any Person (the "GUARANTEEING PERSON"),
any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to
induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "PRIMARY OBLIGATIONS") of any other third Person
(the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or
any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (1) for the purchase or payment of any such primary
obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless the owner
of any such primary obligation against loss in respect thereof; PROVIDED,
HOWEVER, that the term Guarantee Obligation shall not include endorsements
of instruments for deposit or collection in the ordinary course of
business. The terms "GUARANTEE" and "GUARANTEED" used as a verb shall have
a correlative meaning. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (a) an amount equal
to the stated or determinable amount of the primary obligation in respect
of which such Guarantee Obligation is made and (b) the maximum amount for
which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may be
liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in
good faith.
"GUARANTOR": any Person delivering a Guarantee pursuant to this
Agreement.
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"INDEBTEDNESS": of any Person at any date, without duplication, (a)
all indebtedness of such Person for borrowed money (whether by loan or the
issuance and sale of debt securities) or for the deferred purchase price of
property or services (other than current trade liabilities incurred in the
ordinary course of business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which is evidenced by
a note, bond, debenture or similar instrument, (c) all obligations of such
Person under Financing Leases, (d) all obligations of such Person in
respect of letters of credit, acceptances or similar instruments issued or
created for the account of such Person and (e) all liabilities secured by
any Lien on any property owned by such Person even though such Person has
not assumed or otherwise become liable for the payment thereof.
"INSOLVENCY": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"INSOLVENT": pertaining to a condition of Insolvency.
"INTEREST PAYMENT DATE": (a) as to any Base Rate Loan, the last day of
each calendar month, (b) as to any Eurodollar Loan having an Interest
Period of three months or less, the last day of such Interest Period, and
(c) as to any Eurodollar Loan having an Interest Period longer than three
months, (i) each day which is three months or a whole multiple thereof,
after the first day of such Interest Period, and (ii) the last day of such
Interest Period.
"INTEREST PERIOD": with respect to any Eurodollar Loan:
(i) initially, the period commencing on the borrowing or
Conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months thereafter, as selected
by the Borrower in its notice of borrowing or notice of Conversion, as
the case may be, given with respect thereto; and
(ii) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan and
ending one, two, three or six months thereafter, as selected by the
Borrower by irrevocable notice to the Administrative Agent not less
than three Business Days prior to the last day of the then current
Interest Period with respect thereto;
PROVIDED that, all of the foregoing provisions relating to Interest Periods
are subject to the following:
(1) if any Interest Period pertaining to a Eurodollar Loan would
otherwise end on a day that is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless
the result of such extension would be to carry such Interest Period
into another calendar month in which event such Interest Period shall
end on the immediately preceding Business Day;
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(2) any Interest Period that would otherwise extend beyond the
Revolving Credit Termination Date or beyond the date final payment is
due on the Term Loans shall end on the Revolving Credit Termination
Date or such date of final payment, as the case may be;
(3) any Interest Period pertaining to a Eurodollar Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business Day
of a calendar month; and
(4) the Borrower shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during an
Interest Period for such Loan.
"ISSUING LENDER": ING (U.S.) Capital LLC, in its capacity as issuer of
any Letter of Credit, and any other Lender that is designated an Issuing
Lender by the Administrative Agent.
"L/C COMMITMENT": $10,000,000.
"L/C FEE PAYMENT DATE": the last Business Day of each month.
"L/C OBLIGATIONS": at any time, an amount equal to the sum of (a) the
aggregate then undrawn amount of the then outstanding Letters of Credit and
(b) the aggregate amount of drawings under Letters of Credit which have not
then been reimbursed.
"L/C PARTICIPANTS": the collective reference to all the Lenders other
than the Issuing Lender.
"LEASEHOLD MORTGAGE": each Leasehold Mortgage to be executed and
delivered by the Loan Parties, substantially in the form of Exhibit D, as
the same may be amended, supplemented or otherwise modified from time to
time.
"LENDERS": as defined in the heading hereto, which shall include in
any event the Issuing Lender.
"LETTERS OF CREDIT": as defined in Section 4.1(a).
"LEVERAGE RATIO": as of any date of determination, for the period of
four consecutive fiscal quarters most recently ended, the ratio of (i)
Consolidated Indebtedness for such period to (ii) Consolidated EBITDA for
such period; PROVIDED that in calculating the Leverage Ratio for the
periods of four fiscal quarters ending September 30, 1999, December 31,
1999 and March 31, 2000, Consolidated EBITDA for the fiscal quarters ending
December 31, 1998, March 31, 1999 and June 30, 1999 shall be deemed to be
$5,250,000, $5,250,000 and $5,250,000, respectively.
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"LIEN": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement
and any Financing Lease having substantially the same economic effect as
any of the foregoing), and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction in respect of
any of the foregoing.
"LOAN": any Term Loan or Revolving Credit Loan made by any Lender
pursuant to this Agreement.
"LOAN DOCUMENTS": this Agreement, the Notes, the Guarantee, the
Security Documents and the Fee Letter.
"LOAN PARTIES": the Borrower and each Subsidiary of the Borrower which
is a party to a Loan Document, including, without limitation, from and
after the Closing Date, Precision and each Subsidiary of Precision which is
party to a Loan Document.
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole or (b) the
validity or enforceability of this or any of the other Loan Documents or
the rights or remedies of the Administrative Agent or the Lenders hereunder
or thereunder.
"MATERIALS OF ENVIRONMENTAL CONCERN": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"MORTGAGE": each Mortgage to be executed and delivered by the Loan
Parties, substantially in the form of Exhibit E, as the same may be
amended, supplemented or otherwise modified from time to time.
"MULTIEMPLOYER PLAN": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"NET PROCEEDS": (i) the aggregate cash consideration received by the
Borrower or a Subsidiary in connection with any transaction referred to in
Section 5.5(b) less (ii) the expenses (including out-of-pocket expenses)
incurred by the Borrower or such Subsidiary in connection with such
transaction (including, in the case of any issuance of debt or equity
securities, underwriters' commissions and fees) and the amount of any
federal and state taxes incurred in connection with such transaction, in
each case as certified by a Responsible Officer to the Administrative Agent
at the time of such transaction.
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"NON-BANK STATUS CERTIFICATE": as defined in Section 5.11(b)(i)(B).
"NON-EXCLUDED TAXES": as defined in Section 5.11.
"NOTES": the collective reference to the Revolving Credit Notes, the
Tranche A Term Notes and the Tranche B Term Notes.
"OBLIGATIONS": the unpaid principal amount of, and interest
(including, without limitation, interest accruing after the maturity of the
Loans and interest accruing after the filing of any petition in bankruptcy,
or the commencement of any insolvency, reorganization or like proceeding,
relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) on the Loans, and all
other obligations and liabilities of the Loan Parties to the Administrative
Agent and the Lenders, whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, which may
arise under, or out of or in connection with this Agreement, the Notes, the
Guarantees, the Security Documents and any other Loan Documents and any
other document made, delivered or given in connection therewith or
herewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including, without
limitation, all fees and disbursements of counsel to the Administrative
Agent or to the Lenders that are required to be paid by a Loan Party
pursuant to the terms of the Loan Documents) or otherwise.
"PARTICIPANT": as defined in Section 12.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"PERSON": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"PLAN": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"PLAN TERMINATION": the termination of The Monarch Machine Tool
Company Pension Plan A and The Monarch Machine Tool Company Pension Plan B
effective February 28, 1999, as authorized by the Board of Directors of the
Borrower at a meeting on November 3, 1998, and for which the Borrower made
a Form 5310--Application for Determination for Terminating Plan with the
Internal Revenue Service on March 3, 1999.
"PLEDGE AGREEMENT": the Pledge Agreement to be executed and delivered
by the Loan Parties relating to all Domestic Subsidiaries of the Borrower,
substantially in
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the form of Exhibit F, as the same may be amended, supplemented or
otherwise modified from time to time.
"PRECISION": as defined in the Recitals hereto.
"PRECISION ACQUISITION": as defined in the Recitals hereto.
"PRECISION ACQUISITION AGREEMENT": the Stock Purchase Agreement, dated
May 13, 1999, among the Borrower and the stockholders of Precision, as the
same may be amended, supplemented or otherwise modified from time to time.
"PRECISION ACQUISITION DOCUMENTS": the collective reference to the
Precision Acquisition Agreement and any other documents executed in
connection therewith, as the same may be amended, supplemented or otherwise
modified from time to time.
"PROPERTIES": as defined in Section 6.22.
"REIMBURSEMENT OBLIGATION": the obligation of the Borrower to
reimburse the Issuing Bank pursuant to Section 4.5(a) for amounts drawn
under a Letter of Credit.
"REGISTER": as defined in Section 12.6(d).
"REGULATION U": Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"REORGANIZATION": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"REPLACEMENT SUBORDINATED DEBT": any subordinated indebtedness of the
Borrower or any of its Subsidiaries incurred after the Closing Date, the
proceeds of which are used to refinance existing Subordinated Debt, which
shall either (a) have a final maturity date no earlier, an average life to
maturity no shorter, and a priority no higher than the existing
Subordinated Debt being refinanced and be in form and substance
satisfactory to the Administrative Agent and the Required Lenders, or (b)
be in form and substance satisfactory to all the Lenders.
"REPORTABLE EVENT": any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the thirty day notice period is
waived under Sections .21, .22, .23, .26, .27 or .28 of PBGC Reg. ss. 4043.
"REQUIRED LENDERS": at any time, Lenders the Credit Exposure
Percentages of which aggregate at least 66-2/3%.
"REQUIREMENT OF LAW": as to any Person, the certificate of
incorporation and by-laws or other organizational or Governing Documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other
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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.
"RESPONSIBLE OFFICER": the chief executive officer and the president
of the Borrower or, with respect to financial matters, the chief financial
officer of the Borrower.
"RESTRUCTURING": as defined in Section 9.5(c) hereof.
"REVOLVING CREDIT COMMITMENT": as to any Lender, the obligation of
such Lender to make Revolving Credit Loans to the Borrower pursuant to
Section 3.1 and/or to issue or participate in Letters of Credit issued on
behalf of the Borrower hereunder in an aggregate principal amount at any
one time outstanding not to exceed the amount set forth opposite such
Lender's name on Schedule 1.1 under the caption "Revolving Credit
Commitment" or in an Assignment and Acceptance, as such amount may be
reduced from time to time in accordance with the provisions of this
Agreement.
"REVOLVING CREDIT COMMITMENT PERCENTAGE": as to any Lender at any
time, the percentage which such Lender's Revolving Credit Commitment then
constitutes of the aggregate Revolving Credit Commitments (or, at any time
after the Revolving Credit Commitments shall have expired or terminated,
the percentage which the aggregate principal amount of such Lender's
Revolving Credit Loans then outstanding constitutes of the aggregate
principal amount of the Revolving Credit Loans then outstanding).
"REVOLVING CREDIT COMMITMENT PERIOD": the period from and including
the date hereof to but not including the Revolving Credit Termination Date
or such earlier date on which the Revolving Credit Commitments shall
terminate as provided herein.
"REVOLVING CREDIT LOANS": as defined in Section 3.1.
"REVOLVING CREDIT NOTE": as defined in Section 3.2.
"REVOLVING CREDIT TERMINATION DATE": June 30, 2006.
"SECURITY AGREEMENT": the Security Agreement to be executed and
delivered by the Loan Parties, substantially in the form of Exhibit G, as
the same may be amended, supplemented or otherwise modified from time to
time.
"SECURITY DOCUMENTS": the collective reference to the Assignment of
Precision Acquisition Documents, the Foreign Pledge Agreements, the
Leasehold Mortgages, the Mortgages, the Pledge Agreement, the Security
Agreement and all other security documents hereafter delivered to the
Administrative Agent granting a Lien on any asset or assets of any Person
to secure any of the Obligations or to secure any guarantee of any such
Obligations.
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"SINGLE EMPLOYER PLAN": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"SPECIAL SUBORDINATED NOTES": the collective reference to any "Special
Subordinated Notes" issued to the selling holders of Capital Stock of
Precision pursuant to Section 1.2(b) of the Precision Acquisition
Agreement, which shall be in form and substance satisfactory to the
Administrative Agent and the Required Lenders.
"STANDBY LETTER OF CREDIT": as defined in Section 4.1(b).
"SUBORDINATED DEBT": any Special Subordinated Notes, the Three Cities
Subordinated Debt and any Replacement Subordinated Debt.
"SUBORDINATED DEBT DOCUMENTS": the collective reference to any
documents evidencing any Subordinated Debt, together with any other
documents executed in connection therewith, as the same may be amended,
supplemented or otherwise modified from time to time in accordance
herewith.
"SUBSIDIARY": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through
one or more intermediaries, or both, by such Person. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower and
shall included, without limitation, Precision and its Subsidiaries.
"TERM LOAN": any Tranche A Term Loan or Tranche B Term Loan.
"THREE CITIES SUBORDINATED DEBT": the subordinated loans in an
aggregate amount equal to $15,000,000 made by Three Cities Research, Inc.,
a Delaware corporation, or other Persons acceptable to the Administrative
Agent and the Required Lenders to the Borrower, the proceeds of which shall
be used to partially finance the Precision Acquisition, which shall be in
form and substance satisfactory to the Administrative Agent and the
Required Lenders.
"TRANCHE": the collective reference to Eurodollar Loans the then
current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Loans shall
originally have been made on the same day); Tranches may be identified as
"EURODOLLAR TRANCHES".
"TRANCHE A TERM LOAN": as defined in Section 2.1.
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"TRANCHE A TERM LOAN COMMITMENT": as to any Lender, its obligation to
make a Tranche A Term Loan to the Borrower pursuant to Section 2.1 in the
amount set forth opposite such Lender's name on Schedule 1.1 under the
caption "Tranche A Term Loan".
"TRANCHE A TERM LOAN COMMITMENT PERCENTAGE": as to any Lender, the
percentage equal to the quotient of such Lender's Tranche A Term Loan
Commitment divided by the aggregate Tranche A Term Loan Commitments.
"TRANCHE A TERM NOTE": as defined in Section 2.2.
"TRANCHE B TERM LOAN": as defined in Section 2.3.
"TRANCHE B TERM LOAN COMMITMENT": as to any Lender, its obligation to
make a Tranche B Term Loan to the Borrower pursuant to Section 2.3 in the
amount set forth opposite such Lender's name on Schedule 1.1 under the
caption "Tranche B Term Loan".
"TRANCHE B TERM LOAN COMMITMENT PERCENTAGE": as to any Lender, the
percentage equal to the quotient of such Lender's Term Loan Commitment
divided by the aggregate Term Loan Commitments.
"TRANCHE B TERM NOTE": as defined in Section 2.4.
"TRANSACTION PARTIES": the Loan Parties and Precision.
"TRANSFEREE": as defined in Section 12.6(f).
"TYPE": as to any Loan, its nature as a Base Rate Loan or a Eurodollar
Loan.
"UNIFORM CUSTOMS": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No.
500, as the same may be amended from time to time.
"YEAR 2000 PROBLEM": the risk that computer applications used by the
Borrower and its Subsidiaries may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to, and any
date on or after, December 31, 1999.
1.2 OTHER DEFINITIONAL PROVISIONS.
(a) Unless otherwise specified therein, all terms defined in this
Agreement shall have the defined meanings when used in any Notes or any
certificate or other document made or delivered pursuant hereto.
(b) As used herein and in any Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to the
Borrower and its
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Subsidiaries not defined in Section 1.1 and accounting terms partly defined in
Section 1.1, to the extent not defined, shall have the respective meanings given
to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF TERM LOAN COMMITMENTS
2.1 TRANCHE A TERM LOAN COMMITMENTS. Subject to the terms and
conditions hereof, each Lender severally agrees to make a term loan (a "TRANCHE
A TERM LOAN") to the Borrower on the Closing Date in an amount not to exceed the
amount of the Tranche A Term Loan Commitment of such Lender then in effect;
PROVIDED, that the Term Loan Commitments shall terminate at 3:00 p.m., New York
City time, on August 31, 1999, if the Tranche A Term Loans have not been made
prior to that time. The Tranche A Term Loans may from time to time be (a)
Eurodollar Loans, (b) Base Rate Loans or (c) a combination thereof, as
determined by the Borrower and notified to the Administrative Agent in
accordance with Sections 2.5 and 5.2.
2.2 TRANCHE A TERM NOTES. The Tranche A Term Loan of each Lender shall
be evidenced by a promissory note of the Borrower, substantially in the form of
Exhibit A-1 with appropriate insertions as to payee, date and principal amount
(a "TRANCHE A TERM NOTE"), payable to the order of such Lender and representing
the obligation of the Borrower to pay the amount of the Tranche A Term Loan made
by such Lender. Each Lender is hereby authorized to record the date, Type and
amount of its Tranche A Term Loan and the date and amount of each payment or
prepayment of principal thereof and each Conversion of all or a portion thereof
to another Type and, and in the case of Eurodollar Loans, the Interest Period
with respect thereto, on the schedule annexed to and constituting a part of its
Tranche A Term Note, and any such recordation shall constitute prima facie
evidence of the accuracy of the information so recorded; provided, that the
failure of such Lender to make any such recordation shall not impair or
otherwise affect the validity or enforceability of its Tranche A Term Note. Each
Tranche A Term Note shall (a) be dated the Closing Date, (b) be stated to mature
in installments in amounts equal to such Lender's Tranche A Term Loan Commitment
Percentage of the amounts, and payable on the dates, set forth on Schedule 2.2,
and (c) bear interest for the period from the date thereof on the unpaid
principal amount thereof at the applicable interest rates per annum specified in
Section 5.1. Interest on the Tranche A Term Notes shall be payable on the dates
specified in Section 5.1(d).
2.3 TRANCHE B TERM LOAN COMMITMENTS. Subject to the terms and
conditions hereof, each Lender severally agrees to make a term loan (a "TRANCHE
B TERM LOAN") to the Borrower on the Closing Date in an amount not to exceed the
amount of the
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Tranche B Term Loan Commitment of such Lender then in effect; provided, that the
Tranche B Term Loan Commitments shall terminate at 3:00 p.m., New York City
time, on August 31, 1999, if the Tranche B Term Loans have not been made prior
to that time. The Tranche B Term Loans may from time to time be (a) Eurodollar
Loans, (b) Base Rate Loans or (c) a combination thereof, as determined by the
Borrower and notified to the Administrative Agent in accordance with Sections
2.5 and 5.2.
2.4 TRANCHE B TERM NOTES. The Tranche B Term Loan of each Lender shall
be evidenced by a promissory note of the Borrower, substantially in the form of
Exhibit A-2 with appropriate insertions as to payee, date and principal amount
(a "TRANCHE B TERM NOTE"), payable to the order of such Lender and representing
the obligation of the Borrower to pay the amount of the Tranche B Term Loan made
by such Lender. Each Lender is hereby authorized to record the date, Type and
amount of its Tranche B Term Loan and the date and amount of each payment or
prepayment of principal thereof and each Conversion of all or a portion thereof
to another Type and, and in the case of Eurodollar Loans, the Interest Period
with respect thereto, on the schedule annexed to and constituting a part of its
Tranche B Term Note, and any such recordation shall constitute prima facie
evidence of the accuracy of the information so recorded; provided, that the
failure of such Lender to make any such recordation shall not impair or
otherwise affect the validity or enforceability of its Tranche B Term Note. Each
Tranche B Term Note shall (a) be dated the Closing Date, (b) be stated to mature
in installments in amounts equal to such Lender's Tranche B Term Loan Commitment
Percentage of the amounts, and payable on the dates, set forth on Schedule 2.4,
and (c) bear interest for the period from the date thereof on the unpaid
principal amount thereof at the applicable interest rates per annum specified in
Section 5.1. Interest on the Tranche B Term Notes shall be payable on the dates
specified in Section 5.1(d).
2.5 PROCEDURE FOR TERM LOAN BORROWING. The Borrower shall give the
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 10:00 a.m., New York City time, (a) three Business
Days prior to the Closing Date, if all or any part of the Term Loans are to be
initially Eurodollar Loans, or (b) one Business Day prior to the Closing Date,
otherwise) requesting that the Lenders make the Term Loans on the Closing Date
and specifying (i) the Closing Date, (ii) the amount to be borrowed, (iii)
whether the Term Loans are to be initially Eurodollar Loans, Base Rate Loans or
a combination thereof, and (iv) if the Term Loans are to be entirely or partly
Eurodollar Loans, the respective amounts of each such Type of Loan and the
respective lengths of the initial Interest Periods therefor. Upon receipt of
such notice the Administrative Agent shall promptly notify each Lender thereof.
Not later than 11:00 a.m. on the Closing Date each Lender shall make available
to the Administrative Agent at its office specified in Section 12.2 the amount
of such Lender's pro rata share of such borrowing in immediately available
funds. The Administrative Agent shall on such date credit the account of the
Borrower on the books of such office of the Administrative Agent with the
aggregate of the amounts made available to the Administrative Agent by the
Lenders and in like funds as received by the Administrative Agent.
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2.6 COMMITMENT FEE. The Borrower agrees to pay to the Administrative
Agent for the account of each Lender a commitment fee for the period from and
including the Closing Date to the date on which the Tranche A Term Loan
Commitments and the Tranche B Term Loan Commitments have been fully funded,
computed at the rate of 1/2 of 1% per annum on the aggregate unfunded amount of
the Tranche A Term Loan Commitment and the Tranche B Term Loan Commitment of
such Lender during the period for which payment is made, calculated on the basis
of the actual days elapsed over a 360 day year, payable monthly in arrears on
the last Business Day of each calendar month or such earlier date as the Tranche
A Term Loan Commitments and the Tranche B Term Loan Commitments shall terminate
as provided herein, commencing on the first of such dates to occur after the
date hereof.
SECTION 3. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS
3.1 REVOLVING CREDIT COMMITMENTS.
(a) Subject to the terms and conditions hereof, each Lender severally
agrees to make revolving credit loans ("REVOLVING CREDIT LOANS") to the Borrower
from time to time during the Revolving Credit Commitment Period in an aggregate
principal amount at any one time outstanding not to exceed the amount of such
Lender's Revolving Credit Commitment then in effect; PROVIDED, that the
Revolving Credit Commitments shall terminate at 3:00 p.m., New York City time,
on August 31, 1999, if the Term Loans have not been made prior to that time.
During the Revolving Credit Commitment Period the Borrower may use the Revolving
Credit Commitments by borrowing, prepaying the Revolving Credit Loans in whole
or in part, and reborrowing, all in accordance with the terms and conditions
hereof.
(b) The Revolving Credit Loans may from time to time be (i) Eurodollar
Loans, (ii) Base Rate Loans or (iii) a combination thereof, as determined by the
Borrower and notified to the Administrative Agent in accordance with Sections
3.3 and 5.2, PROVIDED, that no Revolving Credit Loan shall be made as a
Eurodollar Loan after the day that is one month prior to the Revolving Credit
Termination Date.
3.2 REVOLVING CREDIT NOTES. The Revolving Credit Loans made by each Lender shall
be evidenced by a promissory note of the Borrower, substantially in the form of
Exhibit A-3 with appropriate insertions as to payee, date and principal amount
(a "REVOLVING CREDIT NOTE"), payable to the order of such Lender and evidencing
the obligation of the Borrower to pay a principal amount equal to the lesser of
(a) the amount of the Revolving Credit Commitment of such Lender and (b) the
aggregate unpaid principal amount of all Revolving Credit Loans made by such
Lender. Each Lender is hereby authorized to record the date, Type and amount of
each Revolving Credit Loan made or Converted by such Lender, the date and amount
of each payment or prepayment of principal thereof, and, in the case of
Eurodollar Loans, the Interest Period with respect thereto, on the schedule
annexed to and constituting a part of its Revolving Credit Note, and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded. Each Revolving Credit Note shall (x) be dated the
Closing Date, (y) be stated to mature on the Revolving Credit
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Termination Date and (z) bear interest on the unpaid principal amount thereof
from time to time outstanding at the applicable interest rate per annum
determined as provided in Section 5.1. Interest on each Revolving Credit Note
shall be payable on the dates specified in Section 5.1(d).
3.3 PROCEDURE FOR REVOLVING CREDIT BORROWING. The Borrower may borrow
under the Revolving Credit Commitments during the Revolving Credit Commitment
Period on any Business Day in an aggregate principal amount not exceeding the
aggregate Available RC Commitments then in effect; PROVIDED, that the Borrower
shall give the Administrative Agent irrevocable notice in the form of a
Borrowing Request in the form of Exhibit H hereto (a "BORROWING REQUEST") (which
notice must be received by the Administrative Agent prior to 10:00 a.m., New
York City time, (a) three Business Days prior to the requested Borrowing Date,
if all or any part of the requested Revolving Credit Loans are to be initially
Eurodollar Loans or (b) one Business Day prior to the requested Borrowing Date,
otherwise), specifying (i) the amount to be borrowed, (ii) the requested
Borrowing Date, (iii) whether the borrowing is to be of Eurodollar Loans, Base
Rate Loans or a combination thereof and (iv) if the borrowing is to be entirely
or partly of Eurodollar Loans, the respective amounts of each such Type of Loan
and the respective lengths of the initial Interest Periods therefor. Each
borrowing under the Revolving Credit Commitments shall be in an amount equal to
(x) in the case of Base Rate Loans, $500,000 or a whole multiple of $100,000 in
excess thereof (or, if the then Available RC Commitments are less than $500,000,
such lesser amount) and (y) in the case of Eurodollar Loans, $3,000,000 or a
whole multiple of $1,000,000 in excess thereof. Upon receipt of any such notice
from the Borrower, the Administrative Agent shall promptly notify each Lender
thereof. Each Lender will make the amount of its pro rata share of each
borrowing available to the Administrative Agent for the account of the Borrower
at the office of the Administrative Agent specified in Section 12.2 prior to
11:00 a.m., New York City time, on the Borrowing Date requested by the Borrower
in funds immediately available to the Administrative Agent. Such borrowing will
then be made available to the Borrower by the Administrative Agent crediting the
account of the Borrower on the books of such office with the aggregate of the
amounts made available to the Administrative Agent by the Lenders and in like
funds as received by the Administrative Agent.
3.4 COMMITMENT FEE. The Borrower agrees to pay to the Administrative
Agent for the account of each Lender a commitment fee for the period from and
including the first day of the Revolving Credit Commitment Period to the
Revolving Credit Termination Date, computed at the rate of 1/2 of 1% per annum
on the average daily amount of the Available RC Commitment of such Lender during
the period for which payment is made, calculated on the basis of the actual days
elapsed over a 360 day year, payable monthly in arrears on the last Business Day
of each calendar month and on the Revolving Credit Termination Date or such
earlier date as the Revolving Credit Commitments shall terminate as provided
herein, commencing on the first of such dates to occur after the date hereof.
3.5 TERMINATION OR REDUCTION OF REVOLVING CREDIT COMMITMENTS. The
Borrower shall have the right, upon not less than five Business Days' notice to
the Administrative Agent, to terminate or reduce the Revolving Credit; PROVIDED,
that no such
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termination or reduction shall be permitted if, after giving effect thereto and
to any prepayments of the Revolving Credit Loans made on the effective date
thereof, the Aggregate Outstanding RC Extensions of Credit would exceed the
Revolving Credit Commitments then in effect. Any such reduction shall be in an
amount equal to $1,000,000 or a whole multiple thereof and shall reduce
permanently the Revolving Credit Commitments then in effect.
SECTION 4. LETTERS OF CREDIT
4.1 L/C COMMITMENT.
(a) Subject to the terms and conditions hereof, the Issuing Lender, in
reliance on the agreements of the other Lenders set forth in Section 4.4(a),
agrees to issue letters of credit ("LETTERS OF CREDIT") for the account of the
Borrower on any Business Day during the Revolving Credit Commitment Period in
such form as may be approved from time to time by the Issuing Lender; PROVIDED
that the Issuing Lender shall have no obligation to issue any Letter of Credit
if, after giving effect to such issuance, (1) the L/C Obligations would exceed
the L/C Commitment or (2) the aggregate Available RC Commitments would be less
than zero.
(b) Each Letter of Credit shall:
(1) be denominated in Dollars (or another currency requested by
the Borrower unless the issuance of such a Letter of Credit by the Issuing
Lender at the time of such request is not permitted under applicable law or
is otherwise not acceptable to the Issuing Lender) and shall be either (A)
a standby letter of credit issued to support obligations of the Borrower,
contingent or otherwise, in respect of (u) warranty obligations or
equipment performance assurance obligations, (v) insurance obligations, (w)
obligations to xxxxxxx'x compensation board or similar Governmental
Authority for xxxxxxx'x compensation liabilities of the Borrower or a
Subsidiary, (x) other contractual obligations of the Borrower or a
Subsidiary in respect of which advance payments have been made, (y)
existing letters of credit outstanding as of the Closing Date and listed on
Schedule 9.2 hereof and (z) such other obligations or for such other
purposes as may be approved by the Issuing Lender and the Administrative
Agent (such consent not to be unreasonably withheld) (a "STANDBY LETTER OF
CREDIT"), or (B) a commercial letter of credit issued in respect of the
purchase of goods or services by the Borrower in the ordinary course of
business (a "COMMERCIAL LETTER OF CREDIT"); and
(2) expire no later than the earlier of (i) five Business Days
prior to the Revolving Credit Termination Date and (ii) 364 days from the
date of issuance (subject to renewal).
(c) Each Letter of Credit shall be subject to the Uniform Customs and,
to the extent not inconsistent therewith, the laws of the State of New York.
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(d) The Issuing Lender shall not at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or cause the
Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
4.2 PROCEDURE FOR ISSUANCE OF LETTERS OF CREDIT. The Borrower may from
time to time request that the Issuing Lender issue a Letter of Credit by
delivering to the Issuing Lender at its address for notices specified herein an
Application therefor, completed to the satisfaction of the Issuing Lender, and
such other certificates, documents and other papers and information as the
Issuing Lender may request. Upon receipt of any Application, the Issuing Lender
will process such Application and the certificates, documents and other papers
and information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Lender be required to issue any
Letter of Credit earlier than three Business Days after its receipt of the
Application therefor and all such other certificates, documents and other papers
and information relating thereto) by issuing the original of such Letter of
Credit to the beneficiary thereof or as otherwise may be agreed by the Issuing
Lender and the Borrower. The Issuing Lender shall furnish a copy of such Letter
of Credit to the Borrower promptly following the issuance thereof.
4.3 FEES, COMMISSIONS AND OTHER CHARGES.
(a) The Borrower shall pay to the Administrative Agent, for the
account of the Issuing Lender and the L/C Participants, a letter of credit
commission with respect to each Letter of Credit, computed for the period from
the date of such payment to the date upon which the next such payment is due
hereunder at a rate equal to the Applicable Margin for Revolving Credit Loan
which are Eurodollar Loans then in effect, calculated on the basis of the actual
days elapsed over a 360 day year, of the aggregate amount available to be drawn
under such Letter of Credit on the date on which such fee is calculated and
shall be payable to the L/C Participants and the Issuing Lender to be shared
ratably among them in accordance with their respective Revolving Credit
Commitment Percentages. Such commissions shall be payable in arrears on each L/C
Fee Payment Date to occur after the issuance of each Letter of Credit and shall
be nonrefundable. Additionally, the Borrower shall pay to the Administrative
Agent, solely for the account of the Issuing Lender, a per annum fronting fee of
one-quarter of one percent (.25%) of the aggregate amount available to be drawn
under each Letter of Credit. Such fronting fee shall be nonrefundable and shall
be payable in arrears on each L/C Fee Payment Date to occur after the issuance
of each Letter of Credit and upon expiration or draw of such Letter of Credit.
(b) In addition to the foregoing fees and commissions, the Borrower
shall pay or reimburse the Issuing Lender for such normal and customary costs
and expenses as are incurred or charged by the Issuing Lender in issuing,
effecting payment under, amending or otherwise administering any Letter of
Credit.
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(c) The Administrative Agent shall, promptly following its receipt
thereof, distribute to the Issuing Lender and the L/C Participants all fees and
commissions received by the Administrative Agent for their respective accounts
pursuant to this subsection.
4.4 L/C PARTICIPATIONS.
(a) The Issuing Lender irrevocably agrees to grant and hereby grants
to each L/C Participant, and, to induce the Issuing Lender to issue Letters of
Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase
and hereby accepts and purchases from the Issuing Lender, on the terms and
conditions hereinafter stated, for such L/C Participant's own account and risk,
an undivided interest equal to such L/C Participant's Revolving Credit
Commitment Percentage in the Issuing Lender's obligations and rights under each
Letter of Credit issued hereunder and the amount of each draft paid by the
Issuing Lender thereunder. Each L/C Participant unconditionally and irrevocably
agrees with the Issuing Lender that, if a draft is paid under any Letter of
Credit for which the Issuing Lender is not reimbursed in full by the Borrower in
accordance with the terms of this Agreement, such L/C Participant shall pay to
the Issuing Lender upon demand at the Issuing Lender's address for notices
specified herein an amount equal to such L/C Participant's Revolving Credit
Commitment Percentage of the amount of such draft, or any part thereof, which is
not so reimbursed.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Lender pursuant to Section 4.4(a) in respect of any unreimbursed portion
of any payment made by the Issuing Lender under any Letter of Credit is paid to
the Issuing Lender within three Business Days after the date such payment is
due, such L/C Participant shall pay to the Issuing Lender on demand an amount
equal to the product of (1) such amount, times (2) the daily average Federal
funds rate, as quoted by the Issuing Lender, during the period from and
including the date such payment is required to the date on which such payment is
immediately available to the Issuing Lender, times (3) a fraction the numerator
of which is the number of days that elapse during such period and the
denominator of which is 360. If any such amount required to be paid by any L/C
Participant pursuant to Section 4.4(a) is not in fact made available to the
Issuing Lender by such L/C Participant within three Business Days after the date
such payment is due, the Issuing Lender shall be entitled to recover from such
L/C Participant, on demand, such amount with interest thereon calculated from
such due date at the rate per annum applicable to Base Rate Loans hereunder. A
certificate of the Issuing Lender submitted to any L/C Participant with respect
to any amounts owing under this Section shall be conclusive in the absence of
manifest error.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its pro
rata share of such payment in accordance with Section 4.4(a), the Issuing Lender
receives any payment related to such Letter of Credit (whether directly from the
Borrower or otherwise, including proceeds of collateral applied thereto by the
Issuing Lender), or any payment of interest on account thereof, the Issuing
Lender will distribute to such L/C Participant its pro rata share thereof;
PROVIDED, HOWEVER, that in the event that any such payment received by the
Issuing Lender
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shall be required to be returned by the Issuing Lender, such L/C Participant
shall return to the Issuing Lender the portion thereof previously distributed by
the Issuing Lender to it.
4.5 REIMBURSEMENT OBLIGATIONS OF THE BORROWER.
(a) The Borrower agrees to reimburse the Issuing Lender on each date
on which the Issuing Lender notifies the Borrower of the date and amount of a
draft presented under any Letter of Credit and paid by the Issuing Lender or, if
later, on each date on which such draft is paid by the Issuing Lender for the
amount of (1) such draft so paid and (2) any taxes and any reasonable fees,
charges or other costs or expenses incurred by the Issuing Lender at its address
for notices specified herein in lawful money of the United States of America and
in immediately available funds.
(b) Interest shall be payable on any and all amounts remaining unpaid
by the Borrower under this Section from the date such amounts become payable
(whether at stated maturity, by acceleration or otherwise) until payment in full
at the rate which would be payable on any outstanding Base Rate Loans which were
then overdue.
(c) Each drawing under any Letter of Credit shall constitute a request
by the Borrower to the Administrative Agent for a borrowing pursuant to Section
4.3 of Base Rate Loans in the amount of such drawing. The Borrowing Date with
respect to such borrowing shall be the date of such drawing.
4.6 OBLIGATIONS ABSOLUTE.
(a) The Borrower's obligations under this Section 4 shall be absolute
and unconditional under any and all circumstances and irrespective of any
set-off, counterclaim or defense to payment which the Borrower may have or have
had against the Issuing Lender or any beneficiary of a Letter of Credit.
(b) The Borrower also agrees with the Issuing Lender that the Issuing
Lender shall not be responsible for, and the Borrower's Reimbursement
Obligations under Section 4.5(a) shall not be affected by, among other things,
(1) the validity or genuineness of documents or of any endorsements thereon,
even though such documents shall in fact prove to be invalid, fraudulent or
forged, or (2) any dispute between or among the Borrower and any beneficiary of
any Letter of Credit or any other party to which such Letter of Credit may be
transferred or (3) any claims whatsoever of the Borrower against any beneficiary
of such Letter of Credit or any such transferee.
(c) The Issuing Lender shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit, except for
errors or omissions caused by the Issuing Lender's gross negligence or willful
misconduct.
(d) The Borrower agrees that any action taken or omitted by the
Issuing Lender under or in connection with any Letter of Credit or the related
drafts or documents, if
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done in the absence of gross negligence or willful misconduct and in accordance
with the standards of care specified in the Uniform Commercial Code of the State
of New York (including, without limitation, the honoring of drawings on a Letter
of Credit), shall be binding on the Borrower and shall not result in any
liability of the Issuing Lender to the Borrower.
4.7 LETTER OF CREDIT PAYMENTS. If any draft shall be presented for
payment under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower of the date and amount thereof. The responsibility of the Issuing
Lender to the Borrower in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are in conformity with such Letter of Credit.
4.8 APPLICATION. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 4, the provisions of this Section 4 shall apply.
SECTION 5. GENERAL PROVISIONS APPLICABLE TO LOANS
5.1 INTEREST RATES AND PAYMENT DATES.
(a) Each Eurodollar Loan shall bear interest for each day during each
Interest Period with respect thereto at a rate per annum equal to the Eurodollar
Rate determined for such day plus the Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum equal
to the Base Rate plus the Applicable Margin.
(c) If all or a portion of (i) any principal of any Loan, (ii) any
interest payable thereon, (iii) any commitment fee or (iv) any other amount
payable hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), the principal of the Loans and any such overdue
interest, commitment fee or other amount shall bear interest at a rate per annum
which is (x) in the case of principal, the rate that would otherwise be
applicable thereto pursuant to the foregoing provisions of this Section plus 2%
or (y) in the case of any such overdue interest, commitment fee or other amount,
the rate described in paragraph (b) of this Section plus 2%, in each case from
the date of such non-payment until such overdue principal, interest, commitment
fee or other amount is paid in full (as well after as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this Section
shall be payable from time to time on demand.
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5.2 CONVERSION AND CONTINUATION OPTIONS.
(a) The Borrower may elect from time to time to Convert Eurodollar
Loans to Base Rate Loans by giving the Administrative Agent at least one
Business Day's prior irrevocable notice of such election, PROVIDED, that any
such Conversion of Eurodollar Loans may only be made on the last day of an
Interest Period with respect thereto. The Borrower may elect from time to time
to Convert Base Rate Loans to Eurodollar Loans by giving the Administrative
Agent at least three Business Days' prior irrevocable notice of such election.
Any such notice of Conversion to Eurodollar Loans shall specify the length of
the initial Interest Period or Interest Periods therefor. Upon receipt of any
such notice the Administrative Agent shall promptly notify each Lender thereof.
All or any part of outstanding Eurodollar Loans and Base Rate Loans may be
Converted as provided herein, provided that (i) no Loan may be Converted into a
Eurodollar Loan when any Event of Default has occurred and is continuing and the
Administrative Agent has or the Required Lenders have determined in their sole
discretion that such a Conversion shall not be permitted, (ii) any such
Conversion may only be made if, after giving effect thereto, Section 5.3 shall
not have been contravened, and (iii) no Loan may be converted into a Eurodollar
Loan after the date that is one month prior to the Revolving Credit Termination
Date (in the case of Conversions of Revolving Credit Loans) or the date of the
final installment of principal (in the case of Conversions of Term Loans).
(b) Any Eurodollar Loans may be Continued as such upon the expiration
of the then current Interest Period with respect thereto by the Borrower giving
notice to the Administrative Agent, in accordance with the applicable provisions
of the term "Interest Period" set forth in Section 1.1, of the length of the
next Interest Period to be applicable to such Loans, PROVIDED, that no
Eurodollar Loan may be Continued as such (i) when any Event of Default has
occurred and is continuing and the Administrative Agent has or the Required
Lenders have determined in their sole discretion that such a Continuation shall
not be permitted, (ii) if, after giving effect thereto, Section 5.3 would be
contravened or (iii) after the date that is one month prior to the Revolving
Credit Termination Date (in the case of Continuations of Revolving Credit Loans)
or the date of the final installment of principal (in the case of Continuations
of Term Loans) and PROVIDED, FURTHER, that if the Borrower shall fail to give
such notice or if such Continuation is not permitted such Loans shall be
automatically converted to Base Rate Loans on the last day of such then expiring
Interest Period.
5.3 MINIMUM AMOUNTS AND MAXIMUM NUMBER OF TRANCHES. All borrowings,
conversions and continuations of Loans hereunder and all selections of Interest
Periods hereunder shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto, the aggregate principal amount
of the Loans comprising each Eurodollar Tranche shall be equal to $3 million or
a whole multiple of $1 million in excess thereof. In no event shall there be
more than six Eurodollar Tranches outstanding at any time.
5.4 OPTIONAL PREPAYMENTS. (a) The Borrower may at any time and from
time to time prepay the Loans, in whole or in part, subject to payments of any
amounts required pursuant to Section 5.12 hereof, without premium or penalty,
upon at least four Business
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Days' irrevocable notice to the Administrative Agent, specifying the date and
amount of prepayment and whether the prepayment is of Eurodollar Loans, Base
Rate Loans or a combination thereof, and, if of a combination thereof, the
amount allocable to each. Upon receipt of any such notice the Administrative
Agent shall promptly notify each Lender thereof. If any such notice is given,
the amount specified in such notice shall be due and payable on the date
specified therein, together with any amounts payable pursuant to Section 5.12
and, in the case of prepayments of the Term Loans only, accrued interest to such
date on the amount prepaid. Partial prepayments of the Term Loans pursuant to
this Section shall be applied to the installments of principal thereof in the
inverse order of their scheduled maturities; PROVIDED, that, other than with
respect to prepayments in full, any Lender holding a Tranche B Term Loan may
elect to reject acceptance of any partial prepayment in respect of its Tranche B
Term Loan by giving notice to such effect to the Administrative Agent prior to
the making of such prepayment by the Borrower, in which case the amount of such
rejected prepayment shall be applied to installments of principal of the Tranche
A Term Loans in the inverse order of their scheduled maturities. Amounts prepaid
on account of the Term Loans may not be reborrowed. Partial prepayments pursuant
to this Section shall be in an aggregate principal amount of $1,000,000 or a
whole multiple thereof.
(b) Any Lender holding a Tranche B Term Loan may elect, by notice to
the Administrative Agent by telephone (confirmed by telecopy or otherwise in
writing) at least one Business Day prior to the prepayment date, to decline all
or any portion of a prepayment of its Tranche B Term Loan pursuant to this
Section 5.4, in which case the aggregate amount of prepayments that would have
been applied to Tranche B Term Loans but was so declined shall be applied to
prepay Tranche A Term Loans and Tranche B Term Loans of Lenders who accept
prepayment of their Tranche B Term Loans pursuant to this Section, on a pro-rata
basis based on their respective then outstanding principal amounts.
5.5 MANDATORY PREPAYMENTS.
(a) Subject to Section 5.12, if on any date the Aggregate Outstanding
Extensions of Credit exceeds the Revolving Credit Commitments, the Borrower
shall immediately prepay the Revolving Credit Loans and/or cash collateralize or
replace Letters of Credit in an amount equal to the amount of such excess.
(b) The Borrower shall prepay the Loans and reduce the Commitments in
an amount equal to (i) 100% of the Net Proceeds from the termination of any
pension plans of the Borrower or any Subsidiary (including, without limitation,
the Plan Termination); PROVIDED, that the Borrower may retain and retire shares
of Capital Stock of the Borrower held as assets of the Plan that is subject of
the Plan Termination to the extent that the Net Proceeds from the Plan
Termination otherwise applied to prepayment of the Loans is at least
$10,000,000, (ii) 100% of the Net Proceeds of
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any sale or issuance of debt securities (other than Replacement Subordinated
Debt), (iii) 100% of the Net Proceeds of any sale or issuance of any equity
securities, in either case by the Borrower or any Subsidiary, whether in a
public offering, a private placement or otherwise (other than issuances of
equity securities pursuant to employee benefit plans issued in the ordinary
course of business) and (iv) 100% of the Net Proceeds of any sale, lease,
assignment, exchange or other disposition for cash of any asset or group of
assets (including, without limitation, but subject to clause (d) of this Section
5.5, insurance proceeds paid as a result of any destruction, casualty or taking
of any property of the Borrower or any Subsidiary), not made in the ordinary
course of business, by the Borrower or any Subsidiary of the Borrower, in any
such case no later than three Business Days following receipt by the Borrower or
such Subsidiary of such proceeds, together with accrued interest to such date on
the amount prepaid; PROVIDED, that, during any fiscal year, no such prepayment
shall be required pursuant to subclause (iv) of this Section 5.5(b) unless the
aggregate amount of such Net Proceeds received by the Borrower and its
Subsidiaries and not previously applied to prepayment of the Term Loans and the
reduction of the Commitments pursuant to Section 5.5(b)(iv) is at least $250,000
for such fiscal year. Amounts prepaid pursuant to this Section 5.5(b) shall be
applied FIRST to installments of principal of the Term Loans until paid in full,
and SECOND to the reduction of the Revolving Credit Commitments and the
prepayment of the Revolving Credit Loans and/or to cash collateralize or replace
Letters of Credit. Prepayments of installments of Term Loans shall be applied in
the inverse order of maturity and such amounts so prepaid may not be reborrowed.
Nothing in this Section 5.5(b) shall be construed to derogate any restriction or
limitation contained in any Loan Document imposed on any transaction of the
types described in this Section 5.5(b), including without limitation the
restrictions set forth in Sections 9.2, 9.5 and 9.6 hereof.
(c) If at the end of a fiscal year of the Borrower the Leverage Ratio
is greater than 3.0 to 1.0, on or before the earlier of the date on which the
financial statements referred to in Section 8.1(a) are required to be delivered
in respect of such fiscal year of the Borrower, beginning with the fiscal year
ending December 31, 2000, and the date on which such financial statements are
actually delivered, the Borrower shall prepay the Term Loans and permanently
reduce the Commitments in the amount of 50% of Excess Cash Flow for such fiscal
year covered by such financial statements, together with accrued interest to
such date on the amount prepaid. Amounts prepaid pursuant to this Section 5.5(c)
shall be applied FIRST to installments of principal of the Term Loans until paid
in full, and SECOND to the reduction of the Revolving Credit Commitments and the
prepayment of the Revolving Credit Loans and/or to cash collateralize or replace
Letters of Credit. Prepayments of installments of Term Loans shall be applied in
the inverse order of maturity and such amounts so prepaid may not be reborrowed.
(d) Net Proceeds received by the Borrower or any Subsidiary as
proceeds of insurance upon any destruction, casualty or taking with respect to
any property of the Borrower or any Subsidiary need not be applied as set forth
in Section 5.5(b) to the extent that such Net Proceeds are committed by the
Borrower or such Subsidiary to the repair, rebuilding or replacement of the
property which was the subject of such destruction, casualty or taking within
120 days after the receipt of such Net Proceeds and applied no later than 360
days following receipt of such Net Proceeds. If required by the Administrative
Agent, such Net Proceeds shall be held in a special collateral account, subject
to the sole dominion and control of the Administrative Agent and in a manner
reasonably satisfactory to the Administrative Agent, as additional Collateral
for the Obligations and the Guarantees, until such time as it is to be applied
to such repair, rebuilding or replacement.
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(e) Any Lender holding a Tranche B Term Loan may elect, by notice to
the Administrative Agent by telephone (confirmed by telecopy or otherwise in
writing) at least one Business Day prior to the prepayment date, to decline all
or any portion of a prepayment of its Tranche B Term Loan pursuant to this
Section 5.5, in which case the aggregate amount of prepayments that would have
been applied to Tranche B Term Loans but was so declined shall be applied to
prepay Tranche A Term Loans and Tranche B Term Loans of Lenders who accept
prepayment of their Tranche B Term Loans pursuant to this Section, on a pro-rata
basis based on their respective then outstanding principal amounts.
5.6 COMPUTATION OF INTEREST AND FEES.
(a) Interest, whenever it is calculated on the basis of the Base Rate,
shall be calculated on the basis of a 365- (or 366-, as the case may be) day
year for the actual days elapsed; and, interest, whenever it is calculated on
the basis of the Eurodollar Rate, and Commitment Fees shall be calculated on the
basis of a 360-day year for the actual days elapsed. The Administrative Agent
shall as soon as practicable notify the Borrower and the Lenders of each
determination of a Eurodollar Rate. Any change in the interest rate on a Loan
resulting from a change in the Base Rate or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day on
which such change becomes effective. The Administrative Agent shall as soon as
practicable notify the Borrower and the Lenders of the effective date and the
amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 5.1(a) or (b).
5.7 INABILITY TO DETERMINE INTEREST RATE. If prior to the first day of
any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by reason
of circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the Eurodollar Rate for such Interest Period, or
(b) the Administrative Agent shall have received notice from Lenders
the Credit Exposure Percentages of which aggregate more than 50% that the
Eurodollar Rate determined or to be determined for such Interest Period will not
adequately and fairly reflect the cost to such Lenders (as conclusively
certified by such Lenders) of making or maintaining their affected Loans during
such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the Lenders as soon as practicable thereafter. If such notice is
given (x) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as Base Rate Loans, (y) any Loans that were to
have been Converted on the first day of such Interest Period to
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Eurodollar Loans shall be Converted to or Continued as Base Rate Loans and (z)
any outstanding Eurodollar Loans shall be Converted, on the first day of such
Interest Period, to Base Rate Loans. Until such notice has been withdrawn by the
Administrative Agent, no further Eurodollar Loans shall be made or Continued as
such, nor shall the Borrower have the right to Convert Loans to Eurodollar
Loans.
5.8 PRO RATA TREATMENT AND PAYMENTS.
(a) Each borrowing by the Borrower from the Lenders hereunder, each
payment by the Borrower on account of any commitment fee hereunder and any
reduction of the Tranche A Term Loan Commitments, Tranche B Term Loan
Commitments or the Revolving Credit Commitments of the Lenders shall be made pro
rata according to the respective Tranche A Term Loan Commitment Percentages,
Tranche B Term Loan Commitment Percentages or Revolving Credit Commitment
Percentages, as applicable, of the Lenders. Each payment (including each
prepayment) by the Borrower on account of principal of and interest on the
Tranche A Term Loans, Tranche B Term Loans or the Revolving Credit Loans shall
be made pro rata according to the respective outstanding principal amounts of
the Tranche A Term Loans, Tranche B Term Loans or the Revolving Credit Loans, as
applicable, then held by the Lenders. All payments (including prepayments) to be
made by the Borrower hereunder, whether on account of principal, interest, fees
or otherwise, shall be made without set-off or counterclaim and shall be made
prior to 12:00 noon, New York City time, on the due date thereof to the
Administrative Agent, for the account of the Lenders, at the Administrative
Agent's office specified in Section 12.2, in Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to the
Lenders promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on Eurodollar Loans) becomes due and payable on a
day other than a Business Day, such payment shall be extended to the next
succeeding Business Day, and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension. If
any payment on a Eurodollar Loan becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day unless the result of such extension would be to extend such payment
into another calendar month in which event such payment shall be made on the
immediately preceding Business Day.
(b) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its Tranche A Term Loan Commitment Percentage,
Tranche B Term Loan Commitment Percentage or Revolving Credit Commitment
Percentage, as applicable, of such borrowing available to the Administrative
Agent, the Administrative Agent may assume that such Lender is making such
amount available to the Administrative Agent, and the Administrative Agent may,
in reliance upon such assumption, make available to the Borrower a corresponding
amount. If such amount is not made available to the Administrative Agent by the
required time on the Borrowing Date therefor, such Lender shall pay to the
Administrative Agent, on demand, such amount with interest thereon at a rate
equal to the daily average Federal Funds Effective Rate for the period until
such Lender makes such amount immediately available to the Administrative Agent.
A certificate of the Administrative Agent submitted to
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any Lender with respect to any amounts owing under this Section shall be
conclusive in the absence of manifest error. If such Lender's Tranche A Term
Loan Commitment Percentage, Tranche B Term Loan Commitment Percentage or
Revolving Credit Commitment Percentage, as applicable, of such borrowing is not
made available to the Administrative Agent by such Lender within three Business
Days of such Borrowing Date, the Administrative Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
Base Rate Loans hereunder, on demand, from the Borrower.
5.9 ILLEGALITY. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans and Continue Eurodollar Loans as such
shall forthwith be cancelled and (b) such Lender's Loans then outstanding as
Eurodollar Loans, if any, shall be Converted automatically to Base Rate Loans on
the respective last days of the then current Interest Periods with respect to
such Loans or within such earlier period as required by law. If any such
Conversion of a Eurodollar Loan occurs on a day which is not the last day of the
then current Interest Period with respect thereto, the Borrower shall pay to
such Lender such amounts, if any, as may be required pursuant to Section 5.12.
5.10 REQUIREMENTS OF LAW.
(a) If the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof or compliance by any Lender with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority made subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Note or any Eurodollar Loan made by it, or
change the basis of taxation of payments to such Lender in respect thereof
(except for Non-Excluded Taxes covered by Section 5.11 and changes in the
rate of tax on the overall net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, Converting into,
Continuing or maintaining Eurodollar Loans or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Borrower shall
promptly pay such Lender such additional amount
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or amounts as will compensate such Lender for such increased cost or reduced
amount receivable.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Lender
or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time, the Borrower shall promptly pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction.
(c) If any Lender becomes entitled to claim any additional amounts
pursuant to this Section, it shall promptly notify the Borrower (with a copy to
the Administrative Agent) of the event by reason of which it has become so
entitled. A certificate as to any additional amounts payable pursuant to this
Section submitted by such Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. The
agreements in this Section shall survive the termination of this Agreement and
the payment of the Loans and all other amounts payable hereunder.
5.11 TAXES.
(a) All payments made by the Borrower under this Agreement and any
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 the Administrative Agent or any Lender as a result of a
present or former connection between the Administrative 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 the Administrative Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any Note). 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 the
Administrative Agent or any Lender hereunder or under any Note, the amounts so
payable to the Administrative Agent or such Lender shall be increased to the
extent necessary to yield to the Administrative 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, provided,
however, that the Borrower shall not be required to increase any such amounts
payable to any Lender that is not organized under the laws of the United States
of
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America or a state thereof if such Lender fails to comply with the requirements
of clause (b) of this Section. Whenever any Non-Excluded Taxes are payable by
the Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for its own account or for the account of such Lender, as
the case may be, a certified copy of an original official receipt received by
the Borrower showing payment thereof. 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, the Borrower shall indemnify the Administrative Agent and
the Lenders for any incremental taxes, interest or penalties that may become
payable by the Administrative Agent or any Lender as a result of any such
failure. The agreements in this Section shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
(i) (A) if such Lender is a "bank" within the meaning of Section
881(c)(3)(A) of the Code, deliver to the Borrower and the Administrative
Agent (x) two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224, or successor applicable form, as the case may
be, and (y) an Internal Revenue Service Form W-8 or W-9, or successor
applicable form, as the case may be, or (B) if such Lender is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Code and cannot deliver
either Internal Revenue Service Form 1001 or 4224, deliver (x) a
certificate substantially in the form of Exhibit I (a "NON-BANK STATUS
CERTIFICATE") and (y) two completed and signed copies of Internal Revenue
Service Form W-8 or successor applicable form;
(ii) deliver to the Borrower and the Administrative Agent two further
copies of any such form or certification on or before the date that any
such form or certification expires or becomes obsolete and 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 complete such
forms or certifications as may reasonably be requested by the Borrower or
the Administrative Agent;
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. Such Lender shall certify (i) in the case of a Form 1001
or 4224, that it is entitled
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to receive payments under this Agreement without deduction or withholding of any
United States federal income taxes, (ii) in the case of a Non-Bank Status
Certificate, that it is not a "bank" as such term is defined in Section
881(c)(3)(A) of the Code, and (iii) in the case of a Form W-8 or W-9, that it is
entitled to an exemption from United States backup withholding tax. Each Person
that shall become a Lender or a Participant pursuant to Section 12.6 shall, upon
the effectiveness of the related transfer, be required to provide all of the
forms and statements required pursuant to this Section, PROVIDED that in the
case of a Participant such Participant shall furnish all such required forms and
statements to the Lender from which the related participation shall have been
purchased.
5.12 INDEMNITY. The Borrower agrees to indemnify each Lender and to
hold each Lender harmless from any loss or expense which such Lender may sustain
or incur as a consequence of (a) default by the Borrower in making a borrowing
of, Conversion into or Continuation of Eurodollar Loans after the Borrower has
given a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment after the
Borrower has given a notice thereof in accordance with the provisions of this
Agreement or (c) the making of a prepayment of Eurodollar Loans on a day which
is not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, Converted or Continued, for the period from the date of such
prepayment or of such failure to borrow, Convert or Continue to the last day of
such Interest Period (or, in the case of a failure to borrow, Convert or
Continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding, however, the Applicable Margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) which
would have accrued to such Bank on such amount by placing such amount on deposit
for a comparable period with leading banks in the interbank eurodollar market.
This covenant shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.
5.13 LENDING OFFICES; CHANGE OF LENDING OFFICE; REPLACEMENT OF
LENDERS.
(a) Loans of each Type made by any Lender shall be made and maintained
at such Lender's Applicable Lending Office for Loans of such Type.
(b) Each Lender agrees that if it makes any demand for payment under
Section 5.10 or 5.11(a), or if any adoption or change of the type described in
Section 5.9 shall occur with respect to it, it will use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions and
so long as such efforts would not be disadvantageous to it, as determined in its
sole discretion) to designate a different lending office if the making of such a
designation would reduce or obviate the need for the Borrower to make payments
under Section 5.10 or 5.11(a), or would eliminate or reduce the effect of any
adoption or change described in Section 5.9.
(c) If any Lender requests compensation under Section 5.10, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section
5.11(a), then the Borrower may, at its sole expense and effort, upon notice to
such Lender and the Administrative Agent,
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require such Lender to assign all of its interests, rights and obligations to an
assignee who shall assume such obligations; provided that (i) the Borrower shall
have received the prior written consent of the Administrative Agent (and, if a
Revolving Credit Commitment is being assigned, the Issuing Bank), which consent
shall not be unreasonably withheld, (ii) such Lender shall have received payment
of an amount equal to the outstanding principal of its Loans, accrued interest
thereon, accrued fees, and all other amount payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts owing hereunder) and
(iii) such assignment will result in a material reduction in the amount of
compensation or payment to be made by the Borrower. A Lender shall not be
required to make any such assignment if, prior thereto, as a result of a waiver
by such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment cease to apply.
SECTION 6. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Loans, the Borrower hereby represents and warrants to
the Administrative Agent and each Lender that:
6.1 FINANCIAL CONDITION.
(a) The consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at December 31, 1998 and the related consolidated
statements of income and of cash flows for the fiscal year ended on such date,
reported on by PricewaterhouseCoopers LLP, copies of which have heretofore been
furnished to each Lender, are complete and correct and present fairly in
accordance with GAAP the consolidated financial condition of the Borrower and
its consolidated Subsidiaries as at such date, and the consolidated results of
their operations and their consolidated cash flows for the fiscal year then
ended. The unaudited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at March 31, 1999 and the related unaudited
consolidated statements of income and of cash flows for the 3-month period ended
on such date, certified by a Responsible Officer, copies of which have
heretofore been furnished to each Lender, are complete and correct and present
fairly in accordance with GAAP (subject to normal year-end adjustments) the
consolidated financial condition of the Borrower and its consolidated
Subsidiaries as at such date, and the consolidated results of their operations
and their consolidated cash flows for the 3-month period then ended (subject to
normal year-end audit adjustments). All such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as approved by such
accountants or Responsible Officer, as the case may be, and as disclosed
therein). Neither the Borrower nor any of its consolidated Subsidiaries had, at
the date of the most recent balance sheet referred to above, any material
Guarantee Obligation, contingent liability or liability for taxes, or any
long-term lease or unusual forward or long-term commitment, including, without
limitation, any interest rate or foreign currency swap or exchange transaction
or other financial derivative, which is not reflected in the foregoing
statements or in the notes thereto. During the period from December 31, 1998 to
and including the date hereof there has been no sale,
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transfer or other disposition by the Borrower or any of its consolidated
Subsidiaries of any material part of its business or property and no purchase or
other acquisition of any business or property (including any Capital Stock of
any other Person) material in relation to the consolidated financial condition
of the Borrower and its consolidated Subsidiaries at December 31, 1998.
(b) The consolidated balance sheet of Precision and its consolidated
Subsidiaries as at March 31, 1999 and the related consolidated statements of
income and of cash flows for the fiscal year ended on such date, reported on by
Xxxxxx Xxxxxxxx LLP, copies of which have heretofore been furnished to each
Lender, are complete and correct and present fairly in accordance with GAAP the
consolidated financial condition of Precision and its consolidated Subsidiaries
as at such date, and the consolidated results of their operations and their
consolidated cash flows for the fiscal year then ended. All such financial
statements, including the related schedules and notes thereto, have been
prepared in accordance with GAAP applied consistently throughout the periods
involved (except as approved by such accountants or Responsible Officer, as the
case may be, and as disclosed therein). Neither Precision nor any of its
consolidated Subsidiaries had, at the date of the most recent balance sheet
referred to above, any material Guarantee Obligation, contingent liability or
liability for taxes, or any long-term lease or unusual forward or long-term
commitment, including, without limitation, any interest rate or foreign currency
swap or exchange transaction or other financial derivative, which is not
reflected in the foregoing statements or in the notes thereto. During the period
from March 31, 1999 to and including the date hereof there has been no sale,
transfer or other disposition by Precision or any of its consolidated
Subsidiaries of any material part of its business or property and no purchase or
other acquisition of any business or property (including any Capital Stock of
any other Person) material in relation to the consolidated financial condition
of Precision and its consolidated Subsidiaries at March 31, 1999.
(c) The PRO FORMA consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at March 31, 1999 certified by a Responsible
Officer of the Borrower (the "PRO FORMA BALANCE SHEET"), a copy of which has
been provided to the Administrative Agent and each Lender, is the unaudited
consolidated balance sheet of the Borrower and its consolidated Subsidiaries
adjusted to give effect (as if such events had occurred on such date) to (i) the
refinancing of any Indebtedness to be made with the proceeds of Loans hereunder,
(ii) the making of the Term Loans, (iii) the making of the Revolving Credit
Loans to be made on the Closing Date, (iv) the Precision Acquisition, (v) the
issuance of all Subordinated Debt to be made on the Closing Date, (vi) the
application of the proceeds of the foregoing in accordance with the terms of the
Loan Documents and (vii) the payment of all fees and expenses related to the
foregoing transactions, as estimated in good faith as of the date of the Pro
Forma Balance Sheet. The Pro Forma Balance Sheet, together with the notes
thereto, presents fairly, on a pro forma basis, the consolidated financial
position of the Borrower and its Subsidiaries as at March 31, 1999, assuming
that the events specified in the preceding sentence had actually occurred on
such date.
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(d) The operating forecast and cash flow projections of the Borrower
and its consolidated Subsidiaries, copies of which have heretofore been
furnished to the Lenders, have been prepared in good faith under the direction
of a Responsible Officer of the Borrower, and in accordance with GAAP. The
Borrower has no reason to believe that as of the date of delivery thereof such
operating forecast and cash flow projections are materially incorrect or
misleading in any material respect, or omit to state any material fact which
would render them misleading in any material respect.
6.2 NO CHANGE. (a) Since December 31, 1998 there has been no
development or event which has had or could reasonably be expected to have a
Material Adverse Effect, and (b) during the period from December 31, 1998 to and
including the date hereof, the Capital Stock of the Borrower has not been
redeemed, retired, purchased or otherwise acquired for value by the Borrower or
any of its Subsidiaries.
6.3 EXISTENCE; COMPLIANCE WITH LAW. Each of the Borrower and its
Subsidiaries (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (b) has the corporate power
and authority, and the legal right, to own and operate its property, to lease
the property it operates as lessee and to conduct the business in which it is
currently engaged, (c) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
and (d) is in compliance with all Requirements of Law, except with respect to
(c) and (d) to the extent that the failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
6.4 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The Borrower has
the corporate power and authority, and the legal right, to make, deliver and
perform the Loan Documents to which it is a party and to borrow hereunder and
has taken all necessary corporate action to authorize the borrowings on the
terms and conditions of this Agreement and any Notes and to authorize the
execution, delivery and performance of the Loan Documents to which it is a
party. No consent or authorization of, filing with, notice to or other act by or
in respect of, any Governmental Authority or any other Person is required in
connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of the Loan Documents to which the
Borrower is a party, other than the filing of UCC Financing Statements and the
recording of Mortgages and Leasehold Mortgages contemplated by Section 6.16
hereof and any other recordings or filings relating to intellectual property or
vehicles of the Borrower as required by the Security Agreement. This Agreement
has been, and each other Loan Document to which it is a party will be, duly
executed and delivered on behalf of the Borrower. This Agreement constitutes,
and each other Loan Document to which it is a party when executed and delivered
will constitute, a legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
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6.5 NO LEGAL BAR. The execution, delivery and performance of the Loan
Documents to which the Borrower is a party, the borrowings hereunder and the use
of the proceeds thereof will not violate any Requirement of Law or Contractual
Obligation of the Borrower or of any of its Subsidiaries and will not result in,
or require, the creation or imposition of any Lien on any of its or their
respective properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation (other than Liens created by the Security Documents in
favor of the Administrative Agent).
6.6 NO MATERIAL LITIGATION. Other than as disclosed on Schedule 6.6
hereof, no litigation, investigation or proceeding of or before any arbitrator
or Governmental Authority is pending or, to the knowledge of the Borrower,
threatened by or against the Borrower or any of its Subsidiaries or against any
of its or their respective properties or revenues (a) with respect to any of the
Loan Documents or any of the transactions contemplated hereby or thereby, or (b)
which could reasonably be expected to have a Material Adverse Effect.
6.7 NO DEFAULT. Neither the Borrower nor any of its Subsidiaries is in
default under or with respect to any of its Contractual Obligations in any
respect which could reasonably be expected to have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
6.8 OWNERSHIP OF PROPERTY; LIENS. Each of the Borrower and its
Subsidiaries has good record and marketable title in fee simple to, or a valid
leasehold interest in, all its real property, and good title to, or a valid
leasehold interest in, all its other property, and none of such property is
subject to any Lien except as permitted by Section 9.3.
6.9 INTELLECTUAL PROPERTY. The Borrower and each of its Subsidiaries
owns, or is licensed to use, all trademarks, tradenames, copyrights, technology,
know-how and processes necessary for the conduct of its business as currently
conducted except for those the failure to own or license which could not
reasonably be expected to have a Material Adverse Effect (the "INTELLECTUAL
PROPERTY"). No claim has been asserted and is pending by any Person challenging
or questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, nor does the Borrower know of
any valid basis for any such claim. The use of such Intellectual Property by the
Borrower and its Subsidiaries does not infringe on the rights of any Person,
except for such claims and infringements that, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
6.10 NO BURDENSOME RESTRICTIONS. No Requirement of Law or Contractual
Obligation of the Borrower or any of its Subsidiaries could reasonably be
expected to have a Material Adverse Effect.
6.11 TAXES. Each of the Borrower and its Subsidiaries has filed or
caused to be filed all tax returns which, to the knowledge of the Borrower, are
required to be filed and has paid all taxes shown to be due and payable on said
returns or on any assessments made against it or any of its property and all
other taxes, fees or other charges imposed on it or any of its property by any
Governmental Authority (other than any the amount or validity of which
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are currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower or its Subsidiaries, as the case may be); no tax Lien has
been filed, and, to the knowledge of the Borrower, no claim is being asserted,
with respect to any such tax, fee or other charge.
6.12 FEDERAL REGULATIONS. No part of the proceeds of any Loans will be
used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U of the Board of
Governors of the Federal Reserve System as now and from time to time hereafter
in effect, or for any purpose which violates, or which would be inconsistent
with, the provisions of the regulations of such Board of Governors. If requested
by any Lender or the Administrative Agent, the Borrower will furnish to the
Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form G-3 or FR Form U-1 referred to in
said Regulation U.
6.13 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. Except for the Plan Termination, no termination of a Single
Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan has
arisen, during such five-year period. The present value of all accrued benefits
under each Single Employer Plan (based on those assumptions used to fund such
Plans) did not, as of the last annual valuation date prior to the date on which
this representation is made or deemed made, exceed the value of the assets of
such Plan allocable to such accrued benefits. Neither the Borrower nor any
Commonly Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan, and neither the Borrower nor any Commonly Controlled Entity
would become subject to any liability under ERISA if the Borrower or any such
Commonly Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the valuation date most closely preceding the date on which this
representation is made or deemed made. No such Multiemployer Plan is in
Reorganization or Insolvent.
6.14 INVESTMENT COMPANY ACT; OTHER REGULATIONS. The Borrower is not an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. The
Borrower is not subject to regulation under any Federal or State statute or
regulation (other than Regulation X of the Board of Governors of the Federal
Reserve System) which limits its ability to incur Indebtedness.
6.15 SUBSIDIARIES. Schedule 6.15 sets forth the name of each direct or
indirect Subsidiary of the Borrower, its form of organization, its jurisdiction
of organization, the total number of issued and outstanding shares or other
interests of Capital Stock thereof, the classes and number of issued and
outstanding shares or other interests of Capital Stock of each such class, the
name of each holder of Capital Stock thereof and the number of shares or other
interests of such Capital Stock held by each such holder and the percentage of
all outstanding shares or other interests of such class of Capital Stock held by
such holders.
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6.16 SECURITY DOCUMENTS.
(a) The provisions of each Security Document are effective to create
in favor of the Administrative Agent for the ratable benefit of the Lenders a
legal, valid and enforceable security interest in all right, title and interest
of the Loan Party which is party thereto in the "Collateral" described therein.
(b) (i) When financing statements have been filed in the offices in
the jurisdictions listed in Schedule 6.16 Part A, the Security Agreement
shall each constitute a fully perfected first Lien on, and security
interest in, all right, title and interest of the Borrower in the
"Collateral" described therein, which can be perfected by such filing.
When certificates representing the Pledged Stock (as defined in the
Pledge Agreement) are delivered to the Administrative Agent, together with
stock powers endorsed in blank by a duly authorized officer of the pledgor
thereof, the Pledge Agreement shall constitute a fully perfected first Lien
on, and security interest in, all right, title and interest of the pledgors
parties thereto in the "Collateral" described therein.
(iii) When each Leasehold Mortgage and Mortgage is recorded with the
appropriate jurisdiction listed on Schedule 6.16 Part B, such Leasehold
Mortgage or Mortgage shall constitute a fully perfected first Lien on, and
security interest in, all right, title and interest of the Loan Party which
is party thereto in the "Collateral" described therein.
(c) Neither the Borrower nor any Domestic Subsidiary owns any
property, or has any interest in any property, that is not subject to a fully
perfected first priority Lien on, or security interest in, such property in
favor of the Administrative Agent, other than any such property having an
aggregate fair market value at any one time not exceeding $250,000 and other
than any property listed on Schedule 6.16, Part C.
6.17 ACCURACY AND COMPLETENESS OF INFORMATION.
(a) All factual information, reports and other papers and data with
respect to the Loan Parties (other than projections) furnished, and all factual
statements and representations made, to the Administrative Agent or the Lenders
by a Loan Party, or on behalf of a Loan Party, were, at the time the same were
so furnished or made, when taken together with all such other factual
information, reports and other papers and data previously so furnished and all
such other factual statements and representations previously so made, complete
and correct in all material respects, to the extent necessary to give the
Administrative Agent and the Lenders true and accurate knowledge of the subject
matter thereof in all material respects, and did not, as of the date so
furnished or made, contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements contained
therein not misleading in light of the circumstances in which the same were
made.
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(b) All projections with respect to the Loan Parties furnished by or
on behalf of a Loan Party to the Administrative Agent or the Lenders were
prepared and presented in good faith by or on behalf of such Loan Party. No fact
is known to a Loan Party which materially and adversely affects or in the future
is reasonably likely (so far as such Loan Party can reasonably foresee) to have
a Material Adverse Effect which has not been set forth in the financial
statements referred to in Section 6.1 or in such information, reports, papers
and data or otherwise disclosed in writing to the Administrative Agent or the
Lenders prior to the Closing Date.
6.18 LABOR RELATIONS. No Loan Party is engaged in any unfair labor
practice which could reasonably be expected to have a Material Adverse Effect.
There is (a) no unfair labor practice compliant pending or, to the best
knowledge of each Loan Party and each of the Subsidiaries, threatened against a
Loan Party before the National Labor Relations Board which could reasonably be
expected to have a Material Adverse Effect and no grievance or arbitration
proceeding arising out of or under a collective bargaining agreement is so
pending or threatened; (b) no strike, labor dispute, slowdown or stoppage
pending or, to the best knowledge of each Loan Party, threatened against a Loan
Party; and (c) no union representation question existing with respect to the
employees of a Loan Party and no union organizing activities are taking place
with respect to any thereof.
6.19 INSURANCE. Each Loan Party has, with respect to its properties
and business, insurance covering the risks, in the amounts, with the deductible
or other retention amounts, and with the carriers, listed on Schedule 6.19,
which insurance meets the requirements of Section 8.5 hereof and Section 5 of
the Security Agreement and Section 6 of the Leasehold Mortgages and Mortgages as
of the date hereof and the Closing Date.
6.20 SOLVENCY. After giving effect to the consummation of the
refinancing of existing Indebtedness, the Precision Acquisition and to the
incurrence of all indebtedness (including any Subordinated Debt) and obligations
being incurred on or prior to such date in connection herewith and therewith and
after giving effect to the making of each Loan and the issuance of each Letter
of Credit, (i) the amount of the "present fair saleable value" of the assets of
the Borrower and of the Borrower and its Subsidiaries, taken as a whole, will,
as of such date, exceed the amount of all "liabilities of the Borrower and of
the Borrower and its Subsidiaries, taken as a whole, contingent or otherwise",
as of such date, as such quoted terms are determined in accordance with
applicable federal and state laws governing determinations of the insolvency of
debtors, (ii) the present fair saleable value of the assets of the Borrower and
of the Borrower and its Subsidiaries, taken as a whole, will, as of such date,
be greater than the amount that will be required to pay the liabilities of the
Borrower and of the Borrower and its Subsidiaries, taken as a whole, on their
respective debts as such debts become absolute and matured, (iii) neither the
Borrower nor the Borrower and its Subsidiaries, taken as a whole, will have, as
of such date, an unreasonably small amount of capital with which to conduct
their respective businesses, and (iv) each of the Borrower and the Borrower and
its Subsidiaries, taken as a whole, will be able to pay their respective debts
as they mature. For purposes of this Section 6.20, "debt" means "liability on a
claim", "claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated,
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unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured, and (y) right to an equitable remedy for
breach of performance if such breach gives rise to a right to payment, whether
or not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured or unmatured, disputed, undisputed, secured or unsecured.
6.21 PURPOSE OF LOANS. The proceeds of the Loans shall be used by the
Borrower to partially finance the Precision Acquisition, to refinance existing
Indebtedness of the Borrower, Precision and their Subsidiaries, to pay fees,
commissions and expenses in connection herewith and therewith, and for working
capital purposes in the ordinary course of business
6.22 ENVIRONMENTAL MATTERS. Except as disclosed on Schedule 6.22
attached hereto:
(a) The facilities and properties owned, leased or operated by the
Borrower or any of its Subsidiaries (the "PROPERTIES") and all operations at the
Properties are in compliance, and have in the last two years been in compliance,
with all applicable Environmental Laws, and there is no contamination at, under
or about the Properties or violation of any Environmental Law with respect to
the Properties or the business operated by the Borrower or any of its
Subsidiaries (the "BUSINESS") which could materially interfere with the
continued operation of the Properties or materially impair the fair saleable
value thereof.
(b) Neither the Borrower nor any of its Subsidiaries has received any
notice of violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or compliance with Environmental Laws
with regard to any of the Properties or the Business, nor does the Borrower have
knowledge or reason to believe that any such notice will be received or is being
threatened, that has not been resolved and which could reasonably be expected to
have a Material Adverse Effect.
(c) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a location
which could reasonably be expected to give rise to liability under, any
Environmental Law, nor have any Materials of Environmental Concern been
generated, treated, stored or disposed of at, on or under any of the Properties
in violation of, or in a manner that could reasonably be expected to give rise
to liability under, any applicable Environmental Law.
(d) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower or any Subsidiary is or will be named as
a party with respect to the Properties or the Business, nor are there any
consent decrees or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding under any
Environmental Law with respect to the Properties or the Business.
(e) There has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations
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of the Borrower or any Subsidiary in connection with the Properties or otherwise
in connection with the Business, in violation of or in amounts or in a manner
that could reasonably give rise to liability under Environmental Laws.
6.23 REGULATION H. No Mortgage or Leasehold Mortgage encumbers
improved real property which is located in an area that has been identified by
the Secretary of Housing and Urban Development as an area having special flood
hazards and in which flood insurance has been made available under the National
Flood Insurance Act of 1968.
6.24 YEAR 2000 COMPLIANCE. Any reprogramming required to permit the
proper functioning, in and following the year 2000, of (i) the computer systems
of the Borrower, Precision and their Subsidiaries and (ii) equipment of the
Borrower, Precision and their Subsidiaries containing embedded microchips
(including systems and equipment supplied by others in which their systems
interface) and the testing of all such systems and equipment, as so
reprogrammed, will be completed no later than October 31, 1999. The cost to the
Borrower and Precision of such reprogramming and testing and of the reasonably
foreseeable consequences of the Year 2000 Problem to the Borrower and Precision
(including, without limitation, reprogramming errors and the failure of others'
systems or equipment) will not result in a 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
Borrower, Precision and their Subsidiaries are and, with ordinary course
upgrading and maintenance, will continue for the term of this Agreement to be,
sufficient to permit the Borrower, Precision and their Subsidiaries to conduct
their business without a Material Adverse Effect.
SECTION 7. CONDITIONS PRECEDENT
7.1 CONDITIONS TO INITIAL LOANS. The agreement of each Lender to make
the initial Loan requested to be made by it and the agreement of the Issuing
Lender to issue the initial Letter of Credit is subject to the satisfaction,
immediately prior to or concurrently with the making of such Loan on the Closing
Date, of the following conditions precedent:
(a) LOAN DOCUMENTS. The Administrative Agent shall have received:
(i) this Agreement, executed and delivered by a duly authorized
officer of the Borrower, with a counterpart for each Lender,
(ii) for the account of each Lender having a Tranche A Term Loan
Commitment, a Tranche A Term Loan Note of the Borrower conforming to the
requirements hereof and executed by a duly authorized officer of the
Borrower,
(iii) for the account of each Lender having a Tranche B Term Loan
Commitment, a Tranche B Term Loan Note of the Borrower conforming to the
requirements hereof and executed by a duly authorized officer of the
Borrower,
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(iv) for the account of each Lender having a Revolving Credit
Commitment, a Revolving Credit Note of the Borrower conforming to the
requirements hereof and executed by a duly authorized officer of the
Borrower,
(v) the Pledge Agreement, executed and delivered by a duly authorized
officer of each party thereto, with a counterpart or a conformed copy for
each Lender,
(vi) the Guarantee, executed and delivered by a duly authorized
officer of each party thereto, with a counterpart or a conformed copy for
each Lender,
(vii) the Security Agreement, executed and delivered by a duly
authorized officer of each party thereto, with a counterpart or a conformed
copy for each Lender,
(viii) each of the Mortgages relating to the locations listed on
Schedule 7.1(a)(viii), each executed and delivered by a duly authorized
officer of the party thereto, with a counterpart or a conformed copy for
each Lender,
(ix) each of the Leasehold Mortgages relating to the locations listed
on Schedule 7.1(a)(ix), each executed and delivered by a duly authorized
officer of the party thereto, with a counterpart or a conformed copy for
each Lender;
(x) the Assignment of Precision Acquisition Documents, executed and
delivered by a duly authorized officer of each party thereto, with a
counterpart or a conformed copy for each Lender; and
(xi) each Foreign Pledge Agreement, executed and delivered by a duly
authorized officer of each party thereto, with a counterpart or a conformed
copy for each Lender.
(b) RELATED AGREEMENTS. The Administrative Agent shall have received,
with a copy for each Lender, true and correct copies, certified as to
authenticity by the Borrower, of all Precision Acquisition Documents, all
Subordinated Debt Documents and such other documents or instruments as may be
reasonably requested by the Administrative Agent, including, without limitation,
a copy of any debt instrument, security agreement or other material contract to
which the Borrower, Precision or any of their Subsidiaries may be a party.
(c) CONCURRENT TRANSACTIONS.
(i) The Precision Acquisition shall have been, or shall be
concurrently with the making of the initial Loans, consummated in
accordance with the terms of the Precision Acquisition Documents for a
total purchase price not exceeding $73,900,000 (subject to adjustments in
the purchase price pursuant to Section 2.1 of the Precision Acquisition
Agreement), without any amendment, modification or waiver thereof except
with the consent of the Required Lenders, and the Administrative Agent
shall have received evidence satisfactory to it to that effect.
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(ii) All amounts owing to the existing creditors of the Borrower,
Precision or any of their Subsidiaries (other than Indebtedness permitted
under Section 9.2 hereof) under existing financing documents shall have
been, or shall be concurrently with the making of the initial Loans, repaid
in full, and any Liens created pursuant to such existing financing
documents shall have been or shall, concurrently with the making of the
initial Loans, released, and such existing financing documents shall
terminate and be of no further force and effect upon such repayment; in
each case pursuant to such payoff letters, Lien releases, termination
statements, mortgage satisfactions and other documents as the
Administrative Agent may require, each of which shall be in form and
substance satisfactory to the Administrative Agent.
(iii) The Three Cities Subordinated Debt and any Special Subordinated
Notes shall have been, or shall be concurrently with the making of the
initial Loans, consummated in accordance with the terms of the related
Subordinated Debt Documents, without any amendment, modification or waiver
thereof except with the consent of the Required Lenders, and the
Administrative Agent shall have received evidence satisfactory to it to
that effect.
(iv) The Administrative Agent shall have received, with a counterpart
for each Lender, a copy of the resolutions, in form and substance
satisfactory to the Administrative Agent, of the Board of Directors of
Precision authorizing the execution, delivery and performance of the
Precision Acquisition Documents.
(d) SECRETARY'S CERTIFICATES. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of each Loan Party,
dated the Closing Date, substantially in the form of Exhibit J, with appropriate
insertions and attachments, satisfactory in form and substance to the
Administrative Agent, executed by the President or any Vice President and the
Secretary or any Assistant Secretary of such Loan Party.
(e) CORPORATE PROCEEDINGS OF THE LOAN PARTIES. The Administrative
Agent shall have received, with a counterpart for each Lender, a copy of the
resolutions, in form and substance satisfactory to the Administrative Agent, of
the Board of Directors of each Loan Party authorizing (i) the execution,
delivery and performance of this Agreement and the other Loan Documents to which
it is a party, (ii) the borrowings contemplated hereunder and (iii) the granting
by it of the Liens created pursuant to the Security Documents, certified by the
Secretary or an Assistant Secretary of such Loan Party as of the Closing Date,
which certificate shall be in form and substance satisfactory to the
Administrative Agent and shall state that the resolutions thereby certified have
not been amended, modified, revoked or rescinded.
(f) INCUMBENCY CERTIFICATES. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of each Loan Party,
dated the Closing Date, as to the incumbency and signature of the officers of
such Loan Party executing any Loan Document satisfactory in form and substance
to the Administrative Agent, executed by the President or any Vice President and
the Secretary or any Assistant Secretary of such Loan Party.
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(g) CORPORATE DOCUMENTS. The Administrative Agent shall have received,
with a counterpart for each Lender, true and complete copies of the certificate
of incorporation and by-laws of each Loan Party, certified as of the Closing
Date as complete and correct copies thereof by the Secretary or an Assistant
Secretary of such Loan Party.
(h) GOOD STANDING CERTIFICATES. The Administrative Agent shall have
received, with a copy for each Lender, certificates dated as of a recent date
from the Secretary of State or other appropriate authority, evidencing the good
standing of each Transaction Party (i) in the jurisdiction of its organization
and (ii) in each other jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires it to qualify as a foreign
Person except, as to this subclause (ii), where the failure to so qualify would
not have a Material Adverse Effect.
(i) CONSENTS, LICENSES AND APPROVALS. The Administrative Agent shall
have received, with a counterpart for each Lender, a certificate of a
Responsible Officer of the Borrower (i) attaching copies of all consents,
authorizations and filings referred to in Section 6.4, and (ii) stating that
such consents, licenses and filings are in full force and effect, and each such
consent, authorization and filing shall be in form and substance satisfactory to
the Administrative Agent.
(j) FEES AND EXPENSES. The Administrative Agent shall have received
the fees to be received on the Closing Date referred to in the Fee Letter and
all expenses required to be reimbursed in accordance herewith.
(k) LEGAL OPINIONS. The Administrative Agent shall have received, with
a counterpart for each Lender, the following executed legal opinions:
(i) the executed legal opinion of Xxxxxxxx, Xxxx & Xxxxx LLP, counsel
to the Borrower and the other Loan Parties, substantially in the form of
Exhibit K-1;
(ii) the executed legal opinion of local counsel to the Borrower and
the other Loan Parties with respect to Pennsylvania, Ohio, New York and
Indiana, substantially in the form of Exhibit K-2; and
(iii) the executed legal opinion of local counsel to the Borrower and
the other Loan Parties with respect to the United Kingdom, substantially in
the form of Exhibit K-3.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.
(l) PLEDGED STOCK; STOCK POWERS.
(i) The Administrative Agent shall have received the certificates
representing the shares pledged pursuant to the Pledge Agreement, together
with an undated stock
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power for each such certificate executed in blank by a duly authorized
officer of the pledgor thereof.
(ii) Each Issuer referred to in the Pledge Agreement shall have
delivered an acknowledgement of and consent to such Pledge Agreement, executed
by a duly authorized officer of such Issuer, in substantially the form appended
to such Pledge Agreement.
(m) ACTIONS TO PERFECT LIENS. The Administrative Agent shall have
received evidence in form and substance satisfactory to it that all filings,
recordings, registrations and other actions, including, without limitation, the
filing of duly executed financing statements on form UCC-1, necessary or, in the
opinion of the Administrative Agent, desirable to perfect the Liens created by
the Security Documents shall have been completed.
(n) SURVEYS. The Administrative Agent shall have received, and the
title insurance company issuing the policy referred to in Section 7.1(o) (the
"TITLE INSURANCE COMPANY") shall have received, maps or plats of an as-built
survey of the sites of the property covered by each Mortgage and Leasehold
Mortgage certified to the Administrative Agent and the Title Insurance Company
in a manner satisfactory to them, dated a date satisfactory to the
Administrative Agent and the Title Insurance Company by an independent
professional licensed land surveyor satisfactory to the Administrative Agent and
the Title Insurance Company, which maps or plats and the surveys on which they
are based shall be made in accordance with the Minimum Standard Detail
Requirements for Land Title Surveys jointly established and adopted by the
American Land Title Association and the American Congress on Surveying and
Mapping in 1962, and, without limiting the generality of the foregoing, there
shall be surveyed and shown on such maps, plats or surveys the following: (i)
the locations on such sites of all the buildings, structures and other
improvements and the established building setback lines; (ii) the lines of
streets abutting the sites and width thereof; (iii) all access and other
easements appurtenant to the sites or necessary or desirable to use the sites;
(iv) all roadways, paths, driveways, easements, encroachments and overhanging
projections and similar encumbrances affecting the site, whether recorded,
apparent from a physical inspection of the sites or otherwise known to the
surveyor; (v) any encroachments on any adjoining property by the building
structures and improvements on the sites; and (vi) if the site is described as
being on a filed map, a legend relating the survey to said map.
(o) TITLE INSURANCE POLICY. The Administrative Agent shall have
received in respect of each parcel covered by each Mortgage and Leasehold
Mortgage a mortgagee's title policy (or policies) or marked up unconditional
binder for such insurance dated the Closing Date. Each such policy shall (i) be
in an amount satisfactory to the Administrative Agent; (ii) be issued at
ordinary rates; (iii) insure that the Mortgage or Leasehold Mortgage insured
thereby creates a valid first Lien on such parcel free and clear of all defects
and encumbrances, except such as may be approved by the Administrative Agent;
(iv) name the Administrative Agent for the benefit of the Lenders as the insured
thereunder; (v) be in the form of ALTA Loan Policy - 1970 (Amended 10/17/70);
(vi) contain such endorsements and affirmative coverage as the Administrative
Agent may request and (vii) be issued by title companies
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satisfactory to the Administrative Agent (including any such title companies
acting as co-insurers or reinsurers, at the option of the Administrative Agent).
The Administrative Agent shall have received evidence satisfactory to it that
all premiums in respect of each such policy, and all charges for mortgage
recording tax, if any, have been paid.
(p) FLOOD INSURANCE. If requested by the Administrative Agent, the
Administrative Agent shall have received (i) a policy of flood insurance which
(A) covers any parcel of improved real property which is encumbered by any
Mortgage (B) is written in an amount not less than the outstanding principal
amount of the indebtedness secured by such Mortgage which is reasonably
allocable to such real property or the maximum limit of coverage made available
with respect to the particular type of property under the Act, whichever is
less, and (C) has a term ending not later than the maturity of the indebtedness
secured by such Mortgage and (ii) confirmation that the Company has received the
notice required pursuant to Section 208(e)(3) of Regulation H of the Board of
Governors of the Federal Reserve System.
(q) COPIES OF DOCUMENTS. The Administrative Agent shall have received
a copy of all recorded documents referred to, or listed as exceptions to title
in, the title policy or policies referred to in Section 7.1(o) and a copy,
certified by such parties as the Administrative Agent may deem appropriate, of
all other documents affecting the property covered by each Mortgage.
(r) LIEN SEARCHES. The Administrative Agent shall have received the
results of a recent search by a Person satisfactory to the Administrative Agent,
of the Uniform Commercial Code, judgment and tax lien filings which may have
been filed with respect to personal property of each Loan Party, and the results
of such search shall be satisfactory to the Administrative Agent.
(s) INSURANCE. The Administrative Agent shall have received evidence
in form and substance satisfactory to it that all of the requirements of Section
8.5 hereof and Section 5 of the Security Agreement and Section 6 of the
Mortgages and Leasehold Mortgages shall have been satisfied.
(t) ENVIRONMENTAL REPORTS. The Administrative Agent shall have
received Phase I environmental reports, and, if requested by the Administrative
Agent based upon its review of the Phase I environmental reports, Phase II or
other environmental reports, prepared by a Person satisfactory to the
Administrative Agent, and which such Person shall have confirmed in writing that
the Administrative Agent and the Lenders shall be entitled to rely upon, with
respect to each of the Properties, and such environmental reports shall be in
form and substance satisfactory to the Administrative Agent.
(u) LANDLORD ESTOPPEL AGREEMENTS. The Administrative Agent shall have
received a landlord estoppel agreement, in form and substance satisfactory to
the Administrative Agent, with respect to each parcel of real property leased by
any Loan Party as of the Closing Date, duly executed and delivered on behalf of
the lessor of such real property.
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(v) FINANCIAL STATEMENTS. The Administrative Agent and each Lender
shall have received and reviewed all financial projections and financial
statements listed in Section 6.1 hereof, which shall be in form and substance
satisfactory to the Administrative Agent and the Lenders.
(w) DUE DILIGENCE. The Administrative Agent and each Lender shall have
completed to its satisfaction due diligence with respect to the Borrower,
Precision, each of their Subsidiaries and their respective businesses and
properties; including, without limitation, review of and satisfaction with (i)
the tax assumptions of the Transaction Parties, (ii) the ownership, capital,
corporate, organization and legal structure of each Transaction Party, (iii) the
value, scope and extent of the Collateral which secures the Obligations
hereunder, (iv) all material contracts of the Transaction Parties, including
without limitation all documents relating to existing Indebtedness or Guarantee
Obligations of the Loan Parties and all material supply and purchase contracts
of the Loan Parties, (v) the structure of the Precision Acquisition and the
financings relating thereto, (vi) all shareholder agreements, employment
agreements, non-compete agreements and any other agreements among any
Transaction Party and its key personnel and (vii) any collective bargaining
agreements and employee benefit plans of the Transaction Parties.
(x) SOLVENCY LETTER. The Administrative Agent and the Lenders shall
have received a certificate from the chief financial officer of the Borrower, in
form and substance satisfactory to the Administrative Agent and the Lenders, as
to the solvency of the Loan Parties after giving effect to all of the
transactions contemplated hereby.
(y) APPROVALS AND WAITING PERIODS. The Administrative Agent shall have
received evidence to its satisfaction of the termination of the waiting period
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 in connection
with the Precision Acquisition and the transactions relating thereto.
7.2 CONDITIONS TO EACH LOAN. The agreement of each Lender to make any
Loan requested to be made by it on any date (including, without limitation, its
initial Loan) and the agreement of the Issuing Lender to issue any Letter of
Credit (including, without limitation, its initial Letter of Credit) is subject
to the satisfaction of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by the Borrower and the other Loan Parties in or pursuant to the
Loan Documents shall be true and correct in all material respects on and as of
such date as if made on and as of such date.
(b) NO DEFAULT. No Default or Event of Default shall have occurred and
be continuing on such date or after giving effect to the Loans requested to be
made on such date.
(c) NO MATERIAL ADVERSE EFFECT. No event or circumstance shall have
occurred and be continuing that has had a Material Adverse Effect.
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(d) ADDITIONAL MATTERS. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement and the other Loan Documents shall
be satisfactory in form and substance to the Administrative Agent, and the
Administrative Agent shall have received such other documents and legal opinions
in respect of any aspect or consequence of the transactions contemplated hereby
or thereby as it shall reasonably request.
Each borrowing by the Borrower hereunder shall constitute a representation and
warranty by the Borrower as of the date thereof that the conditions contained in
this Section 7.2 have been satisfied.
SECTION 8. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as any of the Commitments
remain in effect or any amount is owing to any Lender or the Administrative
Agent hereunder or under any other Loan Document, the Borrower shall and (except
in the case of delivery of financial information, reports and notices) shall
cause each of its Subsidiaries to:
8.1 FINANCIAL STATEMENTS. Furnish to each Lender:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Borrower, a copy of the audited consolidated and
unaudited consolidating balance sheet of the Borrower and its consolidated
Subsidiaries as at the end of such year and the related audited consolidated and
unaudited consolidating statements of income and retained earnings and of cash
flows for such year, setting forth in each case in comparative form the figures
for the previous year, reported on without a "going concern" or like
qualification or exception, or qualification arising out of the scope of the
audit, by PricewaterhouseCoopers LLP or other independent certified public
accountants of nationally recognized standing;
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal year
of the Borrower, the unaudited consolidated and consolidating balance sheet of
the Borrower and its consolidated Subsidiaries as at the end of such quarter and
the related unaudited consolidated and consolidating statements of income and
retained earnings and of cash flows of the Borrower and its consolidated
Subsidiaries for such quarter and the portion of the fiscal year through the end
of such quarter, setting forth in each case in comparative form the figures for
the previous year, certified by a Responsible Officer as being fairly stated in
all material respects in accordance with GAAP (subject to normal year-end audit
adjustments); and
(c) as soon as available, but in any event not later than 30 days
after the end of each calendar month, the unaudited consolidated and
consolidating balance sheet of the Borrower and its consolidated Subsidiaries as
at the end of such month and the related unaudited consolidated and
consolidating statements of income and retained earnings and of cash flows of
the Borrower and its consolidated Subsidiaries for such month and the portion of
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the fiscal year through the end of such month, setting forth in each case in
comparative form the figures for the previous year, certified by a Responsible
Officer as being fairly stated in all material respects in accordance with GAAP
(subject to normal year-end audit adjustments);
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
8.2 CERTIFICATES; OTHER INFORMATION. Furnish to each Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 8.1(a), a certificate of the independent certified public
accountants reporting on such financial statements stating that in making the
examination necessary therefor no knowledge was obtained of any Default or Event
of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements
referred to in Sections 8.1(a), (b) and (c), a certificate of a Responsible
Officer (i) stating that, to the best of such Officer's knowledge, the Borrower
during such period has observed or performed all of its covenants and other
agreements, and satisfied every condition, contained in this Agreement and the
other Loan Documents to be observed, performed or satisfied by it, and that such
Officer has obtained no knowledge of any Default or Event of Default except as
specified in such certificate and (ii) showing in detail the calculations
supporting such Officer's certification of the Borrower's compliance with the
requirements of Section 9.1(a) through 9.1(h);
(c) not later than thirty days after the end of each fiscal year of
the Borrower, a copy of the then current three-year projections by the Borrower
of the operating budget and cash flow budget of the Borrower and its
Subsidiaries for the succeeding three fiscal years, such projections to be
accompanied by a certificate of a Responsible Officer to the effect that such
projections have been prepared on the basis of sound financial planning practice
and that such Officer has no reason to believe they are incorrect or misleading
in any material respect;
(d) within five days after the same are sent, copies of all financial
statements and reports which the Borrower sends to its stockholders, and within
five days after the same are filed, copies of all financial statements and
reports which the Borrower may make to, or file with, the Securities and
Exchange Commission or any successor or analogous Governmental Authority;
(e) during the month of June in each calendar year, a report of a
reputable insurance broker with respect to the insurance maintained by the
Borrower and its Subsidiaries in accordance with Section 8.5 of this Agreement
and Section 5 of each Security Agreement and Section 6 of each Mortgage and
Leasehold Mortgage, and such supplemental reports as the Administrative Agent
may from time to time request; and
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(f) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
8.3 PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature, except where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on the books of
the Borrower or its Subsidiaries, as the case may be.
8.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. Continue to
engage in business of the same general type as now conducted by it and preserve,
renew and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business except as otherwise permitted
pursuant to Section 9.5; comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply therewith could
not, in the aggregate, be reasonably expected to have a Material Adverse Effect.
8.5 MAINTENANCE OF PROPERTY; INSURANCE. Keep all property useful and
necessary in its business in good working order and condition (ordinary wear and
tear excepted); maintain with financially sound and reputable insurance
companies insurance on all its property in at least such amounts and against at
least such risks as are usually insured against in the same general area by
companies engaged in the same or a similar business, which insurance shall name
the Administrative Agent as lender loss payee, in the case of property or
casualty insurance, and as an additional insured, in the case of liability
insurance; and furnish to each Lender, upon written request, full information as
to the insurance carried.
8.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. Keep
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and permit
representatives of any Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired and to discuss the business,
operations, properties and financial and other condition of the Borrower and its
Subsidiaries with officers and employees of the Borrower and its Subsidiaries
and with its independent certified public accountants.
8.7 NOTICES. Promptly give notice to the Administrative Agent and each
Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between the Borrower or
any of its Subsidiaries and any Governmental Authority, which in either case, if
not cured or if adversely determined, as the case may be, could reasonably be
expected to have a Material Adverse Effect;
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62
(c) any litigation or proceeding affecting the Borrower or any of its
Subsidiaries in which the amount involved is $1,000,000 or more and not covered
by insurance or in which injunctive or similar relief is sought;
(d) of the acquisition by any Loan Party of any property or interest
in property (including, without limitation, real property), that is not subject
to a perfected Lien in favor of the Administrative Agent pursuant to the
Security Documents;
(e) of the occurrence of any transaction or occurrence referred to in
Section 5.5(b), and the receipt of any Net Proceeds or any insurance proceeds as
a result thereof (whether or not such Net Proceeds or proceeds are then required
to be applied to the repayment of Loans and reduction of Revolving Credit
Commitments as specified in Section 5.5(b));
(f) the following events, as soon as possible and in any event within
30 days after the Borrower knows or has reason to know thereof: (i) the
occurrence or expected occurrence of any Reportable Event with respect to any
Plan, a failure to make any required contribution to a Plan, the creation of any
Lien in favor of the PBGC or a Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the institution
of proceedings or the taking of any other action by the PBGC or the Borrower or
any Commonly Controlled Entity or any Multiemployer Plan with respect to the
withdrawal from, or the terminating, Reorganization or Insolvency of, any Plan;
and
(g) any development or event which has had or could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a
statement of a Responsible Officer setting forth details of the occurrence
referred to therein and stating what action the Borrower proposes to take with
respect thereto.
8.8 ENVIRONMENTAL LAWS.
(a) Comply with, and ensure compliance by all tenants and subtenants,
if any, with, all applicable Environmental Laws and obtain and comply with and
maintain, and ensure that all tenants and subtenants obtain and comply with and
maintain, any and all licenses, approvals, notifications, registrations or
permits required by applicable Environmental Laws.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply with all lawful orders and directives of
all Governmental Authorities regarding Environmental Laws.
8.9 PERIODIC AUDIT OF ACCOUNTS RECEIVABLE AND INVENTORY. The
Administrative Agent shall be entitled to perform a periodic due diligence
inspection, test and review of the accounts receivable and inventory of the
Borrower and its Subsidiaries on a
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mutually convenient Business Day twice during each calendar year and shall in
each case be satisfied in all material respects with the results thereof;
PROVIDED HOWEVER, if the Administrative Agent in its reasonable judgment is not
satisfied that the results of any due diligence inspection, test, and review
performed pursuant to this Section 8.10, the Administrative Agent shall be
entitled to perform additional due diligence inspections, tests and reviews of
such inventory and accounts receivable on mutually convenient Business Days
during the succeeding twelve-month period until the Administrative Agent shall
be so satisfied; and PROVIDED FURTHER, that upon the occurrence and during the
continuation of an Event of Default, the Administrative Agent shall be entitled
to perform such additional due diligence inspections, tests and review of such
accounts receivable as any Lender shall deem necessary or advisable.
8.10 ADDITIONAL COLLATERAL; ADDITIONAL GUARANTORS.
(a) In the event that the Borrower or any Subsidiary acquires any
property or interest in property (including, without limitation, real property),
that is not subject to a perfected Lien in favor of the Administrative Agent
pursuant to the Security Documents, the Borrower shall, and shall cause
Subsidiary to, take such action (including, without limitation, the preparation
and filing of mortgages or deeds of trust in form and substance satisfactory to
the Administrative Agent) as the Administrative Agent shall request in order to
create and/or perfect a Lien in favor of the Administrative Agent on such
property.
(b) In the event that the Borrower is permitted to acquire or form any
additional Subsidiary, such Subsidiary shall execute a guarantee and a security
agreement, or supplements to the Guarantee and the Security Agreement, and the
Borrower and/or any Subsidiary which is a holder of any Capital Stock of such
Subsidiary shall execute such pledge agreements or supplements to the Pledge
Agreements, each in form and substance satisfactory to the Administrative Agent,
and shall take such other action as shall be necessary or advisable (including,
without limitation, the execution of financing statements on form UCC-1) in
order to perfect the Liens granted by such Subsidiary in favor of the
Administrative Agent for the benefit of the Lenders and to effect and perfect
the pledge of all of the Capital Stock of such Subsidiary in favor of the
Administrative Agent for the benefit of the Lenders. Such Subsidiary shall
thereupon become a Guarantor for all purposes under the Loan Documents,
including, without limitation, Section 8.10(a) of this Agreement. The
Administrative Agent shall be entitled to receive legal opinions of one or more
counsel to the Borrower and such Subsidiary addressing such matters as the
Administrative Agent or its counsel may reasonably request, including, without
limitation, the enforceability of the guaranty and the security agreement to
which such Subsidiary becomes a party and the pledge of the Capital Stock of
such Subsidiary, and the creation, validity and perfection of the Liens so
granted by such Subsidiary and the Borrower and/or other Subsidiaries to the
Administrative Agent for the benefit of the Lenders.
8.11 YEAR 2000 COVENANTS. (a) Take all necessary action to (i) comply
with the provisions of Section 6.24 hereof and (ii) test all of its systems and
equipment supplied by others or with which the Borrower's systems interface on
or prior to June 30, 1999 to verify
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the absence of a Year 2000 Problem, and (b) from time to time, at the request of
the Administrative Agent, provide to the Administrative Agent such updated
information or documentation as is requested regarding the status of their
efforts to address the Year 2000 Problem.
8.12 INTEREST RATE PROTECTION ARRANGEMENTS. No later than 180 days
following the Closing Date, enter into interest rate protection arrangements in
respect of 50% of the initial aggregate principal balance of the Tranche A Term
Loans and the Tranche B Term Loans as such aggregate principal amount is
scheduled to be reduced from time to time, in form and substance acceptable to
the Administrative Agent.
SECTION 9. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as any of the Commitments
remain in effect or any amount is owing to any Lender or the Administrative
Agent hereunder or under any other Loan Document, the Borrower shall not, and
(except with respect to Section 9.1) shall not permit any of its Subsidiaries
to, directly or indirectly:
9.1 FINANCIAL CONDITION COVENANTS.
(a) SENIOR LEVERAGE RATIO PRIOR TO PLAN TERMINATION. (1) Permit, for
any period of four consecutive fiscal quarters ending during a period set forth
below that occurs prior to the date of the Plan Termination and the application
of the net proceeds thereof to repayment of the Loans in accordance with Section
5.5(b), the ratio of (i) Consolidated Senior Indebtedness to (ii) Consolidated
EBITDA to be greater than the amount set forth opposite such period below;
PROVIDED, that in calculating Consolidated EBITDA for the periods of four fiscal
quarters ending September 30, 1999, December 31, 1999 and March 31, 2000,
Consolidated EBITDA for the fiscal quarters ending December 31, 1998, March 31,
1999 and June 30, 1999 shall be deemed to be $5,250,000, $5,250,000 and
$5,250,000, respectively:
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-------------------------------------------------------
Test Period Ending Ratio
-------------------------------------------------------
9/30/99 4.00
-------------------------------------------------------
12/31/99 4.00
-------------------------------------------------------
3/31/00 3.70
-------------------------------------------------------
6/30/00 3.60
-------------------------------------------------------
9/30/00 3.40
-------------------------------------------------------
12/31/00 3.20
-------------------------------------------------------
3/31/01 2.80
-------------------------------------------------------
6/30/01 2.70
-------------------------------------------------------
9/30/01 2.60
-------------------------------------------------------
12/31/01 AND THEREAFTER 2.50
-------------------------------------------------------
(b) SENIOR LEVERAGE RATIO FOLLOWING PLAN TERMINATION. (1) Permit, for
any period of four consecutive fiscal quarters ending during a period set forth
below that occurs from or after the date of the Plan Termination and the
application of the net proceeds thereof to repayment of the Loans in accordance
with Section 5.5(b), the ratio of (i) Consolidated Senior Indebtedness to (ii)
Consolidated EBITDA to be greater than the amount set forth opposite such period
below; PROVIDED that in calculating Consolidated EBITDA for the periods of four
fiscal quarters ending September 30, 1999, December 31, 1999 and March 31, 2000,
Consolidated EBITDA for the fiscal quarters ending December 31, 1998, March 31,
1999 and June 30, 1999 shall be deemed to be $5,250,000, $5,250,000 and
$5,250,000, respectively:
-------------------------------------------------------
Test Period Ending Ratio
-------------------------------------------------------
9/30/99 4.00
-------------------------------------------------------
12/31/99 3.50
-------------------------------------------------------
3/31/00 3.10
-------------------------------------------------------
6/30/00 3.00
-------------------------------------------------------
9/30/00 2.70
-------------------------------------------------------
12/31/00 AND THEREAFTER 2.50
-------------------------------------------------------
(c) INTEREST COVERAGE PRIOR TO PLAN TERMINATION. Permit, for any
period of four consecutive fiscal quarters ending during any period set forth
below, or if less than four consecutive fiscal quarters have elapsed since the
Closing Date, such period of one, two or three consecutive fiscal quarters
following the Closing Date ending during any period set forth below, that occurs
prior to the date of the Plan Termination and the application of the net
proceeds thereof to repayment of the Loans in accordance with Section 5.5(b),
the ratio of (i) Consolidated EBITDA for such period to (ii) Consolidated
Interest Expense for such period, to be less than the amount set forth opposite
such period below:
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Test Period Ending Ratio
----------------------------------- ---------------------
9/30/99 2.00
----------------------------------- ---------------------
12/30/99 2.00
----------------------------------- ---------------------
3/31/00 2.10
----------------------------------- ---------------------
6/30/00 2.25
----------------------------------- ---------------------
9/30/00 2.40
----------------------------------- ---------------------
12/31/00 2.60
----------------------------------- ---------------------
3/31/01 2.70
----------------------------------- ---------------------
6/30/01 2.80
----------------------------------- ---------------------
9/30/01 2.90
----------------------------------- ---------------------
12/31/01 3.00
----------------------------------- ---------------------
3/31/02 3.10
----------------------------------- ---------------------
6/30/02 3.20
----------------------------------- ---------------------
9/30/02 3.30
----------------------------------- ---------------------
12/31/02 3.40
----------------------------------- ---------------------
3/31/03 AND THEREAFTER 3.50
----------------------------------- ---------------------
(d) INTEREST COVERAGE FOLLOWING PLAN TERMINATION. Permit, for any
period of four consecutive fiscal quarters ending during any period set forth
below, or if less than four consecutive fiscal quarters have elapsed since the
Closing Date, such period of one, two or three consecutive fiscal quarters
following the Closing Date ending during any period set forth below, that occurs
from or after the date of the Plan Termination and the application of the net
proceeds thereof to repayment of the Loans in accordance with Section 5.5(b),
the ratio of (i) Consolidated EBITDA for such period to (ii) Consolidated
Interest Expense for such period, to be less than the amount set forth opposite
such period below:
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----------------------------------- ---------------------
Test Period Ratio
----------------------------------- ---------------------
9/30/99 2.00
----------------------------------- ---------------------
12/31/99 2.00
----------------------------------- ---------------------
3/31/00 2.25
----------------------------------- ---------------------
6/30/99 2.40
----------------------------------- ---------------------
9/30/99 2.55
----------------------------------- ---------------------
12/31/00 2.75
----------------------------------- ---------------------
3/31/01 2.85
----------------------------------- ---------------------
6/30/01 3.00
----------------------------------- ---------------------
9/30/01 3.10
----------------------------------- ---------------------
12/31/01 3.20
----------------------------------- ---------------------
3/31/02 3.30
----------------------------------- ---------------------
6/30/02 3.40
----------------------------------- ---------------------
9/30/02 AND THEREAFTER 3.50
----------------------------------- ---------------------
(e) MINIMUM FIXED CHARGE COVERAGE PRIOR TO PLAN TERMINATION. Permit,
for any period of four consecutive fiscal quarters ending during any period set
forth below, or if less than four consecutive fiscal quarters have elapsed since
the Closing Date, such period of one, two or three consecutive fiscal quarters
following the Closing Date ending during any period set forth below, that occurs
prior to the date of the Plan Termination and the application of the net
proceeds thereof to repayment of the Loans in accordance with Section 5.5(b),
the ratio of (i) the sum of (A) Consolidated EBITDA and (B) Consolidated Lease
Expense to (ii) Consolidated Fixed Charges to be less than the ratio set forth
opposite such period below:
----------------------------------- ---------------------
Test Period Ratio
----------------------------------- ---------------------
9/30/99 1.00
----------------------------------- ---------------------
12/31/99 1.00
----------------------------------- ---------------------
3/31/00 1.10
----------------------------------- ---------------------
6/30/00 1.10
----------------------------------- ---------------------
9/30/00 1.20
----------------------------------- ---------------------
12/31/00 AND THEREAFTER 1.25
----------------------------------- ---------------------
(f) MINIMUM FIXED CHARGE COVERAGE FOLLOWING PLAN TERMINATION. Permit,
for any period of four consecutive fiscal quarters ending during any period set
forth below, or if less than four consecutive fiscal quarters have elapsed since
the Closing Date, such period of one, two or three consecutive fiscal quarters
following the Closing Date ending during any period set forth below, that occurs
from or after the date of the Plan Termination and the application of the net
proceeds thereof to repayment of the Loans in accordance with Section 5.5(b),
the ratio of (i) the sum of (A) Consolidated EBITDA and (B) Consolidated Lease
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Expense to (ii) Consolidated Fixed Charges to be less than the ratio set forth
opposite such period below:
----------------------------------- ---------------------
Test Period Ratio
----------------------------------- ---------------------
9/30/99 1.00
----------------------------------- ---------------------
12/31/99 1.00
----------------------------------- ---------------------
3/31/00 1.10
----------------------------------- ---------------------
6/30/00 1.20
----------------------------------- ---------------------
9/30/00 AND THEREAFTER 1.25
----------------------------------- ---------------------
(g) MAINTENANCE OF CONSOLIDATED NET WORTH. Permit Consolidated Net
Worth at any time, to be less than the sum of (i) $46,000,000 LESS any net
losses from write down of assets recorded prior to June 30, 1999 relating to the
sale of the machine tool division and (ii) the sum of 75% of Adjusted
Consolidated Net Income for each fiscal quarter ended prior to such time,
commencing with the fiscal quarter ended September 30, 1999.
9.2 LIMITATION ON INDEBTEDNESS. Create, incur, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness of the Borrower under this Agreement;
(b) the Subordinated Debt;
(c) Indebtedness of the Borrower to any Subsidiary and of any
Subsidiary to the Borrower or any other Subsidiary; and
(d) Indebtedness outstanding on the date hereof and listed on Schedule
9.2.
9.3 LIMITATION ON LIENS. Create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, PROVIDED that adequate reserves with
respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are
not overdue for a period of more than 60 days or which are being contested
in good faith by appropriate proceedings;
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(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;
(d) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Borrower or such Subsidiary;
(f) Liens in existence on the date hereof listed on Schedule 9.3,
securing Indebtedness permitted by Section 9.2(d), PROVIDED that no such
Lien is spread to cover any additional property after the Closing Date and
that the amount of Indebtedness secured thereby is not increased;
(g) unperfected Liens arising by operation of law under Article 2 of
the Uniform Commercial Code in favor of unpaid sellers or prepaying buyers
of goods;
(h) statutory Liens arising from leases or subleases which are entered
into in the ordinary course of business and which do not interfere in any
material respect with the ordinary conduct of the business of the Borrower
or its Subsidiaries; and
(i) Liens created pursuant to the Security Documents.
9.4 LIMITATION ON GUARANTEE OBLIGATIONS. Create, incur, assume or
suffer to exist any Guarantee Obligation except:
(a) Guarantee Obligations in existence on the date hereof and listed
on Schedule 9.4;
(b) guarantees made in the ordinary course of its business by the
Borrower of obligations of any of its Subsidiaries, which obligations are
otherwise permitted under this Agreement; and
(c) the Guarantees.
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9.5 LIMITATION ON FUNDAMENTAL CHANGES. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business, except:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (PROVIDED that the Borrower shall be the continuing or
surviving corporation) or with or into any one or more wholly owned
Subsidiaries of the Borrower (PROVIDED that a wholly owned Subsidiary or
Subsidiaries shall be the continuing or surviving corporation);
(b) any wholly owned Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or
otherwise) to the Borrower or any other wholly owned Subsidiary of the
Borrower; and
(c) the restructuring of the Borrower and its Subsidiaries as
described on Schedule 9.5 hereof (the "RESTRUCTURING").
9.6 LIMITATION ON SALE OF ASSETS. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, or, in the case of any Subsidiary, issue or
sell any shares of such Subsidiary's Capital Stock (other than directors'
qualifying shares of Foreign Subsidiaries) to any Person other than the Borrower
or any wholly owned Subsidiary, except:
(a) the sale or other disposition of obsolete or worn out property in
the ordinary course of business; PROVIDED, that the Net Proceeds of each
such transaction are applied to the prepayment of the Loans as provided in
Section 5.5(b);
(b) the sale of inventory in the ordinary course of business;
(c) the sale of the Borrower's machine tool division; PROVIDED, that
the Net Proceeds of such transaction are applied to the prepayment of the
Loans as provided in Section 5.5(b);
(d) the sale or discount without recourse of accounts receivable
Farising in the ordinary course of business in connection with the
compromise or collection thereof;
(e) as permitted by Section 9.5(b); and
(f) the sale of assets listed on Schedule 9.6 hereof; PROVIDED, that
the Net Proceeds of each such transaction are applied to the prepayment of
the Loans as provided in Section 5.5(b).
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9.7 LIMITATION ON DIVIDENDS. Declare or pay any dividend (other than
dividends payable solely in common stock of the Borrower) on, or make any
payment on account of, or set apart assets for a sinking or other analogous fund
for, the purchase, redemption, defeasance, retirement or other acquisition of,
any shares of any class of Capital Stock of the Borrower or any warrants or
options to purchase any such Capital Stock or make any prepayment, repurchase,
redemption or defeasance in respect of the Three Cities Subordinated Debt or any
Special Subordinated Debt (other than with the proceeds of Replacement
Subordinated Debt and regularly scheduled payments in accordance with the terms
thereof), whether now or hereafter outstanding, or make any other distribution
in respect thereof, either directly or indirectly, whether in cash or property
or in obligations of the Borrower or any Subsidiary (such declarations,
payments, setting apart, purchases, redemptions, defeasances, retirements,
acquisitions and distributions being herein called "RESTRICTED PAYMENTS"),
except that the Borrower may make Restricted Payments as follows:
(a) dividends in respect of preferred stock of the Borrower in an
amount not to exceed $30,000 during any period of four consecutive fiscal
quarters;
(b) dividends in respect of common stock of the Borrower in an amount
not to exceed, during any period of four consecutive fiscal quarters, when
combined with the amount of Restricted Payments made during such period
pursuant to Section 9.7(a), the lesser of (i) $1,000,000 and (ii) 25% of
Consolidated Net Income during such period;
(c) prepayments, repurchases, redemptions or defeasances of any
Subordinated Debt made with the proceeds of Replacement Subordinated Debt;
(d) prepayments, repurchases, redemptions or defeasances of any
Special Subordinated Debt made no earlier than June 30, 2002 (unless paid
from proceeds described in Exhibit 1.2-B(1) of the Precision Acquisition
Agreement) in an amount not to exceed $3,000,000;
(e) purchases of the Capital Stock of the Borrower in connection with
the payment of the option price or taxes in connection with the exercising
of options or the grant of restricted shares under compensation plans of
the Borrower done in the ordinary course of the Borrower's business and
consistent with past practices of the Borrower;
(f) purchases of the Capital Stock of the Borrower in connection with
the termination of any pension plans to the extent permitted by Section
5.5(b).
9.8 LIMITATION ON CAPITAL EXPENDITURES. Make or commit to make (by way
of the acquisition of securities of a Person or otherwise) any expenditure in
respect of the purchase or other acquisition of fixed or capital assets
(excluding any such asset acquired in connection with normal replacement and
maintenance programs properly charged to current operations) except for
expenditures in the ordinary course of business not exceeding, in the aggregate
for the Borrower and its Subsidiaries (i) during the period of four consecutive
fiscal
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quarters of the Borrower ending on June 30, 2000, $9,000,000, (ii) during the
fiscal year of the Borrower ending December 31, 2000, the sum of (A) $5,000,000
and (B) the lesser of (x) $4,000,000 and (y) the excess (if any) of $9,000,000
over the actual capital expenditures of the Borrower and its Subsidiaries during
the period of four consecutive fiscal quarters of the Borrower ending on June
30, 2000 and (iii) during any fiscal year of the Borrower thereafter,
$5,000,000.
9.9 LIMITATION ON INVESTMENTS, LOANS AND ADVANCES. Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of or any assets constituting a
business unit of, or make any other investment in, any Person, except :
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) investments by the Borrower in any Subsidiary and investments by
such Subsidiary in the Borrower and in other Subsidiaries of the Borrower;
(d) seller financing for assets sold by the Borrower or any of its
Subsidiaries in accordance with Section 9.6(f) hereof; PROVIDED, that any
promissory note relating thereto shall have been pledged to the
Administrative Agent for the benefit of the Lenders pursuant to the
Security Agreement and shall be delivered to the Administrative Agent;
(e) loans to employees for relocation expenses in an aggregate amount
at any time outstanding not to exceed $500,000; and
(f) payment of contingent payments if required under Section 2.5 of
the Stock Purchase Agreement, dated as of December 30, 1998 (the "GFG
AGREEMENT"), between Durlan Industries, Inc. and the Borrower in an
aggregate amount not to exceed $1,780,000, or in payment of the amount
required under Section 6.6(b) of the GFG Agreement if the Borrower elects
to make a 338(h)(10) election as permitted by Section 6.6(b) of the GFG
Agreement in an amount not to exceed $1,000,000.
9.10 LIMITATION ON OPTIONAL PAYMENTS AND MODIFICATIONS OF DEBT
INSTRUMENTS. (a) Make any optional payment or prepayment on or redemption or
purchase of any Subordinated Debt, (b) amend, modify or change, or consent or
agree to any amendment, modification or change to any of the terms of any
Subordinated Debt Documents (other than any such amendment, modification or
change which would extend the maturity or reduce the amount of any payment of
principal thereof or which would reduce the rate or extend the date for payment
of interest thereon) or any Precision Acquisition Documents.
9.11 LIMITATION ON TRANSACTIONS WITH AFFILIATES. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted
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under this Agreement, (b) in the ordinary course of the Borrower's or such
Subsidiary's business and (c) upon fair and reasonable terms no less favorable
to the Borrower or such Subsidiary, as the case may be, than it would obtain in
a comparable arm's length transaction with a Person which is not an Affiliate.
9.12 LIMITATION ON SALES AND LEASEBACKS. Enter into any arrangement
with any Person providing for the leasing by the Borrower or any Subsidiary of
real or personal property which has been or is to be sold or transferred by the
Borrower or such Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Borrower or such Subsidiary.
9.13 LIMITATION ON CHANGES IN FISCAL YEAR. Permit the fiscal year of
the Borrower to end on a day other than December 31.
9.14 LIMITATION ON NEGATIVE PLEDGE CLAUSES. Enter into with any Person
any agreement, other than (a) this Agreement and (b) any industrial revenue
bonds, purchase money mortgages or Financing Leases permitted by this Agreement
(in which cases, any prohibition or limitation shall only be effective against
the assets financed thereby), which prohibits or limits the ability of the
Borrower or any of its Subsidiaries to create, incur, assume or suffer to exist
any Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired.
9.15 LIMITATION ON LINES OF BUSINESS. Enter into any business, either
directly or through any Subsidiary, except for those businesses in which the
Borrower and its Subsidiaries are engaged on the date of this Agreement.
9.16 GOVERNING DOCUMENTS. Amend its certificate of incorporation
(except to increase the number of authorized shares of common stock or to change
its name in connection with the Restructuring; PROVIDED, that notice of such
name change is given to the Administrative Agent in accordance with the Security
Agreement), partnership agreement or other Governing Documents, without the
prior written consent of the Required Lenders, which shall not be unreasonably
withheld or delayed.
9.17 LIMITATION ON SUBSIDIARY FORMATION. Form any Subsidiaries unless,
immediately upon the formation of such Subsidiary, all requirements of Section
8.10 shall have been satisfied.
SECTION 10 EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan when due
in accordance with the terms thereof or hereof; or the Borrower shall fail
to pay any interest on any Loan, or any other amount payable hereunder or
under the other Loan
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Documents, within five days after any such interest or other amount becomes
due in accordance with the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by the Borrower
or any other Loan Party herein or in any other Loan Document or which is
contained in any certificate, document or financial or other statement
furnished by it at any time under or in connection with this Agreement or
any such other Loan Document shall prove to have been incorrect in any
material respect on or as of the date made or deemed made; or
(c) The Borrower or any other Loan Party shall default in the
observance or performance of any agreement contained in Section 9 hereof,
Section 10 (b) or 10 (h) of the Mortgage or the Leasehold Mortgage, Section
5 (b) or 5 (g) of the Pledge Agreement or Section 5 (h), 5 (i) or 5 (p) of
the Security Agreement; or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided in paragraphs
(a) through (c) of this Section), and such default shall continue
unremedied for a period of 30 days; or
(e) The Borrower or any of its Subsidiaries shall (i) default in any
payment of principal of or interest of any Indebtedness (other than the
Loans) or in the payment of any Guarantee Obligation, beyond the period of
grace (not to exceed 30 days), if any, provided in the instrument or
agreement under which such Indebtedness or Guarantee Obligation was
created, if the aggregate amount of the Indebtedness and/or Guarantee
Obligations in respect of which such default or defaults shall have
occurred is at least $1,000,000; or (ii) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness or Guarantee Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Guarantee Obligation
(or a trustee or Administrative Agent on behalf of such holder or holders
or beneficiary or beneficiaries) to cause, with the giving of notice if
required, such Indebtedness to become due prior to its stated maturity or
such Guarantee Obligation to become payable; or
(f) (i) The Borrower or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial
part of its assets,
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or the Borrower or any of its Subsidiaries shall make a general assignment
for the benefit of its creditors; or (ii) there shall be commenced against
the Borrower or any of its Subsidiaries any case, proceeding or other
action of a nature referred to in clause (i) above which (A) results in the
entry of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 60 days; or
(iii) there shall be commenced against the Borrower or any of its
Subsidiaries any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets which results in the entry of an
order for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry thereof; or
(iv) the Borrower or any of its Subsidiaries shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v)
the Borrower or any of its Subsidiaries shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as
they become due; or
(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Borrower or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with respect
to a Plan; and in each case in clauses (i) through (vi) above, such event
or condition, together with all other such events or conditions, if any,
could reasonably be expected to have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries involving in the aggregate a liability
(not paid or fully covered by insurance, subject to customary deductibles)
of $1,000,000 or more, and all such judgments or decrees shall not have
been vacated, discharged, stayed or bonded pending appeal within 60 days
from the entry thereof; or
(i) (i) Any of the Security Documents shall cease, for any reason, to
be in full force and effect, or the Borrower or any other Loan Party which
is a party to any of the Security Documents shall so assert or (ii) the
Lien created by any of the Security Documents shall cease to be enforceable
and of the same effect and priority purported to be created thereby; or
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(j) Any Guarantee shall cease, for any reason, to be in full force and
effect or any Guarantor shall so assert; or
(k) The subordination provisions relating to any Subordinated Debt
shall cease for any reason to be effective in respect of the Loans, or any
holder thereof shall so assert; or
(l) A Change of Control shall occur;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) of this Section with respect to the
Borrower, automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement shall immediately become due and payable, and (B) if such
event is any other Event of Default, either or both of the following actions may
be taken: (i) with the consent of the Required Lenders, the Administrative Agent
may, or upon the request of the Required Lenders, the Administrative Agent
shall, by notice to the Borrower declare the Commitments to be terminated
forthwith, whereupon the Commitments shall immediately terminate; and (ii) with
the consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to
the Borrower, declare the Loans hereunder (with accrued interest thereon) and
all other amounts owing under this Agreement (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit have presented the documents required thereunder)
to be due and payable forthwith, whereupon the same shall immediately become due
and payable.
With respect to all Letters of Credit with respect to which presentment for
honor shall not have occurred at the time of an acceleration pursuant to the
preceding paragraph, the Borrower shall at such time deposit in a cash
collateral account opened by the Administrative Agent an amount equal to the
aggregate then undrawn and unexpired amount of such Letters of Credit. The
Borrower hereby grants to the Administrative Agent, for the benefit of the
Issuing Lender and the L/C Participants, a security interest in such cash
collateral to secure all obligations of the Borrower under this Agreement and
the other Loan Documents. Amounts held in such cash collateral account shall be
applied by the Administrative Agent to the payment of drafts drawn under such
Letters of Credit, and the unused portion thereof after all such Letters of
Credit shall have expired or been fully drawn upon, if any, shall be applied to
repay other obligations of the Borrower hereunder and under the Notes. After all
such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of
the Borrower hereunder and under the Notes shall have been paid in full, the
balance, if any, in such cash collateral account shall be returned to the
Borrower. The Borrower shall execute and deliver to the Administrative Agent,
for the account of the Issuing Lender and the L/C Participants, such further
documents and instruments as the Administrative Agent may request to evidence
the creation and perfection of the within security interest in such cash
collateral account.
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SECTION 11 THE ADMINISTRATIVE AGENT
11.1 APPOINTMENT. Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the Administrative Agent of such Lender
under this Agreement and the other Loan Documents, and each such Lender
irrevocably authorizes the Administrative Agent, in such capacity, to take such
action on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Administrative Agent by the terms of this Agreement and the
other Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.
11.2 DELEGATION OF DUTIES. The Administrative Agent may execute any of
its duties under this Agreement and the other Loan Documents by or through
Administrative Agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any
Administrative Agents or attorneys in-fact selected by it with reasonable care.
11.3 EXCULPATORY PROVISIONS. Neither the Administrative Agent nor any
of its officers, directors, employees, Administrative Agents, attorneys-in-fact
or Affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except for its or such Person's own gross negligence or
willful misconduct) or (ii) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by the Borrower or
any officer thereof contained in this Agreement or any other Loan Document or in
any certificate, report, statement or other document referred to or provided for
in, or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of the Borrower to perform its obligations hereunder
or thereunder. The Administrative Agent shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower.
11.4 RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent shall
be entitled to rely, and shall be fully protected in relying, upon any Note,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Borrower or any other Loan Party), independent accountants and other experts
selected by the
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Administrative Agent. The Administrative Agent may deem and treat the payee of
any Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Required Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Loans.
11.5 NOTICE OF DEFAULT. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders; provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
11.6 NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS. Each
Lender expressly acknowledges that neither the Administrative Agent nor any of
its officers, directors, employees, Administrative Agents, attorneys-in-fact or
Affiliates has made any representations or warranties to it and that no act by
the Administrative Agent hereinafter taken, including any review of the affairs
of the Borrower or any other Loan Party, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender. Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Borrower and the other
Loan Parties and made its own decision to make its Loans hereunder and enter
into this Agreement. Each Lender also represents that it will, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrower. Except for notices, reports and other documents expressly required to
be furnished to the Lenders by the Administrative Agent hereunder or under the
other Loan Documents, the Administrative Agent shall not have any duty or
responsibility to provide any Lender with any
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credit or other information concerning the business, operations, property,
condition (financial or otherwise), prospects or creditworthiness of the
Borrower or any other Loan Party which may come into the possession of the
Administrative Agent or any of its officers, directors, employees,
Administrative Agents, attorneys-in-fact or Affiliates.
11.7 INDEMNIFICATION. The Lenders agree to indemnify the
Administrative Agent in its capacity as such (to the extent not reimbursed by
the Borrower and without limiting the obligation of the Borrower to do so),
ratably according to their respective Credit Exposure Percentages in effect on
the date on which indemnification is sought, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Loans)
be imposed on, incurred by or asserted against the Administrative Agent in any
way relating to or arising out of, the Commitments, this Agreement, any of the
other Loan Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by the Administrative Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from the
Administrative Agent's gross negligence or willful misconduct. The agreements in
this Section shall survive the payment of the Loans and all other amounts
payable hereunder.
11.8 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. The
Administrative Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower and the other
Loan Parties as though the Administrative Agent were not the Administrative
Agent hereunder and under the other Loan Documents. With respect to the Loans
made by it, the Administrative Agent shall have the same rights and powers under
this Agreement and the other Loan Documents as any Lender and may exercise the
same as though it were not the Administrative Agent, and the terms "Lender" and
"Lenders" shall include the Administrative Agent in its individual capacity.
11.9 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may
resign as Administrative Agent upon 10 days' notice to the Lenders. If the
Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Loan Documents, then the Required Lenders shall appoint from among
the Lenders a successor Administrative Agent for the Lenders, which successor
Administrative Agent shall be approved by the Borrower, whereupon such successor
Administrative Agent shall succeed to the rights, powers and duties of the
Administrative Agent, and the term "Administrative Agent" shall mean such
successor Administrative Agent effective upon such appointment and approval, and
the former Administrative Agent's rights, powers and duties as Administrative
Agent shall be terminated, without any other or further act or deed on the part
of such former Administrative Agent or any of the parties to this Agreement or
any holders of the Loans. After any retiring Administrative Agent's resignation
as Administrative Agent, the provisions of this Section 11 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement and the other Loan Documents.
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SECTION 12 MISCELLANEOUS
12.1 AMENDMENTS AND WAIVERS. Neither this Agreement nor any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 12.1. The
Required Lenders may, or, with the written consent of the Required Lenders, the
Administrative Agent may, from time to time, (a) enter into with the Borrower
written amendments, supplements or modifications hereto and to the other Loan
Documents for the purpose of adding any provisions to this Agreement or the
other Loan Documents or changing in any manner the rights of the Lenders or of
the Borrower hereunder or thereunder or (b) waive, on such terms and conditions
as the Required Lenders or the Administrative Agent, as the case may be, may
specify in such instrument, any of the requirements of this Agreement or the
other Loan Documents or any Default or Event of Default and its consequences;
PROVIDED, HOWEVER, that no such waiver and no such amendment, supplement or
modification shall (i) reduce the amount or extend the scheduled date of
maturity of any Loan or of any installment thereof, or reduce the stated rate of
any interest or fee payable hereunder or extend the scheduled date of any
payment thereof or increase the amount or extend the expiration date of any
Lender's Commitments, in each case without the consent of each Lender affected
thereby, or (ii) amend, modify or waive any provision of this Section 12.1 or
reduce the percentage specified in the definition of Required Lenders, or
consent to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement and the other Loan Documents or release all or
substantially all of the Collateral or release all or substantially all of the
Guarantors from their obligations under the Guarantees, in each case without the
written consent of each of the Lenders directly affected thereby, or (iii)
amend, modify or waive any provision of Section 11 without the written consent
of the then Agent. Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Lenders and shall be binding
upon the Borrower, the Lenders, the Administrative Agent and all future holders
of the Loans. In the case of any waiver, the Borrower, the Lenders and the
Administrative Agent shall be restored to their former positions and rights
hereunder and under the other Loan Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default or
impair any right consequent thereon. Notwithstanding anything to the contrary
contained in this Section 12.1, the Restructuring and all amendments,
modifications and releases necessary to give effect thereto shall be permitted
and shall not require the consent of the Lenders.
12.2 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand,
when delivered, (b) in the case of delivery by mail, three days after being
deposited in the mails, postage prepaid, or (c) in the case of delivery by
facsimile transmission, when sent and receipt has been electronically confirmed,
addressed as follows in the case of the Borrower and the Administrative Agent,
and as set forth in Schedule I in the case of the other parties hereto, or to
such other address as may be hereafter notified by the respective parties
hereto:
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The Borrower: The Monarch Machine Tool Company
0000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Fax: (000) 000-0000
Telephone: (000) 000-0000
The Administrative Agent: ING (U.S.) Capital LLC
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Fax: (000) 000-0000
Telephone: (000) 000-0000
PROVIDED that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to Section 2.5, 3.3, 3.5, 5.2, 5.4 or 5.8(b) shall not
be effective until received.
12.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any Lender, any
right, remedy, power or privilege hereunder or under the other Loan Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
12.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
12.5 PAYMENT OF EXPENSES AND TAXES. The Borrower agrees (a) to pay or
reimburse the Administrative Agent for all its out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including, without limitation, the reasonable fees and
disbursements of counsel to the Administrative Agent, (b) to pay or reimburse
each Lender and the Administrative Agent for all its costs and expenses incurred
in connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, the fees and disbursements of counsel to each Lender and of
counsel to the Administrative Agent, (c) to pay, indemnify, and hold each Lender
and the Administrative Agent harmless from, any and all recording and filing
fees and any and all liabilities with respect to, or resulting from any delay in
paying, stamp, excise and other taxes, if any, which
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may be payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the other Loan Documents and
any such other documents, and (d) to pay, indemnify, and hold each Lender and
the Administrative Agent harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with respect
to the execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents, the Precision Acquisition Documents, the
Subordinated Debt Documents, the Precision Acquisition or the use of the
proceeds of the Loans in connection with the Precision Acquisition and any such
other documents, including, without limitation, any of the foregoing relating to
the violation of, noncompliance with or liability under, any Environmental Law
applicable to the operations of the Borrower, any of its Subsidiaries or any of
the Properties (all the foregoing in this clause (d), collectively, the
"INDEMNIFIED LIABILITIES"), provided, that the Borrower shall have no obligation
hereunder to the Administrative Agent or any Lender with respect to indemnified
liabilities arising from (i) the gross negligence or willful misconduct of the
Administrative Agent or any such Lender or (ii) legal proceedings commenced
against the Administrative Agent or any such Lender by any security holder or
creditor thereof arising out of and based upon rights afforded any such security
holder or creditor solely in its capacity as such. The agreements in this
Section shall survive repayment of the Loans and all other amounts payable
hereunder.
12.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS.
(a) This Agreement shall be binding upon and inure to the benefit of
the Borrower, the Lenders, the Administrative Agent and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial banking
business, commercial lending or investment business and in accordance with
applicable law, at any time sell to one or more banks or other entities
("PARTICIPANTS") participating interests in any Loan owing to such Lender, any
Commitment of such Lender or any other interest of such Lender hereunder and
under the other Loan Documents. In the event of any such sale by a Lender of a
participating interest to a Participant, such Lender's obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance thereof, such Lender
shall remain the holder of any such Loan for all purposes under this Agreement
and the other Loan Documents, and the Borrower and the Administrative Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement and the other Loan
Documents. The Borrower agrees that if amounts outstanding under this Agreement
are due or unpaid, or shall have been declared or shall have become due and
payable upon the occurrence of an Event of Default, each Participant shall, to
the maximum extent permitted by applicable law, be deemed to have the right of
setoff in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the
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amount of its participating interest were owing directly to it as a Lender under
this Agreement, PROVIDED that, in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in Section 12.7(a) as fully as if it were a Lender
hereunder. The Borrower also agrees that each Participant shall be entitled to
the benefits of Sections 5.10, 5.11, and 5.12 with respect to its participation
in the Commitments and the Loans outstanding from time to time as if it was a
Lender; PROVIDED that, in the case of Section 5.11, such Participant shall have
complied with the requirements of said Section and PROVIDED, FURTHER, that no
Participant shall be entitled to receive any greater amount pursuant to any such
Section than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such Participant had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial banking
business, commercial lending or investment business and in accordance with
applicable law, at any time and from time to time assign to any Lender or any
affiliate thereof or, with the consent of the Administrative Agent and the
Borrower (which in each case shall not be unreasonably withheld), to an
additional bank or financial institution ("an ASSIGNEE") all or any part of its
rights and obligations under this Agreement and the other Loan Documents
pursuant to an Assignment and Acceptance, substantially in the form of Exhibit
L, with appropriate completions (an "ASSIGNMENT AND ACCEPTANCE"), executed by
such Assignee, such assigning Lender (and, in the case of an Assignee that is
not then a Lender or an affiliate thereof, by the Administrative Agent and the
Borrower) and delivered to the Administrative Agent for its acceptance and
recording in the Register; PROVIDED, that no such assignment shall be permitted
if the aggregate amount of the Loans, L/C Obligations and Available RC
Commitments assigned shall be less than $5,000,000, unless otherwise agreed by
the Administrative Agent. Upon such execution, delivery, acceptance and
recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder with Commitments as set forth therein, and
(y) the assigning Lender thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such assigning Lender shall cease to be a party hereto). Notwithstanding any
provision of this paragraph (c) and paragraph (e) of this Section, the consent
of the Borrower shall not be required, and, unless requested by the Assignee
and/or the assigning Lender, new Notes shall not be required to be executed and
delivered by the Borrower, for any assignment which occurs at any time when any
of the events described in Section 10(f) shall have occurred and be continuing.
(d) The Administrative Agent, on behalf of the Borrower, shall
maintain at the address of the Administrative Agent referred to in Section 12.2
a copy of each Assignment and Acceptance delivered to it and a register (the
"REGISTER") for the recordation of the names and addresses of the Lenders and
the Commitments of, and principal amounts of the Loans owing to, each Lender
from time to time. The entries in the Register shall be conclusive, in the
absence of manifest error, and the Borrower, the Administrative Agent and the
Lenders
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may (and, in the case of any Loan or other obligation hereunder not evidenced by
a Note, shall) treat each Person whose name is recorded in the Register as the
owner of a Loan or other obligation hereunder as the owner thereof for all
purposes of this Agreement and the other Loan Documents, notwithstanding any
notice to the contrary. Any assignment of any Loan or other obligation hereunder
not evidenced by a Note shall be effective only upon appropriate entries with
respect thereto being made in the Register. 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.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof, by the Borrower and the Administrative
Agent) together with payment to the Administrative Agent of a registration and
processing fee of $3,500, the Administrative Agent shall (i) promptly accept
such Assignment and Acceptance and (ii) on the effective date determined
pursuant thereto record the information contained therein in the Register and
give notice of such acceptance and recordation to the Lenders and the Borrower.
(f) The Borrower authorizes each Lender to disclose to any Participant
or Assignee (each, a "TRANSFEREE") and any prospective Transferee any and all
financial information in such Lender's possession concerning the Borrower and
its Affiliates which has been delivered to such Lender by or on behalf of the
Borrower pursuant to this Agreement or which has been delivered to such Lender
by or on behalf of the Borrower in connection with such Lender's credit
evaluation of the Borrower and its Affiliates prior to becoming a party to this
Agreement.
(g) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this Section concerning assignments of Loans and Notes
relate only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including, without limitation, any
pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank
in accordance with applicable law.
12.7 ADJUSTMENTS; SET-OFF.
(a) If any Lender (a "BENEFITED LENDER") shall at any time receive any
payment of all or part of its Loans, or interest thereon, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by set-off,
pursuant to events or proceedings of the nature referred to in Section 10(f), or
otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of such other Lender's Loans,
or interest thereon, such benefited Lender shall purchase for cash from the
other Lenders a participating interest in such portion of each such other
Lender's Loan, or shall provide such other Lenders with the benefits of any such
collateral, or the proceeds thereof, as shall be necessary to cause such
benefited Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders; provided, however, that if all or any
portion of such excess payment or benefits is thereafter recovered from such
benefited
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Lender, such purchase shall be rescinded, and the purchase price and benefits
returned, to the extent of such recovery, but without interest. The Borrower
agrees that each Lender so purchasing a portion of another Lender's Loan may
exercise all rights of payment (including, without limitation, rights of
set-off) with respect to such portion as fully as if such Lender were the direct
holder of such portion.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to the Borrower, any
such notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise) to
set-off and appropriate and apply against such amount any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower. Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such set-off and application
made by such Lender, PROVIDED, that the failure to give such notice shall not
affect the validity of such set-off and application.
12.8 COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by facsimile transmission of signature pages hereto), and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Borrower and the Administrative Agent.
12.9 SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
12.10 INTEGRATION. This Agreement and the other Loan Documents
represent the agreement of the Borrower, the Administrative Agent and the
Lenders with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Lender relative to subject matter hereof not expressly set forth or referred to
herein or in the other Loan Documents.
12.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
12.12 SUBMISSION TO JURISDICTION; WAIVERS. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for
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recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of New York, the
courts of the United States of America for the Southern District of New York,
and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to the Borrower at its
address set forth in Section 12.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.
12.13 ACKNOWLEDGEMENTS. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower arising out of or in connection with
this Agreement or any of the other Loan Documents, and the relationship between
the Borrower and the other Loan Parties, on one hand, and Administrative Agent
and Lenders, on the other hand, in connection herewith or therewith is solely
that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among the Borrower and the Lenders.
12.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT
AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
12.15 CONFIDENTIALITY. Each Lender agrees to keep confidential any
written or oral information (a) provided to it by or on behalf of the Borrower
or any of its Subsidiaries
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pursuant to or in connection with this Agreement or (b) obtained by such Lender
based on a review of the books and records of the Borrower or any of its
Subsidiaries; PROVIDED, that nothing herein shall prevent any Lender from
disclosing any such information (i) to the Administrative Agent or any other
Lender, (ii) to any Transferee which agrees to comply with the provisions of
this Section 12.15, (iii) to its employees, directors, agents, attorneys,
accountants and other professional advisors, (iv) upon the request or demand of
any examiner or other Governmental Authority having jurisdiction over such
Lender, (v) in response to any order of any court or other Governmental
Authority or as may otherwise be required pursuant to any Requirement of Law,
(vi) which has been publicly disclosed other than in breach of this Agreement,
or (vii) in connection with the exercise of any remedy hereunder.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
THE MONARCH MACHINE TOOL
COMPANY
By:________________________________
Title:
ING (U.S.) CAPITAL LLC,
as Administrative Agent and as a Lender
By:________________________________
Title:
[Credit Agreement - Signature Page]
88
SCHEDULE 1.1
LENDERS, COMMITMENTS AND APPLICABLE LENDING OFFICES
-----------------------------------------------------------------------------------------------
Tranche A Tranche B
Lender and Lending Offices Term Loan Term Loan Revolving Credit
Commitment Commitment Commitment
-----------------------------------------------------------------------------------------------
ING (U.S.) CAPITAL LLC
Applicable Lending Offices:
Base Rate Loans and Eurodollar
Loans:
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxx
Telephone: 000-000-0000
Telecopy: 000-000-0000
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
Total:
$50,000,000 $20,000,000 $30,000,000
=========== =========== ===========
-----------------------------------------------------------------------------------------------
89
Schedule 2.2
SCHEDULED TRANCHE A TERM LOAN REPAYMENTS
The Tranche A Term Loans shall be repaid in 28 quarterly installments of
principal payable on the last day of each March, June, September and December,
commencing September 1999, each in the aggregate amount set forth below opposite
such installment (as they may be reduced in accordance with the terms of this
Agreement):
INSTALLMENT NO. AMOUNT
--------------- ------
1-4 $1,000,000
5-8 $1,250,000
9-12 $1,750,000
13-16 $1,750,000
17-20 $2,000,000
21-24 $2,250,000
25-28 $2,500,000
90
Schedule 2.4
SCHEDULED TRANCHE B TERM LOAN REPAYMENTS
The Tranche B Term Loans shall be repaid in 30 quarterly installments of
principal payable on the last day of each March, June, September and December,
commencing September 1999, each in the aggregate amount set forth below opposite
such installment (as they may be reduced in accordance with the terms of this
Agreement):
INSTALLMENT NO. AMOUNT
--------------- ------
1-28 $50,000
29-30 $9,300,000
