$45,000,000
CREDIT AGREEMENT
Dated as of
October 13, 1998
between
U.S. HOME & GARDEN INC.
and
BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION
TABLE OF CONTENTS
Section Page
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ARTICLE I DEFINITIONS 1
1.1 Certain Defined Terms 1
1.2 Other Interpretive Provisions 16
1.3 Accounting Principles 17
ARTICLE II THE CREDITS 18
2.1 Amounts and Terms of Commitments 18
2.2 Loan Accounts 18
2.3 Procedure for Borrowing 18
2.4 Conversion and Continuation Elections 19
2.5 Voluntary Termination or Reduction of Commitments 19
2.6 Optional Prepayments 20
2.7 Mandatory Prepayments of Loans; Mandatory Commitment
Reduction 20
2.8 Repayment 21
2.9 Interest 21
2.10 Fees 22
2.11 Computation of Fees and Interest 22
2.12 Payments by the Borrower 23
2.13 Security and Guaranty 23
2.14 Letters of Credit 23
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY 27
3.1 Taxes 27
3.2 Illegality 28
3.3 Increased Costs and Reduction of Return 28
3.4 Funding Losses 29
3.5 Inability to Determine Rates 29
3.6 Certificates of Bank 30
3.7 Survival 30
ARTICLE IV CONDITIONS PRECEDENT 30
4.1 Conditions of Initial Loans 30
4.2 Conditions to All Loans 32
ARTICLE V REPRESENTATIONS AND WARRANTIES 33
5.1 Corporate Existence and Power 33
5.2 Corporate Authorization; No Contravention 33
5.3 Governmental Authorization 34
5.4 Binding Effect 34
5.5 Litigation 34
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5.6 No Default 34
5.7 ERISA Compliance 34
5.8 Use of Proceeds; Margin Regulations 35
5.9 Title to Properties 35
5.10 Taxes 35
5.11 Financial Condition 35
5.12 Environmental Matters 36
5.13 Collateral Documents 36
5.14 Regulated Entities 36
5.15 No Burdensome Restrictions 37
5.16 Copyrights, Patents, Trademarks and Licenses, etc. 37
5.17 Subsidiaries 37
5.18 Insurance 37
5.19 Solvency 37
5.20 Swap Obligations 37
5.21 Full Disclosure 37
5.22 Year 2000 38
ARTICLE VI AFFIRMATIVE COVENANTS 38
6.1 Financial Statements 38
6.2 Certificates; Other Information 39
6.3 Notices 39
6.4 Preservation of Corporate Existence, Etc 41
6.5 Maintenance of Property 41
6.6 Insurance 41
6.7 Payment of Obligations 42
6.8 Compliance with Laws 42
6.9 Compliance with ERISA 42
6.10 Inspection of Property and Books and Records 42
6.11 Environmental Laws 42
6.12 Use of Proceeds 43
6.13 Guarantors 43
6.14 Further Assurances 43
ARTICLE VII NEGATIVE COVENANTS 43
7.1 Limitation on Liens 44
7.2 Disposition of Assets 45
7.3 Consolidations and Mergers 45
7.4 Loans and Investments 46
7.5 Limitation on Indebtedness 47
7.6 Transactions with Affiliates 47
7.7 Use of Proceeds 47
7.8 Contingent Obligations 47
7.9 Joint Ventures 48
7.10 Lease Obligations 48
7.11 Restricted Payments 48
7.12 ERISA 48
7.13 Change in Business 49
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7.14 Accounting Changes 49
7.15 Subordinated Debt 49
7.16 Restrictive Agreements 49
7.17 Limitation on Voluntary Payments of Indebtedness 49
7.18 Financial Covenants 49
ARTICLE VIII EVENTS OF DEFAULT 50
8.1 Event of Default 50
8.2 Remedies 52
8.3 Rights Not Exclusive 53
ARTICLE IX MISCELLANEOUS 53
9.1 Amendments and Waivers 53
9.2 Notices 53
9.3 No Waiver; Cumulative Remedies 53
9.4 Costs and Expenses 53
9.5 Borrower Indemnification 54
9.6 Marshalling; Payments Set Aside 54
9.7 Successors and Assigns 55
9.8 Confidentiality 55
9.9 Set-off 55
9.10 Automatic Debits of Fees 55
9.11 Counterparts; Facsimile Signatures 56
9.12 Severability 56
9.13 No Third Parties Benefited 56
9.14 Governing Law and Jurisdiction 56
9.15 Arbitration 56
9.16 Entire Agreement 58
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SCHEDULES
Schedule 5.5 Litigation
Schedule 5.11 Permitted Liabilities
Schedule 5.12 Environmental Matters
Schedule 5.17 Subsidiaries and Minority Interests
Schedule 7.1 Permitted Liens
Schedule 7.5 Permitted Indebtedness
Schedule 7.6 Affiliate Transactions
Schedule 7.8 Contingent Obligations
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Legal Opinion of Borrower's Counsel
Exhibit E Form of Guaranty
Exhibit F Form of Security Agreement
Exhibit G Form of Perfection Certificate
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CREDIT AGREEMENT
This CREDIT AGREEMENT, dated as of October 13, 1998, is between U.S. HOME &
GARDEN INC., a Delaware corporation (the "Borrower"), and BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION (the "Bank").
In consideration of the mutual agreements, provisions and covenants herein
contained, the parties agree as follows:
ARTICLE I DEFINITIONS
1.1 Certain Defined Terms. The following terms have the following meanings:
"Acquisition" means any transaction or series of related transactions for
the purpose of or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of a Person, or of any business or
division of a Person, (b) the acquisition of in excess of 50% of the capital
stock, partnership interests, membership interests or equity of any Person, or
otherwise causing any Person to become a Subsidiary, or (c) a merger or
consolidation or any other combination with another Person (other than a Person
that is a Subsidiary) provided that the Borrower or the Subsidiary is the
surviving entity.
"Affiliate" means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, membership interests, by contract,
or otherwise.
"Agreement" means this Credit Agreement.
"Ampro" means Ampro Industries, Inc., a Michigan corporation.
"Ampro Acquisition" means the acquisition by the Borrower of the
outstanding capital stock of Ampro pursuant to, and on the terms set forth in,
the documents with respect to such acquisition, in the form previously provided
to the Bank with such changes as the Bank shall have approved, for a total
consideration of approximately $29,000,000 plus Earn-out Amounts.
"Applicable Margin" means
(i) with respect to Facility 1 Loans:
(A) for Base Rate Loans, 0.375%;
(B) for Offshore Rate Loans, 1.625%
(i) with respect to Facility 2 Loans:
(A) for Base Rate Loans, 0.125%;
(B) for Offshore Rate Loans, 1.375%
"Attorney Costs" means and includes all fees and disbursements of any law
firm or other external counsel, the allocated cost of internal legal services
and all disbursements of internal counsel.
"Bank" has the meaning set forth in the introductory clause hereto.
"Bank-Related Persons" means the Bank, together with its affiliates, and
the officers, directors, employees, agents and attorneys-in-fact of the Bank and
such Affiliates.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. 101, et seq.).
"Base Rate" means, for any day, the higher of: (a) 0.50% per annum above
the latest Federal Funds Rate; and (b) the rate of interest in effect for such
day as publicly announced from time to time by the Bank in San Francisco,
California, as its "reference rate." (The "reference rate" is a rate set by the
Bank based upon various factors including the Bank's costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate.) Any change in the reference rate announced by the Bank shall take effect
at the opening of business on the day specified in the public announcement of
such change.
"Base Rate Loan" means a Loan that bears interest based on the Base Rate.
"Borrowing Date" means any date on which a Loan occurs under Section 2.3.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks in New York City or San Francisco are authorized or
required by law to close and, if the applicable Business Day relates to any
Offshore Rate Loan, means such a day on which dealings are carried on in the
applicable offshore dollar interbank market.
"Capital Adequacy Regulation" means any guideline, request or directive of
any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.
"Cash Collateralize" means to pledge and deposit with or deliver to the
Bank, as additional collateral for the Obligations, cash or deposit account
balances pursuant to documentation in form and substance satisfactory to the
Bank. Derivatives of such term shall have corresponding meanings. The Borrower
hereby grants to the Bank a security interest in all such cash and deposit
account balances. Cash collateral shall be maintained in blocked, non-interest
bearing deposit accounts at the Bank.
"CERCLA" has the meaning specified in the definition of "Environmental
Laws."
"Change of Control" means the election of directors constituting a majority
of the Board of Directors of the Borrower who have not been nominated or
approved by a majority of Xxxxxx Xxxxxx, Xxxxxxx Xxxxxx, and Xxxxxxx Xxxxxxx.
"Closing Date" means the date on which all conditions precedent set forth
in Section 4.1 are satisfied or waived by the Bank.
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"Collateral" means all property and interests in property and proceeds
thereof now owned or hereafter acquired by the Borrower and its Subsidiaries in
or upon which a Lien now or hereafter exists in favor of the Bank, whether under
this Agreement or under any other documents executed by any such Person and
delivered to the Bank.
"Collateral Documents" means, collectively, (i) the Security Agreement and
all other security agreements, mortgages, deeds of trust, patent and trademark
assignments, lease assignments, guarantees and other similar agreements between
the Borrower or any Subsidiary or any Guarantor and the Bank now or hereafter
delivered to the Bank pursuant to or in connection with the transactions
contemplated hereby, and all financing statements (or comparable documents now
or hereafter filed in accordance with the UCC or comparable law) against the
Borrower or any Subsidiary or any Guarantor as debtor in favor of the Bank as
secured party, and (ii) any amendments, supplements, modifications, renewals,
replacements, consolidations, substitutions and extensions of any of the
foregoing.
"Commitment" means the Facility 1 Commitment or the Facility 2 Commitment.
"Compliance Certificate" means a certificate substantially in the form of
Exhibit C.
"Consolidated EBITDA" means, for any period for the Borrower and its
Subsidiaries on a consolidated basis, the sum of net income plus the provision
for income tax expense, plus gross interest expense, plus depreciation, plus
non-cash amortization, plus losses (or minus gains) on fixed asset sales, minus
extraordinary income, plus Consolidated Non-cash Extraordinary Losses; provided
that for the purpose of calculating the Leverage Ratio for any period during
which an Acquisition occurred, to the extent recent audited financial
statements, prepared by accountants of recognized national standing reasonable
acceptable to the Bank, are available for the target in such Acquisition,
Consolidated EBITDA for such period shall include the relevant financial results
for the target for such period (with any adjustments to audited actuals for
non-recurring income or expenses satisfactory to the Bank).
"Consolidated EBITDA (Ampro Adjusted)" means for any period beginning
before September 30, 1998, the sum of Consolidated EBITDA for such period plus
the product of $875,000 multiplied by the number of fiscal quarters in such
period ending on or before September 30, 1998, and (b) for any period beginning
on or after October 1, 1998, Consolidated EBITDA.
"Consolidated Fixed Charges" means, for any period for the Borrower and its
Subsidiaries on a consolidated basis, Consolidated Interest Expense (less, to
the extent included in such Consolidated Interest Expense, the prepayment
penalty paid by the Borrower to Provident Bank in the amount of $765,000) plus
scheduled principal payments in respect of indebtedness, plus scheduled payments
in respect of capital leases, plus cash payments on capitalized covenants not to
compete, earn-up or earn-out agreements or obligations of a similar type.
"Consolidated Funded Debt" means at any time for the Borrower and its
Subsidiaries on a consolidated basis, all Indebtedness and Contingent
Obligations of the Borrower and its Subsidiaries.
"Consolidated Interest Expense" means, for any period for the Borrower and
its Subsidiaries on a consolidated basis, (a) the aggregate amount of interest
accrued or paid (without duplication) by Borrower and its Subsidiaries during
such period including (i) any interest accrued or paid during such period which
is capitalized in accordance with GAAP, (ii) the portion of any
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obligation under capital leases allocable to interest expense in accordance with
GAAP, and (iii) the portion of any debt discount that shall be amortized in such
period, plus (b) the net amount, if any, payable by Borrower or its Subsidiaries
pursuant to any Swap Contracts during such period, minus (c) the net amount, if
any, payable to Borrower and its Subsidiaries pursuant to any Swap Contract
during such period.
"Consolidated Interest Expense (Ampro Adjusted)" means for any four fiscal
quarter period beginning before September 30, 1998, the product of (a)
Consolidated Interest Expense for that portion of such period which is in the
1999 fiscal year and (b) (i) 4.00 if only one fiscal quarter of the 1999 fiscal
year is in such period, (ii) 2.00 if only two fiscal quarters of the 1999 fiscal
year are in such period, and (iii) 1.33 if three fiscal quarters of the 1999
fiscal year are in such period.
"Consolidated Net Capital Expenditures" means for any period for the
Borrower and its Subsidiaries on a consolidated basis (a) the capital
expenditures as the same are (or would in accordance with GAAP be) set forth in
a consolidated statement of changes in financial position or cash flows of
Borrower and its Subsidiaries for such period less (b) Indebtedness permitted
hereby and actually incurred to defray the cost of such capital expenditures.
"Consolidated Non-cash Extraordinary Losses" means, for any period for the
Borrower and its Subsidiaries on a consolidated basis, non-cash extraordinary
losses attributable to the write-down in book value of fixed assets and other
non-cash extraordinary losses the Bank determines do and will not have an
adverse effect on Consolidated EBITDA during the period from the Closing Date to
the Facility 1 Maturity Date.
"Contingent Obligation" means, as to any Person, any direct or indirect
liability of that Person, whether or not contingent, with or without recourse,
(a) with respect to any Indebtedness, lease, dividend, letter of credit or other
obligation (the "primary obligations") of another Person (the "primary
obligor"), including any obligation of that Person (i) to purchase, repurchase
or otherwise acquire such primary obligations or any security therefor, (ii) to
advance or provide funds for the payment or discharge of any such primary
obligation, or to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
item, level of income or financial condition 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 holder of any such primary obligation against loss in respect
thereof (each, a "Guaranty Obligation"); (b) with respect to any Surety
Instrument issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings or payments; (c) to purchase any
materials, supplies or other property from, or to obtain the services of,
another Person if the relevant contract or other related document or obligation
requires that payment for such materials, supplies or other property, or for
such services, shall be made regardless of whether delivery of such materials,
supplies or other property is ever made or tendered, or such services are ever
performed or tendered, or (d) in respect of any Swap Contract. The amount of any
Contingent Obligation shall, in the case of Guaranty Obligations, be deemed
equal to the stated or determinable amount of the primary obligation in respect
of which such Guaranty Obligation is made or, if not stated or if
indeterminable, the maximum reasonably anticipated liability in respect thereof,
and in the case of other Contingent Obligations other than in respect of Swap
Contracts, shall be equal to the maximum reasonably anticipated liability in
respect thereof and, in the case of Contingent Obligations in respect of Swap
Contracts, shall be equal to the Swap Termination Value.
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"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement to
which such Person is a party or by which it or any of its property is bound.
"Conversion/Continuation Date" means any date on which, under Section 2.4,
the Borrower (a) converts Loans of one Type to another Type, or (b) continues as
Loans of the same Type, but with a new Interest Period, Loans having Interest
Periods expiring on such date.
"Default" means (a) any Event of Default or (b) any event or circumstance
which, with the giving of notice, the lapse of time, or both, would (if not
cured or otherwise remedied during such time) constitute an Event of Default.
"Disposition" means (i) the sale, lease, conveyance or other disposition of
property, other than sales or other dispositions expressly permitted under
subsection 7.2(a) or 7.2(b), and (ii) the sale or transfer by the Borrower or
any Subsidiary of the Borrower of any equity securities issued by any Subsidiary
of the Borrower and held by such transferor Person.
"Dollars," "dollars" and "$" each mean lawful money of the United States.
"Earn-out Amounts" means for any Acquisition by the Borrower or any of its
Subsidiaries, actual amounts paid and the amount of payments that such Person is
obligated to make in the future under any covenant not to compete, consulting
agreements, earn-up or earn-out agreements and other deferred payment
obligations incurred in connection with such Acquisition (the amount of any
future payments that such Person is obligated to pay but has not yet paid as of
the date of calculation may be estimated by the Borrower applying reasonable
assumptions and facts known to the Borrower at the time of calculation and
discounted to present value using the Base Rate as in effect on the date of
determination).
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment or threat to public health, personal injury (including
sickness, disease or death), property damage, natural resources damage, or
otherwise alleging liability or responsibility for damages (punitive or
otherwise), cleanup, removal, remedial or response costs, restitution, civil or
criminal penalties, injunctive relief, or other type of relief, resulting from
or based upon the presence, placement, discharge, emission or release (including
intentional and unintentional, negligent and non-negligent, sudden or
non-sudden, accidental or non-accidental, placement, spills, leaks, discharges,
emissions or releases) of any Hazardous Material at, in, or from Property,
whether or not owned by the Borrower.
"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.
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"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" means the Borrower and any trade or business (whether or
not incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the IRC (and Sections 414(m) and (o) of the IRC for
purposes of provisions relating to Section 412 of the IRC).
"ERISA Event" means (a) a Reportable Event with respect to a Pension Plan;
(b) a withdrawal by any ERISA Affiliate from a Pension Plan subject to Section
4063 of ERISA during a plan year in which it was a substantial employer (as
defined in Section 4001(a)(2) of ERISA) or a cessation of operations which is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by any ERISA Affiliate from a Multiemployer Plan or
notification that a Multiemployer Plan is in reorganization; (d) the filing of a
notice of intent to terminate, the treatment of a Plan amendment as a
termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e)
an event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than PBGC premiums
due but not delinquent under Section 4007 of ERISA, upon any ERISA Affiliate.
"Eurodollar Reserve Percentage" has the meaning specified in the definition
of "Offshore Rate".
"Event of Default" means any of the events or circumstances specified in
Section 8.1.
"Event of Loss" means, with respect to any property, any of the following:
(a) any loss, destruction or damage of such property; (b) any pending or
threatened institution of any proceedings for the condemnation or seizure of
such property or for the exercise of any right of eminent domain; or (c) any
actual condemnation, seizure or taking, by exercise of the power of eminent
domain or otherwise, of such property, or confiscation of such property or the
requisition of the use of such property.
"Excess Cash" means, for any period, for the Borrower and its Subsidiaries
on a consolidated basis, the sum, without duplication, of net income for such
period, plus income tax expense for the period, plus gross cash interest expense
for such period, plus depreciation and amortization expense for such period,
minus non-cash extraordinary income or gains for such period, plus non-cash
extraordinary expenses and losses for such period, minus gains on sales of fixed
assets during such period, plus losses on sale of fixed assets during such
period, minus capital expenditures for such period (net of the net proceeds of
purchase money financing) plus net proceeds from the sale of fixed assets during
such period, minus income taxes payable in respect to the period, minus gross
interest expense for such period, minus scheduled principal payments during such
period, minus cash payments during such period in respect of covenants not to
compete, consulting agreements, "earn-out" and "earn-up" agreements and other
deferred payment obligations entered into in connection with Acquisitions
permitted by Section 7.4 (d), to the extent such payments do not result in a
reduction of net income.
"Exchange Act" means the Securities Exchange Act of 1934.
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"Facility 1 Commitment" means the agreement of the Bank to lend under
Section 2.1(a) in an aggregate amount at any time outstanding not exceeding
$25,000,000, less the cumulative amounts of all reductions in the Facility 1
Commitment pursuant to Section 2.5 or Section 2.7.
"Facility 1 Loan" has the meaning set forth in Section 2.1(a).
"Facility 1 Maturity Date" means September 30, 2004.
"Facility 2 Commitment" means the agreement of the Bank to lend under
Section 2.1(b) in an aggregate amount at any time outstanding not exceeding
$20,000,000, less the cumulative amounts of all reductions in the Facility 2
Commitment pursuant to Section 2.5.
"Facility 2 Loan" has the meaning set forth in Section 2.1(b).
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor,
"H.15(519)") on the preceding Business Day opposite the caption "Federal Funds
(Effective)"; or, if for any relevant day such rate is not so published on any
such preceding Business Day, the rate for such day will be the arithmetic mean
as determined by the Bank of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 a.m. (New York City time) on that day by
each of three leading brokers of Federal funds transactions in New York City
selected by the Bank.
"Fee Letter" has the meaning specified in subsection 2.10(a).
"Financial Projections" means, with respect to any period beginning on any
date and ending on September 30, 2004, for the Borrower and its Subsidiaries on
a consolidating and consolidated basis, the Borrower's financial plan and
projected results of operations for such period, including projected balance
sheets, income statements, cashflows, and capital expenditures, together with a
statement of the assumptions on which such projections are based, anticipated
compliance levels with respect to the financial tests of Section 7.18, and such
other matters and in such detail as the Bank may reasonably request, all
prepared on a basis consistent with the financial statements most recently
delivered to the Banks pursuant to Section 6.1 or Section 5.11 as applicable and
otherwise in form and substance satisfactory to the Bank, and accompanied by a
certificate of a Responsible Officer of Borrower addressed to the Bank and to
the effect that such projections present fairly the anticipation of the
Borrower's management with respect to the financial performance of the Borrower
on a consolidated basis for the period in question, have been prepared based on
the assumptions which the Borrower's management believes are reasonable based on
current information, and were based on the information known to the Borrower as
of the date of preparation or revision thereof. All Financial Projections shall
be on a fiscal quarterly basis for the first full fiscal year covered thereby
(and for any portion of the preceding fiscal year covered by such projections)
and shall be on a fiscal year basis for the fiscal years following the first
full fiscal year included in such projections.
"Fixed Charge Coverage Ratio" means for any period for the Borrower and its
Subsidiaries on a consolidated basis the ratio of (a) Consolidated EBITDA less
Consolidated Net Capital Expenditures less consolidated cash taxes to (b)
Consolidated Fixed Charges.
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"FRB" means the Board of Governors of the Federal Reserve System, and any
Governmental Authority succeeding to any of its principal functions.
"Further Taxes" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar charges
(including, without limitation, net income taxes and franchise taxes), and all
liabilities with respect thereto, imposed by any jurisdiction on account of
amounts payable or paid pursuant to Section 3.1.
"GAAP" means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Guarantor" means any Person which is a Party to the Guaranty as a
guarantor.
"Guaranty" means the Guaranty substantially in the form of Exhibit E with
such changes as the Bank shall have approved.
"Guaranty Obligation" has the meaning specified in the definition of
"Contingent Obligation."
"Hazardous Materials" means all those substances that are regulated by, or
which may form the basis of liability under, any Environmental Law, including
any substance identified under any Environmental Law as a pollutant,
contaminant, hazardous waste, hazardous constituent, special waste, hazardous
substance, hazardous material, or toxic substance, or petroleum or petroleum
derived substance or waste.
"Indebtedness" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than
accounts payable entered into in the ordinary course of business on ordinary
terms, accrued expenses, accrued co-op advertising, and accrued commissions);
(c) all non-contingent reimbursement or payment obligations with respect to
Surety Instruments; (d) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses; (e) all indebtedness
created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to property
acquired by the Person (even though the rights and remedies of the seller or
bank under such agreement in the event of default are limited to repossession or
sale of such property); (f) all obligations with respect to capital leases; (g)
Earn-out Amounts payable by such person, (h) all indebtedness referred to in
clauses (a) through (g) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property (including accounts and contracts rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of
-8-
such Indebtedness; and (h) all Guaranty Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (a) through (g)
above.
"Indemnified Liabilities" has the meaning specified in Section 9.5.
"Indemnified Person" has the meaning specified in Section 9.5.
"Independent Auditor" has the meaning specified in subsection 6.1(a).
"Initial Financial Projections" means the financial projections delivered
by the Borrower pursuant to Section 4.1(f).
"Insolvency Proceeding" means, with respect to any Person, (a) any case,
action or proceeding with respect to such Person before any court or other
Governmental Authority relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up or relief of debtors, or (b)
any general assignment for the benefit of creditors, composition, marshalling of
assets for creditors, or other, similar arrangement in respect of its creditors
generally or any substantial portion of its creditors; undertaken under U.S.
Federal, state or foreign law, including the Bankruptcy Code.
"Interest Coverage Ratio" means for any period for the Borrower and its
Subsidiaries on a consolidated basis the ratio of (a) Consolidated EBITDA (Ampro
Adjusted) to (b) Consolidated Interest Expense (Ampro Adjusted) (less, to the
extent included in such Consolidated Interest Expense, the prepayment penalty
paid by the Borrower to Provident Bank in the amount of $765,000) for such
period.
"Interest Payment Date" means, as to any Loan, the last Business Day of
each calendar month and each date such Loan is converted into another Type of
Loan, and as to an Offshore Rate Loan, the last day of each Interest Period
applicable to such Loan.
"Interest Period" means, as to any Offshore Rate Loan, the period
commencing on the Borrowing Date of such Loan or on the Conversion/Continuation
Date on which the Loan is converted into or continued as an Offshore Rate Loan,
and ending on the date one, two, three or six months thereafter (and any other
period that is 12 months or less and is consented to by the Bank in the given
instance) as selected by the Borrower in its Notice of Borrowing or Notice of
Conversion/Continuation;
provided that:
(i) if any Interest Period would otherwise end on a day that is not a
Business Day, that Interest Period shall be extended to the following
Business Day unless, in the case of an Offshore Rate Loan, 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 preceding
Business Day;
(ii) any Interest Period pertaining to an Offshore Rate 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 the calendar
month at the end of such Interest Period;
-9-
(iii) no Interest Period for any Facility 1 Loan shall extend beyond
the Facility 1 Maturity Date and no Interest Period for any Facility 2 Loan
shall extend beyond the Revolving Termination Date (as in effect on the
date of commencement of such Interest Period); and
(iv) no Interest Period applicable to a Facility 1 Loan or portion
thereof shall extend beyond any date upon which is due any scheduled
principal payment in respect of the Facility 1 Loans unless the aggregate
principal amount of Facility 1 Loans represented by Base Rate Loans, or by
Offshore Rate Loans having Interest Periods that will expire on or before
such date, equals or exceeds the amount of such principal payment.
"IRC" means the Internal Revenue Code of 1986.
"IRS" means the Internal Revenue Service, and any Governmental Authority
succeeding to any of its principal functions under the IRC.
"Issuance Date" has the meaning specified in Section 2.14(a).
"Issue" means, with respect to any Letter of Credit, to issue or to extend
the expiry of, or to renew or increase the amount of, such Letter of Credit; and
the terms "Issued," "Issuing" and "Issuance" have corresponding meanings.
"Joint Venture" means a partnership, limited liability company, joint
venture or other similar legal arrangement (whether created by contract or
conducted through a separate legal entity) now or hereafter formed by the
Borrower or any of its Subsidiaries with another Person in order to conduct a
common venture or enterprise with such Person.
"L/C Advance" means an extension of credit resulting from a drawing under
any Letter of Credit which shall not have been reimbursed on the date when made
nor converted into a Loan under Section 2.14(c)(ii).
"L/C Amendment Application" means an application form for amendment of
outstanding standby or commercial documentary letters of credit as shall at any
time be in use at the Bank, as the Bank shall request.
"L/C Application" means an application form for issuances of standby or
commercial documentary letters of credit as shall at any time be in use at the
Bank, as the Bank shall request.
"L/C Commitment" means the commitment of the Bank to Issue Letters of
Credit from time to time Issued or outstanding under Section 2.14, in an
aggregate amount not to exceed on any date the amount of $5,000,000, as the same
shall be reduced as a result of a reduction in the L/C Commitment pursuant to
Section 2.5; provided that the L/C Commitment is a part of the Facility 2
Commitment, rather than a separate, independent commitment.
"L/C Obligations" means at any time the sum of (a) the aggregate undrawn
amount of all Letters of Credit then outstanding, plus (b) the amount of all
unreimbursed drawings under all Letters of Credit, including all outstanding L/C
Advances.
"L/C-Related Documents" means the Letters of Credit, the L/C Applications,
the L/C Amendment Applications and any other document relating to any Letter of
Credit, including any of the Bank's standard form documents for letter of credit
issuances.
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"Lending Office" means the office or offices of the Bank specified as its
"Lending Office" or "Domestic Lending Office" or "Offshore Lending Office", as
the case may be, on the signature pages hereof, or such other office or offices
as the Bank may from time to time notify the Borrower and the Bank.
"Letters of Credit" means any letters of credit (whether standby letters of
credit or commercial documentary letters of credit) Issued by the Bank pursuant
to Section 2.14.
"Leverage Ratio" means for any period for the Borrower and its Subsidiaries
on a consolidated basis the ratio of (a) Consolidated Funded Debt as at the end
of such period to (b) Consolidated EBITDA (Ampro Adjusted).
"Lien" means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising under
or evidenced by any conditional sale or other title retention agreement, the
interest of a lessor under a capital lease, any financing lease having
substantially the same economic effect as any of the foregoing, or the filing of
any financing statement naming the owner of the asset to which such lien relates
as debtor, under the UCC or any comparable law) and any contingent or other
agreement to provide any of the foregoing.
"Loan" means an extension of credit by the Bank to the Borrower under
Article II, and may be a Base Rate Loan, or an Offshore Rate Loan (each, a
"Type" of Loan), and includes any Facility 1 Loan or Facility 2 Loan.
"Loan Documents" means this Agreement, the Collateral Documents, the Fee
Letters, and all other documents delivered to the Bank in connection with the
transactions contemplated by this Agreement.
"Major Customer" means at any time any customer of the Borrower or any of
its Subsidiaries which in the preceding 12 months has accounted for 20% or more
of the consolidated sales of the Borrower and its Subsidiaries.
"Margin Stock" means "margin stock" as such term is defined in Regulation U
of the FRB.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, financial
condition, financial prospects of the Borrower and its Subsidiaries taken as a
whole; (b) a material impairment of the ability of the Borrower or any Guarantor
to perform under any Loan Document and to avoid any Event of Default; or (c) an
adverse effect upon (i) the legality, validity, binding effect or enforceability
against the Borrower or any Guarantor of any Loan Document which materially
impairs the Bank's ability to collect the Loans or exposes the Bank to loss or
liability, or (ii) the perfection or priority of any Lien granted under any of
the Collateral Documents as to any material portion of the Collateral.
"Multiemployer Plan" means a "multiemployer plan," within the meaning of
Section 4001(a)(3) of ERISA, to which any ERISA Affiliate makes, is making, or
is obligated to make contributions or, during the preceding three calendar
years, has made, or been obligated to make, contributions.
-11-
"Net Issuance Proceeds" means, as to any issuance of debt or equity by any
Person, cash proceeds and non-cash proceeds received or receivable by such
Person in connection therewith, net of out-of-pocket costs and expenses paid or
incurred in connection therewith in favor of any Person not an Affiliate of such
Person.
"Net Proceeds" means, as to any Disposition by a Person, proceeds in cash,
checks or other cash equivalent financial instruments as and when received by
such Person, net of: (a) the direct costs relating to such Disposition excluding
amounts payable to such Person or any Affiliate of such Person, (b) sale, use or
other transaction taxes and capital gains taxes paid or payable by such Person
as a direct result thereof, and (c) amounts required to be applied to repay
principal, interest and prepayment premiums and penalties on Indebtedness
secured by a Lien on the asset which is the subject of such Disposition and
which was incurred to finance the acquisition of such asset. "Net Proceeds"
shall also include proceeds paid on account of any Event of Loss, net of (i) all
money actually applied to repair or reconstruct the damaged property or property
affected by the condemnation or taking, (ii) all of the costs and expenses
actually incurred in connection with the collection of such proceeds, award or
other payments, and (iii) any amounts retained by or paid to parties having
superior rights to such proceeds, awards or other payments.
"Notice of Borrowing" means a notice in substantially the form of Exhibit
A.
"Notice of Conversion/Continuation" means a notice in substantially the
form of Exhibit B.
"Obligations" means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document owing by the Borrower to
the Bank, or any Indemnified Person, whether direct or indirect (including those
acquired by assignment), absolute or contingent, due or to become due, now
existing or hereafter arising.
"Offshore Rate" means, for any Interest Period, with respect to an Offshore
Rate Loan, the rate of interest per annum (rounded upward to the next 1/16th of
1%) determined by the Bank as follows:
Offshore Rate = LIBOR
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any Interest Period
the maximum reserve percentage (expressed as a decimal, rounded upward to the
next 1/100th of 1%) in effect on such day under regulations issued from time to
time by the FRB for determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement) with respect to
Eurocurrency funding (currently referred to as "Eurocurrency liabilities"); and
"LIBOR" means the rate of interest per annum determined by the Bank to be
the rate of interest (rounded upward to the next 1/16th of 1%)at which dollar
deposits in the approximate amount of the amount of the Loan to be made or
continued as, or converted into, an Offshore Rate Loan and having a maturity
comparable to such Interest Period would be offered by the Bank to major banks
in the London interbank market at their request at approximately 11:00 a.m.
(London time) two Business Days prior to the commencement of such Interest
Period.
-12-
The Offshore Rate shall be adjusted automatically as to all Offshore Rate
Loans then outstanding as of the effective date of any change in the Eurodollar
Reserve Percentage.
"Offshore Rate Loan" means a Loan that bears interest based on the Offshore
Rate.
"Organization Documents" means, for any corporation, the certificate or
articles of incorporation, the bylaws, any certificate of determination or
instrument relating to the rights of preferred shareholders of such corporation,
any shareholder rights agreement, and all applicable resolutions of the board of
directors (or any committee thereof) of such corporation.
"Other Taxes" means any present or future stamp, court or documentary taxes
or any other excise or property taxes, charges or similar levies which arise
from any payment made hereunder or from the execution, delivery, performance,
enforcement or registration of, or otherwise with respect to, this Agreement or
any other Loan Documents.
"PBGC" means the Pension Benefit Guaranty Corporation, or any Governmental
Authority succeeding to any of its principal functions under ERISA.
"Pension Plan" means a pension plan (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA which the Borrower sponsors, maintains, or to which
it makes, is making, or is obligated to make contributions, or in the case of a
multiple employer plan (as described in Section 4064(a) of ERISA) has made
contributions at any time during the immediately preceding five (5) plan years.
"Perfection Certificate" means the certificate by the Borrower or a
Subsidiary in the form attached hereto as Exhibit G, with such changes as the
Bank shall approve.
"Permitted Liens" has the meaning specified in Section 7.1.
"Permitted Swap Obligations" means Swap Contracts entered into by the
Borrower or its Subsidiaries with the Bank or other swap providers of recognized
standing for the purpose of hedging interest rate and foreign exchange risk (and
not for speculative purposes) and which have an aggregate notional amount not
exceeding $10,000,000.
"Person" means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA)
which the Borrower sponsors or maintains or to which the Borrower makes, is
making, or is obligated to make contributions and includes any Pension Plan.
"Reportable Event" means, any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder, other than any such event for which the
30-day notice requirement under ERISA has been waived in regulations issued by
the PBGC.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
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"Responsible Officer" means the chief executive officer or the president of
the Borrower, or any other officer having substantially the same authority and
responsibility; or, with respect to compliance with financial covenants, the
chief financial officer or the treasurer of the Borrower, or any other officer
having substantially the same authority and responsibility.
"Revolving Termination Date" means the earlier to occur of:
(a) October 15, 2001, and
(b) the date on which the Commitments terminate in accordance with the
provisions of this Agreement.
"Security Agreement" means the security agreement between the Borrower, the
Guarantors and the Bank in substantially the form of Exhibit F with such changes
as the Bank shall have approved.
"SEC" means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.
"Solvent" means, as to any Person at any time, that (a) the fair value of
the property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(31) of the Bankruptcy Code and, in the alternative, for purposes of the
California Uniform Fraudulent Transfer Act; (b) the present fair saleable value
of the property of such Person is not less than the amount that will be required
to pay the probable liability of such Person on its debts as they become
absolute and matured; (c) such Person is able to realize upon its property and
pay its debts and other liabilities (including disputed, contingent and
unliquidated liabilities) as they mature in the normal course of business; (d)
such Person does not intend to, and does not believe that it will, incur debts
or liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (e) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.
"Subordinated Debt" means the Indebtedness outstanding pursuant to the
Subordinated Debt Documents.
"Subordinated Debt Documents" means (a) the Borrower's Junior Subordinated
Indenture, dated as of April 17, 1998, between the Borrower and Wilmington Trust
Company, trustee, (b) the Borrower's 9.40% Junior Subordinated Deferrable
Interest Debenture due April 15, 2028, in the original principal amount of
$65,200,000, and (c) the Guarantee Agreement between the Borrower and Wilmington
Trust Company, trustee, dated as of April 17, 1998.
"Subsidiary" of a Person means any corporation , association, partnership,
limited liability company, joint venture or other business entity of which more
than 50% of the voting stock, membership interests or other equity interests (in
the case of Persons other than corporations), is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly requires, references
herein to a "Subsidiary" refer to a Subsidiary of the Borrower.
"Surety Instruments" means all letters of credit (including standby and
commercial), banker's acceptances, bank guaranties, shipside bonds, surety bonds
and similar instruments.
-14-
"Swap Contract" means any agreement, whether or not in writing, relating to
any transaction that is a rate swap, basis swap, forward rate transaction,
commodity swap, commodity option, equity or equity index swap or option, bond,
note or xxxx option, interest rate option, forward foreign exchange transaction,
cap, collar or floor transaction, currency swap, cross-currency rate swap,
swaption, currency option or any other, similar transaction (including any
option to enter into any of the foregoing) or any combination of the foregoing,
and, unless the context otherwise clearly requires, any master agreement
relating to or governing any or all of the foregoing.
"Swap Termination Value" means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a) the amount(s) determined as the
xxxx-to-market value(s) for such Swap Contracts, as determined by the Bank based
upon one or more mid-market or other readily available quotations provided by
any recognized dealer in such Swap Contracts (which may include the Bank).
"Taxes" means any and all present or future taxes, levies, assessments,
imposts, duties, deductions, fees, withholdings or similar charges, and all
liabilities with respect thereto, excluding, in the case of the Bank, taxes
imposed on or measured by its net income by the jurisdiction (or any political
subdivision thereof) under the laws of which the Bank is organized or maintains
a lending office.
"Type" has the meaning specified in the definition of "Loan."
"UCC" means the Uniform Commercial Code as in effect in the relevant
jurisdiction.
"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the IRC for the applicable plan
year.
"United States" and "U.S." each means the United States of America.
"Wholly-Owned Subsidiary" means any corporation in which (other than
directors' qualifying shares required by law) 100% of the capital stock of each
class having ordinary voting power, and 100% of the capital stock of every other
class, in each case, at the time as of which any determination is being made, is
owned, beneficially and of record, by the Borrower, or by one or more of the
other Wholly-Owned Subsidiaries, or both.
"Year 2000 Problem" means the inability of computers (either hardware or
software), as well as embedded microchips in non-computing devices, to perform
properly date-sensitive functions with respect to certain dates prior to and
after December 31, 1999.
1.2 Other Interpretive Provisions. (a) The meanings of defined terms are
equally applicable to the singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar words refer to
this Agreement as a whole and not to any particular provision of this Agreement;
and subsection, Section, Schedule and Exhibit references are to this Agreement
unless otherwise specified.
-15-
(c) (i) The term "documents" includes any and all instruments, documents,
agreements, certificates, indentures, notices and other writings, however
evidenced.
(ii) The term "including" is not limiting and means "including without
limitation."
(iii) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including"; the words
"to" and "until" each mean "to but excluding," and the word "through" means
"to and including."
(iv) The term "property" includes any kind of property or asset, real,
personal or mixed, tangible or intangible.
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms. Unless otherwise expressly provided,
any reference to any action of the Bank by way of consent, approval or waiver
shall be deemed modified by the phrase "in its good faith discretion."
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Bank, the Borrower
and the other parties, and are the products of all parties. Accordingly, they
shall not be construed against the Bank merely because of the Bank's involvement
in their preparation.
1.3 Accounting Principles. (a) Unless the context otherwise clearly
requires, all accounting terms not expressly defined herein shall be construed,
and all financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter" refer to such
fiscal periods of the Borrower.
ARTICLE II THE CREDITS
2.1 Amounts and Terms of Commitments.
(a) Facility 1. The Bank agrees, on the terms and conditions set forth
herein, to make loans to the Borrower (each such loan, a "Facility 1 Loan") from
time to time on any Business Day during the period from the Closing Date to the
Revolving Termination Date, in an aggregate amount not to exceed at any time
outstanding the amount of the Facility 1 Commitment. Within the limits of
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the Facility 1 Commitment, and subject to the other terms and conditions hereof,
the Borrower may borrow under this Section 2.1(a), prepay under Section 2.6 and
reborrow under this Section 2.1(a).
(b) Facility 2. The Bank agrees, on the terms and conditions set forth
herein, to make loans to the Borrower (each such loan, a "Facility 2 Loan") from
time to time on any Business Day during the period from the Closing Date to the
Revolving Termination Date, in an aggregate amount, together with the L/C
Obligations, not to exceed at any time outstanding the amount of the Facility 2
Commitment. Within the limits of the Facility 2 Commitment, and subject to the
other terms and conditions hereof, the Borrower may borrow under this Section
2.1(b), prepay under Section 2.6 and reborrow under this Section 2.1(b).
2.2 Loan Accounts. The Loans made by the Bank shall be evidenced by one or
more loan accounts or records maintained by such Bank in the ordinary course of
business. The loan accounts or records maintained by the Bank shall be
rebuttable presumptive evidence of the amount of the Loans made by the Bank to
the Borrower and the interest and payments thereon. Any failure so to record or
any error in doing so shall not, however, limit or otherwise affect the
obligation of the Borrower hereunder to pay any amount owing with respect to the
Loans.
2.3 Procedure for Borrowing. (a) Each Loan shall be made upon the
Borrower's irrevocable written notice delivered to the Bank in the form of a
Notice of Borrowing (which notice must be received by the Bank prior to 11:00
a.m. (San Francisco time) (i) three Business Days prior to the requested
Borrowing Date, in the case of Offshore Rate Loans; and (ii) on the requested
Borrowing Date, in the case of Base Rate Loans, specifying:
(A) the amount of the Loan, which shall be in an aggregate minimum
amount of $500,000 or any multiple thereof;
(B) the requested Borrowing Date, which shall be a Business Day;
(C) the Type of Loan; and
(D) the duration of the Interest Period applicable to such Loan
included in such notice. If the Notice of Borrowing fails to specify the
duration of the Interest Period for any Offshore Rate Loan, such Interest
Period shall be three months, respectively.
(b) The proceeds of Loans will then be made available to the Borrower by
the Bank at the Lending Office by crediting the account of the Borrower on the
books of the Bank.
(c) After giving effect to any Loan, unless the Bank shall otherwise
consent, there may not be more than 10 different Interest Periods in effect.
2.4 Conversion and Continuation Elections. (a) The Borrower may, upon
irrevocable written notice to the Bank in accordance with subsection 2.4(b):
(i) elect, as of any Business Day, in the case of Base Rate Loans, or
as of the last day of the applicable Interest Period, in the case of any
other Type of Loans, to convert any such Loans (or any part thereof in an
amount not less than $500,000 or any multiple thereof) into Loans of any
other Type; or
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(ii) elect, as of the last day of the applicable Interest Period, to
continue any Loans having Interest Periods expiring on such day (or any
part thereof in an amount not less than $500,000 or any multiple thereof);
provided that if at any time the amount of any Offshore Rate Loans is reduced,
by payment, prepayment, or conversion of part thereof to be less than $500,000,
such Offshore Rate Loans shall automatically convert into Base Rate Loans, and
on and after such date the right of the Borrower to continue such Loans as, and
convert such Loans into Offshore Rate Loans shall terminate.
(b) The Borrower shall deliver a Notice of Conversion/Continuation to be
received by the Bank not later than 11:00 a.m. (San Francisco time) at least (i)
three Business Days in advance of the Conversion/Continuation Date, if the Loans
are to be converted into or continued as Offshore Rate Loans; and (ii) on the
Conversion/Continuation Date, if the Loans are to be converted into Base Rate
Loans, specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount of Loans to be converted or continued;
(C) the Type of Loans resulting from the proposed conversion or
continuation; and
(D) other than in the case of conversions into Base Rate Loans, the
duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to an Offshore
Rate Loan, the Borrower has failed to select timely a new Interest Period to be
applicable to such Offshore Rate Loans, as the case may be, or if any Default
then exists, the Borrower shall be deemed to have elected to convert such
Offshore Rate Loans into Base Rate Loans effective as of the expiration date of
such Interest Period.
(d) During the existence of a Default, the Borrower may not elect to have a
Loan converted into or continued as an Offshore Rate Loan.
(e) After giving effect to any conversion or continuation of Loans, unless
the Bank shall otherwise consent, there may not be more than 10 different
Interest Periods in effect.
2.5 Voluntary Termination or Reduction of Commitments. The Borrower may,
upon not less than three Business Days' prior notice to the Bank (which notice
shall be accompanied by the commitment reduction fee specified by Section
2.10(c)), terminate the Commitments, or permanently reduce the Commitments by an
aggregate minimum amount of $1,000,000 or any multiple thereof; unless, after
giving effect thereto and to any prepayments of Loans made on the effective date
thereof, the then-outstanding principal amount of the Loans under each
Commitment (plus the amount of the L/C Obligations in the case of the Facility 2
Commitment) would exceed the amount of such Commitment as then in effect. Once
reduced in accordance with this Section, the Commitments may not be increased.
All accrued commitment fees to, but not including the effective date of any
reduction or termination of Commitments, shall be paid on the effective date of
such reduction or termination.
-18-
2.6 Optional Prepayments. Subject to Section 3.4, the Borrower may, at any
time or from time to time, upon not less than one Business Days' irrevocable
notice to the Bank in the case of Base Rate Loans and three Business Days'
irrevocable notice to the Bank in the case of Offshore Rate Loans, ratably
prepay Loans in whole or in part, in minimum amounts of $500,000 or any multiple
thereof. Such notice of prepayment shall specify the date and amount of such
prepayment and the Type(s) of Loans to be prepaid. If such notice is given by
the Borrower, the Borrower shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified therein,
together with accrued interest to each such date on the amount prepaid and any
amounts required pursuant to Section 3.4. Optional prepayments of Facility 1
Loans after the Revolving Termination Date shall be applied ratably to the
installments payable under Section 2.8(a).
2.7 Mandatory Prepayments of Loans; Mandatory Commitment Reductions. (a)
Asset Dispositions. If the Borrower or any Subsidiary shall at any time or from
time to time make or agree to make a Disposition (other than Dispositions of
assets in the ordinary course of business not exceeding $500,000 in total book
value in any fiscal year), or shall suffer an Event of Loss, then (i) the
Borrower shall promptly notify the Bank of such proposed Disposition or Event of
Loss(including the amount of the estimated Net Proceeds to be received by the
Borrower or such Subsidiary in respect thereof) and (ii) promptly upon, and in
no event later than five days after, receipt by the Borrower or the Subsidiary
of the Net Proceeds of such Disposition or Event of Loss, the Borrower shall
prepay Facility 1 Loans in an aggregate amount equal to the amount of such Net
Proceeds.
(b) Excess Cash. With respect to each fiscal year ending after the
Revolving Termination Date, as soon as the necessary financial information is
available to determine the amount, if any, of Excess Cash generated by the
Borrower and its Subsidiaries for such fiscal year, but not later than 105 days
after such fiscal year,, the Borrower shall prepay Facility 1 Loans in an amount
equal to the amount of such Excess Cash.
(c) Equity Issuance. If, after the Revolving Termination Date, the Borrower
shall issue new common or preferred equity, the Borrower shall promptly notify
the Bank of the estimated Net Issuance Proceeds of such issuance to be received
by the Borrower in respect thereof. Promptly upon, and in no event later than
five days after, receipt by the Borrower of Net Issuance Proceeds of such
issuance, the Borrower shall prepay the Facility 1 Loans in an aggregate amount
equal to 50% of the amount of such Net Issuance Proceeds.
(d) Utilization. The Borrower shall prepay Facility 2 Loans to the extent,
if any, necessary so that after giving effect to such prepayment, the
outstanding balance of the Facility 2 Loans shall be zero for at least 30
consecutive days during the period from July 1 to December 1 of each year.
(e) General. Any prepayments pursuant to this Section 2.7 shall be applied
first to any Base Rate Loans then outstanding and then to Offshore Rate Loans
with the shortest Interest Periods remaining. The Borrower shall pay, together
with each prepayment under this Section 2.7, accrued interest on the amount
prepaid and any amounts required pursuant to Section 3.4. Mandatory prepayments
of Facility 1 Loans after the Revolving Termination Date shall be applied
ratably to the instalments payable under Section 2.8(a). Any prepayments
pursuant to this Section 2.7 is subject to the same requirement of notice from
the Borrower as a prepayment under Section 2.6.
(f) Reduction of Commitment. Upon the making of any mandatory prepayment
under Section 2.7(a), (b), or (c), the Facility 1 Commitment shall automatically
be reduced by an amount equal to the principal repaid, effective as of the
earlier of the date that such prepayment is
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made or the date by which such prepayment is due and payable hereunder. All
accrued commitment fees to, but not including the effective date of any
reduction or termination of Commitments, shall be paid on the effective date of
such reduction or termination.
2.8 Repayment.
(a) Facility 1 Loans. The Borrower shall repay the following percentages of
the total of the Facility 1 Loans outstanding on the Revolving Termination Date
on the following dates (each a "Principal Payment Date"):
Year
March 31
June 30
September 30
December 31
2001
7.50%
2002
7.50%
7.50%
7.50%
7.50%
2003
7.50%
7.50%
7.50%
10.00%
2004
10.00%
10.00%
10.00%
And on September 30, 2004, the entire remaining balance of the Facility 1 Loans
and all accrued interest thereon shall be immediately due and payable.
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(b) Facility 2 Loans. The Borrower shall repay to the Bank on the Revolving
Termination Date the aggregate principal amount of Facility 2 Loans outstanding
on such date.
2.9 Interest. (a) Each Loan shall bear interest on the outstanding
principal amount thereof from the applicable Borrowing Date at a rate per annum
equal to the Offshore Rate or the Base Rate, as the case may be (and subject to
the Borrower's right to convert to other Types of Loans under Section 2.4), plus
the Applicable Margin.
(b) Interest on each Loan shall be paid in arrears on each Interest Payment
Date. Interest shall also be paid on the date of any prepayment of Loans under
Section 2.6 or 2.7 for the portion of the Loans so prepaid and upon payment
(including prepayment) in full thereof and, during the existence of any Event of
Default, interest shall be paid on demand of the Bank.
(c) Notwithstanding subsection (a) of this Section, while any Event of
Default exists or after acceleration, the Borrower shall pay interest (after as
well as before entry of judgment thereon to the extent permitted by law) on the
principal amount of all outstanding Obligations, at a rate per annum which is
determined by adding 2% per annum to the Applicable Margin then in effect for
such Loans and, in the case of Obligations not subject to an Applicable Margin,
at a rate per annum equal to the Base Rate plus 2%; provided that, on and after
the expiration of any Interest Period applicable to any Offshore Rate Loan
outstanding on the date of occurrence of such Event of Default or acceleration,
the principal amount of such Loan shall, during the continuation of such Event
of Default or after acceleration, bear interest at a rate per annum equal to the
Base Rate plus 2%.
(d) Anything herein to the contrary notwithstanding, the obligations of the
Borrower to the Bank hereunder shall be subject to the limitation that payments
of interest shall not be required for any period for which interest is computed
hereunder, to the extent (but only to the extent) that contracting for or
receiving such payment by the Bank would be contrary to the provisions of any
law applicable to such Bank limiting the highest rate of interest that may be
lawfully contracted for, charged or received by the Bank, and in such event the
Borrower shall pay the Bank interest at the highest rate permitted by applicable
law.
2.10 Fees. (a) Arrangement Fees. The Borrower shall pay an arrangement fee
to the Bank, as required by the letter agreement ("Fee Letter") between the
Borrower and the Bank dated September 25, 1998.
(b) Commitment Fees. The Borrower shall pay to the Bank a commitment fee on
the average daily unused portion of each of the Facility 1 Commitment and the
Facility 2 Commitment, computed on a quarterly basis in arrears on the last
Business Day of each calendar quarter based upon the daily utilization for that
quarter as calculated by the Bank, equal to 0.375 % per annum in the case of
each of the Facility 1 Commitment and the Facility 2 Commitment. Such commitment
fees shall accrue from the Closing Date to the Revolving Termination Date and
shall be due and payable monthly in arrears on the last Business Day of each
calendar month commencing on December 31, 1998, through the Revolving
Termination Date, with the final payment to be made on the Revolving Termination
Date; provided that, in connection with any reduction or termination of
Commitments under Section 2.5 or Section 2.7, the accrued commitment fee
calculated for the period ending on such date shall also be paid on the date of
such reduction or termination, with the following quarterly payment being
calculated on the basis of the period from such reduction or termination date to
such quarterly payment date. The commitment fees provided in this subsection
shall accrue at all
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times after the above-mentioned commencement date, including at any time during
which one or more conditions in Article IV are not met.
(c) Commitment Reduction Fees. Contemporaneously upon giving any notice of
reduction or termination of a Commitment pursuant to Section 2.5, the Borrower
shall pay to the Bank a commitment reduction fee equal to the following
percentage of the amount of such reduction or the amount of the Commitment so
terminated: 1.0% with respect to reductions or terminations occurring on or
before December 31, 1999, and 0.5% with respect reductions or terminations
occurring thereafter.
2.11 Computation of Fees and Interest. (a) All computations of fees and
interest shall be made on the basis of a 360-day year and actual days elapsed
(which results in more interest being paid than if computed on the basis of a
365-day year). Interest and fees shall accrue during each period during which
interest or such fees are computed from the first day thereof to the last day
thereof.
(b) Each determination of an interest rate by the Bank shall be conclusive
and binding on the Borrower in the absence of manifest error.
2.12 Payments by the Borrower. (a) All payments to be made by the Borrower
shall be made without set-off, recoupment or counterclaim. Except as otherwise
expressly provided herein, all payments by the Borrower shall be made to the
Bank at the Lending Office, and shall be made in dollars and in immediately
available funds, no later than 11:00 a.m. (San Francisco time) on the date
specified herein. Any payment received by the Bank later than such time shall be
deemed to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of "Interest
Period" herein, whenever any payment is due on a day other than a Business Day,
such payment shall be made on the following Business Day, and such extension of
time shall in such case be included in the computation of interest or fees, as
the case may be.
2.13 Security and Guaranty. (a) All obligations of the Borrower and its
Subsidiaries under this Agreement and all other Loan Documents shall be secured
in accordance with the Collateral Documents.
(b) All obligations of the Borrower under this Agreement and all other Loan
Documents shall be unconditionally guaranteed by its Subsidiaries pursuant to
the Guaranty.
2.14 Letters of Credit
(a) On the terms and conditions set forth herein (i) the Bank agrees, (A)
from time to time on any Business Day during the period from the Closing Date to
the Revolving Termination Date to issue Letters of Credit for the account of the
Borrower, and to amend or renew Letters of Credit previously issued by it, in
accordance with subsections 2.14(b), and (B) to honor drafts under the Letters
of Credit; provided that the Bank shall not be obligated to Issue any Letter of
Credit if as of the date of Issuance of such Letter of Credit (the "Issuance
Date") and after giving effect thereto, the total amount of the L/C Obligations
would exceed the L/C Commitment or the total amount of the L/C Obligations and
the total amount of the Facility 2 Loans would exceed the Facility 2 Commitment.
Within the foregoing limits, and subject to the other terms and conditions
hereof, the
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Borrower's ability to obtain Letters of Credit shall be fully revolving, and,
accordingly, the Borrower may, during the foregoing period, obtain Letters of
Credit to replace Letters of Credit which have expired or which have been drawn
upon and reimbursed; provided that the Bank shall in no event be under any
obligation to issue any Letter of Credit if:
(i) any order, judgment or decree of any Governmental Authority or
arbitrator shall by its terms purport to enjoin or restrain the Bank from
Issuing such Letter of Credit, or any Requirement of Law applicable to the
Bank or any request or directive (whether or not having the force of law)
from any Governmental Authority with jurisdiction over the Bank shall
prohibit, or request that the Bank refrain from, the Issuance of letters of
credit generally or such Letter of Credit in particular or shall impose
upon the Bank with respect to such Letter of Credit any restriction,
reserve or capital requirement (for which the Bank is not otherwise
compensated hereunder) not in effect on the Closing Date, or shall impose
upon the Bank any unreimbursed loss, cost or expense which was not
applicable on the Closing Date and which the Bank in good xxxxx xxxxx
material to it;
(ii) the expiry date of any requested Letter of Credit is (A) more
than 360 days after the date of Issuance or (B) after the Revolving
Termination Date;
(iii) any requested Letter of Credit does not provide for drafts, or
is not otherwise in form and substance acceptable to the Bank, or the
Issuance of a Letter of Credit shall violate any applicable policies of the
Bank;
(iv) any standby Letter of Credit is for the purpose of supporting the
issuance of any letter of credit by any other Person; or
(v) such Letter of Credit is in a face amount less than $50,000 or to
be denominated in a currency other than Dollars.
(b) Letter of Credit shall be issued, amended, and renewed as follows:
(i) Each Letter of Credit shall be issued upon the irrevocable written
request of the Borrower received by the Bank at least five days prior to
the proposed date of issuance. Each such request for issuance of a Letter
of Credit shall be by facsimile, confirmed immediately in an original
writing, in the form of an L/C Application, and shall specify in form and
detail satisfactory to the Bank: (i) the proposed date of issuance of the
Letter of Credit (which shall be a Business Day); (ii) the face amount of
the Letter of Credit; (iii) the expiry date of the Letter of Credit; (iv)
the name and address of the beneficiary thereof; (v) any documents to be
presented by the beneficiary of the Letter of Credit in case of any drawing
thereunder; (vi) the full text of any certificate to be presented by the
beneficiary in case of any drawing thereunder; and (vii) such other matters
as the Bank may require. Subject to the terms and conditions hereof, the
Bank shall, on the requested date, issue a Letter of Credit for the account
of the Borrower in accordance with the Bank's usual and customary business
practices.
(ii) From time to time while a Letter of Credit is outstanding and
prior to the Revolving Termination Date, the Bank will, upon the written
request of the Borrower received by the Bank at least five days prior to
the proposed date of amendment, amend any Letter of Credit issued by it.
Each such request for amendment of a Letter of Credit shall be made by
facsimile, confirmed immediately in an original writing, made in the form
of an L/C Amendment Application and shall specify in form and detail
satisfactory to the Bank: (i) the Letter of Credit to be amended; (ii) the
proposed date of amendment of the Letter of Credit (which shall be a
Business Day); (iii) the nature
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of the proposed amendment; and (iv) such other matters as the Bank may
require. The Bank shall be under no obligation to amend any Letter of
Credit if: (A) the Bank would have no obligation at such time to issue such
Letter of Credit in its amended form under the terms of this Agreement; or
(B) the beneficiary of any such letter of Credit does not accept the
proposed amendment to the Letter of Credit.
(iii) Each request by the Borrower for renewal of a Letter of Credit
shall be made by facsimile, confirmed immediately in an original writing,
in the form of an L/C Amendment Application, and shall specify in form and
detail satisfactory to the Bank: (i) the Letter of Credit to be renewed;
(ii) the proposed date of notification of renewal of the Letter of Credit
(which shall be a Business Day); (iii) the revised expiry date of the
Letter of Credit; and (iv) such other matters as the Bank may reasonably
require. The Bank shall be under no obligation so to renew any Letter of
Credit if: (A) the Bank would have no obligation at such time to issue or
amend such Letter of Credit in its renewed form under the terms of this
Agreement; or (B) the beneficiary of any such Letter of Credit does not
accept the proposed renewal of the Letter of Credit. If any outstanding
Letter of Credit shall provide that it shall be automatically renewed
unless the beneficiary thereof receives notice from the Bank that such
Letter of Credit shall not be renewed, and if at the time of renewal the
Bank shall not have received any L/C Amendment Application from the
Borrower with respect to such renewal or other written direction by the
Borrower with respect thereto, the Bank shall nonetheless be permitted to
allow such Letter of Credit to renew, and the Borrower and the Banks hereby
authorize such renewal, and, accordingly, the Bank shall be deemed to have
received an L/C Amendment Application from the Borrower requesting such
renewal.
(iv) The Bank may, at its election deliver any notices of termination
or other communications to any Letter of Credit beneficiary or transferee,
and take any other action as necessary or appropriate, at any time and from
time to time, in order to cause the expiry date of such Letter of Credit to
be a date not later than the Revolving Termination Date.
(v) This Agreement shall control in the event of any conflict with any
L/C-Related Document (other than any Letter of Credit).
(c) (i) For purposes of subsection 2.1(b), each Issuance of a Letter of
Credit shall be deemed to utilize the Facility 2 Commitment by an amount equal
to the L/C Obligation under such Letter of Credit.
(ii) In the event of any request for a drawing under a Letter of Credit by
the beneficiary or transferee thereof, the Bank will promptly notify the
Borrower. The Borrower shall reimburse the Bank prior to 12:00 noon (San
Francisco time), on each date that any amount is paid by the Bank under any
Letter of Credit (each such date, an "Honor Date"), in an amount equal to the
amount so paid by the Bank. In the event the Borrower fails to reimburse the
Bank for the full amount of any drawing under any Letter of Credit by 12:00 noon
(San Francisco time) on the Honor Date, the Borrower shall be deemed to have
requested that Base Rate Loans be made by the Bank under the Facility 2
Commitment to be disbursed on the Honor Date under such Letter of Credit,
subject to the amount of the unutilized portion of the Facility 2 Commitment and
subject to the conditions set forth in Section 4.2. Any notice given by the Bank
pursuant to this subsection 2.14(c)(ii) may be oral if immediately confirmed in
writing (including by facsimile); provided that the lack of such an immediate
confirmation shall not affect the conclusiveness or binding effect of such
notice.
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(iii) With respect to any unreimbursed drawing that is not converted into
Loans consisting of Base Rate Loans to the Borrower in whole or in part, because
of the Borrower's failure to satisfy the conditions set forth in Section 4.2 or
for any other reason, the Borrower shall be deemed to have incurred from the
Bank an L/C Advance in the amount of such drawing, which L/C Advance shall be
due and payable on demand (together with interest) and shall bear interest at a
rate per annum equal to the Base Rate plus 2% per annum.
(d) (i) The Borrower agrees that, in paying any drawing under a Letter of
Credit, the Bank shall not have any responsibility to obtain any document (other
than any sight draft and certificates expressly required by the Letter of
Credit) or to ascertain or inquire as to the validity or accuracy of any such
document or the authority of the Person executing or delivering any such
document.
(ii) The Borrower hereby assumes all risks of the acts or omissions of any
beneficiary or transferee with respect to its use of any Letter of Credit;
provided that this assumption is not intended to, and shall not, preclude the
Borrower pursuing such rights and remedies as it may have against the
beneficiary or transferee at law or under any other agreement. The Bank shall
not be liable or responsible for any of the matters described in clauses (i)
through (vii) of Section 2.14(f); provided that, anything in such clauses to the
contrary notwithstanding, the Borrower may have a claim against the Bank, and
the Bank may be liable to the Borrower, to the extent, but only to the extent,
of any direct, as opposed to consequential or exemplary, damages suffered by the
Borrower which the Borrower prove were caused by the Bank's willful misconduct
or gross negligence or the Bank's willful failure to pay under any Letter of
Credit after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of a Letter of
Credit. In furtherance and not in limitation of the foregoing: (i) the Bank may
accept documents that appear on their face to be in order, without
responsibility for further investigation; and (ii) the Bank shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason.
(e) The obligations of the Borrower under this Agreement and any
L/C-Related Document to reimburse the Bank for a drawing under a Letter of
Credit, and to repay any L/C Advance and any drawing under a Letter of Credit
converted into Facility 2 Loans, shall be unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this Agreement and each
such other L/C-Related Document under all circumstances, including the
following:
(i) any lack of validity or enforceability of this Agreement or any
L/C-Related Document;
(ii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the obligations of the Borrower in respect of
any Letter of Credit or any other amendment or waiver of or any consent to
departure from all or any of the L/C-Related Documents;
(iii) the existence of any claim, set-off, defense or other right that
the Borrower may have at any time against any beneficiary or any transferee
of any Letter of Credit (or any Person for whom any such beneficiary or any
such transferee may be acting), the Bank or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or by
the L/C-Related Documents or any unrelated transaction;
-25-
(iv) any draft, demand, certificate or other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; or any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any
Letter of Credit;
(v) any payment by the Bank under any Letter of Credit against
presentation of a draft or certificate that does not strictly comply with
the terms of any Letter of Credit; or any payment made by the Bank under
any Letter of Credit to any Person purporting to be a trustee in
bankruptcy, debtor-in-possession, assignee for the benefit of creditors,
liquidator, receiver or other representative of or successor to any
beneficiary or any transferee of any Letter of Credit, including any
arising in connection with any Insolvency Proceeding;
(vi) any exchange, release or non-perfection of any collateral, or any
release or amendment or waiver of or consent to departure from any other
guarantee, for all or any of the obligations of the Borrower in respect of
any Letter of Credit; or
(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including any other circumstance that
might otherwise constitute a defense available to, or a discharge of, the
Borrower or a Guarantor;
provided that the foregoing does not constitute a waiver by the Borrower of any
claim the Borrower may independently assert against Bank as a result of Bank's
gross negligence or wilful misconduct.
(g) Upon (i) the request of the Bank, (A) if the Bank has honored any full
or partial drawing request on any Letter of Credit and such drawing has resulted
in an L/C Advance hereunder, or (B) if, as of the Revolving Termination Date,
any Letters of Credit may for any reason remain outstanding and partially or
wholly undrawn, or (ii) the total L/C Obligations exceeding the L/C Commitment,
then the Borrower shall immediately Cash Collateralize the L/C Obligations in an
amount equal to such L/C Borrowing, remaining Letters of Credit, or excess, as
the case may be.
(h) In addition to all other fees payable hereunder, the Borrower shall pay
to the Bank from time to time on demand the normal issuance, presentation,
amendment and other processing fees, and other standard costs and charges, of
the Bank relating to letters of credit as from time to time in effect.
(i) The Uniform Customs and Practice for Documentary Credits as published
by the International Chamber of Commerce most recently at the time of issuance
of any Letter of Credit shall (unless otherwise expressly provided in the
Letters of Credit) apply to the Letters of Credit.
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY
3.1 Taxes. (a) Any and all payments by the Borrower to the Bank under this
Agreement and any other Loan Document shall be made free and clear of, and
without deduction or withholding for, any Taxes. In addition, the Borrower shall
pay all Other Taxes.
(b) If the Borrower shall be required by law to deduct or withhold any
Taxes, Other Taxes or Further Taxes from or in respect of any sum payable
hereunder to the Bank, then:
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(i) the sum payable shall be increased as necessary so that, after
making all required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this Section), the
Bank receives and retains an amount equal to the sum it would have received
and retained had no such deductions or withholdings been made;
(ii) the Borrower shall make such deductions and withholdings;
(iii) the Borrower shall pay the full amount deducted or withheld to
the relevant taxing authority or other authority in accordance with
applicable law; and
(iv) the Borrower shall also pay to the Bank at the time interest is
paid, Further Taxes in the amount that the Bank specifies as necessary to
preserve the after-tax yield the Bank would have received if such Taxes,
Other Taxes or Further Taxes had not been imposed.
(c) The Borrower agrees to indemnify and hold harmless the Bank for the
full amount of (i) Taxes, (ii) Other Taxes, and (iii) Further Taxes in the
amount that the Bank specifies as necessary to preserve the after-tax yield the
Bank would have received if such Taxes, Other Taxes or Further Taxes had not
been imposed, and any liability (including penalties, interest, additions to tax
and expenses) arising therefrom or with respect thereto, whether or not such
Taxes, Other Taxes or Further Taxes were correctly or legally asserted. Payment
under this indemnification shall be made within 30 days after the date the Bank
makes written demand therefor.
(d) Within 30 days after the date of any payment by the Borrower of Taxes,
Other Taxes or Further Taxes, the Borrower shall furnish to the Bank the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Bank.
(e) If the Borrower is required to pay any amount to the Bank pursuant to
subsection (b) or (c) of this Section, then the Bank shall use reasonable
efforts (consistent with legal and regulatory restrictions) to change the
jurisdiction of its Lending Office so as to eliminate any such additional
payment by the Borrower which may thereafter accrue, if such change in the sole
judgment of the Bank is not otherwise disadvantageous to the Bank.
3.2 Illegality. (a) If the Bank determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for the Bank or its applicable Lending Office to make
Offshore Rate Loans, then, on notice thereof by the Bank to the Borrower through
the Bank, any obligation of the Bank to make Offshore Rate Loans shall be
suspended until the Bank notifies the Borrower that the circumstances giving
rise to such determination no longer exist.
(b) If the Bank determines that it is unlawful to maintain any Offshore
Rate Loan, the Borrower shall, upon its receipt of notice of such fact and
demand from the Bank (with a copy to the Bank), prepay in full such Offshore
Rate Loans of the Bank then outstanding, together with interest accrued thereon
and amounts required under Section 3.4, either on the last day of the Interest
Period thereof, if the Bank may lawfully continue to maintain such Offshore Rate
Loans to such day, or immediately, if the Bank may not lawfully continue to
maintain such Offshore Rate Loan.
(c) If the obligation of the Bank to make or maintain Offshore Rate Loans
has been so terminated or suspended, the Borrower may elect, by giving notice to
the Bank through the
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Bank that all Loans which would otherwise be made by the Bank as Offshore Rate
Loans shall be instead Base Rate Loans.
3.3 Increased Costs and Reduction of Return. (a) If the Bank determines
that, due to either (i) the introduction of or any change (other than any change
by way of imposition of or increase in reserve requirements included in the
calculation of the Offshore Rate or in respect of the assessment rate payable by
the Bank to the FDIC for insuring U.S. deposits) in or in the interpretation of
any law or regulation or (ii) the compliance by the Bank with any guideline or
request from any central bank or other Governmental Authority (whether or not
having the force of law), there shall be any increase in the cost to the Bank of
agreeing to make or making, funding or maintaining any Offshore Rate Loans, then
the Borrower shall be liable for, and shall from time to time, upon demand (with
a copy of such demand to be sent to the Bank), pay to the Bank, additional
amounts as are sufficient to compensate the Bank for such increased costs.
(b) If the Bank shall have determined that (i) the introduction of any
Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation,
(iii) any change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by the Bank (or its
Lending Office) or any corporation controlling the Bank with any Capital
Adequacy Regulation, affects or would affect the amount of capital required or
expected to be maintained by the Bank or any corporation controlling the Bank
and (taking into consideration the Bank's or such corporation's policies with
respect to capital adequacy and the Bank's desired return on capital) determines
that the amount of such capital is increased as a consequence of its
Commitments, loans, credits or obligations under this Agreement, then, upon
demand of the Bank to the Borrower, the Borrower shall pay to the Bank, from
time to time as specified by the Bank, additional amounts sufficient to
compensate the Bank for such increase.
3.4 Funding Losses. The Borrower shall reimburse the Bank and hold the Bank
harmless from any loss or expense which the Bank may sustain or incur as a
consequence of:
(a) the failure of the Borrower to make on a timely basis any payment of
principal of any Offshore Rate Loan;
(b) the failure of the Borrower to borrow, continue or convert a Loan after
the Borrower has given (or is deemed to have given) a Notice of Borrowing or a
Notice of Conversion/ Continuation;
(c) the failure of the Borrower to make any prepayment in accordance with
any notice delivered under Section 2.6;
(d) the prepayment (including pursuant to Section 2.7) or other payment
(including after acceleration thereof) of an Offshore Rate Loan on a day that is
not the last day of the relevant Interest Period; or
(e) the automatic conversion under Section 2.4 of any Offshore Rate Loan to
a Base Rate Loan on a day that is not the last day of the relevant Interest
Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans or from fees payable
to terminate the deposits from which such funds were obtained. For purposes of
calculating amounts payable by the Borrower to the Bank
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under this Section and under subsection 3.3(a), each Offshore Rate Loan(and each
related reserve, special deposit or similar requirement) shall be conclusively
deemed to have been funded at the LIBOR used in determining the Offshore Rate
for such Offshore Rate Loan by a matching deposit or other borrowing in the
interbank eurodollar market for a comparable amount and for a comparable period,
whether or not such Offshore Rate Loan is in fact so funded.
3.5 Inability to Determine Rates. If the Bank determines that for any
reason adequate and reasonable means do not exist for determining the Offshore
Rate for any requested Interest Period with respect to a proposed Offshore Rate
Loan, or that the Offshore Rate applicable pursuant to subsection 2.9(a) for any
requested Interest Period with respect to a proposed Offshore Rate Loan does not
adequately and fairly reflect the cost to the Bank of funding such Loan, the
Bank will promptly so notify the Borrower. Thereafter, the obligation of the
Bank to make or maintain Offshore Rate Loans hereunder shall be suspended until
the Bank revokes such notice in writing. Upon receipt of such notice, the
Borrower may revoke any Notice of Borrowing or Notice of Conversion/Continuation
then submitted by it. If the Borrower does not revoke such Notice, the Bank
shall make, convert or continue the Loans, as proposed by the Borrower, in the
amount specified in the applicable notice submitted by the Borrower, but such
Loans shall be made, converted or continued as Base Rate Loans instead of
Offshore Rate Loans, as the case may be.
3.6 Certificates of Bank. If the Bank claims reimbursement or compensation
under this Article III, it shall deliver to the Borrower (with a copy to the
Bank) a certificate setting forth in reasonable detail the amount payable to the
Bank hereunder and such certificate shall be presumptive evidence of the
contents thereof.
3.7 Survival. The agreements and obligations of the Borrower in this
Article III shall survive the payment of all other Obligations.
ARTICLE IV CONDITIONS PRECEDENT
4.1 Conditions of Initial Loans. The obligation of the Bank to make its
initial Loan hereunder is subject to the condition that the Bank shall have
received on or before the initial borrowing date all of the following, in form
and substance satisfactory to the Bank:
(a) Credit Agreement. This Agreement executed by each party thereto;
(b) Resolutions; Incumbency. (i) Copies of the resolutions of the board of
directors of the Borrower and each Subsidiary that may become party to a Loan
Document authorizing the transactions contemplated hereby, certified as of the
Closing Date by the Secretary or an Assistant Secretary of such Person; and
(ii) A certificate of the Secretary or Assistant Secretary of the Borrower,
and each Subsidiary that may become party to a Loan Document certifying the
names and true signatures of the officers of the Borrower or such Subsidiary
authorized to execute, deliver and perform, as applicable, this Agreement, and
all other Loan Documents to be delivered by it hereunder;
(c) Organization Documents; Good Standing. Each of the following documents:
(i) the articles or certificate of incorporation and the bylaws of the
Borrower and each Subsidiary party to any Loan Document as in effect on the
Closing Date,
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certified by the Secretary or Assistant Secretary of the Borrower or such
Subsidiary as of the Closing Date; and
(ii) a good standing or subsistence certificate for the Borrower and
each Subsidiary party to any Loan Document from the Secretary of State (or
similar, applicable Governmental Authority) of its state of incorporation
and each state where the Borrower or such Subsidiary is qualified to do
business as a foreign corporation as of a recent date;
(d) Legal Opinions. (i) an opinion of Xxxxxx Xxxxxxxxxx LLP, counsel to the
Borrower and the Subsidiaries and addressed to the Bank, substantially in the
form of Exhibit D;
(e) Payment of Fees. Evidence of payment by the Borrower of all accrued and
unpaid fees, costs and expenses to the extent then due and payable on the
Closing Date, together with reasonable Attorney Costs of the Bank to the extent
invoiced prior to or on the Closing Date, plus such additional amounts of
Attorney Costs as shall constitute the Bank's reasonable estimate of reasonable
Attorney Costs incurred or to be incurred by it through the closing proceedings
(provided that such estimate shall not thereafter preclude final settling of
accounts between the Borrower and the Bank); including any such costs, fees and
expenses arising under or referenced in Sections 2.10 and 9.4;
(f) Initial Financial Projections. Financial Projections for the period
beginning on July 1, 1998;
(g) Guaranty and Collateral Documents. The Guaranty, duly executed by each
Subsidiary of the Borrower in existence on the Closing Date, and the Security
Agreement duly executed by the Borrower and each such Subsidiary, together with
the other Collateral Documents, executed by the appropriate party and, in each
case, in appropriate form for recording, where necessary, and together with:
(i) a Perfection Certificate duly completed for each of Borrower and
its Subsidiaries and executed by a Responsible Officer;
(ii) evidence satisfactory to the Bank that there will be filed,
registered or recorded all financing statements and other filings,
registrations and recordings necessary and advisable to perfect the Liens
of the Bank in accordance with applicable law;
(iii) written advice relating to such Lien and judgment searches as
the Bank shall have requested, and such termination statements or other
documents as may be necessary to confirm that the Collateral is subject to
no other Liens in favor of any Persons (other than Permitted Liens);
(iv) all certificates and instruments representing Collateral to be
delivered to the Bank, together with stock transfer powers or other
transfer documents executed in blank with signatures guaranteed as the Bank
may specify;
(v) funds sufficient to pay any filing or recording tax or fee in
connection with any and all UCC-1 financing statements;
(vi) such consents, estoppels, subordination agreements and other
documents and instruments executed by landlords, tenants and other Persons
party to material
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contracts relating to any Collateral as to which the Bank shall be granted
a Lien, as requested by the Bank; and
(vii) evidence that all other actions necessary or, in the opinion of
the Bank, desirable to perfect and protect the first priority Lien created
by the Collateral Documents, and to enhance the Bank's ability to preserve
and protect its interests in and access to the Collateral, have been taken;
(h) Insurance Policies. Standard lenders' payable endorsements with respect
to the insurance policies or other instruments or documents evidencing insurance
coverage on the properties of the Borrower in accordance with Section 6.6;
(i) Environmental Review. (i) an environmental site assessment with respect
to the real property of Borrower, dated as of a recent date prior to the Closing
Date, prepared by a qualified firm acceptable to the Bank, stating, among other
things, that such real property is free from Hazardous Materials and that
operations conducted thereon are in compliance with all Environmental Laws and
(ii) a fully completed environmental questionnaire in the form previously
delivered by the Bank to the Borrower showing, after giving effect to the Ampro
Acquisition, that the Borrower is in compliance with Sections 5.12 and 6.11;
(j) Certificate. A certificate signed by a Responsible Officer, dated as of
the Closing Date, stating that:
(i) the representations and warranties contained in Article V are true
and correct on and as of such date, as though made on and as of such date;
(ii) no Default exists or would result from the initial Loan; and
(iii) there has occurred since the date of the financial statements
referenced in Section 5.11, no event or circumstance that has resulted or
could reasonably be expected to result in a Material Adverse Effect;
(k) Year 2000. A copy of the Borrower's and its Subsidiaries' plan,
timetable and budget to address the Year 2000 Problem, together with periodic
updates thereof and expenses incurred to date, any third party assessment of the
Borrower's and its Subsidiaries' Year 2000 remediation efforts, and any Year
2000 contingency plans, and any estimates of the Borrower's and its
Subsidiaries' potential litigation exposure (if any) to the Year 2000 Problem;
and
(l) Other Documents. Such other approvals, opinions, documents or materials
as the Bank may request.
4.2 Conditions to All Loans. The obligation of the Bank to make any Loan
(including its initial Loan), to Issue a Letter of Credit, or to continue or
convert any Loan under Section 2.4 is subject to the satisfaction of the
following conditions precedent on the relevant Borrowing Date, Issuance Date, or
Conversion/Continuation Date:
(a) Notice of Borrowing , Issuance, or Conversion/Continuation. The Bank
shall have received a Notice of Borrowing, request for Issuance, or a Notice of
Conversion/Continuation, as applicable;
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(b) Continuation of Representations and Warranties. The representations and
warranties in Article V shall be true and correct on and as of such Borrowing
Date, Issuance Date, or Conversion/Continuation Date with the same effect as if
made on and as of such Borrowing Date, Issuance Date, or Conversion/Continuation
Date (except to the extent such representations and warranties expressly refer
to an earlier date, in which case they shall be true and correct as of such
earlier date);
(c) No Existing Default. No Default shall exist or shall result from such
Loan, Issuance or continuation or conversion; and
(d) Commitment. After giving effect to such Loan or Issuance, (i) the
outstanding Facility 1 Loans of the Bank will not exceed the Facility 1
Commitment, the outstanding Facility 2 Loans of the Bank, together with the
total amount of L/C Obligations, will not exceed the Facility 2 Commitment, and
the total amount of the L/C Obligations will not exceed the L/C Commitment.
Each Notice of Borrowing, request for Issuance, and Notice of
Conversion/Continuation submitted by the Borrower hereunder shall constitute a
representation and warranty by the Borrower hereunder, as of the date of each
such notice and as of each Borrowing Date, Issuance Date, or
Conversion/Continuation Date, as applicable, that the conditions in this Section
4.2 are satisfied.
ARTICLE V REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Bank that:
5.1 Corporate Existence and Power. The Borrower and each of its
Subsidiaries:
(a) is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation;
(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its business
and to execute, deliver, and perform its obligations under the Loan Documents;
(c) is duly qualified or licensed 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
or license; and
(d) is in compliance with all Requirements of Law; except to the extent
that the failure to do so would not reasonably be expected to have a Material
Adverse Effect.
5.2 Corporate Authorization; No Contravention. The execution, delivery and
performance by the Borrower and its Subsidiaries of this Agreement and each
other Loan Document to which such Person is party, have been duly authorized by
all necessary corporate action, and do not and will not:
(a) contravene the terms of any of that Person's Organization Documents;
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(b) conflict with or result in any breach or contravention of, or the
creation of any Lien under, any document evidencing any Contractual Obligation
to which such Person is a party or any order, injunction, writ or decree of any
Governmental Authority to which such Person or its property is subject; or
(c) violate any Requirement of Law.
5.3 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority (except for recordings or filings in connection with the
Liens granted to the Bank under the Collateral Documents) is necessary or
required in connection with the execution, delivery or performance by, or
enforcement against, the Borrower or any of its Subsidiaries of the Agreement or
any other Loan Document.
5.4 Binding Effect. This Agreement and each other Loan Document to which
the Borrower or any of its Subsidiaries is a party constitute the legal, valid
and binding obligations of the Borrower and any of its Subsidiaries to the
extent it is a party thereto, enforceable against such Person in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.
5.5 Litigation. Except as specifically disclosed in Schedule 5.5, to the
best knowledge of the Borrower, there are no actions, suits, proceedings, claims
or disputes pending, or threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, against the Borrower, or its
Subsidiaries or any of their respective properties which:
(a) purport to affect or pertain to this Agreement or any other Loan
Document, or any of the transactions contemplated hereby or thereby; or
(b) if determined adversely to the Borrower or its Subsidiaries, would
reasonably be expected to have a Material Adverse Effect. No injunction, writ,
temporary restraining order or any order of any nature has been issued by any
court or other Governmental Authority purporting to enjoin or restrain the
execution, delivery or performance of this Agreement or any other Loan Document,
or directing that the transactions provided for herein or therein not be
consummated as herein or therein provided.
5.6 No Default. No Default exists or would result from the incurring of any
Obligations by the Borrower or from the grant or perfection of the Liens of the
Bank on the Collateral. As of the Closing Date, neither the Borrower nor any
Subsidiary is in default under or with respect to any Contractual Obligation in
any respect which, individually or together with all such defaults, could
reasonably be expected to have a Material Adverse Effect, or that would, if such
default had occurred after the Closing Date, create an Event of Default under
subsection 8.1(e).
5.7 ERISA Compliance.
(a) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the IRC and other applicable federal or state law. Each
Plan which is intended to qualify under Section 401(a) of the IRC has received a
favorable determination letter from the IRS and to the best knowledge of the
Borrower, nothing has occurred which would cause the loss of such qualification.
Each ERISA Affiliate has made all required contributions to any Plan subject to
Section
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412 of the IRC, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the IRC has been made with
respect to any Plan.
(b) To the best knowledge of Borrower, there are no pending or threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan which has resulted or could reasonably be expected to result
in a Material Adverse Effect. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
has resulted or could reasonably be expected to result in a Material Adverse
Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to occur;
(ii) no Pension Plan has any Unfunded Pension Liability; (iii) no ERISA
Affiliate has incurred, or reasonably expects to incur, any liability under
Title IV of ERISA with respect to any Pension Plan (other than premiums due and
not delinquent under Section 4007 of ERISA); (iv) no ERISA Affiliate has
incurred, or reasonably expects to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) no ERISA Affiliate has engaged in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA.
5.8 Use of Proceeds; Margin Regulations. The proceeds of the Loans are to
be used solely for the purposes set forth in and permitted by Section 6.12 and
Section 7.7. Neither the Borrower nor any Subsidiary is generally engaged in the
business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock.
5.9 Title to Properties. The Borrower and each Subsidiary have good record
and marketable title in fee simple to, or valid leasehold interests in, all real
property necessary or used in the ordinary conduct of their respective
businesses, except for such defects in title as could not, individually or in
the aggregate, have a Material Adverse Effect. As of the Closing Date, the
property of the Borrower and its Subsidiaries is subject to no Liens, other than
Permitted Liens.
5.10 Taxes. The Borrower and its Subsidiaries have filed all Federal and
other material tax returns and reports required to be filed, and have paid, or
made adequate provision for the payment of, all Federal and other material
taxes, assessments, fees and other governmental charges levied or imposed upon
them or their properties, income or assets otherwise due and payable, except
those which are being contested in good faith by appropriate proceedings and for
which adequate reserves have been provided in accordance with GAAP. There is no
proposed tax assessment against the Borrower or any Subsidiary that would, if
made, have a Material Adverse Effect.
5.11 Financial Condition. (a) The audited consolidated financial statements
of the Borrower and its Subsidiaries dated June 30, 1998, and the related
consolidated statements of income or operations, shareholders' equity and cash
flows for the fiscal year ended on that date, including the notes thereto:
(i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein;
(ii) fairly present, in all material respects, the financial condition
of the Borrower and its Subsidiaries as of the date thereof and results of
operations for the period covered thereby; and
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(iii) except as specifically disclosed in Schedule 5.11, show all
material indebtedness and other liabilities, direct or contingent, of the
Borrower and its consolidated Subsidiaries as of the date thereof,
including liabilities for taxes, material commitments and Contingent
Obligations.
(b) Since June 30, 1998, there has been no Material Adverse Effect.
5.12 Environmental Matters. (a) Except as specifically disclosed in
Schedule 5.12, the on-going operations of the Borrower and each of its
Subsidiaries comply in all respects with all Environmental Laws, except such
non-compliance which would not (if enforced in accordance with applicable law)
result in liability in excess of $500,000 in the aggregate.
(b) Except as specifically disclosed in Schedule 5.12, the Borrower and
each of its Subsidiaries have obtained all licenses, permits, authorizations and
registrations required under any Environmental Law ("Environmental Permits") and
necessary for their respective ordinary course operations, all such
Environmental Permits are in good standing, and the Borrower and each of its
Subsidiaries are in compliance with all material terms and conditions of such
Environmental Permits.
(c) Except as specifically disclosed in Schedule 5.12, none of the
Borrower, any of its Subsidiaries or any of their respective present property or
operations, is subject to any outstanding written order from or agreement with
any Governmental Authority, nor subject to any judicial or docketed
administrative proceeding, respecting any Environmental Law, Environmental Claim
or Hazardous Material.
(d) Except as specifically disclosed in Schedule 5.12, there are no
Hazardous Materials or other conditions or circumstances existing with respect
to any property of the Borrower or any Subsidiary, or arising from operations
prior to the Closing Date, of the Borrower or any of its Subsidiaries that would
reasonably be expected to give rise to Environmental Claims with a potential
liability of the Borrower and its Subsidiaries in excess of $500,000 in the
aggregate for any such condition, circumstance or property. In addition, (i)
neither the Borrower nor any Subsidiary has any underground storage tanks (x)
that are not properly registered or permitted under applicable Environmental
Laws, or (y) that are leaking or disposing of Hazardous Materials off-site, and
(ii) the Borrower and its Subsidiaries have notified all of their employees of
the existence, if any, of any health hazard arising from the conditions of their
employment and have met all notification requirements under Title III of CERCLA
and all other applicable Environmental Laws.
5.13 Collateral Documents. (a) The provisions of each of the Collateral
Documents are effective to create in favor of the Bank, a legal, valid and
enforceable first priority security interest in all right, title and interest of
the Borrower and its Subsidiaries in the collateral described therein; and
financing statements have been filed in the offices in all of the jurisdictions
listed in the schedule to the Security Agreement and each such Security
Agreement has been filed in the U.S. Patent and Trademark Office and the U.S.
Copyright Office.
(b) All representations and warranties of the Borrower and any of its
Subsidiaries party thereto contained in the Collateral Documents are true and
correct in all material respects, except in the case of previously delivered
Perfection Certificates, for such changes as have occurred after the date of the
delivery thereof and have been disclosed to the Bank under Section 6.3(g).
5.14 Regulated Entities. None of the Borrower, any Person controlling the
Borrower, or any Subsidiary, is an "Investment Company" within the meaning of
the Investment Company Act of
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1940. The Borrower is not subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, any
state public utilities code, or any other Federal or state statute or regulation
limiting its ability to incur Indebtedness.
5.15 No Burdensome Restrictions. Neither the Borrower nor any Subsidiary is
a party to or bound by any Contractual Obligation, or subject to any restriction
in any Organization Document, or any Requirement of Law, which could reasonably
be expected to have a Material Adverse Effect.
5.16 Copyrights, Patents, Trademarks and Licenses, etc. The Borrower or its
Subsidiaries own or are licensed or otherwise have the right to use all of the
patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably necessary for
the operation of their respective businesses, without conflict with the rights
of any other Person. To the best knowledge of the Borrower, no slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated to be employed, by the Borrower or any
Subsidiary infringes upon any rights held by any other Person. Except as
specifically disclosed in Schedule 5.5 and to the best knowledge of the
Borrower, no claim or litigation regarding any of the foregoing is pending or
threatened, and no conflicting patent, invention, device, application, principle
or any statute, law, rule, regulation, standard or code is pending or, to the
knowledge of the Borrower, proposed, which, in either case, could reasonably be
expected to have a Material Adverse Effect.
5.17 Subsidiaries. As of the Closing Date, the Borrower has no Subsidiaries
other than those specifically disclosed in part (a) of Schedule 5.17 hereto and
has no equity investments in any other corporation or entity other than those
specifically disclosed in part (b) of Schedule 5.17.
5.18 Insurance. To the best of the Borrower's knowledge, the properties of
the Borrower and its Subsidiaries are insured with financially sound and
reputable insurance companies not Affiliates of the Borrower, in such amounts,
with such deductibles and covering such risks as are customarily carried by
companies engaged in similar businesses and owning similar properties in
localities where the Borrower or such Subsidiary operates.
5.19 Solvency. The Borrower and each of its Subsidiaries are Solvent.
5.20 Swap Obligations. Neither the Borrower nor any of its Subsidiaries has
incurred any outstanding obligations under any Swap Contracts, other than
Permitted Swap Obligations. The Borrower has undertaken its own independent
assessment of its consolidated assets, liabilities and commitments and has
considered appropriate means of mitigating and managing risks associated with
such matters and has not relied on any swap counterparty or any Affiliate of any
swap counterparty in determining whether to enter into any Swap Contract.
5.21 Full Disclosure. None of the representations or warranties made by the
Borrower or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Borrower or any Subsidiary in connection with the Loan
Documents (including the offering and disclosure materials delivered by or on
behalf of the Borrower to the Bank prior to the Closing Date), contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when made
or delivered.
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5.22 Year 2000. On the basis of a comprehensive review and assessment of
the Borrower's and its Subsidiaries' systems and equipment and inquiry made of
the Borrower's and its Subsidiaries' material suppliers, vendors and customers,
the Borrower's management is of the view that the Year 2000 Problem, including
costs of remediation, will not result in a Material Adverse Effect. To the best
knowledge of the Borrower, the Borrower and its Subsidiaries have developed
feasible contingency plans adequately to ensure uninterrupted and unimpaired
business operation in the event of failure of their own or a third party's
systems or equipment due to the Year 2000 Problem, including those vendors,
customers, and suppliers, as well as a general failure of or interruption in its
communications and delivery infrastructure.
ARTICLE VI AFFIRMATIVE COVENANTS
So long as the Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Bank waives
compliance in writing:
6.1 Financial Statements. The Borrower shall deliver to the Bank, in form
and detail satisfactory to the Bank:
(a) as soon as available, but not later than 105 days after the end of each
fiscal year, a copy of the audited consolidated balance sheet of the Borrower
and its Subsidiaries as at the end of such year and the related consolidated
statements of income or operations, shareholders' equity and cash flows for such
year, setting forth in each case in comparative form the figures for the
previous fiscal year, and accompanied by the opinion of BDO Xxxxxxx LLP or
another nationally-recognized independent public accounting firm ("Independent
Auditor") which report shall state that such consolidated financial statements
present fairly in all material respects the financial position and results of
operations as at the date and for the periods indicated in conformity with GAAP
applied on a basis consistent with prior years. Such opinion shall not be
qualified as to (i) going concern, (ii) any limitation in the scope of the
audit, or (iii) possible errors generated by financial reporting and related
systems due to the Year 2000 Problem;
(b) as soon as available, but not later than 50 days after the end of each
of the first three fiscal quarters of each fiscal year, a copy of the unaudited
consolidated balance sheet of the Borrower and its Subsidiaries as of the end of
such quarter and the related consolidated statements of income, shareholders'
equity and cash flows for the period commencing on the first day and ending on
the last day of such quarter, and certified by a Responsible Officer as fairly
presenting, in accordance with GAAP (subject to ordinary, good faith year-end
audit adjustments), the financial position and the results of operations of the
Borrower and the Subsidiaries;
(c) Simultaneously with the delivery of each set of financial statements
referenced in subsection (a) of this Section 6.1, a copy of an unaudited
consolidating balance sheet of the Borrower and its Subsidiaries as at the end
of such year and the related consolidating statement of income, shareholders'
equity and cash flows for such year, certified by a Responsible Officer as
having been developed and used in connection with the preparation of the
financial statements referred to in subsection 6.1(a), and showing comparisons
for such fiscal period to the Financial Projections most recently delivered
pursuant to Section 6.2(c) or Section 4.1(f);
(d) Simultaneously with the delivery of each set of financial statements
referenced in subsection (b) of this Section 6.1, a copy of the unaudited
consolidating balance sheets of the Borrower and its Subsidiaries, and the
related consolidating statements of income, shareholders'
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equity and cash flows for such quarter, all certified by a Responsible Officer
as having been developed and used in connection with the preparation of the
financial statements referred to in subsection 6.1(b), and showing comparisons
for such fiscal period to the Financial Projections most recently delivered
pursuant to Section 6.2(c) or Section 4.1(f); and
(e) as soon as available, but not later than 90 days after the Closing
Date, a copy of the audited consolidated balance sheet of the Borrower and its
Subsidiaries as at September 30, 1998, and after giving effect to the Ampro
Acquisition on the Closing Date and matters incidental thereto, and accompanied
by the opinion of an Independent Auditor which report shall state that such
consolidated financial statements present fairly in all material respects the
financial position as at the date thereof in conformity with GAAP applied on a
basis consistent with prior years.
6.2 Certificates; Other Information. The Borrower shall furnish to the
Bank:
(a) concurrently with the delivery of the financial statements referred to
in subsection 6.1(a), a certificate of the Independent Auditor stating that in
making the examination necessary therefor no knowledge was obtained of any
Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements referred to
in subsections 6.1(a) and (b), a Compliance Certificate executed by a
Responsible Officer;
(c) Within 60 days after the beginning of each fiscal year, Financial
Projections for the period commencing with such fiscal year;
(d) promptly, copies of all financial statements and reports that the
Borrower sends to its shareholders, and copies of all financial statements and
regular, periodical or special reports (including Forms 10K, 10Q and 8K) that
the Borrower or any Subsidiary may make to, or file with, the SEC;
(e) promptly upon sending or receipt, copies of any and all management
letters and correspondence relating to management letters, sent or received by
the Company or any of its Subsidiaries to or from the Independent Auditor;
(f) upon the request of the Bank, a copy of the Company's and its
Subsidiaries' current plan, timetable and budget to address the Year 2000
Problem, together with periodic updates thereof and expenses incurred to date,
any third party assessment of the Company's and its Subsidiaries' Year 2000
remediation efforts, and any Year 2000 contingency plans; and
(g) promptly, such additional information regarding the business, financial
or corporate affairs of the Borrower or any Subsidiary as the Bank may from time
to time request.
6.3 Notices. The Borrower shall notify the Bank:
(a) promptly upon any Responsible Officer acquiring knowledge of: the
occurrence of any Default;
(b) promptly upon any Responsible Officer acquiring knowledge of (i) any
breach or non-performance of, or any default under, any Contractual Obligation
of the Borrower or any of its Subsidiaries which could result in a Material
Adverse Effect; and (ii) any material dispute,
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litigation, investigation, proceeding or suspension which may exist at any time
between the Borrower or any of its Subsidiaries and any Governmental Authority;
(c) promptly upon any Responsible Officer acquiring knowledge of the
commencement of, or any material development in, any litigation or proceeding
affecting the Borrower or any Subsidiary (i) in which the amount of damages
claimed is $500,000 (or its equivalent in another currency or currencies) or
more, (ii) in which injunctive or similar relief is sought and which, if
adversely determined, would reasonably be expected to have a Material Adverse
Effect, or (iii) in which the relief sought is an injunction or other stay of
the performance of this Agreement or any Loan Document;
(d) promptly upon any Responsible Officer acquiring knowledge of (i) any
and all enforcement, cleanup, removal or other governmental or regulatory
actions instituted, completed or threatened against the Borrower or any
Subsidiary or any of their respective properties pursuant to any applicable
Environmental Laws, (ii) all other Environmental Claims, and (iii) any
environmental or similar condition on any real property adjoining or in the
vicinity of the property of the Borrower or any Subsidiary that could reasonably
be anticipated to cause such property or any part thereof to be subject to any
material restrictions on the ownership, occupancy, transferability or use of
such property under any Environmental Laws;
(e) of any other litigation or proceeding affecting the Borrower or any of
its Subsidiaries which the Borrower would be required to report to the SEC
pursuant to the Exchange Act, within four days after reporting the same to the
SEC;
(f) promptly upon any Responsible Officer acquiring knowledge of the
occurrence of any of the following events affecting any ERISA Affiliate (but in
no event more than 10 days after such event), and deliver to the Bank a copy of
any notice with respect to such event that is filed with a Governmental
Authority and any notice delivered by a Governmental Authority to any ERISA
Affiliate with respect to such event:
(i) an ERISA Event;
(ii) a material increase in the Unfunded Pension Liability of any
Pension Plan;
(iii) the adoption of, or the commencement of contributions to, any
Plan subject to Section 412 of the IRC by any ERISA Affiliate; or
(iv) the adoption of any amendment to a Plan subject to Section 412 of
the IRC, if such amendment results in a material increase in contributions
or Unfunded Pension Liability;
(g) promptly upon any Responsible Officer acquiring knowledge of any change
of any information set forth in a Perfection Certificate;
(h) promptly upon any Responsible Officer acquiring knowledge of any
material change in accounting policies or financial reporting practices by the
Borrower or any of its consolidated Subsidiaries; and
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(i) upon the request from time to time of the Bank, of the Swap Termination
Values, together with a description of the method by which such amounts were
determined, relating to any then-outstanding Swap Contracts to which the
Borrower or any of its Subsidiaries is party.
Each notice under this Section shall be accompanied by a written statement
by a Responsible Officer setting forth details of the occurrence referred to
therein, and stating what action the Borrower or any affected Subsidiary
proposes to take with respect thereto and at what time. Each notice under
subsection 6.3(a) shall describe with particularity any and all clauses or
provisions of this Agreement or other Loan Document that have been (or
foreseeably will be) breached or violated.
6.4 Preservation of Corporate Existence, Etc. The Borrower shall, and
shall, except as otherwise permitted by Section 7.3, cause each Subsidiary to:
(a) preserve and maintain in full force and effect its corporate existence
and good standing under the laws of its state or jurisdiction of incorporation;
(b) preserve and maintain in full force and effect all governmental rights,
privileges, qualifications, permits, licenses and franchises necessary or
desirable in the normal conduct of its business;
(c) use reasonable efforts, in the ordinary course of business, to preserve
its business organization and goodwill; and
(d) preserve or renew all of its registered patents, trademarks, trade
names and service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect.
6.5 Maintenance of Property. The Borrower shall maintain, and shall cause
each Subsidiary to maintain, and preserve all its property which is used or
useful in its business in good working order and condition, ordinary wear and
tear excepted (and except for casualty losses which are adequately covered by
insurance) and make all necessary repairs thereto and renewals and replacements
thereof except where the failure to do so could not reasonably be expected to
have a Material Adverse Effect.
6.6 Insurance. In addition to insurance requirements set forth in the
Collateral Documents, the Borrower shall maintain, and shall cause each of its
Subsidiaries to maintain, with reputable independent insurers believed to be
financially sound, insurance with respect to its properties and business against
loss or damage of the kinds customarily insured against by Persons engaged in
the same or similar business, of such types and in such amounts as are
customarily carried under similar circumstances by such other Persons; including
workers' compensation insurance, public liability and property and casualty
insurance which amount shall not be reduced by the Borrower in the absence of 10
days' prior notice to the Bank. All such insurance shall name the Bank as loss
payee/mortgagee and as additional insured, as its interests may appear. Upon
request of the Bank, the Borrower shall furnish the Bank at reasonable intervals
(but not more than once per calendar year) a certificate of a Responsible
Officer of the Borrower (and, if requested by the Bank, any insurance broker of
the Borrower) setting forth the nature and extent of all insurance maintained by
the Borrower and its Subsidiaries in accordance with this Section or any
Collateral Documents (and which, in the case of a certificate of a broker, were
placed through such broker).
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6.7 Payment of Obligations. The Borrower shall, and shall cause each
Subsidiary to, pay and discharge as the same shall become due and payable, all
their respective obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental charges or levies
upon it or its properties or assets, unless the same are being contested in good
faith by appropriate proceedings and adequate reserves in accordance with GAAP
are being maintained by the Borrower or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a Lien upon its
property, unless the same are stayed and being contested in good faith by
appropriate proceedings and adequate reserves in accordance with GAAP are being
maintained by the Borrower or such Subsidiary; and
(c) all Indebtedness, as and when due and payable, but subject to any
subordination provisions contained in any instrument or agreement evidencing
such Indebtedness.
6.8 Compliance with Laws. The Borrower shall comply, and shall cause each
Subsidiary to comply, in all material respects with all Requirements of Law of
any Governmental Authority having jurisdiction over it or its business
(including the Federal Fair Labor Standards Act), except such as may be
contested in good faith or as to which a bona fide dispute may exist.
6.9 Compliance with ERISA. The Borrower shall, and shall cause each of the
other ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the IRC and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
IRC to maintain such qualification; and (c) make all required contributions to
any Plan subject to Section 412 of the IRC.
6.10 Inspection of Property and Books and Records. The Borrower shall
maintain and shall cause each Subsidiary to maintain proper books of record and
account, in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial transactions and matters
involving the assets and business of the Borrower and such Subsidiary. The
Borrower shall permit, and shall cause each Subsidiary to permit,
representatives and independent contractors of the Bank to visit and inspect any
of their respective properties, to examine their respective corporate, financial
and operating records, and make copies thereof or abstracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
directors, officers, and independent public accountants, all at the expense of
the Borrower and at such reasonable times during normal business hours and as
often as may be reasonably desired, upon reasonable advance notice to the
Borrower; provided when an Event of Default exists the Bank may do any of the
foregoing at any time during normal business hours and without advance notice.
6.11 Environmental Laws. (a) The Borrower shall, and shall cause each
Subsidiary to, conduct its operations and keep and maintain its property in
compliance in all material respects with all Environmental Laws.
(b) Upon the written request of the Bank, the Borrower shall submit and
cause each of its Subsidiaries to submit, to the Bank, at the Borrower's sole
cost and expense, at reasonable intervals, a report providing an update of the
status of any environmental, health or safety compliance, hazard or liability
issue identified in any notice or report required pursuant to subsection 6.3(d),
that could, individually or in the aggregate, result in liability in excess of
$500,000.
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6.12 Use of Proceeds. The Borrower shall use the proceeds of the Facility 1
Loans for the sole purpose of making Acquisitions permitted by Section 7.4(d)
and shall use the proceeds of the Facility 2 Loans for working capital and other
general corporate purposes other than for purposes of undertaking an Acquisition
not in contravention of any Requirement of Law or of any Loan Document.
6.13 Guarantors. The Borrower shall cause (a) each of the Borrower's
Subsidiaries on the Closing Date promptly to become a signatory to the Guaranty
as a Guarantor on the Closing Date and to become a signatory to the Security
Agreement as a grantor and (b) each Person which becomes a Subsidiary of the
Borrower after the Closing Date promptly to become a signatory to the Guaranty
as a Guarantor and to become a signatory to the Security Agreement as a grantor
at the time such Person becomes a such a Subsidiary. Upon any Person becoming a
Subsidiary of the Borrower after the Closing Date, the Borrower shall promptly
provide a duly completed Perfection Certificate for such Person and executed by
a Responsible Officer, together with the documents and instruments relating to
such Person the type described in Section 4.1(g) or as the Bank may request.
6.14 Further Assurances. (a) The Borrower shall ensure that all written
information, exhibits and reports furnished to the Bank do not and will not
contain any untrue statement of a material fact and do not and will not omit to
state any material fact or any fact necessary to make the statements contained
therein not misleading in light of the circumstances in which made, and will
promptly disclose to the Bank and correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgment
or recordation thereof.
(b) Promptly upon request by the Bank, the Borrower shall (and shall cause
any of its Subsidiaries to) do, execute, acknowledge, deliver, record,
re-record, file, re-file, register and re-register, any and all such further
acts, deeds, conveyances, security agreements, mortgages, assignments, estoppel
certificates, financing statements and continuations thereof, termination
statements, notices of assignment, transfers, certificates, assurances and other
instruments the Bank may reasonably require from time to time in order (i) to
carry out more effectively the purposes of this Agreement or any other Loan
Document, (ii) to subject to the Liens created by any of the Collateral
Documents any of the properties, rights or interests covered by any of the
Collateral Documents, (iii) to perfect and maintain the validity, effectiveness
and priority of any of the Collateral Documents and the Liens intended to be
created thereby, and (iv) to better assure, convey, grant, assign, transfer,
preserve, protect and confirm to the Bank the rights granted or now or hereafter
intended to be granted to the Bank under any Loan Document or under any other
document executed in connection therewith.
ARTICLE VII NEGATIVE COVENANTS
So long as the Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Bank waives
compliance in writing:
7.1 Limitation on Liens. The Borrower shall not, and shall not suffer or
permit any Subsidiary to, directly or indirectly, make, create, incur, assume or
suffer to exist any Lien upon or with respect to any part of its property,
whether now owned or hereafter acquired, other than the following ("Permitted
Liens"):
(a) any Lien existing on property of the Borrower or any Subsidiary on the
Closing Date and set forth in Schedule 7.1 securing Indebtedness outstanding on
such date;
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(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental charges which
are not delinquent or remain payable without penalty, or to the extent that
non-payment thereof is permitted by Section 6.7, provided that no notice of lien
has been filed or recorded under the IRC;
(d) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the ordinary course of business
which are not delinquent or remain payable without penalty or which are being
contested in good faith and by appropriate proceedings, which proceedings have
the effect of preventing the forfeiture or sale of the property subject thereto;
(e) Liens (other than any Lien imposed by ERISA and other than on the
Collateral except for cash deposits made for the specific purpose of serving as
security under such Lien) consisting of pledges or deposits required in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other social security legislation;
(f) Liens on the property of the Borrower or its Subsidiary securing (i)
the non-delinquent performance of bids, trade contracts (other than for borrowed
money), leases, statutory obligations, (ii) contingent obligations on surety and
appeal bonds, and (iii) other non-delinquent obligations of a like nature; in
each case, incurred in the ordinary course of business; provided that all such
Liens in the aggregate would not (even if enforced) cause a Material Adverse
Effect;
(g) Liens consisting of judgment or judicial attachment liens, provided
that the enforcement of such Liens is effectively stayed and all such liens in
the aggregate at any time outstanding for the Borrower and its Subsidiaries do
not exceed $100,000;
(h) 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 interfere with the ordinary conduct of
the businesses of the Borrower and its Subsidiaries;
(i) Liens on assets of corporations which become Subsidiaries after the
date of this Agreement, provided that such Liens existed at the time the
respective corporations became Subsidiaries and were not created in anticipation
thereof and that the amounts thereof do not exceed that permitted by Section
7.5(e);
(j) purchase money security interests on any property acquired or held by
the Borrower or its Subsidiaries in the ordinary course of business, securing
Indebtedness incurred or assumed for the purpose of financing all or any part of
the cost of acquiring such property; provided that (i) any such Lien attaches to
such property concurrently with or within 20 days after the acquisition thereof,
(ii) such Lien attaches solely to the property so acquired in such transaction,
(iii) the principal amount of the debt secured thereby does not exceed 100% of
the cost of such property, and (iv) the principal amount of the Indebtedness
secured by any and all such purchase money security interests shall not at any
time exceed that permitted by 7.5(e);
(k) Liens securing obligations in respect of capital leases on assets
subject to such leases, provided that such capital leases are otherwise
permitted hereunder and that the amounts thereof do not exceed that permitted by
Section 7.5(e);
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(l) Liens arising solely by virtue of any statutory or common law provision
relating to banker's liens, rights of set-off or similar rights and remedies as
to deposit accounts or other funds maintained with a creditor depository
institution; provided that (i) such deposit account is not a dedicated cash
collateral account and is not subject to restrictions against access by the
Borrower in excess of those set forth by regulations promulgated by the FRB, and
(ii) such deposit account is not intended by the Borrower or any Subsidiary to
provide collateral to the depository institution.
7.2 Disposition of Assets. The Borrower shall not, and shall not suffer or
permit any Subsidiary to, directly or indirectly, sell, assign, lease, convey,
transfer or otherwise dispose of (whether in one or a series of transactions)
any property (including accounts and notes receivable, with or without recourse)
or enter into any agreement to do any of the foregoing, except:
(a) dispositions of inventory, or used, obsolete, worn-out or surplus
equipment, all in the ordinary course of business;
(b) the sale of equipment to the extent that such equipment is exchanged
for credit against the purchase price of similar replacement equipment, or the
proceeds of such sale are reasonably promptly applied to the purchase price of
such replacement equipment; and
(c) dispositions not otherwise permitted hereunder which are made for fair
market value; provided that (i) at the time of any disposition, no Event of
Default shall exist or shall result from such disposition, (ii) the aggregate
sales price from such disposition shall be paid in cash, and (iii) the aggregate
value of all assets so sold by the Borrower and its Subsidiaries, together,
shall not exceed in any fiscal year $500,000.
7.3 Consolidations and Mergers. The Borrower shall not, and shall not
suffer or permit any Subsidiary to, merge, consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to or in favor of any Person, except:
(a) any Subsidiary may merge with (i) the Borrower if the Borrower is the
continuing or surviving corporation or (ii) any one or more Subsidiaries
provided that if any transaction is between a Subsidiary and a Wholly-Owned
Subsidiary, the Wholly-Owned Subsidiary is the continuing or surviving
corporation;
(b) any Subsidiary may sell all or substantially all of its assets (upon
voluntary liquidation or otherwise), to the Borrower or another Wholly-Owned
Subsidiary; and
(c) any Person may merge or consolidate with a Subsidiary or the Borrower
in connection with a transaction permitted by Section 7.4(d) so long as the
Borrower or such Subsidiary, as the case may be, is the continuing or surviving
corporation.
7.4 Loans and Investments. The Borrower shall not purchase or acquire, or
suffer or permit any Subsidiary to purchase or acquire, or make any commitment
therefor, any capital stock, equity interest, or any obligations or other
securities of, or any interest in, any Person, or make or commit to make any
Acquisitions, or make or commit to make any advance, loan, extension of credit
or capital contribution to or any other investment in, any Person including any
Affiliate of the Borrower (together, "Investments"), except for:
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(a) Investments held by the Borrower or Subsidiary in the form of cash
equivalents (including money market mutual funds with Pacific Horizon);
(b) extensions of credit in the nature of accounts receivable or notes
receivable arising from the sale or lease of goods or services in the ordinary
course of business;
(c) extensions of credit by the Borrower to any of its Wholly-Owned
Subsidiaries or by any of its Subsidiaries to another of its Wholly-Owned
Subsidiaries;
(d) Investments incurred in order to consummate Acquisitions otherwise
permitted herein, provided that such Acquisitions comply with the following: (i)
each Acquisition is undertaken in accordance with all applicable Requirements of
Law; (ii) the prior, effective written consent or approval to such Acquisition
of the board of directors or equivalent governing body of the target is
obtained, (iii) the target shall be in the same or a related line of business as
the Borrower, (iv) the financial statements for the target for the four fiscal
quarter period immediately preceding the date of such Acquisition show adjusted
EBITDA of the target of not less than zero, (v) after giving effect to the
Acquisition (and any financing related thereto), the Borrower and its
Subsidiaries are in pro forma covenant compliance with Section 7.18, (vi) no
Default exists or shall occur as a result of the Acquisition, (vii) immediately
upon consummation of the Acquisition, the target shall become a Guarantor, and
all assets of the target shall become part of the Collateral, free and clear of
other Liens, except as otherwise permitted by Section 7.1, (viii) prior to the
Acquisition the Bank shall have received and reviewed environmental due
diligence on the target in form and substance satisfactory to the Bank, (ix) if
such Acquisition involves a total consideration to be paid by the Borrower
(including cash, Indebtedness incurred or assumed, value of non-competition
agreements, and value of earn-up obligations) exceeding $2,500,000, then the
Borrower shall provide a Compliance Certificate to the Bank showing compliance
with the Provisions of this Agreement on a pro forma basis after giving effect
to such acquisition, (x) if such Acquisition involves Indebtedness incurred or
assumed by the Borrower of more than $5,000,000 (including borrowings under this
Agreement), then the Borrower shall have delivered to the Bank at the time of
such Acquisition (A) pre and post closing balance sheets, and a reconciliation
showing the accounting adjustments resulting from such acquisition and (B)
revised Financial Projections to the Bank which give effect to such Acquisition
and such additional Indebtedness, (xi) such Acquisition, together with any
related Acquisitions does not involve a total consideration to be paid by the
Borrower (including cash, Indebtedness incurred or assumed, value of
non-competition agreements, and value of earn-up obligations) of $10,000,000 or
more, and (xii) the aggregate total consideration paid by the Borrower
(including cash, Indebtedness incurred or assumed, value of non-competition
agreements, and value of earn-up obligations) for all Acquisitions in any fiscal
year does not exceed $15,000,000;
(e) Investments incurred in order to consummate the Ampro Acquisition;
(f) Investments constituting Permitted Swap Obligations or payments or
advances under Swap Contracts relating to Permitted Swap Obligations; and
(g) Investments in the form of securities received in the ordinary course
of business in the settlement of claims or as distributions in payment of claims
in an Insolvency Proceeding.
7.5 Limitation on Indebtedness. The Borrower shall not, and shall not
suffer or permit any Subsidiary to, create, incur, assume, suffer to exist, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
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(a) Indebtedness incurred pursuant to this Agreement;
(b) Indebtedness consisting of Contingent Obligations permitted pursuant to
Section 7.8;
(c) Indebtedness existing on the Closing Date and set forth in Schedule
7.5;
(d) Subordinated Debt not exceeding $63,250,000 in total principal amount
at any time outstanding;
(e) Indebtedness secured by Liens permitted by subsection 7.1(i), (j) and
(k) in an aggregate amount outstanding not to exceed (i) when taken together
with the Indebtedness described in Section 7.5(c), $5,000,000 in the aggregate
or (ii) $2,500,000 incurred in any fiscal year; and
(f) Additional unsecured Indebtedness not to exceed $5,000,000 in the
aggregate at any time outstanding.
7.6 Transactions with Affiliates. Except as set forth in Schedule 7.6, the
Borrower shall not, and shall not suffer or permit any Subsidiary to, enter into
any transaction with any Affiliate of the Borrower, except upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary than would
obtain in a comparable arm's-length transaction with a Person not an Affiliate
of the Borrower or such Subsidiary.
7.7 Use of Proceeds. The Borrower shall not, and shall not suffer or
permit any Subsidiary to, use any portion of the Loan proceeds, directly or
indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or otherwise
refinance indebtedness of the Borrower or others incurred to purchase or carry
Margin Stock, (iii) to extend credit for the purpose of purchasing or carrying
any Margin Stock, (iv) to acquire any security in any transaction that is
subject to Section 13 or 14 of the Exchange Act or (v) except as permitted by
Section 7.4(d), to enter into or consummate any Acquisition.
7.8 Contingent Obligations. The Borrower shall not, and shall not suffer or
permit any Subsidiary to, create, incur, assume or suffer to exist any
Contingent Obligations except:
(a) Endorsements for collection or deposit in the ordinary course of
business;
(b) Permitted Swap Obligations;
(c) Contingent Obligations of the Borrower and its Subsidiaries existing as
of the Closing Date and listed in Schedule 7.8;
(d) Contingent Obligations with respect to Surety Instruments incurred in
the ordinary course of business; and
(e) Indemnification obligations (i) in favor of directors, officers and
employees of the Borrower and its Subsidiaries under applicable corporation
statutes, certificates or articles of incorporation, by-laws and employment
contracts, (ii) under purchase orders, sales orders and sales agreements
pertaining to sales of products by the Borrower and its Subsidiaries, and (iii)
under Acquisition agreements in respect of Acquisitions.
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7.9 Joint Ventures. The Borrower shall not, and shall not suffer or permit
any Subsidiary to enter into any Joint Venture, other than in the ordinary
course of business.
7.10 Lease Obligations. The Borrower shall not, and shall not suffer or
permit any Subsidiary to, create or suffer to exist any obligations for the
payment of rent for any property under lease or agreement to lease, except for:
(a) leases of the Borrower and of Subsidiaries in existence on the Closing
Date and any renewal, extension or refinancing thereof;
(b) operating leases entered into by the Borrower or any Subsidiary after
the Closing Date in the ordinary course of business;
(c) leases entered into by the Borrower or any Subsidiary after the Closing
Date pursuant to sale-leaseback transactions permitted under subsection 7.2(d);
(d) capital leases other than those permitted under clauses (a) and (c) of
this Section, entered into by the Borrower or any Subsidiary after the Closing
Date to finance the acquisition of equipment to the extent permitted by Section
7.1(k).
7.11 Restricted Payments. The Borrower shall not, and shall not suffer or
permit any Subsidiary to, declare or make any dividend payment or other
distribution of assets, properties, cash, rights, obligations or securities on
account of any shares of any class of its capital stock, or purchase, redeem or
otherwise acquire for value any shares of its capital stock or any warrants,
rights or options to acquire such shares, now or hereafter outstanding; except
that the Borrower may:
(a) make the payment of any distribution by a Subsidiary of the Borrower to
the Borrower or to a Wholly-Owned Subsidiary;
(b) declare and make dividend payments or other distributions payable
solely in its capital stock;
(c) purchase, redeem or otherwise acquire shares of its common stock or
warrants or options to acquire any such shares with the proceeds received from
the substantially concurrent issue of new shares of its common stock; and
(d) declare or pay cash dividends to its stockholders and purchase, redeem
or otherwise acquire shares of its capital stock or warrants, rights or options
to acquire any such shares for cash in an aggregate amount for all such payments
after the Closing Date not exceeding $5,000,000; provided that, immediately
after giving effect to such proposed action, no Default would exist.
7.12 ERISA. The Borrower shall not, and shall not suffer or permit any of
the other ERISA Affiliates to: (a) engage in a prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
has resulted or could reasonably expected to result in liability of the Borrower
in an aggregate amount in excess of $500,000; or (b) engage in a transaction
that could be subject to Section 4069 or 4212(c) of ERISA.
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7.13 Change in Business. The Borrower shall not, and shall not suffer or
permit any Subsidiary to, engage in any material line of business substantially
different from those lines of business carried on by the Borrower and its
Subsidiaries on the date hereof.
7.14 Accounting Changes. The Borrower shall not, and shall not suffer or
permit any Subsidiary to, make any significant change in accounting treatment or
reporting practices, except as required by GAAP, or change the fiscal year of
the Borrower or of any Subsidiary.
7.15 Subordinated Debt. The Borrower will not, and will not permit any of
its Subsidiaries to, (a) consent to any amendment, modification, supplement,
waiver or termination of any of the provisions of any Subordinated Debt or (b)
make any payment or other distribution on account of the purchase, redemption,
retirement, acquisition, or obligations in respect of any Subordinated Debt,
provided that, so long as no Event of Default shall have occurred and be
continuing under this Agreement, the Borrower and its Subsidiaries shall be
entitled to make regularly scheduled payments of interest on account of
Subordinated Debt.
7.16 Restrictive Agreements. The Borrower will not, and will not permit any
Subsidiary of the Borrower to, agree to restrict or otherwise limit or condition
(a) the payment of dividends by any Subsidiary of the Borrower to the Borrower
or to a Wholly-Owned Subsidiary of the Borrower, or (b) the grant of Liens by
the Borrower or any Subsidiary of the Borrower to secure the Obligations.
7.17 Limitation on Voluntary Payments of Indebtedness. The Borrower will
not, and will not permit any Subsidiary of the Borrower to, make any voluntary
or optional payment or prepayment on or redemption or acquisition for value of
(including, without limitation, by way of depositing with the trustee with
respect to any Indebtedness of the Borrower or any Subsidiary money or
securities before such Indebtedness is due for the purpose of paying such
Indebtedness when due) any Indebtedness of the Borrower or any Subsidiary other
than (i) the Loans, or (ii) Indebtedness of any Subsidiary owing to the Borrower
or any other Subsidiary.
7.18 Financial Covenants.
(a) Interest Coverage Ratio. The Borrower shall not permit the Interest
Coverage Ratio for any four fiscal quarter period (on a rolling four quarter
basis) to be less than (i) 2.75 to 1.00: for the four fiscal quarter periods
ending December 31, 1998, and March 31, 1999, and (ii) 3.00 to 1.00 for the four
fiscal quarter periods ending after March 31, 1999.
(b) Leverage Ratio. The Borrower shall not permit the Leverage Ratio for
any four fiscal quarter period (on a rolling four quarter basis) to exceed (i)
4.25 to 1.00: for the four fiscal quarter period ending on December 31, 1998 and
for any four fiscal quarter period ending on March 31 of any fiscal year (other
than Xxxxx 00, 0000), (xx) 4.50 to 1.00 for the four fiscal quarter period
ending on March 31, 1999, and (iii) 4.00 to 1.00 for any other four fiscal
quarter period.
(c) Fixed Charge Coverage Ratio. The Borrower shall not permit the Fixed
Charge Coverage Ratio to be less than (i) 2.00 to 1.00: (A) for the two fiscal
quarter period ending Xxxxx 00, 0000, (X) for the three fiscal quarter period
ending June 30, 1999, and (C) for any four fiscal quarter period (on a rolling
four quarter basis) ending on or after September 30, 1999, and on or before
September 30, 2001, (ii) 1.50 to 1.00 for any four fiscal quarter period (on
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a rolling four quarter basis) ending after September 30, 2001, and on or before
March 31, 2002, and (iii) 1.25 to 1.00 for any four quarter period (on a rolling
four quarter basis) ending after March 31, 2002.
(d) Consolidated EBITDA. The Borrower shall not permit Consolidated EBITDA
(Ampro Adjusted) for any four fiscal quarter period (on a rolling four quarter
basis) to be less than (i) $19,000,000 for the four fiscal quarter period ending
December 31, 1998, (ii) $19,500,000 for the four fiscal quarter period ending
Xxxxx 00, 0000, (xxx) $20,000,000 for the four fiscal quarter period ending June
30, 1999, (iv) $22,000,000 for any four fiscal quarter period ending on or after
September 30, 1999.
ARTICLE VIII EVENTS OF DEFAULT
8.1 Event of Default. Any of the following shall constitute an "Event of
Default":
(a) Non-Payment. The Borrower fails to make, (i) when and as required to be
made herein, payments of any amount of principal of any Loan or (iii) within
five days after the same becomes due, payment of any interest, fee or any other
amount payable hereunder or under any other Loan Document; or
(b) Representation or Warranty. Any representation or warranty by the
Borrower or any Subsidiary made or deemed made herein, in any other Loan
Document, or which is contained in any certificate, document or financial or
other statement by the Borrower, any Subsidiary, or any Responsible Officer,
furnished at any time under this Agreement, or in or under any other Loan
Document is incorrect in any material respect on or as of the date made or
deemed made; or
(c) Specific Defaults. The Borrower fails to perform or observe any term,
covenant or agreement contained in any of Section 6.1, 6.2, 6.3 or 6.9 or in
Article VII; or
(d) Other Defaults. The Borrower or any Subsidiary party thereto fails to
perform or observe any other term or covenant contained in this Agreement or any
other Loan Document, and such default shall continue unremedied for a period of
30 days after the earlier of (i) the date upon which a Responsible Officer knew
or reasonably should have known of such failure or (ii) the date upon which
written notice thereof is given to the Borrower by the Bank; or
(e) Cross-Default. (i) The Borrower or any Subsidiary (A) fails to make any
payment in respect of any Indebtedness or Contingent Obligation having an
aggregate principal amount (including undrawn committed or available amounts and
including amounts owing to all creditors under any combined or syndicated credit
arrangement) of more than $500,000 when due (whether by scheduled maturity,
required prepayment, acceleration, demand, or otherwise) or (B) fails to perform
or observe any other condition or covenant, or any other event shall occur or
condition exist, under any agreement or instrument relating to any such
Indebtedness or Contingent Obligation, if the effect of such failure, event or
condition is to cause, or to permit the holder or holders of such Indebtedness
or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to cause such
Indebtedness to be declared to be due and payable prior to its stated maturity,
or such Contingent Obligation to become payable or cash collateral in respect
thereof to be demanded; or
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(f) Insolvency; Voluntary Proceedings. The Borrower or any Subsidiary (i)
ceases or fails to be Solvent, or generally fails to pay, or admits in writing
its inability to pay, its debts as they become due, subject to applicable grace
periods, if any, whether at stated maturity or otherwise; (ii) voluntarily
ceases to conduct its business in the ordinary course; (iii) commences any
Insolvency Proceeding with respect to itself; or (iv) takes any action to
effectuate or authorize any of the foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is
commenced or filed against the Borrower or any Subsidiary, or any writ,
judgment, warrant of attachment, execution or similar process, is issued or
levied against a substantial part of the Borrower's or any Subsidiary's
properties, and any such proceeding or petition shall not be dismissed, or such
writ, judgment, warrant of attachment, execution or similar process shall not be
released, vacated or fully bonded within 60 days after commencement, filing or
levy; (ii) the Borrower or any Subsidiary admits the material allegations of a
petition against it in any Insolvency Proceeding, or an order for relief (or
similar order under non-U.S. law) is ordered in any Insolvency Proceeding; or
(iii) the Borrower or any Subsidiary acquiesces in the appointment of a
receiver, trustee, custodian, conservator, liquidator, mortgagee in possession
(or agent therefor), or other similar Person for itself or a substantial portion
of its property or business; or
(h) ERISA. (i) An ERISA Event shall occur with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of the Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $500,000; or
(ii) the aggregate amount of Unfunded Pension Liability among all Pension Plans
at any time exceeds $500,000; or (iii) any ERISA Affiliate shall fail to pay
when due, after the expiration of any applicable grace period, any installment
payment with respect to its withdrawal liability under Section 4201 of ERISA
under a Multiemployer Plan in an aggregate amount in excess of $500,000; or
(i) Monetary Judgments. One or more non-interlocutory judgments,
non-interlocutory orders, decrees or arbitration awards is entered against the
Borrower or any Subsidiary involving in the aggregate a liability (to the extent
not covered by independent third-party insurance as to which the insurer does
not dispute coverage) as to any single or related series of transactions,
incidents or conditions, of $500,000 or more, and the same shall remain
unvacated and unstayed pending appeal for a period of 10 days after the entry
thereof; or
(j) Non-Monetary Judgments. Any non-monetary judgment, order or decree is
entered against the Borrower or any Subsidiary which does or would reasonably be
expected to have a Material Adverse Effect, and there shall be any period of 10
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect; or
(k) Change of Control. There occurs any Change of Control; or
(l) Loss of Licenses. The Federal Environmental Protection Agency or any
other Governmental Authority revokes or fails to renew any material license,
permit or franchise of the Borrower or any Subsidiary, or the Borrower or any
Subsidiary for any reason loses any material license, permit or franchise, or
the Borrower or any Subsidiary suffers the imposition of any restraining order,
escrow, suspension or impound of funds in connection with any proceeding
(judicial or administrative) with respect to any material license, permit or
franchise; or
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(m) Adverse Change. There occurs a Material Adverse Effect; or
(n) Loss of Material Customer. Any Major Customer shall substantially cease
to purchase inventory form the Borrower or its Subsidiaries or shall announce
its intention to do so; or
(o) Guarantor Defaults. Any Guarantor fails in any material respect to
perform or observe any term, covenant or agreement in the Guaranty; or the
Guaranty is for any reason partially (including with respect to future advances)
or wholly revoked or invalidated, or otherwise ceases to be in full force and
effect, or any Guarantor contests in any manner the validity or enforceability
thereof or denies that it has any further liability or obligation thereunder; or
(p) Invalidity of Subordination Provisions. The subordination provisions of
the Subordinated Debt Documents or any agreement or instrument governing any
Subordinated Debt is for any reason revoked or invalidated, or otherwise cease
to be in full force and effect, or any holder thereof, or any trustee, agent, or
other Person acting on behalf of any such holder, contests in any manner the
validity or enforceability thereof or denies that it has any further liability
or obligation thereunder, or the Indebtedness hereunder is for any reason
subordinated or does not have the priority contemplated by this Agreement or
such subordination provisions; or
(q) Collateral.
(i) any provision of any Collateral Document shall for any reason
cease to be valid and binding on or enforceable against the Borrower or any
Subsidiary party thereto or the Borrower or any Subsidiary shall so state
in writing or bring an action to limit its obligations or liabilities
thereunder; or
(ii) any Collateral Document shall for any reason (other than pursuant
to the terms thereof) cease to create a valid security interest in the
Collateral purported to be covered thereby or such security interest shall
for any reason cease to be a perfected and first priority security interest
subject only to Permitted Liens.
8.2 Remedies. If any Event of Default occurs, the Bank may:
(a) declare the Commitments of the Bank to make Loans and Issue Letters of
Credit to be terminated, whereupon such commitments shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans and L/C
Obligations (including the obligation to Cash Collateralize), all interest
accrued and unpaid thereon, and all other amounts owing or payable hereunder or
under any other Loan Document to be immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower; and
(c) exercise all rights and remedies available to it under the Loan
Documents or applicable law ;
provided that upon the occurrence of any event specified in subsection (f) or
(g) of Section 8.1 (in the case of clause (i) of subsection (g) upon the
expiration of the 60-day period mentioned therein), the obligation of the Bank
to make Loans shall automatically terminate and the unpaid principal amount of
all outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable without further act of the Bank.
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8.3 Rights Not Exclusive. The rights provided for in this Agreement and the
other Loan Documents are cumulative and are not exclusive of any other rights,
powers, privileges or remedies provided by law or in equity, or under any other
instrument, document or agreement now existing or hereafter arising.
ARTICLE IX MISCELLANEOUS
9.1 Amendments and Waivers. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent with respect to any
departure by the Borrower or any applicable Subsidiary therefrom, shall be
effective unless the same shall be in writing and signed by the Bank and the
Borrower, and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
9.2 Notices. (a) All notices, requests, consents, approvals, waivers and
other communications shall be in writing (including, unless the context
expressly otherwise provides, by facsimile transmission, provided that any
matter transmitted by the Borrower by facsimile (i) shall be immediately
confirmed by a telephone call to the recipient at the number specified on the
signature pages hereof, and (ii) shall be followed promptly by delivery of a
hard copy original thereof) and mailed, faxed or delivered, to the address or
facsimile number specified for notices on the signature pages hereof; or, as
directed to the Borrower or the Bank, to such other address as shall be
designated by such party in a written notice to the other parties, and as
directed to any other party, at such other address as shall be designated by
such party in a written notice to the Borrower and the Bank.
(b) All such notices, requests and communications shall, when transmitted
by overnight delivery, or faxed, be effective when delivered for overnight
(next-day) delivery, or transmitted in legible form by facsimile machine,
respectively, or if mailed, upon the third Business Day after the date deposited
into the U.S. mail, or if delivered, upon delivery; except that notices pursuant
to Article II shall not be effective until actually received by the Bank.
(c) Any agreement of the Bank herein to receive certain notices by
telephone or facsimile is solely for the convenience and at the request of the
Borrower. The Bank shall be entitled to rely on the authority of any Person
purporting to be a Person authorized by the Borrower to give such notice and the
Bank shall not have any liability to the Borrower or other Person on account of
any action taken or not taken by the Bank in reliance upon such telephonic or
facsimile notice. The obligation of the Borrower to repay the Loans shall not be
affected in any way or to any extent by any failure by the Bank to receive
written confirmation of any telephonic or facsimile notice or the receipt by the
Bank of a confirmation which is at variance with the terms understood by the
Bank to be contained in the telephonic or facsimile notice.
9.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Bank, any right, remedy, power or privilege
hereunder, 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.
9.4 Costs and Expenses. The Borrower shall:
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(a) whether or not the transactions contemplated hereby are consummated,
pay or reimburse the Bank within five Business Days after demand (subject to
subsection 4.1(e)) for all costs and expenses incurred by the Bank in connection
with the development, preparation, delivery, administration and execution of,
and any amendment, supplement, waiver or modification to (in each case, whether
or not consummated), this Agreement, any Loan Document and any other documents
prepared in connection herewith or therewith, and the consummation of the
transactions contemplated hereby and thereby, including reasonable Attorney
Costs incurred by the Bank with respect thereto; and
(b) pay or reimburse the Bank within five Business Days after demand
(subject to subsection 4.1(e)) for all costs and expenses (including reasonable
Attorney Costs) incurred by it in connection with the enforcement, attempted
enforcement, or preservation of any rights or remedies under this Agreement or
any other Loan Document during the existence of an Event of Default or after
acceleration of the Loans (including in connection with any "workout" or
restructuring regarding the Loans, and including in any Insolvency Proceeding or
appellate proceeding); and
(c) pay or reimburse the Bank within five Business Days after demand
(subject to subsection 4.1(e)) for all appraisal (including the allocated cost
of internal appraisal services), audit, environmental inspection and review
(including the allocated cost of such internal services), search and filing
costs, fees and expenses, incurred or sustained by the Bank in connection with
the matters referred to under subsections (a) and (b) of this Section.
9.5 Borrower Indemnification. (a) Whether or not the transactions
contemplated hereby are consummated, the Borrower shall indemnify, defend and
hold the Bank-Related Persons, and each of its respective officers, directors,
employees, counsel, agents and attorneys-in-fact (each, an "Indemnified Person")
harmless from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses and disbursements
(including reasonable Attorney Costs) of any kind or nature whatsoever which may
at any time (including at any time following repayment of the Loans be imposed
on, incurred by or asserted against any such Person in any way relating to or
arising out of this Agreement or any document contemplated by or referred to
herein, or the transactions contemplated hereby, or any action taken or omitted
by any such Person under or in connection with any of the foregoing, including
with respect to any investigation, litigation or proceeding (including any
Insolvency Proceeding or appellate proceeding) related to or arising out of this
Agreement or the Loans or the use of the proceeds thereof, whether or not any
Indemnified Person is a party thereto (all the foregoing, collectively, the
"Indemnified Liabilities"); provided that the Borrower shall have no obligation
hereunder to any Indemnified Person with respect to Indemnified Liabilities
resulting solely from the gross negligence or willful misconduct of such
Indemnified Person. The agreements in this Section shall survive payment of all
other Obligations.
(b) Survival; Defense. The obligations in this Section shall survive
payment of all other Obligations. At the election of any Indemnified Person, the
Borrower shall defend such Indemnified Person using legal counsel satisfactory
to such Indemnified Person in such Person's sole discretion, at the sole cost
and expense of the Borrower. All amounts owing under this Section shall be paid
within 30 days after demand.
9.6 Marshalling; Payments Set Aside. The Bank has no obligation to xxxxxxxx
any assets in favor of the Borrower or any other Person or against or in payment
of any or all of the Obligations. To the extent that the Borrower makes a
payment to the Bank, or the Bank exercises its right of set-off, and such
payment or the proceeds of such set-off or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any
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settlement entered into by the Bank in its discretion) to be repaid to a
trustee, receiver or any other party, in connection with any Insolvency
Proceeding or otherwise, then to the extent of such recovery the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such set-off
had not occurred.
9.7 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto 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 the Bank.
9.8 Confidentiality. The Bank agrees to take and to cause its Affiliates to
take normal and reasonable precautions and exercise due care to maintain the
confidentiality of all information identified as "confidential" or "secret" by
the Borrower and provided to it by the Borrower or any Subsidiary, under this
Agreement or any other Loan Document, and neither it nor any of its Affiliates
shall use any such information other than in connection with or in enforcement
of this Agreement and the other Loan Documents or in connection with other
business now or hereafter existing or contemplated with the Borrower or any
Subsidiary; except to the extent such information (i) was or becomes generally
available to the public other than as a result of disclosure by the Bank, or
(ii) was or becomes available on a non-confidential basis from a source other
than the Borrower, provided that such source is not bound by a confidentiality
agreement with the Borrower known to the Bank; provided that the Bank may
disclose such information (A) at the request or pursuant to any requirement of
any Governmental Authority to which the Bank is subject or in connection with an
examination of the Bank by any such authority; (B) pursuant to subpoena or other
court process; (C) when required to do so in accordance with the provisions of
any applicable Requirement of Law; (D) to the extent reasonably required in
connection with any litigation or proceeding to which the Bank or its Affiliates
may be party; (E) to the extent reasonably required in connection with the
exercise of any remedy hereunder or under any other Loan Document; (F) to the
Bank's independent auditors and other professional advisors; (G) to any
participant in or assignee of the Obligations, actual or potential, provided
that such Person agrees in writing to keep such information confidential to the
same extent required of the Bank hereunder; (H) as to the Bank or its
Affiliates, as expressly permitted under the terms of any other document or
agreement regarding confidentiality to which the Borrower or any Subsidiary is
party or is deemed party with the Bank or such Affiliate; and (I) to its
Affiliates.
9.9 Set-off. In addition to any rights and remedies of the Bank provided by
law, if an Event of Default exists or the Loans have been accelerated, the Bank
is authorized at any time and from time to time, without prior notice to the
Borrower, any such notice being waived by the Borrower to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, the Bank to or for the credit or the account
of the Borrower against any and all Obligations, now or hereafter existing,
irrespective of whether or not the Bank shall have made demand under this
Agreement or any Loan Document and although such Obligations may be contingent
or unmatured. The Bank agrees promptly to notify the Borrower after any such
set-off and application made by the Bank; provided that the failure to give such
notice shall not affect the validity of such set-off and application.
9.10 Automatic Debits of Fees. With respect to any commitment fee,
arrangement fee, or other fee, or any other cost or expense (including Attorney
Costs) due and payable to the Bank under the Loan Documents, the Borrower hereby
irrevocably authorizes the Bank to debit any deposit account of the Borrower
with the Bank in an amount such that the aggregate amount debited from all
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such deposit accounts does not exceed such fee or other cost or expense. If
there are insufficient funds in such deposit accounts to cover the amount of the
fee or other cost or expense then due, such debits will be reversed (in whole or
in part, in the Bank's sole discretion) and such amount not debited shall be
deemed to be unpaid. No such debit under this Section shall be deemed a set-off.
9.11 Counterparts; Facsimile Signatures. This Agreement may be executed in
any number of separate counterparts, each of which, when so executed, shall be
deemed an original, and all of said counterparts taken together shall be deemed
to constitute but one and the same instrument. Delivery of an executed
counterpart of the signature page to this Agreement by telecopier shall be
effective as delivery of a manually executed counterpart of this Agreement. Any
party delivering an executed counterpart of the signature page to this Agreement
by telecopier shall thereafter also promptly deliver a manually executed
counterpart of this Agreement, but the failure to deliver such manually executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement.
9.12 Severability. The illegality or unenforceability of any provision of
this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
9.13 No Third Parties Benefited. This Agreement is made and entered into
for the sole protection and legal benefit of the Borrower, the Bank and the
Bank-Related Persons, and their permitted successors and assigns, and no other
Person shall be a direct or indirect legal beneficiary of, or have any direct or
indirect cause of action or claim in connection with, this Agreement or any of
the other Loan Documents.
9.14 Governing Law and Jurisdiction. (a) THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA;
PROVIDED THAT THE BANK SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR
OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF CALIFORNIA, AND BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWER AND THE BANK CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF
THOSE COURTS. EACH OF THE BORROWER AND THE BANK IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE BORROWER AND THE BANK EACH WAIVE
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE
BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.
9.15 Arbitration.
(a) This Section concerns the resolution of any controversies or claims
between the Borrower and the Bank, including but not limited to those that arise
from: (i) this Agreement
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(including any renewals, extensions or modifications of this Agreement); (ii)
any document, agreement or procedure related to or delivered in connection with
this Agreement; (iii) any violation of this Agreement; or (iv) any claims for
damages resulting from any business conducted between the Borrower and the Bank,
including claims for injury to persons, property or business interests (torts).
(b) At the request of the Borrower or the Bank, any such controversies or
claims will be settled by arbitration in accordance with the United States
Arbitration Act. The United States Arbitration Act will apply even though this
Agreement provides that it is governed by California law.
(c) Arbitration proceedings will be administered by the American
Arbitration Association and will be subject to its commercial rules of
arbitration. The arbitration will be conducted in California within the
following county or counties: City and County of San Francisco.
(d) For purposes of the application of the statute of limitations, the
filing of an arbitration pursuant to this Section is the equivalent of the
filing of a lawsuit, and any claim or controversy which may be arbitrated under
this Section is subject to any applicable statute of limitations. The
arbitrators will have the authority to decide whether any such claim or
controversy is barred by the statute of limitations and, if so, to dismiss the
arbitration on that basis.
(e) If there is a dispute as to whether an issue is arbitrable, the
arbitrators will have the authority to resolve any such dispute.
(f) The decision that results from an arbitration proceeding may be
submitted to any authorized court of law to be confirmed and enforced.
(g) The procedure described above will not apply if the controversy or
claim, at the time of the proposed submission to arbitration, arises from or
relates to an obligation to the Bank secured by real property located in
California. In this case, both the Borrower and the Bank must consent to
submission of the claim or controversy to arbitration. If both parties do not
consent to arbitration, the controversy or claim will be settled as follows: (i)
the Borrower and the Bank will designate a referee (or a panel of referees)
selected under the auspices of the American Arbitration Association in the same
manner as arbitrators are selected in Association-sponsored proceedings; (ii)
the designated referee (or the panel of referees) will be appointed by a court
as provided in California Code of Civil Procedure Section 638 and the following
related sections; (iii) the referee (or the presiding referee of the panel) will
be an active attorney or a retired judge; and (iv) the award that results from
the decision of the referee (or the panel) will be entered as a judgment in the
court that appointed the referee, in accordance with the provisions of
California Code of Civil Procedure Sections 644 and 645.
(h) This provision does not limit the right of the Borrower or the Bank to:
(i) exercise self-help remedies such as setoff; (ii) foreclose against or sell
any real or personal property collateral; or (iii) act in a court of law,
before, during or after the arbitration proceeding to obtain: (A) an interim
remedy; and/or (B) additional or supplementary remedies.
(i) The pursuit of or a successful action for interim, additional or
supplementary remedies, or the filing of a court action, does not constitute a
waiver of the right of the Borrower or the Bank, including the suing party, to
submit the controversy or claim to arbitration if the other party contests the
lawsuit. However, if the controversy or claim arises from or relates to an
obligation to the Bank which is secured by real property located in California
at the time of the
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proposed submission to arbitration, this right is limited according to the
provision above requiring the consent of both the Borrower and the Bank to seek
resolution through arbitration.
(j) If the Bank forecloses against any real property securing this
Agreement, the Bank has the option to exercise the power of sale under the deed
of trust or mortgage, or to proceed by judicial foreclosure.
9.16 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Borrower
and the Bank, and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof.
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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 signatories as
of the day and year first above written.
U.S. HOME & GARDEN INC.
By: /s/ Xxxxxxx Xxxxxxx
------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Chief Operating Officer
By:
------------------------------
Name:
Title:
Address for Notices:
Attn: Xxxxx Xxxxxxxxx
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:/s/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
Title:
Address for Notices:
Attn: Xxxx X. Xxxxxx
San Francisco Regional Commercial
Banking Office (#1499)
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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Lending Office:
San Francisco Regional Commercial
Banking Office (#1499)
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
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