EXHIBIT 10.1
EXECUTION COPY
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CREDIT AND SECURITY AGREEMENT
(U.S. $30,000,000)
Dated as of November 1, 2004
among
HAWK CORPORATION, ALLEGHENY CLEARFIELD, INC.,
FRICTION PRODUCTS CO., HAWK MIM, INC., HAWK MOTORS, INC.,
HAWK PRECISION COMPONENTS GROUP, INC., XXXXXX, INC.,
XXXXX METAL STAMPINGS, INC., NET SHAPE TECHNOLOGIES LLC,
QUARTER MASTER INDUSTRIES, INC., SINTERLOY CORPORATION,
X.X. XXXXXXX CORP., X.X. XXXXXXX HOLDINGS, INC.,
TEX RACING ENTERPRISES, INC., XXXXXXX PRODUCTS GROUP, INC.
and XXXXXXX PRODUCTS, LLC, as Borrowers,
THE LENDERS WHICH ARE SIGNATORIES HERETO
and
KEYBANK NATIONAL ASSOCIATION
as Administrative Agent
and
KEYBANK NATIONAL ASSOCIATION
as LC Issuer
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TABLE OF CONTENTS
Section Page
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Section 1 DEFINITIONS; ACCOUNTING TERMS; GOVERNANCE............................................ 1
1.1 Certain Defined Terms............................................................. 1
1.2 Accounting Terms; Calculations.................................................... 1
1.3 Authorization of Borrower Representative.......................................... 1
1.4 Designation of Borrower Representative as Lead Borrower........................... 1
1.5 Construction of Terms Generally................................................... 2
1.6 USA Patriot Act Notification; Representations and Undertaking..................... 2
(a) Borrower's Notification and Representation............................... 2
(b) Lenders' Certification................................................... 2
Section 2 TERMS OF THE CREDIT FACILITIES....................................................... 2
2.1 Revolving Credit Facility......................................................... 2
(a) Revolving Credit Advances................................................ 2
(b) Revolving Credit Notes................................................... 3
(c) Lender Discretion; Establishment of Reserves............................. 3
2.2 Letter of Credit Facility......................................................... 3
(a) Issuance of Letters of Credit............................................ 3
(b) Reimbursement Agreement.................................................. 3
(c) Reimbursement; Interest.................................................. 4
(d) Failure to Reimburse Drawings............................................ 4
(e) Obligations Absolute..................................................... 4
(f) Liability of LC Issuer................................................... 4
(g) LC Issuer Indemnity...................................................... 5
(h) Termination of Letter of Credit Commitment............................... 5
Section 3 LOAN ADMINISTRATION.................................................................. 5
3.1 Credit Requests for Revolving Credit Advances..................................... 5
3.2 Requests and Conditions of Letters of Credit...................................... 5
3.3 Requests for Borrowing Deemed Given............................................... 6
3.4 Limitation on Number LIBOR Rate Advances.......................................... 6
3.5 Funding of Advances............................................................... 6
(a) Notice and Funding....................................................... 6
(b) Disbursement of Funds Received........................................... 6
(c) Availability of Funds.................................................... 7
3.6 Failure of Lender to Fund Revolving Credit Advances or Purchase Participations.... 7
(a) Continuing Obligation of Borrowers....................................... 7
(b) Treatment of Lender Failing To Fund...................................... 7
(c) Continuing Obligation of Lenders to Fund................................. 8
3.7 Affiliated Funding with respect to Lenders........................................ 8
3.8 Cash Control Event; Cash Dominion Funding......................................... 8
(a) Swing Line Advances...................................................... 8
(b) Settlement............................................................... 8
(c) Distributions of Payments Pending Settlement............................. 9
(d) Lender Participations.................................................... 9
(e) Records; Interest........................................................ 10
(f) Permitted Special Advances by the Administrative Agent................... 10
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Section 4 PAYMENT ADMINISTRATION............................................................... 10
4.1 Advance Account; Credits; Application of Payments and Collections................. 10
(a) Lender Maintenance of Advance Account.................................... 10
(b) Advance Account Charges\Credits; Reports................................. 11
(c) Crediting and Application of Specific Payments........................... 11
(d) Deposits in Cash Concentration Account after Cash Control Election;
Application and Crediting........................................... 11
(e) Distribution of Payments................................................. 11
(f) Pro Rata Treatment of Lenders............................................ 12
(g) Payment not on Business Day.............................................. 12
(h) Presumption of Payment in Full by the Borrowers.......................... 12
4.2 Repayment and Prepayments......................................................... 12
(a) Scheduled Repayments..................................................... 12
(b) Mandatory Prepayments.................................................... 12
4.3 Reduction of Revolving Credit Commitment.......................................... 13
Section 5 CASH MANAGEMENT ADMINISTRATION....................................................... 13
5.1 Maintenance of Lockbox and Collection Account..................................... 13
5.2 Processing Collections; Cash Concentration Account................................ 13
5.3 Cash Concentration Account........................................................ 14
5.4 Costs of Collection............................................................... 14
5.5 Return of Funds................................................................... 15
5.6 Notice to Account Debtors......................................................... 15
Section 6 INTEREST AND FEES.................................................................... 15
6.1 Interest Rate on Advances......................................................... 15
(a) Alternate Base Rate Advances............................................. 15
(b) LIBOR Rate Advances...................................................... 15
(c) Default Interest......................................................... 15
(d) Failure of Borrower Representative to Elect Interest Period.............. 16
6.2 Rate Conversion and Rate Continuation............................................. 16
6.3 Computations of Interest and Fees................................................. 17
6.4 Fees.............................................................................. 17
(a) Unused Commitment Fee.................................................... 17
(b) Annual Fee............................................................... 17
(c) Bank Product Fees........................................................ 17
(d) Early Termination Fee.................................................... 17
(e) Letter of Credit Fees.................................................... 17
(f) Payment of Fees; Nonrefundable........................................... 18
6.5 LIBOR Rate Advances: Unascertainable Rate; Illegality; Increased Costs............ 18
(a) Unascertainable Rate; Illegality; Increased Costs........................ 18
Section 7 CONDITIONS OF LENDING................................................................ 19
7.1 Conditions Precedent to Initial Advances.......................................... 19
7.2 Conditions Precedent to all Advances.............................................. 20
(a) Representation Bringdown................................................. 20
(b) No Default; Compliance with Terms........................................ 20
(c) No Material Adverse Change............................................... 20
(d) Confirmation of Borrowing Base........................................... 20
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Section 8 SECURITY INTEREST IN COLLATERAL; COLLATERAL REQUIREMENTS............................. 20
8.1 Grant of Security Interest........................................................ 20
8.2 Perfection........................................................................ 21
(a) Perfection by Filing; Authorization by Debtor............................ 21
(b) Other Perfection Methods................................................. 21
8.3 Changes Affecting Perfection...................................................... 21
8.4 Reinstatement..................................................................... 22
8.5 Further Assurances................................................................ 22
8.6 Termination of Security Interest; Release of Collateral........................... 22
8.7 Partial Releases.................................................................. 22
Section 9 COLLATERAL ADMINISTRATION: REPRESENTATIONS, WARRANTIES AND COVENANTS RELATING TO
COLLATERAL................................................................... 23
9.1 General Representations as to Collateral.......................................... 23
9.2 Protection of Collateral; Reimbursement........................................... 23
9.3 Maintenance of Insurance with respect to Collateral............................... 23
9.4 Collateral Audit; Inspection; Appraisals; Verification............................ 23
9.5 Borrowing Base Certificates....................................................... 24
9.6 Reporting Regarding Accounts...................................................... 25
9.7 Disputes and Claims Regarding Accounts............................................ 25
9.8 Inventory Maintenance Covenants................................................... 25
9.9 Reporting Regarding Inventory..................................................... 25
9.10 Reporting Regarding Accounts Payable............................................. 26
9.11 Status of Collateral............................................................. 26
9.12 Lien Waivers, Landlord Waivers, Warehouse Receipts............................... 26
9.13 Deposit Accounts................................................................. 26
9.14 Delivery of Instruments and Chattel Paper........................................ 26
9.15 Compliance with Terms of Accounts; General Intangibles........................... 27
9.16 Representations and Warranties Regarding Pledged Collateral...................... 27
Section 10 GENERAL REPRESENTATIONS AND WARRANTIES.............................................. 27
10.1 Existence........................................................................ 27
10.2 Authorization.................................................................... 27
10.3 Enforceability................................................................... 27
10.4 Title to Collateral; Liens; Transfers............................................ 28
10.5 Lien Perfection and Priority..................................................... 28
10.6 Litigation; Proceedings.......................................................... 28
10.7 Taxes............................................................................ 28
10.8 Consents; Approvals.............................................................. 28
10.9 Lawful Operations................................................................ 29
10.10 Environmental Compliance........................................................ 29
10.11 Environmental Laws and Permits.................................................. 29
10.12 ERISA........................................................................... 29
10.13 Agreements; Adverse Obligations; Labor Disputes................................. 30
10.14 Financial Statements; Projections............................................... 30
(a) Financial Statements..................................................... 30
(b) Financial Projections.................................................... 30
10.15 Intellectual Property........................................................... 31
10.16 Structure; Capitalization....................................................... 31
10.17 Value; Solvency................................................................. 31
10.18 Investment Company Act Status................................................... 31
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10.19 Blocked Person.................................................................. 31
10.20 Regulation U/Regulation X Compliance............................................ 32
10.21 Full Disclosure................................................................. 32
10.22 Excess Availability............................................................. 32
Section 11 COVENANTS OF THE BORROWER........................................................... 32
11.1 Reporting and Notice Covenants................................................... 32
(a) Monthly Financial Statements............................................. 32
(b) Quarterly Financial Statements........................................... 32
(c) Annual Financial Statements.............................................. 33
(d) Officer's Certificate.................................................... 33
(e) Company Reports.......................................................... 33
(f) Annual Projections....................................................... 33
(g) Other Information........................................................ 33
(h) Notices.................................................................. 34
(i) Notice of Default under ERISA............................................ 34
(j) Environmental Reporting.................................................. 34
(k) Multiemployer Plan Withdrawal Liability.................................. 34
11.2 Affirmative Covenants............................................................ 34
(a) Existence................................................................ 34
(b) Financial Records........................................................ 35
(c) Financial Examinations and Review........................................ 35
(d) Compliance with Law...................................................... 35
(e) Compliance with Environmental Laws....................................... 35
(f) Properties............................................................... 35
(g) Use of Proceeds.......................................................... 36
(h) Compliance with Terms of All Material Contracts.......................... 36
(i) Taxes.................................................................... 36
(j) Insurance................................................................ 36
(k) Licenses to Third Parties and Subsidiaries............................... 36
(l) Coverage for Untendered Notes............................................ 36
(m) Additional Borrowers..................................................... 36
(n) Notice to Account Debtors and Replacement of Lockbox Bank................ 36
11.3 Negative Covenants............................................................... 37
(a) Consolidation, Merger, Sale and Purchase of Assets....................... 37
(b) Credit Extensions; Prepayments........................................... 38
(c) Indebtedness............................................................. 39
(d) Liens; Leases............................................................ 40
(e) Investments.............................................................. 42
(f) Distributions............................................................ 43
(g) Change in Nature of Business............................................. 43
(h) Charter Amendments....................................................... 43
(i) Compliance with ERISA.................................................... 43
(j) Regulation U Compliance.................................................. 44
(k) Accounting Changes....................................................... 44
(l) Arm's-Length Transactions................................................ 44
11.4 Financial Covenants.............................................................. 44
(a) Minimum Shareholder Equity............................................... 44
(b) Minimum Consolidated Cash Flow Coverage Ratio............................ 45
Section 12 EVENTS OF DEFAULT................................................................... 45
12.1 Payment.......................................................................... 45
12.2 Representations and Warranties................................................... 45
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12.3 Reporting and Notice Provisions; Violation of Certain Affirmative Covenants...... 45
12.4 Violation of Negative Covenants, Financial Covenants and Certain Affirmative
Covenants.................................................................... 45
12.5 Cross-Default.................................................................... 45
12.6 Destruction of Collateral........................................................ 46
12.7 Material Adverse Effect; Change of Control....................................... 46
12.8 Termination of Existence......................................................... 46
12.9 Failure of Enforceability of this Agreement, Loan Document; Security............. 46
12.10 ERISA........................................................................... 47
12.11 Judgments....................................................................... 47
12.12 Forfeiture Proceedings.......................................................... 47
12.13 Financial Impairment............................................................ 47
Section 13 REMEDIES............................................................................ 47
13.1 Acceleration; Termination........................................................ 47
13.2 Automatic Acceleration and Termination........................................... 47
13.3 General Rights and Remedies of the Administrative Agent and the Lenders.......... 48
13.4 Additional Remedies.............................................................. 48
(a) Possession of Collateral................................................. 48
(b) Foreclosure of Liens..................................................... 48
(c) Disposition of Collateral................................................ 48
(d) Application of Collateral; Application of Liquidation Proceeds........... 48
13.5 Set-off.......................................................................... 49
13.6 Actions in Respect of the Letters of Credit Upon Default......................... 49
13.7 Authority to Execute Transfers................................................... 50
13.8 Limited License to Liquidate..................................................... 50
13.9 Equalization..................................................................... 50
13.10 Remedies Cumulative............................................................. 50
13.11 Appointment of Attorney-in-Fact................................................. 50
Section 14 THE ADMINISTRATIVE AGENT............................................................ 51
14.1 The Administrative Agent......................................................... 51
14.2 Nature of Appointment............................................................ 52
14.3 Administrative Agent as Lenders; Other Transactions.............................. 52
14.4 Instructions from Lenders........................................................ 52
14.5 Lender's Diligence............................................................... 52
14.6 No Implied Representations....................................................... 52
14.7 Sub-Administrative Agents........................................................ 52
14.8 Administrative Agent's Diligence................................................. 53
14.9 Notice of Default................................................................ 53
14.10 Administrative Agent's Liability................................................ 53
14.11 Administrative Agent's Indemnity................................................ 53
14.12 Resignation of Administrative Agent............................................. 54
Section 15 BORROWER GUARANTY................................................................... 54
15.1 Borrower Cross-Guaranty; Maximum Liability....................................... 54
15.2 Guaranty Unconditional........................................................... 55
15.3 Discharge; Reinstatement......................................................... 55
15.4 Waiver........................................................................... 55
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15.5 Stay of Acceleration............................................................. 56
15.6 Subrogation and Contribution Rights.............................................. 56
15.7 Guaranteed Obligation and Contribution Payments.................................. 56
(a) Pro Rata Sharing......................................................... 56
(b) Deficiency............................................................... 56
Section 16 TRANSFERS AND ASSIGNMENTS........................................................... 56
16.1 Successors and Assigns........................................................... 56
16.2 Transfer of Revolving Credit Commitments......................................... 57
16.3 Maintenance of Register.......................................................... 57
16.4 Sale of Participations........................................................... 58
16.5 Pledge of Interests.............................................................. 58
16.6 Replacement of Lenders........................................................... 58
16.7 USA Patriot Act.................................................................. 59
16.8 Replacement of Non-consenting Lenders............................................ 59
Section 17 CONFIDENTIALITY..................................................................... 59
Section 18 INDEMNITIES......................................................................... 60
18.1 Increased Costs.................................................................. 60
18.2 Risk-Based Capital............................................................... 60
18.3 Taxes............................................................................ 60
(a) Taxes; Withholding; Indemnification of Taxes Paid........................ 60
(b) Stamp Taxes.............................................................. 61
(c) IRS Certificates of Lenders.............................................. 61
(d) Refunds of Taxes......................................................... 62
(e) Avoiding Negative Tax Consequences....................................... 63
(f) Application of These Tax Provisions...................................... 63
18.4 Losses........................................................................... 63
18.5 Indemnification for Requests..................................................... 63
18.6 General Indemnity................................................................ 63
18.7 Certificate for Indemnification.................................................. 64
Section 19 GENERAL............................................................................. 64
19.1 Amendments and Waivers........................................................... 64
19.2 Effective Agreement; Binding Effect.............................................. 64
19.3 Costs and Expenses............................................................... 65
19.4 Survival of Provisions........................................................... 65
19.5 Sharing of Information........................................................... 65
19.6 Interest Rate Limitation......................................................... 65
19.7 Limitation of Liability.......................................................... 65
19.8 Illegality....................................................................... 66
19.9 Notices.......................................................................... 66
19.10 Governing Law................................................................... 66
19.11 Entire Agreement................................................................ 66
19.12 Execution in Counterparts; Execution by Facsimile............................... 66
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EXHIBITS AND SCHEDULES
Exhibit A (Form of Revolving Credit Note)
Exhibit B-1 (Form of Credit Request)
Exhibit B-2 (Form of Letter of Credit Request)
Exhibit C (Form of Rate Conversion/Continuation Request)
Exhibit D-1 (Form of Stock Pledge - Borrower)
Exhibit D-2 (Form of Joinder Agreement)
Exhibit E-1 (Form of Collateral Assignment in Patents)
Exhibit E-2 (Form of Collateral Assignment in Trademarks)
Exhibit E-3 (Form of Collateral Assignment in Copyright)
Exhibit F (Form of Mortgage/Deed of Trust -- intentionally omitted)
Exhibit G (Form of Existing Lender Payout)
Exhibit H (Form of Borrowing Base Certificate)
Exhibit I (Form of Advertising Permission Letter)
Exhibit J (Form of Assignment and Assumption Agreement)
Exhibit K-1 (Form of Landlord Waiver)
Exhibit K-2 (Form of Bailee Waiver)
Exhibit K-3 (Form of Mortgagee Waiver -- Landlord Mortgagee)
Exhibit K-4 (Form of Consignee Waiver)
Exhibit L-1 (Form of Limited License Agreement - Borrower)
Exhibit L-2 (Form of Limited License Agreement - Third Party)
Exhibit M (Form of Securities Account Control Letter)
Exhibit N (Form of Deposit Account Control Letter)
Exhibit O (Form of Cash Collateral Account Control Letter)
Annex I Commitments
Annex II Definitions
Annex III Closing Conditions to Initial Advances
Annex IV Disclosure Schedule
Annex V Perfection Certificate
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CREDIT AND SECURITY AGREEMENT
U.S. $30,000,000
DATED AS OF NOVEMBER 1, 2004
HAWK CORPORATION, a Delaware corporation, ALLEGHENY CLEARFIELD, INC., a
Pennsylvania corporation, FRICTION PRODUCTS CO., an Ohio corporation, HAWK MIM,
INC., an Ohio corporation, HAWK MOTORS, INC., a Delaware corporation, HAWK
PRECISION COMPONENTS GROUP, INC., an Ohio corporation, XXXXXX, INC., a Delaware
corporation, XXXXX METAL STAMPINGS, INC., an Ohio corporation, NET SHAPE
TECHNOLOGIES LLC, a Delaware limited liability company, QUARTER MASTER
INDUSTRIES, INC., a Delaware corporation, SINTERLOY CORPORATION, a Delaware
corporation, X.X. XXXXXXX CORP., a Delaware corporation, X.X. XXXXXXX HOLDINGS,
INC., a Delaware corporation, TEX RACING ENTERPRISES, INC., a Delaware
corporation, XXXXXXX PRODUCTS GROUP, INC., an Ohio corporation, and XXXXXXX
PRODUCTS, LLC, an Ohio limited liability company, each as a Borrower and
collectively as the Borrowers, the LENDERS listed on the signature pages of this
Agreement, KEYBANK NATIONAL ASSOCIATION, a national banking association, as
Administrative Agent, and KEYBANK NATIONAL ASSOCIATION, a national banking
association, as LC Issuer, hereby agree as follows:
SECTION 1 DEFINITIONS; ACCOUNTING TERMS; GOVERNANCE.
1.1 CERTAIN DEFINED TERMS. Certain capitalized terms used in this
Agreement and not otherwise defined herein are defined on Annex II attached
hereto and incorporated herein by reference.
1.2 ACCOUNTING TERMS; CALCULATIONS. All accounting and financial terms not
specifically defined herein shall be construed in accordance with GAAP as in
effect from time to time. In all cases, such accounting and financial terms
shall be applied on a basis consistent with those applied in the preparation of
consolidated audited financial statements of Hawk Corporation and its
consolidated Subsidiaries for the fiscal year ending December 31, 2003 (audited
by Ernst & Young LLP); provided, however, if any change in GAAP in itself
affects the calculation of any financial covenant set forth in this Agreement,
the Borrower Representative may by written notice to the Administrative Agent,
or the Administrative Agent may, by written notice to the Borrower, require that
such covenant thereafter be calculated in accordance with GAAP as in effect (and
applied by the Borrower) immediately before such change in GAAP occurs. If any
such notice is given, compliance certificates delivered pursuant this Agreement
after such change shall be accompanied by reconciliations of the difference
between the calculation set forth therein and a calculation made in accordance
with GAAP as in effect from time to time after such change occurs.
1.3 AUTHORIZATION OF BORROWER REPRESENTATIVE. For purposes of this
Agreement, each of the Borrowers hereby: (i) authorizes the Borrower
Representative to make such requests, give such notices or furnish such
certificates as may be required or permitted by this Agreement for the benefit
of such Borrower and (ii) authorizes the Administrative Agent to treat such
requests, notices, certificates or consents made, given or furnished by the
Borrower Representative as having been made, given or furnished by such Borrower
for purposes of this Agreement. Each of the Borrowers agrees to be bound by all
such requests, notices, certificates and consents and other such actions by the
Borrower Representative and agrees that all notices to and demands upon the
Borrower Representative in respect of any Borrower shall constitute effective
notice to and demand upon such Borrower for all purposes hereof.
1.4 DESIGNATION OF BORROWER REPRESENTATIVE AS LEAD BORROWER. For purposes
of this Agreement, each of the Borrowers hereby: (i) designates and appoints the
Borrower Representative to act as the Borrowers' agent to obtain Revolving
Credit Advances and Letters of Credit under this Agreement, the proceeds of
which shall be available to each Borrower for those uses set forth in Section
11.2(g) (in
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such capacity the "Lead Borrower"). As the disclosed principal for
its agent, each Borrower shall be obligated to the Lenders on the account of the
Revolving Credit Advances so made and the Letters of Credit so issued as if made
directly by the Lenders to that Borrower, notwithstanding the manner by which
such Revolving Credit Advances and Letters of Credit are recorded on the books
and records of the Lead Borrower and of any Borrower. The proceeds of each
Revolving Credit Advance which is requested by the Borrower Representative shall
be deposited into the Operating Account of the Lead Borrower. The Lead Borrower
shall cause the transfer of the proceeds thereof to the (those) Borrower(s) on
whose behalf such Advance was obtained. The Administrative Agent shall not be
obligated to see to the application of such proceeds.
1.5 CONSTRUCTION OF TERMS GENERALLY. In this Agreement, for the purpose of
computing periods of time from a specified date to a later specified date, the
word "from" means "from and including" and the words "to" and "until" each mean
"to but excluding". Unless the context otherwise requires, (a) any definition of
or reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument, or other document as from
time to time amended, supplemented or otherwise modified, (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein," "hereof," and "hereunder," and words of similar
import, shall be construed to refer to this Agreement in its entirety and not
any particular provision hereof, and (d) any reference to payment, repayment, or
prepayment shall be construed as referring to payment of immediately available
funds in Dollars.
1.6 USA PATRIOT ACT NOTIFICATION; REPRESENTATIONS AND UNDERTAKING.
(a) BORROWER'S NOTIFICATION AND REPRESENTATION. The Borrowers are
hereby notified that federal Law requires all financial institutions to obtain,
verify, and record information that identifies each person or entity that opens
an account, including any deposit account, treasury management account, loan,
other extension of credit, or other financial services product. Each Borrower
agrees to provide such documentary and other evidence of such Borrower's
identity as may be reasonably requested by the Administrative Agent at any time
to enable the Administrative Agent to verify such Borrower's identity or to
comply with any applicable Law or regulation, including, without limitation, the
USA Patriot Act.
(b) LENDERS' CERTIFICATION. Each Lender or assignee or participant
of a Lender that is not incorporated under the Laws of the United States or a
state thereof (and is not excepted from the certification requirement contained
in Section 313 of the USA Patriot Act and the applicable regulations because it
is both (i) an affiliate of a depository institution or foreign bank that
maintains a physical presence in the United States or foreign country and (ii)
subject to supervision by a banking authority regulating such affiliated
depository institution or foreign bank) shall deliver to the Administrative
Agent the certification, or, if applicable, recertification, certifying that
such Lender, assignee or participant, as applicable, is not a "shell" and
certifying to other matters as required by Section 313 of the USA Patriot Act
and the applicable regulations: (1) within ten (10) days after the request by
the Administrative Agent, and (2) at such other times as are required under the
USA Patriot Act.
SECTION 2 TERMS OF THE CREDIT FACILITIES.
2.1 REVOLVING CREDIT FACILITY.
(a) REVOLVING CREDIT ADVANCES. Subject to the terms and conditions
set forth in this Agreement, each of the Lenders severally agrees to make, from
time to time on and after the Closing Date until and including the Business Day
immediately preceding the Revolving Credit Termination Date, advances
denominated in Dollars to or for the account of the Borrowers on a revolving
credit basis (each a "Revolving Credit Advance"); provided, however, that the
outstanding principal amount of Revolving Credit Advances by such Lender shall
not at any time exceed the lesser of: (x) an amount equal to such Lender's Pro
Rata Share of the Borrowing Base at such time minus the aggregate LC Exposure of
such
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Lender at such time or (y) the Revolving Credit Commitment of such Lender in
effect at such time minus the LC Exposure of such Lender at such time. The
Revolving Credit Advances shall be comprised of one or more Revolving Credit
Borrowings as the Borrowers may elect from time to time by delivery to the
Administrative Agent by the Borrower Representative of a Borrowing Request or a
Rate Conversion/Continuation Request in accordance with this Agreement. Each
Revolving Credit Borrowing comprised of LIBOR Rate Advances shall be in an
aggregate amount of not less than Five Hundred Thousand Dollars ($500,000) or an
integral multiple of Five Hundred Thousand Dollars ($500,000) in excess thereof.
(b) REVOLVING CREDIT NOTES. Each Lender's Revolving Credit Advances
shall be evidenced at all times by a Revolving Credit Note which shall: (i) be
executed and delivered by the Borrowers and payable to the order of such Lender
and (ii) be in a stated principal amount equal to the Revolving Credit
Commitment of such Lender and payable for the unpaid principal amount of the
Revolving Credit Advances evidenced thereby, (iii) mature on the Revolving
Credit Termination Date, (iv) bear interest as provided in this Agreement, (v)
be subject to mandatory prepayment as provided in this Agreement, and (vi) be
entitled to the benefits of this Agreement and the other Loan Documents.
(c) LENDER DISCRETION; ESTABLISHMENT OF RESERVES. Each Lender may,
but shall not be obligated to, rely on each Borrowing Base Certificate and any
other schedules or reports in determining the eligibility of Accounts and
Inventory. The Administrative Agent shall have the right, from time to time, in
the good faith exercise of its reasonable credit judgment (consistent with the
asset-based nature of this credit), to establish reserves against the Borrowing
Base in such amounts and with respect to such matters as the Administrative
Agent deems necessary or appropriate and to increase or decrease such reserves.
In exercising such reasonable credit judgment, the Administrative Agent may take
into account factors which: (a) will or could reasonably be expected to affect
adversely in any material respect the value of any Collateral, the
enforceability or priority of the Administrative Agent's Liens or the amount
which the Lenders would be likely to receive in the liquidation of such
Collateral or (b) may demonstrate that any collateral report or financial
information concerning the Borrowers is incomplete, inaccurate or misleading in
any material respect. In the exercise of such reasonable credit judgment, the
Administrative Agent may also establish reserves against anticipated
obligations, contingencies or conditions affecting the Borrowers or their
Subsidiaries including: (a) tax liabilities and other obligations owing to
governmental entities, (b) asserted litigation liabilities, (c) anticipated
remediation for compliance with Environmental Laws, or (d) obligations owing to
any lessor of real property, any warehouseman or mortgagor on third party
mortgaged sites. Prior to any Event of Default which is continuing, the
Administrative Agent shall provide five (5) Business Days' advance written
notice to the Borrower Representative prior to the effectiveness of any actions
taken under this Section, but shall not be liable for any failure to so notify
the Borrower Representative .
2.2 LETTER OF CREDIT FACILITY.
(a) ISSUANCE OF LETTERS OF CREDIT. Subject to the terms and
conditions set forth in this Agreement, the LC Issuer agrees to issue Letters of
Credit for the account of the Borrowers; provided, however, that, the aggregate
LC Exposure shall not at any time exceed the lesser of: (x) Five Million Dollars
($5,000,000), (y) an amount equal to the Borrowing Base at such time minus the
aggregate outstanding Revolving Credit Advances to the Borrowers at such time or
(z) the Revolving Credit Commitments of the Lenders at such time, minus the sum
of the aggregate outstanding Revolving Credit Advances to the Borrowers at such
time.
(b) REIMBURSEMENT AGREEMENT. Concurrently with each Letter of Credit
Request, the applicable Borrower shall execute and deliver to the LC Issuer in
respect of such requested Letter of Credit an application for and reimbursement
agreement with respect to letters of credit (such documents being hereinafter
collectively referred to as a "Reimbursement Agreement"), in the LC Issuer's
then standard form; provided, however, that in the event of any conflict between
the provisions of any such Reimbursement Agreement and this Agreement, the
provisions of this Agreement shall govern.
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(c) REIMBURSEMENT; INTEREST. Each of the Borrowers agrees that
whenever there is a drawing on a Letter of Credit issued by the LC Issuer for
the account of the Borrowers, the Borrowers shall pay to the Administrative
Agent on the date of such drawing an amount equal to such drawing. The
Administrative Agent shall promptly remit any such payment to the LC Issuer. If
there is a drawing on a Letter of Credit, then the Borrowers shall reimburse
such amount in full no later than the next Business Day after the date of such
drawing and the unpaid amount thereof shall bear interest for the account of the
LC Issuer for each day from and including the date of such drawing until the
earlier of: (i) the date of reimbursement by the Borrowers and (ii) on the date
on which such drawing is reimbursed by Revolving Credit Advances, at the rate
per annum that would apply to such amount if such amount were a Revolving Credit
Borrowing.
(d) FAILURE TO REIMBURSE DRAWINGS. In the event that the Borrowers
fail to make a timely reimbursement, together with any interest thereon, to the
Administrative Agent on the date of any drawing on a Letter of Credit, such
failure shall constitute a Deemed Credit Request requesting an Alternate Base
Rate Advance to be made to the Borrowers in an aggregate amount equal to the
amount reimbursable to the LC Issuer plus any interest thereon. The
Administrative Agent shall disburse all such loan proceeds directly to the LC
Issuer to satisfy the aforesaid reimbursement liability. In the event that one
or more of the Lenders shall determine that such Lenders are legally prohibited
from making such a Revolving Credit Advance, each such Lender so prohibited
shall be obligated to consummate the purchase, on the date the Revolving Credit
Advance would have been made pursuant to this Section 2.2(d), of its undivided
participating interest in the outstanding unpaid reimbursement obligation owing
to the LC Issuer in an amount equal to the Revolving Credit Advance that such
Lender would otherwise have been obligated to fund. On the purchase date, each
Lender shall pay to the Administrative Agent, for the benefit of the LC Issuer,
in immediately available funds, at the account of the Administrative Agent
maintained at the Payment Office of the Administrative Agent not later than the
time such Lender would have been obligated to fund such Revolving Credit Advance
pursuant to this Section, a participation purchase price for such participating
interest in amount equal to such Revolving Credit Advance.
(e) OBLIGATIONS ABSOLUTE. The obligation of the Borrowers to
reimburse the LC Issuer shall be absolute and unconditional and shall be
performed under all circumstances including, without limitation: (i) any lack of
validity or enforceability of any Letter of Credit, (ii) the existence of any
claim, offset, defense or other right that the Borrowers may have against the
beneficiary of any Letter of Credit or any successor in interest thereto, (iii)
the existence of any claim, offset, defense or other right that any Lender or
the Administrative Agent may have against the Borrowers or against the
beneficiary of any Letter of Credit or against any successor in interest
thereto, (iv) the existence of any fraud or misrepresentation in the presentment
of any draft or other item drawn and paid under any Letter of Credit by any
Person other than the LC Issuer, (v) any payment of any draft or other item by a
LC Issuer which does not strictly comply with the terms of any Letter of Credit
issued by such LC Issuer, (vi) any statement or any other documents presented
under any Letter of Credit proving to be forged, fraudulent or invalid in any
respect or any statement therein being untrue or inaccurate in any respect
whatsoever, or (vii) any act, error, neglect or default, omission, insolvency or
failure of business of any of the correspondents of the LC Issuer; provided that
no Borrower shall be deemed to have waived any claim, offset, defense or other
right that Borrower may have against the beneficiary of any Letter of Credit,
any successor in interest thereto or any other Person.
(f) LIABILITY OF LC ISSUER. It is expressly understood and agreed
that the absolute and unconditional obligation of the Borrowers to reimburse
disbursements in respect of Letters of Credit issued by the LC Issuer shall not
be construed to excuse the LC Issuer from liability to the Borrowers to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by each of the Borrowers to the extent
permitted by applicable Law) suffered by the Borrowers that are caused by the
gross negligence, willful misconduct or bad faith of such LC Issuer in
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties agree that each LC Issuer may
accept documents that appear on their face to be in
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order, without responsibility for further investigation, regardless of any
notice or information to the contrary, and may make payment upon presentation of
documents that appear on their face to be in substantial compliance with the
terms of such Letter of Credit. Any action, inaction or omission on the part of
the LC Issuer or any of its correspondents, under or in connection with any
Letter of Credit issued by the LC Issuer or any renewal or extension thereof or
the related instruments or documents, if taken in good faith and in conformity
with applicable Laws and regulations governing Letters of Credit generally and
the terms of this Section, shall be binding upon the Borrowers and shall not
place the LC Issuer or any of its correspondents under any liability to the
Borrowers.
(g) LC ISSUER INDEMNITY. The Borrowers shall indemnify the LC Issuer
issuing such Letter of Credit from and against any loss, liability or
out-of-pocket expenses (other than any caused by the LC Issuer's gross
negligence, willful misconduct or bad faith as determined by the final judgment
of a court of competent jurisdiction and other than any with respect to taxes,
levies, imposes, deductions, charges or withholdings, or any liability with
respect thereto, the indemnification for which shall be governed solely and
exclusively by Section 18.3 of this Agreement) incurred by the LC Issuer in
respect of this Agreement and the Letters of Credit issued by the LC Issuer for
the account of any of the Borrowers, including, without limitation, reasonable
fees and expenses of legal counsel incurred by such LC Issuer in the defense of
any claim against it or in the prosecution of its rights and remedies.
(h) TERMINATION OF LETTER OF CREDIT COMMITMENT. If: (i) any
restriction is imposed on the LC Issuer which in the judgment of the LC Issuer
would prevent the LC Issuer from issuing Letters of Credit or maintaining its
commitment to issue Letters of Credit or (ii) there shall have occurred, at any
time during the term of this Agreement: (A) any outbreak of hostilities or other
national or international crisis or change in economic conditions if the effect
of such outbreak, crisis or change would make the issuance of Letters of Credit
impracticable, (B) the enactment, publication, decree or other promulgation of
any Law which would materially and adversely affect the ability of the Borrowers
to perform its obligations under this Agreement or any Reimbursement Agreement,
or (C) the taking of any action by any government or agency in respect of its
monetary or fiscal affairs which would have a material adverse effect on the
issuance of Letters of Credit, then the LC Issuer shall give written notice of
the occurrence of such event to the Borrower Representative and the
Administrative Agent whereupon the commitment of the LC Issuer to issue or
extend any Letter of Credit shall be suspended on the effective date of such
notice and shall continue to be suspended until the effect of such event shall
cease to exist.
SECTION 3 LOAN ADMINISTRATION.
3.1 CREDIT REQUESTS FOR REVOLVING CREDIT ADVANCES. Requests for Revolving
Credit Advances shall be given by the Borrower Representative to the
Administrative Agent not later than 2:00 p.m. (Cleveland time): (i) on the
Business Day which is the requested date of a proposed Revolving Credit
Borrowing comprised of Alternate Base Rate Advances and (ii) on the Business Day
which is three (3) Business Days before the requested date of a proposed
Revolving Credit Borrowing comprised of LIBOR Rate Advances (all Revolving
Credit Advances advanced on the Closing Date shall be Alternate Base Rate
Advances). Each such request ("Credit Request") shall be a written or telephonic
notice (in the case of a telephonic notice, promptly confirmed in writing if so
requested by the Administrative Agent). Each written Credit Request or written
confirmation shall be substantially in the form of Exhibit B-1 attached hereto,
signed or otherwise acceptably authenticated by the Borrower Representative and
transmitted by the Borrower Representative to the Administrative Agent by
telecopier or electronic mail. Each Credit Request shall be irrevocable and
binding on the Borrowers and be subject to the indemnification provisions of
this Agreement.
3.2 REQUESTS AND CONDITIONS OF LETTERS OF CREDIT. Requests for Letters of
Credit for the account of the Borrowers, or the amendment, renewal, or extension
of an outstanding Letter of Credit, shall be given by the Borrower
Representative to the Administrative Agent and LC Issuer not later than 12:00
noon (Cleveland time) three (3) Business Days prior to the specified date for
the issuance of the requested Letter of Credit. Each such request (a "Letter of
Credit Request") shall be a written notice or
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telephonic notice (in the case of a telephonic notice, promptly confirmed in
writing if so requested by the Administrative Agent). Such request shall be
substantially in the form of Exhibit B-2 attached hereto, signed or otherwise
acceptably authenticated by the Borrower Representative and transmitted by the
Borrower Representative to the Administrative Agent by telecopier or electronic
mail. Each such request shall specify the proposed issuance date of the
requested Letter of Credit, (which shall be a Business Day), the amount thereof,
the expiry date thereof (which shall not be later than 364 days from the date of
issuance and not later than ten (10) days prior to the Revolving Credit
Termination Date), the name and address of the beneficiary, the name of the
Borrower which is the account party for such Letter of Credit and such other
matters as the LC Issuer may require.
3.3 REQUESTS FOR BORROWING DEEMED GIVEN. The Borrowers shall be deemed to
have made a request for a Revolving Credit Borrowing (a "Deemed Credit
Request"), which Deemed Credit Request shall be irrevocable: (x) in the event of
an unreimbursed drawing under a Letter of Credit, for a Revolving Credit
Borrowing comprised of Alternate Base Rate Advances in an amount equal to the
amount necessary to reimburse the LC Issuer for such drawing and (y) upon any
interest, fee or other payment Obligation of the Borrowers hereunder becoming
due without payment within the applicable grace period set forth in Section
12.1(b), for a Revolving Credit Borrowing comprised of Alternate Base Rate
Advances in an amount necessary to pay such interest, fee or payment obligation.
Each Lender agrees that its obligation to make or participate in Revolving
Credit Advances pursuant to a Deemed Credit Request is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence of any Potential Default or Event of Default or the
failure of any condition precedent.
3.4 LIMITATION ON NUMBER LIBOR RATE ADVANCES. The Borrowers shall not be
entitled to have an aggregate of more than six (6) LIBOR Rate Advances
outstanding at any one time.
3.5 FUNDING OF ADVANCES.
(a) NOTICE AND FUNDING. On the Closing Date, (i) the Administrative
Agent shall use reasonable efforts to notify each Lender required to fund a
Revolving Credit Borrowing by telecopy, telephone or similar form of
transmission of the Credit Request of the Borrower Representative not later 1:30
p.m. (Cleveland time). Prior to the later of 2:30 p.m. (Cleveland time) on the
Closing Date or one hour after such notification from the Administrative Agent,
each Lender will make available to the Administrative Agent, in Dollars in
immediately available funds, at the account of the Administrative Agent
maintained at such Payment Office, such Lender's Pro Rata Share of the amount of
the requested Revolving Credit Borrowing of such Lender specified in Annex I.
After the Closing Date, the Administrative Agent shall notify each Lender
promptly after receipt of a Credit Request or the occurrence of a Deemed Credit
Request no later than 12:30 p.m. (Cleveland time) on the date received by
telecopy, telephone or similar form of transmission. Before 3:00 p.m. (Cleveland
time) on the date of each such Credit Request or Deemed Credit Request, each
Lender will make available to the Administrative Agent, in immediately available
funds at such account of the Administrative Agent maintained at the Payment
Office, such Lender's Pro Rata Share of the Revolving Credit Advances.
(b) DISBURSEMENT OF FUNDS RECEIVED. On the Closing Date, upon the
Administrative Agent's receipt of funds representing a Lender's Revolving Credit
Advance, and subject to the terms and conditions set forth in this Agreement,
the Administrative Agent shall make the Revolving Credit Advance of such Lender
available to the Borrowers, in Dollars in immediately available funds, by wire
transfer or intrabank transfer: (A) to the Operating Account of the Borrower
Representative or (B) such other account of the Borrowers as the Administrative
Agent and the Borrower Representative shall have agreed upon from time to time.
From and after the Closing Date, on the date specified by the Borrower
Representative in any Credit Request (or, in the case of a Deemed Credit
Request, on the earliest date permitted after such Deemed Credit Request), after
the Administrative Agent's receipt of the funds representing a Lender's Pro Rata
Share of the requested Revolving Credit Borrowing and subject to the terms of
this Agreement, the Administrative Agent will make such
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Revolving Credit Advance of such Lender available to the Borrowers in
immediately available funds in Dollars, by wire transfer or intrabank transfer:
(A) to such Operating Account or (B) to such other account.
(c) AVAILABILITY OF FUNDS. Unless the Administrative Agent shall
have received notice from a Lender on the Closing Date that such Lender will not
make available to the Administrative Agent such Lender's Pro Rata Share of
Revolving Credit Borrowing being advanced to the Borrowers on the Closing Date,
the Administrative Agent may assume prior to receipt of funds from such Lender
that such Lender has made such Pro Rata Share available to the Administrative
Agent. Unless the Administrative Agent shall have received notice from a Lender
prior to the time of any Revolving Credit Borrowing that such Lender will not
make available to the Administrative Agent such Lender's Pro Rata Share of the
Revolving Credit Borrowing, the Administrative Agent may assume that such Lender
has made its Pro Rata Share of such Revolving Credit Borrowing available to the
Administrative Agent on the date specified for such Revolving Credit Borrowing
in accordance with Section 3.5 of this Agreement. In each case, and in reliance
upon such assumption, the Administrative Agent may, but shall not be obligated
to, make available to the Borrowers funds in the amount of such Lender's Pro
Rata Share. Any disbursement by the Administrative Agent in reliance on such
assumption shall be deemed to be a Revolving Credit Advance by such Lender.
3.6 FAILURE OF LENDER TO FUND REVOLVING CREDIT ADVANCES OR PURCHASE
PARTICIPATIONS. If any Lender has not made available to the Administrative Agent
funds for such Lender's Pro Rata Share of any Revolving Credit Borrowing or such
Lender's participation payment, such Lender shall pay such amount to the
Administrative Agent immediately upon demand by the Administrative Agent. If any
such Lender does not pay such amount to the Administrative Agent forthwith upon
such demand by the Administrative Agent, the Administrative Agent shall promptly
request payment thereof from the Borrowers, and the Borrowers shall immediately
pay such amount to the Administrative Agent. Such Lender and the Borrowers shall
be severally liable to pay interest to the Administrative Agent on such amount
for each day from the date such amount should otherwise have been made available
to the Administrative Agent until the date any such amount is paid to the
Administrative Agent at a per annum rate of interest equal to: (x) if paid by
such Lender, as the case may be, the Federal Funds Effective Rate or (y) if paid
by the Borrowers, the interest rate applicable to such Revolving Credit
Borrowing.
(a) CONTINUING OBLIGATION OF BORROWERS. Failure of any Lender to
fund its Pro Rata Share of any Revolving Credit Borrowing or to pay any
participation purchase price shall not excuse the performance by the Borrowers
of any of the Borrowers' duties or obligations hereunder. If any such Lender
funds such Lender's Pro Rata Share of such Revolving Credit Borrowing or
participation purchase price prior to repayment of such amount by the Borrowers,
the amount so repaid shall constitute such Lender's share or participation
payment and the Borrowers shall have no further obligation to pay.
(b) TREATMENT OF LENDER FAILING TO FUND. If any Lender fails to make
available such Lender's Pro Rata Share of Borrowings or such Lender's
participation purchase price, the Administrative Agent shall not be obligated to
transfer to such Lender any payments made by the Borrowers for the benefit of
such Lender until such Lender has cured its failure. Until the earlier of such
Lender's cure of its failure to fund or the termination of the Revolving Credit
Commitments, all amounts repaid to the Administrative Agent by the Borrowers
which would otherwise be required to be applied to such Lender's Revolving
Credit Advances, or participation purchase price, as the case may be, shall be
advanced to the Borrowers by the Administrative Agent on behalf such Lender to
cure, in full or in part, the failure by such Lender to fund, but shall
nevertheless be deemed to have been paid to such Lender in satisfaction of the
Obligations to which such payment would otherwise have been applied. No Lender
failing to fund shall have any voting or consent rights under this Agreement and
shall not constitute a "Lender" (or be included in the calculation of "Required
Lenders") for any voting or consent rights under this Agreement. The terms of
this Section shall remain effective with respect to such Defaulting Lender until
such time as such Lender shall no longer be in default of any of its obligations
under this Agreement.
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(c) CONTINUING OBLIGATION OF LENDERS TO FUND. It is understood that:
(i) a Lender shall not be responsible for any failure by any other Lender to
perform its obligation to make any Revolving Credit Advances hereunder or pay
any participation purchase price for its participating interests hereunder, (ii)
the Revolving Credit Commitment of a Lender shall not be increased or decreased
as a result of any failure by any other Lender to perform its obligation to make
any Revolving Credit Advances or pay such participation purchase price
hereunder, (iii) failure by any Lender to perform its obligation to make any
Revolving Credit Advances or pay any participation purchase price hereunder
shall not excuse any other Lender from its obligation to make any Revolving
Credit Advances hereunder or pay any participation purchase price for its
participating interests hereunder and (iv) the obligations of each Lender
hereunder shall be individual and several, not joint and several.
3.7 AFFILIATED FUNDING WITH RESPECT TO LENDERS. All or any part of an
Revolving Credit Advance that any Lender (the "Obligated Lender") may be
obligated to fund pursuant to this Agreement: (i) may be funded by such Lender
on behalf of such Lender's Lending Installation or (ii) may be funded on such
Lender's behalf by such Lender by and through any such Lending Installation;
provided, however, that, (a) if any Lending Installation fails to fund all or
any part of such Revolving Credit Advance, the Obligated Lender shall be
obligated to fund such Revolving Credit Advance pursuant to the terms hereof,
(b) in no event shall any such funding by any Lending Installation increase the
costs or expenses for which the Borrowers are liable under this Agreement and
(c) in no event shall any such funding on behalf of or through any such Lending
Installation subject the Borrowers to any Taxes or Other Taxes without such
Obligated Lender's being subject to the exercise by the Borrowers of their
rights under Section 18.3 of this Agreement. The funding of a Revolving Credit
Advance by a Lending Installation hereunder shall utilize the Revolving Credit
Commitment of the Obligated Lender to the same extent, and as if, such Revolving
Credit Advance were funded by such Obligated Lender, and for purposes of this
Agreement, such Revolving Credit Advance shall be deemed to have been made
directly by such Obligated Lender.
3.8 CASH CONTROL EVENT; CASH DOMINION FUNDING.
(a) SWING LINE ADVANCES. In order to fund Borrowings in an efficient
manner and minimize fund transfers, the Borrowers and the Lenders hereby
authorize the Administrative Agent, upon the occurrence of a Cash Control Event
and notice to Borrower Representative and the Lenders of a Cash Control
Election, to cause the Swing Line Lender to make available on behalf of the
Lenders in accordance with the terms hereof the full amount of the Revolving
Credit Advances requested or deemed requested (any such advance, a "Swing Line
Advance"), without requirement of prior notice to the Lenders of the proposed
Revolving Credit Advances. Each Swing Line Advance shall be considered for all
purposes hereof as a Revolving Credit Advance hereunder and shall be subject to
all the terms and conditions applicable to other Revolving Credit Advances
except that all payments thereon shall be payable to the Administrative Agent
solely for its own account. Except for Swing Line Advances or Permitted Special
Advances pending settlement, each Lender's funded portion of outstanding
Revolving Credit Advances is intended to be equal at all times to such Lender's
Pro Rata Share of such outstanding Revolving Credit Advances.
(b) SETTLEMENT. With respect to settlement of Swing Line Advances
made by the Swing Line Lender (and such Permitted Special Advances for which
settlement is requested by the Administrative Agent), the amount of each
Lender's Pro Rata Share of the outstanding Revolving Credit Advances shall be
computed weekly, and shall be adjusted upward or downward on the basis of the
amount of the outstanding Revolving Credit Advances as of 5:00 p.m. (Cleveland
time) on the Business Day immediately preceding the date of each settlement
computation; provided, that, the Administrative Agent retains the absolute right
at any time or from time to time to settle more frequently than weekly. The
Administrative Agent shall deliver to each of the Lenders after the end of each
week, or at such lesser period or periods as the Administrative Agent shall
determine, a summary statement of the amount of outstanding Revolving Credit
Advances for such period (each such period, a "Settlement Period"). If the
summary statement is sent by the Administrative Agent and received by a Lender
prior to 12:30 p.m.
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(Cleveland time), then each Lender shall make the settlement transfer described
in this Section by no later than 3:00 p.m. (Cleveland time) on the same Business
Day and if received by a Lender after 12:30 p.m. (Cleveland time) or on a day
that is not a Business Day, then each Lender shall make the settlement transfer
by not later than 3:00 p.m. (Cleveland time) on the next Business Day following
the date of receipt (each, a "Settlement Date"). If a Lender's Pro Rata Share of
the outstanding Revolving Credit Advances as of the end of any Settlement Period
is more than such Lender's Pro Rata Share of the outstanding Revolving Credit
Advances as of the end of the previous Settlement Period, then such Lender shall
no later than the time set forth in the preceding sentence transfer to the
Administrative Agent by wire transfer in immediately available funds an amount
corresponding to such increase. Alternatively, if a Lender's Pro Rata Share of
the outstanding Revolving Credit Advances as of the end of any Settlement Period
is less than such Lender's Pro Rata Share of the outstanding Revolving Credit
Advances as of the end of the previous Settlement Period, the Administrative
Agent shall forthwith transfer to such Lender by wire transfer in immediately
available funds an amount corresponding to such decrease. The obligation of each
of the Lenders to transfer such funds and effect such settlement shall be
irrevocable and unconditional and without recourse to or warranty by the
Administrative Agent.
(c) DISTRIBUTIONS OF PAYMENTS PENDING SETTLEMENT. Until the
settlement described above has occurred, the Administrative Agent may apply any
payments by or on behalf of Borrowers and any Collections directly to any
outstanding Swing Line Advances and any outstanding Permitted Special Advances
(for which settlement is requested) as the Administrative Agent deems
appropriate. Until such settlement, if any such amounts are received by the
Administrative Agent, and no Swing Line Advances are then outstanding as to
which such amounts can be applied, the Administrative Agent may pay over such
amounts to the Swing Line Lender for application to the Swing Line Lender's Pro
Rata Share of the outstanding Revolving Credit Advances. As of any Settlement
Date, if payments or Collections received since the then immediately preceding
Settlement Date have been applied to the Swing Line Lender's Pro Rata Share of
the Revolving Credit Advances (other than Swing Line Advances) as provided for
in the immediately preceding sentence, then the Swing Line Lender shall pay to
the Administrative Agent, for the accounts of the Lenders to any outstanding
Revolving Credit Advances of the Lenders, to be applied ratably to the
outstanding Revolving Credit Advances of such Lenders, an amount such that each
Lender shall have outstanding after giving effect to such payments by the Swing
Line Lender, its Pro Rata Share of such Revolving Credit Advances; provided,
however, that the Administrative Agent may net such payments due from the Swing
Line Lender against payments due to the Swing Line Lender hereunder, and require
either the Swing Line Lender or the other Lenders, as applicable, to make only
the amount of the payment due after such netting.
(d) LENDER PARTICIPATIONS. If a Lender determines that such Lender
is legally prohibited from making a Revolving Credit Advance available to the
Administrative Agent with respect to outstanding Swing Line Advances or
Permitted Special Advances, such prohibited Lender shall irrevocably and
unconditionally purchase and receive from the Swing Line Lender or the
Administrative Agent, as applicable, without recourse or warranty, an undivided
interest and participation in such Swing Line Advance or Permitted Special
Advance to the extent of such Lender's Pro Rata Share thereof by paying to the
Administrative Agent, in immediately available funds in Dollars, at the account
of the Administrative Agent maintained at the Payment Office of the
Administrative Agent not later than the time for funding such Revolving Credit
Advance, an amount equal to such Lender's Pro Rata Share of such Revolving
Credit Advances on the date such Lender's Revolving Credit Advance would have
been made pursuant to Section 3.8(b) above. If such amount is not in fact made
available to the Administrative Agent by any Lender, the Administrative Agent
shall be entitled to recover such amount on demand from such Lender together
with interest thereon at the Federal Funds Rate for the first three (3) days
from and after such demand and thereafter at the interest rate then applicable
to the Alternate Base Rate Advances. Upon purchase of an undivided interest in
any Swing Line Advance or Permitted Special Advance pursuant to this Section,
such Lender shall be entitled to payments credited to such Swing Line Advance or
Permitted Special Advance and such Lender shall be entitled to its Pro Rata
Share of all payments credited to such Swing Line Advance or Permitted Special
Advance.
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(e) RECORDS; INTEREST. Each Lender agrees to xxxx its books and
records at the end of each Settlement Period to show at all times the dollar
amount of its Pro Rata Share of the outstanding Revolving Credit Advances and LC
Exposure. Each Lender shall only be entitled to receive interest on its Pro Rata
Share of the Revolving Credit Advances to the extent such Revolving Credit
Advances have been funded by such Lender. Because the Swing Line Lender on
behalf of the Lenders may be advancing and/or may be repaid Swing Line Advances
and the Administrative Agent may be advancing and/or may be repaid Permitted
Special Advances prior to the time when the Lenders will actually advance and/or
be repaid such Revolving Credit Advances, (x) interest with respect to Swing
Line Advances and Permitted Special Advances shall be allocated by the
Administrative Agent in accordance with the amount of Advances actually advanced
by and repaid to each Lender, the Swing Line Lender and the Administrative Agent
and (y) such interest shall accrue from and including the date such Swing Line
Advances or Permitted Special Advances are so advanced to but excluding the date
such Revolving Credit Advances are either repaid by Borrowers or actually
settled with the applicable Lender as described in this Section.
(f) PERMITTED SPECIAL ADVANCES BY THE ADMINISTRATIVE AGENT.
Notwithstanding any provision in this Agreement to the contrary, upon the
occurrence of a Cash Control Event, the Administrative Agent is hereby
authorized by the Borrowers and the Lenders, to the extent the Administrative
Agent, in its sole discretion, deems necessary or desirable to protect or
preserve the interests of the Lenders, to make additional advances ("Permitted
Special Advances") from time to time to Borrower on behalf of the Lenders
holding Revolving Credit Commitments; provided, however, that: (A) the aggregate
amount of such Permitted Special Advances outstanding shall not at any time
exceed One Million Dollars ($1,000,000), (B) the aggregate amount of such
Permitted Special Advances shall not at any time exceed an amount equal to the
aggregate Revolving Credit Advance Commitments minus the sum of outstanding
Revolving Credit Advances (inclusive of outstanding Swing Line Advances) at such
time and the aggregate LC Exposure of the Lenders at such time, (C) such
Permitted Special Advances shall not remain outstanding for more than thirty
(30) days in any period of ninety (90) consecutive days, (D) upon the request of
the Administrative Agent, the Permitted Special Advances shall be subject to
periodic settlement between the Administrative Agent and the Lenders holding
Revolving Credit Advance Commitments pursuant to Section 3.8(b), (E) the
Required Lenders may at any time revoke the Administrative Agent's authorization
contained in this Section 3.8(f) to make additional Permitted Special Advances,
any such revocation to be in writing and to become effective prospectively upon
the Administrative Agent's receipt thereof and (F) Permitted Special Advances
shall be repayable on demand or otherwise as required by this Section 3.8(f),
shall be secured by the Collateral, and shall for all purposes of this Agreement
constitute Revolving Credit Advances and Obligations hereunder bearing interest
at the Default Rate otherwise applicable at the time.
SECTION 4 PAYMENT ADMINISTRATION.
4.1 ADVANCE ACCOUNT; CREDITS; APPLICATION OF PAYMENTS AND COLLECTIONS.
(a) LENDER MAINTENANCE OF ADVANCE ACCOUNT. The Administrative Agent
shall maintain on its books and records an Advance Account (the "Advance
Account") in respect of the Borrowers which shall reflect: (i) with respect to
Revolving Credit Borrowings: (x) the outstanding Revolving Credit Advances to
the Borrowers, (y) the Pro Rata Share of each Lender in the outstanding
Revolving Credit Borrowings to the Borrowers, and (z) accrued interest on the
Revolving Credit Advances payable by the Borrowers, (ii) all Letter of Credit
drawings and (iii) all other Obligations of the Borrowers that have become
payable hereunder. Each entry by the Administrative Agent in the Advance Account
shall be, to the extent permitted by applicable Law and absent manifest error,
prima facie evidence of the data entered. Such entries by the Administrative
Agent shall not be a condition to the Borrowers' obligation to repay the
Obligations. To the extent applicable pursuant to Treasury Regulation Section
5f.103-1(c), the Administrative Agent shall maintain on the Advance Account, for
the benefit of the Borrowers, a record of any Foreign Lenders.
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(b) ADVANCE ACCOUNT CHARGES\CREDITS; REPORTS. The Borrowers hereby
authorize the Administrative Agent to charge the Advance Account of the
Borrowers with all Revolving Credit Advances (including Permitted Special
Advances), and all other Obligations of the Borrowers under this Agreement or
any other Loan Document. The Advance Account of the Borrowers will be credited
in accordance with the provisions of this Agreement with all payments received
by the Administrative Agent directly from the Borrowers or otherwise for the
account of the Borrowers pursuant to this Agreement. The Administrative Agent
shall send the Borrower Representative statements in accordance with the
Administrative Agent's standard procedures. Any and all such periodic or other
statements or reconciliations of the Advance Account shall be final, binding and
conclusive upon the Borrowers in all respects, absent manifest error, unless the
Administrative Agent receives specific written objection thereto from the
Borrower Representative within forty-five (45) Business Days after such
statements or reconciliation shall have been sent to the Borrower Representative
by the Administrative Agent.
(c) CREDITING AND APPLICATION OF SPECIFIC PAYMENTS. Except for the
crediting to the Borrowers' Advance Account for Collections deposited to the
Cash Concentration Account as provided below, the Borrowers shall make all other
payments to be made by the Borrowers under this Agreement with respect to the
Obligations not later than 2:00 p.m. (Cleveland time) on the day when due,
without setoff, counterclaim, defense or deduction of any kind, to the
Administrative Agent's account maintained at the Payment Office of the
Administrative Agent. Payments received after 2:00 p.m. (Cleveland time) shall
be deemed to have been received on the next succeeding Business Day. Prior to
the occurrence of an Event of Default which is continuing, the Borrower
Representative may specify to the Administrative Agent, at the time of the
Borrowers' making any such payment hereunder, the Obligations of the Borrowers
to which such payment is to be applied. If the Borrower Representative does not
specify an application for such payment or if an Event of Default has occurred
which is continuing, the Administrative Agent shall apply such payment to such
Obligations as provided in Section 4.1(d) and 13.4(d) of this Agreement, as
applicable. Prior to the occurrence of a Cash Control Event and a Cash Control
Election, the Borrower Representative may specify to Administrative Agent, at
the time of the Borrowers' making any such payment hereunder, the Obligations of
the Borrowers to which such payment is to be applied. If the Borrower
Representative does not specify an application for such payment or if an Event
of Default has occurred and is continuing, the Administrative Agent shall apply
such payment to such Obligations as provided in Section 4.1(d) and Section
13.4(d) of this Agreement, as applicable.
(d) DEPOSITS IN CASH CONCENTRATION ACCOUNT AFTER CASH CONTROL
ELECTION; APPLICATION AND CREDITING. Upon the occurrence of a Cash Control Event
and notice to the Borrower Representative and the Lenders of a Cash Control
Election, and until such Cash Control Election ceases to be effective in
accordance with the terms of this Agreement, deposits of items of payment with
respect to Collections shall be deposited to the Cash Concentration Account as
provided in Section 5.2 of this Agreement. Such items of payment and proceeds
shall be credited to the Loan Account of the Borrowers. For the purpose of
calculating interest on the Obligations and determining the aggregate Revolving
Credit Advances outstanding and resulting Borrowing Base of the Borrowers for
additional Revolving Credit Advances hereunder, all Collections shall be
credited to the account of Borrowers on the Business Day on which the Lender has
received notice of the deposit of the proceeds of such Collections into the Cash
Concentration Account prior to 2:00 p.m. (Cleveland time) In so crediting items
to the Loan Account of the Borrowers, Administrative Agent may apply such credit
to reduce the outstanding principal amount of such of the outstanding
Obligations of the Borrowers Upon full and final payment in immediately
available funds of all Obligations and the termination of the Revolving Credit
Commitment and all LC Exposure, deposits of Collections to the Cash
Concentration Account shall be credited as directed by the Borrowers.
(e) DISTRIBUTION OF PAYMENTS. Subject to periodic settlement of
accounts among the Lenders as provided for in this Agreement, after receipt of
any payment by the Administrative Agent, the Administrative Agent will cause to
be distributed, on the day of receipt of any payment, like funds relating to
such payment (other than amounts payable solely to the Administrative Agent or
solely to the
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applicable LC Issuer pursuant to Section 6.4) ratably to each of the Lenders at
such Lender's Lending Office.
(f) PRO RATA TREATMENT OF LENDERS. Except as set forth in Sections
6.4 and 13.5 of this Agreement, each Revolving Credit Borrowing and
participating interest hereunder, each payment or prepayment of principal of any
Revolving Credit Borrowing, any reduction of commitments, each payment of
interest on the Revolving Credit Advances, and each payment of the fees provided
for hereunder shall be allocated among the Lenders ratably in accordance with
each Lender's Pro Rata Share thereof.
(g) PAYMENT NOT ON BUSINESS DAY. Whenever any payment hereunder or
under the Notes shall be stated to be due on a day other than a Business Day,
such payment may be made either on the next succeeding Business Day or on the
immediately preceding Business Day. Any such extension or reduction of time
shall in such case be included in the computation of payment of interest, fees
or other compensation, as the case may be.
(h) PRESUMPTION OF PAYMENT IN FULL BY THE BORROWERS. Unless the
Administrative Agent shall have received notice from the Borrower Representative
prior to the date on which any payment is due to the Lenders hereunder that the
Borrowers will not make such payment in full, the Administrative Agent may
assume that the Borrowers have made such payment in full to the Administrative
Agent on such date. In reliance upon such assumption, the Administrative Agent
may, but shall not be obligated to, distribute to each Lender on such due date
the amount then due such Lender. If and to the extent the Borrowers shall not
have made such payment in full to the Administrative Agent, each Lender shall
repay to the Administrative Agent promptly upon demand the amount distributed to
such Lender, together with interest thereon (except to the extent otherwise paid
by the Borrowers) for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to the Administrative Agent
at the Federal Funds Effective Rate.
4.2 REPAYMENT AND PREPAYMENTS.
(a) SCHEDULED REPAYMENTS. Except for the required crediting to the
Borrowers' Advance Account of Collections deposited to the Cash Concentration
Account, the Borrowers shall repay to the Administrative Agent the outstanding
principal amount of the aggregate Revolving Credit Advances on the Revolving
Credit Termination Date. Reimbursements of drawings on Letters of Credit shall
be made as provided in this Agreement.
(b) MANDATORY PREPAYMENTS.
(i) MANDATORY PREPAYMENT OF REVOLVING CREDIT ADVANCES. If, on
any Business Day, the aggregate Revolving Credit Advances then
outstanding exceeds the lesser of: (x) the Borrowing Base minus the
aggregate LC Exposure then existing or (y) the aggregate Revolving
Credit Commitments of the Lenders then applicable minus the
aggregate LC Exposure then existing, the Borrowers shall on such day
prepay to the Administrative Agent an amount sufficient to eliminate
such excess ratably in accordance with each Lender's Pro Rata Share
thereof .
(ii) MANDATORY PREPAYMENT OF PERMITTED SPECIAL ADVANCES.
Subject to Section 3.8(f) of this Agreement, the aggregate
outstanding amount of each Permitted Special Advance shall be
prepaid by the Borrowers to the Administrative Agent for the benefit
of the Lenders (or, to the extent not yet settled with the Lenders
at such time, for the sole account of the Administrative Agent): (x)
on demand by the Administrative Agent or, if no demand is made, on
or before the thirtieth (30th) Business Day after the Administrative
Agent shall have made such Permitted Special Advance and (y) if, on
any Business Day, the aggregate Permitted Special Advances then
outstanding exceeds One
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Million Dollars ($1,000,000), then the Borrowers shall on such day
prepay to the Administrative Agent for the account of the Lenders
(or, to the extent not yet settled with the Lenders at such time,
for the sole account of the Administrative Agent) an amount
sufficient to eliminate such excess.
4.3 REDUCTION OF REVOLVING CREDIT COMMITMENT. Upon five (5) Business Days
prior written notice from the Borrower Representative to the Administrative
Agent, the Borrowers shall be permitted to reduce permanently the Revolving
Credit Commitment, in whole or in part, as provided in such notice. Each
reduction shall be subject to the following: (i) each such reduction shall be in
an aggregate principal amount of not less than One Million Dollars ($1,000,000)
or a multiple of One Hundred Thousand Dollars ($100,000) in excess thereof, (ii)
such reductions shall be subject to the early termination fee set forth in
Section 6.4(d) based on the amount so reduced and (iii) no reduction shall be
permitted to reduce the aggregate Revolving Credit Commitment unless,
concurrently with such reduction, the Borrowers shall make a principal payment
of the then outstanding Revolving Credit Advances to the extent required by
Section 4.2(b)(i) of this Agreement. Each reduction in the Revolving Credit
Commitment hereunder shall be a permanent reduction thereof.
SECTION 5 CASH MANAGEMENT ADMINISTRATION.
5.1 MAINTENANCE OF LOCKBOX AND COLLECTION ACCOUNT. The Borrowers have
established and shall maintain one or more Lockboxes in the name of the
Borrowers with one or more Lockbox Banks that are acceptable to the
Administrative Agent, in its reasonable discretion. The Borrowers have
established and will maintain Collections Accounts in the name of Borrowers with
the Administrative Agent and each Lockbox Bank. The Collection Account
established with the Administrative Agent shall function as the Cash
Concentration Account for all purposes of this Section. Each Lockbox Bank shall
have entered into agreements with the Borrowers establishing the Lockboxes
controlled by such Lockbox Bank (a "Lockbox Agreement") and agreements with
respect to the Collection Account maintained at such Lockbox Bank (a "Deposit
Account Agreement"), each such Lockbox Agreement and Deposit Account Agreement
to be in form and substance reasonably satisfactory to the Administrative Agent.
Each Lockbox Bank shall have entered into a letter agreement with the Borrowers
relating to rights of the Administrative Agent with respect to the Lockboxes
maintained with the Lockbox Bank by Borrowers and with respect to the Collection
Account (a "Deposit Account Control Letter"), substantially in the form of
Exhibit N and otherwise in form and substance reasonably satisfactory to the
Administrative Agent. In the case of the Cash Concentration Account, KeyBank and
the Borrowers shall have entered into a letter agreement (a "Cash Collateral
Account Control Letter"), substantially in the form of Exhibit O hereto and
otherwise in form and substance reasonably satisfactory to the Administrative
Agent.
The Disclosure Schedule shall set forth a list of: (i) all present
Lockboxes, the Collection Accounts, and any other bank accounts maintained by
Borrowers, (ii) the name and address of each Lockbox Bank, (iii) the account
number of the Collection Account, (iv) a contact at such Lockbox Bank, and (v) a
list describing all Lockbox Agreements, Deposit Account Agreements, Deposit
Account Control Letters, and the Cash Collateral Account Control Letter and all
other agreements establishing each Lockbox, Collection Account, the Cash
Concentration Account and Permitted Account.
5.2 PROCESSING COLLECTIONS; CASH CONCENTRATION ACCOUNT. In accordance with
the terms of the applicable Cash Collateral Account Control Letter, each Lockbox
Bank shall be instructed to deposit on a daily basis all Collections sent to the
Lockbox maintained by such Lockbox Bank directly into the applicable Collection
Account of the Borrowers in the identical form in which each such Collections
was made (except for any necessary endorsements) whether by cash or check. All
funds deposited into any Collection Account shall be Collateral in which
Administrative Agent has been granted a security interest on behalf of the
Lenders pursuant to the terms of this Agreement and shall be subject to the sole
and exclusive control of Administrative Agent and only to such signing authority
designated from time to time by Administrative Agent. The Borrowers shall have
no control over such funds; provided, however that, anything contained herein to
the contrary notwithstanding, prior to the occurrence of a Cash Control
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Event and a Cash Control Election by the Administrative Agent, the Borrowers
shall have the unlimited right to withdraw funds from each Collection Account
and to direct the Administrative Agent or direct the applicable Lockbox Bank, as
the case may be, to remit funds from such Collection Account to the Operating
Account of the Borrowers or as otherwise directed by the Borrower
Representative.
No Collection Account shall be subject to any deduction, set off, banker's lien
or any other right in favor of any Person (other than as may be expressly set
forth in the applicable Deposit Account Control Letter). The Borrowers shall
notify all of their customers and Account Debtors to forward all Collections of
every kind due the Borrowers to a Lockbox or to wire all Collections due the
Borrowers to a Collection Account (such notices to be in such form and substance
as Administrative Agent may reasonably require from time to time). The Borrowers
will use commercially reasonable efforts to notify all remitters of Collections
to forward such Collections to a Lockbox or Collection Account.
5.3 CASH CONCENTRATION ACCOUNT. In accordance with the terms of the
applicable Deposit Account Control Letter, each Lockbox Bank shall be instructed
to deposit on a daily basis all collected and available funds from Collections
deposited into a Collection Account to the Cash Concentration Account. Prior to
the occurrence of a Cash Control Event and a Cash Control Election by the
Administrative Agent, the Borrowers shall have the unlimited right to withdraw
funds from the Cash Concentration Account and to direct the Administrative Agent
to remit funds from the Cash Concentration Account to the Operating Account of
the Borrowers or as otherwise directed by the Borrower Representative. After the
occurrence of a Cash Control Event and notice to the Borrowers and the Lenders
of a Cash Control Election, and until such Cash Control Election ceases to be
effective in accordance with the terms of this Agreement, all Collections and
Remittances shall be credited to the Loan Account of the Borrowers and applied
to the outstanding Obligation in accordance with Section 4.1(d). After the
occurrence of a Cash Control Event and notice to the Borrowers and the Lenders
of a Cash Control Election, and until such Cash Control Election ceases to be
effective in accordance with the terms of this Agreement, the Cash Concentration
Account shall not be subject to any deduction, set off, banker's lien or any
other right in favor of any Person. After the occurrence of a Cash Control Event
and notice to the Borrowers and the Lenders of a Cash Control Election, and
until such Cash Control Election ceases to be effective in accordance with the
terms of this Agreement, (i) all funds deposited into the Cash Concentration
Account shall be the exclusive property of Administrative Agent on behalf of the
Lenders, (ii) shall be subject to the sole and exclusive control of
Administrative Agent and only to such signing authority designated from time to
time by Administrative Agent and (iii) the Borrowers shall have no further
rights to withdraw funds form the Cash Concentration Account.
Upon the occurrence of a Cash Control Event and a Cash Control
Election, and until such Cash Control Election ceases to be effective in
accordance with the terms of this Agreement, any Collections received directly
by a Borrower shall be deemed held by such Borrower in trust and as fiduciary
for the Lenders. The Borrowers agree not to commingle any such Collections with
any of the Borrowers' other funds or property, but to hold such funds separate
and apart in trust and as fiduciary for the Lenders until deposit is made into
the applicable Collection Account or the Cash Concentration Account. Upon the
occurrence of a Cash Control Event and a Cash Control Election, and until such
Cash Control Election ceases to be effective in accordance with the terms of
this Agreement, the Borrowers hereby agree to deposit immediately such directly
received Collections into the Collection Account maintain by or on behalf of
such Borrowers or into the Cash Concentration Account.
5.4 COSTS OF COLLECTION. All reasonable costs of collection of the
Borrowers' Accounts, including actual out-of-pocket expenses, administrative and
record-keeping costs, reasonable attorney's fees, and all service charges and
costs related to the establishment and maintenance of the Lockbox, the
Collection Account, and the Cash Concentration Account shall be the sole
responsibility of the Borrowers, whether the same are incurred by the
Administrative Agent or the Borrowers. The Administrative Agent, in its sole
discretion, may charge such costs, fees and charges against the Advance Account
as an Obligation. The Borrowers hereby indemnify and hold the Administrative
Agent harmless from and against any loss or damage with respect to any
Collection deposited in the Collection Account
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or Cash Concentration Account which is dishonored or returned for any reason. If
any Collection deposited in the Collection Account is dishonored or returned
unpaid for any reason, the Administrative Agent, in its sole discretion, may
charge the amount thereof against the Advance Account as an Obligation (but only
if such amount was credited to the Advance Account prior thereto). The
Administrative Agent shall not be liable for any loss or damage resulting from
any error, omission, failure or negligence on the part of the Administrative
Agent, except losses or damages resulting from the Administrative Agent's gross
negligence, willful misconduct or bad faith as determined by a final judgment of
a court of competent jurisdiction.
5.5 RETURN OF FUNDS. Upon the payment in full of all Obligations (other
than continuing Indemnification Obligations) and the termination of the
aggregate Revolving Credit Commitments and LC Exposure hereunder: (a) the
Administrative Agent's security interests and other rights in funds in the
Collection Account shall terminate, (b) all rights to such funds shall revert to
the Borrowers as applicable and (c) the Administrative Agent will, at the
Borrowers' expense, take such steps as the Borrower Representative may
reasonably request to evidence the termination of such security interests and to
effect the return to the Borrowers of such funds, and all pledged stock
certificates and related stock powers.
5.6 NOTICE TO ACCOUNT DEBTORS. The Borrowers hereby authorize the
Administrative Agent, upon the occurrence of a Cash Control Event and a Cash
Control Election, and until such Cash Control Election ceases to be effective in
accordance with the terms of this Agreement, to: (a) notify any or all Account
Debtors that the Accounts have been assigned to the Administrative Agent, for
the ratable benefit of the Administrative Agent, the Lenders and the other
holders of Obligations, and that the Administrative Agent has a security
interest therein; and (b) direct such Account Debtors to make all payments due
from them to the Borrowers upon the Accounts directly to the Administrative
Agent or to a Lockbox designated by the Administrative Agent; provided, however,
that the Administrative Agent shall not exercise any of such rights unless the
Administrative Agent concurrently notifies the Borrower Representative of its
exercise of such rights.
SECTION 6 INTEREST AND FEES.
6.1 INTEREST RATE ON ADVANCES. The Borrowers shall pay interest on the
unpaid principal amount of each Revolving Credit Advance made by the Lenders
from the date such Revolving Credit Advance is advanced until the principal
amount thereof shall have been paid in full as follows:
(a) ALTERNATE BASE RATE ADVANCES. During such periods as any
Alternate Base Rate Advances are outstanding, the Borrowers shall pay interest
on such Alternate Base Rate Advances at a rate per annum equal to the sum of the
Alternate Base Rate plus the Applicable Margin then in effect and applicable to
the Revolving Credit Borrowings comprised of such Revolving Credit Advances,
payable: (A) monthly, in arrears, on the first day of each calendar month, (B)
on the date such Revolving Credit Advances comprising any such Revolving Credit
Borrowing shall be paid in full (whether at maturity, by reason of acceleration
or otherwise) and (C) after maturity, on demand.
(b) LIBOR RATE ADVANCES. During such periods as any LIBOR Rate
Advances are outstanding, the Borrowers shall pay interest on such LIBOR Rate
Advances at a rate per annum equal to the sum of the London Interbank Offered
Rate plus the Applicable Margin then in effect and applicable to Revolving
Credit Borrowings comprised of such Revolving Credit Advances, payable: (A) on
the last day of each Interest Period and (B) if such Interest Period has a
duration of more than three months, on the last day of the third month of such
Interest Period and (C) on the date such Revolving Credit Advances shall be
converted into Alternate Base Rate Advances or paid in full (whether at
maturity, by reason of acceleration or otherwise) and (D) after maturity, on
demand.
(c) DEFAULT INTEREST. If any principal, interest or fees due under
this Agreement shall not be paid when due or if any Revolving Credit Note or any
amounts due under any Revolving Credit Note shall not be paid at maturity,
whether such maturity occurs by reason of lapse of time or by
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operation of any provision of acceleration of maturity therein contained, or if
there shall otherwise occur an Event of Default which is continuing, then the
principal of each outstanding Revolving Credit Advance and, to the extent
permitted by law, the unpaid interest thereon shall, upon the Lender's written
election, bear interest, payable on demand, at a rate per annum equal at all
times to two percent (2.00%) per annum in excess of the interest rate otherwise
then payable pursuant to the terms of this Agreement.
(d) FAILURE OF BORROWER REPRESENTATIVE TO ELECT INTEREST PERIOD. If
no Interest Period is specified in any Credit Request or any Rate
Conversion/Continuation Request for any LIBOR Rate Advance, the Borrower
Representative shall be deemed to have requested such Revolving Credit Advance
to be an Alternate Base Rate Advance. If the Borrower Representative shall not
have given notice in accordance with Section 6.2 of this Agreement to continue
any LIBOR Rate Advance into a subsequent Interest Period (and shall not have
otherwise delivered a Rate Conversion/Continuation Request in accordance with
Section 6.2 of this Agreement to convert such Revolving Credit Advance), then,
at the end of the Interest Period applicable to such LIBOR Rate Advance, such
Revolving Credit Advance shall convert into an Alternate Base Rate Advance.
6.2 RATE CONVERSION AND RATE CONTINUATION. The Borrowers shall have the
right to convert all or any portion of the Revolving Credit Advances comprising
a Revolving Credit Borrowing into, or continue all or any portion of the
Revolving Credit Advances comprising a Revolving Credit Borrowing as, LIBOR Rate
Advances or Alternate Base Rate Advances, as the case may be, upon request
delivered by the Borrower Representative to the Administrative Agent not later
than 2:00 p.m. (Cleveland time) as follows: (a) on the Business Day that the
Borrowers desire to convert all or a portion of the LIBOR Rate Advances into
Alternate Base Rate Advances, (b) three (3) Business Days prior to the Business
Day on which the Borrowers desire to convert all or a portion of the outstanding
Alternate Base Rate Advances into a LIBOR Rate Borrowing for a given permissible
Interest Period, or (c) three (3) Business Days prior to the Business Day on
which the Borrowers desire to continue any LIBOR Rate Advance comprising a LIBOR
Rate Borrowing as a LIBOR Rate Borrowing for an additional Interest Period of
the same duration or as a LIBOR Rate Borrowing having a different permissible
Interest Period; provided, however, that each such Rate Conversion or Rate
Continuation shall be subject to the following:
(a) if less than all of the outstanding principal amount of a
Revolving Credit Borrowing is converted or continued, the aggregate
principal amount of such Revolving Credit Borrowing converted or continued
shall be not less than Five Hundred Thousand Dollars ($500,000), or an
integral multiple of Five Hundred Thousand Dollars ($500,000) in excess
thereof;
(b) LIBOR Rate Advances shall not be converted or continued at a
time other than the end of an Interest Period applicable thereto unless
the Borrowers shall pay, upon demand, any amounts due to the Lenders
pursuant to Section 18.5 of this Agreement;
(c) After the occurrence of an Event of Default which is continuing,
Revolving Credit Advances may not be converted into or continued (at the
expiration of the Interest Period applicable thereto) as LIBOR Rate
Advances;
(d) Revolving Credit Advances may not be converted into or continued
as LIBOR Rate Advances so as to comprise a Revolving Credit Borrowing if
the Interest Period applicable thereto will expire on or after the
Revolving Credit Termination Date;
(e) Revolving Credit Advances that cannot be converted into or
continued as LIBOR Rate Advances by reason of clause (c) or (d) of this
Section shall be automatically converted at the end of the Interest Period
in effect for such LIBOR Rate Advances into Alternate Base Rate Advances.
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Each request for conversion or continuation (a "Rate Conversion/Continuation
Request") shall be a written or telephonic notice (in the case of a telephonic
notice, promptly confirmed in writing if so requested by the Lender). Each
written Rate Conversion/Continuation Request or written confirmation thereof
shall be substantially in the form of Exhibit C attached hereto, signed or
otherwise acceptable authenticated by the Borrower Representative and
transmitted to the Administrative Agent by telecopier or electronic mail.
6.3 COMPUTATIONS OF INTEREST AND FEES. All computations of interest on
Revolving Credit Advances hereunder and of fees and other compensation hereunder
shall be made in all cases by the Lender on the basis of a year of 360 days
(except computations of interest on Alternate Base Rate Advances shall be made
on the basis of a year of 365/366 days) in each case for the actual number of
days elapsed (commencing on the day such Revolving Credit Advance was advanced
but excluding the day such Revolving Credit Advance shall be paid in full)
occurring in the period for which such interest or fees are payable. Each
determination by the Lender of interest, fees or other amounts of compensation
due hereunder shall be rebuttably presumed to be correct.
6.4 FEES. The following fees shall be payable as set forth below:
(a) UNUSED COMMITMENT FEE. The Borrowers agree to pay to the
Administrative Agent for the ratable benefit of the Lenders an unused commitment
fee (the "Unused Commitment Fees") on the average daily unused portion of the
Revolving Credit Commitment (including LC Exposure as usage for purposes of
calculating such unused portion and excluding the Reserve Amount) of the Lenders
from the Closing Date until the Revolving Credit Termination Date at a rate per
annum equal to the Applicable Margin with respect to unused commitment fees,
payable monthly in arrears on the first day of each calendar month, commencing
November 1, 2004, and on the Revolving Credit Termination Date.
(b) ANNUAL FEE. The Borrowers agree to pay to the Administrative
Agent an annual administration fee of Fifteen Thousand Dollars ($15,000) payable
on the Closing Date and each anniversary thereof.
(c) BANK PRODUCT FEES. The Borrowers agree to pay to the
Administrative Agent when due any other fees owing to the Administrative Agent
with respect to services or facilities which may be extended to the Borrowers,
including, without limitation, credit cards, cash management and related
services such automatic clearing house transfer of funds.
(d) EARLY TERMINATION FEE. The Borrowers agrees to pay to the
Administrative Agent for the ratable benefit of the Lenders, allocable to the
Lenders in accordance with each Lender's Pro Rata Share, an early termination
fee of: (i) one and one half percent (1.50%) of the average Revolving Credit
Commitment hereunder in the case of termination of such Commitment hereunder
prior to the first anniversary of the Closing Date; (ii) one percent (1.00%) of
the average Revolving Credit Commitment hereunder in the case of termination of
the such Commitment hereunder prior to the second anniversary of the Closing
Date; or (iii) one half of one percent (0.50%) of the average Revolving Credit
Commitment hereunder in the case of termination of the such Commitment hereunder
prior to the third anniversary of the Closing Date; provided, however, if such
Commitment hereunder is terminated as a result of a transfer or payoff provided
by an affiliate of KeyBank, then no such early termination fee shall be due and
payable. For purposes hereof, average Revolving Credit Commitment shall mean the
average of the most recent twelve month-end Revolving Credit Commitment levels
prior to the date of the termination of the Commitment or, if this Agreement has
been in place less than twelve months, the average Revolving Credit Commitment
levels for such shorter period.
(e) LETTER OF CREDIT FEES. The Borrowers shall pay the following
fees with respect to Letters of Credit:
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(i) The Borrowers agree to pay to the Administrative Agent for
the ratable benefit of the Lenders with respect to each Letter of
Credit, a fee accruing in dollars at a rate per annum equal to the
then current Applicable Margin of LIBOR Rate Advances applicable to
Revolving Credit Borrowings multiplied by the maximum undrawn face
amount of such Letter of Credit, payable in arrears (A) on the first
Business Day of each Fiscal Quarter commencing on the first such
Business Day following the issuance of such Letter of Credit and (B)
on the Revolving Credit Termination Date.
(ii) To the extent that there is more than one Lender under
this Agreement, the Borrowers agree to pay the LC Issuer, for its
own account as issuing bank, a fronting fee equal to fifteen basis
points (15 bps) multiplied by the issued face amount of each Letter
of Credit issued, payable on the date each such Letter of Credit is
issued and on the date such Letter of Credit is renewed.
(iii) The Borrowers agree to pay to the LC Issuer, with
respect to the issuance, amendment, or transfer of each Letter of
Credit and each drawing made thereunder, customary administrative,
documentary and processing charges in accordance with the LC
Issuer's standard schedule for such charges in effect at the time of
issuance, amendment, transfer or drawing, as the case may be.
(f) PAYMENT OF FEES; NONREFUNDABLE. All fees set forth in this
Section 6.4 shall be paid on the date due to the Administrative Agent for
distribution, if appropriate to the Lenders or the LC Issuer. Once paid, to the
extent permitted by applicable Law and absent error on the part of the
Administrative Agent, none of such fees shall be refundable.
6.5 LIBOR RATE ADVANCES: UNASCERTAINABLE RATE; ILLEGALITY; INCREASED
COSTS.
(a) UNASCERTAINABLE RATE; ILLEGALITY; INCREASED COSTS. In the event
that (x) in the case of clause (i) below, the Administrative Agent or (y) in the
case of clauses (ii) and (iii) below, any Lender, shall have determined on a
reasonable basis (which determination shall, absent manifest error, be final and
conclusive and binding upon all parties hereto):
(i) on any date for determining the London Interbank Offered
Rate for LIBOR Rate Advances for any Interest Period that, by reason
of any changes arising after the Closing Date affecting the London
interbank market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for
in the definition of the "London Interbank Offered Rate", or
(ii) at any time, that such Lender shall incur increased costs
or reductions in the amounts received or receivable hereunder in an
amount which such Lender deems material with respect to any LIBOR
Rate Advance to the Borrowers because of any change since the
Closing Date in any applicable Law, governmental rule, regulation,
guideline, order or request (whether or not having the force of
Law), or in the interpretation or administration thereof and
including the introduction of any new Law or governmental rule,
regulation, guideline, order or request (such as, for example, but
not limited to, a change in official reserve requirements, but, in
all events, excluding reserves includable in the "London Interbank
Offered Rate" pursuant to the definition thereof), or
(iii) at any time, that the making or continuance of any LIBOR
Rate Advance has become unlawful by compliance by such Lender in
good faith with any change since the Closing Date in any Law,
governmental rule, regulation, guideline or order, or the
interpretation or application thereof, or would conflict with any
thereof not having the force of Law but with which such Lender
customarily complies;
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THEN, the Administrative Agent, in the case of and on the date of determination
specified in clause (i) above, or such Lender, in the case of and as promptly as
practical after the date of determination specified in clause (ii) and (iii)
above, shall give notice by telephone confirmed in writing to the Borrower
Representative (and to the Administrative Agent in the case of a Lender notice)
of such determination. The Administrative Agent shall promptly transmit such
notice to each of the other applicable Lenders. Thereafter (A) in the case of
clause (i) above, LIBOR Rate Advances shall no longer be available until such
time as the Administrative Agent gives prompt notice to the Borrower
Representative and the applicable Lenders that the circumstances giving rise to
such notice by the Administrative Agent no longer exist, and any Credit Request
or Rate Conversion/Continuation Request given by the Borrower Representative
with respect to LIBOR Rate Advances which have not yet been incurred or
converted shall be deemed rescinded by the Borrower Representative or, in the
case of a Credit Request, shall, at the option of the Borrower Representative,
be deemed converted into a Credit Request for Alternate Base Rate Advances, (B)
in the case of clause (ii) above, the Borrowers shall pay to such Lender, upon
written demand to the Borrower Representative, such additional amounts (in the
form of an increased rate of, or a different method of calculating, interest or
otherwise as such Lender shall determine) as shall be required to compensate
such Lender, for such increased costs or reductions in amounts receivable
hereunder (a written notice as to the additional amounts owed to such Lender,
showing the basis for the calculation thereof and that such Lender is generally
charging all of its customers for comparable amounts, submitted to the Borrower
Representative by such Lender shall, absent manifest error, be final and
conclusive and binding upon all parties hereto) and (C) in the case of clause
(iii) above, the Borrower Representative on behalf of the Borrowers shall take
one of the actions specified in the next paragraph of this Section.
At any time that any LIBOR Rate Advance is affected by the
circumstances described in Section 6.5(a)(ii) above, the Borrowers may, and, in
the event any LIBOR Rate Advance is affected by the circumstances described in
Section 6.5(a) (iii) above, the Borrowers shall, either (i) if the affected
LIBOR Rate Advance is then being made pursuant to a Credit Request for a LIBOR
Rate Borrowing, by causing the Borrower Representative to give the
Administrative Agent telephonic (confirmed promptly in writing if requested)
notice thereof on the same date that the Borrower Representative was notified by
a Lender pursuant to Section 6.5(a) (ii) or (iii) above, cancel said LIBOR Rate
Borrowing or convert such Credit Request to a request for a Revolving Credit
Borrowing of Alternate Base Rate Advances, or (ii) if the affected LIBOR Rate
Advance is then outstanding, upon at least one Business Day's notice from the
Borrower Representative to the Administrative Agent, require the affected Lender
to convert each such LIBOR Rate Advance into an Alternate Base Rate Advance with
such conversion to be effective on the last day of the Interest Period currently
applicable to such LIBOR Rate Advance, if affected Lender may lawfully continue
to maintain such LIBOR Rate Advance until such last day, or immediately, if
affected Lender is not legally permitted to maintain such Revolving Credit
Advance until such last day, and subject to payment to such affected Lender of
any amount required under Section 18.6 provided that if more than one Lender is
affected at any time, then all affected Lenders must be treated the same
pursuant to this Section.
SECTION 7 CONDITIONS OF LENDING.
7.1 CONDITIONS PRECEDENT TO INITIAL ADVANCES. The effectiveness of this
Agreement, the obligation of each Lender to make a Revolving Credit Advance on
the occasion of each Borrowing hereunder, and the obligation of the LC Issuer to
issue any Letters of Credit, are subject to the condition precedent that: (i)
the conditions set forth in Annex III, attached hereto and incorporated herein
by reference, shall have been satisfied, as determined by the Administrative
Agent, in its sole discretion, on or before the Closing Date of this Agreement
and (ii) the Administrative Agent shall have received on or before the Closing
Date of this Agreement the documents and deliveries set forth on said Annex III
(which, in the case of exhibits to this Agreement, shall be in the forms
attached hereto, with blanks completed).
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7.2 CONDITIONS PRECEDENT TO ALL ADVANCES. The obligation of each Lender to
make an Advance on the occasion of each Borrowing hereunder and the obligation
of the LC Issuer to issue or renew any Letter of Credit are subject to the
conditions precedent that:
(a) REPRESENTATION BRINGDOWN. As of the date of any Credit Event,
and before and after giving effect thereto, the representations and warranties
contained in this Agreement and all other Loan Documents are true and correct in
all material respects on and as of the date of such Credit Event with the same
effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date; and
(b) NO DEFAULT; COMPLIANCE WITH TERMS. As of the date of any Credit
Event, and before and after giving effect thereto, no Potential Default or Event
of Default shall have occurred and be continuing; and
(c) NO MATERIAL ADVERSE CHANGE. As of the date of any Credit Event,
and before and after giving effect thereto, there shall have been no event which
has had, or could reasonably be expected to have, a Material Adverse Effect; and
(d) CONFIRMATION OF BORROWING BASE. The Borrower Representative
shall have delivered to the Administrative Agent each Borrowing Base Certificate
required to have been delivered for the period immediately preceding the
occurrence of such Credit Event.
Each Credit Event shall constitute a representation and warranty by the
Borrowers that on the date of such Credit Event, the statements in clauses (a)
through (c) above are true and correct as of such date and that the actions
required under clause (d) above have in fact been taken as of such date.
SECTION 8 SECURITY INTEREST IN COLLATERAL; COLLATERAL REQUIREMENTS.
8.1 GRANT OF SECURITY INTEREST. To secure the prompt payment and
performance of Obligations, each of the Borrowers hereby grants to the
Administrative Agent, for itself in its capacity as Administrative Agent
hereunder and for the benefit of the Lenders, the LC Issuer, and any Hedge
Creditor, a continuing security interest in and a pledge of all of the tangible
and intangible personal property and assets of such Borrower, whether now owned
or existing or hereafter acquired or arising and wheresoever located including,
without limitation: (a) all Accounts, (b) all Inventory, (c) all General
Intangibles and Intellectual Property, (e) all Investment Property, (f) all
Deposit Accounts and any and all monies credited by or due from the Lenders or
any other depository to such Borrower, whether in the Collection Account, any
Cash Concentration Account, any other depository account or other account, or
any Lockbox, (g) all Pledged Collateral and any Additional Pledged Collateral
(arising after the date hereof), (h) all Instruments, Documents, documents of
title, policies and certificates of insurance, securities, goods, choses in
action, Chattel Paper, cash or other property, to the extent owned by such
Borrower or in which such Borrower has an interest, (i) all Collateral of such
Borrower which now or hereafter is at any time in the possession or control of
any of the Lenders or in transit by mail or carrier to or from any of the
Lenders or in the possession of any Person acting in a Lender's behalf, without
regard to whether such Lender received the same in pledge, for safekeeping, as
agent for collection or transmission or otherwise or whether such Lender had
conditionally released the same, and any and all balances, sums, proceeds and
credits of such Borrower with such Lender, (j) all accessions to, substitutions
for, and all replacements, Products and Proceeds of the herein above-referenced
property of the Borrowers described in this Section including, but not limited
to, proceeds of insurance policies insuring such property, and proceeds of any
insurance, indemnity, warranty or guaranty payable to the Borrowers and (k) all
books, records, and other property (including, but not limited to, credit files,
programs, printouts, computer software, and disks, magnetic tape and other
magnetic media, and other materials and records) of Borrowers pertaining to any
such above-referenced property of such Borrower; provided, however, that in no
event shall any Borrower be required to pledge more than sixty-five (65%) of
voting power of all classes of the capital stock of a Subsidiary that is not a
Domestic Subsidiary; and
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provided, further, that the foregoing grant of a security interest and pledge
shall not include a security interest in or pledge of Excluded Property and
provided, finally, that if and when the prohibition which prevents the granting
by such Borrower or such Subsidiary to the Lender of a security interest in
clause (a) of the definition of Excluded Property, the Lender will be deemed to
have, and at all times from and after the date hereof to have had, a security
interest in and pledge of such Excluded Property, as the case may be, and that,
notwithstanding anything set forth herein to the contrary, the Lender will be
deemed to have, and at all times from and after the date hereof to have had, a
security interest in and pledge of the proceeds of such Excluded Property.
8.2 PERFECTION.
(a) PERFECTION BY FILING; AUTHORIZATION BY DEBTOR. Each Borrower (i)
hereby authorizes the Administrative Agent, at any time and from time to time,
to file initial financing statements, financing statements, continuation
statements, and amendments thereto that comply with and contain any other
information required by the UCC for the sufficiency of filing office acceptance
of any such initial financing statement, financing statement, continuation
statement, or amendment and (ii) otherwise agrees to take such other action and
execute such assignments or other instruments or documents, in each case as the
Administrative Agent may request, to evidence, perfect, or record the
Administrative Agent's security interest in the Collateral, now existing or
hereafter arising, or to enable the Administrative Agent to exercise and enforce
its rights and remedies under this Agreement with respect to any Collateral. Any
such initial financing statement, financing statement, continuation statement,
or amendment may be filed by the Administrative Agent on behalf of the
Borrowers.
(b) OTHER PERFECTION METHODS. The Borrowers shall, at any time and
from time to time, take such steps as the Administrative Agent may reasonably
request for the Administrative Agent: (i) to obtain a perfected security
interest in any Pledged Collateral existing on the date hereof or any Additional
Pledged Collateral hereafter arising, (ii) to use commercially reasonable
efforts to obtain an acknowledgment, in form and substance reasonably
satisfactory to the Administrative Agent, of any bailee, warehouseman or
consignee having possession of any of the Collateral, stating that such Person
holds such Collateral for the Administrative Agent as secured party, (iii) to
obtain "control" of any Investment Property, Deposit Accounts, "letter-of-credit
rights", or "electronic chattel paper" (as such terms are defined by the UCC
with corresponding provisions thereof defining what constitutes "control" for
such items of Collateral), with any agreements establishing control to be in
form and substance reasonably satisfactory to the Administrative Agent, and (iv)
otherwise to assure the continued perfection and priority of the Administrative
Agent's security interest in any of the Collateral and of the preservation of
its rights therein. If any Borrower shall at any time acquire a "commercial tort
claim" (as such term is defined in the UCC) in excess of One Hundred Thousand
Dollars ($100,000), the Borrower Representative shall promptly notify the
Administrative Agent thereof in a writing, therein providing a reasonable
description and summary thereof, and upon delivery thereof to the Administrative
Agent, such Borrower shall be deemed to thereby grant to the Administrative
Agent (and such Borrower hereby grants to the Administrative Agent) a security
interest and lien in and to such commercial tort claim and all proceeds thereof,
all upon the terms of and governed by this Agreement.
Nothing contained in this Section shall be construed to narrow the scope of the
Administrative Agent's security interests or the perfection or priority thereof
or to impair or otherwise limit any of the rights, powers, privileges, or
remedies of the Administrative Agent under the Loan Documents. In addition, no
Borrower shall maintain any Securities Account or Commodity Account that is not
a Control Account and nor shall it grant "control" over any Investment Property
to any Person other than the Administrative Agent, except as otherwise expressly
permitted hereunder.
8.3 CHANGES AFFECTING PERFECTION. No Borrower shall nor shall it permit
any Domestic Subsidiary thereof to, without giving the Administrative Agent at
least ten (10) days prior notice thereof: (a) make any change in any location
where Inventory of such Borrower or any of its Domestic Subsidiaries valued at
more than Five Hundred Thousand Dollars ($500,000) is maintained, or locate any
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of such Inventory or at any new locations (other than in connection with sales
of Inventory in the ordinary course of business or Inventory in transit), (b)
change its state of incorporation or make any change in the location of its
chief executive office, principal place of business or the office where its
records pertaining to its Accounts and General Intangibles are kept, (c) add any
new places of business and (d) make any change in its name or corporate
structure.
8.4 REINSTATEMENT. The provisions of this Section 8 and Section 9 of this
Agreement shall remain in full force and effect in respect of a Borrower should
any petition be filed by or against such Borrower for liquidation or
reorganization, should such Borrower become insolvent or make an assignment for
the benefit of creditors or should a receiver or trustee be appointed for all or
any part of such Borrower's assets or should any other Financial Impairment
relating to such Borrower occur. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Obligations shall, to
the extent permitted by applicable law, be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.
8.5 FURTHER ASSURANCES. Each Borrower will, and will cause each of its
Domestic Subsidiaries to, at the expense of the Borrowers, make, execute,
endorse, acknowledge, file and/or deliver to the Administrative Agent from time
to time such conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, and other assurances or instruments and take such
further steps relating to the Collateral, now existing or hereafter arising,
covered by this Agreement and the other Loan Documents as the Administrative
Agent may reasonably require. Each Borrower will execute or cause to be executed
and shall deliver the Administrative Agent any and all documents and agreements
reasonably deemed necessary by the Administrative Agent to give effect to or
carry out the terms or intent of the Loan Documents. The Administrative Agent,
in the reasonable exercise of its credit judgment, may order and obtain at the
Lender's expense or, if an Event of Default has occurred and is continuing, at
the Borrowers' expense, such new or updated title, lien, judgment, patent,
trademark and UCC financing statement searches or reports as to the Borrowers or
any Collateral as the Administrative Agent may deem reasonably appropriate. The
Administrative Agent is authorized to (i) enter into any modification of any
Loan Documents which the Administrative Agent reasonably believes is required to
conform to the mandatory requirements of local law, or to local customs followed
by financial institutions with respect to similar collateral documents involving
property located in any particular jurisdiction and (ii) permit the Borrowers to
update the Disclosure Schedule; provided, however that any such update must be
in substance reasonably acceptable to the Administrative Agent.
8.6 TERMINATION OF SECURITY INTEREST; RELEASE OF COLLATERAL. Upon the
payment in full of all of the Obligations hereunder, the termination of the LC
Exposure of the Lenders hereunder, and the termination of the Revolving Credit
Commitments: (a) the security interests and the other Liens and licenses granted
to the Administrative Agent shall terminate, (b) all rights to the Collateral
shall revert to the Borrower with rights therein, (c) the Administrative Agent
will at the sole reasonable cost and expense of the Borrowers, (x) execute and
deliver to the Borrowers all documents as the Borrowers may reasonably request
to evidence the termination of such security interests and the release of such
Collateral, and (y) take such other actions with respect to this Agreement, the
other Loan Documents, the Liens created thereby as the Borrowers shall
reasonably request, and (d) this Agreement and all of the other Loan Documents
will be terminated, and the Borrowers will have no further liabilities or
obligations thereunder (except any liabilities and/or obligations which under
the terms of this Agreement or any Loan Document survive termination thereof).
8.7 PARTIAL RELEASES. Each of the Lenders hereby irrevocably authorize the
Administrative Agent, at its option and in its discretion, to release any Lien
granted to or held by the Administrative Agent upon any property covered by this
Agreement or the other Loan Documents which: (i) constitutes property being sold
or disposed of and the Borrower Representative certifies to the Administrative
Agent that the sale or disposition is made in compliance with the provisions of
this Agreement (and the Administrative Agent may rely in good faith conclusively
on any such certificate, without further inquiry), (ii) constitutes property
leased to a Borrower or a Subsidiary thereof under a lease which has
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expired or been terminated in a transaction permitted under this Agreement or is
about to expire and which has not been, and is not intended by such Borrower or
such Subsidiary to be renewed or extended, or (iii) constitutes property covered
by Permitted Liens with lien priority superior to those Liens in favor of the
Administrative Agent hereunder or constitutes property as to which the Required
Lenders have otherwise consented in writing to the sale thereof.
SECTION 9 COLLATERAL ADMINISTRATION: REPRESENTATIONS, WARRANTIES AND COVENANTS
RELATING TO COLLATERAL.
9.1 GENERAL REPRESENTATIONS AS TO COLLATERAL. Each Borrower represents
that the Disclosure Schedule sets forth: (a) the place of incorporation of each
Borrower and its Subsidiaries, the principal place of business of each Borrower
and the office where the chief executive offices and accounting offices of each
Borrower are located, (b) the office where each Borrower keeps its records
concerning the Accounts and General Intangibles, (c) the location of each
Borrower's registered office and all locations of their respective operations
and whether such locations are owned or leased, (d) all locations at which any
Inventory or other tangible Collateral of each Borrower are located (other than
Inventory in transit), including, without limitation, the location and name of
any warehousemen, bailee, processor or consignee at which Collateral is located
and good faith estimated dollar value of the Collateral located at each such
location, (e) the locations and addresses of all owned or leased real property
of each Borrower, (f) the locations of each Borrower's registered offices, other
offices and places of business and any locations of Collateral during the five
(5) years prior to the Closing Date and (g) Securities Accounts and Commodity
Accounts maintained by such Borrower.
9.2 PROTECTION OF COLLATERAL; REIMBURSEMENT. All reasonable expenses of
protecting, storing, warehousing, insuring, handling, maintaining, and shipping
any Collateral, any and all excise, property, sales, use, or other taxes imposed
by any Federal, state, or local authority on any of the Collateral, or in
respect of the sale thereof, or otherwise in respect of the Borrowers' business
operations shall be borne and paid by the Borrowers. If the Borrowers fail to
pay any portion thereof promptly when due, the Administrative Agent, at its
option, may, but shall not be required to, pay the same. All sums so paid or
incurred by the Administrative Agent for any of the foregoing shall be repayable
on demand. Unless otherwise provided by Law, the Administrative Agent shall not
be liable or responsible in any way for the safekeeping of any of the Collateral
or for any loss or damage thereto or for any diminution in the value thereof, or
for any act or default of any warehouseman, carrier, forwarding agency, or other
Person whomsoever.
9.3 MAINTENANCE OF INSURANCE WITH RESPECT TO COLLATERAL. Each Borrower
will maintain, and shall cause each Subsidiary thereof to maintain, with
financially sound and reputable companies reasonably satisfactory to the
Administrative Agent, insurance policies: (a) insuring the Inventory and other
tangible personal property of the Borrowers, and all equipment subject to any
lease, against loss by fire, explosion, theft and such other casualties as are
usually insured against by companies engaged in the same or similar businesses,
(b) insuring the Borrowers against liability for personal injury, property
damage relating to such Inventory, other tangible personal property and
equipment covered by any equipment lease, and business interruption, such
policies to be in such form and in such amounts and coverage as may be
reasonably satisfactory to the Administrative Agent (but in any event be upon
such terms as are usual for companies engaged in the same or similar businesses
as the Borrowers), (c) naming the Administrative Agent as additional insured and
loss payee (as applicable) with respect to such insurance and (d) providing that
no cancellation, reduction in amount, change in coverage or expiration shall be
effective until at least thirty (30) days after written notice to the
Administrative Agent.
9.4 COLLATERAL AUDIT; INSPECTION; APPRAISALS; VERIFICATION. During regular
business hours and after reasonable notice to the Borrower Representative, the
Administrative Agent or its designee shall have the right (x) to conduct
collateral audits of all books, records, journals, orders, receipts, or other
correspondence related thereto (and to make extracts or copies thereof as the
Administrative Agent may reasonably request), (y) to inspect the Collateral and
premises upon which any of the Collateral is located
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for the purpose of appraising or verifying the amount, quality, quantity, value,
and condition of, or any other matter relating to, the Collateral, and (z) to
examine and make copies of each Borrower's financial records and to consult with
such Borrower's and its Subsidiaries' officers, directors, accountants,
actuaries, trustees and plan administrators, as the case may be, in respect of
such Borrower's and its Subsidiaries' financial condition, each of which parties
is hereby authorized by the Borrowers to make such information available to the
Administrative Agent, to the same extent that it would to the Borrower. The
Administrative Agent shall be permitted to require that the Borrower
Representative deliver or cause to be delivered to Administrative Agent at the
Borrowers' expense written reports or appraisals as to the Collateral of each
Borrower and in form, scope and methodology reasonably acceptable to the
Administrative Agent and by an appraiser reasonably acceptable to Administrative
Agent, addressed to the Administrative Agent and upon which the Administrative
Agent is expressly permitted to rely. The Borrowers shall pay for all customary
fees and reasonable out-of-pocket expenses incurred by the Administrative Agent
with respect to such audits and appraisals up to three times and one time,
respectively, during any calendar year; provided, however, that upon the
occurrence of an Event of Default which is continuing, the Administrative Agent
may exercise such access and other rights, at the Borrowers' expense, at any
time (with or without advance notice) and as often as the Administrative Agent
deems such action necessary or desirable.
In connection with such collateral audits, inspections, and appraisals as
outlined above, the Administrative Agent or its designee shall have the right to
make test verifications of the validity, amount or any other matter relating to
any Accounts and other Collateral and physical verifications of the Inventory
and other tangible items of the Collateral at the expense of the Borrowers and
in any manner and through any commercially reasonable medium that the
Administrative Agent considers advisable, and each Borrower and each Subsidiary
thereof agrees to furnish all such assistance and information as the
Administrative Agent may require in connection therewith; provided, however,
that, unless an Event of Default is then in existence, (i) prior to conducting
each set of verifications, Administrative Agent shall consult with the Borrower
Representative about the verification process, (ii) such verifications shall not
be conducted in the name of the Administrative Agent or otherwise identify the
Administrative Agent, and (iii) such verifications shall be conducted in the
context of audits conducted pursuant to the terms of this Agreement.
9.5 BORROWING BASE CERTIFICATES. The Borrower Representative shall provide
Administrative Agent with the following documents in a form reasonably
satisfactory to Administrative Agent:
(i) No later than 5:00 p.m. on the 20th day of each calendar
month (or on the next Business Day if the 20th is not a Business
Day) the Borrower Representative shall deliver to the Administrative
Agent a certificate reflecting the calculation of the Borrowers'
Eligible Accounts (the calculation of Eligible Accounts reflecting
the then most recent month end balance pursuant to Section 9.6
hereof) and Eligible Inventory (the calculation of Eligible
Inventory reflecting the then most recent month end balance pursuant
to Section 9.9 hereof) as of the last Business Day of the
immediately preceding month, satisfactory to the Administrative
Agent and substantially in the form attached hereto as Exhibit H
(each a "Borrowing Base Certificate").
(ii) In addition, during any period in which the Excess
Availability of the Borrowers is less than $15,000,000, the Borrower
Representative shall deliver to the Administrative Agent an interim
Borrowing Base Certificate no later than 5:00 p.m. on each Wednesday
(or the next Business Day if such Wednesday is not a Business Day),
reflecting all activity (sales, collections, credits, etc.)
impacting the Accounts of the Borrowers for all Business Days of the
immediately preceding week. The amount derived as being excluded
from Eligible Accounts used on such interim Borrowing Base
Certificate shall be the amount that is calculated and updated
monthly pursuant to Section 9.5(i) and which is satisfactory to the
Administrative Agent. The amount of
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Eligible Inventory to be included on such interim Borrowing Base
Certificate shall calculated and updated monthly pursuant to Section
9.5(i) and which is satisfactory to the Administrative Agent.
(iii) During any period in which the Excess Availability of
the Borrowers is less than $15,000,000 or after the occurrence and
continuance of an Event of Default, the Administrative Agent may
require in good faith credit judgment more frequent delivery of
Borrowing Base Certificates.
9.6 REPORTING REGARDING ACCOUNTS. Each Borrower shall keep accurate and
complete records of its Accounts and all payments and collections thereon. On or
before the twentieth (20th) calendar day of each month, the Borrower
Representative shall deliver to the Administrative Agent, in form and substance
acceptable to the Administrative Agent, (x) a summary trial balance aged by
original invoice date of the Borrowers' Accounts prepared as of the last day of
the preceding month reconciled to the period end balance sheet and the Borrowing
Base Certificate delivered pursuant to Section 9.5(i) and (y) upon the
Administrative Agent's request, a detailed trial balance aged by original
invoice date of all then existing Accounts specifying the names, face value and
dates of invoices for each Account Debtor obligated on a listed Account), and
(z) any other information the Administrative Agent shall reasonably request with
respect to such Accounts and its evaluation of such reports.
9.7 DISPUTES AND CLAIMS REGARDING ACCOUNTS. Each Borrower shall use
commercially reasonable efforts to settle or adjust promptly all disputes and
claims regarding Accounts at no expense to the Administrative Agent, but no
discount, credit or allowance outside the ordinary course of business or adverse
extension, compromise or settlement shall be granted to any customer or Account
Debtor outside the ordinary course of business, and no returns of merchandise
outside the ordinary course of business shall be accepted by such Borrower
without the Administrative Agent's consent which consent shall not be
unreasonably withheld or delayed.
9.8 INVENTORY MAINTENANCE COVENANTS (a) Each Borrower shall at all times
maintain, and shall cause each Domestic Subsidiary thereof to maintain,
inventory records reasonably satisfactory to the Administrative Agent, keeping
correct and accurate records itemizing and describing the kind, type, quality
and quantity of Inventory, such Borrower's cost therefor and daily withdrawals
therefrom and additions thereto, (b) no Borrower shall, nor shall it permit any
Subsidiary thereof to, sell Inventory to any customer on approval, or any other
basis which entitles the customer to return or may obligate such Borrower to
repurchase such Inventory except for the right of return given to retail
customers of such Borrower in the ordinary course of the business of such
Borrower in accordance with the then current return policy of such Borrower; (c)
each Borrower shall keep the Inventory in good and marketable condition; (d) no
Borrower shall, without prior written notice to the Administrative Agent or the
specific identification of such Inventory in a report with respect thereto
provided by the Borrower Representative to the Administrative Agent, acquire or
accept any Inventory on consignment or approval.
9.9 REPORTING REGARDING INVENTORY. The Borrower Representative shall
deliver to the Administrative Agent a summary Inventory listing in detail and
scope reasonably satisfactory to the Administrative Agent no later than the
twentieth (20th) calendar day after the end of each month based upon month-end
balances reconciled to the period end balance sheet and the Borrowing Base
Certificate delivered pursuant to Section 9.5(i) and accompanied by an Inventory
certification in form and substance acceptable to the Administrative Agent, and
the Borrower Representative will make available to the Administrative Agent a
perpetual Inventory listing (and any reconciliations thereof to period end
balance sheets performed by the Borrower Representative) upon request. The
Borrower Representative shall deliver monthly to the Administrative Agent
Inventory records, broken down into such detail and with such categories as the
Administrative Agent shall deem necessary to determine the level of Eligible
Inventory and Inventory which is deemed ineligible). The values shown on reports
of Inventory shall be at the lower of cost or market value determined in
accordance with the Borrowers' usual cost accounting system, consistently
applied. During any period in which the Excess Availability of the Borrowers is
less
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than $15,000,000 or after the occurrence and continuance of an Event of Default,
the Borrower Representative shall provide such other reports as to the Inventory
as the Administrative Agent shall reasonably request from time to time.
9.10 REPORTING REGARDING ACCOUNTS PAYABLE. The Borrower Representative
shall furnish the Administrative Agent with, on or before the twentieth (20th)
day of each month from and after the date of this Agreement, in form and
substance consistent with customary practice for transactions of this type as
determined by the Administrative Agent, a summary accounts payable aging of the
Borrowers' accounts payable dated as of the last day of the preceding month (and
upon the Administrative Agent's request, detail on all then existing accounts
payable specifying the names, face value and dates of invoices for each account
payable).
9.11 STATUS OF COLLATERAL. The Borrower Representative agrees to advise
the Administrative Agent promptly, in sufficient detail, upon becoming aware of:
(a) any substantial change relating to the type, quantity or quality of the
Collateral (other than the ordinary course purchase and sale of Inventory
consistent with past practice), or (b) any event which, singly or in the
aggregate with other such events, could reasonably be expected to have an
adverse effect on Collateral values in excess of Two Hundred Fifty Thousand
Dollars ($250,000), or (c) any event which, singly or in the aggregate with
other such events, could reasonably be expected to adversely effect the security
interests granted to the Administrative Agent herein in excess of Two Hundred
Fifty Thousand Dollars ($250,000).
9.12 LIEN WAIVERS, LANDLORD WAIVERS, WAREHOUSE RECEIPTS. In the event any
Inventory of a Borrower is at any time located on any real property not owned by
such Borrower, such Borrower will use commercially reasonable efforts to obtain
and maintain in effect at all times while any such Inventory is so located valid
and effective lien waivers in form and substance reasonably satisfactory to the
Administrative Agent, whereby each owner, or landlord having an interest in such
real property shall disclaim any interest in such Inventory and shall agree to
allow the Administrative Agent reasonable access to such real property in
connection with any enforcement of the security interest granted hereunder. In
the event that a Borrower stores any Inventory with a bailee, warehouseman or
similar party, such Borrower will concurrently therewith use commercially
reasonable efforts to cause any such bailee, warehouseman or similar party to
issue and deliver to the Administrative Agent, in form and substance reasonably
satisfactory to the Administrative Agent, warehouse receipts therefor in the
Administrative Agent's name.
9.13 DEPOSIT ACCOUNTS. Other than (a) the Lockboxes, Collection Accounts
and the Cash Concentration Accounts and (b) those other operating accounts
(whether checking or deposit accounts) disclosed on the Disclosure Schedule
(which the Borrowers shall use solely for the purpose of disbursing monies of
the Borrowers or any Domestic Subsidiary thereof and not for collecting or
depositing Collections) which have been consented to by the Administrative Agent
from time to time (such payroll, medical, and other operating accounts being
referred to herein as "Permitted Accounts"), no Borrower shall maintain nor
permit any other Person to maintain a post office box, Deposit Account or
checking account receiving Collections or otherwise holding monies of the
Borrowers or any Domestic Subsidiary thereof.
9.14 DELIVERY OF INSTRUMENTS AND CHATTEL PAPER. If any amount in excess of
One Hundred Thousand Dollars ($100,000) in the aggregate payable under or in
connection with any of the Collateral owned by any Borrower or any Domestic
Subsidiary thereof shall be or become evidenced by an Instrument or Chattel
Paper, such Borrower or such Domestic Subsidiary shall immediately deliver such
Instrument or Chattel Paper to the Administrative Agent, duly endorsed in a
manner reasonably satisfactory to the Administrative Agent, or, if consented to
by the Administrative Agent, shall xxxx all such Instruments and Chattel Paper
with the following legend: "This writing and the obligations evidenced or
secured hereby are subject to the security interest of KeyBank National
Association, as Administrative Agent"
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9.15 COMPLIANCE WITH TERMS OF ACCOUNTS; GENERAL INTANGIBLES. The Borrowers
will perform and comply in all material respects with all obligations in respect
of Accounts, Chattel Paper, General Intangibles and under all other contracts
and agreements to which it is a party or by which it is bound relating to the
Collateral where failure to so comply would result in a Material Adverse Effect,
unless the validity thereof is being contested in good faith by appropriate
proceedings and such proceedings do not involve the material danger of the sale,
forfeiture or loss of the Collateral which is the subject of such proceedings or
the priority of the lien in favor of the Administrative Agent thereon.
9.16 REPRESENTATIONS AND WARRANTIES REGARDING PLEDGED COLLATERAL. With
respect to the Pledged Collateral: (a) except for the Liens permitted to exist
on the Collateral pursuant to this Agreement, each Borrower is the record and
beneficial owner of the Pledged Collateral pledged by it hereunder constituting
Instruments or Certificated Securities and is the entitlement holder of all such
Pledged Collateral constituting Investment Property held in a Securities
Account, (b) all of the Pledged Stock, Pledged Partnership Interests and Pledged
LLC Interests have been duly and validly issued and are fully paid and
nonassessable; (c) all Pledged Stock, Pledged Partnership Interests and Pledged
LLC Interests of each Borrower as of the Closing Date are listed on the
Disclosure Schedule; (e) all Pledged Collateral consisting of Certificated
Securities or Instruments has been delivered to the Administrative Agent; (f)
all Pledged Collateral held by a Securities Intermediary in a Securities Account
is in a Control Account; (h) other than the Pledged Partnership Interests and
the Pledged LLC Interests that constitute General Intangibles, there is no
Pledged Collateral other than that represented by Certificated Securities or
Instruments in the possession of the Administrative Agent or that consisting of
Financial Assets held in a Control Account; (i) no Person other than the
Administrative Agent has Control over any Investment Property of any Borrower;
and (j) the LLC Agreement governing any Pledged LLC Interests and the
Partnership Agreement governing any Pledged Partnership Interests provides that,
upon the occurrence and during the continuance of an Event of Default, the
Administrative Agent shall be entitled to exercise all of the rights of the
Borrowers granting the security interest therein, and that a transferee or
assignee of a membership interest or partnership interest of such LLC or
Partnership, as the case may be, shall become a member or partner, as the case
may be, of such LLC or Partnership.
SECTION 10 GENERAL REPRESENTATIONS AND WARRANTIES.
Each Borrower represents and warrants to the Administrative Agent,
the Lenders and the LC Issuer as follows:
10.1 EXISTENCE. Each Borrower and each Subsidiary are duly organized,
validly existing and in good standing under the laws of their respective states
of incorporation. As of the Closing Date, no Borrower has any Subsidiaries other
than as listed in the Disclosure Schedule. Each Borrower and each Subsidiary are
duly qualified or licensed to transact business in their respective
jurisdictions of organization and in each additional jurisdiction where such
qualification or licensure is necessary, except where failure to do so will not
have a Material Adverse Effect.
10.2 AUTHORIZATION. The execution, delivery and performance of this
Agreement and the other Loan Documents to which any Borrower is a party: (a) are
within such Borrower's corporate or limited liability company powers and (b)
have been duly authorized, and are not in contravention of Law or the terms of
such Borrower's Charter Documents or, except as set forth on the Disclosure
Schedule thereto, of any indenture or other document or instrument evidencing
borrowed money or any other material agreement or undertaking to which such
Borrower is a party or by which it or its property is bound.
10.3 ENFORCEABILITY. This Agreement and the other Loan Documents
constitute the legal, valid and binding obligations of any Borrower and any
Domestic Subsidiary thereof which is a party, enforceable against such Borrower
and such Domestic Subsidiary in accordance with the terms thereof, subject to
any applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and by general
equitable principles including principles of
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commercial reasonableness, good faith and fair dealing (whether enforcement is
sought by proceedings in equity or at law).
10.4 TITLE TO COLLATERAL; LIENS; TRANSFERS. Each Borrower has good and
indefeasible title to and ownership of the Collateral, free and clear of all
Liens, except for Liens permitted under Section 11.3(d).
10.5 LIEN PERFECTION AND PRIORITY. From and after the Closing Date, by
reason of the filing of financing statements, assignments of financing
statements and termination statements in all requisite governmental offices,
this Agreement and the other Loan Documents will create and constitute a valid
and perfected first priority security interest (except as permitted by this
Agreement or the other Loan Documents) in and Lien on that portion of the
Collateral which can be perfected by such filing and by the execution and
delivery of this Agreement and the other Loan Documents, which security interest
will be enforceable against the Borrowers and all third parties as security for
payment of all Obligations. From and after the Closing Date, by reason of the
delivery to the Administrative Agent of all Collateral consisting of Instruments
and Certificated Securities, in each case properly endorsed for transfer to the
Administrative Agent or in blank and assuming the Administrative Agent had no
notice of an adverse claim, this Agreement and the other Loan Documents will
create and constitute a valid and perfected first priority security interest
(except as permitted by this Agreement or the other Loan Documents) in and Lien
on that portion of the Collateral which can be perfected by such possession and
endorsement and by the execution and delivery of this Agreement and the other
Loan Documents, which security interest will be enforceable against the
Borrowers and all third parties as security for payment of all Obligations.
10.6 LITIGATION; PROCEEDINGS. As of the Closing Date, except as set forth
in the Disclosure Schedule, there are no actions, suits, investigations or
proceedings, and no orders, writs, injunctions, judgments or decrees, now
pending, existing or, to the knowledge of any Borrower, threatened against such
Borrower or any of its Subsidiaries affecting any property of such Borrower or
any Subsidiary thereof, this Agreement or any other Loan Document, whether at
law, in equity or otherwise, before any court, board, commission, agency or
instrumentality of any federal, state, local or foreign government or of any
agency or subdivision thereof, or before any arbitrator or panel of arbitrators.
There is no action, suit, investigation, proceeding, order, writ, injunction, or
decree against any Borrower or any Subsidiary thereof that, if adversely
determined, when taken singly or with all other actions, suits, investigations,
proceedings, orders, writs, injunctions or decrees currently pending, could
reasonably be expected to result in a Material Adverse Effect.
10.7 TAXES. Each Borrower has, and each Subsidiary thereof has, filed all
federal, state, local and foreign tax returns which are required to be filed by
any of them, and, except to the extent permitted by Section 11.2(i) of this
Agreement, have paid all taxes and assessments due and payable as shown on such
returns, including interest, penalties and fees; provided, however, that no such
tax, assessment, charge or levy need be paid so long as and to the extent that:
(i) it is contested in good faith and by timely and appropriate proceedings
effective, during the pendency of such proceedings, to stay the enforcement of
such taxes, assessments and governmental charges and levies and (x) such stay
prevents the creation of any Lien (other than inchoate Liens for property taxes)
or (y) a bond has been provided which prevents the creation of any Lien (other
than inchoate Liens for property taxes) and (ii) appropriate reserves, as
required by GAAP, are made on the books of each Borrower and its Subsidiaries,
as applicable.
10.8 CONSENTS; APPROVALS. Except as set forth on the Disclosure Schedule,
no action, consent or approval of, registration or filing with or any other
action by any governmental authority or other Person is or will be required in
connection with the transactions contemplated by this Agreement and the other
Loan Documents, except such as have been made or obtained and are in full force
and effect and except for the filings required to create or perfect the Liens in
favor of the Administrative Agent that are contemplated hereby and by the other
Loan Documents.
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10.9 LAWFUL OPERATIONS. The operations of each Borrower and each
Subsidiary thereof are in compliance in all material respects with applicable
requirements imposed by Law, including without limitation, occupational safety
and health laws, and zoning ordinances, except to the extent any such
noncompliance, when taken singly or with all other such noncompliance, has not
resulted, and could not reasonably be expected to result in a Material Adverse
Effect.
10.10 ENVIRONMENTAL COMPLIANCE. Except as disclosed on the Disclosure
Schedule, (a) each Borrower and each Subsidiary thereof are in compliance with
Environmental Laws except for any noncompliance, when taken singly or with all
other such noncompliance, has not resulted, and could not reasonably be expected
to result, in a Material Adverse Effect; (b) with respect to any real property
owned or leased by each Borrower or each Subsidiary thereof (the "Properties"),
there is no pending or, to the knowledge of such Borrower, threatened
Environmental Claim against such Borrower or such Subsidiary, or any other
environmental condition with respect to any Property which Environmental Claim
or condition, when taken singly or with all other such Environmental Claims or
conditions, has not resulted, and could not reasonably be expected to result, in
a Material Adverse Effect; (c) each Borrower and each Subsidiary thereof are in
compliance with all Environmental Permits, except to the extent any such
noncompliance, when taken singly or together with all other instances of such
noncompliance, has not resulted, and could not reasonably be expected to result,
in a Material Adverse Effect; (d) no Property is listed or to the knowledge of
any Borrower, formally proposed for listing on the National Priorities List
pursuant to CERCLA, on the CERCLIS or on any similar federal or state list of
sites requiring investigation or clean-up and to the knowledge of the Borrowers,
no Borrower has, nor has any Subsidiary thereof, directly transported or
directly arranged for the transportation of any Hazardous Material to any such
listed location or location which is proposed for such listing, which could
reasonably be expected to result in such Borrower or such Subsidiary incurring
liabilities under Environmental Laws in excess of Five Hundred Thousand Dollars
($500,000).
10.11 ENVIRONMENTAL LAWS AND PERMITS. Without limiting the representations
made in Section 10.10 above, to the best knowledge of the Borrowers, there are
no circumstances with respect to the Property or operations of any Borrower or
any Subsidiary thereof that could reasonably be expected to: (i) form the basis
of an Environmental Claim against such Borrower or such Subsidiaries which would
constitute a violation of Section 11.2(e) hereof, or (ii) cause any Property
owned, leased or funded by any Borrower or any such Subsidiaries to be subject
to any material restrictions on ownership, occupancy, use or transferability
under any applicable Environmental Law.
10.12 ERISA. The Disclosure Schedule sets forth a list of all of the
Employee Benefit Plans of each Borrower, each Subsidiary thereof, and each ERISA
Affiliate thereof as of the Closing Date. Each Employee Benefit Plan of each
Borrower and each Subsidiary thereof which is intended to qualify under Section
401 of the Code does so qualify, and any trust created thereunder is exempt from
tax under the provision of Section 501 of the Code, except where such failures
in the aggregate would not have a Material Adverse Effect. No Accumulated
Funding Deficiency exists in respect of any Employee Benefit Plan that is
subject to Code Section 412 and no Reportable Event has occurred in respect of
any Employee Benefit Plan that is subject to Title IV of ERISA which is
continuing and which, in the case of such Accumulated Funding Deficiency or
Reportable Event, when taken singly or with all other such Reportable Events or
Accumulated Funding Deficiencies, has resulted, or could reasonably be expected
to result, in a Material Adverse Effect, or has otherwise resulted, or could
reasonably be expected to result, in liabilities or claims against any Borrower
or any Subsidiary thereof in an amount exceeding Five Hundred Thousand Dollars
($500,000). No "prohibited transactions" (as defined in Section 406 of ERISA or
Section 4975 of the Code), have occurred which, when taken singly or with all
other such "prohibited transactions," has resulted, or could reasonably be
expected to result, in a Material Adverse Effect, or has otherwise resulted, or
could reasonably be expected to result, in liabilities or claims against any
Borrower or any Subsidiary in an amount exceeding Five Hundred Thousand Dollars
($500,000). No Borrower, nor any Subsidiary thereof, nor any ERISA Affiliate
thereof, has: (i) had an obligation to contribute to any Multiemployer Plan
except as disclosed in the Disclosure Schedule or (ii) incurred or reasonably
expects to incur any liability for the withdrawal from such a Multiemployer Plan
which
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withdrawal liability, when taken singly or with all other such withdrawal
liabilities, has resulted, or could reasonably be expected to result, in a
Material Adverse Effect, or has otherwise resulted, or could reasonably be
expected to result, in liabilities or claims against any Borrower or any
Subsidiary thereof in an amount exceeding Five Hundred Thousand Dollars
($500,000).
10.13 AGREEMENTS; ADVERSE OBLIGATIONS; LABOR DISPUTES.
The Disclosure Schedule sets forth a list of all Material Business
Agreements of each Borrower and each Subsidiary thereof as of the Closing Date.
As of the Closing Date, the Material Business Agreements of such Borrower and
such Subsidiary are in full force and effect and have not been revoked or
otherwise modified since the execution thereof, except as disclosed on the
Disclosure Schedule. Such Borrower and such Subsidiary are in material
compliance with the terms of the Material Business Agreements. No Borrower is,
nor is any Subsidiary, subject to any contract, agreement, or corporate or
limited liability company restriction which could reasonably be expected to have
a Material Adverse Effect. No Borrower is, nor is any Subsidiary thereof, to the
knowledge of such Borrower or such Subsidiary, party to any labor dispute
(including any strike, slowdown, walkout or other concerted interruptions by its
employees, but excluding grievance disputes) which could, individually or in the
aggregate, be reasonably expected to result in a Material Adverse Effect. There
are no material strikes, slow downs, walkouts or other concerted interruptions
of operations by employees of any Borrower or any Subsidiary thereof whether or
not relating to any labor contracts.
10.14 FINANCIAL STATEMENTS; PROJECTIONS.
(a) FINANCIAL STATEMENTS. The Borrower Representative has furnished
to the Administrative Agent and the Lenders complete and correct copies of (i)
the audited balance sheets of Hawk Corporation and its consolidated Subsidiaries
for the Fiscal Year ending December 31, 2003, and the related statements of
income, shareholder's equity, and cash flows, and, as applicable, changes in
financial position or cash flows for such Fiscal Year, and the notes to such
financial statements, reported upon by Ernst & Young LLP, Independent Registered
Public Accounting Firm, and (ii) the internal unaudited balance sheets of Hawk
Corporation and its consolidated Subsidiaries for the Fiscal Month ending August
31, 2004, and the related statements of income and shareholder's equity for the
eight (8) months ended August 31, 2004, certified by an executive officer of the
Borrower Representative. All such financial statements: (a) have been prepared
in accordance with GAAP, applied on a consistent basis (except as stated
therein), with Hawk Corporation's financial statements from prior Fiscal Years
and (b) fairly present in all material respects the financial condition of the
Hawk Corporation and its consolidated Subsidiaries as of the respective dates
thereof and the results of operations for the respective fiscal periods then
ending, subject in the case of any such financial statements which are
unaudited, to the absence of any notes to such financial statements, to the
absence of information on discontinued operations in such financial statements,
and to normal audit adjustments, none of which are known to or could reasonably
be expected to involve a Material Adverse Effect. No Borrower has experienced,
nor has any Subsidiary thereof experienced, an event or circumstance that would
have a Material Adverse Effect since the August 31, 2004 financial statements,
nor has there been any material change in a Borrower's or any of its
Subsidiaries' accounting procedures used therein. Hawk Corporation and its
consolidated Subsidiaries did not as of December 31, 2003, and will not as of
the Closing Date, after giving effect to the Advances made on the Closing Date,
have any material contingent liabilities, material liabilities for taxes,
unusual and material forward or long-term commitments or material unrealized or
anticipated losses from any unfavorable commitments, except those reflected in
such financial statements or the notes thereto in accordance with GAAP or, to
the extent not required to be reflected by GAAP, are disclosed in the Disclosure
Schedule.
(b) FINANCIAL PROJECTIONS. The Borrower Representative has delivered
to the Administrative Agent and the Lenders prior to the execution and delivery
of this Agreement a copy of financial and business projections for Hawk
Corporation and its consolidated Subsidiaries (including balance sheet, income
and cash flow and other forecasts) prepared by the Borrower Representative (the
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"Financial Projections") with respect to Hawk Corporation and its Subsidiaries
for the fiscal years therein covered. Such Financial Projections for Hawk
Corporation and its Subsidiaries submitted to the Administrative Agent were
prepared in good faith and were based upon assumptions which the Borrower
Representative believed to be reasonable (as of the dates the Financial
Projections were prepared). No facts are known to the executive officers of the
Borrower Representative at the date hereof which, if reflected in the Financial
Projections, would result in a material adverse change in the projected assets,
liabilities, results of operations, or cash flows reflected therein.
10.15 INTELLECTUAL PROPERTY. Each Borrower and each Subsidiary thereof own
or have the legal and valid right to use, sell, and license all Intellectual
Property necessary for the operation of its business as presently conducted,
free from any Lien not permitted under Section 11.3(d) hereof and free of any
restrictions which could reasonably be expected to have a Material Adverse
Effect on the operation of its business as presently conducted. Except as set
forth in the Disclosure Schedule, no Borrower nor any Subsidiary thereof: (a)
owns any Intellectual Property, (b) licenses any Intellectual Property (as
licensor) necessary for the operation of its business, or (c) is a party to any
Material License Agreement with respect to such Intellectual Property.
10.16 STRUCTURE; CAPITALIZATION. The Borrower Representative has delivered
to the Lender true and correct copies of Charter Documents relating to each of
the Borrower and their Subsidiaries. As of the Closing Date, the record and
beneficial owners of the equity interests of each Borrower are as described in
the Disclosure Schedule. As of the Closing Date, no Borrower has any
Subsidiaries other than as described in the Disclosure Schedule. Except as set
forth in the Disclosure Schedule, there are no options, warrants or other rights
issued or granted by any Borrower or any Subsidiary to acquire any of the
capital stock of any Borrower. Each Borrower has and will continue to have a
Fiscal Year end on the last day of December in each calendar year.
10.17 VALUE; SOLVENCY. Each of the Borrowers has received fair
consideration and reasonably equivalent value for the Obligations and
liabilities incurred to the Lenders hereunder. Hawk Corporation is Solvent as of
the Closing Date and after giving effect to the transactions contemplated
hereby. The Borrowers, taken as a whole, are Solvent as of the Closing Date and
after giving effect to the transactions contemplated hereby, the Borrowers,
taken as a whole, are Solvent.
10.18 INVESTMENT COMPANY ACT STATUS. No Borrower is, nor is any Subsidiary
thereof, an "investment company", or an "affiliated person" of, or a "promoter"
or "principal underwriter" for an "investment company" (as such terms are
defined in the Investment Company Act of 1940, as amended (15 U.S.C.Section
80(a)(1), et seq.).
10.19 Blocked Person. No Borrower, nor any Affiliate of any Borrower, is
any of the following (each a "Blocked Person"):
(a) a Person that is listed in the annex to, or is otherwise subject
to the provisions of, the Executive Order No. 13224;
(b) a Person owned or controlled by, or acting for or on behalf of,
any Person that is listed in the annex to, or is otherwise subject to the
provisions of, the Executive Order No. 13224;
(c) a Person with which any Lender is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism Law;
(d) a Person that commits, threatens or conspires to commit or
supports "terrorism" as defined in the Executive Order No. 13224;
(e) a Person that is named as a "specially designated national" on
the most current list published by the U.S. Treasury Department Office of
Foreign Asset Control at its official
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website or any replacement website or other replacement official
publication of such list; or
(f) a Person who is affiliated or associated with a Person listed
above.
No Borrower or any Affiliate thereof (i) conducts any business or engages in
making or receiving any contribution of funds, goods or services to or for the
benefit of any Blocked Person, or (ii) deals in, or otherwise engages in any
transaction relating to, any property or interests in property blocked pursuant
to the Executive Order No. 13224.
10.20 REGULATION U/REGULATION X COMPLIANCE. The proceeds of Advances made
to the Borrowers pursuant to this Agreement will be used only for the purposes
contemplated by Section 11.2(g) hereof. No part of the proceeds of Advances made
to the Borrowers pursuant to this Agreement will be used for a purpose which
violates any applicable law, rule, or regulation including, without limitation,
the provisions of Regulation U or X of the Board of Governors of the Federal
Reserve System, as amended.
10.21 FULL DISCLOSURE. None of the written information, exhibits or
reports taken as a whole furnished by the Borrowers to the Administrative Agent
and the Lenders hereunder contains any untrue statement of a material fact or
omits to state any material fact necessary to make the statements contained
therein not materially misleading in light of the circumstances and purposes for
which such information was provided.
10.22 EXCESS AVAILABILITY. The Borrowers shall have Excess Availability on
the Closing Date of Ten Million Dollars ($10,000,000) after taking into account
(i) all Revolving Credit Advances advanced on the Closing Date and LC Exposure
of the Borrower on the Closing Date plus (ii) payment of transaction fees and
expenses.
SECTION 11 COVENANTS OF THE BORROWER.
So long as any of the Obligations hereunder remain outstanding, or any LC
Exposure hereunder remains outstanding, or the Lenders have any Revolving Credit
Commitment or LC Issuer has any obligation to issue Letters of Credit hereunder,
the Borrowers will comply, and will cause each of its Subsidiaries to comply,
with the following provisions:
11.1 REPORTING AND NOTICE COVENANTS.
(a) MONTHLY FINANCIAL STATEMENTS. The Borrower Representative shall
furnish to the Administrative Agent and each Lender, as soon as practicable and
in any event within twenty (20) days after the end of each Fiscal Month of the
Borrowers, internal unaudited consolidated balance sheets of Hawk Corporation
and its consolidated Subsidiaries as of the end of that Fiscal Month and the
related statements of income, shareholder's equity for such Fiscal Month each
prepared in accordance with GAAP, all in reasonable detail and certified,
subject to normal year-end audit adjustments, absence of notes and absence of
information on discontinued operations, by a Responsible Officer or the
non-officer controller of the Borrower Representative.
(b) QUARTERLY FINANCIAL STATEMENTS. The Borrower Representative
shall furnish to the Administrative Agent and each Lender, as soon as
practicable and in any event within forty-five (45) days after the end of each
Fiscal Quarter of the Borrowers, unaudited consolidated balance sheets of Hawk
Corporation and its consolidated Subsidiaries as of the end of that Fiscal
Quarter and the related statements of income, shareholder's equity and cash flow
for such Fiscal Quarter each prepared on an comparative basis with the
comparable period during the prior year and in accordance with GAAP, all in
reasonable detail and certified, subject to normal year-end audit adjustments
and absence of notes, by a Responsible Officer or the non-officer controller of
the Borrower Representative.
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(c) ANNUAL FINANCIAL STATEMENTS. The Borrower shall furnish to the
Administrative Agent and each Lender, as soon as practicable and in any event
within ninety (90) days after the end of each Fiscal Year of the Borrowers, a
complete copy of the annual audit report of Hawk Corporation and its
consolidated Subsidiaries (including, without limitation, all consolidated
financial statements thereof and the notes thereto) for that Fiscal Year: (i)
audited and certified (without qualification as to GAAP), by Ernst & Young LLP
or other independent public accountants of recognized national standing selected
by Hawk Corporation and reasonably acceptable to the Required Lenders, and (ii)
accompanied by the accountants' management report and any management letters
relating thereto, if any, and an opinion of such accountants, which opinion
shall be unqualified as to scope or as to Hawk Corporation being a going concern
and shall (A) state that such accountants audited such consolidated financial
statements in accordance with generally accepted auditing standards, that such
accountants believe that such audit provides a reasonable basis for their
opinion, and that in their opinion such consolidated financial statements
present fairly, in all material respects, the consolidated financial position of
Hawk Corporation and its consolidated Subsidiaries as at the end of such Fiscal
Year and the consolidated results of their operations and cash flows for such
Fiscal Year in conformity with generally accepted accounting principles, and (B)
contain such statements as are customarily included in unqualified reports of
independent accountants in conformity with the recommendations and requirements
of the American Institute of Certified Public Accountants (or any successor
organization).
(d) OFFICER'S CERTIFICATE. The Borrower Representative shall furnish
to the Administrative Agent and each Lender, concurrently with the financial
statements delivered in connection with Sections 11.1(b)and 11.1(c), a
certificate of a Responsible Officer or the non-officer controller of the
Borrower Representative, in his or her capacity as a Responsible Officer,
setting forth the computations necessary to determine whether the Borrowers and
their consolidated Subsidiaries are in compliance with the financial covenants
set forth in Section 11.4 of this Agreement and certifying, concurrently with
the financial statements delivered in connection with Sections 11.1(a),
11.1(b)and 11.1(c), that: (A) those financial statements fairly present in all
material respects the financial condition and results of operations of the
Borrowers and their consolidated Subsidiaries (to the knowledge of the
Responsible Officer with respect to Section 11.1(a))subject in the case of
interim financial statements, to routine year-end audit adjustments, absence of
notes and absence of information on discontinued operations (with respect to
Sections 11.1(a) and 11.1(b)) and (B) no Potential Default or Event of Default
then exists or, if any Potential Default or Event of Default does exist, a brief
description of the Potential Default or Event of Default and the Borrowers'
intentions in respect thereof.
(e) COMPANY REPORTS. The Borrower Representative shall deliver to
the Administrative Agent, no later than the date of the sending or filing
thereof, copies of all proxy statements, financial statements and reports that
Hawk Corporation or any of its Subsidiaries send to their respective
stockholders generally, and copies of all regular, periodic and special reports,
and all registration statements, and amendments thereto, that Hawk Corporation
or any of its Subsidiaries file with the Securities and Exchange Commission (or
any foreign national or provincial securities commission) or any governmental
authority that may be substituted therefor, or with any national securities
exchange.
(f) ANNUAL PROJECTIONS. On or before the end of the first month of
each Fiscal Year of the Borrowers, the Borrower Representative shall furnish to
the Administrative Agent and each Lender projected monthly consolidated balance
sheets, income statements, cash flow statements and calculation of Excess
Availability for such Fiscal Year with respect to Hawk Corporation and its
consolidated Subsidiaries.
(g) OTHER INFORMATION. During any period in which the Excess
Availability of the Borrowers is less than $15,000,000 or after the occurrence
and continuance of an Event of Default, the Borrower Representative shall
furnish to the Administrative Agent and each Lender, promptly upon the
Administrative Agent's written request, such other information about the
financial condition, properties
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and operations of the Borrower and each of its Subsidiaries and any of their
Employee Benefit Plans as the Administrative Agent or any Lender may from time
to time reasonably request.
(h) NOTICES. The Borrowers will cause a Responsible Officer of the
Borrower Representative to give the Administrative Agent and each Lender prompt
written notice whenever (and in any event within ten (10) Business Days after a
Responsible Officer of the Borrower Representative knows or should have known ):
(i) any Borrower or any of its Subsidiaries receives notice from any court,
agency or other governmental authority of any alleged non-compliance with any
Law or order which would reasonably be expected to have or result in, if such
noncompliance is found to exist, a Material Adverse Effect, (ii) the Internal
Revenue Service or any other federal, state or local taxing authority shall
allege any default by any Borrower or any of its Subsidiaries in the payment of
any tax material in amount or shall threaten or make any assessment in respect
thereof which, if resulting in a determination adverse to such Borrower or such
Subsidiary, would reasonably be expected to have or result in a Material Adverse
Effect, (iii) any litigation or proceeding shall be brought against any Borrower
or any of its Subsidiaries before any court or administrative agency which would
reasonably be expected to have or result in a Material Adverse Effect, (iv) any
material adverse change or development in connection with any such litigation
proceeding, (v) such Responsible Officer reasonably believes that any Potential
Default or Event of Default has occurred or that any other representation or
warranty made herein shall for any reason have ceased to be true and complete in
any material respect or (vi) any notice required by Section 12.5 of this
Agreement.
(i) NOTICE OF DEFAULT UNDER ERISA. If any Borrower shall receive
notice from any ERISA Regulator or otherwise have actual knowledge that a
Default under ERISA exists with respect to any Employee Benefit Plan, the
Borrower Representative shall notify the Administrative Agent and each Lender of
the occurrence of such Default under ERISA, within ten (10) Business Days after
receiving such notice or obtaining such knowledge (the disclosures contained in
the Disclosure Schedule being such notice of each Default under ERISA disclosed
therein to the extent of the disclosure therein) and shall: (i) so long as the
Default under ERISA has not been corrected to the satisfaction of, or waived in
writing by the party giving notice, the Borrowers shall thereafter treat as a
current liability (if not otherwise so treated) all liability of such Borrower
or its Subsidiaries that would arise by reason of the termination of or
withdrawal from such Employee Benefit Plan if such plan was then terminated, and
(ii) within forty-five (45) days of the receipt of such notice or obtaining such
knowledge, furnish to the Administrative Agent and each Lender a current
consolidated balance sheet of the Borrowers with the amount of the current
liability referred to above.
(j) ENVIRONMENTAL REPORTING. The Borrower Representative shall
promptly deliver to the Administrative Agent and each Lender, and in any event
within fifteen (15) Business Days after receipt or transmittal by any Borrower
or any Subsidiary thereof, as the case may be, copies of all material
communications with any government or governmental agency relating to
Environmental Claims and all material communications with any other Person
relating to Environmental Claims brought against such Person which could, in
either case, if successfully brought against such Borrower or such Subsidiary,
reasonably be expected to result in a Material Adverse Effect.
(k) MULTIEMPLOYER PLAN WITHDRAWAL LIABILITY. The Borrower
Representative shall (i) once in each calendar year beginning in January, 2005,
request a current statement of withdrawal liability from each Multiemployer Plan
to which any Borrower or any ERISA Affiliate thereof is or has been obligated to
contribute during such year and (ii) within fifteen (15) days after such
Borrower receives such current statement, transmit a copy of such statement to
the Administrative Agent and each Lender.
11.2 AFFIRMATIVE COVENANTS.
(a) EXISTENCE. Each Borrower shall, and shall cause each of its
Subsidiaries to, at all times maintain its corporate or limited liability
company existence, rights and franchises, except as
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permitted under Section 11.3(a), maintain its good standing in the jurisdiction
of its organization, and qualify as a foreign corporation or limited liability
company in each jurisdiction where failure to qualify could reasonably be
expected to result in a Material Adverse Effect.
(b) FINANCIAL RECORDS. Each Borrower shall maintain at all times,
true and complete financial records with respect to such Borrower and its
Subsidiaries in accordance with GAAP, consistently applied, and, without
limiting the generality of the foregoing, make appropriate accruals to reserves
for estimated and contingent losses and liabilities as required under GAAP.
(c) FINANCIAL EXAMINATIONS AND REVIEW. Each Borrower shall, at the
Lenders expense, or if an Event of Default has occurred and is continuing, at
the Borrowers' expense, upon reasonable prior written notice from the
Administrative Agent or any Lender to such Borrower permit, and shall cause each
of its Subsidiaries to permit, the Administrative Agent or such Lender, during
normal business hours in the presence of an officer of such Borrower: (i) to
examine, with the guidance and supervision of such Borrower, such Borrower's
financial records and to make copies of and extracts from such records and (ii)
to consult with such Borrower's and its Subsidiaries' officers, directors,
accountants, actuaries, trustees and plan administrators, as the case may be, in
respect of such Borrower and its Subsidiaries' financial condition, each of
which parties is hereby authorized by such Borrower to make such information
available to the Administrative Agent or such Lender, to the same extent that it
would to such Borrower.
(d) COMPLIANCE WITH LAW. Each Borrower will comply, and will cause
each Subsidiary to comply, in all respects with all applicable provisions of all
Laws (whether statutory, administrative, judicial or other and whether federal,
state or local and excluding Environmental Laws to the extent addressed in
Section 11.2(e) of this Agreement) and every lawful governmental order;
provided, however, that any alleged noncompliance shall not be deemed to be a
violation of this Section 11.2(d) so long as: (i) such noncompliance by such
Borrower or such Subsidiaries has not resulted or would not reasonably be
expected to result in a Material Adverse Effect and the alleged non-compliance
is contested in good faith by timely and appropriate proceedings effective to
stay, during the pendency of such proceedings, any enforcement action, and (ii)
such Borrower or such Subsidiary has established appropriate reserves and taken
such other appropriate measures as may be required under GAAP.
(e) COMPLIANCE WITH ENVIRONMENTAL LAWS. Each Borrower will use and
operate its facilities and properties, and cause each of its Subsidiaries to use
and operate its respective facilities and properties, in compliance with
Environmental Laws which when taken singly or with all other such obligations,
has resulted or could reasonably be expected to result in a Material Adverse
Effect. Each Borrower will keep, and will cause each of its Subsidiaries to
keep, all necessary Environmental Permits in effect and remain in compliance
therewith, and handle all Hazardous Materials in compliance with all applicable
Environmental Laws, except to the extent that any such lack of effectiveness or
non-compliance, when taken singly or with all other instances lack of
effectiveness or non-compliance, has not resulted and could not reasonably be
expected to result in a Material Adverse Effect. No Borrower shall suffer to
exist, nor shall it permit any of its Subsidiaries to suffer to exist, an
environmental condition which, when taken singly or with all other such
conditions, has resulted or could reasonably be expected to result in a Material
Adverse Effect. No Borrower shall suffer or permit the aggregate of all
liabilities or claims against such Borrower and its Subsidiaries referenced in
this Section and Section 10.10, to result or reasonably be expected to result in
a Material Adverse Effect.
(f) PROPERTIES. Subject to Section 11.3(a) of this Agreement, each
Borrower shall maintain, in all material respects, and shall cause each of its
Subsidiaries to maintain, in all material respects, all assets necessary to its
continuing operations in good working order and condition, ordinary wear and
tear excepted, and shall refrain, and shall cause each of its Subsidiaries to
refrain, from wasting or destroying any such assets or any part thereof.
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(g) USE OF PROCEEDS. The proceeds of the Loans shall be used: (i) to
fund working capital and other general business purposes of the Borrowers (other
than to repurchase, prepay, defease, redeem, or otherwise acquire any of the
Senior Notes), (ii) to reimburse drawings under Letters of Credit issued for the
account of the Borrowers, (iii) to refinance the Borrowers' existing credit
facilities, (iii) to fund redemptions of the Untendered Notes as expressly
permitted by Section 11.3(f) of this Agreement and (v) to pay the transaction
costs and expenses in connection with the transactions contemplated hereby.
(h) COMPLIANCE WITH TERMS OF ALL MATERIAL CONTRACTS. Each Borrower
shall perform and observe, and shall cause each of its Subsidiaries to perform
and observe, all the material terms and provisions of each of the Material
Business Agreements and the Material License Agreements to which it is a party
except those which are subject to a good faith dispute provided such dispute
shall not reasonably be expected to result in a Material Adverse Effect. Each
Borrower and each of its Subsidiaries shall maintain each such Material Business
Agreement and Material License Agreement in full force and effect, and enforce,
to the extent that such Borrower or such Subsidiary, in its reasonable judgment,
determines to be appropriate, each such Material Business Agreement and Material
License Agreement in accordance with its terms.
(i) TAXES. Each Borrower shall pay in full, and shall cause each of
its Subsidiaries to pay in full, prior in each case to the date when penalties
for the nonpayment thereof would attach, all taxes, assessments and governmental
charges and levies for which it may be or become subject and all lawful claims
therefor which, if unpaid, could reasonably be expected to result in a Lien upon
its property; provided, however, that no such tax, assessment, charge or levy
need be paid so long as and to the extent that: (i) it is contested in good
faith and by timely and appropriate proceedings effective, during the pendency
of such proceedings, to stay the enforcement of such taxes, assessments and
governmental charges and levies and (x) such stay prevents the creation of any
Lien (other than inchoate Liens for property taxes) or (y) a bond has been
provided which prevents the creation of any Lien (other than inchoate Liens for
property taxes) and (ii) appropriate reserves, as required by GAAP, are made on
the books of each Borrower and its Subsidiaries, as applicable.
(j) INSURANCE. The Borrower Representative shall, on the Closing
Date and within five (5) Business Days of the request by the Administrative
Agent thereafter, provide evidence satisfactory to the Administrative Agent that
each Borrower and its Subsidiaries have personal and real property, casualty,
liability, business interruption and product liability insurance as required by
Section 9.3 hereof, with the Administrative Agent listed as an additional
insured and, with respect to all Collateral, as loss payee (as applicable).
(k) LICENSES TO THIRD PARTIES AND SUBSIDIARIES. Except as disclosed
in the Disclosure Schedule, no Borrower or any Subsidiary thereof has any
existing license agreement as licensor with respect to Intellectual Property of
such Borrower or such Subsidiary.
(l) COVERAGE FOR UNTENDERED NOTES. Until the Untendered Notes are
redeemed, the Borrowers shall maintain either cash on deposit at HSBC and/or
Excess Availability which when taken together have an aggregate amount greater
than the amount required to redeem the Untendered Notes.
(m) ADDITIONAL BORROWERS. Each Domestic Subsidiary of each Borrower
created, acquired or held on or subsequent to the Closing Date shall immediately
execute and deliver a Joinder Agreement in order to become a Borrower hereunder
and shall deliver such corporate governance and authorization documents and an
opinion of counsel as may be deemed reasonably necessary or advisable by
Administrative Agent.
(n) NOTICE TO ACCOUNT DEBTORS AND REPLACEMENT OF LOCKBOX BANK.
Within fifteen (15) Business Days from the Closing Date, the Borrowers agree to
notify each their respective Account Debtors of the new lockbox addresses at
KeyBank. The Borrowers agree that the existing lockbox arrangements with
JPMorgan Chase will terminate no later than January 31, 2005.
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11.3 NEGATIVE COVENANTS.
(a) CONSOLIDATION, MERGER, SALE AND PURCHASE OF ASSETS. No Borrower
shall, nor shall it permit any Subsidiary thereof to: (i) merge or consolidate
with or into, or enter into any agreement to merge or consolidate with or into,
any other Person or otherwise be a party to any merger or consolidation; (ii)
purchase all or substantially all of the assets and business of another Person;
or (iii) except as set forth in the Disclosure Schedule, lease as lessor, sell,
sell-leaseback, license or otherwise transfer (whether in one transaction or a
series of transactions) any of its assets (whether now owned or hereafter
acquired); provided, however, that:
(A) a Borrower or any Subsidiary thereof may sell or otherwise
dispose of Inventory in the ordinary course of its business;
(B) a Borrower or any Subsidiary thereof may sell or otherwise
dispose of its Equipment that (x) is obsolete, worn out, unnecessary
or no longer used or useful in such Borrower's or such Subsidiary's
business or (y) is sold or otherwise disposed of in the ordinary
course of business;
(C) any Wholly-Owned Subsidiary of a Borrower may merge or
consolidate with or into, or dispose of its assets to, the Borrower
or any other Wholly-Owned Subsidiary (whether such disposal is by
means of lease, sale, sale-leaseback, license or another type of
transfer);
(D) any Borrower or any Subsidiary thereof may enter into sale
and leaseback transactions, provided, however, that (A) the
aggregate proceeds of all such sale-leaseback transactions by all of
the Borrowers and the Subsidiaries thereof shall not exceed One
Million Dollars ($1,000,000), (B) each such sale shall be in an
amount at least equal to the fair market value thereof, and (C) such
leaseback transaction shall be subject to and count against the
limitation in Section 11.3(d)(K);
(E) the Borrowers may sell, lease or otherwise dispose of the
assets or stock of Hawk Motors, Inc. and the Mexican Subsidiaries,
in whole or in part, for consideration in an amount determined to be
commercially reasonable by Hawk Corporation in the exercise of its
good faith business judgment; provided, however, that at the time of
such sale and after giving effect thereto, no Event of Default
exists or will exist;
(F) any Borrower or Wholly-Owned Subsidiary of such Borrower
may merge or consolidate with or into another Borrower;
(G) any Foreign Subsidiary may merge or consolidate with or
into a Borrower or another Foreign Subsidiary; provided, however,
that to the extent that the Administrative Agent reasonably
determines that such merger or consolidation negatively affects the
interest of the Administrative Agent or the Lenders under the Loan
Documents or in the Collateral, the Borrowers will take any and all
actions, in form and substance reasonably satisfactory to the
Administrative Agent, as may be required to fully perfect the
Administrative Agent's security interest in the ownership interest
of any successor entity, which may include, without limitation, U.S.
and foreign law stock pledges, filings and assignments; provided
that the Borrowers shall not be required to pledge more than
sixty-five percent (65%) of their ownership interest in any Foreign
Subsidiary thereof;
(H) the Borrowers and their respective Subsidiaries may sell,
lease or otherwise dispose of assets, not otherwise permitted by
this Section, for consideration in an amount not less than the fair
market value thereof, having an aggregate book value when taken as a
whole not exceeding One Million Dollars ($1,000,000) in the
aggregate
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in any Fiscal Year, provided that at the time of such sale and after
giving effect thereto, no Event of Default exists;
(I) any Borrower and any Subsidiary thereof may consummate
Permitted Acquisitions in accordance with the requirements of this
Agreement;
(J) the Borrowers may sell certain Accounts owing by foreign
Account Debtors which are insured by the Export-Import Bank of the
United States provided, however, that the documentation and any
procedure which may be required for release of the Administrative
Agent's security interest in such Accounts is reasonably
satisfactory to the Administrative Agent; and
(K) Foreign Subsidiaries may sell or otherwise transfer
Accounts with respect to factoring arrangements.
(b) CREDIT EXTENSIONS; PREPAYMENTS. No Borrower shall, nor shall it
permit any Subsidiary to, (i) make prepayments or advance payments in respect of
Indebtedness to others (except to the Administrative Agent for the benefit of
the Lenders in accordance with this Agreement) or (ii) loan any money to, assume
any Indebtedness of or any other obligation of, or undertake any Guaranty
Obligations with respect to the Indebtedness of, any other Person, except:
(A) each Borrower and any Subsidiary thereof may endorse
checks, drafts, and similar instruments for deposit or collection in
the ordinary course of business;
(B) each Borrower or any Subsidiary thereof may undertake
Guaranty Obligations with respect to (i) the Obligations of the
Borrowers hereunder and the obligations under the Senior Notes, (ii)
any existing Indebtedness of the Borrowers or Subsidiaries thereof
set forth on the Disclosure Schedule and (iii) any Indebtedness of
the Borrowers or Subsidiaries thereof that is otherwise permitted
hereunder;
(C) each Borrower and any Subsidiary thereof may renew,
extend, refinance and refund Indebtedness, as long as such renewal,
extension or refunding thereof is permitted under Section 11.3(c)
(without any increase in the principal amount thereof or any
shortening of the maturity of any principal amount thereof) and the
terms thereof (including without limitation the terms of related
warrants convertible into debt) are no less favorable to the Lenders
than the Indebtedness being refinanced, refunded, renewed or
extended);
(D) the Borrowers and any Subsidiary thereof may make loans or
advances to Persons so long as the aggregate outstanding amount of
all such loans and advances does not exceed Two Hundred Fifty
Thousand Dollars ($250,000) at any time outstanding;
(E) the Borrowers may redeem the Untendered Notes;
(F) the Borrowers and any Subsidiary thereof may make
unsecured guaranties of Indebtedness permitted by Section 11.3(c);
(G) the Borrowers and their Subsidiaries may make loans
(including loans made on a non-arms-length basis) to (i) the Mexican
Subsidiaries not to exceed One Million Dollars ($1,000,000) in an
aggregate amount (which amount shall not include loans and advances
made to such entities prior to the Closing Date) and (ii) other
Foreign Subsidiaries not to exceed, when aggregated with the
investments permitted in Section 11.3(e)(C), the following amounts:
(1) for the period commencing on the Closing Date
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through December 31, 2004, One Million Dollars ($1,000,000) at any
time outstanding (which amount shall not include loans and advances
made to such entities prior to the Closing Date); and (2) for the
periods consisting of each Fiscal Year thereafter, Three Million
Five Hundred Thousand Dollars ($3,500,000) at any time outstanding
(which amount shall not include loans and advances made to such
entities prior to the Closing Date), provided, however, that such
amount shall not exceed Twelve Million Dollars ($12,000,000) during
the term of this Agreement and provided further that, beginning on
December 31, 2004 and for each Fiscal Quarter thereafter, the
Borrower Representative delivers a quarterly statement of all
outstanding advances made in compliance with this Section and
investments made in compliance with the terms of Section 11.3(e)(C)
during the above referenced periods as part of the Officer's
Certificate required by Section 11.1(d);
(H) Hawk Corporation may grant unsecured guaranties in the
ordinary course of business requested by vendors or other third
parties doing business with Hawk Corporation's Subsidiaries; and
(I) Hawk Corporation may make a Senior Note Permitted Change
of Control Payment to the extent permitted by and subject to the
satisfaction of the requirements of Section 12.5(iv) of this
Agreement.
(c) INDEBTEDNESS. No Borrower shall, nor shall it permit any
Subsidiary thereof to, create, assume, incur, suffer to exist or have
outstanding at any time any Indebtedness or other debt of any kind or be or
become a Guarantor of or otherwise undertake or assume any Guaranty Obligation
with respect to any Indebtedness of any other Person; except, that this Section
11.3(c) shall not prohibit:
(i) the Obligations;
(ii) Indebtedness outstanding on the Closing Date on the
Senior Notes
(iii) ordinary course trade accounts payable or customer
deposits, other than the trade accounts payable by any Foreign
Subsidiary to any Borrower that arise after the Closing Date;
(iv) the Indebtedness on the Disclosure Schedule;
(v) Indebtedness in respect of currency or interest rate swaps
or similar transactions entered into in the ordinary course of
business and not for speculative purposes;
(vi) Indebtedness in respect of Guaranty Obligations with
respect to (i) the Obligations of the Borrowers hereunder and
obligations under the Senior Notes, (ii) any existing Indebtedness
of the Borrowers or Subsidiaries thereof set forth on the Disclosure
Schedule and (iii) any Indebtedness of the Borrowers or Subsidiaries
thereof that is otherwise permitted hereunder;
(vii) Indebtedness secured by a Lien permitted by clauses (H),
(I), (K) or (N) of Section 11.3(d) hereof;
(viii) any Indebtedness extending the maturity of, refunding
or refinancing (but not increasing), in whole or in part, any of the
Indebtedness permitted under this Section 11.3(c);
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(ix) any Indebtedness pursuant to a sale and leaseback
transaction permitted under Section 11.3(a)(D);
(x) Indebtedness of the Borrowers or any Subsidiary thereof
consisting of its Guaranty of the Obligations of the Borrowers;
(xi) unsecured Indebtedness not otherwise permitted under
Section 11.3(c) of this Agreement, provided, however, that the
aggregate outstanding principal amount of all such Indebtedness
shall not exceed Two Hundred Fifty Thousand Dollars ($250,000) at
any time outstanding;
(xii) Indebtedness with respect to payments by the Borrower of
insurance premiums on an installment basis, in the ordinary course
of business;
(xiii) Indebtedness with respect to Untendered Notes;
(xiv) Indebtedness of the Foreign Subsidiaries to the
Borrowers permitted under Section 11.3(b)(G); or
(xv) Indebtedness for Borrowed Money of the Foreign
Subsidiaries not otherwise permitted hereunder, provided, however,
that the aggregate outstanding principal amount of all such
Indebtedness for Borrowed Money shall not exceed Twelve Million
Dollars ($12,000,000) at any time outstanding; provided, however,
that such Indebtedness shall not be guaranteed in any manner,
directly or indirectly by any of the Borrowers.
(d) LIENS; LEASES. No Borrower shall, nor shall it permit any
Subsidiary thereof to, (i) acquire or hold any assets or property subject to any
Lien, (ii) sell or otherwise transfer any Accounts, whether with or without
recourse, except for assignments of defaulted Accounts without recourse for
purposes of collection in the ordinary course of business, (iii) suffer or
permit any property now owned or hereafter acquired by it to be or become
encumbered by a Lien or (iv) lease as lessee any personal or real property under
any operating lease; provided, however, that this Subsection shall not prohibit:
(A) any lien for a tax, assessment or government charge or
levy for taxes, assessments or charges not yet due and payable or
not yet required to be paid pursuant to Section 11.2(i);
(B) any deposit or cash pledges securing only workers'
compensation, unemployment insurance or similar obligations (other
than Liens arising under ERISA) in the ordinary course of business;
(C) any mechanic's, carrier's, landlord's or similar common
law or statutory lien incurred in the ordinary course of business
for amounts that are not yet due and payable or which are being
diligently contested in good faith, so long as the Administrative
Agent has been notified of any such contest and adequate reserves
are maintained by the Borrowers for their payment;
(D) zoning or deed restrictions, public utility easements,
rights of way, minor title irregularities and similar matters
relating to any real property of a Borrower or its Subsidiaries, in
all such cases having no effect which is materially adverse as a
practical matter on the ownership or use of any such Real Estate in
question, as such property is used in the ordinary course of
business of by the Borrowers or their Subsidiaries;
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(E) any Lien which arises in connection with judgments or
attachments (1) the occurrence of which does not constitute an Event
of Default under Section 12.11, (2) the execution or other
enforcement of such Lien is effectively stayed and the claims
secured thereby are being actively contested in good faith and by
appropriate proceedings and (3) which is junior in priority to the
Liens of the Administration Agent securing the Obligations from time
to time outstanding;
(F) deposits or cash pledges securing performance of
contracts, bids, tenders, leases (other than Capitalized Leases),
statutory obligations, surety and appeal bonds (other than contracts
for the payment of Indebtedness for Borrowed Money) arising in the
ordinary course of business;
(G) any Lien in favor of the Administrative Agent created
pursuant to the Loan Documents for the benefit of the Administrative
Agent, Lenders and the LC Issuer;
(H) any Lien created or assumed in purchasing, constructing or
improving any real property or to which any Real Estate is subject
when purchased; provided, however, that: (x) the mortgage, security
interest or other lien is confined to the property in question and
(y) the Indebtedness secured thereby does not exceed the total cost
of the purchase, construction or improvement and (z) the aggregate
outstanding Indebtedness of the Borrower secured by such Liens (when
taken together with any secured Indebtedness permitted to be secured
pursuant to clause (K) of this subsection) shall not at any time
exceed Five Million Dollars ($5,000,000) in the aggregate;
(I) any operating lease entered into by the Borrower as
lessee; provided; however, that the scheduled rental payments in
respect to all such leases of the Borrower (when taken together with
all such leases of the Borrower) shall not at any time exceed Five
Million Dollars ($5,000,000) in the aggregate during any Fiscal Year
of the Borrowers;
(J) any transfer of a check or other medium of payment for
deposit or collection, or any similar transaction in the ordinary
course of business;
(K) any Lien (including any Lien in respect of a Capitalized
Lease of personal property) which is created in connection with the
purchase of personal property; provided, however, that: (x) the Lien
is confined to the property in question, (y) the Indebtedness
secured thereby does not exceed the total cost of the purchase, and
(z) the aggregate outstanding Indebtedness secured by such Liens
(when taken together with any secured Indebtedness permitted to be
secured pursuant to clause (H) of this subsection and when taken
together with the aggregate Indebtedness of the Borrowers) does not
at any time exceed Five Million Dollars ($5,000,000) in the
aggregate;
(L) security deposits to secure the performance of operating
leases and deposits received from customers, in each case in the
ordinary course of business;
(M) Liens securing the replacement, extension or renewal of
any Indebtedness permitted to be refinanced by Section 11.3(c)
hereof so long as such Lien is upon and limited to the same property
previously subject thereto;
(N) any existing Lien fully disclosed in the Disclosure
Schedule (for the avoidance of doubt, notwithstanding the disclosure
of any Lien as an existing Lien, such Lien shall be taken into
consideration in calculating compliance with the limitations stated
above in this Section 11.3(d));
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(O) Liens with respect to the factoring of any Borrower's
Accounts owing by foreign Account Debtors which are insured by the
Export-Import Bank of the United States, provided, however, that:
(x) the Lien is confined to the Accounts in question and (y) any
procedure which may be required for release of the Administrative
Agent's security interest in such Accounts is reasonably
satisfactory to the Administrative Agent; or
(P) Liens with respect to factoring of any Foreign
Subsidiary's Accounts.
In addition, no Borrower shall, nor shall it permit any of its
Subsidiaries to enter into any contract or agreement with any Person that would
prohibit the Administrative Agent or any Lender from acquiring a security
interest, mortgage, or other Lien on, or a collateral assignment of, any of the
property or assets of such Borrower or its Subsidiaries (except for (1)
restrictions contained in agreements relating to permitted purchase money liens
or Capitalized Leases so long as the restrictions under such agreements and
Capital Leases are only with respect to the purchased or leased assets and the
proceeds thereof, (2) restrictions under any agreement evidencing other
Subordinated Indebtedness existing on the date hereof and (3) restrictions under
any agreement requiring Liens that are permitted under Section 11.3(d)).
(e) INVESTMENTS. No Borrower shall, nor shall it permit any
Subsidiary thereof to, (i) make or hold any investment in any common stocks,
bonds or securities of any Person, or make any further capital contribution to
any Person, or (ii) be or become a party to any joint venture or other
partnership other than:
(A) the common stock of any Subsidiary thereof existing on the
Closing Date and the capital contributions therein outstanding as of
the Closing Date;
(B) notes or securities issued by a customer or account
debtors of the Borrowers or their Subsidiaries pursuant to Section
9.7;
(C) the Borrowers and their Subsidiaries may make investments
in Foreign Subsidiaries not to exceed when aggregated with the
Indebtedness permitted in Section 11.3(b)(G), the following amounts:
(1) for the period commencing on the Closing Date through December
31, 2004, One Million Dollars ($1,000,000) at any time outstanding
(which amount shall not include loans and advances made to such
entities prior to the Closing Date); and (2) for the periods
consisting of each Fiscal Year thereafter, Three Million Five
Hundred Thousand Dollars ($3,500,000) at any time outstanding (which
amount shall not include loans and advances made to such entities
prior to the Closing Date), provided, however, that such amount
shall not exceed Twelve Million ($12,000,000) during the term of
this Agreement and provided further that, beginning on December 31,
2004 and for each Fiscal Quarter thereafter, the Borrower
Representative delivers a quarterly statement of all outstanding
investments made in compliance with this Section and advances made
in compliance with the terms of Section 11.3(b)(G) during the above
referenced periods as part of the Officer's Certificate required by
Section 11.1(d), and provided, finally, that it is expressly
understood that any and all net increases in Foreign Trade Balances
by the Borrowers with any Foreign Subsidiary in excess of the amount
of such Foreign Trade Balances as of the Closing Date shall
constitute investments for purposes of this clause (C) of Section
11.3(e);
(D) the stock of any Person purchased in connection with a
Permitted Acquisition; and
(E) any Subsidiary created for the purpose of having any
Person merge with and into such Subsidiary in connection with a
Permitted Acquisition and holding the stock of such Subsidiary.
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provided, however, that the Borrowers and their Subsidiaries may make or hold
investments, the aggregate amount of which does not exceed One Hundred Thousand
Dollars ($100,000)
(f) DISTRIBUTIONS. No Borrower shall make nor commit itself to make,
nor shall it permit any Subsidiary thereof to make or commit to make, any
Distribution to its shareholders or members at any time, except that: (i) so
long as No Event of Default has occurred which is continuing and the Borrowers'
Excess Availability is no less than Ten Million Dollars ($10,000,000) after
giving effect to such Distribution, Hawk Corporation may make Distributions in
the form of dividends in an aggregate amount not to exceed Two Million Dollars
($2,000,000) per annum; (ii) any Wholly-Owned Subsidiary thereof may declare and
make cash dividends to its shareholders or members; and (iii) any Subsidiary
thereof which is not a Wholly-Owned Subsidiary may declare and make cash
dividends (x) for so long as such Subsidiary is treated as a partnership or
disregarded entity for federal income tax purposes (a "Flow-Through Entity"), in
an amount equal to the Permitted Tax Distributions in respect of such Subsidiary
(provided that, if in any Fiscal Year, the Permitted Tax Distributions received
by a shareholder, member or other equity holder of such Subsidiary are greater
than the actual taxes paid by such shareholder, member or other equity holder,
then the excess amount shall be deducted from the Permitted Tax Distributions
starting in the next Fiscal Quarter until such excess is recouped) and (y) for
so long as such Subsidiary is not a Flow-Through Entity but is included in one
or more consolidated or combined income tax groups, in an amount equal to the
federal, state and local income tax obligations of such Subsidiary as if such
Subsidiary filed separate income tax returns on a consolidated or combined group
basis.
(g) CHANGE IN NATURE OF BUSINESS. No Borrower shall, nor shall it
permit any of its Subsidiaries to, make any material change in the nature of its
business as carried on at the date hereof; provided, however, that operation of
complementary lines or business shall not be deemed to be a change in the nature
of business.
(h) CHARTER AMENDMENTS. No Borrower shall amend any of its Charter
Documents nor permit any amendment of the Charter Documents of any of its
Subsidiaries if such amendment would conflict with the Agreement or cause a
Potential Default under this Agreement.
(i) COMPLIANCE WITH ERISA. No Borrower shall, nor shall it permit
any Subsidiary thereof or any ERISA Affiliate thereof to: (i) engage in any
transaction in connection with which such Borrower, such Subsidiary or such
ERISA Affiliate could reasonably be expected to be subject to either a civil
penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section
4975 of the Internal Revenue Code, terminate or withdraw from any Employee
Benefit Plan (other than a Multiemployer Plan) in a manner, or take any other
action with respect to any such Employee Benefit Plan (including, without
limitation, a substantial cessation of business operations or an amendment of an
Employee Benefit Plan within the meaning of Section 4041(e) of ERISA), which
could reasonably be expected to result in any liability of any or such Borrower
or any ERISA Affiliate to the PBGC, to the Department of Labor or to a trustee
appointed under Section 4042(b) or (c) of ERISA, incur any liability to the PBGC
on account of a withdrawal from or a termination of an Employee Benefit Plan
under Section 4063 or 4064 of ERISA, incur any liability for post-retirement
benefits under any and all welfare benefit plans (as defined in Section 3(1) of
ERISA) other than as required by applicable statute, fail to make full payment
when due of all amounts which, under the provisions of any Employee Benefit Plan
or applicable Law, such Borrower or any ERISA Affiliate is required to pay as
contributions thereto, or permit to exist any Accumulated Funding Deficiency,
whether or not waived, with respect to any Employee Benefit Plan (other than a
Multiemployer Plan); provided, however, that such engagement, termination,
withdrawal, action, incurrence, failure or permitting shall not be deemed to
have violated this clause (i) unless any such engagement, termination,
withdrawal, action, incurrence, failure or permitting (A) has resulted or could
reasonably be expected to result in a Material Adverse Effect or (B) has
otherwise resulted or could reasonably be expected to result in liabilities or
claims against such Borrower in an amount exceeding Five Hundred Thousand
Dollars ($500,000); (ii) at any time permit the termination of any defined
benefit pension plan intended to be qualified under Section 401(a) and
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501(a) of the Internal Revenue Code; provided, however, that such termination
shall not be deemed to have violated this clause (ii) unless (A) the value of
any benefit liability (as defined in Section 4001(a)(16) of ERISA) upon the
termination date of any such terminated defined benefit pension plans of such
Borrower, such Subsidiaries, and their ERISA Affiliates exceeds the then current
value (as defined in Section 3 of ERISA) of all assets in such terminated
defined benefit pension plans by an amount in excess of Five Hundred Thousand
Dollars ($500,000), or (B) the payment of such amount has resulted or could
reasonably be expected to result in a Material Adverse Effect or has resulted or
could reasonably be expected to result in liabilities or claims against such
Borrower or any Subsidiary thereof in an amount exceeding Five Hundred Thousand
Dollars ($500,000); or (iii) if such Borrower or any ERISA Affiliate becomes
obligated under a Multiemployer Plan (except with respect to the potential
liabilities now existing as disclosed in the Disclosure Schedule), effect a
complete or partial withdrawal such that such Borrower, any such Subsidiary, or
their ERISA Affiliates incur Withdrawal Liability under Title IV of ERISA with
respect to Multiemployer Plans or otherwise have liability under Title IV of
ERISA; provided, however, that the incurrence of such Withdrawal Liability or
other liability under Title IV of ERISA shall not be deemed to be a violation of
this clause (iii) unless (A) the amount of the payment by such Borrower of such
Withdrawal Liability or other liability has resulted or could reasonably be
expected to result in a Material Adverse Effect or (B) has otherwise resulted or
could reasonably be expected to result in liabilities or claims against any or
all of the Borrowers or any Subsidiary thereof in an amount exceeding Five
Hundred Thousand Dollars ($500,000).
(j) REGULATION U COMPLIANCE. No Borrower shall use any portion of
the proceeds of any Advance, in violation of any requirement of Law including
Regulation U or of the terms and conditions of this Agreement.
(k) ACCOUNTING CHANGES. No Borrower shall, nor shall it permit any
Subsidiary thereof to, make or permit any change in its accounting policies or
financial reporting practices and procedures, except as required or permitted by
GAAP or as required by applicable law, in each case as to which the Borrower
Representative shall have delivered to the Administrative Agent prior to the
effectiveness of any such change a report prepared by a Responsible Officer of
the Borrower Representative describing such change and explaining in reasonable
detail the basis therefor and effect thereof.
(l) ARM'S-LENGTH TRANSACTIONS. Except as set forth on the Disclosure
Schedule, no Borrower will, nor permit any Subsidiary thereof to, enter into or
permit to exist any transaction (including, without limitation, any transaction
involving the investment, purchase, sale, lease, transfer or exchange of any
property or the rendering of any service) with any Affiliate of such Borrower or
such Subsidiaries except in the ordinary course of the business of such Borrower
or such Subsidiaries and upon fair and reasonable terms not less favorable to
such Borrower or such Subsidiaries than would be usual and customary in
transactions with persons who are not such Affiliates; provided, however, that
any payment made pursuant to Section 13.3(f) hereof shall be permitted by this
Section 11.3(l).
11.4 FINANCIAL COVENANTS.
(a) MINIMUM SHAREHOLDER EQUITY. The Borrowers shall not permit
Shareholder Equity at any time to be less than the Shareholder Equity as of
September 30, 2004, minus Five Million Dollars ($5,000,000), minus actual
expenses up to Five Million Dollars ($5,000,000) associated with the move of the
Brook Park, Ohio facility, and minus expenses up to One Million Dollars
($1,000,000) associated with the sale of the Motors Division incurred after
September 30, 2004, but no later than March 31, 2005 (the "September 30, 2004
Shareholder Equity Amount") and as of each Fiscal Year ending on or after
December 31, 2004, not less than the sum of:
(x) the September 30, 2004 Shareholder Equity Amount, plus
(y an aggregate amount equal to fifty percent (50%) of Consolidated
Net Income (if
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any and only to the extent a positive number) attributable to the
Fiscal Quarter of the Borrowers ending December 31, 2004 (which
aggregate amount shall not be reduced by any consolidated net losses
reported for the Fiscal Quarter ending December 31, 2004), plus
(z) an amount equal to fifty percent (50%) of the Consolidated Net
Income (if any and only to the extent a positive number) for the
Fiscal Year ending December 31, 2005 and each Fiscal Year ending
thereafter (which aggregate amount shall not be reduced by any
consolidated net losses reported for the Fiscal Year ending December
31, 2005 and each Fiscal Year ending thereafter).
(b) MINIMUM CONSOLIDATED CASH FLOW COVERAGE RATIO. In the event of
an Consolidated Cash Flow Coverage Ratio Testing Event, then the Borrowers shall
not permit the Consolidated Cash Flow Coverage Ratio of the Borrowers and their
consolidated Subsidiaries as of the most recently ended Fiscal Quarter to be
less than 1.00 to 1.00, provided, however, that if: (i) the Borrowers' Excess
Availability is no less than Ten Million Dollars ($10,000,000) for a period of
sixty (60) consecutive days after a Consolidated Cash Flow Coverage Ratio
Testing Event and (ii) no Event of Default has occurred and is continuing, then
the Borrowers shall not be subject to this financial covenant unless and until
the occurrence of a subsequent Consolidated Cash Flow Coverage Ratio Testing
Event.
SECTION 12 EVENTS OF DEFAULT.
The occurrence of any one or more of the following events shall
constitute an "Event of Default" hereunder:
12.1 PAYMENT. Failure by the Borrowers (a) to make payment of principal on
any Revolving Credit Note when due or (b) pay any interest on the Advances when
due to the extent such failure is not remedied within three (3) Business Days
after such required date of payment or (c) to pay any other Obligation when
required to be paid hereunder to the extent such failure is not remedied within
three (3) Business Days after such required date of payment; or
12.2 REPRESENTATIONS AND WARRANTIES. Any warranty or representation made
or deemed made by any Borrowers in respect of such Borrower or any of its
Subsidiaries in this Agreement, any other Loan Document or any certificate
furnished at any time in compliance with this Agreement shall prove to have been
false or inaccurate in any material respect when made or deemed made; or
12.3 REPORTING AND NOTICE PROVISIONS; VIOLATION OF CERTAIN AFFIRMATIVE
COVENANTS. Failure by any Borrower or any of its Subsidiaries in any material
respect to perform, keep or observe any other term, provision, condition or
covenant contained in this Agreement (other than those provisions, terms or
conditions referenced in Sections 12.1, 12.2, and 12.4 of this Agreement) or any
other Loan Document that is required to be kept or observed by any Borrower or
any Subsidiary thereof and such failure shall continue without remedy for a
period of thirty (30) Business Days; or
12.4 VIOLATION OF NEGATIVE COVENANTS, FINANCIAL COVENANTS AND CERTAIN
AFFIRMATIVE COVENANTS. Failure by any Borrower or any Subsidiary thereof to
perform, keep, or observe any other term, provision, condition or covenant
contained in Sections 8.2, 8.3, Section 9 or Sections 10.4 and 10.5 of this
Agreement, or Sections 11.1(h), 11.2(a), 11.2(b), 11.2(c), 11.2(g), 11.2(i),
11.3 or 11.4 of this Agreement which is required to be performed, kept, or
observed by such Borrower or any Subsidiary thereof; or
12.5 CROSS-DEFAULT. (i) Failure by any Borrower or any Subsidiary thereof
to make any payment on any Indebtedness for Borrowed Money of such Borrower or
such Subsidiary having a principal amount in excess of Two Hundred Fifty
Thousand Dollars ($250,000), when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or
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otherwise), or (ii) the occurrence of any other event or the existence of any
condition under any agreement or instrument relating to any such Indebtedness,
if the effect of such event or condition is to accelerate, or to permit the
acceleration of, the maturity of such Indebtedness for Borrowed Money, or causes
such Indebtedness to be repurchased, prepaid, defeased, redeemed, or otherwise
acquired or (iii) the declaration of any such Indebtedness for Borrowed Money to
be due and payable, or the requiring of any such Indebtedness to be prepaid or
repurchased (other than by a regularly scheduled required prepayment), prior to
the stated maturity thereof, (iv) any condition (within the meaning of any
"change of control", "mandatory repurchase" or similar provision in any note,
agreement or instrument evidencing any such Indebtedness for Borrowed Money)
shall occur or exist which condition permits a repurchase, prepayment of
principal, defeasance, redemption prior to the maturity of such Indebtedness to
be required by or offered to the holder thereof; provided, however, such
requirement or permitted offer of repurchase, prepayment, defeasance, or
redemption shall be prohibited hereunder and constitute an Event of Default
hereunder only if the Administrative Agent has received notice of such required
or permitted offer of repurchase, prepayment, defeasance or redemption or
otherwise, the Obligations have been accelerated by reason of such required or
permitted offer of repurchase, prepayment, defeasance or redemption or otherwise
and there is not a contemporaneous payment of that portion of the Obligations
that have been so accelerated and the Commitment with respect thereto shall have
been terminated, and; provided, further that such limitation on the effect of
this clause (iv) shall only be effective so long as there has not been any
amendment or other modification to the Senior Note Indenture shortening or
eliminating the thirty (30) day waiting period for a Change of Control Offer set
forth in Section 4.19 of the Senior Note Indenture (the repurchase, repayment,
defeasance or redemption pursuant to such Change of Control Offer, the "Senior
Note Permitted Change of Control Payment") or (v) default by any Borrower or any
Subsidiary thereof in respect of any Material Business Agreement or any Material
License Agreement where such default (A) would permit the other party or parties
to such agreement to terminate such agreement and (B) has resulted or could
reasonably be expected to result in a Material Adverse Effect; or
12.6 DESTRUCTION OF COLLATERAL. The loss, theft, damage or destruction of
any portion of the Collateral having an aggregate value in excess of Five
Hundred Thousand Dollars ($500,000), to the extent not insured by an insurance
carrier which has acknowledged coverage in the amount of the claim without any
material reservation of rights or which has been ordered by a court of competent
jurisdiction to pay such claim (excluding any loss of Intellectual Property by
reason of abandonment where such abandonment is undertaken in good faith,
pursuant to prudent business practice and would reasonably be expected to result
in a Material Adverse Effect); or
12.7 MATERIAL ADVERSE EFFECT; CHANGE OF CONTROL. The occurrence of any
Material Adverse Effect or the occurrence of any Change of Control; or
12.8 TERMINATION OF EXISTENCE. The dissolution or termination of existence
of any Borrower or any Subsidiary thereof, but only to the extent not permitted
under Section 11.3(a); or
12.9 FAILURE OF ENFORCEABILITY OF THIS AGREEMENT, LOAN DOCUMENT; SECURITY.
If: (a) any covenant, material agreement or any Obligation of any Borrower
contained in or evidenced by this Agreement or any of the other Loan Documents
shall cease to be enforceable, or shall be determined to be unenforceable, in
accordance with its terms, or (b) such Borrower shall deny or disaffirm its
obligations under this Agreement or any of the other Loan Documents or any of
the Liens granted in connection therewith, or (c) any Liens in favor of the
Administrative Agent or any Lender granted in this Agreement or any of the other
Loan Documents shall be determined to be void, voidable or invalid, or are
subordinated or not otherwise given the priority contemplated by this Agreement,
or (d) any perfected Liens granted in favor of the Administrative Agent or the
Lenders shall be determined to be unperfected except in connection with sales of
Inventory in the normal course of the business of the Borrowers, except, to the
extent that the aggregate book value of the Collateral secured by such
unperfected Liens does not exceed Two Hundred Fifty Thousand Dollars ($250,000)
in the aggregate or (e) any Subsidiary shall revoke or permit a payment default
under such Guaranty; or
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12.10 ERISA. If: (a) any Borrower, any Subsidiary thereof, or any of their
ERISA Affiliates or any other Person institutes any steps to terminate an
Employee Benefit Plan of such Borrower, such Subsidiaries, or such ERISA
Affiliates, which Employee Benefit Plan is subject to Title IV of ERISA and, as
a result of such termination, such Borrower, its Subsidiaries, or ERISA
Affiliate is required to make or could reasonably be expected to be required to
make, a contribution to such Employee Benefit Plan the payment of which, when
taken together with all like termination payments suffered by, such Borrower,
such Subsidiaries or such ERISA Affiliates, either has resulted in, or could
reasonably be expected to result in, a Material Adverse Effect, or (b) such
Borrower, such Subsidiary or such ERISA Affiliate fails to make a contribution
to any Employee Benefit Plan which failure would be sufficient to give rise to a
Lien under Section 302(f) of ERISA; or
12.11 JUDGMENTS. Any money judgment, writ or warrant of attachment or
similar process involving an amount, when aggregated with all such money
judgment, writ or warrant of attachment or similar process outstanding at such
time, in excess of Five Hundred Thousand Dollars ($500,000), to the extent not
insured by an insurance carrier which has acknowledged coverage in the amount of
the claim without any material reservation of rights or which has been ordered
by a court of competent jurisdiction to pay such claim, is entered or filed
against any or all of the Borrowers or any Subsidiary thereof or against any of
their respective assets and is not released, discharged, vacated, fully bonded
or stayed within sixty (60) days after such judgment, writ or warrant of
attachment or similar proceeding is entered; or
12.12 FORFEITURE PROCEEDINGS. An adjudication against any Borrower or any
Subsidiary thereof or in any criminal proceedings requiring such Borrower's or
such Subsidiary's forfeiture of any asset or assets having, either individually
or in the aggregate, a value in excess of One Hundred Thousand Dollars
($100,000); or
12.13 FINANCIAL IMPAIRMENT. The Financial Impairment of any Borrower or
any Subsidiary thereof.
SECTION 13 REMEDIES.
13.1 ACCELERATION; TERMINATION. Upon the occurrence of an Event of Default
described in Sections 12.1 through 12.12 above, inclusive, that is continuing,
the Administrative Agent may and, at the written request of the Required
Lenders, shall without presentment, demand or notice of any kind all of which
are hereby expressly waived by the Borrowers: (a) declare all of the Obligations
due or to become due from the Borrowers to the Administrative Agent and the
Lenders, whether under this Agreement, the Notes or otherwise, immediately due
and payable, anything in the Notes or other evidence of the Obligations or in
any of the other Loan Documents to the contrary notwithstanding, (b) terminate
each Lender's Revolving Credit Commitment whereupon no Lender shall have any
further obligation to make any Advance, (c) terminate the LC Issuer's obligation
to issue Letters of Credit whereupon the LC Issuer shall have no further
obligation to issue any Letter of Credit hereunder and (d) terminate the
Lender's obligation to participate in Letters of Credit issued after such
termination of the obligation of the LC Issuer to issue Letters of Credit.
13.2 AUTOMATIC ACCELERATION AND TERMINATION. If any Event of Default
referred to in Section 12.13 above shall occur, (a) each Lender's Revolving
Credit Commitment shall automatically and immediately terminate (if not already
expired or terminated by the Borrowers or terminated pursuant to this Section
13) whereupon the no Lender shall have any obligation thereafter to make any
Advance hereunder, (b) the LC Issuer's obligation to issue Letters of Credit
shall immediately terminate whereupon the LC Issuer shall have no obligation
thereafter to issue any Letters of Credit hereunder, and (c) all of the
Obligations and the Letter of Credit Obligations then owing to the
Administrative Agent, Lenders or the LC Issuer shall thereupon become and
thereafter be immediately due and payable in full, all without any presentment,
demand or notice of any kind, which are hereby waived by the Borrowers.
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13.3 GENERAL RIGHTS AND REMEDIES OF THE ADMINISTRATIVE AGENT AND THE
LENDERS. With respect to the Collateral, the Administrative Agent shall have all
of the rights and remedies of a secured party under the UCC or under other
applicable Law. The Administrative Agent, each Lender and the LC Issuer shall
have all other legal and equitable rights to which each may be entitled, all of
which rights and remedies shall be cumulative, and none of which shall be
exclusive, to the extent permitted by law, in addition to any other rights or
remedies contained in this Agreement or in any of the other Loan Documents. The
Administrative Agent, each Lender and the LC Issuer hereby expressly agree that,
unless requested by the Administrative Agent, upon the concurrence of the
Required Lenders, such Lender and the LC Issuer will not take or cause to be
taken, in respect of the Advances or the other Obligations or the Collateral,
any action or remedy that is independent from the actions or remedies taken or
to be taken by the Administrative Agent, except for any actions taken by any
Lender or the LC Issuer necessary to preserve its rights in connection with any
Event of Default described in Section 12.13 of this Agreement.
13.4 ADDITIONAL REMEDIES. After the Obligations and/or the Letter of
Credit Obligations shall have been declared by the Administrative Agent to be or
shall have otherwise hereunder become immediately due and payable, the
Administrative Agent may, in its sole discretion, exercise the following rights
and remedies to the extent permitted by applicable law and in addition to any
other right or remedy provided for in this Agreement:
(a) POSSESSION OF COLLATERAL. The Administrative Agent shall have
the right to take immediate possession of the Collateral and all Proceeds
relating to such Collateral and: (i) require the Borrowers, at the Borrowers'
expense, to assemble the Collateral of the Borrowers and make it available to
the Administrative Agent at such facilities of the Borrowers as the
Administrative Agent shall designate or (ii) enter any of the premises of the
Borrowers or wherever any Collateral shall be located and to keep and store the
same on such premises until sold. If the premises on which the Collateral are
located is owned or leased by any of the Borrowers, then the Borrowers shall not
charge the Administrative Agent for storage of such Collateral on such premises.
(b) FORECLOSURE OF LIENS. The Administrative Agent shall have the
right to foreclose the Liens created under this Agreement and each of the other
Loan Documents or under any other agreement relating to the Collateral.
(c) DISPOSITION OF COLLATERAL. The Administrative Agent shall have
the right to sell or to otherwise dispose of all or any Collateral in its then
condition, or after any further processing thereof, at public or private sale or
sales, wholesale dispositions, or sales pursuant to one or more contracts, with
such notice as may be required by law, in lots or in bulk, for cash or on
credit, all as the Administrative Agent, in its discretion, may deem advisable.
Each Borrower acknowledges and covenants that ten (10) days written notice to
the Borrower Representative of any public or private sale or other disposition
of Collateral shall be reasonable notice thereof, and such sale shall be at such
Borrower's premises or at such other locations where the Collateral then is
located, or as otherwise determined by the Administrative Agent. The
Administrative Agent shall have the right to conduct such sales on such
Borrower's premises, without charge therefor, and such sales may be adjourned
from time to time in accordance with applicable law without further requirement
of notice to the Borrower Representative. Each Lender and each LC Issuer shall
have the right to bid or credit bid any such sale on its own behalf.
(d) APPLICATION OF COLLATERAL; APPLICATION OF LIQUIDATION PROCEEDS.
Subject to Section 4.1(d) herein with respect to Collections, the Administrative
Agent, with or without proceeding with sale or foreclosure or demanding payment
of the Obligations, shall, without notice, at any time, appropriate and apply to
the Obligations all monies received with respect to any and all Collateral of
the Borrowers in the possession of the Administrative Agent, a Lender or the LC
Issuer as follows:
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(i) First, to the payment of all expenses (to the extent not
otherwise paid by the Borrowers) incurred by the
Administrative Agent and the Lenders in connection with the
exercise of such remedies, including, without limitation, all
reasonable costs and expenses of collection, reasonable
documented attorneys' fees, court costs and any foreclosure
expenses;
(ii) Second, to the payment pro rata of any fees then accrued
and payable to the Administrative Agent or any Lender under
this Agreement;
(iii) Third, to the payment pro rata of interest then accrued
on the outstanding Revolving Credit Advances of the Borrowers;
(iv) Fourth, to the payment pro rata of the principal balance
then owing on the outstanding Revolving Credit Advances as
follows: (A) first, to Revolving Credit Advances comprised of
Permitted Special Advances, (B) second, to the Revolving
Credit Advances pro rata to the Lenders determined based on
such outstanding and such deficiency;
(v) Fifth, as cash collateral security against the aggregate
undrawn amount of any Letter of Credit outstanding for the
account of the Borrowers and any other Letter of Credit
Obligations (whether then or thereafter anticipated to be
outstanding) of the Borrowers;
(vi) Sixth, to the payment of: (i) all other amounts owed by
the Borrowers to the Administrative Agent, any Lender, the LC
Issuer under this Agreement or any other Loan Document, (ii)
all amounts owing to the Designated Hedge Creditor as
Designated Hedge Obligations and (iii) all amounts owing to
any Lender in connection with cash management services
provided by such Lender to the Borrowers and their
Subsidiaries; provided, however, if such monies and Proceeds
are insufficient to pay such amounts in full, to the payment
of such amounts pro rata; and
(vii) Last, any remaining surplus after all of the Obligations
have been paid in full, to the Borrowers or to whomsoever
shall be lawfully entitled thereto.
13.5 SET-OFF. If any Event of Default referred to in Section 12 of this
Agreement shall occur which is continuing, each of the Lenders and the LC Issuer
and each Affiliate thereof shall have the right (in addition to such other
rights as it may have by operation of Law or otherwise) to the extent permitted
by applicable law, but subject to Section 13.10 of this Agreement, at any time
to set off against and to appropriate to and apply toward the payment of the
Obligations and the Letter of Credit Obligations, and all other liabilities
under this Agreement and the other Loan Documents then owing to it (and any
participation purchased or to be purchased pursuant to Section 13.10 below)
whether or not the same shall then have matured, any and all deposit (general or
special) and any other Indebtedness at any time held or owing by such Lender or
each Affiliate thereof (including branches and agencies thereof wherever
located) to or for the credit or account of the Borrowers, all without notice to
or demand upon the Borrowers or any other Person, all such notices and demands
being hereby expressly waived.
13.6 ACTIONS IN RESPECT OF THE LETTERS OF CREDIT UPON DEFAULT. Upon the
occurrence of an Event of Default which is continuing, to the extent that any
Letters of Credit have been issued which then are outstanding, the
Administrative Agent, for the benefit of itself, the Lenders and the LC Issuer,
may make demand upon Borrowers to, and forthwith upon such demand the Borrowers
will, pay to the Administrative Agent in same day funds and in the currency in
which such Letter of Credit is denominated, for deposit in a special cash
collateral account (the "Letter of Credit Collateral Account"), an amount equal
to one hundred five percent (105%) of the maximum amount available to be drawn
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under the Letters of Credit (i) to secure the Letter of Credit Obligations and
(ii) upon payment in full thereof, to secure any other Obligations then
outstanding. In the event that the Borrowers shall not deposit such funds upon
demand by the Administrative Agent, the Administrative Agent may, in its sole
discretion, deposit any funds of the Borrowers in the possession of the
Administrative Agent to the Letter of Credit Collateral Account until the amount
deposited in such account equals the maximum amount available to be drawn under
the Letters of Credit. The Letter of Credit Collateral Account shall be in the
name of Administrative Agent and under the sole dominion and control of the
Administrative Agent subject to the terms of this Agreement. The Administrative
Agent may apply funds held in the Letter of Credit Collateral Account to the
payment of any amounts, as shall have become or shall become due and payable by
the Borrowers to the LC Issuer and, after the occurrence and during the
continuance of any Event of Default, to the payment of Obligations then
outstanding. Each Borrower agrees not to: (i) sell or otherwise dispose of any
interest in the Letter of Credit Collateral Account or any funds held therein,
or (ii) create or permit to exist any Lien, security interest or other charge or
encumbrances upon or with respect to the Letter of Credit Collateral Account or
any funds held therein, except in favor of the Administrative Agent as provided
in this Agreement.
13.7 AUTHORITY TO EXECUTE TRANSFERS. Without limitation of any
authorization granted to the Administrative Agent hereunder, each Borrower also
hereby authorizes the Administrative Agent, upon the occurrence of an Event of
Default which is continuing, to execute, in connection with the exercise by the
Administrative Agent of its remedies hereunder, any endorsements, assignments or
other instruments of conveyance or transfer with respect to the Collateral.
13.8 LIMITED LICENSE TO LIQUIDATE. Each Borrower hereby grants to the
Administrative Agent, for the benefit of itself, the Lenders and the LC Issuer:
(a) a non-exclusive, royalty-free license or other right to use, without charge,
all of such Borrower's Intellectual Property (including all rights of use of any
name or trade secret, but excluding the Excluded Property) as it pertains to the
Collateral, in manufacturing, advertising for sale and selling any Collateral;
provided, however, that such license and right to use shall be exercisable by
the Administrative Agent for the benefit of the Lenders only upon request by the
Administrative Agent after the occurrence of an Event of Default which is
continuing, and (b) to the extent permitted thereunder, all of such Borrower's
rights under all licenses and all franchise agreements that do not constitute
Excluded Property, which shall inure to the Administrative Agent for the benefit
of itself, the Lenders and the LC Issuer without charge but only upon request by
the Administrative Agent after the occurrence of an Event of Default which is
continuing.
13.9 EQUALIZATION. Each Lender agrees with the other Lenders that if at
any time it shall obtain any Advantage over the other Lenders or any thereof in
respect of the Advances it will purchase from such other Lender or Lenders, for
cash and at par, such additional participation in the Advances owing to the
other or others as shall be necessary to nullify the Advantage. If any such
Advantage shall be recovered in whole or in part from the Lender receiving the
Advantage, each such purchase shall be rescinded, and the purchase price
restored (with interest and other charges if and to the extent actually incurred
by the Lender receiving the Advantage) ratably to the extent of the recovery.
During the existence of any Potential Default or upon the occurrence of an Event
of Default which is continuing, any payment of any Indebtedness owing by the
Borrowers to any Lender shall be applied to the Obligations owing to such Lender
until the same shall have been paid in full before being applied to other
Indebtedness of the Borrowers owing to such Lender.
13.10 REMEDIES CUMULATIVE. The above-stated remedies are not intended to
be exhaustive and the full or partial exercise of any of such remedies shall not
preclude the full or partial exercise of any other remedy by the Administrative
Agent under this Agreement, under any Loan Document, or at equity or under law.
13.11 APPOINTMENT OF ATTORNEY-IN-FACT. The Administrative Agent shall
hereby have the right, and each Borrower hereby irrevocably makes, constitutes,
and appoints the Administrative Agent (and all officers, employees, or agents
designated by the Administrative Agent) as its true and lawful
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attorney-in-fact and agent, with full power of substitution, from time to time
following the occurrence of an Event of Default which is continuing and without
assent by such Borrower: (a) to effectuate, in such Borrower's name, such
Borrower's obligations under this Agreement, (b) in such Borrower's or
Administrative Agent's name: (i) to demand payment of the Accounts, (ii) to
enforce payment of the Accounts, by legal proceedings or otherwise, (iii) to
exercise all of such Borrower's rights and remedies with respect to the
collection of the Accounts and any other Collateral, (iv) to settle, adjust,
compromise, extend, or renew the Accounts, (v) to settle, adjust, or compromise
any legal proceedings brought to collect the Accounts, (vi) if permitted by
applicable Law, to sell or assign the Accounts and other Collateral, (vii) to
take control, in any manner, of any item of payment or Proceeds relating to any
Collateral, (viii) to prepare, file, and sign such Borrower's name on a proof of
claim in a bankruptcy against any Account Debtor or on any notice of Lien,
assignment, or satisfaction of Lien in connection with any Accounts, (ix) to do
all acts and things reasonably necessary, in the Administrative Agent's good
faith discretion, to fulfill such Borrower's obligations under this Agreement,
(x) to endorse the name of such Borrower upon any of the items of payment or
Proceeds relating to any Collateral and deposit the same to any Collection
Account or to the Cash Concentration Account of the Administrative Agent, (xi)
to endorse the name of such Borrower upon any Chattel Paper, document,
Instrument, invoice, freight xxxx, xxxx of lading, or similar document or
agreement relating to the Accounts, Inventory and any other Collateral, (xii) to
use such Borrower's stationery and sign the name of such Borrower to
verifications of the Accounts and notices thereof to Account Debtors, (xiii) to
use the information recorded on or contained in any data processing equipment
and computer hardware and software relating to the Accounts, Inventory, and any
other Collateral to which such Borrower has access, (xiv) to make and adjust
claims under such policies of insurance insuring the Collateral, receive and
endorse the name of such Borrower on any check, draft, instrument or other item
of payment for the proceeds of such policies, and make all determinations with
respect to such policies, and (xvi) to notify post office authorities to change
the address for delivery of such Borrower's mail to an address designated by the
Administrative Agent, receive and open all mail addressed to such Borrower, and,
after removing all Collections, forward the mail to such Borrower, (c) to pay or
discharge taxes or Liens levied against the Collateral; (d) to the extent not
inconsistent with the applicable Lockbox Agreement and Blocked Account
Agreement, to take all action necessary to grant the Administrative Agent sole
access to any Lockbox or Blocked Account of such Borrower, (e) contact Account
Debtors to pay any Collections to the Lockbox, (f) upon notice to the Borrower
Representative, to commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect the
Collateral and to enforce any other right in respect of any Collateral; (g) upon
notice to the Borrower the Borrower Representative, to defend any suit, action
or proceeding brought against such Borrower with respect to any Collateral; (h)
upon notice to the Borrower, Representative to settle, compromise or adjust any
such suit, action or proceeding; (i) to sell, transfer, pledge, or make any
agreement with respect to the Collateral; and (j) to do, at the Administrative
Agent's option and the Borrowers' expense, at any time, or from time to time,
all acts and things which the Administrative Agent reasonably deems necessary to
protect, preserve or realize upon the Collateral.
Each Borrower hereby ratifies all that said attorney shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power coupled
with an interest and shall be irrevocable. The expenses of the Administrative
Agent incurred in connection with such the exercise of such power of attorney,
together with interest thereon at a the rate then applicable hereunder to
Alternate Base Rate Advances, shall be payable by the Borrowers to the
Administrative Agent on demand.
SECTION 14 THE ADMINISTRATIVE AGENT.
14.1 THE ADMINISTRATIVE AGENT. Each Lender and the LC Issuer irrevocably
appoints KeyBank to act as Administrative Agent under this Agreement and the
other Loan Documents for the benefit of such Lender and the LC Issuer with full
authority to take such actions, and to exercise such powers, on behalf of such
Lender and the LC Issuer in respect of this Agreement and the other Loan
Documents as are herein and therein respectively delegated to the Administrative
Agent or as are reasonably incidental to those delegated powers. The
Administrative Agent in such capacity shall be deemed to be an independent
contractor of the Lenders and the LC Issuer. Each of the Lenders and the
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LC Issuer hereby expressly agrees that, without first obtaining the prior
written consent of the Administrative Agent or the Required Lenders, such Lender
and the LC Issuer, as the case may be, shall not take or cause to be taken, in
respect of the Obligations hereunder or the Collateral, any enforcement or
remedial action that is independent from the actions or remedies taken or to be
taken by the Administrative Agent, except for any actions taken by any Lender or
the LC Issuer which are necessary to preserve its rights in connection with any
Event of Default described in Section 12.3 of this Agreement.
14.2 NATURE OF APPOINTMENT. The Administrative Agent shall not have any
fiduciary relationship with any Lender or the LC Issuer by reason of this
Agreement and the other Loan Documents. The Administrative Agent shall not have
any duty or responsibility whatsoever to any Lender or the LC Issuer except
those expressly set forth in this Agreement and the other Loan Documents.
Without limiting the generality of the foregoing, each Lender or the LC Issuer
acknowledges that the Administrative Agent is acting as such solely as a
convenience to the Lenders and not as a manager of the Revolving Credit
Commitments, the obligations to issue Letters of Credit or the Obligations
evidenced by the Notes. This Section 14 does not confer any rights upon the
Borrowers or anyone else (except the Lenders and the LC Issuer), whether as a
third party beneficiary or otherwise.
14.3 ADMINISTRATIVE AGENT AS LENDERS; OTHER TRANSACTIONS. The
Administrative Agent's rights as a Lender under this Agreement and the other
Loan Documents shall not be affected by serving as the Administrative Agent. The
Administrative Agent and its Affiliates may generally transact any banking,
financial, trust, advisory or other business with any Borrower and any
Subsidiary thereof (including, without limitation, the acceptance of deposits,
the extension of credit and the acceptance of fiduciary appointments) without
notice to the Lenders or the LC Issuer, without accounting to the Lenders or the
LC Issuer and without prejudice to the Administrative Agent's rights as a Lender
under this Agreement and the other Loan Documents except as may be expressly
required under this Agreement.
14.4 INSTRUCTIONS FROM LENDERS. The Administrative Agent shall not be
required to exercise any discretion or take any action as to matters not
expressly provided for by this Agreement and the other Loan Documents
(including, without limitation, collection and enforcement actions in respect of
any Obligations and any Collateral) except that the Administrative Agent shall
take such action (or omit to take such action) other than actions referred to in
Section 16 of this Agreement, as may be reasonably requested of it in writing by
the Required Lenders and which actions and omissions shall be binding upon all
of the Lenders and the LC Issuer; provided, however, that the Administrative
Agent shall not be required to act (or omit any act) if, in its judgment, any
such action or omission might expose the Administrative Agent to personal
liability or might be contrary to this Agreement, any Loan Document or any
applicable Law.
14.5 LENDER'S DILIGENCE. Each Lender and the LC Issuer: (a) represents and
warrants that it has made its decision to enter into this Agreement and the
other Loan Documents and (b) agrees that it will make its own decision as to
taking or not taking future actions in respect of this Agreement and the other
Loan Documents; in each case without reliance on the Administrative Agent or any
other Lender and the LC Issuer and on the basis of its independent credit
analysis and its independent examination of and inquiry into such documents and
other matters as it deems relevant and material.
14.6 NO IMPLIED REPRESENTATIONS. The Administrative Agent shall not be
liable for any representation, warranty, agreement or obligation of any kind of
any other party to this Agreement or anyone else, whether made or implied by any
Borrower in this Agreement or any Borrower or any Subsidiary in any Loan
Document or by a Lender or the LC Issuer in any notice or other communication or
by anyone else or otherwise.
14.7 SUB-ADMINISTRATIVE AGENTS. The Administrative Agent may employ agents
and shall not be liable (except as to money or property received by it or its
agents) for any negligence or willful misconduct of any such agent selected by
it with reasonable care.
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14.8 ADMINISTRATIVE AGENT'S DILIGENCE. The Administrative Agent shall not
be required: (a) to keep itself informed as to anyone's compliance with any
provision of this Agreement or any Loan Document, (b) to make any inquiry into
the properties, financial condition or operation of the Borrowers and each
Subsidiary thereof or any other matter relating to this Agreement or any Loan
Document, (c) to report to any Lender and the LC Issuer any information (other
than which this Agreement or any Loan Document expressly requires to be so
reported) that the Administrative Agent or any of its Affiliates may have or
acquire in respect of the properties, business or financial condition of the
Borrowers and each Subsidiary thereof or any other matter relating to this
Agreement or any Loan Document or (d) to inquire into the validity,
effectiveness or genuineness of this Agreement or any Loan Document.
14.9 NOTICE OF DEFAULT. The Administrative Agent shall not be deemed to
have knowledge of any Potential Default or Event of Default unless and until it
shall have received a written notice describing such Potential Default or Event
of Default and citing the relevant provision of this Agreement or any Loan
Document. The Administrative Agent shall give each Lender (except the Lender or
the LC Issuer giving such notice) reasonably prompt notice of any such written
notice.
14.10 ADMINISTRATIVE AGENT'S LIABILITY. Neither the Administrative Agent
(acting in its capacity as Administrative Agent) nor any directors, officers,
employees, attorneys, and other agents acting for the Administrative Agent,
acting in such capacities respectively, shall be liable to the Lenders or the LC
Issuer for any action or omission on their respective parts except for gross
negligence, willful misconduct or bad faith. Without limitation of the
generality of the foregoing, the Administrative Agent: (a) may treat the payee
of any Note as the holder thereof until the Administrative Agent receives a
fully executed copy of any assignment with respect thereto, signed by such payee
and in form reasonably satisfactory to the Administrative Agent; (b) may consult
with legal counsel, independent public accountants and other experts selected by
it and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts which have been selected by the Administrative Agent with reasonable
care; (c) makes no warranty or representation to any Lender and shall not be
responsible for any statements, certifications, warranties or representations
made in or in connection with this Agreement or any other Loan Document, the
Administrative Agent being entitled to rely conclusively upon such certificates;
(d) shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement, the
Notes or any other Loan Document or to inspect the property (including the books
and records) of the Borrowers; (e) shall not be responsible for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement, or collateral covered by any agreement or any other Loan
Document and (f) shall incur no liability by acting upon any notice, consent,
certificate or other instrument or writing believed by it in good faith to be
genuine and correct and signed or sent by the proper party or parties.
Neither the Administrative Agent, nor any of directors, officers,
employees or agents thereof shall have any responsibility to the Borrowers or
any Subsidiary thereof on account of the failure of or delay in performance or
breach by any Lender or the LC Issuer of any of its obligations hereunder or to
any Lender on account of the failure of or delay in performance or breach by any
other Lender or the LC Issuer or the Borrowers of any of their respective
obligations hereunder or under any Loan Document or in connection herewith or
therewith. The Lenders and the LC Issuer each hereby acknowledge that the
Administrative Agent shall be under no duty to take any discretionary action
permitted to be taken by it pursuant to the provisions of this Agreement, the
Notes or any other Loan Document unless it shall be requested in writing to do
so by the Required Lenders.
14.11 ADMINISTRATIVE AGENT'S INDEMNITY. The Lenders shall indemnify the
Administrative Agent, in its capacity as Administrative Agent (to the extent the
Administrative Agent is not reimbursed by the Borrowers), from and against: (a)
any loss or liability (other than any caused by the Administrative Agent's gross
negligence, willful misconduct or bad faith) incurred by the Administrative
Agent as such, in respect of this Agreement, the Notes or any Loan Document and
(b) any out-of-pocket expenses incurred in defending itself or otherwise related
to this Agreement, the Notes or any Loan Document
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(other than any caused by the Administrative Agent's gross negligence, willful
misconduct or bad faith) including, without limitation, reasonable fees and
disbursements of legal counsel of its own selection (including, without
limitation, the reasonable interdepartmental charges of its salaried attorneys)
in the defense of any claim against it or in the prosecution of its rights and
remedies as the Administrative Agent (other than the loss, liability or costs
incurred by the Administrative Agent in the defense of any claim against it by
the Lenders or the LC Issuer arising in connection with its actions in its
capacity as Administrative Agent); provided, however, that each Lender shall be
liable for only its Pro Rata Share of the whole loss or liability.
14.12 RESIGNATION OF ADMINISTRATIVE AGENT. The Administrative Agent may
resign as Administrative Agent for any reason effective twenty (20) Business
Days after giving notice thereof to the Lenders and the LC Issuer and the
Borrower Representative. If the Administrative Agent shall resign, the Required
Lenders shall appoint from among the Lenders a successor Administrative Agent
for the Lenders and the LC Issuer which successor Administrative Agent shall be
reasonably acceptable to the Borrowers. If, however, in the case of resignation
by the Administrative Agent, no successor Administrative Agent shall have been
appointed by the time such resignation becomes effective, then the retiring
Administrative Agent may, on behalf of the Lenders and the LC Issuer, appoint a
successor Administrative Agent from among the remaining Lenders. Upon
appointment (whether effected by the Required Lenders or the retiring
Administrative Agent on behalf of the Lenders) and acceptance of such
appointment as "Administrative Agent," the successor Administrative Agent shall
succeed to the rights, powers and duties of the Administrative Agent, and the
term "Administrative Agent" shall mean such successor Administrative Agent,
effective upon its appointment and acceptance, and the former Administrative
Agent's rights, powers and duties as Administrative Agent shall be terminated,
without any other or further act or deed on the part of such former
Administrative Agent or any of the parties to this Agreement or any holder of
the Notes. After any Administrative Agent's resignation, the provisions of
Section 14.11 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent.
SECTION 15 BORROWER GUARANTY.
15.1 BORROWER CROSS-GUARANTY; MAXIMUM LIABILITY. To induce the Lenders to
make the Revolving Credit Advances to the Borrowers and the LC Issuer to issue
Letters of Credit, and in consideration thereof, each of the Borrowers hereby
unconditionally and irrevocably: (a) guarantees, jointly and severally, to the
Administrative Agent, the Lenders and the LC Issuer the due and punctual payment
in immediately available funds of all Obligations owing by any or all of the
other Borrowers hereunder (whether by acceleration or otherwise), under any
Designated Hedge Agreement or with respect to any cash management services
provided by a Lender, (b) guarantees, jointly and severally, to the LC Issuer
the due and punctual payment in immediately available funds of all reimbursement
obligations of each Letter of Credit Obligor and (c) agrees, jointly and
severally, to pay any and all reasonable expenses which may be incurred by the
Administrative Agent in enforcing its rights with respect to such Obligations
(collectively, the "Borrower Guaranteed Obligations"). To the extent that the
Obligations of a Borrower are construed to be a Borrower Guaranty of the
Obligations of any other Borrower to the Lenders and the LC Issuer, and to the
extent it is necessary for the enforceability of such a Borrower Guaranty, the
maximum liability of a Borrower Guarantor under its Borrower Guaranty shall be
the greatest amount which, after taking into account Section 10.03 of the Senior
Note Indenture and after taking into consideration all other valid and
enforceable debts and liabilities of such Borrower Guarantor, an applicable
court has determined (after any appeals) would not render such Borrower
Guarantor insolvent, unable to pay its debts as they become due, inadequately
capitalized for the business which it intends to conduct (in all such cases,
within the meaning of Section 548 of the Bankruptcy Code, 11 U.S.C.Sections 101,
et. seq., or any other similar state Law), or unable to pay a judgment rendered
upon a claim that is the subject of an action or proceeding pending at the time
when the obligations of this Borrower Guaranty are incurred or increased. For
avoidance of doubt, in determining the amount of all valid and enforceable debts
and liabilities of any Borrower Guarantor, such amount shall not take into
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account debts and liabilities owing to the holders of the Senior Notes under the
Senior Note Indenture to the extent permitted by law.
15.2 GUARANTY UNCONDITIONAL. The obligations of the Borrower Guarantors
under the Borrower Guaranty shall be joint and several, irrevocable,
unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by, except
for payment of Obligations and to the extent permitted by applicable Law (i) any
extension, renewal, settlement, compromise, waiver or release in respect of any
Obligation or any Revolving Credit Advance under this Agreement or any Loan
Document by operation of Law or otherwise; (ii) any modification or amendment of
or supplement to this Agreement or any Loan Document; (iii) any modification,
amendment, waiver, release, non-perfection or invalidity of any direct or
indirect security, or of any guarantee or other liability of any third party, of
the Obligations of any Borrower or any Subsidiary thereof with respect to which
the Borrower Guaranty relates; (iv) any change in the corporate existence,
structure, or ownership of, or any insolvency, bankruptcy, reorganization or
other similar proceeding affecting any Borrower Guarantor or its assets or any
resulting release or discharge of any of the Obligations of the Borrower
Guarantors contained in this Agreement or any Loan Document; (v) the existence
of any claim, set-off or other rights which any Borrower Guarantor may have at
any time against any Lender, the LC Issuer or any other Person, whether or not
arising in connection with this Agreement or any Loan Document; provided,
however, that nothing herein shall prevent the assertion of any such claim by
separate suit or compulsory counterclaim; (vi) any invalidity or
unenforceability relating to or against any Borrower or any Subsidiary thereof
for any reason of this Agreement or any Loan Document or any provision of
applicable Law or regulation purporting to prohibit the payment by any Borrower
under this Agreement or any Loan Document; or (vii) to the extent permitted by
applicable Law, any other act or omission to act or delay of any kind by a
Borrower, a Borrower Guarantor, the Administrative Agent, the Lenders, the LC
Issuer or any other Person or any other circumstance whatsoever that might, but
for the provisions of this paragraph, constitute a legal or equitable discharge
of the Borrower Guaranteed Obligations under this Section 15.
15.3 DISCHARGE; REINSTATEMENT. The obligations of each Borrower Guarantor
under this Section 15 shall remain in full force and effect until the Revolving
Credit Commitments of the Lenders and the obligations of the LC Issuer are
terminated, and the Obligations of the Borrowers under this Agreement or any
other Loan Document have been paid in full. If at any time any payment of any
amount payable by Borrower Guarantor under this Section 15, any other section of
this Agreement or other Loan Document is rescinded or must be otherwise restored
or returned upon the insolvency, bankruptcy or reorganization of any Borrower
Guarantor or otherwise, the other Borrower Guarantors' obligations under this
Section 15 with respect to such payment shall be reinstated at such time as
though such payment had become due but had not been made at such time. This
Section 15 shall survive the termination of this Agreement until the payment in
full of all amounts payable under this Agreement and any other Loan Documents.
15.4 WAIVER. No Borrower Guarantor shall be entitled to enforce any remedy
which the Administrative Agent, any Lender or the LC Issuer now has or may
hereafter have against any Borrower, any endorser or any Guarantor or other
Borrower Guarantor in respect of all or any part of the Borrower Guaranteed
Obligations paid by such Borrower Guarantor until all of the Obligations and
Letter of Credit Obligations shall have been fully and finally paid to the
Administrative Agent for the benefit of the Administrative Agent, any Lender or
the LC Issuer and all commitments of the Lenders and the LC Issuer to the
Borrowers have terminated. Each Borrower Guarantor hereby waives any benefit of,
and any right to participate in, any security or collateral given to the
Administrative Agent for the benefit of the Administrative Agent, the Lenders
and the LC Issuer to secure payment of the Borrower Guaranteed Obligations or
any other liability of any Borrower, any Guarantor or any Borrower Guarantor to
the Administrative Agent, any Lender or the LC Issuer. Each Borrower Guarantor
also waives all setoffs and counterclaims and all presentments, demands for
performance, notices of nonperformance, protests, notices of protest, notices of
dishonor, and notices of acceptance of this Borrower Guaranty. Each Borrower
Guarantor further waives all notices of the existence, creation or incurring of
additional
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Obligations by any other Borrower, and also waives all notices that the
principal amount, or any portion thereof, and/or any interest on any instrument
or document evidencing all or any part of the Borrower Guaranteed Obligations is
due, notices of any and all proceedings to collect all or any part of the
Borrower Guaranteed Obligations, and, to the extent permitted by Law, notices of
exchange, sale, surrender or other handling of any Collateral given to the
Administrative Agent for the benefit of the Administrative Agent, the Lenders
and the LC Issuer to secure payment of the Borrower Guaranteed Obligations.
15.5 STAY OF ACCELERATION. If acceleration of the time for payment of any
amount payable by any Borrower or Borrower Guarantor under this Agreement or any
other Loan Document in respect of a Borrower Guaranteed Obligation is stayed
upon the insolvency, bankruptcy or reorganization of any Borrower or Borrower
Guarantor all such amounts otherwise subject to acceleration under the terms of
this Agreement shall nonetheless be payable by the other Borrower Guarantors
hereunder forthwith on demand by the Administrative Agent or the Required
Lender, to the extent permitted by applicable law.
15.6 SUBROGATION AND CONTRIBUTION RIGHTS. If any Borrower Guarantor makes
a payment in respect of the Borrower Guaranteed Obligations, it shall be
subrogated to the rights, if any, of the payees against the other Borrower
Guarantors with respect to such payment and shall have the rights of
contribution set forth below against the other Borrower Guarantors; provided,
however, that such Borrower Guarantor shall not enforce its rights to any
payment by way of subrogation or by exercising its right of contribution until
all the Obligations and Letter of Credit Obligations, as the case may be, owing
to the Administrative Agent, the Lenders and the LC Issuer shall have been
finally paid in full and may not under applicable insolvency laws be required to
be repaid by the Administrative Agent, any Lender or the LC Issuer, as the case
may be, and the Revolving Credit Commitments of the Lenders and all obligations
of the LC Issuer to issue Letters of Credit hereunder have been terminated.
15.7 GUARANTEED OBLIGATION AND CONTRIBUTION PAYMENTS. Subject to all of
the Obligations and Letter of Credit Obligations, as the case may be, owing to
the Administrative Agent, the Lenders and the LC Issuer having been finally paid
in full and not subject to required repayment under applicable insolvency laws
and the Revolving Credit Commitments of the Lenders hereunder and all
obligations of the LC Issuer to issue Letters of Credit hereunder having
terminated, each Borrower Guarantor shall make, and agrees with each of the
other Borrower Guarantors (and the successors and assigns of such Borrower
Guarantors) to make, payments in respect of the Obligations of such Borrower
Guarantor to which such other Borrower Guarantors are subrogated or contribution
payments to which such other Borrower Guarantors are entitled, such that, taking
into account all such payments on account of subrogation or contribution rights:
(a) PRO RATA SHARING. Each Borrower Guarantor shall have paid to the
other Borrower Guarantors on account of such subrogation and contribution
rights, (A) all Obligations the benefit of which has been received by such
Borrower Guarantor or which relate to Obligations the benefit of which has been
received by such Borrower Guarantor or (B) if the aggregate of all such payments
by all Borrower Guarantors to all other Borrower Guarantors would exceed the
outstanding Obligations, such Borrower Guarantor's pro rata share of the
outstanding Obligations (other than Designated Hedge Obligations), in accordance
with the amount of the benefit received by the Borrower Guarantor as described
under subsection (A) hereinabove; and
(b) DEFICIENCY. If there remain Obligations unpaid after application
of the payments referred to above, the deficiency shall be shared among the
Borrower Guarantors pro rata in proportion to their respective net worth on the
Closing Date of this Agreement.
SECTION 16 TRANSFERS AND ASSIGNMENTS.
16.1 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 permitted hereby,
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except that no Borrower may assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender. No
Lender may assign or otherwise transfer any of its rights or obligations
hereunder except: (i) to an Eligible Assignee in accordance with the provisions
of Section 16.2, (ii) by way of participation in accordance with the provisions
of Section 16.4 or (iii) by way of pledge or assignment of a security interest
subject to the restrictions of Section 16.6 (and any other attempted assignment
or transfer by any party hereto shall be null and void). Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby, Participants to the extent provided in Section 16.4 and, to
the extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.
16.2 TRANSFER OF REVOLVING CREDIT COMMITMENTS. Any Lender may at any time
assign to one or more Eligible Assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Revolving
Credit Commitment and the Revolving Credit Loans at the time owing to such
Lender); provided that (i) except in the case of an assignment of the entire
remaining amount of the assigning Lender's Revolving Credit Commitment and the
Revolving Credit Loans at the time owing to such Lender or in the case of an
assignment to a Lender or an Affiliate of a Lender or an Approved Fund with
respect to a Lender, the aggregate amount of the Revolving Credit Commitment
(which for this purpose includes Revolving Credit Loans outstanding thereunder)
or, if the applicable Revolving Credit Commitment is not then in effect, the
principal outstanding balance of the Revolving Credit Loans of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Assumption with respect to such assignment is delivered to the
Administrative Agent or, if "Trade Date" is specified in the Assignment and
Assumption, as of the Trade Date) shall not be less than Five Million Dollars
($5,000,000), and, so long as no Event of Default has occurred and is
continuing, the Borrower Representative otherwise consents (each such consent
not to be unreasonably withheld or delayed); (ii) each partial assignment shall
be made as an assignment of a proportionate part of all the assigning Lender's
rights and obligations under this Agreement with respect to the Revolving Credit
Loan or the Revolving Credit Commitment or any other future facilities hereunder
assigned except that this clause (ii) shall not prohibit any Lender from
assigning all or a portion of its rights and obligations among the Revolving
Credit Loans on a non-pro rata basis; (iii) any assignment of a Revolving Credit
Commitment must be approved by the Administrative Agent, the LC Issuer and, so
long as no Event of Default has occurred and is continuing, the Borrower
Representative (each such approval not to be unreasonably withheld or delayed)
unless the Person that is the proposed assignee is itself a Lender with a
Revolving Credit Commitment (whether or not the proposed assignee would
otherwise qualify as an Eligible Assignee); and (iv) the parties to each
assignment shall execute and deliver to the Administrative Agent an Assignment
and Assumption, together with a processing and recordation fee of Three Thousand
Five Hundred Dollars ($3,500), and the Eligible Assignee, if it shall not be a
Lender, shall deliver to the Administrative Agent an administrative
questionnaire in form and substance satisfactory to the Administrative Agent.
Subject to acceptance and recording thereof by the Administrative Agent pursuant
to 16.3 of this Section, from and after the effective date specified in each
Assignment and Assumption, the Eligible Assignee thereunder shall be a party to
this Agreement and, to the extent of the interest assigned by such Assignment
and Assumption, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Section 18 with respect to facts and
circumstances occurring prior to the effective date of such assignment. Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with Section 16.4.
16.3 MAINTENANCE OF REGISTER. The Administrative Agent, acting solely for
this purpose as an agent of each Borrower, shall maintain at its office in
Cleveland, Ohio, a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Lenders,
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and the Revolving Credit Commitments of, and principal amounts of the Revolving
Credit Loans owing to, each Lender pursuant to the terms hereof from time to
time (the "Register"). The entries in the Register shall be conclusive, and the
Borrowers, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the Borrowers and
any Lender, at any reasonable time and from time to time upon reasonable prior
notice.
16.4 SALE OF PARTICIPATIONS. Each Lender shall have the right at any time
or times to sell one or more participations to a financial institution in all
or, if less than all, any constant fixed percentage of such Lender's Revolving
Credit Commitments, any Advance made by such Lender, any Note executed in favor
of such Lender, any participation by such Lender in a Letter of Credit and any
participations, if any, purchased by such Lender pursuant to Section 16.4 of
this Agreement or this Section 16; provided, however, in each such case, such
Lender shall, as between itself and the purchaser, shall retain all of its
rights (including, without limitation, rights to enforce against the Borrowers
this Agreement and the other Loan Documents) and duties pursuant to this
Agreement and the other Loan Documents, including, without limitation, that
Lender's right to approve any waiver, consent or amendment pursuant to Section
19.1 of this Agreement; except any waiver, consent or amendment which would (A)
reduce any fee or commission allocated to the participation or subparticipation,
as the case may be, (B) reduce the amount of any principal payment on any
Advance allocated to the participation or subparticipation, as the case may be,
or reduce the principal amount of any Advance so allocated or the rate of
interest payable thereon, (C) extend the time for payment of any amount
allocated to the participation or subparticipation, as the case may be, or (D)
result in the release of a substantial portion of the Collateral.. Such
purchaser shall not be a Lender for any purposes of this Agreement and the other
Loan Documents. The provisions of Section 18 of this Agreement shall inure to
the benefit of each purchaser of a participation (provided that (i) each such
participant shall look solely to the seller of its participation for those
benefits, (ii) no seller (whether or not a Lender) shall have a claim against
the Borrowers of any kind whatsoever resulting from such benefits, and (iii) the
Borrowers' liabilities, if any, under any of those Sections shall not be
increased as a result of the sale of any such participation) and Administrative
Agent shall continue to distribute payments pursuant to this Agreement as if no
participation has been sold. No participation or subparticipation shall operate
as a delegation of any duty of the seller of such participation or
subparticipation. Under no circumstance shall any participation be deemed a
novation in respect of all or any part of the selling Lender's obligations
pursuant to this Agreement. Each purchaser of a participation shall be required
to represent and warrant that its purchase shall not constitute a "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code).
16.5 PLEDGE OF INTERESTS. Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including without limitation any pledge or
assignment to secure obligations to a Federal Reserve Bank; provided that no
such pledge or assignment shall release such Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.
16.6 REPLACEMENT OF LENDERS. If any Lender is a "Defaulting Lender"
hereunder, then, the Borrowers may, at their sole expense and effort, upon
notice to such Lender and the Administrative Agent, require such Lender to
assign and delegate, without recourse (in accordance with the restrictions
contained in Section 16.2), all of its interests, rights and obligations under
this Agreement to an Eligible Assignee that shall assume such obligations;
provided that: (i) the Borrower Representative shall have received the prior
written consent of the Administrative Agent, which consent shall not be
unreasonably withheld and (ii) such Lender shall have received payment of an
amount equal to the outstanding principal of its Advances, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrowers (in the case of all other amounts). None of the Lenders
shall be required to make any such assignment and delegation if, prior thereto,
as a result of a waiver by such Lender or otherwise, the circumstances entitling
the Borrowers to require such assignment and delegation cease to apply.
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00.0 XXX XXXXXXX XXX. Each assignee and participant that is not
incorporated (or formed, as applicable) under the Laws of the United States or a
state thereof (and is not excepted from the certification requirement contained
in Section 313 of the USA Patriot Act and the applicable regulations because it
is both (i) an affiliate of a depository institution or foreign bank that
maintains a physical presence in the United States or foreign country, and (ii)
subject to supervision by a banking authority regulating such affiliated
depository institution or foreign bank) shall deliver to the Administrative
Agent the certification, or, if applicable, recertification, certifying that
such assignee or participant is not a "shell" and certifying to other matters as
required by Section 313 of the USA Patriot Act and the applicable regulations at
such times as are required under the USA Patriot Act.
16.8 REPLACEMENT OF NON-CONSENTING LENDERS. If, in connection with any
proposed amendment, waiver or consent hereunder pursuant to Section 19.1 hereof:
(i) requiring the consent of all Lenders, the consent of Required Lenders is
obtained but the consent of all Lenders whose consent is required is not
obtained or (ii) requiring the consent of Required Lenders, the consent Lenders
holding fifty-one percent (51%) or more is obtained but the consent of Required
Lenders is not obtained (any Lender withholding consent as described in clause
(i) and (ii) hereof being referred to as a "Non-Consenting Lender"), then, so
long as the Administrative Agent is not the Non-Consenting Lender, the
Administrative Agent may, at the sole reasonable expense of the Borrowers, upon
notice to such Non-Consenting Lender and the Borrower Representative, require
such Non-Consenting Lender to assign and delegate, without recourse (in
accordance with the restrictions contained in Section 16.2), all of its
interests, rights and obligations under this Agreement to an Eligible Assignee
that shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that such Lender shall have received
payment of an amount equal to the outstanding principal of its Advances, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrowers (in the case of all other amounts).
SECTION 17 CONFIDENTIALITY.
(a) The Administrative Agent, each Lender and the LC Issuer hereby
agree to use all commercially reasonable efforts to hold all non-public
information obtained pursuant to the requirements of this Agreement in
accordance with customary procedures for handling confidential information of
this nature and in accordance with safe and sound banking practices; except that
any such confidential information may be disclosed: (i) to the extent permitted
by applicable Law, with at least concurrent written notice to the Borrower
Representative, if required by subpoena or similar order of any court of
competent jurisdiction, (ii) if required to be disclosed to any regulatory or
administrative governmental agency or commission having any regulatory authority
over the Administrative Agent, such Lender or the LC Issuer or its securities,
(iii) to any other party to this Agreement, (iv) to any Affiliate of any Lender
so long as such Affiliate agrees in writing to be bound by the provisions of
this Section 17 prior to the time of such disclosure, (v) to any prospective
transferee, participant so long as such Person agrees in writing to be bound by
the provisions of this Section 17 prior to the time of such disclosure, (vi) to
any Person if such information shall have been already publicly disclosed other
than as a result of a breach of this Section 17, (vii) in connection with the
preparation, negotiation or administration of this Agreement or the exercise of
any right or remedy under this Agreement, to the counsel, auditors, professional
advisors and consultants, and accountants to the Administrative Agent and (viii)
to the extent permitted by applicable Law, with at least concurrent written
notice to the Borrower Representative, if required in connection with any legal
proceedings instituted by or against the Administrative Agent, such Lender or
the LC Issuer with respect to such respective capacities.
(b) Notwithstanding anything to the contrary set forth herein or in
any other agreement to which the parties hereto are parties or by which they are
bound, the obligations of confidentiality contained herein and therein shall not
apply to the tax structure or tax treatment of the transactions: contemplated by
the Loan Documents, and each party hereto (and any employee representative, or
agent of any party hereto) may disclose to any and all persons, without
limitation of any
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kind, the tax structure and tax treatment of such transactions and all materials
of any kind (including opinions or other tax analyses) that are provided to such
party relating to such tax treatment and tax structure; provided, however, that
such disclosure shall not include the name (or other identifying, information
not relevant to the tax structure or tax treatment) of any Person and shall not
include information for which nondisclosure is reasonably necessary in order to
comply with applicable securities laws.
SECTION 18 INDEMNITIES.
18.1 INCREASED COSTS. If, after the Closing Date of this Agreement, (a)
the introduction of any Law, rule or regulation or any change therein, (b) any
change in the interpretation or administration of any Law, rule or regulation by
any central bank or other governmental authority or (b) the compliance by any
Lender or the LC Issuer with any guideline, request or directive from any
central bank or other governmental authority (whether or not having the force of
Law) shall increase the cost to any Lender or the LC Issuer (other than any
increase in the cost of the overhead of a Lender or the LC Issuer) of agreeing
to make or making, funding or maintaining Advances to the Borrowers or the cost
to the LC Issuer or any Lender of issuing, maintaining or participating in any
Letter of Credit, then the Borrowers shall from time to time, upon demand by
such Lender (with a copy of such demand to the Administrative Agent), pay to the
Administrative Agent for the account of such Lender or the LC Issuer additional
amounts sufficient to indemnify such Lender and the LC Issuer for such increased
cost.
18.2 RISK-BASED CAPITAL. If any Lender or the LC Issuer shall have
determined that after the Closing Date, the adoption of any applicable law, rule
or regulation regarding capital adequacy, or any change therein, or any change
in the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged by law with the interpretation or
administration thereof, or compliance by such Lender or the LC Issuer or the
parent corporation of any thereof with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank, or comparable agency, in each case made subsequent to the Closing
Date, has or would have the effect of reducing by an amount reasonably deemed by
such Lender or the LC Issuer to be material to the rate of return on the capital
or assets of such Lender or the LC Issuer or the parent corporation of any
thereof as a consequence of the commitments or obligations of such Lender or the
LC Issuer hereunder to a level below that which such Lender or the LC Issuer or
the parent corporation of any thereof could have achieved but for such adoption,
effectiveness, change or compliance, then from time to time, within 15 Business
Days after demand by such Lender or the LC Issuer (with a copy to the
Administrative Agent), the Borrowers shall pay to such Lender such additional
amount or amounts as will compensate such Lender or the LC Issuer or the parent
corporation of any thereof for such reduction.
18.3 TAXES.
(a) TAXES; WITHHOLDING; INDEMNIFICATION OF TAXES PAID. Any and all
payments by the Borrowers hereunder, under the Notes or the other Loan Documents
shall be made, free and clear of and without deduction for any and all present
or future taxes, levies, imposts, deductions, charges or withholdings imposed by
any governmental entity, and all liabilities with respect thereto, excluding,
(i) in the case of a Lender and the LC Issuer, taxes imposed on or measured by
its net income or overall gross receipts, and franchise taxes imposed on it, by
the jurisdiction under the Laws of which such Lender or the LC Issuer, as
applicable, is organized, is doing business or has a present or former
connection, or any political subdivision thereof, (ii) any United States
withholding taxes payable with respect to payments hereunder or under the Loan
Documents under Laws (including any statute, treaty or regulation) in effect on
the Closing Date (or, in the case of (a) a transferee of any rights of Lender,
the date of the transfer, (b) a successor Lender, the date of the appointment of
such Lender and (c) a successor LC Issuer, the date such LC Issuer becomes an LC
Issuer) applicable to such Lender or LC Issuer, as the case may be, but not
excluding any United States withholding tax payable with respect to interest
arising under a Loan Document as a result of any change in such Laws occurring
after the Closing Date (or the date of such transfer or the date of such
appointment of such successor Lender or the date such successor LC Issuer
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becomes a LC Issuer), (iii) any non-United States withholding taxes imposed by
the jurisdictions under the Laws of which such Lender or the LC Issuer, as
applicable, is organized, conducts business or has a present or former
connection, or any political subdivision thereof, in effect on the Closing Date
(or, in the case of (a) a transferee of any rights of a Lender, the date of the
transfer, (b) a successor Lender, the date of the appointment of such Lender and
(c) a successor LC Issuer, the date such LC Issuer becomes a LC Issuer)
applicable to such Lender or such LC Issuer, as the case may be, but not
excluding any United States withholding tax payable with respect to interest
arising under a Loan Document as a result of any change in such Laws occurring
after the Closing Date (or the date of such transfer or the date of such
appointment of such successor Lender or the date such successor LC Issuer
becomes a LC Issuer) and (iv) all liabilities, penalties. and interest with
respect to any of the forgoing (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If any Borrower shall be required by Law to deduct any Taxes from
or in respect of any sum payable hereunder or under any Note to the Lenders or
the LC Issuer: (i) the sum payable shall be increased as may be necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section) each Lender or the LC Issuer, as
applicable, receives an amount equal to the sum it would have received had no
such deductions been made, (ii) such Borrower shall make such deductions and
(iii) such Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable Law. The Borrowers
shall indemnify each Lender and the LC Issuer for the full amount of such Taxes
(including any Taxes on amounts payable under this Section paid by such Lender
and the LC Issuer and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto paid by such Lender or the LC Issuer
on the account of any obligation of the Borrowers hereunder or under any Loan
Document, and any penalties, interest and reasonable out-of-pocket expense
arising therefrom or with respect thereto, provided such written demand sets
forth in reasonable detail the basis and calculation of such amount.
(b) STAMP TAXES. The Borrowers agrees to pay, and will indemnify the
Administrative Agent, each Lender and the LC Issuer for, any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or under the Notes or
from the execution, delivery or registration of, or otherwise with respect to,
this Agreement or the Notes (hereinafter referred to as "Other Taxes").
(c) IRS CERTIFICATES OF LENDERS.
(i) Each Lender and each LC Issuer that is not a United States
person as defined in Section 7701(a)(30) of the Code (each, a
"Foreign Lender") as to which payments to be made under this
Agreement are fully exempt from United States withholding tax
under an applicable statute or tax treaty shall provide prior
to or on the Closing Date to the Borrower Representative a
properly completed and executed IRS Form W-8ECI or Form W-8BEN
or other applicable form, certificate or document prescribed
by the IRS certifying as to such Foreign Lender's entitlement
to such exemption (a "Certificate of Exemption"). Any Person
that is not a United States person as defined in Section
7701(a)(30) of the Code that seeks to become a Lender or a LC
Issuer, as applicable, under this Agreement shall provide a
Certificate of Exemption to the Borrower Representative prior
to becoming, a Lender or a LC Issuer, as applicable,
hereunder. No Person that is not a United States person as
defined in Section 7701(a)(30) of the Code may become a Lender
or a LC Issuer, as applicable, hereunder if such Person fails
to deliver a Certificate of Exemption as prescribed in this
Section in advance of becoming a Lender or a LC Issuer, as
applicable.
(ii) Each Lender and each LC Issuer that is a United States
person as defined in Section 7701(a)(30) of the Code (each, a
"U.S. Lender") shall provide prior to or on the Closing Date
(or on or prior to the date it becomes a party to this
Agreement) to the Borrower Representative appropriately
completed and
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executed IRS Form W-9 (certifying that such U.S. Lender is
entitled to an exemption from United States backup withholding
tax) or any successor form. Solely for purposes of this
Section, a U.S. Lender shall not include a Lender or a LC
Issuer that may be treated as an exempt recipient based on the
indicators described in Treasury Regulation Section
1.6049-4(c)(1)(ii).
(iii) Each Lender and each LC Issuer, from time to time after
submitting, the forms, certificates or documents referred to,
in this Section, shall submit to the Borrower Representative
such additional duly completed and signed copies of one or
more other such forms, certificates or documents (or such
successor forms, certificates or other documents as shall be
adopted from time to time by the IRS or relevant taxing
authorities) (A) on or before the date that any such form,
certificate or document expires or becomes obsolete, (B) after
the occurrence of any event requiring a change in the most
recent form, certificate or document previously delivered by
it to the Borrower Representative, (C) from time to time
thereafter if reasonably requested by the Borrower
Representative, and (D) as may be appropriate under then
current United States law or regulations to avoid United
States withholding taxes on payments in respect of any amounts
to be received by such Lender or such LC Issuer as applicable,
pursuant to this Agreement.
(iv) If any Lender or the LC Issuer determines that it is
unable to submit to the Borrower Representative any form,
certificate or document that such Lender or the LC Issuer, as
the case may be, is requested to submit pursuant to this
Section, or that it is required to withdraw or cancel any such
form, certificate or document, or that any such form,
certificate or document previously submitted has otherwise
become ineffective or inaccurate such Lender or the LC Issuer,
as the case may be, shall promptly notify the Borrower
Representative, as appropriate, of such fact.
(v) The Borrowers shall not be required pursuant to this
Section to pay any additional amount to, or to indemnify the
Administrative Agent, any Lender or any LC Issuer, as the case
may be, to the extent that (A) the Administrative Agent, such
Lender or such LC Issuer becomes subject to Taxes subsequent
to the Closing Date (or, if applicable, subsequent to the date
such Person becomes a party to this Agreement) as a result of
any change in the circumstances of the Administrative Agent,
such Lender or the LC Issuer, as the case may be (other than a
change in applicable Law), including without limitation a
change in the residence, place of incorporation, principal
place of business the Administrative Agent, such Lender or the
LC Issuer or a change in the branch or lending office of the
Administrative Agent, such Lender or such Issuer, as the case
may be; or (B) such Taxes would not have been incurred but for
the failure of the Administrative Agent, such Lender or such
LC Issuer, as the case may be, to provide to the Borrower
Representative any form, certificate or document that it was
required so to do pursuant to this Section other than any
form, certificate or document required as a result of a change
in Law.
(d) REFUNDS OF TAXES. If the Administrative Agent, any Lender or the
LC Issuer determines that it has received a refund in respect of any Taxes or
Other Taxes as to which indemnification has been paid by the Borrowers pursuant
to this Section or with respect to any Taxes that have been deducted and paid to
a taxing authority pursuant to this Section by the Borrowers, it shall promptly
remit such refund (including any interest) to the Borrowers, net of all
out-of-pocket expenses of the Administrative Agent, such Lender or the LC
Issuer, as the case may be; provided, however, that the Borrowers, upon the
request of the Administrative Agent, such Lender or the LC Issuer, as the case
may
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be, agrees promptly to return such refund (plus any interest) to such party in
the event such party is required to repay such refund to the relevant taxing
authority. In addition, the Administrative Agent, such Lender or the LC Issuer
shall provide the Borrower Representative with a copy of any notice of
assessment from the relevant taxing authority (deleting any confidential
information contained therein).
(e) AVOIDING NEGATIVE TAX CONSEQUENCES. The Administrative Agent,
each Lender and the LC Issuer agree that, upon the occurrence of any event
giving rise to the operation of Section 18.3(a) or Section 18.3(b) with respect
to the Administrative Agent, such Lender or the LC Issuer, as the case may be,
it will, if requested by the Borrower Representative, use reasonable commercial
efforts (subject to the Administrative Agent, such Lender's or the LC Issuer's
overall, internal policies of general application) to designate another lending
office for any Advance, Note or Letter of Credit affected by such event with the
object of avoiding the consequences of such event, provided that such
designation is made on terms that do not, in the reasonable judgment of the
Administrative Agent, such Lender or the LC Issuer, as the case may be, cause
the Administrative Agent, such Lender and its lending office(s) or cause the LC
Issuer and its lending office(s), as the case may be, to suffer no economic,
legal or regulatory disadvantage, and provided, further, that nothing in this
Section 18.3(e) shall affect or postpone any of the obligations of the Borrowers
or the rights of the Administrative Agent, a Lender or the LC Issuer pursuant to
Section 18.3(a) and Section 18.3(b).
(f) APPLICATION OF THESE TAX PROVISIONS. Notwithstanding any
provision contained herein to the contrary, any indemnity with respect to taxes,
levies, imposts, deductions, charges or withholdings imposed by any governmental
authority, or any liabilities with respect thereto, shall be governed solely and
exclusively by this Section.
18.4 LOSSES. If any payment of principal of, or Rate Conversion or Rate
Continuation of, any LIBOR Rate Advance is not paid when due or is made on a day
other than on the last day of an Interest Period relating to such Loan, as a
result of a payment or Rate Conversion or Rate Continuation or acceleration of
the maturity of the Notes for any other reason, the Borrowers shall, upon demand
by the Administrative Agent, pay to the Administrative Agent the greater of (i)
Two Hundred Dollars ($200) or (ii) any amounts required to compensate the
Administrative Agent and the Lenders for any additional losses, costs or
expenses which it may reasonably incur as a result of such payment or Rate
Conversion or Rate Continuation, including, without limitation, any loss, cost
or expense (other than any expenses directly attributable to loan origination
efforts) incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Administrative Agent and Lenders to fund or
maintain such Loan.
18.5 INDEMNIFICATION FOR REQUESTS. Whenever the Borrower Representative:
(a) shall revoke any Credit Request or Rate Conversion/Continuation Request
involving any LIBOR Rate Advance, (b) shall for any other reason fail to borrow
pursuant to any such Credit Request or Rate Conversion/Continuation Request or
otherwise comply therewith, (c) shall fail to fulfill, on or before the date
specified in any such request, the applicable conditions set forth in Section 7
of this Agreement or (d) shall fail to honor any prepayment notice with respect
to LIBOR Rate Advances, then, in each case on any Lender's demand, the Borrowers
shall indemnify each Lender and the Administrative Agent against any loss, cost
or expense reasonably incurred by such Lender as a result of any such failure by
the Borrowers, including, without limitation, any such loss, cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by such Lender or the Administrative Agent to fund the LIBOR Rate
Advance to be made by such Lender or the Administrative Agent in connection with
such request when such LIBOR Rate Advance, as a direct result of such failure by
the Borrowers, is not made on such date.
18.6 GENERAL INDEMNITY. The Borrowers shall jointly and severally
indemnify and hold harmless the Administrative Agent, each Lender and the LC
Issuer, and the respective directors, officers, employees and Affiliates
thereof, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind or nature whatsoever
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including, without limitation, reasonable fees and disbursements of counsel and
settlements costs, which may be imposed on, incurred by, or asserted against the
Administrative Agent, any Lender or the LC Issuer, or the respective directors,
officers, employees and Affiliates thereof in connection with any investigative,
administrative or judicial proceeding by a third party (whether the
Administrative Agent, such Lender or the LC Issuer is or is not designated as a
party thereto) directly relating to or arising out of: (x) this Agreement or any
other Loan Document, (y) the transactions contemplated thereby or any actual or
proposed use of proceeds hereunder, or (z) any Environmental Claims against any
Borrower or any Subsidiary thereof or any Environmental Claims against the
Administrative Agent or any Lender pursuant to the transactions contemplated
hereby or the exercise of any remedies hereunder; except that neither the
Administrative Agent, any Lender nor the LC Issuer, nor any such directors,
officers, employees and Affiliates thereof shall have the right to be
indemnified hereunder for its own gross negligence, willful misconduct or bad
faith as determined by a court of competent jurisdiction.
18.7 CERTIFICATE FOR INDEMNIFICATION. Each demand by the Administrative
Agent, a Lender or the LC Issuer for payment pursuant to this Section 18 shall
be accompanied by a certificate setting forth the reason for the payment, the
amount to be paid, and the computations and assumptions in determining the
amount, which certificate shall, absent manifest error, be presumed to be
correct. In determining the amount of any such payment thereunder, the
Administrative Agent, each Lender and the LC Issuer may use reasonable averaging
and attribution methods, so long as such methods are set forth in the
certificate referred to in the preceding sentence. The failure to give any such
notice shall not release or diminish any of the Borrowers' obligations to pay
additional amounts pursuant to this Section 18 upon the subsequent receipt of
such notice.
SECTION 19 GENERAL.
19.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or the Notes or any other Loan Document, nor consent to any
departure by the Borrowers therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Required Lenders, the Administrative
Agent and the Borrowers, and to the extent Consent of the LC Issuer shall be
required with respect to any amendment, waiver, or consent, with respect to
Section 2.2 or any other provision the amendment or waiver of which would
adversely affect the LC Issuer; provided, however, that unanimous consent of all
of the Lenders shall be required with respect to (a) the extension of maturity
of any Note, or the extension of the payment date for interest, principal and/or
fees thereunder, or (b) any reduction in fees hereunder or the rate of interest
on any Note, or in any amount of principal or interest due on any Note, or in
the manner of pro rata application of any payments made by the Borrowers to the
Lenders hereunder, or (c) any change in any percentage voting requirements in
this Agreement, or (d) any increase in the principal amount of or percentage of
any Lender's Commitments, or (e) any change in the definitions "Collateral" or
"Required Lenders", or (f) any increase in the permitted amount of Permitted
Special Advances, or (g) except as otherwise permitted herein, the release in
one or more actions of Collateral with an aggregate value exceeding One Hundred
Thousand Dollars ($100,000) or (h) the release of any Guarantor, or (i) any
change in Section 14, 16.2, 16.4, or Section 18 hereof or this Section 19.1
itself, or (j) subject to the Administrative Agent's exercise of its reasonable
credit judgment with respect to reserves, any change in the advance rates set
forth in the definition of "Borrowing Base" or in any other component thereof or
definition applicable thereto or any reduction in the amount of any reserve
established on the Closing Date. The Lender, the LC Issuer and any other current
of future holder of a Note hereunder shall be bound by any amendment, waiver or
consent obtained as authorized by this Section, regardless of its failure to
agree thereto. Any amendment, waiver, discharge, termination or consent pursuant
to this Section shall be effective only in the specific instance and for the
specific purpose for which it was given.
19.2 EFFECTIVE AGREEMENT; BINDING EFFECT. This Agreement shall become
effective on the date and as of the time on and as of which: (x) the Borrowers,
the Administrative Agent, each Lender and the LC Issuer shall have signed a copy
hereof (whether the same or different copies) and shall have delivered the same
to the Administrative Agent at the address specified in Section 19.9. As of such
time,
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this Agreement shall be binding upon and inure to the benefit of the Borrowers,
the Administrative Agent, each Lender and the LC Issuer, and their respective
successors and assigns, except that not Borrower shall have any right to assign
its rights hereunder or any interest herein without the prior unanimous written
consent of the Administrative Agent, the Lenders and the LC Issuer.
19.3 COSTS AND EXPENSES. Except as otherwise specifically provided in
Section 9.4 of this Agreement, each Borrower agrees to pay on demand (a) all
reasonable costs and expenses of the Administrative Agent (including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Administrative Agent) in connection with the preparation, execution, delivery,
administration, modification, amendment, forbearance and waiver of this
Agreement or the other Loan Documents, and (b) the Administrative Agent, the
Lenders and the LC Issuer in connection with the enforcement of, the exercise of
remedies under, or the preservation of rights and remedies under this Agreement
or any of the other Loan Documents (including any collection, bankruptcy or
other enforcement proceedings arising with respect to the Borrowers, this
Agreement, or any Event of Default under this Agreement); provided, however,
that Lenders who are not acting in the capacity as the Administrative Agent or
the LC Issuer shall be entitled to reimbursement for no more than one counsel
representing all such Lenders (absent a conflict of interest in which case the
Lenders may engage and be reimbursed for additional counsel).
19.4 SURVIVAL OF PROVISIONS. All representations and warranties made in or
pursuant to this Agreement shall survive the execution and delivery of this
Agreement and of the Notes. The provisions of Section 17 and Section 18 of this
Agreement shall survive the payment of the Obligations and any other
Indebtedness owed by the Borrowers hereunder and the termination of this
Agreement (whether by acceleration or otherwise).
19.5 SHARING OF INFORMATION. Subject to the provisions of Section 17, the
Administrative Agent, each Lender and the LC Issuer shall have the right to
furnish to its Affiliates, its accountants, its employees, its officers, its
directors, its legal counsel, potential participants, and to any governmental
agency having jurisdiction over the Administrative Agent, such Lender and the LC
Issuer information concerning the business, financial condition, and property of
the Borrowers, the amount of the Advances of the Borrowers hereunder, and the
terms, conditions and other provisions applicable to the respective parts
thereof.
19.6 INTEREST RATE LIMITATION. Notwithstanding anything herein to the
contrary, if at any time the applicable interest rate, together with all fees
and charges that are treated as interest under applicable law as provided for
herein or in any other document executed in connection herewith, or otherwise
contracted for, charged, taken, received or reserved by any Lender or the LC
Issuer shall exceed the maximum lawful rate that may be contracted for, charged,
taken, received or reserved by such Lender in accordance with applicable law
(the "Maximum Lawful Rate"), then so long as the Maximum Lawful Rate would be so
exceeded, the rate of interest and all such charges payable, contracted for,
charged, taken, received or reserved in respect of the Advances of the Lenders
or the LC Issuer to the Borrowers shall be equal to the Maximum Lawful Rate.
19.7 LIMITATION OF LIABILITY. To the extent permitted by applicable law,
no claim may be made by any parties hereto against the Administrative Agent, any
Lender or the LC Issuer or the Affiliates, directors, officers, employees,
agents, attorneys and consultants of any of them, for any special, indirect,
consequential or punitive damages in respect of any claim for breach of contract
or any other theory of liability arising out of or related to the transactions
contemplated by this Agreement, or any act, omission or event occurring in
connection therewith. Each of the parties hereto hereby waives, releases and
agrees not to xxx upon any claim for any such damages, whether or not accrued
and whether or not known or suspected to exist in its favor.
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19.8 ILLEGALITY. If any provision in this Agreement or any other Loan
Document shall for any reason be or become illegal, void or unenforceable, that
illegality, voidness or unenforceability shall not affect any other provision.
19.9 NOTICES. All notices, requests, demands and other communications
provided for hereunder shall be in writing and shall be given solely: (a) by
hand delivery or by overnight courier delivery service, with all charges paid,
(b) by facsimile transmission, if confirmed same day in writing by first class
mail, (c) by registered or certified mail, postage prepaid and addressed to the
parties, or (d) electronic mail. For the purposes of this Agreement, such
notices shall be deemed to be given and received: (i) if by hand or by overnight
courier service, upon actual receipt, (ii) if by facsimile transmission, upon
receipt of machine-generated confirmation of such transmission (and provided the
above-stated written confirmation is sent), (iii) if by registered or certified
mail, upon the first to occur of actual receipt or the expiration of 72 hours
after deposit with the U.S. Postal Service, or (iv) if by electronic mail, when
transmitted to an electronic email address (or by another means of electronic
delivery; provided, however, that notices from the Borrower -------- -------
Representative to the Administrative Agent, any Lender or the LC Issuer shall
not be effective until actually received thereby. Notices or other
communications hereunder shall be addressed: if to the Borrower Representative,
at the address specified on the signature pages of this Agreement with respect
to the Borrower Representative; if to the Administrative Agent, to the Notice
Office of the Administrative Agent; if to a Lender, to the Notice Office of such
Lender; specified on the signature pages of this Agreement or, if such Lender
shall have become a party hereto pursuant to Section 16.2, in the most recent
Assignment Agreement to which such Lender is a party; if to the LC Issuer, to
the Notice Office of such LC Issuer specified on the signature pages of this
Agreement.
19.10 GOVERNING LAW. This Agreement and the other Loan Documents
(including the Administrative Agent Fee Letter) and the respective rights and
obligations of the parties hereto shall be governed by and construed in
accordance with the internal laws of the State of Ohio (without giving effect to
the conflict of laws rules thereof and except to the extent perfection of the
Administrative Agent's security interests and Liens and the effect thereof are
otherwise governed pursuant to the UCC or the applicable Law of any foreign
jurisdiction).
19.11 ENTIRE AGREEMENT. This Agreement and the other Loan Documents
referred to in or otherwise contemplated by this Agreement set forth the entire
agreement of the parties as to the transactions contemplated by this Agreement.
19.12 EXECUTION IN COUNTERPARTS; EXECUTION BY FACSIMILE. This Agreement
may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the same
agreement. Delivery of an executed counterpart hereof by facsimile shall be
effective as manual delivery of such counterpart; provided, however, that, each
party hereto will promptly thereafter deliver counterpart originals of such
counterpart facsimiles delivered by or on behalf of such party.
EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG
THE PARTIES OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS
AGREEMENT, THE NOTES OR OTHER LOAN DOCUMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH OR THE TRANSACTIONS RELATED THERETO.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR
ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY OHIO STATE
COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA
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SITTING IN CUYAHOGA COUNTY, OHIO, AND ANY APPELLATE COURT FROM ANY THEREOF, IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES
OR ANY LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT
ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH OHIO STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH
FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY
SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT ANY PARTY MAY OTHERWISE
HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE NOTES OR
ANY LOAN DOCUMENT IN THE COURTS OF ANY JURISDICTION.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THAT IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN
DOCUMENT IN ANY OHIO STATE OR FEDERAL COURT SITTING IN OHIO. EACH OF THE PARTIES
HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT. THE PARTIES CONFIRM THAT THE FOREGOING WAIVERS ARE INFORMED AND FREELY
MADE.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers or agents thereunto duly authorized, as of
the date first above written.
BORROWERS
BORROWERS
HAWK CORPORATION
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
By: Xxxxxx X. Xxxxxxxx
Its: Chairman of the Board, Chief Executive
Officer and President
Address for notices:
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000-0000
Attention: Vice President - Chief Financial Officer
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxxx & Xxxxxx P.L.L.
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
0000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
ALLEGHENY CLEARFIELD, INC.
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
By: Xxxxxx X. Xxxxxxxx
Its: Chairman of the Board and Chief Executive
Officer
Address for notices:
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000-0000
Attention: Vice President - Chief Financial Officer
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxxx & Xxxxxx P.L.L.
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
0000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
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FRICTION PRODUCTS CO.
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
By: Xxxxxx X. Xxxxxxxx
Its: Chairman of the Board and Chief Executive
Officer
Address for notices:
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000-0000
Attention: Vice President - Chief Financial Officer
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxxx & Xxxxxx P.L.L.
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
0000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
HAWK MIM, INC.
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
By: Xxxxxx X. Xxxxxxxx
Its: Chairman of the Board and Chief Executive
Officer
Address for notices:
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000-0000
Attention: Vice President - Chief Financial Officer
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxxx & Xxxxxx P.L.L.
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
0000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
HAWK MOTORS, INC.
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
By: Xxxxxx X. Xxxxxxxx
Its: Chairman of the Board and Chief Executive
Officer
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Address for notices:
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000-0000
Attention: Vice President - Chief Financial Officer
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxxx & Xxxxxx P.L.L.
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
0000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
HAWK PRECISION COMPONENTS GROUP, INC.
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
By: Xxxxxx X. Xxxxxxxx
Its: Chairman of the Board and Chief Executive
Officer
Address for notices:
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000-0000
Attention: Vice President - Chief Financial Officer
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxxx & Xxxxxx P.L.L.
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
0000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
XXXXXX, INC.
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
By: Xxxxxx X. Xxxxxxxx
Its: Chairman of the Board and Chief Executive
Officer
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Address for notices:
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000-0000
Attention: Vice President - Chief Financial Officer
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxxx & Xxxxxx P.L.L.
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
0000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
XXXXX METAL STAMPINGS, INC.
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
By: Xxxxxx X. Xxxxxxxx
Its: Chairman of the Board and Chief Executive
Officer
Address for notices:
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000-0000
Attention: Vice President - Chief Financial Officer
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxxx & Xxxxxx P.L.L.
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
0000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
NET SHAPE TECHNOLOGIES LLC
By: Hawk MIM, Inc., its sole member
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
By: Xxxxxx X. Xxxxxxxx
Its: Chairman of the Board and Chief Executive
Officer
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Address for notices:
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000-0000
Attention: Vice President - Chief Financial Officer
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxxx & Xxxxxx P.L.L.
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
0000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopy: 216) 621-6536
QUARTER MASTER INDUSTRIES, INC.
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
By: Xxxxxx X. Xxxxxxxx
Its: Chairman of the Board and Chief Executive
Officer
Address for notices:
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000-0000
Attention: Vice President - Chief Financial Officer
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxxx & Xxxxxx P.L.L.
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
0000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
SINTERLOY CORPORATION
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
By: Xxxxxx X. Xxxxxxxx
Its: Chairman of the Board and Chief Executive
Officer
S-5
Address for notices:
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000-0000
Attention: Vice President - Chief Financial Officer
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxxx & Xxxxxx P.L.L.
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
0000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
X.X. XXXXXXX CORP.
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
By: Xxxxxx X. Xxxxxxxx
Its: Chairman of the Board and Chief Executive
Officer
Address for notices:
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000-0000
Attention: Vice President - Chief Financial Officer
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxxx & Xxxxxx P.L.L.
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
0000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
X.X. XXXXXXX HOLDINGS, INC.
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
By: Xxxxxx X. Xxxxxxxx
Its: Chairman of the Board and Chief Executive
Officer
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Address for notices:
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000-0000
Attention: Vice President - Chief Financial Officer
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxxx & Xxxxxx P.L.L.
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
0000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
TEX RACING ENTERPRISES, INC.
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
By: Xxxxxx X. Xxxxxxxx
Its: Chairman of the Board and Chief Executive
Officer
Address for notices:
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000-0000
Attention: Vice President - Chief Financial Officer
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxxx & Xxxxxx P.L.L.
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
0000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
XXXXXXX PRODUCTS GROUP, INC.
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
By: Xxxxxx X. Xxxxxxxx
Its: Chairman of the Board and Chief Executive
Officer
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Address for notices:
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000-0000
Attention: Vice President - Chief Financial Officer
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxxx & Xxxxxx P.L.L.
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
0000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
XXXXXXX PRODUCTS, LLC
BY: XXXXXXX PRODUCTS GROUP, INC., ITS SOLE MEMBER
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
By: Xxxxxx X. Xxxxxxxx
Its: Chairman of the Board and Chief Executive
Officer
Address for notices:
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000-0000
Attention: Vice President - Chief Financial Officer
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxxx & Xxxxxx P.L.L.
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
0000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
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ADMINISTRATIVE AGENT
KEYBANK NATIONAL ASSOCIATION
as a Administrative Agent
/s/ Xxxx X. Xxxx
----------------------------------------
By: Xxxx X. Xxxx
Its: Vice President
Address for Notices:
KeyBank National Association
Asset Based Lending Department
Mail Code OH-01-27-0618
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000
Email: Xxxxxx_X_Xxxxx@XxxXxxx.xxx
Payment Office:
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000
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LENDERS
KEYBANK NATIONAL ASSOCIATION
as a Lender
/s/ Xxxx X. Xxxx
----------------------------------------
By: Xxxx X. Xxxx
Its: Vice President
Address for Notices:
KeyBank National Association
Asset Based Lending Department
Mail Code OH-01-27-0618
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000
Email: Xxxxxx_X_Xxxxx@XxxXxxx.xxx
Payment Office:
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000
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LC ISSUER
KEYBANK NATIONAL ASSOCIATION
as LC Issuer
/s/ Xxxx X. Xxxx
----------------------------------------
By: Xxxx X. Xxxx
Its: Vice President
KeyBank National Association
Asset Based Lending Department
Mail Code OH-01-27-0618
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000
Email: Xxxxxx_X_Xxxxx@XxxXxxx.xxx
Payment Office:
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000
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ANNEX I
CREDIT AND SECURITY AGREEMENT, DATED AS OF NOVEMBER 1, 2004,
AMONG THE BORROWERS, THE ADMINISTRATIVE AGENT, THE LENDERS, AND THE LC ISSUER
COMMITMENTS AND PERCENTAGES OF THE LENDERS
Revolving Credit Pro Rata Share
Name of Lender Commitment (percentage)
KeyBank $30,000,000 100%
Total Commitment $30,000,000
ANNEX I-1
ANNEX II
TO
CREDIT AND SECURITY AGREEMENT
DEFINITIONS
As used in this Agreement and all other Loan Documents, the
following Uniform Commercial Code terms shall have the meanings (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined) ascribed to such terms in the UCC: "Account", "Account Debtor",
"Certificated Security", "Chattel Paper", "Deposit Account", "Document",
"Commodity Account", "Commodity Contract", "Commodity Customer", "Commodity
Intermediary", "Control" "Entitlement Holder", "Entitlement Order", "Equipment",
"Financial Asset", "Fixture", "General Intangible", "Instrument", "Inventory",
"Issuer", "Investment Property", "Lease", "Lessor", "Record", "Proceeds",
"Sale", "Secured Party", "Securities Account", "Securities Act", "Securities
Intermediary", "Security", "Security Agreement", "Security Certificate",
"Security Entitlement", "Security Interest", and "Uncertificated Security".
As used in this Agreement and all other Loan Documents, the
following terms shall have the meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined) set forth below:
"ACCUMULATED FUNDING DEFICIENCY" has the meaning ascribed thereto in
Section 302(a)(2) of ERISA.
"ACQUISITION" means and includes (i) any acquisition on a going
concern basis (by purchase of fee title) of any facility and/or business
operated by a Person which is not a Subsidiary of a Borrower and (ii) any
acquisition of all or substantially all (but in all cases greater than or
equal to fifty percent (50%) or such greater amount as required to acquire
majority control) of the outstanding equity or other similar interests in
any Person that is not a natural Person (whether by merger, stock
purchase, creation of a corporate joint venture or otherwise).
"ADDITIONAL PLEDGED COLLATERAL" means all shares of, limited and /or
general partnership interest in, and limited liability company interests
in, and all securities convertible into, and warrants, options and other
rights to purchase or otherwise acquire, stock of, either (i) any Person
that, after the Closing Date of this Agreement, as a result of any
occurrence, becomes a Subsidiary of a Borrower, or (ii) any issuer of
Pledged Stock, any Partnership or any LLC that are acquired by a Borrower
after the Closing Date; all certificates or other instruments representing
any of the foregoing; all Security Entitlements of such Borrower in
respect of any of the foregoing; all additional indebtedness from time to
time owed to such Borrower by any obligor on the Pledged Notes and the
instruments evidencing such indebtedness; and all interest, cash,
instruments and other property or Proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any
or all of the foregoing. Additional Pledged Collateral may be General
Intangibles or Investment Property.
"ADJUSTMENT DATE" means (a) the date, with respect to the last
Fiscal Quarter of the Borrower in each Fiscal Year that is the 15th day
after the date on which the Borrower delivers the audited financial
statements required to be delivered with respect to its Fiscal Year end,
commencing with the Fiscal Year ending December 31, 2004, together with
the Officer's Certificate required to be furnished by the Borrower with
such financial statements pursuant to (and complying with) Section
11.1(e), and (b) the date, with respect to each of the first three Fiscal
Quarters of the Borrower in each Fiscal Year, commencing with the Fiscal
Quarter ending March 31, 2005, that is the 15th day after the date on
which the Borrower delivers the financial
ANNEX II-1
statements required hereunder to be delivered with respect to such Fiscal
Quarter, together with the Officer's Certificate required to be furnished
by the Borrower with such financial statements pursuant to (and complying
with) Section 11.1(e).
"ADMINISTRATIVE AGENT" means KeyBank, in its capacity as
Administrative Agent for the Lenders.
"ADVANCE ACCOUNT" has the meaning set forth in Section 4.1 of this
Agreement.
"ADVANTAGE" means any payment (whether made voluntarily or
involuntarily, by offset of any deposit or other Indebtedness or
otherwise) received by a Lender in respect of the Obligations if the
payment results in any other Lender's having more than its Pro Rata Share
of the Obligations in question.
"AFFILIATE" means, with respect to a specified Person, any other
Person: (a) which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control
with such Person ("control" meaning the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise), (b) which beneficially owns
or holds with power to vote ten percent (10%) or more of any class of the
voting stock or similar interest of such Person, (c) ten percent (10%) or
more of the voting stock or similar interest of which other Person is
beneficially owned or held by such Person, or (d) who is an executive
officer or director of such Person or of such other Person.
"AGREEMENT" means this Credit and Security Agreement and any
amendment, supplement or modification, if any, to this Credit and Security
Agreement.
"ALTERNATE BASE RATE" means, for any day, a rate per annum equal to
the higher of: (a) the rate of interest which is established from time to
time by KeyBank at its principal office in Cleveland, Ohio as its "prime
rate" or "base rate" in effect, such rate to be adjusted automatically,
without notice, as of the opening of business on the effective date of any
change in such rate (it being agreed that: (i) such rate is not
necessarily the lowest rate of interest then available from KeyBank on
fluctuating rate loans and (ii) such rate may be established by KeyBank by
public announcement or otherwise) and (b) the Federal Funds Effective Rate
in effect on such day plus one half of one percent (1/2 of 1%) per annum.
"ALTERNATE BASE RATE ADVANCE" means an Advance, denominated in
Dollars which bears interest as provided in Section 6.1 of this Agreement.
"ALTERNATE BASE RATE BORROWING" means a Borrowing consisting of
Alternate Base Rate Advances.
"ANTI-TERRORISM LAWS" shall mean any laws relating to terrorism or
money laundering, including Executive Order No. 13224, the USA Patriot
Act, the Laws comprising or implementing the Bank Secrecy Act, and the
laws administered by the United States Treasury Department's Office of
Foreign Asset Control (as any of the foregoing laws may from time to time
be amended, renewed, extended, or replaced).
"APPLICABLE MARGIN" means, with respect to any Borrowing: (i) from
the Closing Date until the first Adjustment Date, (x) for the Unused
Commitment Fees, 25 bps per annum and (y) for Revolving Credit Borrowings,
zero (0) bps with respect to Alternate Base Rate Advances and 175 bps per
annum with respect to LIBOR Rate Advances, and (ii) with respect the first
Adjustment Date and any subsequent Adjustment Date, the percentage per
annum applicable to Alternate Base Rate Borrowings or LIBOR Rate
Borrowings, as the case may be, corresponding
Annex II-2
to the level of the Consolidated Leverage Ratio for the Testing Period
ending as of the Fiscal Quarter immediately preceding such Adjustment Date
in the table set forth below; provided, however, that notwithstanding
clauses (i) and (ii) above, to the extent that either (A) the financial
statements or the Officer's Certificate required to be delivered following
any Fiscal Quarter under Sections 11.1(b), 11.1(c) and 11.1(d) are not
delivered by the due date therefor, or (B) any Event of Default occurs,
then the Applicable Margin shall be, from and after such due date or the
date of such Event of Default (as applicable) until the date on which such
financial statements and Officer's Certificate are delivered or such Event
of Default is no longer continuing (as applicable), the per annum
percentages set forth in Level IV; provided, further, however, that
nothing in herein shall limit the applicability of Section 6.1(c) with
respect to the imposition of a default rate of interest.
Level Consolidated Leverage Alternate Base LIBOR Rate Margin Unused
Ratio Rate Margin (bps) (bps) Commitment Fee
Margin (bps)
I <3.00 to 1.00 0 bps 150 bps 25 bps
II > or = 3.00 to 1.00 but 0 bps 175 bps 25 bps
< 4.00 to 1.00
III > or = 4.00 to 1.00 but 0 bps 200 bps 25 bps
< 4.75 to 1.00
IV > or = 4.75 to 1.00 0 bps 225 bps 25 bps
"APPROVED FUND" means any Fund that is administered or managed by
(a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers or manages a Lender.
"APPROVED SECURITIES INTERMEDIARY" means a Securities Intermediary
or Commodity Intermediary selected or approved by the Administrative Agent
and with respect to which a Borrower has delivered to the Administrative
Agent an executed Control Account Letter.
"ASSUMED TAX RATE" means, for or in respect of any Tax Period (as
defined in the definition of "Permitted Tax Distribution"), fifty percent
(50%).
"BLOCKED ACCOUNT" means a Deposit Account established with a bank
acceptable to the Agent by a Borrower in its respective name pursuant to a
Deposit Account Agreement and to which only the applicable depository bank
and the Administrative Agent have access pursuant to Section 5.1 of this
Agreement.
"BLOCKED PERSON" shall have the meaning assigned to such term in
Section 10.19 hereof.
"BORROW" means to obtain a Borrowing.
Annex II-3
"BORROWER GUARANTEED OBLIGATIONS" has the meaning set forth in
Section 15.1.
"BORROWER GUARANTOR" means any Borrower with respect to the
Obligations owing to the Lenders by the other Borrowers.
"BORROWER GUARANTY" means the joint and several obligation of each
Borrower Guarantor to pay the Obligations of the other Borrowers pursuant
to Section 15 of this Agreement.
"BORROWER REPRESENTATIVE" means Hawk Corporation, a Delaware
corporation.
"BORROWERS" means collectively, Hawk Corporation, a Delaware
corporation, Allegheny Clearfield, Inc., a Pennsylvania corporation,
Friction Products Co., an Ohio corporation, Hawk MIM, Inc., an Ohio
corporation, Hawk Motors, Inc., a Delaware corporation, Hawk Precision
Components Group, Inc., an Ohio corporation, Xxxxxx, Inc., a Delaware
corporation, Xxxxx Metal Stampings, Inc., an Ohio corporation, Net Shape
Technologies LLC, a Delaware limited liability company, Quarter Master
Industries, Inc., a Delaware corporation, Sinterloy Corporation, a
Delaware corporation, X.X. Xxxxxxx Corp., a Delaware corporation, X.X.
Xxxxxxx Holdings, Inc., a Delaware corporation, Tex Racing Enterprises,
Inc., a Delaware corporation, Xxxxxxx Products Group, Inc., an Ohio
corporation, and Xxxxxxx Products, LLC, an Ohio limited liability company.
"BORROWING" means an Advance made by the Lenders on a single date.
"BORROWING BASE" means, at any date of determination, the sum of the
following:
(a) up to eighty-five percent (85%) of the aggregate amount of
Eligible Accounts minus any applicable Dilution Reserve;
plus
(b) the lesser of:
(1) up to sixty percent (60%) of the amount of Eligible
Inventory which consists of raw materials and finished goods
plus the lesser of (i) up to twenty-five percent (25%) of
Eligible Inventory which consists of work-in-process or (ii)
Three Million Dollars ($3,000,000)
and
(2) Seventeen Million Five Hundred Thousand Dollars
($17,500,000);
minus
(c) the Reserve Amount.
For purposes hereof, (1) the net amount of Eligible Accounts at any time shall
be the face amount of such Eligible Accounts less, without duplication, any and
all returns, rebates, discounts (which may, at the Administrative Agent's
option, be calculated on shortest terms), credits, allowances or excise taxes of
any nature at any time issued, owing, claimed by Account Debtors, granted,
outstanding or payable in connection with such Accounts at such time, and (2)
the net amount of Eligible Inventory shall be determined on a first-in,
first-out, lower of historical cost or market basis (and will exclude any write
up resulting from purchase accounting treatment) in accordance with GAAP.
Annex II-4
"BORROWING BASE CERTIFICATE" has the meaning specified in Section
9.5(i) of this Agreement.
"BUSINESS DAY" means (i) a day of the year on which the Lender is
not required or authorized to close in the city in which the applicable
Payment Office of the Lender is located and (ii) if the applicable
Business Day relates to LIBOR Rate Advances, a day of the year which is a
Business Day described in clause (i) above and which is also a day on
which dealings in Dollar deposits are carried on in the London interbank
market and banks are open for business in London.
"CAPITAL EXPENDITURES" means those expenses or lease obligations
which should be capitalized in accordance with GAAP.
"CAPITALIZED LEASES" means, in respect of any Person, any lease of
property imposing obligations on such Person, as lessee of such property,
which are required in accordance with GAAP to be capitalized on a balance
sheet of such Person.
"CASH COLLATERAL ACCOUNT CONTROL LETTER" has the meaning specified
in Section 5.1 of this Agreement and further specifically means a letter
agreement, substantially in the form of Exhibit O (with such changes as
may be agreed to by the Administrative Agent), executed by the Borrower,
acknowledged and agreed to by the Lockbox Bank, and accepted by the
Administrative Agent, and regarding the Lockbox and the Collection Account
maintained by the Lockbox Bank for the Borrower.
"CASH CONCENTRATION ACCOUNT" means (i) that certain Deposit Account,
account number 359681155636, maintained by the Borrowers at KeyBank for
the benefit of Administrative Agent or (ii) such other Deposit Account as
the Administrative Agent may designated from time to time by written
notice to the Borrower Representative as being the Cash Concentration
Account.
"CASH CONTROL ELECTION" means the election by the Administrative
Agent made after the occurrence and during the continuance of a Cash
Control Event to elect to exercise direct dominion over Collections by
notice to the Borrower Representative and applicable Lockbox Banks of such
election; provided, however, that a Cash Control Election shall cease to
be effective after the cure or waiver of any Cash Control Event pursuant
to the terms hereof if no Event of Default occurs within the three (3)
consecutive calendar month period after such cure or waiver; provided
further, however, that any Cash Control Election that was based in whole
or in part on the occurrence of an Event of Default arising from
Borrowers' failure to comply with any of the covenants contained in
Section 11.4 of the Credit Agreement shall cease to be effective after
waiver of such Cash Control Event pursuant to the terms hereof if no Event
of Default occurs within the three (3) consecutive calendar month period
after such waiver and the Borrowers has delivered financial statements to
the Lenders pursuant to Section 11.1(b) which evidence that Borrowers have
complied with each of the covenants contained in Section 11.4 of the
Credit Agreement for the Fiscal Quarter ending immediately after the
waiver of such Cash Control Event.
"CASH CONTROL EVENT" means (i) the occurrence of any Event of
Default or (ii) the Borrowers' Excess Availability shall be less than Ten
Million Dollars ($10,000,000) for a period of two consecutive Business
Days pursuant to which Administrative Agent may elect to exercise direct
dominion over Collections.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. Sections 9601 et
seq.
"CERTIFICATE OF EXEMPTION" shall have the meaning set forth in
Section 18.3(c)(i) of this
Annex II-5
Agreement.
"CHANGE OF CONTROL" means any of the following:
(a) an acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act of 1934) of
beneficial ownership (within the meaning of Rule 13-d promulgated under
the Exchange Act) of twenty-five percent (25%) or more of either (i) the
then outstanding shares of common stock of Hawk Corporation (the
"Outstanding Hawk Corporation Common Stock"), or (ii) the combined voting
power of the then outstanding voting securities of Hawk Corporation
entitled to vote generally in the election of directors (the "Outstanding
Hawk Corporation Voting Securities"), excluding, however, the following
acquisitions of Outstanding Hawk Corporation Common Stock and Outstanding
Hawk Corporation Voting Securities: (A) any acquisition by Hawk
Corporation or any entity directly or indirectly controlled by Hawk
Corporation, and (B) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by Hawk Corporation or any entity
directly or indirectly controlled by Hawk Corporation, and (C) any
acquisition by any of Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxxx, Xxxxx X.
Xxxxxx or any "group" (as defined in Rule 13d-5 of the Securities Exchange
Act) consisting of any or all of the foregoing or their heirs;
(b) individuals who constitute the Board of Directors of Hawk
Corporation (the "Hawk Corporation Board") , as of the Closing Date (the
"Incumbent Board") cease for any reason to constitute at least a majority
of such Hawk Corporation Board; provided, however, that any individual who
becomes a member of such Hawk Corporation Board subsequent to the Closing
Date whose election, or nomination for election by Hawk Corporation's
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board and but
provided further, that any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election
contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Securities Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Hawk Corporation Board shall not be so considered as a
member of the Incumbent Board;
(c) violates any "change of control" or similar provision in any
agreement entered into by a Borrower in connection with the Senior Notes
and the Senior Notes Indenture; or
(d) any "change of control" or "mandatory repurchase" event based on
change of control or similar provision in any document entered into by a
Borrower in connection with the Senior Notes and the Senior Note Indenture
becomes operative, effective or triggered.
"CHARTER DOCUMENTS" means, as to any Person (other than a natural
person), the charter, certificate or articles of incorporation, by-laws,
regulations, general or limited partnership agreement, certificate of
limited partnership, certificate of formation, operating agreement, or
other similar organizational or governing documents of such Person.
"CLOSING DATE" means the date and the time as of which any initial
Revolving Credit Borrowings are advanced under this Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" means all assets of the Borrowers in which a security
interest or Lien is granted to the Administrative Agent for the benefit of
the Lenders pursuant to Section 8.1 hereof or any other Loan Document to
secure repayment of the Obligations and all other property of the
Borrowers in which a Lien is granted to the Administrative Agent for the
benefit of the Lenders to secure repayment of the Obligations; provided,
however, that in no event shall any Borrower
Annex II-6
be required to pledge more than sixty-five percent (65%) of voting power
of all classes of the capital stock of a Subsidiary that is not a Domestic
Subsidiary and provided further that in no event shall any Borrower be
required to cause the pledge of any capital stock of any Subsidiary of any
Foreign Subsidiary.
"COLLECTION ACCOUNT" means a Deposit Account established by the
Borrowers with one or more other Lockbox Banks which may be reasonably
acceptable to the Administrative Agent in the name of the Borrowers,
pursuant to a Deposit Account Agreement and: (i) to which account after
the occurrence of a Cash Control Event which is continuing and receipt of
notice from the Administrative Agent to the Lockbox Bank pursuant to the
Deposit Account Control Letter, only the Lockbox Bank and Administrative
Agent shall have access pursuant to Section 5.1 of this Agreement and (ii)
which account shall not be a payroll account.
"COLLECTIONS" means all payments to a Person from Account Debtors in
respect of Accounts, Chattel Paper, and General Intangibles owing to such
Person.
"CONSOLIDATED AMORTIZATION EXPENSE" means, with respect to a Person,
for any period, all amortization expenses with respect to the General
Intangibles of such Person and its consolidated Subsidiaries during such
period, as determined on a consolidated basis in accordance with GAAP,
including, without duplication, amortization realized as the result of the
tender offer contemplated in Hawk Corporation's Offer to Purchase and
Consent Solicitation Statement dated September 30, 2004.
"CONSOLIDATED CAPITAL EXPENDITURES" means, with respect to a Person
for any period, all Capital Expenditures of such Person and its
consolidated Subsidiaries during such period, as determined on a
consolidated basis in accordance with GAAP.
"CONSOLIDATED CASH FLOW COVERAGE RATIO" means, with respect to a
Person, for any Testing Period, the ratio of (x) the sum of Consolidated
EBITDA of such Person and its consolidated Subsidiaries for such period
less Unfunded Capital Expenditures of such Person and its consolidated
Subsidiaries for such period less Consolidated Cash Income Tax Expense of
such Person and its consolidated Subsidiaries for such period less, with
respect to Hawk Corporation, Distributions paid in cash by such Person to
(y) the sum, without duplication, of Consolidated Cash Interest Expense of
such Person and its consolidated Subsidiaries for such period plus
regularly scheduled cash principal payments on Indebtedness (other than
the Revolving Credit Advances) of such Person and its consolidated
Subsidiaries for such period, all as determined on a consolidated basis in
accordance with GAAP.
"CONSOLIDATED CASH FLOW COVERAGE RATIO TESTING EVENT" means any time
that the Borrowers' Excess Availability has fallen below Ten Million
Dollars ($10,000,000).
"CONSOLIDATED CASH INCOME TAX EXPENSE" means, with respect to a
Person, for any period, without duplication, all taxes (based on the net
income of such Person and its consolidated Subsidiaries) paid in cash
during such period (including, without limitation, any additions to such
taxes and any penalties and interest with respect thereto and net of any
tax refunds received during such period), all as determined on a
consolidated basis in accordance with GAAP.
"CONSOLIDATED CASH INTEREST EXPENSE" means, with respect to a
Person, for any period, (a) the amount of interest expense of such Person
and its consolidated Subsidiaries during such period paid in cash during
such period, as determined on a consolidated basis in accordance with
GAAP, plus (b) the interest payment portion of any Capitalized Lease
rental payment of such Person and its consolidated Subsidiaries paid in
cash during such period, as determined on a consolidated basis in
accordance with GAAP, less (c) interest income received in cash or accrued
during such period, as determined on a consolidated basis in accordance
with GAAP.
Annex II-7
"CONSOLIDATED DEPRECIATION EXPENSE" means, with respect to a Person,
for any period, all depreciation expenses of such Person and its
consolidated Subsidiaries during such period, as determined on a
consolidated basis in accordance with GAAP.
"CONSOLIDATED EBIT" means, with respect to a Person, for any period,
(a) Consolidated Net Income of such Person and its consolidated
Subsidiaries for such period; plus (b) the sum (without duplication) of
the amounts taken into account for such period in determining such
Consolidated Net Income of (i) Consolidated Interest Expense of such
Person and its consolidated Subsidiaries for such period, (ii)
Consolidated Income Tax Expense of such Person and its consolidated
Subsidiaries for such period, (iii) amortization or write-off of deferred
financing costs of such Person and its consolidated Subsidiaries for such
period, (iv) non-cash gains and losses in respect of unrealized foreign
exchange obligations for such period and (v) extraordinary and other
non-recurring non-cash losses and charges for such period; less (c) gains
on sales of assets (other than sales of Inventory in the ordinary course
of business of such Person or its consolidated Subsidiaries) and other
extraordinary gains and other non-recurring non-cash gains; all as
determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED EBITDA" means, with respect to a Person, for any
period, (a) Consolidated EBIT of such Person and its consolidated
Subsidiaries for such period; plus (b) the sum (without duplication) of
the amounts taken into account for such period in determining such
Consolidated EBIT of (i) Consolidated Depreciation Expense of such Person
and its consolidated Subsidiaries for such period, (ii) Consolidated
Amortization Expense with respect to of such Person and its consolidated
Subsidiaries for such period, and (iii) any non-cash losses in respect of
the write-off of equipment by such Person and its consolidated
Subsidiaries for such period, all as determined on a consolidated basis in
accordance with GAAP.
"CONSOLIDATED INCOME TAX EXPENSE" means, with respect to a Person,
for any period, all taxes (based on the net income of such Person and its
consolidated Subsidiaries) paid in cash or accrued during such period
(including, without limitation, any penalties and interest with respect
thereto and net of any tax refunds received during such period), all as
determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to a Person,
without duplication, for any period, (a) the amount of interest expense of
such Person and its consolidated Subsidiaries during such period paid in
cash or accrued during such period, all as determined on a consolidated
basis in accordance with GAAP, plus (b) the interest payment portion of
any Capitalized Lease rental payment of such Person and its consolidated
Subsidiaries paid in cash or accrued during such period, as determined on
a consolidated basis in accordance with GAAP, less (c) interest income
received in cash or accrued during such period, as determined on a
consolidated basis in accordance with GAAP, less (d) the deferred
financing cost of such Person and its consolidated Subsidiaries during
such period, as determined on a consolidated basis in accordance with
GAAP.
"CONSOLIDATED LEVERAGE RATIO" means, with respect to a Person, for
any Testing Date, the ratio of: (x) the Consolidated Total Funded Debt of
such Person and its consolidated Subsidiaries for such period then ending
to (y) the Consolidated EBITDA of such Person and its consolidated
Subsidiaries for such period then ending.
"CONSOLIDATED NET INCOME" means, with respect to a Person, for any
period, the net income (or loss) of such Person and its consolidated
Subsidiaries for such period (after taxes and extraordinary items) taken
as a single accounting period determined on a consolidated basis in
conformity with GAAP; provided, however, that there shall be excluded from
Consolidated Net Income of the Borrowers and their consolidated
Subsidiaries: (i) the income, (or loss) of any entity (other than the
consolidated Subsidiaries of the Borrowers) in which the Borrowers or any
Annex II-8
such consolidated Subsidiaries has a joint interest, except to the extent
of the amount of dividends or other distributions actually paid to the
Borrowers or any of its consolidated Subsidiaries during such period, and
(ii) the income of any Subsidiary of the Borrowers or any of its
consolidated Subsidiaries to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is
not at the time permitted by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary.
"CONSOLIDATED TOTAL FUNDED DEBT" means, with respect to a Person, at
any date of determination, without duplication and net of cash on hand if
no Revolving Credit Advances are outstanding hereunder, all Indebtedness
of such Person and its consolidated Subsidiaries which consists of: (a)
Indebtedness for Borrowed Money, (b) bonds, notes, debentures and similar
debt securities, (c) the deferred purchase price of capital assets or
services (other than trade accounts payable and accrued expenses in the
ordinary course of business) which in accordance with GAAP would be shown
on the liability side of a consolidated balance sheet of such Person and
its consolidated Subsidiaries, (d) all Capitalized Leases, (e) the present
value, determined on the basis of the implicit interest rate, of all basic
rental obligations under all synthetic leases (i.e. leases accounted for
by the lessee as operating leases under which the lessee is the "owner" of
the leased property for Federal income tax purposes), (f) all net
obligations of such Person under hedge or swap agreements, (g) the full
outstanding value of trade accounts receivable sold with full or limited
recourse (other than sales of delinquent accounts receivable for
collection purposes), and (h) the stated value, or liquidation value (if
higher), of all redeemable equity securities of such Person; all as
determined on a consolidated basis in accordance with GAAP.
"CONTROL ACCOUNT" means a Securities Account or Commodity Account
maintained by a Borrowers with an Approved Securities Intermediary which
account is the subject of an effective Control Account Letter, and
includes all Financial Assets held therein and all certificates and
instruments, if any, representing or evidencing the Financial Assets
contained therein.
"CONTROL ACCOUNT LETTER" means a letter agreement, substantially in
the form of Exhibit L (with such changes as may be agreed to by the
Lender), executed by a Borrower and the Administrative Agent and
acknowledged and agreed to by the relevant Approved Securities
Intermediary.
"CREDIT EVENT" means: (a) the making of a Revolving Credit Advance
by any Lenders or (b) the issuance of any Letter of Credit by the LC
Issuer and the participation by the Lenders in the risk thereof.
"CREDIT REQUEST" means a request for a Revolving Credit Borrowing
made in accordance with Section 3.1, in the form attached hereto as
Exhibit B-1 and incorporated herein by reference.
"DEEMED CREDIT REQUEST" has the meaning specified in Section 3.3 of
this Agreement.
"DEFAULT UNDER ERISA" means: (a) the occurrence or existence of a
material Accumulated Funding Deficiency in respect of any Employee Benefit
Plan within the scope of Section 302(a) of ERISA, or (b) any failure by
the Borrowers or any Subsidiary thereof to make a full and timely payment
of premiums required by Section 4001 of ERISA in respect of any Employee
Benefit Plan, or (c) the occurrence or existence of any material liability
under Section 4062, 4063, 4064, 4069, 4201, 4217 or 4243 of ERISA in
respect of any Employee Benefit Plan, or (d) the occurrence or existence
of any material breach of any other law or regulation in respect of any
such Employee Benefit Plan, or (e) the institution or existence of any
action for the forcible termination of any such Employee Benefit Plan
which is within the scope of Section 4001(a)(3) or (15) of ERISA.
Annex II-9
"DEFAULTING LENDER" means any Lender with respect to which a Lender
Default is in effect.
"DEPOSIT ACCOUNT AGREEMENT" has the meaning set forth in Section 5.1
of this Agreement.
"DEPOSIT ACCOUNT CONTROL LETTER" has the meaning set forth in
Section 5.1 of this Agreement.
"DESIGNATED HEDGE AGREEMENT" means any Hedge Agreement to which a
Borrower is a party which, pursuant to a written instrument signed by the
Administrative Agent, has been designated as a Designated Hedge Agreement
so that credit exposure of the counterparty thereunder will be entitled to
share in the benefits of the grant of security interests by the Borrower
set forth in Section 8.1 of this Agreement under Designated Hedge
Agreements.
"DESIGNATED HEDGE CREDITOR" means the counterparty to any Hedge
Agreement to which a Borrower is a party which has been designated by the
Administrative Agent in accordance with this Agreement as a Designated
Hedge Agreement.
"DESIGNATED HEDGE OBLIGATIONS" means the obligations of a Borrower
to the Designated Hedge Creditor under any Designated Hedge Agreement.
"DILUTION" means, as of any date of determination, the total of all
non-cash deductions from Accounts by Account Debtors of the Borrowers,
other than those deductions arising from payment of such Accounts, and
includes, without limitation, deductions arising from credit memos,
returns, discounts, bad debts, and all other deductions, expressed as a
percentage of cash collections plus dilutive items, as determined by the
Administrative Agent in the good faith exercise of its reasonable credit
judgment.
"DILUTION RESERVE" means, as of each date of determination thereof,
the Dilution Reserve Percentage times the amount of the Eligible Accounts
of the Borrowers.
"DILUTION RESERVE PERCENTAGE" means, as of each date of
determination thereof, the percentage by which Dilution exceeds five
percent (5%) as determined by the Administrative Agent from time to time
in the good faith exercise of its reasonable credit judgment. The Dilution
Reserve Percentage as of the Closing Date is zero percent (0%). The
Administrative Agent may, in its reasonable discretion, adjust the
Dilution Reserve Percentage to reflect any changes in Dilution which are
demonstrated by any field examination of the Borrowers' Accounts by the
Administrative Agent.
"DISCLOSURE SCHEDULE" means the schedule which is attached hereto as
Annex IV and is incorporated into this Agreement.
"DISTRIBUTION" means a payment made, liability incurred or other
consideration (other than any stock dividend or stock split payable solely
in capital stock of a Borrower) given by a Borrower for the purchase,
acquisition, redemption or retirement of any capital stock (whether added
to treasury or otherwise) of such Borrower or as a dividend, return of
capital or other distribution in respect of the capital stock of such
Borrower.
"DOLLARS" and the sign "$" each means lawful money of the United
States.
"DOMESTIC SUBSIDIARY" means (i) any direct Subsidiary of a Borrower
that is organized under the Laws of any state of the United States or the
District of Columbia and (ii) any direct or indirect Subsidiary of another
Domestic Subsidiary which is not a Foreign Subsidiary.
Annex II-10
"ELIGIBLE ACCOUNTS" means the Accounts of a Borrower which are
comprised of a right to payment for goods sold or leased or for services
rendered, but, by way of example and not limitation, excluding Accounts
which:
(a) other than Retail Accounts, remain unpaid more than ninety
(90) days after the original date of invoice or sixty (60)
days from the date payment is due (provided that (i) with
respect to Accounts approved in writing by the Administrative
Agent that arise during the period from October 1st through
June 30th of each year and that by their terms are due and
payable in full within ninety (90) days after the sale of
goods or the rendering of services giving rise to such
Account, such Accounts shall be considered Eligible Accounts;
and (ii) that the Administrative Agent may from time to time,
in its reasonable discretion, elect to treat certain other
Accounts that are the subject of normal seasonal dating terms
programs as Eligible Accounts; provided that in the case of
clauses (i) and (ii) such Accounts are otherwise Eligible
Accounts);
(b) have arisen from services performed by the Borrower to or
for the Account Debtor outside the ordinary course of
business;
(c) have arisen from the sale by the Borrower of goods where
such goods have not been shipped or delivered to the Account
Debtor;
(d) have arisen from transactions which are not complete, are
not bona fide, or require further acts on the part of the
Borrower to make such Account payable by the Account Debtor;
(e) have arisen in connection with sales of goods which were
shipped or delivered to the Account Debtor on other than an
absolute sale basis, such as shipments or deliveries made on
consignment, a sale or return basis, a guaranteed sale basis,
a xxxx and hold basis, or on the basis of any similar
understanding;
(f) have arisen in connection with sales of goods which were,
at the time of sale thereof, subject to any Lien, except the
security interest in favor of the Administrative Agent created
by the Loan Documents;
(g) are subject to any provision prohibiting assignment or
requiring notice of or consent to such assignment;
(h) are subject to any Lien other than the Lien in favor of
the Administrative Agent or as permitted by Section 11.3(d)
(A) or (E);
(i) are subject to any asserted setoff, counterclaim, defense,
chargeback, allowance, dispute, or adjustment to the extent
thereof, or have arisen in connection with the sale of goods
which have been returned, rejected, repossessed, lost or
damaged to the extent of such return;
(j) are owed from an Account Debtor of which the Borrower has
received notice that such Account Debtor is the subject of
Financial Impairment or has suspended normal business
operations, dissolved, liquidated or terminated its existence;
(k) are owed by any Account Debtor located in New Jersey or
Minnesota unless the Borrower has filed all legally required
Notice of Business Activities Reports with the New Jersey
Department of Taxation or the Minnesota
Annex II-11
Department of Revenue, respectively;
(l) are evidenced by Chattel Paper or any Instrument of any
kind (including, without limitation, any promissory notes);
(m) are Accounts with respect to which any of the
representations, warranties, covenants and agreements
contained in this Agreement or any of the Loan Documents are
not or have ceased to be complete and correct or have been
breached;
(n) are Accounts with respect to which the Administrative
Agent does not have a first priority, perfected security
interest;
(o) represent a progress billing or have had the time for
payment extended by the Borrower without the consent of the
Administrative Agent (for the purposes hereof, "progress
billing" means any invoice for goods sold or leased or
services rendered under a contract or agreement pursuant to
which the Account Debtor's obligation to pay such invoice is
conditioned upon the Borrower's completion of any further
performance under the contract or agreement);
(p) are owed by a Person that is not a citizen of or organized
under the laws of the United States or any State or are owed
by any Person located outside of the United States unless (i)
such Accounts are owed by an Account Debtor located in Canada
and the Administrative Agent has a first priority lien
perfected to its satisfaction in such Accounts, (ii) payment
of such Accounts is guaranteed by a letter of credit in form
and substance and issued by a financial institution
satisfactory to the Administrative Agent, in its reasonable
discretion, and which has been transferred or assigned to the
Administrative Agent as security for the Obligations, or (iii)
such Accounts are insured by the Export Import Bank of the
United States and sold to KeyBank pursuant to a factoring
arrangement, the terms of which are in form and substance
satisfactory to the Administrative Agent (provided, however,
that only ninety-five percent (95%) of such Accounts shall
qualify as Eligible Accounts);
(q) are owed by the United States or any department, agency,
or instrumentality thereof unless the Borrower has complied
with the Federal Assignment of Claims Act in respect of the
Administrative Agent's security interest therein as granted
hereunder;
(r) are owed by any State or any department, agency, or
instrumentality thereof unless the Borrower has complied with
any applicable statutory or regulatory requirements thereof in
respect of the Administrative Agent's security interest
therein as granted hereunder;
(s) are owed by an Affiliate of the Borrower;
(t) with respect to Retail Accounts (i) are not outstanding
more than one hundred fifty (150) days from the dates of their
original invoice dates (provided however, that the Retail
Accounts with respect to the initial stocking order by X.X.
Xxxxxxx Corp. customer nos. 30174 and 30178 may be outstanding
until February 15, 2005) or sixty (60) days from their payment
due dates or are otherwise not considered Eligible Accounts,
or (ii) and do not exceed Three Million Dollars ($3,000,000)
in the aggregate.
Annex II-12
(u) are owed by an Account Debtor with respect to which more
than twenty-five percent (25%) of the balances then
outstanding on Accounts owed by such Account Debtor and its
Affiliates to the Borrower has remained unpaid for more than
ninety (90) days from the dates of their original dates (or
one hundred fifty (150) days with respect to Retail Accounts
or until February 15, 2005 with respect to the initial
stocking order by X.X. Xxxxxxx Corp. customer nos. 30174 and
30178) of invoice or sixty (60) days from the payment due
date, as applicable;
(v) when added to any and all other Accounts of the Account
Debtor thereof owing to the Borrower, produce aggregate
indebtedness from any such Account Debtor in excess of twenty
percent (20%) of the Eligible Accounts of the Borrowers, to
the extent of such excess; or
(w) are, in the Administrative Agent's good faith exercise of
its reasonable credit judgment as provided in Section 2.1(c)
hereof, Accounts of an Account Debtor which Account Debtor is
deemed to be an unacceptable credit risk or Accounts which are
otherwise deemed unacceptable or ineligible. In exercising
such judgment, the Administrative Agent may consider without
limitation the following factors or circumstances (i) the
financial and business condition of the Borrower, (ii) changes
in collection history and dilution with respect to the
Accounts, (iii) changes material to any concentration of risk
with respect to Accounts, (iv) any other factors or
circumstances that will or could reasonably be expected to
have a Material Adverse Effect, (v) history of charge-backs or
other credit adjustments, and (vi) any other factors that
change or could reasonably be expected to materially change
the credit risk of lending to the Borrower on the security of
the Accounts. The Administrative Agent shall use reasonable
efforts to notify the Borrower of any such determination under
this clause (w), but shall not be liable for any damages
arising out of any failure to so notify the Borrower.
"ELIGIBLE ASSIGNEE" means any of the following Persons: (a) a
Lender; (b) an Affiliate of a Lender; (c) an Approved Fund; and (d) any
other Person (other than a natural person) approved by (i) the
Administrative Agent, (ii) the L/C Issuer, and (iii) unless an Event of
Default has occurred and is continuing, the Borrower Representative (each
such approval not to be unreasonably withheld or delayed); provided that,
notwithstanding the foregoing, "Eligible Assignee" shall not include any
Borrower or any of the Borrowers' Affiliates or Subsidiaries and;
provided, further, that, notwithstanding the foregoing, a Person shall
only be an "Eligible Assignee" if (i) such Person shall have complied with
the requirements of Section 18.3(c), and (ii) the assignment to or
participation of such Person shall not constitute a "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code).
"ELIGIBLE INVENTORY" means the Inventory of a Borrower, but, by way
of example and not limitation, excluding Inventory which:
(a) consists of (i) damaged, defective, unmerchantable,
spoiled or unsalable items or (ii) reserves associated with
slow-moving Inventory as determined by the Borrowers based on
the Borrowers reserve policies as applied on a consistent
basis as verified by any field examinations of the Borrowers'
Inventory;
(b) consists of goods (i) not held for sale, such as any
labels, any maintenance items, any supplies and packaging or
(ii) any Inventory used in connection with research and
development;
(c) are subject to any Lien other than the Lien in favor of
the Administrative
Annex II-13
Agent or as permitted by Section 11.3(d)(A) or (E);
(d) is not subject to a first priority, perfected security
interest in favor of the Administrative Agent;
(e) is located at a location not owned by the Borrower, or at
a location owned by the Borrower with respect to which
location a Person other the Administrative Agent has a first
priority mortgage Lien thereon and for which the Borrower has
not delivered to the Administrative Agent an appropriate
landlord or warehouseman's waiver, in form, and substance
reasonably satisfactory to the Administrative Agent;
(f) is held for return to vendor;
(g) is in the possession of a bailee or other third Person
(other than a consignee) including Inventory held by a third
party for processing or Inventory purchased by but not yet
delivered to the Borrower and for which the Borrower has not
delivered to the Administrative Agent an appropriate bailee's
waiver, in form and substance reasonably satisfactory to the
Administrative Agent;
(h) is Inventory of the Borrower held by a third Person on
consignment or is held by or placed into the possession of a
third Person for sale or display by that Person;
(i) is located outside of the United States; except, that
Inventory located in Canada shall not be excluded from
Eligible Inventory under this clause (i) unless the
Administrative Agent's security interest therein is not able
to be perfected by filing;
(j) is processed or purchased pursuant to any contract with
the United States government, any agency or instrumentality
thereof or prime contractor thereof, which contract provides
for progress or advance payments to the extent such Inventory
is identified to such contract; or
(k) is, in the Administrative Agent's good faith exercise of
its reasonable credit judgment as provided is Section 2.1(c)
hereof, Inventory which is otherwise deemed ineligible. In
exercising such judgment, the Administrative Agent may
consider without limitation the following factors or
circumstances (i) the financial and business condition of the
Borrower, (ii) material changes in demand for, and changes in
pricing of, Inventory, (iv) changes material to any
concentration of risk with respect to Inventory, (v) any other
factors or circumstances that will or could reasonably be
expected to have a Material Adverse Effect, and (vi) any other
factors that change or could reasonably be expected to
materially change the credit risk of lending to the Borrower
on the security of the Inventory. The Administrative Agent
shall use reasonable efforts to notify the Borrower of any
such determination under this clause (k), but shall not be
liable for any damages arising out of any failure to so notify
the Borrower.
"EMPLOYEE BENEFIT PLAN" means an "employee benefit plan" as defined
in Section 3 of ERISA of a Borrower or any of its ERISA Affiliates or any
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA or any
"pension plan" as defined in Section 3(2) of ERISA or any "welfare plan"
as defined in Section 3(1) of ERISA.
"ENVIRONMENTAL CLAIMS" means any and all administrative, regulatory
or judicial
Annex II-14
actions, suits, demands, demand letters, claims, complaints, liens,
notices of non-compliance, investigations, proceedings alleging
non-compliance with or liabilities under any Environmental Law or any
Environmental Permit, instituted by any Person, including, without
limitation, (a) by governmental or regulatory authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages pursuant
to any applicable Environmental Law or (b) by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from
alleged injury or threat of injury to health or the environment.
"ENVIRONMENTAL LAWS" means any applicable federal, state or local
law, regulation, ordinance, or order pertaining to the protection of the
environment, including (but not limited to) applicable provision of
CERCLA, RCRA, the Hazardous Materials Transportation Act, 49 USC Sections
1801 et seq., the Federal Water Pollution Control Act (33 USC Sections
1251 et seq.), the Toxic Substances Control Act (15 USC Sections 2601 et
seq.) and the Occupational Safety and Health Act (29 USC Sections 651 et
seq.), and all similar state, regional or local laws, treaties,
regulations, statutes or ordinances, common law, civil laws, or any case
precedents, rulings, requirements, directives or requests having the force
of law of any foreign or domestic governmental authority, agency or
tribunal, and all foreign equivalents thereof, as the same have been or
hereafter may be amended, and any and all analogous future laws, treaties,
regulations, statutes or ordinances, common law, civil laws, or any case
precedents, rulings, requirements, directives or requests having the force
of law of any foreign or domestic governmental authority, agency and which
govern: (a) the existence, cleanup and/or remedy of contamination on
property; (b) the emission or discharge of Hazardous Materials into the
environment; (c) the control of hazardous wastes; (d) the use, generation,
transport, treatment, storage, disposal, removal or recovery of Hazardous
Materials; or (e) the maintenance and development of wetlands.
"ENVIRONMENTAL PERMITS" means all permits, approvals, certificates,
notifications, identification numbers, licenses and other authorizations
required under any applicable Environmental Laws or necessary for the
conduct of business.
"ERISA" means the Employee Retirement Income Security Act of 1974
(Public Law 93-406), as amended, and in the event of any amendment
affecting any Section thereof referred to in this Agreement, that
reference shall be a reference to that Section as amended, supplemented,
replaced or otherwise modified.
"ERISA AFFILIATE" means, with respect to any Person, any other
Person that is under common control with such Person within the meaning of
Section 4001(a)(14) of ERISA, or is a member of a group which includes
such Person and which is treated as a single employer under Sections
414(b) or (c) of the Internal Revenue Code. In addition, for provisions of
this Agreement that relate to Section 412 of the Internal Revenue Code,
the term "ERISA Affiliate" of any Person shall mean any other Person
aggregated with such Person under Sections 414(b), (c), (m) or (o) of the
Internal Revenue Code.
"ERISA REGULATOR" means any governmental agency (such as the
Department of Labor, the Internal Revenue Service and the Pension Benefit
Guaranty Corporation) having any regulatory authority over any Employee
Benefit Plan.
"EUROCURRENCY RESERVE PERCENTAGE" means, for any Interest Period in
respect of any LIBOR Rate Advance, as of any date of determination, the
then stated maximum reserve percentages (including any marginal, special,
emergency or supplemental reserves), expressed as a decimal, applicable to
such Interest Period (if more than one such percentage is applicable, the
daily average of such percentages for those days in such Interest Period
during which any such percentages shall be so applicable) by the Board of
Governors of the Federal Reserve System, any successor thereto, or any
other banking authority, domestic or foreign, to which the Lender may
Annex II-15
be subject in respect to eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Federal Reserve Board)
or in respect of any other category of liabilities including deposits by
reference to which the interest rate on LIBOR Rate Advances is determined
or any category of extension of credit or other assets that include the
LIBOR Rate Advances. For purposes hereof, such reserve requirements shall
include, without limitation, those imposed under Regulation D of the
Federal Reserve Board and the LIBOR Rate Advances shall be deemed to
constitute Eurocurrency Liabilities subject to such reserve requirements
without benefit of credits for proration, exceptions or offsets which may
be available from time to time to the Lender under said Regulation D.
"EVENT OF DEFAULT" has the meaning specified in Section 12 of this
Agreement.
"EXCESS AVAILABILITY" means, as of any date of determination, the
excess, if any, of the (x) lesser of (A) an amount equal to the Borrowing
Base of the Borrowers at such time or (B) the amount of the Lender's
Revolving Credit Commitment in effect at such time minus (y) the sum of
the aggregate amount of Revolving Credit Advances of the Lenders
outstanding at such time plus, without duplication, the aggregate LC
Exposure of the Lenders at such time.
"EXCLUDED PROPERTY" means:
(a) any permit, lease, license, contract or agreement held by
a Borrower or any Subsidiary (in each case as otherwise permitted by
this Agreement) that validly prohibits the creation by such Borrower
or such Subsidiary of a security interest therein;
(b) all Equipment and Fixtures now or hereafter owned or
leased by a Borrower or any Subsidiary;
(c) all Properties now or hereafter owned or leased by a
Borrower or any Subsidiary; and
(d) the proceeds of the split-dollar life insurance policies
maintained by Hawk Corporation with respect to Xxxxxx X. Xxxxxxx and
Xxxxxx X. Xxxxxxxx to the extent such proceeds are payable to Xxxxxx
X. Xxxxxxx, Xxxxxx X. Xxxxxxxx or their respective estates or
beneficiaries.
and in the case of clause (a) above, only to the extent, and for so long
as, such permit, lease, license, contract or other agreement, validly
prohibits the creation of a Lien in such property in favor of the Lender
and, upon the termination of such prohibition (howsoever occurring), such
permit, lease, license, contract or other agreement shall cease to be
"Excluded Property".
"EXECUTIVE ORDER NO. 13224" means the Executive Order No. 13224 on
Terrorist Financing effective September 24, 2001, as the same has been or
hereafter may be renewed, extended, amended or replaced.
"EXISTING CREDIT FACILITY" means the Indebtedness under the Existing
Credit Facility. means that certain Credit Agreement, dated as of October
18, 2002, as amended or supplemented from time to time, among Hawk
Corporation, and certain of its Domestic Subsidiaries from time to time
party thereto, as Borrowers and Guarantors, the lending institutions party
hereto, as Lenders, X.X. Xxxxxx Business Credit Corp., as Advisor,
JPMorgan Chase Bank, as Administrative Agent and Collateral Agent, Issuing
Bank and Arranger, PNC Bank, National Association, as a Documentation
Agent, and Fleet Capital Corp., as a Documentation Agent.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest one hundredth of one
percent (1/100th of 1%) equal to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers on such day, as published by the
Annex II-16
Federal Reserve Bank of New York on the Business Day next succeeding such
day; provided, however, that: (a) if the day for which such rate is to be
determined is not a Business Day, the Federal Funds Rate for such day
shall be such a rate on such transactions on the immediately preceding
Business Day as so published on the next succeeding Business Day and (b)
if such rate is not so published for any Business Day, the Federal Funds
Rate for such Business Day shall be the average of quotations for such day
on such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by the
Administrative Agent.
"FINANCIAL IMPAIRMENT" means, in respect of a Person, the distressed
economic condition of such Person manifested by any one or more of the
following events:
(a) the discontinuation of the business of the Person, unless
such discontinuation is part of a consolidation, or sale permitted
by Section 11.3(a) hereof;
(b) the Person generally ceases or is generally unable or
admits in writing its inability, generally, to make timely payment
upon the Person's debts, obligations, or liabilities as they mature
or come due;
(c) the assignment by the Person for the benefit of creditors;
(d) the voluntary institution by the Person of, or the consent
granted by the Person to the involuntary institution of (whether by
petition, complaint, application, default, answer (including,
without limitation, an answer or any other permissible or required
responsive pleading admitting: (i) the jurisdiction of the forum or
(ii) any material allegations of the petition, complaint,
application, or other writing to which such answer serves as a
responsive pleading thereto), or otherwise) of any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt,
dissolution, liquidation, receivership, trusteeship, or similar
proceeding pursuant to or purporting to be pursuant to any
bankruptcy, insolvency, reorganization, arrangement, readjustment of
debt, dissolution, liquidation, receivership, trusteeship, or
similar law of any jurisdiction;
(e) the voluntary application by the Person for or consent
granted by the Person to the involuntary appointment of any
receiver, trustee, or similar officer (i) for the Person or (ii) of
or for all or any substantial part of the Person's property; or
(f) the commencement or filing against a Person, without such
Person's application, approval or consent, of an involuntary
proceeding or an involuntary petition seeking: (a) liquidation,
reorganization or other relief in respect of such Person, its debts
or all or a substantial part of its assets under any Federal, state
or foreign bankruptcy, insolvency, receivership, or similar law now
or hereafter in effect or (b) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official
for such Person or for a substantial part of its assets, and, in any
such case, either (i) such proceeding or petition shall continue
undismissed for sixty (60) days or (ii) an order or decree approving
or ordering any of the foregoing shall be entered; or
(g) in the case of a Person which is an Account obligor, any
judgment, writ, warrant of attachment, execution, or similar process
is issued or levied against all or any substantial part of such
Person's property and such judgment, writ, warrant of attachment,
execution, or similar process is not released, vacated, or fully
bonded within thirty (30) days after it is issued, levied or
rendered.
"FINANCIAL PROJECTIONS" has the meaning specified in Section
10.14(b) of this Agreement.
Annex II-17
"FISCAL MONTH" means any of the twelve consecutive monthly fiscal
accounting periods collectively forming a Fiscal Year of the Borrowers.
"FISCAL QUARTER" means any of the four consecutive three-month
fiscal accounting periods collectively forming a Fiscal Year of the
Borrowers.
"FISCAL YEAR" means the Borrowers' regular annual accounting period
for federal income tax purposes ending December 31.
"FOREIGN LENDER" has the meaning specified in Section 18.3(c)(i) of
this Agreement.
"FOREIGN SUBSIDIARY" means (i) any Subsidiary of a Borrower that is
not organized under the laws of any state of the United States or the
District of Columbia and (ii) any direct or indirect Subsidiary of any
Subsidiary described in clause (i) of this definition.
"FOREIGN TRADE BALANCES" means the amount of trade accounts payable
by any Foreign Subsidiaries to any Borrower in existence on the Closing
Date and as at any time outstanding thereafter based on repayment and
issuance of new trade accounts payable as permitted by Section 11.3(e)(C)
of this Agreement.
"GAAP" means generally accepted accounting principles of the U.S.
consistent with those applied in the preparation of the financial
statements referred to in Section 11.1 of this Agreement and otherwise
consistently applied.
"GUARANTOR" means a Person who pledges his credit or property in any
manner for the payment or other performance of Indebtedness, agreements or
other obligation of another Person including, without limitation, any
guarantor (whether of collection or payment), any obligor in respect of a
standby letter of credit or surety bond issued for the account of another
Person, any surety, any co-maker, any endorser, and any Person who agrees
conditionally or otherwise to make any loan, purchase or investment in
order thereby to enable another Person to prevent or correct a default of
any kind.
"GUARANTY" means the obligation of a Guarantor.
"GUARANTY OBLIGATIONS" means, with respect to any Person, without
duplication, any obligation of such Person guaranteeing any Indebtedness
("primary Indebtedness") of any other Person (the "primary obligor") in
any manner, whether directly or indirectly, including, without limitation,
any obligation of such Person, whether contingent or not contingent, (a)
to purchase any such primary Indebtedness or any property constituting
direct or indirect security therefor, (b) to advance or supply funds (i)
for the purchase or payment of any such primary Indebtedness or (ii) to
maintain working capital or equity capital of the primary obligor or
otherwise maintain the net worth or solvency of the primary obligor, (c)
to purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary Indebtedness of the ability of the
primary obligor to make payment of such primary Indebtedness, or (d)
otherwise to assure or hold harmless the owner of such primary
Indebtedness against loss in respect thereof; provided, however, that the
term "Guaranty Obligations" shall not include endorsements of instruments
for deposit or collection in the ordinary course of business. The amount
of any Guaranty Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary Indebtedness in respect of
which such Guaranty Obligation is made or, if not stated or determinable,
the maximum reasonably anticipated liability in respect thereof (assuming
such Person is required to perform thereunder) as determined by such
Person in good faith.
"HAZARDOUS MATERIAL" means and includes: (a) any asbestos or other
material composed of or containing asbestos which is, or may become, even
if properly managed, friable,
Annex II-18
(b) petroleum and any petroleum product, including crude oil or any
fraction thereof, and natural gas or synthetic natural gas liquids or
mixtures thereof, or (c) any hazardous or toxic waste, substance or
material defined as such in (or for purposes of) CERCLA or RCRA, any
so-called "Superfund" or "Superlien" law, or any other applicable
Environmental Laws.
"HEDGE AGREEMENT" means (i) any interest rate swap agreement, any
interest rate cap agreement, any interest rate collar agreement, or
similar agreement or arrangement designed to protect against fluctuations
in interest rates as well as (ii) any foreign exchange, option or similar
derivative agreement designed to protect against fluctuations in foreign
exchange rates.
"INDEBTEDNESS" means, with respect to any Person, without
duplication, (a) Indebtedness for Borrowed Money, (b) obligations to pay
the deferred purchase price of property or services (other than accrued
liabilities incurred in the ordinary course of business), (c) Capital
Expenditures or other obligations as lessee under leases which shall have
been or should be, in accordance with GAAP, recorded as capital leases,
(d) all obligations of such Person as an account party in respect of
letters of credit or banker's acceptances, (e) obligations secured by any
Lien on the properties or assets of the Person, (f) obligations of such
Person in respect of currency or interest rate swap or comparable
transactions and (g) obligations under direct or indirect Guaranties in
respect of, and obligations (contingent or otherwise) to purchase or
otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds referred to
in clauses (a) through (g) above.
"INDEBTEDNESS FOR BORROWED MONEY" means, with respect to any Person,
without duplication, all obligations of such Person for money borrowed
including, without limitation, all notes payable, drafts accepted
representing extensions of credit, obligations evidenced by bonds,
debentures, Notes or other similar instruments, and obligations upon which
interest charges are customarily paid or discounted, and all Guaranties of
such obligations.
"INTELLECTUAL PROPERTY" means all inventions, designs, patents, and
applications therefor, trademarks, service marks, trade names, and
registrations and applications therefor, copyrights, any registrations
therefor, and any licenses thereof, whether now owned or existing or
hereafter arising or acquired.
"INTEREST PERIOD" means, for each LIBOR Rate Advance comprising a
Borrowing, the period commencing on the date of such LIBOR Rate Advance or
the date of the Rate Conversion or Rate Continuation of any Loans into
such LIBOR Rate Advance and ending on the numerically corresponding day of
the period selected by the Borrower Representative pursuant to the
provisions hereof and each subsequent period commencing on the last day of
the immediately preceding Interest Period in respect of such LIBOR Rate
Advances and ending on the last day of the period selected by the Borrower
Representative pursuant to the provisions hereof; provided, however, that
the duration of each such Interest Period shall be one, two, three, or six
months, in each case as the Borrower Representative may select by delivery
to the Lender of a Credit Request therefor in accordance with Section 3.1
of this Agreement or a Rate Conversion\Continuation Request in accordance
with Section 6.2 of this Agreement; provided, further, that:
(i) the Interest Period for each LIBOR Rate Advance comprising
part of the same Borrowing shall be of the same duration;
(ii) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such
Interest Period shall be extended to occur on the next
succeeding Business Day; provided, however, that, if such
extension would cause the last day of such Interest Period to
occur in the next
Annex II-19
following calendar month, the last day of such Interest Period
shall occur on the immediately preceding Business Day;
(iii) if the Interest Period commences on a Business Day for which
there is no numerical equivalent in the calendar month in
which the Interest Period is to end, such Interest Period
shall end on the last Business Day of that calendar month; and
(iv) with respect to LIBOR Rate Advances which constitute Revolving
Credit Advances, no Interest Period may end on a date later
than the Revolving Credit Termination Date.
"IRS" means the Internal Revenue Service of the United States.
"KEYBANK" means KeyBank National Association, a national banking
association.
"LAW" means any law, treaty, regulation, statute or ordinance,
common law, civil law, or any case precedent, ruling, requirement,
directive or request having the force of law of any foreign or domestic
governmental authority, agency or tribunal.
"LC EXPOSURE" means, with respect to any Lender, at any time of
determination, such Lender's Pro Rata Share of the sum of: (a) the
aggregate undrawn amount of all Letters of Credit outstanding at such
time, plus (b) the aggregate amount that has been drawn under such Letters
of Credit for which the LC Issuer (or the Lenders, pursuant to any
participation therein), has not at such time been reimbursed by the
Borrowers.
"LC ISSUER" means, with respect to any Letter of Credit, the issuer
of such Letter of Credit and shall be, with respect to any Letter of
Credit hereunder, KeyBank, or each other Lender that is requested by the
Administrative Agent with the approval of the Borrowers, and agrees to act
as a LC Issuer, and each of their successors and assigns (and which may be
replaced at the sole discretion of the Administrative Agent).
"LENDER DEFAULT" means (i) the refusal (which has not been
retracted) of a Lender in violation of its obligations under this
Agreement to make available to the Administrative Agent its Pro Rata Share
of any Revolving Credit Borrowing hereunder or to fund any portion of the
participation purchase price payable by such Lender for its participating
interests hereunder or (ii) the notification to the Administrative Agent
or the Borrower Representative by a Lender that such Lender does not
intend to comply with its obligations hereunder to make available to the
Administrative Agent its Pro Rata Share of any Revolving Credit Borrowing
hereunder or to fund any portion of the participation purchase price
payable by such Lender for its participating interests hereunder.
"LENDERS" means the financial institutions listed on the signature
pages hereof as the "Lenders" and having Revolving Credit Commitments
hereunder or outstanding Revolving Credit Advances hereunder and the
successors thereto and assignees thereof.
"LENDING INSTALLATION" means, with respect to a Lender, the branch,
Subsidiary or Affiliate of such Lender specified under the name of such
Lender on the signature pages hereto or as otherwise selected by such
Lender pursuant to Section 3.7 of this Agreement, or such other branch,
Subsidiary or Affiliate as such Lender may from time to time specify in
writing to the Borrower Representative, the Administrative Agent and the
Lenders as its Lending Installation.
"LENDING OFFICE" means, with respect to any Lender or Designated
Letter of Credit Issuer, the office of such Lender or LC Issuer specified
as its "Lending Office" under its name on
Annex II-20
the signature pages hereto, or such other office of such Lender or LC
Issuer as such Lender or LC Issuer may from time to time specify in
writing to the Borrower Representative and the Administrative Agent as the
office at which Revolving Credit Advances or Letters of Credit are to be
made, issued and maintained, as the case may be.
"LETTER OF CREDIT" means each (i) commercial documentary letter of
credit issued in connection with the purchase of goods in the ordinary
course of business thereof and (ii) each documentary standby letter of
credit for the account of the Borrowers or any of their Subsidiaries
issued by the LC Issuer, in each case in support or guarantee of (x)
worker compensation obligations, liability insurance, releases of contract
retention obligations, contract tender or bid performance obligations,
obligations for repayment of advance payments, contract performance
obligations, and other bonding obligations of the Borrowers or such
Subsidiaries incurred in the ordinary course of business thereof and (y)
such other standby obligations of the Borrowers and such Subsidiaries
incurred in the ordinary course of business thereof: provided, however,
that in no case may a Borrower or any of its Subsidiaries request or have
issued for its account any standby Letter of Credit to secure or otherwise
support any Indebtedness for Borrowed Money of such Borrower or such
Subsidiaries, or any Affiliates thereof, existing as of the Closing Date
or any Guaranties of such Borrower or such Subsidiaries existing as of or
after the Closing Date even to the extent such Indebtedness or Guaranties
are otherwise permitted hereunder.
"LETTER OF CREDIT COLLATERAL ACCOUNT" has the meaning set forth in
Section 13.6 hereof.
"LETTER OF CREDIT OBLIGATIONS" means (a) the obligations of the
Borrowers to reimburse the LC Issuer hereunder, (b) all fees owing to the
LC Issuer under this Agreement and the other Loan Documents, (c) any costs
and expenses reimbursable to the LC Issuer pursuant to Section 19.3 of
this Agreement, and (d) taxes, Other Taxes, compensation, indemnification
obligations or other amounts owing to the LC Issuer under this Agreement,
the reimbursement agreement executed in favor of the LC Issuer or any
other Loan Document.
"LETTER OF CREDIT REQUEST" means a request for the issuance of a
Letter of Credit made in accordance with this Agreement, in the form
attached hereto as Exhibit B-2 and incorporated herein by reference.
"LIBOR RATE ADVANCE" means a Loan, denominated in Dollars, which
bears interest as provided in Section 6.1(b) of this Agreement.
"LIBOR RATE BORROWING" means a Borrowing consisting of LIBOR Rate
Advances.
"LIEN" means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance on
title to real property.
"LLC" means each limited liability company in which a Borrower has
an interest, including those set forth on the Disclosure Schedule.
"LLC AGREEMENT" means each operating agreement governing an LLC, as
each such agreement has heretofore been and may hereafter be amended,
restated, supplemented or otherwise modified.
"LOAN DOCUMENTS" means this Agreement, any note, mortgage, deed of
trust, security agreement, guaranty or other lien instrument, any fee
letter, reimbursement agreement, financial statement, audit report,
environmental audit, notice, request of Advance, cash management
agreement, officer's certificate or other writing of any kind which is now
or hereafter required to
Annex II-21
be delivered by or on behalf of the Borrowers to the Administrative Agent,
the Lenders or the LC Issuer (or any of their respective Affiliates) in
connection with this Agreement, including, without limitation, the Notes.
"LOCKBOX" means a post office box rented by and in the name of a
Borrower as required by this Agreement and as to which only the Lockbox
Bank and the Administrative Agent has access pursuant to the requirements
of this Agreement.
"LOCKBOX AGREEMENT" has the meaning set forth in Section 5.1 of this
Agreement.
"LOCKBOX BANK" means KeyBank National Association or any other bank
reasonably acceptable to the Agent.
"LONDON INTERBANK OFFERED RATE" means, for any Interest Period with
respect to a LIBOR Rate Borrowing, the quotient (rounded upwards, if
necessary, to the nearest one sixteenth of one percent (1/16th of 1%) of:
(x) the per annum rate of interest, determined by the Lender in accordance
with its usual procedures (which determination shall be conclusive absent
manifest error) as of approximately 12:00 noon (London time) two Business
Days prior to the beginning of such Interest Period pertaining to such
LIBOR Rate Advance, as provided by Bloomberg's or Reuters (or any other
similar company or service that provides rate quotations comparable to
those currently provided by such companies as the rate in the London
interbank market), as determined by the Lender from time to time for
purposes of providing quotations of interest rates applicable to deposits
in Dollars or in the London interbank market) as the rate in the London
interbank market for deposits in Dollars in immediately available funds
with a maturity comparable to such Interest Period divided by (y) a number
equal to 1.00 minus the Eurocurrency Reserve Percentage. In the event that
such rate quotation is not available for any reason, then the rate (for
purposes of clause (x) hereof) shall be the rate, determined by the Lender
as of approximately 12:00 noon (London time) two Business Days prior to
the beginning of such Interest Period pertaining to such LIBOR Rate
Advance, to be the average (rounded upwards, if necessary, to the nearest
one sixteenth of one percent (1/16th of 1%)) of the per annum rates at
which deposits in Dollars in immediately available funds in an amount
comparable to such LIBOR Borrowing and with a maturity comparable to such
Interest Period are offered to the prime banks by leading banks in the
London interbank market. The London Interbank Offered Rate shall be
adjusted automatically on and as of the effective date of any change in
the Eurocurrency Reserve Percentage.
"MATERIAL ADVERSE EFFECT" means: (a) a material adverse effect on
the business, properties, operations or condition (financial or otherwise)
of the Borrowers, taken as a whole, (b) an impairment of a material
portion of the Collateral, (c) a material impairment of the Borrowers'
ability to repay the Obligations, (d) a material impairment to the
Administrative Agent's security interest and Lien on the Collateral valued
at more than Two Hundred Fifty Thousand Dollars ($250,000) or the priority
thereof, or (e) a material adverse effect on the legality, validity or
enforceability of this Agreement, the other Loan Documents or any Lien
created hereby or thereby in respect of Collateral valued at more than Two
Hundred Fifty Thousand Dollars ($250,000).
"MATERIAL BUSINESS AGREEMENT" means each agreement or contract (not
including Material License Agreements) of any Borrower or any Subsidiary
thereof (other than any agreement that by its terms may be terminated upon
60 days notice or less) which: (a) the termination of which could
reasonably be expected to result in a Material Adverse Effect or (b) that
Hawk Corporation is required to disclose in its public filings under Item
601(b)(10) of Regulation S-K promulgated under the Securities Exchange
Act.
"MATERIAL LICENSE AGREEMENT" means each license agreement of a
Borrower in respect
Annex II-22
of Third Party Intellectual Property set forth on the Disclosure Schedule
as being a license agreement the termination of which could reasonably be
expected to result in a Material Adverse Effect.
"MAXIMUM LAWFUL RATE" has the meaning specified in Section 19.6 of
this Agreement.
"MEXICAN SUBSIDIARIES" means Hawk Motors de Mexico, S. de X.X. de
C.V. and Hawk Motors Monterrey, S.A. de C.V.
"XXXXX'X" means Xxxxx'x Investors Services, Inc., and any successor
thereto.
"MULTIEMPLOYER PLAN" means any Employee Benefit Plan which is a
"multiemployer plan" as such term is defined in Section 4001(a)(3) of
ERISA.
"NON-TAX DISTRIBUTIONS" has the meaning set forth in Section
11.3(f).
"NOTICE OFFICE" means (i) with respect to the Administrative Agent,
such office of the Administrative Agent specified as its "Notice Office"
under its name on the signature pages hereto, or such other office,
located in a city in the United States Eastern Time Zone, as the
Administrative Agent may from time to time specify in writing to the
Borrower Representative, the Lenders and the LC Issuer as the office to
which notices to the Administrative Agent are to be given by the Borrower
Representative, the Lenders and the LC Issuer, as the case may be, and
(ii) with respect to each Lender and each LC Issuer, such office thereof
specified as its "Notice Office" under its name on the signature pages
hereto, or such other office as such Lender or LC Issuer may from time to
time specify in writing to the Borrower Representative, the Administrative
Agent, the other Lenders and the LC Issuer as the office to which notices
thereto are to be given by the Borrower Representative, the Lenders or the
LC Issuer, as the case may be.
"NOTES" means the Revolving Credit Notes.
"OBLIGATIONS" means the present and future obligations of the
Borrowers to the Lenders under this Agreement or any other Loan Document
including without limitation (a) the outstanding principal and accrued
interest (including interest accruing after a petition for relief under
the federal bankruptcy laws has been filed) in respect of any Revolving
Credit Advances advanced to the Borrowers by the Lenders plus the
outstanding LC Exposure of the Lenders and the obligation of the Borrowers
to repay the Lenders for Advances thereby in connection with the LC
Exposure, (b) all fees owing to the Lenders or the Administrative Agent
under this Agreement and the other Loan Documents, (c) any costs and
expenses reimbursable to the Lenders or the Administrative Agent pursuant
to Section 19.3 of this Agreement, and (d) Taxes, Other Taxes,
compensation, indemnification obligations or other amounts owing by the
Borrowers to the Administrative Agent or the Lenders under this Agreement,
the Notes or any Loan Document, and also includes Designated Hedge
Obligations owing to any Lender (amounts owing to a Person which was a
Lender at the time the hedge exposure of the Borrowers was first incurred
shall continue to be considered as an Obligation for all purposes
hereunder and secured hereby even after such Person is no longer a
Lender).
"OPERATING ACCOUNT" means, with respect to the Borrowers, the
account described in the Disclosure Schedule and maintained by and in the
name of the Borrower Representative with KeyBank for the purposes of
disbursing the proceeds of Advances, which account shall in no case be a
payroll or medical account.
"OTHER TAXES" has the meaning specified in Section 18.3(b) of this
Agreement.
"PARTNERSHIP" means each partnership in which a Borrower has an
interest, including
Annex II-23
those set forth on the Disclosure Schedule.
"PARTNERSHIP AGREEMENT" means each partnership agreement governing a
Partnership, as each such agreement has heretofore been and may hereafter
be amended, restated, supplemented or otherwise modified.
"PAYMENT OFFICE" means, with respect to the Administrative Agent,
such office of the Administrative Agent specified as its "payment office"
under its name on the signature pages hereto, or such other office as the
Administrative Agent may from time to time specify in writing to the
Borrower Representative and the Lenders as the office to which payments
are to be made by the Borrowers or funds are to be made accessible to the
Administrative Agent by the Lenders, as the case may be.
"PBGC" means the Pension Benefit Guaranty Corporation or any other
governmental authority succeeding to any of its functions.
"PERMITTED ACCOUNT" has the meaning specified in Section 9.13 of
this Agreement but expressly excludes any Blocked Account or any other
Deposit Account into which Collections are received which is required to
be a Blocked Account hereunder.
"PERMITTED ACQUISITION" shall mean and include any Acquisition as to
which all of the following conditions are satisfied or as to which the
Required Lenders have otherwise consented in accordance with Section 19.1
of this Agreement:
(i) such Acquisition does not involve the Acquisition of a Person
which is (A) a general partnership, general partner of a limited
partnership or is otherwise a Person as to which limited liability is
unavailable to the holders of its equity or other similar interests
therein or (B) a limited partnership interest, or (C) a trust or
unincorporated association, or (D) without the consent of the Required
Lenders, a Person having an equity interest or other similar interest held
by a foreign government or any political subdivision or agency thereof;
(ii) such Acquisition involves a line or lines of business which are
complementary (including machining operations and aluminum casting
operations) to the lines of business in which the Borrowers and their
Subsidiaries, considered as an entirety, are engaged on the Closing Date;
(iii) such Acquisition is not actively opposed by the board of
directors (or similar governing body) of the selling Person or the person
whose equity interests are to be acquired, unless all of the Lenders
specifically approve or consent to such Acquisition in writing;
(iv) after giving effect to the consummation of the Acquisition, the
Borrowers shall have (A) Excess Availability under the Revolving Credit
Commitment hereunder of Ten Million Dollars ($10,000,000) and (B) a Cash
Flow Coverage Ratio of no less than 1.0 to 1.0 on a pro forma basis for
the trailing twelve months then ending;
(v) the Total Acquisition Consideration for any single Permitted
Acquisition shall be limited to Two Million Five Hundred Thousand Dollars
($2,500,000) and all Permitted Acquisitions consummated after the Closing
Date shall be limited to Five Million Dollars ($5,000,000) in the
aggregate;
(vi) at least thirty (30) Business Days prior to the completion of
such transaction, the Borrowers shall have delivered to the Administrative
Agent (A) a notice of the proposed Permitted Acquisition and (B) a
certificate of a Responsible Officer of the Borrower Representative
demonstrating, in reasonable detail, the computations necessary to show
Annex II-24
compliance with the financial covenants contained in Section 11.4 hereof
on a pro forma basis; and
(vii) no Event of Default has occurred which is continuing and has
not been waived in accordance with Section 19.1 of this Agreement and no
Event of Default will occur by reason of consummation of the Acquisition.
"PERMITTED SPECIAL ADVANCES" means Revolving Credit Advances made by
the Administrative Agent on behalf of the Lenders pursuant to Section
3.8(f) hereof and which are advanced in one or more of the following
circumstances: (i) such Advances are advanced after the occurrence and
during the continuance of a Potential Default or after the occurrence of
an Event of Default which is continuing or (ii) such Advances are advanced
at any time that any of the other applicable conditions precedent set
forth in Section 7.2 of this Agreement have not been satisfied, or (iii)
such Advances cause the outstanding balance of Revolving Credit Advances
to exceed the Borrowing Base at such time minus the sum of outstanding
Revolving Credit Advances at such time and the aggregate LC Exposure of
the Lenders at such time.
"PERMITTED TAX DISTRIBUTIONS" means, for or in respect of any fiscal
year or other tax period of a Borrower (each a "Tax Period"), a
distribution by such Borrower to its members in an amount equal to the
product of (x) taxable income of such Borrower for such Tax Period
multiplied by (y) the Assumed Tax Rate. Permitted Tax Distributions shall
be calculated and made in advance of the dates on which estimated tax
payments relating to the pertinent Tax Period are due, and shall be made
without regard to the actual tax status of any member of such Borrower.
Notwithstanding the foregoing, Permitted Tax Distributions shall also
include any amounts determined pursuant to the foregoing formula with
respect to adjustments to the taxable income of such Borrower imposed by
any governmental authority (or otherwise).
"PERSON" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association,
joint venture or other entity, or a government or any political
subdivision or agency thereof.
"PLEDGED COLLATERAL" means, collectively, the Pledged Notes, the
Pledged Stock, the Pledged Partnership Interests, the Pledged LLC
Interests, any other Investment Property of any Borrower in excess of One
Hundred Thousand Dollars ($100,000) in the aggregate, all certificates or
other instruments representing any of the foregoing, all Security
Entitlements of any Borrower in respect of any of the foregoing, all
dividends, interest distributions, cash, warrants, rights, instruments and
other property or Proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the
foregoing. Pledged Collateral may be General Intangibles or Investment
Property.
"PLEDGED LLC INTERESTS" means all of a Borrower's right, title and
interest as a member of any LLCs and all of a Borrower's right, title and
interest in, to and under any LLC Agreement to which it is a party.
"PLEDGED NOTES" means all right, title and interest of a Borrower in
the Instruments evidencing all Indebtedness owed to a Borrower including
all Indebtedness described on the Disclosure Schedule, issued by the
obligors named therein, and all interest, cash, Instruments and other
property or Proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
Indebtedness.
"PLEDGED PARTNERSHIP INTERESTS" shall mean all of a Borrower's
right, title and interest as a limited and/or general partner in all
Partnerships and all of a Borrower's right, title and interest in, to and
under any Partnership Agreements to which it is a party.
Annex II-25
"PLEDGED STOCK" means the shares of capital stock owned by a
Borrower, including all shares of capital stock listed on the Disclosure
Schedule; provided, however, that with respect to a Subsidiary that is not
a Domestic Subsidiary only outstanding capital stock possessing up to but
not exceeding sixty-five percent (65%) of the voting power of all classes
of capital stock of such controlled foreign entity entitled to vote shall
be deemed to be pledged hereunder; and provided further that any capital
stock of Hawk Corporation held in treasury by Hawk Corporation shall not
constitute Pledged Stock.
"POTENTIAL DEFAULT" means: (i) an event, condition or thing which
with the lapse of any applicable grace period or with the giving of notice
or both would constitute, an Event of Default referred to in Section 12 of
this Agreement and which has not been appropriately waived in writing in
accordance with this Agreement or fully corrected, prior to becoming an
actual Event of Default and (ii) any financial condition which can
reasonably be expected to result in a violation of the financial covenants
hereof with the expiration of time.
"PRODUCTS" means property directly or indirectly resulting from any
manufacturing, processing, assembling or commingling of any Inventory.
"PROPERTIES" has the meaning specified in Section 10.10 of this
Agreement.
"PRO RATA SHARE" means, in respect of any Lender, the quotient
(expressed as a percentage) obtained at any time by dividing: (x) the sum
of such Lender's Revolving Credit Commitment at such time by (y) the sum
of the aggregate amount of the Revolving Credit Commitments of all of the
Lenders; provided, however, that, if all of the Revolving Credit
Commitments are terminated pursuant to the terms hereof, then, such
Lender's Pro Rata Share shall mean the quotient (expressed as a
percentage) obtained by dividing (x) the aggregate amount of such Lender's
Advances (together with any participating interests of such Lender
hereunder) outstanding at such time by (y) the aggregate amount of
Advances (together with all such participating interests of all of the
Lenders hereunder) of all of the Lenders outstanding at such time.
"RATE CONTINUATION" means a continuation pursuant to Section 6.2 of
this Agreement of LIBOR Rate Advances having a particular Interest Period
as LIBOR Rate Advances having an Interest Period of the same duration.
"RATE CONVERSION" means a conversion pursuant to Section 6.2 of this
Agreement of Loans of one Type into Loans of another Type and, with
respect to LIBOR Rate Advances, from one permissible Interest Period to
another permissible Interest Period.
"RATE CONVERSION/CONTINUATION REQUEST" has the meaning specified in
Section 6.2 of this Agreement.
"RCRA" means the Resource Conservation and Recovery Act, 42 U.S.C.
Sections 6901 et seq.
"REIMBURSEMENT AGREEMENT" has the meaning set forth in Section
2.2(b) of this Agreement.
"REPORTABLE EVENT" means any of the events set forth in Section 4043
of ERISA excluding those events for which the requirement of notice has
been waived by the PBGC.
"REQUIRED LENDERS" means, at any time: (i) Lenders (excluding, for
purposes of this definition, any Lender then constituting a "Defaulting
Lender" under Section 3.6(b)) having at least sixty-six and two thirds
percent (66 and 2/3rds%) of the aggregate outstanding Revolving Credit
Commitments of the Revolving Credit Lenders at such time; provided,
however, that if
Annex II-26
that, if the Revolving Credit Commitments are terminated pursuant to the
terms hereof, then, the term "Required Lenders" shall mean Lenders
(excluding any Lender then constituting a Defaulting Lender) having at
least sixty-six and two thirds percent (66 and 2/3rds%) of the aggregate
outstanding principal amount of the Revolving Credit Advances of all of
the Lenders outstanding at such time (excluding, for purposes of
determining the aggregate outstanding Revolving Credit Commitments of the
Revolving Credit Lenders and the aggregate outstanding principal amount of
Revolving Credit Advances of the Lenders, as the case may be, at such
time, the outstanding Revolving Credit Commitments and the outstanding
principal amount of the Revolving Credit Advances, as the case may be, of
any such Defaulting Lender) and (ii) if there are only two Lenders
(excluding, for purposes of this definition, any Lender then constituting
a "Defaulting Lender" under Section 3.6(b)), Lenders having one hundred
percent (100%) of the aggregate outstanding Revolving Credit Commitments
of the Revolving Credit Lenders at such time or, if the Revolving Credit
Commitments are terminated, then Lenders (excluding any Lender then
constituting a Defaulting Lender) having one hundred percent (100%) of the
aggregate outstanding principal amount of Revolving Credit Advances.
"RESERVE AMOUNT" means the aggregate amount of the reserves against
Borrowing Base availability as such amount is determined by the
Administrative Agent pursuant to Section 2.1(c) of this Agreement.
"RESPONSIBLE OFFICER" means, with respect to a Borrower and the
Borrower Representative, President, Chief Executive Officer, Vice
President - Chief Financial Officer, Vice President -Finance, or Corporate
Controller.
"RETAIL ACCOUNTS" means Accounts that (i) are owing from retail
customers with a Xxxxx'x rating of no less than Baa3 or S&P's rating of no
less than BBB-, (ii) are owing from X.X. Xxxxxxx Corp. customer nos. 30174
and 30178, or (iii) are owing from such other retail customers as agreed
in writing by the Administrative Agent.
"REVOLVING CREDIT ADVANCE" means a Revolving Credit Advance made by
a Lender to the Borrowers pursuant to Section 2.1(a) of this Agreement
(whether made by a Lender pursuant to a Credit Request or by reason of a
Deemed Credit Request), and includes Swing Line Advances and Permitted
Special Advances (except to the extent Swing Line Advances or Permitted
Special Advances are expressly excluded for purposes of certain
calculations under this Agreement).
"REVOLVING CREDIT BORROWING" means a Borrowing consisting of
Revolving Credit Advances.
"REVOLVING CREDIT COMMITMENT" means the commitment of each Lender to
advance Revolving Credit Advances up to the amount, if any, set forth in
opposite such Lender's name in Annex I hereto as its Revolving Credit
Commitment as such commitment may be reduced from time to time pursuant to
Section 4.3 and/or Section 13 hereof, or adjusted from time to time as a
result of assignments to or from such Lender pursuant to Section 16.2 of
this Agreement.
"REVOLVING CREDIT NOTE" means, with respect to the Borrowers, the
promissory note of the Borrowers payable to the order of each Lender, in
substantially the form of Exhibit A-1 hereto, and in the original
principal amount of the Revolving Credit Commitment, evidencing the
aggregate indebtedness of the Borrowers to such Lender resulting from the
Revolving Credit Advances made by such Lender.
"REVOLVING CREDIT TERMINATION DATE" means November 1, 2009, or
earlier if terminated pursuant to the terms of this Agreement.
Annex II-27
"SENIOR NOTES" means the 8-3/4% Senior Notes due 2014 of Hawk
Corporation issued pursuant to the Senior Note Indenture, including, but
not limited to any Exchange Notes (as defined in the Senior Note
Indenture) issued thereunder.
"SENIOR NOTE INDENTURE" means that certain Indenture, dated as of
November 1, 2004, among Hawk Corporation, as Issuer, the Guarantors named
therein, as Guarantors, and HSBC Bank USA, National Association, as
Trustee as the same may be further amended, supplemented, replaced or
otherwise modified from time to time in accordance with this Agreement.
"SETTLEMENT DATE" has the meaning specified in Section 3.8(b) of
this Agreement.
"SETTLEMENT PERIOD" has the meaning specified in Section 3.8(b) of
this Agreement.
"SHAREHOLDER EQUITY" shall mean all amounts that would be included
under the caption "shareholders' equity" (or any like caption) on a
balance sheet of Hawk Corporation, all as determined on a consolidated
basis in accordance with GAAP as at such date.
"SOLVENT" means, with respect to any Person, as of any date of
determination, that: (a) the fair value of the property of the Person as
of such date is greater than the total amount of the liabilities
(including contingent liabilities computed at the amount that, in light of
all the facts and circumstances existing as of such date, represents the
amount that can reasonably be expected to become an actual or matured
liability) of the Person, (b) the present fair salable value of the assets
of the Person as of such date is not less than the amount that will be
required to pay the probable liabilities of the Person on its debts as
they become absolute and matured, (c) the Person is able to pay all
liabilities of the Person as those liabilities mature, and (d) the Person
does not have unreasonably small capital for the business in which it is
engaged or for any business or transaction in which it is about to engage.
The determination of whether a Person is Solvent shall take into account
all such Person's assets and liabilities regardless of whether, or the
amount at which, any such asset or liability is included on a balance
sheet of such Person prepared in accordance with GAAP, including assets
such as contingent contribution or subrogation rights, business prospects,
distribution channels and goodwill. In computing the amount of contingent
or unrealized assets or contingent or unliquidated liabilities at any
time, such assets and liabilities will be computed at the amounts which,
in light of all the facts and circumstances existing at such time,
represent the amount that reasonably can be expected to become realized
assets or matured liabilities, as the case may be. In computing the amount
that would be required to pay a Person's probable liability on its
existing debts as they become absolute and matured, reasonable valuation
techniques, including a present value analysis, shall be applied using
such rates over such periods as are appropriate under the circumstances,
and it is understood that, in appropriate circumstances, the present value
of contingent liabilities may be zero.
"S&P" means Standard and Poor's Rating Services, a division of
McGraw Hill Companies, Inc., and any successor thereto.
"SUBSIDIARY" means, in respect of a corporate Person, a corporation
or other business entity the shares constituting a majority of the
outstanding capital stock (or other form of ownership) or constituting a
majority of the voting power in any election of directors (or shares
constituting both majorities) of which are (or upon the exercise of any
outstanding warrants, options or other rights would be) owned directly or
indirectly at the time in question by such Person or another subsidiary of
such Person or any combination of the foregoing.
"SWING LINE ADVANCE" has the meaning set forth in Section 3.8(a) of
this Agreement.
"SWING LINE LENDER" means KeyBank.
Annex II-28
"TESTING PERIOD" means in respect of each Fiscal Quarter ending
after the Closing Date, the period consisting of the four consecutive
Fiscal Quarters then last ended (whether or not such quarters are all
within the same Fiscal Year).
"THIRD PARTY INTELLECTUAL PROPERTY" means any Intellectual Property
not owned by a Borrower.
"TOTAL ACQUISITION CONSIDERATION" means, with respect to any
Permitted Acquisition, the total of all consideration (whether in cash,
property or other form of consideration other than consideration in the
form of equity securities) received by the Person whose assets or stock is
being acquired or by the shareholders thereof in connection with the
Permitted Acquisition.
"TYPE" means a LIBOR Rate Advance or an Alternate Base Rate Advance,
as applicable.
"UCC" means the Uniform Commercial Code as from time to time in
effect in the State of Ohio; provided, however, that in the event that, by
reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the Administrative Agent's security interest in
any Collateral is governed by the Uniform Commercial Code as in effect in
a jurisdiction other than the State of Ohio, the term "UCC" shall mean the
Uniform Commercial Code as from time to time in effect in such other
jurisdiction for purposes of the provisions hereof relating to such
attachment, perfection or priority and for the purposes of definitions
related to such provisions; provided, further, that if the UCC is amended
after the date hereof, such amendment will not be given effect for the
purposes of this Agreement if and to the extent the result of such
amendment would be to limit or eliminate any item of Collateral.
"UNFUNDED CAPITAL EXPENDITURES" means Capital Expenditures which are
not funded with the proceeds of Indebtedness (other than Revolving Credit
Advances).
"UNITED STATES" and "U.S." each means United States of America.
"UNTENDERED NOTES" means those certain 12% Senior Notes due 2006
which remain outstanding after the completion of the tender offer
contemplated in the Borrower's Offer to Purchase and Consent Solicitation
Statement dated September 30, 2004.
"USA PATRIOT ACT" shall mean the Uniting and Strengthening America
by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001, Public Law 107-56, as the same has been, or shall
hereafter be, renewed, extended, amended or replaced.
"U.S. LENDER" has the meaning set forth in Section 18.3(c)(ii) of
this Agreement.
"VOTING STOCK" means capital stock of a corporation, the holders of
which are ordinarily, in the absence of contingencies, entitled to elect a
majority of the corporate directors (or persons performing similar
functions).
"WITHDRAWAL LIABILITY" means (in respect of a Borrower, its
Subsidiaries and their ERISA Affiliates), at any date of determination,
the amount equal to the aggregate present value (as defined in Section 3
of ERISA) at such date of the amount claimed to have been incurred as a
result of a withdrawal less any portion thereof as to which such Borrower
reasonably believes, after appropriate consideration of the possible
adjustments arising under subtitle E of Title IV of ERISA, such Borrower,
its Subsidiaries and their ERISA Affiliates will have no liability;
provided, however, that such Borrower shall obtain promptly written advice
from independent actuarial consultants supporting such determination.
Annex II-29
"WHOLLY-OWNED SUBSIDIARY" means, in respect of any Person, a
Subsidiary of such Person in which such Person owns all of the outstanding
capital stock (or other form of ownership) and controls all of the voting
power in any election of directors or otherwise.
Annex II-30
