1
DRAFT
7/29/97
CREDIT AGREEMENT
Among
SAFETY 1ST, INC.
and
SAFETY 1ST HOME PRODUCTS CANADA INC.,
as Borrowers,
EACH OF THE FINANCIAL INSTITUTIONS
INITIALLY A SIGNATORY HERETO, TOGETHER WITH
THOSE ASSIGNEES PURSUANT TO SECTION 10.8 HEREOF,
as Lenders,
BT COMMERCIAL CORPORATION,
as Agent,
and
BANKERS TRUST COMPANY,
as Issuing Bank
Dated as of July 30, 1997
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1. General Definitions.......................................... 1
SECTION 1.2. Accounting Terms and Determinations.......................... 28
SECTION 1.3. Other Terms; Headings........................................ 28
SECTION 1.4. Computation of Time Periods.................................. 28
ARTICLE II
LOANS
SECTION 2.1. Revolving Credit Commitments................................. 29
SECTION 2.2. Borrowing of Revolving Loans................................. 29
SECTION 2.3. Disbursement of Revolving Loans.............................. 30
SECTION 2.4. Notices of Borrowing......................................... 30
SECTION 2.5. Same Day Settlement of Lender Advances....................... 31
SECTION 2.6. Periodic Settlement of Agent Advances........................ 31
SECTION 2.7. Term Loan.................................................... 32
SECTION 2.8. Sharing of Payments.......................................... 33
SECTION 2.9. Defaulting Lenders........................................... 33
SECTION 2.10. Mandatory Payment; Mandatory Reduction of
the Commitments.............................................. 34
SECTION 2.11. Maintenance of Loan Account; Statements of
Account...................................................... 36
SECTION 2.12. Payment Procedures........................................... 36
SECTION 2.13. Collection of Accounts....................................... 36
SECTION 2.14. Application of Payments...................................... 37
ARTICLE III
LETTERS OF CREDIT
SECTION 3.1. Issuance of Letters of Credit................................ 37
SECTION 3.2. Terms of Letters of Credit................................... 38
SECTION 3.3. Lenders' Participation....................................... 38
SECTION 3.4. Notice of Issuance........................................... 39
SECTION 3.5. Payment of Amount Drawn Under Letters of
Credit....................................................... 39
SECTION 3.6. Payment by Lenders........................................... 40
SECTION 3.7. Nature of Issuing Bank's Duties.............................. 40
SECTION 3.8. Obligations Absolute......................................... 41
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ARTICLE IV
INTEREST, FEES AND EXPENSES
SECTION 4.1. Interest on Prime Rate Loans................................. 42
SECTION 4.2. Interest on Eurodollar Rate Loans............................ 42
SECTION 4.3. Interest and Letter of Credit Fees After
Event of Default............................................. 43
SECTION 4.4. Letter of Credit Fees........................................ 43
SECTION 4.5. Unused Line Fee.............................................. 43
SECTION 4.6. Other Fees and Expenses...................................... 44
SECTION 4.7. Calculations................................................. 44
SECTION 4.8. Special Provisions Relating to Eurodollar
Rate Loans................................................... 44
SECTION 4.9. Indemnification in Certain Events............................ 47
SECTION 4.10. Net Payments................................................. 48
SECTION 4.11. Affected Lenders............................................. 52
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.1. Conditions to Initial Loans and Letters of
Credit....................................................... 53
SECTION 5.2. Conditions Precedent to All Loans and
Letters of Credit............................................ 56
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.1. Representations and Warranties of the
Borrower..................................................... 56
ARTICLE VII
COVENANTS OF THE BORROWER
SECTION 7.1. Affirmative Covenants........................................ 66
SECTION 7.2. Negative Covenants........................................... 78
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. Events of Default............................................ 88
SECTION 8.2. Acceleration and Cash Collateralization...................... 90
SECTION 8.3. Rescission of Acceleration................................... 90
SECTION 8.4. Remedies..................................................... 91
SECTION 8.5. Right of Setoff.............................................. 91
SECTION 8.6. License for Use of Software and Other
Intellectual Property........................................ 92
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SECTION 8.7. No Marshalling; Deficiencies; Remedies
Cumulative.................................................. 92
ARTICLE IX
THE AGENT
SECTION 9.1. Appointment of Agent........................................ 92
SECTION 9.2. Nature of Duties of Agent................................... 93
SECTION 9.3. Lack of Reliance on Agent................................... 93
SECTION 9.4. Certain Rights of the Agent................................. 94
SECTION 9.5. Reliance by Agent........................................... 94
SECTION 9.6. Indemnification of Agent.................................... 94
SECTION 9.7. The Agent in Its Individual Capacity........................ 94
SECTION 9.8. Holders of Notes............................................ 95
SECTION 9.9. Successor Agent............................................. 95
SECTION 9.10. Collateral Matters.......................................... 95
SECTION 9.11. Actions with Respect to Defaults............................ 96
SECTION 9.12. Delivery of Information..................................... 97
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Governing Law............................................... 97
SECTION 10.2. Submission to Jurisdiction.................................. 97
SECTION 10.3. Service of Process.......................................... 98
SECTION 10.4. Jury Trial.................................................. 98
SECTION 10.5. Limitation of Liability..................................... 98
SECTION 10.6. Delays; Partial Exercise of Remedies........................ 98
SECTION 10.7. Notices..................................................... 98
SECTION 10.8. Assignments and Participations.............................. 99
SECTION 10.9. Confidentiality............................................. 102
SECTION 10.10. Indemnification; Reimbursement of Expenses
of Collection............................................... 102
SECTION 10.11. Amendments and Waivers...................................... 103
SECTION 10.12. Nonliability of Agent and Lenders........................... 105
SECTION 10.13. Independent Nature of Lenders' Rights....................... 105
SECTION 10.14. Counterparts................................................ 105
SECTION 10.15. Effectiveness............................................... 105
SECTION 10.16. Severability................................................ 106
SECTION 10.17. Maximum Rate................................................ 106
SECTION 10.18. Entire Agreement; Successors and Assigns.................... 107
SECTION 10.19. Judgment.................................................... 107
SECTION 10.20. Waiver of Immunities........................................ 107
SECTION 10.21. Interest Act (Canada)....................................... 107
SECTION 10.22. Limitation of Obligations of Safety Europe.................. 108
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Schedules
Schedule 1 -- List of Lenders, Lending Offices and
Commitments
Schedule 2 -- Account Debtors with Material
Concentrations
Schedule 3 -- Existing Indebtedness
Schedule 5.1(c) -- List of Closing Documents
Schedule 6.1(a) -- Jurisdictions in which the Borrowers and
the Subsidiaries are Qualified to do
Business
Schedule 6.1(d) -- Conflicts
Schedule 6.1(i) -- Financial Data
Schedule 6.1(k) -- Location of Offices, Records and
Inventory
Schedule 6.1(l)(i) -- List of Subsidiaries
Schedule 6.1(l)(ii) -- 100% owned Subsidiaries
Schedule 6.1(l)(iii) -- Proxies with respect to Stock of
subsidiaries
Schedule 6.1(m)(i) -- Pending Litigation, etc.
Schedule 6.1(m)(ii) -- Products Liability Claims
Schedule 6.1(o) -- Defaults
Schedule 6.1(p) -- Labor Contracts
Schedule 6.1(q) -- Compliance with Law
Schedule 6.1(r) -- Pension Plans
Schedule 6.1(u) -- Environmental Actions
Schedule 6.1(v) -- Real Property
Schedule 6.1(w) -- Material Contracts
Schedule 6.1(x) -- Intellectual Property
Schedule 6.1(y) -- Taxes
Schedule 6.1(z) -- Predecessor Names
Schedule 6.1(ac) -- Affiliate Transactions
Schedule 6.1(ae) -- Location of Molds
Schedule 7.2(a) -- Permitted Liens
Schedule 7.2(f) -- Investments
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Exhibits
Exhibit A--1 -- Revolving Note
Exhibit A--2 -- Term Note
Exhibit B -- Borrowing Base Certificate
Exhibit C -- Notice of Borrowing
Exhibit D -- Notice of Continuation
Exhibit E -- Notice of Conversion
Exhibit F -- Letter of Credit Request
Exhibit G--1 -- Borrower Security Agreement
Exhibit G--2 -- Guarantor Security Agreement
Exhibit H--1 -- Borrower Intellectual Property Security
Agreement
Exhibit H--2 -- Guarantor Intellectual Property Security
Agreement
Exhibit I--1 -- 3232301 Hypothecation Agreement
Exhibit I--2 -- Safety Hypothecation Agreement
Exhibit J -- Guaranty
Exhibit K -- Lockbox Agreement
Exhibit L -- Collateral Access Agreement
Exhibit M -- Compliance Certificate
Exhibit N -- Assignment and Assumption Agreement
Exhibit O -- 3232301 Hypothec
Exhibit P -- Safety Canada Hypothec
Exhibit Q -- Contribution Agreement
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THIS CREDIT AGREEMENT is entered into as of July 30, 1997, among SAFETY
1ST, INC., a Massachusetts corporation ("Safety"), SAFETY 1ST HOME PRODUCTS
CANADA INC., a Canadian federal corporation ("Safety Canada" and, together with
Safety, the "Borrowers"), and each of those financial institutions identified as
Lenders on Schedule 1 hereto (together with each of their successors and
assigns, referred to individually as a "Lender" and collectively as the
"Lenders"), BT COMMERCIAL CORPORATION, acting in the manner and to the extent
described in Article IX (in such capacity, the "Agent") and Bankers Trust
Company, as issuer of letters of credit (in such capacity, the "Issuing Bank").
W I T N E S S E T H :
WHEREAS, the Borrowers wish to obtain a revolving credit facility and a
term loan facility for general working capital purposes, to refinance existing
indebtedness and to pay the costs and expenses incurred in connection with the
closing of the transactions contemplated hereby; and
WHEREAS, the Borrowers wish to obtain a letter of credit facility for
their ongoing letter of credit requirements; and
WHEREAS, upon the terms and subject to the conditions set forth herein,
the Lenders are willing to (i) make loans and advances to the Borrowers and (ii)
purchase participations in letters of credit issued by the Issuing Bank for the
account of the Borrowers, and the Issuing Bank is willing to issue letters of
credit for the account of the Borrowers.
NOW, THEREFORE, the Borrowers, the Lenders, the Issuing Bank and the
Agent hereby agree as follows:
ARTICLE I
DEFINITIONS
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SECTION 1.1. GENERAL DEFINITIONS. As used herein, the following terms
shall have the meanings herein specified (to be equally applicable to both the
singular and plural forms of the terms defined):
"Acceptance Date" is defined in Section 10.8(b).
"Accounts" is defined in the Security Agreements.
"Accounts Borrowing Base" means, on any day, an amount up to
75% of the outstanding Eligible Accounts Receivable of the Borrowers on
such day.
"Adjusted Eurodollar Rate" means, with respect to each
Interest Period for any Eurodollar Rate Loan, the rate obtained by
dividing (i) the Eurodollar Rate for such Interest Period by (ii) a
percentage equal to 1 minus the stated maximum rate (stated as a
decimal) of all reserves, if any, required to be maintained against
"Eurocurrency liabilities" as specified in Regulation D of the Board of
Governors Federal Reserve System (or against any other category of
liabilities which includes deposits by reference to which the interest
rate on Eurodollar Loans is determined or any category of extensions of
credit or other assets which includes loans by a non-United States
office of any Lender to United States residents).
"Adjusted Net Income" means, in any fiscal period, Net Income
plus or minus (as the case may be) losses or gains from extraordinary
items and from sales of assets, other than sales of Inventory in the
ordinary course of business.
"Affiliate" of a Person means another Person who directly or
indirectly controls, is controlled by, is under common control with or
is a director or officer of such Person. For purposes of this
definition, "control" means the possession, directly or indirectly, of
the power to vote ten percent (10%) or more of the securities having
ordinary voting power for the election of directors or the direct or
indirect power to direct the management and policies of a business.
"Agent" means BTCC as provided in the preamble to this Credit
Agreement or any successor to BTCC.
"Agent Advance" is defined in Section 2.2.
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"Applicable Lending Office" means, with respect to each
Lender, such Lender's Eurodollar Lending Office in the case of a
Eurodollar Rate Loan, and such Lender's Domestic Lending Office in the
case of a Prime Rate Loan.
"Applicable Margin" means (a) with respect to Revolving Loans,
(i) 1.75% per annum for Prime Rate Loans and (ii) 2.75% per annum for
Eurodollar Rate Loans and (b) with respect to the Term Loan, (i) 2.00%
per annum for Prime Rate Loans and (ii) 3.00% for Eurodollar Rate
Loans.
"Asset Sale" means, for any Person, any sale, transfer or
other disposition or series of sales, transfers or other dispositions
(including, without limitation, by merger or consolidation or by
exchange of assets and whether by casualty, loss, operation of law or
otherwise) made by such Person or any of its Subsidiaries to any Person
other than such Person or one of its wholly-owned Subsidiaries (or, in
the case of a sale, transfer or other disposition by a Subsidiary, to
any Person other than a Borrower or a direct or indirect wholly-owned
Subsidiary of a Borrower) of any assets (excluding Inventory and
Accounts) of such Person or any of its Subsidiaries including, without
limitation, assets consisting of any capital stock or other securities
held by such Person or any of its Subsidiaries (other than capital
stock of such Person), and any capital stock issued by any Subsidiary
of such Person.
"Assignment and Assumption Agreement" is defined in Section
10.8(b).
"Auditors" means a nationally recognized firm of independent
public accountants selected by Safety and satisfactory to the Agent in
its sole discretion. For purposes of this Credit Agreement, Safety's
current firm of independent public accountants, Xxxxx Xxxxxxxx LLP,
shall be deemed to be satisfactory to the Agent.
"Authorized Officer" means the Chief Executive Officer, Chief
Operating Officer, President, Chief Financial Officer or Treasurer of
Safety.
"Base Amount" is defined in Section 7.2(r).
"Benefit Plan" means a "defined benefit plan" as defined in
Section 3(35) of ERISA for which the Borrowers, any Subsidiary or any
ERISA Affiliate has
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been an "employer" as defined in Section 3(5) of ERISA within the past
six years.
"Blocked Account Agreement" is defined in Section 7.1(q)(iv).
"Borrower Intellectual Property Security Agreement" means the
security agreement relating to the intellectual property of the
Borrowers, substantially in the form of Exhibit H-1, made by the
Borrowers in favor of the Agent for the benefit of the Agent, the
Issuing Bank and the Lenders, as amended, supplemented or otherwise
modified from time to time.
"Borrower Security Agreement" means the security agreement,
substantially in the form of Exhibit G-1, made by the Borrowers in
favor of the Agent for the benefit of the Agent, the Issuing Bank and
the Lenders, as amended, supplemented or otherwise modified from time
to time.
"Borrowing" means a borrowing consisting of a Loan of the same
Type made on the same day by the Lenders.
"Borrowing Base" means, on any day, an amount equal to the sum
of (a) the Accounts Borrowing Base on such day and (b) the Inventory
Borrowing Base on such day.
"Borrowing Base Certificate" is defined in Section 7.1(b)(i).
"BTCC" means BT Commercial Corporation, in its individual
capacity.
"Business Day" means any day other than a Saturday, Sunday or
a day on which commercial banks in New York, New York are required or
permitted by law to close. When used in connection with Eurodollar Rate
Loans, this definition will also exclude any day on which commercial
banks are not open for dealing in Dollar deposits in the London
(England, U.K.) interbank market.
"Capital Expenditures" means, for any period, the sum of all
expenditures capitalized for financial statement purposes in accordance
with GAAP (whether payable in cash or other property or accrued as
liability), including any mold deposits and the capitalized portion of
capital leases and that portion of Investments allocable to property,
plant or equipment. Capital Expenditures shall exclude proceeds
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of a Casualty Loss applied to the repair or replacement of the property
affected by the Casualty Loss.
"Cash Equivalents" means (i) securities issued, guaranteed or
insured by the United States or any of its agencies with maturities of
not more than one year from the date acquired; (ii) certificates of
deposit with maturities of not more than one year from the date
acquired, issued by a U.S. federal or state chartered commercial bank
of recognized standing, which has capital and unimpaired surplus in
excess of $200,000,000 and which bank or its holding company has a
short-term commercial paper rating of at least A-1 or the equivalent by
Standard & Poor's Corporation or at least P-1 or the equivalent by
Xxxxx'x Investors Service, Inc.; (iii) repurchase agreements and
reverse repurchase agreements with terms of not more than seven days
from the date acquired, for securities of the type described in (i)
above and entered into only with commercial banks having the
qualifications described in (ii) above; (iv) commercial paper, other
than commercial paper issued by a Borrower or any of its Affiliates,
issued by any Person incorporated under the laws of the United States
or any state thereof and rated at least A-1 or the equivalent thereof
by Standard & Poor's Corporation or at least P-1 or the equivalent
thereof by Xxxxx'x Investors Service, Inc., in each case with
maturities of not more than one year from the date acquired; (v)
investments in money market funds registered under the Investment
Company Act of 1940, which have net assets of at least $200,000,000 and
at least eighty-five percent (85%) of whose assets consist of
securities and other obligations of the type described in clauses (i)
through (iv) above and (vi) other instruments, commercial paper or
investments acceptable to the Agent in its sole discretion.
"Casualty Loss" is defined in Section 7.1(g).
"Change of Control" means one or more of the following events:
(a) less than a majority of the members of Safety's board
of directors shall be persons who either (i) were serving as directors
on the Closing Date or were nominated by the Investors (as defined in
the Stock Purchase Agreement) or (ii) were nominated as directors and
approved by the vote of at least two-thirds of the directors who are
directors referred to in clause (i) above or this clause (ii); or
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(b) the stockholders of Safety shall approve any plan or
proposal for the liquidation or dissolution of Safety; or
(c) a Person or group of Persons (other than Xxxxxx and
the Xxxxxx Trust) acting in concert (other than the direct or indirect
beneficial owners of the capital stock of Safety as of the Closing
Date) shall, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise, have become the
direct or indirect beneficial owner (within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934, as amended from time to
time) of securities of the Borrower representing more than thirty
percent (30%) of the combined voting power of the outstanding voting
securities for the election of directors or shall have the right to
elect a majority of the Board of directors of Safety; or
(d) Xxxxxx shall cease to be the direct or indirect
beneficial owner (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended from time to time) of at least
twenty-five percent (25%) of the combined voting power of the
outstanding voting securities for the election of directors of Safety;
or
(e) If Xxxxxx or two of Safety's other Executive Officers
shall within a period of six months cease for any reason to hold the
office and have the management and policy making responsibilities which
he or they hold on the date hereof, unless such officer is replaced
within forty-five days of such cessation with a person or persons
reasonably acceptable to the Agent.
"Closing Date" means the date of execution and delivery of
this Credit Agreement.
"Code" is defined in Section 1.3.
"Collateral" means the Accounts, Inventory, the Collateral (as
such term is defined in the Borrower Intellectual Property Security
Agreement and the Guarantor Intellectual Property Security Agreement)
and other property identified as security for any of the Obligations or
any of the obligations under the Guaranty pursuant to the Collateral
Documents.
"Collateral Access Agreements" means any landlord waiver,
mortgagee waiver, bailee letter or any similar acknowledgment agreement
of any warehousemen or
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processor in possession of Inventory, in each case substantially in the
form of Exhibit L.
"Collateral Documents" means all contracts, instruments and
other documents now or hereafter executed and delivered in connection
with this Credit Agreement (including, without limitation, any
agreements executed and delivered after the Closing Date pursuant to
Section 7.1(q)), pursuant to which liens and security interests are
granted to the Agent in the Collateral for the benefit of the Lenders,
including without limitation, the Security Agreements, the Hypothecs
and the Hypothecation Agreements and any amendments, supplements or
modifications thereto.
"Collection Account" is defined in Section 2.13.
"Collections" means all cash, funds, checks, notes,
instruments and any other form of remittance tendered by account
debtors in payment of Accounts.
"Commitment" of any Lender means its commitment to make
Revolving Loans and to participate in Letters of Credit, up to the
amount set forth opposite its name on Schedule 1, as such amount may be
reduced from time to time in accordance with the terms of this Credit
Agreement.
"Compliance Certificate" is defined in Section 7.1(a)(i).
"Components Inventory" means Inventory consisting of completed
television monitors for the 48010 (TV Monitor System) that need cameras
to create finished product.
"Concentration Account" is defined in Section 2.13.
"Concentration Percentage" means (a) with respect to any
account debtor of a Borrower set forth on Schedule 2, the percentage
set forth on Schedule 2 opposite the name of such account debtor, and
(b) with respect to any other account debtor of a Borrower, ten percent
(10%), unless otherwise agreed to in writing by the Agent.
"Consolidated Fixed Charge Coverage Ratio" means with respect
to Safety and its Subsidiaries for any period, the ratio of (X) EBITDA
for such period, to (Y) (i) scheduled principal amounts of all
Indebtedness paid or payable by such Person in such period, whether
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or not such payments are actually made, other than payments on the Line
of Credit which do not permanently reduce the Commitments, plus (ii)
all interest and fees for the use of money or the availability of
money, including commitment, facility and like fees and charges upon
Indebtedness (including Indebtedness to the Lender) payable by such
Persons during such period whether or not such interest or fees are
actually paid, plus (iii) all loans and Investments made by such
Persons in or to any other Person made during such period, plus (iv)
all Capital Expenditures paid or payable by such Persons during such
period, plus (v) all cash dividends paid or declared by Safety during
such period, regardless of whether or when such dividends are actually
paid, plus (vi) cash income taxes of Safety and its Subsidiaries for
such period.
"Consolidated Tangible Net Worth" means the consolidated
assets of Safety and its Subsidiaries minus (i) their consolidated
liabilities, and (ii) their intangible assets (including, without
limitation, patents, trade or service marks, franchises, trade names
and goodwill), all as reflected on the Financial Statements.
"Contingent Obligation" means any direct, indirect, contingent
or non-contingent guaranty or obligation for the Indebtedness of
another, except endorsements in the ordinary course of business.
"Contribution Agreement" means the Contribution Agreement,
substantially in the form of Exhibit Q, made by the Credit Parties
(other than Safety) in favor of the Agent for the benefit of the
Lenders, as amended, supplemented or otherwise modified from time to
time.
"Covered Taxes" is defined in Section 4.10(a).
"Credit Agreement" means this Credit Agreement, as amended,
supplemented or otherwise modified from time to time.
"Credit Documents" means this Credit Agreement, the Notes, the
Guaranty, the Security Agreements, the Hypothecs, the Hypothecation
Agreements, the Lockbox Agreements, the Fee Letter, the Letter of
Credit Related Documents, the Contribution Agreement and each other
document, agreement and instrument from time to time executed by any
Credit Party and delivered to the Agent or a Lender in connection
herewith (including, without limitation, those delivered after the
Closing Date pursuant to Section 7.1(q)), as each may be
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amended, supplemented or otherwise modified from time to time.
"Credit Parties" means the Borrowers and the Guarantors.
"Default" means an event, condition or default which with the
giving of notice, the passage of time or both would be an Event of
Default.
"Defaulting Lender" is defined in Section 2.9(a).
"Disbursement Accounts" means the operating account of each
Borrower maintained with the Disbursement Account Bank.
"Disbursement Account Bank" means BT Delaware.
"Documentary Letter of Credit Obligations" means the sum of
the aggregate undrawn amount of all documentary Letters of Credit
outstanding plus the aggregate amount of all drawings under documentary
Letters of Credit for which a Borrower has not reimbursed the Issuing
Bank.
"Dollars" and the sign "$" mean freely transferable lawful
money of the United States.
"Domestic Lending Office" means, with respect to any Lender,
the office of such Lender specified as its "Domestic Lending Office"
opposite its name on Schedule 1, as such Schedule may be amended from
time to time.
"EBITDA" means, in any fiscal period, Adjusted Net Income
plus, to the extent deducted in determining Adjusted Net Income, the
amount of all interest expense, income tax expense, the write-off of
deferred financing fees in connection with the transactions
contemplated herein, depreciation and amortization, including
amortization of any goodwill, deferred financing fees in connection
with the transactions contemplated herein, or other intangibles, of
Safety and its Subsidiaries, on a consolidated basis, for such period
all determined in accordance with GAAP.
"Eligible Accounts Receivable" means Accounts of the Borrowers
deemed by the Agent in its Permitted Discretion to be eligible for
inclusion in the calculation of the Borrowing Base. In determining the
amount to be so included, the face amount of such Accounts shall be
reduced by the aggregate amount of
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all reserves, limits and deductions provided for in this definition and
elsewhere in this Credit Agreement. For purposes of calculating the
Accounts of Safety Canada under this Credit Agreement, if any Account
is denominated in a currency other than Dollars, then the face amount
of such Account shall be converted into Dollars at the Rate of Exchange
on the date that the Accounts are calculated. No Accounts of Safety
Canada shall be included as Eligible Accounts Receivable until the
Blocked Account Agreement is executed and delivered. Unless otherwise
approved in writing by the Agent, no Account shall be deemed to be an
Eligible Account Receivable if:
(a) it arises out of a sale made by a Borrower to an
Affiliate; or
(b) its payment terms are longer than 60 days from date of
invoice; provided, that an aggregate amount of Accounts not to exceed
$2,500,000 may have payment terms of up to 90 days from the date of
invoice; or
(c) it remains unpaid after the earlier of (i) 60 days from
the due date and (ii) 120 days from the date of invoice; or
(d) it is from the same account debtor (or any Affiliate
thereof) and fifty percent (50%) or more of all Accounts from such
account debtor (or any Affiliate thereof) are ineligible under clause
(c) above; or
(e) the Account, when aggregated with all other Accounts of
such account debtor, exceeds such account debtor's Concentration
Percentage in face value of all Accounts of the Borrowers then
outstanding, to the extent of such excess; provided, however, that
Accounts supported or secured by an irrevocable letter of credit in
form and substance satisfactory to the Agent, issued by a financial
institution satisfactory to the Agent, and duly pledged to the Agent
(together with sufficient documentation to permit direct draws by the
Agent) shall be excluded for purposes of such calculation; or
(f) the account debtor for the Account is a creditor of a
Borrower, has or has asserted a right of setoff, has disputed its
liability or made any claim with respect to the Account or any other
Account which has not been resolved, to the extent of the amount owed
by such Borrower to the account debtor, the amount of such actual or
asserted right of setoff, or the amount of such dispute or claim, as
the case may be; or
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(g) the account debtor is (or its assets are) the subject of
an Insolvency Event or, in the reasonable judgment of the Agent, likely
to become subject to an Insolvency Event; or
(h) the sale is to an account debtor outside of the United
States or Canada, unless the Account is supported by an irrevocable
letter of credit in form and substance satisfactory to the Agent and
assigned to and directly drawable by the Agent; or
(i) the sale to the account debtor is on a xxxx-and-hold,
guaranteed sale, sale-and-return, sale on approval or consignment basis
or made pursuant to any other written agreement providing for
repurchase or return; or
(j) the Agent determines in its Permitted Discretion that
collection of such Account is uncertain or the Account may not be paid;
or
(k) the goods giving rise to such Account have not been
shipped and delivered to and accepted by the account debtor, the
services giving rise to such Account have not been performed and
accepted by the account debtor or the Account otherwise does not
represent a final sale; or
(l) the Account does not comply with all Requirements of Law,
including, without limitation, the Federal Consumer Credit Protection
Act, the Federal Truth in Lending Act and Regulation Z of the Board of
Governors of the Federal Reserve System; or
(m) the Agent does not have a valid and perfected first
priority Lien on such Account or the Account does not otherwise conform
to the representations and warranties contained in this Credit
Agreement or the other Credit Documents; or
(n) the account debtor is the government of the United States
of America, the government of Canada or any department, body, agency,
authority or instrumentality thereof, unless the applicable Borrower
duly and validly assigns its right to payment of such Account to the
Agent pursuant to the Assignment of Claims Act of 1940, as amended (31
U.S.C. Sections 3727 et seq.), or the Financial Administration
Act (Canada) in form and substance satisfactory to the Agent, and
otherwise complies with such legislation; or
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(o) the Account is subject to any adverse security deposit,
progress payment or other similar advance made by or for the benefit of
the applicable account debtor; or
(p) the account debtor with respect to the Account is located
in New Jersey, Minnesota or any other state or jurisdiction imposing
conditions on the right of a creditor to collect accounts receivable,
unless the applicable Borrower has either qualified as a foreign
corporation authorized to transact business in such state or
jurisdiction or has filed a Notice of Business Activities Report or
other appropriate report with the taxing or other designated
authorities of such state or jurisdiction for the then current year.
"Eligible Components Inventory" means the aggregate amount of
Inventory consisting of Components Inventory deemed by the Agent in the
exercise of its Permitted Discretion to be eligible for inclusion in
the calculation of the Borrowing Base. In determining the amount to be
so included, Inventory shall be valued at the lower of cost or market
on a basis consistent with the Borrowers' current and historical
accounting practice, and such amount shall be reduced by the amount of
all reserves and deductions maintained by the applicable Borrower.
Unless otherwise approved in writing by the Agent, an item of
Components Inventory shall not be included in Eligible Components
Inventory if it does not satisfy the criteria set forth in (a)-(e) of
the definition of Eligible Inventory or without duplication of other
amounts excluded from Eligible Inventory, is obsolete or slow moving,
represents demonstration or sample inventory or does not otherwise
conform to the representations and warranties contained in the Credit
Documents.
"Eligible Inventory" means the aggregate amount of Inventory
consisting of finished goods (not including Components Inventory)
deemed by the Agent in the exercise of its Permitted Discretion to be
eligible for inclusion in the calculation of the Borrowing Base. In
determining the amount to be so included, Inventory shall be valued at
the lower of cost or market on a basis consistent with the Borrowers'
current and historical accounting practice, and such amount shall be
reduced by the amount of all reserves and deductions maintained by the
applicable Borrower. Unless otherwise approved in writing by the Agent,
an item of Inventory shall not be included in Eligible Inventory if:
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(a) it is not owned solely by a Borrower or a Borrower does
not have good, valid and marketable title thereto; or
(b) it is not located in the United States or the Province of
Quebec, Canada; or
(c) it is not located on property owned or leased by a
Borrower or in a contract warehouse, subject to a Collateral Access
Agreement executed by the mortgagee, lessor or the contract
warehousemen, as the case may be, and segregated or otherwise
separately identifiable from goods of others, if any, stored on the
premises; or
(d) it is not subject to a valid and perfected first priority
Lien in favor of the Agent except, with respect to Inventory stored at
sites described in clause (c) above, for Liens for unpaid rent or
normal and customary warehousing charges; or
(e) it consists of defective goods returned or rejected by a
Borrower's customers or goods in transit to third parties (other than
to warehouse sites covered by a Collateral Access Agreement); or
(f) without duplication of other amounts excluded from
Eligible Inventory, it is not first-quality finished goods, is obsolete
or slow moving, represents demonstration or sample inventory, or does
not otherwise conform to the representations and warranties contained
in the Credit Documents.
"Environmental Laws" means all federal, state, provincial and
local statutes, laws (including common or case law), rulings,
regulations or governmental, administrative or judicial policies,
directories, orders or interpretations applicable to the business or
property of Safety or any of its Subsidiaries relating to pollution or
protection of human health or the environment (including, without
limitation, ambient air, surface water, ground water, land surface or
subsurface strata), including without limitation, laws and regulations
relating to emissions, discharges, releases or threatened releases of
Hazardous Materials, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of any Hazardous Materials.
"Equipment" is defined in the Security Agreements.
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"ERISA" means the Employee Retirement Income Security Act of
1974, 29 U.S.C. Sections 1000 et seq., amendments thereto,
successor statutes, and regulations or guidance promulgated thereunder.
"ERISA Affiliate" means any entity required to be aggregated
with Safety or any of its Subsidiaries under Sections 414(b), (c), (m)
or (o) of the Internal Revenue Code.
"Eurodollar Lending Office" means, with respect to any Lender,
the office of such Lender specified as its "Eurodollar Lending Office"
opposite its name on Schedule 1, as such Schedule may be amended from
time to time (or, if no such office is specified, its Domestic Lending
Office), or such other office or Affiliate of such Lender as such
Lender may from time to time specify in writing to the Borrowers and
the Agent.
"Eurodollar Rate" means, with respect to the Interest Period
for each Eurodollar Rate Loan comprising part of the same Borrowing, an
interest rate per annum equal to the rate (rounded upward to the
nearest whole multiple of one-sixteenth (1/16) of one percent (1%) per
annum, if such rate is not such a multiple) of the offered quotation,
if any, to first class banks in the Eurodollar market by Bankers Trust
Company for Dollar deposits of amounts in immediately available funds
comparable to the principal amount of the Eurodollar Rate Loan for
which the Eurodollar Rate is being determined with maturities
comparable to the Interest Period for which such Eurodollar Rate will
apply as of approximately 10:00 a.m. (New York City time) two (2)
Business Days prior to the commencement of such Interest Period.
"Eurodollar Rate Loan" means a Loan that bears interest as
provided in Section 4.2.
"Event of Default" is defined in Section 8.1.
"Excess Cash Flow" means with respect to any period of Safety,
EBITDA for such period minus the sum without duplication of (i) cash
interest expense of Safety and its Subsidiaries for such period, (ii)
cash income taxes of Safety and its Subsidiaries for such period, (iii)
all Capital Expenditures of Safety and its Subsidiaries made during
such period, (iv) all cash dividends declared by Safety during such
period, regardless of when such dividends are actually paid, (v) all
scheduled principal payments on Indebtedness of
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Safety or its Subsidiaries other than payments on the Line of Credit
which do not permanently reduce the Commitments and other than payments
on account of the Existing Indebtedness paid on the Closing Date and
(vi) all Investments made by Safety and its Subsidiaries during such
period.
"Executive Officers" means Xxxxxx, Xxxxxxx Xxxx, Xxxxxxx
Xxxxxxxxx and Xxxxxxx Xxxxxxxx.
"Existing Indebtedness" means the Indebtedness of Safety and
its Subsidiaries existing on the date of the initial Loan hereunder as
set forth on Schedule 3.
"Existing Loan Facility" means the First Amended and Restated
Loan Agreement, dated as of January 31, 1997, among Safety, the lenders
parties thereto and Xxxxxxx Sachs Credit Partners L.P., as agent, and
all other agreements, documents and instruments executed and delivered
by Safety or any of its Subsidiaries in connection therewith, each as
amended, supplemented or otherwise modified from time to time.
"Expenses" means all costs and expenses of the Agent incurred
in connection with the Credit Documents and the transactions
contemplated therein, including, without limitation, (i) the costs of
conducting record searches, examining collateral, opening bank accounts
and lockboxes, depositing checks, receiving and transferring funds
(including charges for checks for which there are insufficient funds),
and other costs of administration and enforcement of the rights of the
Lenders under the Credit Documents, (ii) the reasonable fees and
expenses of legal counsel and paralegals (including the allocated cost
of internal counsel and paralegals), accountants, appraisers and other
consultants, experts or advisors retained by the Agent, (iii)
reasonable fees and expenses incurred in connection with the
assignments of or sales of participations in the Loans, (iv) fees and
taxes in connection with the filing of financing statements, (v) the
costs of preparing and recording Collateral Documents, releases of
Collateral, and waivers, amendments, and terminations of any of the
Credit Documents and (vi) all other fees and expenses set forth in the
Fee Letter.
"Expiration Date" means the earlier of the date occurring five
years from the Closing Date and the date of termination of the
Commitments pursuant to the terms hereof.
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"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal, for each day during such period, to the
weighted average of the rates on overnight Federal Funds transactions
with members of the Federal Reserve System arranged by Federal Funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by it.
"Fee Letter" means the letter agreement dated as of the date
hereof between BT Commercial Corporation and the Borrowers.
"Fees" means, collectively, the Unused Line Fee, Letter of
Credit Fees, the Issuing Bank Fees and the fees provided for in the Fee
Letter.
"Financial Covenants" means the covenants set forth in
Sections 7.2(r) through (v).
"Financial Statements" means the consolidated and
consolidating balance sheets, statements of operations, statements of
cash flows and statements of changes in shareholder's equity of Safety
and its Subsidiaries for the period specified, prepared in accordance
with GAAP and consistent with prior practices.
"Foreign Lender" means any Lender organized under the laws of
a jurisdiction outside of the United States.
"Foreign Subsidiary" means any Person (i) that is a
"controlled foreign corporation," as defined in Section 957(a) of the
Internal Revenue Code and (ii) of which Safety or any of its
Subsidiaries is a "United States shareholder," as defined in Section
951(b) of the Internal Revenue Code.
"Funding Bank" is defined in Section 4.9.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time.
"Governing Documents" means, as to any Person, the certificate
or articles of incorporation and by-laws or
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other organizational or governing documents of such Person.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantors" means Safety 1st International, Inc., Safety 1st
(Europe) Limited, 3232301 and any other Person who from time to time
guarantees any or all of the Obligations.
"Guarantor Intellectual Property Security Agreement" means the
security agreement relating to the intellectual property of the
Guarantor, substantially in the form of Exhibit H-2, made by the
Guarantors in favor of the Agent for the benefit of the Agent, the
Issuing Bank and the Lenders, as amended, supplemented or otherwise
modified from time to time.
"Guarantor Security Agreement" means the security agreement,
substantially in the form of Exhibit G-2, made by the Guarantors in
favor of the Agent for the benefit of the Agent, the Issuing Bank and
the Lenders, as amended, supplemented or otherwise modified from time
to time.
"Guaranty" means the Guaranty, substantially in the form of
Exhibit J, made by the Guarantors in favor of the Agent for the benefit
of the Lenders, as amended, supplemented or otherwise modified from
time to time.
"Hazardous Materials" means any and all pollutants and
contaminants and any and all toxic, caustic, radioactive or hazardous
materials, substances or wastes that are regulated under any
Environmental Laws, including without limitation, petroleum, its
derivatives and by-products and any other hydrocarbons.
"Highest Lawful Rate" means, at any given time during which
any Obligations shall be outstanding hereunder, the maximum
non-usurious interest rate, if any, that at any time or from time to
time may be contracted for, taken, reserved, charged or received on the
Obligations, under the laws of the State of New York (or the law of any
other jurisdiction whose laws may be mandatorily applicable
notwithstanding other provisions of this Credit Agreement and the other
Credit Documents), or under applicable federal laws
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which may presently or hereafter be in effect and which allow a higher
maximum nonusurious interest rate than under New York (or such other
jurisdiction's) law, in any case after taking into account, to the
extent permitted by applicable law, any and all relevant payments or
charges under this Credit Agreement and any other Credit Documents
executed in connection herewith, and any available exemptions,
exceptions and exclusions.
"Hypothec" means the collective reference to the Safety Canada
Hypothec and the 3232301 Hypothec.
"Hypothecation Agreements" means the collective reference to
the Safety Hypothecation Agreement and the 3232301 Hypothecation
Agreement.
"Indebtedness" of any Person means (a) indebtedness for
borrowed money or for the deferred purchase price of property or
services (other than trade liabilities incurred in the ordinary course
of business and payable in accordance with customary trade practices of
the Credit Party), whether on open account or evidenced by a note,
bond, debenture or similar instrument, (b) obligations under capital
leases computed in accordance with GAAP, (c) reimbursement obligations
for letters of credit, banker's acceptances or other credit
accommodations, (d) liabilities, as determined by the Agent in its
reasonable judgment, under any Interest Rate Agreement, (e) Contingent
Obligations and (f) obligations secured by any Lien on that Person's
property, even if that Person has not assumed such obligations.
"Indemnified Party" is defined in Section 10.10(a).
"Insolvency Event" means, with respect to any Person, the
occurrence of any of the following: (a) such Person shall be
adjudicated insolvent or bankrupt, or shall generally fail to pay or
admit in writing its inability to pay its debts as they become due, (b)
such Person shall seek dissolution or reorganization or the appointment
of a receiver, trustee, custodian or liquidator for it or a substantial
portion of its property, assets or business or to effect a plan or
other arrangement with its creditors, (c) such Person shall make a
general assignment for the benefit of its creditors, or consent to or
acquiesce in the appointment of a receiver, trustee, custodian or
liquidator for a substantial portion of its property, assets or
business, (d) such
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Person shall file a voluntary petition under any bankruptcy, insolvency
or similar law, (e) such Person, or a substantial portion of its
property, assets or business shall become the subject of an involuntary
proceeding or petition for its dissolution, reorganization, or the
appointment of a receiver, trustee, custodian or liquidator or shall
become subject to any writ, judgment, warrant of attachment, execution
or similar process or (f) such Person shall take any action to
authorize any of the foregoing.
"Interest Period" means for any Eurodollar Rate Loan the
period commencing on the date of such Borrowing and ending on the last
day of the period selected by a Borrower pursuant to the provisions
below. The duration of each such Interest Period shall be one, two,
three or six months, in each case as a Borrower may, in an appropriate
Notice of Borrowing, Notice of Continuation or Notice of Conversion,
select; provided, however, that a Borrower may not select any Interest
Period that ends after the Expiration Date. 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 that if such
extension would cause the last day of such Interest Period to occur in
the next following calendar month, the last day of such Interest Period
shall occur on the next preceding Business Day.
"Interest Rate Agreement" means any interest rate protection
or hedge agreement, including, without limitation, any interest rate
future, option, swap and cap agreement, in form and substance
acceptable to the Agent.
"Internal Revenue Code" means the Internal Revenue Code of
1986, any amendments thereto, and any successor statute thereto and
regulations and guidance promulgated thereunder.
"Internal Revenue Service" or "IRS" means the United States
Internal Revenue Service and any successor agency.
"Inventory" is defined in the Security Agreements.
"Inventory Borrowing Base" means, on any day, the lesser of
(a) $10,000,000 and (b) an amount up to 60% of the value of the
Eligible Inventory of the Borrowers on such day and, through December
31, 1997, an amount
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up to 40% of the value of the Eligible Components Inventory of the
Borrowers on such day.
"Investment" means all expenditures made and all liabilities
incurred (including Contingent Obligations) for or in connection with
the acquisition of stock or Indebtedness of a Person, loans, advances,
capital contributions or transfers of property to a Person, or
acquisition of all or substantially all the assets of a Person. In
determining the aggregate amount of Investments outstanding at any
particular time, (i) a guaranty shall be valued at not less than the
principal amount outstanding unless such guaranty is a limited
guaranty, in which case it shall be valued at not less than the maximum
principal amount guaranteed; (ii) returns of capital (but only by
repurchase, redemption, retirement, repayment, liquidating dividend or
liquidating distribution) shall be deducted; (iii) earnings, whether as
dividends, interest or otherwise, shall not be deducted; and (iv)
decreases in market value shall not be deducted unless such decreases
are computed in accordance with GAAP.
"Issuing Bank Fees" is defined in Section 4.4(b).
"Lender" is defined in the preamble to this Credit Agreement.
"Lender Advance" is defined in Section 2.2.
"Xxxxxx" means Xxxxxxx Xxxxxx, an individual residing at 000
Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
"Xxxxxx Trust" means Xxxxxx Collateral Trust, a Delaware
business trust of which Xxxxxx is the sole beneficiary.
"Letter of Credit Agreement" is defined in Section 3.4.
"Letter of Credit Fees" is defined in Section 4.4(a).
"Letter of Credit Obligations" means the sum of the
Documentary Letter of Credit Obligations and the Standby Letter of
Credit Obligations.
"Letter of Credit Related Documents" is defined in Section
3.8.
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"Letter of Credit Request" is defined in Section 3.4.
"Letters of Credit" means all standby and documentary letters
of credit issued for the account of a Borrower pursuant to Article III
of this Credit Agreement and all amendments, renewals, extensions or
replacements thereof.
"Lien(s)" means any lien, claim, charge, pledge, security
interest, assignment, legal cause of preference, hypothecation, deed of
trust, mortgage, lease, conditional sale, retention of title, or other
preferential arrangement having substantially the same economic effect
as any of the foregoing, whether voluntary or imposed by law.
"Line of Credit" means the aggregate revolving line of credit
extended by the Lenders to the Borrowers for Revolving Loans and
Letters of Credit pursuant to and in accordance with the terms of this
Credit Agreement, in the amount of $27,500,000 as such revolving line
of credit may be reduced from time to time in accordance with Section
2.10.
"Loan Account" is defined in Section 2.11.
"Loans" means the Revolving Loans and the Term Loan made from
time to time hereunder.
"Lockbox Agreements" is defined in Section 2.13.
"Lockbox Banks" is defined in Section 2.13.
"Lockboxes" is defined in Section 2.13.
"Majority Lenders" means those Lenders owed or holding in the
aggregate more than 50% of the total Commitments or if the Commitments
are terminated, more than 50% of the Loans and Letter of Credit
Obligations then outstanding; provided, that if there are at least two
Lenders and BTCC holds more than 50% of the total Commitments, Majority
Lenders means BTCC and one other Lender.
"Material Adverse Effect" means (i) a material adverse effect
on the business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of either Borrower
individually or Safety and its Subsidiaries, taken as a whole, (ii) the
material impairment of the ability of either Borrower individually or
Safety and its
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Subsidiaries, taken as a whole, to perform its obligations under the
Credit Documents to which it is a party or of the Agent or the Lenders
to enforce the Obligations or realize upon the Collateral, or (iii) a
material adverse effect on the value of the Collateral or the amount
which the Agent or the Lenders would be likely to receive (after giving
consideration to delays in payment and costs of enforcement) in the
liquidation of such Collateral, in either of the events described in
this clause (iii) having a value in excess of $250,000.
"Material Contract" means any contract or other arrangement to
which Safety or any of its Subsidiaries is a party (other than the
Credit Documents) for which breach, nonperformance, cancellation or
failure to renew could have a Material Adverse Effect.
"Mold" means a mold used in connection with the manufacture of
the Borrowers' inventory which accounts for at least five percent (5%)
of the Borrowers' gross sales.
"Multiemployer Plan" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which Safety, any of its Subsidiaries
or any ERISA Affiliate has contributed within the past six years or
with respect to which Safety or any of its Subsidiaries may incur any
liability.
"Net Cash Proceeds" means, with respect to any Asset Sale, any
issuance of any equity securities by a Credit Party or any incurrence
of Indebtedness by a Credit Party (other than Indebtedness permitted
under Section 7.2(b)), the aggregate amount of cash received from time
to time by or on behalf of such Credit Party in connection with such
transaction after deducting therefrom only (a) reasonable and customary
brokerage commissions, underwriting fees and discounts, legal fees,
finder's fees and other similar fees and commissions, (b) the amount of
income taxes reasonably estimated to be actually payable in connection
with or as a result of such transaction within one year of such
transaction, and (c) in the case of any Asset Sale, the amount of any
Indebtedness secured by a Lien on such asset that, by the terms of such
transaction, is required to be repaid upon such disposition.
"Net Income" means, for any period, the net income of Safety
and its Subsidiaries on a consolidated basis, as reflected on the
Financial Statements for such period.
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"Notes" means the Revolving Notes and the Term Notes.
"Notice of Borrowing" is defined in Section 2.2(a).
"Notice of Continuation" is defined in Section 4.8(a).
"Notice of Conversion" is defined in Section 4.8(b).
"Obligations" means the unpaid principal and interest
hereunder (including interest accruing on or after the occurrence of an
Insolvency Event, whether or not an allowed claim), reimbursement
obligations under Letters of Credit, Fees, Expenses and all other
obligations and liabilities of the Borrowers to the Agent, the Issuing
Bank or to the Lenders under this Credit Agreement, the Notes, or any
other Credit Document.
"Other Taxes" is defined in Section 4.10(b).
"PBGC" means the Pension Benefit Guaranty Corporation and any
Person succeeding to the functions thereof.
"Pending Borrowings" means prospective Borrowings for which a
Notice of Borrowing has been delivered but for which Revolving Loans
have not been advanced.
"Permitted Discretion" means the Agent's good faith judgment
based upon any factor which the Agent believes in good faith: (i) will
or could reasonably be expected to adversely affect the value of any
Collateral, the enforceability or priority of the Agent's Liens thereon
or the amount which the Agent and the Lenders would be likely to
receive (after giving consideration to delays in payment and costs of
enforcement) in the liquidation of such Collateral; (ii) suggests that
any collateral report or financial information delivered to the Agent
by any Person on behalf of a Borrower is incomplete, inaccurate or
misleading in any material respect; (iii) materially increases the
likelihood of a bankruptcy, reorganization or other insolvency
proceeding involving Safety or any of its Subsidiaries or any of the
Collateral, or (iv) creates or reasonably could be expected to create a
Default or Event of Default. In exercising such judgment, the Agent may
consider such factors already included in or tested by the definition
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of Eligible Accounts Receivable or Eligible Inventory, as well as any
of the following: (A) the financial and business climate of the
Borrowers' industry and general macroeconomic conditions, (B) changes
in collection history and dilution with respect to the Accounts, (C)
changes in demand for, and pricing of, Inventory, (D) changes in any
concentration of risk with respect to Accounts or Inventory, and (E)
any other factors that change the credit risk of lending to the
Borrowers on the security of the Accounts or Inventory. The burden of
establishing lack of good faith shall be on the Borrowers.
"Permitted Liens" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding
shall have been commenced and be continuing: (a) Liens for taxes,
assessments and governmental charges not yet due and payable or which
are being diligently contested in good faith by Safety or one of its
Subsidiaries by appropriate proceedings, provided that in any such case
an adequate reserve is being maintained by Safety or one of its
Subsidiaries for the payment of the same; (b) so long as the Agent has
been notified of the same, Liens imposed by law, such as materialmen's,
mechanics', carriers', workmen's and repairmen's Liens and other
similar Liens arising in the ordinary course of business securing
obligations that are not overdue and, in any case, where the property
subject thereto is not material to the operations of the Person whose
assets are subject to such Lien or which are being diligently contested
in good faith and by appropriate proceedings and as to which
appropriate reserves are being maintained; (c) pledges or deposits to
secure obligations under workers' compensation laws or similar
legislation or to secure public or statutory obligations; and (d)
easements, rights of way and other encumbrances incurred in the
ordinary course of business which, in the aggregate, are not
substantial in amount and which do not materially detract from the
value of the property subject thereto or materially interfere with the
ordinary conduct of the business of the Person whose property is
subject to such easement, right of way or encumbrance.
"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, corporation, limited or unlimited liability company,
institution, entity, party or government (including any division,
agency or department thereof), and, as applicable, the successors,
heirs and assigns of each.
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"Plan" means any employee benefit plan, program or arrangement
maintained or contributed to by Safety or any of its Subsidiaries, or
with respect to which any of them may incur liability.
"Prime Lending Rate" means the rate which Bankers Trust
Company announces as its prime lending rate from time to time. The
Prime Lending Rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to any customer.
Bankers Trust Company and each of the Lenders may make commercial loans
or other loans at rates of interest at, above or below the Prime
Lending Rate.
"Prime Rate Loan" means a Loan that bears interest as provided
in Section 4.1.
"Prohibited Transaction" is defined in Section 6.1(r)(v).
"Proportionate Share" of a Lender means a fraction, expressed
as a decimal, obtained by dividing its Commitment by the total
Commitments of all the Lenders or, if the Commitments are terminated,
by dividing its then outstanding Revolving Loans and/or Letter of
Credit participations by the aggregate Revolving Loans and/or Letter of
Credit Obligations then outstanding.
"Purchase Money Liens" is defined in Section 7.2(b)(v).
"Rate of Exchange" means the rate at which the Agent is able
on the relevant date to purchase Dollars with other currency and shall
include any premiums and costs of exchange payable in connection with
the purchase of or conversion into Dollars.
"Reduced Rate" is defined in Section 4.10(e), relating to
backup withholding tax.
"Register" is defined in Section 10.8(c).
"Reportable Event" means any of the events described in
Section 4043 of ERISA and the regulations thereunder, other than a
reportable event for which the 30-day notice requirement to the PBGC
has been waived.
"Requirement of Law" means (a) the Governing Documents of a
Person, (b) any law, treaty, rule or regulation or determination of an
arbitrator, court or other Governmental Authority, or (c) any
governmental
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franchise, license, lease, permit, certificate, authorization,
qualification, easement, right of way, right or approval binding on a
Person or any of its property.
"Retiree Health Plan" means an "employee welfare benefit plan"
within the meaning of Section 3(1) of ERISA that provides benefits to
persons after termination of employment, other than as required by
Section 601 of ERISA.
"Revolving Loans" is defined in Section 2.1(a).
"Revolving Note" means a promissory note of the Borrowers
payable to the order of any Lender, substantially in the form of
Exhibit A-1, as the same may be amended, supplemented or otherwise
modified from time to time.
"Safety Canada Hypothec" means the Movable Hypothec,
substantially in the form of Exhibit P, made by Safety Canada in favor
of the Agent for the benefit of the Lenders, as amended, supplemented
or otherwise modified from time to time.
"Safety Canada Trade Payable" means amounts owed from Safety
Canada to Safety on account of goods sold and delivered or services
rendered.
"Safety Europe" means Safety 1st (Europe) Limited, a limited
liability company organized under the laws of the United Kingdom.
"Safety Hypothecation Agreement" means the Hypothecation
Agreement, substantially in the form of Exhibit I-2, made by Safety in
favor of the Agent for the ratable benefit of the Lenders, as amended,
supplemented or otherwise modified from time to time.
"Security Agreements" means the Borrower Security Agreement,
the Borrower Intellectual Property Security Agreement, the Guarantor
Security Agreement and the Guarantor Intellectual Property Security
Agreement.
"Settlement Date" is defined in Section 2.6(a).
"Standby Letter of Credit Obligations" means the sum of the
aggregate undrawn amount of all standby Letters of Credit outstanding
plus the aggregate amount of all drawings under standby Letters of
Credit for which a Borrower has not reimbursed the Issuing Bank.
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"Stock Purchase Agreement" means the Stock and Warrant
Purchase Agreement dated as of even date herewith among Safety and the
Investors named therein, as amended, supplemented or otherwise modified
from time to time.
"Subsidiary" means as to any Person, a corporation or other
entity in which that Person directly or indirectly owns or controls the
shares of stock or other ownership interests having ordinary voting
power to elect a majority of the board of directors or appoint other
managers of such corporation or other entity. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in
this Credit Agreement shall refer to a Subsidiary or Subsidiaries of
Safety.
"Syndication Date" means the earlier of (i) the date that is
ninety (90) days after the Closing Date and (ii) the date on which the
Agent notifies Safety of the completion of the primary syndication of
the Loans under this Credit Agreement, as determined by the Agent in
its sole discretion, which notice shall be promptly given.
"Taxes" is defined in Section 4.10(a).
"Tax Transferee" is defined in Section 4.10(a).
"Termination Event" means (i) a Reportable Event with respect
to any Benefit Plan or Multiemployer Plan; (ii) the withdrawal of
Safety, any of its Subsidiaries or any ERISA Affiliate from a Benefit
Plan during a plan year in which it was a "substantial employer" (as
defined in Section 4001(a)(2) of ERISA); (iii) the providing of notice
of intent to terminate a Benefit Plan in a distress termination (as
described in Section 4041(c) of ERISA); (iv) the institution by the
PBGC of proceedings to terminate a Benefit Plan or Multiemployer Plan;
(v) any event or condition (a) which is reasonably likely to constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan or
Multiemployer Plan, or (b) that is reasonably likely to result in
termination of a Multiemployer Plan pursuant to Section 4041A of ERISA;
or (vi) the partial or complete withdrawal within the meaning of
Sections 4203 and 4205 of ERISA, of Safety, any of its Subsidiaries or
any ERISA Affiliate from a Multiemployer Plan.
"Term Loan" is defined in Section 2.7.
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"Term Note" means a promissory note of the Borrowers payable
to the order of any Lender, substantially in the form of Exhibit A-2,
as the same may be amended, supplemented or otherwise modified from
time to time.
"3232301" means 3232301 Canada Inc., a Canadian federal
corporation, and its successors and permitted assigns.
"3232301 Hypothec" means the Movable Hypothec, substantially
in the form of Exhibit O, made by 3232301 in favor of the Agent for the
ratable benefit of the Lenders, as amended, supplemented or otherwise
modified from time to time.
"3232301 Hypothecation Agreement" means the Hypothecation
Agreement, substantially in the form of I-2, made by 3232301 in favor
of the Agent for the ratable benefit of the Lenders, as amended,
supplemented or otherwise modified from time to time.
"Type" means, with respect to any Loan, whether such Loan is a
Eurodollar Rate Loan or a Prime Rate Loan.
"Unused Availability" means, at any time of determination, the
excess of (x) the lesser of the Borrowing Base or the Line of Credit
over (y) the sum of the unpaid principal amount of the Revolving Loans
outstanding and the Letter of Credit Obligations.
"Unused Line Fee" is defined in Section 4.5.
SECTION 1.2. ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
defined or specified herein, all accounting terms used in this Credit Agreement
shall be construed in accordance with GAAP, applied on a basis consistent in all
material respects with the Financial Statements delivered to the Agent on or
before the Closing Date. All accounting determinations for purposes of
determining compliance with Section 7.2(r) through (v) shall be made in
accordance with GAAP as in effect on the Closing Date and applied on a basis
consistent in all material respects with the audited Financial Statements
delivered to the Agent on or before the Closing Date. The Financial Statements
required to be delivered hereunder from and after the Closing Date, and all
financial records, shall be maintained in accordance with GAAP. If GAAP shall
change from the basis used in preparing the audited Financial Statements
delivered to the Agent on or before the Closing Date, the certificates required
to be delivered pursuant to Section 7.1
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demonstrating compliance with the covenants contained herein shall include
calculations setting forth the adjustments necessary to demonstrate how each
Borrower is in compliance with the financial covenants based upon GAAP as in
effect on the Closing Date. References to a fiscal period ending on a particular
date shall mean the fiscal period ending on or about such date.
SECTION 1.3. OTHER TERMS; HEADINGS. Terms used herein that are defined
in the Uniform Commercial Code, from time to time, in effect in the State of New
York (the "Code") shall have the meanings given in the Code. Each of the words
"hereof," "herein," and "hereunder" refer to this Credit Agreement as a whole.
An Event of Default shall "continue" or be "continuing" until such Event of
Default has been cured (to the extent capable of being cured) or waived in
accordance with Section 10.11 hereof. References to Articles, Sections, Annexes,
Schedules, and Exhibits are internal references to this Credit Agreement, and to
its attachments, unless otherwise specified. The headings and the Table of
Contents are for convenience only and shall not affect the meaning or
construction of any provision of this Credit Agreement.
SECTION 1.4. COMPUTATION OF TIME PERIODS. In this Credit Agreement, in
the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each mean "to but excluding."
ARTICLE II
LOANS
SECTION 2.1. REVOLVING CREDIT COMMITMENTS.
(a) Subject to the terms and conditions set forth in this
Credit Agreement, on and after the Closing Date and to the Expiration Date, each
Lender severally agrees to make loans and advances to Safety ("Revolving Loans")
in an outstanding amount not to exceed at any time its Proportionate Share of
the lesser of (x) the total Commitments and (y) the Borrowing Base, minus, in
each case, the then outstanding Letter of Credit Obligations, the Pending
Borrowings and the Borrower's exposure (as determined by the Agent) under any
Interest Rate Agreements entered into in accordance with Section 7.2(b)(vii).
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(b) The Agent, at any time in the exercise of its Permitted
Discretion, may (i) establish and increase or decrease reserves against Eligible
Accounts Receivable and Eligible Inventory, (ii) reduce the advance rates
provided for in the definition of Accounts Borrowing Base and Inventory
Borrowing Base, or restore such advance rates to any level equal to or below the
advance rates in effect as of the date of this Credit Agreement, (iii) increase
advance rates provided for in the definition of Accounts Borrowing Base up to a
maximum of 85% of Eligible Accounts Receivable based on evidence of lower
dilution levels of the Accounts of the Borrowers, and (iv) impose additional
restrictions (or eliminate the same) to the standards of eligibility set forth
in the definitions of Eligible Accounts Receivable and Eligible Inventory. The
Agent 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.
SECTION 2.2. BORROWING OF REVOLVING LOANS. It is contemplated that
Revolving Loans will be made available to Safety directly by the Lenders
("Lender Advances") and, in the circumstances described in Section 2.2(b), from
the Agent acting on behalf of the Lenders ("Agent Advances"). The Revolving
Loans made by each Lender shall be evidenced by Revolving Notes payable to the
order of each Lender, with appropriate insertions as to the date and principal
amount.
(a) Lender Advances of Revolving Loans. Subject to the
determination by the Agent and the Lenders that the conditions for borrowing
contained in Section 5.2 are satisfied, upon notice from Safety to the Agent,
substantially in the form of Exhibit C ("Notice of Borrowing") received by the
Agent before 12:00 noon (New York City time) on a Business Day, Lender Advances
of Revolving Loans shall be made to the extent of each Lender's Proportionate
Share of the requested borrowing. The Notice of Borrowing shall specify whether
the requested Borrowing is of Prime Rate Loans or Eurodollar Rate Loans.
(b) Agent Advances of Revolving Loans. The Agent is authorized
by the Lenders, but is not obligated, to make Agent Advances (i) upon a Notice
of Borrowing received by the Agent before 2:00 p.m. (New York City time) on a
Business Day, or (ii) upon advice received by the Agent on a Business Day from
the Disbursement Account Bank of the face amount of checks drawn on the
Disbursement Account, which have been or will be presented for payment on that
day, minus the amount of funds then available in the Disbursement Account. All
Agent Advances shall be Prime Rate Loans. Agent Advances will not at any time
exceed the amount available for borrowing under Section 2.1(a). Agent Advances
will be subject to periodic settlement with the Lenders under Section 2.6. Agent
Advances may be made only in the following circumstances:
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(i) For administrative convenience, the Agent may, but is not
obligated to, make Agent Advances in reliance upon Safety's actual or
deemed representations under Section 5.2 that the conditions for
borrowing are satisfied.
(ii) If the conditions for borrowing under Section 5.2 cannot
be fulfilled, Safety shall in its Notice of Borrowing or otherwise give
immediate notice thereof to the Agent, with a copy to each of the
Lenders, and the Agent may, but is not obligated to, continue to make
Agent Advances for twenty (20) Business Days from the date the Agent
first receives such notice, or until sooner instructed by the Majority
Lenders to cease.
SECTION 2.3. DISBURSEMENT OF REVOLVING LOANS. The proceeds of Revolving
Loans shall be transmitted by the Agent (x) upon advice received by the Agent
from the Disbursement Account Bank, as described in Section 2.2(b), directly to
the Disbursement Account, (y) in the circumstances described in Section 3.5,
directly to the Issuing Bank and (z) in all other circumstances, as requested by
Safety in its Notice of Borrowing.
SECTION 2.4. NOTICES OF BORROWING. Notices of Borrowing may be given
under this Section by telephone or facsimile transmission, and, if by telephone,
promptly confirmed in writing, substantially in the form of Exhibit C. Safety
shall specify in each Notice of Borrowing whether the conditions for the
requested borrowing are satisfied. Safety may request one or more borrowings of
Prime Rate Loans by Notice of Borrowing given not later than 12:00 noon (New
York City time) on the same Business Day as the proposed Borrowing. Notice of
Borrowing for Eurodollar Rate Loans shall be given not later than 2:00 p.m. (New
York City time) on the third Business Day prior to the proposed Borrowing. Each
Notice of Borrowing shall, unless otherwise specifically provided herein,
consist entirely of Revolving Loans of the same Type and, if such Borrowing is
to consist of Eurodollar Rate Loans, shall be in an aggregate amount for all
Lenders of not less than $1,000,000 or an integral multiple of $100,000 in
excess thereof. The right of Safety to choose Eurodollar Rate Loans is subject
to the provisions of Section 4.8. Once given, a Notice of Borrowing is
irrevocable by and binding on Safety. Safety shall provide to the Agent a list,
with specimen signatures, of officers authorized to request Revolving Loans and
Letters of Credit. The Agent is entitled to rely upon such list until it is
replaced by Safety.
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SECTION 2.5. SAME DAY SETTLEMENT OF LENDER ADVANCES. The Agent shall
give each Lender prompt notice by telephone or facsimile transmission of a
Notice of Borrowing that requests Lender Advances of Revolving Loans. No later
than 2:00 p.m. (New York City time) on the date of receipt of the Notice of
Borrowing, each Lender shall make available to the Agent at the Agent's address
such Lender's Proportionate Share of such borrowing in immediately available
funds. Unless the Agent receives contrary written notice prior to the date of
any such borrowing of Revolving Loans, it is entitled to assume that each Lender
will make available its Proportionate Share of the borrowing and in reliance
upon that assumption, but without any obligation to do so, may advance such
Proportionate Share on behalf of such Lender.
SECTION 2.6. PERIODIC SETTLEMENT OF AGENT ADVANCES.
(a) The Settlement Date. The amount of each Lender's
Proportionate Share of Revolving Loans shall be computed weekly (or more
frequently in the Agent's discretion) and shall be adjusted upward or downward
based on all Revolving Loans (including Agent Advances) and repayments received
by the Agent as of 5:00 p.m. (New York City time) on the last Business Day of
the period specified by the Agent (such date, the "Settlement Date").
(b) Summary Statements; Settlements of Principal. The Agent
shall deliver to each of the Lenders promptly after the Settlement Date a
summary statement of the amount of outstanding Revolving Loans (including Agent
Advances) for the period and the amount of repayments received for the period.
As reflected on the summary statement: (i) the Agent shall transfer to each
Lender its Proportionate Share of repayments; and (ii) each Lender shall
transfer to the Agent, or the Agent shall transfer to each Lender, such amounts
as are necessary to insure that, after giving effect to all such transfers, the
amount of Revolving Loans made by each Lender shall be equal to such Lender's
Proportionate Share of the aggregate amount of Revolving Loans outstanding as of
such Settlement Date. If the summary statement requires transfers to be made to
the Agent by the Lenders and is received prior to 12:00 Noon (New York City
time) on a Business Day, such transfers shall be made in immediately available
funds no later than 2:00 p.m. (New York City time) that day; and, if received
after 12:00 Noon (New York City time), then no later than 2:00 p.m. (New York
City time) on the next Business Day. The obligation of each Lender to transfer
such funds is irrevocable, unconditional and without recourse to or warranty by
the Agent.
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(c) Distribution of Interest and Unused Line Fees. Interest on
the Revolving Loans (including Agent Advances), together with the amount of the
Unused Line Fee, shall be allocated by the Agent to each Lender in accordance
with the Proportionate Share of Revolving Loans actually advanced by and repaid
to each Lender, and shall accrue from and including the date such Revolving
Loans are so advanced and to but excluding the date such Revolving Loans are
either repaid by a Borrower or actually settled under this Section. After the
end of each month, the Agent shall, upon receipt from a Borrower, distribute to
each Lender its Proportionate Share of the interest and Unused Line Fee accrued
during such month. The Agent shall, upon receipt from a Borrower, distribute
interest on Eurodollar Rate Loans promptly after it is received from a Borrower.
SECTION 2.7. TERM LOAN.
(a) Upon the request of Safety to the Agent, each Lender
severally agrees, subject to the terms and conditions set forth in this
Agreement, to make a term loan (the "Term Loan") to Safety on the Closing Date
in an aggregate principal amount equal to such Lender's Proportionate Share of
$12,500,000.
(b) The Term Loan made by each Lender shall be evidenced by
Term Notes payable to the order of each Lender, with appropriate insertions as
to the date and principal amount. The principal amount of each Term Loan shall
be payable in twenty (20) consecutive equal quarterly installments, the first
nineteen (19) installments of which shall be payable on the first Business Day
of each calendar quarter, commencing with October 1, 1997, and the last
installment of which shall be payable on the Expiration Date, whereupon the
entire outstanding principal balance thereof and all accrued and unpaid interest
thereon shall be payable in full. Amounts paid on account of the Term Loan may
not be reborrowed.
SECTION 2.8. SHARING OF PAYMENTS. If any Lender shall obtain any
payment pursuant to the terms of this Credit Agreement (whether voluntary,
involuntary, through the exercise of any right of setoff or otherwise) on
account of the Loans made by it or its participation in Letters of Credit in
excess of its Proportionate Share of payments on account of the Loans or Letters
of Credit obtained by all the Lenders, such Lender shall forthwith purchase from
the other Lenders such participations in the Loans made by them or in their
participation in Letters of Credit as shall be necessary to cause such
purchasing Lender to share the excess payment ratably with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and each such Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal to
such Lender's
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ratable share (according to the proportion of (i) the amount of such Lender's
required repayment to (ii) the total amount so recovered from the purchasing
Lender) of any interest or other amount paid or payable by the purchasing Lender
in respect to the total amount so recovered, and provided, further that this
Section shall not apply with respect to any fees which are intended to be for
the benefit of less than all of the Lenders. Each Borrower agrees that any
Lender so purchasing a participation from another Lender pursuant to this
Section 2.8 may, to the fullest extent permitted by law, exercise all of its
rights of payment (including the right of setoff) with respect to such
participation as fully as if such Lender were the direct creditor of such
Borrower in the amount of such participation. Notwithstanding anything contained
herein to the contrary, the sharing provisions of this Section 2.8 shall not
apply to any payments received by any Lender from or on behalf of a Borrower or
the Agent that is not made pursuant to the express terms and provisions of this
Credit Agreement.
SECTION 2.9. DEFAULTING LENDERS.
(a) A Lender who fails to pay the Agent its Proportionate
Share of any Loans (including Agent Advances) made available to a Borrower by
the Agent on such Lender's behalf, or who fails to pay any other amount owing by
it to the Agent, is a defaulting lender ("Defaulting Lender"). The Agent may
recover all such amounts owing by a Defaulting Lender on demand. If the
Defaulting Lender does not pay such amounts on the Agent's demand, the Agent
shall promptly notify the Borrowers and the Borrowers shall jointly and
severally pay such amounts within five (5) Business Days. In addition, the
Defaulting Lender or the Borrowers shall jointly and severally pay the Agent
interest on such amount for each day from the date it was made available by the
Agent to Safety to the date it is recovered by the Agent at a rate per annum
equal to (x) the overnight Federal Funds Rate, if paid by the Defaulting Lender,
or (y) the then applicable rate of interest calculated under Section 4.1, if
paid by the Borrower; plus, in each case, the Expenses and losses, if any,
incurred as a result of the Defaulting Lender's failure to perform its
obligations.
(b) The failure of any Lender to fund its Proportionate Share
of any Loan (including Agent Advances) shall not relieve any other Lender of its
obligation to fund its Proportionate Share of such Loan. Conversely, no Lender
shall be responsible for the failure of another Lender to fund such other
Lender's Proportionate Share of a Loan.
(c) The Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by the Borrower to the Agent for the
Defaulting Lender's benefit; nor shall a Defaulting Lender be entitled to the
sharing of any payments hereunder.
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Amounts payable to a Defaulting Lender shall instead be paid to or retained by
the Agent. The Agent may hold and, in its discretion, re-lend to Safety the
amount of all such payments received or retained by it for the account of such
Defaulting Lender. For purposes of voting or consenting to matters with respect
to the Credit Documents and determining Proportionate Shares, such Defaulting
Lender shall be deemed not to be a "Lender" and such Lender's Commitment shall
be deemed to be zero (-0-). This Section shall remain effective with respect to
such Lender until (x) the Obligations under this Credit Agreement shall have
been declared or shall have become immediately due and payable or (y) the
Majority Lenders, the Agent and the Borrowers shall have waived such Lender's
default in writing. The operation of this Section shall not be construed to
increase or otherwise affect the Commitment of any Lender, or relieve or excuse
the performance by a Borrower of its duties and obligations hereunder.
SECTION 2.10. MANDATORY PAYMENT; MANDATORY REDUCTION OF THE
COMMITMENTS.
(a) The aggregate balance of Revolving Loans and all Letter of
Credit Obligations outstanding at any time in excess of the lesser of (i) the
Borrowing Base then in effect and (ii) the Line of Credit shall be immediately
due and payable without the necessity of any demand.
(b) On the Expiration Date, the Commitment of each Lender
shall automatically reduce to zero and may not be reinstated. The obligation of
each Lender to make its Proportionate Share of the Term Loan shall expire on the
Closing Date, after giving effect to the Term Loan borrowed on such date.
(c) The Borrower may reduce or terminate the Commitments on a
pro rata basis at any time and from time to time in whole or in part; provided,
however, that each such reduction must be in an aggregate amount for all Lenders
of not less than $1,000,000 (and in increments of $1,000,000 thereafter). If the
Borrower seeks to reduce the Commitments to an aggregate amount of less than
$5,000,000, then the Commitments shall be reduced to zero. Once reduced, no
portion of the Commitments may be reinstated.
(d) If any Credit Party shall receive any proceeds from the
consummation of any Asset Sales or the issuance of any equity securities (other
than proceeds of the preferred stock and warrants acquired by the Investors
under (and as defined in) the Stock Purchase Agreement) 100% of the Net Cash
Proceeds received therefrom shall be immediately paid to the Agent to be applied
toward the prepayment of the Term Loan and, after the Term Loan is repaid in
full, in payment of the Revolving Loans as set forth in Section 2.10(f).
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(e) If, for the six month period ended December 31, 1997 or
any fiscal year ending thereafter, there shall be Excess Cash Flow for such
period or fiscal year, 75% of such Excess Cash Flow shall be applied toward
prepayment of the Term Loan as set forth in subsection 2.10(f). Each such
prepayment or reduction shall be made on or before the date on which the
financial statements referred to in Section 7.1(a)(i) in respect of such fiscal
year are delivered, but in no event later than the date by which such statements
are required to be delivered pursuant to such Section.
(f) Prepayments made pursuant to Section 2.10(e) shall be
applied by the Credit Parties to the prepayment of the Term Loan. Prepayments
made pursuant to Section 2.10(d) shall be applied by the Credit Parties first,
to the prepayment of the Term Loan and, second, to repay the Revolving Loans,
which amounts may be reborrowed, subject to the terms and conditions contained
herein. Any reduction of the Line of Credit or the Commitment, shall reduce the
Commitment of each Lender proportionately by its Proportionate Share of the
amount of such reduction. Prepayments of the Term Loan pursuant to this Section
2.10 shall be ratable and applied to the remaining installments of the Term Loan
in the inverse order of their scheduled maturities. Amounts prepaid on account
of the Term Loan may not be reborrowed.
(g) Notwithstanding anything to the contrary contained in
Section 2.10(d), if at any time any Credit Party shall receive any Net Cash
Proceeds in excess of $250,000 from any casualty or loss of any assets, such
proceeds shall be promptly deposited with the Agent who shall hold such proceeds
in a cash collateral account satisfactory to the Agent. From time to time upon
request, the Agent will release such proceeds to such Credit Party, as
necessary, to pay for replacement or rebuilding of the assets subject to such
casualty or loss. If such assets are not replaced or rebuilt within 120 days
following the date of the Credit Party's receipt of the proceeds of the loss or
casualty or if Safety fails to notify the Agent in writing on or before 45 days
after the Credit Party's receipt of the proceeds of such casualty or loss that
the Credit Party shall commence the replacement or rebuilding of such asset,
then, in either case, the Agent may apply any amounts in the cash collateral
account toward the prepayment of the Term Loan or reduction of the Line of
Credit in accordance with Section 2.10(f).
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SECTION 2.11. MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF
ACCOUNT. The Agent shall maintain an account on its books in the name of Safety
(the "Loan Account") in which Safety will be charged with all loans and advances
made by the Lenders to Safety or for Safety's account, including the Loans, the
Letter of Credit Obligations, the Fees, the Expenses and any other Obligations.
The Loan Account will be credited with all amounts received by the Agent from
the Borrowers or for the Borrowers' account, including, as set forth in Section
2.13, all amounts received in the Concentration Account from any Lockbox Bank.
The Agent shall send the Borrowers a monthly statement reflecting the activity
in the Loan Account. Absent manifest error, each monthly statement shall be an
account stated and shall be final, conclusive and binding on the Borrowers.
SECTION 2.12. PAYMENT PROCEDURES. The Borrowers hereby
authorize the Agent to charge the Loan Account with the amount of all interest,
Fees and Expenses and other payments to be made hereunder and under the other
Credit Documents. The Borrowers' obligations to the Agent and the Lenders with
respect to such payments shall be discharged by the Agent charging the Loan
Account as provided herein.
SECTION 2.13. COLLECTION OF ACCOUNTS. Subject to Section
7.1(q)(iv), Safety and Safety Canada shall at all times maintain lockboxes (the
"Lockboxes") and shall instruct all account debtors on their respective Accounts
to remit all Collections to their respective Lockboxes. Each Borrower, the Agent
and financial institutions selected by such Borrower and acceptable to the Agent
(the "Lockbox Banks") shall enter into separate agreements, substantially in the
form of Exhibit K (the "Lockbox Agreements"), which among other things shall
provide for the opening of an account for the deposit of Collections (a
"Collection Account") at a Lockbox Bank. All Collections and other amounts
received by a Borrower from any account debtor, in addition to all other cash
received from any other source, shall upon receipt be deposited into a
Collection Account. Upon the terms and subject to the conditions set forth in
the Lockbox Agreements, all available amounts held in each Collection Account
shall be wired each Business Day into an account (the "Concentration Account")
maintained by the Agent at Bankers Trust Company.
SECTION 2.14. APPLICATION OF PAYMENTS. All amounts received in
the Concentration Account from the Lockbox Banks shall be credited to the Loan
Account. All amounts received by the Agent from the Lockbox Banks, from
liquidation of Collateral or otherwise, shall be applied in the following order:
first, to the payment of any Fees, Expenses or other Obligations due and payable
to the Agent under any of the Credit Documents, including Agent Advances and any
other amounts advanced by the Agent on
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behalf of the Lenders; second, to the payment of any Fees, Expenses or other
Obligations due and payable to the Issuing Bank under any of the Credit
Documents; third, to the ratable payment of any Fees, Expenses or other
Obligations due and payable to the Lenders under any of the Credit Documents
other than those Obligations specifically referred to in this Section; fourth,
to the ratable payment of interest due on the Loans; fifth, to the ratable
payment of principal due on the Term Loan (to be applied to the installments
thereof in the inverse order of maturity); sixth, to the ratable payment of
principal due on the Revolving Loans; seventh, to cash collateralize Letters of
Credit in accordance with the provisions of Section 8.2(c); and eighth, to the
ratable payment of any then due and owing obligations arising under any Interest
Rate Agreement entered into by the Borrower in accordance with Section
7.2(b)(vii).
ARTICLE III
LETTERS OF CREDIT
SECTION 3.1. ISSUANCE OF LETTERS OF CREDIT. Subject to the
terms and conditions of this Credit Agreement and in reliance upon the
representations and warranties of the Borrowers set forth herein, the Issuing
Bank shall issue Letters of Credit hereunder at the request of Safety and for
its account, as more specifically described below. The Issuing Bank shall not be
obligated to issue any Letter of Credit for the account of Safety on or after
the Expiration Date or if at the time of such requested issuance:
(a) The face amount of such requested Letter of
Credit when added to the Letter of Credit Obligations then outstanding, would
cause the Letter of Credit Obligations to exceed (i) $2,000,000 or (ii) when
added to the aggregate amount of Revolving Loans and all Letter of Credit
Obligations then outstanding would cause the sum of the Revolving Loans and
Letter of Credit Obligations to exceed the lesser of (x) the Line of Credit and
(y) the Borrowing Base then in effect;
(b) Any order, judgment or decree of any
Governmental Authority or arbitrator shall purport by its terms to enjoin or
restrain the Issuing Bank from issuing such Letter of Credit or any Requirement
of Law applicable to the Issuing Bank or any request or directive (whether or
not having the force of law) from any Governmental Authority with jurisdiction
over the Issuing Bank shall prohibit, or request the Issuing Bank refrain from,
the issuance of letters of credit generally or such Letter of Credit in
particular or shall impose upon the Issuing Bank with respect to such Letter of
Credit any restriction or
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reserve or capital requirement (for which the Issuing Bank is not otherwise
compensated) not in effect as of the Closing Date, or any unreimbursed loss,
cost or expense which was not applicable, in effect or known to the Issuing Bank
as of the Closing Date and which the Issuing Bank deems in good faith to be
material to it; or
(c) A default of any Lender's obligations to fund
under Section 3.6 exists, or such Lender is a Defaulting Lender, unless the
Agent and the Issuing Bank have entered into satisfactory arrangements with the
Borrowers to eliminate the Issuing Bank's risk with respect to such Lender,
including cash collateralization of such Lender's Proportionate Share of the
Letter of Credit Obligations.
SECTION 3.2. TERMS OF LETTERS OF CREDIT. The Letters of Credit
shall be in a form customarily used by the Issuing Bank or in such other form as
has been approved by the Issuing Bank. At the time of issuance, the amount and
the terms and conditions of each Letter of Credit, and of any drafts or
acceptances thereunder, shall be subject to approval by the Agent and Safety. In
no event may the term of any standby Letter of Credit issued hereunder exceed
360 days (except that such Letters of Credit may provide for annual renewal) and
all Letters of Credit issued hereunder shall expire no later than the date that
is five (5) Business Days prior to the Expiration Date. Any Letter of Credit
containing an automatic renewal provision shall also contain a provision
pursuant to which, notwithstanding any other provisions thereof, it shall not be
renewable on or after the Expiration Date and it shall expire no later than the
date that is five (5) Business Days prior to the Expiration Date.
Notwithstanding the foregoing, a Letter of Credit may have an expiry date
subsequent to the Expiration Date if such Letter of Credit contains such terms
and conditions as are satisfactory to the Agent and the Lenders.
SECTION 3.3. LENDERS' PARTICIPATION. Immediately upon issuance
or amendment by the Issuing Bank of any Letter of Credit in accordance with the
procedures set forth in Section 3.1 and 3.2, each Lender shall be deemed to have
irrevocably and unconditionally purchased and received from the Issuing Bank,
without recourse or warranty, an undivided interest and participation to the
extent of such Lender's Proportionate Share (based upon its Commitment) of the
liability with respect to such Letter of Credit (including, without limitation,
all obligations of the Borrowers with respect thereto, other than amounts owing
to the Issuing Bank consisting of Issuing Bank Fees) and any security therefor
or guaranty pertaining thereto.
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SECTION 3.4. NOTICE OF ISSUANCE. (i) Whenever Safety desires
the issuance of a Letter of Credit, Safety shall deliver to the Agent a written
notice no later than 12:00 noon New York City time at least five (5) Business
Days (or such shorter period as may be agreed to by the Issuing Bank) in advance
of the proposed date of issuance of a letter of credit request in substantially
the form attached as Exhibit F (a "Letter of Credit Request") accompanied by
such application and agreement for letter of credit (a "Letter of Credit
Agreement") as the Issuing Bank may specify to Safety in connection with such
requested Letter of Credit. The transmittal by Safety of each Letter of Credit
Request shall be deemed to be a representation and warranty by Safety that the
Letter of Credit may be issued in accordance with and will not violate any of
the requirements of Section 3.1 and 3.2. Prior to the date of issuance of each
Letter of Credit, Safety shall provide to the Agent a precise description of the
documents and the text of any certificate to be presented by the beneficiary of
such Letter of Credit which if presented by such beneficiary on or prior to the
expiration date of the Letter of Credit would require the Issuing Bank to make
payment under the Letter of Credit. The Issuing Bank, in its reasonable
judgment, may require changes in any such documents and certificates. No Letter
of Credit shall require payment against a conforming draft to be made thereunder
prior to the second Business Day (under the laws of the jurisdiction of the
Issuing Bank) after the date on which such draft is presented. A Letter of
Credit Request may be given in writing or electronically and, if requested by
the Agent, with prompt confirmation in writing. Any electronic Letter of Credit
Request shall be deemed to have been prepared by, or under the supervision of
the chief financial officer of Safety. The Agent shall promptly provide the
aforementioned Letter of Credit Request, document description and proposed text
of certification to the Issuing Bank.
SECTION 3.5. PAYMENT OF AMOUNT DRAWN UNDER LETTERS OF CREDIT.
In the event of any request for drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Bank shall notify the Agent, which shall notify
the Borrowers of such request, not later than 11:00 a.m. (New York City time) on
the Business Day immediately prior to the date on which the Issuing Bank intends
to honor such drawing. The Borrowers shall give notice to be received by the
Agent and the Issuing Bank not later than 1:00 p.m. (New York City time) on such
Business Day if they intend to reimburse the Issuing Bank for the amount of such
drawing with funds other than the proceeds of Loans. Such notice from the
Borrowers shall be irrevocable and, if given, the Borrowers shall jointly and
severally reimburse the Issuing Bank not later than the close of business (New
York City time) on the day on which such drawing is honored in an amount in same
day funds equal to the amount of such drawing. If the Agent shall
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not have timely received such notice (i) the Borrowers shall be deemed to have
timely given a Notice of Borrowing to the Agent to make Revolving Loans on the
date on which such drawing is honored in an amount equal to the amount of such
drawing and (ii) subject to satisfaction or waiver of the applicable conditions
specified in Article V and the other terms and conditions of Borrowings
contained herein, the Lenders shall, on the date of such drawing, make Revolving
Loans in the amount of such drawing, the proceeds of which shall be applied
directly by the Agent to reimburse the Issuing Bank for the amount of such
drawing or payment. If for any reason, proceeds of Revolving Loans are not
received by the Issuing Bank on such date in an amount equal to the amount of
such drawing, the Borrowers shall jointly and severally be obligated to and
shall reimburse the Issuing Bank, on the Business Day (under the laws of the
jurisdiction of the Issuing Bank) immediately following the date of such
drawing, in an amount in same day funds equal to the excess of the amount of
such drawing over the amount of such Loans, if any, which are so received, plus
accrued interest on such amount at the rate set forth in Section 4.1 for
Revolving Loans.
SECTION 3.6. PAYMENT BY LENDERS. In the event that the
Borrowers do not reimburse the Issuing Bank for the amount of any drawing
pursuant to Section 3.5, the Agent shall promptly notify each Lender of the
unreimbursed amount of such drawing and of such Lender's respective
participation therein. Each Lender shall make available to the Issuing Bank an
amount equal to its respective participation in same day funds, at the office of
the Issuing Bank specified in such notice, not later than 1:00 p.m. (New York
City time) on the first Business Day (under the laws of the jurisdiction of the
Issuing Bank) after the date notified by the Agent. In the event that any Lender
fails to make available to the Issuing Bank the amount of such Lender's
participation in such Letter of Credit as provided in this Section 3.6, the
Issuing Bank shall be entitled to recover such amount on demand from such Lender
together with interest at the Federal Funds Rate for three (3) Business Days and
thereafter at the Prime Rate. The Agent or the Issuing Bank shall distribute to
each other Lender which has paid all amounts payable by it under this Section
3.6 with respect to any Letter of Credit issued by the Issuing Bank such other
Lender's Proportionate Share of all payments subsequently received by the Agent
or the Issuing Bank from the Borrowers in reimbursement of drawings honored by
the Issuing Bank under such Letter of Credit when such payments are received.
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SECTION 3.7. NATURE OF ISSUING BANK'S DUTIES. In determining
whether to pay under any Letter of Credit, the Issuing Bank shall be responsible
only to determine that the documents and certificates required to be delivered
under that Letter of Credit have been delivered and that they comply on their
face with the requirements of that Letter of Credit. Subject to the last
sentence of this Section 3.7, as between the Borrowers, the Issuing Bank and
each other Lender, the Borrowers assume all risks of the acts and omissions of
the Issuing Bank, or misuse of the Letters of Credit issued by the Issuing Bank
by the respective beneficiaries of such Letters of Credit. In furtherance and
not in limitation of the foregoing, neither the Issuing Bank nor any of the
Lenders shall be responsible (i) for the form, validity, sufficiency, accuracy,
genuineness or legal effects of any document submitted by any party in
connection with the application for and issuance of or any drawing honored under
such Letters of Credit even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged, (ii) for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit, or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason, (iii) for failure of the beneficiary
of any such Letter of Credit to comply fully with conditions required in order
to draw upon such Letter of Credit, (iv) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex, telecopy or otherwise, whether or not they be in cipher, (v) for errors
in interpretation of technical terms, (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit, or of the proceeds thereof, (vii) for the
misapplication by the beneficiary of any such Letter of Credit, of the proceeds
of any drawing honored under such Letter of Credit, and (viii) for any
consequences arising from causes beyond the control of the Issuing Bank or the
other Lenders. None of the above shall affect, impair, or prevent the vesting of
any of the Issuing Bank's rights or powers hereunder. The Issuing Bank shall
have no liability to the Borrowers or any Lender for any action taken or omitted
to be taken by the Issuing Bank under or in connection with any Letter of
Credit, unless such action or omission constitutes gross negligence or willful
misconduct, as determined by a court of competent jurisdiction. Any action taken
or omitted to be taken by the Issuing Bank under or in connection with any
Letter of Credit, if taken or omitted in the absence of gross negligence or
willful misconduct, shall not create any liability of the Issuing Bank to the
Borrowers or any Lender.
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SECTION 3.8. OBLIGATIONS ABSOLUTE. The obligations of the
Borrowers to reimburse the Issuing Bank for drawings honored under the Letters
of Credit and the obligations of the Lenders under Section 3.6 shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Credit Agreement under all circumstances including, without
limitation, the following circumstances: (i) any lack of validity or
enforceability of this Credit Agreement, any Letter of Credit, any Letter of
Credit Agreement or any other agreement or instrument relating thereto (the
"Letter of Credit Related Documents"); (ii) the existence of any claim, setoff,
defense or other right which a Borrower or any Affiliate of a Borrower may have
at any time against a beneficiary or any transferee of any Letter of Credit (or
any Persons or entities for whom any such beneficiary or transferee may be
acting), the Issuing Bank, any Lender or any other Person, whether in connection
with this Credit Agreement, the other Credit Documents, the transactions
contemplated herein or therein or any unrelated transaction; (iii) any draft,
demand, certificate or any other documents presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect; (iv) the surrender
or impairment of any security for the performance or observance of any of the
terms of any of the Credit Documents; (v) payment by the Issuing Bank under any
Letter of Credit against presentation of a demand, draft or certificate or other
document which does not comply with the terms of such Letter of Credit; or (vi)
failure of any drawing under a Letter of Credit or any non-application or
misapplication by that a Default or Event of Default shall have occurred and be
continuing. Nothing in this Section 3.8 shall release the Issuing Bank of its
duties set forth in Section 3.7.
ARTICLE IV
INTEREST, FEES AND EXPENSES
SECTION 4.1. INTEREST ON PRIME RATE LOANS. The Borrowers shall
jointly and severally pay to the Agent for the benefit of the Lenders interest
on Prime Rate Loans on the first Business Day of each month, calculated monthly
in arrears at an interest rate per annum equal to the Prime Lending Rate plus
the Applicable Margin on the average net balances owing to the Agent and the
Lenders at the close of business each day during such month. The rate under this
Section 4.1 shall change each day as the Prime Lending Rate changes.
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SECTION 4.2. INTEREST ON EURODOLLAR RATE LOANS. The Borrowers
shall jointly and severally pay to the Agent for the benefit of the Lenders
interest on Eurodollar Rate Loans on the last day of each Interest Period with
respect to such Eurodollar Rate Loan and, in the case of an Interest Period
longer than three months, on the date occurring every three months from the
first day of such Interest Period, at the date of conversion of such Eurodollar
Rate Loan (or a portion thereof) to a Prime Rate Loan, and at maturity of such
Eurodollar Rate Loan, in each case at a per annum interest rate equal during the
Interest Period for such Eurodollar Loan to the Adjusted Eurodollar Rate for the
Interest Period in effect for such Eurodollar Rate Loan plus the Applicable
Margin. After maturity of such Eurodollar Rate Loan (whether by acceleration or
otherwise), interest shall be payable upon demand. The Agent, upon determining
the Adjusted Eurodollar Rate for any Interest Period, shall promptly notify the
Borrowers and the Lenders by telephone (confirmed promptly in writing) or in
writing thereof. Each determination by the Agent of an interest rate hereunder
shall be conclusive and binding for all purposes, absent manifest error.
SECTION 4.3. INTEREST AND LETTER OF CREDIT FEES AFTER EVENT OF
DEFAULT. From the date of occurrence of any Event of Default until the earlier
of the date upon which (i) all Obligations shall have been paid and satisfied in
full or (ii) such Event of Default shall have been cured (to the extent capable
of being cured) or waived, interest on the Loans, and Letter of Credit Fees on
Letter of Credit Obligations, shall each be payable on demand at a rate per
annum equal to, with respect to the Loans, the rate in effect under Section 4.1,
plus two percent (2%), and with respect to the Letter of Credit Obligations, the
rate in effect under Section 4.4(a), plus two percent (2%).
SECTION 4.4. LETTER OF CREDIT FEES.
(a) The Borrowers shall jointly and severally pay to
the Agent for distribution to the Lenders on the first Business Day of each
month a fee (the "Letter of Credit Fee"), in an amount equal to the sum of 2.50%
per annum of the daily average amount of Standby Letter of Credit Obligations
outstanding during the immediately preceding month and 1.375% per annum of the
daily average amount of Documentary Letter of Credit Obligations outstanding
during the immediately preceding month. In addition, the Borrower shall pay the
Agent, for its own benefit, the letter of credit facing fees outlined in the Fee
Letter.
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(b) The Borrowers shall jointly and severally
also pay the customary charges, fees and expenses of the Issuing Bank for the
issuance, administration and negotiation of each Letter of Credit (the "Issuing
Bank Fees"). Each determination by the Agent of Letter of Credit Fees and other
fees, charges and expenses under this Section shall be conclusive and binding
for all purposes, absent manifest error.
SECTION 4.5. UNUSED LINE FEE. The Borrowers shall jointly and
severally pay to the Agent for distribution to the Lenders on the first Business
Day of each month and on the Expiration Date a fee equal to 0.50% per annum
calculated monthly in arrears on the average unused portion of the total
Commitments at the close of business each day during such month or occurring
prior to the Expiration Date (the "Unused Line Fee").
SECTION 4.6. OTHER FEES AND EXPENSES. The Borrowers agree to
jointly and severally pay fees to BTCC in the amounts and at the times set forth
in the Fee Letter and shall be obligated to reimburse the Agent's Expenses
promptly upon demand.
SECTION 4.7. CALCULATIONS. All calculations of (i) interest
hereunder and (ii) Fees, including, without limitation, Unused Line Fees and
Letter of Credit Fees, shall be made by the Agent, on the basis of a year of 360
days for the actual number of days elapsed (including the first day but
excluding the last day) occurring in the period for which such interest or Fees
are payable. Each determination by the Agent of an interest rate, Fee or other
payment hereunder shall be conclusive and binding for all purposes, absent
manifest error.
SECTION 4.8. SPECIAL PROVISIONS RELATING TO EURODOLLAR RATE
LOANS.
(a) Continuation. With respect to any Borrowing
consisting of Eurodollar Rate Loans, Safety may (so long as no Default or Event
of Default has occurred and is continuing), subject to the provisions of Section
4.8(c), elect to maintain such Borrowing or any portion thereof as consisting of
Eurodollar Rate Loans by selecting a new Interest Period for such Borrowing,
which new Interest Period shall commence on the last day of the immediately
preceding Interest Period. Each selection of a new Interest Period shall be made
by notice given not later than 2:00 p.m. (New York City time) on the third
Business Day prior to the date of any such continuation relating to Eurodollar
Rate Loans, by Safety to the Agent. Such notice by Safety of a continuation (a
"Notice of Continuation") shall be by telephone or facsimile transmission, and
if by telephone, promptly confirmed in writing substantially in the form of
Exhibit D, in each case specifying (i) the date of such continuation, (ii) the
Type of Loans subject to such continuation, (iii) the aggregate
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amount of Loans subject to such continuation and (iv) the duration of the
selected Interest Period. Safety may elect to maintain more than one Borrowing
consisting of Eurodollar Rate Loans by combining such Borrowings into one
Borrowing and selecting a new Interest Period pursuant to this Section 4.8(a).
If Safety shall fail to select a new Interest Period for any Borrowing
consisting of Eurodollar Rate Loans in accordance with this Section 4.8(a), such
Revolving Loans will automatically, on the last day of the then existing
Interest Period therefore, convert into Prime Rate Loans. The Agent shall give
each Lender prompt notice by telephone or facsimile transmission of each Notice
of Continuation.
(b) Conversion. Safety may on any Business Day (so
long as no Default or Event of Default has occurred and is continuing), upon
notice (each such notice, a "Notice of Conversion") given to the Agent, and
subject to the provisions of Section 4.8(c), convert the entire amount of or a
portion of all Loans of one Type comprising the same Borrowing into Loans of
another Type; provided, however, that any conversion of any Eurodollar Rate
Loans into Loans of another Type shall be made on, and only on, the last day of
an Interest Period for such Eurodollar Rate Loans and, upon conversion of any
Prime Rate Loans into Loans of another Type, Safety shall pay accrued interest
to the date of conversion on the principal amount converted. Each such Notice of
Conversion shall be given not later than 10:00 a.m. (New York City time) on the
Business Day prior to the date of any proposed conversion into Prime Rate Loans
and on the third Business Day prior to the date of any proposed conversion into
Eurodollar Rate Loans. Subject to the restrictions specified above, each Notice
of Conversion shall be by telephone or facsimile transmission, and if by
telephone, promptly confirmed in writing substantially in the form of Exhibit E,
in each case specifying (i) the requested date of such conversion, (ii) the Type
of Loans to be converted, (iii) the portion of such Type of Loan to be
converted, (iv) the Type of Loan such Loans are to be converted into and (v) if
such conversion is into Eurodollar Rate Loans, the duration of the Interest
Period of such Loan. Each conversion shall be in an aggregate amount for the
Loans of all Lenders of not less than $1,000,000 or an integral multiple of
$100,000 in excess thereof. Safety may elect to convert the entire amount of or
a portion of all Loans of one Type comprising more than one Borrowing into Loans
of another Type by combining such Borrowings into one Borrowing; provided,
however, that if the Borrowings so combined consist of Eurodollar Rate Loans,
such Loans shall have Interest Periods ending on the same date.
(c) Certain Limitations on Eurodollar Rate Loans. The
right of Safety to maintain, select, continue or convert Eurodollar Rate Loans
shall be limited as follows:
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(i) If the Agent is advised by Bankers Trust
Company that it is not offering U.S. dollar deposits (in the
applicable amounts) in the London interbank market, or the
Agent determines that adequate and fair means do not otherwise
exist for ascertaining the Eurodollar Rate for Eurodollar Rate
Loans comprising any requested Borrowing, continuation or
conversion, the right of Safety to select or maintain
Eurodollar Rate Loans for such Borrowing or any subsequent
Borrowing shall be suspended until the Agent shall notify
Safety and the Lenders that the circumstances causing such
suspension no longer exists, and each Loan comprising such
Borrowing shall be made as a Prime Rate Loan.
(ii) If the Majority Lenders shall, at least
one Business Day before the date of any requested Borrowing,
continuation or conversion, notify the Agent that the
Eurodollar Rate for Loans comprising such Borrowing will not
adequately reflect the cost to such Lenders of making or
funding their respective Loans for such Borrowing, the right
of Safety to select Eurodollar Rate Loans for such Borrowing
shall be suspended until the Agent shall notify Safety and the
Lenders that the circumstances causing such suspension no
longer exist, and each Loan comprising such Borrowing shall be
made as a Prime Rate Loan.
(iii) If at any time any Lender determines (which
determination shall, absent manifest error, be conclusive and
binding on all parties) that the making, continuation or
conversion of any Loan as a Eurodollar Rate Loan has become
unlawful or impermissible by reason of compliance by that
Lender with any law, governmental rule, regulation or order of
any Governmental Authority (whether or not having the force of
law or resulting in costs or penalties), then, and in any such
event, such Lender may give notice of that determination in
writing, to Safety and the Agent and the Agent shall promptly
transmit the notice to each other Lender. Until such Lender
gives notice otherwise, the right of Safety to select
Eurodollar Rate Loans from that Lender shall be suspended and
each Eurodollar Rate Loan outstanding from that Lender shall
automatically and immediately convert to a Prime Rate Loan.
(iv) The right of Safety to select Eurodollar
Rate Loans for any Borrowing is suspended until the first
Business Day following the Syndication Date.
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(v) There shall not be outstanding at any one
time more than an aggregate of three (3) Borrowings of Loans
which consist of Eurodollar Rate Loans.
(vi) No Agent Advance shall be made as a
Eurodollar Rate Loan.
(d) Compensation.
(i) Each Notice of Continuation and Notice of
Conversion shall be irrevocable by and binding on Safety. In
the case of any Borrowing, continuation or conversion that the
related Notice of Borrowing, Notice of Continuation or Notice
of Conversion specifies is to be comprised of Eurodollar Rate
Loans, the Borrowers shall jointly and severally indemnify
each Lender against any loss, cost or expense incurred by such
Lender as a result of any failure to fulfill, on or before the
date for such Borrowing, continuation or conversion specified
in such Notice of Borrowing, Notice of Continuation or Notice
of Conversion, the applicable conditions set forth in Article
V, including, without limitation, any loss (excluding loss of
anticipated profits), cost or expense incurred by reason of
the liquidation or re-employment of deposits or other funds
acquired by such Lender to fund the Loan to be made by such
Lender as part of such Borrowing, continuation or conversion.
(ii) If any payment of principal of, or
conversion or continuation of, any Eurodollar Rate Loan is
made other than on the last day of the Interest Period for
such Loan as a result of a payment, prepayment, conversion or
continuation of such Loan or acceleration of the maturity of
the Notes pursuant to Article VIII or for any other reason,
the Borrowers shall jointly and severally, upon demand by any
Lender (with a copy of such demand to the Agent), pay to the
Agent for the account of such Lender any amounts required to
compensate such Lender for any additional losses, costs or
expenses which it may reasonably incur as a result of such
payment, including, without limitation, any loss (excluding
loss of anticipated profits), cost or expense incurred by
reason of the liquidation or reemployment of deposits or other
funds acquired by any Lender to fund or maintain such Loan.
(iii) Calculation of all amounts payable to a
Lender under this Section 4.8(d) shall be made as though such
Lender elected to fund all Eurodollar Rate Loans by purchasing
U.S. dollar deposits in its
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Eurodollar Lending Office's interbank eurodollar market.
SECTION 4.9. INDEMNIFICATION IN CERTAIN EVENTS. If after the
Closing Date, either (i) any change in or in the interpretation of any law or
regulation becomes effective, including, without limitation, with respect to
reserve requirements, applicable to the Agent, to any of the Lenders, or to
Bankers Trust Company, or any other banking or financial institution from whom
any of the Lenders borrows funds or obtains credit (a "Funding Bank"), or (ii)
the Agent, a Funding Bank or any of the Lenders complies with any future
guideline or request from any central bank or other Governmental Authority or
(iii) the Agent, a Funding Bank or any of the Lenders determines that 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
with the interpretation or administration thereof has or would have the effect
described below, or the Agent, a Funding Bank or any of the Lenders complies
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, and
in the case of any event set forth in this clause (iii), such adoption, change
or compliance has or would have the direct or indirect effect of reducing the
rate of return on any of the Lenders' capital as a consequence of its
obligations hereunder to a level below that which such Lender could have
achieved but for such adoption, change or compliance (taking into consideration
the Agent's or such Funding Bank's or Lender's policies as the case may be with
respect to capital adequacy) by an amount deemed by such Lender to be material,
and any of the foregoing events described in clauses (i), (ii) or (iii)
increases the cost to the Agent, the Issuing Bank or any of the Lenders of (A)
funding or maintaining the total Commitments or (B) issuing, making or
maintaining any Letter of Credit or of purchasing or maintaining any
participation therein, or reduces the amount receivable in respect thereof by
the Agent, the Issuing Bank or any Lender, then the Borrowers shall jointly and
severally upon demand by the Agent, pay to the Agent, for the account of each
applicable Lender or, as applicable, the Issuing Bank or a Funding Bank,
additional amounts sufficient to indemnify the Lenders against such increase in
cost or reduction in amount receivable. A certificate as to the amount of such
increased cost and setting forth in reasonable detail the calculation thereof
shall be submitted to the Borrowers by the Agent, or the applicable Lender,
Issuing Bank or Funding Bank, and shall be conclusive absent manifest error.
Prior to making any such demand, each of the Lenders, the Agent, Funding Bank or
other such party shall use reasonable efforts to designate a different Lending
Office if such a designation could reduce or eliminate any such payment.
56
SECTION 4.10. NET PAYMENTS.
(a) Any and all payments by the Borrowers hereunder,
under the Loans or under the Letters of Credit to or for the benefit of any
Lender, the Issuing Bank or the Agent shall be made free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings and penalties, interests and all other
liabilities with respect thereto ("Taxes"), including any Taxes imposed under
Section 7701(l) of the Internal Revenue Code, excluding, (i) in the case of each
such Lender, the Issuing Bank or the Agent, taxes imposed on its net income
(including, without limitation, any taxes imposed on branch profits) and
franchise taxes imposed on it by the jurisdiction under the laws of which such
Lender, the Issuing Bank or the Agent (as the case may be) is organized or any
political subdivision thereof, (ii) in the case of each Lender, taxes imposed on
its net income (including, without limitation, any taxes imposed on branch
profits), and franchise taxes imposed on it, by the jurisdiction of such
Lender's Applicable Lending Office or any political subdivision thereof, (iii)
in the case of each such Lender, the Issuing Bank and the Agent, any Taxes that
are in effect and that would apply to a payment to such Lender, the Issuing Bank
or Agent, as applicable, as of the Closing Date (other than any Taxes imposed
under Section 7701(l) of the Internal Revenue Code), and (iv) if any Person
acquires any interest in this Credit Agreement, any Loan or Letter of Credit
pursuant to the provisions hereof, or a Foreign Lender or the Agent changes the
office in which the Borrowing is made, accounted for or booked (any such person,
or such Foreign Lender or the Agent in that event, being referred to as a "Tax
Transferee"), any Taxes (other than Taxes imposed under Section 7701(l) of the
Internal Revenue Code) to the extent that they are in effect and would apply to
a payment to such Tax Transferee as of the date of the acquisition of such
interest or change in office, as the case may be (all such nonexcluded Taxes
being hereinafter referred to as "Covered Taxes"). If the Borrowers shall be
required by law to deduct any Covered Taxes from or in respect of any sum
payable hereunder, under any Loan or under any Letter of Credit to or for the
benefit of any Lender, the Issuing Bank or the Agent or any Tax Transferee, (A)
the sum payable shall be increased as may be necessary so that after making all
required deductions of Covered Taxes (including deductions of Covered Taxes
applicable to additional sums payable under this Section 4.10) such Lender, the
Issuing Bank, the Agent or such Tax Transferee, as the case may be, receives an
amount equal to the sum it would have received had no such deductions been made,
(B) the Borrowers shall make such deductions and (C) the Borrowers shall jointly
and severally pay the full amount so deducted to the relevant taxation authority
or other authority in accordance with applicable law.
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(b) In addition, the Borrowers agree to jointly and
severally pay any present or future stamp, documentary, excise, privilege,
intangible or similar levies that arise at any time or from time to time (i)
from any payment made under any and all Credit Documents, (ii) from the transfer
of the rights of the Lender under any Credit Documents to any transferee, or
(iii) from the execution or delivery by the Borrowers of, or from the filing or
recording or maintenance of, or otherwise with respect to the exercise by the
Agent or the Lenders of their rights under, any and all Credit Documents
(hereinafter referred to as "Other Taxes").
(c) The Borrowers jointly and severally indemnify
each Lender, the Issuing Bank, the Agent, and any Tax Transferee for the full
amount of (i) Covered Taxes imposed on or with respect to amounts payable
hereunder, (ii) Other Taxes, and (iii) any Taxes (other than Covered Taxes
imposed by any jurisdiction on amounts payable under this Section 4.10) paid by
such Lender, the Issuing Bank or the Agent or such Tax Transferee, as the case
may be, and any liability (including penalties, interest and expenses) arising
solely therefrom or with respect thereto. Payment of this indemnification shall
be made within 30 days from the date such Lender, the Issuing Bank or the Agent
or Tax Transferee certifies and sets forth in reasonable detail the calculation
thereof as to the amount and type of such Taxes. Any such certificate submitted
by the Lender, the Issuing Bank or Agent or Tax Transferee in good faith to the
Borrowers shall, absent manifest error, be final, conclusive and binding on all
parties.
(d) Within 30 days after having received a receipt of
Covered Taxes or Other Taxes, the Borrowers will furnish to the Agent the
original or a certified copy of a receipt evidencing payment thereof.
(e) On or before the Closing Date, each Foreign
Lender shall deliver to the Agent and the Borrowers (i) two valid, duly
completed copies of IRS Form 1001 or 4224 or successor applicable form, as the
case may be, and any other required form, certifying in each case that such
Foreign Lender is entitled to receive payments under this Credit Agreement or
the Loans payable to it without deduction or withholding of any United States
federal income taxes or with such withholding imposed at a reduced rate (the
"Reduced Rate"), and (ii) a valid, duly completed IRS Form W-8 or W-9 or
successor applicable form, as the case may be, to establish an exemption from
United States backup withholding tax. Each such Foreign Lender shall also
deliver to the Agent and the Borrowers two further copies of said Form 1001 or
4224 and W-8 or W-9, or successor applicable forms, or other manner of required
certification, as the case may be, on or before the date that any such form
expires or becomes obsolete or otherwise is required to be resubmitted as a
condition to
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obtaining an exemption from a required withholding of United States federal
income tax or entitlement to having such withholding imposed at the Reduced Rate
or after the occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrowers and the Agent, and such extensions
or renewals thereof as may reasonably be requested by the Borrowers and the
Agent, certifying (i) in the case of a Form 1001 or 4224 that such Foreign
Lender is entitled to receive payments under this Credit Agreement or the Notes
payable to it without deduction or withholding of any United States federal
income taxes, unless in any such case any change in a tax treaty to which the
United States is a party, or any change in law or regulation of the United
States or official interpretation thereof has occurred after the Closing Date
and prior to the date on which any such delivery would otherwise be required
that renders all such forms inapplicable or that would prevent such Foreign
Lender from duly completing and delivering any such form with respect to it, and
such Foreign Lender advises the Borrowers and the Agent that it is not capable
of receiving payments without any deduction or withholding at the Reduced Rate,
or (ii) in the case of a Form W-8 or W-9, establishing an exemption from United
States backup withholding tax.
(f) If a Tax Transferee that is organized under the
laws of a jurisdiction outside of the United States acquires an interest in this
Credit Agreement or any Loan or a Foreign Lender changes the office through
which Loans are made, accounted for or booked, the transferor, or the applicable
Foreign Lender, in the case of a change of office, shall cause such Tax
Transferee to agree that, on or prior to the effective date of such acquisition
or change, as the case may be, it will deliver to the Borrowers and the Agent
(i) two valid, duly completed copies of IRS Form 1001 or 4224 or successor
applicable form, as the case may be, and any other required form, certifying in
each case that such Tax Transferee is entitled to receive payments under this
Credit Agreement and the Notes payable to it without deduction or withholding of
United States federal income tax or with such withholding imposed at a Reduced
Rate; and (ii) a valid, duly completed IRS Form W-8 or W-9 or successor
applicable form, as the case may be, to establish an exemption from United
States backup withholding tax. Each Tax Transferee that delivers to the
Borrowers and the Agent a Form 1001 or 4224, and Form W-8 or W-9 and any other
required form, pursuant to the next preceding sentence, further undertakes to
deliver two further copies of the said Form 1001 or 4224 and Form W-8 or W-9, or
successor applicable forms, or other manner of required certification, as the
case may be, on or before the date that any such form expires or becomes
obsolete or otherwise is required to be resubmitted as a condition to obtaining
an exemption from a required withholding of United States federal income tax or
entitlement to having such withholding imposed at the Reduced Rate or after the
occurrence of any event requiring a change in
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the most recent form previously delivered by it to the Borrowers and the Agent,
and such extensions or renewals thereof as may reasonably be requested by the
Borrowers and the Agent, certifying (i) in the case of a Form 1001 or 4224 that
such Tax Transferee is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes or with such
withholding imposed at the Reduced Rate, unless any change in treaty, law or
regulation or official interpretation thereof has occurred after the effective
date of such acquisition or change and prior to the date on which any such
delivery would otherwise be required that renders all such forms inapplicable or
that would prevent such Tax Transferee from duly completing and delivering any
such form with respect to it, and such Tax Transferee advises the Borrowers and
the Agent that it is not capable of receiving payments (a) without any deduction
or withholding of United States federal income tax or (b) with such withholding
at the Reduced Rate, as the case may be, or (ii) in the case of a Form W-8 or
W-9, establishing an exemption from United States backup withholding tax.
(g) If any Taxes for which the Borrowers would be
required to make payment under this Section 4.10 are imposed, the Lender, the
Issuing Bank or the Agent, as the case may be, shall use its reasonable best
efforts to avoid or reduce such Taxes by taking any appropriate action
(including, without limitation, assigning its rights hereunder to a related
entity or a different office) which would not in the sole opinion of such
Lender, the Issuing Bank or Agent be otherwise disadvantageous to such Lender,
the Issuing Bank or Agent, as the case may be.
(h) Without prejudice to the survival of any other
agreement of the Borrowers hereunder, the agreements and obligations of the
Borrowers contained in this Section 4.10 shall survive the payment in full of
the Obligations.
SECTION 4.11. AFFECTED LENDERS. If a Borrower is obligated to
pay to any Lender any amount under Sections 4.9 or 4.10 materially in excess of
any such amounts payable to the other Lenders, the Borrowers may, if no Default
or Event of Default then exists, replace such Lender with another lender
acceptable to the Agent, and such Lender hereby agrees to be so replaced subject
to the following:
(a) The obligations of the Borrowers hereunder to the
Lender to be replaced (including such increased or additional costs incurred
from the date of notice to the Borrowers of such increase or additional costs
through the date such Lender is replaced hereunder) shall be paid in full to
such Lender concurrently with such replacement;
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(b) The replacement Lender shall be a bank or other
financial institution that is not subject to the increased costs arising under
Section 4.10 which have effectuated the Borrowers' election to replace any
Lender hereunder, and each such replacement Lender shall execute and deliver to
the Agent such documentation satisfactory to the Agent pursuant to which such
replacement Lender is to become a party hereto, conforming to the provisions of
Section 10.8, with a Commitment equal to that of the Lender being replaced and
shall make a Loan or Loans in the aggregate principal amount equal to the
aggregate outstanding principal amount of the Loan or Loans of the Lender being
replaced;
(c) Upon such execution of such documents referred to
in clause (b) and repayment of the amounts referred to in clause (a), the
replacement lender shall be a "Lender" with a Commitment as specified
hereinabove and the Lender being replaced shall cease to be a "Lender"
hereunder, except with respect to indemnification provisions under this Credit
Agreement, which shall survive as to such replaced Lender;
(d) The Agent shall reasonably cooperate in
effectuating the replacement of any Lender under this Section 4.11, but at no
time shall the Agent be obligated to initiate any such replacement; and
(e) Any Lender replaced under this Section 4.11 shall
be replaced at the Borrowers' sole cost and expense and at no cost or expense to
the Agent or any of the Lenders.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.1. CONDITIONS TO INITIAL LOANS AND LETTERS OF
CREDIT. The obligation of each Lender to fund its Proportionate Share of the
initial Loan and the obligation of the Issuing Bank to issue the initial Letter
of Credit is subject to the satisfaction of the following conditions precedent:
(a) There shall be no pending or, to the best
knowledge of the Borrowers, threatened litigation, proceeding, inquiry or other
action seeking an injunction or other restraining order, damages or other relief
with respect to the transactions contemplated by this Credit Agreement, the
other Credit Documents or the transactions contemplated hereby and thereby or
the Borrowers' other business activities, except where such litigation,
proceeding, inquiry or other action could not reasonably be expected to have a
Material Adverse Effect.
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(b) The Borrowers shall have paid all accrued fees
and expenses of the Agent (which have been invoiced) in connection with the
negotiation, preparation, execution and delivery of the Credit Documents
(including, without limitation, the reasonable accrued fees and expenses of
counsel to the Agent).
(c) The Agent and the Lenders shall have received
each of the agreements, opinions, reports, approvals, consents, certificates and
other documents set forth on the Closing Document List attached hereto as
Schedule 5.1(c), in each case, in form and substance satisfactory to the
Lenders.
(d) All documentation relating to the transactions
contemplated hereby (including, without limitation, the Credit Documents) shall
be in form and substance satisfactory to the Agent and the Lenders.
(e) All Existing Indebtedness shall be on terms and
conditions (including, without limitation, amount, pricing, amortization,
intercreditor arrangements and extent of subordination) satisfactory to the
Agent.
(f) Safety and its Subsidiaries shall have been
released from all obligations under the Existing Loan Facility and all related
documents and agreements pursuant to a release in form and substance
satisfactory to the Agent and all liens and security interests related thereto
shall be released or terminated.
(g) Except as set forth on Schedule 5.1(g), and
except for (i) the filing of U.C.C. financing statements under the Code, the
filing of the Borrower Intellectual Property Security Agreement and the
Guarantor Intellectual Property Security Agreement in the United States Patent
and Trademark Office and the Canadian Intellectual Property Office and the
filing of the Hypothecs and the Hypothecation Agreements under the laws of
Quebec, (ii) consents or authorizations which have been obtained or filings
which have been made, and which in either case are in full force and effect,
(iii) the filings of the releases of any Liens on the Collateral pledged in
connection with the Existing Loan Facility or (iv) consents or authorizations
the failure to obtain or filings the failure to make could not reasonably be
expected to have a Material Adverse Effect, no consent or authorization of,
filing with or other act by or in respect of, any Governmental Authority or any
other Person is required in connection with the Borrowings hereunder, the grant
of the Liens pursuant to the Credit Documents or the continuing operations of
Safety and its Subsidiaries following such consummation or with the execution,
delivery, performance, validity or enforceability of this Credit Agreement, the
Notes, the Letters of Credit or the other Credit Documents.
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(h) (i) No change, occurrence, event or development
or event involving a prospective change that is reasonably likely to have a
Material Adverse Effect shall have occurred and be continuing since December 31,
1996 or (ii) there shall not have occurred a substantial impairment of the
financial markets generally that is reasonably likely to materially and
adversely affect the transactions contemplated hereby, in each case as
determined by the Agent and each Lender in its sole discretion.
(i) Subject to the provisions of Section 7.1(q)(iv),
there shall be established cash management systems for Safety and its
Subsidiaries on terms and conditions satisfactory to the Agent including,
without limitation, establishment of the Borrowers' principal bank accounts with
the Agent, establishment of the Disbursement Accounts, and establishment of the
Lockboxes with the Lockbox Banks.
(j) Counsel to the Agent shall have performed a legal
review satisfactory to the Agent of all of each Credit Party's material
contracts and tax, litigation, environmental and other potential contingent
liabilities, and of the corporate and capital structure of Safety and its
Subsidiaries.
(k) Each Credit Party shall be in compliance with all
material indentures or agreements to which it is a party.
(l) The Agent shall have received a solvency
certificate, in form and substance satisfactory to the Agent, duly executed by
an authorized officer of each Credit Party.
(m) The Liens and all other security interests in
favor of the Agent, for the benefit of the Lenders, shall have been duly
perfected and shall constitute first and prior Liens.
(n) The Agent shall have received evidence
satisfactory to it that there will be Unused Availability in an amount
satisfactory to it after giving effect to the Revolving Loans to be borrowed and
the Letters of Credit to be issued on the Closing Date.
(o) The Agent shall have received evidence
satisfactory to it that Safety shall have received gross cash proceeds from an
equity sale of at least $15,000,000 on terms and conditions and from an investor
satisfactory to the Agent.
(p) The Agent shall have performed a due diligence
review with respect to the Credit Parties (including, without limitation, a
review of the management information systems and a collateral examination of the
working capital
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assets of the Credit Parties), and the Agent shall be satisfied with the results
thereof.
(q) The Agent shall have received projections of the
financial condition and results of operations of Safety and its Subsidiaries for
the five-year period ending December 31, 2002, certified by an Authorized
Officer, prepared on a monthly basis for the first year, a quarterly basis for
the second year and annually thereafter, and such projections shall be
satisfactory to the Agent.
(r) The Agent shall have received all of the products
liability insurance policies of Safety and its Subsidiaries and all riders and
endorsements thereto, and the Agent shall be satisfied with the scope and amount
of coverage, the deductibles, the effectiveness and all other terms and
conditions of such policies.
(s) The Agent shall have received such other
approvals, opinions or documents as any Lender or the Issuing Bank through the
Agent may reasonably request.
SECTION 5.2. CONDITIONS PRECEDENT TO ALL LOANS AND LETTERS OF
CREDIT. The obligation of each Lender to fund its Proportionate Share of any
requested Loan or of the Agent to cause the Issuing Bank to issue any requested
Letter of Credit is subject to the conditions precedent set forth below. Each
Notice of Borrowing and each Letter of Credit Request, and each issuance by the
Borrowers of a check drawn against, or request for transfer from, the
Disbursement Accounts shall constitute a representation and warranty that such
conditions are satisfied.
(a) All representations and warranties contained in
this Credit Agreement and the other Credit Documents shall be true and correct
in all material respects on and as of the date of such Notice of Borrowing or
Letter of Credit Request or issuance of a check drawn against or request for
transfer from the Disbursement Account, as if then made, other than
representations and warranties that relate solely to an earlier date;
(b) No Default or Event of Default shall have
occurred, or would result from the making of the requested Loan or the issuance
of the requested Letter of Credit, which has not been cured (to the extent
capable of being cured) or waived; and
(c) No event has occurred since December 31, 1996
which has had or could reasonably be expected to have a Material Adverse Effect.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.1. REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
The Borrowers represent and warrant as follows:
(a) Organization and Qualification. Safety and each
Subsidiary (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, (ii) has the
capacity, power and authority to own its properties and assets and to transact
the businesses in which it presently is, or proposes to be, engaged and (iii) is
duly qualified and is authorized to do business and is in good standing in each
jurisdiction where it presently is engaged in business. Schedule 6.1(a) lists
all jurisdictions in which Safety and each Subsidiary are qualified to do
business as foreign corporations as of the Closing Date.
(b) Authority. Each Credit Party has the requisite
corporate capacity, power and authority to execute, deliver and perform each of
the Credit Documents to which it is a party. All corporate action necessary for
the execution, delivery and performance by any Credit Party of any of the Credit
Documents has been taken.
(c) Enforceability. This Credit Agreement is and,
when executed and delivered, each other Credit Document will be the legal, valid
and binding obligation of any Credit Party which is a party thereto, enforceable
in accordance with its terms, except as such enforceability may be limited by
(i) bankruptcy, insolvency or similar laws affecting creditors' rights
generally, and (ii) general principles of equity.
(d) No Conflict. Except as described in Schedule
6.1(d), the execution, delivery and performance of each Credit Document by or on
behalf of any Credit Party does not contravene (i) the Governing Documents of
any Credit Party, or (ii) any Requirement of Law or (iii) any franchise,
license, permit, indenture, contract, lease, agreement, instrument or other
commitment to which it is a party or by which it or any of its properties are
bound, and will not, except as contemplated herein, result in the imposition of
any Liens upon any of its properties.
(e) Consents and Filings. No consent, authorization,
approval or filing is required in connection with the execution, delivery and
performance by any Credit Party of this Credit Agreement or any Credit Document,
or the continuing
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operations of Safety and any Subsidiary, except: (i) those that have been
obtained or made; (ii) filings necessary to create, perfect or retain the
perfection of Liens against the Collateral; (iii) in the case of the continuing
operations of Safety and each Subsidiary, those the failure to obtain would not
have a Material Adverse Effect.
(f) Government Regulation. Neither Safety nor any
Subsidiary is subject to regulation under the Public Utility Holding Company Act
of 1935, the Federal Power Act, the Interstate Commerce Act, the Investment
Company Act of 1940, or any other Requirement of Law that limits its ability to
incur indebtedness or its ability to consummate the transactions contemplated in
this Credit Agreement and the other Credit Documents.
(g) Solvency. The fair saleable value of the assets
of Safety and its Subsidiaries on a consolidated basis and each Borrower on an
individual basis exceeds all its probable liabilities, including those to be
incurred pursuant to this Credit Agreement and the other Credit Documents. None
of either of the Borrowers individually or Safety and its Subsidiaries, taken as
a whole (i) has unreasonably small capital in relation to the business in which
it is or proposes to be engaged and (ii) has incurred, or believes that it will
incur, after giving effect to the transactions contemplated by this Credit
Agreement and the other Credit Documents, debts beyond its ability to pay as
such debts become due.
(h) Rights in Collateral; Priority of Liens. All
property consisting of Collateral is owned or leased by a Credit Party, free and
clear of any and all Liens in favor of third parties, other than Permitted
Liens. No Credit Party owns any real or immovable property. Upon the proper
filing of the UCC financing statements and Forms for registration in the
Province of Quebec, the security interests granted pursuant to the Credit
Documents constitute valid and enforceable first, prior and perfected Liens on
the Collateral to the extent such Liens can be perfected by the filing of such
financing statements and forms.
(i) Financial Data. Safety has provided to the Agent
and each of the Lenders complete and accurate copies of annual audited Financial
Statements for the fiscal year ended December 31, 1996, reported on by Xxxxx
Xxxxxxxx LLP, unaudited Financial Statements for the fiscal period ended March
31, 1997 and Monthly Financial Statements for April, May and June 1997. Such
Financial Statements have been prepared in accordance with GAAP consistently
applied throughout the periods involved and fairly present the respective
financial positions, results of operations and cash flows of Safety and its
Subsidiaries for each of the periods covered. Neither Safety nor any of its
Subsidiaries has any Contingent Obligation, or liability for
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taxes or long-term leases, which is not reflected in such Financial Statements
or the footnotes thereto. During the period from December 31, 1996 to and
including the date hereof there has been no sale, transfer or other disposition
by Safety or any of its Subsidiaries of any material part of its business or
property and no purchase or other acquisition of any business or property
(including any capital stock of any other Person) material in relation to the
consolidated financial condition of Safety and its Subsidiaries at December 31,
1996. Since December 31, 1996, except as set forth on Schedule 6.1(i), (a) there
has been no change, occurrence, development or event which has had or could
reasonably be expected to have a Material Adverse Effect and (b) no dividends or
other distributions have been declared, paid or made upon the capital stock of
any Credit Party, except for dividends paid to Safety by its Subsidiaries, nor
has any of the capital stock of Safety or any of its Subsidiaries been redeemed,
retired, purchased or otherwise acquired for value by Safety or any of its
Subsidiaries.
(j) Projections. The projected balance sheet, statement of
operations, statement of cash flows and other financial statements of Safety
individually and Safety and its Subsidiaries on a consolidated basis delivered
to the Lenders pursuant to Section 5.1(q) were prepared in good faith on the
basis of assumptions which were fair in light of the conditions existing at the
time of delivery of such projections, and represented, at the time of delivery,
Safety's best estimate of its and its Subsidiaries' future financial
performance.
(k) Locations of Offices, Records and Inventory. The address of
the principal place of business and chief executive office of each Credit Party
is set forth on Schedule 6.1(k). The books and records of each Credit Party, and
all of its chattel paper and records of Accounts, are (or will be) maintained
exclusively at the locations for such Credit Party set forth on such Schedule.
There is no jurisdiction in which any Credit Party has any Collateral (except
for vehicles and Inventory in transit for processing) other than those
jurisdictions with respect to such Credit Party identified on Schedule 6.1(k). A
complete list of the legal name and address of each warehouse at which any
Credit Party's Inventory or Equipment is located is set forth on Schedule
6.1(k). Schedule 6.1(k) indicates whether each premises listed thereon is leased
or owned by such Credit Party. None of the receipts received and to be received
by any Credit Party from any warehouseman state that any Credit Party's
Inventory or Equipment covered thereby is to be delivered to bearer or to the
order of a named person or to a named person and such named person's assigns
(other than a Credit Party). All Accounts of Safety Canada are and will continue
to be payable to Safety Canada in the Province of Quebec.
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(l) Subsidiaries; Ownership of Stock. The only direct or indirect
Subsidiaries of Safety are those listed on Schedule 6.1(l)(i). Safety is the
record and beneficial owner of all of the shares of capital stock of each of the
Subsidiaries listed on Schedule 6.1(l)(ii). 3232301 is the record and beneficial
owner of all of the shares of capital stock of Safety Canada. Except as set
forth on Schedule 6.1(l)(iii), there are no proxies, irrevocable or otherwise,
with respect to such shares, and no equity securities of any of the Subsidiaries
are or may become required to be issued by reason of any options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of any capital stock of any such Subsidiary, and there are no contracts,
commitments, understandings or arrangements by which any such Subsidiary is or
may become bound to issue additional shares of its capital stock or securities
convertible into or exchangeable for such shares. All of such shares so owned by
Safety and by 3232301 are owned by Safety and by 3232301 free and clear of any
Liens.
(m) No Judgments or Litigation. (i) Except as set forth on
Schedule 6.1(m)(i), no judgments, orders, writs or decrees are outstanding
against Safety or any of its Subsidiaries nor is there now pending or, to the
best of the Borrowers' knowledge after diligent inquiry, threatened any
litigation, contested claim, investigation, arbitration, or governmental
proceeding by or against Safety or any of its Subsidiaries that (A) could
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect or (B) purports to affect the legality, validity or
enforceability of this Credit Agreement, any Note or any other Credit Document
or the consummation of the transactions contemplated hereby or thereby.
(ii) Except as set forth on Schedule 6.1(m)(ii), no judgments,
orders, writs or decrees with respect to any products liability claims are
outstanding against Safety or any of its Subsidiaries nor is there now pending
or, to the best of the Borrowers' knowledge after diligent inquiry, threatened
any litigation, contested claim, investigation, arbitration, or governmental
proceeding by or against Safety or any of its Subsidiaries with respect to any
products liability claim where the amount sought to be recovered is in excess of
$250,000. In addition to an accurate description of each products liability
claim involving Safety and its Subsidiaries, Schedule 6.1(m)(ii) sets forth an
accurate description of the status of each such claim, the estimated liability
therefor, the reserves taken therefor and the insurance coverage applicable with
respect thereto (including the total amount of insurance coverage available to
pay each such claim).
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(n) Licenses and Permits. Safety and each Subsidiary has obtained
and holds in full force and effect, all franchises, licenses, leases, permits,
certificates, authorizations, qualifications, easements, rights of way and other
rights and approvals which are necessary or advisable for the operation of its
business as presently conducted and as proposed to be conducted.
(o) No Defaults. Except as set forth on Schedule 6.1(o), neither
Safety nor any of its Subsidiaries is in default under any term of any
indenture, contract, lease, agreement, instrument or other commitment to which
any of them is a party or by which any of them is bound which could,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect. Except as set forth on Schedule 6.1(o), the Borrowers know of no
dispute regarding any such indenture, contract, lease, agreement, instrument or
other commitment which would, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect.
(p) Labor Matters. Schedule 6.1(p) accurately sets forth all labor
contracts to which Safety or any of its Subsidiaries is a party as of the
Closing Date, and their dates of expiration. There are no existing or threatened
strikes, lockouts or other disputes relating to any collective bargaining or
similar agreement to which Safety or any of its Subsidiaries is a party which
would, individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect.
(q) Compliance with Law. Except as set forth on Schedule 6.1(q),
neither Safety nor any of its Subsidiaries has violated or failed to comply with
any Requirement of Law, including without limitation ERISA and Environmental
Laws which violation or failure to comply could, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect.
(r) ERISA.
(i) None of Safety, any of its Subsidiaries or any ERISA
Affiliate maintains or contributes to any Plan, other than those listed
on Schedule 6.1(r).
(ii) Safety, each of its Subsidiaries and each ERISA Affiliate
have fulfilled all contribution obligations for each Plan (including
obligations related to the minimum funding standards of ERISA and the
Internal Revenue Code).
(iii) No Termination Event has occurred nor has any other event
occurred that is likely to result in a Termination Event. None of
Safety or its Subsidiaries,
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any ERISA Affiliate, or any fiduciary of any Plan is subject to any
direct or indirect liability with respect to any Plan under any
Requirement of Law or agreement.
(iv) None of Safety or its Subsidiaries or any ERISA Affiliate
is required to or reasonably expects to be required to provide security
to any Plan under Section 401(a)(29) of the Internal Revenue Code.
(v) Safety, each of its Subsidiaries and each ERISA Affiliate
are in compliance in all material respects with any applicable
provisions of ERISA with respect to all Plans. There has been no
prohibited transaction as defined in Section 406 of ERISA or Section
4975 of the Internal Revenue Code (a "Prohibited Transaction") with
respect to any Plan or, to the best knowledge of the Borrowers, with
respect to any Multiemployer Plan, which could result in any material
liability to Safety, its Subsidiaries or any other ERISA Affiliates.
Safety, its Subsidiaries and each ERISA Affiliate have made when due
any and all payments required to be made under any agreement relating
to a Multiemployer Plan or any Requirement of Law pertaining thereto.
With respect to each Plan and Multiemployer Plan, Safety, its
Subsidiaries and each ERISA Affiliate have not incurred any liability
to the PBGC and have not had asserted against them any penalty for
failure to fulfill the minimum funding requirements of ERISA.
(vi) To the Borrowers' best knowledge, Safety and its
Subsidiaries are able to pay benefits under each Multiemployer Plan
when due.
(vii) Neither Safety, its Subsidiaries nor any ERISA Affiliate
has instituted or intends to institute proceedings to terminate any
Plan.
(viii) The aggregate actuarial present value of all benefit
liabilities (whether or not vested) under each Plan, determined on a
plan termination basis, as disclosed in, and as of the date of, the
most recent actuarial report for such Plan, does not exceed the
aggregate fair market value of the assets of such Plan.
(ix) Neither Safety, its Subsidiaries nor any ERISA Affiliate
has incurred or reasonably expects to incur any material withdrawal
liability under ERISA to any Multiemployer Plan.
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(x) To the extent that any Plan is insured, Safety, its
Subsidiaries and all ERISA Affiliates have paid when due all premiums
required to be paid for all periods through and including the Closing
Date. To the extent that any Plan is funded other than with insurance,
Safety, its Subsidiaries and all ERISA Affiliates have made when due
all contributions required to be paid for all periods through and
including the Closing Date.
(s) Business and Properties. Neither the business nor the
properties of Safety or any Subsidiary is affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance) that could reasonably be expected to have
a Material Adverse Effect.
(t) Investment Company. No Credit Party is an "investment
company," or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940, as amended. Neither the making of any Loans, nor the
issuance of any Letters of Credit, nor the application of the proceeds or
repayment thereof by a Borrower, nor the consummation of the other transactions
contemplated by this Credit Agreement or the other Credit Documents, will
violate any provision of such Act or any rule, regulation or order of the
Securities and Exchange Commission thereunder.
(u) Compliance with Environmental Laws. Except as set forth on
Schedule 6.1(u), (i) neither Safety nor any of its Subsidiaries is the subject
of a judicial or administrative proceeding or investigation relating to the
violation of any Environmental Laws, or asserting potential liability arising
from the release or disposal by any Person of any Hazardous Materials which
individually or in the aggregate could reasonably be expected to have a Material
Adverse Effect, (ii) neither Safety nor any of its Subsidiaries has filed or
received any notice under any Environmental Laws concerning the treatment,
storage, disposal, spill or release or threatened release of any Hazardous
Materials at, on, beneath or adjacent to property owned or leased by Safety or
any of its Subsidiaries, or the release or threatened release at any other
location of any Hazardous Material generated, used, stored, treated, transported
or released by or on behalf of Safety or any of its Subsidiaries which
individually or in the aggregate could reasonably be expected to have a Material
Adverse Effect; and (iii) neither Safety nor any of its Subsidiaries has
knowledge of any contingent liability for any release of any Hazardous
Materials, in each case which individually or in the aggregate could reasonably
be expected to have a Material Adverse Effect.
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(v) Real Property. Except as set forth on Schedule 6.1(v), no
Credit Party either owns or leases any real or immovable property.
(w) Material Contracts. Set forth on Schedule 6.1(w) is a complete
and accurate list of all Material Contracts, showing as of the date hereof the
parties, subject matter and term thereof. Each such contract has been duly
authorized, executed and delivered by each Credit Party that is a party thereto,
and, to Safety's best knowledge, each other party thereto. Except as described
on Schedule 6.1(w), none of the Material Contracts contains any restrictions on
Safety or any of its Subsidiaries or any of their respective properties which
could have a Material Adverse Effect, and each Material Contract is in full
force and effect and is binding upon and enforceable against all parties thereto
in accordance with its terms, and there exists no default under such contract by
any party thereto.
(x) Intellectual Property. Set forth on Schedule 6.1(x) hereto is
a complete and accurate list of all patents, trademarks, trade names, service
marks and copyrights, and all applications therefor and material licenses
thereof, of each Credit Party, showing as of the date hereof the jurisdiction in
which registered, the registration number, the date of registration and the
expiration date. Each Credit Party owns or licenses all material patents,
trademarks, service-marks, logos, tradenames, trade secrets, know-how,
copyrights, or licenses and other rights with respect to any of foregoing, which
are necessary or advisable for the operation of its business as presently
conducted or proposed to be conducted. To the best of Safety's knowledge, no
Credit Party has infringed any patent, trademark, service-xxxx, tradename,
copyright, license or other right owned by any other Person by the sale or
employment of any product, process, method, substance, part or other material
presently contemplated to be sold or employed, where such sale or employment
could reasonably be expected to have a Material Adverse Effect and, except as
set forth on Schedule 6.1(x), no claim or litigation is pending, or to the best
of Safety's knowledge, threatened against or affecting any Credit Party that
contests its right to sell or use any such product, process, method, substance,
part or other material that could reasonably be expected to have a Material
Adverse Effect.
(y) Taxes and Tax Returns.
(i) Except as set forth on schedule 6.1(y), Safety and each of
its Subsidiaries has properly completed and timely filed, without
request for extension, all income tax returns it is required to file.
The information filed is complete and accurate in all material
respects. All deductions taken in such
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income tax returns are appropriate and in accordance with applicable
laws and regulations, except deductions that may have been disallowed
but are being challenged in good faith and for which adequate reserves
have been made in accordance with GAAP.
(ii) All taxes, assessments, fees and other governmental charges
for periods beginning prior to the date hereof have been timely paid
(or, if not yet due, adequate reserves therefor have been established)
and neither Safety nor any of its Subsidiaries has any material
liability for taxes in excess of the amounts so paid or reserves so
established.
(iii) No deficiencies for taxes have been claimed, proposed or
assessed by any taxing or other Governmental Authority against Safety
or any of its Subsidiaries and no tax liens have been filed. There are
no pending or threatened audits, investigations or claims for or
relating to any liability for taxes and there are no matters under
discussion with any Governmental Authority which could result in a
material additional liability for taxes. Either the federal income tax
returns of Safety have been audited by the Internal Revenue Service and
such audits have been closed, or the period during which any
assessments may be made by the Internal Revenue Service has expired
without waiver or extension for all years up to and including the
fiscal year of the Borrower ended December 31, 1993. No extension of a
statute of limitations relating to taxes, assessments, fees or other
governmental charges is in effect with respect to Safety or any of its
Subsidiaries.
(iv) Neither Safety nor any of its Subsidiaries is a party to or
has any obligation under any written tax sharing agreement or agreement
regarding payments in lieu of taxes.
(z) Corporate and Trade Name. During the past five years, except
as set forth on Schedule 6.1(z), no Credit Party has been known by or used any
other corporate or fictitious name.
(aa) Title to Property. Each of Safety and its Subsidiaries has
(i) good and marketable fee simple title to or valid leasehold interests in all
of its real property and (ii) good and marketable title to all of its other
property (including, without limitation, all real and other property in each
case as reflected in the Financial Statements delivered to the Agent hereunder),
other than, with respect to properties described in clause (ii) above,
properties disposed of in the
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ordinary course of business or in any manner otherwise permitted under this
Credit Agreement since the date of the most recent audited consolidated balance
sheet of Safety and its Subsidiaries, and in each case subject to no Liens other
than those Liens that are permitted by Section 7.2(a).
(bb) Accuracy and Completeness of Information. All factual
information heretofore, contemporaneously or hereafter furnished by or on behalf
of Safety or any of its Subsidiaries in writing to the Agent or any Lender for
purposes of or in connection with this Credit Agreement or any Credit Documents,
or any transaction contemplated hereby or thereby is or will be true and
accurate in all material respects on the date as of which such information is
dated or certified and not incomplete by omitting to state any material fact
necessary to make such information not misleading at such time. There are no
facts now known to any officer of the Borrowers which individually or in the
aggregate could reasonably be expected to have a Material Adverse Effect and
which have not been set forth herein (including the Schedules hereto), in the
Financial Statements, or any certificate, opinion or other written statement
made or furnished by the Borrowers to the Agent.
(cc) Affiliate Transactions. Except as set forth on Schedule
6.1(ac), neither Safety nor any of its Subsidiaries is a party to or bound by
any agreement or arrangement (whether oral or written) to which any Affiliate of
Safety or any Subsidiary is a party except (i) in the ordinary course of and
pursuant to the reasonable requirements of Safety's or such Subsidiary's
business and (ii) upon fair and reasonable terms no less favorable to Safety and
such Subsidiary than it could obtain in a comparable arm's-length transaction
with an unaffiliated Person.
(dd) No Other Indebtedness. After giving effect to the closing of
this Credit Agreement and the transactions contemplated hereby, neither Safety
nor any of its Subsidiaries has any Indebtedness other than Indebtedness that is
permitted under Section 7.2(b).
(ee) Locations of Molds. Set forth on Schedule 6.1(ae) is a
listing of all of the Molds owned by any Credit Party and the location thereof
as of April 30, 1997.
(ff) Safety Canada Trade Payable. The Safety Canada Trade Payable
constitutes a legal, valid and binding obligation of Safety Canada to Safety and
is indebtedness which is non-interest bearing.
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(gg) Survival of Representations. All representations made by any
Credit Party in this Credit Agreement and in any other Credit Document executed
and delivered in connection herewith shall survive the execution and delivery
hereof and thereof and the closing of the transactions contemplated hereby.
ARTICLE VII
COVENANTS OF THE BORROWER
SECTION 7.1. AFFIRMATIVE COVENANTS. Until termination of this
Credit Agreement and all outstanding Letters of Credit and payment and
satisfaction of all Obligations due hereunder:
(a) Financial Reporting. Safety shall timely deliver to each
Lender the following information:
(i) Annual Financial Statements. As soon as available, but not
later than ninety (90) days after each fiscal year end, beginning with
the fiscal year ending December 31, 1997: (A) Safety's annual audited
Financial Statements; (B) a comparison in reasonable detail to the
prior year audited Financial Statements; (C) the Auditors' unqualified
opinion, "Management Letter" and a statement indicating that the
Auditors have not obtained knowledge of the existence of any Default or
Event of Default during their audit; (D) a narrative discussion of
Safety's consolidated financial condition and results of operations and
the consolidated liquidity and capital resources for such fiscal year,
prepared by an Authorized Officer; (E) a compliance certificate,
substantially in the form of Exhibit M (a "Compliance Certificate"),
with an attached schedule of calculations demonstrating compliance with
the Financial Covenants; and (F) a certificate demonstrating the
calculation of Excess Cash Flow. To the extent that Safety's annual
report on Form 10-K contains any of the foregoing items, the Lenders
will accept Safety's Form 10-K in lieu of such items.
(ii) Projections. Prior to December 31 of each year, beginning
with the fiscal year ended December 31, 1997, projections of Safety's
financial condition and results of operations for the next five years
prepared in good faith and based upon reasonable assumptions,
containing projected consolidating balance sheets, statements of
operations, statements of cash flows and
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statements of changes in shareholders equity on a monthly basis for the
first year, quarterly for the second year and annually thereafter. The
projections provided pursuant to this Section 7.1(a)(ii) are for
information purposes only and will not be construed by the Agent or the
Lenders as a guaranty of results or performance in the future.
(iii) Quarterly Financial Statements. As soon as available, but
not later than forty-five (45) days after the end of each of the first
three (3) fiscal quarters, beginning with the fiscal quarter ending
June 30, 1997: (A) Safety's unaudited Financial Statements as of the
fiscal quarter then ended, and for the fiscal year to date; (B) a
comparison in reasonable detail to the Financial Statements for the
corresponding periods of the prior fiscal year; (C) the certification
of an Authorized Officer that such Financial Statements have been
prepared in accordance with GAAP (subject to year-end audit adjustments
and footnotes); (D) a narrative discussion of Safety's consolidated
financial condition and results of operations and the consolidated
liquidity and capital resources for such fiscal quarter and fiscal year
to date, prepared by an Authorized Officer; and (E) a Compliance
Certificate signed by an Authorized Officer with an attached schedule
of calculations demonstrating compliance with the Financial Covenants.
To the extent that Safety's quarterly report on Form 10-Q contains any
of the foregoing terms, the Lenders will accept Safety's Form 10-Q in
lieu of such items.
(iv) Monthly Financial Statements. As soon as available, but not
later than thirty (30) days after the end of each month other than
December, commencing with the month of July, 1997, and forty-five (45)
days after the end of each fiscal year of Safety: (A) a balance sheet
for Safety as at the end of such month and for the fiscal year to date
and statements of operations and cash flows for such month and for the
fiscal year to date; (B) a comparison to the balance sheet, statement
of operations and statement of cash flows for the same periods in the
prior year; (C) a certification by an Authorized Officer that such
balance sheet, statement of operations and statement of cash flows have
been prepared in accordance with GAAP (subject to year-end audit
adjustments and footnotes); and (D) a Compliance Certificate signed by
an Authorized Officer with an attached schedule of calculations
demonstrating compliance with the Financial Covenants.
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(v) Monthly Comparison to Prior Projections. As soon as
available, but not later than thirty (30) days after the end of each
month other than December, commencing with the month of July, 1997, and
forty-five (45) days after the end of each fiscal year of Safety, a
comparison of actual results of operations, cash flow and capital
expenditures for Safety and its Subsidiaries for such month and for the
period from the beginning of the current fiscal year through the end of
such month with amounts previously projected for those periods and with
actual results for corresponding periods in the previous fiscal year.
(vi) Public Filings. As soon as filed, copies of all 00-Xx,
00-Xx, 0-Xx, proxy statements, annual reports, quarterly reports,
registration statements and any other public filings or other
communications made by Safety to its stockholders or the Securities
Exchange Commission from time to time pursuant to the Exchange Act or
the Securities Act of 1933, as amended.
(b) Collateral Reporting. Safety shall timely deliver to the Agent
the following certificates and reports:
(i) Weekly and Monthly Borrowing Base Certificates. Weekly,
before 12:00 noon on the second Business Day of each week (except the
last week of each month); monthly, within two (2) Business Days after
the last Business day of each month, and at any other time requested by
the Agent during the continuance of a Default or Event of Default, a
borrowing base certificate, substantially in the form of Exhibit B (the
"Borrowing Base Certificate"), which shall: (A) detail the Borrowers'
Eligible Accounts Receivable and the Borrowers' Eligible Inventory as
of each Saturday of the immediately preceding week and as of the last
day of each month, as applicable (or as of such other date as the Agent
may request); (B) prepared by or under the supervision of an Authorized
Officer and certified by such officer subject only to adjustment upon
completion of the normal year-end audit of physical inventory; and (C)
attached to such additional schedules and other information as the
Agent may reasonably request (including, without limitation, a monthly
aging of Accounts).
(ii) Appraisals. When requested by the Agent, a report of
Inventory, based upon a physical count, which shall describe the
Borrowers' Inventory by category and by item (in reasonable detail) and
report the then appraised value (at lower of cost or market) of such
Inventory.
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(iii) Further Assurances. When requested by the Agent, any further
information regarding the Collateral, business affairs and financial
condition of Safety or any of its Subsidiaries.
(c) Notification Requirements. Safety shall timely give the Agent
and each of the Lenders the following notices:
(i) Notice of Defaults. Promptly, and in any event within two
(2) Business Days after becoming aware of the occurrence of a Default
or Event of Default, a certificate signed by an Authorized Officer
specifying the nature thereof and Safety's proposed response thereto,
each in reasonable detail.
(ii) Proceedings or Adverse Changes. Promptly, and in any event
within five (5) Business Days after Safety becomes aware of (A) any
proceeding being instituted or threatened to be instituted by or
against Safety or any of its Subsidiaries in any federal, state,
provincial, local or foreign court or before any commission or other
regulatory body (federal, state, provincial, local or foreign)
involving a sum in excess of $250,000, (B) any order, judgment or
decree in excess of $250,000 being entered against Safety or any of its
Subsidiaries or any of their respective properties or assets, (C) any
proceeding with respect to a products liability claim being instituted
or threatened to be instituted against Safety of any of its
Subsidiaries in any federal, state, provincial, local or foreign court
or before any commission or other regulatory body (federal, state,
provincial, local or foreign) or (D) any actual or prospective change,
development or event which has had or could reasonably be expected to
have a Material Adverse Effect, a written statement describing such
proceeding, order, judgment, decree, change, development or event and
any action being taken with respect thereto by Safety or any such
Subsidiary.
(iii) ERISA Notices.
(A) Promptly, and in any event within five (5) Business
Days after Safety, any of its Subsidiaries or any ERISA Affiliate
knows or has reason to know that a Termination Event has occurred,
a written statement of an Authorized Officer describing such
Termination Event and any action that is being taking with respect
thereto by Safety, any such Subsidiary or ERISA Affiliate,
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and any action taken or threatened by the Internal Revenue
Service, Department of Labor or PBGC. Safety, such Subsidiary and
the ERISA Affiliate shall be deemed to know all facts known by the
administrator of any Benefit Plan of which it is the plan sponsor;
(B) promptly, and in any event within three (3) Business
Days after the filing thereof with the Internal Revenue Service, a
copy of each funding waiver request filed with respect to any
Benefit Plan and all communications received by Safety, any of its
Subsidiaries or any ERISA Affiliate with respect to such request;
(C) promptly, and in any event within three (3) Business
Days after receipt by Safety, any of its Subsidiaries or any ERISA
Affiliate, of notice of the PBGC's intention to terminate a
Benefit Plan or to have a trustee appointed to administer a
Benefit Plan, copies of each such notice;
(D) promptly, and in any event within three (3) Business
Days after receipt by Safety, any of its Subsidiaries or any ERISA
Affiliate, notice (including the nature of the event and, when
known, any action taken or threatened by the Internal Revenue
Service or the PBGC with respect thereto) of:
(1) any Prohibited Transaction which could subject
Safety or any ERISA Affiliate to a civil penalty assessed pursuant
to Section 502(i) of ERISA or a tax imposed by Section 4975 of the
Internal Revenue Code in connection with any Plan, or any trust
created thereunder,
(2) any cessation of operations (by Safety or any ERISA
Affiliate) at a facility in the circumstances described in Section
4063(e) of ERISA,
(3) a failure by Safety or any ERISA Affiliate to make
a payment to a Plan required to avoid imposition of a lien under
Section 302(f) of ERISA,
(4) the adoption of an amendment to a Plan requiring
the provision of security to such Plan pursuant to Section 307 of
ERISA, or
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(5) any change in the actuarial assumptions or funding
methods used for any Plan, where the effect of such change is to
materially increase or materially reduce the unfunded benefit
liability or obligation to make periodic contributions;
(E) promptly upon the request of the Agent or any Lender,
each annual report (IRS Form 5500 series) and all accompanying
schedules, the most recent actuarial reports, the most recent
financial information concerning the financial status of each Plan
administered or maintained by Safety or any ERISA Affiliate, and
schedules showing the amounts contributed to each such Plan by or
on behalf of Safety or any ERISA Affiliate in which any of their
personnel participate or from which such personnel may derive a
benefit, and each Schedule B (Actuarial Information) to the annual
report filed by Safety or any ERISA Affiliate with the Internal
Revenue Service with respect to each such Plan; and
(F) Promptly upon the filing thereof, copies of any Form
5310, or any successor or equivalent form to Form 5310, filed with
the PBGC in connection with the termination of any Plan.
(iv) Material Contracts. Promptly, and in any event within five
(5) Business Days after any Material Contract of Safety or any of its
Subsidiaries is terminated or amended or any new Material Contract is
entered into, a written statement describing such event, with copies of
amendments or new contracts, and an explanation of any actions being
taken with respect thereto.
(v) Collateral Matters. At least twenty (20) Business Days
prior written notice to the Agent of any change in the location of any
Collateral or in the location of the chief executive office or place of
business of any Credit Party from the locations specified in Schedule
6.1(k). At least ten (10) Business Days prior to any such change,
Safety shall cause to be executed and delivered to the Agent any
financing statements, Collateral Access Agreements or other documents
reasonably required by the Agent, all in form and substance reasonably
satisfactory to the Agent.
(vi) Location of Molds, etc. Safety shall give the Agent notice
of the change in the location of any
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of the Molds or the assertion by a third party of a claim to any of the
Molds.
(d) Corporate Existence. Safety shall, and shall cause each of its
Subsidiaries to, (i) maintain its corporate existence (except for mergers
permitted by Section 7.2(d), provided the Agent receives five (5) Business Days
prior written notice thereof), (ii) maintain in full force and effect all
material licenses, bonds, franchises, leases, trademarks and qualifications to
do business, and all material patents, contracts and other rights necessary or
advisable to the profitable conduct of their businesses, except where such
leases, contracts or patents expire in accordance with their respective terms
and (iii) continue in, and limit their operations to, the same general lines of
business as presently conducted by them.
(e) Books and Records; Inspections. Safety agrees to maintain, and
to cause each of its Subsidiaries to maintain, books and records pertaining to
the Collateral in such detail, form and scope as is consistent with good
business practice. Safety agrees that the Agent or its agents may at any time
and from time to time contact customers indebted on the Accounts of Safety or
any of its Subsidiaries to verify information concerning such Accounts and the
amounts owing thereon. Safety agrees that the Agent or its agents may enter upon
the premises of Safety or any of its Subsidiaries at any time and from time to
time, during normal business hours and upon reasonable notice under the
circumstances, and at any time at all on and after the occurrence of a Default
or Event of Default which continues beyond the expiration of any grace or cure
period applicable thereto, and which has not otherwise been waived by the Agent,
for the purposes of (i) inspecting and verifying the Collateral, (ii) inspecting
and/or copying (at the Borrowers' expense) any and all records pertaining
thereto, and (iii) discussing the affairs, finances and business of Safety with
any officers, employees and directors of Safety or with the Auditors.
(f) Insurance. Safety agrees to maintain, and to cause each of its
Subsidiaries to maintain, products liability insurance, public liability
insurance, business interruption insurance, third party property damage
insurance and replacement value insurance on its assets (including the
Collateral) under such policies of insurance, with such insurance companies, in
such amounts and covering such risks as are at all times satisfactory to the
Agent in its commercially reasonable judgment. All policies covering the
Collateral and are to name the Agent as an additional insured and the loss payee
in case of loss, and are to contain such other provisions as the Agent may
reasonably require to fully protect the Agent's interest in the Collateral and
to any payments to be made under such policies.
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(g) Casualty Loss. Safety shall provide written notice to the
Agent and the Lenders of the occurrence of any of the following events within
five (5) Business Days after the occurrence of such event: any asset or property
owned or used by any Credit Party is (i) damaged or destroyed, or suffers any
material loss, or (ii) condemned, confiscated or otherwise taken, in whole or in
part, or the use thereof is otherwise diminished so as to render impracticable
or unreasonable the use of such asset or property for the purposes to which such
asset or property were used immediately prior to such condemnation, confiscation
or taking, by exercise of the powers of condemnation or eminent domain or
otherwise, and in either case the amount of the damage, destruction, loss or
diminution in value is in excess of $1,000,000 (collectively, a "Casualty
Loss"). Safety shall, and shall cause its Subsidiaries to, diligently file and
prosecute its claim or claims for any award or payment in connection with a
Casualty Loss.
(h) Taxes. Safety agrees to pay, when due, and to cause each of
its Subsidiaries to pay when due, all taxes lawfully levied or assessed against
Safety, any of its Subsidiaries or any of the Collateral before any penalty or
interest accrues thereon; provided, however, that, unless such taxes have become
a federal tax or ERISA Lien on any of the assets of Safety or any of its
Subsidiaries, no such tax need be paid if the same is being contested, in good
faith, by appropriate proceedings promptly instituted and diligently conducted
and if an adequate reserve or other appropriate provision shall have been made
therefor as required in order to be in conformity with GAAP.
(i) Compliance With Laws. Safety agrees to comply, and to cause
each of its Subsidiaries to comply, with all Requirements of Law applicable to
the Collateral or any part thereof, or to the operation of its business or its
assets generally, unless Safety or such Subsidiary contests any such
Requirements of Law in a reasonable manner and in good faith and except where
the failure to so comply could not be reasonably expected to have a Material
Adverse Effect.
(j) Use of Proceeds. The Loans made and Letters of Credit issued
hereunder shall be used by Safety solely (i) to refinance the Existing
Indebtedness owed by Safety under the Existing Loan Facility, (ii) for the
Borrowers' general corporate purposes and (iii) to pay the costs and expenses
incurred in connection with the transactions contemplated hereby. The Borrowers
shall not use any portion of the proceeds of any Revolving Loans for the purpose
of purchasing or carrying any "margin stock" (as defined in Regulation G of the
Board of Governors of the Federal Reserve System) in any manner which violates
the provisions of Regulation G or X of said Board of Governors or for any other
purpose in violation of any applicable
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statute or regulation, or of the terms and conditions of this Credit Agreement.
(k) Fiscal Year. Safety agrees to maintain, and to cause each of
its Subsidiaries to maintain, its fiscal year as a year ending on the Saturday
closest to December 31.
(l) Maintenance of Property. Except as permitted by Section
7.2(e), Safety agrees to keep, and to cause each of its Subsidiaries to keep,
all property useful and necessary to their respective businesses in good working
order and condition (ordinary wear and tear excepted) in accordance with their
past operating practices and not to commit or suffer any material waste with
respect to any of their properties.
(m) ERISA Documents. Safety will cause to be delivered to the
Agent, upon the Agent's request, each of the following: (i) a copy of each Plan
(or, where any such plan is not in writing, complete description thereof) (and
if applicable, related trust agreements or other funding instruments) and all
amendments thereto, all written interpretations thereof and written descriptions
thereof that have been distributed to employees or former employees of Safety or
its Subsidiaries; (ii) the most recent determination letter issued by the
Internal Revenue Service with respect to each Benefit Plan; (iii) for the three
most recent plan years, Annual Reports on Form 5500 Series required to be filed
with any governmental agency for each Benefit Plan; (iv) all actuarial reports
prepared for the last three plan years for each Benefit Plan; (v) a listing of
all Multiemployer Plans, with the aggregate amount of the most recent annual
contributions required to be made by Safety or any ERISA Affiliate to each such
plan and copies of the collective bargaining agreements requiring such
contributions; (vi) any information that has been provided to Safety or any
ERISA Affiliate regarding withdrawal liability under any Multiemployer Plan; and
(vii) information relating to the aggregate amount of the most recent annual
payments made to former employees of Safety or any ERISA Affiliate under any
Retiree Health Plan.
(n) Environmental and Other Matters.
(i) Safety and its Subsidiaries will conduct their businesses so
as to comply in all material respects with all applicable Environmental
Laws, in all jurisdictions in which any of them is doing business,
including, without limitation, compliance in all material respects with
the terms and conditions of all permits and governmental
authorizations, except to the extent that Safety or any of the
Subsidiaries are contesting, in good faith by appropriate legal
proceedings, any such Environmental Law or interpretation thereof or
application thereof;
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provided, further, that Safety and each of the Subsidiaries shall
comply in all material respects with the applicable order of any court
or other governmental agency relating to such Environmental Laws unless
Safety or the Subsidiaries shall currently be prosecuting an appeal or
proceedings for review and shall have secured a stay of enforcement or
execution or other arrangement postponing enforcement or execution
pending such appeal or proceedings for review. If Safety or any of the
Subsidiaries shall (A) receive written notice that any material
violation of any federal, state or local Environmental Law may have
been committed or is about to be committed by Safety or any of the
Subsidiaries, (B) receive written notice that any administrative or
judicial complaint or order has been filed or is about to be filed
against Safety or any of the Subsidiaries alleging material violations
of any federal, state, provincial or local Environmental Law, or
requiring Safety or any of the Subsidiaries to take any action in
connection with the release of toxic or hazardous substances into the
environment or (C) receive any written notice from a federal, state,
provincial or local governmental agency or private party alleging that
Safety or any of the Subsidiaries may be liable or responsible for
material costs associated with a response to or cleanup of a release of
a toxic or hazardous substance into the environment or any damages
caused thereby, Safety shall provide the Agent and the Lenders with a
copy of such notice within ten (10) Business Days after the receipt
thereof by Safety or any of the Subsidiaries. Within ten (10) Business
Days after Safety has knowledge of the enactment or promulgation of any
federal, state or local Environmental Law, which could reasonably be
expected to have a Material Adverse Effect, Safety shall provide the
Agent and the Lenders with notice thereof. The Borrowers shall promptly
take all reasonable actions necessary to prevent the imposition of any
Liens on any of its properties arising out of or related to any
environmental matters. At the request of the Agent, the Borrowers shall
provide the Agent with any additional information relating to
environmental matters and any potential related liability resulting
therefrom as the Agent may reasonably request.
(ii) For purposes of this Section 7.1(n), "material" means any
noncompliance or basis of liability that could reasonably be expected
to subject the Borrower or any of its Subsidiaries to liability in
excess of $250,000.
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(o) Security Interests. Safety will defend, and will cause its
Subsidiaries to defend, the Collateral against all claims and demands of all
Persons at any time claiming the same or any interest therein, other than claims
relating to Liens permitted by the Credit Documents. Safety agrees to comply,
and will cause its Subsidiaries to comply, with the requirements of all
provincial, state and federal laws in order to grant to the Lenders valid and
perfected first security interests in the Collateral. The Agent is hereby
authorized by each Borrower to file any financing statements or other forms
covering the Collateral whether or not such Borrower's signatures appear
thereon. Safety agrees, and shall cause its Subsidiaries, to do whatever the
Agent may reasonably request, from time to time, by way of: filing notices of
liens, financing statements, and amendments, renewals and continuations thereof;
cooperating with the Agent's representatives; keeping stock records; paying
claims which could, if unpaid, become a Lien on the Collateral; and performing
such further acts as the Agent may reasonably require in order to effect the
purposes of this Credit Agreement and the other Credit Documents. Any and all
fees, costs and expenses incurred in connection with the actions contemplated by
this Section 7.1(o) shall be borne and paid by the Borrowers. If same are not
promptly paid by the Borrowers, the Agent may pay same on the Borrowers' behalf,
and the amount thereof shall be an Obligation secured hereby and due to the
Agent on demand.
(p) Trademarks. Safety shall do and cause to be done all things
necessary to preserve and keep in full force and effect all of its and its
Subsidiaries' material registrations of trademarks, service marks and other
marks, trade names or other trade rights.
(q) Further Assurances. (i) Safety shall take, and shall cause
each of its Subsidiaries to take, all such further actions and execute all such
further documents and instruments as the Agent may at any time reasonably
determine in its sole discretion to be necessary or desirable to further carry
out and consummate the transactions contemplated by the Credit Documents, to
cause the execution, delivery and performance of the Credit Documents to be duly
authorized and to perfect or protect the Liens (and the priority status thereof)
of the Agent for the benefit of the Lenders on the Collateral.
(ii) In the event that any Person becomes a Subsidiary after
the date hereof, (it being understood that this Section 7.1(q)(ii) is not and
shall not be deemed to be a consent to the creation or acquisition of any such
Subsidiary), Safety will promptly notify the Agent and cause such Subsidiary to
execute and deliver to the Agent a counterpart of the Guaranty, Contribution
Agreement, the Guarantor Security Agreement and the Guarantor Intellectual
Property Security Agreement, and to take all such further actions and execute
all such further documents
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and instruments as may be required to grant and perfect in favor of the Agent,
for the benefit of the Lenders, a first-priority security interest in all the
assets of such Subsidiary. Safety shall deliver to the Agent, together with such
documents, all legal opinions and other Credit Documents that the Agent may
reasonably request. In the event that Safety or any of its Subsidiaries creates
a new Subsidiary, all of the capital stock or partnership interests of such new
Subsidiary shall promptly be duly and validly pledged to the Agent for the
benefit of the Lenders pursuant to the Credit Documents, subject to no other
Liens.
(iii) With respect to the assets of any Credit Party that are
not subject to a perfected Lien in favor of the Agent, Safety shall, and shall
cause each of its Subsidiaries to, promptly following the request of the Agent,
(A) execute and deliver to the Agent such amendments to the relevant Collateral
Documents or such other documents as the Agent shall deem necessary or advisable
to grant to the Agent, for the benefit of the Lenders, a Lien on such assets,
(B) take all actions necessary or advisable to cause such Lien to be duly
perfected in accordance with all applicable Requirements of Law, and (C) deliver
to the Agent legal opinions relating to the matters described in clauses (A) and
(B) above, which in each case shall be in form and substance reasonably
satisfactory to the Agent.
(iv) (A) Within three (3) days after the Closing Date and
without limiting the generality of Section 7.1 (q)(iii), Safety Canada shall
cause to be delivered to the Agent a blocked account agreement, in form and
substance acceptable to the Agent, executed by a financial institution
acceptable to the Agent, pursuant to which Safety Canada agrees to maintain a
Collection Account with such financial institution and such financial
institution agrees, among other things, to follow the Agent's instructions with
respect to all collections deposited in the Collection Account (the "Blocked
Account Agreement"); (B) within 45 days after the Closing Date, without limiting
the generality of Section 7.1(q)(iii), (i) Safety shall cause to be delivered to
the Agent a new Lockbox Agreement, duly executed by Safety and a Lockbox Bank,
and (ii) Safety Canada shall cause to be delivered to the Agent a Lockbox
Agreement, duly executed by Safety Canada and a Lockbox Bank which shall
supersede and replace the Blocked Account Agreement.
(v) Within 45 days after the Closing Date and without limiting
the generality of Section 7.1(q)(iii), Safety shall cause Safety 1st (Europe)
Limited to (A) execute and deliver to the Agent such documents as the Agent
shall deem necessary or advisable to grant to the Agent, for the benefit of the
Lenders, a Lien on all of the assets of Safety 1st (Europe) Limited, (B) take
all actions necessary or advisable to cause such Lien to be duly perfected in
accordance with all applicable
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Requirements of Law, and (C) deliver to the Agent legal opinions relating to the
matters described in clauses (A) and (B) above, which in each case shall be in
form and substance reasonably satisfactory to the Agent.
(vi) Within 45 days after the Closing Date and without
limiting the generality of Section 7.1(q)(iii), Safety shall obtain BAAN U.S.A.
Inc.'s consent to a collateral assignment to the Agent of the Software License
and Support Agreement executed by Safety on March 27, 1996.
(vii) Within ten (10) days after the Closing Date, Safety
shall deliver to the Agent certificates evidencing key man life insurance
policies on the life of Xxxxxxx Xxxxxx in a minimum amount of $5,000,000 and on
the life of Xxxxxxx Xxxx in a minimum amount of $1,000,000, naming the Agent as
an additional insured.
(r) Safety Canada Trade Payable. The Safety Canada Trade Payable
shall, at all times, be non-interest bearing. Safety Canada shall pay the Safety
Canada Trade Payable from Collections which it deposits in a Collection Account
pursuant to Section 2.13 (the "Canada Collections Account") by transfer to the
Agent of amounts in the Canada Collections Account maintained by Safety Canada
in accordance with Section 2.13. Safety acknowledges that the Safety Canada
Trade Payable, outstanding from time to time, will be reduced to the extent of
any transfer from the Canada Collections Account to the Agent. The Borrowers
agree to notify the Agent immediately if the difference between the Safety
Canada Trade Payable and all Accounts of Safety Canada is equal to or less than
$500,000. The Borrowers shall execute such further documents and do such further
acts as the Agent may reasonably determine are necessary to effectuate the
provisions of this Section 7.1(r).
SECTION 7.2. NEGATIVE COVENANTS. Until termination of this Credit
Agreement and all outstanding Letters of Credit and payment and satisfaction of
all Obligations due hereunder:
(a) Liens, Etc. Safety will not, nor will it permit any of its
Subsidiaries to, directly or indirectly at any time create, incur, assume or
suffer to exist any Lien on or with respect to any of its properties of any
character (including, without limitation, Accounts) whether now owned or
hereafter acquired, except:
(i) Liens created by the Collateral Documents;
(ii) Permitted Liens;
(iii) the Liens existing on the date hereof and described on
Schedule 7.2(a);
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(iv) Purchase Money Liens;
(v) cash deposits for bids and other performance obligations
under contracts entered into in the ordinary course of business;
(vi) Liens on a Credit Party's goods, or documents evidencing
title to such goods, which are established in the ordinary course of
such Credit Party's business for the purpose of such Credit Party's
receiving interim trade financing; provided, however, that no such Lien
shall extend to or cover any property other than such goods or
documents so financed;
(vii) the replacement, extension or renewal of any Lien permitted
by clauses (iii), (iv) or (v) above upon or in the same property
theretofore subject thereto or the replacement, extension or renewal
(without increase in the amount or change in any direct or contingent
obligor) of the Indebtedness secured thereby; and
(viii) leases or subleases of real estate or immovable property
(other than the real estate or immovable property upon which Agent is
granted a mortgage) granted by a Credit Party to other Persons in the
ordinary course of business and not materially interfering with the
conduct of the business of such Credit Party and cash security deposits
made pursuant to real estate or immovable property leases in customary
amounts.
(b) Indebtedness. Safety will not, nor will it permit any of its
Subsidiaries to, directly or indirectly, at any time create, incur, assume or
suffer to exist, any Indebtedness other than:
(i) Indebtedness under the Credit Documents;
(ii) Indebtedness secured by Liens permitted by Section
7.2(a)(iii);
(iii) the Existing Indebtedness;
(iv) indorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(v) Indebtedness secured by purchase money liens on equipment
acquired after the date of this Credit Agreement not to exceed $500,000
in the
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aggregate outstanding at any one time ("Purchase Money Liens") so long
as such Indebtedness shall be from parties and on terms and conditions
satisfactory to the Agent. Each Purchase Money Lien shall attach only
to the property to be acquired and the debt incurred shall not exceed
one hundred percent (100%) of the purchase price of the item or items
of equipment purchased; and
(vi) Indebtedness constituting Contingent Obligations otherwise
permitted by Section 7.2(v); and
(vii) Indebtedness of Safety under Interest Rate Agreements
provided that the outstanding exposure in connection therewith shall be
subject to the Agent's approval; and
(viii) Indebtedness in an aggregate outstanding principal amount
not to exceed $250,000 owing by Safety Canada to Safety and
Indebtedness in an aggregate outstanding principal amount not to exceed
$250,000 owing by Safety Europe to Safety; provided that (A) such
Indebtedness is used only for general working capital purposes, (B)
such Indebtedness is evidenced by one or more demand promissory notes
in form and substance satisfactory to the Agent, (C) such promissory
notes are pledged to the Agent for the ratable benefit of the Lenders
pursuant to documentation in form and substance satisfactory to the
Agent, (D) such notes are delivered to the Agent with note powers
executed in blank and (E) if an Event of Default has occurred and is
continuing, no such Indebtedness may be incurred by Safety 1st (Europe)
Limited.
(c) Contingent Obligations. Safety shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly incur, assume, or suffer to
exist any Contingent Obligation, excluding (i) indemnities given in connection
with the sale of Inventory or other asset dispositions permitted hereunder and
(ii) Contingent Obligations for Indebtedness permitted to be incurred under
Section 7.2(b).
(d) Corporate Changes, Etc. Safety will not, nor will it permit
any of its Subsidiaries to, directly or indirectly, at any time merge or
consolidate or otherwise alter or modify Safety's or any such Subsidiary's
Governing Documents, corporate names, mailing addresses, principal places of
business, structure, status or existence, or liquidate or dissolve itself (or
suffer any liquidation or dissolution), except for the merger of any Subsidiary
with and into Safety (provided Safety shall be the surviving corporation) and
the merger of 3232301 with and into Safety Canada and except that any Credit
Party may modify
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its Governing Documents in a manner which could not have an adverse effect on
the Agent or the Lenders.
(e) Sales, Etc. of Assets. Safety will not, nor will it permit any
of its Subsidiaries to, directly or indirectly, at any time sell, lease,
transfer or otherwise dispose of any assets (including contract rights), or
grant any option or other right to purchase, lease or otherwise acquire any
assets (including contract rights), except (i) sales of Inventory and obsolete
equipment in the ordinary course of its business, (ii) the sale or disposition
of scrap, waste and obsolete assets in the ordinary course of business, (iii)
the sale of any other assets that do not constitute Collateral, provided that
(A) such sales are for fair value, (B) at least eighty percent (80%) of the
aggregate consideration is paid in full in cash at the time of sale and is
applied in the manner set forth in Section 2.10(d) and (C) the aggregate amount
of all such sales does not exceed $500,000 in the aggregate for any fiscal year
and (iv) so long as no Event of Default shall occur and be continuing, the grant
of any option or other right to purchase any asset in a transaction which would
be permitted under the provisions of the immediately preceding clause (iii).
(f) Investments in Other Persons. Safety will not, nor will it
permit any of its Subsidiaries to, directly or indirectly, at any time make or
hold any Investment in any Person (whether in cash, securities or other property
of any kind) other than:
(i) Investments in Cash Equivalents;
(ii) Advances or loans made in the ordinary course of business
not to exceed $100,000 outstanding at any one time to any one Person
and $250,000 in the aggregate outstanding at any one time;
(iii) loans, investments and advances between Safety and its
Subsidiaries in existence as of the date hereof and described on
Schedule 7.2(f);
(iv) the endorsement of instruments for collection or deposit in
the ordinary course of business;
(v) stock or obligations issued to a Credit Party by any Person
(or the representative of such Person) in respect of Indebtedness of
such Person owing to such Credit Party in connection with the
insolvency, bankruptcy, receivership or reorganization of such Person
or a composition or readjustment of the debts of such Person; provided,
that, the original of any such stock or instrument evidencing such
obligations shall
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be promptly delivered to the Agent, upon the Agent's request, together
with such stock power, assignment or endorsement by such Credit Party
as the Agent may request;
(vi) Investments in existence on the date hereof and described
on Schedule 7.2(f);
(vii) Investments constituting Indebtedness permitted by Section
7.2(b)(vii); and
(viii) such other Investments as the Agent and the Majority
Lenders may approve in writing in their sole discretion.
(g) Affiliate Transactions. Safety will not, nor will it permit
any of its Subsidiaries to, at any time enter into, directly or indirectly, any
transaction with, including, without limitation, the purchase, sale or exchange
of property or the rendering of any service to, any Subsidiary or Affiliate of
Safety, except in the ordinary course of and pursuant to the reasonable
requirements of Safety's or such Subsidiary's or Affiliate's business, as the
case may be, and upon fair and reasonable terms no less favorable to Safety or
such Subsidiary than could be obtained in a comparable arm's-length transaction
with an unaffiliated Person; provided, that, except as set forth on Schedule
6.1(ac), the aggregate amount of all transactions with Affiliates may not exceed
$250,000 in any twelve month period. Safety may pay fees to any Affiliate for
legal, accounting, financial, consulting or investment banking services
(including, without limitation, any underwriting discounts and commissions and
placement agent fees, but excluding management fees) performed in the ordinary
course of such Affiliate's business, provided, that the amount of any such fees
for any such service provided shall not exceed the usual and customary fees of
such Affiliate for similar services rendered to third parties.
(h) Dividends, Exchange, Etc. (i) Safety will not, nor will it
permit any of its Subsidiaries to, directly or indirectly, declare or pay any
dividends (other than solely in shares of stock or the accumulation (but not
payment) of dividends in accordance with Section 3 of the Certificate of
Designation of Safety dated as of July 28, 1997) on, or make any payment on
account of, or set apart assets for a sinking or other analogous fund for, the
purchase, redemption, defeasance, retirement or other acquisition of, any shares
of any class of its capital stock or any warrants, options or rights to purchase
any such capital stock, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of Safety or any of its Subsidiaries, except that
(A) Subsidiaries of Safety may pay dividends to Safety and (B) after the Term
Loan
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has been paid in full so long as no Default or Event of Default has occurred and
is continuing or would result therefrom Safety may pay regularly scheduled cash
dividends to the holders of Safety's Series A Preferred Stock so long as there
is at least $3,000,000 of Unused Availability on each of the thirty (30) days
immediately prior to the date of such payment and after giving effect to the
payment of such dividends.
(i) Change in Nature of Business. Safety will not, nor will it
permit any of its Subsidiaries to, at any time make any material change in the
lines of its business as carried on at the date hereof. Safety will not permit
Safety 1st International, Inc. to own any material assets, incur any liens or
Indebtedness or conduct any material business.
(j) Charter Amendments, Etc. Safety will not, nor will it permit
any of its Subsidiaries to, at any time amend its certificate of incorporation
except for the filing of any certificate of designation with respect to the
preferred stock of Safety.
(k) Accounting Changes. Safety will not, nor will it permit any of
its Subsidiaries to, at any time make or permit any change in accounting
policies (as defined in GAAP) or reporting practices, except as required by
GAAP.
(l) Prepayments and Material Amendments of Material Contracts.
Safety will not, nor will it permit any of its Subsidiaries to, at any time (i)
prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled
maturity thereof in any manner, or make any payment in violation of any
subordination terms of, any Indebtedness, other than the prepayment of the Loans
in accordance with the terms of this Credit Agreement and payments of the
Indebtedness permitted by Section 7.2(b)(viii), or (ii) amend, modify, cancel or
terminate or permit the amendment, modification, cancellation or termination of,
any of the Material Contracts, except in the event that such amendments or
modifications could not have a Material Adverse Effect. Without limiting the
generality of the foregoing, the Borrower shall not, and shall not permit any of
its Subsidiaries to, amend, modify or change, or consent or agree to any
amendment, modification or change, to any of the terms of any Indebtedness.
(m) Negative Pledge. Safety will not, nor will it permit any of
its Subsidiaries to, at any time enter into or suffer to exist, any agreement
prohibiting or conditioning the creation or assumption of any Lien upon any of
its property or assets other than (i) in favor of the Agent and the Lenders, or
(ii) in connection with Liens described in Section 7.2(a)(iv), but solely with
respect to the property so acquired.
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(n) Limitation on Sales and Leasebacks. Safety will not, nor will
it permit any of its Subsidiaries to, at any time enter into any arrangement
with any Person providing for the leasing by Safety or such Subsidiary of real
or immovable or personal or movable property which has been or is to be sold or
transferred by Safety or such Subsidiary to such Person or to any other Person
to whom funds have been or are to be advanced by such Person on the security of
such property or rental obligations of Safety or such Subsidiary.
(o) Partnerships; Subsidiaries; Joint Ventures. Safety will not,
nor will it permit any of its Subsidiaries to, at any time create any direct or
indirect subsidiary, enter into any joint venture or similar arrangement or
become a partner in any general or limited partnership.
(p) Additional Bank Accounts. Safety will not at any time open,
maintain or otherwise have or permit Safety Canada to enter into or otherwise
have any checking, savings or other accounts at any bank or other financial
institution, or any other account where money is or may be deposited or
maintained with any Person, other than the Lockbox Accounts, the Disbursement
Accounts or as otherwise agreed to in writing by the Agent.
(q) Excess Cash. Safety will not, and will not permit any of its
Subsidiaries to, directly or indirectly, maintain in the aggregate in all
deposit accounts of Safety and its Subsidiaries (other than the Disbursement
Account and payroll accounts) total cash balances and Investments permitted by
Sections 7.2(f)(i) and (viii) in excess of $100,000 at any time during which any
Revolving Loans are outstanding.
(r) Capital Expenditures. Safety and its Subsidiaries will not at
any time make or commit to make any payments for Capital Expenditures, except
that Safety and its Subsidiaries in the aggregate may make or commit to make
Capital Expenditures not exceeding the amount (the "Base Amount") per fiscal
year (or portion thereof) set forth below:
Period Amount
------ ------
from the Closing Date through
December 31, 1997 $2,700,000
fiscal year ending December 31, 1998 6,000,000
fiscal year ending December 31, 1999 6,750,000
fiscal year ending December 31, 2000 7,500,000
fiscal year ending December 31, 2001 8,250,000
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six months ending June 30, 2002 4,000,000
provided, however, that for any fiscal year commencing with the fiscal
year ending December 31, 1998, the Base Amount set forth above may be
increased for any such fiscal year by carrying over to any such fiscal
year any portion of the Base Amount (not to exceed 50% of such Base
Amount) not spent in the immediately preceding fiscal year (but not in
any year prior thereto); provided, further, however, that any Capital
Expenditures made must be directly related to the business conducted by
Safety and its Subsidiaries on the Closing Date.
(s) Minimum Consolidated Tangible Net Worth. As of the Closing
Date and the end of any fiscal quarter thereafter, Safety will not permit
Consolidated Tangible Net Worth to be less than the sum of (a) $9,000,000, (b)
75% of the increases to (but not decreases to) Net Income of Safety for each of
the fiscal quarters ending subsequent to the Closing Date, (c) 100% of the net
proceeds of any capital or equity infusion received by Safety through an
offering of the capital stock of Safety and (d) 100% of the fair market value of
any capital stock issued by Safety in connection with an Investment by Safety.
(t) Minimum Consolidated Current Ratio. Safety will not at any
time permit, during each period set forth below, the ratio of its consolidated
current assets to its consolidated current liabilities to be less than the ratio
set forth below opposite such period, provided, however, that for purposes of
the calculation of such ratio, the determination of consolidated current
liabilities shall include the full outstanding balance of the Revolving Loans:
Period Ratio
------ -----
from the Closing Date to
September 30, 1997 .90:1
October 1, 1997 to December 31, 1997 .90:1
January 1, 1998 to March 31, 1998 1.00:1
April 1, 1998 to June 30, 1998 1.00:1
July 1, 1998 to September 30, 1998 1.25:1
October 1, 1998 to December 31, 1998 1.25:1
January 1, 1999 to March 31, 1999 1.25:1
April 1, 1999 to June 30, 1999 1.25:1
for each fiscal quarter from and 1.50:1
after July 1, 1999
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(u) Minimum Consolidated EBITDA. Safety will not, for the
following periods, permit the EBITDA of Safety and its Subsidiaries, determined
for each period set forth below, to be less than the amount set forth below
opposite such period:
Period Amount
------ ------
fiscal quarter ended September 30,
1997 $ 3,500,000
two fiscal quarters ended
December 31, 1997 6,000,000
three fiscal quarters ended March 31,
1998 10,000,000
four fiscal quarters ended June 30,
1998 13,000,000
four fiscal quarters ended
September 30, 1998 16,000,000
four fiscal quarters ended
December 31, 1998 19,000,000
four fiscal quarters ended each March
31, June 30, September 30 and
December 31 thereafter 20,000,000
========================================================
(v) Minimum Consolidated Fixed Charge Coverage Ratio. Safety will
not permit Consolidated Fixed Charge Coverage Ratio, for any period, to be less
than 1.50:1.
(w) No Prohibited Transactions Under ERISA. Safety will not, and
shall not permit any of its Subsidiaries to, directly or indirectly:
(i) Engage in any prohibited transaction which could reasonably
be expected to result in a civil penalty or excise tax described in
Sections 406 of ERISA or 4975 of the Internal Revenue Code for which a
statutory or class exemption is not available or a private exemption
has not been previously obtained from the Department of Labor;
(ii) permit to exist with respect to any Benefit Plan any
accumulated funding deficiency (as defined in Sections 302 of ERISA and
412 of the Internal Revenue Code), whether or not waived;
(iii) fail to pay timely required contributions or annual
installments due with respect to any waived funding deficiency to any
Benefit Plan;
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(iv) terminate any Benefit Plan where such event would result in
any liability of Safety, any Subsidiary or any ERISA Affiliate under
Title IV of ERISA;
(v) fail to make any required contribution or payment to any
Multiemployer Plan;
(vi) fail to pay any required installment or any other payment
required under Section 412 of the Internal Revenue Code on or before
the due date for such installment or other payment;
(vii) amend a Plan resulting in an increase in current liability
for the plan year such that Safety, any Subsidiary or any ERISA
Affiliate is required to provide security to such Plan under Section
401(a)(29) of the Internal Revenue Code; or
(viii) withdraw from any Multiemployer Plan where such withdrawal
is reasonably likely to result in any liability of any such entity
under Title IV of ERISA.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. EVENTS OF DEFAULT. The occurrence of any of the following
events shall constitute an "Event of Default":
(a) the Borrowers shall fail to pay (i) any interest, Fees,
Expenses or other Obligations (other than principal) when due or within three
(3) Business Days of when due, whether at stated maturity, by acceleration, or
otherwise or (ii) any principal when due, whether at stated maturity, by
acceleration or otherwise; or
(b) any representation or warranty made by any Credit Party under
or in connection with any Credit Document or the Stock Purchase Agreement shall
prove to have been incorrect in any material respect when made or deemed made;
or
(c) the Borrowers or any other Credit Party shall fail to perform
or observe any term, covenant or agreement contained in Sections 7.1(a), (b),
(c), (d)(i), (f) and (j) and 7.2 of this Credit Agreement or Section 4 of the
Borrower Security Agreement, Section 4 of the Guarantor Security Agreement,
Section 2 of the Borrower Intellectual
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Property Security Agreement, Section 2 of the Guarantor Intellectual Property
Security Agreement, Section 5 of the 3232301 Hypothecation Agreement or Section
5 of the Safety Hypothecation Agreement; or
(d) any Credit Party shall fail to perform or observe any term,
covenant or agreement contained in any Credit Document (other than as set forth
in Sections 8.1(a) and (c)) on its part to be performed or observed or Safety or
any Subsidiary shall fail to comply with any provisions contained in any
Material Contract to which it is a party if such failure shall remain unremedied
or not waived for ten (10) Business Days after its occurrence; or
(e) Safety or any Subsidiary (i) shall fail to pay any
Indebtedness or any interest or premium thereon, when due (whether at scheduled
maturity or by required prepayment, acceleration, demand or otherwise), or (ii)
shall otherwise be in breach or default in any of its obligations under any
agreement with respect to any such Indebtedness, if the effect of such failure
to pay, breach or default is to cause such Indebtedness to become due or
redeemed or permit the holder or holders of such Indebtedness (or a trustee or
agent on behalf of such holder or holders) to declare such Indebtedness due or
require such Indebtedness to be redeemed prior to its stated maturity; or
(f) any Credit Party shall dissolve, wind up or otherwise cease
its business (except pursuant to a merger permitted by Section 7.2(d)); or
(g) Safety or any Subsidiary shall become the subject of (i) an
Insolvency Event as set forth in clause (e) of the definition of Insolvency
Event that is not resolved or dismissed within sixty (60) days or (ii) any
Insolvency Event except as set forth in clause (e) of the definition of
Insolvency Event; or
(h) any judgment or order for the payment of money in excess of
$500,000 shall be rendered against any Credit Party and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order or (ii) there shall be any period of twenty (20) consecutive days during
which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; or
(i) any non-monetary judgment or order shall be rendered by a
court of competent jurisdiction against Safety or any of its Subsidiaries that
could reasonably be expected to have a Material Adverse Effect, and there shall
be any period of thirty (30) consecutive days during which a stay of enforcement
of such judgment or order, by reason of a pending appeal or otherwise, shall not
be in effect; or
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(j) any material covenant, agreement or obligation of any Credit
Party contained in or evidenced by any of the Credit Documents shall cease to be
enforceable, or shall be determined to be unenforceable, in accordance with its
terms; any Credit Party shall deny or disaffirm its obligations under any of the
Credit Documents or any Liens granted in connection therewith; or any Liens
granted in any of the Collateral shall be determined to be void, voidable or
invalid, are subordinated or are not given the priority contemplated by this
Credit Agreement; or
(k) a Collateral Document shall for any reason (other than
pursuant to the terms thereof) cease to create a valid and, except as otherwise
permitted under Section 7.2(a), perfected first priority Lien on the Collateral
purported to be covered thereby; or
(l) a Change in Control shall have occurred.
SECTION 8.2. ACCELERATION AND CASH COLLATERALIZATION. Upon the
occurrence and during the continuance of an Event of Default, the Agent may take
any or all of the following actions, without prejudice to the rights of the
Agent or any Lender to enforce its claims against the Borrowers:
(a) Acceleration. Upon the written request of the Majority
Lenders, and by delivery of written notice to the Borrowers from the Agent, all
Obligations may be declared to be immediately due and payable (except with
respect to any Event of Default with respect to a Credit Party set forth in
Section 8.1(g) hereof, in which case all Obligations shall automatically become
immediately due and payable without the necessity of any request of the Majority
Lenders or notice or other demand to the Borrowers) without presentment, demand,
protest or any other action or obligation of the Agent or any Lender.
(b) Termination of Commitments. Upon the written request of the
Majority Lenders, and by delivery of written notice to the Borrowers from the
Agent, the Commitments may be immediately terminated and, at all times
thereafter, all Loans made by any Lender pursuant to this Credit Agreement shall
be at such Lender's sole discretion, unless such Event of Default is waived in
accordance with Section 10.11.
(c) Cash Collateralization. On demand of the Agent or the Majority
Lenders, the Borrowers jointly and severally shall immediately deposit with the
Agent for each Letter of Credit then outstanding, cash or Cash Equivalents in an
amount equal to 105% of the greatest amount drawable thereunder and execute and
deliver documentation with respect to such cash
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collateralization in form and substance satisfactory to the Agent.
SECTION 8.3. RESCISSION OF ACCELERATION. After acceleration of the
maturity of the Loans, if the Borrowers pay all accrued interest and all
principal due (other than by reason of the acceleration) and all Defaults and
Events of Default are otherwise remedied or waived in accordance with Section
10.11, the Majority Lenders may elect in their sole discretion, to rescind the
acceleration and return any cash collateral. (This Section is intended only to
bind all of the Lenders to a decision of the Majority Lenders and not to confer
any right on the Borrowers, even if the described conditions for the Majority
Lenders' election may be met.)
SECTION 8.4. REMEDIES. Upon the occurrence and during the continuance
of an Event of Default, the Agent and the Lenders shall have all rights and
remedies with respect to the Obligations under the Credit Documents and the
Collateral available to it as creditors under applicable law and the Credit
Documents and the Agent may do any or all of the following:
(a) remove for copying all documents, instruments, files and
records (including the copying of any computer records) relating to the Accounts
or use (at the expense of the Borrowers) such supplies or space of any Credit
Party at such Credit Party's place of business necessary to properly administer
and collect the Accounts thereon;
(b) accelerate or extend the time of payment, compromise, issue
credits, or bring suit on the Accounts (in the name of the Borrowers or the
Lenders) and otherwise administer and collect the Accounts;
(c) sell, assign and deliver the Accounts and any returned,
reclaimed or repossessed merchandise, with or without advertisement, at public
or private sale, for cash, on credit or otherwise, subject to applicable law;
and
(d) foreclose the security interests created pursuant to the
Credit Documents by any available procedure, or take possession of any or all of
the Collateral without judicial process and enter any premises where any
Collateral may be located for the purpose of taking possession of or removing
the same.
Any Lender may bid or become a purchaser at any sale, free from any right of
redemption, which right is expressly waived by the Borrowers. If notice of
intended disposition of any Collateral is required by law, it is agreed that ten
(10) Business Days notice shall constitute reasonable notification. Safety will
assemble, and cause its Subsidiaries to assemble, the Collateral
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and make it available to the Agent at such locations as the Agent may specify,
whether at the premises of such Credit Party or elsewhere, and will make
available to the Agent the premises and facilities of such Credit Party for the
purpose of the Agent's taking possession of, removing or putting the Collateral
in saleable form.
SECTION 8.5. RIGHT OF SETOFF. In addition to and not in limitation of
all rights of offset that any Lender or the Issuing Bank may have under
applicable law, upon the occurrence of any Event of Default, and whether or not
any Lender or the Issuing Bank has made any demand or the Obligations of any
Credit Party have matured, each Lender and the Issuing Bank shall have the right
to appropriate and apply to the payment of the Obligations of a Credit Party all
deposits and other obligations then or thereafter owing by such Lender or the
Issuing Bank to such Credit Party. Each Lender or the Issuing Bank exercising
such rights shall notify the Agent thereof (and the Agent shall promptly notify
the Borrowers thereof) and any amount received as a result of the exercise of
such rights shall be shared in accordance with Section 2.8.
SECTION 8.6. LICENSE FOR USE OF SOFTWARE AND OTHER INTELLECTUAL
PROPERTY. The Agent is hereby granted a license to use all computer software
programs, data bases, processes, patents, trademarks and materials used by
Safety and its Subsidiaries in connection with their businesses or in connection
with the Collateral. The Agent agrees not to use any such license prior to the
occurrence of an Event of Default without giving the Borrowers prior notice.
SECTION 8.7. NO MARSHALLING; DEFICIENCIES; REMEDIES CUMULATIVE. The net
cash proceeds resulting from the Agent's exercise of any of the foregoing rights
to liquidate all or substantially all of the Collateral (after deducting all of
the Agent's Expenses related thereto) shall be applied by the Agent to the
payment of the Obligations to the Agent and the Lenders, whether due or to
become due, in such order as the Agent may elect. The Borrowers shall remain
liable to the Agent and the Lenders for any deficiencies, and the Agent and the
Lenders in turn agree to remit to the Borrowers or the Guarantors or their
respective successors or assigns, any surplus resulting therefrom. The foregoing
remedies are not intended to be exhaustive and the full or partial exercise of
any of them shall not preclude the full or partial exercise of any other
available remedy under this Credit Agreement, under any other Credit Document,
at equity or at law.
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ARTICLE IX
THE AGENT
SECTION 9.1. APPOINTMENT OF AGENT.
(a) Each Lender hereby designates BTCC as its Agent and
irrevocably authorizes the Agent to take action on such Lender's behalf under
the Credit Documents and to exercise the powers and to perform the duties
described therein and to exercise such other powers as are reasonably incidental
thereto. The Agent may perform any of its duties by or through its agents or
employees.
(b) Other than the Borrowers' rights under Section 9.9, the
provisions of this Article IX are solely for the benefit of the Agent and the
Lenders, and none of the Credit Parties shall have any rights as a third party
beneficiary of any of the provisions hereof. The Agent shall act solely as agent
of the Lenders and assumes no obligation toward or relationship of agency or
trust with or for any Credit Party.
SECTION 9.2. NATURE OF DUTIES OF AGENT. The Agent shall have no duties
or responsibilities except those expressly set forth in the Credit Documents.
Neither the Agent nor any of its officers, directors, employees or agents shall
be liable for any action taken or omitted by it as such hereunder or in
connection herewith, unless caused by its or their gross negligence or willful
misconduct. The duties of the Agent shall be mechanical and administrative in
nature. The Agent shall not have a fiduciary relationship in respect of any
Lender or any participant of any Lender.
SECTION 9.3. LACK OF RELIANCE ON AGENT.
(a) Independently and without reliance upon the Agent, each
Lender, to the extent it deems appropriate, has made and shall continue to make
(i) its own independent investigation of the financial or other condition and
affairs of each Credit Party in connection with the taking or not taking of any
action in connection herewith and (ii) its own appraisal of the creditworthiness
of each Credit Party, and, except as expressly provided in this Credit
Agreement, the Agent shall have no duty or responsibility, either initially or
on a continuing basis, to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession before the
making of the Loans or at any time or times thereafter.
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(b) The Agent shall not be responsible to any Lender for any
recitals, statements, information, representations or warranties herein or in
any document, certificate or other writing delivered in connection herewith or
for the execution, effectiveness, genuineness, validity, enforceability,
collectibility, priority or sufficiency of this Credit Agreement or the Notes or
the financial or other condition of any Credit Party. The Agent shall not be
required to make any inquiry concerning either the performance or observance of
any of the terms, provisions or conditions of this Credit Agreement or the
Notes, or the financial condition of any Credit Party, or the existence or
possible existence of any Default or Event of Default, unless specifically
requested to do so in writing by any Lender.
SECTION 9.4. CERTAIN RIGHTS OF THE AGENT. The Agent may request
instructions from the Majority Lenders at any time. If the Agent requests
instructions from the Majority Lenders with respect to any action or inaction,
the Agent shall be entitled to await instructions from the Majority Lenders
before such action or inaction. No Lender shall have any right of action based
upon the Agent's action or inaction in response to instructions from the
Majority Lenders.
SECTION 9.5. RELIANCE BY AGENT. The Agent may rely upon written or
telephonic communication it believes to be genuine and to have been signed, sent
or made by the proper person. The Agent may obtain the advice of legal counsel
(including counsel for the Borrowers with respect to matters concerning the
Borrowers), independent public accountants and other experts selected by it and
shall have no liability for any action or inaction taken or omitted to be taken
by it in good faith based upon such advice.
SECTION 9.6. INDEMNIFICATION OF AGENT. To the extent the Agent is not
reimbursed and indemnified by the Borrowers, each Lender will reimburse and
indemnify the Agent, to the extent of its Proportionate Share for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including counsel fees and disbursements) or disbursements of
any kind or nature whatsoever (including all Expenses) which may be imposed on,
incurred by or asserted against the Agent in performing its duties hereunder or
otherwise relating to the Credit Documents unless resulting from the Agent's
gross negligence or willful misconduct. The agreements contained in this Section
shall survive any termination of this Credit Agreement and the other Credit
Documents and the payment in full of the Obligations.
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SECTION 9.7. THE AGENT IN ITS INDIVIDUAL CAPACITY. In its individual
capacity, the Agent shall have the same rights and powers hereunder as any other
Lender or holder of a Note or participation interests and may exercise the same
as though it was not performing the duties specified herein. The terms
"Lenders," "Majority Lenders," "holders of Notes," or any similar terms shall,
unless the context clearly otherwise indicates, include the Agent in its
individual capacity. The Agent and its Affiliates may accept deposits from, lend
money to, acquire equity interests in, and generally engage in any kind of
banking, trust, financial advisory or other business with the Borrowers or any
Affiliate of the Borrowers as if it were not performing the duties specified
herein, and may accept fees and other consideration from the Borrowers for
services in connection with this Credit Agreement and otherwise without having
to account for the same to the Lenders.
SECTION 9.8. HOLDERS OF NOTES. The Agent may deem and treat the payee
of any Note as the owner thereof for all purposes hereof unless and until a
written notice of the assignment or transfer thereof shall have been filed with
the Agent. Any request, authority or consent of any Person who, at the time of
making such request or giving such authority or consent, is the holder of any
Note, shall be conclusive and binding on any subsequent holder, transferee or
assignee of such Note or of any Note or Notes issued in exchange therefor.
SECTION 9.9. SUCCESSOR AGENT.
(a) The Agent may, upon ten (10) Business Days' notice to the
Lenders and the Borrowers, resign by giving written notice thereof to the
Lenders and the Borrowers. The Agent's resignation shall be effective upon the
appointment of a successor Agent. Such resignation of the Agent shall be deemed
to be a resignation of Bankers Trust Company as Issuing Bank.
(b) Upon receipt of the Agent's resignation, the Majority Lenders
may appoint a successor Agent which shall also be a Lender. Unless an Event of
Default shall have occurred and be continuing at the time of such appointment,
the successor Agent shall be subject to approval by the Borrowers, which
approval shall not be unreasonably withheld and shall be delivered to the
Majority Lenders within five (5) Business Days after the Borrowers' receipt of
notice of a proposed successor Agent. If a successor Agent has not accepted its
appointment within fifteen (15) Business Days, then the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent.
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(c) Upon its acceptance of the agency hereunder, such successor
Agent shall succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under this Credit Agreement. The retiring Agent
shall continue to have the benefit of this Article IX for any action or inaction
while it was Agent.
SECTION 9.10. COLLATERAL MATTERS.
(a) Each Lender authorizes and directs the Agent to enter into the
Collateral Documents for the benefit of the Lenders. Except as otherwise set
forth herein, any action or exercise of powers by the Majority Lenders under the
Credit Documents, together with such other powers as are reasonably incidental
thereto, shall be authorized and binding upon all of the Lenders. Prior to an
Event of Default, without notice to or consent from any Lender, the Agent may
take any action necessary or advisable to perfect and maintain the perfection of
the Liens upon the Collateral.
(b) The Agent is authorized to release any Lien granted to or held
by the Agent upon any Collateral (i) upon termination of the Commitments and
payment and satisfaction of all of the Obligations, (ii) required to be
delivered from permitted sales of Collateral hereunder, if any, upon receipt of
the proceeds or (iii) if the release can be and is approved by the Majority
Lenders. The Agent may request and the Lenders will provide confirmation of the
Agent's authority to release particular types or items of Collateral.
(c) Upon any sale and transfer of Collateral which is expressly
permitted pursuant to the terms of this Credit Agreement, or consented to in
writing by the Majority Lenders or all of the Lenders, as applicable, and upon
at least five (5) Business Days' prior written request by the Borrowers, the
Agent shall (and is hereby irrevocably authorized by the Lenders to) execute
such documents as may be necessary to evidence the release of the Liens granted
to the Agent for the benefit of the Lenders herein or pursuant hereto upon the
Collateral that was sold or transferred; provided that (i) the Agent shall not
be required to execute any such document on terms which, in the Agent's opinion,
would expose the Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or warranty
and (ii) such release shall not in any manner discharge, affect or impair the
Obligations or any Liens upon (or obligations of the Borrowers or any Subsidiary
of Safety in respect of) all interests retained by Safety or any Subsidiary,
including (without limitation) the proceeds of the sale, all of which shall
continue to constitute part of the Collateral. In the event of any sale or
transfer of Collateral, or any foreclosure with respect to any of the
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Collateral, the Agent shall be authorized to deduct all of the Expenses
reasonably incurred by the Agent from the proceeds of any such sale, transfer or
foreclosure.
(d) The Agent shall have no obligation to assure that the
Collateral exists or is owned by Safety or any of its Subsidiaries, that such
Collateral is cared for, protected or insured, or that the Liens in the
Collateral have been created, perfected, or have any particular priority. With
respect to the Collateral, the Agent may act in any manner it may deem
appropriate, in its sole discretion, given the Agent's own interest in the
Collateral as one of the Lenders and it shall have no duty or liability
whatsoever to the Lenders, except for its gross negligence or willful
misconduct.
SECTION 9.11. ACTIONS WITH RESPECT TO DEFAULTS. In addition to the
Agent's right to take actions on its own accord as permitted under this Credit
Agreement, the Agent shall take such action with respect to a Default or Event
of Default as shall be directed by the Majority Lenders. Until the Agent shall
have received such directions, the Agent may act or not act as it deems
advisable and in the best interests of the Lenders.
SECTION 9.12. DELIVERY OF INFORMATION. The Agent shall not be required
to deliver to any Lender originals or copies of any documents, instruments,
notices, communications or other information received by the Agent from any
Credit Party, the Subsidiaries of Safety, the Majority Lenders, any Lender or
any other Person under or in connection with this Credit Agreement or any other
Credit Document except (i) as specifically provided in this Credit Agreement or
any other Credit Document and (ii) as specifically requested from time to time
in writing by any Lender with respect to a specific document, instrument, notice
or other written communication received by and in the possession of the Agent at
the time of receipt of such request and then only in accordance with such
specific request.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND
ENFORCEMENT OF THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND ANY
DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS CREDIT AGREEMENT OR ANY OF THE
CREDIT DOCUMENTS, WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL
BE GOVERNED BY THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS
OTHER THAN SECTION 5-1401 OF THE
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NEW YORK GENERAL OBLIGATIONS LAW) AND DECISIONS OF THE STATE OF NEW YORK.
SECTION 10.2. SUBMISSION TO JURISDICTION. ALL DISPUTES AMONG THE
BORROWERS AND THE LENDERS (OR THE AGENT ACTING ON THEIR BEHALF), WHETHER
SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE
AND FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK, AND THE COURTS TO WHICH AN
APPEAL THEREFROM MAY BE TAKEN; PROVIDED, HOWEVER, THAT THE AGENT, ON BEHALF OF
THE LENDERS, SHALL HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO
PROCEED AGAINST THE BORROWERS OR THEIR PROPERTY IN ANY LOCATION REASONABLY
SELECTED BY THE AGENT IN GOOD FAITH TO ENABLE THE AGENT TO REALIZE ON SUCH
PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE AGENT.
THE BORROWERS AGREE THAT THEY WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS,
SETOFFS OR CROSS-CLAIMS IN ANY PROCEEDING BROUGHT BY THE AGENT. THE BORROWERS
WAIVE ANY OBJECTION THAT THEY MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE
AGENT HAS COMMENCED A PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON FORUM NON CONVENIENS.
SECTION 10.3. SERVICE OF PROCESS. EACH OF THE BORROWERS HEREBY
IRREVOCABLY DESIGNATES XXXXXXX & XXXXX, P.C., 000 XXXX XXXXXX, XXXXXX,
XXXXXXXXXXXXX 00000 AS THE DESIGNEE, APPOINTEE AND AGENT OF SUCH BORROWER TO
RECEIVE, FOR AND ON BEHALF OF SUCH BORROWER, SERVICE OF PROCESS IN SUCH
RESPECTIVE JURISDICTIONS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
CREDIT AGREEMENT OR ANY OTHER CREDIT DOCUMENT. IT IS UNDERSTOOD THAT A COPY OF
SUCH PROCESS SERVED ON SUCH AGENT AT ITS ADDRESS WILL BE PROMPTLY FORWARDED BY
MAIL TO SUCH BORROWER, BUT FAILURE OF SUCH BORROWER TO RECEIVE SUCH COPY SHALL
NOT AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS.
SECTION 10.4. JURY TRIAL. THE BORROWERS, THE AGENT, THE ISSUING BANK
AND THE LENDERS EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY. INSTEAD, ANY
DISPUTES WILL BE RESOLVED IN A BENCH TRIAL.
SECTION 10.5. LIMITATION OF LIABILITY. NEITHER THE AGENT NOR ANY LENDER
SHALL HAVE ANY LIABILITY TO THE BORROWERS (WHETHER SOUNDING IN TORT, CONTRACT,
OR OTHERWISE) FOR LOSSES SUFFERED BY ANY BORROWER IN CONNECTION WITH, ARISING
OUT OF, OR IN ANY WAY RELATED TO THE TRANSACTIONS OR RELATIONSHIPS CONTEMPLATED
BY THIS CREDIT AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION
THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OR
COURT ORDER BINDING ON THE AGENT OR ANY SUCH LENDER, THAT THE LOSSES WERE THE
RESULT OF ACTS OR OMISSIONS CONSTITUTING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
THE BORROWERS HEREBY WAIVE ALL FUTURE CLAIMS AGAINST
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THE AGENT FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES.
SECTION 10.6. DELAYS; PARTIAL EXERCISE OF REMEDIES. No delay or
omission of the Agent, the Issuing Bank or the Lenders to exercise any right or
remedy hereunder shall impair any such right or operate as a waiver thereof. No
single or partial exercise by the Agent, the Issuing Bank or the Lenders of any
right or remedy shall preclude any other or further exercise thereof, or
preclude any other right or remedy.
SECTION 10.7. NOTICES. Except as otherwise provided herein, all notices
and correspondences hereunder shall be in writing and sent by certified or
registered mail, return receipt requested, or by overnight delivery service,
with all charges prepaid, if to the Agent, or any of the Lenders, then to BT
Commercial Corporation, at 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Credit Department, Xxxxx Xxxxxx, if to the Issuing Bank, then to Bankers Trust
Company, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx Xxxxxx, with
a copy to Luskin, Xxxxx & Xxxxxx LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxxxx Xxxxx, Esq., and if to the Borrowers, then to the
Borrowers c/o Safety at 000 Xxxxxxxx Xxxxxx, Xxxxxxxx Xxxx, Xxxxxxxxxxxxx 00000,
Attention: Xxxxxxx Xxxx, President, with a copy to Xxxxxxx & Xxxxx, 000 Xxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxx X. Xxxxx, Esq., or by
facsimile transmission, promptly confirmed in writing sent by first class mail,
if to the Agent, or any of the Lenders, at (000) 000-0000, if to the Borrowers,
at (000) 000-0000, if to Luskin, Xxxxx & Xxxxxx LLP, at (000) 000-0000 and if to
Xxxxxxx & Xxxxx, P.C., at (000) 000-0000. All such notices and correspondence
shall be deemed given (i) if sent by certified or registered mail, three (3)
Business Days after being postmarked, (ii) if sent by overnight delivery
service, when received at the above stated addresses or when delivery is refused
and (iii) if sent by telex or facsimile transmission, when receipt of such
transmission is acknowledged.
SECTION 10.8. ASSIGNMENTS AND PARTICIPATIONS.
(a) Borrower Assignment. The Borrowers shall not assign this
Credit Agreement or any rights or obligations hereunder, without the prior
written consent of the Agent and the Lenders.
(b) Lender Assignments. Each Lender may assign to one or more
banks or other financial institutions all or a portion of its rights and
obligations under this Credit Agreement, the Notes and the other Credit
Documents, with the consent of the Agent, and with the consent of the Borrowers
(not to be unreasonably withheld), and upon execution and delivery to
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the Agent, for its acceptance and recording in the Register, of an agreement in
substantially the form of Exhibit N (an "Assignment and Assumption Agreement"),
together with surrender of any Note or Notes subject to such assignment and a
processing and recordation fee of $5,000.00. No such assignment shall be for
less than $5,000,000 of the Commitments unless it is to another Lender. Any
assignment by a Lender hereunder must include a ratable portion of such Lender's
Revolving Loans (and Commitment, if any) and the Term Loan. Upon such execution
and delivery of the Assignment and Assumption Agreement to the Agent, from and
after the date specified as the effective date in the Assignment and Assumption
Agreement (the "Acceptance Date"), (x) the assignee thereunder shall be a party
hereto, and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Assumption Agreement, such
assignee shall have the rights and obligations of a Lender hereunder and (y) the
assignor thereunder shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Assumption Agreement,
relinquish its rights (other than any rights it may have pursuant to Section
10.10 which will survive) and be released from its obligations under this Credit
Agreement (and, in the case of an Assignment and Assumption Agreement covering
all or the remaining portion of an assigning Lender's rights and obligations
under this Credit Agreement, such Lender shall cease to be a party hereto).
(This Section does not apply to branches and Affiliates of a Lender, it being
understood that a Lender may make, carry or transfer Loans at or for the account
of any of its branch offices or Affiliates without consent of the Borrowers, the
Agent or any Lender.)
By executing and delivering an Assignment and Assumption Agreement, the
assignee thereunder confirms and agrees as follows: (i) other than as provided
in such Assignment and Assumption Agreement, the assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Credit Agreement, the Notes or any
other instrument or document furnished pursuant hereto, (ii) such assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrowers or any other Credit Parties
or the performance or observance by the Borrowers or any other Credit Parties of
any of its obligations under this Credit Agreement or any other instrument or
document furnished pursuant hereto, (iii) such assignee confirms that it has
received a copy of this Credit Agreement, together with copies of the Financial
Statements referred to in Section 6.1(i) and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Assumption Agreement, (iv) such
assignee
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will, independently and without reliance upon the Agent, such assigning Lender
or any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Credit Agreement, (v) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Credit Agreement as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto and
(vi) such assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Credit Agreement are required
to be performed by it as a Lender.
(c) Agent's Register. The Agent shall maintain a register of the
names and addresses of the Lenders, their Commitments, and the principal amount
of their Revolving Loans and Term Loan (the "Register"). The Agent shall also
maintain a copy of each Assignment and Assumption Agreement delivered to and
accepted by it and modify the Register to give effect to each Assignment and
Assumption Agreement. The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the Borrowers, the Agent
and the Lenders may treat each Person whose name is recorded in the Register as
a Lender hereunder for all purposes of this Credit Agreement. The Register and
copies of each Assignment and Assumption Agreement shall be available for
inspection by the Borrowers or any Lender at any reasonable time and from time
to time upon reasonable prior notice. Upon its receipt of each Assignment and
Assumption Agreement and surrender of the affected Revolving Note and Term Note
subject to such assignment, the Agent will give prompt notice thereof to the
Borrowers. Within five (5) Business Days after its receipt of such notice, both
Borrowers shall execute and deliver to the Agent (i) a new Revolving Note or
Revolving Notes to the order of the assignee in the amount of the Commitment or
Commitments assumed by it and to the assignor in the amount of the Commitment or
Commitments retained by it, if any and (ii) a new Term Note or Term Notes to the
order of the assignee in the amount of the Term Loan assumed by it and to the
assignor in the amount of the Term Loan retained by it, if any, in exchange for
which the Agent shall deliver to the Borrowers the existing Notes subject to
such assignment. Such new Notes shall re-evidence the indebtedness outstanding
under the surrendered Notes and shall be in an aggregate principal amount equal
to the aggregate principal amount of such surrendered Notes and shall be dated
as of the Closing Date. The Agent shall be entitled to rely upon the Register
exclusively for purposes of identifying the Lenders hereunder.
(d) Lender Participations. Each Lender may sell participations
(without the consent of the Agent, the Borrowers or any other Lender) to one or
more parties in or to all or a portion of its rights and obligations under this
Credit
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Agreement, the Notes and the other Credit Documents. Notwithstanding a Lender's
sale of a participation interest, such Lender's obligations hereunder shall
remain unchanged. The Borrowers, the Agent, and the other Lenders shall continue
to deal solely and directly with such Lender. No participant shall have rights
to approve any amendment or waiver of this Credit Agreement except to the extent
such amendment or waiver would (i) increase the Commitment of the Lender from
whom the participant purchased its participation interest; (ii) reduce the
principal of, or rate or amount of interest on the Loans subject to such
participation; (iii) postpone any date fixed for any payment of principal of, or
interest on, the Loans subject to the participation interest; or (iv) release
all or a substantial portion of the Collateral, other than in each case when
otherwise permitted hereunder.
Each Lender agrees that, without the prior written consent of Safety
and the Agent, it will not make any assignment hereunder in any manner or under
any circumstances that would require registration or qualification of, or
filings in respect of, any Loan, Note or other Obligation under the securities
laws of the United States or of any jurisdiction.
(e) Confidentiality. In connection with their efforts to assign
its rights or obligations or sell participations pursuant to Sections 10.8(b)
and (d) hereof, the Agent or the Lenders may disclose any information they have,
now or in the future, with respect to the business of the Borrowers to
prospective assignees or purchasers, provided that each such prospective
assignee of purchaser is notified of the confidential nature of the information
and agrees to be bound by the terms of Section 10.9.
SECTION 10.9. CONFIDENTIALITY. Except as provided in Section 10.8(e),
each Lender agrees that it will not disclose, without the prior written consent
of the Borrowers, any information with respect to Safety or any of its
Subsidiaries, which is furnished pursuant to this Credit Agreement and which is
designated by the Borrowers to the Lenders in writing as confidential (the
information delivered pursuant to Sections 7.1(a)(ii), (iv) and (v), 7.1(b), (c)
and (e) and 8.4(a) being hereby so designated), provided, that any Lender may
disclose any such information (a) to its Affiliates, employees, auditors, or
counsel, or to another Lender if the disclosing Lender or such disclosing
Lender's holding or parent company in its reasonable discretion determines that
any such party should have access to such information provided that each such
person will be advised of the confidential nature of such information, (b) as
has become generally available to the public, (c) as may be required or
appropriate in any report, statement or testimony submitted to any Governmental
Authority having or claiming to have jurisdiction over such Lender, (d) as may
be required or
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appropriate in response to any summons or subpoena or in connection with any
litigation and (e) in order to comply with any Requirement of Law; provided,
that, in the case of clauses (c) through (e) above, if practicable Safety is
given five (5) Business Days' notice prior to such disclosure.
SECTION 10.10. INDEMNIFICATION; REIMBURSEMENT OF EXPENSES OF
COLLECTION.
(a) The Borrowers, jointly and severally, hereby indemnify and
agree to defend and hold harmless the Agent, the Issuing Bank and each of the
Lenders and their respective directors, officers, agents, employees and counsel
(each, an "Indemnified Party") from and against any and all losses, claims,
damages, liabilities, deficiencies, judgments or expenses incurred by any of
them (except to the extent that it is finally judicially determined to have
resulted from their own gross negligence or willful misconduct) arising out of
or by reason of (i) any litigations, investigations, claims or proceedings which
arise out of or are in any way related to (A) this Credit Agreement, any other
Credit Document or the transactions contemplated hereby or thereby, (B) the
issuance of the Letters of Credit, (C) the failure of the Issuing Bank to honor
a drawing under any Letter of Credit, as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
government or Governmental Authority, (D) any actual or proposed use by the
Borrowers of the proceeds of the Loans or (E) the Agent's or the Lenders'
entering into this Credit Agreement, the other Credit Documents or any other
agreements and documents relating hereto, including, without limitation, amounts
paid in settlement, court costs and the reasonable fees and disbursements of
counsel incurred in connection with any such litigation, investigation, claim or
proceeding or any advice rendered in connection with any of the foregoing and
(ii) any remedial or other action taken by any of the Credit Parties or any of
the Lenders in connection with compliance by Safety or any of its Subsidiaries,
or any of their respective properties, with any federal, state, provincial or
local Environmental Laws. In addition, the Borrowers shall, upon demand, pay to
the Agent all costs and expenses incurred by the Agent (including the reasonable
fees and disbursements of counsel and other professionals) in connection with
the preparation, execution, delivery, administration, modification and amendment
of the Credit Documents, and pay to the Agent and any Lender all costs and
expenses (including the reasonable fees and disbursements of counsel and other
professionals) paid or incurred by the Agent or such Lender in (A) enforcing or
defending its rights under or in respect of this Credit Agreement, the other
Credit Documents or any other document or instrument now or hereafter executed
and delivered in connection herewith, (B) in collecting the Obligations, (C) in
foreclosing or otherwise collecting upon the Collateral or any part thereof and
(D) obtaining any legal,
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accounting or other advice in connection with any of the foregoing. If and to
the extent that the Obligations of the Borrowers hereunder are unenforceable for
any reason, the Borrowers, jointly and severally, hereby agree to make the
maximum contribution to the payment and satisfaction of such Obligations which
is permissible under applicable law.
(b) The Borrowers' Obligations under Sections 4.9, 4.10, 9.6 and
this Section 10.10 shall survive any termination of this Credit Agreement and
the other Credit Documents and the payment in full of the Obligations, and are
in addition to, and not in substitution of, any other of their Obligations set
forth in this Credit Agreement.
SECTION 10.11. AMENDMENTS AND WAIVERS.
(a) No amendment or waiver of any provision of this Credit
Agreement or any other Credit Document shall be effective unless in writing and
signed by the Majority Lenders (or by the Agent on their behalf) and the
Borrowers, except that:
(i) the consent of all the Lenders is required to (A) reduce the
principal of, or interest on, the Notes, any Letter of Credit
reimbursement obligations or any Fees hereunder (other than Fees that
are exclusively for the account of the Agent or the Issuing Bank), (B)
postpone the final scheduled date of maturity of the Notes or any date
fixed for any payment in respect of interest on the Notes, any Letter
of Credit reimbursement obligations or any Fees hereunder, (C) change
any minimum requirement necessary for the Lenders or Majority Lenders
to take any action hereunder or the percentage of Commitments necessary
to take any such action, (D) amend or waive this Section 10.11(a), or
change the definition of Majority Lenders, (E) release any Liens in
favor of the Lenders on all or substantially all of the Collateral,
except as otherwise expressly provided in this Credit Agreement, and
other than in connection with the financing, refinancing, sale or other
disposition of any asset of the Credit Parties permitted under this
Credit Agreement, (F) increase the advance rate from that set forth in
the definitions of Accounts Borrowing Base or Inventory Borrowing Base
or (G) consent to the assignment or transfer by a Borrower of any of
its rights and obligations under this Credit Agreement;
(ii) no such amendment or waiver shall increase the Commitment of
any Lender over the amount thereof then in effect without the consent
of such Lender (it being understood that amendments or waivers of
conditions precedent, covenants, Defaults or Events of
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Default shall not constitute an increase in the Commitment of any
Lender, and that an increase in the available portion of any Commitment
of any Lender shall not constitute an increase in the Commitment of
such Lender);
(iii) the consent of the Agent or the Issuing Bank, as the case
may be, shall be required for any amendment, waiver or consent
affecting the rights or duties of the Agent or the Issuing Bank under
any Credit Document, in addition to the consent of the Lenders
otherwise required by this Section 10.11; and
(iv) the consent of the Borrowers shall not be required for any
amendment, modification or waiver of the provisions of Article IX
(other than Section 9.9).
(b) The Borrowers and the Lenders hereby authorize the Agent to
modify this Credit Agreement by unilaterally amending or supplementing Annex I
to reflect assignments of the Commitments.
(c) Notwithstanding the foregoing, the Borrowers may amend
Schedule 6.1(a) without the consent of the Majority Lenders; provided that,
except as contemplated by Section 8.1, no amendment to any such Schedule shall
be permitted to cure any Default or Event of Default which would otherwise have
existed in the absence of such amendment; and provided further that, with
respect to any amendment Schedule 6.1(a) the Borrowers shall comply with Section
7.1(c)(v).
(d) If, in connection with any proposed amendment or waiver of any
of the provisions of this Credit Agreement as contemplated by Section
10.11(a)(i), the consent of the Majority Lenders is obtained but the consent of
one or more of such other Lenders whose consent is required is not obtained,
then the Borrowers shall have the right to replace each such nonconsenting
Lender or Lenders (so long as all non-consenting Lenders are so replaced) with
one or more replacement Lenders pursuant to Section 4.11 so long as at the time
of such replacement, each such replacement Lender consents to the proposed
amendment or waiver; provided that the Borrowers shall not have the right to
replace a Lender solely as a result of the exercise of such Lender's rights (and
the withholding of any required consent by such Lender) pursuant to Section
10.11(a)(ii).
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SECTION 10.12. NONLIABILITY OF AGENT AND LENDERS. The relationship
between the Borrowers and the Lenders and the Agent shall be solely that of
borrower and lender. Neither the Agent nor any Lender shall have any fiduciary
responsibilities to the Borrowers. Neither the Agent nor any Lender undertakes
any responsibility to the Borrowers to review or inform the Borrowers of any
matter in connection with any phase of the Borrowers' business or operations.
SECTION 10.13. INDEPENDENT NATURE OF LENDERS' RIGHTS. The amounts
payable at any time hereunder to each Lender under such Lender's Note or Notes
shall be a separate and independent debt.
SECTION 10.14. COUNTERPARTS. This Credit Agreement and any waiver or
amendment hereto may be executed in any number of counterparts and by the
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
SECTION 10.15. EFFECTIVENESS. This Credit Agreement shall become
effective on the date on which all of the parties hereto shall have signed a
copy hereof (whether the same or different copies) and shall have delivered the
same to the Agent, or, in the case of the Lenders, shall have given to the Agent
written, telecopied or telex notice (actually received) at such office that the
same has been signed and mailed to it.
SECTION 10.16. SEVERABILITY. In case any provision in or obligation
under this Credit Agreement or the Notes or the other Credit Documents shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 10.17. MAXIMUM RATE. Notwithstanding anything to the contrary
contained elsewhere in this Credit Agreement or in any other Credit Document,
the Borrowers, the Agent and the Lenders hereby agree that all agreements among
them under this Credit Agreement and the other Credit Documents, whether now
existing or hereafter arising and whether written or oral, are expressly limited
so that in no contingency or event whatsoever shall the amount paid, or agreed
to be paid, to the Agent or any Lender for the use, forbearance, or detention of
the money loaned to the Borrowers and evidenced hereby or thereby or for the
performance or payment of any covenant or obligation contained herein or
therein, exceed the Highest Lawful Rate. If due to any circumstance whatsoever,
fulfillment of any provisions of this Credit Agreement or any of the other
Credit Documents at the time
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performance of such provision shall be due shall exceed the Highest Lawful Rate,
then, automatically, the obligation to be fulfilled shall be modified or reduced
to the extent necessary to limit such interest to the Highest Lawful Rate, and
if from any such circumstance any Lender should ever receive anything of value
deemed interest by applicable law which would exceed the Highest Lawful Rate,
such excessive interest shall be applied to the reduction of the principal
amount then outstanding hereunder or on account of any other then outstanding
Obligations and not to the payment of interest, or if such excessive interest
exceeds the principal unpaid balance then outstanding hereunder and such other
then outstanding Obligations, such excess shall be refunded to the Borrowers.
All sums paid or agreed to be paid to the Agent or any Lender for the use,
forbearance, or detention of the Obligations and other indebtedness of the
Borrowers to the Agent or any Lender shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the full
term of such indebtedness, until payment in full thereof, so that the actual
rate of interest on account of all such indebtedness does not exceed the Highest
Lawful Rate throughout the entire term of such indebtedness. The terms and
provisions of this Section shall control every other provision of this Credit
Agreement and all agreements among the Borrowers, the Agent and the Lenders.
SECTION 10.18. ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. This Credit
Agreement and the other Credit Documents constitute the entire agreement among
the Borrowers, the Agent and the Lenders, supersedes any prior agreements among
them, and shall bind and benefit the Borrowers and the Lenders and their
respective successors and permitted assigns.
SECTION 10.19. JUDGMENT. The obligation of Safety Canada in respect of
any sum due from it to the Agent or any Lender under any Credit Document shall,
notwithstanding any judgment in a currency other than Dollars, be discharged
only to the extent that on the Business Day following receipt by the Agent or
such Lender of any sum adjudged to be so due in such other currency, the Agent
or such Lender may in accordance with normal banking procedures purchase Dollars
with such other currency; if the Dollars so purchased are less than the sum
originally due to the Agent or such Lender in Dollars, the Borrowers agree, as a
separate obligation and notwithstanding any such judgment, to, jointly and
severally, indemnify the Agent or such Lender against such loss, and if the
Dollars so purchased exceed the sum originally due to the Agent or such Lender
in Dollars, the Agent or such Lender agrees to remit to Safety Canada such
excess.
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SECTION 10.20. WAIVER OF IMMUNITIES. To the extent that Safety Canada
has or hereafter may acquire any immunity from jurisdiction of any court or from
any legal process (whether through service or notice, attachment prior to
judgment, attachment in aid of execution, execution or otherwise) with respect
to itself or its property, to the fullest extent permitted by law, Safety Canada
hereby irrevocably waives such immunity in respect of its obligations under this
Credit Agreement and any other Credit Document to which it is a party and,
without limiting the generality of the foregoing, agrees that the waivers set
forth in this Section shall have the fullest scope permitted under the Foreign
Sovereign Immunities Act of 1976 of the United States and are intended to be
irrevocable for purposes of such Act.
SECTION 10.21. INTEREST ACT (CANADA). Safety Canada hereby acknowledges
that the rate or rates of interest applicable to the Obligations are computed on
the basis of a year of 360 days and paid for the actual number of days elapsed.
For purposes of the Interest Act (Canada), at any time and from time to time,
the yearly rate of interest provided in this Credit Agreement, which is paid or
payable pursuant hereto is equivalent and may be determined by multiplying the
applicable rate of interest by the number of days in such calendar year and
dividing such product by 360.
SECTION 10.22. LIMITATION OF OBLIGATIONS OF SAFETY EUROPE.
Notwithstanding anything to the contrary contained in any Credit Document
(including without limitation the Guaranty of Safety Europe), the liability of
Safety Europe for the Obligations shall be limited as provided in the debenture
of Safety Europe.
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IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be executed by their proper and duly authorized officers as of the
date set forth above.
BORROWERS
SAFETY 1ST, INC.
By: /s/ Xxxxxxx X. Xxxx
------------------------------
Xxxxxxx X. Xxxx
President
SAFETY 1ST HOME PRODUCTS
CANADA INC.
By: /s/ Xxxxxxx X. Xxxx
------------------------------
Xxxxxxx X. Xxxx
Vice President
AGENT
BT COMMERCIAL CORPORATION, as Agent
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Xxxxxx X. Xxxxxx
Vice President
LENDER
BT COMMERCIAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Xxxxxx X. Xxxxxx
Vice President
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ISSUING BANK
BANKERS TRUST COMPANY,
as Issuing Bank
By: /s/ Xxxxxx X. Xxxxxx
----------------------------
Xxxxxx X. Xxxxxx
Vice President
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