LOAN AND SECURITY AGREEMENT
BY AND AMONG
THE GSI GROUP, INC.,
AS BORROWER
AND
GSI HOLDINGS CORP., AND
ASSUMPTION LEASING COMPANY, INC.,
AS GUARANTORS
WACHOVIA CAPITAL FINANCE CORPORATION (CENTRAL),
AS AGENT
AND
THE LENDERS NAMED HEREIN,
AS LENDERS
DATED: MAY 16, 2005
TABLE OF CONTENTS
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PAGE
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SECTION 1. DEFINITIONS 1
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SECTION 2. CREDIT FACILITIES 31
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2.1 Revolving Loans. 31
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2.2 Letter of Credit Accommodations. 32
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2.3 [Intentionally Omitted]. 36
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2.4 Amortization of Fixed Asset Amount and Fixed Asset Acquisition Value 36
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2.5 Commitments 36
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2.6 Maximum Revolving Credit Increases 37
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2.7 Minimum Revolving Credit Reductions 37
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2.8 Voluntary Prepayments 37
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2.9 Payment of Excess Borrowings. 37
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SECTION 3. INTEREST AND FEES 37
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3.1 Interest. 37
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3.2 Fees. 39
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3.3 Changes in Laws and Increased Costs of Loans. 39
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SECTION 4. CONDITIONS PRECEDENT 41
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4.1 Conditions Precedent to Closing Date Loans and Letter of Credit
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Accommodations 41
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4.2 Conditions Precedent to Closing Date and Future Loans and Letter of
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Credit Accommodations 44
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4.3 Additional Conditions Precedent to Exim Revolving Loans and Exim Letter
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of Credit Accommodations 44
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SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST 45
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5.1 Grant of Security Interest 45
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5.2 Perfection of Security Interests. 46
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SECTION 6. COLLECTION AND ADMINISTRATION 50
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6.1 Borrower's Loan Accounts 50
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6.2 Statements 50
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6.3 Collection of Accounts. 51
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6.4 Payments. 52
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6.5 Request For and Authorization to Make Loans 55
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6.6 Use of Proceeds 55
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6.7 [Intentionally Omitted]. 56
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6.8 Pro Rata Treatment 56
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6.9 Sharing of Payments, Etc. 56
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i
6.10 Settlement Procedures. 57
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6.11 Obligations Several; Independent Nature of Lenders' Rights 59
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SECTION 7. COLLATERAL REPORTING AND COVENANTS 59
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7.1 Collateral Reporting. 59
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7.2 Accounts Covenants. 60
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7.3 Inventory Covenants 61
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7.4 Equipment and Real Property Covenants 62
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7.5 Power of Attorney 62
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7.6 Right to Cure 63
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7.7 Access to Premises 64
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SECTION 8. REPRESENTATIONS AND WARRANTIES 64
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8.1 Corporate Existence, Power and Authority 64
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8.2 Name; State of Organization; Chief Executive Office; Collateral
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Locations. 65
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8.3 Financial Statements; No Material Adverse Change. 65
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8.4 Priority of Liens; Title to Properties 66
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8.5 Tax Returns 66
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8.6 Litigation 66
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8.7 Compliance with Other Agreement and Applicable Laws. 67
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8.8 Environmental Compliance. 67
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8.9 Employee Benefits. 68
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8.10 Bank Accounts 68
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8.11 Intellectual Property 69
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8.12 Subsidiaries; Affiliates; Capitalization; Solvency. 69
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8.13 Labor Disputes. 70
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8.14 Restrictions on Subsidiaries 70
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8.15 Material Contracts 70
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8.16 [Intentionally Omitted] 71
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8.17 Accuracy and Completeness of Information 71
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8.18 Senior Indebtedness 71
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8.19 [Intentionally Omitted] 71
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8.20 New Disclosures 71
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8.21 Acquisition Agreement 71
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SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS 72
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9.1 Maintenance of Existence. 72
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9.2 New Collateral Locations 72
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9.3 Compliance with Laws, Regulations, Etc. 72
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9.4 Payment of Taxes and Claims 73
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9.5 Insurance 74
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9.6 Financial Statements and Other Information. 75
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9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc 77
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ii
9.8 Encumbrances 79
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9.9 Indebtedness 80
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9.10 Loans, Investments, Etc 82
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9.11 Dividends and Redemptions 86
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9.12 Transactions with Affiliates 87
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9.13 Compliance with ERISA 88
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9.14 End of Fiscal Years; Fiscal Quarters 88
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9.15 Change in Business 88
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9.16 Limitation of Restrictions Affecting Subsidiaries 88
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9.17 [Intentionally Omitted] 89
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9.18 License Agreements. 89
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9.19 After Acquired Real Property 90
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9.20 Costs and Expenses 91
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9.21 Further Assurances 91
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9.22 Fixed Charge Coverage Ratio 91
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9.23 Permitted Bond Repurchases 92
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9.24 Sale Leasebacks 92
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9.25 [Intentionally Omitted] 92
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9.26 Exim Covenants 92
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9.27 Brazil 92
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SECTION 10. EVENTS OF DEFAULT AND REMEDIES 93
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10.1 Events of Default 93
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10.2 Remedies. 95
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SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW 98
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11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver 98
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11.2 Waiver of Notices 100
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11.3 Amendments and Waivers. 100
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11.4 Waiver of Counterclaims 102
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11.5 Indemnification 102
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11.6 Limited Recourse Against Holdings 102
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SECTION 12. THE AGENT 103
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12.1 Appointment, Powers and Immunities 103
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12.2 Reliance by Agent 103
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12.3 Events of Default. 103
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12.4 Wachovia in its Individual Capacity 104
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12.5 Indemnification 104
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12.6 Non-Reliance on Agent and Other Lenders 105
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12.7 Failure to Act 105
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12.8 Additional Loans 105
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12.9 Concerning the Collateral and the Related Financing Agreements 106
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iii
12.10 Field Audit, Examination Reports and Other Information; Disclaimer by
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Lenders 106
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12.11 Collateral Matters. 106
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12.12 Agency for Perfection 108
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12.13 Successor Agent 108
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SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS 109
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13.1 Term. 109
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13.2 Interpretative Provisions. 110
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13.3 Notices 111
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13.4 Partial Invalidity 112
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13.5 Successors 112
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13.6 Assignments; Participations. 113
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13.7 Entire Agreement 115
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13.8 Counterparts, Etc 115
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13.9 Confidentiality. 115
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iv
INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A
Form of Assignment and Acceptance
Exhibit B
Information Certificate
Exhibit C Form of Compliance Certificate
Exhibit D Form of Borrowing Base Certificate
Exhibit E Closing Checklist
Schedule 1
[Intentionally Omitted]
Schedule 2
[Intentionally Omitted]
Schedule 3
[Intentionally Omitted]
Schedule 4
Commitments
Schedule 5
Eligibility Matters
Schedule 6
Fiscal Months
v
LOAN AND SECURITY AGREEMENT
---------------------------
This Loan and Security Agreement dated May 16, 2005 is entered into by and
among The GSI Group, Inc., a Delaware corporation ("Borrower"), GSI Holdings
Corp., a Delaware corporation ("Holdings"), Assumption Leasing Company, Inc., an
Illinois corporation ("ALC" and together with Holdings, each individually a
"Guarantor" and collectively, "Guarantors"), the lenders from time to time
parties hereto, whether by execution of this Agreement or an Assignment and
Acceptance (each individually, a "Lender" and collectively, "Lenders") and
Wachovia Capital Finance Corporation (Central) (f/k/a Congress Financial
Corporation (Central)), an Illinois corporation, in its capacity as agent for
Lenders (in such capacity, "Agent").
W I T N E S S E T H:
WHEREAS, Borrower and Guarantors have requested that Agent and Lenders
enter into financing arrangements with Borrower pursuant to which Lenders may
make loans and provide other financial accommodations to Borrower; and
WHEREAS, each Lender is willing to agree (severally and not jointly) to make
such loans and provide such financial accommodations to Borrower on a pro rata
basis according to its Commitment (as defined below) on the terms and conditions
set forth herein and Agent is willing to act as agent for Lenders on the terms
and conditions set forth herein and the other Financing Agreements; and
WHEREAS, Holdings, which owns all of the Capital Stock of Borrower, is willing
to guaranty all of the Obligations and to pledge to Agent, for the benefit of
Agent and Lenders, all of the Capital Stock of Borrower to secure the
Obligations;
NOW, THEREFORE, in consideration of the mutual conditions and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
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For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
"Accounts" shall mean, as to Borrower and each Guarantor, all present and future
rights of Borrower and such Guarantor to payment of a monetary obligation,
whether or not earned by performance, which is not evidenced by chattel paper or
an instrument, (a) for property that has been or is to be sold, leased,
licensed, assigned, or otherwise disposed of, (b) for services rendered or to be
rendered, (c) for a secondary obligation incurred or to be incurred, or (d)
arising out of the use of a credit or charge card or information contained on or
for use with the card.
"Acquisition" shall mean any transaction resulting in the acquisition by
Borrower or a Subsidiary of Borrower of (a) all or substantially all of the
assets of a Person or of any business or division of a Person or (b) more than
50% of the Capital Stock of a Person.
"Acquisition Agreement" means collectively, that certain Stock Purchase
Agreement dated as of April 6, 2005 among Holdings and the stockholders of
Borrower party thereto as the same may be amended or otherwise modified from
time to time, together with all schedules, exhibits agreements and documents
executed and/or delivered in connection therewith.
"Adjusted Eurodollar Rate" shall mean, with respect to each Interest Period for
any Eurodollar Rate Loan, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1% determined by dividing (a) the Eurodollar Rate for such
Interest Period by (b) a percentage equal to: (i) one (1) minus (ii) the Reserve
Percentage. For purposes hereof, "Reserve Percentage" shall mean the reserve
percentage, expressed as a decimal, prescribed by any United States or foreign
banking authority for determining the reserve requirement which is or would be
applicable to deposits of United States dollars in a non-United States or an
international banking office of Reference Bank used to fund a Eurodollar Rate
Loan or any Eurodollar Rate Loan made with the proceeds of such deposit, whether
or not the Reference Bank actually holds or has made any such deposits or loans.
The Adjusted Eurodollar Rate shall be adjusted on and as of the effective day of
any change in the Reserve Percentage.
"Affiliate" shall mean, with respect to a specified Person, any other Person
which directly or indirectly, through one or more intermediaries, controls or is
controlled by or is under common control with such Person, and without limiting
the generality of the foregoing, includes (a) any Person which beneficially owns
or holds ten (10%) percent or more of any class of Voting Stock of such Person
or other equity interests in such Person, (b) any Person of which such Person
beneficially owns or holds ten (10%) percent or more of any class of Voting
Stock or in which such Person beneficially owns or holds ten (10%) percent or
more of the equity interests and (c) any director or executive officer of such
Person. For the purposes of this definition, the term "control" (including with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of Voting Stock, by
agreement or otherwise.
"Agent" shall mean Wachovia Capital Finance Corporation (Central) (f/k/a
Congress Financial Corporation (Central)) in its capacity as agent on behalf of
Lenders pursuant to the terms hereof and any replacement or successor agent
hereunder.
"Agent Payment Account" shall mean account no. 5000000030266 of Agent at
Wachovia Bank, National Association, or such other account of Agent as Agent may
from time to time designate to Borrower as the Agent Payment Account for
purposes of this Agreement and the other Financing Agreements.
"Applicable Margin" shall mean, at any time, as to the Interest Rate for Prime
Rate Loans, Eurodollar Rate Loans and the letter of credit fee on the
outstanding undrawn amount of Letter of Credit Accommodations, the applicable
row of percentages set forth below if the Excess Availability as of the last
Business Day of the immediately preceding Fiscal Month is at or within the
amounts indicated for such row:
1
Excess Availability Applicable Margin for Prime Rate Loans Applicable
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Margin for Eurodollar Rate Loans Letter of Credit Accommodations
-- ---------- --------------
(a) $10,000,000 or more 0.00% 1.50% 1.25%
(b) Greater than or equal to $5,000,000 and less than $10,000,000 0.25%
1.75% 1.50%
(c) Less than $5,000,000 0.50% 2.00% 1.75%
provided however, that, beginning on the date hereof and continuing through May
----------------- ----
31, 2005, the Applicable Margin shall be (i) 0.00% for Prime Rate Loans, (ii)
1.50% for Eurodollar Rate Loans and (iii) 1.25% for the letter of credit fee on
the outstanding undrawn amount of Letter of Credit Accommodations.
"Approved Fund" shall mean with respect to any Lender that is a fund or
similar investment vehicle that makes or invests in commercial loans, any fund
or similar investment vehicle that invests in commercial loans which is managed
or advised by the same investment advisor as such Lender or by an Affiliate of
such investment advisor.
"Assignment and Acceptance" shall mean an Assignment and Acceptance
substantially in the form of Exhibit A attached hereto (with blanks
appropriately completed) delivered to Agent in connection with an assignment of
a Lender's interest hereunder in accordance with the provisions of Section 13.6
hereof.
"Blocked Accounts" shall have the meaning set forth in Section 6.3 hereof.
"Bond Repurchase" shall have the meaning set forth in Section 9.23 hereof.
"Borrowing Base" shall mean, at any time, without duplication, the amount equal
to:
(a) eighty-five (85%) percent of the Net Amount of the Eligible
Accounts;
plus
----
(b) the lesser of:
(i) sixty-five (65%) percent of the Value of Eligible Inventory,
(ii) eighty-five (85%) percent of the Net Orderly Liquidation Value
Factor (based on the then most recent appraisal) multiplied by the Value of
Eligible Inventory; provided, that such eighty-five (85%) percent advance rate
--------
shall be increased to ninety (90%) percent from April 1 through and including
October 31 of each year and shall remain at eighty-five (85%) percent at all
other times, and
(iii) the Inventory Loan Limit;
2
plus
----
(c) the Fixed Asset Amount at such time;
plus
----
(d) the Fixed Asset Acquisition Value at such time; provided, that the
--------
aggregate amount of the Fixed Asset Amount and the Fixed Asset Acquisition Value
shall at no time exceed $20,000,000;
minus
-----
(e) Reserves.
For purposes only of applying the Inventory Loan Limit, Agent may treat the then
undrawn amounts of outstanding Non-Exim Letter of Credit Accommodations for the
purpose of purchasing Eligible Inventory as Non-Exim Revolving Loans to the
extent Agent is in effect basing the issuance of the Non-Exim Letter of Credit
Accommodations on the Value of the Eligible Inventory being purchased with such
Non-Exim Letter of Credit Accommodations. In determining the actual amounts of
such Non-Exim Letter of Credit Accommodations to be so treated for purposes of
the Inventory Loan Limit, the outstanding Non-Exim Revolving Loans and Reserves
shall be attributed first to any components of the lending formulas set forth
above that are not subject to such sublimit, before being attributed to the
components of the lending formulas that are subject to such sublimit. The
amounts of Eligible Inventory shall be determined based on the lesser of (A) the
amount of Inventory set forth in the general ledger of Borrower or (B) the sum
of the perpetual inventory record maintained by Borrower;
"Brazil" means Agromarau Industria E. Commercio Ltda.
"Business Day" shall mean any day other than a Saturday, Sunday, or other day on
which commercial banks are authorized or required to close under the laws of the
State of New York, or the State of North Carolina, provided that Agent is open
for the transaction of business on such day, except that if a determination of a
Business Day shall relate to any Eurodollar Rate Loans, the term Business Day
shall also exclude any day on which banks are closed for dealings in dollar
deposits in the London interbank market or other applicable Eurodollar Rate
market.
"Capital Leases" shall mean, as applied to any Person, any lease of (or any
agreement conveying the right to use) any property (whether real, personal or
mixed) by such Person as lessee which, in accordance with GAAP, is required to
be reflected as a liability on the balance sheet of such Person.
"Capital Stock" shall mean, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's capital stock or partnership, limited liability company or other equity
interests at any time outstanding, and any and all rights, warrants or options
exchangeable for or convertible into such capital stock or other interests (but
excluding any debt security that is exchangeable for or convertible into such
capital stock).
3
"Cash Equivalents" shall mean, at any time, (a) any evidence of Indebtedness
with a maturity date of ninety (90) days or less issued or directly and fully
guaranteed or insured by the United States of America of any agency or
instrumentality thereof; provided, that the full faith and credit of the United
--------
States of America is pledged in support thereof; (b) certificates of deposit or
bankers' acceptances with a maturity of ninety (90) days or less of any
financial institution that is a member of the Federal Reserve System having
combined capital and surplus and undivided profits of not less than
$250,000,000; (c) commercial paper (including variable rate demand notes) with a
maturity of ninety (90) days or less issued by a corporation (except an
Affiliate of Borrower or any Guarantor) organized under the laws of any State of
the United States of America or the District of Columbia and rated at least A-1
by Standard & Poor's Ratings Service, a division of The XxXxxx-Xxxx Companies,
Inc. or at least P-1 by Xxxxx'x Investors Service, Inc.; (d) repurchase
obligations with a term of not more than thirty (30) days for underlying
securities of the types described in clause (a) above entered into with any
financial institution having combined capital and surplus and undivided profits
of not less than $250,000,000; (e) repurchase agreements and reverse repurchase
agreements relating to marketable direct obligations issued or unconditionally
guaranteed by the United States of America or issued by any governmental agency
thereof and backed by the full faith and credit of the United States of America,
in each case maturing within ninety (90) days or less from the date of
acquisition; provided, that the terms of such agreements comply with the
--------
guidelines set forth in the Federal Financial Agreements of Depository
Institutions with Securities Dealers and Others, as adopted by the Comptroller
of the Currency on October 31, 1985; (f) investments in money market funds and
mutual funds which invest substantially all of their assets in securities of the
types described in clauses (a) through (e) above; and (g) other "Cash
Equivalents" as defined in the Indenture as of the date hereof.
"Change of Control" shall mean (a) the transfer (in one transaction or a series
of transactions) of all or substantially all of the assets of Borrower or any
Guarantor to any Person or group (as such term is used in Section 13(d)(3) of
the Exchange Act), other than as permitted in Section 9.7 hereof; (b) the
liquidation or dissolution of Borrower or any Guarantor or the adoption of a
plan by the stockholders of Borrower or any Guarantor relating to the
dissolution or liquidation of Borrower or such Guarantor, other than as
permitted in Section 9.7 hereof; (c) the failure of the Permitted Holders to own
directly or indirectly more than fifty percent (50%) of the voting power of the
total outstanding Voting Stock of Holdings; (d) the failure of Holdings to own
directly or indirectly one hundred percent (100%) of the Capital Stock of
Borrower; or (e) the failure of Borrower to own directly or indirectly one
hundred percent (100%) of the voting power of the total outstanding Voting Stock
of any Guarantor (other than Holdings); (f) the occurrence of any "Change of
Control" (as such term is defined in the Indenture).
"Closing Date" shall mean the date of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as the same now exists or
may from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
"Collateral" shall have the meaning set forth in Section 5.1 hereof.
4
"Collateral Access Agreement" shall mean an agreement in writing, in form and
substance reasonably satisfactory to Agent, from any lessor of premises to
Borrower or any Guarantor, or any other person to whom any Collateral is
consigned or who has custody, control or possession of any such Collateral or
who is otherwise the owner or operator of any premises on which any of such
Collateral is located, pursuant to which such lessor, consignee or other person,
inter alia, acknowledges the first priority security interest of Agent in such
Collateral, agrees to waive (or otherwise subordinate to Agent's security
interest) any and all claims such lessor, consignee or other person may, at any
time, have against such Collateral, whether for processing, storage or
otherwise, and agrees to permit Agent access to, and the right to remain on, the
premises of such lessor, consignee or other person to the extent reasonably
necessary to exercise Agent's rights and remedies and otherwise deal with such
Collateral to the extent permitted under any of the Financing Agreements, and in
the case of any consignee or other person who at any time has custody, control
or possession of any Collateral, acknowledges that upon and during the
continuance of an Event of Default it holds and will hold possession of the
Collateral for the benefit of Agent and Lenders and will follow all instructions
of Agent with respect thereto.
"Commitment" shall mean, at any time, as to each Lender, the principal amount
set forth next to such Lender's name on Schedule 4 hereto designated as the
Commitment or on Schedule 1 to the Assignment and Acceptance Agreement pursuant
to which such Lender became a Lender hereunder in accordance with the provisions
of Section 13.6 hereof, as the same may be adjusted from time to time in
accordance with the terms hereof; sometimes being collectively referred to
herein as "Commitments".
"Credit Facility" shall mean the Loans and Letter of Credit Accommodations
provided to or for the benefit of Borrower pursuant to Sections 2.1 and 2.2
hereof.
"Default" shall mean an act, condition or event which with notice or passage of
time or both would constitute an Event of Default.
"Defaulting Lender" shall have the meaning set forth in Section 6.10(d) hereof.
"Deposit Account Control Agreement" shall mean an agreement in writing, in form
and substance reasonably satisfactory to Agent, by and among Agent, Borrower or
a Guarantor with a deposit account at any bank and the bank at which such
deposit account is at any time maintained which provides that such bank will
comply with instructions originated by Agent directing disposition of the funds
in the deposit account without further consent by Borrower or such Guarantor and
such other terms and conditions as Agent may reasonably require, including as to
any such agreement with respect to any Blocked Account, providing that all items
received or deposited in the Blocked Accounts are collateral for the benefit of
Agent, and that the bank has no lien upon, or right to setoff against, the
Blocked Accounts.
"EBITDA" shall mean, for any period, with respect to Borrower and its
Subsidiaries on a consolidated basis for such period, net income for such
period,
PLUS (a) without duplication and to the extent deducted in determining such net
income, the sum of
(i) Interest Expense, accretion of original issue discount, amortization of debt
issuance costs and any other fees and costs under any Financing Agreement or any
prior financing agreement,
(ii) income tax expense,
(iii) depreciation and amortization,
(iv) any non-recurring fees, cash charges and other cash expenses made or
incurred in connection with this Agreement, the Indenture or the Acquisition
Agreement that were paid or otherwise accounted for within 90 days of the
consummation of such transactions,
(v) non-cash losses from equity investments,
(vi) any extraordinary losses in accordance with GAAP,
(vii ) charges related to the Management Services Agreement,
(viii) unusual or non-recurring fees, cash charges and other cash expenses
deducted in such period in computing net income (including costs associated with
the closure or consolidation of facilities and operations and other
restructuring charges or reserves, such as, but not limited to, retention,
severance and contract termination costs); in an aggregate amount under this
clause (viii) not to exceed (A) $2,000,000 in any Fiscal Year and (B) $4,000,000
in the aggregate,
(ix) any non-recurring fees, cash charges and other cash expenses made or
incurred in connection with any equity offering or any issuance or other
disposition of Indebtedness, investment or acquisition permitted hereunder (in
each case, whether or not consummated),
(x) any non-cash compensation charges, including any such charges arising from
stock options, restricted stock grants or other equity-incentive programs,
(xi) any other non-cash charges (including goodwill or other asset impairment
charges),
(xii) dividends required to be recorded as compensation expenses under GAAP,
(xiii) any non-cash charges as a result of the application of purchase
accounting (including, for example, the amortization of inventory step-up to
fair value within cost of sales),
(xiv) the cumulative effect of changes in accounting principles,
(xv) losses in connection with an asset sale or disposition, and
(xvi) any unrealized losses arising from hedging transactions,
MINUS (b) without duplication
(i) all cash payments made during such period that are not otherwise
5
reflected in net income for such period, to the extent that such cash payments
reflect non-cash, non-recurring charges that were previously added back to
EBITDA in a prior period,
(ii) to the extent included in determining net income for such period, any
extraordinary gains for such period (including any gains associated with the
disposition of assets (other than Inventory sold in the ordinary course of
business) or the purchase and retirement of securities subject to the
Indenture),
(iii) interest income,
(iv) income tax credits, and
(v) any unrealized gains arising from hedging transactions.
"Eligible Accounts" shall mean Accounts (other than Eligible Export-Related
Accounts Receivable) created by Borrower which are and continue to be acceptable
to Agent based on the criteria set forth below as determined by Agent in good
faith. In general, Accounts (other than Eligible Export-Related Accounts
Receivable) shall be Eligible Accounts if:
(a) such Accounts arise from the actual and bona fide sale and delivery
of goods by Borrower or rendition of services by Borrower in the ordinary course
of its business, which transactions are completed substantially in accordance
with the terms and provisions contained in any documents governing such
transaction;
(b) such Accounts are not unpaid for more than sixty (60) days past the
original due date for them;
(c) such Accounts are not unpaid more than (i) ninety (90) days after the
date of the original invoice for them or (ii) one hundred fifty (150) days from
the original invoice date thereof for Accounts with special dating terms arising
under existing programs of Borrower set forth on Part I of Schedule 5 hereto or
such other programs which are otherwise approved by Agent in writing in its
reasonable credit judgment;
(d) such Accounts comply with the terms and conditions contained in Section
7.2(b) of this Agreement;
(e) such Accounts do not arise from sales on consignment, guaranteed sale,
sale and return, sale on approval, or other terms under which payment by the
account debtor may be conditional or contingent;
(f) the chief executive office or principal place of business of the account
debtor with respect to such Accounts is located in the United States of America
or Canada (provided, that at any time promptly upon Agent's request, Borrower
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shall execute and deliver, or cause to be executed and delivered, such other
agreements, documents and instruments as may be reasonably required by Agent to
perfect the security interests of Agent in those Accounts of an account debtor
with its chief executive office or principal place of business in Canada in
accordance with the applicable laws of the Province of Canada in which such
chief executive office or principal place of business is located and shall xxxx
0
or cause to be taken such other and further actions as Agent may reasonably
request to enable Agent, as secured party with respect thereto, to collect such
Accounts under the applicable Federal or Provincial laws of Canada) or, at
Agent's option, if the chief executive office and principal place of business of
the account debtor with respect to such Accounts is located other than in the
United States of America or Canada, then if either: (i) the account debtor has
delivered to Borrower an irrevocable letter of credit issued or confirmed by a
bank reasonably satisfactory to Agent and payable only in the United States of
America and in U.S. dollars, sufficient to cover such Account, in form and
substance satisfactory to Agent and if reasonably required by Agent, the
original of such letter of credit has been delivered to Agent or Agent's agent
and the issuer thereof, and Borrower have complied with the terms of Section
5.2(f) hereof with respect to the assignment of the proceeds of such letter of
credit to Agent or naming Agent as transferee beneficiary thereunder, as Agent
may specify, or (ii) such Account is subject to credit insurance payable to
Agent issued by an insurer and on terms and in an amount reasonably acceptable
to Agent, or (iii) such Account is otherwise reasonably acceptable in all
material respects to Agent (subject to such lending formula with respect thereto
as Agent may reasonably determine);
(g) such Accounts do not consist of progress xxxxxxxx (such that the
obligation of the account debtors with respect to such Accounts is conditioned
upon Borrower's satisfactory completion of any further performance under the
agreement giving rise thereto), xxxx and hold invoices or retainage invoices,
except as to xxxx and hold invoices, if Agent shall have received an agreement
in writing from the account debtor, in form and substance reasonably
satisfactory to Agent, confirming the unconditional obligation of the account
debtor to take the goods related thereto and to pay such invoice;
(h) the account debtor with respect to such Accounts has not asserted a
counterclaim, defense or dispute and does not have, and does not engage in
transactions which may give rise to any right of setoff or recoupment against
such Accounts (but the portion of the Accounts of such account debtor in excess
of the amount at any time and from time to time owed by Borrower to such account
debtor or claimed owed by such account debtor shall be deemed Eligible Accounts
to the extent the same would otherwise be Eligible Accounts hereunder),
(i) there are no facts, events or occurrences which could reasonably be
expected to impair the validity, enforceability or collectability of such
Accounts or reduce the amount payable or delay payment thereunder;
(j) such Accounts are subject to the first priority, valid and perfected
security interest of Agent and any goods giving rise thereto are not, and were
not at the time of the sale thereof, subject to any liens except those permitted
in this Agreement;
(k) neither the account debtor nor any officer or employee of the account
debtor with respect to such Accounts is an officer, employee, agent or other
Affiliate of Borrower or any Guarantor except as set forth on Part II of
Schedule 5 hereto or as otherwise approved by Agent in writing;
(l) the account debtors with respect to such Accounts are not any foreign
government, the United States of America, any State, political subdivision,
department, agency or instrumentality thereof, unless, (i) a letter of credit,
7
in form and substance reasonably satisfactory to Agent, has been obtained with
respect to such Account and account debtor, or (ii) if the account debtor is the
United States of America, any State, political subdivision, department, agency
or instrumentality thereof, upon Agent's request, the Federal Assignment of
Claims Act of 1940, as amended or any similar State or local law, if applicable,
has been complied with in a manner reasonably satisfactory to Agent;
(m) there are no proceedings or actions which are threatened in writing or
pending against the account debtors with respect to such Accounts which could
reasonably be expected to result in any material adverse change in any such
account debtor's financial condition (including, without limitation, any
bankruptcy, dissolution, liquidation, reorganization or similar proceeding);
(n) such Accounts are not evidenced by or arising under any instrument or
chattel paper;
(o) the aggregate amount of such Accounts owing by a single account debtor
does not constitute more than ten (10%) percent of the aggregate amount of all
otherwise Eligible Accounts (but the portion of such Accounts not in excess of
ten (10%) percent shall be deemed Eligible Accounts to the extent the same would
otherwise be Eligible Accounts hereunder);
(p) such Accounts are not owed by an account debtor who has Accounts unpaid
more than the number of days set forth in clauses (b) and (c) of this definition
after the original due date or invoice date therefor, as applicable, which
collectively constitute more than fifty (50%) percent of the total Accounts of
such account debtor;
(q) the account debtor is not located in a state requiring the filing of a
Notice of Business Activities Report or similar report in order to permit
Borrower to seek judicial enforcement in such State of payment of such Account,
unless Borrower has qualified to do business in such state or has filed a Notice
of Business Activities Report or equivalent report for the then current year or
such failure to file and inability to seek judicial enforcement is capable of
being remedied without any material delay or material cost; and
(r) such Accounts are owed by account debtors determined to be creditworthy
at all times by Agent acting in good faith and in accordance with commercially
reasonable standards.
The criteria for Eligible Accounts set forth above may only be changed, and any
new criteria for Eligible Accounts may only be established, by Agent in good
faith based on either: (i) an event, condition or other circumstance arising
after the date hereof, or (ii) an event, condition or other circumstance
existing on the date hereof to the extent Agent has no written notice or other
actual knowledge thereof from Borrower prior to the date hereof that, in the
good faith determination of Agent, in either case under clause (i) or (ii),
materially adversely affects or could reasonably be expected to materially
adversely affect the Accounts. Any Accounts which are not Eligible Accounts
shall nevertheless be part of the Collateral.
"Eligible Equipment" shall mean Equipment of Borrower which (a) have been
appraised by an appraiser reasonably acceptable to Agent and which appraisals
are reasonably satisfactory to Agent as to form, scope and methodology in
accordance with Section 7.4(a), (b) do not consist of fixtures, (c) can be
8
readily removed from the Real Property unless Agent also has a first priority
perfected lien on such Real Property or otherwise has a Collateral Access
Agreement with all necessary parties permitting the removal thereof, (d) are not
leased, worn-out or obsolete, (e) are subject to the first priority, valid and
perfected security interest of Agent and are subject to no other liens, except
for liens described in Section 9.8(b), (c) and (i), and (f) are located on
properties which are owned by Borrower or as to which the lessor or other
operator of any such property has executed a Collateral Access Agreement in
favor of Agent. New criteria for Eligible Equipment acquired after the Closing
Date may be established by Agent in good faith based on either an event,
condition or other circumstance arising with respect to any Equipment which
materially adversely affects or could reasonably be expected to materially
adversely affect the Equipment.
"Eligible Export-Related Accounts Receivable" shall have the meaning set forth
in the Exim Borrower Agreement.
"Eligible Export-Related Inventory" shall have the meaning set forth in the
Exim Borrower Agreement.
"Eligible Inventory" shall mean, as to of Borrower, Inventory of Borrower
consisting of finished goods held for resale in the ordinary course of the
business of Borrower, raw materials for such finished goods and work-in-process,
in each case unless the same are not acceptable to Agent based on the criteria
set forth below as determined by Agent in good faith. In general, Eligible
Inventory shall not include:
(a) spare parts for equipment other than Inventory consisting of spare
parts held for sale to customers;
(b) packaging and shipping materials not specifically identified as a
component of any finished goods;
(c) supplies used or consumed in Borrower's business;
(d) Inventory at premises other than those owned and controlled by Borrower,
except that any Inventory which would otherwise be deemed Eligible Inventory
that is not located at premises owned and operated by Borrower may nevertheless
be considered Eligible Inventory:
(i) as to locations which are leased by Borrower, if Agent shall have
received a Collateral Access Agreement from the owner and lessor of such
location, duly authorized, executed and delivered by such owner and lessor (or
such lease provides Agent with substantially the same rights as Agent would have
under a Collateral Access Agreement), or if Agent shall not have received such
Collateral Access Agreement (or Agent shall determine to accept a Collateral
Access Agreement that does not include all required provisions or provisions in
the form otherwise required by Agent), Agent may, at its option, nevertheless
consider Inventory at such location to be Eligible Inventory to the extent Agent
shall have established such Reserves in respect of amounts at any time payable
by Borrower to the owner and lessor thereof as Agent shall reasonably
determine, and
9
(ii) as to any location owned or operated by a third party (other than
consignment locations under clause (i) below), if Agent shall have received a
Collateral Access Agreement from such owner or operator with respect to such
location to the extent the Value of Inventory at such location is in excess of
$100,000 or if Agent has requested a Collateral Access Agreement for such
location during the existence of a Trigger Event, in each case duly authorized,
executed and delivered by such owner and operator or if Agent shall not have
received such Collateral Access Agreement (or Agent shall determine to accept a
Collateral Access Agreement that does not include all required provisions or
provisions in the form otherwise required by Agent), Agent may, at its option,
nevertheless consider Inventory at such location to be Eligible Inventory to the
extent Agent shall have established such Reserves in respect of amounts at any
time payable by Borrower to the owner and operator thereof as Agent shall
reasonably determine, and in addition, if required by Agent, if Agent shall have
received: (A) UCC financing statements between the owner and operator, as
consignee or bailee and Borrower, as consignor or xxxxxx, in form and substance
satisfactory to Agent, which are duly assigned to Agent and (B) a written notice
to any lender to the owner and operator of the first priority security interest
in such Inventory of Agent;
(e) Inventory subject to a security interest or lien in favor of any Person
other than Agent except those permitted in this Agreement (but without limiting
the right of Agent to establish any Reserves in accordance with the definition
of the term "Reserves" herein with respect to amounts secured by such security
interest or lien in favor of any Person even if permitted herein);
(f) xxxx and hold goods; unserviceable, obsolete or slow moving Inventory or
crib Inventory;
(g) Inventory which is not subject to the first priority, valid and
perfected security interest of Agent;
(h) returned, damaged and/or defective Inventory;
(i) Inventory purchased or sold on consignment (excluding augers) unless, in
the case of Inventory sold on consignment, the requirements of Section 5.2(j)
with respect to such consigned Inventory are satisfied; provided, that if Agent
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shall not have received a Collateral Access Agreement from the consignee in
accordance with Section 5.2(j), such consigned Inventory shall be considered to
be Eligible Inventory to the extent the Value of such Inventory, together with
the Value of all other consigned Inventory at any location without a Collateral
Access Agreement, is less than $250,000 and no Trigger Event exists; provided,
--------
that Agent may, at its option, nevertheless consider such consigned Inventory to
be Eligible Inventory to the extent Agent shall have established such Reserves
as Agent shall determine;
(j) Inventory that qualifies as Eligible Export-Related Inventory;
(k) Inventory consisting of augers sold on consignment or any similar
arrangement with Borrower's dealers; provided, that the same shall be Eligible
--------
Inventory only to the extent that (x) with respect to any location, the
10
requirements of Section 5.2(j) are satisfied with respect to such location
(without regard to the $250,000 exception therein) within 90 days after the
Closing Date (or if not within 90 days, then the same shall cease to be Eligible
Inventory until such requirements are satisfied), (y) the value of such
Inventory at any single location that may be included in the Borrowing Base
shall not exceed $100,000 per location and (z) the value of all such Inventory
that may be included in the Borrowing Base shall not exceed $650,000 for all
locations;
(l) Inventory located outside the United States of America; and
(m) Inventory which has been returned or repurchased under any warranty
issued by Borrower.
The criteria for Eligible Inventory set forth above may only be changed and any
new criteria for Eligible Inventory may only be established by Agent in good
faith based on either: (i) an event, condition or other circumstance arising
after the date hereof, or (ii) an event, condition or other circumstance
existing on the date hereof to the extent Agent has no written notice or other
actual knowledge thereof from Borrower prior to the date hereof, that, in the
good faith determination of Agent, in either case under clause (i) or (ii)
materially adversely affects or could reasonably be expected to materially
adversely affect the Inventory. Any Inventory which is not Eligible Inventory
shall nevertheless be part of the Collateral.
"Eligible Real Property" shall mean Real Property of Borrower (i) subject
to a Mortgage pursuant to which Agent has been granted a valid first mortgage
lien in such Real Property subject to no other liens except as described in
Section 9.8(b), (c), (d) and (i) and (ii) as to which Agent has received, in
each case, in form and substance satisfactory to Agent (A) a valid and effective
title policy (or binding commitment to issue the same) insuring such Mortgage
meeting the requirements set forth in Section 4.1(n), (B) an environmental audit
meeting the requirements set forth in Section 4.1(m) and (C) written appraisals
meeting the requirements set forth in Section 7.4(a) or (iii) which has
otherwise been approved by Agent for inclusion in the Borrowing Base prior to
the date hereof.
"Eligible Transferee" shall mean (a) any Lender; (b) the parent company of any
Lender and/or any Affiliate of such Lender which is at least fifty (50%) percent
owned by such Lender or its parent company; (c) any person (whether a
corporation, partnership, trust or otherwise) that is engaged in the business of
making, purchasing, holding or otherwise investing in bank loans and similar
extensions of credit in the ordinary course of its business and is administered
or managed by a Lender or with respect to any Lender that is a fund which
invests in bank loans and similar extensions of credit, any other fund that
invests in bank loans and similar extensions of credit and is managed by the
same investment advisor as such Lender or by an Affiliate of such investment
advisor, and in each case is approved by Agent; and (d) any other commercial
bank, financial institution or "accredited investor" (as defined in Regulation D
under the Securities Act of 1933) approved by Agent, provided, that, (i) neither
Borrower nor any Guarantor or any Affiliate of Borrower or any Guarantor shall
qualify as an Eligible Transferee and (ii) no Person to whom any Indebtedness
which is in any way subordinated in right of payment to any other Indebtedness
of Borrower or any Guarantor shall qualify as an Eligible Transferee, except as
Agent may otherwise specifically agree.
11
"Enforcement Action"shall mean the exercise by Agent in good faith of any of its
material enforcement rights and remedies as a secured creditor hereunder or
under the other Financing Agreements, applicable law or otherwise at any time
following the occurrence and during the continuance of an Event of Default
(including, without limitation, the demand for the immediate payment of all of
the Obligations, the solicitation of bids from third parties to conduct the
liquidation of the Collateral, the engagement or retention of sales brokers,
marketing agents, investment bankers, accountants, appraisers, auctioneers or
other third parties for the purposes of valuing, marketing, promoting and
selling the Collateral, the commencement of any action to foreclose on the
security interests or liens of Agent in all or any material portion of the
Collateral, notification of account debtors to make payments to Agent, any
action to take possession of all or any material portion of the Collateral or
commencement of any legal proceedings or actions against or with respect to all
or any portion of the Collateral).
"Environmental Laws" shall mean all foreign, Federal, State and local laws,
legislation, rules, codes, licenses, permits (including any conditions imposed
therein), authorizations, judicial or administrative decisions, injunctions or
agreements between Borrower or any Guarantor and any Governmental Authority, (a)
relating to pollution and the protection, preservation or restoration of the
environment (including air, water vapor, surface water, ground water, drinking
water, drinking water supply, surface land, subsurface land, plant and animal
life or any other natural resource), or to human health or safety, (b) relating
to the exposure to, or the use, storage, recycling, treatment, generation,
manufacture, processing, distribution, transportation, handling, labeling,
production, release or disposal, or threatened release, of Hazardous Materials,
or (c) relating to all laws with regard to recordkeeping, notification,
disclosure and reporting requirements respecting Hazardous Materials. The term
"Environmental Laws" includes (i) the Federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Federal Superfund
Amendments and Reauthorization Act, the Federal Water Pollution Control Act of
1972, the Federal Clean Water Act, the Federal Clean Air Act, the Federal
Resource Conservation and Recovery Act of 1976 (including the Hazardous and
Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the
Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, and the Federal Safe Drinking Water Act of 1974 and (ii)
applicable state counterparts to such laws.
"Equipment" shall mean, as to Borrower or any Guarantor, all of Borrower's or
such Guarantor's now owned and hereafter acquired equipment, wherever located,
including machinery, data processing and computer equipment (whether owned or
licensed and including embedded software), vehicles, tools, furniture, fixtures,
all attachments, accessions and property now or hereafter affixed thereto or
used in connection therewith, and substitutions and replacements thereof,
wherever located.
"Equipment Sublimit" shall have the meaning set forth in the definition of Fixed
Asset Amount.
"Equity Sponsor" means Charlesbank Capital Partners LLC.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, together
with all rules, regulations and interpretations thereunder or related thereto.
"ERISA Affiliate" shall mean any person required to be aggregated with Borrower,
any Guarantor or any of its or their respective Subsidiaries under Sections
414(b), 414(c), 414(m) or 414(o) of the Code.
"ERISA Event" shall mean (a) any "reportable event", as defined in Section
4043(c) of ERISA or the regulations issued thereunder other than those events as
to which notice is waived by regulation, with respect to a Plan; (b) the
adoption of any amendment to a Plan that would require the provision of security
pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (d) the filing pursuant to Section 412 of the Code or Section 303(d) of
ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (e) the occurrence of a "prohibited transaction" with
respect to which Borrower, any Guarantor or any of its or their respective
Subsidiaries is a "disqualified person" (within the meaning of Section 4975 of
the Code) or with respect to which Borrower, any Guarantor or any of its or
their respective Subsidiaries could otherwise reasonably be expected to have
material liability; (f) a complete or partial withdrawal by Borrower, any
Guarantor or any ERISA Affiliate from a Multiemployer Plan or a cessation of
operations which is treated as such a withdrawal or notification that a
Multiemployer Plan is in reorganization; (g) the filing of a notice of intent to
terminate, the treatment of a Plan amendment as a termination under Section 4041
or 4041A of ERISA, or the commencement of proceedings by the Pension Benefit
Guaranty Corporation to terminate a Plan; (h) an event or condition which might
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan; and (i)
the imposition of any liability under Title IV of ERISA, other than the Pension
Benefit Guaranty Corporation premiums due but not delinquent under Section 4007
of ERISA, upon Borrower, any Guarantor or any ERISA Affiliate in excess of
$500,000.
"Eurodollar Rate" shall mean, with respect to any Eurodollar Rate Loan for the
Interest Period applicable thereto, the rate of interest per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on Telerate Page
3750 (or any successor page) as the London interbank offered rate for deposits
in U.S. Dollars at approximately 11:00 A.M. (London time) two (2) Business Days
prior to the first day of such Interest Period for a term comparable to such
Interest Period; provided, that, if more than one rate is specified on Telerate
--------- -----
Page 3750, the applicable rate shall be the arithmetic mean of all such rates.
If, for any reason, such rate is not available, the term "Eurodollar Rate" shall
mean, with respect to any Eurodollar Rate Loan for the Interest Period
applicable thereto, the rate of interest per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as
the London interbank offered rate for deposits in Dollars at approximately 11:00
A.M. (London time) two (2) Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates.
"Eurodollar Rate Loans" shall mean any Loans or portion thereof on which
interest is payable based on the Adjusted Eurodollar Rate in accordance with the
terms hereof.
"Event of Default" shall mean the occurrence or existence of any event or
condition described in Section 10.1 hereof.
12
"Excess Availability" shall mean the amount, calculated at any date, equal to
(a) Non-Exim Excess Availability as of such date plus, to the extent all the
----
conditions set forth in Section 4.3 hereof are satisfied, (b) Exim Excess
Availability as of such date, minus (c) the aggregate amount of all then
-----
outstanding and unpaid trade payables of Borrower which are outstanding more
than sixty (60) days past due as of such time (other than trade payables being
contested or disputed by Borrower in good faith).
"Exchange Act" shall mean the Securities Exchange Act of 1934, together with all
rules, regulations and interpretations thereunder or related thereto.
"Exim" shall mean Export-Import Bank of the United States.
"Exim Borrower Agreement" shall mean that certain Borrower Agreement, among
Borrower, Agent and Exim, as modified by any applicable loan authorization
agreements and by any waivers approved by Agent and Exim, and as otherwise
amended or modified from time to time.
"Exim Excess Availability" shall mean the amount calculated at any date, equal
to: (a) the lesser of: (i) the Export-Related Borrowing Base and (ii) the
lesser of: (A) the Maximum Exim Revolving Credit and (B) the Maximum Revolving
Credit less the outstanding amount of Non-Exim Revolving Loans and Non-Exim
Letter of Credit Accommodations, minus (b) the amount of all then outstanding
-----
and unpaid Exim Revolving Loans and Exim Letter of Credit Accommodations.
"Exim Facility" shall mean the Exim Revolving Loans and the Exim Letter of
Credit Accommodations provided under this Agreement to the extent all the
conditions under Section 4.3 have been satisfied.
"Exim Guarantee" shall mean the Master Guaranty Agreement issued by Exim in form
and substance reasonably satisfactory to Agent which guarantees to Agent, for
the benefit of the Lenders, the outstanding amount of any Exim Revolving Loans
and/or Exim Letter of Credit Accommodations (or such portion thereof as shall be
acceptable to Agent and Required Lenders).
"Exim Guarantee Documents" shall mean, collectively, the Exim Borrower
Agreement, the Exim Guarantee, and all other agreements, documents and
instruments executed in connection herewith or with the Prior Loan Agreement or
at any time hereafter executed and/or delivered by Exim, Agent, any Lender,
Borrower or any Obligor in connection with the Exim Borrower Agreement and Exim
Guarantee, in each case as amended or otherwise modified from time to time.
"Exim Letter of Credit Accommodations" shall mean, collectively, (a) the letters
of credit, merchandise purchase or other guaranties which are from time to time
either issued or opened by Agent or any Lender for the account of Borrower or
any Obligor or (b) with respect to which Agent or Lenders have agreed to
indemnify the issuer or guaranteed to the issuer the performance by Borrower or
any Obligor of its obligations to such issuer; sometimes being referred to
herein individually as an "Exim Letter of Credit Accommodation", in each case as
provided under Section 2.2(a)(ii) hereof and in each case supported by an Exim
Guarantee.
13
"Exim Primary Collateral" shall mean the Collateral designated under the terms
of the Exim Guarantee Documents as constituting primary collateral securing the
Exim Revolving Loans and the Exim Letter of Credit Accommodations.
"Exim Revolving Loans" shall mean the loans now or hereafter made by or on
behalf of any Lender or by Agent for the account of any Lender on a revolving
basis pursuant to the Credit Facility (involving advances, repayments and
readvances) as set forth in Section 2.1(b) hereof and which are supported by the
Exim Guarantee.
"Export-Related Borrowing Base" shall mean the "Export-Related Borrowing Base"
(as defined in the Exim Borrower Agreement) less such Reserves as Agent shall
establish under clause (d) of the definition of "Reserves" herein.
"Export-Related Account Receivable" shall have the meaning set forth in the
Exim Borrower Agreement.
"Export-Related Inventory" shall have the meaning set forth in the Exim Borrower
Agreement.
"Fair Market Value" shall mean the value that would be paid by a willing buyer
to an unaffiliated willing seller in a transaction not involving distress or
necessity of either party, determined in good faith by the Board of Directors of
Borrower.
"Fee Letter" shall mean the letter agreement, dated as of the date hereof,
between Borrower and Agent, setting forth certain fees payable by Borrower to
Agent for the benefit of itself and Lenders, as the case may be, as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
"Financing Agreements" shall mean, collectively, this Agreement, the Fee Letter
and all notes, guarantees, security agreements, mortgages, deeds of trust,
deposit account control agreements, investment property control agreements,
intercreditor agreements and all other agreements, documents and instruments
executed and/or delivered in connection with this Agreement (or in connection
with the Prior Loan Agreement if assigned to Agent) or at any time hereafter
executed and/or delivered by Borrower or any Obligor in connection with this
Agreement and including, without limitation, the Exim Guarantee Documents.
"Fiscal Month" shall mean, for any Fiscal Year of Borrower, each of the twelve
one-month periods set forth for such Fiscal Year on Schedule 6 hereto, which
schedule shall be updated by Borrower on the first Business Day of December of
each Fiscal Year (commencing on December 1, 2005) to reflect the twelve Fiscal
Months for the immediately following Fiscal Year.
"Fiscal Quarter" means for each Fiscal Year the periods ending and dates which
are thirteen (13), twenty-six (26), thirty-nine (39) and fifty-two (52) weeks
following the prior Fiscal Year end.
"Fiscal Year" means the twelve (12) month period ending on December 31 of each
calendar year.
14
"Fixed Asset Acquisition Sublimit" shall mean $3,000,000 per Fiscal Year.
"Fixed Asset Acquisition Value" shall mean, as of any date of determination,
with respect to any Equipment acquired by Borrower after the date hereof for
which Borrower has notified Agent of its desire to include in the Borrowing
Base, the amount equal to, at Borrower's election, either (a) seventy-five
percent (75%) of the Hard Cost of such Equipment or (b) eighty-five percent
(85%) of the appraised Net Orderly Liquidation Value of such Equipment, in each
case provided that such Equipment satisfies all the criteria of Eligible
Equipment (except for clause (a) of the definition thereof in the case where
option (a) is elected), as such amount shall be reduced from time to time
pursuant to Section 2.4; provided, that in no event shall the aggregate Fixed
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Acquisition Value included in the Borrowing Base in any Fiscal Year exceed the
Fixed Asset Sublimit. Notwithstanding the foregoing, if Borrower acquires any
new Equipment for the purpose of either (x) replacing Equipment that was damaged
or destroyed and Borrower uses proceeds of insurance to make such acquisition in
accordance with Section 9.5 or (y) replacing Equipment that was sold and
Borrower uses proceeds of such sold Equipment to make such acquisition in
accordance with Section 9.7(b)(ii), then to the extent Borrower notifies Agent
of its intent to include such Equipment in the Borrowing Base, only that portion
of the Fixed Asset Acquisition Value of such Equipment in excess of the portion
of the Borrowing Base that was allocable to the Equipment so damaged, destroyed
or sold shall be counted toward the Fixed Asset Acquisition Sublimit in the
applicable Fiscal Year.
"Fixed Asset Amount" shall mean, as of any date of determination, the lesser of
(a) $20,000,000; or (b) the sum of (x) eighty-five percent (85%) of the
appraised Net Orderly Liquidation Value of Eligible Equipment as determined
pursuant to the most recently delivered appraisal received by Agent prior to the
date hereof (the "Equipment Sublimit") plus (y) seventy-five percent (75%) of
the appraised Fair Market Value of Eligible Real Property as determined pursuant
to the most recently delivered appraisal received by Agent prior to the date
hereof (the "Real Property Sublimit"), in each case under clause (b), as reduced
from time to time pursuant to Section 2.4.
"Fixed Charge Coverage Ratio" shall mean, with respect to Borrower and its
Subsidiaries on a consolidated basis for any fiscal period, the ratio of EBITDA
to Fixed Charges.
"Fixed Charges" shall mean, with respect to Borrower and its Subsidiaries on a
--------------
consolidated basis for any fiscal period, without duplication,
(a) the aggregate of all Interest Expense paid or required to be paid in such
period in cash,
PLUS (b) regularly scheduled principal payments, regularly scheduled capital
lease payments and regularly scheduled redemption obligations in respect of any
Indebtedness of Borrower and its Subsidiaries paid or required to be paid in
cash during such period,
PLUS (c)scheduled reductions to the Fixed Asset Amount and Fixed Asset
Acquisition Value pursuant to Section 2.4;
PLUS (d) all capital expenditures determined in accordance with GAAP made during
such period (other than (i) capital expenditures that are financed with proceeds
15
of Indebtedness for borrowed money except for Loans, (ii) capital expenditures
that result in an increase in the Fixed Asset Acquisition Value and (iii)
capital expenditures that are made using the cash proceeds of asset sales
permitted under Section 9.7(b), in each case to the extent not included in the
calculation of EBITDA for such period);
PLUS (e) federal, state, local and foreign taxes, paid or required to be paid in
such period in cash;
PLUS (f) cash payments made under the Management Services Agreement.
"Foreign Subsidiary" shall mean any Subsidiary of Borrower organized outside of
the United States.
"GAAP" shall mean generally accepted accounting principles set forth in the
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as have been approved by a
significant segment of the accounting profession, which are in effect on the
date hereof.
"Governmental Authority" shall mean any nation or government, any state,
province, or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"GSI Intellectual Property" shall mean the Intellectual Property listed in
Schedule 8.11 to the Information Certificate that is material to the businesses
of Borrower and each Guarantor as of the date of this Agreement.
"Guarantor(s)" shall have the meaning set forth in the Preamble hereof and shall
include any other Subsidiary of Borrower that executes a guaranty of any or all
of the Obligations in favor of Agent.
"Hard Cost" shall mean, with respect to the purchase by Borrower of an item of
Equipment, the cash amount actually paid, and the value of any property
exchanged, to acquire title to such item, net of all incentives, discounts and
rebates, and exclusive of freight, delivery charges, installation costs and
charges, warranty costs, taxes and insurances and other incidental costs or
expenses and all indirect costs or expenses of any kind incurred in connection
with such purchase.
"Hazardous Materials" shall mean any hazardous, toxic or dangerous substances,
materials and wastes, including hydrocarbons (including naturally occurring or
man-made petroleum and hydrocarbons), flammable explosives, asbestos, urea
formaldehyde insulation, radioactive materials, biological substances,
polychlorinated biphenyls, pesticides, herbicides and any other kind and/or type
of pollutants or contaminants (including materials which include hazardous
constituents), sewage, sludge, industrial slag, solvents and/or any other
similar substances, materials, or wastes and including any other substances,
materials or wastes that are regulated under any Environmental Law (including
any that are classified as hazardous or toxic under any Environmental Law).
"Holdings" shall have the meaning set forth in the preamble hereto.
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"Indebtedness" shall mean, with respect to any Person, any liability, whether or
not contingent, (a) in respect of borrowed money (whether or not the recourse of
the lender is to the whole of the assets of such Person or only to a portion
thereof) or evidenced by bonds, notes, debentures or similar instruments; (b)
representing the balance deferred and unpaid of the purchase price of any
property or services (except any such balance that constitutes an account
payable to a trade creditor (whether or not an Affiliate) created, incurred,
assumed or guaranteed by such Person in the ordinary course of business of such
Person in connection with obtaining goods, materials or services that is not
overdue by more than ninety (90) days, unless the trade payable is being
contested in good faith); (c) all obligations as lessee under leases which have
been, or should be, in accordance with GAAP recorded as Capital Leases; (d) any
contractual obligation, contingent or otherwise, of such Person to pay or be
liable for the payment of any indebtedness described in this definition of
another Person, including, without limitation, any such indebtedness, directly
or indirectly guaranteed, or any agreement to purchase, repurchase, or otherwise
acquire such indebtedness, obligation or liability or any security therefor, or
to provide funds for the payment or discharge thereof, or to maintain solvency,
assets, level of income, or other financial condition; (e) all obligations with
respect to redeemable stock and redemption or repurchase obligations under any
Capital Stock or other equity securities issued by such Person; (f) all
reimbursement obligations and other liabilities of such Person with respect to
surety bonds (whether bid, performance or otherwise), letters of credit,
banker's acceptances, drafts or similar documents or instruments issued for such
Person's account; (g) all indebtedness of such Person in respect of indebtedness
of another Person for borrowed money or indebtedness of another Person otherwise
described in this definition which is secured by any consensual lien, security
interest, collateral assignment, conditional sale, mortgage, deed of trust, or
other encumbrance on any asset of such Person, whether or not such obligations,
liabilities or indebtedness are assumed by or are a personal liability of such
Person, all as of such time; (h) all obligations, liabilities and indebtedness
of such Person (marked to market) arising under swap agreements, cap agreements
and collar agreements and other agreements or arrangements designed to protect
such person against fluctuations in interest rates or currency or commodity
values; and (i) all obligations owed by such Person under License Agreements
with respect to non-refundable, advance or minimum guarantee royalty payments.
"Indenture" means that certain Indenture dated as of May 16, 2005 among
Borrower, the "Guarantors" party thereto and U.S. Bank National Association, as
Trustee, as the same may be amended, restated or otherwise modified from time to
time.
"Information Certificate" shall mean, collectively, the Information Certificates
of Borrower and Guarantors constituting Exhibit B hereto containing material
information with respect to Borrower, Guarantors, their Subsidiaries and their
respective businesses and assets provided by Borrower and Guarantors to Agent in
connection with the preparation of this Agreement and the other Financing
Agreements and the financing arrangements provided for herein.
"Insolvency Case" shall mean, as to any Person, any of the following: (i) any
case or proceeding with respect to such person under the Bankruptcy Code, or any
other Federal, State or other bankruptcy, insolvency, reorganization or other
17
law affecting creditors' rights or any other or similar proceedings seeking any
stay, reorganization, arrangement, composition or readjustment of all or
substantially all of the obligations and indebtedness of such person or (ii) any
proceeding seeking the appointment of any receiver, trustee, administrator,
liquidator, custodian or other insolvency official with similar powers with
respect to such person or all or substantially all of its assets or (iii) any
proceeding for liquidation, dissolution or other winding up of the business of
such person or (iv) any general assignment for the benefit of creditors or any
general marshaling of all or substantially all of the assets of such person.
"Insolvency Event" shall mean the commencement of an Insolvency Case by or
against Borrower or any Obligor.
"Intellectual Property" shall mean all patents, patent rights, patent
applications, copyright rights, works which are the subject matter of
copyrights, copyright registrations and registration applications, trademarks,
service marks, trade names, trade styles, trademark and service xxxx
registrations and registration applications and all goodwill symbolized by such
trademarks, service marks, trade names and trade styles; all extensions,
renewals, reissues, divisions, continuations, and continuations-in-part of any
of the foregoing; all rights to xxx for past, present and future infringement
of, and to collect damages related thereto, any of the foregoing; inventions,
trade secrets, formulae, processes, compounds, drawings, designs, blueprints,
surveys, reports, manuals, operating standards; customer and other lists,
business plans, domain names and domain name registrations; software and
contract rights relating to computer software programs, and any other
proprietary information in whatever form created or maintained; and all licenses
and rights to use any and all of the foregoing. As to Borrower and each
Guarantor, the term Intellectual Property shall mean only the Intellectual
Property now owned or hereinafter acquired by Borrower or such Guarantor.
"Interest Expense" shall mean, with respect to Borrower and its
Subsidiaries on a consolidated basis for any fiscal period, cash interest
expense of such Persons determined in accordance with GAAP for such period.
"Interest Period" shall mean for any Eurodollar Rate Loan, a period of
approximately one (1), two (2), three (3) or six (6) months duration as Borrower
may elect, the exact duration to be determined in accordance with the customary
practice in the applicable Eurodollar Rate market; provided, that, Borrower may
not elect an Interest Period which will end after the last day of the
then-current term of this Agreement.
"Interest Rate" shall mean:
(a) Subject to clauses (b) and (c) of this definition below:
(i) as to Prime Rate Loans consisting of Revolving Loans, a rate
equal to the Applicable Margin for Prime Rate Loans then in effect plus the
Prime Rate,
(ii) as to Eurodollar Rate Loans, a rate equal to the Applicable
Margin for Eurodollar Rate Loans then in effect plus the Adjusted Eurodollar
Rate (in each case, based on the Eurodollar Rate applicable for the Interest
Period selected by Borrower, as in effect three (3) Business Days after the date
of receipt by Agent of the request of Borrower for such Eurodollar Rate Loans in
accordance with the terms hereof, whether such rate is higher or lower than any
rate previously quoted to Borrower), and
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(iii) as to fees for Letter of Credit Accommodations, a rate equal
to the Applicable Margin for Letter of Credit Accommodations then in effect;
(b) If, in any month commencing after May 31, 2005, Borrower fails to
deliver a Borrowing Base Certificate reflecting the Borrowing Base as of the
last Business Day of the immediately preceding Fiscal Month in accordance with
Section 7.1(a)(i), the Applicable Margins shall be increased to their highest
levels set forth in the definition of the term "Applicable Margin" (without
regard to the amount of Excess Availability) effective as of the first Business
Day of such month until such time as Borrower satisfies such delivery
requirement; and
(c) Notwithstanding anything to the contrary contained in clauses (a)
and (b) of this definition, with respect to Revolving Loans and fees for Letter
of Credit Accommodations, the Applicable Margin otherwise used to calculate the
Interest Rate for Prime Rate Loans, Eurodollar Rate Loans and fees for Letter of
Credit Accommodations shall be the highest respective percentages set forth in
the definition of the term Applicable Margin for each such category (without
regard to the amount of Excess Availability) plus in each case two percent (2%)
per annum, at Agent's or the Required Lenders' option, without notice, (A)
either (x) for the period on and after the date of termination or non-renewal of
the term of this Agreement until such time as all Obligations owing to Agent and
Lenders are indefeasibly paid in full in immediately available funds, or (y) for
the period from and after the date of the occurrence of any Event of Default
arising under Sections 10.1 (a)(i), (a)(ii), or (a)(iii) and for so long as such
Event of Default is continuing and (B) on the Revolving Loans (or any portion
thereof) to Borrower at any time outstanding which are in excess of the
Borrowing Base, the Export-Related Borrowing Base, the Maximum Revolving Credit
or the Maximum Exim Revolving Credit (whether or not such excess(es) arise or
are made with or without Agent's or any Lender's knowledge or consent and
whether made before or after an Event of Default),
"Inventory" shall mean, as to Borrower and each Guarantor, all of Borrower's and
such Guarantor's now owned and hereafter existing or acquired goods, wherever
located, which (a) are leased by Borrower or such Guarantor as lessor; (b) are
held by Borrower for sale or lease or to be furnished under a contract of
service; (c) are furnished by Borrower or such Guarantor under a contract of
service; or (d) consist of raw materials, work in process, finished goods or
materials used or consumed in its business.
"Inventory Loan Limit" shall mean (a) with respect to all Eligible Inventory, an
amount equal to $30,000,000 and (b) with respect to all Eligible Inventory
consisting of work in process, an amount equal to $12,000,000.
"Investment Property Control Agreement" shall mean an agreement in writing, in
form and substance reasonably satisfactory to Agent, by and among Agent,
Borrower or any Guarantor (as the case may be) and any securities intermediary,
commodity intermediary or other person who has custody, control or possession of
any investment property of Borrower or such Guarantor acknowledging that such
securities intermediary, commodity intermediary or other person has custody,
control or possession of such investment property on behalf of Agent, that it
will comply with entitlement orders originated by Agent with respect to such
19
investment property, or other instructions of Agent, or (as the case may be)
apply any value distributed on account of any commodity contract as directed by
Agent, in each case, without the further consent of Borrower or such Guarantor
and including such other terms and conditions as Agent may reasonably require.
"Knowledge" shall mean the actual knowledge by the chief executive officer,
chief financial officer, chief operating officer and/or comptroller of Borrower,
in each case after due inquiry.
"LaSalle Indenture" shall mean that certain Indenture dated November 1, 1997
between Borrower and LaSalle National Bank, as trustee.
"Lenders" shall mean the lenders that are signatories hereto as Lenders and
other persons made a party to this Agreement as a Lender in accordance with
Section 13.6 hereof, and their respective successors and assigns; each sometimes
being referred to herein individually as a "Lender".
"Letter of Credit Accommodations" shall mean Exim Letter of Credit
Accommodations and Non-Exim Letter of Credit Accommodations.
"License Agreements" shall have the meaning set forth in Section 8.11 hereof.
"Loans" shall mean the Revolving Loans and the Special Agent Advances
"Management Services Agreement" shall mean (a) that certain Corporate
Development and Administrative Services Agreement dated as of the Closing Date
among Equity Sponsor, Holdings and Borrower, as amended or otherwise modified
from time to time and (b) the Management Services Agreement dated as of the
Closing Date among the Borrower, the YCII Litigation Trust and the individuals
listed as "Sellers" therein.
"Margin Stock" shall mean "margin stock" as such term is defined in Regulation
T, U or X of the Federal Reserve Board.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
financial condition, business, performance or operations of Borrower and
Guarantors, taken as a whole, or the legality, validity or enforceability of
this Agreement or any of the other Financing Agreements; (b) the legality,
validity, enforceability, perfection or priority of the security interests and
liens of Agent upon the Collateral; (c) the value of the Collateral, (d) the
ability of Borrower to repay the Obligations or to perform its other obligations
under this Agreement or any of the other Financing Agreements as and when due or
to be performed; (e) the ability of Agent or any Lender to enforce the
Obligations or to realize upon the Collateral; or (f) any of the other material
rights and remedies of Agent and Lenders under this Agreement or any of the
other Financing Agreements.
"Material Contract" shall mean (a) any contract or other agreement (other than
the Financing Agreements), written or oral, of Borrower or any Guarantor
involving monetary liability of or to any Person in an amount in excess of
20
$250,000 in any Fiscal Year and (b) any other contract or other agreement (other
than the Financing Agreements), whether written or oral, to which Borrower or
any Guarantor is a party as to which the breach, nonperformance, cancellation
thereof or the failure to renew the same by any party thereto would have a
Material Adverse Effect.
"Maximum Credit" shall mean, at any time, the lesser of (a) the Maximum
Revolving Credit and (b) the amount of Indebtedness permitted to be incurred
under this Agreement under the terms of the Indenture.
"Maximum Exim Revolving Credit" shall mean an amount approved by Exim not to
exceed $2,500,000.
"Maximum Revolving Credit" shall initially mean $60,000,000, as such amount may
be increased in $5,000,000 increments pursuant to Section 2.6, but not to exceed
$75,000,000, and as such amount may be reduced in $1,000,000 increments pursuant
to Section 2.7.
"Mortgages" shall mean, individually and collectively, each of the following (as
the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced): (a) the Mortgage, dated of even date
herewith, by Borrower in favor of Agent with respect to the Real Property and
related assets of Borrower located at 0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxxx,
XX, (b) the Mortgage, dated of even date herewith, by Borrower in favor of Agent
with respect to the Real Property and related assets of Borrower located at 000
Xxxxx Xxxx Xxxxxx, Xxxxx, XX, (x) the Mortgage, dated of even date herewith, by
Borrower in favor of Agent with respect to the Real Property and related assets
of Borrower located at 000 Xxxxxxxx Xxxxx, Xxxxxx, XX, (d) the Mortgage, dated
of even date herewith, by Borrower in favor of Agent with respect to the Real
Property and related assets of Borrower located at 000-000 Xxxxx Xxxxx,
Xxxxxxxx, XX, (e) the Mortgage, dated of even date herewith, by Borrower in
favor of Agent with respect to the Real Property and related assets of Borrower
located at 0000 0xx Xxxxxx Xxxxx, Xxxxx Xxxx, XX, (f) the Mortgage dated of even
date herewith, by Borrower in favor of Agent with respect to the Real Property
and related assets of Borrower located at 00000 Xxxxxxxx Xxxxxxx, Xxxxx, XX, and
(g) the Mortgage, dated of even date herewith, by Borrower in favor of Agent
with respect to the Real Property and related assets of Borrower located at 0000
X. Xxxxx Xxx., Xxxxx, XX.
"Multiemployer Plan" shall mean a "multi-employer plan" as defined in Section
3(37) of ERISA which is or was at any time during the current year or the
immediately preceding six (6) years contributed to by Borrower, any Guarantor or
any ERISA Affiliate.
"Net Amount" shall mean, with respect to the Eligible Accounts, the gross amount
of the Eligible Accounts less the amount of (a) sales, excise or similar taxes
owed by Borrower in respect thereof and (b) returns, discounts, claims, credits
and allowances of any nature at any time issued, owing, granted, outstanding,
available or claimed with respect thereto.
"Net Orderly Liquidation Value" at any time means, with respect to Inventory or
any piece of Equipment, the estimated net recovery value of all Inventory or
such piece of Equipment, as applicable, as determined based on the then most
recent appraisal delivered in accordance with this Agreement, which reflects the
estimated net cash value expected by the appraiser to be derived from a sale or
disposition at a liquidation or going-out-of-business sale of such Inventory or
Equipment after deducting all costs, expenses and fees attributable to such sale
or disposition, including, without limitation, all fees, costs and expenses of
any liquidator(s) engaged to conduct such sale or disposition and all costs and
expenses of removing and delivering the same to a purchaser.
"Net Orderly Liquidation Value Factor" at any time means the ratio of the Net
Orderly Liquidation Value to the book value of Inventory, expressed as a
21
percentage. The Net Orderly Liquidation Value Factor shall be determined as of
the date hereof based on the most recent appraisal delivered prior to the date
hereof and shall be updated pursuant to appraisals delivered under Section 7.3.
"Net Proceeds" means, with respect to any asset, the aggregate cash proceeds
received in respect of its sale, disposition, condemnation or casualty
(collectively, a "Disposition") (including, without limitation, any cash
received upon the sale or other disposition of any non-cash consideration
received from such Disposition), net of the direct costs relating to such
Disposition, including, without limitation, legal, accounting and investment
banking fees, and sales commissions, and any relocation expenses incurred as a
result of such Disposition, taxes paid or payable as a result of such
Disposition, in each case, after taking into account any available tax credits
or deductions and any tax sharing arrangements, and amounts required to be
applied to the repayment of Indebtedness, other than the Obligations, secured by
a lien on the asset subject to such Disposition and any reserve for adjustment
in respect of the sale price of such asset established in accordance with GAAP.
"Non-Exim Excess Availability" shall mean, as to Borrower, the amount,
calculated at any date, equal to: (a) the lesser of: (i) the Borrowing Base
and (ii) the Maximum Revolving Credit less the then outstanding amount of Exim
Revolving Loans and Exim Letter of Credit Accommodations, minus (b) the amount
-----
of all then outstanding Non-Exim Revolving Loans and Non-Exim Letter of Credit
Accommodations.
"Non-Exim Letter of Credit Accommodations" shall mean, collectively, the letters
of credit, merchandise purchase or other guaranties (a) which are from time to
time either issued or opened by Agent or any Lender for the account of Borrower
or any Obligor or (b) with respect to which Agent or Lenders have agreed to
indemnify the issuer or guaranteed to the issuer the performance by Borrower or
any Obligor of its obligations to such issuer; sometimes being referred to
herein individually as a "Non-Exim Letter of Credit Accommodation", in each case
provided under Section 2.2(a)(i) hereof.
"Non-Exim Revolving Loans" shall mean the loans now or hereafter made by or on
behalf of any Lender or by Agent for the account of any Lender on a revolving
basis pursuant to the Credit Facility (involving advances, repayments and
readvances) as set forth in Section 2.1(a) hereof.
"Obligations" shall mean any and all Loans, Letter of Credit Accommodations and
all other obligations, liabilities and indebtedness of every kind, nature and
description owing by Borrower and Obligors to Agent or any Lender and/or any of
their Affiliates, including principal, interest, charges, fees, costs and
expenses, however evidenced, whether as principal, surety, endorser, guarantor
or otherwise, arising under this Agreement or any of the other Financing
Agreements or pursuant to any Product Obligations, whether now existing or
hereafter arising, whether arising before, during or after the initial or any
renewal term of this Agreement or after the commencement of any case with
22
respect to Borrower or any Obligor under the United States Bankruptcy Code or
any similar statute (including the payment of interest and other amounts which
would accrue and become due but for the commencement of such case, whether or
not such amounts are allowed or allowable in whole or in part in such case), and
whether direct or indirect, absolute or contingent, joint or several, due or not
due, primary or secondary, liquidated or unliquidated, or secured or unsecured.
"Obligor" shall mean any guarantor, endorser, acceptor, surety or other person
liable on or with respect to the Obligations or who is the owner of any property
which is security for the Obligations (including, without limitation,
Guarantors), other than Borrower.
"Owned Intellectual Property" shall have the meaning set forth in Section 8.11
hereof.
"Participant" shall mean any Person that acquires and holds a participation in
the interest of any Lender in any of the Loans and Letter of Credit
Accommodations in conformity with the provisions of Section 13.6 of this
Agreement governing participations.
"Permitted Acquisition" shall mean an Acquisition permitted under Section
9.10(l) hereof.
"Permitted Bond Repurchase" shall have the meaning set forth in Section 9.23
hereof.
"Permitted Holders" shall mean the Equity Sponsor and Affiliates owned or
controlled by the Equity Sponsor.
"Person" or "person" shall mean any individual, sole proprietorship,
partnership, corporation (including any corporation which elects subchapter S
status under the Code), limited liability company, limited liability
partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
"Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA)
which Borrower or any Guarantor sponsors, maintains, or to which it makes, is
making, or is obligated to make contributions, or in the case of a Multiemployer
Plan has made contributions at any time during the immediately preceding six (6)
plan years.
"Prime Rate" shall mean the rate from time to time publicly announced by
Reference Bank, or its successors, as its prime rate, whether or not such
announced rate is the best rate available at such bank.
"Prime Rate Loans" shall mean any Loans or portion thereof on which interest is
payable based on the Prime Rate in accordance with the terms thereof.
"Prior Loan Agreement" shall mean that certain Loan and Security Agreement dated
as of October 31, 2003 (as amended) among Borrower, ALC, Congress Financial
Corporation (Central) and the lenders from time to time party thereto and all
documents, agreements and instruments executed in connection therewith.
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"Prior Obligations" means the Obligations existing under (and as defined in) the
Prior Loan Agreement.
"Priority Event" shall mean the occurrence of any one or more of the following:
(a) the occurrence and continuance of an Event of Default under Section
10.1(a)(i) or (ii) hereof; (b) the occurrence and continuance of an Event of
Default under Sections 10.1(g) or 10.1(h) hereof; or (c) the occurrence of any
other Event of Default and the acceleration by Agent of the payment of all or a
material portion of the Obligations, in each case after giving effect to any
applicable cure periods, if any.
"Product Obligations" shall mean every obligation of Borrower or any Guarantor
under and in respect of any one or more of the following types of services or
facilities extended to Borrower or any Guarantor by Agent, any Lender or any
Affiliate of any Lender or Agent: (i) credit cards, (ii) cash management or
related services including the automatic clearing house transfer of funds for
the account of Borrower or any Guarantor pursuant to agreement or overdraft and
(iii) cash management, including controlled disbursement services.
"Pro Rata Share" shall mean as to any Lender, the fraction (expressed as a
percentage) the numerator of which is such Lender's Commitment and the
denominator of which is the aggregate amount of all of the Commitments of
Lenders, as adjusted from time to time in accordance with the provisions of
Section 13.6 hereof; provided, that, if the Commitments have been terminated,
the numerator shall be the unpaid amount of such Lender's Loans and its interest
in the Letter of Credit Accommodations and the denominator shall be the
aggregate amount of all unpaid Loans and Letter of Credit Accommodations; and
"Real Property" shall mean all now owned and hereafter acquired real property of
Borrower and each Guarantor, including leasehold interests, together with all
buildings, structures, and other improvements located thereon and all licenses,
easements and appurtenances relating thereto, wherever located, including the
real property and related assets more particularly described in the Mortgages.
"Real Property Sublimit" shall have the meaning set forth in the definition of
Fixed Asset Amount.
"Receivables" shall mean all of the following now owned or hereafter arising or
acquired property of Borrower and each Guarantor: (a) all Accounts; (b) all
interest, fees, late charges, penalties, collection fees and other amounts due
or to become due or otherwise payable in connection with any Account; (c) all
payment intangibles of Borrower or such Guarantor; (d) letters of credit,
indemnities, guarantees, security or other deposits and proceeds thereof issued
payable to Borrower or any Guarantor or otherwise in favor of or delivered to
Borrower or any Guarantor in connection with any Account; or (e) all other
accounts, contract rights, chattel paper, instruments, notes, general
intangibles and other forms of obligations owing to Borrower or any Guarantor,
whether from the sale and lease of goods or other property, licensing of any
property (including Intellectual Property or other general intangibles),
24
rendition of services or from loans or advances by Borrower or any Guarantor or
to or for the benefit of any third person (including loans or advances to any
Affiliates or Subsidiaries of Borrower or any Guarantor) or otherwise associated
with any Accounts, Inventory or general intangibles of Borrower or any Guarantor
(including, without limitation, choses in action, causes of action, tax refunds,
tax refund claims, any funds which may become payable to Borrower or any
Guarantor in connection with the termination of any Plan or other employee
benefit plan and any other amounts payable to Borrower or any Guarantor from any
Plan or other employee benefit plan, rights and claims against carriers and
shippers, rights to indemnification, business interruption insurance and
proceeds thereof, casualty or any similar types of insurance and any proceeds
thereof and proceeds of insurance covering the lives of employees on which
Borrower or any Guarantor is a beneficiary).
"Records" shall mean, as to Borrower and each Guarantor, all of Borrower's and
such Guarantor's present and future books of account of every kind or nature,
purchase and sale agreements, invoices, ledger cards, bills of lading and other
shipping evidence, statements, correspondence, memoranda, credit files and other
data relating to the Collateral or any account debtor, together with the tapes,
disks, diskettes and other data and software storage media and devices, file
cabinets or containers in or on which the foregoing are stored (including any
rights of Borrower or any Guarantor with respect to the foregoing maintained
with or by any other person).
"Reference Bank" shall mean Wachovia Bank, National Association, or such other
bank as Agent may from time to time designate and that is reasonably acceptable
to Borrower.
"Register" shall have the meaning set forth in Section 13.6 hereof.
"Renewal Date" shall have the meaning set forth in Section 13.1 hereof.
"Required Lenders" shall mean, at any time, those Lenders whose aggregate Pro
Rata Shares exceed fifty (50%) percent of the aggregate of the Commitments of
all Lenders, or if the Commitments shall have been terminated, Lenders to whom
more than fifty (50%) percent of the then outstanding Obligations are owing.
"Required Supermajority Lenders" shall mean at any time, those Lenders whose
Commitments aggregate seventy (70%) percent or more of the aggregate of the
Commitments of all Lenders, or if the Commitments shall have been terminated,
Lenders to whom at least seventy (70%) percent of the then outstanding
Obligations are owing.
"Reserves" shall mean as of any date of determination, such amounts as Agent may
from time to time establish and revise in good faith reducing the amount of
Revolving Loans and Letter of Credit Accommodations which would otherwise be
available to Borrower under the lending formulas provided for herein:
(a) to reflect events, conditions, contingencies or risks which, as
determined by Agent in good faith, adversely affect, or would have a reasonable
likelihood of adversely affecting, either (i) the Collateral or any other
property which is security for the Obligations or its value or (ii) the assets,
25
business or prospects of Borrower or any Obligor or (iii) the security interests
and other rights of Agent or any Lender in the Collateral (including the
enforceability, perfection and priority thereof and the absence of any
Collateral Access Agreement required to be obtained under this Agreement); or
(b) to reflect Agent's good faith belief that any collateral report or
financial information furnished by Borrower or any Obligor to Agent is
incomplete, inaccurate or misleading in any material respect; or
(c) in respect of any state of facts which Agent determines in good faith
constitutes an Event of Default; or
(d) to reflect reserves required to be taken by Agent under the terms of the
Exim Guarantee Documents.
Without limiting the generality of the foregoing, Reserves may be
established from time to time to reflect that (i) dilution with respect to the
Accounts (which is the ratio of the aggregate amount of non-cash reductions in
Accounts for any period to the aggregate dollar amount of the sales of Borrower
for such period) as calculated by Agent in good faith for any period is or is
reasonably anticipated to be greater than five (5%) percent or (ii) the Net
Orderly Liquidation Value of the Eligible Equipment or Fair Market Value of the
Eligible Real Property as set forth in the most recent acceptable appraisals
received by Agent with respect thereto has declined so that the then outstanding
principal amount of the Revolving Loans that were advanced against Eligible
Equipment or Eligible Real Property is greater than the principal amounts of
Revolving Loans that are permitted to be advanced at the date of determination
of such Reserves.
To the extent Agent establishes new criteria or revises existing criteria for
Eligible Accounts, Eligible Inventory, Export-Related Accounts Receivable or
Export-Related Inventory so as to address any circumstances, condition, event or
contingency as permitted by and in accordance with this Agreement, Agent shall
not establish a Reserve for the same purpose.
The amount of any Reserve established by Agent under this definition shall have
a reasonable relationship to the event, condition, circumstance or other
contingency which is the basis for establishing such reserve as determined by
Agent in good faith. Agent shall provide a written or oral notice (followed by
a written notice in the case of any initial oral notice), at the time of or
prior to the establishment of any Reserve after the Closing Date, detailing the
amount and reason for such Reserve. To the extent a Reserve has been
established based on an event or condition and such event or condition no longer
exists or exposes the Borrower or Collateral to any risks as determined by Agent
in good faith, such Reserve shall be removed.
"Revolving Loans" shall mean Exim Revolving Loans and Non-Exim Revolving Loans.
"Seller" means all the parties designated as "Stockholders" under the
Acquisition Agreement.
"Senior Notes" means those certain 12% Senior Notes due 2013 issued under the
Indenture.
"Solvent" shall mean, at any time with respect to any Person, that at such time
(a) such Person is able to pay its debts as they mature and has (and has a
reasonable basis to believe it will continue to have) sufficient capital (and
not unreasonably small capital) to carry on its business consistent with its
practices as of the date hereof, and (b) the Fair Market Value of the assets and
properties of such Person (and including as assets for this purpose all rights
26
of subrogation, contribution or indemnification arising pursuant to any
guarantees given by such Person) are greater than the Indebtedness of such
Person and including subordinated and contingent liabilities computed at the
amount which, such person has a reasonable basis to believe, represents an
amount which can reasonably be expected to become an actual or matured liability
(and including as to contingent liabilities arising pursuant to any guarantee
the face amount of such liability as reduced to reflect the probability of it
becoming a matured liability).
"Special Agent Advances" shall have the meaning set forth in Section 12.11
hereof.
"Specified Amounts" shall have the meaning set forth in Section 6.4(a) hereof.
"Subsidiary" or "subsidiary" shall mean, with respect to any Person, any
corporation, limited liability company, limited liability partnership or other
limited or general partnership, trust, association or other business entity of
which an aggregate of a majority of the outstanding Capital Stock or other
interests entitled to vote in the election of the board of directors of such
corporation (irrespective of whether, at the time, Capital Stock of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency), managers, trustees or other
controlling persons, or an equivalent controlling interest therein, of such
Person is, at the time, directly or indirectly, owned by such Person and/or one
or more subsidiaries of such Person.
"Trigger Event" shall mean that (a) an Event of Default shall have occurred and
shall be continuing and/or that (b) Excess Availability shall be less than
$7,500,000; provided, that a Trigger Event shall remain in existence until (i)
Excess Availability has exceeded $7,500,000 for four (4) consecutive weekly
periods (with each such weekly period ending on a Friday) following the
occurrence of such Trigger Event and (ii) no Event of Default has occurred or
continues to exist during such four (4) week period; provided, further, that if
a Trigger Event occurs three (3) times in any 360 day period, then any
subsequent Trigger Event to occur in such 360 day period shall remain in
existence until the requirements set forth in clauses (i) and (ii) in this
definition have been satisfied for four (4) consecutive weekly periods
commencing after the sixtieth (60th) day following the occurrence of such
subsequent Trigger Event.
"UCC" shall mean the Uniform Commercial Code as in effect in the State of
Illinois, and any successor statute, as in effect from time to time (except that
terms used herein which are defined in the Uniform Commercial Code as in effect
in the State of Illinois on the date hereof shall continue to have the same
meaning notwithstanding any replacement or amendment of such statute except as
Agent may otherwise determine).
"Value" shall mean, with respect to Eligible Inventory, the lower of its (a)
cost, computed on a first-in first-out basis in accordance with GAAP or (b) Fair
Market Value; provided, that, for purposes of the calculation of the Borrowing
Base, (i) the Value of the Inventory shall not include: (A) the portion of the
value of Inventory equal to the profit earned by any Affiliate on the sale
thereof to Borrower or (B) write-ups or write-downs in value with respect to
currency exchange rates and (ii) notwithstanding anything to the contrary
contained herein, the cost of the Inventory shall be computed in the same manner
and consistent with the most recent appraisal of the Inventory received and
accepted by Agent prior to the date hereof, if any.
27
"Voting Stock" shall mean with respect to any Person, (a) one (1) or more
classes of Capital Stock of such Person having general voting powers to elect at
least a majority of the board of directors, managers or trustees of such Person,
irrespective of whether at the time Capital Stock of any other class or classes
has or might have voting power by reason of the happening of any contingency,
and (b) any Capital Stock of such Person convertible or exchangeable without
restriction at the option of the holder thereof into Capital Stock of such
Person described in clause (a) of this definition.
"Wachovia" shall mean Wachovia Capital Finance Corporation (Central), an
Illinois corporation, in its individual capacity, and its successors and
assigns.
SECTION 2. CREDIT FACILITIES
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2.1 Revolving Loans.
(a) Non-Exim Revolving Loans. (i) Subject to and upon the terms and
--------------------------
conditions contained herein, each Lender severally (and not jointly) agrees to
fund its Pro Rata Share of Non-Exim Revolving Loans to Borrower from time to
time in amounts requested by Borrower up to the amount outstanding at any time
equal to the lesser of: (A) the Borrowing Base at such time or (B) the Maximum
Revolving Credit at such time minus the aggregate amount of outstanding Exim
Revolving Loans and Letter of Credit Accommodations.
(ii) INTENTIONALLY OMITTED.
----------------------
(iii) Except in Agent's discretion, with the consent of all Lenders, or as
otherwise provided herein, but subject to Section 12.8 hereof, in the event that
the aggregate principal amount of the Non-Exim Revolving Loans and Non-Exim
Letter of Credit Accommodations outstanding exceed the Borrowing Base or the
Maximum Revolving Credit minus the aggregate amount of outstanding Exim
Revolving Loans and Exim Letter of Credit Accommodations, or the aggregate
principal amount of Non-Exim Revolving Loans and Non-Exim Letter of Credit
Accommodations based on Eligible Inventory exceed the Inventory Loan Limit or
the aggregate amount of the outstanding Letter of Credit Accommodations exceed
the sublimit for Letter of Credit Accommodations set forth in Section 2.2(e),
such event shall not limit, waive or otherwise affect any rights of Agent or
Lenders in such circumstances or on any future occasions and Borrower shall,
upon demand by Agent, which may be made at any time or from time to time,
immediately repay to Agent the entire amount of any such excess for which
payment is demanded.
(b) Exim Revolving Loans. (i) Subject to and upon the terms and
----------------------
conditions contained herein, each Lender severally (and not jointly) agrees to
fund its Pro Rata Share of Exim Revolving Loans to Borrower from time to time in
amounts requested by Borrower up to the amount outstanding at any time equal to
the lesser of: (A) the Export-Related Borrowing Base at such time, (B) the
Maximum Exim Revolving Credit or (C) the Maximum Revolving Credit minus the
aggregate amount of outstanding Non-Exim Revolving Loans and Letter of Credit
Accommodations at such time.
(ii) Except in Agent's discretion, with the consent of all Lenders, or
as otherwise provided herein, in the event that the aggregate principal amount
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of Exim Revolving Loans and Exim Letter of Credit Accommodations outstanding
exceed (x) the Export-Related Borrowing Base, (y) the Maximum Exim Revolving
Credit or (z) the Maximum Revolving Credit minus the aggregate amount of
outstanding Non-Exim Revolving Loans and Non-Exim Letter of Credit
Accommodations, such event shall not limit, waive or otherwise affect any rights
of Agent or Lenders in such circumstances or on any future occasions and
Borrower shall, upon demand by Agent, which may be made at any time or from time
to time, immediately repay to Agent the entire amount of any such excess for
which payment is demanded.
2.2 Letter of Credit Accommodations.
(a) (i) Subject to and upon the terms and conditions contained herein,
at the request of Borrower, Agent agrees, for the ratable risk of each Lender
according to its Pro Rata Share, to provide or arrange for Non-Exim Letter of
Credit Accommodations for the account of Borrower containing terms and
conditions reasonably acceptable to Agent and acceptable to the issuer thereof.
Any payments made by or on behalf of Agent or any Lender to any issuer thereof
and/or related parties in connection with the Non-Exim Letter of Credit
Accommodations provided to or for the benefit of Borrower shall constitute
additional Non-Exim Revolving Loans to Borrower pursuant to Section 2.1(a);
provided, that if there is insufficient Non-Exim Excess Availability as of the
----
date of such payment, Borrower shall reimburse Agent for the amount of such
payment within one (1) Business Day after demand therefor.
(i) hidden level
(ii) Subject to and upon the terms and conditions contained herein, at the
request of Borrower, Agent agrees, for the ratable risk of each Lender according
to its Pro Rata Share, to provide or arrange for Exim Letter of Credit
Accommodations for the account of Borrower containing terms and conditions
reasonably acceptable to Agent and acceptable to the issuer thereof. Any
payments made by or on behalf of Agent or any Lender to any issuer thereof
and/or related parties in connection with the Exim Letter of Credit
Accommodations provided to or for the benefit of Borrower shall constitute
additional Exim Revolving Loans to Borrower pursuant to Section 2.1(b);
provided, that if there is insufficient Exim Excess Availability as of the date
of such payment, Borrower shall reimburse Agent for the amount of such payment
within one (1) Business Day after demand therefor.
(b) In addition to any charges, fees or expenses charged by any bank or
issuer in connection with the Letter of Credit Accommodations, Borrower shall
pay to Agent, for the benefit of Lenders, a letter of credit fee at a rate equal
to the Interest Rate then in effect on the daily outstanding balance available
to be drawn on the Letter of Credit Accommodations issued and outstanding for
the immediately preceding month (or part thereof), payable in arrears as of the
first day of each succeeding month. Such letter of credit fee shall be
calculated on the basis of a three hundred sixty (360) day year and actual days
elapsed and the obligation of Borrower to pay such fee shall survive the
termination of this Agreement.
(c) Borrower shall give Agent two (2) Business Days' prior written notice of
Borrower's request for the issuance of a Letter of Credit Accommodation. Such
notice shall be irrevocable and shall specify whether such Letter of Credit
Accommodation is an Exim Letter of Credit Accommodation or a Non-Exim Letter of
Credit Accommodation, the original face amount of the Letter of Credit
Accommodation requested, the effective date (which date shall be a Business Day)
of issuance of such requested Letter of Credit Accommodation, whether such
Letter of Credit Accommodation may be drawn in a single or in partial draws, the
29
date on which such requested Letter of Credit Accommodation is to expire (which
date shall be a Business Day), the purpose for which such Letter of Credit
Accommodation is to be issued, and the beneficiary of the requested Letter of
Credit Accommodation. Borrower shall attach to such notice the proposed form of
the Letter of Credit Accommodation.
(d) In addition to being subject to the satisfaction of the applicable
conditions precedent contained in Section 4 hereof and the other terms and
conditions contained herein, no Letter of Credit Accommodations shall be
available unless each of the following conditions precedent have been satisfied
in a manner reasonably satisfactory to Agent: (i) Borrower shall have delivered
to the proposed issuer of such Letter of Credit Accommodation at such times and
in such manner as such proposed issuer may require, an application, in form and
substance satisfactory to such proposed issuer and Agent, for the issuance of
the Letter of Credit Accommodation and such other documents as may be required
pursuant to the terms thereof, and the form and terms of the proposed Letter of
Credit Accommodation shall be reasonably satisfactory to Agent and satisfactory
to such proposed issuer, (ii) as of the date of issuance, no order of any court,
arbitrator or other Governmental Authority shall purport by its terms to enjoin
or restrain money center banks generally from issuing letters of credit of the
type and in the amount of the proposed Letter of Credit Accommodation, and no
law, rule or regulation applicable to money center banks generally and no
request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over money center banks generally shall
prohibit, or request that the proposed issuer of such Letter of Credit
Accommodation refrain from, the issuance of letters of credit generally or the
issuance of such Letters of Credit Accommodation; and (iii) the Exim Excess
Availability or Non-Exim Excess Availability, as applicable, of Borrower, prior
to giving effect to such Letter of Credit Accommodations, on the date of the
proposed issuance of any Letter of Credit Accommodations, shall be equal to or
greater than: (A) if the proposed Letter of Credit Accommodation is for the
purpose of purchasing Eligible Inventory or Eligible Export-Related Inventory,
as applicable, and the documents of title with respect thereto are consigned to
the issuer, the sum of (1) the product of (x) a percentage equal to one hundred
(100%) percent minus the then applicable percentage with respect to Eligible
Inventory or Eligible Export-Related Inventory, as applicable, set forth in the
definition of the term Borrowing Base or Export-Related Borrowing Base, as
applicable, multiplied by (y) the Value of such Eligible Inventory or Eligible
Export-Related Inventory, as applicable, plus (2) freight, taxes, duty and other
amounts which are or will be due, or if not then determined, which Agent
reasonably estimates in good faith must be paid in connection with such
Inventory upon arrival and for delivery to one of Borrower's locations for
Eligible Inventory or Eligible Export-Related Inventory, as applicable, within
the United States of America and (B) if the proposed Letter of Credit
Accommodation is for any other purpose or the documents of title are not
consigned to the issuer in connection with a Letter of Credit Accommodation for
the purpose of purchasing Inventory, an amount equal to one hundred (100%)
percent of the face amount thereof and all other commitments and obligations
made or incurred by Agent with respect thereto.
(e) Except in Agent's discretion, with the consent of all Lenders, the
amount of all outstanding Letter of Credit Accommodations and all other
commitments and obligations made or incurred by Agent or any Lender in
connection therewith shall not at any time exceed $15,000,000.
30
(f) Borrower and Guarantors shall indemnify and hold Agent and Lenders
harmless from and against any and all losses, claims, damages, liabilities,
costs and expenses which Agent or any Lender may suffer or incur in connection
with any Letter of Credit Accommodations and any documents, drafts or
acceptances relating thereto, including any losses, claims, damages,
liabilities, costs and expenses due to any action taken by any issuer or
correspondent with respect to any Letter of Credit Accommodation, except for
such losses, claims, damages, liabilities, costs or expenses that are a direct
result of the gross negligence or willful misconduct of Agent or any Lender as
determined pursuant to a final non-appealable order of a court of competent
jurisdiction. Borrower and each Guarantor assumes all risks with respect to the
acts or omissions of the drawer under or beneficiary of any Letter of Credit
Accommodation and for purposes of this indemnity the drawer or beneficiary shall
be deemed Borrower's agent. Borrower and each Guarantor assumes all risks for,
and agrees to pay, all foreign, Federal, State and local taxes, duties and
levies relating to any goods purchased in connection with any Letter of Credit
Accommodations or any documents, drafts or acceptances thereunder. Borrower and
each Guarantor hereby releases and holds Agent and Lenders harmless from and
against any acts, waivers, errors, delays or omissions, whether caused by
Borrower, any Guarantor, by any issuer or correspondent or otherwise with
respect to or relating to any Letter of Credit Accommodation, except for the
gross negligence or willful misconduct of Agent or any Lender as determined
pursuant to a final, non-appealable order of a court of competent jurisdiction.
The provisions of this Section 2.2(f) shall survive the payment of Obligations
and the termination of this Agreement.
(g) In connection with Inventory purchased pursuant to Letter of Credit
Accommodations, Borrower and Guarantors shall, at Agent's request, instruct all
suppliers, carriers, forwarders, customs brokers, warehouses or others receiving
or holding cash, checks, Inventory, documents or instruments in which Agent
holds a security interest to deliver them to the Blocked Accounts (in the case
of cash or checks) or to Agent and/or subject to Agent's order (as to such other
items), and if they shall come into Borrower's or such Guarantor's possession,
to deliver them, upon Agent's request, to the Blocked Accounts (in the case of
cash or checks) or to Agent in their original form (as to such other items).
Borrower and Guarantors shall also, at Agent's request, designate Agent as the
consignee on all bills of lading and other negotiable and non-negotiable
documents.
(h) Borrower and each Guarantor hereby irrevocably authorizes and directs
any issuer of a Letter of Credit Accommodation to name Borrower or such
Guarantor as the account party therein and to deliver to Agent all instruments,
documents and other writings and property received by issuer pursuant to the
Letter of Credit Accommodations and to accept and rely upon Agent's instructions
and agreements with respect to all matters arising in connection with the Letter
of Credit Accommodations or the applications therefor. Nothing contained herein
shall be deemed or construed to grant Borrower or any Guarantor any right or
authority to pledge the credit of Agent or any Lender in any manner. Agent and
Lenders shall have no liability of any kind with respect to any Letter of Credit
Accommodation provided by an issuer other than Agent or any Lender unless Agent
has duly executed and delivered to such issuer the application or a guarantee or
indemnification in writing with respect to such Letter of Credit Accommodation.
Borrower and Guarantors shall be bound by any reasonable interpretation made in
good faith by Agent, or any other issuer or correspondent under or in connection
with any Letter of Credit Accommodation or any documents, drafts or acceptances
thereunder, notwithstanding that such interpretation may be inconsistent with
any instructions of Borrower or any Guarantor. Agent shall have the sole and
31
exclusive right and authority to, and Borrower and Guarantors shall not: (i) at
any time an Event of Default exists or has occurred and is continuing, (A)
approve or resolve any questions of non-compliance of documents with respect to
Letter of Credit Accommodations, (B) give any instructions as to acceptance or
rejection of any documents or goods with respect to Letter of Credit
Accommodations or (C) execute any and all applications for steamship or airway
guaranties, indemnities or delivery orders with respect to Letter of Credit
Accommodations, and (ii) at all times (provided that if no Event of Default has
occurred, Agent shall not exercise any of the following unless agreed to by
Borrower in writing in advance), (A) grant any extensions of the maturity of,
time of payment for, or time of presentation of, any drafts, acceptances, or
documents, and (B) agree to any amendments, renewals, extensions, modifications,
changes or cancellations of any of the terms or conditions of any of the
applications, Letter of Credit Accommodations, or documents, drafts or
acceptances thereunder or any letters of credit included in the Collateral, but
in each case (including while an Event of Default has occurred and is
continuing) only if the same does not increase the liabilities or adversely
affect the rights of Borrower or any Guarantor to more than a de minimis extent.
Agent may take such actions either in its own name or in Borrower's name or in
any Guarantor's name.
(i) Any rights, remedies, duties or obligations granted or undertaken by
Borrower or any Guarantor to any issuer or correspondent in any application for
any Letter of Credit Accommodation, or any other agreement in favor of any
issuer or correspondent relating to any Letter of Credit Accommodation, shall be
deemed to have been granted or undertaken by Borrower or such Guarantor to Agent
for the ratable benefit of Lenders. Any duties or obligations undertaken by
Agent to any issuer or correspondent in any application for any Letter of Credit
Accommodation, or any other agreement by Agent in favor of any issuer or
correspondent to the extent relating to any Letter of Credit Accommodation,
shall be deemed to have been undertaken by Borrower and Guarantors to Agent for
the ratable benefit of Lenders and to apply in all respects to Borrower and
Guarantors.
(j) Immediately upon the issuance or amendment of any Letter of Credit
Accommodation, each Lender shall be deemed to have irrevocably and
unconditionally purchased and received, without recourse or warranty, an
undivided interest and participation to the extent of such Lender's Pro Rata
Share of the liability with respect to such Letter of Credit Accommodation
(including, without limitation, all Obligations with respect thereto).
(k) Borrower is irrevocably and unconditionally obligated without
presentment, demand or protest, to pay to Agent any amounts paid by an issuer of
a Letter of Credit Accommodation with respect to such Letter of Credit
Accommodation (whether through the borrowing of Non-Exim Revolving Loans or Exim
Revolving Loans in accordance with Section 2.2(a) or otherwise). In the event
that Borrower fails to pay Agent any payment under a Letter of Credit
Accommodation in an amount equal to the amount of such payment as required in
Section 2.2(a), Agent (to the extent it has actual notice thereof) shall
promptly notify each Lender of the unreimbursed amount of such payment and each
Lender agrees, upon one (1) Business Day's notice, to fund to Agent the purchase
of its participation in such Letter of Credit Accommodation in an amount equal
to its Pro Rata Share of the unpaid amount. The obligation of each Lender to
32
deliver to Agent an amount equal to its respective participation pursuant to the
foregoing sentence is absolute and unconditional and such remittance shall be
made notwithstanding the occurrence or continuance of any Event of Default, the
failure to satisfy any other condition set forth in Section 4 or any other event
or circumstance. If such amount is not made available by a Lender when due,
Agent shall be entitled to recover such amount on demand from such Lender with
interest thereon, for each day from the date such amount was due until the date
such amount is paid to Agent at the interest rate then payable by Borrower in
respect of Loans that are Prime Rate Loans as set forth in Section 3.1(a)
hereof.
2.3 [Intentionally Omitted].
2.4 Amortization of Fixed Asset Amount and Fixed Asset Acquisition
Value
(a) The Equipment Sublimit (determined as of the date hereof and as
adjusted pursuant to the last sentence hereof) shall be reduced on the first
Business Day of each month, commencing on the first Business Day of June, 2005,
by an amount sufficient (assuming a like repayment each month) to reduce such
Equipment Sublimit to zero ($0) by the first Business Day of May, 2012. The
Real Property Sublimit (determined as of the date hereof and as adjusted
pursuant to the last sentence hereof) shall be reduced on the first Business Day
of each month, commencing on the first Business Day of June, 2005, by an amount
sufficient (assuming a like repayment each month) to reduce such Real Property
Sublimit to zero ($0) by the first Business Day of May, 2015. Notwithstanding
the foregoing, in the event of any sale, disposition, condemnation or casualty
of Equipment or Real Property of Borrower (or in the event of receipt of any
condemnation awards or casualty insurance proceeds in respect thereof), the
value of which Equipment or Real Property has been included in the Fixed Asset
Amount, the Fixed Asset Amount shall be reduced on the date of such event by an
amount equal to that portion of the Fixed Asset Amount attributable to such
Equipment or Real Property, and such reduction shall be allocated to the
applicable installment reductions described above proportionally.
(b) Whenever any Eligible Equipment is acquired after the date hereof, the
Fixed Asset Acquisition Value of such Equipment shall be reduced on the first
Business Day of each month, commencing on the first Business Day of the month
following the date on which such Fixed Asset Acquisition Value became effective,
by an amount sufficient (assuming a like repayment each month) to reduce such
Fixed Asset Acquisition Value to zero ($0) on the first Business Day of the 83rd
month following such first reduction. In the event of any sale, disposition,
condemnation or casualty of any such Eligible Equipment acquired after the date
hereof (or in the event of receipt of any condemnation awards or casualty
insurance proceeds in respect thereof), the Fixed Asset Acquisition Value of
such Equipment which has been included in the Borrowing Base, shall no longer be
included in or counted against the Fixed Asset Acquisition Sublimit and the
Fixed Asset Acquisition Value of such Equipment shall be deemed to be $0 (unless
and until, in the case of Equipment damaged by a casualty, the same shall have
been repaired or restored to at least the condition that existed immediately
before such casualty).
2.5 Commitments
. The aggregate amount of each Lender's Pro Rata Share of the Loans and
Letter of Credit Accommodations shall not exceed the amount of such Lender's
Commitment, as the same may from time to time be amended in accordance with the
provisions hereof.
33
2.6 Maximum Revolving Credit Increases
. Borrower may elect to increase the Maximum Revolving Credit in minimum
increments of $5,000,000; provided, that (a) Borrower shall have provided Agent
--------
with five (5) Business Days' prior written notice of such election, (b) no Event
of Default shall have occurred and be continuing immediately before, and
immediately after giving effect to, such increase, (c) the Maximum Revolving
Credit shall in no event exceed $75,000,000 and (d) prior to exercising any such
election to increase the Maximum Revolving Credit, Borrower shall not have
elected to reduce the Maximum Revolving Credit under Section 2.7. An election
to increase the Maximum Revolving Credit shall be irrevocable and once
increased, the Maximum Revolving Credit may not be reduced without the prior
written consent of Agent except as provided in Section 2.7. Any such increase
to the Maximum Revolving Credit shall automatically increase the Commitment of
each Lender ratably among all Lenders' Commitments unless otherwise agreed to by
the Lenders.
2.7 Minimum Revolving Credit Reductions
. Borrower may elect to reduce the Maximum Revolving Credit in minimum
increments of $1,000,000; provided, that (a) Borrower shall have provided Agent
with five (5) Business Days' prior written notice of such election, (b) after
giving effect to any such reduction, the principal amount of Loans and Letter of
Credit Accommodations then outstanding shall not exceed the Maximum Revolving
Credit as reduced and (c) as a result of such reductions, the Maximum Revolving
Credit shall in no event be less than $50,000,000 until the date which is the
first anniversary of the date hereof. An election to reduce the Maximum
Revolving Credit shall be irrevocable and once decreased, the Maximum Revolving
Credit may not be increased without the prior written consent of Agent. Any
reduction to the Maximum Revolving Credit shall automatically reduce the
Commitments of such Lender ratably among all Lenders' Commitments unless
otherwise agreed to by the Lenders.
2.8 Voluntary Prepayments
. Borrower may from time to time prepay the principal amount of Revolving
Loans outstanding in minimum increments of $1,000,000 without premium or penalty
or a reduction in the Maximum Revolving Credit.
2.9 Payment of Excess Borrowings.
If at any time the outstanding Obligations exceed the Maximum Credit,
Borrower shall immediately prepay the Revolving Loans by an amount equal to the
amount of such excess.
SECTION 3. INTEREST AND FEES
-------------------
3.1 Interest.
(a) Borrower shall pay to Agent, for the benefit of Lenders, interest
on the outstanding principal amount of the Loans at the applicable Interest
Rate. All interest accruing hereunder on and after the date of any Event of
Default or termination hereof shall be payable on demand.
(b) With respect to any requests for Loans made in accordance with Section
6.5, Borrower may from time to time request Prime Rate Loans or Eurodollar Rate
Loans, or may request that Prime Rate Loans be converted to Eurodollar Rate
34
Loans or that any existing Eurodollar Rate Loans continue for an additional
Interest Period. Such request from Borrower shall specify the amount of the
Prime Rate Loans or Eurodollar Rate Loans, or the amount of the Prime Rate Loans
to be converted to Eurodollar Rate Loans or the amount of the Eurodollar Rate
Loans to be continued (subject to the limits set forth below) and the Interest
Period to be applicable to any such Eurodollar Rate Loans. Subject to the terms
and conditions contained herein, on the same Business Day if such request is
received prior to 11:00 a.m. Chicago time on such Business Day (or the next
Business Day if received after such time), following Agent's receipt of such a
request from Borrower for a Prime Rate Loan or three (3) Business Days after
receipt by Agent of such a request from Borrower for the making, conversion or
continuation of a Eurodollar Loan, such Loans shall be made or Prime Rate Loans
shall be converted to Eurodollar Rate Loans or such Eurodollar Rate Loans shall
continue, as the case may be, provided, that, (i) no Default or Event of Default
shall exist or have occurred and be continuing, (ii) no party hereto shall have
sent any notice of termination of this Agreement if the effective date of such
termination is prior to the end of the applicable Interest Period selected,
(iii) Borrower shall have complied with such customary procedures as are
established by Agent in good faith and specified by Agent to Borrower from time
to time for requests by Borrower for Eurodollar Rate Loans, (iv) no more than
eight (8) Interest Periods may be in effect at any one time, (v) the aggregate
amount of the Eurodollar Rate Loans requested must be in an amount not less than
$1,000,000 or an integral multiple of $1,000,000 in excess thereof, and (vi)
Agent and each Lender shall have determined in good faith that the Interest
Period or Adjusted Eurodollar Rate is available to Agent and such Lender and can
be readily determined as of the date of the request for such Eurodollar Rate
Loan by Borrower. Any request by Borrower for Eurodollar Rate Loans or to
convert Prime Rate Loans to Eurodollar Rate Loans or to continue any existing
Eurodollar Rate Loans shall be irrevocable. Notwithstanding anything to the
contrary contained herein, Agent and Lenders shall not be required to purchase
United States Dollar deposits in the London interbank market or other applicable
Eurodollar Rate market to fund any Eurodollar Rate Loans, but the provisions
hereof shall be deemed to apply as if Agent and Lenders had purchased such
deposits to fund the Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to Prime Rate
Loans upon the last day of the applicable Interest Period therefor, unless Agent
has received a request to continue such Eurodollar Rate Loan at least three (3)
Business Days prior to such last day in accordance with the terms hereof. Any
Eurodollar Rate Loans shall, at Agent's option, upon notice by Agent to
Borrower, be subsequently converted to Prime Rate Loans in the event that this
Agreement shall terminate or not be renewed. Borrower shall pay to Agent, for
the benefit of Lenders, upon demand by Agent any amounts required to compensate
any Lender or Participant for any loss (excluding loss of anticipated profits),
cost or expense incurred by such person, as a result of the conversion of
Eurodollar Rate Loans to Prime Rate Loans pursuant to any of the foregoing.
(d) Interest shall be payable by Borrower to Agent, for the account of
Lenders, monthly in arrears not later than the first Business Day of each
calendar month and shall be calculated on the basis of a three hundred sixty
(360) day year and actual days elapsed. The interest rate on non-contingent
Obligations (other than Eurodollar Rate Loans) shall increase or decrease by an
amount equal to each increase or decrease in the Prime Rate effective on the
first day of the month after any change in such Prime Rate is announced based on
35
the Prime Rate in effect on the last day of the month in which any such change
occurs. In no event shall charges constituting interest payable by Borrower to
Agent and Lenders exceed the maximum amount or the rate permitted under any
applicable law or regulation, and if any such part or provision of this
Agreement is in contravention of any such law or regulation, such part or
provision shall be deemed amended to conform thereto.
3.2 Fees.
(a) Borrower shall pay to Agent, for the account of Lenders, monthly an
unused line fee at a rate equal to one quarter of one (.25%) percent per annum
calculated upon the amount by which the Maximum Revolving Credit then in effect
exceeds the average daily principal balance of the outstanding Revolving Loans
and Letter of Credit Accommodations during the immediately preceding month (or
part thereof) while this Agreement is in effect which fee shall be payable on
the first Business Day of each month in arrears.
(b) Borrower agrees to pay to Agent the other fees and amounts set forth in
the Fee Letter in the amounts and at the times specified therein.
(c) Borrower agrees to immediately reimburse Agent upon demand for any fees
required to be paid by Agent or any of its affiliates to Exim in connection with
the Exim Guarantee Documents.
3.3 Changes in Laws and Increased Costs of Loans.
(a) If after the date hereof, either (i) any change in, or in the
interpretation of, any law or regulation is introduced, including, without
limitation, with respect to reserve requirements, applicable to Lender or any
banking or financial institution from whom any Lender borrows funds or obtains
credit (a "Funding Bank"), or (ii) a Funding Bank or any Lender complies with
any future guideline or request from any central bank or other Governmental
Authority or (iii) a Funding Bank or any Lender 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 a Funding Bank or any Lender 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
Lender's capital as a consequence of its obligations hereunder to a level below
that which Lender could have achieved but for such adoption, change or
compliance (taking into consideration the Funding Bank's or Lender's policies
with respect to capital adequacy) by an amount deemed by such Lender to be
material, and the result of any of the foregoing events described in clauses
(i), (ii) or (iii) is or results in an increase in the cost to any Lender of
funding or maintaining the Loans or the Letter of Credit Accommodations, then
Borrower and Guarantors shall from time to time within five Business Days after
demand by Agent pay to Agent additional amounts sufficient to indemnify Lenders
against such increased cost on an after-tax basis (after taking into account
applicable deductions and credits in respect of the amount indemnified). A
certificate as to the amount of such increased costs shall be submitted to
Borrower by Agent and shall be conclusive, absent manifest error.
36
(b) If prior to the first day of any Interest Period, (i) Agent shall have
determined in good faith (which determination shall be conclusive and binding
upon Borrower and Guarantors absent manifest error) that, by reason of
circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the Eurodollar Rate for such Interest Period, (ii)
Agent has received notice from the Required Lenders that the Eurodollar Rate
determined or to be determined for such Interest Period will not adequately and
fairly reflect the cost to Lenders of making or maintaining Eurodollar Rate
Loans during such Interest Period, or (iii) Dollar deposits in the principal
amounts of the Eurodollar Rate Loans to which such Interest Period is to be
applicable are not generally available in the London interbank market, Agent
shall give telecopy or telephonic notice thereof to Borrower as soon as
practicable thereafter, and will also give prompt written notice to Borrower
when such conditions no longer exist. If such notice is given (A) any
Eurodollar Rate Loans requested to be made on the first day of such Interest
Period shall be made as Prime Rate Loans, (B) any Loans that were to have been
converted on the first day of such Interest Period to or continued as Eurodollar
Rate Loans shall be converted to or continued as Prime Rate Loans and (C) each
outstanding Eurodollar Rate Loan shall be converted, on the last day of the
then-current Interest Period thereof, to Prime Rate Loans. Agent shall withdraw
such notice as soon as the conditions with respect to which such notice was
given no longer exist. Until such notice has been withdrawn by Agent, no
further Eurodollar Rate Loans shall be made or continued as such, nor shall
Borrower have the right to convert Prime Rate Loans to Eurodollar Rate Loans.
(c) Notwithstanding any other provision herein, if the adoption of or any
change in any law, treaty, rule or regulation or final, non-appealable
determination of an arbitrator or a court or other Governmental Authority or in
the interpretation or application thereof occurring after the date hereof shall
make it unlawful for Agent or any Lender to make or maintain Eurodollar Rate
Loans as contemplated by this Agreement, (i) Agent or such shall promptly give
written notice of such circumstances to Borrower (which notice shall be
withdrawn whenever such circumstances no longer exist), (ii) the commitment of
such Lender hereunder to make Eurodollar Rate Loans, continue Eurodollar Rate
Loans as such and convert Prime Rate Loans to Eurodollar Rate Loans shall
forthwith be suspended and, until such time as it shall no longer be unlawful
for such Lender to make or maintain Eurodollar Rate Loans, such Lender shall
then have a commitment only to make a Prime Rate Loan when a Eurodollar Rate
Loan is requested and (iii) such Lender's Revolving Loans then outstanding as
Eurodollar Rate Loans, if any, shall be converted automatically to Prime Rate
Loans on the respective last days of the then current Interest Periods with
respect to such Loans or within such earlier period as required by law. If any
such conversion of a Eurodollar Rate Loan occurs on a day which is not the last
day of the then current Interest Period with respect thereto, Borrower and
Guarantors shall pay to such Lender such amounts, if any, as may be required
pursuant to Section 3.3(d) below.
(d) Borrower and Guarantors shall indemnify Agent and each Lender and to
hold Agent and each Lender harmless from any loss or expense (excluding loss of
anticipated profits), which Agent or such Lender may sustain or incur as a
consequence of (i) default by Borrower in making a borrowing of, conversion into
or extension of Eurodollar Rate Loans after Borrower has given a notice
requesting the same in accordance with the provisions of this Loan Agreement,
(ii) default by Borrower in making any prepayment of a Eurodollar Rate Loan
after Borrower has given a notice thereof in accordance with the provisions of
37
this Agreement, and (iii) the making of a prepayment of Eurodollar Rate Loans on
a day which is not the last day of an Interest Period with respect thereto.
With respect to Eurodollar Rate Loans, such indemnification may include an
amount equal to the excess, if any, of (A) the amount of interest (excluding any
profit margin) which would have accrued on the amount so prepaid, or not so
borrowed, converted or extended, for the period from the date of such prepayment
or of such failure to borrow, convert or extend to the last day of the
applicable Interest Period (or, in the case of a failure to borrow, convert or
extend, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Eurodollar
Rate Loans provided for herein over (B) the amount of interest (as determined by
such Agent or such Revolving Lender) which would have accrued to Agent or such
Lender on such amount (excluding any profit margin) by placing such amount on
deposit for a comparable period with leading banks in the interbank Eurodollar
market. This covenant shall survive the termination or non-renewal of this
Agreement and the payment of the Obligations.
SECTION 4. CONDITIONS PRECEDENT
---------------------
4.1 Conditions Precedent to Closing Date Loans and Letter of Credit
Accommodations
. Each of the following is a condition precedent to Agent and Lenders
making the initial Loans and providing the initial Letter of Credit
Accommodations hereunder on the Closing Date:
(a) Agent shall have received, in form and substance reasonably
satisfactory to Agent, all releases, terminations and such other documents as
Agent may request to evidence and effectuate the payoff and termination of (i)
the LaSalle Indenture and (ii) the Prior Obligations and the Prior Loan
Agreement and the termination and release by it or them, as the case may be, of
any interest in and to any assets and properties of Borrower and each Guarantor,
duly authorized, executed and delivered by it or each of them.
(b) Agent shall have received, in form and substance reasonably satisfactory
to Agent and its counsel, a duly executed copy of this Agreement and the other
Financing Agreements, together with such additional documents, instruments,
opinions and certificates as Agent and its counsel shall reasonably require in
connection therewith (including, without limitation, all items set forth in
Exhibit E except to the extent such items are not required to be delivered on
the date hereof), all in form and substance reasonably satisfactory to Agent and
its counsel.
(c) all requisite corporate action and proceedings in connection with this
Agreement and the other Financing Agreements shall be reasonably satisfactory in
form and substance to Agent, and Agent shall have received all information and
copies of all documents, including records of requisite corporate action and
proceedings which Agent may have reasonably requested in connection therewith,
such documents where reasonably requested by Agent or its counsel to be
certified by appropriate corporate officers or Governmental Authority (and
including a copy of the certificate of incorporation of Borrower and each
Guarantor certified by the Secretary of State (or equivalent Governmental
Authority) which shall set forth the same complete corporate name of Borrower or
such Guarantor as is set forth herein and such document as shall set forth the
organizational identification number of Borrower or such Guarantor, if one is
issued in its jurisdiction of incorporation);
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(d) no material adverse change shall have occurred in the assets or business
of Borrower or any Obligor since the date of Agent's latest field examination
(not including for this purpose the field review referred to in clause (g)
below) and no change or event shall have occurred which would materially impair
the ability of Borrower or any Obligor to perform its obligations hereunder or
under any of the other Financing Agreements to which it is a party or of Agent
or any Lender to enforce the Obligations or realize upon the Collateral;
(e) Borrower and its Subsidiaries shall be in compliance, in all material
respects, with all applicable foreign and U.S. federal, state and local laws and
regulations, including all applicable environmental laws and regulations;
(f) All necessary governmental and material third party approvals required
in connection with this Agreement shall have been obtained and shall be in
effect;
(g) Agent shall have completed a field review of the Records and such other
information with respect to the Collateral as Agent may require to determine the
amount of Loans available to Borrower (including, without limitation, current
perpetual inventory records and/or roll-forwards of Accounts and Inventory
through the date of closing and test counts of the Inventory in a manner
reasonably satisfactory to Agent, together with such supporting documentation as
may be necessary or appropriate, and other documents and information that will
enable Agent to accurately identify and verify the Collateral), the results of
which in each case shall be reasonably satisfactory to Agent, not more than
seven (7) Business Days prior to the date hereof;
(h) Agent shall have received, in form and substance reasonably satisfactory
to Agent, all consents, waivers, acknowledgments and other agreements from third
persons which Agent may reasonably deem necessary or desirable in order to
permit, protect and perfect its security interests in and liens upon the
Collateral or to effectuate the provisions or purposes of this Agreement and the
other Financing Agreements, including, without limitation, Collateral Access
Agreements by owners and lessors of leased premises of Borrower and each
Guarantor and by processors and warehouses at which Collateral is located;
(i) Excess Availability (based on the Borrowing Base and Export-Related
Borrowing Base reflected in the most recent Borrowing Base Certificate delivered
to Agent on or prior to the date hereof), as of the date hereof, shall be not
less than $7,500,000 after giving effect to (i) all Loans to be made and the
Letter of Credit Accommodations to be issued in connection with the closing of
the transactions hereunder and (ii) payment of all fees and expenses in
connection with the transactions under this Agreement and the other Financing
Agreements;
(j) Agent shall have received, in form and substance reasonably satisfactory
to Agent, Deposit Account Control Agreements by and among Agent, Borrower and
each Guarantor, as the case may be, and each bank where Borrower or such
Guarantor, as the case may be, has a deposit account, in each case, duly
authorized, executed and delivered by such bank and Borrower or such Guarantor,
as the case may be (or Agent shall be the bank's customer with respect to such
deposit account as Agent may specify);
39
(k) Agent shall have received evidence, in form and substance reasonably
satisfactory to Agent, that Agent has a valid perfected first priority security
interest in all of the Collateral, subject to liens permitted under this
Agreement;
(l) Agent shall have received and reviewed lien and judgment search results
for the jurisdiction of incorporation of Borrower and each Guarantor, the
jurisdiction of the chief executive office of Borrower and each Guarantor and
all jurisdictions in which assets of Borrower and Guarantors are located, which
search results shall be in form and substance reasonably satisfactory to Agent;
(m) Agent shall have received the results of database and similar
environmental searches of the Real Property subject to the Mortgages, confirming
that since the last environmental reports received by Agent on such Real
Property, the Borrower is not subject to any material potential or actual
liability with respect to any environmental condition in connection with such
Real Property;
(n) Agent shall have received, in form and substance reasonably satisfactory
to Agent, evidence of the insurance coverage required to be maintained under
Section 9.5, including (i) casualty insurance certificates of Borrower and
Guarantors naming Agent as an additional insured, (ii) mortgagee's and lender's
loss payee endorsements in favor of Agent as to casualty and business
interruption insurance and containing all endorsements, assurances or
affirmative coverage reasonably requested by Agent for protection of its
interests and (iii) mortgagee's title insurance by a company and agent
reasonably acceptable to Agent, (A) insuring the priority, amount and
sufficiency of the mortgage, deed of trust or deed to secure debt in favor of
Agent on each parcel or real estate included in the calculation of the Borrowing
Base, (B) insuring against (except to the extent waived by Agent) matters that
would be disclosed by surveys and (C) containing any endorsements and assurances
of affirmative coverage reasonably requested by Agent for protection of its
interests;
(o) Agent shall have received originals of the stock certificates
representing (i) all of the issued and outstanding shares of the Capital Stock
of Borrower, (ii) all of the issued and outstanding shares of the Capital Stock
of each Subsidiary of Borrower organized in the United States and owned by
Borrower or any Guarantor and (iii) 66 2/3% of the issued and outstanding shares
of the Capital Stock of each Subsidiary of Borrower organized outside the United
States (other than Brazil) and directly owned by Borrower or any Guarantor, in
each case together with stock powers duly executed in blank with respect
thereto;
(p) Agent shall have received, in form and substance reasonably satisfactory
to Agent, such opinion letters of counsel to Borrower and Guarantors with
respect to the Financing Agreements and such other matters as Agent may
reasonably request;
(q) [Intentionally Omitted];
(r) Agent shall have received evidence that Borrower has received (i) cash
equity contributions from Equity Sponsor in an amount not less than $50,000,000,
and (iii) net cash proceeds of not less than $110,000,000 from the issuance of
the Senior Notes, which in each case shall be on terms and conditions reasonably
satisfactory to the Agent;
40
(s) Agent shall have received evidence that (i) the transactions described
in the Acquisition Agreement shall have been consummated in accordance with the
terms of the Acquisition Agreement, (ii) all consents and approvals required to
consummate the acquisition of all the Capital Stock of Borrower by Holdings were
obtained and (iii) the aggregate consideration for the purchase of such Capital
Stock was not in excess of $43,750,000; and
(t) Agent shall have received payment of all fees and expenses then owing to
them, including with out limitation those fees due and owing under Section 3.2.
4.2 Conditions Precedent to Closing Date and Future Loans and Letter of
Credit Accommodations
. Each of the following is a condition precedent to Loans to be made
and/or Letter of Credit Accommodations to be provided to Borrower after the
Closing Date, and is an additional condition precedent to the initial Loans and
Letter of Credit Accommodations to be made and provided on the Closing Date.
(a) all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct in all material respects
(and it shall be conclusively presumed that all of the same have been relied on
by Agent and Lenders) with the same effect as though such representations and
warranties had been made on and as of the date of the making of each such Loan
or providing each such Letter of Credit Accommodation and upon giving effect
thereto, except to the extent that such representations and warranties expressly
relate solely to an earlier date (in which case such representations and
warranties shall have been true and accurate on and as of such earlier date);
(b) no law, regulation, order, judgment or decree of any Governmental
Authority shall exist, which purports to enjoin, prohibit, restrain the making
of the Loans or providing the Letter of Credit Accommodations; and
(c) no Default or Event of Default shall exist or have occurred and be
continuing on and as of the date of the making of such Loan or providing each
such Letter of Credit Accommodation and upon giving effect thereto.
4.3 Additional Conditions Precedent to Exim Revolving Loans and Exim
Letter of Credit Accommodations
. Each of the following is a condition precedent to the Exim Revolving
Loans and/or providing Exim Letter of Credit Accommodations and shall be in
addition to, as applicable, (i) the conditions set forth in Sections 4.1 and 4.2
for such Exim Revolving Loans and/or Exim Letter of Credit Accommodations to be
made on the Closing Date and (ii) the conditions set forth in Section 4.2 for
such Exim Revolving Loans and Exim Letter of Credit Accommodations to be made
after the Closing Date.
(a) Exim shall have provided its prior written consent to the terms and
conditions of this Agreement and the related Financing Agreement;
(b) Agent shall have received a duly executed copy of each of the Exim
Guarantee Documents, together with such additional agreements, documents,
instruments, opinions and certificates as Exim shall require and as Agent shall
reasonably require in connection therewith from time to time, all in form and
substance satisfactory to Exim, and reasonably satisfactory to Agent and
Required Lenders;
41
(c) All other conditions and requirements for the making of an Exim
Revolving Loan and/or an Exim Letter of Credit Accommodation, as set forth in
the Exim Guarantee Documents, shall have been satisfied;
(d) Agent and the Lenders shall not otherwise be prohibited from making an
Exim Revolving Loan or providing an Exim Letter of Credit Accommodation pursuant
to the terms and conditions of the Exim Guarantee Documents; and
(e) The Exim Guarantee shall be in full force and effect and no defenses
shall exist to the enforcement by Agent of the guarantee provisions under the
Exim Guarantee.
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST
----------------------------------------------
5.1 Grant of Security Interest
. To secure payment and performance of all Obligations, Borrower and each
Guarantor hereby grants to Agent, for itself and the ratable benefit of Lenders,
a continuing security interest in, a lien upon, and a right of set off against,
and hereby assigns to Agent, for itself and the ratable benefit of Lenders, as
security, all personal property and fixtures, of Borrower and each Guarantor,
whether now owned or hereafter acquired or existing, and wherever located
(together with all other collateral security for the Obligations at any time
granted by Borrower or any Obligor to or held or acquired by Agent or any
Lender, collectively, the "Collateral"), including, without limitation:
(a) all Accounts;
(b) all general intangibles, including, without limitation, all Intellectual
Property;
(c) all goods, including, without limitation, Inventory and Equipment;
(d) all fixtures;
(e) all chattel paper, including, without limitation, all tangible and
electronic chattel paper;
(f) all instruments, including, without limitation, all promissory notes;
(g) all documents;
(h) all deposit accounts;
(i) all letters of credit, banker's acceptances and similar instruments and
including all letter-of-credit rights;
(j) all supporting obligations and all present and future liens, security
interests, rights, remedies, title and interest in, to and in respect of
Receivables and other Collateral, including (i) rights and remedies under or
relating to guaranties, contracts of suretyship, letters of credit and credit
and other insurance related to the Collateral, (ii) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, (iii) goods described in invoices,
42
documents, contracts or instruments with respect to, or otherwise representing
or evidencing, Receivables or other Collateral, including returned, repossessed
and reclaimed goods, and (iv) deposits by and property of account debtors or
other persons securing the obligations of account debtors;
(k) all (i) investment property (including securities, whether certificated
or uncertificated, securities accounts, security entitlements, commodity
contracts or commodity accounts) and (ii) monies, credit balances, deposits and
other property of Borrower or any Guarantor now or hereafter held or received by
or in transit to Agent, any Lender or its Affiliates or at any other depository
or other institution from or for the account of Borrower or any Guarantor,
whether for safekeeping, pledge, custody, transmission, collection or otherwise;
(l) all commercial tort claims, including, without limitation, those
identified in the Information Certificate;
(m) to the extent not otherwise described above, all Receivables;
(n) all Records; and
(o) all products and proceeds of the foregoing, in any form, including
insurance proceeds and all claims against third parties for loss or damage to or
destruction of or other involuntary conversion of any kind or nature of any or
all of the other Collateral.
Notwithstanding the foregoing, in no event shall the Collateral consist of
any of the Capital Stock of Brazil or more than sixty-six and two-thirds percent
(66%) of the Capital Stock of any other Foreign Subsidiary.
5.2 Perfection of Security Interests.
(a) Borrower and each Guarantor irrevocably and unconditionally
authorizes Agent (or its agent) to file at any time and from time to time such
financing statements with respect to the Collateral naming Agent or its designee
as the secured party and Borrower or such Guarantor as debtor, as Agent may
reasonably require, and including any other information with respect to Borrower
or such Guarantor or otherwise required by part 5 of Article 9 of the Uniform
Commercial Code of such jurisdiction as Agent may determine, together with any
amendment and continuations with respect thereto, which authorization shall
apply to all financing statements filed on, prior to or after the date hereof.
Borrower and each Guarantor hereby ratifies and approves all financing
statements naming Agent or its designee as secured party and Borrower or such
Guarantor, as the case may be, as debtor with respect to the Collateral (and any
amendments with respect to such financing statements) filed by or on behalf of
Agent prior to the date hereof to the extent the same are consistent with the
terms hereof and ratifies and confirms the authorization of Agent to file such
financing statements (and amendments, if any). Borrower and each Guarantor
hereby authorizes Agent to adopt on behalf of Borrower or such Guarantor any
symbol required for authenticating any electronic filing. In the event that the
description of the collateral in any financing statement naming Agent or its
designee as the secured party and Borrower or any Guarantor as debtor includes
assets and properties of Borrower or such Guarantor that do not at any time
constitute Collateral, whether hereunder, under any of the other Financing
Agreements or otherwise, the filing of such financing statement shall
nonetheless be deemed authorized by Borrower or such Guarantor to the extent of
the Collateral included in such description and it shall not render the
financing statement ineffective as to any of the Collateral or otherwise affect
the financing statement as it applies to any of the Collateral; provided,
--------
however, that promptly after request therefor, Agent shall properly file a
-------
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correction to such financing statement and/or a partial release with respect to
those assets that are not (or are no longer required to be) Collateral
(including those assets which Borrower or any Guarantor is permitted to sell or
otherwise dispose of in accordance with the terms of this Agreement) effective
to release the Agent's and Lenders' lien on such assets. In no event shall
Borrower or any Guarantor at any time file, or permit or cause to be filed, any
correction statement or termination statement with respect to any financing
statement (or amendment or continuation with respect thereto) naming Agent or
its designee as secured party and Borrower or such Guarantor as debtor.
(b) Borrower and each Guarantor does not have any chattel paper (whether
tangible or electronic) or instruments as of the date hereof, except as set
forth in the Information Certificate. In the event that Borrower or any
Guarantor shall be entitled to or shall receive any chattel paper or instrument
after the date hereof, Borrower or such Guarantors shall promptly notify Agent
thereof in writing. Promptly upon the receipt thereof by Borrower or any
Guarantor (including by any agent or representative), Borrower or such Guarantor
shall deliver, or cause to be delivered to Agent, all tangible chattel paper and
instruments that Borrower or such Guarantor has or may at any time acquire,
accompanied by such instruments of collateral assignment duly executed in blank
as Agent may from time to time reasonably request, in each case except as Agent
may otherwise agree. At Agent's option, Borrower and each Guarantor shall, or
Agent may at any time on behalf of Borrower or any Guarantor, cause the original
of any such instrument or chattel paper to be conspicuously marked in a form and
manner acceptable to Agent with the following legend referring to chattel paper
or instruments as applicable: "This [chattel paper][instrument] is subject to
the security interest of Wachovia Capital Finance Corporation (Central) and any
sale, transfer, assignment or encumbrance of this [chattel paper][instrument]
violates the rights of such secured party."
(c) In the event that Borrower or any Guarantor shall at any time hold or
acquire an interest in any electronic chattel paper or any "transferable record"
(as such term is defined in Section 201 of the Federal Electronic Signatures in
Global and National Commerce Act or in Section 16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction), Borrower or such
Guarantor shall promptly notify Agent thereof in writing. Promptly upon Agent's
request, Borrower or such Guarantor shall take, or cause to be taken, such
actions as Agent may reasonably request to give Agent control of such electronic
chattel paper under Section 9-105 of the UCC and control of such transferable
record under Section 201 of the Federal Electronic Signatures in Global and
National Commerce Act or, as the case may be, Section 16 of the Uniform
Electronic Transactions Act, as in effect in such jurisdiction.
(d) Borrower and each Guarantor does not have any deposit accounts as of the
date hereof, except as set forth in the Information Certificate. Borrower and
Guarantors shall not, directly or indirectly, after the date hereof open,
establish or maintain any deposit account unless each of the following
conditions is satisfied: (i) Agent shall have received not less than five (5)
Business Days prior written notice of the intention of Borrower or any Guarantor
44
to open or establish such accounts which notice shall specify in reasonable
detail and specificity the name of the account, the owner of the account, the
name and address of the bank at which such account is to be opened or
established, the individual at such bank with whom Borrower or such Guarantor is
dealing and the purpose of the account, (ii) the bank where such account is
opened or maintained shall be reasonably acceptable to Agent, and (iii) on or
before the opening of such deposit account, Borrower or such Guarantor shall
deliver to Agent a Deposit Account Control Agreement with respect to such
deposit account duly authorized, executed and delivered by Borrower or such
Guarantor and the bank at which such deposit account is opened and maintained.
The terms of this subsection (d) shall not apply to deposit accounts
specifically and exclusively used for payroll, payroll taxes and other employee
wage and benefit payments to or for the benefit of Borrower's or any Guarantor's
salaried employees.
(e) Neither Borrower nor any Guarantor owns or holds, directly or
indirectly, beneficially or as record owner or both, any investment property, as
of the date hereof, or have any investment account, securities account,
commodity account or other similar account with any bank or other financial
institution or other securities intermediary or commodity intermediary as of the
date hereof, in each case except as set forth in the Information Certificate.
(i) In the event that Borrower or any Guarantor shall be entitled to or
shall at any time after the date hereof hold or acquire any certificated
securities, Borrower or such Guarantor shall promptly collaterally assign and
deliver the same to Agent, accompanied by an endorsement in blank as Agent may
from time to time reasonably request. If any securities, now or hereafter
acquired by Borrower or any Guarantor are uncertificated and are issued to
Borrower or such Guarantor or its nominee directly by the issuer thereof,
Borrower or such Guarantor shall immediately notify Agent thereof and shall
cause the issuer to agree to comply with instructions from Agent as to such
securities upon and during the continuation of an Event of Default, without
further consent of Borrower or any Guarantor or such nominee.
(ii) Borrower and Guarantors shall not, directly or indirectly, after the
date hereof open, establish or maintain any investment account, securities
account, commodity account or any other similar account (other than a deposit
account) with any securities intermediary or commodity intermediary unless each
of the following conditions is satisfied: (A) Agent shall have received not
less than five (5) Business Days prior written notice of the intention of
Borrower or such Guarantor to open or establish such account, which notice shall
specify in reasonable detail and specificity the name of the account, the owner
of the account, the name and address of the securities intermediary or commodity
intermediary at which such account is to be opened or established, the
individual at such intermediary with whom Borrower or such Guarantor is dealing
and the purpose of the account, (B) the securities intermediary or commodity
intermediary (as the case may be) where such account is opened or maintained
shall be reasonably acceptable to Agent, and (C) on or before the opening of
such investment account, securities account or other similar account with a
securities intermediary or commodity intermediary, Borrower or such Guarantor
shall execute and deliver, and cause to be executed and delivered to Agent, an
Investment Property Control Agreement with respect thereto duly authorized,
executed and delivered by Borrower or such Guarantor and such securities
intermediary or commodity intermediary.
(f) Borrower and Guarantors are not the beneficiary or otherwise
entitled to any right to payment under any letter of credit, banker's acceptance
or similar instrument as of the date hereof, except as set forth in the
Information Certificate. In the event that Borrower or any Guarantor shall be
45
entitled to or shall receive any right to payment under any letter of credit,
banker's acceptance or any similar instrument, whether as beneficiary thereof or
otherwise after the date hereof, Borrower or such Guarantor shall promptly
notify Agent thereof in writing. Borrower or such Guarantor shall deliver, or
cause to be delivered to Agent, with respect to any such letter of credit,
banker's acceptance or similar instrument, the written agreement of the issuer
and any other nominated person obligated to make any payment in respect thereof
(including any confirming or negotiating bank), in form and substance reasonably
satisfactory to Agent, consenting to the assignment of the proceeds of the
letter of credit to Agent by Borrower or such Guarantor and agreeing to make all
payments thereon upon and during the continuation of an Event of Default
directly to Agent or as Agent may otherwise direct.
(g) Borrower and Guarantors do not have any commercial tort claims as of the
date hereof, except as set forth in the Information Certificate. In the event
that Borrower or any Guarantor shall at any time after the date hereof have any
commercial tort claims, Borrower or such Guarantor shall promptly notify Agent
thereof in writing, which notice shall (i) set forth in reasonable detail the
basis for and nature of such commercial tort claim and (ii) include the express
grant by Borrower or such Guarantor to Agent of a security interest in such
commercial tort claim (and the proceeds thereof). In the event that such notice
does not include such grant of a security interest, the sending thereof by
Borrower or such Guarantor to Agent shall be deemed to constitute such grant to
Agent. Upon the sending of such notice, any commercial tort claim described
therein shall constitute part of the Collateral and shall be deemed included
therein. Without limiting the authorization of Agent provided in Section 5.2(a)
hereof or otherwise arising by the execution by Borrower or such Guarantor of
this Agreement or any of the other Financing Agreements, Agent is hereby
irrevocably authorized from time to time and at any time to file such financing
statements naming Agent or its designee as secured party and Borrower or such
Guarantor as debtor, or any amendments to any financing statements, covering any
such commercial tort claim as Collateral.
(h) Borrower and Guarantors do not have any goods, documents of title or
other Collateral in the custody, control or possession of a third party as of
the date hereof, except as set forth in the Information Certificate and except
for goods located in the United States in transit to a location of Borrower or
Guarantor permitted herein in the ordinary course of business of Borrower or
such Guarantor in the possession of the carrier transporting such goods. In the
event that any goods, documents of title or other Collateral are at any time
after the date hereof in the custody, control or possession of any other person
not referred to in the Information Certificate or such carriers, Borrower and
Guarantors shall promptly notify Agent thereof in writing. Promptly upon
Agent's request, Borrower and Guarantors shall deliver to Agent a Collateral
Access Agreement duly authorized, executed and delivered by such person and
Borrower or the Guarantor that is the owner of such Collateral.
(i) Borrower and Guarantors shall take any other actions reasonably
requested by Agent from time to time to cause the attachment, perfection and
first priority of, and the ability of Agent to enforce, the security interest of
Agent in any and all of the Collateral, including, without limitation, (i)
executing, delivering and, where appropriate, filing financing statements and
46
amendments relating thereto under the UCC or other applicable law, to the
extent, if any, that Borrower's or Guarantors' signature thereon is required
therefor, (ii) causing Agent's name to be noted as secured party on any
certificate of title for a titled good if such notation is a condition to
attachment, perfection or priority of, or ability of Agent to enforce, the
security interest of Agent in such Collateral, (iii) complying with any
provision of any statute, regulation or treaty of the United States as to any
Collateral if compliance with such provision is a condition to attachment,
perfection or priority of, or ability of Agent to enforce, the security interest
of Agent in such Collateral, (iv) obtaining the consents and approvals of any
Governmental Authority or third party, including, without limitation, any
consent of any licensor, lessor or other person obligated on Collateral, and
taking all actions required by any earlier versions of the UCC or by other law,
as applicable in any relevant jurisdiction.
(j) To the extent Borrower or any Guarantor consigns Inventory to any
consignee, Borrower will, prior to such consignment, cause the following to be
delivered to Agent with respect to each consigned location, in each case in form
and substance satisfactory to Agent: (i) copies of UCC financing statements
naming Borrower or such Guarantor as consignor and the applicable customer as
consignee covering such Inventory and naming Agent as assignee thereof, (ii) if
applicable, a copy of a notification letter executed by Borrower or such
Guarantor as delivered to any secured lender of such consignee which has a lien
on consignee's Inventory notifying such secured lender of Agent's lien on such
consigned Inventory; provided, that, if such Inventory is already consigned to
-------- ----
such consignee prior to such secured lender receiving said notice, to the extent
Borrower desires to include such consigned Inventory within Eligible Inventory,
Agent shall receive an acknowledgement letter from such secured lender pursuant
to which such lender waives any lien on such consigned Inventory and recognizes
Agent's lien on such consigned Inventory and (iii) to the extent the Value of
Inventory at any consigned location is in excess of $250,000, a Collateral
Access Agreement from such consignee in favor of Agent plus, at Agent's request
----
upon the occurrence and during the continuation of an Event of Default, copies
of applicable shipping and invoice documents evidencing and identifying the
Inventory delivered to such consigned location.
SECTION 6. COLLECTION AND ADMINISTRATION
-------------------------------
6.1 Borrower's Loan Accounts
. Agent shall maintain one or more loan account(s) (each, a "loan
account") on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all payments
made by Borrower or any Guarantor and (c) all other appropriate debits and
credits as provided in this Agreement, including fees, charges, costs, expenses
and interest. All entries in the loan account(s) shall be made in accordance
with Agent's customary practices as in effect from time to time.
6.2 Statements
. Agent shall render to Borrower each calendar month a statement setting
forth the outstanding balance in Borrower's loan account(s) maintained by Agent
for Borrower pursuant to the provisions of this Agreement, including principal,
interest, fees, costs and expenses. Each such statement shall be subject to
subsequent adjustment by Agent but shall, absent manifest errors or omissions,
be considered correct and deemed accepted by Borrower and Guarantors and
conclusively binding upon Borrower and Guarantors as an account stated except to
the extent that Agent receives a written notice from Borrower of any specific
exceptions of Borrower thereto within thirty (30) days after the date such
47
statement has been received by Borrower. Until such time as Agent shall have
rendered to Borrower a written statement as provided above, the balance in
Borrower's loan account(s) shall be presumptive evidence of the amounts due and
owing to Agent and Lenders by Borrower and Guarantors.
6.3 Collection of Accounts.
(a) Borrower shall establish and maintain, at its expense, lockboxes
and related blocked accounts (in either case, "Blocked Accounts"), with such
banks as are reasonably acceptable to Agent into which Borrower shall promptly
deposit and direct account debtors to directly remit all payments on Receivables
and all payments constituting proceeds of Inventory or other Collateral in the
identical form in which such payments are made, whether by cash, check or other
manner. Borrower shall deliver, or cause to be delivered to Agent a Depository
Account Control Agreement duly authorized, executed and delivered by each bank
where a Blocked Account is maintained as provided in Section 5.2 hereof.
Borrower agrees that at the election of Agent, upon the occurrence and during
the continuation of a Trigger Event, all payments made to such Blocked Accounts
or other funds received and collected by Agent or any Lender, whether in respect
of the Receivables, as proceeds of Inventory or other Collateral or otherwise
shall be directed to the Agent Payment Account on a daily basis and, at Agent's
election upon the occurrence and during the continuation of an Event Default,
shall be treated as payments to Agent and Lenders in respect of the Obligations
and therefore such payments shall constitute the property of Agent and Lenders
to the extent of the then outstanding Obligations. To the extent no Event of
Default has occurred and is continuing, amounts in the Agent Payment Account
shall be disbursed as directed by Borrower. For the avoidance of doubt, unless
and until a Trigger Event shall have occurred and shall be continuing, Borrower
shall have the sole and exclusive right to make or direct payments and
withdrawals from the Blocked Accounts.
(b) For purposes of calculating the amount of the Loans available to
Borrower, amounts on deposit in the Agent Payment Account will be applied
(conditional upon final collection) to the Obligations on the Business Day of
receipt by Agent of immediately available funds in the Agent Payment Account;
provided such payments and notice thereof are received in accordance with
Agent's usual and customary practices as in effect from time to time and within
sufficient time to credit Borrower's loan account on such day, and if not, then
on the next Business Day. For the purposes of calculating interest on the
Obligations, such payments or other funds received will be applied (conditional
upon final collection) to the Obligations the next Business Day following the
date of receipt of immediately available funds by Agent in the Agent Payment
Account provided such payments or other funds and notice thereof are received in
accordance with Agent's usual and customary practices as in effect from time to
time and within sufficient time to credit Borrower's loan account on such day,
and if not, then on the next Business Day. As between the Agent and the
Lenders, the economic benefit of the timing in the application of payments (and
the administrative charge with respect thereto, if applicable) shall be for the
sole benefit of Agent.
(c) Borrower and each Guarantor shall, and shall cause their respective
shareholders, directors, employees, agents, Subsidiaries or other Affiliates to,
immediately upon receipt of any monies, checks, notes, drafts or any other
payment relating to and/or proceeds of Accounts or other Collateral which come
into their possession or under their control, deposit or cause the same to be
deposited in the Blocked Accounts. Borrower and each Guarantor agrees to
48
reimburse Agent within five (5) Business Days after demand for any amounts owed
or paid to any bank at which a Blocked Account or any other deposit account is
established or any other bank or person involved in the transfer of funds to or
from the Blocked Accounts arising out of Agent's payments to or indemnification
of such bank or person. The obligation of Borrower and each Guarantor to
reimburse Agent for such amounts pursuant to this Section 6.3 shall survive the
termination of this Agreement.
(d) Notwithstanding anything herein to the contrary, all proceeds received
in the Agent Payment Account that originated from a Guarantor shall, to the
extent applied to the Obligations, be deemed (i) if Agent has made demand of
payment under such Guarantor's guaranty or an Event of Default has occurred
under Section 10.1(g) or Section 10.1(h) hereof with respect to such Guarantor,
a payment on such Guarantor's guaranty in favor of Agent, (ii) to the extent
such Guarantor owes monetary obligations to Borrower and clause (i) is not
otherwise applicable, a repayment of such Guarantor's obligations to Borrower or
(iii) to the extent no such monetary obligations are owing from such Guarantor
to Borrower and clause (i) is not otherwise applicable, a loan from such
Guarantor to Borrower subject to the terms of Section 9.10(g) hereof.
6.4 Payments.
(a) All Obligations shall be payable to the Agent Payment Account as
provided in Section 6.3 or such other place as Agent may designate from time to
time in writing to Borrower. Agent shall apply payments to the extent received
or collected from any Borrower or any Obligor or for the account of such
Borrower or such Obligor (including the monetary proceeds of collections or of
realization upon any Collateral) as follows (provided that payments received
from the Exim Guarantee, proceeds of Exim Primary Collateral and allocations
among Exim Revolving Loans, Non-Exim Revolving Loans, Exim Letter of Credit
Accommodations and Non-Exim Revolving Credit Accommodations shall be applied and
allocated solely in accordance with clause (D) of this Section 6.4):
(i) so long as no Priority Event shall have occurred and be continuing,
or will result from any of the following payment applications,
first, to pay in full all indemnities or expense reimbursements then due to
Agent from Borrower and Guarantors (other than fees);
second, to pay in full indemnities or expense reimbursements then due to Lenders
from Borrower and Guarantors (other than fees);
third, to pay in full all fees payable by Borrower under the Financing
Agreements then due;
fourth, to pay in full interest due in respect of the Loans (including interest
payable in respect of the Revolving Loans and Special Agent Advances);
fifth, to pay or prepay principal in respect of Special Agent Advances;
sixth, to pay principal in respect of the Revolving Loans then outstanding
(whether or not then due) until paid in full;
49
seventh, to cash collateralize any outstanding Letter of Credit Accommodations
during the continuation of an Event of Default, which cash collateral shall be
released if such Event of Default shall no longer be continuing and in the
absence of any other Event of Default then outstanding;
eighth, to pay or prepay any other Obligations whether or not then due, in such
order and manner as Agent determines; and
ninth, to Borrower or any other Person then entitled thereto in accordance with
applicable law.
provided, that, in each instance set forth above in Section 6.4(a)(i), so long
-------- ----
as no Priority Event has occurred and is continuing, Section 6.4(a)(i) shall not
be deemed to apply to any payment by a Borrower specified by such Borrower to be
for the payment of specific Obligations then due and payable (or prepayable)
under and in accordance with any provision of this Agreement;
and
(ii) from and after the occurrence and during the continuance of a
Priority Event,
first, to pay in full the expenses of Agent for the collection and
enforcement of the Obligations and for the protection, preservation or sale,
disposition or other realization upon the Collateral, including all expenses,
liabilities and advances incurred or made by or on behalf of Agent, in
connection therewith (including reasonable attorneys' fees and legal expenses
and other expenses of Agent);
second, to the extent proceeds remain after the application pursuant to the
preceding clause, to pay all Obligations (other than Product Obligations) until
paid in full, in cash or other immediately available funds, in such order and
manner as Agent shall elect in its discretion (including cash collateral for any
outstanding Letter of Credit Accommodations in accordance with Section 13.1(a)
hereof; provided, however, that such cash collateral shall be returned to
Borrower if such Priority Event shall no longer be continuing);
third, to the extent proceeds remain after the application pursuant to the
preceding two clauses, to pay any outstanding Product Obligations; and
fourth, to Borrower or to any other Person then entitled thereto in accordance
with applicable law.
Notwithstanding anything contained in this Section 6.4 or this Agreement to the
contrary,
(A) [Intentionally Omitted];
(B) should any payment or distribution on security or instrument or the
proceeds thereof be received by a Lender other than in accordance with this
Section 6.4, such Lender shall receive and hold the same in trust, for the
benefit of Agent and Lenders or the Borrower (to the extent such parties are
50
then entitled thereto in accordance with this Agreement) and shall forthwith
deliver the same to such party (together with any endorsement or assignment of
such Lender where necessary), in the case of delivery to the Agent, for
application by Agent to the Obligations in accordance with the terms of this
Section 6.4;
(C) unless so directed by Borrower, or unless an Event of Default shall have
occurred and be continuing, Agent shall not apply any payments which it receives
to any Eurodollar Rate Loans, except (1) on the expiration date of the Interest
Period applicable to any such Eurodollar Rate Loans or (2) in the event that
there are no outstanding Prime Rate Loans. With respect to any Loans to the
extent not specified above, Agent may apply payments to such Loans in such order
as Agent shall determine; and
(D) unless otherwise agreed to by Agent, Required Lenders and Exim, (1) all
proceeds of Exim Primary Collateral and all payments received from the Exim
Guarantee shall be applied first, to reduce the "Loan Facility Obligations" (as
-----
such term is defined in the Exim Guarantee) in such order as set forth in the
Exim Guarantee Documents or, if not set forth therein, in such order as Agent
shall determine, until paid in full and second, to any other Obligations in such
------
order as set forth in the Exim Guarantee Documents or, if not set forth therein,
in such order as set forth in Section 6.4(a)(i) or (ii), as applicable, and (2)
all proceeds from other Collateral that is required under Section 6.4(a)(i) or
(ii) to be applied to the Revolving Loans and to cash collateralize the Letter
of Credit Accommodations shall be applied first, to reduce the Non-Exim
Revolving Loans until paid in full, second, to cash collateralize the Non-Exim
Letter of Credit Accommodations, third, to reduce the Exim Revolving Loans until
paid in full and fourth, to cash collateralize the Exim Letter of Credit
Accommodations.
(b) At Agent's option, Agent may make a Revolving Loan in the amount of
all principal, interest, fees, costs, expenses and other charges provided for in
this Agreement or the other Financing Agreements due to it or the Lenders from
time to time under the Financing Agreements and a description thereof shall be
set forth in the monthly statement provided under Section 6.2 hereof.
(c) Borrower shall make all payments to Agent and Lenders on the Obligations
free and clear of, and without deduction or withholding for or on account of,
any setoff, counterclaim, defense, duties, taxes, levies, imposts, fees,
deductions, withholding, restrictions or conditions of any kind; provided, that
--------
to the extent Borrower is required by law to deduct or withhold any taxes in
respect of any sum payable hereunder as a result of a Lender's breach of any
representation or warranty in its Assignment and Acceptance as to its tax status
or otherwise, Borrower may deduct or withhold such taxes, subject to Section
51
6.4(d), and may pursue any claims it has at law against such Lender. If after
receipt of any payment of, or proceeds of Collateral applied to the payment of,
any of the Obligations, Agent or any Lender is required to surrender or return
such payment or proceeds to any Person for any reason, then the Obligations
intended to be satisfied by such payment or proceeds shall be reinstated and
continue and this Agreement shall continue in full force and effect as if such
payment or proceeds had not been received by Agent or such Lender. Borrowers
shall be liable to pay to Agent, and does hereby indemnify and hold Agent and
Lenders harmless for the amount of any payments or proceeds surrendered or
returned. This Section 6.4(b) shall remain effective notwithstanding any
contrary action which may be taken by Agent or any Lender in reliance upon such
payment or proceeds. This Section 6.4 shall survive the payment of the
Obligations and the termination of this Agreement.
(d) If Borrower shall be required by law to deduct or withhold any taxes
from or in respect of any sum payable hereunder to Agent or any Lender, then the
sum payable shall be increased as necessary so that after making all required
deductions and withholdings such Lender (or Agent on behalf of such Lender)
receives an amount equal to the sum it would have received had no such
deductions or withholdings been made; provided, that no Lender shall be entitled
--------
to such additional payments pursuant to this Section 6.4(d) to the extent that
--------------
Borrower's obligation to deduct or withhold such taxes was caused as a result of
such Lender's breach of any representation, warranty or obligation in its
Assignment and Acceptance relating to its tax status.
6.5 Request For and Authorization to Make Loans
. Borrower may make a request for Loans and Letter of Credit
Accommodations, and Agent and Lenders are authorized to make Loans and provide
Letter of Credit Accommodations, based upon telephonic or other instructions
given and received from any officer of Borrower or any other authorized person
(or anyone that Agent believes in good faith to be an officer of Borrower or
other authorized Person) or, at the discretion of Agent, if such Loans are
necessary to satisfy any Obligations. All requests for Loans or Letter of
Credit Accommodations hereunder shall specify whether such Loan or Letter of
Credit Accommodation is an Exim Revolving Loan, Exim Letter of Credit
Accommodation, Non-Exim Revolving Loan or Non-Exim Letter of Credit
Accommodation, the date on which the requested advance is to be made or Letter
of Credit Accommodations established (which day shall be a Business Day) and the
amount of the requested Loan. Requests received after 11:00 a.m. Chicago time
on any day shall be deemed to have been made as of the opening of business on
the immediately following Business Day. All Loans and Letter of Credit
Accommodations under this Agreement shall be conclusively presumed to have been
made to, and at the request of and for the benefit of, Borrower or any Guarantor
when deposited to the credit of Borrower or any Guarantor or otherwise disbursed
or established in accordance with the instructions of Borrower or any Guarantor
or in accordance with the terms and conditions of this Agreement.
6.6 Use of Proceeds
. All Non-Exim Revolving Loans made or Non-Exim Letter of Credit
Accommodations provided to or for the benefit of Borrower pursuant to the
provisions hereof shall be used by Borrower for general operating, working
capital and other proper corporate purposes of Borrower not otherwise prohibited
by the terms hereof; provided, that a portion of the Non-Exim Revolving Loans
--------
may be used to repay Indebtedness existing under the Indenture in accordance
with Section 9.23. All Exim Revolving Loans made or Exim Letter of Credit
Accommodations provided to or for the benefit of Borrower pursuant to the
provisions hereof shall be used by Borrower only for the manufacturing of,
production of, or purchase and subsequent export sale of, finished goods which
are intended for export from the United States and as more particularly
described in the Exim Guarantee Documents. None of the proceeds of the Loans
will be used, directly or indirectly, for the purpose of purchasing or carrying
any margin security or for the purposes of reducing or retiring any indebtedness
which was originally incurred to purchase or carry any margin security or for
any other purpose which might cause any of the Loans to be considered a "purpose
credit" within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System, as amended.
52
6.7 [Intentionally Omitted].
6.8 Pro Rata Treatment
. Except to the extent otherwise provided in this Agreement: (a) the
making and conversion of Loans shall be made among the Lenders based on their
respective Pro Rata Shares as to the applicable Loans and (b) each payment on
account of any Obligations to or for the account of one or more of Lenders in
respect of any Obligations due on a particular day shall be allocated among the
Lenders entitled to such payments based on their respective Pro Rata Shares of
such Obligations and shall be distributed accordingly.
6.9 Sharing of Payments, Etc.
(a) Borrower and each Guarantor agrees that, in addition to (and
without limitation of) any right of setoff, banker's lien or counterclaim Agent
or any Lender may otherwise have, each Lender shall be entitled, at its option
(but subject, as among Agent and Lenders, to the provisions of Section 12.3(b)
hereof), to offset balances held by it for the account of Borrower or such
Guarantor at any of its offices, in dollars or in any other currency, against
any principal of or interest on any Loans owed to such Lender or any other
amount payable to such Lender hereunder, that is not paid when due (regardless
of whether such balances are then due to Borrower or such Guarantor), in which
case it shall promptly notify Borrower and Agent thereof; provided, that, such
Lender's failure to give such notice shall not affect the validity thereof.
(b) If any Lender (including Agent) shall obtain from Borrower or any
Guarantor payment of any principal of or interest on any Loan owing to it or
payment of any other amount under this Agreement or any of the other Financing
Agreements through the exercise of any right of setoff, banker's lien or
counterclaim or similar right or otherwise (other than from Agent as provided
herein), and, as a result of such payment, such Lender shall have received more
than its Pro Rata Share of the principal of the Loans or more than its share of
such other amounts then due hereunder or thereunder by Borrower or any Guarantor
to such Lender than the percentage thereof received by any other Lender, it
shall promptly pay to Agent, for the benefit of Lenders, the amount of such
excess and simultaneously purchase from such other Lenders a participation in
the Loans or such other amounts, respectively, owing to such other Lenders (or
such interest due thereon, as the case may be) in such amounts, and make such
other adjustments from time to time as shall be equitable, to the end that all
Lenders shall share the benefit of such excess payment (net of any expenses that
may be incurred by such Lender in obtaining or preserving such excess payment)
in accordance with their respective Pro Rata Shares or as otherwise agreed by
Lenders. To such end all Lenders shall make appropriate adjustments among
themselves (by the resale of participation sold or otherwise) if such payment is
rescinded or must otherwise be restored.
(c) Borrower and each Guarantor agrees that any Lender purchasing a
participation (or direct interest) as provided in this Section may exercise, in
a manner consistent with this Section, all rights of setoff, banker's lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender were a direct holder of Loans or other amounts (as the case may be)
owing to such Lender in the amount of such participation.
53
(d) Nothing contained herein shall require any Lender to exercise any right
of setoff, banker's lien, counterclaims or similar rights or shall affect the
right of any Lender to exercise, and retain the benefits of exercising, any such
right with respect to any other Indebtedness or obligation of Borrower or any
Guarantor. If, under any applicable bankruptcy, insolvency or other similar
law, any Lender receives a secured claim in lieu of a setoff to which this
Section applies, such Lender shall, to the extent practicable, assign such
rights to Agent for the benefit of Lenders and, in any event, exercise its
rights in respect of such secured claim in a manner consistent with the rights
of Lenders entitled under this Section to share in the benefits of any recovery
on such secured claim.
6.10 Settlement Procedures.
(a) In order to administer the Credit Facility in an efficient manner
and to minimize the transfer of funds between Agent and Lenders, Agent may, at
its option, subject to the terms of this Section, make available, on behalf of
Lenders, the full amount of the Revolving Loans requested by Borrower or charged
to Borrower's loan account(s) or otherwise to be advanced by Agent pursuant to
the terms hereof, without requirement of prior notice to Lenders of the proposed
Revolving Loans.
(b) With respect to all Revolving Loans made by Agent on behalf of Lenders
as provided in this Section, the amount of each Lender's Pro Rata Share of the
outstanding Revolving Loans shall be computed weekly, and shall be adjusted
upward or downward on the basis of the amount of the outstanding Revolving Loans
as of 5:00 p.m. Chicago time on the Business Day immediately preceding the date
of each settlement computation; provided, that, Agent retains the absolute right
at any time or from time to time to make the above described adjustments at
intervals more frequent than weekly, but in no event more than twice in any
week. Agent shall deliver to each of the Lenders after the end of each week, or
at such lesser period or periods as Agent shall determine, a summary statement
of the amount of outstanding Revolving Loans for such period (such week or
lesser period or periods being hereinafter referred to as a "Settlement
Period"). If the summary statement is sent by Agent and received by a Lender
prior to 12:00 p.m. Chicago time, then such Lender shall make the settlement
transfer described in this Section by no later than 3:00 p.m. Chicago time on
the same Business Day and if received by a Lender after 12:00 p.m. Chicago time,
then such Lender shall make the settlement transfer by not later than 3:00 p.m.
Chicago time on the next Business Day following the date of receipt. If, as of
the end of any Settlement Period, the amount of a Lender's Pro Rata Share of the
outstanding Revolving Loans is more than such Lender's Pro Rata Share of the
outstanding Revolving Loans as of the end of the previous Settlement Period,
then such Lender shall forthwith (but in no event later than the time set forth
in the preceding sentence) transfer to Agent by wire transfer in immediately
available funds the amount of the increase. Alternatively, if the amount of a
Lender's Pro Rata Share of the outstanding Revolving Loans in any Settlement
Period is less than the amount of such Lender's Pro Rata Share of the
outstanding Revolving Loans for the previous Settlement Period, Agent shall
forthwith transfer to such Lender by wire transfer in immediately available
funds the amount of the decrease. The obligation of each of the Lenders to
transfer such funds and effect such settlement shall be irrevocable and
unconditional and without recourse to or warranty by Agent. Agent and each
Lender agrees to xxxx its books and records at the end of each Settlement Period
to show at all times the dollar amount of its Pro Rata Share of the outstanding
Revolving Loans and Letter of Credit Accommodations. Each Lender shall only be
entitled to receive interest on its Pro Rata Share of the Revolving Loans to the
extent such Revolving Loans have been funded by such Lender. Because Agent on
54
behalf of Lenders may be advancing and/or may be repaid Revolving Loans prior to
the time when Lenders will actually advance and/or be repaid such Revolving
Loans, interest with respect to Revolving Loans shall be allocated by Agent in
accordance with the amount of Revolving Loans actually advanced by and repaid to
each Lender and Agent and shall accrue from and including the date such
Revolving Loans are so advanced to but excluding the date such Revolving Loans
are either repaid by Borrower or actually settled with the applicable Lender as
described in this Section.
(c) To the extent that Agent has made any such amounts available and the
settlement described above shall not yet have occurred, upon repayment of any
Revolving Loans by Borrower, Agent may apply such amounts repaid directly to any
amounts made available by Agent pursuant to this Section. In lieu of weekly or
more frequent settlements, Agent may, at its option, at any time require each
Lender to provide Agent with immediately available funds representing its Pro
Rata Share of each Revolving Loan, prior to Agent's disbursement of such
Revolving Loan to Borrower. In such event, all Revolving Loans under this
Agreement shall be made by the Lenders simultaneously and proportionately to
their Pro Rata Shares. No Lender shall be responsible for any default by any
other Lender in the other Lender's obligation to make a Revolving Loan requested
hereunder nor shall the Commitment of any Lender be increased or decreased as a
result of the default by any other Lender in the other Lender's obligation to
make a Revolving Loan hereunder.
(d) If Agent is not funding a particular Revolving Loan to Borrower pursuant
to this Section on any day, Agent may assume that each Lender will make
available to Agent such Lender's Pro Rata Share of the Revolving Loan requested
or otherwise made on such day and Agent may, in its discretion, but shall not be
obligated to, cause a corresponding amount to be made available to or for the
benefit of Borrower on such day. If Agent makes such corresponding amount
available to Borrower and such corresponding amount is not in fact made
available to Agent by such Lender, Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest thereon
for each day from the date such payment was due until the date such amount is
paid to Agent at the Federal Funds Rate for each day during such period (as
published by the Federal Reserve Bank of New York or at Agent's option based on
the arithmetic mean determined by Agent of the rates for the last transaction in
overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on that
day by each of the three leading brokers of Federal funds transactions in New
York City selected by Agent) and if such amounts are not paid within three (3)
days of Agent's demand, at the highest Interest Rate provided for in Section 3.1
hereof applicable to Prime Rate Revolving Loans consisting of Revolving Loans.
During the period in which such Lender has not paid such corresponding amount to
Agent, notwithstanding anything to the contrary contained in this Agreement or
any of the other Financing Agreements, the amount so advanced by Agent shall,
for all purposes hereof, be a Loan made by Agent for its own account. Upon any
such failure by a Lender to pay Agent, Agent shall promptly thereafter notify
Borrower of such failure and Borrower shall pay such corresponding amount to
Agent for its own account within five (5) Business Days of Borrower's receipt of
such notice. A Lender who fails to pay Agent its Pro Rata Share of any
Revolving Loans made available by Agent on such Lender's behalf, or any Lender
who fails to pay any other amount owing by it to Agent, is a "Defaulting
Lender". Agent shall not be obligated to transfer to a Defaulting Lender any
payments received by Agent for the Defaulting Lender's benefit, nor shall a
Defaulting Lender be entitled to the sharing of any payments hereunder
(including any principal, interest or fees). Amounts payable to a Defaulting
Lender shall instead be paid to or retained by Agent. Agent may hold and, in
its discretion, relend to Borrower the amount of all such payments received or
55
retained by it for the account of such Defaulting Lender. For purposes of
voting or consenting to matters with respect to this Agreement and the other
Financing Agreements and determining Pro Rata 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 a
Defaulting Lender until such default is cured. 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 Borrower or any Obligor of their
duties and obligations hereunder.
(e) Nothing in this Section or elsewhere in this Agreement or the other
Financing Agreements shall be deemed to require Agent to advance funds on behalf
of any Lender or to relieve any Lender from its obligation to fulfill its
Commitment hereunder or to prejudice any rights that Borrower may have against
any Lender as a result of any default by any Lender hereunder in fulfilling its
Commitment.
6.11 Obligations Several; Independent Nature of Lenders' Rights
. The obligation of each Lender hereunder is several, and no Lender shall
be responsible for the obligation or commitment of any other Lender hereunder.
Nothing contained in this Agreement or any of the other Financing Agreements and
no action taken by the Lenders pursuant hereto or thereto shall be deemed to
constitute the Lenders to be a partnership, an association, a joint venture or
any other kind of entity. The amounts payable at any time hereunder to each
Lender shall be a separate and independent debt, and subject to Section 12.3
hereof, each Lender shall be entitled to protect and enforce its rights arising
out of this Agreement and it shall not be necessary for any other Lender to be
joined as an additional party in any proceeding for such purpose.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
-------------------------------------
7.1 Collateral Reporting.
(a) Borrower shall provide Agent with the following documents in a form
reasonably satisfactory to Agent as soon as possible after the end of each
Fiscal Month but in any event within ten (10) Business Days after the end
thereof (or weekly, within three (3) Business Days after each Friday, if a
Trigger Event exists and is continuing):
(i) a monthly Borrowing Base Certificate in the form of Exhibit D
hereto setting forth the calculation of the Borrowing Base and the
Export-Related Borrowing Base as of the last Business Day of the immediately
preceding Fiscal Month (or weekly if a Trigger Event exists and is continuing),
which Borrowing Base Certificate shall be complete and accurate in all material
respects;
(ii) [Intentionally omitted];
(iii) (A) perpetual inventory reports, (B) inventory reports by location
and category (and including the amounts of Inventory and the value thereof at
any leased locations and at premises of warehouses, processors or other third
56
parties), (C) agings of accounts receivable (together with a reconciliation to
the previous month's aging and general ledger) and (D) agings of accounts
payable (and including information indicating the amounts owing to owners and
lessors of leased premises, warehouses, processors and other third parties from
time to time in possession of any Collateral);
(iv) [Intentionally omitted];
(v) such other reports as to the Collateral as Agent shall reasonably
request and that can produced without undue expense or burden to Borrower.
(b) During the existence of a Trigger Event, Borrower shall provide to
Agent on a regularly scheduled basis as reasonably required by Agent, schedules
in a form reasonably satisfactory to Agent reflecting sales made, credits
issued, cash or other items of payment received and other data relating to the
current calculation of the Borrowing Base and the Export-Related Borrowing Base,
as well as the level of intercompany loan balances as Agent shall reasonably
request.
(c) If Borrower's or Guarantors' records or reports of the Collateral are
prepared or maintained by an accounting service, contractor, shipper or other
agent, Borrower and such Guarantor hereby irrevocably authorizes such service,
contractor, shipper or agent to deliver such records, reports, and related
documents to Agent and to follow Agent's instructions with respect to further
services at any time that an Event of Default exists or has occurred and is
continuing.
All documents delivered pursuant to this Section shall include the U.S. dollar
equivalent of any values stated in a currency other than U.S. dollars.
7.2 Accounts Covenants.
(a) Borrower shall notify Agent promptly of: (i) any material delay in
Borrower's or any of its Subsidiaries performance of any of their respective
material obligations to any account debtor or the assertion of any material
claims, offsets, defenses or counterclaims by any account debtor, or any
material disputes with account debtors, or any material settlement, adjustment
57
or compromise thereof, (ii) all material adverse information known to Borrower
or any Guarantor relating to the financial condition of any account debtor and
(iii) any event or circumstance which, to the best of Borrower's or Guarantors'
knowledge, would cause Agent to consider any then existing Accounts as no longer
constituting Eligible Accounts or Eligible Export-Related Accounts Receivable in
accordance with the respective criteria therefor set forth in the respective
definitions thereof. So long as no Event of Default exists or has occurred and
is continuing, Borrower and Guarantors shall have the exclusive right to settle,
adjust or compromise any claim, offset, counterclaim or dispute with any account
debtor. At any time that an Event of Default has occurred and is continuing,
Agent shall, at its option, have the exclusive right to settle, adjust or
compromise any claim, offset, counterclaim or dispute with account debtors or
grant any credits, discounts or allowances.
(b) With respect to each Account: (i) the amounts shown on any invoice
delivered to Agent or schedule thereof delivered to Agent shall be true and
complete in all material respects to the Borrower's Knowledge, (ii) no payments
shall be made thereon except payments immediately delivered to the Blocked
Accounts pursuant to the terms of this Agreement, (iii) no credit, discount,
allowance or extension or agreement for any of the foregoing shall be granted to
any account debtor except as reported to Agent in accordance with this Agreement
and except for credits, discounts, allowances or extensions made or given in the
ordinary course of Borrower's business in accordance with practices and policies
previously disclosed to Agent, (iv) there shall be no setoffs, deductions,
contras, defenses, counterclaims or disputes existing or asserted with respect
thereto except as reported to Agent in accordance with the terms of this
Agreement, (v) none of the transactions giving rise thereto will violate any
applicable foreign, Federal, State or local laws or regulations, all
documentation relating thereto will be legally sufficient under such laws and
regulations and all such documentation will be legally enforceable in accordance
with its terms in all material respects.
(c) Upon the occurrence and during the continuation of a Trigger Event,
Agent shall have the right at any time or times, in Agent's name or in the name
of a nominee of Agent, to verify the validity, amount or any other matter
relating to any Receivables or other Collateral, by mail, telephone, facsimile
transmission or otherwise.
7.3 Inventory Covenants
. With respect to the Inventory: (a) Borrower and each Guarantor shall at
all times maintain inventory records reasonably satisfactory to Agent, keeping
correct and accurate records itemizing and describing the kind, type, quality
and quantity of Inventory, Borrower's or such Guarantor's cost therefor and
daily withdrawals therefrom and additions thereto; (b) Borrower and Guarantors
shall conduct cycle counts of the Inventory at least once each year which shall
include counts of at least 85% of the Borrower's and Guarantors' Inventory;
provided that Borrower and Guarantors shall conduct a physical count of the
----
Inventory at any time or times as Agent may request after the occurrence and
during the continuance of an Event of Default, and promptly following such cycle
count or physical count, as applicable, shall supply Agent with a report in the
form and with such specificity as may be reasonably satisfactory to Agent
concerning such count; (c) except as expressly permitted under this Agreement,
Borrower and Guarantors shall not remove any Inventory from the locations set
forth or permitted herein, without the prior written consent of Agent, except
for sales of Inventory in the ordinary course of its business and except to move
Inventory directly from one location set forth or permitted herein to another
such location (that is owned or covered by a Collateral Access Agreement) and
except for Inventory shipped from the manufacturer thereof to Borrower or such
Guarantor which is in transit to the locations set forth or permitted herein
(that is owned or covered by a Collateral Access Agreement); (d) upon Agent's
request, Borrower shall, at its expense, no more than once during any Fiscal
Year, but at any time or times as Agent may request after the occurrence and
during the continuance of an Event of Default, deliver or cause to be delivered
to Agent written appraisals as to the Inventory in form, scope and methodology
reasonably acceptable to Agent and by an appraiser reasonably acceptable to
Agent, addressed to Agent and Lenders and upon which Agent and Lenders are
expressly permitted to rely; (e) Borrower and Guarantors shall produce, use,
store and maintain the Inventory with commercially reasonable care and caution
and in accordance with applicable standards of any insurance and in conformity
with applicable laws (including the requirements of the Federal Fair Labor
Standards Act of 1938, as amended and all rules, regulations and orders related
thereto); (f) none of the Inventory or other Collateral constitutes farm
products or the proceeds thereof; (g) Borrower and Guarantors shall not sell
58
Inventory to any customer on approval, or any other basis which entitles the
customer to return or may obligate Borrower or any Guarantor to repurchase such
Inventory, except for returns and repurchases in connection with any warranties
issued on such Inventory in the ordinary course of business and upon accepting
any return or making any repurchase, Borrower shall provide Agent with prompt
notice thereof to the extent any return or repurchase involves Inventory with a
Value in excess of $100,000 and Agent may adjust the Borrowing Base or establish
Reserves accordingly to reflect such returned or repurchased Inventory and the
related Accounts; (h) Borrower and Guarantors shall keep the Inventory in good
and marketable condition; and (i) Borrower and Guarantors shall not, without
prior written notice to Agent or the specific identification of such Inventory
in a report with respect thereto provided by Borrower to Agent pursuant to
Section 7.1(a) hereof, acquire or accept any Inventory on consignment or
approval.
7.4 Equipment and Real Property Covenants
. With respect to the Equipment and Real Property: (a) upon Agent's
request, Borrower and Guarantors shall, at their expense, no more than once
during each Fiscal Year for Equipment or more than once during any two Fiscal
Years for Real Property, but at any time or times as Agent may request after the
occurrence and during the continuance of an Event of Default, deliver or cause
to be delivered to Agent written appraisals as to the Equipment and/or the Real
Property in form, scope and methodology reasonably acceptable to Agent and by an
appraiser reasonably acceptable to Agent, addressed to Agent and upon which
Agent is expressly permitted to rely; (b) Borrower and Guarantors shall (i) keep
the Equipment in good order, repair, running and marketable condition (ordinary
wear and tear excepted) and (ii) keep the Real Property in good order and repair
and in commercially reasonable operating condition (ordinary wear and tear
excepted); (c) Borrower and Guarantors shall use the Equipment and Real Property
with commercially reasonable care and caution and in accordance with applicable
standards of any insurance and in conformity with all applicable laws; (d) the
Equipment is and shall be used in the business of Borrower and Guarantors and
not for personal, family, household or farming use; (e) except as expressly
permitted under this Agreement, Borrower and Guarantors shall not remove any
Equipment from the locations set forth or permitted herein, except to the extent
necessary to have any Equipment repaired or maintained in the ordinary course of
its business or to move Equipment directly from one location set forth or
permitted herein to another such location (that is owned or covered by a
Collateral Access Agreement) and except for the movement of motor vehicles used
by or for the benefit of Borrower or such Guarantor in the ordinary course of
business; and (f) the Equipment is now and shall remain personal property and
Borrower and Guarantors shall not permit any of the Equipment to be or become a
part of or affixed to real property unless such real property is subject to one
of the Mortgages.
7.5 Power of Attorney
. Borrower and each Guarantor hereby irrevocably designates and appoints
Agent (and all persons designated by Agent) as Borrower's and such Guarantor's
true and lawful attorney-in-fact, and authorizes Agent, in Borrower's, such
Guarantor's or Agent's name, to at any time an Event of Default has occurred and
is continuing (i) demand payment on Receivables or other Collateral, (ii)
enforce payment of Receivables by legal proceedings or otherwise, (iii) exercise
all of Borrower's or such Guarantor's rights and remedies to collect any
Receivable or other Collateral, (iv) sell or assign any Receivable upon such
terms, for such amount and at such time or times as Agent deems advisable, (v)
settle, adjust, compromise, extend or renew an Account, (vi) discharge and
release any Receivable, (vii) prepare, file and sign Borrower's or such
Guarantor's name on any proof of claim in bankruptcy or other similar document
against an account debtor or other obligor in respect of any Receivables or
other Collateral, (viii) notify the post office authorities to change the
address for delivery of remittances from account debtors or other obligors in
respect of Receivables or other proceeds of Collateral to an address designated
by Agent, and open and dispose of all mail addressed to Borrower or Guarantor
and handle and store all mail relating to the Collateral; and (ix) do all acts
and things which are necessary, in Agent's reasonable determination, to fulfill
Borrower's or such Guarantor's obligations under this Agreement and the other
59
Financing Agreements; (x) take control in any manner of any item of payment in
respect of Receivables or constituting Collateral or otherwise received in or
for deposit in the Blocked Accounts or otherwise received by Agent or any
Lender, (xi) have access to any lockbox or postal box into which remittances
from account debtors or other obligors in respect of Receivables or other
proceeds of Collateral are sent or received, (xii) endorse Borrower's or such
Guarantor's name upon any items of payment in respect of Receivables or
constituting Collateral or otherwise received by Agent and any Lender and
deposit the same in Agent's account for application to the Obligations, (xiii)
endorse Borrower's or such Guarantor's name upon any chattel paper, document,
instrument, invoice, or similar document or agreement relating to any Receivable
or any goods pertaining thereto or any other Collateral, including any warehouse
or other receipts, or bills of lading and other negotiable or non-negotiable
documents, (xiv) clear Inventory the purchase of which was financed with Letter
of Credit Accommodations through U.S. Customs or foreign export control
authorities in Borrower's or such Guarantor's name, Agent's name or the name of
Agent's designee, and to sign and deliver to customs officials powers of
attorney in Borrower's or such Guarantor's name for such purpose, and to
complete in Borrower's or such Guarantor's or Agent's name, any order, sale or
transaction, obtain the necessary documents in connection therewith and collect
the proceeds thereof, and (xv) sign Borrower's or such Guarantor's name on any
verification of Receivables and notices thereof to account debtors or any
secondary obligors or other obligors in respect thereof. Borrower and each
Guarantor hereby releases Agent and Lenders and their respective officers,
employees and designees from any liabilities arising from any act or acts under
this power of attorney and in furtherance thereof, whether of omission or
commission, except as a result of Agent's or any Lender' s own gross negligence
or willful misconduct as determined pursuant to a final non-appealable order of
a court of competent jurisdiction.
7.6 Right to Cure
. Following and during the continuance of an Event of Default, Agent may,
at its option, upon notice to Borrower, (a) cure any default by Borrower or any
Guarantor under any agreement with a third party that materially affects the
Collateral, its value or the ability of Agent to collect, sell or otherwise
dispose of the Collateral or the rights and remedies of Agent or any Lender
therein or the ability of Borrower or any Guarantor to perform its obligations
hereunder or under any of the other Financing Agreements, (b) pay or bond on
appeal any judgment entered against Borrower or any Guarantor, (c) discharge
taxes, liens, security interests or other encumbrances at any time levied on or
existing with respect to the Collateral and pay any amount, incur any expense or
perform any act which, in Agent's judgment exercised in good faith, is necessary
or appropriate to preserve, protect, insure or maintain the Collateral and the
rights of Agent and Lenders with respect thereto. Agent may add any reasonable
amounts so expended to the Obligations and make Revolving Loans to pay such
amounts, such amounts to be repayable by Borrower within five (5) Business Days
after demand. Agent and Lenders shall be under no obligation to effect such
cure, payment or bonding and shall not, by doing so, be deemed to have assumed
60
any obligation or liability of Borrower or any Guarantor. Any payment made or
other action taken by Agent or any Lender under this Section shall be without
prejudice to any right to assert an Event of Default hereunder and to proceed
accordingly.
7.7 Access to Premises
. From time to time as requested by Agent, at the cost and expense of
Borrower, (a) Agent or its designee shall have complete access to all of
Borrower's and Guarantors' premises during normal business hours and after
notice to Borrower or such Guarantor, or at any time and without notice to
Borrower if an Event of Default exists or has occurred and is continuing, for
the purposes of inspecting, verifying and auditing the Collateral and all of
Borrower's and Guarantors' books and records, including the Records, and (b)
Borrower and each Guarantor shall promptly furnish to Agent such copies of such
books and records or extracts therefrom as Agent may request, and Agent or any
Lender or Agent's designee may use during normal business hours such of
Borrower's and Guarantors' personnel, equipment, supplies and premises as may be
reasonably necessary for the foregoing and if an Event of Default exists or has
occurred and is continuing for the collection of Receivables and realization of
other Collateral; provided that, so long as no Event of Default exists and is
continuing Agent shall not conduct such inspections, verifications and audits
more than three (3) times during any twelve-month period and Borrower shall only
be responsible for the cost and expense (not to exceed $30,000 in the aggregate)
of two (2) such inspections, verifications and audits.
SECTION 8. REPRESENTATIONS AND WARRANTIES
--------------------------------
Borrower and each Guarantor hereby represents and warrants to Agent and
Lenders the following:
8.1 Corporate Existence, Power and Authority
. Borrower and each Guarantor is a corporation duly organized and in good
standing under the laws of its state of incorporation and is duly qualified as a
foreign corporation and in good standing in all states or other jurisdictions
where the nature and extent of the business transacted by it or the ownership of
assets makes such qualification necessary, except for those jurisdictions in
which the failure to so qualify would not have a Material Adverse Effect on
Borrower's or Guarantor' s financial condition, results of operation or business
or the rights of Agent in or to any of the Collateral. The execution, delivery
and performance of this Agreement, the other Financing Agreements and the
transactions contemplated hereunder and thereunder (a) are all within Borrower's
and each Guarantor's corporate powers, (b) have been duly authorized, (c) are
not in contravention of law or the terms of Borrower's or such Guarantor's
certificate of incorporation, by-laws, or other organizational documentation,
(d) are not in contravention of the Indenture, (e) are not in contravention of
any other agreement or undertaking to which Borrower or any Guarantor is a party
or by which Borrower or any Guarantor or its property are bound except to the
extent that the same could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, and (f) will not result in the
creation or imposition of, or require or give rise to any obligation to grant,
any lien, security interest, charge or other encumbrance upon any property of
Borrower or any Guarantor. This Agreement and the other Financing Agreements to
which Borrower or any Guarantor is a party constitute legal, valid and binding
61
obligations of Borrower or such Guarantor enforceable in accordance with their
respective terms except in each case as such enforceability may be limited by
bankruptcy, insolvency, moratorium or similar laws affecting the enforceability
of creditors' rights generally and by equitable principles of general
applicability.
8.2 Name; State of Organization; Chief Executive Office; Collateral
Locations.
(a) The exact legal name of Borrower and each Guarantor is as set forth
on the signature page of this Agreement and in the Information Certificate.
Neither Borrower nor any Guarantor has, during the past five years, been known
by or used any other corporate or fictitious name or been the non-surviving
party to any merger or consolidation, or acquired all or substantially all of
the assets of any Person, or acquired any of its property or assets out of the
ordinary course of business, except as set forth in the Information Certificate.
(b) The Information Certificate accurately sets forth the organizational
identification number of Borrower and each Guarantor or accurately states that
Borrower or such Guarantor has none and accurately sets forth the federal
employer identification number of Borrower and each Guarantor.
(c) The chief executive office and mailing address of Borrower and each
Guarantor is, and Borrower's and Guarantors' Records concerning Accounts are
located only at, the address identified as such in Schedule 8.2 to the
Information Certificate and their only other places of business and the only
other locations of Collateral, if any, are the addresses set forth in Schedule
8.2 to the Information Certificate, subject to the rights of Borrower or any
Guarantor to establish new locations in accordance with Section 9.2 below. The
Information Certificate correctly identifies any of such locations which are not
owned by Borrower or Guarantor and sets forth the owners and/or operators
thereof.
8.3 Financial Statements; No Material Adverse Change.
(a) Subject to Section 8.3(b) below, all financial statements relating
to Borrower or any Guarantor which have been delivered by Borrower or any
Guarantor to Agent and Lenders since January 1, 2005 have been prepared in
accordance with GAAP (except as to any interim monthly financial statements,
which have been prepared in accordance with standards that are no more lenient
than those used in the preparation of monthly financial statements under the
Prior Loan Agreement) and fairly present in all material respects the financial
condition and the results of operation of Borrower and such Guarantor as at the
dates and for the periods set forth therein. Except as disclosed in any interim
financial statements furnished by Borrower and Guarantors to Agent from January
1, 2005 to the date of this Agreement, no act, condition or event has occurred
which had or is reasonably likely to have a Material Adverse Effect.
(b) (i) the audited consolidated balance sheet of the Borrower and its
Subsidiaries as of December 31, 2004 and the audited consolidated statements of
operations, stockholders' deficit and cash flows of the Borrower and its
Subsidiaries for the year then ended, together with the notes thereto and the
62
report of the Borrower's independent public accountants thereon (the "2004
----
Audited Financial Statements"), (ii) the restated audited consolidated balance
-------------------------
sheet of the Borrower and its Subsidiaries as of December 31, 2003, 2002 and
2001 and the restated audited consolidated statements of operations,
stockholders' deficit and cash flows of the Borrower and its Subsidiaries for
the years then ended, together with the notes thereto and the report of the
Borrower's independent public accountants thereon (the "Restated Financial
------------------
Statements") and (iii) if required to be filed with the SEC prior to the Closing
-----
Date, any unaudited interim condensed consolidated balance sheets and
consolidated statements of operations, stockholders' deficit and cash flows of
the Borrower and its Subsidiaries for such interim period, together with the
notes thereto (the "2005 Interim Financial Statements") will (A) have been
------------------------------------
prepared in accordance with GAAP applied on a consistent basis (except with
respect to prescribed changes in the application of GAAP that are described in
the notes thereto) throughout the periods to which they relate, except in the
case of the 2005 Interim Financial Statements, which are subject to normal
year-end adjustments and except for the absence of notes and certain other
information as permitted by Regulation S-X under the Securities Act, (B) comply
in all material respects with the applicable accounting requirements and the
rules and regulations of the SEC with respect thereto and (C) fairly present in
all material respects the consolidated financial condition of the Borrower and
its Subsidiaries as of the dates set forth therein and the consolidated results
of operations, cash flows and stockholders' deficit of the Borrower and its
Subsidiaries for the periods set forth therein.
8.4 Priority of Liens; Title to Properties
. The security interests and liens granted to Agent under this Agreement
and the other Financing Agreements constitute valid and perfected first priority
liens and security interests in and upon the Collateral, subject only to the
liens indicated on Schedule 8.4 to the Information Certificate and the other
liens permitted under Section 9.8 hereof. Borrower and each Guarantor has good
and marketable fee simple title to or valid leasehold interests in all of its
Real Property and good, valid and marketable title to all of its other
properties and assets, subject to no liens, mortgages, pledges, security
interests, encumbrances or charges of any kind, except those granted to Agent
and such others as are specifically listed on Schedule 8.4 to the Information
Certificate or permitted under Section 9.8 hereof.
8.5 Tax Returns
. Borrower and each Guarantor has filed, or caused to be filed, in a
timely manner all tax returns, reports and declarations which are required to be
filed by it. All information in such tax returns, reports and declarations is
complete and accurate in all material respects. Borrower and each Guarantor has
paid or caused to be paid all taxes due and payable or claimed due and payable
in any assessment received by it, except taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to Borrower or such Guarantor and with respect to which adequate
reserves have been set aside on its books. Adequate provision has been made for
the payment of all accrued and unpaid Federal, State, county, local, foreign and
other taxes whether or not yet due and payable and whether or not disputed.
8.6 Litigation
. Except as set forth on Schedules 8.6 and 8.11 to the Information
Certificate, (a) there is no investigation by any Governmental Authority
pending, or to the Borrower's Knowledge, threatened against Borrower or any
Guarantor, or its or their assets or business and (b) there is no action, suit,
proceeding or claim by any Person pending, or to the Borrower's Knowledge
threatened, against Borrower or any Guarantor or its or their assets, in each
case under clause (a) or (b), which could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. None of the items
disclosed on Schedules 8.6 and 8.11 to the Information certificate will, if
adversely determined, have a Material Adverse Effect.
63
8.7 Compliance with Other Agreement and Applicable Laws.
(a) Borrower and Guarantors are not in default under, or in violation
of the terms of, any agreement, contract, instrument, lease or other commitment
to which it is a party or by which it or any of its assets are bound, in each
case except to the extent that the same could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Borrower
and Guarantors are in compliance with the requirements of all applicable laws,
rules, regulations and orders of any Governmental Authority relating to their
respective businesses, including, without limitation, those set forth in or
promulgated pursuant to the Occupational Safety and Health Act of 1970, as
amended, the Fair Labor Standards Act of 1938, as amended, ERISA, the Code, as
amended, and the rules and regulations thereunder, and all Environmental Laws,
in each case except to the extent that such noncompliance could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(b) Borrower and Guarantors have obtained all material permits, licenses,
approvals, consents, certificates, orders or authorizations of any Governmental
Authority or which are required by any Environmental Law, in each case which are
required for the lawful conduct of its business (the "Permits"), all of the
Permits are valid and subsisting and in full force and effect and there are no
actions, claims or proceedings pending, or to the best of Borrower's Knowledge,
threatened, that seek the revocation, cancellation, suspension or modification
of any of the Permits, in each case except to the extent that any inaccuracy in
the foregoing statements could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
8.8 Environmental Compliance.
(a) Except as set forth on Schedule 8.8 to the Information Certificate,
to the Borrower's Knowledge, Borrower and its Subsidiaries have not generated,
used, stored, treated, transported, manufactured, handled, produced, released or
disposed of any Hazardous Materials, on or off its premises (whether or not
owned by it) in any manner which violates any applicable Environmental Law or
Permit, and the operations of Borrower and its Subsidiaries comply in all
respects with all Environmental Laws and all Permits, in each case except to the
extent that the same could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(b) Except as set forth on Schedule 8.8 to the Information Certificate, to
the Borrower's Knowledge, there is no investigation by any Governmental
Authority or any proceeding, complaint, order, directive, claim, citation or
notice by any Governmental Authority or any other person pending or threatened
with respect to any non-compliance with or violation of the requirements of any
Environmental Law by Borrower or any Subsidiary of Borrower or the release,
spill or discharge, threatened or actual, of any Hazardous Material or the
generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials or any other environmental,
health or safety matter in violation of Environmental Law which could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
64
(c) Except as set forth on Schedule 8.8 to the Information Certificate, to
the Borrower's Knowledge, Borrower and its Subsidiaries have no liability
(contingent or otherwise) in connection with a release, spill or discharge,
threatened or actual, of any Hazardous Materials or the generation, use,
storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials, in each case except to the extent that the
same could not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect.
(d) [Intentionally Omitted].
(e) To the Borrower's Knowledge, no conditions exist at any property now or
previously owned, leased or operated by Borrower or a Subsidiary, which could
reasonably be expected to give rise to any liability under any Environmental
Laws, in each case except to the extent that the same could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
8.9 Employee Benefits.
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or State law. Each
Plan which is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the Internal Revenue Service and to the
Borrower's Knowledge, nothing has occurred which would cause the loss of such
qualification. Borrower and its ERISA Affiliates have made all required
contributions to any Plan subject to Section 412 of the Code, and no application
for a funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending, or to the Borrower's Knowledge, threatened claims,
actions or lawsuits, or action by any Governmental Authority, with respect to
any Plan. There has been no nonexempt prohibited transaction or violation of
the fiduciary responsibility rules with respect to any Plan, in each case except
to the extent that the same could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to occur;
(ii) the current value of each Plan's assets (determined in accordance with the
assumptions used for funding such Plan pursuant to Section 412 of the Code) are
not less than such Plan's liabilities under Section 4001(a)(16) of ERISA; (iii)
Borrower and each Guarantor, and their ERISA Affiliates, have not incurred and
do not reasonably expect to incur, any liability under Title IV of ERISA with
respect to any Plan (other than premiums due and not delinquent under Section
4007 of ERISA); (iv) Borrower and each Guarantor, and their ERISA Affiliates,
have not incurred and do not reasonably expect to incur, any liability (and no
event has occurred which, with the giving of notice under Section 4219 of ERISA,
would result in such liability) under Section 4201 or 4243 of ERISA with respect
to a Multiemployer Plan; and (v) Borrower and each Guarantor, and their ERISA
Affiliates, have not engaged in a transaction that would be subject to Section
4069 or 4212(c) of ERISA.
8.10 Bank Accounts
. All of the deposit accounts, investment accounts or other accounts in
the name of or used by Borrower or any Guarantor maintained at any bank or other
65
financial institution are set forth on Schedule 8.10 to the Information
Certificate, subject to the right of Borrower and each Guarantor to establish
new accounts in accordance with Section 5.2 hereof.
8.11 Intellectual Property
. To the knowledge of Borrower, Schedule 8.11 to the Information
Certificate lists all GSI Intellectual Property (other than commercially
available prepackaged software and software generally available to the public)
owned, licensed or used by Borrower and each Guarantor in the development,
manufacturing and sale of products sold by Borrower and each Guarantor as of the
date of this Agreement. As of the date hereof, Borrower and Guarantors do not
have any material Intellectual Property registered, or subject to pending
applications, in the United States Patent and Trademark Office or any similar
office or agency in the United States, any State thereof, any political
subdivision thereof or in any other country, other than those described in
Schedule 8.11 to the Information Certificate and has not granted any material
licenses with respect thereto other than as set forth in Schedule 8.11 to the
Information Certificate. As of the date hereof, to the knowledge of Borrower,
no event has occurred which permits or would permit after notice or passage of
time or both, the revocation, suspension or termination of any GSI Intellectual
Property. To the knowledge of Borrower, (a) no GSI Intellectual Property owned
by Borrower or such Guarantor ("Owned Intellectual Property") or goods bearing,
embodying, or using any Owned Intellectual Property currently sold, or offered
for sale by or employed by Borrower or any Guarantor infringes any Intellectual
Property rights owned by any other Person presently and there is no pending or
threatened action, suit, proceeding or claim before any court or other
governmental authority contesting its right to sell or use any such Owned
Intellectual Property and (b), except as otherwise set forth in Schedule 8.11 to
the Information Certificate, no third party has infringed or misappropriated any
Owned Intellectual Property. Schedule 8.11 to the Information Certificate sets
forth all of the agreements or other arrangements of Borrower and each Guarantor
pursuant to which Borrower or any Guarantor has a license or other right to use
any Intellectual Property material to the businesses of Borrower and each
Guarantor owned by another Person as in effect on the date hereof (collectively,
together with such agreements or other arrangements as may be entered into by
Borrower or any Guarantor after the date hereof, collectively, the "License
Agreements" and individually, a "License Agreement"). All License Agreements
listed in Schedule 8.11 to the Information Certificate are in full force and
effect as of the date hereof. As of the date hereof, to the knowledge of
Borrower, Owned Intellectual Property is subject to no security interest, lien,
collateral assignment, pledge or other encumbrance in favor of any Person other
than Agent, except for any liens permitted under Section 9.8(b), (c) and (i).
To the Borrower's Knowledge, no trademark, servicemark, copyright or other
Intellectual Property at any time used by Borrower or any Guarantor which is
owned by another person, or owned by Borrower or such Guarantor is affixed to
any Eligible Inventory.
8.12 Subsidiaries; Affiliates; Capitalization; Solvency.
(a) Borrower and each Guarantor does not have any direct or indirect
Subsidiaries or Affiliates and is not engaged in any joint venture or
partnership except as set forth in Schedule 8.12 to the Information Certificate.
(b) Borrower and each Guarantor is the record and beneficial owner of all of
the issued and outstanding shares of Capital Stock of each of the Subsidiaries
listed on Schedule 8.12 to the Information Certificate as being owned by
66
Borrower or such Guarantor and 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,
rights to subscribe to, calls or commitments of any kind or nature and there are
no contracts, commitments, understandings or arrangements by which its
Subsidiaries is or may become bound to issue additional shares of it Capital
Stock or securities convertible into or exchangeable for such shares.
(c) The issued and outstanding shares of Capital Stock of Borrower and each
Guarantor are directly and beneficially owned and held by the persons indicated
in the Information Certificate, and in each case all of such shares have been
duly authorized and are fully paid and non-assessable, free and clear of all
claims, liens, pledges and encumbrances of any kind, except as disclosed in
writing to Agent prior to the date hereof.
(d) Borrower and each Guarantor is Solvent upon the creation of the
Obligations, the security interests of Agent and the other transactions
contemplated hereunder.
8.13 Labor Disputes.
(a) Set forth on Schedule 8.13 to the Information Certificate is a list
(including dates of termination) of all collective bargaining or similar
agreements between or applicable to Borrower and each Guarantor and any union,
labor organization or other bargaining agent in respect of the employees of
Borrower or any Guarantor on the date hereof.
(b) There is (i) no significant unfair labor practice complaint pending
against Borrower or any Guarantor or, to the Borrower's Knowledge, threatened
against it, before the National Labor Relations Board, and no significant
grievance or significant arbitration proceeding arising out of or under any
collective bargaining agreement is pending on the date hereof against Borrower
or any Guarantor or, to Borrower's Knowledge, threatened against it, and (ii) no
significant strike, labor dispute, slowdown or stoppage is pending against
Borrower or any Guarantor or, to the Borrower's Knowledge, threatened against
Borrower or any Guarantor, in each case except to the extent that the same could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
8.14 Restrictions on Subsidiaries
. Except for restrictions contained in this Agreement or any other
agreement with respect to Indebtedness of Borrower or any Guarantor permitted
hereunder as in effect on the date hereof, there are no contractual or
consensual restrictions on Borrower or any Guarantor or any of its Subsidiaries
which prohibit or otherwise restrict (a) the transfer of cash or other assets
(i) between Borrower or any Guarantor and any of its or their Subsidiaries or
(ii) between any Subsidiaries of Borrower or any Guarantor or (b) the ability of
Borrower or any Guarantor or any of its or their Subsidiaries to incur
Indebtedness or grant security interests to Agent or any Lender in the
Collateral.
8.15 Material Contracts
. As of the Closing Date, Schedule 8.15 to the Information Certificate
sets forth all Material Contracts to which Borrower or any Guarantor is a party
or is bound as of the date hereof. Borrower and Guarantors have delivered true,
correct and complete copies of such Material Contracts to Agent on or before the
date hereof. To the Borrower's Knowledge, Borrower and Guarantors are not in
67
breach or in default in any material respect of or under any Material Contract,
and have not received any notice of the intention of any other party thereto to
terminate any Material Contract, in each case except to the extent that the same
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
8.16 [Intentionally Omitted]
.
8.17 Accuracy and Completeness of Information
. All information furnished by Borrower or any Guarantor in writing to
Agent or any Lender in connection with this Agreement or any of the other
Financing Agreements or any transaction contemplated hereby or thereby,
including all information on the Information Certificate, is true and correct in
all material respects on the date as of which such information is dated or
certified and does not omit any material fact necessary in order to make such
information not misleading.
8.18 Senior Indebtedness
. All the Obligations constitute "Senior Indebtedness", as such term is
defined in the Indenture.
8.19 [Intentionally Omitted]
.
8.20 New Disclosures
. To the extent any actions are taken which are expressly permitted under
any Financing Agreements and which result in any representation or warranty made
in any Financing Agreement or in the Information Certificate being inaccurate or
misleading, Borrower shall promptly provide Agent with updated information as
required to make the foregoing complete and accurate and thereafter, the
applicable representations, warranties and Information Certificate shall be
deemed to be amended to reflect such information provided to Agent.
8.21 Acquisition Agreement
. As of the date hereof, Borrower has delivered to Agent a complete and
correct copy of the Acquisition Agreement (including all schedules, exhibits,
amendments, supplements, modifications, assignments and all other documents
delivered pursuant thereto or in connection therewith). Neither Borrower nor
any Guarantor, and to the knowledge of Borrower, no other Person party thereto
is in material default in the performance or compliance with any provisions
thereof. The Acquisition Agreement complies with, and the Acquisition has been
consummated in accordance with, all laws applicable to Holdings, Borrower and
Borrower's Subsidiaries. The Acquisition Agreement is in full force and effect
as of the date hereof and has not been terminated, rescinded or withdrawn. All
material approvals by Governmental Authorities having jurisdiction over Seller,
Borrower, Guarantors and other Persons referenced therein with respect to the
transactions contemplated by the Acquisition Agreement have been obtained, and
no such approvals impose any conditions to the consummation of the transactions
contemplated by the Acquisition Agreement. To Borrower's Knowledge, none of the
Seller's representations and warranties in the Acquisition Agreement contain any
untrue statement of a material fact or omit any fact necessary to make the
statements therein not misleading.
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SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
-------------------------------------
9.1 Maintenance of Existence.
(a) Borrower and each of its Subsidiaries shall at all times preserve,
renew and keep in full force and effect its corporate existence and rights and
franchises with respect thereto and maintain in full force and effect all
licenses, trademarks, tradenames, approvals, authorizations, leases, contracts
and Permits necessary to carry on the business as presently or proposed to be
conducted, except as to any Subsidiary as permitted in Section 9.7 hereto.
(b) Neither Borrower nor any of its Subsidiaries shall change its name
unless (i) Agent shall have received not less than thirty (30) days prior
written notice from Borrower of such proposed change in its corporate name,
which notice shall accurately set forth the new name; and (ii) promptly after
the effective date of such name change, Agent shall receive a copy of the
amendment to the Certificate of Incorporation of Borrower or such Subsidiary
providing for the name change certified by the Secretary of State of the
jurisdiction of incorporation or organization of Borrower or such Subsidiary as
soon as it is available.
(c) Neither Borrower nor any of its Subsidiaries shall change its chief
executive office or its mailing address or organizational identification number
(or if it does not have one, shall not acquire one) unless Agent shall have
received not less than thirty (30) days' prior written notice from Borrower of
such proposed change, and Agent shall have received such agreements as Agent may
reasonably require in connection therewith to establish, preserve and maintain
the perfection and priority of its security interests in the Collateral.
Neither Borrower nor any Guarantor shall change its type of organization,
jurisdiction of organization or other legal structure.
9.2 New Collateral Locations
. Borrower and each Subsidiary may only locate any Collateral at any new
location within the continental United States provided Borrower or such
Subsidiary (a) gives Agent thirty (30) days prior written notice of the intended
opening of any such new location and (b) executes and delivers, or causes to be
executed and delivered, to Agent such agreements, documents, and instruments as
Agent may deem reasonably necessary or desirable to establish, preserve and
maintain the perfection and priority of its security interests in the
Collateral.
9.3 Compliance with Laws, Regulations, Etc.
(a) Borrower and each Guarantor shall, and shall cause its Subsidiaries
to, at all times, comply in all respects with all laws, rules, regulations,
licenses, approvals, orders and other Permits applicable to it and duly observe
all requirements of any foreign, Federal, State or local Governmental Authority,
including ERISA, the Code, the Occupational Safety and Health Act of 1970, as
amended, the Fair Labor Standards Act of 1938, as amended, and all statutes,
rules, regulations, orders, permits and stipulations relating to environmental
pollution and employee health and safety, including all of the Environmental
Laws, in each case except to the extent that the same could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
69
(b) Borrower and each Guarantor shall, and shall cause its Subsidiaries to,
give written notice to Agent promptly after Borrower's or such Guarantor's
receipt of any notice of, or Borrower's or such Guarantor's otherwise obtaining
knowledge of, (i) the occurrence of any event involving the release, spill or
discharge, threatened or actual, of any Hazardous Material or (ii) any
investigation, proceeding, complaint, order, directive, claims, citation or
notice with respect to: (A) any non-compliance with or violation of any
Environmental Law by Borrower or such Guarantor or (B) the release, spill or
discharge, threatened or actual, of any Hazardous Material other than in the
ordinary course of business, as permitted under any applicable Environmental Law
or to the extent that such event could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Copies of all
environmental surveys, audits, assessments, feasibility studies and results of
remedial investigations conducted by Borrower or a Guarantor after the date
hereof shall be promptly furnished, or caused to be furnished, by Borrower or
Guarantors to Agent. Borrower and each Guarantor shall take prompt action to
respond to any material non-compliance with any Environmental Laws of which it
has knowledge and shall thereafter report to Agent on such response.
(c) Without limiting the generality of the foregoing, whenever Agent
reasonably determines in good faith that there is material non-compliance, or
any condition which requires any action by Borrower or any Guarantor in order to
avoid any material non-compliance, with any Environmental Law, Borrower shall,
at Agent's request and Borrower's expense: (i) cause an independent
environmental engineer reasonably acceptable to Agent to conduct such tests of
the site where material non-compliance or alleged material non-compliance with
such Environmental Laws has occurred as to such material non-compliance and
prepare and deliver to Agent a report as to such material non-compliance setting
forth the results of such tests, a proposed plan for responding to any
environmental problems described therein, and an estimate of the costs thereof
and (ii) provide to Agent a supplemental report of such engineer whenever the
scope of such material non-compliance, or Borrower's or such Guarantor's
response thereto or the estimated costs thereof, shall change in any material
respect.
(d) Borrower and each Guarantor shall, jointly and severally, indemnify and
hold harmless Agent and Lenders and their respective directors, officers,
employees, agents, invitees, representatives, successors and assigns, from and
against any and all losses, claims, damages, liabilities, costs, and expenses
(including reasonable attorneys' fees and expenses) directly or indirectly
arising out of or attributable to the use, generation, manufacture,
reproduction, storage, release, threatened release, spill, discharge, disposal
or presence of a Hazardous Material in violation of applicable Environmental
Laws, including the costs of any required or necessary repair, cleanup or other
remedial work with respect to any property of Borrower or any Guarantor and the
preparation and implementation of any closure, remedial or other required plans.
The indemnifications in this Section 9.3 shall survive the payment of the
Obligations and the termination of this Agreement.
9.4 Payment of Taxes and Claims
. Borrower and each Guarantor shall, and shall cause its Subsidiaries to,
duly pay and discharge all material taxes, assessments, contributions and
governmental charges upon or against it or its properties or assets, except for
taxes the validity of which are being contested in good faith by appropriate
70
proceedings diligently pursued and available to Borrower, such Guarantor or such
Subsidiary, as the case may be, and with respect to which adequate reserves have
been set aside on its books. Borrower and each Guarantor shall be liable for
any tax or penalties imposed on Agent or any Lender as a result of the financing
arrangements provided for herein and Borrower and each Guarantor agrees to
indemnify and hold Agent harmless with respect to the foregoing, and to repay to
Agent, for the benefit of Lenders, on demand the amount thereof, and until paid
by Borrower or such Guarantor such amount shall be added and deemed part of the
Loans, provided, that, nothing contained herein shall be construed to require
Borrower or any Guarantor to pay any income or franchise taxes attributable to
the income of Lenders from any amounts charged or paid hereunder to Lenders. The
foregoing indemnity shall survive the payment of the Obligations and the
termination of this Agreement.
9.5 Insurance
. Borrower and each Guarantor shall, and shall cause its Subsidiaries to,
at all times, maintain with financially sound and reputable insurers insurance
with respect to the Collateral against loss or damage and all other insurance of
the kinds and in the amounts customarily insured against or carried by
corporations engaged in the same or similar businesses and similarly situated.
Said policies of insurance shall be reasonably satisfactory to Agent as to form,
amount and insurer. Borrower and Guarantors shall furnish certificates,
policies or endorsements to Agent as Agent shall reasonably require as proof of
such insurance, and, if Borrower or any Guarantor fails to do so, Agent is
authorized, but not required, to obtain such insurance at the expense of
Borrower. All policies shall provide for the insurer thereunder to endeavor to
give at least thirty (30) days prior written notice to Agent of any cancellation
or reduction of coverage and that at any time an Event of Default has occurred
and is continuing, Agent may act as attorney for Borrower and each Guarantor in
obtaining, adjusting, settling, amending, canceling and replacing such
insurance. Borrower and Guarantors shall cause Agent to be named as a loss
payee and an additional insured (but without any liability for any premiums)
under such insurance policies and Borrower and any Guarantors shall obtain
non-contributory lender's loss payable endorsements to all insurance policies in
form and substance reasonably satisfactory to Agent. Such lender's loss payable
endorsements shall specify that the proceeds of such insurance shall be payable
to Agent as its interests may appear and further specify that Agent and Lenders
shall be paid regardless of any act or omission by Borrower, Guarantor or any of
its or their Affiliates. Notwithstanding the foregoing, such proceeds shall be
deposited in a bank account subject to a Deposit Account Control Agreement if
Borrower requests such proceeds and delivers a certificate to Agent confirming
Borrower's intention to use such Net Proceeds in accordance with the
requirements of the following sentence. The Net Proceeds of any insurance up to
$5,000,000 in any Fiscal Year may be used by Borrower or any Guarantor to
repair, restore or replace property that was damaged, destroyed or otherwise
rendered not reasonably useful by any casualty event; provided, that (a) such
--------
Net Proceeds are reinvested within one hundred eighty (180) days of receipt
thereof, (b) Excess Availability at the time of such reinvestment is at least
$7,500,000, (c) no Event of Default has occurred and is continuing at the time
of receipt of such Net Proceeds and at the time of reinvestment and (d) until
such reinvestment, all Net Proceeds from insurance shall be held in a bank
account subject to a Deposit Account Control Agreement. If any of the foregoing
conditions set forth in clauses (a)-(d) are not satisfied or Borrower or any
Guarantor notifies Agent that it does not intend to make such reinvestment or to
the extent that such Net Proceeds in any Fiscal Year are in excess of the
$5,000,000 threshold for such Fiscal Year, Agent may apply such excess Net
Proceeds to payment of the Obligations, whether or not then due, in accordance
with Section 6.4.
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9.6 Financial Statements and Other Information.
(a) Borrower and each Guarantor shall, and shall cause its Subsidiaries
to, keep proper books and records in which true and complete entries shall be
made of all dealings or transactions of or in relation to the Collateral and the
business of Borrower, such Guarantor and such Subsidiary in accordance with
GAAP. Borrower and Guarantors shall promptly furnish to Agent and Lenders all
such financial and other information as Agent shall reasonably request relating
to the Collateral and the assets, business and operations of Borrower and
Guarantors to the extent such information can be produced without undue expense
or burden to Borrower. Without limiting the foregoing, Borrower and Guarantors
shall furnish or cause to be furnished to Agent, the following: (i) within
thirty (30) days after the end of each of the first two Fiscal Months of each
Fiscal Quarter commencing with the Fiscal Month ending July 31, 2005, monthly
unaudited consolidated financial statements, and unaudited consolidating
financial statements (including in each case balance sheets, statements of
income and loss, statements of cash flow (which cash flow statements may be on a
consolidated basis), and statements of shareholders' equity), all in reasonable
detail, fairly presenting the financial position and the results of the
operations of Borrower and its Subsidiaries as of the end of and through such
Fiscal Month, certified to be correct by the chief financial officer of
Borrower, subject to normal year-end adjustments and no footnotes and
accompanied by a compliance certificate substantially in the form of Exhibit C
hereto, along with a schedule in a form reasonably satisfactory to Agent of the
calculations used in determining, as of the end of such month, whether Borrower
and Guarantors are in compliance with the covenant set forth in Sections, 9.22
of this Agreement for such month, (ii) within forty-five (45) days after the end
of each Fiscal Quarter commencing with the Fiscal Quarter ending June 30, 2005
(which Fiscal Quarter shall be deemed to have commenced on the Closing Date and
to have ended on June 30, 2005), quarterly unaudited consolidated financial
statements, and unaudited consolidating financial statements (including in each
case balance sheets, statements of income and loss, statements of cash flow
(which cash flow statements may be on a consolidated basis), and statements of
shareholders' equity), all in reasonable detail, fairly presenting the financial
position and the results of the operations of Borrower and its Subsidiaries as
of the end of and through such Fiscal Quarter, certified to be correct by the
chief financial officer of Borrower, subject to normal year-end adjustments and
the absence of footnotes and accompanied by a compliance certificate
substantially in the form of Exhibit C hereto, along with a schedule in a form
reasonably satisfactory to Agent of the calculations used in determining, as of
the end of the last month in such Fiscal Quarter, whether Borrower and
Guarantors are in compliance with the covenant set forth in Section 9.22 of this
Agreement for such month and (iii) within ninety (90) days after the end of each
Fiscal Year, audited consolidated financial statements and unaudited
consolidating financial statements of Borrower and its Subsidiaries (including
in each case balance sheets, statements of income and loss, statements of cash
flow, and statements of shareholders' equity), and the accompanying notes
thereto, all in reasonable detail, fairly presenting the financial position and
the results of the operations of Borrower and its Subsidiaries as of the end of
and for such Fiscal Year (provided, that the Fiscal Year ending December 31,
2005 shall be deemed to have commenced on the Closing Date and to have ended on
December 31, 2005), together with the unqualified opinion of independent
certified public accountants with respect to the audited consolidated financial
statements, which accountants shall be an independent accounting firm selected
by Borrower and reasonably acceptable to Agent, that such audited consolidated
72
financial statements have been prepared in accordance with GAAP, and present
fairly the results of operations and financial condition of Borrower and its
Subsidiaries as of the end of and for the Fiscal Year then ended.
(b) Borrower and Guarantors shall promptly notify Agent in writing of the
details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to Collateral having a value of more than $2,500,000, (ii) any
material amendment or waiver to the Indenture (in which event Borrower and
Guarantors shall provide Agent with a copy of such amendment or waiver), (iii)
any order, judgment or decree in excess of $2,500,000 that becomes entered
against Borrower or any Guarantor or any of its or their properties or assets,
(iv) any notification of a material violation of laws or regulations received by
Borrower or any Guarantor in writing, (v) any ERISA Event, and (vi) the
occurrence of any Default or Event of Default.
(c) Borrower and Guarantors shall promptly after the sending or filing
thereof furnish or cause to be furnished to Agent copies of all reports which
Borrower or any Guarantor sends to its stockholders generally and copies of all
reports and registration statements which Borrower or any Guarantor files with
the Securities and Exchange Commission, any national securities exchange or the
National Association of Securities Dealers, Inc.
(d) Borrower and Guarantors shall furnish or cause to be furnished to Agent
such budgets, forecasts, projections and other information respecting the
Collateral and the business of Borrower and Guarantors, as Agent may, from time
to time, reasonably request (including, without limitation, an annually prepared
monthly budget within thirty (30) days of the start of Borrower's Fiscal Year
indicating line items for budgeted Borrowing Base levels and credit
utilization). Agent is hereby authorized to deliver a copy of any financial
statement or any other information relating to the business of Borrower and
Guarantors to any court or other Governmental Authority to which Agent is
legally required to deliver the same or to any Lender or Participant or
prospective Lender or Participant or any Affiliate of any Lender or Participant,
in each case, with respect to any Participant, prospective Lender or prospective
Participant or any of their Affiliates, who agrees to keep the same confidential
on the same terms and conditions as set forth in Section 13.9. Borrower and
each Guarantor hereby irrevocably authorizes and directs all accountants or
auditors to deliver to Agent, at Borrower's expense, copies of the financial
statements of Borrower and Guarantors and any reports or management letters
prepared in writing by such accountants or auditors on behalf of Borrower or any
Guarantor and to disclose to Agent and Lenders such information as they may have
regarding the business of Borrower and any Guarantor reasonably related to such
financial statements, reports or management letters as Agent may request. Any
documents, schedules, invoices or other papers delivered to Agent or any Lender
may be destroyed or otherwise disposed of by Agent or such Lender one (1) year
after the same are delivered to Agent or such Lender, except as otherwise
designated by Borrower to Agent or such Lender in writing.
(e) Borrower shall furnish to Agent on the first Business Day of December of
each Fiscal Year (commencing on December 1, 2005) a revised Schedule 6 to this
Agreement setting forth each of the twelve (12) Fiscal Months for the
immediately following Fiscal Year of Borrower.
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9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc
. Borrower and each Guarantor shall not, and shall not permit any of its
Subsidiaries (other than Brazil) to, directly or indirectly,
(a) merge into or with or consolidate with any other Person or permit
any other Person to merge into or with or consolidate with it, except that (x)
any wholly-owned domestic Subsidiary of Borrower may merge with and into or
consolidate with any other wholly-owned domestic Subsidiary of Borrower, and any
wholly-owned Foreign Subsidiary of Borrower may merge with and into or
consolidate with any other wholly-owned Foreign Subsidiary of Borrower and (y)
any Subsidiary formed for the purpose of effectuating a Permitted Acquisition
may merge or consolidate with a Person acquired pursuant to such Permitted
Acquisition; provided, that, in each case above, each of the following
conditions is satisfied: (i) Agent shall have received not less than ten (10)
Business Days' prior written notice of the intention of such Subsidiaries to so
merge or consolidate, which notice shall set forth in reasonable detail
reasonably satisfactory to Agent, the persons that are merging or consolidating,
which person will be the surviving entity, the locations of the assets of the
persons that are merging or consolidating, and the material agreements and
documents relating to such merger or consolidation, (ii) Agent shall have
received such other information with respect to such merger or consolidation as
Agent may reasonably request, (iii) as of the effective date of the merger or
consolidation and immediately after giving effect thereto, no Default or Event
of Default shall exist or have occurred, (iv) Agent shall have received, true,
correct and complete copies of all agreements, documents and instruments
relating to such merger or consolidation then in effect or to be executed and
delivered upon the consummation thereof (in substantially final form),
including, but not limited to, the certificate or certificates of merger to be
filed with each appropriate Secretary of State (with a copy as filed promptly
after such filing), (v) the surviving corporation shall expressly confirm,
ratify and assume the Obligations and the Financing Agreements to which it is a
party in writing, in form and substance reasonably satisfactory to Agent, and
(vi) Borrower and Guarantors shall execute and deliver such other agreements,
documents and instruments as Agent may reasonably request in connection
therewith;
(b) sell, assign, lease, transfer, abandon or otherwise dispose of any
Capital Stock or Indebtedness to any other Person or any of its assets to any
other Person, except for
(i) sales of Inventory in the ordinary course of business,
(ii) the sale or other dispositions of assets (excluding Eligible Inventory,
Eligible Accounts and Capital Stock of any Subsidiary of Borrower) in the
ordinary course of business so long as (A) such sales or other dispositions do
not involve assets having an aggregate Fair Market Value in excess of $5,000,000
for all such assets disposed of in any Fiscal Year of Borrower or as Agent may
otherwise agree, (B) to the extent such assets to be sold consist of Eligible
Equipment or Eligible Real Property, Borrower provides Agent with prior written
notice identifying such assets to be sold, (C) no Event of Default shall have
occurred and be continuing at the time of and immediately after giving effect to
any such sale or disposition, (D) the consideration received is at least equal
to the Fair Market Value of such assets sold or otherwise disposed of and (E)
the Net Proceeds from such sale or disposition are applied to reduce the then
outstanding principal balance of the Loans; provided, that in lieu of clause
--------
(E), Borrower or any Guarantor may use such Net Proceeds to reinvest in
productive assets of a kind then used or usable in the business of Borrower or
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such Guarantor so long as (1) such Net Proceeds are reinvested within three
hundred sixty-five (365) days of receipt thereof, (2) no Event of Default has
occurred and is continuing at the time of such reinvestment and (3) until such
reinvestment, all such Net Proceeds shall be held in a bank account subject to a
Deposit Account Control Agreement. If any of the foregoing conditions set forth
in clauses (1)-(3) are not satisfied or Borrower or any Guarantor notifies Agent
that it does not intend to make such reinvestment, then such Net Proceeds shall
be applied to reduce the then outstanding principal balance of the Loans,
(iii) the issuance and sale by Holdings of Capital Stock of Holdings after
the date hereof; provided, that, no Change of Control shall result immediately
after giving effect to such issuance of Capital Stock,
(iv) the sale of the Capital Stock of Brazil; provided, that if Excess
--------
Availability is less than $7,500,000 at the time of, or immediately after giving
effect to, such sale, the proceeds from such sale shall be applied to repay the
outstanding amount of the Loans until Excess Availability is $7,500,000.
(c) wind up, liquidate or dissolve except that any Guarantor (other
than Holdings) may wind up, liquidate and dissolve, provided, that, each of the
following conditions is satisfied; (i) the winding up, liquidation and
dissolution of such Guarantor shall not violate any law or any order or decree
of any court or other Governmental Authority in any material respect and shall
not conflict with or result in the breach of, or constitute a default under, any
indenture, mortgage, deed of trust, or any other agreement or instrument to
which Borrower or any Guarantor is a party or may be bound, (ii) such winding
up, liquidation or dissolution shall be done in accordance with the requirements
of all applicable laws and regulations, (iii) effective upon such winding up,
liquidation or dissolution, all of the assets and properties of such Guarantor
shall be duly and validly transferred and assigned to Borrower, free and clear
of any liens, restrictions or encumbrances other than the security interest and
liens of Agent (and Agent shall have received such evidence thereof as Agent may
reasonably require) and Agent shall have received such deeds, assignments or
other agreements as Agent may reasonably request to evidence and confirm the
transfer of such assets to of such Guarantor to Borrower, (iv) Agent shall have
received all documents and agreements that Borrower or any Guarantor has filed
with any Governmental Authority or as are otherwise required to effectuate such
winding up, liquidation or dissolution, (v) neither Borrower nor any Guarantor
shall assume any Indebtedness, obligations or liabilities as a result of such
winding up, liquidation or dissolution, or otherwise become liable in respect of
any obligations or liabilities of the entity that is winding up, liquidating or
dissolving, unless such Indebtedness is otherwise expressly permitted hereunder,
(vi) Agent shall have received not less than ten (10) Business Days prior
written notice of the intention of such Guarantor to wind up, liquidate or
dissolve, and (vii) as of the date of such winding up, liquidation or
dissolution and immediately after giving effect thereto, no Default or Event of
Default shall exist or have occurred; or
(d) agree to do any of the foregoing which are otherwise prohibited pursuant
to Sections 9.7(a), 9.7(b) or 9.7(c) hereof.
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9.8 Encumbrances
. Borrower and each Guarantor shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any security interest,
mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever on
any of its assets or properties, including the Collateral, except:
(a) the security interests and liens of Agent for itself and the
benefit of Lenders;
(b) liens securing the payment of taxes, assessments or other governmental
charges or levies either not yet overdue or the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to Borrower, such Guarantor or such Subsidiary, as the case may be and
with respect to which adequate reserves have been set aside on its books;
(c) non-consensual statutory liens (other than liens securing the payment of
taxes as provided in clause (b) above) arising in the ordinary course of
Borrower's, such Guarantor's or such Subsidiary's business to the extent: (i)
such liens secure Indebtedness which is not overdue or (ii) such liens secure
Indebtedness relating to claims or liabilities which are fully insured and being
defended at the sole cost and expense and at the sole risk of the insurer or
being contested in good faith by appropriate proceedings diligently pursued and
available to Borrower, such Guarantor or such Subsidiary, in each case prior to
the commencement of foreclosure or other similar proceedings and with respect to
which adequate reserves have been set aside on its books;
(d) zoning restrictions, easements, licenses, covenants and other
restrictions affecting the use of Real Property which (i) are disclosed in any
endorsement to, commitment for or policy of title insurance issued to the Agent
as of the Closing Date with respect to such Real Property, or (ii) do not
interfere in any material respect with the use of such Real Property or ordinary
conduct of the business of Borrower, such Guarantor or such Subsidiary as
presently conducted thereon or materially impair the value of the Real Property
which may be subject thereto;
(e) purchase money security interests in Equipment (including Capital
Leases) and purchase money mortgages on Real Property to secure Indebtedness
permitted under Section 9.9(b) hereof;
(f) pledges and deposits of cash by Borrower or any Guarantor after the date
hereof in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security benefits
consistent with the current practices of Borrower or such Guarantor as of the
date hereof or as otherwise required by applicable law;
(g) pledges and deposits of cash by Borrower or any Guarantor after the date
hereof to secure the performance of tenders, bids, leases, trade contracts
(other than for the repayment of Indebtedness), statutory obligations and other
similar obligations, in each case in the ordinary course of business consistent
with the current practices of Borrower or such Guarantor as of the date hereof;
76
provided, that, in connection with any performance bonds issued by a surety or
other person, the issuer of such bond shall have waived in writing any rights in
or to, or other interest in, any of the Collateral in an agreement, in form and
substance reasonably satisfactory to Agent;
(h) precautionary UCC financing statement filings in respect of operating
leases of equipment or other materials which are not owned by Borrower or any
Guarantor but are located on the premises of Borrower or such Guarantor (but not
in connection with, or as part of, the financing thereof) from time to time in
the ordinary course of business and consistent with current practices of
Borrower or such Guarantor;
(i) judgments and other similar liens arising in connection with court
proceedings that do not constitute an Event of Default, provided, that, (i) such
judgments and liens are being contested in good faith and by appropriate
proceedings diligently pursued, (ii) adequate reserves or other appropriate
provision, if any, as are required by GAAP have been made therefor on Borrower's
or the applicable Subsidiary's books, (iii) such judgments and liens are not
then enforceable, whether by a stay of enforcement thereof or otherwise and (iv)
Agent may establish an appropriate Reserve with respect thereto;
(j) the security interests and liens set forth on Schedule 8.4 to the
Information Certificate;
(k) the security interests and liens on the assets of a Foreign Subsidiary
securing Indebtedness of such Foreign Subsidiary to the extent such Indebtedness
is permitted under Section 9.9 hereof; and
(l) other security interests and liens on assets with a Fair Market Value
not to exceed $750,000; provided, that Agent has the right to implement a
--------
Reserve to the extent such liens and security interests are on Collateral in the
Borrowing Base or otherwise adversely affect such Collateral.
9.9 Indebtedness
. Borrower and each Guarantor shall not, and shall not permit any of its
Subsidiaries to, incur, create, assume, become or be liable in any manner with
respect to, or permit to exist, any Indebtedness, or guarantee, assume, endorse,
or otherwise become responsible for (directly or indirectly), the Indebtedness,
performance, obligations or dividends of any other Person, except:
------
(a) the Obligations;
(b) purchase money Indebtedness (including Capital Leases but excluding
operating leases) arising after the date hereof to the extent secured by
purchase money security interests in Equipment (including Capital Leases) and
purchase money mortgages on Real Property not to exceed $5,000,000 in the
aggregate at any time outstanding so long as such security interests and
mortgages do not apply to any property of Borrower, such Guarantor or such
Subsidiary other than the Equipment or Real Property so acquired, and the
Indebtedness secured thereby does not exceed the cost of the Equipment or Real
Property so acquired, as the case may be;
77
(c) guarantees by Borrower or any Guarantor of the Obligations of the other
Borrower or such Guarantors in favor of Agent for the benefit of Lenders;
(d) the Indebtedness of Borrower or any Guarantor or any of their
Subsidiaries arising after the date hereof pursuant to loans by Borrower or any
Guarantor permitted under Sections 9.10(g), (h) and (n) hereof;
(e) unsecured Indebtedness of Borrower arising after the date hereof to any
third person (but not to Borrower or any other Guarantor), provided, that, each
of the following conditions is satisfied as determined by Agent: (i) such
Indebtedness shall be on terms and conditions acceptable to Agent and Required
Lenders shall be subject and subordinate in right of payment to the right of
Agent and Lenders to receive the prior indefeasible payment of all of the
Obligations pursuant to the terms of an intercreditor agreement between Agent
and such third party, in form and substance satisfactory to Agent, (ii) Agent
shall have received not less than ten (10) days prior written notice of the
intention of Borrower or such Guarantor to incur such Indebtedness, which notice
shall set forth in reasonable detail reasonably satisfactory to Agent the amount
of such Indebtedness, the person or persons to whom such Indebtedness will be
owed, the interest rate, the schedule of repayments and maturity date with
respect thereto and such other information as Agent may reasonably request with
respect thereto, (iii) Agent shall have received true, correct and complete
copies of all agreements, documents and instruments evidencing or otherwise
related to such Indebtedness, (iv) the proceeds of such Indebtedness shall be
used for general corporate purposes not prohibited by this Agreement; provided,
that if an Event of Default has occurred and is continuing at the time such
Indebtedness is issued, the proceeds thereof shall be applied against the
Obligations, in accordance with Section 6.4, (v) as of the date of incurring
such Indebtedness and immediately after giving effect thereto, no Default or
Event of Default shall exist, (vi) Borrower and such Guarantor shall not,
directly or indirectly, (A) amend, modify, alter or change the terms of such
Indebtedness or any agreement, document or instrument related thereto, except
that Borrower or such Guarantor may, after prior written notice to Agent, amend,
modify, alter or change the terms thereof so as to extend the maturity thereof,
or defer the timing of any payments in respect thereof, or to forgive or cancel
any portion of such Indebtedness (other than pursuant to payments thereof), or
to reduce the interest rate or any fees in connection therewith, or (B) redeem,
retire, defease, purchase or otherwise acquire such Indebtedness (except
pursuant to regularly scheduled payments permitted herein), or set aside or
otherwise deposit or invest any sums for such purpose, and (vii) Borrower and
Guarantors shall furnish to Agent all notices or demands in connection with such
Indebtedness either received by Borrower or any Guarantor or on its behalf
promptly after the receipt thereof, or sent by Borrower or any Guarantor or on
its behalf concurrently with the sending thereof, as the case may be;
(f) the Indebtedness set forth on Schedule 9.9 to the Information
Certificate (including, without limitation, Indebtedness under the Indenture);
provided, that, (i) Borrower and Guarantors may only make regularly scheduled
payments of principal and interest in respect of such Indebtedness in accordance
with the terms of the agreement or instrument evidencing or giving rise to such
Indebtedness as in effect on the date hereof; provided, that Borrower may make
Permitted Bond Repurchases in accordance with Section 9.23 hereof, (ii) Borrower
and Guarantors shall not, directly or indirectly, (A) amend, modify, alter or
78
change the terms of such Indebtedness or any agreement, document or instrument
related thereto as in effect on the date hereof if materially adverse to the
interests of Agent and Lenders, except that Borrower and Guarantors may, after
prior written notice to Agent, amend, modify, alter or change the terms thereof
so as to extend the maturity thereof, or defer the timing of any payments in
respect thereof, or to forgive or cancel any portion of such Indebtedness (other
than pursuant to payments thereof), or to reduce the interest rate or any fees
in connection therewith or to increase the principal amount under the Indenture
so long as after giving effect to such increase, the Fixed Charge Coverage Ratio
would be at least 1.0:1.0 for the prior 12 month period then ending on a pro
forma basis immediately after giving effect to such increase in such principal
amount for such 12 month period, or (B) redeem, retire, defease, purchase or
otherwise acquire such Indebtedness (other than Permitted Bond Repurchases under
Section 9.23), and (iii) Borrower and Guarantors shall furnish to Agent all
notices or demands in connection with such Indebtedness either received by
Borrower or any Guarantor or on its behalf, promptly after the receipt thereof,
or sent by Borrower or any Guarantor or on its behalf, concurrently with the
sending thereof, as the case may be;
(g) [Intentionally Omitted]
(h) Indebtedness incurred after the date hereof by a Foreign Subsidiary to
any Person (other than to Holdings, Borrower or any Subsidiary of Borrower);
provided, that, (i) at the time of incurring such Indebtedness, such Foreign
----- ----
Subsidiary is not a Guarantor with respect to the Exim Revolving Loans and is
not otherwise subject to the Exim Guarantee Documents, (ii) recourse for any
such Indebtedness shall only be against such Foreign Subsidiary and its assets
and the terms and conditions of such Indebtedness shall not restrict or in any
manner affect the obligations of Borrower and the Guarantors under the Financing
Agreements, (iii) at the time and immediately after giving effect to such
incurrence of Indebtedness, no Event of Default shall have occurred and be
continuing, and (iv) the aggregate amount of such Indebtedness that may be
outstanding at any time to all Foreign Subsidiaries (other than Brazil) shall
not exceed $7,500,000; and
(i) any other unsecured Indebtedness not to exceed $10,000,000 in the
aggregate at any time outstanding; provided that at the time of and immediately
--------
after giving effect to such incurrence of Indebtedness no Event of Default shall
have occurred and be continuing.
9.10 Loans, Investments, Etc
. Borrower and each Guarantor shall not, and shall not permit its
Subsidiaries to, directly or indirectly, make any loans or advance money
(including trade credit outstanding to any Foreign Subsidiary) or property to
any person, or invest in (by capital contribution, dividend or otherwise) or
purchase or repurchase the Capital Stock or Indebtedness or all or a substantial
part of the assets or property of any person, or form or acquire any
Subsidiaries, or agree to do any of the foregoing, except:
(a) the endorsement of instruments for collection or deposit in the
ordinary course of business;
(b) investments in cash or Cash Equivalents, provided, that the terms and
conditions of Section 5.2 hereof shall have been satisfied with respect to the
deposit account, investment account or other account in which such cash or Cash
Equivalents are held;
79
(c) (i) the existing equity investments of Borrower and each Guarantor as of
the date hereof in its Subsidiaries, (ii) equity contributions made by Holdings
to Borrower, whether in the form of the purchase of Capital Stock of Borrower or
otherwise, (iii) equity contributions made after the date hereof by Borrower in
a Guarantor (other than Holdings and any Foreign Subsidiaries) so long as (A) as
of the date of any such contribution and immediately after giving effect
thereto, Excess Availability shall not be less than $7,500,000, (B) as of the
date of any such contribution and immediately after giving effect thereto, no
Event of Default shall have occurred and be continuing and Borrower shall be
Solvent and (C) the aggregate amount of such equity contributions made do not
exceed $7,500,000 during the term of this Agreement less the amount of
intercompany loans made under Section 9.10(g)(iii), and (iv) equity
contributions made after the date hereof by Borrower or a Guarantor in (A) any
Foreign Subsidiary (other than Brazil) so long as (1) as of the date of any such
contribution and immediately after giving effect thereto, Excess Availability
shall not be less than $7,500,000, (2) as of the date of any such contribution
and immediately after giving effect thereto, no Event of Default shall have
occurred and be continuing and Borrower or such Guarantor shall be Solvent, (3)
the aggregate amount of such equity contributions made to such Foreign
Subsidiaries (excluding Brazil) do not exceed $7,500,000 during the term of this
Agreement less the amount of intercompany loans made under Section 9.10(h) to
such Foreign Subsidiaries (excluding Brazil) and (B) Brazil so long as (1) as of
the date of any such contribution and immediately after giving effect thereto,
no Event of Default shall have occurred and be continuing and Borrower or such
Guarantor shall be Solvent, (2) if Excess Availability is at least $7,500,000 at
the time of and immediately after giving effect to such equity contribution, the
aggregate amount of equity contributions that may be made to Brazil at such time
shall not exceed $7,500,000, (3) if Excess Availability is at less than
$7,500,000 at the time of and immediately after giving effect to such equity
contribution, the aggregate amount of equity contributions that may be made to
Brazil at such time shall not exceed $1,000,000 and (4) in no event shall the
aggregate amount of equity contributions made to Brazil under this Section
9.10(c) plus the aggregate amount of loans made to Brazil under Section 9.10(h)
----
exceed $7,500,000.
(d) loans and advances by Borrower or any Guarantor to employees of Borrower
or such Guarantor not to exceed the principal amount of $1,000,000 in the
aggregate at any time outstanding for: (i) reasonably and necessary work-related
travel or other ordinary business expenses to be incurred by such employee in
connection with their work for Borrower or such Guarantor and (ii) reasonable
and necessary relocation expenses of such employees (including home mortgage
financing for relocated employees);
(e) stock or obligations issued to Borrower or any Guarantor by any Person
(or the representative of such Person) in respect of Indebtedness of such Person
owing to Borrower or such Guarantor 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 be promptly delivered
to Agent, upon Agent's request, together with such stock power, collateral
assignment or endorsement in blank by Borrower or such Guarantor as Agent may
reasonably request;
(f) obligations of account debtors to Borrower or any Guarantor arising from
Accounts which are past due evidenced by a promissory note made by or other
80
written agreement from such account debtor payable to Borrower or such
Guarantor; provided, that, promptly upon the receipt of the original of any such
promissory note by Borrower or such Guarantor, such promissory note shall be
collaterally assigned to the Agent, endorsed to the order of Agent by Borrower
or such Guarantor and promptly delivered to Agent as so endorsed;
(g) loans by Borrower or any Guarantor to Borrower or any other Guarantor
after the date hereof, provided, that,
(i) as to all of such loans, (A) within thirty (30) days after the end
of each Fiscal Month, Borrower shall provide to Agent a report in form and
substance reasonably satisfactory to Agent of the outstanding amount of such
loans as of the last day of the immediately preceding month and indicating any
loans made and payments received during the immediately preceding month, (B) the
Indebtedness arising pursuant to any such loan shall not be evidenced by a
promissory note or other instrument, unless the single original of such note or
other instrument is promptly delivered to Agent upon its request to hold as part
of the Collateral, with such endorsement and/or collateral assignment by the
payee of such note or other instrument as Agent may reasonably require, (C) as
of the date of any such loan (except for loans deemed made pursuant to Section
6.3(d) hereof) and immediately after giving effect thereto, Borrower or any
Guarantor making such loan shall be Solvent, and (D) as of the date of any such
loan (except for loans deemed made pursuant to Section 6.3(d) hereof) and
immediately after giving effect thereto, no Default or Event of Default shall
have occurred and be continuing,
(ii) as to loans by a Guarantor to Borrower, (A) the Indebtedness arising
pursuant to such loan shall be subject to, and subordinate in right of payment
to, the right of Agent and Lenders to receive the prior final payment and
satisfaction in full of all of the Obligations on terms and conditions
acceptable to Agent, (B) promptly upon Agent's request, Agent shall have
received a subordination agreement, in form and substance satisfactory to Agent,
providing for the terms of the subordination in right of payment of such
Indebtedness of Borrower to the prior final payment and satisfaction in full of
all of the Obligations, duly authorized, executed and delivered by such
Guarantor and Borrower, and (C) Borrower shall not, directly or indirectly make,
or be required to make, any payments in respect of such Indebtedness prior to
the end of the then current term of this Agreement;
(iii) as to loans by a Borrower to a Guarantor (other than any Foreign
Subsidiaries), as of the date of any such loan and immediately after giving
effect thereto, (A) Excess Availability shall be not less than $7,500,000 and
(B) the aggregate amount of loans made to Guarantors (other than any Foreign
Subsidiaries) which are outstanding at any time shall not exceed $7,500,000 less
the amount of equity contributions made pursuant to Section 9.10(c)(iii);
(h) loans by Borrower or a Guarantor after the date hereof to (i) any
Foreign Subsidiary (other than Brazil); provided, that, (A) as to any such loan,
-------- ----
Borrower or such Guarantor complies with all the conditions set forth in clause
(g)(i) of this Section 9.10, (B) Excess Availability shall be no less than
$7,500,000 upon giving effect to such loan, and (C) the aggregate amount of
loans made to such Foreign Subsidiaries (excluding Brazil) which are outstanding
at any time shall not exceed $7,500,000 less the amount of equity contributions
made pursuant to Section 9.10(c)(iv)(A) or (ii) Brazil; provided, that, (A) as
--------
to any such loan, Borrower or such Guarantor complies with all the conditions
set forth in clause (g)(i) of this Section 9.10, (B) if Excess Availability is
at least $7,500,000 at the time of and immediately after giving effect to any
such loan, the aggregate amount of loans that may be advanced to Brazil at such
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time shall not exceed $7,500,000, (C) if Excess Availability is at less than
$7,500,000 at the time and immediately after giving effect to any such loan, the
aggregate amount of loans that may be advanced to Brazil at such time shall not
exceed $1,000,000 and (D) in no event shall the aggregate amount of loans made
to Brazil under this Section 9.10(h) plus equity contributions made to Brazil
----
under Section 9.10(c)(iv)(B) exceed $7,500,000;
(i) the loans and advances set forth on Schedule 9.10 to the Information
Certificate; provided, that, as to such loans and advances, Borrower and
-------- ----
Guarantors shall not, directly or indirectly, amend, modify, alter or change the
terms of such loans and advances or any agreement, document or instrument
related thereto in a manner materially adverse to Agent and Lenders and Borrower
and Guarantors shall furnish to Agent all notices or demands in connection with
such loans and advances either received by Borrower or any Guarantor or on its
behalf, promptly after the receipt thereof, or sent by Borrower or any Guarantor
or on its behalf, concurrently with the sending thereof, as the case may be;
(j) the making of Permitted Bond Repurchases in accordance with Section 9.23
hereof;
(k) intercompany advances which consist of the deferred and/or unpaid
balance of the purchase price of goods, materials and/or services provided by
Borrower to any Foreign Subsidiary; provided, that the aggregate amount of such
--------
advances does not exceed $7,500,000 outstanding at any time in the aggregate for
all Foreign Subsidiaries;
(l) Borrower and its Subsidiaries may form new Subsidiaries for the purpose
of consummating an Acquisition pursuant to clause (m) below; provided that (i)
prior to the consummation of such Acquisition, such Subsidiary shall not engage
in any business activities, maintain any assets or incur any liabilities and
(ii) such Subsidiary shall have complied with all the requirements of clause (D)
in Section 9.10(m) below;
(m) Borrower or a Subsidiary of Borrower may make an Acquisition of assets
or an Acquisition of a Person (the "Target") to be designated as a Subsidiary;
provided, that, at the time of making such Acquisition (A) Excess Availability
------- ----
is, and will be immediately after giving effect to such Acquisition, $7,500,000
and no Default or Event of Default exists or would exist at the time of and
immediately after giving effect to such Acquisition, (B) Agent received, twenty
(20) days prior to the day such Acquisition is to be made, a certificate signed
by an authorized officer of Borrower describing the Acquisition and attaching
all applicable purchase agreements in substantially final form, lien search
results and recent year end audited and interim financial statements for the
Target, (C) if Borrower intends for the acquired assets (whether through the
Acquisition of a Person or through the Acquisition of assets) to be included in
the Borrowing Base (whether through a subsequent merger, consolidation or
otherwise), then Agent must provide prior written approval (which approval shall
be based on, among other things, satisfactory results of such field
examinations, audits, appraisals and other due diligence as Agent shall
reasonably require); provided, that, up to $1,000,000 in Accounts and Inventory
--------
in connection with a Permitted Acquisition of assets may be included in the
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Borrowing Base at the election of Borrower but only to the extent such assets
satisfy the definitions of Eligible Accounts and Eligible Inventory, (D)
Borrower shall cause such Subsidiary (and any other applicable Person) to
execute such joinder agreements to the Financing Agreements, and such
guarantees, security agreements, pledge agreements and other documents as Agent
shall reasonably require, in each case in form and substance reasonably
satisfactory to Agent, to further guaranty and secure the Obligations with a
first lien security interest on all acquired assets, (E) such Permitted
Acquisition shall only involve assets located in the United States and
comprising a business, or those assets of a business, of the type or consistent
with or complimentary to the type engaged in by Borrower or such Subsidiary, and
which business would not subject Agent or any Lender to regulatory or third
party approvals in connection with the exercise of its rights and remedies under
this Loan and Security Agreement or any other Financing Agreements other than
approvals applicable to the exercise of such rights and remedies with respect to
Borrower prior to such Permitted Acquisition, (F) the sum of all amounts payable
in connection with all Permitted Acquisitions (including all transaction costs
and all Indebtedness, liabilities and contingent obligations incurred or assumed
in connection therewith or otherwise reflected on a consolidated balance sheet
of Borrower and Target) shall not exceed $15,000,000 in the aggregate during the
term of this Agreement, (G) the Target shall not have incurred an operating loss
for the trailing twelve-month period preceding the date of the Permitted
Acquisition, as determined based upon the Target's financial statements for its
most recently completed Fiscal Year and its most recent interim financial period
completed within sixty (60) days prior to the date of consummation of such
Permitted Acquisition and (H) Agent shall have received such other information
and diligence material relation go the Acquisition as Agent may reasonably
request.
9.11 Dividends and Redemptions
. Borrower and each Guarantor (other than Holdings) shall not, directly or
indirectly, declare or pay any dividends on account of any shares of class of
any Capital Stock of Borrower or such Guarantor now or hereafter outstanding, or
set aside or otherwise deposit or invest any sums for such purpose, or redeem,
retire, defease, purchase or otherwise acquire any of its shares of any class of
Capital Stock (or set aside or otherwise deposit or invest any sums for such
purpose) for any consideration or apply or set apart any sum, or make any other
distribution (by reduction of capital or otherwise) in respect of any such
shares or agree to do any of the foregoing, except that:
(a) Borrower or any Guarantor may declare and pay such dividends or
redeem, retire, defease, purchase or otherwise acquire any shares of any class
of Capital Stock for consideration in the form of shares of common stock (so
long as immediately after giving effect thereto no Change of Control or other
Default or Event of Default shall exist or occur);
(b) any Subsidiary of Borrower may pay dividends to its parent;
(c) for so long as Borrower is a member of a group filing a consolidated or
combined tax return with Holdings, Borrower may make payments to Holdings in
respect of the allocable portion of the tax liabilities of such group that is
attributable to Borrower and its Subsidiaries ("Tax Payments"), provided, that
Tax Payments shall not exceed the lesser of (x) the amount of the relevant tax
(including any penalties and interest) that Borrower would owe if Borrower were
filing a separate tax return (or a consolidated or combined tax return with its
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Subsidiaries that are members of the consolidated or combined group), taking
into account any carryforward or carryback of tax attributes (such as net
operating losses) of Borrower and such Subsidiaries from other taxable years and
(y) the net amount of the relevant tax that Holdings actually owes to the
appropriate taxing authority and provided further, that any Tax Payments
received from Borrower shall be paid to the relevant taxing authority within 30
days of Holding's receipt of such Tax Payment or refunded to Borrower;
(d) Borrower may (i) declare and pay dividends to Holdings in an amount not
to exceed $500,000 for the sole purpose of satisfying Holdings' tax obligations
under the Acquisition Agreement and (ii) declare and pay other dividends to
Holdings so long as at the time of, and immediately after giving effect to, such
dividends (A) Excess Availability shall be at least $7,500,000, (B) no Event of
Default shall have occurred and be continuing, and (C) such dividends are
permitted to be paid under the terms of the Indentures as in effect an the date
hereof; and
(e) Borrower and Guarantors may repurchase Capital Stock consisting of (x)
Capital Stock held by employees pursuant to any employee stock ownership plan
thereof upon the termination, retirement or death of any such employee in
accordance with the provisions of such plan and (y) Capital Stock held by
management at any time and by officers, directors and employees at any time
after any such Person ceases to be an officer, director or employee, as
applicable; provided, that, in each case as to any such repurchase, each of the
following conditions is satisfied: (i) as of the date of the payment for such
repurchase and immediately after giving effect thereto, no Default or Event of
Default shall have occurred and be continuing, (ii) such repurchase shall be
paid with funds legally available therefor, (iii) such repurchase shall not
violate any law or regulation or the terms of any indenture, agreement or
undertaking to which Borrower or such Guarantor is a party or by which Borrower
or such Guarantor or its or their property are bound, (iv) Excess Availability
shall be at least $7,500,000 immediately after giving effect to such repurchase
and (v) the aggregate amount of all payments for such repurchases in any
calendar year shall not exceed $3,000,000.
9.12 Transactions with Affiliates
. Borrower and each Guarantor shall not, directly or indirectly:
(a) purchase, acquire or lease any property from, or sell, transfer or
lease any property to, any officer, director or other Affiliate of Borrower or
such Guarantor, except in the ordinary course of and pursuant to the reasonable
requirements of Borrower's or Guarantors' business (as the case may be) and upon
fair and reasonable terms no less favorable to Borrower or such Guarantor than
Borrower or such Guarantor would obtain in a comparable arm's length transaction
with an unaffiliated person; provided that, in any event, Borrower may lease
-------- ----
equipment from Xxxxx Xxxxxxx for rents not to exceed an aggregate amount of
$25,000 per Fiscal Year; or
(b) make any payments (whether by fees, advances, loans or otherwise) of
management, consulting or other fees for management or similar services, or in
respect of any Indebtedness owing to any officer, employee, shareholder,
director or any other Affiliate of Borrower or such Guarantor, except (i)
reasonable compensation to officers, employees and directors for services
rendered to Borrower or such Guarantor in the ordinary course of business, (ii)
payments by Borrower or any Guarantor to Borrower for actual and necessary
reasonable out-of-pocket legal and accounting, insurance, marketing, payroll and
similar types of services paid for by Borrower on behalf of Borrower or such
Guarantor, in the ordinary course of their respective businesses, and (iii)
payments due or owing under the Management Services Agreement, as in effect on
the date hereof, so long as no Event of Default has occurred and is continuing
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at the time of such payment under the Management Services Agreement or would
occur upon the making of such payment as a result thereof; provided, that after
--------
such Event of Default no longer exists, and no other Event of Default has
occurred and is continuing, the Borrower may make all such payments under the
Management Services Agreement that were due during such Event of Default but
that were not paid as a result thereof, together with interest thereon as
provided in such agreement.
9.13 Compliance with ERISA
. Borrower and each Guarantor shall, and shall cause each of its ERISA
Affiliates, to: (a) maintain each Plan in compliance in all material respects
with the applicable provisions of ERISA, the Code and other Federal and State
law; (b) cause each Plan which is qualified under Section 401(a) of the Code to
maintain such qualification; (c) not terminate any of such Plans so as to incur
any material liability to the Pension Benefit Guaranty Corporation; (d) not
engage in any prohibited transaction involving any of such Plans or any trust
created thereunder which would subject Borrower or such Guarantor to a material
tax or penalty or other liability on prohibited transactions imposed under
Section 4975 of the Code or ERISA; (e) make all required contributions to any
Plan which it is obligated to pay under Section 302 of ERISA, Section 412 of the
Code or the terms of such Plan; (f) not allow or suffer to exist any accumulated
funding deficiency, whether or not waived, with respect to any such Plan; or (g)
not allow or suffer to exist any occurrence of a reportable event or any other
event or condition which presents a material risk of termination by the Pension
Benefit Guaranty Corporation of any such Plan that is a single employer plan,
which termination could result in any material liability to the Pension Benefit
Guaranty Corporation.
9.14 End of Fiscal Years; Fiscal Quarters
. Borrower and each Guarantor shall, for financial reporting purposes,
cause its, and each of its Subsidiaries' (a) Fiscal Years to end on December 31
of each year and (b) Fiscal Quarters to end on dates which are thirteen (13),
twenty-six (26), thirty-nine (39) and fifty-two (52) weeks following the prior
Fiscal Year end.
9.15 Change in Business
. Borrower and each Guarantor shall not, and shall not permit its
Subsidiaries to, engage in any business other than the business of Borrower,
such Guarantor or such Subsidiary on the date hereof and any business reasonably
related, ancillary or complimentary to the business in which Borrower, such
Guarantor or such Subsidiary is engaged on the date hereof. Neither Holdings
nor FarmPro, Inc. shall incur any liabilities (except for the Obligations and
loans made to Holdings in connection with the acquisition of Capital Stock in
Holdings by certain Persons currently or formerly involved in the management of
Borrower), maintain any assets (except for the equity of Borrower and rights
under the Acquisition Agreement) or engage in any business activities.
9.16 Limitation of Restrictions Affecting Subsidiaries
. Borrower and each Guarantor shall not, directly, or indirectly, create
or otherwise cause or suffer to exist any encumbrance or restriction which
prohibits or limits the ability of its Subsidiaries of Borrower or such
Guarantor to (a) pay dividends or make other distributions or pay any
Indebtedness owed to Borrower or such Guarantor or its Subsidiaries of Borrower
or such Guarantor; (b) make loans or advances to Borrower or such Guarantor or
its Subsidiaries of Borrower or such Guarantor, (c) transfer any of its
properties or assets to Borrower or such Guarantor or its Subsidiaries of
Borrower or such Guarantor; or (d) create, incur, assume or suffer to exist any
lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, other than encumbrances and restrictions arising under (i)
applicable law, (ii) this Agreement, (iii) customary provisions restricting
subletting or assignment of any lease governing a leasehold interest of Borrower
or such Guarantor or its Subsidiaries of Borrower or such Guarantor, (iv)
85
customary restrictions on dispositions of real property interests found in
reciprocal easement agreements of Borrower or such Guarantor or its Subsidiaries
of Borrower or such Guarantor, (v) any agreement relating to permitted
Indebtedness incurred by a Subsidiary of Borrower or such Guarantor prior to the
date on which such Subsidiary was acquired by Borrower or such Guarantor and
outstanding on such acquisition date, (vi) any agreement relating to
Indebtedness permitted under Section 9.9(h) hereof so long as such encumbrances
and restrictions are imposed only on the Foreign Subsidiary incurring such
Indebtedness and (vii) the extension or continuation of contractual obligations
in existence on the date hereof; provided, that, any such encumbrances or
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restrictions contained in such extension or continuation are no less favorable
to Agent and Lenders than those encumbrances and restrictions under or pursuant
to the contractual obligations so extended or continued.
9.17 [Intentionally Omitted]
.
9.18 License Agreements.
(a) With respect to any License Agreement that is material to the
Borrower's or any Guarantor's business, Borrower and each Guarantor shall using
commercially reasonable efforts (i) promptly and faithfully observe and perform
all of the material terms, covenants, conditions and provisions of such License
Agreement to which it is a party to be observed and performed by it, at the
times set forth therein, if any, (ii) not do, permit, suffer or refrain from
doing anything that could reasonably be expected to result in a default under or
breach of any of the terms of such License Agreement, (iii) not cancel,
surrender, modify, amend, waive or release such License Agreement in any
material respect or any term, provision or right of the licensee thereunder in
any material respect, or consent to or permit to occur any of the foregoing;
except, that, subject to Section 9.18(b) below, Borrower or such Guarantor may
also cancel, surrender or release any such License Agreement in the ordinary
course of the business of Borrower or such Guarantor; provided, that, Borrower
or such Guarantor (as the case may be) shall give Agent not less than thirty
(30) days prior written notice of its intention to so cancel, surrender and
release any such License Agreement, (iv) give Agent prompt written notice of any
such License Agreement entered into by Borrower or such Guarantor after the date
hereof, together with a true, correct and complete copy thereof and such other
information with respect thereto as Agent may reasonably request, (v) give Agent
prompt written notice of any material breach of any obligation, or any default,
by any party under any such License Agreement, and deliver to Agent (promptly
upon the receipt thereof by Borrower or such Guarantor in the case of a notice
to Borrower or such Guarantor and concurrently with the sending thereof in the
case of a notice from Borrower or such Guarantor) a copy of each notice of
default and every other written notice and other written communication received
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or delivered by Borrower or such Guarantor in connection with such License
Agreement which relates to the right of Borrower or such Guarantor to continue
to use the property subject to such License Agreement, and (vi) furnish to
Agent, promptly upon the request of Agent, such information and evidence as
Agent may reasonably require from time to time concerning the observance,
performance and compliance by Borrower or such Guarantor or the other party or
parties thereto with the material terms, covenants or provisions of such License
Agreement.
(b) With respect to any License Agreement that is material to the Borrower's
or any Guarantor's business, Borrower and each Guarantor using commercially
reasonable efforts will either exercise any option to renew or extend the term
of each such License Agreement to which it is a party in such manner as will
cause the term of such License Agreement to be effectively renewed or extended
for the period provided by such option and give prompt written notice thereof to
Agent or give Agent prior written notice that Borrower or such Guarantor does
not intend to renew or extend the term of any such material License Agreement or
that the term thereof shall otherwise be expiring, not less than thirty (30)
days prior to the date of any deadline for non-renewal. In the event of the
failure of Borrower or such Guarantor to extend or renew any such License
Agreement to which it is a party, Agent shall have, and is hereby granted, the
irrevocable right and authority, at its option, to renew or extend the term of
such License Agreement, whether in its own name and behalf, or in the name and
behalf of a designee or nominee of Agent or in the name and behalf of Borrower
or such Guarantor, as Agent shall determine at any time that an Event of Default
shall exist or have occurred and be continuing. Following the occurrence and
during the continuance of an Event of Default, Agent may, but shall not be
required to, perform any or all of such obligations of Borrower or such
Guarantor under any of such License Agreements, including, but not limited to,
the payment of any or all sums due from Borrower or such Guarantor thereunder.
Any sums so paid by Agent shall constitute part of the Obligations.
9.19 After Acquired Real Property
. If Borrower or any Guarantor hereafter acquires any Real Property,
fixtures or any other property that is of the kind or nature described in the
Mortgages and such Real Property, fixtures or other property at any one location
has a Fair Market Value in an amount equal to or greater than $1,000,000 (or if
a Trigger Event exists then regardless of the Fair Market Value of such assets)
(but excluding any such Real Property and fixtures subject to a purchase money
mortgage to secure Indebtedness incurred to purchase such Real Property and
fixtures under Section 9.9(b), unless the Fair Market Value of such Real
Property and fixtures exceeds such purchase money Indebtedness by an amount
equal to or greater than $1,000,000 and the mortgage holder does not prohibit a
second lien in favor of Agent), then, without limiting any other rights of Agent
or any Lender, or duties or obligations of Borrower or any Guarantor, promptly
after Agent's request, Borrower or such Guarantor shall execute and deliver to
Agent a mortgage, deed of trust or deed to secure debt, as Agent may determine,
in form and substance substantially similar to the Mortgages and as to any
provisions relating to specific state laws satisfactory to Agent and in form
appropriate for recording in the real estate records of the jurisdiction in
which such Real Property or other property is located, granting to Agent a first
and only lien and mortgage on and security interest in such Real Property,
fixtures or other property (except as Borrower or such Guarantor would otherwise
be permitted to incur hereunder or under the Mortgages or as otherwise consented
to in writing by Agent) and such other agreements, documents and instruments as
Agent may reasonably require in connection therewith.
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9.20 Costs and Expenses
. Borrower and Guarantors shall pay to Agent (and to Lenders during the
occurrence and continuation of an Event of Default) within one (1) Business Day
of demand all costs, expenses, filing fees and taxes paid in connection with the
preparation, negotiation, execution, delivery, recording, administration,
collection, liquidation, enforcement and defense of the Obligations, Agent's
rights in the Collateral, this Agreement, the other Financing Agreements and all
other documents related hereto or thereto, including any amendments, supplements
or consents which may hereafter be contemplated (whether or not executed) or
entered into in respect hereof and thereof, including: (a) all costs and
expenses of filing or recording (including Uniform Commercial Code financing
statement filing taxes and fees, documentary taxes, intangibles taxes and
mortgage recording taxes and fees, if applicable); (b) costs and expenses and
fees for insurance premiums, appraisal fees and search fees, costs and expenses
of remitting loan proceeds, collecting checks and other items of payment, and
establishing and maintaining the Blocked Accounts, together with Agent's
customary charges and fees with respect thereto; (c) charges, fees or expenses
charged by any bank or issuer in connection with the Letter of Credit
Accommodations; (d) costs and expenses of preserving and protecting the
Collateral; (e) costs and expenses paid or incurred in connection with obtaining
payment of the Obligations, enforcing the security interests and liens of Agent,
selling or otherwise realizing upon the Collateral, and otherwise enforcing the
provisions of this Agreement and the other Financing Agreements or defending any
claims made or threatened against Agent or any Lender arising out of the
transactions contemplated hereby and thereby (including preparations for and
consultations concerning any such matters); (f) all out-of-pocket expenses and
costs heretofore and from time to time hereafter incurred by Agent (and Lenders
during the occurrence and continuation of an Event of Default) during the course
of periodic field examinations of the Collateral and Borrower's or such
Guarantor's operations permitted to be conducted hereunder, plus a per diem
charge at the rate of $850 per person per day for Agent's examiners in the field
and office; and (g) the reasonable fees and disbursements of counsel (including
legal assistants) to Agent (and Lenders during the occurrence and continuation
of an Event of Default) in connection with any of the foregoing.
9.21 Further Assurances
. At the reasonable request of Agent at any time and from time to time,
Borrower and Guarantors shall, at their expense, duly execute and deliver, or
cause to be duly executed and delivered, such further agreements, documents and
instruments, and do or cause to be done such further acts as may be necessary or
proper to evidence, perfect, maintain and enforce the security interests and the
priority thereof in the Collateral and to otherwise effectuate the provisions or
purposes of this Agreement or any of the other Financing Agreements. In
connection with a request for a Loan or Letter of Credit Accommodation under
Section 4.2, Agent may at any time and from time to time request a certificate
from an officer of Borrower or any Guarantor representing that all conditions
precedent under Section 4.2 to the making of such Loans and providing such
Letter of Credit Accommodations contained herein are satisfied. In the event of
such request by Agent, Agent and Lenders may, at Agent's option, cease to make
any further Loans or provide any further Letter of Credit Accommodations until
Agent has received such certificate and, in addition, Agent has determined that
such conditions are satisfied.
9.22 Fixed Charge Coverage Ratio
. At any time when a Trigger Event exists under clause (b) of the
definition thereof, Borrower and its Subsidiaries on a consolidated basis shall,
88
at the end of each Fiscal Month (including as of the end of the Fiscal Month
immediately prior to the occurrence of such Trigger Event), have a Fixed Charge
Coverage Ratio for the twelve Fiscal Month period then ended of not less than
1:00 to 1:00. For purposes of determining the Fixed Charge Coverage Ratio for
the periods ending on, or as of, June 30, 2005, and September 30, 2005,
(x) EBITDA will be deemed to be equal to
(i) for the Fiscal Quarter ended September 30, 2004, $14,200,000, and
(ii) for the Fiscal Quarter ended December 31, 2004, $8,900,000, and
(y) Fixed Charges will be deemed to be equal to $4,750,000 for each of such
Fiscal Quarters.
9.23 Permitted Bond Repurchases
. Borrower and Guarantors shall not and shall not permit their
Subsidiaries to prepay, repurchase or defease any Indebtedness existing under
the Indenture (a "Bond Repurchase") except that Borrower may make one or more
Bond Repurchases (each, a "Permitted Bond Repurchase") so long as (a) Borrower
provides Agent with prior written notice of its proposal to engage in a Bond
Repurchase specifying (i) the date of such Bond Repurchase, (ii) the face amount
of the Indebtedness subject to such Bond Repurchase and (iii) the amount of
Non-Exim Revolving Loans to be advanced to pay for such Bond Repurchase, (b) no
Default or Event of Default has occurred and is continuing immediately before,
and immediately after giving effect to, such Bond Repurchase, and (c) Borrower
has Excess Availability immediately before, and immediately after giving effect
to, such Bond Repurchase in an amount equal to at least $7,500,000.
9.24 Sale Leasebacks
. Neither Borrower nor any of its Subsidiaries shall enter into any
arrangement, directly or indirectly, whereby Borrower or any of its Subsidiaries
shall sell or transfer any property owned by it to a Person (other than Borrower
or any of its Subsidiaries) in order then or thereafter to lease such property
or lease other property which Borrower or any of its Subsidiaries intends to use
for substantially the same purpose as the property being sold or transferred.
9.25 [Intentionally Omitted]
.
9.26 Exim Covenants
. At such time as any Exim Revolving Loans and/or Exim Letter of Credit
Accommodations are outstanding, Borrower and each Guarantor shall comply with
all the covenants, terms and conditions set forth in the Exim Guarantee
Documents, which covenants, terms and conditions are incorporated into this
Section 9.26 by reference during such times; provided, that, failure to so
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comply shall not constitute a Default or Event of Default hereunder to the
extent Borrower repays all Exim Revolving Loans and cash collateralizes all Exim
Letter of Credit Accommodations within five (5) Business Days of demand by Agent
following any such failure by Borrower to comply with such covenants, terms and
conditions.
9.27 Brazil
. For the avoidance of doubt, the parties hereto agree that Brazil is not
bound or subject to any of the covenants in Section 9, nor does Borrower or any
of its Subsidiaries have an obligation to cause Brazil to comply with any
covenant in Section 9.
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SECTION 10. EVENTS OF DEFAULT AND REMEDIES
----------------------------------
10.1 Events of Default
. The occurrence or existence of any one or more of the following events
are referred to herein individually as an "Event of Default", and collectively
as "Events of Default":
(a) (i) Borrower fails to pay any payment of principal of any Loan when
due, (ii) Borrower fails to pay any Obligations (other than a payment of
principal) within three (3) Business Days after the due date, (iii) Borrower or
any Guarantor fails to perform any of the covenants contained in Section
7.1(a)(i), 9.1 (with respect to corporate existence and name change), 9.7, 9.8,
9.9, 9.10, 9.11, 9.12, 9.14, 9.15, 9.22, 9.23 or 9.24 of this Agreement, (iv)
Borrower or any Guarantor fails to perform any of the covenants contained in
Sections 7.1 (other than 7.1(a)(i)), 9.2, 9.4, 9.5 and 9.6 (other than
9.6(a)(ii) and 9.6(a)(iii)) of this Agreement and such failure shall continue
for ten (10) days, or (v) Borrower or any Guarantor fails to perform any of the
other terms, covenants, conditions or provisions contained in this Agreement or
any of the other Financing Agreements (other than the those described in Section
10.1(a)(i), (a)(ii), (a)(iii) or (a)(iv)) and such failure shall continue for
twenty (20) days after the earlier of (A) receipt by Borrower of notice from
Agent or Required Lenders of such default or (B) actual knowledge of Borrower or
any Guarantor of such default; provided, that, in the case of clauses (iv) and
(v) above, such ten (10) day or twenty (20) day, as applicable, period shall not
apply in the case of any failure to observe any such covenant which has been the
subject of a prior failure within a six (6) month period;
(b) any representation, warranty or statement of fact made by Borrower or
any Guarantor to Agent in this Agreement, the other Financing Agreements or any
other written agreement, schedule, confirmatory assignment or otherwise shall
when made or deemed made be false or misleading in any material respect;
(c) any Guarantor revokes or terminates or purports to revoke or terminate
its Guaranty or any other Financing Agreement to which it is a party;
(d) (i) any judgment for the payment of money is rendered against Borrower
or any Guarantor in excess of $2,500,000 in any one case or in excess of
$2,500,000 in the aggregate (to the extent not covered by insurance where the
insurer has assumed responsibility in writing for such judgment within 30 days
after the rendering thereof) and shall remain undischarged or unvacated for a
period in excess of thirty (30) days unless the execution thereof shall be
effectively stayed, or (ii) any judgment other than for the payment of money, or
injunction, attachment, garnishment or execution is rendered against Borrower or
any Guarantor or any of the Collateral having a value in excess of $2,500,000;
(e) Borrower or any Guarantor dissolves or suspends or discontinues doing
business;
(f) Borrower or any Guarantor makes a general assignment for the benefit of
creditors, or makes or sends notice of a bulk transfer;
(g) a case or proceeding under the bankruptcy laws of the United States of
America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction now or hereafter in effect (whether at law or in equity) is
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filed against Borrower or any Guarantor or all or any part of its properties and
such petition or application is not dismissed within thirty (30) days after the
date of its filing or Borrower or any Guarantor shall file any answer admitting
or not contesting such petition or application or indicates its consent to,
acquiescence in or approval of, any such action or proceeding or the relief
requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United States of
America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction now or hereafter in effect (whether at a law or equity) is
filed by Borrower or any Guarantor or for all or any part of its property;
(i) any default in respect of any Indebtedness of Borrower or any Guarantor
(other than Indebtedness owing to Agent and Lenders hereunder), in any case in
an amount in excess of $5,000,000, which default continues for more than the
applicable cure period, if any, with respect thereto;
(j) any material provision hereof or of any of the other Financing
Agreements shall for any reason cease to be valid, binding and enforceable with
respect to any party hereto or thereto (other than Agent) in accordance with its
terms, or any such party shall challenge the enforceability hereof or thereof,
or shall assert in writing, or take any action or fail to take any action based
on the assertion that any material provision hereof or of any of the other
Financing Agreements has ceased to be or is otherwise not valid, binding or
enforceable in accordance with its terms, or any security interest provided for
herein or in any of the other Financing Agreements shall cease to be a valid and
perfected first priority security interest in any of the Collateral purported to
be subject thereto (except as otherwise permitted herein or therein);
(k) an ERISA Event shall occur which results in or could reasonably be
expected to result in liability of Borrower in an aggregate amount in excess of
$2,500,000;
(l) any Change of Control shall occur;
(m) the indictment by any Governmental Authority of Borrower or any
Guarantor under any criminal statute, or the commencement of criminal
proceedings against Borrower or any Guarantor, pursuant to which statute or
proceedings the penalties or remedies sought or available include forfeiture of
any of the Collateral having a value in excess of $2,500,000;
(n) there shall be a Material Adverse Effect after the date hereof; or
(o) there shall be an event of default under any of the other Financing
Agreements (excluding the Exim Guarantee Documents, which shall be governed by
Section 9.26).
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10.2 Remedies.
(a) At any time that an Event of Default has occurred and is
continuing, Agent and Lenders shall have all rights and remedies provided in
this Agreement, the other Financing Agreements, the UCC and other applicable
law, all of which rights and remedies may be exercised without notice to or
consent by Borrower or any Guarantor, except as such notice or consent is
expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Agent and Lenders hereunder, under any of the
other Financing Agreements, the UCC or other applicable law, are cumulative, not
exclusive and enforceable, in Agent's discretion, alternatively, successively,
or concurrently on any one or more occasions, and shall include, without
limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by Borrower or any Guarantor of this
Agreement or any of the other Financing Agreements. Subject to Section 12
hereof and Section 10.2(k) hereof, Agent may, and at the direction of the
Required Lenders shall, at any time or times, proceed directly against Borrower
or any Guarantor to collect the Obligations without prior recourse to the
Collateral.
(b) Without limiting the foregoing, at any time an Event of Default has
occurred and is continuing, Agent may, in its discretion, and upon the direction
of the Required Lenders, shall, subject to Section 10.2(k) hereof, (i)
accelerate the payment of all or a portion of the Obligations and demand
immediate payment thereof to Agent for itself and the ratable benefit of
Lenders, (provided, that, upon the occurrence of any Event of Default described
in Sections 10.1(g) and 10.1(h), all Obligations shall automatically become
immediately due and payable), (ii) with or without judicial process or the aid
or assistance of others, enter upon any premises on or in which any of the
Collateral may be located and take possession of the Collateral or complete
processing, manufacturing and repair of all or any portion of the Collateral,
(iii) require Borrower or any Guarantor, at Borrower's expense, to assemble and
make available to Agent any part or all of the Collateral at any place and time
designated by Agent, (iv) collect, foreclose, receive, appropriate, setoff and
realize upon any and all Collateral, (v) remove any or all of the Collateral
from any premises on or in which the same may be located for the purpose of
effecting the sale, foreclosure or other disposition thereof or for any other
purpose, (vi) sell, lease, transfer, assign, deliver or otherwise dispose of any
and all Collateral (including entering into contracts with respect thereto,
public or private sales at any exchange, broker's board, at any office of Agent
or elsewhere) at such prices or terms as Agent may deem reasonable, for cash,
upon credit or for future delivery, with Agent having the right to purchase the
whole or any part of the Collateral at any such public sale, all of the
foregoing being free from any right or equity of redemption of Borrower or any
Guarantor, which right or equity of redemption is hereby expressly waived and
released by Borrower and Guarantors and/or (vii) terminate this Agreement. If
any of the Collateral is sold or leased by Agent upon credit terms or for future
delivery, the Obligations shall not be reduced as a result thereof until payment
therefor is finally collected by Agent. If notice of disposition of Collateral
is required by law, ten (10) days prior notice by Agent to Borrower designating
the time and place of any public sale or the time after which any private sale
or other intended disposition of Collateral is to be made, shall be deemed to be
reasonable notice thereof and Borrower and Guarantors waive any other notice.
In the event Agent institutes an action to recover any Collateral or seeks
recovery of any Collateral by way of prejudgment remedy, Borrower and each
Guarantor waives the posting of any bond which might otherwise be required. At
any time an Event of Default has occurred and is continuing, upon Agent's
request, Borrower will either, as Agent shall specify, furnish cash collateral
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to the issuer to be used to secure and fund Agent's reimbursement obligations to
the issuer in connection with any Letter of Credit Accommodations or furnish
cash collateral to Agent for the Letter of Credit Accommodations. Such cash
collateral shall be in the amount equal to one hundred five (105%) percent of
the amount of the Letter of Credit Accommodations plus the amount of any fees
and expenses payable in connection therewith through the end of the latest
expiration date of such Letter of Credit Accommodations.
(c) At any time or times that an Event of Default has occurred and is
continuing, subject to Section 10.2(k) hereof, Agent may, in its discretion, and
upon the direction of the Required Lenders, Agent shall, enforce the rights of
Borrower or any Guarantor against any account debtor, secondary Guarantor or
other obligor in respect of any of the Accounts or other Receivables. Without
limiting the generality of the foregoing, subject to Section 10.2(k) hereof,
Agent may, in its discretion, and upon the direction of the Required Lenders,
Agent shall, at such time or times (i) notify any or all account debtors,
secondary obligors or other obligors in respect thereof that the Receivables
have been assigned to Agent and that Agent has a security interest therein and
Agent may direct any or all accounts debtors, secondary obligors and other
obligors to make payment of Receivables directly to Agent, (ii) extend the time
of payment of, compromise, settle or adjust for cash, credit, return of
merchandise or otherwise, and upon any terms or conditions, any and all
Receivables or other obligations included in the Collateral and thereby
discharge or release the account debtor or any secondary obligors or other
obligors in respect thereof without affecting any of the Obligations, (iii)
demand, collect or enforce payment of any Receivables or such other obligations,
but without any duty to do so, and Agent and Lenders shall not be liable for any
failure to collect or enforce the payment thereof nor for the negligence of its
agents or attorneys with respect thereto and (iv) take whatever other action
Agent may deem necessary or desirable for the protection of its interests and
the interests of Lenders. At any time that an Event of Default has occurred and
is continuing, at Agent's request, all invoices and statements sent to any
account debtor shall state that the Accounts and such other obligations have
been assigned to Agent and are payable directly and only to Agent, and Borrower
and Guarantors shall deliver to Agent such originals of documents evidencing the
sale and delivery of goods or the performance of services giving rise to any
Accounts as Agent may require. In the event any account debtor returns
Inventory when an Event of Default has occurred and is continuing, Borrower
shall, upon Agent's request, hold the returned Inventory in trust for Agent,
segregate all returned Inventory from all of its other property, dispose of the
returned Inventory solely according to Agent's instructions, and not issue any
credits, discounts or allowances with respect thereto without Agent's prior
written consent.
(d) [Intentionally Omitted]
.
(e) If Agent determines at any time that any amount received by Agent
must be returned to Borrower or any Guarantor or paid to any other person
pursuant to any insolvency law or otherwise, then, notwithstanding any other
term or condition of this Agreement or any other Financing Agreement, Agent will
not be required to distribute any portion thereof to any Lender. In addition,
each Lender will repay to Agent on demand any portion of such amount that Agent
has distributed to such Lender, together with interest at such rate, if any,
that Agent is required to pay to Borrower or any Guarantor or such other person
(without setoff, counterclaim or deduction of any kind).
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(f) Anything in this Agreement or otherwise to the contrary notwithstanding,
each Lender hereby agrees with each other Lender that no Lender shall take any
action (other than actions against Agent for violating its obligations under
this Agreement) to protect or enforce its rights arising out of this Agreement
or one or more Financing Agreements without first obtaining the prior written
consent of Agent, it being the intent of Lenders that any such action to protect
or enforce rights under this Agreement or one or more Financing Agreements shall
be taken in concert and at the direction or with the consent of Agent. Each
Lender agrees and acknowledges that Agent may exercise all rights and remedies
provided to Agent under, and in accordance with, the terms of the Financing
Agreements and applicable law (including, without limitation, with respect to
the liens granted to Agent).
(g) To the extent that applicable law imposes duties on Agent or any Lender
to exercise remedies in a commercially reasonable manner (which duties cannot be
waived under such law), Borrower and each Guarantor acknowledges and agrees that
it is not commercially unreasonable for Agent or any Lender (i) to fail to incur
expenses reasonably deemed significant by Agent or any Lender to prepare
Collateral for disposition or otherwise to complete raw material or work in
process into finished goods or other finished products for disposition, (ii) to
fail to obtain third party consents for access to Collateral to be disposed of,
or to obtain or, if not required by other law, to fail to obtain consents of any
Governmental Authority or other third party for the collection or disposition of
Collateral to be collected or disposed of, (iii) to fail to exercise collection
remedies against account debtors, secondary obligors or other persons obligated
on Collateral or to remove liens or encumbrances on or any adverse claims
against Collateral, (iv) to exercise collection remedies against account debtors
and other persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (v) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (vi) to contact other
persons, whether or not in the same business as Borrower or any Guarantor, for
expressions of interest in acquiring all or any portion of the Collateral, (vii)
to hire one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the collateral is of a specialized nature, (viii) to
dispose of Collateral by utilizing Internet sites that provide for the auction
of assets of the types included in the Collateral or that have the reasonable
capability of doing so, or that match buyers and sellers of assets, (ix) to
dispose of assets in wholesale rather than retail markets, (x) to disclaim
disposition warranties, (xi) to purchase insurance or credit enhancements to
insure Agent or Lenders against risks of loss, collection or disposition of
Collateral or to provide to Agent or Lenders a guaranteed return from the
collection or disposition of Collateral, or (xii) to the extent deemed
appropriate by Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist Agent in the collection
or disposition of any of the Collateral. Borrower and each Guarantor
acknowledges that the purpose of this Section is to provide non-exhaustive
indications of what actions or omissions by Agent or any Lender would not be
commercially unreasonable in the exercise by Agent or any Lender of remedies
against the Collateral and that other actions or omissions by Agent or any
Lender shall not be deemed commercially unreasonable solely on account of not
being indicated in this Section. Without limitation of the foregoing, nothing
contained in this Section shall be construed to grant any rights to Borrower or
any Guarantor or to impose any duties on Agent or Lenders that would not have
been granted or imposed by this Agreement or by applicable law in the absence of
this Section.
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(h) For the purpose of enabling Agent to exercise the rights and remedies
hereunder, Borrower and each Guarantor hereby grants to Agent, to the extent
assignable, an irrevocable, non-exclusive license (exercisable at any time an
Event of Default shall have occurred and for so long as the same is continuing)
without payment of royalty or other compensation to Borrower or any Guarantor,
to use, assign, license or sublicense any of the trademarks, service-marks,
trade names, business names, trade styles, designs, logos and other source of
business identifiers and other Intellectual Property and general intangibles now
owned or hereafter acquired by Borrower or any Guarantor, wherever the same
maybe located, including in such license reasonable access to all media in which
any of the licensed items may be recorded or stored and to all computer programs
used for the compilation or printout thereof.
(i) Agent may apply the cash proceeds of Collateral actually received by
Agent from any sale, lease, foreclosure or other disposition of the Collateral
to payment of the Obligations, in whole or in part and in accordance with
Section 6.4 hereof. Borrower and Guarantors shall remain liable to Agent and
Lenders for the payment of any deficiency with interest at the highest rate
provided for herein and all costs and expenses of collection or enforcement,
including reasonable attorneys' fees and expenses.
(j) Without limiting the foregoing, subject to Section 10.2(k) hereof, upon
the occurrence and during the continuance of a Default or an Event of Default,
(i) Agent and Lenders may, at Agent's option, and upon the occurrence of an
Event of Default at the direction of the Required Lenders, Agent and Lenders
shall, without notice, (A) cease making Loans or arranging for Letter of Credit
Accommodations or reduce the lending formulas or amounts of Loans and Letter of
Credit Accommodations available to Borrower and/or (B) terminate any provision
of this Agreement providing for any future Loans or Letter of Credit
Accommodations to be made by Agent and Lenders to Borrower and (ii) Agent may,
at its option, establish such Reserves as Agent determines. Notwithstanding the
foregoing, when such Default or Event of Default no longer exists and in the
absence of any other Default or Event of Default, any of the foregoing actions
taken by Agent or Lenders in connection with such Default or Event of Default
that no longer exists shall be withdrawn.
(k) To the extent the Required Lenders request that Agent accelerate any
portion of the Exim Facility (except for the automatic acceleration of the Exim
Facility as a result of Events of Default arising under Sections 10.1(g) and
10.1(h) hereof), undertake any legal action with respect to the Exim Facility or
exercise any remedies under the Financing Agreements in connection with the Exim
Facility or the Exim Primary Collateral, the parties hereto agree that no such
action shall be taken unless and until Agent has received the prior written
consent of Exim pursuant to the Exim Guarantee Documents and at the request of
Required Lenders, Agent shall promptly seek to obtain such written consent.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
---------------------------------------------------------------
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this Agreement and
the other Financing Agreements (other than the Mortgages to the extent provided
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therein) and any dispute arising out of the relationship between the parties
hereto, whether in contract, tort, equity or otherwise, shall be governed by the
internal laws of the State of Illinois but excluding any principles of conflicts
of law or other rule of law that would cause the application of the law of any
jurisdiction other than the laws of the State of Illinois.
(b) Borrower, Guarantors, Agent and Lenders irrevocably consent and submit
to the non-exclusive jurisdiction of the state courts located in Xxxx County,
City of Chicago, Illinois and the United States District Court for the Northern
District of Illinois whichever Agent may elect, and waive any objection based on
venue or forum non conveniens with respect to any action instituted therein
arising under this Agreement or any of the other Financing Agreements or in any
way connected with or related or incidental to the dealings of the parties
hereto in respect of this Agreement or any of the other Financing Agreements or
the transactions related hereto or thereto, in each case whether now existing or
hereafter arising, and whether in contract, tort, equity or otherwise, and agree
that any dispute with respect to any such matters shall be heard only in the
courts described above (except that Agent and Lenders shall have the right to
bring any action or proceeding against Borrower or any Guarantor or its or their
property in the courts of any other jurisdiction which Agent deems necessary or
appropriate in order to realize on the Collateral or to otherwise enforce its
rights against Borrower or any Guarantor or its or their property).
(c) Borrower and each Guarantor hereby waives personal service of any and
all process upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth
herein and service so made shall be deemed to be completed five (5) days after
the same shall have been so deposited in the U.S. mails, or, at Agent's option,
by service upon Borrower or any Guarantor (or Borrower on behalf of Borrower or
such Guarantor) in any other manner provided under the rules of any such courts.
Within thirty (30) days after such service, Borrower or such Guarantor shall
appear in answer to such process, failing which Borrower or such Guarantor shall
be deemed in default and judgment may be entered by Agent against Borrower or
such Guarantor for the amount of the claim and other relief requested.
(d) BORROWER, GUARANTORS, AGENT AND LENDERS EACH HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS
AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF
THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWER,
GUARANTORS, AGENT AND LENDERS EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY AND THAT BORROWER, ANY GUARANTOR, AGENT OR ANY LENDER MAY FILE AN
ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
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(e) Agent and Lenders shall not have any liability to Borrower or any
Guarantor (whether in tort, contract, equity or otherwise) for losses suffered
by Borrower or such Guarantor in connection with, arising out of, or in any way
related to the transactions or relationships contemplated by this Agreement, or
any act, omission or event occurring in connection herewith, unless it is
determined by a final and non-appealable judgment or court order binding on
Agent and such Lender, that the losses were the result of acts or omissions
constituting gross negligence or willful misconduct. Borrower and each
Guarantor: (i) certifies that neither Agent, any Lender nor any representative,
agent or attorney acting for or on behalf of Agent or any Lender has
represented, expressly or otherwise, that Agent and Lenders would not, in the
event of litigation, seek to enforce any of the waivers provided for in this
Agreement or any of the other Financing Agreements and (ii) acknowledges that in
entering into this Agreement and the other Financing Agreements, Agent and
Lenders are relying upon, among other things, the waivers and certifications set
forth in this Section 11.1 and elsewhere herein and therein.
11.2 Waiver of Notices
. Borrower and each Guarantor hereby expressly waives demand, presentment,
protest and notice of protest and notice of dishonor with respect to any and all
instruments and chattel paper, included in or evidencing any of the Obligations
or the Collateral, and any and all other demands and notices of any kind or
nature whatsoever with respect to the Obligations, the Collateral and this
Agreement, except such as are expressly provided for herein. No notice to or
demand on Borrower or any Guarantor which Agent or any Lender may elect to give
shall entitle Borrower or such Guarantor to any other or further notice or
demand in the same, similar or other circumstances.
11.3 Amendments and Waivers.
(a) Neither this Agreement nor any other Financing Agreement nor any
terms hereof or thereof may be amended, waived, discharged or terminated unless
such amendment, waiver, discharge or termination is in writing signed by Agent
and the Required Lenders or at Agent's option, by Agent with the authorization
of the Required Lenders, and as to amendments to any of the Financing Agreements
(other than with respect to any provision of Section 12 hereof), by Borrower;
except, that, no such amendment, waiver, discharge or termination shall:
(i) reduce the interest rate or any fees or extend the time of payment
of principal, interest or any fees or reduce the principal amount of any Loan or
Letter of Credit Accommodations, in each case without the consent of each Lender
directly affected thereby,
(ii) increase the Commitment of any Lender over the amount thereof then in
effect or provided hereunder, in each case without the consent of the Lender
directly affected thereby (except as provided in Section 2.6),
(iii) release all or substantially all of the Collateral (except as
expressly required hereunder or under any of the other Financing Agreements or
applicable law and except as permitted under Section 12.11(b) hereof), without
the consent of Agent and all of Lenders,
(iv) reduce any percentage specified in the definition of Required Lenders,
without the consent of Agent and all of Lenders,
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(v) consent to the assignment or transfer by Borrower or any Guarantor of
any of their rights and obligations under this Agreement, without the consent of
Agent and all of Lenders,
(vi) amend, modify or waiver any terms of this Section 11.3 hereof, without
the consent of Agent and all of Lenders, or
(vii) increase the advance rates constituting part of the Borrowing Base,
without the consent of Agent and all of the Required Supermajority Lenders.
Notwithstanding anything to the contrary contained herein, (x) any amendment or
waiver with respect to clause (D) of Section 6.4 shall only require the consent
of Agent and the Required Lenders, and (y) any amendment, waiver, discharge or
termination in respect of any provision relating to the Exim Facility or
Collateral securing the Exim Facility shall require the prior written approval
of Exim:
(b) Agent and Lenders shall not, by any act, delay, omission or
otherwise be deemed to have expressly or impliedly waived any of its or their
rights, powers and/or remedies unless such waiver shall be in writing and signed
as provided herein. Any such waiver shall be enforceable only to the extent
specifically set forth therein. A waiver by Agent or any Lender of any right,
power and/or remedy on any one occasion shall not be construed as a bar to or
waiver of any such right, power and/or remedy which Agent or any Lender would
otherwise have on any future occasion, whether similar in kind or otherwise.
(c) Notwithstanding anything to the contrary contained in Section 11.3(a)
above, in the event that Borrower or any Guarantor requests that this Agreement
or any other Financing Agreements be amended or otherwise modified in a manner
which would require the unanimous consent of all of the Lenders and such
amendment or other modification is agreed to by the Required Lenders (but not
all of the other Lenders), then, with the consent of Borrower and Agent, the
Required Lenders, Agent and Borrower may amend this Agreement without the
consent of the Lenders that did not agree to such amendment or other
modification (collectively, the "Minority Lenders") to provide for the
termination of the Commitment of each of the Minority Lenders, the addition to
this Agreement of one or more other Lenders, or an increase in the Commitment of
one or more of the Required Lenders, so that the Commitments, after giving
effect to such amendment, shall be in the same aggregate amount as the
Commitments immediately before giving effect to such amendment, if any Loans
are outstanding at the time of such amendment, the making of such additional
Loans by such new Lenders or Required Lenders, as the case may be, as may be
necessary to repay in full the outstanding Loans of the Minority Lenders
immediately before giving effect to such amendment and the payment of all
interest, fees and other Obligations payable or accrued in favor of the Minority
Lenders and such other modifications to this Agreement as Borrower and the
Required Lenders may determine to be appropriate.
(d) The consent of Agent shall be required for any amendment, waiver or
consent affecting the rights or duties of Agent hereunder or under any of the
other Financing Agreements, in addition to the consent of the Lenders otherwise
required by this Section and the exercise by Agent of any of its rights
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hereunder with respect to Reserves or Eligible Accounts or Eligible Inventory
shall not be deemed an amendment to the advance rates provided for in this
Section 11.3.
11.4 Waiver of Counterclaims
. Borrower and each Guarantor waives all rights to interpose any claims,
deductions, setoffs or counterclaims of any nature (other than compulsory
counterclaims or other claims or actions that Borrower or any Guarantor would
not otherwise be permitted to pursue in a separate action) in any action or
proceeding with respect to this Agreement, the Obligations, the Collateral or
any matter arising therefrom or relating hereto or thereto.
11.5 Indemnification
. Borrower and each Guarantor shall, jointly and severally, indemnify and
hold Agent and each Lender, and its officers, directors, agents, employees,
advisors and counsel and their respective Affiliates (each such person being an
"Indemnitee"), harmless from and against any and all losses, claims, damages,
liabilities, costs or expenses (including reasonable attorneys' fees and
expenses) imposed on, incurred by or asserted against any of them in connection
with any litigation, investigation, claim or proceeding commenced or threatened
related to the negotiation, preparation, execution, delivery, enforcement,
performance or administration of this Agreement, any other Financing Agreements,
or any undertaking or proceeding related to any of the transactions contemplated
hereby or any act, omission, event or transaction related or attendant thereto,
including amounts paid in settlement, court costs, and the fees and expenses of
counsel, except that Borrower and Guarantors shall not have any obligation under
this Section 11.5 to indemnify an Indemnitee with respect to a matter covered
hereby resulting from the gross negligence or willful misconduct of such
Indemnitee as determined pursuant to a final, non-appealable order of a court of
competent jurisdiction (but without limiting the obligations of Borrower or
Guarantors as to any other Indemnitee). To the extent that the undertaking to
indemnify, pay and hold harmless set forth in this Section may be unenforceable
because it violates any law or public policy, Borrower and Guarantors shall pay
the maximum portion which it is permitted to pay under applicable law to Agent
and Lenders in satisfaction of indemnified matters under this Section. To the
extent permitted by applicable law, neither Borrower nor any Guarantor shall
assert, and Borrower and each Guarantor hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any of the other Financing
Agreements or any undertaking or transaction contemplated hereby. All amounts
due under this Section shall be payable upon demand. The foregoing indemnity
shall survive the payment of the Obligations and the termination or non-renewal
of this Agreement.
11.6 Limited Recourse Against Holdings
. Agent and Lenders shall have no personal recourse to or against
Holdings, and Holdings shall have no personal liability, for or in connection
with any default or breach by Holdings or Borrower, or any other Person, of any
of the terms, covenants or conditions of any Financing Agreement, or for any
other matter or thing in connection with any Financing Agreement, and Agent and
Lenders shall look solely to the Collateral owned by Holdings for the
satisfaction of any remedy of Agent or any Lender or for the collection of any
judgment (or other judicial process) requiring the payment of money by Holdings,
or otherwise, and no property of Holdings other than the Collateral owned by
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Holdings shall be subject to levy, execution or other enforcement procedure for
the satisfaction of any remedy of Agent or any Lender for any such default or
breach, or otherwise in connection with any other matter or thing with respect
to any Financing Agreement.
SECTION 12. THE AGENT
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12.1 Appointment, Powers and Immunities
. Each Lender irrevocably designates, appoints and authorizes Wachovia to
act as Agent hereunder and under the other Financing Agreements with such powers
as are specifically delegated to Agent by the terms of this Agreement and of the
other Financing Agreements, together with such other powers as are reasonably
incidental thereto. Agent (a) shall have no duties or responsibilities except
those expressly set forth in this Agreement and in the other Financing
Agreements, and shall not by reason of this Agreement or any other Financing
Agreement be a trustee or fiduciary for any Lender; (b) shall not be responsible
to Lenders for any recitals, statements, representations or warranties contained
in this Agreement or in any of the other Financing Agreements, or in any
certificate or other document referred to or provided for in, or received by any
of them under, this Agreement or any other Financing Agreement, or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Financing Agreement or any other document referred
to or provided for herein or therein or for any failure by Borrower or any
Obligor or any other Person to perform any of its obligations hereunder or
thereunder; and (c) shall not be responsible to Lenders for any action taken or
omitted to be taken by it hereunder or under any other Financing Agreement or
under any other document or instrument referred to or provided for herein or
therein or in connection herewith or therewith, except for its own gross
negligence or willful misconduct as determined by a final non-appealable
judgment of a court of competent jurisdiction. Agent may employ agents and
attorneys-in-fact and shall not be responsible for the negligence or misconduct
of any such agents or attorneys-in-fact selected by it in good faith. Agent may
deem and treat the payee of any note as the holder thereof for all purposes
hereof unless and until the assignment thereof pursuant to an agreement (if and
to the extent permitted herein) in form and substance satisfactory to Agent
shall have been delivered to and acknowledged by Agent.
12.2 Reliance by Agent
. Agent shall be entitled to rely upon any certification, notice or other
communication (including any thereof by telephone, telecopy, telex, telegram or
cable) believed by it in good faith to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel, independent accountants and other experts
selected by Agent. As to any matters not expressly provided for by this
Agreement or any other Financing Agreement, Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder or thereunder in
accordance with instructions given by the Required Lenders or all of Lenders as
is required in such circumstance, and such instructions of such Agents and any
action taken or failure to act pursuant thereto shall be binding on all Lenders.
12.3 Events of Default.
(a) Agent shall not be deemed to have knowledge or notice of the
occurrence of an Event of Default or other failure of a condition precedent to
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the Loans and Letter of Credit Accommodations hereunder, unless and until Agent
has received written notice from a Lender, or Borrower specifying such Event of
Default or any unfulfilled condition precedent, and stating that such notice is
a "Notice of Default or Failure of Condition". In the event that Agent receives
such a Notice of Default or Failure of Condition, Agent shall give prompt notice
thereof to the Lenders. Agent shall (subject to Section 12.7) take such action
with respect to any such Event of Default or failure of condition precedent as
shall be directed by the Required Lenders; provided, that, unless and until
Agent shall have received such directions, Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to or by
reason of such Event of Default or failure of condition precedent, as it shall
deem advisable in the best interest of Lenders. Without limiting the foregoing,
and notwithstanding the existence or occurrence and continuance of an Event of
Default or any other failure to satisfy any of the conditions precedent set
forth in Section 4 of this Agreement to the contrary, Agent may, but shall have
no obligation to, continue to make Loans and issue or cause to be issued Letter
of Credit Accommodations for the ratable account and risk of Lenders from time
to time if Agent believes making such Loans or issuing or causing to be issued
such Letter of Credit Accommodations is in the best interests of Lenders.
(b) Except with the prior written consent of Agent, no Lender may assert or
exercise any enforcement right or remedy in respect of the Loans, Letter of
Credit Accommodations or other Obligations, as against Borrower or any Obligor
or any of the Collateral or other property of Borrower or any Obligor.
12.4 Wachovia in its Individual Capacity
. With respect to its Commitment and the Loans made and Letter of Credit
Accommodations issued or caused to be issued by it (and any successor acting as
Agent), so long as Wachovia shall be a Lender hereunder, it shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not acting as Agent, and the term "Lender" or "Lenders" shall,
unless the context otherwise indicates, include Wachovia in its individual
capacity as Lender hereunder. Wachovia (and any successor acting as Agent) and
its Affiliates may (without having to account therefor to any Lender) lend money
to, make investments in and generally engage in any kind of business with
Borrower (and any of its Subsidiaries or Affiliates) as if it were not acting as
Agent, and Wachovia and its Affiliates may accept fees and other consideration
from Borrower or any Guarantor and any of its Subsidiaries and Affiliates for
services in connection with this Agreement or otherwise without having to
account for the same to Lenders.
12.5 Indemnification
. Lenders agree to indemnify Agent (to the extent not reimbursed by
Borrower hereunder and without limiting any obligations of Borrower hereunder)
ratably, in accordance with their Pro Rata Shares, for any and all claims of any
kind and nature whatsoever that may be imposed on, incurred by or asserted
against Agent (including by any Lender) arising out of or by reason of any
investigation in or in any way relating to or arising out of this Agreement or
any other Financing Agreement or any other documents contemplated by or referred
to herein or therein or the transactions contemplated hereby or thereby
(including the costs and expenses that Agent is obligated to pay hereunder) or
the enforcement of any of the terms hereof or thereof or of any such other
documents, provided, that, no Lender shall be liable for any of the foregoing to
the extent it arises from the gross negligence or willful misconduct of the
party to be indemnified as determined by a final non-appealable judgment of a
court of competent jurisdiction. The foregoing indemnity shall survive the
payment of the Obligations and the termination or non-renewal of this Agreement.
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12.6 Non-Reliance on Agent and Other Lenders
. Each Lender agrees that it has, independently and without reliance on
Agent or other Lender, and based on such documents and information as it has
deemed appropriate, made its own credit analysis of Borrower and Obligors and
has made its own decision to enter into this Agreement and that it will,
independently and without reliance upon Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not taking action
under this Agreement or any of the other Financing Agreements. Agent shall not
be required to keep itself informed as to the performance or observance by
Borrower or any Obligor of any term or provision of this Agreement or any of the
other Financing Agreements or any other document referred to or provided for
herein or therein or to inspect the properties or books of Borrower or any
Obligor. Agent will use reasonable efforts to provide Lenders with any
information received by Agent from Borrower or any Obligor which is required to
be provided to Lenders hereunder and with a copy of any Notice of Default or
Failure of Condition received by Agent from Borrower or any Lender; provided,
that, Agent shall not be liable to any Lender for any failure to do so, except
to the extent that such failure is attributable to Agent's own gross negligence
or willful misconduct as determined by a final non-appealable judgment of a
court of competent jurisdiction. Except for notices, reports and other
documents expressly required to be furnished to Lenders by Agent hereunder,
Agent shall not have any duty or responsibility to provide any Lender with any
other credit or other information concerning the affairs, financial condition or
business of Borrower or any Obligor that may come into the possession of Agent.
12.7 Failure to Act
. Except for action expressly required of Agent hereunder and under the
other Financing- Agreements, Agent shall in all cases be fully justified in
failing or refusing to act hereunder and thereunder unless it shall receive
further assurances to its satisfaction from Lenders of their indemnification
obligations under Section 12.5 hereof against any and all liability and expense
that may be incurred by it by reason of taking or continuing to take any such
action.
12.8 Additional Loans
.. Agent shall not make any Revolving Loans or provide any Letter of Credit
Accommodations to Borrower on behalf of Lenders intentionally and with actual
knowledge that such Revolving Loans or Letter of Credit Accommodations would
cause the aggregate amount of the total outstanding Revolving Loans and Letter
of Credit Accommodations to Borrower to exceed the Borrowing Base or the
Export-Related Borrowing Base, without the prior consent of all Lenders, except,
that, Agent may make such additional Non-Exim Revolving Loans or provide such
additional Non-Exim Letter of Credit Accommodations on behalf of Lenders,
intentionally and with actual knowledge that such Non-Exim Revolving Loans or
Non-Exim Letter of Credit Accommodations will cause the total outstanding
Non-Exim Revolving Loans and Non-Exim Letter of Credit Accommodations to
Borrower to exceed the Borrowing Base, as Agent may deem necessary or advisable
in its discretion; provided, that: (a) the total principal amount of the
additional Non-Exim Revolving Loans or Non-Exim additional Letter of Credit
Accommodations to Borrower which Agent may make or provide after obtaining such
actual knowledge that the aggregate principal amount of the Non-Exim Revolving
Loans and Non-Exim Letter of Credit Accommodations equal or exceed the Borrowing
Base, plus the amount of Special Agent Advances made pursuant to Section
12.11(a)(i) and (a)(ii) hereof then outstanding, shall not exceed the lesser of
(x) an amount equal to ten percent (10%) of the Borrowing Base at any time or
(y) the Maximum Revolving Credit less the outstanding amount of all Exim
Revolving Loans and Exim Letter of Credit Accommodations and (b) no such
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additional Non-Exim Revolving Loan or Non-Exim Letter of Credit Accommodation
shall be outstanding more than ninety (90) days after the date such additional
Non-Exim Revolving Loan or Non-Exim Letter of Credit Accommodation is made or
issued (as the case may be), except as the Required Lenders may otherwise agree.
Each Lender shall be obligated to pay Agent the amount of its Pro Rata Share of
any such additional Non-Exim Revolving Loans or Non-Exim Letter of Credit
Accommodations.
12.9 Concerning the Collateral and the Related Financing Agreements
. Each Lender authorizes and directs Agent to enter into this Agreement
and the other Financing Agreements. Each Lender agrees that any action taken by
Agent or Required Lenders in accordance with the terms of this Agreement or the
other Financing Agreements and the exercise by Agent or Required Lenders of
their respective powers set forth therein or herein, together with such other
powers that are reasonably incidental thereto, shall be binding upon all of the
Lenders.
12.10 Field Audit, Examination Reports and Other Information;
Disclaimer by Lenders
. By signing this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report and a weekly report with respect to the Borrowing Base prepared by Agent
(each field audit or examination report and monthly report with respect to the
Borrowing Base being referred to herein as a "Report" and collectively,
"Reports");
(b) expressly agrees and acknowledges that Agent (i) does not make any
representation or warranty as to the accuracy of any Report, or (ii) shall not
be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not comprehensive
audits or examinations, that Agent or any other party performing any audit or
examination will inspect only specific information regarding Borrower and
Guarantors and will rely significantly upon Borrower's and Guarantors' books and
records, as well as on representations of Borrower's and Guarantors' personnel;
and
(d) agrees to keep all Reports confidential and strictly for its internal
use in accordance with the terms of Section 13.5 hereof, and not to distribute
or use any Report in any other manner.
12.11 Collateral Matters.
(a) Agent may, at its option, from time to time, at any time on or
after an Event of Default and for so long as the same is continuing make such
disbursements and advances ("Special Agent Advances") which Agent, in its sole
discretion, (i) deems necessary or desirable either to preserve or protect the
Collateral or any portion thereof or (ii) to enhance the likelihood or maximize
the amount of repayment by Borrower and Guarantors of the Loans and other
Obligations or (iii) to pay any other amount chargeable to Borrower or any
Guarantor pursuant to the terms of this Agreement or any of the other Financing
Agreements consisting of costs, fees and expenses and payments to any issuer of
Letter of Credit Accommodations; provided, that, the aggregate principal amount
of the Special Agent Advances pursuant to clauses (i) and(ii) above, plus the
then outstanding principal amount of the additional Loans and Letter of Credit
Accommodations which Agent may make or provide as set forth in Section 12.8
hereof, shall not exceed an amount equal to ten percent (10%) of the Borrowing
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Base at any time. Special Agent Advances shall be repayable on demand and be
secured by the Collateral. Special Agent Advances shall not constitute Loans
but shall otherwise constitute Obligations hereunder. Agent shall notify each
Lender and Borrower in writing of each such Special Agent Advance, which notice
shall include a description of the purpose of such Special Agent Advance.
Without limitation of its obligations pursuant to Section 6.9, each Lender
agrees that it shall make available to Agent, upon Agent's demand, in
immediately available funds, the amount equal to such Lender's Pro Rata Share of
each such Special Agent Advance. If such funds are not made available to Agent
by such Lender, Agent shall be entitled to recover such funds, on demand from
such Lender together with interest thereon for each day from the date such
payment was due until the date such amount is paid to Agent at the Federal Funds
Rate for each day during such period (as published by the Federal Reserve Bank
of New York or at Agent's option based on the arithmetic mean determined by
Agent of the rates for the last transaction in overnight Federal funds arranged
prior to 9:00 a.m. (New York City time) on that day by each of the three leading
brokers of Federal funds transactions in New York City selected by Agent) and if
such amounts are not paid within three (3) days of Agent's demand, at the
highest Interest Rate provided for in Section 3.1 hereof applicable to Prime
Rate Loans.
(b) Lenders hereby irrevocably authorize Agent, at its option and in its
discretion to, and Agent agrees with Borrower that it shall, with respect to
clauses (i), (ii), (iii) and (vi) below only, release any security interest in,
mortgage or lien upon, any of the Collateral (i) upon termination of the
Commitments and payment of all of the Obligations and delivery of cash
collateral to the extent required under Section 13.1 below, or (ii) constituting
property being sold or disposed of if Borrower certifies to Agent that the sale
or disposition is made in compliance with Section 9.7 hereof (and Agent may rely
conclusively on any such certificate, without further inquiry), or (iii)
constituting property in which Borrower or any Guarantor did not own an interest
at the time the security interest, mortgage or lien was granted or at any time
thereafter, or (iv) having a value in the aggregate in any twelve (12) month
period of less than $250,000 and to the extent permitted to be released under
the Exim Guarantee Documents, or (v) upon the sale, lease, transfer, assignment
or disposition of any property of Borrower or any Guarantor in connection with
an Enforcement Action or (vi) if approved, authorized or ratified in writing by
all of Lenders. Except as provided above, Agent will not release any security
interest in, mortgage or lien upon, any of the Collateral without the prior
written authorization of all of Lenders. Upon request by Agent at any time,
Lenders will promptly confirm in writing Agent's authority to release particular
types or items of Collateral pursuant to this Section.
(c) Without any manner limiting Agent's authority to act without any
specific or further authorization or consent by the Required Lenders, each
Lender agrees to confirm in writing, upon request by Agent, the authority to
release Collateral conferred upon Agent under this Section. Agent shall (and is
hereby irrevocably authorized by Lenders to) execute such documents as may be
necessary to evidence the release of the security interest, mortgage or liens
granted to Agent upon any Collateral to the extent set forth above; provided,
that, (i) Agent shall not be required to execute any such document on terms
which, in Agent's opinion, would expose Agent to liability or create any
obligations or entail any consequence other than the release of such security
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interest, mortgage or liens without recourse or warranty and (ii) such release
shall not in any manner discharge, affect or impair the Obligations or any
security interest, mortgage or lien upon (or obligations of Borrower or any
Guarantor in respect of) the Collateral retained by Borrower or such Guarantor.
(d) Agent shall have no obligation whatsoever to any Lender or any other
Person to investigate, confirm or assure that the Collateral exists or is owned
by Borrower or any Guarantor or is cared for, protected or insured or has been
encumbered, or that any particular items of Collateral meet the eligibility
criteria applicable in respect of the Loans or Letter of Credit Accommodations
hereunder, or whether any particular reserves are appropriate, or that the liens
and security interests granted to Agent pursuant hereto or any of the Financing
Agreements or otherwise have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent in this Agreement or in any
of the other Financing Agreements, it being understood and agreed that in
respect of the Collateral, or any act, omission or event related thereto, Agent
may act in any manner it may deem appropriate, in its discretion, given Agent's
own interest in the Collateral as a Lender and that Agent shall have no duty or
liability whatsoever to any other Lender.
12.12 Agency for Perfection
. Each Lender hereby appoints Agent and each other Lender as agent and
bailee for the purpose of perfecting the security interests in and liens upon
the Collateral of Agent in assets which, in accordance with Article 9 of the UCC
can be perfected only by possession (or where the security interest of a secured
party with possession has priority over the security interest of another secured
party) and Agent and each Lender hereby acknowledges that it holds possession of
any such Collateral for the benefit of Agent as secured party. Should any
Lender obtain possession of any such Collateral, such Lender shall notify Agent
thereof, and, promptly upon Agent's request therefor shall deliver such
Collateral to Agent or in accordance with Agent's instructions.
12.13 Successor Agent
. Agent may resign as Agent upon thirty (30) days' notice to Lenders and
Borrower. If Agent resigns under this Agreement, the Required Lenders shall
appoint from among the Lenders a successor agent for Lenders. If no successor
agent is appointed prior to the effective date of the resignation of Agent,
Agent may appoint, after consulting with Lenders and Borrower, a successor agent
from among Lenders; provided, that, Borrower has provided its prior written
--------
consent so long as no Event of Default has occurred and is continuing (which
consent shall not be unreasonably withheld or delayed). Upon the acceptance by
the Lender so selected of its appointment as successor agent hereunder, such
successor agent shall succeed to all of the rights, powers and duties of the
retiring Agent and the term "Agent" as used herein and in the other Financing
Agreements shall mean such successor agent and the retiring Agent's appointment,
powers and duties as Agent shall be terminated. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Section 12 shall inure to
its benefit as to any actions taken or omitted by it while it was Agent under
this Agreement. If no successor agent has accepted appointment as Agent by the
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date which is thirty (30) days after the date of a retiring Agent 's notice of
resignation, the retiring Agent's resignation shall nonetheless thereupon become
effective and Lenders shall perform all of the duties of Agent hereunder until
such time, if any, as the Required Lenders appoint a successor agent as provided
for above.
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS
-----------------------------------
13.1 Term.
(a) This Agreement and the other Financing Agreements shall become
effective as of the date set forth on the first page hereof and shall continue
in full force and effect for a term ending on the date that is five (5) years
from the date hereof (the "Renewal Date"), and from year to year thereafter,
unless sooner terminated pursuant to the terms hereof. Agent may, at its option
(or shall at the direction of any Lender in writing received by Agent at least
ninety (90) days prior to the Renewal Date or the anniversary of any Renewal
Date, as the case may be), terminate this Agreement and the other Financing
Agreements, or Borrower may terminate this Agreement and the other Financing
Agreements, in each case, effective on the Renewal Date or on the anniversary of
the Renewal Date in any year by giving to the other party at least ninety (90)
days prior written notice; provided, that, this Agreement and all other
Financing Agreements must be terminated simultaneously. In addition, Borrower
may terminate this Agreement at any time upon ten (10) days prior written notice
to Agent (which notice shall be irrevocable) and Agent may, at its option, and
shall at the direction of Required Lenders, terminate this Agreement at any time
on or after an Event of Default. Upon the Renewal Date or any other effective
date of termination of the Financing Agreements, Borrower shall pay to Agent all
outstanding and unpaid Obligations and shall furnish cash collateral to Agent
(or at Agent's option, a letter of credit issued for the account of Borrower and
at Borrower's expense, in form and substance satisfactory to Agent, by an issuer
acceptable to Agent and payable to Agent as beneficiary) in such amounts as
Agent determines are reasonably necessary to secure Agent and Lenders from loss,
cost, damage or expense, including attorneys' fees and expenses, in connection
with any contingent Obligations, including issued and outstanding Letter of
Credit Accommodations and checks or other payments provisionally credited to the
Obligations and/or as to which Agent or any Lender has not yet received final
and indefeasible payment. The amount of such cash collateral (or letter of
credit, as Agent may determine) as to any Letter of Credit Accommodations shall
be in the amount equal to one hundred five (105%) percent of the amount of the
Letter of Credit Accommodations plus the amount of any fees and expenses payable
in connection therewith through the end of the latest expiration date of such
Letter of Credit Accommodations. Such payments in respect of the Obligations
and cash collateral shall be remitted by wire transfer in Federal funds to the
Agent Payment Account or such other bank account of Agent, as Agent may, in its
discretion, designate in writing to Borrower for such purpose. Interest shall
be due until and including the next Business Day, if the amounts so paid by
Borrower to the Agent Payment Account or other bank account designated by Agent
are received in such bank account later than 12:00 noon, Chicago time.
(b) No termination of this Agreement or the other Financing Agreements shall
relieve or discharge Borrower or any Guarantor of its respective duties,
obligations and covenants under this Agreement or the other Financing Agreements
until all Obligations have been fully and finally paid, and Agent's continuing
security interest in the Collateral and the rights and remedies of Agent and
Lenders hereunder, under the other Financing Agreements and applicable law,
shall remain in effect until all such Obligations have been fully and finally
paid. Accordingly, Borrower and each Guarantor waives any rights it may have
under the UCC to demand the filing of termination statements with respect to the
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Collateral and Agent shall not be required to send such termination statements
to Borrower or Guarantors, or to file them with any filing office, unless and
until this Agreement shall have been terminated in accordance with its terms and
all Obligations paid in full in immediately available funds.
(c) If for any reason this Agreement is terminated before the date which is
the first anniversary of the date hereof, in view of the impracticality and
extreme difficulty of ascertaining actual damages and by mutual agreement of the
parties as to a reasonable calculation of Agent's and each Lender's lost profits
as a result thereof, Borrower agrees to pay to Agent for itself and the ratable
benefit of Lenders, upon the effective date of such termination, an early
termination fee in the amount equal to 0.50% of the Maximum Revolving Credit
then in effect. Such early termination fee shall be presumed to be the amount
of damages sustained by Agent and Lenders as a result of such early termination
and Borrower and Guarantors agree that it is reasonable under the circumstances
currently existing. In addition, Agent and Lenders shall be entitled to such
early termination fee upon the occurrence of any Event of Default described in
Sections 10.1(g) and 10.1(h) hereof prior to the first anniversary of the date
hereof, even if Agent and Lenders do not exercise the right to terminate this
Agreement, but elect, at their option, to provide financing to Borrower or
permit the use of cash collateral under the United States Bankruptcy Code. The
early termination fee provided for in this Section 13.1 shall be deemed included
in the Obligations. Such early termination fee shall be waived in the event of
a refinancing of the Credit Facility pursuant to which all of the Obligations
are paid in full in cash and for which Wachovia Bank, National Association or an
Affiliate thereof serves as "Agent".
13.2 Interpretative Provisions.
(a) All terms used herein which are defined in Article 1, Article 8 or
Article 9 of the UCC shall have the meanings given therein unless otherwise
defined in this Agreement.
(b) All references to the plural herein shall also mean the singular and to
the singular shall also mean the plural unless the context otherwise requires.
(c) All references to Borrower, any Guarantor, any Obligor, Agent and
Lenders pursuant to the definitions set forth in the recitals hereto, or to any
other person herein, shall include their respective successors and assigns.
(d) The words "hereof", "herein", "hereunder", "this Agreement" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not any particular provision of this Agreement and as this Agreement
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
(e) The word "including" when used in this Agreement shall mean "including,
without limitation".
(f) An Event of Default shall exist or continue or be continuing until such
Event of Default is waived in accordance with Section 11.3 or is cured, if such
Event of Default is capable of being cured.
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(g) All references to the term "good faith" used herein when applicable to
Agent or any Lender shall mean, notwithstanding anything to the contrary
contained herein or in the UCC, honesty in fact in the conduct or transaction
concerned. Borrower and Guarantors shall have the burden of proving any lack of
good faith on the part of Agent or any Lender alleged by Borrower or any
Guarantor at any time.
(h) Any accounting term used in this Agreement shall have, unless otherwise
specifically provided herein, the meaning customarily given in accordance with
GAAP, and all financial computations hereunder shall be computed unless
otherwise specifically provided herein, in accordance with GAAP.
(i) In the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including", the words "to" and
"until" each mean "to but excluding" and the word "through" means "to and
including".
(j) Unless otherwise expressly provided herein, (i) references herein to any
agreement, document or instrument shall be deemed to include all subsequent
amendments, modifications, supplements, extensions, renewals, restatements or
replacements with respect thereto, but only to the extent the same are not
prohibited by the terms hereof or of any other Financing Agreement, and (ii)
references to any statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending, replacing,
recodifying, supplementing or interpreting the statute or regulation.
(k) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
(l) This Agreement and the other Financing Agreements are the result of
negotiations among and have been reviewed by counsel to Agent and the other
parties, and are the products of all parties. Accordingly, this Agreement and
the other Financing Agreements shall not be construed against Agent or Lenders
merely because of Agent's or any Lender's involvement in their preparation.
13.3 Notices
. All notices, requests and demands hereunder shall be in writing and
deemed to have been given or made: if delivered in person, immediately upon
delivery; if by telex, telegram or facsimile transmission, immediately upon
sending and upon confirmation of receipt; if by nationally recognized overnight
courier service with instructions to deliver the next Business Day, one (1)
Business Day after sending; and if by certified mail, return receipt requested,
five (5) days after mailing. All notices, requests and demands upon the parties
are to be given to the following addresses (or to such other address as any
party may designate by notice in accordance with this Section):
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If to Borrower or any Guarantor:
The GSI Group, Inc.
0000 X. Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx - CFO
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy to:
Charlesbank Capital Partners LLC
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
If to Agent:
Wachovia Capital Finance Corporation (Central)
000 X. Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx - GSI Account Manager
Telephone No.: (312) 332-0420 ext. 231
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx
000 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
13.4 Partial Invalidity
. If any provision of this Agreement is held to be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate this
Agreement as a whole, but this Agreement shall be construed as though it did not
contain the particular provision held to be invalid or unenforceable and the
rights and obligations of the parties shall be construed and enforced only to
such extent as shall be permitted by applicable law.
13.5 Successors
. This Agreement, the other Financing Agreements and any other document
referred to herein or therein shall be binding upon and inure to the benefit of
and be enforceable by Agent, Lenders, Borrower, Guarantors and their respective
successors and assigns, except that Borrower may not assign its rights under
this Agreement, the other Financing Agreements and any other document referred
to herein or therein without the prior written consent of Agent and Lenders.
Any such purported assignment without such express prior written consent shall
be void. No Lender may assign its rights and obligations under this Agreement
without the prior written consent of Agent, except as provided in Section 13.6
below. The terms and provisions of this Agreement and the other Financing
109
Agreements are for the purpose of defining the relative rights and obligations
of Borrower, Guarantors, Agent and Lenders with respect to the transactions
contemplated hereby and there shall be no third party beneficiaries of any of
the terms and provisions of this Agreement or any of the other Financing
Agreements.
13.6 Assignments; Participations.
(a) Each Lender may assign all or, if less than all, a portion equal to
at least $5,000,000 in the aggregate for the assigning Lender, of such rights
and obligations under this Agreement to one or more Eligible Transferees or
Approved Funds (but not including for this purpose any assignments in the form
of a participation), each of which assignees shall become a party to this
Agreement as a Lender by execution of an Assignment and Acceptance; provided
that so long as no Event of Default has occurred and is continuing, the consent
of Borrower shall be required in connection with any assignment to an Eligible
Transferee described in clauses (c) and (d) of the definition of Eligible
Transferee (such consent not to be unreasonably withheld); provided further
that, (i) such transfer or assignment will not be effective until recorded by
Agent on the Register and (ii) Agent shall have received for its sole account
payment of a processing fee from the assigning Lender or the assignee in the
amount of $5,000. Anything contained herein to the contrary notwithstanding,
the consent of Borrower or Agent shall not be required, the minimum assignment
amount shall not be applicable such transfer or assignment shall not be required
to be recorded by Agent on the Register in order to be effective, and payments
of the processing fee shall not be required if such assignment is in connection
with any merger, consolidation, or sale, transfer or other disposition of all or
any substantial portion of the business or loan portfolio of a Lender; provided,
--------
however, that Borrower and Agent may continue to deal solely and directly with
-------
the assigning Lender in connection with the interest so assigned until such time
as written notice of such assignment shall have been delivered by the assigning
Lender or the assignee to Agent.
(b) Agent shall maintain a register of the names and addresses of Lenders,
their Commitments and the principal amount of their Loans (the "Register").
Agent shall also maintain a copy of each Assignment and Acceptance delivered to
and accepted by it and shall modify the Register to give effect to each
Assignment and Acceptance. The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and Borrower, any Obligors,
Agent and Lenders may treat each Person whose name is recorded in the Register
as a Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by Borrower and any Lender at any reasonable time and
from time to time upon reasonable prior notice.
(c) Upon such execution, delivery, acceptance and recording, from and after
the effective date specified in each Assignment and Acceptance, the assignee
thereunder shall be a party hereto and to the other Financing Agreements and, to
the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, have the rights and obligations
(including, without limitation, the obligation to participate in Letter of
Credit Accommodations) of a Lender hereunder and thereunder and the assigning
Lender shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under this Agreement.
110
(d) By execution and delivery of an Assignment and Acceptance, the assignor
and assignee thereunder confirm to and agree with each other and the other
parties hereto as follows: (i) other than as provided in such Assignment and
Acceptance, 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 Agreement or any of the other Financing
Agreements or the execution, legality, enforceability, genuineness, sufficiency
or value of this Agreement or any of the other Financing Agreements furnished
pursuant hereto, (ii) the assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrower, any Obligor or any of their Subsidiaries or the performance or
observance by Borrower or any Obligor of any of the Obligations; (iii) such
assignee confirms that it has received a copy of this Agreement and the other
Financing Agreements, together with such other documents and information it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance, (iv) such assignee will, independently and
without reliance upon the assigning Lender, Agent 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 Agreement and the
other Financing Agreements, (v) such assignee appoints and authorizes Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement and the other Financing Agreements as are delegated to Agent by the
terms hereof and thereof, 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 Agreement and the
other Financing Agreements are required to be performed by it as a Lender.
Agent and Lenders may furnish any information concerning Borrower or any Obligor
in the possession of Agent or any Lender from time to time to assignees and
Participants.
(e) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement and the other Financing Agreements (including, without limitation, all
or a portion of its Commitments and the Loans owing to it and its participation
in the Letter of Credit Accommodations, without the consent of Agent or the
other Lenders); provided, that, (i) such Lender's obligations under this
Agreement (including, without limitation, its Commitment hereunder) and the
other Financing Agreements shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, and Borrower, Guarantors, the other Lenders and Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and the other Financing
Agreements, and (iii) the Participant shall not have any rights under this
Agreement or any of the other Financing Agreements (the Participant's rights
against such Lender in respect of such participation to be those set forth in
the agreement executed by such Lender in favor of the Participant relating
thereto) and all amounts payable by Borrower or any Obligor hereunder shall be
determined as if such Lender had not sold such participation.
(f) Nothing in this Agreement shall prevent or prohibit any Lender from
pledging its Loans hereunder to a Federal Reserve Bank in support of borrowings
made by such Lenders from such Federal Reserve Bank.
111
(g) Borrower and Guarantors shall assist Agent or any Lender permitted to
sell assignments or participations under this Section 13.6 in whatever manner
reasonably necessary in order to enable or effect any such assignment or
participation, including (but not limited to) the execution and delivery of any
and all agreements, notes and other documents and instruments as shall be
requested and the delivery of informational materials, appraisals or other
documents for, and the participation of relevant management in meetings and
conference calls with, potential Lenders or Participants. Borrower shall
certify the correctness, completeness and accuracy, in all material respects, of
all descriptions of Borrower and Guarantors and their affairs provided, prepared
or reviewed by Borrower or any Guarantor that are contained in any selling
materials and all other information provided by it and included in such
materials.
(h) To the extent the ratio of (x) the outstanding principal balance of the
Obligations (other than Obligations arising under the Exim Facility) to (y) the
outstanding principal balance of the Obligations under the Exim Facility is less
than 1.0 to 1.0, each of the Lenders agrees to, if requested by Exim, assign to
Exim all of its right, title and interest in and to (A) the portion of the
Financing Agreements relating to the Exim Facility and (B) the Exim Primary
Collateral, in each case pursuant to an assignment agreement, and such terms and
conditions, that are acceptable to Exim, Agent and each Lender.
13.7 Entire Agreement
. This Agreement, the other Financing Agreements, any supplements hereto
or thereto, and any instruments or documents delivered or to be delivered in
connection herewith or therewith represents the entire agreement and
understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written. In the event of any inconsistency between the terms of this
Agreement and any schedule or exhibit hereto, the terms of this Agreement shall
govern.
13.8 Counterparts, Etc
. This Agreement or any of the other Financing Agreements may be executed
in any number of counterparts, each of which shall be an original, but all of
which taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of this Agreement or any of the other Financing Agreements
by telefacsimile shall have the same force and effect as the delivery of an
original executed counterpart of this Agreement or any of such other Financing
Agreements. Any party delivering an executed counterpart of any such agreement
by telefacsimile shall also deliver an original executed counterpart, but the
failure to do so shall not affect the validity, enforceability or binding effect
of such agreement.
13.9 Confidentiality.
Agent and each Lender agree to exercise their commercially reasonable
efforts to keep confidential any non-public information delivered pursuant to
the Financing Agreements and identified as such by Borrower and not to disclose
such information to Persons other than to bona fide potential assignees or
participants who have agreed to be bound by this Section 13.9 or to Persons
------------
employed by or engaged by Agent a Lender or a Lender's assignees or participants
including attorneys, auditors, professional consultants, rating agencies,
insurance industry associations and portfolio management services. The
confidentiality provisions contained in this Section 13.9 shall not apply to
------------
112
disclosures (i) required to be made by Agent or any Lender to any regulatory or
governmental agency or pursuant to legal process or (ii) consisting of general
portfolio information that does not identify Borrower.
[signature page follows]
113
[Signature Page to Loan and Security Agreement]
| ||
IN WITNESS WHEREOF, Agent, Lenders, Borrower and Guarantors have caused
these presents to be duly executed as of the day and year first above written.
AGENT: BORROWER:
----- --------
WACHOVIA CAPITAL FINANCE CORPORATION(CENTRAL) THE GSI GROUP, INC.
By: By:
Title: Title:
REVOLVING LENDERS: GUARANTORS:
------------------ ----------
WACHOVIA CAPITAL FINANCE CORPORATION (CENTRAL) GSI HOLDINGS CORP.
By: By:
Title: Title: _
ASSUMPTION LEASING COMPANY, INC.
By:
Title:
114
EXHIBIT A
TO
LOAN AND SECURITY AGREEMENT
---------------------------
ASSIGNMENT AND ACCEPTANCE AGREEMENT
-----------------------------------
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and Acceptance")
dated as of _____________, 200_ is made between ________________________ (the
"Assignor") and ____________________ (the "Assignee").
W I T N E S S E T H:
WHEREAS, Wachovia Capital Finance Corporation (Central), in its capacity as
agent pursuant to the Loan Agreement (as hereinafter defined) acting for and on
behalf of the lenders that are parties thereto (in such capacity, "Agent"), and
the lenders that are parties to the Loan Agreement (individually, each a
"Lender" and collectively, "Lenders") have entered or are about to enter into
financing arrangements pursuant to which Agent and Lenders may make loans and
advances and provide other financial accommodations to The GSI Group, Inc.
("Borrower") as set forth in the Loan and Security Agreement, dated _________,
2005, by and among Borrower, certain of its affiliates, Agent and Lenders (as
the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced, the "Loan Agreement"), and the other
agreements, documents and instruments referred to therein or at any time
executed and/or delivered in connection therewith or related thereto (all of the
foregoing, together with the Loan Agreement, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, being collectively referred to herein as the "Financing Agreements");
WHEREAS, as provided under the Loan Agreement, Assignor committed to making
Loans (the "Committed Loans") to Borrower in an aggregate amount not to exceed
$___________ (the "Commitment");
WHEREAS, Assignor wishes to assign to Assignee [part of the] [all] rights and
obligations of Assignor under the Loan Agreement in respect of its Commitment in
an amount equal to $______________ (the "Assigned Commitment Amount") on the
terms and subject to the conditions set forth herein and Assignee wishes to
accept assignment of such rights and to assume such obligations from Assignor on
such terms and subject to such conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:
1. Assignment and Acceptance.
---------------------------
(a) Subject to the terms and conditions of this Assignment and
Acceptance, Assignor hereby sells, transfers and assigns to Assignee, and
Assignee hereby purchases, assumes and undertakes from Assignor, without
recourse and without representation or warranty (except as provided in this
Assignment and Acceptance) an interest in (i) the Commitment and each of the
Committed Loans of Assignor and (ii) all related rights, benefits, obligations,
liabilities and indemnities of the Assignor under and in connection with the
Loan Agreement and the other Financing Agreements, so that after giving effect
thereto, the Commitment of Assignee and the Commitment of Assignor shall be as
set forth below and the Pro Rata Share of Assignee shall be _______ (__%)
percent and the Pro Rata Share of Assignor shall be ____ (__%) percent.
(b) With effect on and after the Effective Date (as defined in Section 5
hereof), Assignee shall be a party to the Loan Agreement and succeed to all of
the rights and be obligated to perform all of the obligations of a Lender under
the Loan Agreement, including the requirements concerning confidentiality and
the payment of indemnification, with a Commitment in an amount equal to the
Assigned Commitment Amount. Assignee agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Loan Agreement
are required to be performed by it as a Lender. It is the intent of the parties
hereto that the Commitment of Assignor shall, as of the Effective Date, be
reduced by an amount equal to the Assigned Commitment Amount and Assignor shall
relinquish its rights and be released from its obligations under the Loan
Agreement to the extent such obligations have been assumed by Assignee;
provided, that, Assignor shall not relinquish its rights under Sections 2.1,
6.4, 6.8 and 6.9 of the Loan Agreement to the extent such rights relate to the
time prior to the Effective Date.
(c) After giving effect to the assignment and assumption set forth herein,
on the Effective Date Assignee's Commitment will be $_____________.
(d) After giving effect to the assignment and assumption set forth herein,
on the Effective Date Assignor's Commitment will be $______________.
2. Payments. As consideration for the sale, assignment and transfer
--------
contemplated in Section 1 hereof, Assignee shall pay to Assignor on the
Effective Date in immediately available funds an amount equal to $____________,
representing Assignee's Pro Rata Share of the principal amount of all Committed
Loans.
3. Reallocation of Payments. Any interest, fees and other payments accrued
-------------------------
to the Effective Date with respect to the Commitment, Committed Loans and
outstanding Letter of Credit Accommodations shall be for the account of
Assignor. Any interest, fees and other payments accrued on and after the
Effective Date with respect to the Assigned Commitment Amount shall be for the
account of Assignee. Each of Assignor and Assignee agrees that it will hold in
trust for the other party any interest, fees and other amounts which it may
receive to which the other party is entitled pursuant to the preceding sentence
and pay to the other party any such amounts which it may receive promptly upon
receipt.
4. Independent Credit Decision. Assignee acknowledges that it has received
---------------------------
a copy of the Loan Agreement and the Schedules and Exhibits thereto, together
with copies of the most recent financial statements of Borrower and its
Subsidiaries, and such other documents and information as it has deemed
appropriate to make its own credit and legal analysis and decision to enter into
this Assignment and Acceptance and agrees that it will, independently and
without reliance upon Assignor, Agent or any Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit and legal decisions in taking or not taking action under the Loan
Agreement.
5. Effective Date; Notices.
-------------------------
(a) As between Assignor and Assignee, the effective date for this
Assignment and Acceptance shall be _______________, 200_ (the "Effective Date");
provided, that, the following conditions precedent have been satisfied on or
before the Effective Date:
(i) this Assignment and Acceptance shall be executed and delivered by
Assignor and Assignee;
(ii) the consent of Agent as required for an effective assignment of the
Assigned Commitment Amount by Assignor to Assignee shall have been duly obtained
and shall be in full force and effect as of the Effective Date;
(iii) written notice of such assignment, together with payment instructions,
addresses and related information with respect to Assignee, shall have been
given to Borrower and Agent; and
(iv) Assignee shall pay to Assignor all amounts due to Assignor under this
Assignment and Acceptance.
(b) Promptly following the execution of this Assignment and Acceptance,
Assignor shall deliver to Borrower and Agent for acknowledgment by Agent, a
Notice of Assignment in the form attached hereto as Schedule 1.
[6. Agent. [INCLUDE ONLY IF ASSIGNOR IS AN AGENT]
-----
(a) Assignee hereby appoints and authorizes Assignor in its capacity as
Agent to take such action as agent on its behalf to exercise such powers under
the Loan Agreement as are delegated to Agent by Lenders pursuant to the terms of
the Loan Agreement.
(b) Assignee shall assume no duties or obligations held by Assignor in its
capacity as Agent under the Loan Agreement.]
7. Withholding Tax. Assignee (a) represents and warrants to Assignor,
----------------
Agent and Borrower that under applicable law and treaties no tax will be
required to be withheld by Assignee, Agent or Borrower with respect to any
payments to be made to Assignee hereunder or under any of the Financing
Agreements, (b) agrees to furnish (if it is organized under the laws of any
jurisdiction other than the United States or any State thereof) to Agent and
Borrower prior to the time that Agent or Borrower are required to make any
payment of principal, interest or fees hereunder, duplicate executed originals
of either U.S. Internal Revenue Service Form W-8 ECI or U.S. Internal Revenue
Service Form W-8 BEN (wherein Assignee claims entitlement to the benefits of a
tax treaty that provides for a complete exemption from U.S. federal income
withholding tax on all payments hereunder) and agrees to provide new Forms W-8
ECI or W-8 BEN upon the expiration of any previously delivered form or
comparable statements in accordance with applicable U.S. law and regulations and
amendments thereto, duly executed and completed by Assignee, and (c) agrees to
comply with all applicable U.S. laws and regulations with regard to such
withholding tax exemption.
8. Representations and Warranties.
--------------------------------
(a) Assignor represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any security interest, lien, encumbrance or other
adverse claim, it is duly organized and existing and it has the full power and
authority to take, and has taken, all action necessary to execute and deliver
this Assignment and Acceptance and any other documents required or permitted to
be executed or delivered by it in connection with this Assignment and Acceptance
and to fulfill its obligations hereunder, no notices to, or consents,
authorizations or approvals of, any Person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance, and apart from any agreements or undertakings or
filings required by the Loan Agreement, no further action by, or notice to, or
filing with, any Person is required of it for such execution, delivery or
performance, and this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of
Assignor, enforceable against Assignor in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles.
(b) Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Loan Agreement or any of the other Financing
Agreements or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Agreement or any other instrument or document
furnished pursuant thereto. Assignor makes no representation or warranty in
connection with, and assumes no responsibility with respect to, the solvency,
financial condition or statements of Borrower, Guarantors or any of their
respective Affiliates, or the performance or observance by Borrower, Guarantors
or any other Person, of any of its respective obligations under the Loan
Agreement or any other instrument or document furnished in connection therewith.
(c) Assignee represents and warrants that (i) it is duly organized and
existing and it has full power and authority to take, and has taken, all action
necessary to execute and deliver this Assignment and Acceptance and any other
documents required or permitted to be executed or delivered by it in connection
with this Assignment and Acceptance, and to fulfill its obligations hereunder,
(ii) no notices to, or consents, authorizations or approvals of, any Person are
required (other than any already given or obtained) for its due execution,
delivery and performance of this Assignment and Acceptance, and apart from any
agreements or undertakings or filings required by the Loan Agreement, no further
action by, or notice to, or filing with, any Person is required of it for such
execution, delivery or performance; and (iii) this Assignment and Acceptance has
been duly executed and delivered by it and constitutes the legal, valid and
binding obligation of Assignee, enforceable against Assignee in accordance with
the terms hereof, subject, as to enforcement, to bankruptcy, insolvency,
moratorium, reorganization and other laws of general application relating to or
affecting creditors' rights to general equitable principles.
9. Further Assurances. Assignor and Assignee each hereby agree to
-------------------
execute and deliver such other instruments, and take such other action, as
either party may reasonably request in connection with the transactions
contemplated by this Assignment and Acceptance, including the delivery of any
notices or other documents or instruments to Borrower or Agent, which may be
required in connection with the assignment and assumption contemplated hereby.
10. Miscellaneous.
-------------
(a) Any amendment or waiver of any provision of this Assignment and
Acceptance shall be in writing and signed by the parties hereto. No failure or
delay by either party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof and any waiver of any breach of the
provisions of this Assignment and Acceptance shall be without prejudice to any
rights with respect to any other for further breach thereof.
(b) All payments made hereunder shall be made without any set-off or
counterclaim.
(c) Assignor and Assignee shall each pay its own costs and expenses incurred
in connection with the negotiation, preparation, execution and performance of
this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF ILLINOIS Assignor and Assignee each
irrevocably submits to the non-exclusive jurisdiction of any State or Federal
court sitting in Xxxx County, Illinois over any suit, action or proceeding
arising out of or relating to this Assignment and Acceptance and irrevocably
agrees that all claims in respect of such action or proceeding may be heard and
determined in such Illinois State or Federal court. Each party to this
Assignment and Acceptance hereby irrevocably waives, to the fullest extent it
may effectively do so, the defense of an inconvenient forum to the maintenance
of such action or proceeding.
(f) ASSIGNOR AND ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH
THIS ASSIGNMENT AND ACCEPTANCE, THE LOAN AGREEMENT, ANY OF THE OTHER FINANCING
AGREEMENTS OR ANY RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, OR STATEMENTS (WHETHER ORAL OR WRITTEN).
IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment and
Acceptance to be executed and delivered by their duly authorized officers as of
the date first above written.
[ASSIGNOR]
By:
Title:
[ASSIGNEE]
By:
Title:
SCHEDULE 1
NOTICE OF ASSIGNMENT AND ACCEPTANCE
-----------------------------------
______, 200__
Attn.:
Re:
Ladies and Gentlemen:
Wachovia Capital Finance Corporation (Central), in its capacity as agent
pursuant to the Loan Agreement (as hereinafter defined) acting for and on behalf
of the lenders that are parties thereto (in such capacity, "Agent"), and the
lenders that are parties to the Loan Agreement (individually, each a "Lender"
and collectively, "Lenders") have entered or are about to enter into financing
arrangements pursuant to which Agent and Lenders may make loans and advances and
provide other financial accommodations to The GSI Group, Inc. as set forth in
the Loan and Security Agreement, dated _____________, 2005, by and among
Borrower, certain of their affiliates, Agent and Lenders (as the same now exists
or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced, the "Loan Agreement"), and the other agreements, documents and
instruments referred to therein or at any time executed and/or delivered in
connection therewith or related thereto (all of the foregoing, together with the
Loan Agreement, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, being collectively
referred to herein as the "Financing Agreements"). Capitalized terms not
otherwise defined herein shall have the respective meanings ascribed thereto in
the Loan Agreement.
1. We hereby give you notice of, and request your consent to, the assignment
by __________________________ (the "Assignor") to ___________________________
(the "Assignee") such that after giving effect to the assignment Assignee shall
have an interest equal to ________ (__%) percent of the total Commitments
pursuant to the Assignment and Acceptance Agreement attached hereto (the
"Assignment and Acceptance"). We understand that the Assignor's Commitment
shall be reduced by $_____________.
2. Assignee agrees that, upon receiving the consent of Agent to such
assignment, Assignee will be bound by the terms of the Loan Agreement as fully
and to the same extent as if the Assignee were the Lender originally holding
such interest under the Loan Agreement.
3. The following administrative details apply to Assignee:
(A) Notice address:
Assignee name:
Address:
Attention:
Telephone:
Telecopier:
(B) Payment instructions:
Account No.:
At:
Reference:
Attention:
4. You are entitled to rely upon the representations, warranties and
covenants of each of Assignor and Assignee contained in the Assignment and
Acceptance.
IN WITNESS WHEREOF, Assignor and Assignee have caused this Notice of Assignment
and Acceptance to be executed by their respective duly authorized officials,
officers or agents as of the date first above mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
By:
Title:
[NAME OF ASSIGNEE]
By:
Title:
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
WACHOVIA CAPITAL FINANCE CORPORATION (CENTRAL), as Agent
By:
Title:
------
EXHIBIT C
TO
LOAN AND SECURITY AGREEMENT
---------------------------
Compliance Certificate
----------------------
To: Wachovia Capital Finance Corporation (Central), as Agent
_________________________
_________________________
Ladies and Gentlemen:
I hereby certify to you pursuant to Section 9.6 of the Loan Agreement (as
defined below) as follows:
1. I am the duly elected Chief Financial Officer of The GSI Group, Inc., a
Delaware corporation ("Borrower"). Capitalized terms used herein without
definition shall have the meanings given to such terms in the Loan and Security
Agreement, dated ______, 2005, by and among Wachovia Capital Finance Corporation
(Central) as agent for the lenders party thereto (in such capacity, "Agent") and
the lenders party thereto (collectively, "Lenders"), Borrower and certain of its
affiliates (as such Loan and Security Agreement is amended, modified or
supplemented, from time to time, the "Loan Agreement").
2. I have reviewed the terms of the Loan Agreement, and have made, or have
caused to be made under my supervision, a review in reasonable detail of the
transactions and the financial condition of Borrower and Guarantors during the
immediately preceding Fiscal Month.
3. The review described in Section 2 above did not disclose the existence
during or at the end of such Fiscal Month, and I have no knowledge of the
existence and continuance on the date hereof, of any condition or event which
constitutes a Default or an Event of Default, except as set forth on Schedule I
attached hereto. Described on Schedule I attached hereto are the exceptions, if
any, to this Section 3 listing, in detail, the nature of the condition or event,
the period during which it has existed and the action which Borrower or any
Guarantor has taken, is taking, or proposes to take with respect to such
condition or event.
4. I further certify that, based on the review described in Section 2 above,
Borrower and Guarantors have not at any time during or at the end of such Fiscal
Month, except as specifically described on Schedule II attached hereto or as
permitted by the Loan Agreement, done any of the following:
(a) Changed its respective corporate name, or transacted business under any
trade name, style, or fictitious name, other than those previously described to
you and set forth in the Financing Agreements.
(b) Changed the location of its chief executive office, changed its
jurisdiction of incorporation, changed its type of organization or changed the
location of or disposed of any of its properties or assets (other than pursuant
to the sale of Inventory in the ordinary course of its business or as otherwise
permitted by Section 9.7 of the Loan Agreement), or established any new asset
locations.
(c) Materially changed the terms upon which it sells goods (including sales
on consignment) or provides services, nor has any vendor or trade supplier to
Borrower or any Guarantor during or at the end of such period materially
adversely changed the terms upon which it supplies goods to Borrower or such
Guarantor.
(d) Permitted or suffered to exist any security interest in or liens on any
of its properties, whether real or personal, other than as specifically
permitted in the Financing Agreements.
(e) Received any notice of, or obtained knowledge of any matter of which
Borrower is required to notify Agent under Section 9.3(b) of the Loan Agreement
which was not previously disclosed to Agent.
(f) Become aware of, obtained knowledge of, or received notification of, any
breach or violation of any material covenant contained in any instrument or
agreement in respect of Indebtedness for money borrowed by Borrower or any
Guarantor.
5. Attached hereto as Schedule III are the calculations used in
determining, as of the end of such Fiscal Month whether Borrower and Guarantors
are in compliance with the covenant set forth in Sections 9.22 of the Loan
Agreement for such Fiscal Month.
The foregoing certifications are made and delivered this day of ___________,
20__.
Very truly yours,
By:
Title:
