EXECUTION COPY
EXHIBIT 10.1
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$530,000,000
CREDIT AGREEMENT
AMONG
K&F INTERMEDIATE HOLDCO, INC.
K&F ACQUISITION, INC.,
(TO BE MERGED WITH AND INTO K&F INDUSTRIES, INC.)
AS BORROWER,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO,
XXXXXX BROTHERS INC.
AND
X.X. XXXXXX SECURITIES INC.,
AS JOINT LEAD ARRANGERS AND JOINT BOOKRUNNERS,
X.X. XXXXXX SECURITIES INC.,
AS SYNDICATION AGENT,
XXXXXXX SACHS CREDIT PARTNERS L.P.
AND
CITIGROUP GLOBAL MARKETS INC.,
AS CO-DOCUMENTATION AGENTS
AND
XXXXXX COMMERCIAL PAPER INC.,
AS ADMINISTRATIVE AGENT
DATED AS OF NOVEMBER 18, 2004
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS........................................................................................... 1
1.1 Defined Terms.................................................................................. 1
1.2 Other Definitional Provisions.................................................................. 26
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS....................................................................... 26
2.1 Term Loan Commitments.......................................................................... 26
2.2 Procedure for Term Loan Borrowing.............................................................. 27
2.3 Repayment of Term Loans........................................................................ 27
2.4 Revolving Credit Commitments................................................................... 28
2.5 Procedure for Revolving Credit Borrowing....................................................... 28
2.6 Swing Line Commitment.......................................................................... 29
2.7 Procedure for Swing Line Borrowing; Refunding of Swing Line Loans.............................. 29
2.8 Repayment of Loans; Evidence of Debt........................................................... 31
2.9 Commitment Fees, etc........................................................................... 32
2.10 Termination or Reduction of Revolving Credit Commitments....................................... 32
2.11 Optional Prepayments........................................................................... 32
2.12 Mandatory Prepayments.......................................................................... 33
2.13 Conversion and Continuation Options............................................................ 34
2.14 Minimum Amounts and Maximum Number of Eurodollar Tranches...................................... 34
2.15 Interest Rates and Payment Dates............................................................... 35
2.16 Computation of Interest and Fees............................................................... 35
2.17 Inability to Determine Interest Rate........................................................... 36
2.18 Pro Rata Treatment and Payments................................................................ 36
2.19 Requirements of Law............................................................................ 38
2.20 Taxes.......................................................................................... 39
2.21 Indemnity...................................................................................... 41
2.22 Illegality..................................................................................... 41
2.23 Change of Lending Office....................................................................... 41
SECTION 3. LETTERS OF CREDIT..................................................................................... 42
3.1 L/C Commitment................................................................................. 42
3.2 Procedure for Issuance of Letter of Credit..................................................... 42
3.3 Fees and Other Charges......................................................................... 42
3.4 L/C Participations............................................................................. 43
3.5 Reimbursement Obligation of the Borrower....................................................... 44
3.6 Obligations Absolute........................................................................... 45
3.7 Letter of Credit Payments...................................................................... 45
3.8 Applications................................................................................... 45
SECTION 4. REPRESENTATIONS AND WARRANTIES........................................................................ 45
4.1 Financial Condition............................................................................ 45
4.2 No Change...................................................................................... 46
4.3 Corporate Existence; Compliance with Law....................................................... 46
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4.4 Corporate Power; Authorization; Enforceable Obligations........................................ 47
4.5 No Legal Bar................................................................................... 47
4.6 No Material Litigation......................................................................... 47
4.7 No Default..................................................................................... 47
4.8 Ownership of Property; Liens................................................................... 47
4.9 Intellectual Property.......................................................................... 48
4.10 No Burdensome Restrictions..................................................................... 48
4.11 Taxes.......................................................................................... 48
4.12 Federal Regulations............................................................................ 48
4.13 Labor Matters.................................................................................. 48
4.14 ERISA.......................................................................................... 49
4.15 Investment Company Act; Other Regulations...................................................... 49
4.16 Subsidiaries................................................................................... 49
4.17 Use of Proceeds................................................................................ 50
4.18 Environmental Matters.......................................................................... 50
4.19 Accuracy of Information, etc................................................................... 51
4.20 Security Documents............................................................................. 51
4.21 Solvency....................................................................................... 52
4.22 Senior Indebtedness............................................................................ 52
4.23 Regulation H................................................................................... 52
4.24 Certain Documents.............................................................................. 52
SECTION 5. CONDITIONS PRECEDENT.................................................................................. 52
5.1 Conditions to Initial Extension of Credit...................................................... 52
5.2 Conditions to Each Extension of Credit......................................................... 57
SECTION 6. AFFIRMATIVE COVENANTS................................................................................. 58
6.1 Financial Statements........................................................................... 58
6.2 Certificates; Other Information................................................................ 59
6.3 Payment of Obligations......................................................................... 60
6.4 Conduct of Business and Maintenance of Existence; Compliance................................... 60
6.5 Maintenance of Property; Insurance............................................................. 61
6.6 Inspection of Property; Books and Records; Discussions......................................... 61
6.7 Notices........................................................................................ 61
6.8 Environmental Laws............................................................................. 62
6.9 Interest Rate Protection....................................................................... 63
6.10 Additional Collateral, etc..................................................................... 63
6.11 Government Contracts........................................................................... 64
6.12 Further Assurances............................................................................. 64
6.13 Aircraft Braking Systems, Inc.................................................................. 65
SECTION 7. NEGATIVE COVENANTS.................................................................................... 65
7.1 Financial Condition Covenants.................................................................. 65
7.2 Limitation on Indebtedness..................................................................... 66
7.3 Limitation on Liens............................................................................ 68
7.4 Limitation on Fundamental Changes.............................................................. 70
7.5 Limitation on Disposition of Property.......................................................... 71
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7.6 Limitation on Restricted Payments.............................................................. 72
7.7 Limitation on Capital Expenditures............................................................. 73
7.8 Limitation on Investments...................................................................... 74
7.9 Limitation on Optional Payments and Modifications of Debt Instruments, etc..................... 75
7.10 Limitation on Transactions with Affiliates..................................................... 76
7.11 Limitation on Sales and Leasebacks............................................................. 76
7.12 Limitation on Changes in Fiscal Periods........................................................ 76
7.13 Limitation on Negative Pledge Clauses.......................................................... 76
7.14 Limitation on Restrictions on Subsidiary Distributions......................................... 77
7.15 Limitation on Lines of Business................................................................ 77
7.16 Limitation on Amendments to Acquisition Documentation.......................................... 77
7.17 Limitation on Amendments to Other Documents.................................................... 77
7.18 Limitation on Activities of Holdings........................................................... 78
SECTION 8. EVENTS OF DEFAULT..................................................................................... 78
SECTION 9. THE AGENTS............................................................................................ 81
9.1 Appointment.................................................................................... 81
9.2 Delegation of Duties........................................................................... 82
9.3 Exculpatory Provisions......................................................................... 82
9.4 Reliance by Agents............................................................................. 82
9.5 Notice of Default.............................................................................. 83
9.6 Non-Reliance on Agents and Other Lenders....................................................... 83
9.7 Indemnification................................................................................ 83
9.8 Agent in Its Individual Capacity............................................................... 84
9.9 Successor Administrative Agent................................................................. 84
9.10 Authorization to Release Liens and Guarantees.................................................. 85
9.11 The Arrangers; the Syndication Agent; the Co-Documentation Agents.............................. 85
SECTION 10. MISCELLANEOUS........................................................................................ 85
10.1 Amendments and Waivers......................................................................... 85
10.2 Notices........................................................................................ 88
10.3 No Waiver; Cumulative Remedies................................................................. 89
10.4 Survival of Representations and Warranties..................................................... 90
10.5 Payment of Expenses............................................................................ 90
10.6 Successors and Assigns; Participations and Assignments......................................... 91
10.7 Adjustments; Set-off........................................................................... 94
10.8 Counterparts................................................................................... 95
10.9 Severability................................................................................... 95
10.10 Integration.................................................................................... 95
10.11 GOVERNING LAW.................................................................................. 95
10.12 Submission To Jurisdiction; Waivers............................................................ 95
10.13 Acknowledgments................................................................................ 96
10.14 Confidentiality................................................................................ 96
10.15 Release of Collateral and Guarantee Obligations................................................ 97
10.16 Accounting Changes............................................................................. 98
10.17 Delivery of Lender Addenda..................................................................... 98
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10.18 WAIVERS OF JURY TRIAL.......................................................................... 98
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ANNEXES:
A Pricing Grid
B Existing Letters of Credit
SCHEDULES:
1.1A Mortgaged Property
1.1B Real Property
4.4 Consents, Authorizations, Filings and Notices
4.6 Litigation
4.16 Subsidiaries
4.20(a) UCC Filing Jurisdictions
4.20(b) Mortgage Filing Jurisdictions
5.1(b)(vi) Capital Structure
7.2(d) Existing Indebtedness
7.3(f) Existing Liens
EXHIBITS:
A Form of Guarantee and Collateral Agreement
B Form of Compliance Certificate
C Form of Closing Certificate
D Form of Mortgage
E Form of Assignment and Acceptance
F-1 Form of Legal Opinion of Xxxxxx, Xxxx & Xxxxxxxx LLP
F-2 Form of Legal Opinion of Xxxxxx Xxxxxx, Esq., general counsel of Holdings,
the Borrower and its Subsidiaries
G-1 Form of Term Note
G-2 Form of Revolving Credit Note
G-3 Form of Swing Line Note
H Form of Lender Addendum
I Form of Borrowing Notice
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CREDIT AGREEMENT, dated as of November 18, 2004, among K&F
INTERMEDIATE HOLDCO, INC., a Delaware corporation ("Holdings"), K&F ACQUISITION,
INC., a Delaware corporation (the "Borrower"), the several banks and other
financial institutions or entities from time to time parties to this Agreement
(the "Lenders"), XXXXXX BROTHERS INC. and X.X. XXXXXX SECURITIES INC., as
exclusive advisors, joint lead arrangers and joint bookrunners (in such
capacity, the "Arrangers"), X.X. XXXXXX SECURITIES INC., as syndication agent
(in such capacity, the "Syndication Agent"), XXXXXXX SACHS CREDIT PARTNERS L.P.
and CITIGROUP GLOBAL MARKETS INC., as co-documentation agents (in such capacity,
the "Co-Documentation Agents") and XXXXXX COMMERCIAL PAPER INC., as
administrative agent (in such capacity, the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, Holdings has entered into a Stock Purchase Agreement,
dated as of October 15, 2004 (as amended, supplemented or otherwise modified as
permitted by Section 7.16, the "Acquisition Agreement"), by and among the Parent
(as defined below), K&F Industries, Inc., a Delaware corporation (the "Target"),
and the other parties listed therein as the stockholders, pursuant to which
Holdings will purchase all of the outstanding shares of common stock, and
options to purchase common stock, of the Target (the "Acquisition");
WHEREAS, immediately after the Acquisition, the Borrower will
merge with and into the Target (the "Merger"), with the Target continuing as the
surviving corporation and, upon the effectiveness of the Merger, the Target will
succeed to all rights and obligations of the Borrower by operation of law, and
all references herein and in the other Loan Documents to the term "Borrower"
shall thereupon be deemed to be references to the Target as the surviving entity
of the Merger;
WHEREAS, the Borrower has requested the Lenders make available
the credit facilities described in this Agreement in order to finance a portion
of the purchase price of the Acquisition and the payment of certain fees and
expenses related to the Acquisition, and to provide for the ongoing general
corporate needs of the Borrower and its Subsidiaries; and
WHEREAS, the Lenders are willing to make such credit
facilities available upon and subject to the terms and conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the premises and the
agreements hereinafter set forth, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
Defined Terms. As used in this Agreement, the terms listed in
this Section 1.1 shall have the respective meanings set forth in this Section
1.1.
"Acquired Entity": any Person, assets of a Person or line of
business or division of a Person acquired by the Borrower or any of its
Subsidiaries pursuant to a Permitted Acquisition.
"Acquisition": as defined in the recitals hereto.
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"Acquisition Agreement": as defined in the recitals hereto.
"Acquisition Documentation": collectively, the Acquisition
Agreement and all schedules, exhibits, annexes and amendments thereto and all
side letters and agreements affecting the terms thereof or entered into in
connection therewith, in each case, as amended, supplemented or otherwise
modified from time to time.
"Adjustment Date": as defined in the Pricing Grid.
"Administrative Agent": as defined in the preamble hereto.
"Affiliate": as to any Person, any other Person that, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person means
the power, directly or indirectly, either to (a) vote 10% or more of the
securities having ordinary voting power for the election of directors (or
persons performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
"Agents": the collective reference to the Syndication Agent,
the Co-Documentation Agents and the Administrative Agent.
"Aggregate Exposure": with respect to any Lender at any time,
an amount equal to (a) until the Closing Date, the aggregate amount of such
Lender's Commitments at such time and (b) thereafter, the sum of (i) the
aggregate then unpaid principal amount of such Lender's Term Loans and (ii) the
amount of such Lender's Revolving Credit Commitment then in effect or, if the
Revolving Credit Commitments have been terminated, the amount of such Lender's
Revolving Extensions of Credit then outstanding.
"Aggregate Exposure Percentage": with respect to any Lender at
any time, the ratio (expressed as a percentage) of such Lender's Aggregate
Exposure at such time to the sum of the Aggregate Exposures of all Lenders at
such time.
"Agreement": this Credit Agreement, as amended, supplemented
or otherwise modified from time to time.
"Applicable Margin": for each Type of Loan under each
Facility, the rate per annum set forth opposite such Facility under the relevant
column heading below:
Base Rate Eurodollar
Loans Loans
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Revolving Credit Facility
(including Swing Line Loans) 1.50% 2.50%
Term Loan Facility 1.50% 2.50%
provided, that on and after the first Adjustment Date occurring after the
completion of two full fiscal quarters of the Borrower after the Closing Date,
the Applicable Margins will be determined pursuant to the Pricing Grid.
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"Application": an application, in such form as the relevant
Issuing Lender may specify from time to time, requesting such Issuing Lender to
issue a Letter of Credit.
"Arrangers": as defined in the preamble hereto.
"Asset Sale": any Disposition of Property or series of related
Dispositions of Property (excluding any such Disposition permitted by clause
(a), (b), (c), (d), (e), (f), (g) or (h) of Section 7.5) which yields gross
proceeds to Holdings, the Borrower or any of its Subsidiaries (valued at the
initial principal amount thereof in the case of non-cash proceeds consisting of
notes or other debt securities and valued at fair market value in the case of
other non-cash proceeds) in excess of $500,000.
"Assignee": as defined in Section 10.6(c).
"Assignment and Acceptance": an assignment and acceptance
delivered by an Assignor and related Assignee in accordance with Section
10.6(c), substantially in the form of Exhibit E.
"Assignor": as defined in Section 10.6(c).
"Attributable Debt": as to any sale and leaseback transaction,
at the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Available Revolving Credit Commitment": with respect to any
Revolving Credit Lender at any time, an amount equal to the excess, if any, of
(a) such Lender's Revolving Credit Commitment then in effect over (b) such
Lender's Revolving Extensions of Credit then outstanding; provided, that in
calculating any Lender's Revolving Extensions of Credit for the purpose of
determining such Lender's Available Revolving Credit Commitment pursuant to
Section 2.9(a), the aggregate principal amount of Swing Line Loans then
outstanding shall be deemed to be zero.
"Base Rate": for any day, a rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate
in effect on such day and (b) the Federal Funds Effective Rate in effect on such
day plus -1/2 of 1%. For purposes hereof: "Prime Rate" shall mean the prime
lending rate as set forth on the British Banking Association Telerate Page 5 (or
such other comparable publicly available page as may, in the reasonable opinion
of the Administrative Agent after notice to the Borrower, replace such page for
the purpose of displaying such rate if such rate no longer appears on the
British Bankers Association Telerate page 5), as in effect from time to time.
The Prime Rate is a reference rate and does not necessarily represent the lowest
or best rate actually available. Any change in the Base Rate due to a change in
the Prime Rate or the Federal Funds Effective Rate shall be effective as of the
opening of business on the effective day of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively.
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"Base Rate Loans": Loans for which the applicable rate of
interest is based upon the Base Rate.
"Benefitted Lender": as defined in Section 10.7.
"Board": the Board of Governors of the Federal Reserve System
of the United States (or any successor).
"Borrower": as defined in the preamble hereto.
"Borrower Equity Financing": the issuance of equity by the
Borrower to Holdings described in Section 5.1(b)(ii).
"Borrower Preferred Stock": the preferred stock of the
Borrower issued and sold on the Closing Date pursuant to the Stock Purchase
Agreement.
"Borrowing Date": any Business Day specified by the Borrower
as a date on which the Borrower requests the relevant Lenders to make Loans
hereunder.
"Borrowing Notice": with respect to any request for borrowing
of Loans hereunder, a notice from the Borrower, substantially in the form of,
and containing the information prescribed by, Exhibit J, delivered to the
Administrative Agent.
"Business": as defined in Section 4.18.
"Business Day": (a) for all purposes other than as covered by
clause (b) below, a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to close and
(b) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (a) and which is also a day for trading by and
between banks in Dollar deposits in the interbank eurodollar market.
"Business Properties": as defined in Section 4.18.
"Capital Expenditures": for any period, with respect to any
Person, the aggregate of all expenditures by such Person for the acquisition or
leasing (pursuant to a capital lease) of fixed or capital assets or additions to
equipment (including replacements, capitalized repairs and improvements during
such period) which are required to be capitalized under GAAP on a balance sheet
of such Person.
"Capital Lease Obligations": with respect to any Person, the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP;
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
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"Capital Stock": any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the foregoing.
"Cash Equivalents": (a) marketable obligations issued by, or
directly and unconditionally guaranteed by, the United States government or
issued by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the date of
acquisition; (b) certificates of deposit, time deposits, eurodollar time
deposits or overnight bank deposits having maturities of one year or less from
the date of acquisition issued by any commercial bank organized under the laws
of the United States of America or any state thereof having combined capital and
surplus of not less than $100,000,000; (c) commercial paper of an issuer rated
at least A-2 by Standard & Poor's Ratings Services ("S&P") or P-2 by Xxxxx'x
Investors Service, Inc. ("Moody's"), or carrying an equivalent rating by a
nationally recognized rating agency, if both of the two named rating agencies
cease publishing ratings of commercial paper issuers generally, and maturing
within one year from the date of acquisition; (d) repurchase obligations of any
commercial bank satisfying the requirements of clause (b) of this definition,
having a term of not more than 30 days with respect to securities issued or
fully guaranteed or insured by the United States government; (e) securities with
maturities of one year or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States, by any
political subdivision or taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A by Moody's; (f)
securities with maturities of six months or less from the date of acquisition
backed by standby letters of credit issued by any commercial bank satisfying the
requirements of clause (b) of this definition; and (g) shares of money market
mutual or similar funds which invest primarily in assets satisfying the
requirements of clauses (a) through (f) of this definition.
"Change of Control": the occurrence of any of the following
events: (a) the Permitted Investors shall cease to have the power to elect
(directly or indirectly, by proxy or by other agreement) a majority of directors
of the Parent, Holdings and the Borrower; (b) any "person" or "group" (within
the meaning of Sections 13(d) and 14(d) of the Exchange Act), excluding the
Permitted Investors, shall become, or obtain rights (whether by means or
warrants, options or otherwise) to become, the "beneficial owner" (as defined in
Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of
more than 40% of the outstanding common stock of Holdings; (c) Continuing
Directors shall cease to be a majority of the board of directors of the Parent,
Holdings and the Borrower; (d) the Parent shall cease to own and control, of
record and beneficially, directly, 100% of each class of outstanding Capital
Stock of Holdings (other than the Holdings Preferred Stock) free and clear of
all Liens (except Liens created by the Guarantee and Collateral Agreement), (e)
Holdings shall cease to own and control, of record and beneficially, directly,
100% of each class of outstanding Capital Stock of the Borrower (other than the
Borrower Preferred Stock) free and clear of all Liens (except Liens created by
the Guarantee and Collateral Agreement); or (f) a Specified Change of Control.
"Closing Date": the date on which the conditions precedent set
forth in Section 5.1 shall have been satisfied, which date shall be not later
than November 18, 2004.
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"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral": all Property of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by any Security
Document.
"Commitment": with respect to any Lender, each of the Term
Loan Commitment and the Revolving Credit Commitment of such Lender.
"Commitment Fee Rate": 1/2 of 1% per annum.
"Commonly Controlled Entity": an entity, whether or not
incorporated, that is under common control with the Borrower within the meaning
of Section 4001 of ERISA or is part of a group that includes the Borrower and
that is treated as a single employer under Section 414 of the Code.
"Compliance Certificate": a certificate duly executed by a
Responsible Officer, substantially in the form of Exhibit B.
"Confidential Information Memorandum": the Confidential
Information Memorandum dated October, 2004 and furnished to the initial Lenders
in connection with the syndication of the Facilities.
"Consolidated Current Assets": of any Person at any date of
determination, all amounts (other than cash and Cash Equivalents) that would, in
conformity with GAAP, be set forth opposite the caption "total current assets"
(or any like caption) on a consolidated balance sheet of such Person and its
Subsidiaries at such date.
"Consolidated Current Liabilities": of any Person at any date
of determination, all amounts that would, in conformity with GAAP, be set forth
opposite the caption "total current liabilities" (or any like caption) on a
consolidated balance sheet of such Person and its Subsidiaries at such date, but
excluding, with respect to the Borrower, (a) the current portion of any Funded
Debt of the Borrower and its Subsidiaries and (b), without duplication, all
Indebtedness consisting of Revolving Credit Loans or Swing Line Loans, to the
extent otherwise included therein.
"Consolidated EBITDA": of any Person for any period,
Consolidated Net Income of such Person and its Subsidiaries for such period
plus, without duplication and to the extent deducted in the calculation of such
Consolidated Net Income for such period, the sum of (a) income tax expense
(including franchise, value added and similar taxes), (b) interest expense of
such Person and its Subsidiaries, amortization or write-off of debt discount and
debt issuance costs and commissions, discounts and other fees and charges
associated with Indebtedness, (c) depreciation and amortization expense, (d)
amortization of intangibles (including, but not limited to, goodwill) and
organization costs, (e) any extraordinary, unusual or non-recurring expenses or
losses (including, whether or not otherwise includable as a separate item in the
statement of such Consolidated Net Income for such period, losses on sales of
assets outside of the ordinary course of business), (f) fees and expenses under
the Management Agreement and (g) any other non-cash charges (including non-cash
expenses for grants of options), minus, without duplication and to the extent
included in the calculation of such Consolidated Net
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Income for such period, the sum of (a) interest income (except to the extent
deducted in determining such Consolidated Net Income), (b) any extraordinary,
unusual or non-recurring income or gains (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net Income
for such period, gains on the sales of assets outside of the ordinary course of
business), (c) any other non-cash income (other than the accrual of revenue in
the ordinary course of business), (d) any cash payments made during such period
reducing reserves or liabilities for accruals made in any prior fiscal quarter
but only to the extent such reserves or accruals were included in the
determination of Consolidated EBITDA for such prior fiscal quarter, all as
determined on a consolidated basis and (e) upon and following the election of
the Borrower to capitalize Program Investments on its balance sheet, the amount
of such capitalized Program Investments for such period; provided that for
purposes of calculating Consolidated EBITDA of the Borrower and its Subsidiaries
for any period, (i) the Consolidated EBITDA of any Person acquired by the
Borrower or its Subsidiaries during such period shall be included on a pro forma
basis (including adjustments for non-recurring items) for such period (assuming
the consummation of such acquisition and the incurrence or assumption of any
Indebtedness in connection therewith occurred on the first day of such period)
if the consolidated balance sheet of such acquired Person and its consolidated
Subsidiaries as at the end of the period preceding the acquisition of such
Person and the related consolidated statements of income and stockholders'
equity and of cash flows for the period in respect of which Consolidated EBITDA
is to be calculated (x) have been previously provided to the Administrative
Agent and the Lenders and (y) either (1) have been reported on without a
qualification arising out of the scope of the audit by independent certified
public accountants of nationally recognized standing or (2) have been found
reasonably acceptable by the Administrative Agent (or, in the case of this
clause (2), if such financial statements are not reasonably acceptable to the
Administrative Agent, the Consolidated EBITDA of such acquired Person shall be
included to the extent reasonably satisfactory to the Administrative Agent) and
(ii) the Consolidated EBITDA of any Person Disposed of by the Borrower or its
Subsidiaries during such period shall be excluded for such period (assuming the
consummation of such Disposition and the repayment of any Indebtedness in
connection therewith occurred on the first day of such period). For the purposes
of determining Consolidated EBITDA of the Borrower and its Subsidiaries, (i)
Consolidated EBITDA for the quarter ending June 30, 2004 shall be deemed to be
$26,917,000, (ii) Consolidated EBITDA for the quarter ending September 30, 2004
shall be deemed to be $31,472,000, and (iii) Consolidated EBITDA for the quarter
ending December 31, 2004 shall be deemed to be $33,000,000.
"Consolidated Interest Coverage Ratio": for any period, the
ratio of (a) Consolidated EBITDA of the Borrower and its Subsidiaries for such
period to (b) Consolidated Interest Expense of the Borrower and its Subsidiaries
for such period; provided, that for the purposes of determining the Consolidated
Interest Coverage Ratio for the fiscal quarters of the Borrower ending March 31,
2005, June 30, 2005 and September 30, 2005, Consolidated Interest Expense for
the relevant period shall be deemed to equal Consolidated Interest Expense for
such fiscal quarter (and, in the case of the latter two such determinations,
each previous fiscal quarter commencing after December 31, 2004) multiplied by
4, 2 and 4/3, respectively.
"Consolidated Interest Expense": of any Person for any period,
total cash interest expense (including that attributable to Capital Lease
Obligations in accordance with GAAP) of
8
such Person and its Subsidiaries on a consolidated basis for such period with
respect to all outstanding Indebtedness of such Person and its Subsidiaries
(including, without limitation, all commissions, discounts and other fees and
charges owed by such Person with respect to letters of credit and bankers'
acceptance financing and net cash costs of such Person under Hedge Agreements in
respect of interest rates) (except for fees or other upfront costs of swaps, cap
or collar arrangements in respect of acquiring or entering into any such
arrangement during such period), minus total net cash interest income of such
Person for such period.
"Consolidated Leverage Ratio": as at the last day of any
period of four consecutive fiscal quarters of the Borrower, the ratio of (a)
Consolidated Total Debt on such day to (b) Consolidated EBITDA of the Borrower
and its Subsidiaries for such period.
"Consolidated Net Income": of any Person for any period, the
consolidated net income (or loss) of such Person and its Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP; provided,
that in calculating Consolidated Net Income of the Borrower and its consolidated
Subsidiaries for any period, there shall be excluded (a) the income (or deficit)
of any Person (other than a Subsidiary of the Borrower) in which any other
Person (other than the Borrower or any of its Subsidiaries) has an ownership
interest, except to the extent that any such income is actually received by the
Borrower or such Subsidiary in the form of cash dividends or similar
distributions during such period, (b) the undistributed earnings of any
Subsidiary of the Borrower to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any Contractual Obligation (other than under any Loan
Document) or Requirement of Law applicable to such Subsidiary, (c) any step-up
in costs of sales of inventory arising out of the application of purchase
accounting treatment in connection with the Acquisition and financing related to
the Acquisition, (d) the fees, expenses and other costs incurred in connection
with the consummation and the financing of the Acquisition and (e) any increase
in amortization or write-off of goodwill or other intangible assets or increased
depreciation or amortization expense arising solely from the Acquisition and
financing related to the Acquisition.
"Consolidated Total Debt": at any date of determination, (a)
the aggregate stated balance sheet amount of all Indebtedness of the Borrower
and its Subsidiaries, determined on a consolidated basis in accordance with GAAP
less (b) unrestricted cash and Cash Equivalents held by the Borrower and its
Subsidiaries on such date, provided that, the aggregate amount of cash and Cash
Equivalents in clause (b) shall not exceed (x) $50,000,000, solely for the
purpose of determining compliance with the financial covenant in Section 7.1(a),
and (y) $15,000,000, for any other purpose.
"Consolidated Working Capital": at any date of determination,
the difference of (a) Consolidated Current Assets of the Borrower on such date
less (b) Consolidated Current Liabilities of the Borrower on such date.
"Continuing Directors": with respect to the Parent, Holdings
and the Borrower, the directors of any such Person on the Closing Date, after
giving effect to the Acquisition and the other transactions contemplated hereby,
and each other director of such Person, if, in each case, such other director's
nomination for election to the board of directors of such Person is
9
recommended by at least 66-2/3% of the then Continuing Directors or such other
director receives the vote of the Permitted Investors in his or her election by
the stockholders of such Person.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
Property is bound.
"Control Investment Affiliate": as to any Person, any other
Person that (a) directly or indirectly, is in control of, is controlled by, or
is under common control with, such Person and (b) is organized by either such
Person primarily for the purpose of making equity or debt investments in one or
more companies. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
"Default": any of the events specified in Section 8, whether
or not any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"Defeasance Costs Tax Note": the Defeasance Costs Tax Note,
dated as of the date hereof, made by the Parent to Xxxxxxx X. Xxxxxxxx and Xxxx
X. Xxxxxxxxxx for the benefit of certain stockholders of the Target.
"Derivatives Counterparty": as defined in Section 7.6.
"Development Participation Costs": cash funding to original
equipment manufacturers to fund the co-development of aircraft wheels, brakes
and brake control systems for new aircraft platforms.
"Disposition": with respect to any Property, any sale, lease,
sale and leaseback, assignment, conveyance, transfer or other disposition
thereof; and the terms "Dispose" and "Disposed of" shall have correlative
meanings.
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"Domestic Subsidiary": any Subsidiary of the Borrower
organized under the laws of any jurisdiction within the United States of
America.
"ECF Percentage": with respect to any fiscal year of the
Borrower, 75%; provided, that, with respect to any fiscal year of the Borrower
ending on or after December 31, 2005, the ECF Percentage shall be (x) 50% if the
Consolidated Leverage Ratio as of the last day of such fiscal year is not
greater than 5.5 to 1.0 and (y) 0% if the Consolidated Leverage Ratio as of the
last day of such fiscal year is not greater than 4.0 to 1.0.
"Environmental Laws": any and all laws, rules, orders,
regulations, statutes, ordinances, codes, decrees, or other legally enforceable
requirements (including, without limitation, common law) of any international
authority, foreign government, the United States, or any state, local, municipal
or other governmental authority, regulating, relating to or imposing liability
or standards of conduct concerning protection of the environment or of human
health, or employee health and safety, as has been, is now, or may at any time
hereafter be, in effect.
10
"Environmental Permits": any and all permits, licenses,
approvals, registrations, notifications, exemptions and other authorizations
required under any Environmental Law.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Reserve Requirements": for any day, the
aggregate (without duplication) of the maximum rates (expressed as a decimal
fraction) of reserve requirements in effect on such day (including, without
limitation, basic, supplemental, marginal and emergency reserves) under any
regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period, the rate per annum determined on the basis of the rate for
eurodollar deposits for a period equal to such Interest Period commencing on the
first day of such Interest Period appearing on Page 3750 of the Telerate screen
as of 11:00 A.M., London time, two Business Days prior to the beginning of such
Interest Period. In the event that such rate does not appear on Page 3750 of the
Telerate screen (or otherwise on such screen), the "Eurodollar Base Rate" for
purposes of this definition shall be determined by reference to such other
comparable publicly available service for displaying eurodollar rates as may be
selected by the Administrative Agent.
"Eurodollar Loans": Loans for which the applicable rate of
interest is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each
Interest Period, a rate per annum determined for such day in accordance with the
following formula (rounded upward to the nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to Eurodollar
Loans under a particular Facility the then current Interest Periods with respect
to all of which begin on the same date and end on the same later date (whether
or not such Loans shall originally have been made on the same day).
"Event of Default": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
"Excess Cash Flow": for any fiscal year of the Borrower, the
excess, if any, of (a) the sum, without duplication, of (i) Consolidated Net
Income of the Borrower for such fiscal year, (ii) an amount equal to all
non-cash charges (including depreciation and amortization) deducted in arriving
at such Consolidated Net Income, (iii) the amount of the decrease, if any, in
Consolidated Working Capital for such fiscal year, (iv) the aggregate net amount
of non-cash loss on the Disposition of Property by the Borrower and its
Subsidiaries during such fiscal year (other than sales of inventory in the
ordinary course of business), to the extent deducted in
11
arriving at such Consolidated Net Income, (v) the net increase during such
fiscal year (if any) in deferred tax accounts of the Borrower and (vi) the
amount of any cash increase in Other Long-Term Liabilities during such fiscal
year minus (b) the sum, without duplication, of (i) the amount of all non-cash
credits included in arriving at such Consolidated Net Income, (ii) the aggregate
amount actually paid by the Borrower and its Subsidiaries in cash during such
fiscal year on account of Capital Expenditures and Development Participation
Costs (in each case, minus the principal amount of Indebtedness incurred in
connection with such expenditures and minus the amount of any such expenditures
financed with the proceeds of any Reinvestment Deferred Amount), (iii) the
aggregate amount of all prepayments of Revolving Credit Loans and Swing Line
Loans during such fiscal year to the extent accompanying permanent optional
reductions of the Revolving Credit Commitments and all optional prepayments of
the Term Loans during such fiscal year, (iv) the aggregate amount of all
regularly scheduled principal payments of Funded Debt (including, without
limitation, the Term Loans and Capital Lease Obligations) of the Borrower and
its Subsidiaries made during such fiscal year (other than in respect of any
revolving credit facility to the extent there is not an equivalent permanent
reduction in commitments thereunder), (v) the aggregate amount of all mandatory
and voluntary principal prepayments of Funded Debt of the Borrower and its
Subsidiaries made during such fiscal year in an aggregate amount not to exceed
$5,000,000 during such fiscal year (other than in respect of any revolving
credit facility to the extent there is not an equivalent permanent reduction in
commitments thereunder), (vi) the amount of the increase, if any, in
Consolidated Working Capital for such fiscal year, (vii) the aggregate net
amount of non-cash gain on the Disposition of Property by the Borrower and its
Subsidiaries during such fiscal year (other than sales of inventory in the
ordinary course of business), to the extent included in arriving at such
Consolidated Net Income, (viii) the net decrease during such fiscal year (if
any) in deferred tax accounts of the Borrower, (ix) the aggregate amount of
Restricted Payments during such fiscal year that were permitted under Section
7.6 (excluding Section 7.6(d), to the extent such Restricted Payment was made
with the portion of Excess Cash Flow for any preceding fiscal year which was not
required to be applied pursuant to Section 2.12(d), and the aggregate amount of
any Indebtedness incurred to finance such Restricted Payments), (ix) the amount
of any cash decrease in Other Long-Term Liabilities and (x) the aggregate amount
of cash consideration paid for Permitted Acquisitions (or other acquisitions
otherwise approved by the Required Lenders) during such period, except to the
extent that such cash consideration was funded with the proceeds of any
Disposition of Property, incurrence of Indebtedness or issuance of Capital Stock
of the Parent.
"Excess Cash Flow Application Date": as defined in Section
2.12(d).
"Excluded Foreign Subsidiary": any Foreign Subsidiary in
respect of which either (a) the pledge of all of the Capital Stock of such
Subsidiary as Collateral or (b) the guaranteeing by such Subsidiary of the
Obligations, would, in the good faith judgment of the Borrower, result in
adverse tax consequences to the Borrower under Section 956 of the Code or any
other similar provision under foreign, state or local law.
"Existing Credit Facility": the Amended and Restated Credit
Agreement, dated as of December 20, 2002, among Aircraft Braking Systems
Corporation and Engineered Fabrics Corporation, as borrowers, the several
lenders party thereto, the several agents named therein,
12
and Xxxxxx Commercial Paper Inc., as administrative agent, as amended,
supplemented or otherwise modified prior to the date hereof.
"Existing Issuing Lender": JPMorgan Chase Bank, N.A.
(successor by merger to Bank One, N.A. (Main Office Chicago)), as issuer of the
Existing Letters of Credit.
"Existing Letters of Credit": the letters of credit described
in Annex B.
"Existing Notes": the Target's 9.25% Senior Subordinated Notes
Due 2007 having an outstanding principal amount of approximately $145.0 million
and 9.625% Senior Subordinated Notes Due 2010 having an outstanding principal
amount of approximately $250.0 million.
"Facility": each of (a) the Term Loan Commitments and the Term
Loans made thereunder (the "Term Loan Facility") and (b) the Revolving Credit
Commitments and the extensions of credit made thereunder (the "Revolving Credit
Facility").
"Federal Funds Effective Rate": for any day, the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the average of
the quotations for the day of such transactions received by the Administrative
Agent from three federal funds brokers of recognized standing selected by it.
"Foreign Subsidiary": any Subsidiary of the Borrower that is
not a Domestic Subsidiary.
"Funded Debt": with respect to any Person, all Indebtedness of
such Person of the types described in clauses (a) through (e) of the definition
of "Indebtedness" in this Section 1.1.
"Funding Office": the office specified from time to time by
the Administrative Agent as its funding office by notice to the Borrower and the
Lenders.
"GAAP": generally accepted accounting principles in the United
States of America as in effect from time to time.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).
"Guarantee and Collateral Agreement": the Guarantee and
Collateral Agreement to be executed and delivered by Holdings, the Borrower and
each Subsidiary Guarantor, substantially in the form of Exhibit A, as the same
may be amended, supplemented or otherwise modified from time to time.
13
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation, including a reimbursement, counterindemnity or similar
obligation, of the guaranteeing person that guarantees or in effect guarantees,
or which is given to induce the creation of a separate obligation by another
Person (including any bank under any letter of credit) that guarantees or in
effect guarantees any Indebtedness, leases, dividends or other obligations (the
"primary obligations") of any other third Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of the guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any Property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the purchase
or payment of any such primary obligation or (2) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase Property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; provided, however, that the
term Guarantee Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Guarantee Obligation of any guaranteeing person shall be deemed to be the lower
of (a) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and (b) the
maximum amount for which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may be
liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in good
faith.
"Guarantors": the collective reference to Holdings and the
Subsidiary Guarantors.
"Hedge Agreements": all interest rate or currency swaps, caps
or collar agreements, foreign exchange agreements, commodity contracts or
similar arrangements entered into by the Borrower or its Subsidiaries providing
for protection against fluctuations in interest rates, currency exchange rates,
commodity prices or the exchange of nominal interest obligations, either
generally or under specific contingencies.
"Holdings Equity Financings": a collective reference to the
issuance of equity by Holdings described in Section 5.1(b)(i).
"Holdings Preferred Stock": the preferred stock of Holdings
issued and sold on the Closing Date pursuant to the Stock Purchase Agreement.
"Indebtedness": of any Person at any date, without
duplication, (a) all indebtedness of such Person for borrowed money, (b) all
obligations of such Person for the deferred purchase price of Property or
services (other than trade payables incurred in the ordinary course of such
Person's business), (c) all obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments, (d) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to Property acquired by such
14
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
Property), (e) all Capital Lease Obligations of such Person, (f) all obligations
of such Person, contingent or otherwise, as an account party or applicant under
acceptance, letter of credit, surety bond or similar facilities, (g) the
liquidation value of all the Capital Stock of such Person that is mandatorily
redeemable (other than as a result of a change of control or an asset sale)
prior to the date that is one year after the final payment is due on the Term
Loans, (h) all Guarantee Obligations of such Person in respect of obligations of
the kind referred to in clauses (a) through (g) above, (i) all obligations of
the kind referred to in clauses (a) through (h) above secured by (or for which
the holder of such obligation has an existing right, contingent or otherwise, to
be secured by) any Lien on Property (including, without limitation, accounts and
contract rights) owned by such Person, whether or not such Person has assumed or
become liable for the payment of such obligation and (j) for the purposes of
Section 8(e) only, all obligations of such Person in respect of Hedge
Agreements. The Indebtedness of any Person shall include the Indebtedness of any
other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness expressly provide that such Person is
not liable therefor.
"Indemnified Liabilities": as defined in Section 10.5.
"Indemnitee": as defined in Section 10.5.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intellectual Property": the collective reference to all
rights, priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, copyrights, copyright licenses, patents, patent
licenses, trademarks, trademark licenses, technology, know-how and processes,
and all rights to xxx at law or in equity for any infringement or other
impairment thereof, including the right to receive all proceeds and damages
therefrom.
"Intercompany Loans": (a) the loan in the original principal
amount of $48,400,000 made by the Target to Engineered Fabrics Corporation on or
about April 28, 1989 and (b) the loan in the original principal amount of
$304,600,000 made by the Target to Aircraft Braking Systems Corporation on or
about April 28, 1989.
"Interest Payment Date": (a) as to any Base Rate Loan, the
last day of each March, June, September and December to occur while such Loan is
outstanding and the final maturity date of such Loan, (b) as to any Eurodollar
Loan having an Interest Period of three months or shorter, the last day of such
Interest Period, (c) as to any Eurodollar Loan having an Interest Period longer
than three months, each day that is three months, or a whole multiple thereof,
after the first day of such Interest Period and the last day of such Interest
Period and (d) as to any Loan or portion thereof that is repaid or prepaid
(other than any Revolving Credit
15
Loan that is a Base Rate Loan and any Swing Line Loan), the date of any such
repayment or prepayment made in respect thereof.
"Interest Period": as to any Eurodollar Loan, (a) initially,
the period commencing on the borrowing or conversion date, as the case may be,
with respect to such Eurodollar Loan and ending one, two, three or six or (if
consented to by all Lenders under the relevant Facility, as determined by such
Lenders in their sole discretion) nine or twelve months thereafter, as selected
by the Borrower in its notice of borrowing or notice of conversion, as the case
may be, given with respect thereto; and (b) thereafter, each period commencing
on the last day of the next preceding Interest Period applicable to such
Eurodollar Loan and ending one, two, three or six or (if consented to by all
Lenders under the relevant Facility, as determined by such Lenders in their sole
discretion) nine or twelve months thereafter, as selected by the Borrower by
irrevocable notice to the Administrative Agent not later than 11:00 A.M., New
York City time, on the date that is three Business Days prior to the last day of
the then current Interest Period with respect thereto; provided that, all of the
foregoing provisions relating to Interest Periods are subject to the following:
(1) if any Interest Period would otherwise end on a day that
is not a Business Day, such Interest Period shall be extended
to the next succeeding Business Day unless the result of such
extension would be to carry such Interest Period into another
calendar month in which event such Interest Period shall end
on the immediately preceding Business Day;
(2) any Interest Period that would otherwise extend beyond the
Revolving Credit Termination Date or beyond the date final
payment is due on the Term Loans shall end on the Revolving
Credit Termination Date or such due date, as applicable; and
(3) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Business Day of
the calendar month at the end of such Interest Period.
"Investments": as defined in Section 7.8.
"Issuing Lender": the Existing Issuing Lender and any
Revolving Credit Lender from time to time designated by the Borrower as an
Issuing Lender with the consent of such Revolving Credit Lender and the
Administrative Agent.
"L/C Commitment": $10,000,000.
"L/C Fee Payment Date": the last day of each March, June,
September and December and the last day of the Revolving Credit Commitment
Period.
"L/C Obligations": at any time, an amount equal to the sum of
(a) the aggregate then undrawn and unexpired amount of the then outstanding
Letters of Credit and (b) the aggregate amount of drawings under Letters of
Credit that have not then been reimbursed pursuant to Section 3.5.
16
"L/C Participants": with respect to any Letter of Credit, the
collective reference to all the Revolving Credit Lenders other than the Issuing
Lender that issued such letter of Credit.
"Xxxxxx Entity": any of Xxxxxx Commercial Paper Inc. or any of
its affiliates (including Syndicated Loan Funding Trust).
"Lender Addendum": with respect to any initial Lender, a
Lender Addendum, substantially in the form of Exhibit I, to be executed and
delivered by such Lender on the Closing Date as provided in Section 10.17.
"Lenders": as defined in the preamble hereto.
"Letters of Credit": as defined in Section 3.1(a).
"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any
capital lease having substantially the same economic effect as any of the
foregoing).
"Loan": any loan made by any Lender pursuant to this
Agreement.
"Loan Documents": this Agreement, the Security Documents, the
Applications and the Notes.
"Loan Parties": Holdings, the Borrower and each Subsidiary of
the Borrower that is a party to a Loan Document.
"Majority Facility Lenders": with respect to any Facility, the
holders of more than 50% of the aggregate unpaid principal amount of the Term
Loans or the Total Revolving Extensions of Credit, as the case may be,
outstanding under such Facility (or, in the case of the Revolving Credit
Facility, prior to any termination of the Revolving Credit Commitments, the
holders of more than 50% of the Total Revolving Credit Commitments).
"Majority Revolving Credit Facility Lenders": the Majority
Facility Lenders in respect of the Revolving Credit Facility.
"Management Agreement": the Management Services Agreement,
dated as of November 18, 2004, among Holdings, the Borrower and Aurora
Management Partners LLC, a Delaware limited liability company, as the same may
be amended, supplemented or otherwise modified from time to time in accordance
with Section 7.17.
"Material Adverse Effect": a material adverse effect on (a)
the condition (financial or otherwise), results of operation, assets or
liabilities of Holdings, the Borrower (or, on the Closing Date, the Target) and
its Subsidiaries, taken as a whole, or (b) the ability of the Loan Parties to
perform their obligations under the Loan Documents, or (c) the validity or
17
enforceability of this Agreement or any of the other Loan Documents or the
rights or remedies of the Administrative Agent or the Lenders hereunder or
thereunder.
"Material Environmental Amount": an amount or amounts payable
by the Borrower and/or any of its Subsidiaries, in the aggregate in excess of
$5,000,000, for: costs to comply with any Environmental Law; costs of any
investigation, and any remediation, of any Material of Environmental Concern;
and compensatory damages (including, without limitation damages to natural
resources), punitive damages, fines, and penalties pursuant to any Environmental
Law.
"Materials of Environmental Concern": any gasoline or
petroleum (including, without limitation, crude oil or any fraction thereof) or
petroleum products, polychlorinated biphenyls, urea-formaldehyde insulation,
asbestos, pollutants, contaminants, radioactivity, and any other substances of
any kind, whether or not any such substance is defined as hazardous or toxic
under any Environmental Law, that is regulated pursuant to or could give rise to
liability under any Environmental Law.
"Merger": as defined in the recitals hereto.
"Mortgaged Properties": (a) the real properties listed on
Schedule 1.1A and identified as "Mortgaged Property," as to which the
Administrative Agent for the benefit of the Secured Parties shall be granted a
Lien pursuant to one or more Mortgages and (b) any fee owned real property
subject to a Mortgage pursuant to Section 6.10(b).
"Mortgages": each of the mortgages, deeds to secure debt and
deeds of trust made by any Loan Party in favor of, or for the benefit of, the
Administrative Agent for the benefit of the Secured Parties, substantially in
the form of Exhibit D (with such changes thereto as shall be advisable under the
law of the jurisdiction in which such mortgage or deed of trust is to be
recorded to create a valid and enforceable Lien securing the obligations and
liabilities of any Borrower or any guarantor under any Loan Document), as the
same may be amended, supplemented or otherwise modified from time to time.
"Multiemployer Plan": a Plan that is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": (a) in connection with any Asset Sale or
any Recovery Event, the proceeds thereof in the form of cash and Cash
Equivalents (including any such proceeds received by way of deferred payment of
principal pursuant to a note or installment receivable or purchase price
adjustment receivable or otherwise, but only as and when received) of such Asset
Sale or Recovery Event, net of attorneys' fees, accountants' fees, investment
banking fees, amounts required to be applied to the repayment of Indebtedness
secured by a Lien expressly permitted hereunder on any asset which is the
subject of such Asset Sale or Recovery Event (other than any Lien pursuant to a
Security Document) and other customary fees and expenses actually incurred in
connection therewith and net of taxes paid or reasonably estimated to be payable
as a result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), (b) in connection with any
issuance or sale of equity securities or debt securities or instruments or the
incurrence of loans, the cash proceeds received
18
from such issuance or incurrence, net of attorneys' fees, investment banking
fees, accountants' fees, underwriting discounts and commissions and other
customary fees and expenses actually incurred in connection therewith, (c) in
the case of any Asset Sale, any reserves required to be established by such
Person in accordance with GAAP against liabilities reasonably anticipated and
directly attributable to such Asset Sale, it being understood and agreed that
"Net Cash Proceeds" shall include any net cash received by Holdings, the
Borrower or any of its Subsidiaries upon any release of such reserves and (d) in
connection with any Purchase Price Refund, the cash amount thereof, net of any
expenses incurred in the collection thereof.
"Non-Excluded Taxes": as defined in Section 2.20(a).
"Non-U.S. Lender": as defined in Section 2.20(d).
"Note": any promissory note evidencing any Loan.
"Obligations": the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity of the
Loans and Reimbursement Obligations and interest accruing after the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding)
the Loans, the Reimbursement Obligations and all other obligations and
liabilities of the Borrower to the Administrative Agent or to any Lender or any
Qualified Counterparty, whether direct or indirect, absolute or contingent, due
or to become due, or now existing or hereafter incurred, which may arise under,
out of, or in connection with, this Agreement, any other Loan Document, the
Letters of Credit, any Specified Hedge Agreement, cash management arrangement or
any other document made, delivered or given in connection herewith or therewith,
whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses (including, without limitation, all fees, charges
and disbursements of counsel to the Administrative Agent or to any Lender that
are required to be paid by the Borrower pursuant hereto) or otherwise; provided,
that (i) obligations of the Borrower or any Subsidiary under any Specified Hedge
Agreement shall be secured and guaranteed pursuant to the Security Documents
only to the extent that, and for so long as, the other Obligations are so
secured and guaranteed and (ii) any release of Collateral or Guarantors effected
in the manner permitted by this Agreement shall not require the consent of
holders of obligations under Specified Hedge Agreements.
"Other Long-Term Liabilities": on any date of determination,
all amounts which would, in conformity with GAAP, be included on a consolidated
balance sheet of the Borrower and its Subsidiaries under the item "Other
Long-Term Liabilities", including, without limitation, amounts accrued under
FASB No. 106 and under FASB No. 87.
"Other Taxes": any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement or any other
Loan Document.
"Parent": K&F Parent, Inc., a Delaware corporation and direct
parent of Holdings.
19
"Participant": as defined in Section 10.6(b).
"Payment Office": the office specified from time to time by
the Administrative Agent as its payment office by notice to the Borrower and the
Lenders.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).
"Permitted Acquisition": the acquisition by the Borrower or
any Subsidiary of all or substantially all the assets of a Person or line of
business of such Person, or not less than 100% of the Capital Stock (except for
directors' qualifying shares) of a Person; provided that (i) the Acquired Entity
shall be a going concern and after giving effect to the acquisition the Borrower
shall be in compliance with Section 7.15; (ii) the Acquired Entity is located,
and substantially all of its operations are conducted, in the United States of
America; (iii) at the time of such transaction (A) both before and after giving
effect thereto, no Event of Default or Default shall have occurred and be
continuing; (B) the Borrower shall have demonstrated to the reasonable
satisfaction of the Administrative Agent that the Borrower would be in pro forma
compliance with the financial covenants in Section 7.1; (C) after giving effect
to such acquisition, the amount of the Available Revolving Credit Commitments of
all the Lenders must be at least $10,000,000; and (D) the total consideration
paid in connection with such acquisition and any other acquisitions pursuant to
Section 7.8(j) (including any Indebtedness of the Acquired Entity that is
assumed, refinanced or repaid by the Borrower or any Subsidiary in connection
with or following such acquisition) shall not in the aggregate exceed (x)
$150,000,000 during the term of this Agreement or (y) $50,000,000 prior to the
first anniversary of the Closing Date; (iv) the Administrative Agent shall have
received, to the extent available, the most recently available audited financial
statements with respect to such Person, assets or line of business; and (v) the
Borrower shall comply, and shall cause the Acquired Entity to comply, with the
applicable provisions of Section 6.10 and the Security Documents.
"Permitted Investors": the collective reference to:
(i) Aurora Industrial Holdings LLC, Aurora Equity
Partners II L.P., Aurora Overseas Equity Partners II,
L.P., Aurora Equity Partners III L.P. and Aurora
Overseas Capital Partners III, L.P. (collectively,
the "Limited Partnerships");
(ii) Aurora Capital Partners II L.P., Aurora Overseas
Capital Partners II, L.P., Aurora Capital Partners
III L.P. and Aurora Overseas Capital Partners III,
L.P. (collectively, the "General Partners");
(iii) Aurora Advisors II LLC, Aurora Advisors III LLC,
Aurora Overseas Advisors II, LDC and Aurora Overseas
Advisors III, LDC (collectively, the "Ultimate
General Partners");
(iv) any limited partners of the Limited Partnerships, any
limited partners of the General Partners or any
Control Investment Affiliate of such limited
partners, provided that such limited partner or
Control Investment Affiliate
20
gives a proxy to, or otherwise agrees that it will
vote in a manner consistent with, any of the Limited
Partnerships or the General Partners;
(v) any managing director, consultant or employee of
Aurora Management Partners LLC, provided that such
managing director, consultant or employee gives a
proxy to, or otherwise agrees that he or she will
vote in a manner consistent with the Limited
Partnerships;
(vi) any member of the Advisory Board of Aurora Management
Partners LLC, provided that such member gives a proxy
to, or otherwise agrees that he or she will vote in a
manner consistent with the Limited Partnerships;
(vii) any Affiliate of Aurora Management Partners LLC,
provided that such Affiliate agrees that it will vote
in a manner consistent with the Limited Partnerships;
or
(viii) any investment fund or other entity controlled by or
under common control with, any one or more of the
Ultimate General Partners or Aurora Management
Partners LLC or the principals that control any one
or more of the Ultimate General Partners or Aurora
Management Partners LLC.
"Person": an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
"Plan": at a particular time, any employee benefit plan that
is covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"Pricing Grid": the pricing grid attached hereto as Annex A.
"Principal Officer": as to any Person, the chief executive
officer, president, chief financial officer, general counsel, treasurer or
controller of such Person.
"Pro Forma Balance Sheet": as defined in Section 4.1(a).
"Program Investments": for any period, the amount of
investments capitalized by the Borrower and its Subsidiaries during such period
consisting of the sale of original wheel and brake assemblies to customers below
factory cost in accordance with industry practice in the commercial, military
and general aviation industries.
"Projections": as defined in Section 6.2(c).
"Property": any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible, including, without limitation, Capital Stock.
21
"Purchase Price Refund": any amount received by Holdings, the
Borrower or any Subsidiary as a result of a purchase price adjustment or similar
event in connection with any acquisition of Property by Holdings, the Borrower
or any Subsidiary.
"Qualified Counterparty": with respect to any Specified Hedge
Agreement, any counterparty thereto that, at the time such Specified Hedge
Agreement was entered into, was a Lender or an affiliate of a Lender.
"Recovery Event": any settlement of or payment of $250,000 or
more in respect of any property or casualty insurance claim or any condemnation
proceeding relating to any asset of Holdings, the Borrower or any of its
Subsidiaries.
"Refunded Swing Line Loans": as defined in Section 2.7.
"Refunding Date": as defined in Section 2.7.
"Register": as defined in Section 10.6(d).
"Regulation G": Regulation G under the Securities Exchange Act
of 1934, as amended.
"Regulation H": Regulation H of the Board as in effect from
time to time.
"Regulation U": Regulation U of the Board as in effect from
time to time.
"Reimbursement Obligation": the obligation of the Borrower to
reimburse each Issuing Lender pursuant to Section 3.5 for amounts drawn under
Letters of Credit issued by such Issuing Lender.
"Reinvestment Deferred Amount": with respect to any
Reinvestment Event, the aggregate Net Cash Proceeds received by Holdings, the
Borrower or any of its Subsidiaries in connection therewith that are not applied
to prepay the Term Loans or reduce the Revolving Credit Commitments pursuant to
Section 2.12(c) as a result of the delivery of a Reinvestment Notice.
"Reinvestment Event": any Asset Sale, Purchase Price Refund or
Recovery Event in respect of which the Borrower has delivered a Reinvestment
Notice.
"Reinvestment Notice": a written notice executed by a
Responsible Officer stating that no Default or Event of Default has occurred and
is continuing and that the Borrower (directly or indirectly through a
Subsidiary) intends and expects to use all or a specified portion of the Net
Cash Proceeds of an Asset Sale, Purchase Price Refund or Recovery Event to
acquire, construct, improve or repair assets useful in its business.
"Reinvestment Prepayment Amount": with respect to any
Reinvestment Event, the Reinvestment Deferred Amount relating thereto less any
amount expended prior to the relevant Reinvestment Prepayment Date to acquire
assets useful in the Borrower's business.
22
"Reinvestment Prepayment Date": with respect to any
Reinvestment Event, the earlier of (a) the date occurring eleven months (or, in
the event any Senior Preferred Stock is outstanding, ten months) after such
Reinvestment Event and (b) the date on which the Borrower shall have determined
not to, or shall have otherwise ceased to, acquire or repair assets useful in
the Borrower's business with all or any portion of the relevant Reinvestment
Deferred Amount.
"Related Fund": with respect to any Lender, any fund that (x)
makes purchases, holds or otherwise invests in commercial loans and similar
extensions of credit and (y) is managed, administered or advised by the same
investment advisor as such Lender or an Affiliate of such investment advisor, by
such Lender or an Affiliate of such Lender.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
"Reportable Event": any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the thirty day notice
period is waived under subsections .21 through .35 of PBGC Reg. Section 4043.
"Required Lenders": at any time, the holders of more than 50%
of (a) until the Closing Date, the Commitments and (b) thereafter, the sum of
(i) the aggregate unpaid principal amount of the Term Loans then outstanding and
(ii) the Total Revolving Credit Commitments then in effect or, if the Revolving
Credit Commitments have been terminated, the Total Revolving Extensions of
Credit then outstanding.
"Required Prepayment Lenders": the Majority Facility Lenders
in respect of each Facility.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its Property or to which such Person or
any of its Property is subject.
"Responsible Officer": the chief executive officer, president
or chief financial officer of the Borrower, but in any event, with respect to
financial matters, the chief financial officer of the Borrower.
"Restricted Payments": as defined in Section 7.6.
"Revolving Credit Commitment": as to any Lender, the
obligation of such Lender, if any, to make Revolving Credit Loans and
participate in Swing Line Loans and Letters of Credit, in an aggregate principal
and/or face amount not to exceed the amount set forth under the heading
"Revolving Credit Commitment" opposite such Lender's name on Schedule 1 to the
Lender Addendum delivered by such Lender, or, as the case may be, in the
Assignment and Acceptance pursuant to which such Lender became a party hereto,
as the same may be changed from time to time pursuant to the terms hereof. The
original aggregate amount of the Total Revolving Credit Commitments is
$50,000,000.
23
"Revolving Credit Commitment Period": the period from and
including the Closing Date to the Revolving Credit Termination Date.
"Revolving Credit Facility": as defined in the definition of
"Facility" in this Section 1.1.
"Revolving Credit Lender": each Lender that has a Revolving
Credit Commitment or that is the holder of Revolving Credit Loans.
"Revolving Credit Loans": as defined in Section 2.4.
"Revolving Credit Note": as defined in Section 2.8.
"Revolving Credit Percentage": as to any Revolving Credit
Lender at any time, the percentage which such Lender's Revolving Credit
Commitment then constitutes of the Total Revolving Credit Commitments (or, at
any time after the Revolving Credit Commitments shall have expired or
terminated, the percentage which the aggregate amount of such Lender's Revolving
Extensions of Credit then outstanding constitutes of the Total Revolving
Extensions of Credit then outstanding).
"Revolving Credit Termination Date": November 18, 2010.
"Revolving Extensions of Credit": as to any Revolving Credit
Lender at any time, an amount equal to the sum of (a) the aggregate principal
amount of all Revolving Credit Loans made by such Lender then outstanding, (b)
such Lender's Revolving Credit Percentage of the L/C Obligations then
outstanding and (c) such Lender's Revolving Credit Percentage of the aggregate
principal amount of Swing Line Loans then outstanding.
"SEC": the Securities and Exchange Commission (or successors
thereto or an analogous Governmental Authority).
"Secured Parties": as defined in the Guarantee and Collateral
Agreement.
"Security Documents": the collective reference to the
Guarantee and Collateral Agreement, the Mortgages and all other security
documents hereafter delivered to the Administrative Agent granting a Lien on any
Property of any Person to secure the obligations and liabilities of any Loan
Party under any Loan Document.
"Senior Preferred Stock": as defined in the Stock Purchase
Agreement.
"Senior Subordinated Note Indenture": the Indenture entered
into by the Borrower and certain of its Subsidiaries in connection with the
issuance of the Senior Subordinated Notes, together with all instruments and
other agreements entered into by the Borrower or such Subsidiaries in connection
therewith, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with Section 7.9.
24
"Senior Subordinated Notes": the $315,000,000 aggregate
principal amount of senior subordinated notes of the Borrower issued on the
Closing Date pursuant to the Senior Subordinated Note Indenture and any exchange
notes issued in respect thereof thereunder.
"Single Employer Plan": any Plan that is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Solvent": with respect to any Person, as of any date of
determination, (a) the amount of the "present fair saleable value" of the assets
of such Person will, as of such date, exceed the amount of all "liabilities of
such Person, contingent or otherwise", as of such date, as such quoted terms are
determined in accordance with applicable federal and state laws governing
determinations of the insolvency of debtors, (b) the present fair saleable value
of the assets of such Person will, as of such date, be greater than the amount
that will be required to pay the liability of such Person on its debts as such
debts become absolute and matured, (c) such Person will not have, as of such
date, an unreasonably small amount of capital with which to conduct its
business, and (d) such Person will be able to pay its debts as they mature. For
purposes of this definition, (i) "debt" means liability on a "claim", and (ii)
"claim" means any (x) right to payment, whether or not such a right is reduced
to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an
equitable remedy for breach of performance if such breach gives rise to a right
to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured
or unsecured.
"Specified Change of Control": a "Change of Control", (or any
other defined term having a similar purpose), as defined in the Senior
Subordinated Note Indenture.
"Specified Hedge Agreement": any Hedge Agreement entered into
by the Borrower or any Subsidiary Guarantor and any Qualified Counterparty.
"Stock Purchase Agreement": the Stock Purchase Agreement dated
as of November 18, 2004, among the Parent, Holdings, the Borrower and Cerberus
Partners, L.P., as amended, supplemented or otherwise modified from time to time
in accordance with Section 7.17.
"Subsidiary": as to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Borrower.
"Subsidiary Guarantor": each Subsidiary of the Borrower that
is a party to the Guarantee and Collateral Agreement.
25
"Swing Line Commitment": the obligation of the Swing Line
Lender to make Swing Line Loans pursuant to Section 2.6 in an aggregate
principal amount at any one time outstanding not to exceed $5,000,000.
"Swing Line Lender": Xxxxxx Commercial Paper Inc., in its
capacity as the lender of Swing Line Loans.
"Swing Line Loans": as defined in Section 2.6.
"Swing Line Note": as defined in Section 2.8.
"Swing Line Participation Amount": as defined in Section 2.7.
"Syndication Agent": as defined in the preamble hereto.
"Target": as defined in the recitals hereto.
"Tax Sharing Agreement": the Tax Sharing Agreement, dated as
of November 18, 2004, by and between the Parent and the Target, as the same may
be amended, supplemented or otherwise modified from time to time in accordance
with Section 7.17.
"Tender Offers": offers made by the Target to repurchase any
and all of the Existing Notes.
"Term Loan": as defined in Section 2.1.
"Term Loan Commitment": as to any Lender, the obligation of
such Lender, if any, to make a Term Loan to the Borrower hereunder in a
principal amount not to exceed the amount set forth under the heading "Term Loan
Commitment" opposite such Lender's name on Schedule 1 to the Lender Addendum
delivered by such Lender, or, as the case may be, in the Assignment and
Acceptance pursuant to which such Lender became a party hereto, as the same may
be changed from time to time pursuant to the terms hereof. The original
aggregate amount of the Term Loan Commitments is $480,000,000.
"Term Loan Facility": as defined in the definition of
"Facility" in this Section 1.1.
"Term Loan Lender": each Lender that has a Term Loan
Commitment or is the holder of a Term Loan.
"Term Loan Percentage": as to any Term Loan Lender at any
time, the percentage which such Lender's Term Loan Commitment then constitutes
of the aggregate Term Loan Commitments (or, at any time after the Closing Date,
the percentage which the aggregate principal amount of such Lender's Term Loan
then outstanding constitutes of the aggregate principal amount of the Term Loans
then outstanding).
"Term Note": as defined in Section 2.8(e).
26
"Total Revolving Credit Commitments": at any time, the
aggregate amount of the Revolving Credit Commitments then in effect.
"Total Revolving Extensions of Credit": at any time, the
aggregate amount of the Revolving Extensions of Credit of the Revolving Credit
Lenders outstanding at such time.
"Transferee": as defined in Section 10.14.
"Type": as to any Loan, its nature as a Base Rate Loan or a
Eurodollar Loan.
"Wholly Owned Subsidiary": as to any Person, any other Person
all of the Capital Stock of which (other than directors' qualifying shares
required by law) is owned by such Person directly and/or through other Wholly
Owned Subsidiaries.
"Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor
that is a Wholly Owned Subsidiary of the Borrower.
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in the other Loan Documents or any certificate or other
document made or delivered pursuant hereto or thereto.
(a) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to Holdings, the Borrower and its Subsidiaries not
defined in Section 1.1 and accounting terms partly defined in Section 1.1, to
the extent not defined, shall have the respective meanings given to them under
GAAP.
(b) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
(d) All calculations of financial ratios set forth in Section
7.1 and the calculation of the Consolidated Leverage Ratio for purposes of
determining the Applicable Margin and any other purpose specified herein shall
be calculated to the same number of decimal places as the relevant ratios are
expressed in and shall be rounded upward if the number in the decimal place
immediately following the last calculated decimal place is five or greater. For
example, if the relevant ratio is to be calculated to the hundredth decimal
place and the calculation of the ratio is 5.126, the ratio will be rounded up to
5.13.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Term Loan Commitments. Subject to the terms and conditions
hereof, the Term Loan Lenders severally agree to make term loans (each, a "Term
Loan") to the Borrower on the Closing Date in an amount for each Term Loan
Lender not to exceed the amount of the
27
Term Loan Commitment of such Lender. The Term Loans may from time to time be
Eurodollar Loans or Base Rate Loans, as determined by the Borrower and notified
to the Administrative Agent in accordance with Sections 2.2 and 2.13.
2.2 Procedure for Term Loan Borrowing. The Borrower shall
deliver to the Administrative Agent a Borrowing Notice (which Borrowing Notice
must be received by the Administrative Agent prior to 10:00 A.M., New York City
time, one Business Day prior to the anticipated Closing Date) requesting that
the Term Loan Lenders make the Term Loans on the Closing Date. The Term Loans
made on the Closing Date shall initially be Base Rate Loans, and no Term Loan
may be converted into or continued as a Eurodollar Loan having an Interest
Period in excess of one month prior to the date which is 60 days after the
Closing Date. Upon receipt of such Borrowing Notice the Administrative Agent
shall promptly notify each Term Loan Lender thereof. Not later than 12:00 Noon,
New York City time, on the Closing Date each Term Loan Lender shall make
available to the Administrative Agent at the Funding Office an amount in
immediately available funds equal to the Term Loan or Term Loans to be made by
such Lender. The Administrative Agent shall make available to the Borrower the
aggregate of the amounts made available to the Administrative Agent by the Term
Loan Lenders, in like funds as received by the Administrative Agent.
2.3 Repayment of Term Loans. The Term Loan of each Term Loan
Lender shall mature in 32 consecutive quarterly installments, commencing on
March 31, 2005, each of which shall be in an amount equal to such Lender's Term
Loan Percentage multiplied by the percentage set forth below opposite such
installment of the aggregate amount of Term Loans made on the Closing Date:
Installment Percentage
----------- ----------
March 31, 2005 0.25%
June 30, 2005 0.25%
September 30, 2005 0.25%
December 31, 2005 0.25%
March 31, 2006 0.25%
June 30, 2006 0.25%
September 30, 2006 0.25%
December 31, 2006 0.25%
March 31, 2007 0.25%
June 30, 2007 0.25%
September 30, 2007 0.25%
December 31, 2007 0.25%
March 31, 2008 0.25%
June 30, 2008 0.25%
September 30, 2008 0.25%
December 31, 2008 0.25%
March 31, 2009 0.25%
June 30, 2009 0.25%
28
Installment Percentage
----------- ----------
September 30, 2009 0.25%
December 31, 2009 0.25%
March 31, 2010 0.25%
June 30, 2010 0.25%
September 30, 2010 0.25%
December 31, 2010 0.25%
March 31, 2011 0.25%
June 30, 2011 0.25%
September 30, 2011 0.25%
December 31, 2011 0.25%
March 31, 2012 23.25%
June 30, 2012 23.25%
September 30, 2012 23.25%
November 18, 2012 All amounts outstanding in
respect of the Term Loans
2.4 Revolving Credit Commitments. (a) Subject to the terms and
conditions hereof, the Revolving Credit Lenders severally agree to make
revolving credit loans ("Revolving Credit Loans") to the Borrower from time to
time during the Revolving Credit Commitment Period in an aggregate principal
amount at any one time outstanding for each Revolving Credit Lender which, when
added to such Lender's Revolving Credit Percentage of the sum of (i) the L/C
Obligations then outstanding and (ii) the aggregate principal amount of the
Swing Line Loans then outstanding, does not exceed the amount of such Lender's
Revolving Credit Commitment. During the Revolving Credit Commitment Period the
Borrower may use the Revolving Credit Commitments by borrowing, prepaying the
Revolving Credit Loans in whole or in part, and reborrowing, all in accordance
with the terms and conditions hereof. The Revolving Credit Loans may from time
to time be Eurodollar Loans or Base Rate Loans, as determined by the Borrower
and notified to the Administrative Agent in accordance with Sections 2.5 and
2.13, provided that no Revolving Credit Loan shall be made as a Eurodollar Loan
after the day that is one month prior to the Revolving Credit Termination Date.
(b) The Borrower shall repay all outstanding Revolving Credit
Loans on the Revolving Credit Termination Date.
2.5 Procedure for Revolving Credit Borrowing. The Borrower may
borrow under the Revolving Credit Commitments on any Business Day during the
Revolving Credit Commitment Period, provided that the Borrower shall deliver to
the Administrative Agent a Borrowing Notice (which Borrowing Notice must be
received by the Administrative Agent prior to 12:00 Noon, New York City time,
(a) three Business Days prior to the requested Borrowing Date, in the case of
Eurodollar Loans, or (b) one Business Day prior to the requested Borrowing Date,
in the case of Base Rate Loans). Each borrowing of Revolving Credit Loans under
the Revolving Credit Commitments shall be in an amount equal to (x) in the case
of Base Rate Loans, $1,000,000 or a whole multiple thereof (or, if the then
aggregate Available Revolving
29
Credit Commitments are less than $1,000,000, such lesser amount) and (y) in the
case of Eurodollar Loans, $5,000,000 or a whole multiple of $1,000,000 in excess
thereof; provided, that the Swing Line Lender may request, on behalf of the
Borrower, borrowings of Base Rate Loans under the Revolving Credit Commitments
in other amounts pursuant to Section 2.7. Upon receipt of any such Borrowing
Notice from the Borrower, the Administrative Agent shall promptly notify each
Revolving Credit Lender thereof. Each Revolving Credit Lender will make its
Revolving Credit Percentage of the amount of each borrowing of Revolving Credit
Loans available to the Administrative Agent for the account of the Borrower at
the Funding Office prior to 12:00 Noon, New York City time, on the Borrowing
Date requested by the Borrower in funds immediately available to the
Administrative Agent. Such borrowing will then be made available to the Borrower
by the Administrative Agent in like funds as received by the Administrative
Agent.
2.6 Swing Line Commitment. (a) Subject to the terms and
conditions hereof, the Swing Line Lender agrees that, during the Revolving
Credit Commitment Period, it will make available to the Borrower in the form of
swing line loans ("Swing Line Loans") a portion of the credit otherwise
available to the Borrower under the Revolving Credit Commitments; provided that
(i) the aggregate principal amount of Swing Line Loans outstanding at any time
shall not exceed the Swing Line Commitment then in effect (notwithstanding that
the Swing Line Loans outstanding at any time, when aggregated with the Swing
Line Lender's other outstanding Revolving Credit Loans hereunder, may exceed the
Swing Line Commitment then in effect or such Swing Line Lender's Revolving
Credit Commitment then in effect) and (ii) the Borrower shall not request, and
the Swing Line Lender shall not make, any Swing Line Loan if, after giving
effect to the making of such Swing Line Loan, the aggregate amount of the
Available Revolving Credit Commitments would be less than zero. During the
Revolving Credit Commitment Period, the Borrower may use the Swing Line
Commitment by borrowing, repaying and reborrowing, all in accordance with the
terms and conditions hereof. Swing Line Loans shall be Base Rate Loans only.
(b) The Borrower shall repay all outstanding Swing Line Loans
on the Revolving Credit Termination Date.
2.7 Procedure for Swing Line Borrowing; Refunding of Swing
Line Loans. (a) The Borrower may borrow under the Swing Line Commitment on any
Business Day during the Revolving Credit Commitment Period, provided, the
Borrower shall give the Swing Line Lender irrevocable telephonic notice
confirmed promptly in writing (which telephonic notice must be received by the
Swing Line Lender not later than 1:00 P.M., New York City time, on the proposed
Borrowing Date), specifying (i) the amount to be borrowed and (ii) the requested
Borrowing Date. Each borrowing under the Swing Line Commitment shall be in an
amount equal to $500,000 or a whole multiple of $100,000 in excess thereof. Not
later than 3:00 P.M., New York City time, on the Borrowing Date specified in the
borrowing notice in respect of any Swing Line Loan, the Swing Line Lender shall
make available to the Administrative Agent at the Funding Office an amount in
immediately available funds equal to the amount of such Swing Line Loan. The
Administrative Agent shall make the proceeds of such Swing Line Loan available
to the Borrower on such Borrowing Date in like funds as received by the
Administrative Agent.
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(b) The Swing Line Lender, at any time and from time to time
in its sole and absolute discretion may, on behalf of the Borrower (which hereby
irrevocably directs the Swing Line Lender to act on its behalf), on one Business
Day's notice given by the Swing Line Lender no later than 12:00 Noon, New York
City time, request each Revolving Credit Lender to make, and each Revolving
Credit Lender hereby agrees to make, a Revolving Credit Loan (which shall
initially be a Base Rate Loan), in an amount equal to such Revolving Credit
Lender's Revolving Credit Percentage of the aggregate amount of the Swing Line
Loans (the "Refunded Swing Line Loans") outstanding on the date of such notice,
to repay the Swing Line Lender. Each Revolving Credit Lender shall make the
amount of such Revolving Credit Loan available to the Administrative Agent at
the Funding Office in immediately available funds, not later than 10:00 A.M.,
New York City time, one Business Day after the date of such notice. The proceeds
of such Revolving Credit Loans shall be made immediately available by the
Administrative Agent to the Swing Line Lender for application by the Swing Line
Lender to the repayment of the Refunded Swing Line Loans.
(c) If prior to the time a Revolving Credit Loan would have
otherwise been made pursuant to Section 2.7(b), one of the events described in
Section 8(f) shall have occurred and be continuing with respect to the Borrower,
or if for any other reason, as determined by the Swing Line Lender in its sole
discretion, Revolving Credit Loans may not be made as contemplated by Section
2.7(b), each Revolving Credit Lender shall, on the date such Revolving Credit
Loan was to have been made pursuant to the notice referred to in Section 2.7(b)
(the "Refunding Date"), purchase for cash an undivided participating interest in
the then outstanding Swing Line Loans by paying to the Swing Line Lender an
amount (the "Swing Line Participation Amount") equal to (i) such Revolving
Credit Lender's Revolving Credit Percentage times (ii) the sum of the aggregate
principal amount of Swing Line Loans then outstanding which were to have been
repaid with such Revolving Credit Loans.
(d) Whenever, at any time after the Swing Line Lender has
received from any Revolving Credit Lender such Lender's Swing Line Participation
Amount, the Swing Line Lender receives any payment on account of the Swing Line
Loans, the Swing Line Lender will distribute to such Lender its Swing Line
Participation Amount (appropriately adjusted, in the case of interest payments,
to reflect the period of time during which such Lender's participating interest
was outstanding and funded and, in the case of principal and interest payments,
to reflect such Lender's pro rata portion of such payment if such payment is not
sufficient to pay the principal of and interest on all Swing Line Loans then
due); provided, however, that in the event that such payment received by the
Swing Line Lender is required to be returned, such Revolving Credit Lender will
return to the Swing Line Lender any portion thereof previously distributed to it
by the Swing Line Lender.
(e) Each Revolving Credit Lender's obligation to make the
Loans referred to in Section 2.7(b) and to purchase participating interests
pursuant to Section 2.7(c) shall be absolute and unconditional and shall not be
affected by any circumstance, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense or other right which such Revolving Credit
Lender or the Borrower may have against the Swing Line Lender, the Borrower or
any other Person for any reason whatsoever; (ii) the occurrence or continuance
of a Default or an Event of Default or the failure to satisfy any of the other
conditions specified in Section 5; (iii) any adverse change in the condition
(financial or otherwise) of the Borrower; (iv) any breach
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of this Agreement or any other Loan Document by the Borrower, any other Loan
Party or any other Revolving Credit Lender; or (v) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.
Repayment of Loans; Evidence of Debt. (a) The Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
the appropriate Revolving Credit Lender or Term Loan Lender, as the case may be,
(i) the then unpaid principal amount of each Revolving Credit Loan of such
Revolving Credit Lender on the Revolving Credit Termination Date (or on such
earlier date on which the Loans become due and payable pursuant to Section 8),
(ii) the then unpaid principal amount of each Swing Line Loan of such Swing Line
Lender on the Revolving Credit Termination Date (or on such earlier date on
which the Loans become due and payable pursuant to Section 8) and (iii) the
principal amount of each Term Loan of such Term Loan Lender in installments
according to the amortization schedule set forth in Section 2.3 (or on such
earlier date on which the Loans become due and payable pursuant to Section 8).
The Borrower hereby further agrees to pay interest on the unpaid principal
amount of the Loans from time to time outstanding from the date hereof until
payment in full thereof at the rates per annum, and on the dates, set forth in
Section 2.15.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Borrower to such
Lender resulting from each Loan of such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
(c) The Administrative Agent, on behalf of the Borrower, shall
maintain the Register pursuant to Section 10.6(d), and a subaccount therein for
each Lender, in which shall be recorded (i) the amount of each Loan made
hereunder and any Note evidencing such Loan, the Type of such Loan and each
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) both the amount of any sum received by the Administrative
Agent hereunder from the Borrower and each Lender's share thereof.
(d) The entries made in the Register and the accounts of each
Lender maintained pursuant to Section 2.8(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made to
the Borrower by such Lender in accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the
Administrative Agent by any Lender, the Borrower will promptly execute and
deliver to such Lender a promissory note of the Borrower evidencing any Term
Loans, Revolving Credit Loans or Swing Line Loans, as the case may be, of such
Lender, substantially in the forms of Exhibit G-1, G-2 or G-3, respectively (a
"Term Note", "Revolving Credit Note" or "Swing Line Note", respectively), with
appropriate insertions as to date and principal amount; provided, that delivery
of Notes shall not be a condition precedent to the occurrence of the Closing
Date or the making of the Loans or issuance of Letters of Credit on the Closing
Date.
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2.9 Commitment Fees, etc. (a) The Borrower agrees to pay to
the Administrative Agent for the account of each Revolving Credit Lender a
commitment fee for the period from and including the Closing Date to the last
day of the Revolving Credit Commitment Period, computed at the Commitment Fee
Rate on the average daily amount of the Available Revolving Credit Commitment of
such Lender during the period for which payment is made, payable quarterly in
arrears on the last day of each March, June, September and December and on the
Revolving Credit Termination Date, commencing on the first of such dates to
occur after the date hereof.
(b) The Borrower agrees to pay to the Administrative Agent the
fees in the amounts and on the dates from time to time agreed to in writing by
the Borrower and the Administrative Agent.
2.10 Termination or Reduction of Revolving Credit Commitments.
The Borrower shall have the right, upon not less than three Business Days'
notice to the Administrative Agent, to terminate the Revolving Credit
Commitments or, from time to time, to reduce the aggregate amount of the
Revolving Credit Commitments; provided that no such termination or reduction of
Revolving Credit Commitments shall be permitted if, after giving effect thereto
and to any prepayments of the Revolving Credit Loans and Swing Line Loans made
on the effective date thereof, the Total Revolving Extensions of Credit would
exceed the Total Revolving Credit Commitments. Any such reduction shall be in an
amount equal to $1,000,000, or a whole multiple thereof, and shall reduce
permanently the Revolving Credit Commitments then in effect.
2.11 Optional Prepayments. (a) The Borrower may at any time
and from time to time prepay the Loans, in whole or in part, without premium or
penalty (except as otherwise provided herein), upon irrevocable notice delivered
to the Administrative Agent no later than 11:00 A.M., New York City time, three
Business Days prior thereto in the case of Eurodollar Loans and no later than
11:00 A.M., New York City time, one Business Day prior thereto in the case of
Base Rate Loans, which notice shall specify the date and amount of such
prepayment, whether such prepayment is of Term Loans or Revolving Credit Loans;
provided, that (i) if a Eurodollar Loan is prepaid on any day other than the
last day of the Interest Period applicable thereto, the Borrower shall also pay
any amounts owing pursuant to Section 2.21 and (ii) no prior notice is required
for the prepayment of Swing Line Loans. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof. If any
such notice is given, the amount specified in such notice shall be due and
payable on the date specified therein, together with (except in the case of
Revolving Credit Loans that are Base Rate Loans and Swing Line Loans) accrued
interest to such date on the amount prepaid. Partial prepayments of Term Loans
and Revolving Credit Loans shall be in an aggregate principal amount of
$1,000,000 or a whole multiple thereof. Partial prepayments of Swing Line Loans
shall be in an aggregate principal amount of $100,000 or a whole multiple
thereof.
(b) Any prepayment of the Loans upon the refinancing thereof
(whether with proceeds of equity or Indebtedness) or upon the occurrence of a
Change of Control shall be deemed to be an optional prepayment.
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2.12 Mandatory Prepayments . (a) Unless the Required
Prepayment Lenders shall otherwise agree, if any Capital Stock shall be issued
by Holdings, the Borrower or any of its Subsidiaries (excluding (i) any Capital
Stock of Holdings issued to the Parent, (ii) any convertible debt securities or
(iii) any Capital Stock issued to Holdings or its Subsidiaries), then on the
date of such issuance, the Term Loans and/or the Total Revolving Extensions of
Credit then outstanding (without resulting in a permanent reduction of the
Revolving Credit Commitments) shall be prepaid by an amount equal to 50% of the
Net Cash Proceeds of such issuance, as set forth in Section 2.12(e), provided
that, the foregoing percentage shall be reduced to (i) 25%, if the Consolidated
Leverage Ratio on the date of such issuance is not greater than 5.5 to 1.0 and
is greater than 4.0 to 1.0 and (ii) 0%, if the Consolidated Leverage Ratio on
the date of such issuance is not greater than 4.0 to 1.0. The provisions of this
Section do not constitute a consent to the issuance of any equity securities by
any entity whose equity securities are pledged pursuant to the Guarantee and
Collateral Agreement.
(b Unless the Required Prepayment Lenders shall otherwise
agree, if any Indebtedness shall be incurred by Holdings, the Borrower or any of
its Subsidiaries (excluding any Indebtedness incurred in accordance with Section
7.2 as in effect on the date of this Agreement), then on the date of such
incurrence, the Term Loans and/or the Total Revolving Extensions of Credit then
outstanding (without resulting in a permanent reduction of the Revolving Credit
Commitments) shall be prepaid by an amount equal to the amount of the Net Cash
Proceeds of such incurrence, as set forth in Section 2.12(e). The provisions of
this Section do not constitute a consent to the incurrence of any Indebtedness
by Holdings, the Borrower or any of its Subsidiaries.
(c) Unless the Required Prepayment Lenders shall otherwise
agree, if on any date Holdings, the Borrower or any of its Subsidiaries shall
receive Net Cash Proceeds from any Asset Sale, Purchase Price Refund or Recovery
Event then, unless a Reinvestment Notice shall be delivered in respect thereof,
on the date of receipt by Holdings, the Borrower or such Subsidiary of such Net
Cash Proceeds, the Term Loans and/or the Total Revolving Extensions of Credit
then outstanding (without resulting in a permanent reduction of the Revolving
Credit Commitments) shall be prepaid by an amount equal to the amount of such
Net Cash Proceeds, as set forth in Section 2.12(e); provided, that,
notwithstanding the foregoing, on each Reinvestment Prepayment Date the Term
Loans and/or the Revolving Credit Loans shall be prepaid by an amount equal to
the Reinvestment Prepayment Amount with respect to the relevant Reinvestment
Event, as set forth in Section 2.12(e). The provisions of this Section do not
constitute a consent to the consummation of any Disposition not permitted by
Section 7.5.
(d) Unless the Required Prepayment Lenders shall otherwise
agree, if, for any fiscal year of the Borrower commencing with the fiscal year
ending December 31, 2005, there shall be Excess Cash Flow, then, on the relevant
Excess Cash Flow Application Date, the Term Loans and/or the Total Revolving
Extensions of Credit then outstanding (without resulting in a permanent
reduction of the Revolving Credit Commitments) shall be prepaid by an amount
equal to the ECF Percentage of such Excess Cash Flow, as set forth in Section
2.12(e). Each such prepayment shall be made on a date (an "Excess Cash Flow
Application Date") no later than five days after the date on which the financial
statements of the Borrower referred to in Section 6.1(a), for the fiscal year
with respect to which such prepayment is made, are required to be delivered to
the Lenders.
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(e) Amounts to be applied in connection with prepayments made
pursuant to this Section shall be applied, first, to the prepayment of the Term
Loans and, second, to the prepayment of amounts outstanding under the Revolving
Credit Facility (without resulting in a permanent reduction of the Revolving
Credit Facility). Amounts to be applied to prepay the Total Revolving Extensions
of Credit outstanding under the Revolving Credit Facility shall be applied,
first, to the prepayment of the Revolving Credit Loans and the Swing Line Loans,
and second, to replace outstanding Letters of Credit and/or deposit an amount in
a cash collateral account established with the Administrative Agent for the
benefit of the Secured Parties on terms and conditions satisfactory to the
Administrative Agent.
2.13 Conversion and Continuation Options. (a) The Borrower may
elect from time to time to convert Eurodollar Loans to Base Rate Loans by giving
the Administrative Agent at least two Business Days' prior irrevocable notice of
such election, provided that any such conversion of Eurodollar Loans may be made
only on the last day of an Interest Period with respect thereto. The Borrower
may elect from time to time to convert Base Rate Loans to Eurodollar Loans by
giving the Administrative Agent at least three Business Days' prior irrevocable
notice of such election (which notice shall specify the length of the initial
Interest Period therefor), provided that no Base Rate Loan under a particular
Facility may be converted into a Eurodollar Loan (i) when any Event of Default
has occurred and is continuing and the Administrative Agent has, or the Majority
Facility Lenders in respect of such Facility have, determined in its or their
sole discretion not to permit such conversions or (ii) after the date that is
one month prior to the final scheduled termination or maturity date of such
Facility. Upon receipt of any such notice the Administrative Agent shall
promptly notify each relevant Lender thereof.
(b) The Borrower may elect to continue any Eurodollar Loan as
such upon the expiration of the then current Interest Period with respect
thereto by giving irrevocable notice to the Administrative Agent, in accordance
with the applicable provisions of the term "Interest Period" set forth in
Section 1.1, of the length of the next Interest Period to be applicable to such
Loan, provided that no Eurodollar Loan under a particular Facility may be
continued as such (i) when any Event of Default has occurred and is continuing
and the Administrative Agent has, or the Majority Facility Lenders in respect of
such Facility have, determined in its or their sole discretion not to permit
such continuations or (ii) after the date that is one month prior to the final
scheduled termination or maturity date of such Facility, and provided, further,
that if the Borrower shall fail to give any required notice as described above
in this paragraph or if such continuation is not permitted pursuant to the
preceding proviso, such Loans shall be converted automatically to Base Rate
Loans on the last day of such then expiring Interest Period. Upon receipt of any
such notice the Administrative Agent shall promptly notify each relevant Lender
thereof.
2.14 Minimum Amounts and Maximum Number of Eurodollar
Tranches. Notwithstanding anything to the contrary in this Agreement, all
borrowings, conversions, continuations and optional prepayments of Eurodollar
Loans and all selections of Interest Periods shall be in such amounts and be
made pursuant to such elections so that, (a) after giving effect thereto, the
aggregate principal amount of the Eurodollar Loans comprising each Eurodollar
Tranche shall be equal to $5,000,000 or a whole multiple of $1,000,000 in excess
thereof and (b) no more than ten Eurodollar Tranches shall be outstanding at any
one time.
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2.15 Interest Rates and Payment Dates. (a) Each Eurodollar
Loan shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such day
plus the Applicable Margin in effect for such day.
(b) Each Base Rate Loan shall bear interest for each day on
which it is outstanding at a rate per annum equal to the Base Rate in effect for
such day plus the Applicable Margin in effect for such day.
(c) (i) If all or a portion of the principal amount of any
Loan or Reimbursement Obligation shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), all outstanding Loans and
Reimbursement Obligations (whether or not overdue) (to the extent legally
permitted) shall bear interest at a rate per annum that is equal to (x) in the
case of the Loans, the rate that would otherwise be applicable thereto pursuant
to the foregoing provisions of this Section plus 2% and (y) in the case of
Reimbursement Obligations, the rate applicable to Base Rate Loans under the
Revolving Credit Facility plus 2%, and (ii) if all or a portion of any interest
payable on any Loan or Reimbursement Obligation or any commitment fee or other
amount payable hereunder shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue amount shall bear interest
at a rate per annum equal to the rate then applicable to Base Rate Loans under
the relevant Facility plus 2% (or, in the case of any such other amounts that do
not relate to a particular Facility, the rate then applicable to Base Rate Loans
under the Revolving Credit Facility plus 2%), in each case, with respect to
clauses (i) and (ii) above, from the date of such non-payment until such amount
is paid in full (after as well as before judgment).
(d) Interest shall be payable in arrears on each Interest
Payment Date, provided that interest accruing pursuant to paragraph (c) of this
Section shall be payable from time to time on demand.
2.16 Computation of Interest and Fees. (a) Interest, fees and
commissions payable pursuant hereto shall be calculated on the basis of a
360-day year for the actual days elapsed, except that, with respect to Base Rate
Loans on which interest is calculated on the basis of the Prime Rate, the
interest thereon shall be calculated on the basis of a 365- (or 366-, as the
case may be) day year for the actual days elapsed. The Administrative Agent
shall as soon as practicable notify the Borrower and the relevant Lenders of
each determination of a Eurodollar Rate. Any change in the interest rate on a
Loan resulting from a change in the Base Rate or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day on
which such change becomes effective. The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of the effective date
and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and the Lenders in the absence of
manifest error. The Administrative Agent shall, at the request of the Borrower,
deliver to the Borrower a statement showing the quotations used by the
Administrative Agent in determining any interest rate pursuant to Section
2.15(a).
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2.17 Inability to Determine Interest Rate. If prior to the
first day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that,
by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period, or
(b) the Administrative Agent shall have received notice
from the Majority Facility Lenders in respect of the relevant Facility
that the Eurodollar Rate determined or to be determined for such
Interest Period will not adequately and fairly reflect the cost to such
Lenders (as conclusively certified by such Lenders) of making or
maintaining their affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the relevant Lenders as soon as practicable thereafter. If such
notice is given (x) any Eurodollar Loans under the relevant Facility requested
to be made on the first day of such Interest Period shall be made as Base Rate
Loans, (y) any Loans under the relevant Facility that were to have been
converted on the first day of such Interest Period to Eurodollar Loans shall be
continued as Base Rate Loans and (z) any outstanding Eurodollar Loans under the
relevant Facility shall be converted, on the last day of the then current
Interest Period with respect thereto, to Base Rate Loans. Until such notice has
been withdrawn by the Administrative Agent, no further Eurodollar Loans under
the relevant Facility shall be made or continued as such, nor shall the Borrower
have the right to convert Loans under the relevant Facility to Eurodollar Loans.
2.18 Pro Rata Treatment and Payments. (a) Each borrowing by
the Borrower from the Lenders hereunder, each payment by the Borrower on account
of any commitment fee or Letter of Credit fee, and any reduction of the
Commitments of the Lenders, shall be made pro rata according to the respective
Term Loan Percentages or Revolving Credit Percentages, as the case may be, of
the relevant Lenders. Each payment of interest in respect of the Loans and each
payment in respect of fees payable hereunder shall be applied to the amounts of
such obligations owing to the Lenders pro rata according to the respective
amounts then due and owing to the Lenders.
(b) Each payment (including each prepayment) on account of
principal of the Term Loans shall be allocated among the Term Loan Lenders pro
rata based on the principal amount of such Term Loans held by such Term Loan
Lenders, and shall be applied (other than in the case of installment payments
made in accordance with Section 2.3) to the installments of such Term Loans
first, to the four immediately succeeding quarterly installments and thereafter,
ratably to the remaining installments in accordance with the then outstanding
amounts thereof. Amounts prepaid or repaid on account of the Term Loans may not
be reborrowed.
(c) Each payment (including each prepayment) by the Borrower
on account of principal of the Revolving Credit Loans shall be made pro rata
according to the respective outstanding principal amounts of the Revolving
Credit Loans then held by the Revolving Credit Lenders. Each payment in respect
of Reimbursement Obligations in respect of any Letter of Credit shall be made to
the Issuing Lender that issued such Letter of Credit.
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(d) The application of any payment of Loans under any Facility
(including optional and mandatory prepayments) shall be made, first, to Base
Rate Loans under such Facility and, second, to Eurodollar Loans under such
Facility. Each payment of the Loans (except in the case of Swing Line Loans and
Revolving Credit Loans that are Base Rate Loans) shall be accompanied by accrued
interest to the date of such payment on the amount paid.
(e) All payments (including prepayments) to be made by the
Borrower hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without setoff or counterclaim and shall be made prior
to 12:00 Noon, New York City time, on the due date thereof to the Administrative
Agent, for the account of the relevant Lenders, at the Payment Office, in
Dollars and in immediately available funds. Any payment made by the Borrower
after 12:00 Noon, New York City time, on any Business Day shall be deemed to
have been on the next following Business Day. If any payment hereunder (other
than payments on the Eurodollar Loans) becomes due and payable on a day other
than a Business Day, such payment shall be extended to the next succeeding
Business Day. If any payment on a Eurodollar Loan becomes due and payable on a
day other than a Business Day, the maturity thereof shall be extended to the
next succeeding Business Day unless the result of such extension would be to
extend such payment into another calendar month, in which event such payment
shall be made on the immediately preceding Business Day. In the case of any
extension of any payment of principal pursuant to the preceding two sentences,
interest thereon shall be payable at the then applicable rate during such
extension.
(f) Unless the Administrative Agent shall have been notified
in writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal to the greater of (i) the Federal Funds Effective Rate and (ii) a
rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation, for the period until such Lender makes such
amount immediately available to the Administrative Agent. A certificate of the
Administrative Agent submitted to any Lender with respect to any amounts owing
under this paragraph shall be conclusive in the absence of manifest error. If
such Lender's share of such borrowing is not made available to the
Administrative Agent by such Lender within three Business Days after such
Borrowing Date, the Administrative Agent shall also be entitled to recover such
amount with interest thereon at the rate per annum applicable to Base Rate Loans
under the relevant Facility, on demand, from the Borrower.
(g) Unless the Administrative Agent shall have been notified
in writing by the Borrower prior to the date of any payment due to be made by
the Borrower hereunder that the Borrower will not make such payment to the
Administrative Agent, the Administrative Agent may assume that the Borrower is
making such payment, and the Administrative Agent may, but shall not be required
to, in reliance upon such assumption, make available to the Lenders their
respective pro rata shares of a corresponding amount. If such payment is not
made to the Administrative Agent by the Borrower within three Business Days
after such due date, the
38
Administrative Agent shall be entitled to recover, on demand, from each Lender
to which any amount which was made available pursuant to the preceding sentence,
such amount with interest thereon at the rate per annum equal to the daily
average Federal Funds Effective Rate. Nothing herein shall be deemed to limit
the rights of the Administrative Agent or any Lender against the Borrower.
(h) Upon receipt by the Administrative Agent of payments on
behalf of Lenders, the Administrative Agent shall promptly distribute such
payments to the Lender or Lenders entitled thereto, in like funds as received by
the Administrative Agent.
2.19 Requirements of Law. (a) If the adoption of or any change
in any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement, any Letter of
Credit, any Application or any Eurodollar Loan made by it, or
change the basis of taxation of payments to such Lender in
respect thereof (except for Non-Excluded Taxes covered by
Section 2.20 and changes in the rate of tax on the overall net
income of such Lender);
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar
requirement against assets held by, deposits or other
liabilities in or for the account of, advances, loans or other
extensions of credit by, or any other acquisition of funds by,
any office of such Lender that is not otherwise included in
the determination of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other
condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such Lender for
such increased cost or reduced amount receivable. If any Lender becomes entitled
to claim any additional amounts pursuant to this Section, it shall promptly
notify the Borrower (with a copy to the Administrative Agent) of the event by
reason of which it has become so entitled.
(b) If any Lender shall have determined that the adoption of
or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under or in respect of any Letter of
Credit to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy)
39
by an amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to the Borrower (with a copy to the Administrative
Agent) of a written request therefor, the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender or such corporation
for such reduction; provided that the Borrower shall not be required to
compensate a Lender pursuant to this paragraph for any amounts incurred more
than six months prior to the date that such Lender notifies the Borrower of such
Lender's intention to claim compensation therefor; and provided further that, if
the circumstances giving rise to such claim have a retroactive effect, then such
six-month period shall be extended to include the period of such retroactive
effect.
(c) A certificate as to any additional amounts payable
pursuant to this Section submitted by any Lender to the Borrower (with a copy to
the Administrative Agent) shall be conclusive in the absence of manifest error.
The obligations of the Borrower pursuant to this Section shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
2.20 Taxes. (a) All payments made by the Borrower under this
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on any Agent or any Lender as a result of a present or
former connection between such Agent or such Lender and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
such Agent's or such Lender's having executed, delivered or performed its
obligations or received a payment under, or enforced, this Agreement or any
other Loan Document). If any such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions or withholdings ("Non-Excluded Taxes") or any Other
Taxes are required to be withheld from any amounts payable to any Agent or any
Lender hereunder, the amounts so payable to such Agent or such Lender shall be
increased to the extent necessary to yield to such Agent or such Lender (after
payment of all Non-Excluded Taxes and Other Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement; provided, however, that the Borrower shall not be required to
increase any such amounts payable to any Lender with respect to any Non-Excluded
Taxes (i) that are attributable to such Lender's failure to comply with the
requirements of paragraph (d) or (e) of this Section or (ii) that are United
States withholding taxes imposed on amounts payable to such Lender at the time
such Lender becomes a party to this Agreement, except to the extent that such
Lender's assignor (if any) was entitled, at the time of assignment, to receive
additional amounts from the Borrower with respect to such Non-Excluded Taxes
pursuant to this paragraph (a).
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable
by the Borrower, as promptly as possible thereafter the Borrower shall send to
the Administrative Agent for the account of the relevant Agent or Lender, as the
case may be, a certified copy of an original official receipt received by the
Borrower showing payment thereof. If the Borrower
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fails to pay any Non-Excluded Taxes or Other Taxes when due to the appropriate
taxing authority or fails to remit to the Administrative Agent the required
receipts or other required documentary evidence, the Borrower shall indemnify
the Agents and the Lenders for any incremental taxes, interest or penalties that
may become payable by any Agent or any Lender as a result of any such failure.
The agreements in this Section shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
(d) Each Lender (or Transferee) that is not a "U.S. Person" as
defined in Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver
to the Borrower and the Administrative Agent (or, in the case of a Participant,
to the Lender from which the related participation shall have been purchased)
two copies of either U.S. Internal Revenue Service Form W-8BEN, Form W-8ECI, or
W-8IMY or any subsequent versions thereof or successors thereto or, in the case
of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of "portfolio
interest", such Non-U.S. Lender delivers a Form W-8BEN or W-8IMY with the
appropriate forms attached thereto, or any subsequent versions thereof or
successors thereto properly completed and duly executed by such Non-U.S. Lender
and represents that such Non-U.S. Lender is the sole record and beneficial owner
of the Loans or the obligations evidenced by Note(s) in respect of which it is
providing the following representations and is not (A) a "bank" within the
meaning of section 881(c)(3)(A) of the Code and furthermore (i) is not subject
to regulatory or other legal requirements as a bank in any jurisdiction, and
(ii) has not been treated as a bank for purposes of any tax, securities law or
other filing or submission made to any Governmental Authority, any application
made to a rating agency or qualification for any exemption from tax, securities
law or other legal requirements, (B) a "10 percent shareholder" of the Borrower
within the meaning of section 881(c)(3)(B) of the Code, or (C) a "controlled
foreign corporation" described in section 881(c)(3)(C) of the Code. Such forms
shall be delivered by each Non-U.S. Lender on or before the date it becomes a
party to this Agreement (or, in the case of any Participant, on or before the
date such Participant purchases the related participation). In addition, each
Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S. Lender. Each
Non-U.S. Lender shall promptly notify the Borrower at any time it determines
that it is no longer in a position to provide any previously delivered
certificate to the Borrower (or any other form of certification adopted by the
U.S. taxing authorities for such purpose). Notwithstanding any other provision
of this paragraph, a Non-U.S. Lender shall not be required to deliver any form
pursuant to this paragraph that such Non-U.S. Lender is not legally able to
deliver.
(e) A Lender that is entitled to an exemption from or
reduction of non-U.S. withholding tax under the law of the jurisdiction in which
the Borrower is located, or any treaty to which such jurisdiction is a party,
with respect to payments under this Agreement shall deliver to the Borrower
(with a copy to the Administrative Agent), at the time or times prescribed by
applicable law or reasonably requested by the Borrower, such properly completed
and executed documentation prescribed by applicable law as will permit such
payments to be made without withholding or at a reduced rate, provided that such
Lender is legally entitled to complete, execute and deliver such documentation
and in such Lender's reasonable judgment such completion, execution or
submission would not prejudice the legal position of such Lender.
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2.21 Indemnity. The Borrower agrees to indemnify each Lender
for, and to hold each Lender harmless from, any loss or expense that such Lender
may sustain or incur as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans after the
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrower in making any
prepayment of Eurodollar Loans after the Borrower has given a notice thereof in
accordance with the provisions of this Agreement or (c) the making of a
prepayment or conversion of Eurodollar Loans on a day that is not the last day
of an Interest Period with respect thereto. Such indemnification may include an
amount equal to the excess, if any, of (i) the amount of interest that would
have accrued on the amount so prepaid, or not so borrowed, converted or
continued, for the period from the date of such prepayment or of such failure to
borrow, convert or continue to the last day of such Interest Period (or, in the
case of a failure to borrow, convert or continue, the Interest Period that would
have commenced on the date of such failure) in each case at the applicable rate
of interest for such Loans provided for herein (excluding, however, the
Applicable Margin included therein, if any) over (ii) the amount of interest (as
reasonably determined by such Lender) that would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank Eurodollar market. A certificate as to any
amounts payable pursuant to this Section submitted to the Borrower by any Lender
shall be conclusive in the absence of manifest error. This covenant shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
2.22 Illegality. Notwithstanding any other provision herein,
if the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for any Lender to
make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the
commitment of such Lender hereunder to make Eurodollar Loans, continue
Eurodollar Loans as such and convert Base Rate Loans to Eurodollar Loans shall
forthwith be canceled and (b) such Lender's Loans then outstanding as Eurodollar
Loans, if any, shall be converted automatically to Base Rate Loans on the
respective last days of the then current Interest Periods with respect to such
Loans or within such earlier period as required by law. If any such conversion
of a Eurodollar Loan occurs on a day which is not the last day of the then
current Interest Period with respect thereto, the Borrower shall pay to such
Lender such amounts, if any, as may be required pursuant to Section 2.21.
2.23 Change of Lending Office. Each Lender agrees that, upon
the occurrence of any event giving rise to the operation of Section 2.19,
2.20(a) or 2.22 with respect to such Lender, it will, if requested by the
Borrower, use reasonable efforts (subject to overall policy considerations of
such Lender) to designate another lending office for any Loans affected by such
event with the object of avoiding the consequences of such event; provided, that
such designation is made on terms that, in the sole judgment of such Lender,
cause such Lender and its lending office(s) to suffer no economic, legal or
regulatory disadvantage, and provided, further, that nothing in this Section
shall affect or postpone any of the obligations of any Borrower or the rights of
any Lender pursuant to Section 2.19, 2.20(a) or 2.22.
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SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Prior to the Closing Date, the
Existing Issuing Lender has issued the Existing Letters of Credit which, from
and after the Closing Date, shall constitute Letters of Credit hereunder.
Subject to the terms and conditions hereof, each Issuing Lender, in reliance on
the agreements of the other Revolving Credit Lenders set forth in Section
3.4(a), agrees to issue letters of credit (the letters of credit issued on and
after the Closing Date pursuant to this Section 3, together with the Existing
Letters of Credit, collectively, the "Letters of Credit") for the account of the
Borrower on any Business Day during the Revolving Credit Commitment Period in
such form as may be approved from time to time by such Issuing Lender; provided,
that no Issuing Lender shall have any obligation to issue any Letter of Credit
if, after giving effect to such issuance, (i) the L/C Obligations would exceed
the L/C Commitment or (ii) the aggregate amount of the Available Revolving
Credit Commitments would be less than zero. Each Letter of Credit shall (i) be
denominated in Dollars and (ii) expire no later than the earlier of (x) the
first anniversary of its date of issuance and (y) the date which is five
Business Days prior to the Revolving Credit Termination Date; provided that any
Letter of Credit with a one-year term may provide for the renewal thereof for
additional one-year periods (which shall in no event extend beyond the date
referred to in clause (y) above).
(b) No Issuing Lender shall at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
such Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
3.2 Procedure for Issuance of Letter of Credit. The Borrower
may from time to time request that an Issuing Lender issue a Letter of Credit by
delivering to such Issuing Lender at its address for notices specified herein an
Application therefor, completed to the satisfaction of such Issuing Lender, and
such other certificates, documents and other papers and information as such
Issuing Lender may request. Concurrently with the delivery of an Application to
an Issuing Lender, the Borrower shall deliver a copy thereof to the
Administrative Agent. Upon receipt of any Application, an Issuing Lender will
process such Application and the certificates, documents and other papers and
information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby by issuing the original of such Letter of Credit to the beneficiary
thereof or as otherwise may be agreed to by such Issuing Lender and the Borrower
(but in no event shall any Issuing Lender be required to issue any Letter of
Credit earlier than three Business Days after its receipt of the Application
therefor and all such other certificates, documents and other papers and
information relating thereto). Promptly after issuance by an Issuing Lender of a
Letter of Credit, such Issuing Lender shall furnish a copy of such Letter of
Credit to the Borrower. Each Issuing Lender shall promptly give notice to the
Administrative Agent of the issuance of each Letter of Credit issued by such
Issuing Lender (including the face amount thereof), and shall provide a copy of
such Letter of Credit to the Administrative Agent as soon as possible after the
date of issuance.
3.3 Fees and Other Charges. (a) The Borrower will pay a fee on
the aggregate drawable amount of all outstanding Letters of Credit at a per
annum rate equal to the Applicable Margin then in effect with respect to
Eurodollar Loans under the Revolving Credit Facility, shared ratably among the
Revolving Credit Lenders in accordance with their respective
43
Revolving Credit Percentages and payable quarterly in arrears on each L/C Fee
Payment Date after the issuance date. In addition, the Borrower shall pay to the
relevant Issuing Lender for its own account a fronting fee on the aggregate
drawable amount of all outstanding Letters of Credit issued by it of a
percentage per annum to be agreed upon by the Borrower and such Issuing Lender,
payable quarterly in arrears on each L/C Fee Payment Date after the issuance
date.
(b) In addition to the foregoing fees, the Borrower shall pay
or reimburse each Issuing Lender for such normal and customary costs and
expenses as are incurred or charged by such Issuing Lender in issuing,
negotiating, effecting payment under, amending or otherwise administering any
Letter of Credit.
3.4 L/C Participations. (a) Each Issuing Lender irrevocably
agrees to grant and hereby grants to each L/C Participant, and, to induce each
Issuing Lender to issue Letters of Credit hereunder, each L/C Participant
irrevocably agrees to accept and purchase and hereby accepts and purchases from
each Issuing Lender, on the terms and conditions hereinafter stated, for such
L/C Participant's own account and risk, an undivided interest equal to such L/C
Participant's Revolving Credit Percentage in each Issuing Lender's obligations
and rights under each Letter of Credit issued by such Issuing Lender hereunder
and the amount of each draft paid by such Issuing Lender thereunder. Each L/C
Participant unconditionally and irrevocably agrees with each Issuing Lender
that, if a draft is paid under any Letter of Credit issued by such Issuing
Lender for which such Issuing Lender is not reimbursed in full by the Borrower
in accordance with the terms of this Agreement, such L/C Participant shall pay
to the Administrative Agent for the account of such Issuing Lender upon demand
at such Issuing Lender's address for notices specified herein (and thereafter
the Administrative Agent shall promptly pay to such Issuing Lender) an amount
equal to such L/C Participant's Revolving Credit Percentage of the amount of
such draft, or any part thereof, that is not so reimbursed. Each L/C
Participant's obligation to pay such amount shall be absolute and unconditional
and shall not be affected by any circumstance, including (i) any setoff,
counterclaim, recoupment, defense or other right that such L/C Participant may
have against the Issuing Lender, the Borrower or any other Person for any reason
whatsoever, (ii) the occurrence or continuance of a Default or an Event of
Default or the failure to satisfy any of the other conditions specified in
Section 5, (iii) any adverse change in the condition (financial or otherwise) of
the Borrower, (iv) any breach of this Agreement or any other Loan Document by
the Borrower, any other Loan Party or any other L/C Participant or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.
(b) If any amount (a "Participation Amount") required to be
paid by any L/C Participant to an Issuing Lender pursuant to Section 3.4(a) in
respect of any unreimbursed portion of any payment made by such Issuing Lender
under any Letter of Credit is paid to such Issuing Lender within three Business
Days after the date such payment is due, such Issuing Lender shall so notify the
Administrative Agent, which shall promptly notify the L/C Participants, and each
L/C Participant shall pay to the Administrative Agent, for the account of such
Issuing Lender, on demand (and thereafter the Administrative Agent shall
promptly pay to such Issuing Lender) an amount equal to the product of (i) such
Participation Amount, times (ii) the daily average Federal Funds Effective Rate
during the period from and including the date such payment is required to the
date on which such payment is immediately available to such Issuing Lender,
times (iii) a fraction the numerator of which is the number of days that elapse
44
during such period and the denominator of which is 360. If any Participation
Amount required to be paid by any L/C Participant pursuant to Section 3.4(a) is
not made available to the Administrative Agent for the account of the relevant
Issuing Lender by such L/C Participant within three Business Days after the date
such payment is due, the Administrative Agent on behalf of such Issuing Lender
shall be entitled to recover from such L/C Participant, on demand, such
Participation Amount with interest thereon calculated from such due date at the
rate per annum applicable to ABR Loans under the Revolving Facility. A
certificate of the Administrative Agent submitted on behalf of an Issuing Lender
to any L/C Participant with respect to any amounts owing under this Section
shall be conclusive in the absence of manifest error.
(c) Whenever, at any time after an Issuing Lender has made
payment under any Letter of Credit and has received from the Administrative
Agent any L/C Participant's pro rata share of such payment in accordance with
Section 3.4(a), such Issuing Lender receives any payment related to such Letter
of Credit (whether directly from the Borrower or otherwise, including proceeds
of collateral applied thereto by such Issuing Lender), or any payment of
interest on account thereof, such Issuing Lender will distribute to the
Administrative Agent for the account of such L/C Participant (and thereafter the
Administrative Agent will promptly distribute to such L/C Participant) its pro
rata share thereof; provided, however, that in the event that any such payment
received by such Issuing Lender shall be required to be returned by such Issuing
Lender, such L/C Participant shall return to the Administrative Agent for the
account of such Issuing Lender (and thereafter the Administrative Agent shall
promptly return to such Issuing Lender) the portion thereof previously
distributed by such Issuing Lender.
3.5 Reimbursement Obligation of the Borrower. The Borrower
agrees to reimburse each Issuing Lender, on each date on which such Issuing
Lender notifies the Borrower of the date and amount of a draft presented under
any Letter of Credit and paid by such Issuing Lender, for the amount of (a) such
draft so paid and (b) any taxes, fees, charges or other costs or expenses
incurred by such Issuing Lender in connection with such payment (the amounts
described in the foregoing clauses (a) and (b) in respect of any drawing,
collectively, the "Payment Amount"). Each such payment shall be made to such
Issuing Lender at its address for notices specified herein in lawful money of
the United States of America and in immediately available funds. Interest shall
be payable on each Payment Amount from the date of the applicable drawing until
payment in full at the rate set forth in (i) until the second Business Day
following the date of the applicable drawing, Section 2.15(b) and (ii)
thereafter, Section 2.15(c). Each drawing under any Letter of Credit shall
(unless an event of the type described in clause (i) or (ii) of Section 8(f)
shall have occurred and be continuing with respect to the Borrower, in which
case the procedures specified in Section 3.4 for funding by L/C Participants
shall apply) constitute a request by the Borrower to the Administrative Agent
for a borrowing pursuant to Section 2.5 of Base Rate Loans (or, at the option of
the Administrative Agent and the Swing Line Lender in their sole discretion, a
borrowing pursuant to Section 2.7 of Swing Line Loans) in the amount of such
drawing. The Borrowing Date with respect to such borrowing shall be the first
date on which a borrowing of Revolving Credit Loans (or, if applicable, Swing
Line Loans) could be made, pursuant to Section 2.5 (or, if applicable, Section
2.7), if the Administrative Agent had received a notice of such borrowing at the
time the Administrative Agent receives notice from the relevant Issuing Lender
of such drawing under such Letter of Credit.
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3.6 Obligations Absolute. The Borrower's obligations under
this Section 3 shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
that the Borrower may have or have had against any Issuing Lender, any
beneficiary of a Letter of Credit or any other Person. The Borrower also agrees
with each Issuing Lender that such Issuing Lender shall not be responsible for,
and the Borrower's Reimbursement Obligations under Section 3.5 shall not be
affected by, among other things, the validity or genuineness of documents or of
any endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or any dispute between or among the Borrower and
any beneficiary of any Letter of Credit or any other party to which such Letter
of Credit may be transferred or any claims whatsoever of the Borrower against
any beneficiary of such Letter of Credit or any such transferee. No Issuing
Lender shall be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
such Issuing Lender. The Borrower agrees that any action taken or omitted by an
Issuing Lender under or in connection with any Letter of Credit issued by it or
the related drafts or documents, if done in the absence of gross negligence or
willful misconduct and in accordance with the standards or care specified in the
Uniform Commercial Code of the State of New York, shall be binding on the
Borrower and shall not result in any liability of such Issuing Lender to the
Borrower.
3.7 Letter of Credit Payments. If any draft shall be presented
for payment under any Letter of Credit, the relevant Issuing Lender shall
promptly notify the Borrower and the Administrative Agent of the date and amount
thereof. The responsibility of the relevant Issuing Lender to the Borrower in
connection with any draft presented for payment under any Letter of Credit, in
addition to any payment obligation expressly provided for in such Letter of
Credit issued by such Issuing Lender, shall be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment appear on their face to be in conformity with
such Letter of Credit.
3.8 Applications. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into this
Agreement and to make the Loans and issue or participate in the Letters of
Credit, each of Holdings and the Borrower hereby represents and warrants to each
Agent and each Lender on the Closing Date and each Borrowing Date that:
4.1 Financial Condition. (a) The unaudited pro forma
consolidated balance sheet of the Borrower and its consolidated Subsidiaries as
at September 30, 2004 (including the notes thereto) (the "Pro Forma Balance
Sheet"), copies of which have heretofore been furnished to each Lender, has been
prepared giving effect (as if such events had occurred on such date) to (i) the
consummation of the Acquisition, (ii) the Loans to be made and the Senior
Subordinated Notes to be issued on the Closing Date and the use of proceeds
thereof and (iii) the payment of
46
fees and expenses in connection with the foregoing. The Pro Forma Balance Sheet
has been prepared based on the good faith assumptions and best information
available to the Borrower as of the date of delivery thereof, and reflects on a
pro forma basis the estimated financial position of the Borrower and its
consolidated Subsidiaries as at September 30, 2004, assuming that the events
specified in the preceding sentence (and the other events specified in the Pro
Forma Balance Sheet) had actually occurred at such date.
(b) The audited consolidated balance sheets of the Target and
its Subsidiaries as at December 31, 2002 and December 31, 2003, and the related
consolidated statements of income and of cash flows for the fiscal years ended
on such dates, reported on by and accompanied by an unqualified report from
Deloitte & Touche LLP, copies of which have heretofore been furnished to each
Lender, present fairly the consolidated financial condition of the Target and
its Subsidiaries as at such date, and the consolidated results of its operations
and its consolidated cash flows for the respective fiscal years then ended. The
unaudited consolidated balance sheet of the Target and its Subsidiaries as at
September 30, 2004, and the related unaudited consolidated statements of income
and cash flows for the nine-month period ended on such date, copies of which
have heretofore been furnished to each Lender, present fairly the consolidated
financial condition of the Target and its Subsidiaries as at such date, and the
consolidated results of its operations and its consolidated cash flows for the
nine-month period then ended (subject to the absence of footnotes and normal
year-end audit adjustments). All such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as approved by the
aforementioned firm of accountants and disclosed therein and except for the
absence of notes and normal year-end adjustments in the unaudited financial
statements). As of the most recent financial statements referred to in this
Section 4.1(b), Holdings, the Borrower and its Subsidiaries do not have any
material Guarantee Obligations, contingent liabilities and liabilities for
taxes, or any material long-term leases or unusual forward or long-term
commitments, including, without limitation, any interest rate or foreign
currency swap or exchange transaction or other obligation in respect of
derivatives, that are not reflected in the most recent financial statements
referred to in this paragraph. During the period from December 31, 2003 to and
including the date hereof there has been no Disposition by Holdings, the
Borrower or any of its Subsidiaries of any material part of its business or
Property.
4.2 No Change. Since June 30, 2004 there has been no
development or event that has had or could reasonably be expected to have a
Material Adverse Effect.
4.3 Corporate Existence; Compliance with Law. Each of
Holdings, the Borrower and its Subsidiaries (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (b) has the corporate power and authority, and the legal right, to
own and operate its Property, to lease the Property it operates as lessee and to
conduct the business in which it is currently engaged, (c) is duly qualified as
a foreign corporation or other organization and in good standing under the laws
of each jurisdiction where its ownership, lease or operation of Property or the
conduct of its business requires such qualification, except in jurisdictions
where the failure to be so qualified or in good standing has not had, and could
not reasonably be expected to have, a Material Adverse Effect and (d) is in
compliance with all Requirements of Law except to the extent that the failure to
comply therewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
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4.4 Corporate Power; Authorization; Enforceable Obligations.
Each Loan Party has the corporate power and authority, and the legal right, to
make, deliver and perform the Loan Documents to which it is a party, to
consummate the Acquisition and, in the case of the Borrower, to borrow
hereunder. Each Loan Party has taken all necessary corporate or other action to
authorize the execution, delivery and performance of the Loan Documents to which
it is a party, to consummate the Acquisition and, in the case of the Borrower,
to authorize the borrowings on the terms and conditions of this Agreement. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required for
Holdings, Borrower or any of its Subsidiaries in connection with the
consummation of the Acquisition, the borrowings hereunder or the execution,
delivery, performance, validity or enforceability of this Agreement or any of
the other Loan Documents, except (i) consents, authorizations, filings and
notices described in Schedule 4.4, which consents, authorizations, filings and
notices have been obtained or made and are in full force and effect and (ii) the
filings referred to in Section 4.20. Each Loan Document has been duly executed
and delivered on behalf of each Loan Party that is a party thereto. This
Agreement constitutes, and each other Loan Document upon execution will
constitute, a legal, valid and binding obligation of each Loan Party that is a
party thereto, enforceable against each such Loan Party in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
4.5 No Legal Bar. The execution, delivery and performance of
this Agreement and the other Loan Documents, the consummation of the
Acquisition, the issuance of Letters of Credit, the borrowings hereunder and the
use of the proceeds thereof will not violate any Requirement of Law or any
Contractual Obligation of Holdings, the Borrower or any of its Subsidiaries,
except for such violations that would not reasonably be expected to have a
Material Adverse Effect, and will not result in, or require, the creation or
imposition of any Lien on any of their respective properties or revenues
pursuant to any Requirement of Law or any such Contractual Obligation (other
than the Liens created by the Security Documents).
4.6 No Material Litigation. Except as set forth on Schedule
4.6, no litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of a Principal Officer of
Holdings or the Borrower, threatened by or against Holdings, the Borrower or any
of its Subsidiaries or against any of their respective properties or revenues
(a) with respect to any of the Loan Documents or any of the transactions
contemplated hereby or thereby, or (b) that could reasonably be expected to have
a Material Adverse Effect.
4.7 No Default. Neither Holdings, the Borrower nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect that could reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
4.8 Ownership of Property; Liens. Each of Holdings, the
Borrower and its Subsidiaries has title in fee simple to, or a valid leasehold
interest in, all its real property, and good title to, or a valid leasehold
interest in, all its other Property material to the conduct of its business, and
none of such Property is subject to any Lien except as permitted by Section 7.3.
48
The Borrower and its Subsidiaries have (a) title in fee simple to no real
property other than as specified on Schedule 1.1B and (b) a valid leasehold
interest in no real property other than as specified on Schedule 1.1B, provided
that the Borrower may revise the information set forth on Schedule 1.1A from
time to time upon notice to the Administrative Agent with a copy to each Lender.
4.9 Intellectual Property. Each of Holdings, the Borrower and
each of its Subsidiaries owns, or is validly licensed to use, all material
Intellectual Property necessary for the conduct of its business as currently
conducted, except for such Intellectual Property that is readily available from
alternative sources. No Principal Officer of Holdings or the Borrower has been
made aware of any material claim by any Person challenging or questioning the
use of any such Intellectual Property or the validity or effectiveness of any
such Intellectual Property. To the knowledge of the Principal Officers of the
Borrower and its Subsidiaries, the use of such Intellectual Property by the
Borrower and its Subsidiaries does not infringe on the rights of any Person
except for such claims and infringements that, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
4.10 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of the Borrower or any of its Subsidiaries exists that
could reasonably be expected to have a Material Adverse Effect.
4.11 Taxes. Each of Holdings, the Borrower and each of its
Subsidiaries has filed or caused to be filed all federal, state and other
material tax returns that are required to be filed and has paid all taxes shown
to be due and payable on said returns or on any material assessments made
against it or any of its Property and all other material taxes, fees or other
charges imposed on it or any of its Property by any Governmental Authority
(other than any such taxes, assessments, fees or other charges the amount or
validity of which are currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided on the books of Holdings, the Borrower or its Subsidiaries, as the case
may be); and no tax Lien has been filed (other than inchoate tax Liens on real
property or as otherwise permitted by Section 7.3(a)), and, to the knowledge of
Holdings and the Borrower, no claim is being asserted for payment, with respect
to any material tax, fee or other charge (other than any such taxes,
assessments, fees or other charges the amount or validity of which are currently
being contested in good faith by appropriate proceedings and with respect to
which reserves in conformity with GAAP have been provided on the books of
Holdings, the Borrower or its Subsidiaries, as the case may be).
4.12 Federal Regulations. No part of the proceeds of any
Loans, and no other extensions of credit hereunder, will be used for
"purchasing" or "carrying" any "margin stock" within the respective meanings of
each of the quoted terms under Regulation U as now and from time to time
hereafter in effect or for any purpose that violates the provisions of the
Regulations of the Board. If requested by any Lender or the Administrative
Agent, the Borrower will furnish to the Administrative Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR Form
G-3 or FR Form U-1 referred to in Regulation U.
4.13 Labor Matters. There are no strikes or other labor
disputes against Holdings, the Borrower or any of its Subsidiaries pending or,
to the knowledge of Holdings or
49
the Borrower, threatened that (individually or in the aggregate) could
reasonably be expected to have a Material Adverse Effect. Hours worked by and
payment made to employees of Holdings, the Borrower and its Subsidiaries have
not been in violation of the Fair Labor Standards Act or any other applicable
Requirement of Law dealing with such matters that (individually or in the
aggregate) could reasonably be expected to have a Material Adverse Effect. All
payments due from Holdings, the Borrower or any of its Subsidiaries on account
of employee health and welfare insurance that (individually or in the aggregate)
could reasonably be expected to have a Material Adverse Effect if not paid have
been paid or accrued as a liability on the books of Holdings, the Borrower or
the relevant Subsidiary.
4.14 ERISA. Neither a Reportable Event nor an "accumulated
funding deficiency" (within the meaning of Section 412 of the Code or Section
302 of ERISA) has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Plan (other
than with respect to the K&F Industries Retirement Plan for Salaried Employees
and the Aircraft Braking Systems/Engineered Fabrics Retirement Plan for
Bargaining Unit Employees for which, in each case, as of December 31, 2002, no
such event or condition exists), and each Plan has complied in all material
respects with the applicable provisions of ERISA and the Code. Other than with
respect to the K&F Industries Retirement Plan for Salaried Employees and the
Aircraft Braking Systems/Engineered Fabrics Retirement Plan for Bargaining Unit
Employees for which, in each case, as of December 31, 2002, no liability remains
unsatisfied or Lien remains outstanding, no termination of a Single Employer
Plan has occurred, and no Lien in favor of the PBGC or a Plan has arisen, during
such five-year period. The present value of all accrued benefits under each
Single Employer Plan (based on those actuarial methods and assumptions used to
fund such Plans for the purposes of Section 412 of the Code and indicated in the
most recent applicable actuarial valuation reports) did not, as of the last
annual valuation date prior to the date on which this representation is made or
deemed made, exceed the value of the assets of such Plan allocable to such
accrued benefits by a material amount. Neither the Borrower nor any Commonly
Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan that has resulted or could reasonably be expected to result
in a material liability under ERISA, and neither the Borrower nor any Commonly
Controlled Entity would become subject to any material liability under ERISA if
the Borrower or any such Commonly Controlled Entity were to withdraw completely
from all Multiemployer Plans as of the valuation date most closely preceding the
date on which this representation is made or deemed made. No such Multiemployer
Plan is in Reorganization or Insolvent.
4.15 Investment Company Act; Other Regulations. No Loan Party
is an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
No Loan Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) that limits its ability to incur Indebtedness.
4.16 Subsidiaries. (a) Except as disclosed to the
Administrative Agent by any Loan Party in writing from time to time after the
Closing Date, the Subsidiaries listed on Schedule 4.16 constitute all the
Subsidiaries of the Borrower at the date hereof. Schedule 4.16 sets forth as of
the Closing Date the name and jurisdiction of incorporation of each Subsidiary
50
and, as to each Subsidiary, the percentage of each class of Capital Stock owned
by each Loan Party.
(b) Except as disclosed to the Administrative Agent by any
Loan Party in writing from time to time after the Closing Date, Holdings, the
Borrower and its Subsidiaries are not parties to, or granted any, outstanding
subscriptions, options, warrants, calls or other rights to purchase (other than
rights in favor of the Parent, Holdings, the Borrower or its Subsidiaries and
directors' qualifying shares) any Capital Stock of Holdings, the Borrower or any
Subsidiary, except as disclosed on Schedule 4.16.
4.17 Use of Proceeds. The proceeds of the Term Loans shall be
used to finance a portion of the Acquisition and to pay related fees and
expenses. The proceeds of the Revolving Credit Loans and the Swing Line Loans,
and the Letters of Credit, shall be used for general corporate purposes of the
Borrower and its Subsidiaries, in the ordinary course of business and for other
transactions to the extent permitted by this Agreement.
4.18 Environmental Matters. Other than exceptions to any of
the following that could not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect:
(a) Materials of Environmental Concern have not been
generated, treated, stored, disposed of, arranged to be disposed of,
installed or released at, on, under or from facilities or properties
currently or formerly owned, leased or operated by the Borrower or any
of its Subsidiaries (the "Business Properties") in amounts or
concentrations or under circumstances which would reasonably be
expected to (i) constitute or have constituted a violation of, or (ii)
give rise to liability under, any Environmental Law.
(b) The Business Properties, all operations at the Business
Properties and the Borrower and its Subsidiaries and the business
operated by the Borrower and any of its Subsidiaries (the "Business")
are in compliance, and have in the last five years been in compliance,
with all applicable Environmental Laws. Neither Borrower nor any of its
Subsidiaries has assumed any liability of any other Person under
Environmental Laws.
(c) Neither Borrower nor any of its Subsidiaries has received
or is aware of any written notice of (i) violation, (ii) alleged
violation, (iii) non-compliance, (iv) liability or (v) potential
liability regarding Environmental Laws, including without limitation,
with regard to any of the Business Properties or the Business, nor does
any Principal Officer of the Borrower or any of its Subsidiaries have
knowledge that any such notice will be received or is being threatened.
(d) To the knowledge of the Principal Officers of the Borrower
or any of its Subsidiaries, Materials of Environmental Concern have not
been transported or disposed of from the Business Properties in
violation of, or in a manner or to a location which could give rise to
liability under, any Environmental Law.
(e) No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Principal Officers of the
Borrower or any of its Subsidiaries, threatened, under any
Environmental Law to which the Borrower or any of
51
its Subsidiaries is or, to the knowledge of the Principal Officers of
the Borrower or any of its Subsidiaries, will be named as a party with
respect to the Business Properties or the Business, nor are there any
consent decrees or other decrees, consent orders, administrative orders
or other orders outstanding under any Environmental Law with respect to
the Business Properties or the Business.
4.19 Accuracy of Information, etc. No statement or information
contained in this Agreement, any other Loan Document, the Confidential
Information Memorandum or any other document, certificate or statement furnished
to the Administrative Agent or the Lenders or any of them, by or on behalf of
any Loan Party for use in connection with the transactions contemplated by this
Agreement or the other Loan Documents, contained as of the date such statement,
information, document or certificate was so furnished (or, in the case of the
Confidential Information Memorandum, as of the date of this Agreement), any
untrue statement of a material fact or, when considered as a whole, omitted to
state a material fact necessary to make the statements contained herein or
therein not misleading. The projections and pro forma financial information
contained in the materials referenced above are based upon good faith estimates
and assumptions believed by management of the Borrower to be reasonable at the
time made, it being recognized by the Lenders that such financial information as
it relates to future events is not to be viewed as fact and that actual results
during the period or periods covered by such financial information may differ
from the projected results set forth therein by a material amount. There is no
fact known to any Principal Officer of any Loan Party that could reasonably be
expected to have a Material Adverse Effect that has not been expressly disclosed
herein, in the other Loan Documents, in the Confidential Information Memorandum
or in any other documents, certificates and statements furnished to the Agents
and the Lenders for use in connection with the transactions contemplated hereby
and by the other Loan Documents.
4.20 Security Documents. (a) The Guarantee and Collateral
Agreement is effective to create in favor of the Administrative Agent, for the
benefit of the Secured Parties, a legal, valid and enforceable security interest
in the Collateral described therein and proceeds thereof. In the case of the
Pledged Stock described in the Guarantee and Collateral Agreement, when any
stock certificates representing such Pledged Stock are delivered to the
Administrative Agent, and in the case of the other Collateral described in the
Guarantee and Collateral Agreement, when financing statements in appropriate
form are filed in the offices specified on Schedule 4.20(a) (which financing
statements have been duly completed and delivered to the Administrative Agent)
and such other filings as are specified on Schedule 3 to the Guarantee and
Collateral Agreement have been completed (all of which filings have been duly
completed), the Guarantee and Collateral Agreement shall constitute a fully
perfected Lien on, and security interest in, all right, title and interest of
the Loan Parties in such Collateral (other than Liens on Collateral that cannot
be perfected under the Uniform Commercial Code by filing or as otherwise
specified on Schedule 3 to the Guarantee and Collateral Agreement) and the
proceeds thereof, as security for the Obligations (as defined in the Guarantee
and Collateral Agreement), in each case prior and superior in right to any other
Person (except, in the case of Collateral other than Pledged Stock, Liens
permitted by Section 7.3).
(b) Each of the Mortgages is effective to create in favor of
the Administrative Agent, for the benefit of the Secured Parties, a legal, valid
and enforceable Lien on the Mortgaged Properties described therein and proceeds
thereof; and when the Mortgages are filed
52
in the offices specified on Schedule 4.20(b) (in the case of the Mortgages to be
executed and delivered on the Closing Date) or in the recording office
designated by the Borrower (in the case of any Mortgage to be executed and
delivered pursuant to Section 6.10(b)), each Mortgage shall constitute a fully
perfected Lien on, and security interest in, all right, title and interest of
the Loan Parties in the Mortgaged Properties described therein and the proceeds
thereof, as security for the Obligations (as defined in the relevant Mortgage),
in each case prior and superior in right to any other Person (other than Persons
holding Liens or other encumbrances or rights permitted by the relevant Mortgage
or otherwise permitted by Sections 7.3(a) through (e) or Section 7.3(r) (to the
extent that such Liens (i) are incurred in the ordinary course of business, (ii)
are not substantial in amount and (iii) do not in any case materially detract
from the value of the Property subject thereto or materially interfere with the
ordinary conduct of the business of the Borrower or any of its Subsidiaries)).
Schedule 1.1B lists, as of the Closing Date, each parcel of owned real property
and each leasehold interest in real property located in the United States and
held by the Borrower or any of its Subsidiaries that has a value, in the
reasonable opinion of the Borrower, in excess of $1,000,000.
4.21 Solvency. Each Loan Party is, and after giving effect to
the Acquisition and the incurrence of all Indebtedness and obligations being
incurred in connection herewith and therewith will be and will continue to be,
Solvent.
4.22 Senior Indebtedness. The Obligations constitute "Senior
Debt" of the Borrower under and as defined in the Senior Subordinated Note
Indenture. The obligations of each Subsidiary Guarantor under the Guarantee and
Collateral Agreement constitute "Senior Debt" of such Subsidiary Guarantor under
and as defined in the Senior Subordinated Note Indenture.
4.23 Regulation H. No Mortgage encumbers improved real
property which is located in an area that has been publicly identified by the
Secretary of Housing and Urban Development as an area having special flood
hazards and in which flood insurance has been made available under the National
Flood Insurance Act of 1968 (except any Mortgaged Properties as to which such
flood insurance as required by Regulation H has been obtained and is in full
force and effect as required by this Agreement).
4.24 Certain Documents. The Borrower has delivered to the
Administrative Agent a complete and correct copy of the Acquisition
Documentation, the Senior Subordinated Note Indenture and the Management
Agreement, including any amendments, supplements or modifications with respect
to any of the foregoing.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Extension of Credit. The agreement
of each Lender to make the initial extension of credit requested to be made by
it hereunder is subject to the satisfaction, prior to or concurrently with the
making of such extension of credit on the Closing Date, of the following
conditions precedent:
(a) Loan Documents. The Administrative Agent shall have
received (i) this Agreement, executed and delivered by a duly
authorized officer of Holdings and the
53
Borrower, (ii) the Guarantee and Collateral Agreement, executed and
delivered by a duly authorized officer of Holdings, the Borrower and
each Subsidiary (other than any Excluded Foreign Subsidiary or any
Subsidiary of an Excluded Foreign Subsidiary), (iii) a Mortgage
covering each of the Mortgaged Properties, executed and delivered by a
duly authorized officer of each party thereto and (iv) a Lender
Addendum executed and delivered by each Lender and accepted by the
Borrower.
(b) Acquisition, etc. The following transactions shall have
been consummated, or shall be consummated substantially concurrently
with the making of the Loans on the Closing Date:
(i) Holdings shall have received at least
$310,000,000 in cash from the issuance of its common stock to
the Parent;
(ii) the Borrower shall have issued $310,000,000 of
common stock for cash to Holdings;
(iii) the Borrower shall have received at least
$315,000,000 in gross cash proceeds from the issuance of the
Senior Subordinated Notes, provided that, the amount of the
Senior Subordinated Notes shall be reduced by the aggregate
principal amount of Existing Notes not purchased in the Tender
Offers, or for which a defeasance deposit has not been made;
(iv) the Administrative Agent shall have received
satisfactory evidence that the Borrower shall have issued on
or prior to the Closing Date a notice to the holders of its
9-1/4% Senior Subordinated Notes due 2007 redeeming the
remaining outstanding principal amount of such notes which
were not tendered in accordance with Section 5.1(e);
(v) the Acquisition shall have been consummated
pursuant to the Acquisition Agreement for an aggregate
purchase price not exceeding $1,105,000,000 (including fees
and expenses not exceeding $45,000,000 in the aggregate and
excluding the increase in the purchase price resulting from
existing cash balances at the Target and excluding the
Defeasance Costs Tax Note), and no material provision thereof
shall have been waived, amended, supplemented or otherwise
modified without the consent of the Agents (such consent not
to be unreasonably withheld or delayed), and immediately
thereafter the Merger shall have been consummated; and
(vi) the capital structure of each Loan Party after
the Acquisition shall be as described in Schedule 5.1(b)(vi).
(c) Pro Forma Balance Sheet; Financial Statements. The Lenders
shall have received (i) the Pro Forma Balance Sheet, (ii) audited
consolidated financial statements of the Target and its Subsidiaries
for the 2002 and 2003 fiscal years and (iii) unaudited interim
consolidated financial statements of the Target and its Subsidiaries
for each quarterly period ended subsequent to the date of the latest
applicable financial statements delivered pursuant to clause (ii) of
this paragraph as to which such financial statements
54
are available; and such financial statements shall not, in the
reasonable judgment of the Lenders, reflect any material adverse change
in the consolidated financial condition of the Target and its
Subsidiaries, as reflected in the financial statements or projections
contained in the Confidential Information Memorandum.
(d) Capitalization. The total equity capitalization of
Holdings shall not be less than 25% of the consolidated total
capitalization of Holdings after giving effect to the Holdings Equity
Financings. The total equity capitalization of the Borrower shall not
be less than 25% of the consolidated total capitalization of the
Borrower after giving effect to the Borrower Equity Financing.
(e) Notes Satisfaction. The Notes Satisfaction Condition (as
defined in the Acquisition Agreement) shall have been satisfied.
(f) Pro Forma Leverage Ratio. The ratio of pro forma
Consolidated Total Debt of the Borrower at the Closing Date to pro
forma Consolidated EBITDA of the Borrower (as adjusted to give effect
to the consummation of the Acquisition and the financings contemplated
hereby and calculated in accordance with Regulation G and including
adjustments described in footnote (d) under "Summary Historical and Pro
Forma Consolidated Financial Information" in the Offering Memorandum
for the Senior Subordinated Notes and such other adjustments as the
Agents agree are appropriate) for the Borrower's most recently ended
four fiscal quarters for which internal financial statements are
available shall not exceed 6.52 to 1.00.
(g) No Material Adverse Effect. There shall not have occurred
or become known to the Lenders any event, development or circumstance
since June 30, 2004 that has caused or could reasonably be expected to
cause a Material Adverse Effect.
(h) Approvals. All governmental and third party approvals
(including landlords' and other consents) required pursuant to the
Acquisition Agreement shall have been obtained and be in full force and
effect, and all applicable waiting periods shall have expired without
any action being taken or threatened by any competent authority that
would restrain, prevent or otherwise impose material adverse conditions
on the Acquisition or the financing contemplated hereby.
(i) Related Agreements. The Administrative Agent shall have
received (in a form reasonably satisfactory to the Administrative
Agent), true and correct copies, certified as to authenticity by the
Borrower, of (i) the Senior Subordinated Note Indenture, (ii) the
Acquisition Agreement, (iii) the Management Agreement and the Tax
Sharing Agreement and (iv) such other documents or instruments as may
be reasonably requested by the Administrative Agent, including, without
limitation, a copy of any debt instrument, security agreement or other
material contract to which the Loan Parties may be a party.
(j) Termination of Existing Credit Facility. The
Administrative Agent shall have received evidence satisfactory to the
Administrative Agent that the Existing Credit Facility shall be
55
simultaneously terminated, all amounts thereunder shall be
simultaneously paid in full and arrangements reasonably satisfactory to
the Administrative Agent shall have been made for the termination of
Liens and security interests granted in connection therewith.
(k) Fees. The Lenders and the Administrative Agent shall have
received all fees required to be paid, and all expenses for which
invoices have been presented (including reasonable fees, disbursements
and other charges of counsel to the Administrative Agent), on or before
the Closing Date. All such amounts will be paid with proceeds of Loans
made on the Closing Date and will be reflected in the funding
instructions given by the Borrower to the Administrative Agent on or
before the Closing Date.
(l) Solvency Analysis. The Lenders shall have received a
solvency analysis in customary form certified by the chief financial
officer of the Borrower which shall document the solvency of the
Borrower and its Subsidiaries considered as a whole after giving effect
to the Acquisition and the other transactions contemplated hereby, in
form and substance satisfactory to the Lenders.
(m) Lien Searches. The Lenders shall have received the results
of a recent lien search in each of the jurisdictions in which Uniform
Commercial Code financing statement or other filings or recordations
should be made to evidence or perfect security interests in all assets
of the Loan Parties, and such search shall reveal no liens on any of
the assets of the Loan Party, except for Liens permitted by Section 7.3
or Liens to be discharged on or prior to the Closing Date pursuant to
documentation satisfactory to the Administrative Agent.
(n) Closing Certificate. The Administrative Agent shall have
received a certificate of each Loan Party, dated the Closing Date,
substantially in the form of Exhibit C, with appropriate insertions and
attachments.
(o) Legal Opinions. The Administrative Agent shall have
received the following executed legal opinions:
(i) the legal opinion of Xxxxxx, Xxxx & Xxxxxxxx LLP,
counsel to Holdings, the Borrower and its Subsidiaries,
substantially in the form of Exhibit F-1;
(ii) the legal opinion of Xxxxxx Xxxxxx, Esq.,
general counsel of the Target and its Subsidiaries,
substantially in the form of Exhibit F-2;
(iii) to the extent consented to by the relevant
counsel, each legal opinion, if any, delivered to Holdings in
connection with the Acquisition Agreement, accompanied by a
reliance letter in favor of the Lenders; and
(iv) the legal opinion of local counsel in each of
Georgia and Ohio and of such other special and local counsel
as may be required by the Administrative Agent.
56
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent
may reasonably require and shall be addressed to the Administrative
Agent and the Lenders.
(p) Pledged Stock; Stock Powers; Acknowledgment and Consent;
Pledged Notes. Subject to Section 6.13, the Administrative Agent shall
have received (i) the certificates representing the shares of Capital
Stock pledged pursuant to the Guarantee and Collateral Agreement,
together with an undated stock power for each such certificate executed
in blank by a duly authorized officer of the pledgor thereof, (ii) an
Acknowledgment and Consent, substantially in the form of Annex II to
the Guarantee and Collateral Agreement, duly executed by any issuer of
Capital Stock pledged pursuant to the Guarantee and Collateral
Agreement that is not itself a party to the Guarantee and Collateral
Agreement and (iii) each promissory note, if any, pledged pursuant to
the Guarantee and Collateral Agreement endorsed (without recourse) in
blank (or accompanied by an executed transfer form in blank reasonably
satisfactory to the Administrative Agent) by the pledgor thereof.
(q) Filings, Registrations and Recordings. Each document
(including, without limitation, any Uniform Commercial Code financing
statement) required by the Security Documents or under law or
reasonably requested by the Administrative Agent to be filed,
registered or recorded in order to create in favor of the
Administrative Agent, for the benefit of the Secured Parties, a
perfected Lien on the Collateral described therein, prior and superior
in right to any other Person (other than with respect to Liens
expressly permitted by Section 7.3), shall have been filed, registered
or recorded or shall have been delivered to the Administrative Agent
and shall be in proper form for filing, registration or recordation.
(r) Title Insurance; Flood Insurance. (i) If requested by the
Administrative Agent, the Administrative Agent shall have received, and
the title insurance company issuing the policy referred to in clause
(ii) below (the "Title Insurance Company") shall have received, maps or
plats of an as-built survey of the sites of the Mortgaged Properties
certified to the Administrative Agent and the Title Insurance Company
in a manner satisfactory to them, dated a date satisfactory to the
Administrative Agent and the Title Insurance Company by an independent
professional licensed land surveyor satisfactory to the Administrative
Agent and the Title Insurance Company, which maps or plats and the
surveys on which they are based shall be made in accordance with the
Minimum Standard Detail Requirements for Land Title Surveys jointly
established and adopted by the American Land Title Association and the
American Congress on Surveying and Mapping in 1992, and, without
limiting the generality of the foregoing, there shall be surveyed and
shown on such maps, plats or surveys the following: (A) the locations
on such sites of all the buildings, structures and other improvements
and the established building setback lines; (B) the lines of streets
abutting the sites and width thereof; (C) all access and other
easements appurtenant to the sites; (D) all roadways, paths, driveways,
easements, encroachments and overhanging projections and similar
encumbrances affecting the site, whether recorded, apparent from a
physical inspection of the sites or otherwise known to the surveyor;
(E) any encroachments on any adjoining property by the building
structures and improvements on the sites; (F) if the site is described
as being
57
on a filed map, a legend relating the survey to said map; and (G) the
flood zone designations, if any, in which the Mortgaged Properties are
located.
(ii) The Administrative Agent shall have received in
respect of each Mortgaged Property a mortgagee's title insurance policy
(or policies) or marked up unconditional binder for such insurance.
Each such policy shall (A) be in an amount satisfactory to the
Administrative Agent; (B) be issued at ordinary rates; (C) insure that
the Mortgage insured thereby creates a valid first Lien on such
Mortgaged Property free and clear of all defects and encumbrances,
except as disclosed therein; (D) name the Administrative Agent for the
benefit of the Secured Parties as the insured thereunder; (E) be in the
form of ALTA Loan Policy - 1970 (Amended 10/17/70 and 10/17/84) (or
equivalent policies); (F) contain such endorsements and affirmative
coverage as the Administrative Agent may reasonably request and (G) be
issued by title companies satisfactory to the Administrative Agent
(including any such title companies acting as co-insurers or
reinsurers, at the option of the Administrative Agent). The
Administrative Agent shall have received evidence satisfactory to it
that all premiums in respect of each such policy, all charges for
mortgage recording tax, and all related expenses, if any, have been
paid.
(ii) If requested by the Administrative Agent, the
Administrative Agent shall have received confirmation that the Borrower
has received the notice required pursuant to Section 208(e)(3) of
Regulation H of the Board.
(iii) The Administrative Agent shall have received a
copy of all recorded documents referred to, or listed as exceptions to
title in, the title policy or policies referred to in clause (ii) above
and a copy of all other material documents affecting the Mortgaged
Properties.
(s) Insurance. The Administrative Agent shall have received
insurance certificates satisfying the requirements of Section 5.3 of
the Guarantee and Collateral Agreement.
(t) PATRIOT Act. The Lenders shall have received, sufficiently
in advance of the Closing Date, all documentation and other information
required by bank regulatory authorities under applicable "know your
customer" and anti-money laundering rules and regulations, including
without limitation the United States PATRIOT Act.
5.2 Conditions to Each Extension of Credit. The agreement of
each Lender to make any extension of credit requested to be made by it hereunder
on any date (including, without limitation, its initial extension of credit) is
subject to the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by any Loan Party in or pursuant to
the Loan Documents shall be true and correct in all material respects
on and as of such date as if made on and as of such date (except to the
extent such representations and warranties were expressly made only as
of a specified date).
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(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
extensions of credit requested to be made on such date (and, on the
Closing Date, after giving effect to the Acquisition and the financing
thereof).
Each borrowing by and issuance of a Letter of Credit on behalf
of the Borrower hereunder shall constitute a representation and warranty by the
Borrower as of the date of such extension of credit that the conditions
contained in this Section 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agree
that, so long as the Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other amount is owing to any Lender or any Agent
hereunder, each of Holdings and the Borrower shall and shall cause each of its
Subsidiaries to:
6.1 Financial Statements. Furnish to the Administrative Agent
(for prompt distribution to each Lender):
(a) as soon as available, but in any event within 90 days (or,
in the event the Borrower is required to file such reports with the
SEC, such earlier date specified for filing annual reports on Form 10-K
under Section 13 or Section 15 of the Exchange Act or the date on which
the Borrower has filed such reports with the SEC) after the end of each
fiscal year of the Borrower, a copy of the audited consolidated balance
sheet of the Borrower and its consolidated Subsidiaries as at the end
of such year and the related audited consolidated statements of income
and of cash flows for such year, setting forth in each case in
comparative form the figures as of the end of and for the previous
year, reported on without a "going concern" or like qualification or
exception, or qualification arising out of the scope of the audit, by
Deloitte & Touche LLP or other "Big Four" independent certified public
accountants of nationally recognized standing;
(b) as soon as available, but in any event not later than 45
days (or, in the event the Borrower is required to file such reports
with the SEC, such earlier date specified for filing quarterly reports
on Form 10-Q under Section 13 or Section 15 of the Exchange Act or the
date on which the Borrower has filed such reports with the SEC) after
the end of each of the first three quarterly periods of each fiscal
year of the Borrower commencing with the quarter ending March 31, 2005,
the unaudited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of such quarter and the related
unaudited consolidated statements of income and of cash flows for such
quarter and the portion of the fiscal year through the end of such
quarter, certified by a Responsible Officer of the Borrower (subject to
changes resulting from audit, normal year-end adjustments and the
absence of footnotes), setting forth in each case in comparative form
the figures as of the end of and for the corresponding period in the
previous year, certified by a Responsible Officer as being fairly
stated in all material respects (subject to normal year-end audit
adjustments); and
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(c) as soon as available, but in any event not later than 45
days after the end of each month occurring during each fiscal year of
the Borrower (other than the third, sixth, ninth and twelfth such
month), commencing with the month ending January 31, 2005, the
unaudited consolidated balance sheets of the Borrower and its
Subsidiaries as at the end of such month and the related unaudited
consolidated statements of income and of cash flows for such month and
the portion of the fiscal year through the end of such month, setting
forth in each case in comparative form the figures as of the end of and
for the corresponding period in the previous year, certified by a
Responsible Officer as being fairly stated in all material respects
(subject to changes resulting from audit, normal year-end audit
adjustments and the absence of footnotes);
all such financial statements shall (i) in the case of financial statements
referred to in Sections 6.1(a) and (b), contain such information as may be
necessary to calculate compliance with Sections 7.1 and 7.7 for the four-quarter
period ending on the date of such balance sheets and (ii) be prepared in
reasonable detail and in accordance with GAAP applied consistently throughout
the periods reflected therein and with prior periods (except as approved by such
accountants or officer, as the case may be, and disclosed therein).
6.2 Certificates; Other Information. Furnish to the
Administrative Agent (for prompt distribution to each Lender), or, in the case
of Section 6.2(h), to the relevant Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of the independent
certified public accountants reporting on such financial statements
stating that in making the examination necessary therefor no knowledge
was obtained of any Default or Event of Default, except as specified in
such certificate (it being understood that such certificate shall be
limited to the items that independent certified public accountants are
permitted to cover in such certificates pursuant to their professional
standards and customs of the profession);
(b) concurrently with the delivery of any financial statements
pursuant to Sections 6.1(a) and (b), (i) a certificate of a Responsible
Officer stating that, to the best of such Responsible Officer's
knowledge, each Loan Party during such period has observed or performed
all of its covenants and other agreements contained in this Agreement
and the other Loan Documents to which it is a party to be observed,
performed or satisfied by it, and that such Responsible Officer has
obtained no knowledge of any Default or Event of Default except as
specified in such certificate and (ii) in the case of quarterly or
annual financial statements, a Compliance Certificate containing all
information and calculations necessary for determining compliance by
Holdings, the Borrower and its Subsidiaries with the provisions of this
Agreement referred to therein as of the last day of the fiscal quarter
or fiscal year of the Borrower, as the case may be;
(c) as soon as available, and in any event no later than 120
days after the end of each fiscal year of the Borrower, a detailed
consolidated budget for the following fiscal year (including a
projected consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of the following fiscal year, and the
related consolidated statements of projected cash flow, projected
changes in financial position and projected income and a description of
the underlying assumptions applicable thereto), and, as soon
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as available, materially adverse revisions, if any, of such budget and
projections with respect to such fiscal year (collectively, the
"Projections"), which Projections shall in each case be accompanied by
a certificate of a Responsible Officer stating that such Projections
are based on good faith estimates, information and assumptions believed
by such Responsible Officer to be reasonable under the circumstances
and that such Responsible Officer has no reason to believe that such
Projections are incorrect or misleading in any material respect,
provided that, each Lender recognizes that such Projections are not to
be viewed as fact and that actual results during the period or periods
covered by such Projections may differ from the projected results set
forth therein by a material amount;
(d) within 45 days after the end of each fiscal quarter of the
Borrower, a narrative discussion and analysis of the financial
condition and results of operations of the Borrower and its
Subsidiaries for such fiscal quarter and for the period from the
beginning of the then current fiscal year to the end of such fiscal
quarter, as compared to the portion of the Projections covering such
periods and to the comparable periods of the previous year;
(e) no later than 10 Business Days prior to the effectiveness
thereof, copies of substantially final drafts of any proposed
amendment, supplement, waiver or other modification with respect to the
Senior Subordinated Note Indenture or the Acquisition Agreement;
(f) within five days after the same are sent, copies of all
financial statements and reports that Holdings or the Borrower sends to
the holders of any class of its debt securities or public equity
securities (other than any certificate required to be delivered to the
trustee pursuant to the Senior Subordinated Note Indenture, which is
not distributed to the holders of the Senior Subordinated Notes) and,
within five days after the same are filed, copies of all financial
statements and reports that Holdings or the Borrower may make to, or
file with, the SEC;
(g) promptly after the Borrower's receipt thereof, a copy of
any "management letter" received by the Borrower from its independent
certified public accountants; and
(h) promptly, such additional financial and other information
as any Lender may from time to time reasonably request.
6.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its obligations of whatever nature, except where (i) the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of Holdings, the Borrower or its Subsidiaries, as the case
may be or (ii) the failure to pay, discharge or satisfy such obligation could
not reasonably be expected to have a Material Adverse Effect.
6.4 Conduct of Business and Maintenance of Existence;
Compliance. (a)(i) Preserve, renew and keep in full force and effect its
organizational existence and (ii) take
61
all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business, except, in each
case, as otherwise permitted by Section 7.4 and except, in the case of clause
(ii) above, to the extent that failure to do so could not reasonably be expected
to have a Material Adverse Effect; and (b) comply with all Contractual
Obligations and Requirements of Law, except to the extent that failure to comply
therewith could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.
6.5 Maintenance of Property; Insurance. (a) Keep all material
Property useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted and (b) maintain with financially
sound and reputable insurance companies insurance on all its Property in at
least such amounts and against at least such risks (but including in any event
public liability, product liability and business interruption) as are usually
insured against in the same general area by companies engaged in the same or a
similar business; and furnish to the Administrative Agent, upon written request,
full information as to the insurance carried. The Borrower and its Subsidiaries
shall retain the right to self-insure all or a portion of the required coverages
(other than property insurance and product liability insurance relating to
aircraft and aerospace products; provided that deductibles consistent with past
practice shall not be considered self-insurance for purposes of this sentence)
to the extent such self-insurance is reasonable and customary.
6.6 Inspection of Property; Books and Records; Discussions.
(a) Keep proper books of records and account in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities and (b)
permit representatives of any Lender during normal business hours and without
any unreasonable disruption to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time and upon reasonable notice (which visits and inspections shall not be made
more than once each year unless an Event of Default shall have occurred and is
continuing) and to discuss the business, operations, properties and financial
and other condition of Holdings, the Borrower and its Subsidiaries with officers
and employees of Holdings, the Borrower and its Subsidiaries and with its
independent certified public accountants.
6.7 Notices. Promptly, once any Principal Officer of the
Borrower obtains knowledge thereof, give notice to the Administrative Agent,
addressed to the Administrative Agent and each Lender, of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of Holdings, the Borrower or any of its Subsidiaries or (ii)
litigation, investigation or proceeding which may exist at any time
between Holdings, the Borrower or any of its Subsidiaries and any
Governmental Authority, that in either case, if not cured or if
adversely determined, as the case may be, could reasonably be expected
to have a Material Adverse Effect;
(c) any litigation or proceeding affecting Holdings, the
Borrower or any of its Subsidiaries (i) in which the amount involved is
$7,500,000 or more and not covered by
62
insurance or the escrow established pursuant to the Acquisition
Agreement, (ii) in which injunctive or similar relief is sought that
could materially and adversely affect Holdings, the Borrower or any of
its Subsidiaries or (iii) which relates to any Loan Document, the
Merger or the Acquisition;
(d) the following events, as soon as possible and in any event
within 30 days after the Borrower obtains knowledge thereof: (i) the
occurrence of any Reportable Event with respect to any Plan, a failure
to make any required contribution to a Plan, the creation of any Lien
in favor of the PBGC or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan or
(ii) the institution of proceedings or the taking of any other action
by the PBGC or the Borrower or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the
termination, Reorganization or Insolvency of, any Plan;
(e) as soon as possible and in any event within 30 days after
any Principal Officer obtains knowledge thereof: (i) any development,
event, or condition that, individually or in the aggregate with other
developments, events or conditions, could reasonably be expected to
result in the payment by the Borrower and its Subsidiaries, in the
aggregate, of a Material Environmental Amount; and (ii) any notice that
any governmental authority may deny any application for an
Environmental Permit sought by, or revoke or refuse to renew any
Environmental Permit held by, the Borrower, the absence of which
Environmental Permit could reasonably be expected to result in a
Material Adverse Effect; and
(f) any development or event that has had or could reasonably
be expected to have a Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action Holdings, the Borrower or the relevant Subsidiary
proposes to take with respect thereto.
6.8 Environmental Laws. (a) Comply in all material respects
with, and ensure compliance in all material respects by all tenants and
subtenants, if any, with, all applicable Environmental Laws, and obtain and
comply in all material respects with and maintain, and ensure that all tenants
and subtenants obtain and comply in all material respects with and maintain, any
required Environmental Permit. Noncompliance with any applicable Environmental
Law or Environmental Permit, or the failure to obtain and maintain any
Environmental Permit, shall be deemed not to constitute a breach of this Section
6.8(a) if, (i) upon obtaining knowledge of any such noncompliance or failure,
the Borrower or the relevant Subsidiary, as appropriate, promptly undertakes
reasonable efforts to achieve compliance or to obtain and maintain the
Environmental Permit, and (ii) in any case, such noncompliance or failure, and
any other noncompliance with any Environmental Law or Environmental Permit,
individually or in the aggregate, could not reasonably be expected to give rise
to a Material Adverse Effect.
(b) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required under
Environmental Laws and promptly
63
comply in all material respects with all lawful orders and directives of all
Governmental Authorities regarding Environmental Laws, other than such orders
and directives as to which an appeal or other challenge has been timely and
properly taken in good faith and the pendency of any and all such appeals and
other challenges could not reasonably be expected to give rise to a Material
Adverse Effect.
6.9 Interest Rate Protection. In the case of the Borrower,
within 90 days after the Closing Date, enter into, and thereafter maintain for a
period of not less than three years, Hedge Agreements to the extent necessary to
provide that at least 50% of the aggregate principal amount of the Term Loans is
subject to either a fixed interest rate or interest rate protection for a period
of not less than three years, which Hedge Agreements shall have terms and
conditions reasonably satisfactory to the Administrative Agent.
6.10 Additional Collateral, etc. (a) With respect to any
Property acquired after the Closing Date by Holdings, the Borrower or any of its
Subsidiaries (other than (w) any real property or any Property described in
paragraph (c) of this Section, (x) any Property subject to a Lien expressly
permitted by Section 7.3(g), (y) Property acquired by an Excluded Foreign
Subsidiary and (z) any Excluded Assets (as defined in the Guarantee and
Collateral Agreement) as to which the Administrative Agent, for the benefit of
the Secured Parties, does not have a perfected Lien, promptly (i) execute and
deliver to the Administrative Agent such amendments to the Guarantee and
Collateral Agreement or such other documents as the Administrative Agent deems
necessary or advisable to grant to the Administrative Agent, for the benefit of
the Secured Parties, a security interest in such Property and (ii) take all
actions necessary or advisable to grant to the Administrative Agent, for the
benefit of the Secured Parties, a perfected first priority security interest in
such Property, including without limitation, the filing of Uniform Commercial
Code financing statements in such jurisdictions as may be required by the
Guarantee and Collateral Agreement or by law or as may be requested by the
Administrative Agent.
(b) With respect to any fee interest in any real property
having a value (together with improvements thereof) of at least $1,000,000
acquired after the Closing Date by Holdings, the Borrower or any of its
Subsidiaries (other than any such real property owned by an Excluded Foreign
Subsidiary or subject to a Lien expressly permitted by Section 7.3(g)), promptly
(i) execute and deliver a first priority Mortgage in favor of the Administrative
Agent, for the benefit of the Secured Parties, covering such real property, (ii)
if requested by the Administrative Agent, provide the Lenders with (x) title and
extended coverage insurance covering such real property in an amount at least
equal to the purchase price of such real property (or such other amount as shall
be reasonably specified by the Administrative Agent) as well as a current ALTA
survey thereof, together with a surveyor's certificate and (y) use reasonable
best efforts to obtain any consents or estoppels reasonably deemed necessary or
advisable by the Administrative Agent in connection with such Mortgage, each of
the foregoing in form and substance reasonably satisfactory to the
Administrative Agent and (iii) if requested by the Administrative Agent, deliver
to the Administrative Agent legal opinions relating to the matters described
above, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Administrative Agent.
(c) With respect to any new Subsidiary or any Subsidiary not a
party to the Guarantee and Collateral Agreement that owns assets or property
with a fair market value in
64
excess of $250,000 (other than an Excluded Foreign Subsidiary) created or
acquired after the Closing Date (which, for the purposes of this paragraph,
shall include any existing Subsidiary that ceases to be an Excluded Foreign
Subsidiary), by Holdings, the Borrower or any of its Subsidiaries, promptly (i)
execute and deliver to the Administrative Agent such amendments to the Guarantee
and Collateral Agreement as the Administrative Agent deems necessary or
advisable to grant to the Administrative Agent, for the benefit of the Secured
Parties, a perfected first priority security interest in the Capital Stock of
such new Subsidiary that is owned by Holdings, the Borrower or any of its
Subsidiaries, (ii) deliver to the Administrative Agent the certificates
representing such Capital Stock, together with undated stock powers, in blank,
executed and delivered by a duly authorized officer of Holdings, the Borrower or
such Subsidiary, as the case may be, (iii) cause such new Subsidiary (A) to
become a party to the Guarantee and Collateral Agreement and (B) to take such
actions necessary or advisable to grant to the Administrative Agent for the
benefit of the Secured Parties a perfected first priority security interest in
the Collateral described in the Guarantee and Collateral Agreement with respect
to such new Subsidiary, including, without limitation, the filing of Uniform
Commercial Code financing statements in such jurisdictions as may be required by
the Guarantee and Collateral Agreement or by law or as may be requested by the
Administrative Agent, and (iv) if requested by the Administrative Agent, deliver
to the Administrative Agent legal opinions relating to the matters described
above, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Administrative Agent.
(d) With respect to any new Excluded Foreign Subsidiary
created or acquired after the Closing Date by Holdings, the Borrower or any of
its Subsidiaries (other than any Excluded Foreign Subsidiaries), promptly (i)
execute and deliver to the Administrative Agent such amendments to the Guarantee
and Collateral Agreement or such other documents as the Administrative Agent
deems necessary or advisable in order to grant to the Administrative Agent, for
the benefit of the Secured Parties, a perfected first priority security interest
in the Capital Stock of such new Subsidiary that is owned by Holdings, the
Borrower or any of its Subsidiaries (other than any Excluded Foreign
Subsidiaries), (provided that in no event shall more than 65% of the total
outstanding voting Capital Stock of any such new Excluded Foreign Subsidiary be
required to be so pledged), (ii) deliver to the Administrative Agent the
certificates representing such Capital Stock, together with undated stock
powers, in blank, executed and delivered by a duly authorized officer of
Holdings, the Borrower or such Subsidiary, as the case may be, and take such
other action as may be necessary or, in the opinion of the Administrative Agent,
desirable to perfect the Lien of the Administrative Agent thereon, and (iii) if
requested by the Administrative Agent, deliver to the Administrative Agent legal
opinions relating to the matters described above, which opinions shall be in
form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
6.11 Government Contracts. At such times as the Administrative
Agent may reasonably request, furnish the Administrative Agent with a list of
all contracts entered into between the United States Government and the Borrower
or any of its Subsidiaries.
6.12 Further Assurances. From time to time execute and
deliver, or cause to be executed and delivered, such additional instruments,
certificates or documents, and take such actions, as the Administrative Agent
may reasonably request for the purposes of implementing or effectuating the
provisions of this Agreement and the other Loan Documents, or of more fully
65
perfecting or renewing the rights of the Administrative Agent and the Lenders
with respect to the Collateral (or with respect to any additions thereto or
replacements or proceeds thereof or with respect to any other property or assets
hereafter acquired by the Borrower or any Subsidiary which may be deemed to be
part of the Collateral) pursuant hereto or thereto. Upon the exercise by the
Administrative Agent or any Lender of any power, right, privilege or remedy
pursuant to this Agreement or the other Loan Documents which requires any
consent, approval, recording, qualification or authorization of any Governmental
Authority, the Borrower will execute and deliver, or will cause the execution
and delivery of, all applications, certifications, instruments and other
documents and papers that the Administrative Agent or such Lender may be
required to obtain from the Borrower or any of its Subsidiaries for such
governmental consent, approval, recording, qualification or authorization.
6.13 Post-Closing Actions. No later than 30 days after the
Closing Date:
(a) Aircraft Braking Systems. Cause the Certificate of
Incorporation of Aircraft Braking Systems, Inc. to be amended to delete
Section 7 thereof to eliminate the settlement requirement following the
occurrence of certain bankruptcy and insolvency events.
(b) Pledged Notes. Cause to be delivered to the Administrative
Agent, the promissory notes and endorsements referred to in Section
5.1(p)(iii).
(c) Pledged Stock. Cause to be delivered to the Administrative
Agent, stock certificates for each of Aircraft Braking Foreign Sales
Ltd. and Aircraft Braking Systems Europe Limited referred to in Section
5.1(p)(i).
(d) Schedule 6 to the Guarantee and Collateral Agreement.
Cause to be delivered to the Administrative Agent a revised Schedule 6
to the Guarantee and Collateral Agreement reflecting the Intellectual
Property owned by the Loan Parties after giving effect to the Merger,
in form and substance reasonably satisfactory to the Administrative
Agent.
SECTION 7. NEGATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agree
that, so long as the Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other amount is owing to any Lender or any Agent
hereunder, each of Holdings and the Borrower shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly:
7.1 Financial Condition Covenants.
(a) Consolidated Leverage Ratio. Permit the Consolidated
Leverage Ratio as at the last day of any period of four consecutive fiscal
quarters of the Borrower ending during any period set forth below to exceed the
ratio set forth opposite such period:
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Consolidated
Period Leverage Ratio
----------------------------------- --------------
January 1, 2005 to March 31, 2006 7.75 to 1.00
April 1, 2006 to September 30, 2006 7.65 to 1.00
October 1, 2006 to March 31, 2007 7.50 to 1.00
April 1, 2007 to June 30, 2007 7.25 to 1.00
July 1, 2007 to September 30, 2007 7.00 to 1.00
October 1, 2007 to March 31, 2008 6.75 to 1.00
April 1, 2008 to September 30, 2008 6.50 to 1.00
October 1, 2008 to March 31, 2009 6.25 to 1.00
April 1, 2009 to September 30, 2009 6.00 to 1.00
October 1, 2009 to March 31, 2010 5.75 to 1.00
April 1, 2010 to June 30, 2010 5.50 to 1.00
July 1, 2010 to September 30, 2010 5.25 to 1.00
October 1, 2010 to March 31, 2011 5.00 to 1.00
April 1, 2011 to September 30, 2011 4.75 to 1.00
October 1, 2011 and thereafter 4.50 to 1.00
(b) Consolidated Interest Coverage Ratio. Permit the
Consolidated Interest Coverage Ratio for any period of four consecutive fiscal
quarters of the Borrower ending during any period set forth below to be less
than the ratio set forth below opposite such period:
Consolidated
Period Interest Coverage Ratio
----------------------------------- -----------------------
January 1, 2005 to March 31, 2007 1.65 to 1.00
April 1, 2007 to September 30, 2007 1.70 to 1.00
October 1, 2007 to March 31, 2008 1.75 to 1.00
April 1, 2008 to September 30, 2008 1.80 to 1.00
October 1, 2008 to March 31, 2009 1.85 to 1.00
April 1, 2009 to June 30, 2009 1.95 to 1.00
July 1, 2009 to September 30, 2009 2.05 to 1.00
October 1, 2009 to March 31, 2010 2.15 to 1.00
April 1, 2010 to June 30, 2010 2.25 to 1.00
July 1, 2010 to September 30, 2010 2.35 to 1.00
October 1, 2010 to March 31, 2011 2.50 to 1.00
April 1, 2011 to September 30, 2011 2.65 to 1.00
October 1, 2011 and thereafter 2.75 to 1.00
7.2 Limitation on Indebtedness. Create, incur, assume or
suffer to exist any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan
Document;
(b) Indebtedness of (i) the Borrower to any Subsidiary and of
any Wholly Owned Subsidiary Guarantor to the Borrower or any other
Subsidiary and (ii) to the
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extent permitted by Section 7.8(p), of any Foreign Subsidiary to the
Borrower or any Subsidiary Guarantor;
(c) Indebtedness (including, without limitation, Capital Lease
Obligations) secured by Liens permitted by Section 7.3(g) in an
aggregate principal amount not to exceed $60,000,000 at any one time
outstanding, provided that, such amount shall be reduced by the
aggregate amount of Indebtedness outstanding pursuant to Section
7.2(h);
(d) Indebtedness outstanding on the date hereof and listed on
Schedule 7.2(d) and any refinancings, refundings, renewals or
extensions thereof (without any increase in the principal amount
thereof or any shortening of the maturity of any principal amount
thereof), provided that, any refinancing, refunding, renewal or
extension of the Intercompany Loans shall be with the Borrower;
(e) Guarantee Obligations by the Borrower or any of its
Subsidiaries of obligations of the Borrower or any Subsidiary
Guarantor;
(f) (i) Indebtedness of the Borrower in respect of the Senior
Subordinated Notes in an aggregate principal amount not to exceed
$315,000,000 and (ii) Guarantee Obligations of any Subsidiary Guarantor
in respect of such Indebtedness; provided that such Guarantee
Obligations are subordinated to the obligations of such Subsidiary
Guarantor under the Guarantee and Collateral Agreement to the same
extent as the obligations of the Borrower in respect of the Senior
Subordinated Notes are subordinated to the Obligations;
(g) Indebtedness of the Borrower and its Subsidiaries in an
aggregate amount not exceeding the unused L/C Commitment, in respect of
trade letters of credit, standby letters of credit, surety bonds and
similar facilities issued for the purpose of supporting (i) workers'
compensation liabilities of the Borrower or any of the Subsidiaries as
required by law, (ii) performance, payment, deposit or surety
obligations of the Borrowers or any of the Subsidiaries and (iii)
environmental liabilities of the Borrowers or any of the Subsidiaries
as required by law;
(h) Indebtedness of the Borrower and its Subsidiaries in
respect of Capital Lease Obligations incurred in a sale and leaseback
transaction permitted by Section 7.11;
(i) Indebtedness acquired or assumed by the Borrower or any
Subsidiary in connection with any Permitted Acquisition permitted under
Section 7.8(j) (or an acquisition otherwise permitted by the Required
Lenders), provided that, such Indebtedness existed at the time of such
Permitted Acquisition and was not created in connection therewith or in
contemplation thereof;
(j) additional Indebtedness of the Borrower or any of its
Subsidiaries which is unsecured and subordinated to the Obligations in
a manner reasonably satisfactory to the Administrative Agent the
proceeds of which are used to pay the consideration for any Permitted
Acquisition (or an acquisition otherwise permitted by the Required
Lenders), the terms and conditions of which (i) shall provide for a
maturity date at least one year after the final payment is due on the
Term Loans and with no scheduled amortization of
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principal prior to such date, (ii) shall be no more restrictive than
those set forth in this Agreement and (iii) shall otherwise be
reasonably satisfactory to the Administrative Agent (including, without
limitation, with respect to mandatory prepayments); provided that (A)
after giving effect to the incurrence of any such Indebtedness, the pro
forma Consolidated Leverage Ratio as of the date of such incurrence
shall be less than the maximum Consolidated Leverage Ratio then in
effect pursuant to Section 7.1(a) and (B) no Default or Event of
Default has occurred or is continuing at the time of incurrence or
would result therefrom;
(k) any refinancing, refunding, renewal or extension of any
Indebtedness permitted by Section 7.2(f), (i) or (j), provided that,
(i) any such refinancing, refunding, renewal or extension ("Refinancing
Indebtedness") (A) is in an aggregate principal amount not greater than
the aggregate principal amount of the Indebtedness being refinanced,
refunded, renewed or extended, plus the amount of any interest,
premiums or penalties required to be paid thereon, plus fees and
expenses associated therewith, (B) has a later or equal final maturity
and a longer or equal weighted average life to maturity than the
Indebtedness being refinanced, refunded, renewed or extended, and (C)
if the Indebtedness being refinanced, refunded, renewed or extended is
subordinated to the Obligations, such Refinancing Indebtedness is
subordinated to the Obligations on terms no less favorable to the
Lenders than the Indebtedness being refinanced, refunded, renewed or
extended, (ii) only the obligors in respect of the Indebtedness being
refinanced, refunded, renewed or extended may become obligated with
respect to such Refinancing Indebtedness, and (iii) the non-economic
covenants, events of default, remedies and other provisions of the
Refinancing Indebtedness, when taken as a whole, shall be materially no
less favorable to the Lenders than those contained in the Indebtedness
being refinanced, refunded, renewed or extended;
(l) Indebtedness incurred by any Foreign Subsidiary to any
Person (other than a Loan Party), provided, that (i) recourse for any
such Indebtedness shall only be against Foreign Subsidiaries and (ii)
the aggregate amount of such Indebtedness does not exceed $7,500,000 at
any one time outstanding; and
(m) additional Indebtedness of the Borrower or any of its
Domestic Subsidiaries in an aggregate principal amount not to exceed
$10,000,000 at any one time outstanding.
7.3 Limitation on Liens. Create, incur, assume or suffer to
exist any Lien upon any of its Property or revenues, whether now owned or
hereafter acquired, except for:
(a) Liens for taxes not yet due or that are being contested in
good faith by appropriate proceedings, provided that adequate reserves
with respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business that are not overdue for a
69
period of more than 60 days or that are being contested in good faith
by appropriate proceedings;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation and deposits securing liability to insurance carriers under
insurance or self-insurance arrangements;
(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business that, in the
aggregate, are not substantial in amount and that do not in any case
materially detract from the value of the Property subject thereto or
materially interfere with the ordinary conduct of the business of the
Borrower or any of its Subsidiaries;
(f) Liens in existence on the date hereof listed on Schedule
7.3(f), securing Indebtedness permitted by Section 7.2(d) (and any
refinancing, refunding, renewal or extension thereof permitted by such
Section), provided that no such Lien is spread to cover any additional
Property after the Closing Date and that the principal amount of
Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Borrower or any other
Subsidiary incurred pursuant to Section 7.2(c) and 7.2(h) to finance
the acquisition, construction, improvement or repair of fixed or
capital assets (and any refinancing, refunding, renewal or extension
thereof without any increase in the principal amount thereof), provided
that (i) such Liens shall be created substantially simultaneously with
or promptly after the acquisition, construction, improvement or repair
of such fixed or capital assets, (ii) such Liens do not at any time
encumber any Property other than the Property financed by such
Indebtedness and (iii) the principal amount of Indebtedness secured
thereby is not increased;
(h) non-exclusive licenses of Intellectual Property granted by
Borrower or any of its Subsidiaries in the ordinary course of business
and not interfering in any respect with the ordinary conduct of the
business of Borrower or such Subsidiary;
(i) bankers' lien and rights of set-off with respect to
customary depositary arrangements entered into in the ordinary course
of business of Borrower and its Subsidiaries;
(j) Liens securing Indebtedness permitted under Section
7.2(i), provided that, such Liens (i) are not created in contemplation
of or in connection with such Person becoming a Subsidiary, (ii) do not
apply to any other property of Borrower or any of its Subsidiaries and
are not spread to cover any additional Property and (iii) secure only
those obligations secured by such Liens on the date such Person becomes
a Subsidiary (and any refinancings, refundings, renewals or extensions
of such Indebtedness permitted by Section 7.2(k));
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(k) Liens created pursuant to the Security Documents;
(l) any interest or title of a lessor or sublessor under any
operating lease or true lease entered into by the Borrower or any other
Subsidiary in the ordinary course of its business and covering only the
assets so leased, including, without limitation, in connection with
Indebtedness permitted by Section 7.2(c);
(m) Liens in favor of customs and revenue authorities arising
as a matter of law to secure payment of customs duties in connection
with the importation of goods;
(n) judgment Liens in respect of judgments that do not
constitute an Event of Default;
(o) Liens on goods the purchase price of which is financed by
a documentary letter of credit or bankers' acceptances issued for the
account of the Borrower or any of its Subsidiaries where such Lien
secures the obligations of the Borrower or such Subsidiary in respect
of such letter of credit or bankers' acceptances;
(p) Liens on assets that are the subject of any sale and
leaseback transaction permitted by Section 7.11;
(q) Liens against Collateral in favor of PBGC in connection
with any Plan which are junior to the Liens created pursuant to the
Security Documents; provided that an intercreditor agreement
satisfactory to the Administrative Agent shall be in effect with
respect to such Collateral; and
(r) Liens not otherwise permitted by this Section 7.3 so long
as neither (i) the aggregate outstanding principal amount of the
obligations secured thereby nor (ii) the aggregate fair market value
(determined, in the case of each such Lien, as of the date such Lien is
incurred) of the assets subject thereto exceeds (as to the Borrower and
all of its Subsidiaries) $5,000,000 at any one time.
7.4 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or Dispose of all or substantially all
of its Property or business, except that:
(a) any Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower (provided that the Borrower
shall be the continuing or surviving corporation) or with or into any
Wholly Owned Subsidiary Guarantor (provided that (i) the Wholly Owned
Subsidiary Guarantor shall be the continuing or surviving corporation
or (ii) simultaneously with such transaction, the continuing or
surviving corporation shall become a Wholly Owned Subsidiary Guarantor
and the Borrower shall comply with Section 6.10 in connection
therewith);
(b) any Subsidiary of the Borrower may Dispose of any or all
of its assets (upon voluntary liquidation or otherwise) to the Borrower
or any Subsidiary Guarantor;
(c) the Merger; and
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(d) Dispositions permitted by Section 7.5.
7.5 Limitation on Disposition of Property. Dispose of any of
its Property or business (including, without limitation, receivables and
leasehold interests), whether now owned or hereafter acquired, or, in the case
of any Subsidiary, issue or sell any shares of such Subsidiary's Capital Stock
to any Person, except:
(a) the Disposition of Property that is obsolete or worn out
property in the ordinary course of business;
(b) (i) the sale of inventory in the ordinary course of
business and the sale of Cash Equivalents from time to time and (ii)
transfers or other Dispositions of cash and Cash Equivalents in the
ordinary course of business in connection with transactions not
otherwise prohibited by this Agreement;
(c) Dispositions permitted by Section 7.4(a) or (b);
(d) the sale or issuance of (i) any Subsidiary's Capital Stock
to the Borrower or any Subsidiary Guarantor, (ii) any Foreign
Subsidiary's Capital Stock to any other Foreign Subsidiary, the Capital
Stock of which is subject to a perfected security interest pursuant to
Section 6.10(d), (iii) the Borrower's Capital Stock to Holdings or (iv)
Holdings' Capital Stock to the Parent;
(e) Dispositions, by means of trade-in, of equipment owned by
it and used or previously used in the ordinary course of its business,
so long as such equipment is replaced, substantially concurrently, by
like-kind equipment in an effort to upgrade Borrower's or any of
Borrower's Subsidiaries' facilities;
(f) Dispositions of leasehold interests that are no longer
used or useful in the business of the Borrower or its Subsidiaries;
(g) Dispositions of assets (i) to the Borrower or any
Subsidiary Guarantor, (ii) by any Foreign Subsidiary to any other
Foreign Subsidiary or (iii) to the extent permitted by Section 7.5(j),
by the Borrower or any Subsidiary Guarantor to any Foreign Subsidiary;
(h) Investments permitted by Section 7.8;
(i) sale and leaseback transactions permitted by Section 7.11;
(j) the Disposition of other assets (other than inventory or
Cash Equivalents), including any Dispositions pursuant to Section
7.5(g)(iii), having a combined fair market value not to exceed
$15,000,000 in the aggregate for any fiscal year of the Borrower,
provided that, the sum of (x) the aggregate fair market value of assets
conveyed to Foreign Subsidiaries pursuant to Section 7.5(g)(iii) plus
(y) the aggregate amount of Investments (valued at cost) made by the
Borrower and its Subsidiaries in Foreign Subsidiaries pursuant to
Section 7.8(p) shall not exceed $10,000,000 at any one time
outstanding; and
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(k) any Recovery Event, provided, that the requirements of
Section 2.12(c) are complied with in connection therewith.
7.6 Limitation on Restricted Payments. Declare or pay any
dividend on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any Capital Stock of Holdings, the Borrower
or any Subsidiary or any warrants or options to purchase any such Capital Stock,
whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or property or in
obligations of Holdings, the Borrower or any Subsidiary or make any loan or
advance or other payment to Holdings, or enter into any derivatives or other
transaction with any financial institution, commodities or stock exchange or
clearinghouse (a "Derivatives Counterparty") obligating Holdings, the Borrower
or any Subsidiary to make payments to such Derivatives Counterparty as a result
of any change in market value of any such Capital Stock (collectively,
"Restricted Payments"), except that:
(a) any Subsidiary may make Restricted Payments to the
Borrower or any Subsidiary Guarantor or, in the case of a Foreign
Subsidiary, such Foreign Subsidiary may make Restricted Payments to any
other Foreign Subsidiary, the Capital Stock of which is subject to a
perfected Security interest pursuant to Section 6.10(d);
(b) Holdings may make Restricted Payments in the form of
common stock of Holdings;
(c) the Borrower may pay dividends to Holdings to permit
Holdings to pay a dividend to the Parent in an aggregate amount equal
to the amounts due and payable under the Defeasance Costs Tax Note;
(d) so long as no Default or Event of Default shall have
occurred and be continuing, the Borrower may pay dividends to Holdings,
and Holdings may pay dividends to the Parent in an aggregate amount not
exceeding the aggregate amount of Excess Cash Flow each fiscal year of
the Borrower commencing with the fiscal year ending December 31, 2005
not required to be applied pursuant to Section 2.12(d), provided that,
immediately prior to and after giving effect to such Restricted
Payments, the Consolidated Leverage Ratio on the date of such
Restricted Payment is less than 5.5 to 1.00;
(e) so long as no Default or Event of Default shall have
occurred and be continuing, the Borrower may pay dividends to Holdings,
and Holdings may pay dividends to the Parent, to permit the Parent to
purchase the Parent's common stock or common stock options from present
or former officers or employees of Holdings, the Borrower or any
Subsidiary upon the death, disability or termination of employment of
such officer or employee, provided, that the aggregate amount of
payments under this paragraph (e) subsequent to the date hereof (net of
any proceeds received by Holdings and contributed to the Borrower
subsequent to the date hereof in connection with resales of any common
stock or common stock options so purchased) shall not exceed $5,000,000
in any fiscal year and, provided further that, the amount available to
make
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Restricted Payments in any fiscal year of the Borrower shall be
increased by the excess, if any, of (i) $5,000,000 over (ii) the amount
used to make Restricted Payments pursuant to this Section 7.6(e) in the
immediately preceding two fiscal years;
(f) so long as no Default or Event of Default has occurred
under Section 8(a), the Borrower may pay dividends to Holdings, and
Holdings may pay dividends to the Parent, to permit the Parent to pay
management and advisory fees and expenses expressly permitted by
Section 7.10;
(g) the Borrower may pay dividends or make other payments to
Holdings, and Holdings may pay dividends or make other payments to the
Parent, to permit the Parent to (i) pay customary corporate overhead
expenses incurred in the ordinary course of business, (ii) pay any
taxes which are due and payable by the Parent, Holdings, the Borrower
and its Subsidiaries as part of a consolidated group and (iii) pay
filing fees in connection with the initial public offering of the
Parent's common stock; and
(h) the Borrower may pay, or may pay dividends to Holdings to
permit Holdings to pay, or Holdings may pay, or pay dividends to the
Parent to permit the Parent to pay, payments required to be made
pursuant to the Acquisition Agreement.
7.7 Limitation on Capital Expenditures. (a) Make or commit to
make any Capital Expenditure (excluding (i) any such asset acquired in
connection with normal replacement and maintenance programs properly charged to
current operations, (ii) Development Participation Costs, (iii) after the
Borrower has elected to capitalize Program Investments on its balance sheet,
Program Investments, (iv) expenditures constituting the purchase price for
acquisitions permitted under Section 7.8(j) and (v) Capital Expenditures
permitted by Section 7.7(c)), except for expenditures in the ordinary course of
business in an aggregate amount for any fiscal year not exceeding $25,000,000;
provided that (i) any such amount permitted by this Section 7.7 if not so
expended in the fiscal year for which it is permitted may be carried over for
expenditure in the next following fiscal year, and (ii) Capital Expenditures
made pursuant to this Section 7.7(a) during any fiscal year shall be deemed
made, first, in respect of amounts permitted for such fiscal year as provided
above and, second, in respect of amounts carried over from the prior fiscal year
pursuant to clause (i) above;
(b) make or commit to make any Development Participation Costs
except for Developmental Participation Costs in an aggregate amount for the
Borrower and its Subsidiaries not exceeding $20,000,000 in each fiscal year;
provided that (i) any such amount permitted by this paragraph (b) if not so
expended in the fiscal year for which it is permitted may be carried over for
expenditure on Developmental Participation Costs in the next following fiscal
year and (ii) Capital Expenditures made pursuant to this Section 7.7(b) during
any fiscal year shall be deemed made, first, in respect of amounts permitted for
such fiscal year as provided above and, second, in respect of amounts carried
over from the prior fiscal year pursuant to clause (i) above; or
(c) Capital Expenditures made with the proceeds of any
Reinvestment Deferred Amount.
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7.8 Limitation on Investments. Make any advance, loan,
extension of credit (by way of guaranty or otherwise) or capital contribution
to, or purchase any Capital Stock, bonds, notes, debentures or other debt
securities of, or any assets constituting all or a material part of an ongoing
business from, or make any other investment in, any other Person (all of the
foregoing, "Investments"), except:
(a) extensions of trade credit in the ordinary course of
business;
(b) Investments in Cash Equivalents;
(c) Investments arising in connection with the incurrence of
Indebtedness permitted by Section 7.2(b) and (e);
(d) loans and advances to employees of Holdings, the Borrower
or any Subsidiaries of the Borrower in the ordinary course of business
(including, without limitation, for travel, entertainment and
relocation expenses) in an aggregate amount for Holdings, the Borrower
and Subsidiaries of the Borrower not to exceed $2,000,000 at any one
time outstanding;
(e) the Acquisition;
(f) Capital Expenditures (including any Program Investments)
to the extent permitted by Section 7.7;
(g) Investments in assets useful in the Borrower's business
made by the Borrower or any of its Subsidiaries with the proceeds of
any Reinvestment Deferred Amount;
(h) loans and advances in the ordinary course of business to
customers, suppliers, franchises and licensees of the Borrower and its
Subsidiaries in an aggregate principal amount not to exceed $3,000,000
at any one time outstanding;
(i) Investments (other than those relating to the incurrence
of Indebtedness permitted by Section 7.8(c)) by Holdings, the Borrower
or any of its Subsidiaries in the Borrower or any Person that, prior to
such Investment, is a Subsidiary Guarantor;
(j) Permitted Acquisitions;
(k) Investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes
with, customers and suppliers, in each case in the ordinary course of
business;
(l) Investments consisting of prepayments and other credits to
supplies made in the ordinary course of business;
(m) loans and advances to officers or other employees of
Holdings or its Subsidiaries in connection with such officers' or
employees' acquisition of equity interests of Holdings;
75
(n) Investments consisting of obligations under any Hedge
Agreement incurred in the normal course of business and not for
speculative purposes;
(o) Investments consisting of non-cash consideration issued to
the Borrower and its Subsidiaries by the purchaser of assets in
connection with a sale of such assets permitted by Section 7.5,
provided that, (x) any such debt Investment in excess of $500,000 is
evidenced by a promissory note pledged to the Administrative Agent for
the ratable benefit of the Secured Parties pursuant to the Guarantee
and Collateral Agreement and (y) the aggregate amount of such
Investments made by Loan Parties to Subsidiaries that are not Loan
Parties shall not exceed $3,000,000 at any one time outstanding,
(p) intercompany Investments by the Borrower and its
Subsidiaries in Foreign Subsidiaries in an aggregate amount (valued at
cost), provided that, the sum of (x) the aggregate fair market value of
assets conveyed to Foreign Subsidiaries pursuant to Section 7.5(g)(iii)
plus (y) the aggregate amount of Investments (valued at cost) made by
the Borrower and its Subsidiaries in Foreign Subsidiaries pursuant to
Section 7.8(p) shall not exceed $10,000,000 at any one time
outstanding; and
(q) in addition to Investments otherwise expressly permitted
by this Section, Investments by the Borrower and its Subsidiaries
(other than Investments in Foreign Subsidiaries) so long as the
aggregate amount of Investments pursuant to this paragraph (q)
(determined without regard to any write-downs or write-offs of such
Investments) does not exceed an amount equal to the sum of $5,000,000
plus the aggregate amount of cash capital contributions made by the
Permitted Investors in Holdings, provided that, with respect to any
such capital contribution (i) immediately prior to and after giving
effect to such capital contribution and the use of proceeds thereof, no
Default or Event of Default shall have occurred and be continuing and
(ii) after giving effect to such capital contribution and the use of
proceeds thereof, the Administrative Agent shall have received
satisfactory evidence, together with supporting calculations reasonably
acceptable to the Administrative Agent, that the Borrower would be in
pro forma compliance with the financial covenants in Section 7.1.
7.9 Limitation on Optional Payments and Modifications of Debt
Instruments, etc. (a) Make or offer to make any optional or voluntary payment,
prepayment, repurchase or redemption of, or otherwise voluntarily or optionally
defease, the Senior Subordinated Notes, or segregate funds for any such payment,
prepayment, repurchase, redemption or defeasance, or enter into any derivative
or other transaction with any Derivatives Counterparty obligating Holdings, the
Borrower or any Subsidiary to make payments to such Derivatives Counterparty as
a result of any change in market value of the Senior Subordinated Notes (other
than any refinancings, refundings, renewals or extensions thereof permitted by
Section 7.2(k)), (b) amend, modify, waive or otherwise change, or consent or
agree to any amendment, modification, waiver or other change to, any of the
terms of the Senior Subordinated Notes (other than any such amendment,
modification, waiver or other change which (i) would extend the maturity or
reduce the amount of any payment of principal thereof, reduce the rate or extend
the date for payment of interest thereon or relax any covenant or other
restriction applicable to Holdings, the Borrower or any of its Subsidiaries and
(ii) does not involve the payment of a consent fee), (c) designate any
Indebtedness (other than the Obligations) as "Designated Senior Indebtedness"
for the purposes
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of the Senior Subordinated Note Indenture or (d) amend its certificate of
incorporation in any manner determined by the Administrative Agent to be adverse
to the Lenders.
7.10 Limitation on Transactions with Affiliates. Enter into
any transaction, including, without limitation, any purchase, sale, lease or
exchange of Property, the rendering of any service or the payment of any
management, advisory or similar fees, with any Affiliate (other than Holdings,
the Borrower or any Subsidiary Guarantor) unless such transaction is (a)
otherwise permitted under this Agreement, (b) in the ordinary course of business
of Holdings, the Borrower or such Subsidiary, as the case may be, and (c) upon
fair and reasonable terms no less favorable to Holdings, the Borrower or such
Subsidiary, as the case may be, than it would obtain in a comparable arm's
length transaction with a Person that is not an Affiliate, except for (i)
reasonably and customary fees paid to, and customary indemnification of, members
of the board of directors (or similar governing body) of Holdings and its
Subsidiaries, (ii) compensation arrangements (including customary
indemnification arrangements for officers, employees, and consultants of
Holdings and its Subsidiaries) entered into in the ordinary course of business,
(iii) any transaction among the Borrower and its Subsidiaries, (iv) capital
contributions, (v) Restricted Payments permitted by Section 7.6 and (vi)
Investments permitted by Sections 7.8(d) and (m). Notwithstanding the foregoing,
so long as no Default or Event of Default under Section 8(a) has occurred and is
continuing, Holdings, the Borrower and its Subsidiaries may pay fees and
expenses pursuant to the Management Agreement.
7.11 Limitation on Sales and Leasebacks. Enter into any
arrangement with any Person providing for the leasing by Holdings, the Borrower
or any Subsidiary of real or personal property which has been or is to be sold
or transferred by Holdings, the Borrower or such Subsidiary to such Person or to
any other Person to whom funds have been or are to be advanced by such Person on
the security of such property or rental obligations of Holdings, the Borrower or
such Subsidiary, except that the Borrower or any of its Subsidiaries may enter
into a sale and leaseback transaction if (i) the aggregate amount of
Indebtedness incurred equal to the Attributable Debt relating to such sale and
leaseback transaction does not exceed $30,000,000 during the term of this
Agreement, (ii) the Net Cash Proceeds of such sale and leaseback transaction are
at least equal to the fair market value (as determined in good faith by the
Board of Directors if in excess of $5,000,000) of the Property that is the
subject of such sale and leaseback transaction and (iii) Net Cash Proceeds
received by the Borrower or any of its Subsidiaries as result of such sale and
leaseback transaction are reinvested or applied to prepay the Loans in
accordance with Section 2.12(c).
7.12 Limitation on Changes in Fiscal Periods. Permit the
fiscal year of the Borrower to end on a day other than December 31 or change the
Borrower's method of determining fiscal quarters.
7.13 Limitation on Negative Pledge Clauses. Enter into or
suffer to exist or become effective any agreement that prohibits or limits the
ability of Holdings, the Borrower or any of its Subsidiaries to create, incur,
assume or suffer to exist any Lien upon any of its Property or revenues, whether
now owned or hereafter acquired, to secure the Obligations or, in the case of
any guarantor, its obligations under the Guarantee and Collateral Agreement,
other than (a) this Agreement and the other Loan Documents, (b) the Senior
Subordinated Note Indenture (and any refinancings, refundings, renewals or
extensions thereof permitted by
77
Section 7.2(k)), (c) any agreements governing any purchase money Liens or
Capital Lease Obligations (or refinancings thereof) otherwise permitted hereby
(in which case, any prohibition or limitation shall only be effective against
the assets financed thereby), (d) pursuant to customary non-assignment or
no-subletting clauses in leases, licenses or contracts entered into in the
ordinary course of business, which restrict only the assignment of such lease,
license or contract, as applicable, (e) with respect to specific Property to be
sold pursuant to an executed agreement in connection with Dispositions permitted
by Section 7.5, restrictions covering such specific Property and (f) pursuant to
the terms of any Lien permitted by Section 7.3 solely to the extent that such
restrictions apply to the assets subject to such Lien.
7.14 Limitation on Restrictions on Subsidiary Distributions.
Enter into or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary to (a) make Restricted Payments in
respect of any Capital Stock of such Subsidiary held by, or pay any Indebtedness
owed to, the Borrower or any other Subsidiary, (b) make Investments in the
Borrower or any other Subsidiary or (c) transfer any of its assets to the
Borrower or any other Subsidiary, except for such encumbrances or restrictions
existing under or by reason of (i) any restrictions existing under the Loan
Documents, (ii) any restrictions with respect to a Subsidiary imposed pursuant
to an agreement that has been entered into in connection with the Disposition of
all or substantially all of the Capital Stock or assets of such Subsidiary,
(iii) restrictions in the Senior Subordinated Note Indenture (and any
refinancings, refundings, renewals or extensions thereof permitted by Section
7.2(k)), (iv) restrictions arising by reason of customary non-assignment or
no-subletting clauses in leases or other contracts entered into in the ordinary
course of business, (v) purchase money obligations or Capital Lease Obligations
permitted by Section 7.2(c) (or refinancings thereof that impose no more
restrictive restrictions) for property acquired, improved, repaired or
constructed in the ordinary course of business that impose restrictions of the
nature described in clause (iv) above solely on the property so acquired,
improved repaired or constructed, and (vi) Liens on assets permitted by Section
7.3 solely to the extent such restrictions apply to assets subject to such Lien.
7.15 Limitation on Lines of Business. Enter into any business,
either directly or through any Subsidiary, except for those businesses in which
the Borrower and its Subsidiaries are engaged on the date of this Agreement
(after giving effect to the Acquisition) or that are reasonably related thereto.
7.16 Limitation on Amendments to Acquisition Documentation.
(a) Amend, supplement or otherwise modify (pursuant to a waiver or otherwise)
the terms and conditions of the indemnities and licenses furnished to the
Borrower or any of its Subsidiaries pursuant to the Acquisition Documentation
such that after giving effect thereto such indemnities or licenses shall be
materially less favorable to the interests of the Loan Parties or the Lenders
with respect thereto or (b) otherwise amend, supplement or otherwise modify the
terms and conditions of the Acquisition Documentation except to the extent that
any such amendment, supplement or modification could not reasonably be expected
to have a Material Adverse Effect.
7.17 Limitation on Amendments to Other Documents. (a) Amend,
supplement or otherwise modify (pursuant to a waiver or otherwise) the terms and
conditions of the Management Agreement or Tax Sharing Agreement in any manner
that would (x) increase, in any material respect, the amounts payable by the
Borrower thereunder or (y) with respect to the
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Management Agreement, require the management fees and expenses to be payable to
any Person other than Aurora Management Partners LLC or any Affiliate thereof,
(b) otherwise amend, supplement or otherwise modify the terms and conditions of
the Management Agreement or Tax Sharing Agreement except to the extent that any
such amendment, supplement or modification could not reasonably be expected to
have a Material Adverse Effect or (c) amend, supplement or modify the Stock
Purchase Agreement, the Borrower Preferred Stock or the Holdings Preferred Stock
to provide for the payment of any dividend or other distribution with respect to
any such Preferred Stock or the redemption of such Preferred Stock, optional or
mandatory, prior to the date that is one year after the final payment is due on
the Term Loans.
7.18 Limitation on Activities of Holdings. In the case of
Holdings, notwithstanding anything to the contrary in this Agreement or any
other Loan Document, (a) conduct, transact or otherwise engage in, or commit to
conduct, transact or otherwise engage in, any business or operations other than
those incidental to its ownership of the Capital Stock of the Borrower, (b)
incur, create, assume or suffer to exist any Indebtedness or other liabilities
or financial obligations, except (i) nonconsensual obligations imposed by
operation of law, (ii) pursuant to the Loan Documents to which it is a party and
(iii) obligations with respect to its Capital Stock, or (c) own, lease, manage
or otherwise operate any properties or assets (including cash and Cash
Equivalents (other than cash received in connection with dividends made by the
Borrower in accordance with Section 7.6 pending application in the manner
contemplated by said Section or cash received as common equity from the Parent
to be contributed to the Borrower promptly after Holdings' receipt thereof)
other than the ownership of shares of Capital Stock of the Borrower.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of any Loan
or Reimbursement Obligation when due in accordance with the terms
hereof; or the Borrower shall fail to pay any interest on any Loan or
Reimbursement Obligation, or any other amount payable hereunder or
under any other Loan Document, within five days after any such interest
or other amount becomes due in accordance with the terms hereof or
thereof; or
(b) any representation or warranty made or deemed made by any
Loan Party herein or in any other Loan Document or that is contained in
any certificate, document or financial or other statement furnished by
it at any time under or in connection with this Agreement or any such
other Loan Document shall prove to have been inaccurate in any material
respect on or as of the date made or deemed made or furnished; or
(c) any Loan Party shall default in the observance or
performance of any agreement contained in clause (i) of Section 6.4(a)
(with respect to Holdings and the Borrower only), Section 6.7(a) or
Section 7, or in Section 5.6 of the Guarantee and Collateral Agreement;
or
(d) any Loan Party shall default in the observance or
performance of any other agreement contained in this Agreement or any
other Loan Document (other than as
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provided in paragraphs (a) through (c) of this Section), and such
default shall continue unremedied for a period of 30 days after the
earlier of (i) the date on which a Principal Officer of the Borrower or
any of its Subsidiaries first learns of such default, and (ii) the date
on which written notice thereof shall have been made to the Borrower by
the Administrative Agent or any Lender; or
(e) Holdings, the Borrower or any of its Subsidiaries shall
(i) default in making any payment of any principal of any Indebtedness
beyond the grace period, if any, provided in the instrument or
agreement under which such Indebtedness was created (including, without
limitation, any Guarantee Obligation, but excluding the Loans and
Reimbursement Obligations) on the scheduled or original due date with
respect thereto; or (ii) default in making any payment of any interest
on any such Indebtedness beyond the period of grace, if any, provided
in the instrument or agreement under which such Indebtedness was
created; or (iii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness or contained
in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist (other than
any due on sale provision), the effect of which default or other event
or condition is to cause, or to permit the holder or beneficiary of
such Indebtedness (or a trustee or agent on behalf of such holder or
beneficiary) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or to become
subject to a mandatory offer to purchase by the obligor thereunder or
(in the case of any such Indebtedness constituting a Guarantee
Obligation) to become payable; provided, that a default, event or
condition described in clause (i), (ii) or (iii) of this paragraph (e)
shall not at any time constitute an Event of Default unless, at such
time, one or more defaults, events or conditions of the type described
in clauses (i), (ii) and (iii) of this paragraph (e) shall have
occurred and be continuing with respect to Indebtedness the outstanding
principal amount of which exceeds in the aggregate $7,500,000; or
(f) (i) Holdings, the Borrower or any of its Subsidiaries
shall commence any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to
it, or seeking to adjudicate it bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any
substantial part of its assets, or Holdings, the Borrower or any of its
Subsidiaries shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against Holdings, the
Borrower or any of its Subsidiaries any case, proceeding or other
action of a nature referred to in clause (i) above that (A) results in
the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a
period of 60 days; or (iii) there shall be commenced against Holdings,
the Borrower or any of its Subsidiaries any case, proceeding or other
action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its
assets that results in the entry of an order for any such relief that
shall not have been vacated, discharged, or stayed or bonded pending
appeal within 60 days from the entry thereof; or (iv) Holdings, the
Borrower or any of its Subsidiaries shall take any action in
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furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or
(iii) above; or (v) Holdings, the Borrower or any of its Subsidiaries
shall generally not, or shall be unable to, or shall admit in writing
its inability to, pay its debts as they become due; or
(g) (i) any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan, or any Lien in favor of the PBGC or a Plan
shall arise on the assets of the Borrower or any Commonly Controlled
Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is reasonably likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA,
(v) the Borrower or any Commonly Controlled Entity shall be reasonably
likely to incur any liability in connection with a withdrawal from, or
the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any
other event or condition shall occur or exist with respect to a Plan;
and in each case in clauses (i) through (vi) above, such event or
condition, together with all other such events or conditions, if any,
could reasonably be expected to have a Material Adverse Effect; or
(h) one or more judgments or decrees shall be entered against
Holdings, the Borrower or any of its Subsidiaries involving for
Holdings, the Borrower and its Subsidiaries taken as a whole a
liability (not paid or fully covered by insurance as to which the
relevant insurance company has acknowledged coverage) of $7,500,000 or
more, and all such judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal within 30 days from the
entry thereof; or
(i) any of the Security Documents shall cease, for any reason
(other than by reason of the express release thereof pursuant to
Section 10.15), to be in full force and effect, or any Loan Party or
any Affiliate of any Loan Party shall so assert, or any Lien created by
any of the Security Documents shall cease to be enforceable and of the
same effect and priority purported to be created thereby or any Loan
Party or any Affiliate of any Loan Party shall so assert; or
(j) the guarantee contained in Section 2 of the Guarantee and
Collateral Agreement shall cease, for any reason (other than by reason
of the express release thereof pursuant to Section 10.15), to be in
full force and effect or any Loan Party or any Affiliate of any Loan
Party shall so assert; or
(k) any Change of Control shall occur; or
(l) the Senior Subordinated Notes or the guarantees thereof
shall cease, for any reason, to be validly subordinated to the
Obligations or the obligations of the Subsidiary Guarantors under the
Guarantee and Collateral Agreement, as the case may
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be, as provided in the Senior Subordinated Note Indenture, or any Loan
Party or any Affiliate of any Loan Party shall so assert; or
(m) the Parent shall default in making any payment required to
be paid by the Defeasance Costs Tax Note;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) shall immediately become due and payable, and (B) if such event is
any other Event of Default, either or both of the following actions may be
taken: (i) with the consent of the Required Lenders, the Administrative Agent
may, or upon the request of the Required Lenders, the Administrative Agent
shall, by notice to the Borrower declare the Revolving Credit Commitments to be
terminated forthwith, whereupon the Revolving Credit Commitments shall
immediately terminate; and (ii) with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Borrower, declare the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) to be due and payable forthwith, whereupon the same shall
immediately become due and payable. In the case of all Letters of Credit with
respect to which presentment for honor shall not have occurred at the time of an
acceleration pursuant to this paragraph, the Borrower shall at such time deposit
in a cash collateral account opened by the Administrative Agent an amount equal
to the aggregate then undrawn and unexpired face amount of such Letters of
Credit. Amounts held in such cash collateral account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
obligations of the Borrower hereunder and under the other Loan Documents. After
all such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of
the Borrower hereunder and under the other Loan Documents shall have been paid
in full, the balance, if any, in such cash collateral account shall be returned
to the Borrower (or such other Person as may be lawfully entitled thereto).
SECTION 9. THE AGENTS
9.1 Appointment. Each Lender hereby irrevocably designates and
appoints the Agents as the agents of such Lender under this Agreement and the
other Loan Documents, and each Lender irrevocably authorizes each Agent, in such
capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to such Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, no Agent shall have any duties or responsibilities,
except those expressly set forth
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herein, or any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against any
Agent. Each Lender authorizes and directs the Administrative Agent to execute
and deliver the Guarantee and Collateral Agreement.
9.2 Delegation of Duties. Each Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. No Agent shall be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
9.3 Exculpatory Provisions. Neither any Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any other Loan Document
(except to the extent that any of the foregoing are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
from its or such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by any Loan Party or any officer thereof
contained in this Agreement or any other Loan Document or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Agents under or in connection with, this Agreement or any other Loan
Document or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document or for any failure
of any Loan Party to perform its obligations hereunder or thereunder. The Agents
shall not be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of any Loan Party.
9.4 Reliance by Agents. Each Agent shall be entitled to rely,
and shall be fully protected in relying, upon any instrument, writing,
resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Loan Parties), independent accountants and
other experts selected by such Agent. The Agents may deem and treat the payee of
any Note as the owner thereof for all purposes unless such Note shall have been
transferred in accordance with Section 10.6 and all actions required by such
Section in connection with such transfer shall have been taken. Each Agent shall
be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Required Lenders (or, if so specified by this Agreement,
all Lenders or any other instructing group of Lenders specified by this
Agreement) as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action.
Each Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement and the other Loan Documents in accordance
with a request of the Required Lenders (or, if so specified by this Agreement,
all Lenders or any other instructing group of Lenders specified by this
Agreement),
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and such request and any action taken or failure to act pursuant thereto shall
be binding upon all the Lenders and all future holders of the Loans.
9.5 Notice of Default. No Agent shall be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless such Agent shall have received notice from a Lender, Holdings
or the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent shall receive such a notice, the Administrative Agent
shall give notice thereof to the Lenders. The Administrative Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders (or, if so specified by this
Agreement, all Lenders or any other instructing group of Lenders specified by
this Agreement); provided that unless and until the Administrative Agent shall
have received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
9.6 Non-Reliance on Agents and Other Lenders. Each Lender
expressly acknowledges that neither any of the Agents nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates have made any representations or warranties to it and that no act by
any Agent hereafter taken, including any review of the affairs of a Loan Party
or any affiliate of a Loan Party, shall be deemed to constitute any
representation or warranty by any Agent to any Lender. Each Lender represents to
the Agents that it has, independently and without reliance upon any Agent or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon any Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their affiliates. Except for notices,
reports and other documents expressly required to be furnished to the Lenders by
the Administrative Agent hereunder, no Agent shall have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any affiliate of
a Loan Party that may come into the possession of such Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates.
9.7 Indemnification. The Lenders agree to indemnify each Agent
in its capacity as such (to the extent not reimbursed by Holdings or the
Borrower and without limiting the obligation of Holdings or the Borrower to do
so), ratably according to their respective Aggregate Exposure Percentages in
effect on the date on which indemnification is sought under this Section (or, if
indemnification is sought after the date upon which the Commitments shall have
terminated and the Loans shall have been paid in full, ratably in accordance
with such Aggregate Exposure Percentages immediately prior to such date), for,
and to save each Agent
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harmless from and against, any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever that may at any time (including, without limitation, at
any time following the payment of the Loans) be imposed on, incurred by or
asserted against such Agent in any way relating to or arising out of, the
Commitments, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by such Agent
under or in connection with any of the foregoing; provided that no Lender shall
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements that are found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from such Agent's gross negligence or
willful misconduct. The agreements in this Section shall survive the payment of
the Loans and all other amounts payable hereunder.
9.8 Agent in Its Individual Capacity. Each Agent and its
affiliates may make loans to, accept deposits from, hold equity interests in and
generally engage in any kind of business with any Loan Party as though such
Agent were not an Agent. With respect to its Loans made or renewed by it and
with respect to any Letter of Credit issued or participated in by it, each Agent
shall have the same rights and powers under this Agreement and the other Loan
Documents as any Lender and may exercise the same as though it were not an
Agent, and the terms "Lender" and "Lenders" shall include each Agent in its
individual capacity.
9.9 Successor Administrative Agent. The Administrative Agent
may resign as Administrative Agent upon 10 days' notice to the Lenders and the
Borrower. If the Administrative Agent shall resign as Administrative Agent under
this Agreement and the other Loan Documents, then the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall (unless an Event of Default under Section 8(a) or Section
8(f) with respect to the Borrower shall have occurred and be continuing) be
subject to approval by the Borrower (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. If no successor agent
has accepted appointment as Administrative Agent by the date that is 10 days
following a retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become
effective, and the Lenders shall assume and perform all of the duties of the
Administrative Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above. The Syndication Agent may, at
any time, by notice to the Lenders and the Administrative Agent, resign as
Syndication Agent hereunder, whereupon the duties, rights, obligations and
responsibilities of the Syndication Agent hereunder shall automatically be
assumed by, and inure to the benefit of, the Administrative Agent, without any
further act by the Syndication Agent, the Administrative Agent or any Lender.
After any retiring Agent's resignation as Agent, the provisions of this Section
9 shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement and the other Loan Documents.
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9.10 Authorization to Release Liens and Guarantees. The
Administrative Agent is hereby irrevocably authorized by each of the Lenders to
effect any release of Liens or guarantee obligations contemplated by Section
10.15.
9.11 The Arrangers; the Syndication Agent; the
Co-Documentation Agents. None of the Arrangers, the Syndication Agent or the
Co-Documentation Agents, in their respective capacities as such, shall have any
duties or responsibilities, nor shall either such Person incur any liability,
under this Agreement and the other Loan Documents.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. (a) Neither this Agreement or any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
Section 10.1. The Required Lenders and each Loan Party party to the relevant
Loan Document may, or (with the written consent of the Required Lenders) the
Administrative Agent and each Loan Party party to the relevant Loan Document
may, from time to time, (x) enter into written amendments, supplements or
modifications hereto and to the other Loan Documents (including amendments and
restatements hereof or thereof) for the purpose of adding any provisions to this
Agreement or the other Loan Documents or changing in any manner the rights of
the Lenders or of the Loan Parties hereunder or thereunder or (y) waive, on such
terms and conditions as may be specified in the instrument of waiver, any of the
requirements of this Agreement or the other Loan Documents or any Default or
Event of Default and its consequences; provided, however, that no such waiver
and no such amendment, supplement or modification shall:
(i) forgive or reduce the principal amount or extend
the final scheduled date of maturity of any Loan or
Reimbursement Obligation, extend the scheduled date of any
amortization payment in respect of any Term Loan, reduce the
stated rate of any interest or fee payable under this
Agreement (except (x) in connection with the waiver of
applicability of any post-default increase in interest rates
(which waiver shall be effective with the consent of the
Majority Facility Lenders of each adversely affected Facility)
and (y) that any amendment or modification of defined terms
used in the financial covenants in this Agreement shall not
constitute a reduction in the rate of interest or fees for
purposes of this clause (i)) or extend the scheduled date of
any payment thereof, or increase the amount or extend the
expiration date of any Commitment of any Lender, in each case
without the consent of each Lender directly affected thereby;
(ii) amend, modify or waive any provision of this
Section or reduce any percentage specified in the definition
of Required Lenders or Required Prepayment Lenders, consent to
the assignment or transfer by the Borrower of any of its
rights and obligations under this Agreement and the other Loan
Documents, release all or substantially all of the Collateral
or release all or substantially all of the Guarantors from
their guarantee obligations under the Guarantee and Collateral
Agreement, in each case without the consent of all the
Lenders;
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(iii) amend, modify or waive any condition precedent
to any extension of credit under the Revolving Credit Facility
set forth in Section 5.2 (including, without limitation, the
waiver of an existing Default or Event of Default required to
be waived in order for such extension of credit to be made)
without the consent of the Majority Revolving Credit Facility
Lenders;
(iv) reduce the percentage specified in the
definition of Majority Facility Lenders with respect to any
Facility without the consent of all of the Lenders under such
Facility;
(v) amend, modify or waive any provision of Section
9, or any other provision affecting the rights, duties or
obligations of any Agent, without the consent of any Agent
directly affected thereby;
(vi) amend, modify or waive any provision of Section
2.6 or 2.7 without the consent of the Swing Line Lender;
(vii) amend, modify or waive any provision of Section
2.12 without the consent of the Required Prepayment Lenders;
(viii) amend, modify or waive any provision of
Section 2.18 without the consent of each Lender directly
affected thereby;
(ix) amend, modify or waive any provision of Section
3 without the consent of each Issuing Lender affected thereby;
or
(x) impose restrictions on assignments and
participations that are more restrictive than, or additional
to, those set forth in Section 10.6 without the consent of
each Lender directly affected thereby.
Any such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon the Loan Parties, the
Lenders, the Agents and all future holders of the Loans. In the case of any
waiver, the Loan Parties, the Lenders and the Agents shall be restored to their
former position and rights hereunder and under the other Loan Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon. Any such waiver,
amendment, supplement or modification shall be effected by a written instrument
signed by the parties required to sign pursuant to the foregoing provisions of
this Section; provided, that delivery of an executed signature page of any such
instrument by facsimile transmission shall be effective as delivery of a
manually executed counterpart thereof.
(b) For the avoidance of doubt, this Agreement and any other
Loan Document may be amended (or amended and restated) with the written consent
of the Required Lenders, the Administrative Agent and each Loan Party to each
relevant Loan Document (x) to add one or more additional credit facilities to
this Agreement and to permit the extensions of credit from time to time
outstanding thereunder and the accrued interest and fees in respect thereof
(collectively, the "Additional Extensions of Credit") to share ratably in the
benefits of this
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Agreement and the other Loan Documents with the Term Loans and Revolving
Extensions of Credit and the accrued interest and fees in respect thereof and
(y) to include appropriately the Lenders holding such credit facilities in any
determination of the Required Lenders, Required Prepayment Lenders and Majority
Revolving Facility Lenders; provided, however, that no such amendment shall
permit the Additional Extensions of Credit to share ratably with or with
preference to the Loans in the application of mandatory prepayments without the
consent of the Required Prepayment Lenders.
(c) In addition, notwithstanding the foregoing, this Agreement
may be amended with the written consent of the Administrative Agent, the
Borrower and the Lenders providing the relevant Replacement Term Loans (as
defined below) to permit the refinancing or modification of all outstanding Term
Loans ("Refinanced Term Loans") with a replacement term loan tranche hereunder
("Replacement Term Loans"), provided that (i) the aggregate principal amount of
such Replacement Term Loans shall not exceed the aggregate principal amount of
such Refinanced Term Loans plus the amount of any fees and expenses incurred by
the Borrower in connection with such refinancing, (ii) the Applicable Margin for
such Replacement Term Loans shall not be higher than the Applicable Margin for
such Refinanced Term Loans, (iii) the weighted average life to maturity of such
Replacement Term Loans shall not be shorter than the weighted average life to
maturity of such Refinanced Term Loans at the time of such refinancing and (iv)
all other terms applicable to such Replacement Term Loans shall be substantially
identical to, or less favorable to the Lenders providing such Replacement Term
Loans than, those applicable to such Refinanced Term Loans, except to the extent
necessary to provide for covenants and other terms applicable to any period
after the latest final maturity of the Term Loans in effect immediately prior to
such refinancing.
(d) The Borrower shall be permitted to replace any Lender in
connection with any proposed amendment, modification, supplement or waiver with
respect to any of the provisions of the Loan Documents as contemplated in this
Section 10.1 where such amendment, modification, supplement or waiver requires
the consent of either (i) 100% of the Lenders, and the consent of the holders of
more than 66-2/3% of the aggregate amount of the Term Loans and the then
outstanding Total Revolving Credit Commitments then in effect (or, if the
Revolving Credit Commitments have been terminated, the Total Revolving
Extensions of Credit then outstanding) is obtained or (ii) all affected Lenders
under any Facility, and the consent of the holders of more than 66-2/3% of the
aggregate amount of Loans or Commitments, as applicable, under the relevant
Facility is obtained, and such Lender fails to consent to such proposed action;
provided that (A) such replacement or removal does not conflict with any
Requirement of Law, (B) the Borrower shall be liable to such replaced Lender
under Section 2.21 (as though Section 2.21 were applicable) if any Eurodollar
Loan owing to such replaced Lender shall be purchased other than on the last day
of the Interest Period or maturity date relating thereto, (C) the replacement
financial institution shall purchase, at par, all Loans and other amounts owing
to such replaced Lender on or prior to the date of replacement and shall have
consented to the proposed amendment, (D) the replaced Lender shall be obligated
to make such replacement in accordance with the provisions of Section 10.6
(provided that the Borrower shall be obligated to pay the registration and
processing fee referred to therein), (E) the Borrower shall pay all additional
amounts (if any) required pursuant to Section 2.19 or 2.20, as the case may be,
in respect of any period prior to the date on which such replacement shall be
consummated, and (F) any such replacement shall not be deemed to be a waiver of
any rights that the Borrower, the
88
Administrative Agent or any other Lender shall have against the replaced Lender.
The Borrower shall replace any such non-consenting Lender within 120 days of
such Lender's failure to consent to the proposed action.
10.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, certified or registered, postage prepaid, or, in the case
of telecopy notice, when received, addressed (a) in the case of Holdings, the
Borrower and the Agents, as follows and (b) in the case of the Lenders, as set
forth in an administrative questionnaire delivered to the Administrative Agent
or on Schedule I to the Lender Addendum to which such Lender is a party or, in
the case of a Lender which becomes a party to this Agreement pursuant to an
Assignment and Acceptance, in such Assignment and Acceptance or (c) in the case
of any party, to such other address as such party may hereafter notify to the
other parties hereto:
Holdings: K&F Intermediate Holdco, Inc.
c/o Aurora Capital Group
00000 Xxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
The Borrower K&F Acquisition, Inc.
(prior to the Merger): c/o Aurora Capital Group
00000 Xxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
The Borrower K&F Industries, Inc.
(after the Merger): 000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Financial Officer
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
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In the case of Holdings
and the Borrower, with Aurora Capital Group
a copy to: 00000 Xxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
The Syndication Agent: X.X. Xxxxxx Securities
Inc. 000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
The Administrative Agent: Xxxxxx Commercial Paper Inc.
000 Xxxxxxx Xxxxxx
00(xx) Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx XxXxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Issuing Lender: As notified by such Issuing Lender to the
Administrative Agent and the Borrower
provided that any notice, request or demand to or upon any Agent, any Issuing
Lender or any Lender shall not be effective until received.
Notices and other communications to the Lenders hereunder may
be delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to Section 2 unless otherwise agreed by the
Administrative Agent and the applicable Lender. The Administrative Agent or the
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.
10.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of any Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
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10.4 Survival of Representations and Warranties. All
representations and warranties made herein, in the other Loan Documents and in
any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans and other extensions of credit hereunder.
10.5 Payment of Expenses. The Borrower agrees (a) to pay or
reimburse the Agents and the Arrangers for all their reasonable out-of-pocket
costs and expenses incurred in connection with the syndication and
administration of the Facilities (other than fees payable to syndicate members)
and the development, preparation, execution and delivery of, and any amendment,
supplement, modification or waiver to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including, without limitation, the reasonable fees and
disbursements and other charges of counsel to the Administrative Agent and the
Arrangers and the charges of Intralinks, (b) to pay or reimburse each Lender,
the Agents and the Arrangers for all their costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any other documents prepared in
connection herewith or therewith, including, without limitation, the fees,
disbursements and other charges of counsel (including, without duplication, the
allocated fees and disbursements and other charges of in-house counsel) to each
Lender and of counsel to the Administrative Agent, (c) to pay, indemnify, or
reimburse each Lender and the Administrative Agent for, and hold each Lender and
the Administrative Agent harmless from, any and all recording and filing fees
and any and all liabilities with respect to, or resulting from any delay in
paying, stamp, excise and other taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the other Loan Documents and any such other
documents, and (d) to pay, indemnify or reimburse each Lender, the Agents, the
Arrangers, their respective affiliates, and their respective officers,
directors, trustees, employees, advisors, agents and controlling persons (each,
an "Indemnitee") for, and hold each Indemnitee harmless from and against any and
all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever incurred by an Indemnitee or asserted against any Indemnitee by any
third party or by the Borrower or any other Loan Party arising out of, in
connection with, or as a result of (i) the execution or delivery of this
Agreement, any other Loan Document or any agreement or instrument contemplated
hereby or thereby, the performance by the parties hereto or thereto of their
respective obligations hereunder or thereunder or the consummation of the
transactions contemplated hereby or thereby, (ii) any Loan or Letter of Credit
or the use or proposed use of the proceeds thereof (including any refusal by any
Issuing Bank to honor a demand for payment under a Letter of Credit if the
documents presented in connection with such demand do not strictly comply with
the terms of such Letter of Credit), (iii) any actual or alleged presence or
release of Materials of Environmental Concern on or from any property owned,
occupied or operated by the Borrower or any of its Subsidiaries, or any
liability under Environmental Law arising from or relating to the Business or
the Business Properties or this Agreement or the other Loan Documents, or (iv)
any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other
theory, whether brought by any third party or by the Borrower or any other Loan
Party, and regardless of whether any Indemnitee is a party thereto (all the
foregoing
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in this clause (d), collectively, the "Indemnified Liabilities"), provided, that
the Borrower shall have no obligation hereunder to any Indemnitee with respect
to Indemnified Liabilities to the extent such Indemnified Liabilities resulted
from the gross negligence or willful misconduct of such Indemnitee as determined
by a final and nonappealable decision of a court of competent jurisdiction. No
Indemnitee shall be liable for any damages arising from the use by unauthorized
persons of Information or other materials sent through electronic,
telecommunications or other information transmission systems that are
intercepted by such persons or for any special, indirect, consequential or
punitive damages in connection with the Facilities. Without limiting the
foregoing, and to the extent permitted by applicable law, the Borrower agrees
not to assert and to cause its Subsidiaries not to assert, and hereby waives and
agrees to cause its Subsidiaries so to waive, all rights for contribution or any
other rights of recovery with respect to all claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or
nature, under or related to Environmental Laws, that any of them might have by
statute or otherwise against any Indemnitee that relate to the subject matter of
this Agreement or any other Loan Document . All amounts due under this Section
shall be payable not later than 30 days after written demand therefor.
Statements payable by the Borrower pursuant to this Section shall be submitted
to Xxxxxxx X. Xxxxxxxx (Telephone No. (000) 000-0000) (Fax No. (000) 000-0000)
(with a copy to Xxxxxxx X. Xxxxxx (Telephone No. (000) 000-0000) (Fax No. (310)
000-0000), at the address of the Borrower set forth in Section 10.2, or to such
other Person or address as may be hereafter designated by the Borrower in a
notice to the Administrative Agent. The agreements in this Section shall survive
repayment of the Loans and all other amounts payable hereunder.
10.6 Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of Holdings,
the Borrower, the Lenders, the Agents, all future holders of the Loans and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of the Agents and each Lender.
(b) Any Lender may, without the consent of the Borrower or any
Agent, in accordance with applicable law, at any time sell to one or more banks,
financial institutions or other entities (each, a "Participant") participating
interests in any Loan owing to such Lender, any Commitment of such Lender or any
other interest of such Lender hereunder and under the other Loan Documents. In
the event of any such sale by a Lender of a participating interest to a
Participant, such Lender's obligations under this Agreement to the other parties
to this Agreement shall remain unchanged, such Lender shall remain solely
responsible for the performance thereof, such Lender shall remain the holder of
any such Loan for all purposes under this Agreement and the other Loan
Documents, and the Borrower and the Agents shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. In no event shall
any Participant under any such participation have any right to approve any
amendment or waiver of any provision of any Loan Document, or any consent to any
departure by any Loan Party therefrom, except to the extent that such amendment,
waiver or consent requires the consent of each Lender directly affected thereby
pursuant to the proviso to the second sentence of Section 10.1. The Borrower
agrees that if amounts outstanding under this Agreement and the Loans are due or
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall, to the maximum
extent permitted
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by applicable law, be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement, provided that, in purchasing such participating
interest, such Participant shall be deemed to have agreed to share with the
Lenders the proceeds thereof as provided in Section 10.7(a) as fully as if such
Participant were a Lender hereunder. The Borrower also agrees that each
Participant shall be entitled to the benefits of Sections 2.19, 2.20 and 2.21
with respect to its participation in the Commitments and the Loans outstanding
from time to time as if such Participant were a Lender; provided that, in the
case of Section 2.20, such Participant shall have complied with the requirements
of said Section, and provided, further, that no Participant shall be entitled to
receive any greater amount pursuant to any such Section than the transferor
Lender would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred.
(c) Any Lender (an "Assignor") may, in accordance with
applicable law and upon written notice to the Administrative Agent, at any time
and from time to time assign to any Lender or any affiliate, Related Fund or
Control Investment Affiliate thereof or, with the written consent of the
Borrower, the Administrative Agent and, in the case of any assignment of
Revolving Credit Commitments, the written consent of the Issuing Lender and the
Swing Line Lender (which, in each case, shall not be unreasonably withheld or
delayed), to an additional bank, financial institution or other entity (an
"Assignee") all or any part of its rights and obligations under this Agreement
pursuant to an Assignment and Acceptance executed by such Assignee and such
Assignor (and, where the consent of the Borrower, the Administrative Agent, the
Issuing Lender or the Swing Line Lender is required pursuant to the foregoing
provisions, by the Borrower and such other Persons) and delivered to the
Administrative Agent for its acceptance and recording in the Register; provided
that, no such assignment to an Assignee (other than any Lender or any affiliate
or Related Fund thereof) shall be in an aggregate principal amount of less than
$5,000,000, with respect to an assignment of Revolving Credit Loans, and
$1,000,000, with respect to an assignment of Term Loans and, after giving effect
thereto, the Assignor shall have Commitments and Loans aggregating at least
$5,000,000, with respect to an assignment of Revolving Credit Loans, and
$1,000,000, with respect to an assignment of Term Loans (in each case, other
than in the case of an assignment of all of a Lender's interests under this
Agreement), unless otherwise agreed by the Borrower and the Administrative
Agent. Any such assignment need not be ratable as among the Facilities. Upon
such execution, delivery, acceptance and recording, from and after the effective
date determined pursuant to such Assignment and Acceptance, (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
with Commitments and/or Loans as set forth therein, and (y) the Assignor
thereunder shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of an Assignor's rights and obligations
under this Agreement, such Assignor shall cease to be a party hereto, except as
to Section 2.19, 2.20 and 10.5 in respect of the period prior to such effective
date). Notwithstanding any provision of this Section, the consent of the
Borrower shall not be required for any assignment that occurs at any time when
any Event of Default shall have occurred and be continuing, provided that, after
the occurrence and during the continuation of an Event of Default, the Borrower
may identify, by written notice to the Administrative Agent (and the
Administrative Agent shall promptly notify the Lenders), up to two banks,
financial
93
institutions or other entities who shall not be permitted to be an Assignee
hereunder during the continuation of such Event of Default. For purposes of the
minimum assignment or hold amounts set forth in this paragraph, multiple
assignments to or by two or more Related Funds shall be aggregated.
(d) The Administrative Agent shall, on behalf of the Borrower,
maintain at its address referred to in Section 10.2 a copy of each Assignment
and Acceptance delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Lenders and the Commitment of, and
principal amount of the Loans owing to, each Lender from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, each Agent and the Lenders shall treat each Person whose name
is recorded in the Register as the owner of the Loans and any Notes evidencing
such Loans recorded therein for all purposes of this Agreement. Any assignment
of any Loan, whether or not evidenced by a Note, shall be effective only upon
appropriate entries with respect thereto being made in the Register (and each
Note shall expressly so provide). Any assignment or transfer of all or part of a
Loan evidenced by a Note shall be registered on the Register only upon surrender
for registration of assignment or transfer of the Note evidencing such Loan,
accompanied by a duly executed Assignment and Acceptance; thereupon one or more
new Notes in the same aggregate principal amount shall be issued to the
designated Assignee, and the old Notes shall be returned by the Administrative
Agent to the Borrower marked "canceled". The Register shall be available for
inspection by the Borrower or any Lender (with respect to any entry relating to
such Lender's Loans) at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed
by an Assignor and an Assignee (and, in any case where the consent of any other
Person is required by Section 10.6(c), by each such other Person) together with
payment to the Administrative Agent of a registration and processing fee of
$3,500 (treating multiple, simultaneous assignments by or to two or more Related
Funds as a single assignment) (except that no such registration and processing
fee shall be payable (y) in connection with an assignment by or to a Xxxxxx
Entity or (z) in the case of an Assignee which is already a Lender or is an
affiliate or Related Fund of a Lender or a Person under common management with a
Lender), the Administrative Agent shall (i) promptly accept such Assignment and
Acceptance and (ii) on the effective date determined pursuant thereto record the
information contained therein in the Register and give notice of such acceptance
and recordation to the Borrower. On or prior to such effective date, the
Borrower, at its own expense, upon request, shall execute and deliver to the
Administrative Agent (in exchange for the Revolving Credit Note and/or
applicable Term Notes, as the case may be, of the assigning Lender) a new
Revolving Credit Note and/or applicable Term Notes, as the case may be, to the
order of such Assignee in an amount equal to the Revolving Credit Commitment
and/or applicable Term Loans, as the case may be, assumed or acquired by it
pursuant to such Assignment and Acceptance and, if the Assignor has retained a
Revolving Credit Commitment and/or Term Loans, as the case may be, upon request,
a new Revolving Credit Note and/or Term Notes, as the case may be, to the order
of the Assignor in an amount equal to the Revolving Credit Commitment and/or
applicable Term Loans, as the case may be, retained by it hereunder. Such new
Note or Notes shall be dated the Closing Date and shall otherwise be in the form
of the Note or Notes replaced thereby.
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(f) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section concerning assignments of Loans
and Notes relate only to absolute assignments and that such provisions do not
prohibit assignments creating security interests in Loans and Notes, including,
without limitation, any pledge or assignment by a Lender of any Loan or Note to
any Federal Reserve Bank in accordance with applicable law.
(g) Notwithstanding anything to the contrary contained herein,
any Lender (a "Granting Lender") may grant to a special purpose funding vehicle
(an "SPC"), identified as such in writing from time to time by the Granting
Lender to the Administrative Agent and the Borrower, the option to provide to
the Borrower all or any part of any Loan that such Granting Lender would
otherwise be obligated to make to the Borrower pursuant to this Agreement;
provided that (i) nothing herein shall constitute a commitment by any SPC to
make any Loan and (ii) if an SPC elects not to exercise such option or otherwise
fails to provide all or any part of such Loan, the Granting Lender shall be
obligated to make such Loan pursuant to the terms hereof. The making of a Loan
by an SPC hereunder shall utilize the Commitment of the Granting Lender to the
same extent, and as if, such Loan were made by such Granting Lender. Each party
hereto hereby agrees that no SPC shall be liable for any indemnity or similar
payment obligation under this Agreement (all liability for which shall remain
with the Granting Lender). In furtherance of the foregoing, each party hereto
hereby agrees (which agreement shall survive the termination of this Agreement)
that, prior to the date that is one year and one day after the payment in full
of all outstanding commercial paper or other indebtedness of any SPC, it will
not institute against, or join any other person in instituting against, such SPC
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under the laws of the United States or any state thereof. In
addition, notwithstanding anything to the contrary in this Section 10.6(g), any
SPC may (A) with notice to, but without the prior written consent of, the
Borrower and the Administrative Agent and without paying any processing fee
therefor, assign all or a portion of its interests in any Loans to the Granting
Lender, or with the prior written consent of the Borrower and the Administrative
Agent (which consent shall not be unreasonably withheld) to any financial
institutions providing liquidity and/or credit support to or for the account of
such SPC to support the funding or maintenance of Loans, and (B) disclose on a
confidential basis any non-public information relating to its Loans to any
rating agency, commercial paper dealer or provider of any surety, guarantee or
credit or liquidity enhancement to such SPC; provided that non-public
information with respect to the Borrower may be disclosed only with the
Borrower's consent which will not be unreasonably withheld. This paragraph (g)
may not be amended without the written consent of any SPC with Loans outstanding
at the time of such proposed amendment.
10.7 Adjustments; Set-off. (a) Except to the extent that this
Agreement provides for payments to be allocated to a particular Lender or to the
Lenders under a particular Facility, if any Lender (a "Benefitted Lender") shall
at any time receive any payment of all or part of the Obligations owing to it,
or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 8(f), or otherwise), in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in respect
of such other Lender's Obligations, such Benefitted Lender shall purchase for
cash from the other Lenders a participating interest in such portion of each
such other Lender's Obligations, or shall provide such other Lenders with the
benefits of any such collateral, as shall be necessary to cause such Benefitted
Lender to share the
95
excess payment or benefits of such collateral ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such Benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to
Holdings or the Borrower, any such notice being expressly waived by Holdings and
the Borrower to the extent permitted by applicable law, upon any amount becoming
due and payable by Holdings or the Borrower hereunder (whether at the stated
maturity, by acceleration or otherwise), to set off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender or
any branch or agency thereof to or for the credit or the account of Holdings or
the Borrower, as the case may be. Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such setoff and application made
by such Lender, provided that the failure to give such notice shall not affect
the validity of such setoff and application.
10.8 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. Delivery of an executed signature page of this
Agreement or of a Lender Addendum by facsimile transmission shall be effective
as delivery of a manually executed counterpart hereof. A set of the copies of
this Agreement signed by all the parties shall be lodged with the Borrower and
the Administrative Agent.
10.9 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10 Integration. This Agreement and the other Loan Documents
represent the entire agreement of Holdings, the Borrower, the Agents, the
Arrangers and the Lenders with respect to the subject matter hereof and thereof,
and there are no promises, undertakings, representations or warranties by
Holdings, the Borrower, the Arrangers, any Agent or any Lender relative to
subject matter hereof not expressly set forth or referred to herein or in the
other Loan Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 Submission To Jurisdiction; Waivers. Each of Holdings
and the Borrower hereby irrevocably and unconditionally:
96
(a) submits for itself and its Property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgment
in respect thereof, to the non-exclusive general jurisdiction of the
courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and appellate courts
from any thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or
that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to Holdings or the Borrower, as the case may be at its address
set forth in Section 10.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this Section any special, exemplary, punitive or
consequential damages.
10.13 Acknowledgments. Each of Holdings and the Borrower
hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) neither the Arrangers, any Agent nor any Lender has any
fiduciary relationship with or duty to Holdings or the Borrower arising
out of or in connection with this Agreement or any of the other Loan
Documents, and the relationship between the Arrangers, the Agents and
the Lenders, on one hand, and Holdings and the Borrower, on the other
hand, in connection herewith or therewith is solely that of creditor
and debtor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Arrangers, the Agents and the Lenders or
among Holdings, the Borrower and the Lenders.
10.14 Confidentiality. Each of the Agents and the Lenders
agrees to keep confidential all non-public information provided to it by any
Loan Party pursuant to this Agreement that is designated by such Loan Party as
non-public or confidential; provided that nothing herein shall prevent any Agent
or any Lender from disclosing any such information (a) to the Arrangers, any
Agent, any other Lender or any affiliate of any thereof, (b) to any Participant
or Assignee (each, a "Transferee") or prospective Transferee that agrees to
comply
97
with the provisions of this Section or substantially equivalent provisions, (c)
to any of its employees, directors, agents, attorneys, accountants and other
professional advisors, (d) to any financial institution that is a direct or
indirect contractual counterparty in swap agreements or such contractual
counterparty's professional advisor (so long as such contractual counterparty or
professional advisor to such contractual counterparty expressly agrees to be
bound by the provisions of this Section or confidentiality provisions similar to
the provisions of this Section), (e) upon the request or demand of any
Governmental Authority having jurisdiction over it, (f) in response to any order
of any court or other Governmental Authority or as may otherwise be required
pursuant to any Requirement of Law, (g) in connection with any litigation or
similar proceeding, (h) that has been publicly disclosed other than in breach of
this Section, (i) to the National Association of Insurance Commissioners or any
similar organization or any nationally recognized rating agency that requires
access to information about a Lender's investment portfolio in connection with
ratings issued with respect to such Lender or (j) in connection with the
exercise of any remedy hereunder or under any other Loan Document.
10.15 Release of Collateral and Guarantee Obligations.
(a) Notwithstanding anything to the contrary contained herein
or in any other Loan Document, upon request of the Borrower in
connection with any Disposition of Property permitted by the Loan
Documents, or made with the prior written consent of the Required
Lenders, the Administrative Agent shall (without notice to, or vote or
consent of, any Lender, or any affiliate of any Lender that is a party
to any Specified Hedge Agreement) take such actions as shall be
required to release its security interest in any Collateral being
Disposed of in such Disposition, and to release any guarantee
obligations under any Loan Document of any Person being Disposed of in
such Disposition, to the extent necessary to permit consummation of
such Disposition in accordance with the Loan Documents.
(b) Notwithstanding anything to the contrary contained herein
or any other Loan Document, when all Obligations (other than
obligations in respect of any Specified Hedge Agreement) have been paid
in full, all Commitments have terminated or expired and no Letter of
Credit shall be outstanding, upon request of the Borrower, the
Administrative Agent shall (without notice to, or vote or consent of,
any Lender, or any affiliate of any Lender that is a party to any
Specified Hedge Agreement) take such actions as shall be required to
release its security interest in all Collateral, and to release all
guarantee obligations under any Loan Document, whether or not on the
date of such release there may be outstanding Obligations in respect of
Specified Hedge Agreements. Any such release of guarantee obligations
shall be deemed subject to the provision that such guarantee
obligations shall be reinstated if after such release any portion of
any payment in respect of the Obligations guaranteed thereby shall be
rescinded or must otherwise be restored or returned upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of
the Borrower or any Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or
similar officer for, the Borrower or any Guarantor or any substantial
part of its property, or otherwise, all as though such payment had not
been made.
98
10.16 Accounting Changes. In the event that any "Accounting
Change" (as defined below) shall occur and such change results in a change in
the method of calculation of financial covenants, standards or terms in this
Agreement, then the Borrower and the Administrative Agent agree to enter into
negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such Accounting Change with the desired result that the
criteria for evaluating the Borrower's financial condition shall be the same
after such Accounting Change as if such Accounting Change had not been made.
Until such time as such an amendment shall have been executed and delivered by
the Borrower, the Administrative Agent and the Required Lenders, all financial
covenants, standards and terms in this Agreement shall continue to be calculated
or construed as if such Accounting Change had not occurred. "Accounting Change"
refers to any change in accounting principles required by the promulgation of
any rule, regulation, pronouncement or opinion by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants or, if
applicable, the SEC.
10.17 Delivery of Lender Addenda. Each initial Lender shall
become a party to this Agreement by delivering to the Administrative Agent a
Lender Addendum duly executed by such Lender, the Borrower and the
Administrative Agent.
10.18 WAIVERS OF JURY TRIAL. HOLDINGS, THE BORROWER, THE
AGENTS AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
K&F INTERMEDIATE HOLDCO, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President and Secretary
K&F ACQUISITION, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President and Secretary
XXXXXX BROTHERS INC.,
as Arranger
By: /s/ Xxxxxxx Abt
-----------------------------------------------
Name: Xxxxxxx Abt
Title: Senior Vice President
X.X. XXXXXX SECURITIES INC.,
as Arranger and Syndication Agent
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President
XXXXXXX SACHS CREDIT PARTNERS L.P., as
Co-Documentation Agent
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
CITIGROUP GLOBAL MARKETS INC.,
as Co-Documentation Agent
By: /s/ Xxxxxxx X. Xxxxxxxxxx
-----------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Managing Director
XXXXXX COMMERCIAL PAPER INC.,
as Administrative Agent
By: /s/ Xxxxxxx Abt
-----------------------------------------------
Name: Xxxxxxx Abt
Title: Senior Vice President
The undersigned hereby acknowledges and agrees that, upon the effectiveness of
the Merger, it will succeed by operation of law to all of the rights and
obligations of the Borrower set forth herein and that all references herein to
the "Borrower" shall thereupon be deemed to be references to the undersigned, as
the surviving entity of the Merger.
K&F INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President and CEO
